Acushnet Holdings Corp. Q3 2025 Earnings Call - Solid Equipment Growth Balanced by Regional Apparel Softness and Rising Tariff Pressures

Sondra, Moderator/Investor Relations, Acushnet Holdings Corp.: Good morning, everyone. Thank you for joining us today for Acushnet Holding Corp.’s third quarter 2025 earnings conference call. Joining me this morning are David Maher, our President and Chief Executive Officer, and Sean Sullivan, our Chief Financial Officer. Before I turn the call over to David, I would like to remind everyone that we will make forward-looking statements on the call today. These forward-looking statements are based on Acushnet’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations. For a list of factors that could cause actual results to differ, please see today’s press release, the slides that accompany our presentation, and our filings with the U.S. Securities and Exchange Commission. Throughout this discussion, we will make reference to non-GAAP financial measures, including items such as net sales on a constant currency basis and adjusted EBITDA.

Explanations of how and why we use these measures and reconciliations of these items to the most directly comparable GAAP measures can be found in the schedules in today’s press release, the slides that accompany this presentation, and in our filings with the U.S. Securities and Exchange Commission. Please also note that references throughout this presentation to year-on-year net sales increases and decreases are on a constant currency basis unless otherwise stated, as we feel this measurement best provides context as to the performance and trends of our business. When referring to year-to-date results or comparisons, we are referring to the nine-month period ended September 30, 2025, and the comparable nine-month period in 2024. With that, I’ll turn the call over to David.

David Maher, President and Chief Executive Officer, Acushnet Holdings Corp.: Good morning, everyone, and thanks to Sondra, who last month started her 28th year with our company. As always, we appreciate your interest in Acushnet Holdings. As the golf world exits peak season in many regions and begins prime time across the Sunbelt, the sport and business of golf continue to be vibrant, with an increased number of golfers playing an increased number of rounds globally. After a weather-induced slow start to the year in the U.S., rounds of play accelerated in the third quarter, which is the largest participation period of the year, and we now expect worldwide rounds in 2025 to match or exceed what was a record in 2024. Acushnet’s trade partners are, by and large, healthy and investing to enhance their facilities and ultimately their value propositions to best meet the evolving preferences of tomorrow’s golfers.

The global golf market is structurally sound, with momentum in the U.S. and EMEA offsetting softness, mainly from footwear and apparel, across Japan and Korea. Within Acushnet, our team is relentlessly focused on exceeding dedicated golfer expectations, developing great products, earning the trust and endorsement of the pyramid of influence and our partners, and executing a wide range of fitting and golfer connection initiatives. Tying this together is the company’s unwavering commitment to product quality, best exemplified by every Pro V1 golf ball, which passes more than 100 quality checks throughout the production process. As a result of this commitment, our return rate is one golf ball out of every 16 million Pro V1s produced.

This operating model, Acushnet’s blueprint for success, is continually refined and improved upon by our team as we strive to provide great products and services to golfers, execute our capital allocation strategy, and create shareholder value for our investors. With this as background, I now point to slide four and our third quarter and year-to-date results. First, for the quarter, Acushnet delivered worldwide net sales of $658 million, a 5% constant currency increase over last year, with gains across all segments. Adjusted EBITDA of $119 million grew by 10%. Year-to-date, sales of $2.08 billion were up 4%, and adjusted EBITDA of $401 million was up 2% compared to last year. Getting to our segment results, you see the continued global momentum within Titleist golf equipment, which has grown 5% in both the quarter and year-to-date.

Key drivers have been the year-to-date growth of our Pro V1 franchise in all regions and the very successful launch of new Titleist T-Series irons and limited edition Vokey SM10 wedges in Q3. We have spoken in recent years about the investments we have made to strengthen our golf equipment product development and enhance manufacturing capabilities. Our growth and momentum today are byproducts of these investments. Acushnet’s golf gear segment also had a strong quarter, posting a 13% gain, and is up 8% year-to-date as our team brings a steady flow of compelling products to market and leverages our expanding custom capabilities and strengthening supply chain. Within gear, the company’s travel brands have increased 20% year-to-date, with especially strong growth from our Links & Kings and Club Glove brands. Our FootJoy business continues to build momentum and delivered another positive quarter with revenues up 3%.

FootJoy is benefiting from the success of our Premier and Hyper-Flex footwear models, fewer footwear closeouts, and steady glove growth. FJ’s apparel business adds to the brand story, showing resilience with quarterly and year-to-date gains. As we have discussed throughout the year, these trends are positively affecting FJ’s market momentum and financial performance in 2025. Finally, net sales of products not allocated to a reportable segment were up nicely in the quarter, with continued momentum and double-digit growth from shoes led by outsized gains across their golf business. Now, looking at our business by region on slide five, you see the U.S. market continues to be strong, up 6% with growth across all segments led by Titleist golf equipment. EMEA posted a 14% gain in the quarter and is now up 8% year-to-date.

Rounds of play are up high single digits as the region benefits from favorable weather comps versus last year. Korea was up 3% in the quarter with strength in Titleist golf equipment led by golf balls, while Japan was off 13% in the quarter and 7% year-to-date. As you see, our revenues in rest of world were up 5% in the quarter and 3% year-to-date. In summary, we are pleased with Acushnet’s performance in the quarter and the overall health of our consumer. The company’s product lines are in great shape. Inventory positions, both owned and at retail, are in line for this time of the year, and we are confident in our team’s ability to execute against our strategies. Thanks for your attention this morning. I will now pass the call over to Sean.

Sean Sullivan, Chief Financial Officer, Acushnet Holdings Corp.: Thank you, David. Good morning, everyone. As highlighted, we had a great third quarter and solid year-to-date performance. Third quarter net sales were up 5%, while adjusted EBITDA was $119 million, up $11 million from last year’s third quarter. For the first nine months of 2025, net sales increased 4% and adjusted EBITDA increased 2% as compared to the same period last year. Moving to our income statement highlights on slide eight, gross profit in the third quarter of $319 million was up $15 million compared to 2024, driven by increases across all three reportable segments, primarily related to higher average selling prices, higher sales volumes, and a favorable mix shift in FootJoy. We also had approximately $10 million in incremental tariff costs in the quarter, and year-to-date have recognized $15 million.

Third quarter gross margin of 48.5% was down 50 basis points versus prior year, primarily related to the headwind from higher tariff costs. Year-to-date gross margin of 48.6% was consistent with last year. SG&A expense of $205 million in the quarter increased $5 million from the third quarter of 2024 as we continue to invest in A&P to support new product launches and future growth initiatives, including our fitting network and IT systems. SG&A also included $2 million of restructuring costs related to the voluntary retirement program the company initiated earlier this year. As a reminder, we expect a further charge in Q4 related to this program of approximately $5 million. Interest expense of $14.5 million in the quarter was up $1 million due to an increase in borrowings. Year-to-date, our effective tax rate is 23.6%, 200 basis points more than last year’s rate through nine months.

Our effective tax rate in Q3 was 37.3%, up from 19.3% last year, primarily driven by a shift in our jurisdictional mix of earnings and a reduced income tax benefit related to the U.S. deduction of foreign-derived intangible income resulting from the enactment of the One Big Beautiful Bill Act. Moving to our balance sheet and cash flow highlights on slide nine. Our strong balance sheet and consistent cash flow generation continue to support the disciplined execution of our capital allocation strategy. We remain focused on investing in the business to drive long-term growth while also returning capital to shareholders through dividends and share repurchases. Our net leverage ratio at the end of Q3, using average trailing net debt, was two times. Inventories were up 3% when compared to last year’s third quarter, reflecting some advancement of inventory ahead of tariff deadlines and the impact of our iron launch.

Overall, we remain comfortable with our current inventory position and quality. Year-to-date cash flow from operations decreased from 2024, primarily due to increased investments in strategic initiatives, including our IT systems and increased working capital requirements. Capital expenditures were $51 million in the first nine months of 2025, and we now expect full-year CapEx spend to be approximately $75 million. Through September, we returned approximately $230 million to shareholders, with $188 million in share repurchases and $42 million in cash dividends. Today, our board of directors declared a quarterly cash dividend of $0.235 per share, payable on December 19th to shareholders of record on December 5th, 2025. Looking ahead to the remainder of the year, I would like to provide an update on our full-year revenue and adjusted EBITDA outlook shown on slide 10.

We expect full-year 2025 revenue to be in the range of $2.52 billion-$2.54 billion on a reported basis. As discussed on our second quarter call, we are still forecasting low single-digit growth in the second half, driven by contributions across all reportable segments. We now anticipate the full-year FX impact to be negligible compared to last year, resulting in aligned reported and constant currency growth ranges. Both are projected to be between 2.6% and 3.4% for the full year, representing a midpoint growth of 3%. This midpoint implies fourth quarter revenue of approximately $448 million, representing high single-digit growth over Q4 2023, a period consistent with the cadence of our product launch cycle. Moving to adjusted EBITDA, we are projecting full-year 2025 to be in the range of $405-$415 million.

Incremental full-year gross tariff costs are expected to be $30 million, about $5 million lower than our previous estimate, driven by timing shifts and tariff-related variables. This reflects a $15 million gross tariff headwind in the fourth quarter. Through the strategic mitigation efforts we’ve discussed, we still anticipate offsetting a meaningful portion of the full-year gross tariff headwind. Overall, we are very pleased with our year-to-date performance and full-year outlook. The team remains focused on finishing the year strong and continuing to execute on our long-term strategic priorities. With that, I’ll now turn the call over to Sondra for Q&A.

Sondra, Moderator/Investor Relations, Acushnet Holdings Corp.: Thanks, Sean. Operator, could we please open the lines for questions?

Operator: Thank you. As a reminder, to ask a question, please press star one on your telephone keypad. If you would like to withdraw from the queue, please press star two. Our first question comes from Joe Oltavello at Raymond James. Please go ahead.

Thanks. Hey, guys. Good morning. I guess my first question is on U.S. sales. If I look at it year-to-date, you’re up almost 5%. I was wondering if you could kind of parse that out between volume and price and maybe what that looks like relative to the category.

Yeah, Joe, this is Sean. I’ll take it. Obviously, David can supplement as necessary. When we look at U.S. sales, again, very pleased. I think it’s also important to keep in mind the product cadence, right, of each of our categories and each of the segments. The ball business has done incredibly well in the U.S. We’ve had a good year in clubs as well, in terms of both volume and price. We didn’t take price in balls in 2025, so you can see that a lot of the ball growth is coming from volume gains in that category. On the club side, we’re comping against last year’s metals launch, which is generally higher ASP, so a more difficult comp. Given the momentum we have with the irons launch and.

The other special edition categories of Vokey wedges, as David highlighted, we’ve seen good gains there as well. As I look at clubs versus two years ago, we’re seeing volume gains independent of price, which I think is the right comp for that category. On the FootJoy side in the U.S., obviously, we are focused on profitability, winnowing the portfolio, and really going more premium, particularly in the footwear category. Gear in the U.S. has seen really great performance across all categories: gloves, bags, and headwear. Obviously, even FootJoy has done great with gloves. Rounds of play with that consumable product is a good comp too. All in all, sorry to answer your question directly, I think we’re pleased with both price and volume. I think the product cadence matters a lot.

We did take some selective pricing in both FootJoy and gear midpoint of the year. That is having some effect on those segments. Yeah, Joe, I’d echo what Sean said. Really, two parts: equipment. Really not a pricing story this year. Again, you really need to look at our two-year cadence. We are very pleased with the growth and momentum within equipment. Then, as Sean said, the wearables gear market. A little more tariff impact there. We took some selective price moves across footwear and gear, not across the line, but in key models earlier in the year. I think the best way to think about it is to look at equipment one way and the rest of the portfolio a little bit differently.

Got it. Very helpful. Maybe just to kind of pivot to tariffs, I think you mentioned earlier $30 million for this year, but you expect to mitigate a good portion of that. How does it look for 2026 in terms of what you’re thinking about maybe an incremental impact for next year?

Yeah, Joe. Again, to highlight, certainly this year at 30 was slightly lower than what we had anticipated on our last call. I just want to make sure everybody has that and what the impact is in Q4. As we fast forward to 2026, our number today, if nothing changes, is probably just north of $70 million, seven-zero. We’ve done good work in terms of our strategic initiatives around vendor sharing, around certain changes within the supply chain. Again, I’m not going to give you a percentage today given where we sit in the year, but the expectation is as we go in our 2026 planning cycle, we’re going to mitigate, again, a meaningful portion of that $70 plus million in 2026.

I’m sorry, Sean. Is the $70 million total or is that incremental?

That is the full impact for 2026. It’s obviously $40-some-odd million incremental to 2025.

Okay. Super. Thank you.

Sondra, Moderator/Investor Relations, Acushnet Holdings Corp.: Thanks, Joe. Operator, next question, please.

Operator: Thank you. Our next question comes from Matthew Boss at JPMorgan Chase & Co. Please go ahead.

Great. Thanks. It’s Amanda Douglas on for Matt. David, just to start, could you speak to the health of the overall golf participation that you’re seeing across regions and elaborate on reception you’ve seen in the marketplace to your T-Series irons and the Pro V1 franchise?

Yeah. Hi, Amanda. Maybe high level, right, we like where industry fundamentals are. They’re in very good shape. Rounds of play, obviously very strong. I made the point earlier, our consumer is engaged and healthy. To your question, if I dig into rounds of play around the world. Up slightly in the U.S., terrific after a strong third quarter. U.K., EMEA. Up by single digits, great. Even Japan and Korea, where we’ve called out some softness in. Wearables. And in footwear. We’ve got Japan through nine months flat versus a year ago, up double digits versus four or five years ago. We’ve got Korea down 1% through the first nine months, but up 20-some-odd percent versus four or five years ago. Structurally, we like where the industry sits.

Participation is the engine and driver to a lot of what we do, which is why we pay very close attention to it. That is really part one. I will lean into just, hey, fundamentals, rounds of play, consumer all in good shape, certainly for this time of year. To your questions about Pro V1. This was our 25th anniversary of the Pro V1 golf ball. We leaned into that a bit early in the season. As we have said, very pleased with our golf ball performance this year, both in terms of sell-in and sell-through and growth in all regions. Behind that is the great work by our production team, right? We produce some 70% of our golf balls in Massachusetts, the rest in our plant in Thailand. Our team’s done a great job keeping pace with strong demand.

Really pleased with where Pro V1 is through this time of year. As we start gearing up for next year, similar to that, across the pyramid of influence, our counts, our wins are really strong, and that just, for us, provides validation and endorsement of our performance and quality stories. Particularly strong year for Pro V1. Your question about T-Series iron launches, again, we’re really pleased. We had high expectations. We made some meaningful changes to the product, which I think the golf audience, our target consumer, has responded very well to. I will make the point that anytime we talk about golf clubs, particularly irons, which are so custom fitting-centric, for us, it’s great work by the product development team on the products. Part two of that is great work by our fitting teams around the world.

To tell the story to golfers and make sure golfers are getting fit with the right products. The final point I’d make is we’re seeing a whole lot of blended sets, which we like, which shows the strength and capabilities of our fitting network and also our supply chain. To your questions, Pro V1, T-Series, really strong out of the gates on both fronts. We like our position.

That’s helpful. Sean, just as a follow-up, as we look ahead to 2026 in a flat or modest growth rounds played backdrop for the industry, how best to think about gross margin drivers or multi-year SG&A investments just as we’re shaping the initial P&L?

Yeah. When we look at gross margin, again, we’re in the midst of obviously mitigating the tariff impacts that I just highlighted. I think that we continue to see a growth story that outpaces the market, even in a flat rounds of play environment. We believe that where our club business is positioned particularly helps us drive better than market growth. As I look at the puts and takes on gross margin, again, I think tariff will be the headwind. We’ll mitigate a meaningful portion of that as we move forward. I’m hopeful that we don’t have a material impact to our gross margin portfolio. As we’ve talked about on past calls, we’ve made a lot of investments in 2024 and 2025 in OpEx. We’ve obviously invested in our fitting networks, as David talked about, both on balls and clubs.

The expectation is we’re going to see operating leverage, and hopefully we’ll see the opportunity to continue to drive better than revenue growth, even dog growth for the company. Still early days as we go through our 2026 planning cycle, but we feel very good about where we are positioned going into 2026.

That’s helpful. Thank you.

Sondra, Moderator/Investor Relations, Acushnet Holdings Corp.: Thanks, Amanda. Operator, next question, please.

Operator: Thank you. Our next question is from Simeon Ari Gutman at Morgan Stanley. Please go ahead.

Good morning, everyone. This is Pedro on for Simeon. Congratulations on a strong quarter. As my first question, could you give us a bit of color on the sell-through trends at retail and channel inventory levels, both for the Pro V1 ball and for the club launches?

Yeah. I’ll link, and this is as much a global commentary. I’ll link our couple of comments made. One, we like our growth and our golf ball growth year to date. We like our in-market inventory positions, and what obviously connects those is sell-through. It’s been a good sell-through year for Titleist golf balls, and especially Pro V1. Again, growth in all regions is no small feat, but our team managed to achieve that. I would say aided by some interesting new follow-ons, whether it’s Pro V1X, Left Dash, some new enhanced alignment products. We’re really pleased with the product itself, but the franchise continues to get, I think, more compelling and value-added to our target audience. Yeah, as you may know, Pedro, we don’t really zero in on market share by region for a lot of different reasons.

I would say if you look at our top-line growth and you look at inventory levels around the world, which are in great shape, that implies we’re in really good shape. It implies a very favorable, positive sell-through story for the year.

Okay. Great. That’s helpful. As a follow-up, the full-year guidance implies a bit of a deceleration in sales growth relative to where you’ve been running the past couple of quarters on a year-on-year basis. Is there something that you’re seeing specifically kind of going into the holidays, or is it just the tougher comparisons versus last year?

Yeah. I do not think it is a tougher comparison. I think the implied midpoint of the guide is about, what, $448 million of revenue. Certainly better than last year. If you look back to Q4 of 2023, where I think we did about $413 million, that is a high, almost double-digit growth rate over 2023. Given the product cadence, given the two-year product lifecycle, I think we are very pleased with the Q4. I will reiterate what I said in my comments, that we had a second half where we expected low single-digit revenue growth and growth across all segments. I think this guide at the midpoint delivers that. We feel very good about the Q4, and I do not think there is anything unusual about demand, about product, or otherwise that would indicate otherwise. Yeah. I will just affirm Sean’s point as it relates to the two-year product cadence.

Really in equipment, right? The best way to see like-for-like comparison Q4 2025 in equipment, balls, and clubs is to look back two years because that’s when the product line was comparable. Again, gear, footwear, less of a two-year story. Yeah, just to reiterate Sean’s point, we feel really good about our business. We feel really good about the half, how we’re organizing. Our stories and our product lines for next year. We don’t really think about it or see the fourth quarter as being a period of deceleration. We see it as a period of continued momentum generation, but it is noteworthy to call out within equipment of how we look at things over a two-year product lifecycle.

Okay. Great. That’s helpful. Thank you. Good luck.

Sondra, Moderator/Investor Relations, Acushnet Holdings Corp.: Thanks, Pedro. Operator, next question, please.

Operator: Thank you. Our next question is from Noah Zatkin at KeyBank Capital. Please go ahead.

Sean Sullivan, Chief Financial Officer, Acushnet Holdings Corp.: Hi. Thanks for taking my questions. I guess first, if you could just kind of comment on how you’re feeling about inventory in the channel, both in terms of your inventory and from an industry perspective, and then just any comments on potential changes or not in retail partner ordering habits. Thanks.

Yeah. I would just first say, Noah, that inventories in the golf industry at this time of year should be relatively low as you move as the snowbelt, if you will, and northern markets and mid-belt markets sort of move out of season. They should be relatively low. They are. We like what we see there. In the sunbelt, they should be high. They’re filling up the stores for the start of their season. That’s the expectation as we look at channel inventories around the world. That’s what we’re seeing. No unusual callouts. Sure, there are pockets here and there, but nothing that bubbles up to caution or concern. We really look at our channel inventories on a months of inventory basis and all very much in line with where they should be.

The next step will be our retail partners who are open for the holidays in the north and mid-belt will fill up their shops here in the fourth quarter. It is as much commentary on the ebb and flow of inventories in golf throughout the year. Again, channel inventories at a seasonally low level and very much in line with what we expect. To our own inventories, yeah, really good shape. Sean mentioned it. We like what we have. We like the quality of it. We did some pull forward along the way to stay in front of ever-evolving tariffs. We like where things sit from an overall channel inventory perspective.

Great. Very helpful. Maybe just looking outside of the U.S., obviously, maybe some puts and takes when you’re looking across regions. EMEA has been strong this year. Japan’s been a bit softer, as has Korea been. Just any thoughts on both your business and the sport outside of the U.S. looking ahead? Thanks.

Yeah. I think I’ve leaned into enough the U.S. business, right? Real strong rounds of play, consumer. I think our numbers bear that out. Especially strong in the EMEA this year and U.K. I think that speaks to pretty good fundamentals, but clearly they’re getting a bump because of some very favorable weather against some less than favorable weather a year ago. That attributes or contributes to some of the high growth rates we’re seeing around the play. Obviously, that’s good for balls and gloves and consumables. Those two markets particularly strong. Maybe a minute on Japan. I made the comment earlier. Japan rounds are flat. They’re certainly up versus four or five years ago. Structurally, Japan’s in decent shape. I would say to our business, we feel pretty good about equipment, right? We like our equipment positioning.

Ball growth this year, year to date, is obviously strong. Part one of the story is equipment in Japan is healthy and trending in the right direction. A couple of behind-the-scenes stories in Japan would be, we’re going through a pretty meaningful repositioning with our FootJoy business. We’re exiting some price points, introducing some more premium products in the market. We had expectations to be down in 2025, and we’re meeting those expectations. I would add to it, our gear business in Japan has been down. I think that’s a little bit timing and a little bit overall market softness. Japan equipment in pretty good shape and repositioning happening within FootJoy and gear. I’ll move to Korea. Really a similar story. Their equipment business, our equipment business, in good shape. Balls and clubs in good shape.

I’ve talked over the years about the ascension and growth of the premium apparel business in that market. It rode up high, and it’s been through a bit of a correction this year. We’re seeing that have a negative effect on our business. Overall, structurally, in decent shape from an equipment standpoint. Footwear and apparel softer. I would just add the consumer not as healthy in Japan and Korea as we’re seeing certainly in the U.S. Again, you add it up, we’re pleased with how the game is holding up. Rounds of play roughly flat in both markets, we’re comfortable with. Again, as we look at the comp versus a handful of years ago, there’s been a bump in the golf marketplace in those markets. I think they’re just dealing with some different macroeconomic forces that are shaping consumer spending.

We’re certainly seeing that in our business.

Thank you.

Sondra, Moderator/Investor Relations, Acushnet Holdings Corp.: Thanks, Noah. Operator, next question, please.

Operator: Our next question is from Doug Lane at Water Tower Research. Please go ahead.

Yes. Hi. Thank you, Doug. Good morning, everybody. I just wanted to press a little bit on Europe because you just see a noticeable acceleration in growth in Europe, including double-digit local currency growth in two of the last four quarters, after really most of 2024 and 2023 being flattish, maybe down a little bit. Is there something more going on there than weather? Are we seeing a change in the competitive dynamic in Europe?

Yeah. I think it’s I don’t want to give all the credit to weather, but certainly rounds of play and the golf industry has been very healthy. U.K. up low double digits in rounds of play. That just drives the golf economy. I think the golf economy is outpacing other sectors. Yeah. We like our positioning and our share positions. Across all our categories. We’re certainly growing in all categories. It’s a whole lot healthier environment this year than we’ve seen in the last couple of years. Again, just a healthy rounds of play environment, nice execution by our team. We got our product lines right in those markets. The final piece would be just our continued build-out and activation of fitting across balls and clubs and now footwear. We’re doing more fitting in EMEA than we ever have.

That’s certainly having a favorable impact on, again, on balls, on clubs, and across footwear, which is the latest entrant into our fitting realm with FitLab. Yeah, really happy with the team, happy with the market. Weather deserves some of the credit, but not all of the credit.

Okay. That’s good color. Just one last thing on working capital. The use of working capital is more than twice what it was last year. Is there something going on there? Specifically, that is using up more cash than last year?

I mean, again, we talked about the inventory. We talked about some of the investments we’re making in IT and some of the systems. I think that Doug is having some impact of it. Overall, I feel good about the free cash flow outlook conversion as well. I feel very comfortable at our working capital position.

Okay. Thank you.

Sondra, Moderator/Investor Relations, Acushnet Holdings Corp.: Thank you.

Thanks, everybody. As always, we appreciate your time on these calls. I look forward to connecting in a few months as we wrap up the fourth quarter in 2025 and start talking more in earnest about 2026. Thanks again.

Operator: This concludes today’s conference call. Thank you all very much for joining, and you may now disconnect.