Operator: Good morning, and welcome to the Second Quarter Conference Call for Graco Inc. If you wish to access the replay for this call, you may do so by visiting the company website at www.graco.com. Graco has additional information available in a PowerPoint slide presentation. Which is available as part of the webcast player. At the request of the company, we will open the conference up for questions and answers after opening remarks from management. I will now hand the conference over to John Bauer, Director of Investor Relations. John, please go ahead.
Mark W. Sheahan: Good morning. I am here with Mark W. Sheahan, our president and chief executive officer; Sanjiv Gupta, Chief Financial Officer and Treasurer and Christopher Knutson, vice president, chief accounting officer, and controller. We welcome you to our conference call to report Graco's fiscal 26 second quarter results. Before we begin, I would like to remind everyone that certain statements made during this call may be forward looking and are subject to risks and uncertainties. Please refer to the Safe Harbor statement included in our earnings release and earnings presentation as well as our SEC filings. For additional information regarding these risks and uncertainties. We will now turn the conference over to Mark W. Sheahan. Thank you, John. Good morning, everyone. We delivered record second quarter sales of $591 million and record second quarter earnings reflecting growth across all 3 segments. And margin expansion supported by disciplined expense management and operational execution. Contractor generated organic growth in the Americas, led by Home Center and Professional Paint. Industrial benefited from broad based activity across core markets, while expansion markets continue to see strong semiconductor demand. Organic orders increased 5% during the quarter. The most recent 6 week booking average was up 14% versus last year, and backlog as of July 17 excluding acquisitions was up $57 million or 28% from the beginning of the year. Together, these positive trends give us confidence in a stronger second half. Capital allocation remains an important part of how we create long term shareholder value. In May, we announced the acquisition of VELCRO Meltan, 1 of Graco's largest acquisitions in more than a decade. VELCRO Meltan is an attractive strategic fit that adds complementary technology, products, and customer relationships in the high-growing packaging dispense market. We expect to create additional value by applying Graco's manufacturing expertise, operating discipline, and global reach to improve profitability over time following a playbook already underway with COROB, Color Service, and Radia. At the same time, we continue to be active in evaluating additional M&A opportunities. Our strong cash position and balance sheet provide the flexibility to invest in businesses pursue strategic acquisition, and return capital to shareholders. Turning to some of the segment performance. The contractor segment delivered record sales and earnings in the quarter, Revenue increased 4%. And organic sales were higher across both paint and home center markets in the Americas for the first time in nearly 2 years. We saw a greater stability across many of our core markets during the quarter, supported by improved North America activity in residential repaint, and remodel projects. Sell through trends across the channel, stronger customer engagement, improved execution, and targeted commercial programs. We also continue to see good demand in protective coatings and foam, which represent a more global and application driven part of the contractor business. These areas continue to benefit from commercial construction, infrastructure, and industrial project activity including investments tied to data centers, energy and manufacturing. The strength in these applications highlights the breadth of the contractor segment, and our ability to serve customers beyond traditional residential paint. Innovation is an important way that we support customers and differentiate our offerings in the contractor business. New product introductions, including the next generation of QuickShot, the ProReach extension system, and new autonomous and semi autonomous striping solutions are designed to improve productivity, reduce labor requirements, minimize material waste, and help customers deliver more consistent, high quality results. Together, these factors helped drive 4% organic bookings growth in the quarter with the most recent 6 week order trends improving to 14% growth over last year. In the industrial segment, sales increased 3% in the quarter, reflecting better activity across process manufacturing, machinery manufacturing, general industrial applications, semiconductor related investment, and continued adoption of electrified product platforms. These trends reflect customer investment in productivity, automation, and infrastructure projects. Additionally, we are seeing benefit from a more coordinated commercial approach that helps teams focus execution on larger opportunities and gain specifications with OEMs. Beyond these larger investment driven markets, we also saw healthy demand in day to day industrial applications including MRO channels. The quarter also reflected a few anticipated headwindsOrganic Powder Finishing Systems were lower due to the timing of order acceptance, which should occur in the second half of the year. In Asia, activity was slower to start the year with China specifically affected by prior year pull forward activity ahead of tariff related pricing actions and a softer automotive demand. Organic orders improved throughout the quarter with bookings increasing 3% year to date through July 17 and 11% over the most recent 6 week period versus the prior year. Combined with a healthy backlog, these trends support our expectation for stronger performance in the second half of the year for Industrial. Expansion markets grew 3% with growth across all key businesses, Semiconductor continues to have a strong year particularly in Asia Pacific. Supported by ongoing investment in semiconductor manufacturing capacity. Bookings increased 58% in the quarter bringing year to date bookings growth to 33% with the most recent 6 week average up 36% and backlogs remain strong. Overall, Graco's growth in the quarter came from multiple end markets. Products, and geographies. It was supported by improving customer activity, focused investments in attractive markets, and the advantages of a diversified portfolio. These factors continue to guide our decisions and position us for long term value creation. Moving on to our outlook. Looking ahead, we are encouraged by the improving trends we are seeing across Graco's business segments. New product introductions, and strong channel initiatives support second half performance while our teams remain focused on the actions to capture opportunities and drive growth. We are maintaining our full year outlook and initiating a third quarter revenue guide of $580 million to $600 million excluding VELCRO Meltan which is expected to close during the third quarter. Overall, our strategy remains consistent. We are building a broader growth platform through innovation, disciplined capital allocation, and targeted acquisitions while staying focused on the highest return opportunities to drive our long term success. With that, I will turn the call over to Sanjiv to provide more detail on our financial results for the quarter.
Sanjiv Gupta: Thank you, Mark, and good morning, everyone. We reported second quarter sales of $591 million an increase of 3% from last year. Acquisitions contributed 3% growth and currency translation added 1% partially offset by 1% unfavorable change in organic sales. Driven primarily by timing of finishing systems revenue within the industrial segment. We delivered another quarter of strong earnings performance Reported net earnings were $145 million or $0.87 per diluted share an increase of 14% from the prior year. On an adjusted basis, excluding acquisition related cost, amortizations of acquired intangible assets and certain tax items, adjusted earnings per share were $0.91, up 17% year-over-year. Gross margin increased 130 basis points from the prior year The improvement reflects price realization, improved manufacturing performance, and the favorable impact of $9 million in tariff refunds net of related surcharges. While the tariff refunds provided a meaningful benefit, margin improvement was also supported by the fundamentals of our operating model and disciplined cost management across the organization. Operating expenses were essentially flat in the quarter despite inflationary pressures and the addition of acquired businesses. Reflecting continued cost management, which drove an operating earnings increase of 11% and an operating margin rate of 30% of sales compared to 26% in the prior year quarter. Across the portfolio, segment profitability remained strong, contractor and expansion market expanded margins, while industrial maintains its profitability although project timing impacted revenue. Turning to cash flow and capital allocation. We generated $298 million of operating cash flow through the first 6 months of the year representing strong conversion of earnings into cash and continuing our long track record of strong cash generation. We remain committed to our balanced capital allocation framework In the first half of the year, we repurchased 4.2 million shares totaling approximately $331 million, paid $898 million in dividends, and invested $29 million in capital expenditure. Including strategic facility expansion projects. We continue to have significant flexibility to invest in growth, while returning capital to shareholders. As we look ahead, at current exchange rate, currency is expected to provide a approximately a 1% favorable impact on both full year sales and earnings. We now expect unallocated corporate expenses to be $39 million to $42 million, capital expenditures of $90 million to $100 million, and an adjusted effective tax rate of 20% to 21% for the full year. In summary, the quarter demonstrated the strength of our operating model delivering double-digit earnings growth, significant margin expansion, strong cash generation, and continued disciplined capital allocation. Positive order trends and backlog growth during the quarter further support our confidence in the underlying health of the business. That concludes our prepared remarks. Operator, we are ready for the questions.
Operator: Thank you. Question and answer session will begin at this time. To ask a question, please press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. Your question will be taken in the order that it is received. Please standby for your first question. Our first question comes from Deane Dray of RBC. Please state your question.
Deane Dray: Thank you. Good morning, everyone. Can we start with the and I guess I want to call it a momentous decision to give quarterly sales guidance. So it begs the question to why now. Obviously, you have got better visibility. You got backlog up 28%. The 6 week orders look strong. Expansion markets are living up to their name. So just kind of take us through your decision to give this guidance metric, and should we expect this on a go forward basis? Thank you.
Mark W. Sheahan: Yeah. it is a good question. And I think you really answered the question with your commentary. We do have pretty good visibility particularly over a 13-week time period. And we thought it would be helpful to the analysts like you that follow the company to get our perspective on how these quarters are actually playing out because if for example, if you look at this year, we have not changed our revenue outlook for the full year And you know, there is some volatility around the first half versus second half that we if we had done a different job, we might have given you some more information about how we saw those 2 halves playing out and you know, been a little bit more insightful in terms of the information that we are providing to the analysts and actually have to put reports out and you know, give numbers and, represent the company that way. So I think that we feel comfortable I think that, as you said, backlogs are strong. I think this is a change that we are committing to make going forward. So it is not just a 1 quarter thing that we are gonna do. And, I think it is the right I think it is the right approach for the company at this time.
Deane Dray: Great. Well, we welcome that. So thank you. And I think the last time I was surprised at this level was when you all had to make a second price increase midyear, which you know, just not something you typically did. But that begs the question, can you talk about price in the quarter, where you are on price cost? And just kind of the outlook there?
Sanjiv Gupta: Yeah. So being so the price cost stays positive. I think our plan here is given that our price cost equation is positive, we are gonna stick to our historic price cadence, which is basically we will be introducing the price increases beginning of the year. So that is the plan. And that is what we are gonna stick to. We have realized a pricing this year roughly 1.5% to 2% consistent with how we have been doing historically. So Yeah.
Mark W. Sheahan: I think we are I think we are in good shape, Deane. Of course, we always have the flexibility if we need to do something, we can. But, right now, things look pretty good.
Deane Dray: All good to hear. Congrats. Thanks. Thanks.
Operator: Our next question comes from Michael Halloran of Baird. Please state your question.
Michael Halloran: Hi. Good morning, everyone.
Mark W. Sheahan: Hi, Mike. Hey.
Michael Halloran: So, like Deane, appreciate the 3 q help. You know, what I am what I am looking for more holistically and it is just translating how you are talking about the bookings in the front half of the year, last 6 weeks, however you want to put it, in the back half of the year, and just how that relationship in your mind works out. Obviously, back half of the year implies something above 5% depending on what your definition of low single digit is. From an organic growth perspective. Orders front half of the year were particularly in Q2, were kind of there. in the full year. And so what is the correlation, the lag How much revenue do you think is getting pushed to the back half of the year? How much of this is just sequential momentum that you expect to continue in the back of half the year? So just any help you can give on that relationship and why the visibility is higher and all those factors.
Mark W. Sheahan: Yeah. I will start and I will let these guys chime in. May not cover everything, but if I were to play back Q1, I think we had a decent Q1. We just built backlog. We were not able to ship it out. And so we had a I think, an organic decline of about 6% But if you had, you know, kind of if we had gotten the product down, the backlog had not grown, it would have been a much different story. In q '2, we built even more backlog, but we were able to, you know, push through enough orders generate, you know, closer to a flattish organic growth number. We benefited obviously from acquisitions as well. I think year to date, our backlogs are up about $57 million from the beginning of the year. So that gives us a lot of momentum heading into the back half. We had quite a bit of headwind in powder coatings business, the Gema business in the first half. We knew that. They had a great first half last year, and we think that their comps are going to be easier in the back half, but they have also gotten nice benefit from the ColorService acquisition, which is actually performing ahead of our plan and our schedule. So that is a factor that goes into the equation because that will become organic here in the third quarter. For us. And I would say probably the biggest positive in my mind that we have seen in the more recent numbers is the momentum that we are seeing on the contractor side. Of the business. Well, we did expect that we would see, you know, some positivity there. Just the, you know, broad based nature of it, the fact that it is happening in North America, which is our biggest market, The infrastructure spending that they are getting involved with, the protective coatings and foam side of the business are really nice things that have happened, since the end of the first quarter. And I think that you combine that with the backlogs, the Gema numbers, the big growth that we are seeing in semiconductor, with our white knight business, that really gives us confidence that we are gonna be able to hit the full year revenue guide that we put out at the beginning of January it is just that we will definitely be more back half loaded. So I do not know if I answered your question enough specifically, but I welcome the group here to chime in if there is anything else that you guys wanna add. They are shaking their heads. Okay.
Michael Halloran: No. All good. That helps. And then, you know, maybe the follow-up is something you alluded to there. Which is, you know, I think people historically think about Graco more as a traditional res and to a lesser extent nonres exposed company, but know, what you were referencing is exposure to broader build out that happening through the ecosystem, the large CapEx dollars out there. You know, you can see that in the expansionary, numbers. The semiconductor growth, Maybe talk how aggressively you think that you are participating or what kind of impact it can have on the other 2 segments? All else equal. In other words, if this contagion kinda grows through you know, spend through the economy, we just underappreciating how much Graco can participate in that?
Mark W. Sheahan: Yeah. I do not know. I think that there is different ways that we can participate. Obviously, semiconductor is probably the cleanest area where we can talk about it. Because we have a specific business that is dedicated there. And, of course, they are benefiting from this build out that is happening. They are more involved with the tool manufacturing of the equipment that is used to manufacture the chips. But, you know, there is definitely some uptick there that you are seeing in our business. When it comes to the data centers, I am themselves, I mean, they are sort of the outside of the building stuff. Which is, you know, anything to do with putting up the building itself. Putting roofs on the building, you know, even, like, parking lots and stuff like that. We get involved with all those. Activities. Our game of powder business gets involved in some of the applications with respect to the transfer equipment that is put in. They have, you know, powder coating systems that coat the cabinets that go into power these things, and they have seen an uptick in their business there. In our industrial business, we have equipment that applies these thermal interface materials, which are really kind of a fancy way of saying materials that they kind of dissipate the heat that is involved in, a lot of the activities in the data center. And so our channel partners, our distributors are really starting to see some activity around there where we are taking Graco applications and really using our thermal interface dispense materials, in areas like you know, the cabinets that are put into data centers of some of the chips that are being produced. You know, traditionally, we have kinda participated in them like cell phones and personal items, but now starting to broaden out a little bit in commercial application. So we touch it in a lot of ways. And I think it is know, net, it is it is a positive compared to what we may have seen, you know, a year or 2 ago. Great. Thanks, Mike. Appreciate it. Yep.
Operator: Our next question is from Bryan Blair of Oppenheimer. Please state your question.
Bryan Blair: Thank you. Good morning, everyone.
Mark W. Sheahan: Bryan.
Bryan Blair: Circling back to, the Momenta decision to provide the quarterly guide, quarterly sales guide, I agree with that. Characterization. Was hoping you could provide a little more detail by segment, what your team is contemplating for the third quarter, and then obviously, we can back into what is then implied for Q4 as well.
Mark W. Sheahan: Yeah. I think for now, we are just giving the overall number, and it includes M&A in that number. We have not really broken it out by segment. Of course, we, you know, have our own thoughts around that. But I think that at this point, do not know that we are prepared to give segment information. I will I will throw it over to Sanjiv. And I think that, you know, being a new CFO, this was something that he thought was important that we do. And, you know, part of this too, Bryan, is when you put a number out there, you know, it creates it creates a little bit of accountability for our team. And so you can you can believe that we are having those discussions and we are building that muscle as well. But I will let Sanjiv just comment on his thoughts.
Sanjiv Gupta: No. I think, Mark, you captured it I would say this is our first step. We are starting off with, you know, a consolidated number. We will have to really make sure that internally we have the processes and, you know, checks and balances in terms of how we roll up develop that number. Do have an internal forecast, but I think we are not ready to really go at that level of detail yet. Again, it is a start. Let us give us some time, and then we will come back to you.
Bryan Blair: Okay. Understood. it is our job to ask for more of course. What it is. Alright.
Mark W. Sheahan: And so, VELCRO MELTAN sounds like, you know, they are very high set acquisition for your team. So kudos there. You provided the starting EBITDA margin of around 20%. I guess, to level set as we think about the prospective levers to the deal model, what is run rate gross margin And then with regard to the 27 facility footprint, what is the breakout between manufacturing, sales, and service locations?
Christopher Knutson: Yeah.
Mark W. Sheahan: So the gross margins of that business are, you know, 50% or more. So they are good. And I think we also flagged that you know, more than half of the business is parts and accessories, which is which is really good. So you start with a high quality business with good gross margins like that, it does give you some opportunities to drive some value on the operating side. A lot of that will come with revenue growth, but also, you know, we and the VELCRO team, when we get together with them, know, have really kind of identified some areas that we think we can help them in. Be more efficient, more productive, and hopefully drive some costs out as their revenue grows. I mean, for sure, 1 for us is to maintain, the revenue that they have and continue to grow at the rates that it has. it is been growing very nicely. We certainly did not did not build that into the deal model. But, you know, our expectation is that this is a nice market. They are doing well. are 1 of the major players here. This is a business that I personally have wanted in the Graco portfolio for quite some time. You might recall that in 2013, we launched a product called Invisipak where we went into this space. We built a nice business there, and we think that, they can help us sell more Invisipak, and I think we can help them as well. Sell some of the Graco equipment into some of the customers they have that are in focus in the corrugated area. So it is a really nice hand and glove acquisition that we are excited about. And Bryan, remind me the second part of your question. I do not know if we have detail, but we do, I will give it to you.
Bryan Blair: I was just curious in terms of the 27 facility footprints, how that breaks down between manufacturing sales and service locations?
Christopher Knutson: Bryan, this is Christopher. I am going off the top of my head here, but I think they have about 5 manufacturers locations, and the rest are going to be sales and service offices.
Bryan Blair: Okay. Excellent. Appreciate the detail. Thank you.
Operator: Next question is from Matt Summerville of D. A. David. Please state your question.
Matt Summerville: Thanks. Maybe just sticking with the acquisition, that 9% CAGR referenced in the deck is that all organic? Or is there M&A in there? And if there is M&A, what would the organic number look like? And then does VELCRO tend to capture the same priced goodness that you guys capture on an annual basis, or is there some commercial opportunity? And then I have a follow-up.
Christopher Knutson: I will start with that 1, Matt. This is Christopher. When you are looking at the revenue CAGR, they have been acquisitive, but their acquisitions have been very much smaller. So that is an organic number. The 9%.
Matt Summerville: Got it. And then the rest of the sort of their ability to capture price and do you underwrite that kind of 9% CAGR going forward?
Mark W. Sheahan: I think that they have what I will call normal pricing practices. Obviously, they are they compete against, you know, some large other companies in that space. You probably know who they are. They keep each other honest. it is it is it is a good you know, I would call it a rational pricing environment. I think VELCRO has done a good job of positioning themselves into some applications, where they feel like they can add a lot of value, like, in particular, the corrugated packaging market. And, you know, we are not going into this expecting that we are gonna do anything dramatically different from a pricing standpoint than what they have done historically. I think a lot of their growth has been mostly products, and market demand you know, market their market position, I think, has improved over that 5 year time period, and we really do not wanna do anything to disrupt that momentum that they have got.
Matt Summerville: Thank you. And then as a follow-up, just thinking about I mean, I am looking at the bookings, Slide 11, In any period you look at, expansion markets bookings are excellent. You mentioned some timing on Powder systems and industrial, which we know can add and has much past some volatility quarter to quarter. As we think about that oncoming expansion markets demand, should we be thinking about, you know, a sustained period that this business is growing double digits? Number 1. And then number 2, on industrial, do those powder projects favor Q3 or Q4 in terms of timing? Thank you.
Mark W. Sheahan: Yeah. I think that, you know, my view is semi is a pretty lumpy end market. You get really hot periods. They tend to run, you know, 3 to 5-year time periods, and then they can it can cool off All signs at this point are this is pretty sustainable. it is gonna run for a while. And so I do not would not tell you that you should run out those growth rates in perpetuity, obviously, but I do feel pretty confident that customers are interested in our products. They are talking to us all the time. They are placing orders. So in the near term, I think that there is really good momentum. It should last you know, for sure, through the end of this year, and I would guess in the next year as well beyond that. If you look at the macro data with all the build up, it is happening around AI and other things, I think you get yourself comfortable that this is gonna be a multiyear favorable trend for our business. You know, as we continue to, you know, evolve and pursue that. That opportunity. I think the final part of your question was the timing of the powder. We have historically seen a strong fourth quarter in powder. We expect to see that again this year. Last year, their third quarter was 1 of their slowest. And we expect, you know, we have had some slowness to start this year with the timing of the installation and completion of projects. We expect that to pick up in both third and fourth quarter this year.
Matt Summerville: Got it. Thank you, guys. Thank you.
Operator: Our next question comes from Jeffrey Hammond of KeyBanc Capital Markets. Please state your question.
Mitchell Moore: Hey, everyone. Good morning. This is Mitchell Moore on for Jeffrey. Hey, Mitchell. My first question, you really stepped into buybacks this quarter and have been doing more M&A recently. I was just wondering if that was purely opportunistic or if moving forward, we should expect a more constructive approach to deploying cash flow and cash on the balance sheet.
Sanjiv Gupta: I will let Sanjiv handle the buyback question. So I think from a capital allocation, framework standpoint, I think our strategy or approach has not changed. It will be consistent. It will be disciplined. It will be balanced. And that is what we have been doing. And I think as I have stated before, we will be investing in growth first organically and, you know, pursuing strategic M&A, which we have outlined to you guys. As long as they, you know, meet our financial and strategic threshold, then we will return cash through dividends and share buybacks to the shareholders. And I think terms of dividend, we have a very consistent history or approach. We have been returning cash to the shareholders. But in terms of share buyback, it has to be opportunistic and that is the you know, philosophy we will continue to pursue and it will basically based on the financial returns, it is the right play and essentially the choice between what other sources of other uses of cash we have. So I think the bottom line is the same capital allocation framework which we have deployed, we will continue to look at share buyback opportunities opportunistically.
Mark W. Sheahan: Yeah. And I would just add that, I mean, let's be candid here. I mean, we were a $95 stock price not that long ago. Our outlook's the same. Cash conversion's great. Business is performing well. So I think we do view the current environment as a as a buying opportunity for Graco. I think you have seen that here in our actions. Recently. And then I think the other part of your question was M&A. And again, our long-term view is that we would like you know, let's call it a third of our revenue growth through a cycle to come from acquired businesses. And I think the pipelines are good. M&A is opportunistic. We obviously have activities going on there all the time. Really depends upon whether it is a good strategic fit, timing of the seller, are we interested at the price that they wanna sell at, those kinds of things. But I think the point is if you were to look out over the next 5 years, we do feel pretty confident that we are gonna be able to get that kind of contribution from M&A with our teams as focused on it as they are. And I think we have got a really good story to tell in terms of the companies that we have acquired and how they have how they are contributing to Graco overall today. We wanna do more of that. Great. that is that is very helpful.
Mitchell Moore: And then, my second question is just on Contractor. You mentioned, I think it was the first time in 2 years that pro paint and home center channels grew in the same quarter. And you talked about some of the new product introductions and some of the, you know, nonresidential applications. Can you just speak to, you know, the confidence that the improvements you have seen this last quarter and then the bookings are kind of sustainable through the year? Thanks.
Mark W. Sheahan: Yeah. I guess my impression, Mitchell, would be that and I am hopeful that we have kind of seen the worst of the market, the macro market conditions that business has had to face over the last 4 or 5 years. We are starting to see in our numbers, orders, you know, kind of a broad based pickup versus what we experienced. A year ago. it is still pretty early, so I do not wanna get irrationally exuberant, but I do feel better about where that position that business is positioned today than I have for the last few years. And, of course, you know, the products that they are launching, the ones that we mentioned, you know, some of the activities that we have going on. Within the business unit to really drive brand preference and you know, create more demand from our customers. It has translated into some growth that we are excited about. And we are we are kind of hopeful here that we have seen the worst of it and we can grow off of the base that we that we have. I will say that the core of acquisition that we did about 18 months ago, again, like the other part of Contractor, we have seen nice order pickup there. As well in the in the last 6 weeks. And so that is nice profitable business that we expect to get in the back half that we did not really see a whole lot of in the in the front half. So feel pretty good about Contractor. I think I think we are in good shape, and we will see what happens.
Mitchell Moore: Thank you.
Operator: Our next question comes from Walter Liptak of Seaport Research. Please state your question.
Walter Liptak: Hi. Thanks. Good morning. Yeah. Well, I will do a follow-on. I will do a follow-on first on contractor And, you know, kind of going to this idea of the data center build out for nonres construction, Are there new products that go into that market or are there specific products that you think are being sold for use in data center construction that kind of supports the view that your business is getting a lift from that build out I think it is the same products.
Mark W. Sheahan: I think it is just you know, capitalizing on these opportunities that are out there today that you know, were not there a year ago. So it is it is paint. it is, you know, protective coatings in some of the areas in the facilities. it is the roofing applications that we get involved with. it is pavement it is the flooring within the data centers. So all those, you know, construction type activities that you would expect us to be involved with, we are seeing decent activity there, and the team is doing a good job of capitalizing on it. Okay. Great. Is has there been a way for you guys to quantify the benefit from it, or is there too much know, channel in a way to see a direct, you know, data center-related sales channel? it is not a number I would be comfortable sharing with you, but our teams have a perspective on it and, you know, we ask for data about actual buildings and construction that they are seeing, and we have got some of that information. But, you know, it is again, it is not like hundreds of millions of dollars, but it is it is enough of an uptick for that business where we thought it was worth mentioning. And we do see that activity continuing here, you know, in the near term and probably, you know, into the next few years as long as data centers continue to be built out.
Walter Liptak: Okay. Great. And then just kind of, you know, we are all kind of watching for industrial and, you know, if we continue to see improvement in sort of the general industrial market, some of the core things like automotive for you guys or these things, larger projects going through your rep channel. you know, I wonder if you could talk a little bit about the sort of those general markets. And if, you know, some of the recent order growth is a result of you know, better, you know, projects getting released. And then, you know, maybe, you know, are we on easier comps now? You know, do you think you are gaining from selling strategies, or are we seeing market growth?
Mark W. Sheahan: Yeah. I will maybe take the second part first. So for sure we have easier comps in the powder business on the in the back half of the year. And really, if you looked at the legacy Graco industrial business in the first half of the year, we did have growth. In that part of our business, kind of in line with our low single digit organic guide that we gave for the full year. So any of the pressure that you have seen on the organic side here in the first half has really been tied to the powder business, and those comps are gonna be easier. I would characterize the growth as pretty broad based. I think we are seeing, you know, the PMI start to turn positive. So, you know, we are seeing investments being made in machinery manufacturing, general industrial, applications. Pretty healthy MRO channels. As well. So that activity is tweaked up a little bit for us. And, of course, we have you know, been focusing on creating the right digital assets here at Graco to be able to interact with those larger MRO partners And I think that is starting to bear some fruit as well for us. So I would kind of say broad based across the board. Nothing is really spiking it. Temple feels pretty good here as we are exiting Q2, and we feel, again, fairly confident in that the back half of the year is gonna be better than what we saw in the front half of the year.
Walter Liptak: Okay. Great. Thank you. Yep.
Operator: If there are no further questions, I will now turn the conference over to Mark W. Sheahan.
Mark W. Sheahan: Okay. Well, I thank you all for participating in the call today. I look forward to seeing some of you on the road here in the next few months. And hope you have a great rest of the day. Thanks again.
Operator: This concludes our conference for today. Thank you all for participating, and have a nice day. All parties may now disconnect.
