Power Solutions International (PSIX) Q3 2026 Earnings Call Transcript

DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Vice President and Corporate Controller - Ken Janke
• Chief Executive Officer - Richard Hu
• Chief Financial Officer - Ken Li

TAKEAWAYS

• Net Sales -- $202.1 million, representing a 1% decrease compared to the third quarter of 2025.
• Sequential Sales Growth -- 32.5%, driven by higher shipments of data center-related products and industrial products.
• Net Income -- $29.9 million, or $1.30 per diluted share, compared to $27.6 million in the prior year period.
• Gross Profit -- $59.9 million, an increase of 23% year over year.
• Gross Margin -- 29.7%, expanding 260 basis points sequentially due to operational improvements in Wisconsin.
• Tariff Refund -- $3.8 million, contributing approximately 188 basis points to the quarterly gross margin.
• Power Systems Revenue -- $6.2 million year-over-year decrease, reflecting softness in the oil and gas sector.
• Industrial Sales -- $5.6 million year-over-year increase, driven by the timing of shipments for legacy products.
• EBITDA -- $42.7 million, increasing 43% year over year.
• Operating Income -- $40.9 million, representing a 20.2% operating margin.
• Interest Expense -- $1 million, compared to $1.6 million last year due to a lower average debt balance.
• Operating Cash Flow -- $40.9 million, compared to $3.3 million in the third quarter of 2025.
• Nine-Month Operating Cash Flow -- $116.6 million, up from $28.7 million in the prior year period.
• Total Debt -- $37.7 million, reduced by $34.9 million during the quarter from strong cash flow.
• Net Cash -- $34 million, an improvement from a net debt position of $55 million at the end of 2025.
• Revolving Credit Facility -- $220 million, maturing in Sept. 2029 with an 80 basis point reduction in borrowing spread.
• SG&A Expense -- $13.7 million, decreasing 10% year over year due to lower customer relationship initiative costs.
• Effective Tax Rate -- 25.3%, compared to a benefit in the prior year period.
• Capital Expenditures -- $2.6 million, supporting growth and operational efficiency initiatives.
• Manufacturing Footprint -- 800,000 square feet at the Wisconsin operations to support enclosure demand.

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RISKS

• Li warned that gross margin is expected to decline in the fourth quarter because the $3.8 million tariff refund is not expected to recur.
• Janke indicated that the timing and volume of revenue remains subject to "customer scheduling, manufacturing throughput, and also some of our supply chain material availability and some challenges from our supplier base."
• Li stated, "Softness in demand within the oil and gas market is expected to continue," noting that this sector typically carries higher margins than data center products.

SUMMARY

Power Solutions International, Inc. (NASDAQ:PSIX) reported third quarter results featuring sequential revenue growth and record operating income. Management stated that the company is moving toward a strategy named Power Boost 2030, which expands its focus to include the data center power market alongside its traditional industrial oil and gas segments. The company reported a reduction in total debt and an improved liquidity position supported by operating cash flow generation. Management updated its second half sales outlook, projecting that revenue will exceed the levels recorded in the prior year period.

• CEO Hu described the Power Boost 2030 initiative as a plan to "transition the company from a pure player in the industrial oil and gas market into a wider range of the portfolio."
• CEO Hu noted a trend where "gradually, more and more incremental demand will be shifted to the natural gas prime power or bridge power," leading the company to reallocate engineering resources.
• The company entered into a new three-year credit facility in Sept. 2026, which Li stated "increased our committed borrowing capacity from $135 million and matures in September 2029."
• Management stated that current operational efforts in Wisconsin are focused on "enhancing manufacturing efficiency, streamlining production process, improving labor productivity, and strengthening cost controls."
• Hu stated, "PSI is a company with a really deep engineering expertise, with a strong, long-standing relationship with our customers," while noting the company's focus on execution.

INDUSTRY GLOSSARY

• Enclosure: A protective housing for power systems, a primary focus of the Wisconsin manufacturing facility.
• Genset: A combination of an electrical generator and an engine used to provide power.
• Power Boost 2030: The company's strategic roadmap focusing on data center market growth and operational optimization.
• PSI 2.0: An internal designation for the company's next phase of development focusing on diversified power solutions.
• SOFR: Secured Overnight Financing Rate, a benchmark interest rate for dollar-denominated derivatives and loans.
• Tariff Refund: A reimbursement of government-imposed duties on imported goods, recorded as a reduction in cost of sales.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the Power Solutions International Third Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ken Janke, VP Corporate Controller for Power Solutions International. Please go ahead.

Ken Janke: Good afternoon, and welcome to Power Solutions International's Third Quarter 2026 Earnings Conference Call. I'm Ken Janke, Vice President and Corporate Controller. Joining me today are Richard Hu, our Chief Executive Officer, and Ken Li, our Chief Financial Officer. Before we begin, I would like to remind everyone that today's prepared remarks and responses to questions will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about our sales and margin outlook, order conversion, capacity ramp-up, operational improvements, new product development, potential investments in manufacturing capabilities, and our Power Boost 2030 strategy.

These statements are based on current expectations and assumptions, speak only as of today, and are subject to risks and uncertainties that could cause actual results to differ materially.

Important factors include the timing and ultimate conversion of Power Systems orders into revenue, including data center-related orders, quarterly variability in product mix, including the lower gross margins of data center products relative to oil and gas products, customer-specific requirements and changes to custom product orders, the cost, pace, throughput, and operational outcomes of capacity ramp-up activities at our Wisconsin operations, including the duration and magnitude of related production costs, our ability to execute operational improvement initiatives, the level and persistence of customer demand, including demand conditions in the oil and gas end market, the concentration of our sales among a limited number of customers, including in the data center market, existing material availability constraints and other supply chain factors affecting shipment timing.

Mix, sales, and gross margin, the non-recurrence of the tariff refund and year-end adjustments, including those arising from inventory counts, the timing, scope, cost, and funding of potential investments in manufacturing capabilities, which remain under evaluation, integration of recent acquisitions, including MTL Manufacturing & Equipment, compliance with the covenants under our credit facility, macroeconomic, regulatory, and trade conditions, including U.S. tariffs and trade restrictions, changes in management or other personnel, and the outcome of pending or threatened litigation, including the previously disclosed securities class action and related shareholder derivative actions, and other legal or regulatory matters.

Additional information concerning factors that could cause actual results to differ materially is contained in our earnings release dated November 5th, 2026, and under risk factors and the other cautionary disclosures in our annual report on Form 10-K for the year ended December 31st, 2025, and subsequent Forms 10-Q and other SEC filings. Those disclosures are incorporated by reference for purposes of today's call and are available in the Investor Relations section of our website at www.psiengines.com. Our SEC filings are also available at sec.gov. We undertake no obligation to update any forward-looking statements except as required by law. We will also reference EBITDA, EBITDA margin, and net cash or net debt, which are non-GAAP financial measures.

The accompanying presentation also includes Adjusted EBITDA. EBITDA margins represents EBITDA as a percentage of net sales. Net cash or net debt represents cash and cash equivalents less total debt, including finance lease liabilities. Definitions and reconciliations to the most directly comparable GAAP financial measures appear in today's earnings release and the appendix to the accompanying investor presentation, both available in the Investor Relations section of our website at www.psiengines.com. These measures supplement and do not replace our GAAP results. With that, I will turn the call over to Richard.

Richard Hu: Thank you, Ken, and good afternoon, everybody. Welcome again to joining us here with PSI earnings call. This is really my very first earnings call as the Chief Executive Officer of PSI. Indeed, today, if I look at the calendar, it marks actually my 80th day with the company. I am again super excited and humbled to be speaking with you during the call. Before we jump into the business, first, I do want to take the chance to thank Ken Li for taking his leadership, helping the company, being an interim Chief Executive Officer. I also want to thank Ken for his partnership and also strong cooperation during the transition. Thank you very much, Ken.

Since I joined the company in August, my focus has been learning and evaluating the business as soon as I can, as fast as I can. I did it actually with my so-called 6P playbooks, the people, product, process, profit, partners, and sometimes politics. As of today, I have met actually five of our key customers across the traditional industrial oil and gas customer segment, as well as the data center power customers. I have visited all today five existing production locations we have today in Illinois and Wisconsin. I also did already two intercontinental travels, meeting our key shareholders as well. The takeaway here is what I have found.

PSI is a company with a really deep engineering expertise, with a strong, long-standing relationship with our customers, and also, more importantly, a wide range of the balanced and resilient product portfolio, which I think it well position us ready to pivot to the embracing the new growth opportunities from either the traditional industrial oil and gas, as well as to capture the new incremental growth from a data center power market. During the past 80 days, I have worked intensively and closely with our leadership team in the company. We did have quite several rounds of the strategic sessions, workshops together. Collectively, the team of the PSI has developed a so-called Power Boost 2030 initiative.

This strategy and roadmap will guide the company continue to pivot to the next chapter of the company history. We call it PSI 2.0. PSI 2.0 marks, in my opinion, a new era, a new journey for the company and for the organization. Essentially, what PSI 2.0 or Power Boost 2030 will do for us is to transition the company from a pure player in the industrial oil and gas market into a wider range of the portfolio, covering both our traditional market as well as capture a new incremental data center power incremental growth market.

The keyword here I would emphasize is we are going to build a more balanced and resilient portfolio in which we can grow both from our heritage market as well as to capture the new incremental data center power market. With that being said, a minor example, one step forward for the company was last month, we launched our new refreshed corporate logo identity, which it does reflect, in my opinion, the new evolution to move into a world to a more modern, more technology-oriented company as PSI. Today, our priorities under Power Boost 2030 is clear. Deliver the customer commitment, expanding our presence into the new rapid growth AI data center market, and also fast-forward with our key initiatives.

For example, we do want to reinforce our manufacturing in the U.S. That's one of the key initiatives we are promoting. We do want to continually to deepening our commitment and investment in North America to support our customers more sustainably and with a profitable growth. Last but not least, let me talk about VIEso vision into the action. Me, myself, being a big fan of VIE, which is all about execution. Currently, our team are working intensively to put the strategy into the actions. Internally, as of today, we are focusing on shifting and optimizing our operational model, organizational structure, processes in promoting a greater speed and agility.

Also, we are making a DNA reprogramming the culture of the company. All about, we are pivoting to a more agile, focus on execution deliverable organization. Now let's turn to the Q3. Big picture overall, I believe our Q3 result does reflect a strong operational performance. Net sales of $202 million increased 32.5% sequentially versus Q2, and also it's well in line year-over-year at the same quarter last year. You look at the net income, net income was growing about 8% into $29.9 million, or you look at from a diluted earnings per share, it's reaching about $1.3 per diluted share. We also generated a very strong cash flow in the quarter three.

We are talk about around about $34 million net cash, very strong performance. With that being said, Ken, the CFO, will walk you through on some of the details of the quarter when it comes to cash flow, because there are some one-time factors which we do not expect to recur. Talk about market and operations. I would say again, in power systems, we see the demand from data center-related applications remaining strong, and that's really partially offset the continued softness of oil and gas revenue.

The timing and the volume for the revenue from that demand remains subject to the customer scheduling, some of the manufacturing throughput, and also some of our supply chain material availability and some challenges from our supplier base as well. At this moment, we are not predicting a specific level of the data center revenue in any near future. With that being said, we are indeed, again, working very intensively with our customers, focusing on the 2027 order intake. When we talk about Wisconsin operations, I think the message here is that our operations are continuously improving, climbing on the performance meeting pattern. We see the performance is keep moving up, reduced significantly the elevated production cost.

Also, the capacity ramping up, it is on track, on plan, and continue. Also, we expect today the related production cost to persist. We remain focused on the on-time delivery for the customer, which is number one priority for Wisconsin operations. Again, if we talk about the AI data center power industry, I think the business continued to expanding rapidly demand, and also they are asking a more reliable, scalable, and efficient power solutions. We see the situation is continuously accelerating, at least in the middle longer term.

In response, PSI, what we are doing today from product perspective, we are advancing the development activities in term of the natural gas engines and the generators, because this is potentially a new mainstream of the demand from the industry. Over the past year, we have established a regular quarterly earnings calls. We refreshed also our investor website to improve the communications with our external investors. I think this pattern we are going to continuously continue and continuously improve. Our goal is to really reinforce the communication with our investors, and also in parallel, we continuously to strengthen our balance sheet position for the next future to support the growth.

When we roll out Power Boost 2030 in 2027, we do expect we should be able to in a better position to provide more additional perspective on our strategy and roadmap during our Q4 earnings call onwards. With that, let me turn the call to Ken Li, our CFO, to review in more details about financial result in the quarter.

Ken Li: Thank you, Richard, and good afternoon, everyone. Net sales for the third quarter of 2026 were $202.1 million, a decrease of $1.8 million, or 1%, compared with the third quarter of 2025. Sequentially, net sales increased 32.5%, from $152.5 million in the second quarter. By end markets, Power Systems sales decreased $6.2 million year-over-year, a significant narrowing from the $34.6 million year-over-year decline in the second quarter. The decrease primarily reflects the continued softness in oil and gas, partially offset by higher sales of data center-related products. Transportation sales decreased $1.1 million. Industrial sales increased $5.6 million, primarily reflecting the timing of shipments of certain legacy products, and we do not expect the elevated level of industrial sales to continue.

Gross profit was $59.9 million, an increase of $11.2 million, or 23%, compared with the third quarter of 2025. Gross margin was 29.7%, compared with 23.9% in the prior year period. Sequentially, gross profits increased 45%, and the gross margin expanded 260 basis points from 27.1% in the second quarter.

The increase in gross margin compared with the third quarter of 2025 primarily reflects the benefits of company's operational improvement initiatives at its Wisconsin operations, which have reduced the elevated production costs associated with capacity ramp-up activities, supporting the data center-related applications, as well as a $3.8 million tariff refund recognized as a reduction in cost of sales in the third quarter of 2026, which contributes approximately 188 basis points to gross margin, partially offset by an unfavorable year-over-year product mix resulting from lower oil and gas sales. These initiatives focus on enhancing manufacturing efficiency, streamlining production process, improving labor productivity, and strengthening cost controls, resulting in lower manufacturing costs and improved gross margins.

Capacity ramp-up activities at the Wisconsin operation are continuing, and the company expects the related production costs to persist. Gross margin remains subject to product mix, production volume, slow parts, and other operational factors. We do not expect the third quarter gross margin level, which included the tariff refund, to be sustained in the fourth quarter. Research and development expense were $5.1 million in the third quarter, compared with $4.8 million in the prior year period. The increase was primarily driven by higher program expenditure to support new programs in 2026. Selling, general, and administrative expense was $13.7 million, a decrease of $1.6 million, or 10%, compared with the third quarter of 2025.

The decrease reflects certain prior year expense tied to customer relationship improvements initiatives, partially offset by higher cost supporting our data center goals. As a percentage of sales, SG&A was 6.8%, compared with 7.5% in the prior year period. On a GAAP basis, net income as a percentage of net sales was 14.8%, compared with 13.5% in the prior year period, and 11.1% in the second quarter. EBITDA, a non-GAAP measure, was $42.7 million, compared with $29.8 million in the prior year period. EBITDA margin was 21.1%, compared with 14.6%. On a sequential basis, EBITDA increased 66% from $25.7 million in the second quarter, and EBITDA margin improved 420 basis points from 16.9%.

EBITDA includes the $3.8 million tariff refund discussed earlier. Operating income was a record $40.9 million, including the $3.8 million tariff refund, an increase of $12.5 million, or 44%, compared with the third quarter of 2025. Operating margin expanded to 20.2% from 13.9%. Interest expense was $1.0 million, compared with $1.6 million in the prior year period, primarily due to lower average debt balance. Income before income tax increased 50% to $40.1 million. Income tax expense was $10.2 million, compared with an income tax benefit of $0.9 million in the third quarter of 2025. The prior year period included $7 million, or $0.30 per diluted share, tax benefits from the release of a valuation allowance on deferred tax assets.

Our effective tax rate was approximately 25.3% in the third quarter. Net income for the third quarter was $29.9 million, or $1.30 per diluted share, compared with $27.6 million, or $1.20 per diluted share, in the third quarter of 2025, which included the $0.30 per diluted share valuation allowance release I just mentioned. Turning to cash flow, we generated $40.9 million of operating cash flow in the third quarter, compared with $3.3 million in the prior year period. For the first nine months of 2026, operating cash flow was $116.6 million, compared with $28.7 million in the first nine months of 2025. Capital expenditures were $2.6 million in the third quarter.

Strong cash flow enabled us to reduce total debt by approximately $34.9 million during the quarter, from $72.6 million at June 30th to $37.7 million at September 30th, which includes $35 million of borrowings and our new revolving credit facility. With $72 million of cash and cash equivalents, we ended the quarter with net cash of approximately $34 million, compared with net debt of approximately $55 million at the end of 2025. In October 2026, the company made a payment totaling $20 million in its revolving credit agreements. As of today, the outstanding balance under the revolving credit agreement is $15 million. In September, we closed a new three-year, $220 million committed revolving credit facility.

It increased our committed borrowing capacity from $135 million and matures in September 2029. Borrowings bear interest at SOFR plus 180 basis points, compared with SOFR plus 260 basis points in our prior facility, which was paid in full and terminated at the closing. This is an 80 basis points reduction in our borrowing spread. We appreciate the support of our banking partners and their confidence in PSI. Our balance sheet is solid, and we believe our liquidity position is sufficient to fund the working capital and the capital investments required as larger Power Systems orders move through production. Turning to our outlook. Based on our current production schedule and the information available today, we are raising our outlook.

We now expect the second half 2026 net sales to exceed second half 2025 net sales, as larger power systems orders move into production and are recognized as revenue. That compares with our prior expectation for second half sales to be approximately in line with the second half of 2025. The timing, volume, and mix of shipments, including customer orders, remain subject to customer scheduling, manufacturing throughput, supply chain factors, and other variables, including current material availability constraints affecting certain planned fourth quarter deliveries. There can be no assurance that orders will convert to revenue in any particular quarter.

Looking ahead to the fourth quarter, gross margin is expected to decline from the third quarter because the $3.8 million tariff refund, which contributes approximately 188 basis points to third quarter gross margin, is not expected to recur. In addition to that effect, we expect a modest further reduction in gross margin, primarily reflecting a less favorable product mix. Softness in demand within the oil and gas market is expected to continue, so we expect it to be approximately offset for full year 2026 by higher sales of data center products, subject to customer contracting and the recognition of the associated revenue by year-end. Data center products generally carry lower gross margins than oil and gas products.

We anticipate continued benefits from our operational improvement initiatives, particularly at our Wisconsin facilities. However, continuing ramp-up costs, material availability constraints, production volume, and year-end adjustments, including those arising from inventory counts, may adversely affect gross margin and the resulting margin below our current expectation. Finally, we expect to provide additional perspectives on 2027 with our fourth quarter results. With that, I will turn the call back to Richard.

Richard Hu: Thank you, Ken. Finally, in closing, with today our statement, I do have three key takeaways here from my side. Firstly, I would say our operational improvement we are delivering. If you look at our Wisconsin operational team, I would say the team is keeping up with their strong momentum, the good work, to continue improving our operational performance and also ramp up the capacity. Bottom line, we are on track with that improvement plan. Secondly, I would say, like Ken mentioned before, we do have a strong financial firepower prepared to invest our growth in the future.

Today, the growth, a strong cash flow generation, and also the newly agreed settled credit facility, it does give us a solid financial foundation and also the flexibility to deliver to our customers to invest in the growth initiatives that will define PSI 2.0. Thirdly, I also see, again, we are very well prepared with our balanced and resilient product portfolio and customer mix. Here, please, again, the key word from my side is balanced and resilient, right, when it comes to our product portfolio and customer mix.

What that means is we do believe while we are continuously maintaining our traditional foundation of the business, industrial oil and gas, in the meanwhile, we also try to work very hard to capture the new incremental data center power growth market as well. Overall, PSI, again, it's a pivotal point today. We are going to evolve from a pure player of the traditional industrial oil and gas maker, becoming a, again, balanced and resilient wider range of the power solution provider. We are going to work with our journey with two legs. Again, with our traditional industry oil and gas, but also the new incremental data center power market in North America.

The new Power Boost 2030 will pave the road. for the company and will empower our journey ahead. Thank you, and with that, operator, I think we are ready to open the line for Q&A.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Eric Stine of Craig-Hallum Capital Group. Your line is now open.

Eric Stine: Hi, everyone. Thanks for taking the questions.

Ken Li: Hi, Eric.

Eric Stine: Hey. Maybe just touching on your 2026 outlook to start, and I know that it is quite high level and you have increased it, but could you talk a little bit about just the moving pieces there? You have got oil and gas still depressed. The enclosure business, you have still made a lot of progress, but still in ramp-up mode. I am just trying to get a little context as to what the potential magnitude or the puts and takes could be dictating how much improvement you could see over the second half of 2025.

Ken Li: Mm-hmm. Eric, as we mentioned, we raised our outlook for the second half, right? Previously, we said it is flat versus last year. Now we say the second half will be higher than last year. Just for the 3Q, it is about 32.5% sales increase versus 2Q. For the oil and gas, I always say it is stabilizing, okay? But definitely, we expect to see high sales for data center products, and this reflects our current production schedule and also the higher expected shipments of the data center products in the fourth quarter. The enclosure side business in Wisconsin, we are making improvements in the operation, productivity, and efficiency.

Definitely, we see growth for the enclosure side of the business, plus the genset business to support the data center. I will not give you a kind of quantitative number, what is the percentage increase versus last year, but definitely, we expect it will exceed the second half last year.

Eric Stine: Okay. Well, maybe now, just sticking with the Wisconsin operations, now that it is basically been a year or a little under a year since you undertook that you have been making progress and it has been ramping. As you look at that and as you look at where the demand is trending and obviously continues to grow, is there a current view on whether you need more capacity in Wisconsin, or given the efficiency improvements that you have made in that current footprint, that is more than sufficient, at least for the time being?

Ken Li: Mm-hmm. For Wisconsin, as you know, we increased our footprint pretty significantly, right? We used to have like 150,000 sq ft. Now it is about 800,000 sq ft, and some of the facility is used for warehouse. We see strong demand for our products, and definitely, we think at the current time, we do not think we need to lease more facility to support the demand, and we are more focusing on operation excellence improvements to increase our capacity to support the high demand for the enclosure business.

Richard Hu: Yeah, just building on, this is Richard speaking, Eric. Just building on what Ken mentioned. Again, with my 80 days age at the company, but I would agree with what Ken mentioned. I think today, the opportunity from Wisconsin enclosure, it's rather an internal, continuously lifting improvement on the operational performance, improvement on the OEE productivity, rather than any additional expansion whatsoever. I think the current team, we are working closely with our enclosure team, monitoring week by week how they are doing. Are they on track for the capacity ramping up? Are they on track for the productivity improvement? That's exactly where the laser focus is about, Eric.

Eric Stine: Okay. Maybe last one for me. You mentioned, looking at the Power Gen side, natural gas, and I know to this point, it's predominantly been diesel. So what do you kind of think of that, how that market's developing, what the overall opportunity might be?

Richard Hu: Yeah, I mean, if I may answer that question, I feel overall we are seeing, firstly, the data center power market remains strong. We see over the past maybe 24, 48 hours, there has been some bumpy dynamics because of the midterm election whatsoever. Nevertheless, we remain bullish with the middle long term, this mega wave of the data center compute demand. That's our foundation perspective. With that being said, we do see, I think a new trend from the industry will be like a kind of shifting. The major demand or incremental demand will be a major shifting from, let's say, the standby diesel.

Gradually, more and more incremental demand will be shifted to the natural gas prime power or bridge power. We hear that from our customer, and we see that's overall a kind of trend today, Eric.

Eric Stine: Okay. Thank you.

Richard Hu: And by the way, before I forget, that is exactly, if you look at our engineering organization focus, that is exactly we are allocating tremendously the incremental resource, developing and engineering the natural gas genset, prepare for this upcoming incremental growth, right?

Operator: Thank you. As a reminder, to ask a question, you will need to press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again. Please stand by while we continue to compile the Q&A roster. Okay. I am seeing no further questions at this time, so I would now like to turn the conference call back over to Richard Hu, the CEO, for the closing remarks for this conference today.

Richard Hu: All right. Thanks, Grace. Again, from my side and the whole PSI leadership team, I want to thank everybody interested to participating the Q3 earnings call today. As we just mentioned, I think we are excited. We are in the beginning of a new journey, a new era. Please stay tuned and more to come. Thank you. Thanks, everybody.

Operator: Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.

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