Q3 2019 Earnings Call
Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to standby. Thank you for your patience.
Matter Gerry ladies and gentlemen, thank you for standing by welcome to Houston Wire and cable companies third quarter 2019 earnings Conference call. My name is Sydney and I will be your operator for today.
Joining us on the call today, our Jim Pokluda, President and Chief Executive Officer, and Chris Micklas.
Vice President and Chief Financial Officer, today's call is being recorded for replay purposes. All participants are in listen only mode.
The end of the financial discussion, we will conduct a question and answer session and instructions will be given at that time.
Comments during today's call may include forward looking statement.
Such statements are based on assumptions that the company believes are reasonable, but subject to risk factors that are summarized and press releases and FCC filing.
Forward looking statements are not guarantees and actual results could differ materially from what is indicated in such statements any forward looking statements speak only as of the date of this call and the company undertakes no obligation to publicly update such statements. If you did not receive a copy of the earnings press release that was distributed.
Earlier. This morning, a copy can be found under the Investor Relations page of the company's website at Www Dot H.
<unk> Dot com.
This time I would like to turn the call over to Jim Pokluda, President and Chief Executive Officer. Please begin when you're ready.
Thank you Sydney good morning, everyone.
Thank you for joining us on our call today.
Beginning with the brief brief update over third quarter results and then I'll pass the call over to Chris who will discuss our financial performance in greater detail and also provide updates on recent accomplishments as a reminder, today I'll be referring to revenue results have been adjusted to reflect the third quarter's aggregate reduction and the price of metals.
As I mentioned as I mentioned during the second quarter earnings release call, we experienced the mid summer slowdown that negatively impacted customer demand and sales.
We felt the effects of this pullback in the latter part of Q2 in the early part of Q3 market conditions and customer demand began to improve in August and September , but we were able to offset but we were unable to offset the pressures from the beginning of the core.
And overall Q3 revenue to crop decline approximately 3% versus the prior year period.
The sequential basis versus the second quarter 2019 sales grew approximately 1%.
Gross margin was 22.8%, which was down versus the prior year, but not unexpected given the industrial slowdown most companies in our industry are experiencing.
For the entire year to date period gross margin remains slightly above prior year at 23.9%.
Operating expenses, excluding onetime expenses due to the closure of the Attleboro, Massachusetts vertex facility.
Decreased 18 basis points versus the prior year period.
And just a moment, Chris will provide greater detail on the costs associated with this transaction.
Net income adjusted to exclude cost associated with the Alberta lease termination was $1.1 million.
We estimate the sales results in our core business, which services maintenance repair and operations demand decreased approximately 4% it from the prior year quarter and were up sequentially. The sequential growth was primarily driven by increased activity in certain industrial regions and the reduction on supply chain disruptions from the trade war with China has been negative.
Really affecting inventory levels and sales of fastener problems.
We estimate the project sales generated from oil and gas utility power generation and industrial manufacturing end markets decreased approximately 1% versus the prior year period, and improved 12% sequentially versus Q2 of this year.
Finally, as we move further into the final quarter the year the improved levels of business activity experienced in August and September have continued through today. We are encouraged by this trend although on a year over year basis. The overall operating environment remains more challenging accordingly, with a long view in mind, we are laser focused on the items within.
In our control and top priorities remain developing best in class customers are delivering best in class customer service executing prudent expense management, driving operational excellence and reducing debt.
With that I'll now turn the call over to Chris for more detailed analysis of our third quarter results as well as an update on progress made in other areas of our business.
Chris.
Thanks, Jim and good morning.
Today throughout my prepared remarks, I will cover the third quarter 2019 resolves and would first like to cover cover the out over a lease termination.
As its impacts.
Got it as it impacts many of the metrics to be discussed.
As I mentioned on the second quarter earnings call in July we agreed with our landlord to modify the terms of the lease agreement Vertexs, Massachusetts facility.
This includes early termination of the least on November Thirtyth and subleasing, a portion of the space until the end of November .
In connection with these changes we agreed to pay the landlord approximately $2.5 million.
After considering all accounting impacts and nonrecurring expenses associated with this agreement.
We had charges the $2.2 million to operating expense in the quarter.
These charges reduced earnings by 11 cents per share.
However.
The long term value of this agreement as a net savings of approximately $4 million and future Rad property taxes insurance utilities and anticipated maintenance.
Additionally, we are now freed up to strategically located our facilities along improves transportation corridors and closer to our customers.
We are on plan to operate before year end, new facilities in Chicago, and Edison New Jersey.
The net result of combining the arrow barrels savings and the additional costs at the new facilities is an annual operating savings of approximately $1 million.
In the third quarter 2019.
HW see had a net loss of $721000 or a loss of four cents per share.
Adjusting for outer borough, we earned $1.1 million or six cents per share.
Sales for the quarter, where $85.4 million a decrease of 5.2%.
From the third quarter of 2018 with metals negatively impacting the results by approximately 2%.
The margins were 22.8% a decrease of 100 basis points from the prior year.
Operating expenses after adjusting for out of borough were down $1.1 million or 5.8% as we managed salaries and commissions in line with the sales decline.
Additionally, our operating expenses, which were death or other operating expenses, which were down 8.1%.
Benefited approximately 4.5% from the non recurrence of prior year warehouse moves.
Interest expense in the third quarter was $812000, which is up $73000 from the prior year with the average debt of $78 million up $1.1 million from the third quarter 2018.
The average interest rate was 4%.
20 basis point increase from the same period in 2018.
Finally on the income statement, our tax rate was 19.8% and reflects the impacts of the out of charge.
Since its charger tax rate would have been within our communicated range of 26% to 28%.
The prior year tax rate of negative 6.4 was impacted by the release of our valuation allowance.
Turning our attention to the balance sheet cash flow and liquidity during the third quarter 2019, we used $2.8 million in operations and our working capital was $133.4 million if the ended the quarter.
The use of cash in the quarter was mainly a result of payment for an opportunistic inventory buys the ended the second quarter.
Although we were able to sell a majority of the items purchase.
Our inventory remained high as we work to rebuild Vertexs inventory, which has been impacted by disruptions caused by the ongoing tariff and trade negotiations and their warehouse restructuring activities.
We continue to manage these disruptions and changes in supply lines and believe our inventories will remain at similar levels throughout year end.
However, we anticipate that during the first quarter of 2020, we will be able to monetize these excess inventories in our inventories will return to the levels demonstrated in the past.
Cash paid for capital expenditures during the quarter was $867000 and year to date is $1.7 million to spend for the quarter was elevated above normal levels, mainly because of a $284000 information systems as we six.
Thats fully implemented a new ERP systems and infrastructure projects.
These information system changes are part of our digital plan, which is aimed at improving operational efficiencies and customer service.
As I previously mentioned, we anticipate about $2 million in total capex for the full year and we believe that we were finished the year slightly above that 2 million dollar level.
We remain in compliance with the covenants of our 100 million dollar asset based credit facility.
At the ended the quarter, we had $20.3 million in available capacity.
During the third quarter, we repurchased $1.1 million of stock or 235000 shares.
This represents 1.4% of the shares outstanding.
Currently the program has $8.1 million available to repurchase outstanding shares of common stock from time to time, depending on market conditions trading activity business conditions and other factors.
In closing I would like to reiterate that despite some marketing market challenges, which have the effect of pressuring our sales we were able to continue our operational improvements in several areas in particular.
Fixing vertexs distribution network cutting operation expenses, and implementing several business process improvement projects, most notably our new ERP system.
The top priorities remain executing on our growth and operating plan driving profitable profitable growth and using lean techniques to drive outweighs.
Disciplined expense management, and improving shareholder return through repurchase minute debt and retirement of debt and repurchasing our shares in conclusion.
This concludes my prepared remarks, and I'll turn the call back over to the operator.
Thank you.
Dissipate and the question answer session. Please press star one.
And our first question comes from Damon Benedict with.
Please proceed with your question.
Good morning, Jim Good morning, Chris how are you.
Hi, Good morning, David Good morning Damon.
So some top end markets, obviously and in oil and gas right now and not too surprising to see.
Down 3% year over year revenue decline next metals given that.
Could you refresh us on the areas of exposure.
You've got an upstream midstream downstream oil and gas end markets, and where you're seeing most of that year over year revenue headwind right now.
Sure Damon.
And likely you will be are only color. So.
Please just feel free I think to ask questions as we go along here.
Unlike 2018, the summer doldrums kicked in this year and as I mentioned in my prepared remarks towards the end of Q2 and the early part of Q3, we experienced an unexpected slowdown.
Oh in industrial markets overall, but primarily in oil and gas and primarily in the upstream and midstream.
Oil transportation and storage infrastructure.
Those trends have largely reverse now beginning in the Latin middle to latter part of Q3.
Answer your question specifically, though.
During during that Doldrum period.
Oh several things converged.
One of which.
I don't like to say, but it's the truth the vacation season.
Was a headwind.
Sourcing pipe in the midstream transportation transportation infrastructure was another problem.
And capex slowed down due to the pullback in price of oil, which is especially especially frustrating because as you know the pipeline infrastructure out of the Permian.
His woefully.
Under developed.
Nonetheless, we had to pull back in that period was in the pipeline infrastructure transportation infrastructure.
And the support.
Units that go along that so pumping stations compressor stations metering stations et cetera.
That's really in our wheel house for specialty wire and cable products.
Fortunately that trend reversed.
In August of this year, and we had a good September and so far through.
Good September good October and so far through November significantly up versus the summer period.
With respect to other investments in industrial.
Approximately 20% of our sales comes from projects.
And that's a derivative of capex, so when markets get a little skittish are worried about what may happen with interest rates trade Wars Capitol Hill.
They tend to.
Procrastinate.
Capex spend.
It's important to note this though and I mentioned this on the last calls well.
They're just procrastinating it.
Pushing it to the right a little bit.
I've not seen any material jobs being canceled.
Why because there are too far into it as I said also earlier it takes a long time to license a proven fund these projects so.
Depending on what's going on in the and the present day you may see some delays with respect to actually pulling the trigger to get this work going.
We're big eight beginning to enter the seasonally slow period of the year, which is always a little bit frustrating.
But we are encouraged that despite market headwinds and in industrial economy that.
Is it still above the line, but on the downward slope of the economic cycle slowing down.
We have be mindful that things may may slow later in the quarter.
Overall, though.
I will report that voice of customer book to Bill ratio project pipeline.
Activity overall.
Still pretty good and oil and gas is pretty good to very good.
It's just that during this past summer it wasn't as extraordinary as it was in 2018 and the effect of that is seen in our results.
Okay makes sense and.
On the bright side, if you look at it sequentially Q3 is year over year result was down three versus Q2 down seven I think so directionally things got better even though it was a tough quarter. It sounds like there's the potential for things to get.
A little better from here in Q4.
Well, Yes project business sequentially was up significantly, 12%, which has always encouraging because sequential results are good indicator of market straight.
On a two year stack.
Q3 over Q3 were up almost of approximately 6%. So that's also encouraging as well.
The reality of a small business in a business, whose revenues and profitability can swing quite a bit based on project activity is that.
Moves are often not linear somewhat choppy.
We're happy to see the sequential growth.
As I said before we're mindful that.
Q4 tends to be seasonally slow.
Ultimately, though I'm encouraged that.
The voice of customer and the value proposition.
Is.
Remains very leverageable and very much in demand.
We don't like to see projects pushed pushed out.
But there are going to happen there in process and evidence of that was at least last quarter nice sequential growth.
Great great.
Can you remind us I think you'd said before roughly 30% of your business is direct into energy end markets and and maybe 50% more indirectly is it that's still the right or sort of mid there.
It is if you.
Literally exactly exactly as you said, 30% highly correlated to oil and gas and then the first derivative effect of another 20% based on tangential spend so what I often say is if you're drilling wells somewhere you're also building churches schools bridge and infrastructure around that so all in its its most.
Correct to think about it as a 50% relationship and I think we saw that our economy. If you go back to the 2016 17 period oil and gas pullback affected markets much more broadly than I think all of us had anticipated. So it really is tied and quite symbiotic.
Okay, and maybe you could tell us a little more about what you're seeing outside of oil and gas.
And the general industrial side.
Sure.
Well general industrial I think most would say has slowed on a year over year basis.
And we use industrial is a pretty big catch all that includes oil and gas industrial manufacturing general manufacturing.
Even mining and minerals and pulp and paper.
It's fair to say that business activity overall in industrial is down slightly year over year. Other end market. So that and include non residential construction or commercial construction.
Remain quite good I know that housing single family housing starts are down.
Multifamily are about flat.
We felt a little bit of that effect, but commercial construction remains quite good.
As as do our sales to those to those end markets.
Okay great.
And.
On gross margin.
Maybe a question for Chris can you help us understand the roughly 100 basis points of year over year decline in baby separate how much of that was.
Copper and metals deflation inventory accounting driven versus.
Competitive pricing in the market or or just cost deleveraging from lower volumes or what the various drivers where there.
Hey, David let me take it cut that in.
Chris May chime in from time to time, you're right overall, it's a 100 basis point exactly 100 basis points to lot declined quarter to quarter and there are a lot of moving parts there.
I tried to try and dissecting by product category.
Fasteners for example are largely employed imported from overseas markets Asia, primarily.
As is as our certain of our wire and cable steel products.
Which.
Both product categories broadly have been highly impacted by tariffs were doing the best we can to pass those price increases along.
But man it is it's tricky Damon because there is a lot of product there was a lot of products still on the channel.
Costed at the old level, and the pricing discipline by some others in the marketplace.
Was was not good so although we feel like we did a good job.
Re matrices re matrix in prices and.
Passing these increases along.
That didnt materialize equally as well in the broad marketplace with our competitors. So the bottom line is with certain product categories steel wire rope and fasteners, there was a lot of pricing pressure.
On top of that particularly in steel theres been a significant amount of deflation in the price per pound or the metal.
So as a distributor you can imagine the pressures that applies because when you have inventories cost it at the higher level and the spot market price reduces.
You can be up.
A bit of a burden for a few quarters until you cycle out the old product and average cost in the new product.
So pricing pressures there.
In the other end markets, particularly oil and gas when they slowed down.
Price reductions were necessary in order to remain competitive.
So that was another headwind.
On the other side of that equation, we made advances with fabrication of certain products heavy lift swings.
Services or fees that come they came from engineering services rentals to help offset some of these margin declines, but they weren't enough to offset it in its entirety.
And then of course, you had some metals deflation, which we've already talked about in.
Hopper, particularly that accounted for.
Well all in all metals, the combination of about 2% quarter over quarter.
Pricing is a real tricky thing and when markets slowed down.
You have to be responsive in the interest of retaining share.
If it's necessary to cut the price in certain areas, we will do that.
As a point when you say no.
I think that it will flatten out from here and we won't see much further decline relative to what we did in Q3. So that gives me some peace of mind.
And most recently it looks like we're making some advances with the trade wars, so that would be nice as well, Chris do you have anything else you'd like to add to that.
No thats good.
It's consistent with what I had I just wanted to make sure. We got it out so okay, alright Super Damon I hope that helps but I'm happy to take any follow ons to that question because there are a lot of moving parts to that question.
Yeah, no that's very helpful.
And particularly good to hear that much of the competitive price pressure is just a slow.
Lower reaction to tariff compared to you guys and that's the type of thing that will just that'll take care of itself over time as as your competitors realized they need to do something.
Yeah, either intentionally or they'll run out of the cheap stuff and they'll have to do the right thing.
Great.
So on the operating expense line.
Moving attleboro, another another quarter of great cost control.
Impressive you were able to reduce expenses in line with.
Revenue and that's been multi year record of good execution in our opinion on that front. So could you tell us a little bit about the sources of.
Cost savings this quarter and frame that within your longer term effort.
Damon I'll just identify a few broad areas and Chris will be able to provide additional detail beyond it.
Thank you for recognizing that certainly there were some reductions due to two variable comp, but it's a far bigger story than that.
Our execution of lean and lean processes and controls.
Have been very successful, it's an exciting initiative for our company and there are real gains that are coming from Chris and his team lead that.
Productivity improvements have also been been very noticeable cuts per hour lines per hour pounds shipped per hour at certain of our distribution centers are up remarkably year over year, which has allowed us to operate more efficiently those gains are evident in the numbers as well.
Chris anything else you'd like to add to that I was just going to say David what we're doing is we're using a lot of analysis to study.
Better ways to do things and this is why I'm, particularly proud that we've been able to change the ERP system to be able to get.
New system going.
That's more modern and allows us more flexibility because our desire is to use it to the data to drive decision, making so we're using for using lean take techniques and looking at just wasted.
Time, and wasted effort and working to eliminate those particular activities out in the shop. So that we can take out anything thats non value added. So that's that was the part that drove the.
The variable piece I'm going to college of our labor is actually down quite a bit. So when I mentioned that salaries are down in line with sales well, that's actually better because the sales were metals was the was the gross sales not the net sales and we've been able to reduce our staffing and organize better.
Around getting product out the door so.
To me. The success here is is that every every time, we do something now we're looking at and training people.
And looking at it to reduce any wasted energy getting it out the door. So that we can provide the best customer service with the least amount to effort doing it.
Tim and I'll, just add one more comment there that this should not be taken lightly.
This.
Exit from the lease and Attleboro, Massachusetts has been an enormous undertaking.
A very large facility, it's where formerly we housed them the majority of our fashion or products.
Moving that product too.
New regional geographies to better support customer demand.
And round out.
Mix and optimize mix to service regional and customer demand.
Is something that's very exciting.
Our new facility in Chicago, where literally in the process of moving there as we speak today.
We'll be done.
Very soon.
Followed by.
A transfer of product and.
Implementation of of systems in Edison New Jersey.
Where we have formerly not had a footprint.
We're really excited about this these will be state of the our facilities with state of the art materials storage in material handling.
Highly talented and qualified labor.
And we're doing it all with a smaller footprint.
And saving a lot of money a million dollars a year.
So smaller footprint better geographic location higher levels of customer service better product mix improved fill rates faster response time and less labor.
Net net net.
A million dollars per year.
We'll be done with this very soon.
Having said that we have some work to do for the next several weeks and there's going to be there our bills to pay for labor and freight and all hands on debt kind of stuff.
But it will be done before we know it.
We'll have a clean slate and will be off often running.
Day, one in January of next year.
Right, well a million annualized versus the 2 million out the door upfront you pick a 50% return.
Any day, so sounds like a no brainer.
Even I can do that math Damon.
Back to the ERP for a moment you mentioned some customer service improvements as well on top of the operational.
So can you tell us a little more about the.
The digital.
Customer interface thing sort of improvements you'll see.
Oh that.
Yes, yes, and no. Okay. So at the highest level. The objective is to think about how to use digital technologies to invaluable to enable in advance enterprise strategy.
Okay, that's a pretty nice statement and.
There is about I don't know two months of conversation that can come behind that.
How we have tons of data, we have a great ERP system.
Now updated to the most recent platform the challenges to extract that data Intel intelligently to get us to the next steps.
With our with our customer service strategy business development strategy, it's an enabling agent.
And there's just a wealth of things we can do.
And the interest of.
Confidentiality and for competitive purposes.
I think it's probably best not to get too much into the weeds other than just say.
We've converted the system, we have a lot of very smart people on the team that no what to do and how to do it.
We have a plan well architected plan.
That identifies priorities that are currently underway.
Our customers will see the manifestation of that work over the next year. It's a journey as you know not a destination, but you have to have the appropriate foundation the infrastructure the cornerstones in place to be able to do any of this you have to have the desire you have to have the systems you have to have the talent with the human capital.
To do it.
And the passion and we have all of that so we're very excited about this theres lots to work lots of work to do and we'll never be done.
Okay.
So.
Taking a taking it back up a level.
Big picture, Jim you've spoken before on these calls about the long term, earning history of.
The business and the fact that the company has generated.
More than a dollar of earnings per share in years past I know, it's been a while since we've seen that level and there's been some changes in the markets you serve like utility is moving away from coal towards natural gas and lower product intensity that results from that.
But you've also made.
Great progress on cost structure you.
Developed new areas for growth like aluminum for instance, if shrunk the share count five or 10% since last time, you earned a dollar and.
And I think you've said in the past that netting all all of the various.
Headwinds tailwinds changes that that nothing structural.
Is so different in your business that that it would prevent you from reaching a dollar and earnings per share again sometime in the future.
So I'd love to hear you refresh us on the pathway from where we are now running it.
40 to 50 cents a share if I look at year to date or past.
Six quarters or so.
Getting back to that dollar plus in earnings power.
Yes.
Another big question.
We have a multiyear plan, which.
Gets us there.
And.
There are multiple levers that.
We will execute to do that.
Let's try and dissect them.
Sales.
As you mentioned.
And mix around sales today.
Isn't what it was in 2006, when we were selling to coal fired power plants.
The important thing, though is that the value proposition.
Ms skews in the mix it that that we deliver to the value proposition.
Applied to multiple end markets.
In multiple geographies, so, although we're not building coal fired power plants.
At least in utility we're still.
Scrubbing and putting environmental compliance devices on the existing fleet and.
The coal fired.
The natural gas fired plants that were building today.
Wind and solar consumer products not to the extent that coal would.
So we have to find new markets and we have if you look at the industrial landscape today versus 10 years ago.
Very few people even knew what fracking was in 2006 I know it's been around for decades, but the average guy on the street Didnt know that.
Today, the U.S. is the largest oil producer in the world and in the supply stack in the hydrocarbon resources get better and better every day.
So it's our view that.
Although we are disappointed that coal has gone fracking is big oil independence is critical to our future and the natural resource available.
It's not going is not going to go away.
So sales are one lever.
Opex is another lever.
Today, we're running at a slightly over 20% opex to sales.
The good thing about this business is that when the topline increases we realized tremendous amount of pull through leverage and you've seen that.
Most in the industry would say anything about 50% is good and last year, we're in the mid seventies.
So to extent that we can improve the topline will realize a lot of leverage on the Opex line.
And is that ratio improved.
Initially falling below.
20% and gets into the range of where we were formally.
18, 19%.
There will be a lot of EPS availability that comes from that.
Gross margin improvement is another objective, although recently market headwinds of pressure that.
It doesn't mean that we can improve.
In certain areas of our business. So we talked I talked a little bit about the fabrication end of our business and services around services that come with the fabrication of products rentals.
Actual fabrication of rentals.
And engineering services high profit revenue streams.
When trade war disruptions work their way through the system I expect to see a lift in product margins for both fasteners and bulk steel wire rope.
As we as we make these improvements in our business.
We'll be able to.
Retired debt.
And that's a key component of our strategy.
So right now are Leverages a little high.
But over.
The next several years, we'd have a well architected plan to bring that down to a point, where we land in a area of 2.5 to.
Three debt by EBITDA debt divided by EBITDA.
When we do that and coincidentally.
Repurchase shares.
The combined effect of all this.
Prove utilization of working capital.
Sales to working capital ratios debt to EBITDA.
Reduced share count topline growth will all contribute to making this company far more profitable than it is today.
So you've asked a really big question and I've tried to give you a high level response.
To help set up some bumper rails.
Important thing to take away from this is that we have a plan.
So it's a plan that gets us to what you're describing over the next couple of years.
And.
In my view at least it doesn't require any remarkable things to occur in the marketplace.
Other period, what we need to do is incrementally attacked the components.
That can help us topline expense management gross margin optimization.
Debt reduction share repurchase and the combined effect of all that takes us through a very nice place.
Wonderful.
Fully agree and.
Last time, you were in that sort of place the stock prices and the teens, so clearly plenty of upside for investors with the patients to to wait for you to execute on it.
Let's see.
One more just on the new the new product area had revenue growth I think a couple of years ago you had.
Invested in some new experienced talent.
And charge those folks with finding some avenues for growth new categories can you can you catch us up on where.
That stands and what progress has been made there.
Yes.
But I want to be careful not get too far out over.
Our skis here.
And we have multiple product categories. So so again this would be quite a long answer.
I'll do my best just to.
Addressed a few items for each one of them.
Because he ever everyone's different certain of our product categories require sales excellence.
More on the business development side, which would be outside sales for example.
Simply acquiring.
New customers, we already have the products they need.
We just need talent to go get a new customer.
We've made investments there.
Other for other.
On a categories.
One can realize immediate leverage through application engineering expertise that sits on the desk. So we have.
Business development unit that recruits at the college level and trains sales candidates for a period of time and.
We move them out into into the field in application engineers sales positions.
That's working.
Other product categories actually require.
New vendors and new skews themselves.
So we have expanded supply lines overseas.
Made new vendor relationships.
Enhanced old vendor relationships.
Invested in people to help us develop the supply in distribution logistics infrastructure.
Thats paid off.
With respect to new product development.
We've had a very high concentration of customers in the general industrial marketplace.
And that's wonderful when industrial is doing well, but it leaves you pretty exposed when it's not so commercial end markets construction end markets. As you know have been quite good for the past several years.
I mean, you remember this there was a time when living in the city was kind of taboo.
And now living in the suburbs.
Sure.
You feel kind of like alone or.
And a lot of huge movement nationally for.
Communal development in Aruba urban areas and the.
Restaurants in the shops in the stores in the entertainment venues that come with that.
That's been driving.
Commercial construction and we've added to the skews sets and product category managers that can help us in those areas.
Those products require new suppliers different distribution and logistics service platform and a slightly different type of Salesforce and we've made investments in all of those.
So again for competitive purposes, I wouldn't want to get to specific with you here, but the message we want to leave you with is.
We're not standing still.
You've got to continuously challenges status quo and look for new market opportunities and new customers in the service platform and.
Okay.
Well you proposition to support that.
We've been doing that actively for the past.
Eight years.
Yep.
I'll leave it just with.
With a comment.
So by my math your quarter, ending tangible book value is $4.30 per share.
And as I look at.
Small and micro cap.
Equity universe, it's pretty hard to find.
Good companies with solid history of the profitability.
Well run in executing well at that.
At a discount the tangible book.
So.
Looking at that I'm on the downside support and.
The potential for a dollar and earnings power again at some point.
The $4 stock, we we like our investment odds here. So thank you for everything you're you're doing and.
Nice to see you restart the share repurchase.
6% ish annualized pace to start.
So that's a nice healthy healthy rate and we think you're doing the right thing for long term shareholders. So.
Appreciate all the hard work.
Well, thank you very much for that Damon.
I've enjoyed visiting with you today, Chris is enjoying visiting with you today.
And now we're going to go back to work.
Thank you.
Third to ask a question please press star one.
This concludes our Q session I will now turn the call back to Jim.
For any closing remarks.
Thanks, Sydney and thanks to our value team members for their continued hard work and dedication to the company to our shareholders. We appreciate you joining us on our call today, we look forward to this to success in the period ahead.
Good day everyone.
Ladies and gentlemen, this concludes today's conference. Thank you for participating.