Q2 2020 Earnings Call
Thank you feel patients feel conference call will begin in approximately one minute if you need assistance down zero in the meantime, we will continue to tighten music.
Good morning, and welcome to the <unk> second quarter earnings call full Richardson electronics.
I'll now turn the call over to your host Mr., Ed Richardson CEO .
Joining me today or Robert then Chief Financial Officer, when needed now Chief operating Officer, a general manager for Richardson healthcare.
Greg <unk> general manager of our power and microwave technologies group.
And yet is Rupert general manager Candace.
As a reminder, this cosby recorder and I'll be available for audio playback.
I'd also like to remind you that we'll be making forward looking statements and they're based on current expectations.
Hey, Bob risks and uncertainties.
Therefore, actual results could be materially different.
Please refer to our press release and SBC filings for an explanation of our risk factors.
We opened the second quarter are lower than we anticipated due primarily to on favorable economic conditions.
That's had an impact on our power grid to business and on refurbish C.T. system sales.
Probably semiconductor market started to show signs of rights in the quarter.
I had to work with our vendors the pro in critical components required to build park in assembly.
On a comparative basis sales to customers no sorry, conductor wafer fab Margaret we're still garden and the second quarter Blaster.
We expect to see an increase in this business later in fiscal year.
So we use that our investments in C.T. to manufacturing PMT and Cabot's continued to drive revenue growth.
All three areas exceeded prior year sales.
In addition to driving sales our teams are staying focused on gross margin improvement or an expense control.
We continually look for ways to improve efficiency, such as reallocating headcount and sharing resources across SP use.
And the second quarter gross margin improved and expenses decreased compared to last year.
As a result operating income was comparable to Q2 and half why 19.
I'll now turn the call over to Bob Dan will provide a detailed recap our second quarter financial then Greg when do you any enzo to discuss individual business unit performance.
Thank you Adam good morning.
I will review our financial results for our second quarter and first six sponsor fiscal year 2020, followed by a review of our cash position.
Net sales for canvas increased for the second quarter fiscal year, 2020 by 1.4 million or 20.9%.
Total company net sales for the second quarter fiscal year 2020.
Were 39.6 million compared to prior year second quarter, a 41.3 million.
Which was a decrease of 1.7 million or 4.1%.
Although P.M.T. that sales benefited from much higher sales of power conversion.
And RF and microwave components.
Overall sales for PMT decreased 2.7 million or 8.4%.
Richardson healthcare and net sales decreased zero point, threemillion or 12.6%.
As a result of lower sales of equipment in Latin America, partially offset by higher sales of our office 750 see teacher.
Which grew by 11.9% in the quarter.
Gross margin for the quarter improved to 32.0 per setting that sales compared to 31.4% of net sales in last year's second quarter.
This was primarily due to the favorable product mix in Richardson healthcare and improved manufacturing performance in both PMT and Richardson healthcare.
Canvas gross margin was slightly higher than last year's second quarter.
Operating expenses decreased to 13.2 million for the second quarter fiscal 2020.
Compared to 13.4 million and the second quarter fiscal 2019.
The decrease in operating expenses resulted from lower severance and legal expenses.
Partially offset by higher research and development expenses for Richardson healthcare.
As a result of the improved gross margin and lower operating expenses. The company reported the same operating loss as in the second quarter of last year.
Which was 0.5 million.
Other expense for the second quarter fiscal 2020, including interest income in foreign exchange.
0.1 million compared to other income.
Zero point, Threemillion and the second quarter fiscal 2019.
The income tax provision, a 0.1 million for the quarter reflected a provision for foreign income taxes.
Which was lower than the prior year second quarter.
And no U.S. tax benefit due to the valuation allowance recorded against the net operating loss.
Although there is no tax benefit shown on our financial statements from U.S. net operating losses.
We can use our net operating losses to offset any cash tax liability.
Reported in our U.S. federal income tax return.
The amount of federal went out wells.
Thats currently 15.3 million.
Overall, we had a net loss of 0.6 million for the second quarter fiscal 2020.
As compared to a net loss of 0.3 million in the second quarter fiscal 2019.
Turning to review of the results for the first six months of fiscal year 2020.
Net sales for the first six months fiscal year 2020.
Were 80.3 million a decrease of 6.1%.
The first six months of fiscal year 2019, net sales of 85.5 million.
Net sales decreased by 6.9 million for PMT.
But increased by 1.5 million or 10.7% for canvas.
And 0.3 million or 6% for Richardson healthcare.
Gross margin increased to 31.9% from 31.5%.
Primarily reflecting favorable product mix.
And improved manufacturing performance for health care.
Operating expenses were 26.0 million for the first six months or the fiscal year.
Which represented a decrease of 0.5 million.
From the first six months so the last fiscal year.
The decrease was due to lower severance legal and I T expenses.
Operating loss for the first six months at fiscal year 2020 was 0.4 million.
As compared to operating income of 0.4 million for the first six months of fiscal year 2019.
Other income for the first six months of fiscal 2020, including interest income and foreign exchange.
0.2 million.
The same as for the first six months of fiscal 2019.
The income tax provision has 0.3 million primarily reflected a provision for foreign income taxes.
Which was lower than the prior years first six months and no U.S. tax benefit.
Due to the valuation allowance recorded against the net operating loss.
Overall, we had a net losses 0.5 million for the first six months in fiscal year 2020.
Compared to net income of 0.1 million and the first six months.
Fiscal year 2019.
We continue to closely manage our cash position.
Cash and investments at the end of the second quarter.
Fiscal 2020 were 46.1 million.
Compared to 46.5 million at the end of the first quarter fiscal 2020.
53.2 mailing at the end of the second quarter fiscal 2019.
During the quarter, we repatriated a total of 4.4 million from Germany, and the Netherlands.
You asked cash was 24.3 million.
At the ended the second quarter fiscal 2020.
Capital expenditures were 0.5 million in the second quarter fiscal 2020, compared to 1.1 billion in the second quarter fiscal year 2019.
Approximately 0.2 million related to investments in our health care growth strategy 0.2 million to our IP system at another 0.1 million was for facilities and other projects.
On a year to date basis capital expenditures totaled 0.8 million.
As compared to 2.2 million in the first six months of fiscal 2019.
Free cash flow for the second quarter fiscal 2020 was 0.14 4 million.
Which wasn't improvement from the second quarter fiscal 2019.
Lastly, we paid 0.8 million dividends in the second quarter fiscal 2020.
Now I will turn the call over to Greg who will discuss the results for our power and microwave technologies group.
Thank you Bob and good morning, everyone.
PMT sales in the second quarter fiscal year, 2020, or 29.6 million versus 32.3 million in Q2 about why 19.
Our gross margin improved in the quarter to 31.6% versus 31.3% from the prior year.
Q2 results when compared to prior year, well once again impacted by the year over year sales decline with our major semiconductor wafer fab vacation customers and a slowdown in the power grid to business.
However, this decline was partially offset by continued strong growth with our new technology partners supporting the RF and power markets.
Another positive trend was our book to Bill the book to Bill was 1.12, driven by strong bookings from our wafer fab customers key two product lines and our PMG business unit.
Our bookings growth for our EG business unit was based on continued engineering and logistic support the wafer fab market and global infrastructure to support our OEM and MRO customers.
The growth in PMT bookings is due to our new technology partners products, our demand creation model, our newest design wins and our unique global business model.
We've improved our go to market strategy by investing in key development resources to greatly improve our customer contact any more efficient manner.
As the market conditions dictate we continue to take control of our SGN and invest in key growth areas as I just mentioned.
We also continue to implement strategies to improve our efficiencies and increase our customer contact these actions allow us to generate more opportunities in growing markets using our existing global infrastructure and head count.
This while the positive impact on a performance for the balance of the year and into the future.
Our revenue growth with our new technologies is being supported by key partners, such as Korbel Maycom Nokia wave.
United Silicon Carbide and food you semiconductor our core legacy business continues to be greatly supported by the key to manufacturers in the industry, such as Cpis tell us NDRC and for tightness.
Key markets and expectations showing growth in the calendar year 2020.
Fiveg wireless infrastructure sat com and power management.
Specific to Fiveg infrastructure markets, we're continuing to grow extraction throughout the world with our experienced field sales engineers, we have seen hundreds of ongoing opportunities and are consistently growing our list of design wins in the base station mobile test equipment sat com wind energy and motor control applications. Our global sales team has a great value.
You to our customers and suppliers and these power and wireless infrastructure Rollouts.
I want to reiterate the importance of our bookings.
We're very excited about the booking trends in both business units.
Our power and microwave group or PMG far from microwave our growth in calendar year 2020 will be in the satcom and numerous by GE applications, such as infrastructure test equipment and telematics.
Fiveg will be supported by these key suppliers, including Nokia wave make corvo and numerous current and new RF past the technology lines.
We also have a large and growing backlog in the power management group with applications, including motor controls you Pos systems and with energy projects ranging from active components, we needed silicon carbide food you semiconductor two ultracapacitors.
And finally passive components from else Emtrol and AMETEK make up the balance.
There's also great to see strong bookings in the quarter from our key semi wafer fab customers along with incremental bookings growth in our two business.
I can't stress enough the value of Richardson electronics, Unparallel capability and global go to market strategy that is unique to the power and microwave industries.
I will leave position the manufacturing and distribution elektron devices supports legacy equipment as well as new equipment were solid state cannot replace tubes.
The combination of these two niche strategies separates us from the competition and had been proven successful with that I'll turn it over to Wendy and Richardson healthcare.
Thank you Greg good morning, everyone.
Overall healthcare sales.
Due to less significant decline in equipment.
Our refurbish the T systems.
Customers throughout Latin America.
Given the economic and political turmoil in countries like Bolivia and Argentina.
Okay and credit terms to many of our customers in these regions.
Hi, threatening was also down slightly in the quarter a number of transactions.
Selling price with lower.
Good day basis, part sales are still well above prior year.
Revenues generated from two sales were up over second quarter last year sales of our all to 752 increased well we saw a decline in certified pre owned kids town.
Our longest life to now nearing eccentric came back.
With a good inventory of the all to 750 and as customers continue to gain confidence in the.
Harvesting PBT system.
Asleep definitely you were pre owned tends to sell.
I feel sales organization is creating awareness for the older 750, stressing the alternative hospitals have to the L. yen.
This process takes time.
Under multiyear contracts.
Customers are reluctant to change unless we have a full service option.
We have a strong network of third party service.
We are working with others to fill any gaps are training programs are critical in this we guide.
Having a flexible p. three programs mitigate risk like an insurance policy.
Manage.
Hospitals, and third party service organizations, not only won't stop transport pipe, but instead order then what a system failed so for us staying in front of customers. This critical.
Well to sales are still lower than we originally anticipated they are steadily increasing.
We have the CE, mark well, you're seeing more interesting altitude and the European countries as well as country surrounding the European Union.
Our efforts to obtain regulatory approval ongoing in other countries where demand for an alternative to the OEM is strong.
We're currently working on China Korea in Russia.
Cannon continues to fight for its market share, creating price pressure. This is more prevalent in the European country.
Gross margin in Q2 improved to 34.3% versus 29.4% in last year's second quarter.
Year to date gross margin is now 34.1% versus 24.3% last year.
Manufacturing yield is improving and we are putting more too and heat exchangers to stock.
We still have room for improvement as we strengthened our processes and we increased production.
The improvement in gross margin is also related to product next.
System sales in Latin America tend to have a lower margin.
Did sell several systems in the quarter offset some of the margin improvement, but generated cash cleared out some old inventory.
I can't development activities continue to run according to plan, we anticipate having the Alta 750 GE version in customer beta sites. This summer.
If I did everything continues in this manner full production will begin by the end of calendar year 2020.
In China, it's all about sales staying in front of our customer base.
Ill now turn the call over to young throughput to discuss second quarter results for campus.
Thanks, Wendy and good morning, everyone came this which includes engineering affection sale of custom displays to original equipment manufacturers in industrial and medical markets delivered strong performance with sales of 7.9 million during the second quarter fiscal 2020, an increase of 20.9% over the same period last year.
The revenue increase for the quarter was related to increased caught some demand in both north American and European markets.
Gross margin increased slightly as a percent shelf sales in the second quarter fiscal 2020% to 32.9% from 32.8%. The same period last year. The increase those margin was related to a favorable product mix.
Q2 fiscal 2020 with another strong quarter for canvas.
With a book to Bill of 1.97.
We were able to increase our backlog to an all time high in recent history.
Our backlog consists of purchase orders that typically ship over one or more years customers you caught up orders that vary quarter to quarter based on customer demand component availability and other factors that the backlog position along with a number of projects that are currently and then in engineering stage position us.
Well for continued growth.
During the quarter, we received several new orders from both existing and first time medical OEM customers applications, where I would just space I used under Mertz. Some of these include real time sell analyzers to determine the metabolic Petro type.
Cryolipolysis systems that breakdown pet sales by cooling of body fat.
Connie cross linking minimally invasive procedure that combines the use of Uva light and especially I drop that stiffness to Connie asked which have been we can buy disease.
Refractive surgery essential second laser system for therapeutic in refractive applications of cutting edge corneal surgery.
Patient monitoring well money towards I'd start at the patients that well remote location such as the central enough station.
I come compliant monochrome displays placebo arms.
So it shouldn't obligation assistant that enabled surgeons to criticise detract the location of surgical instruments throughout a procedure.
Lisa assistance for treatment of peripheral and coronary arterial disease with photo ablation.
Into very new project, a highly entered mass production stage and the robotic assisted surgery space navigation data will be used to control medical device.
In the Nonmedical base, we received orders for various displays and only one product applications include passenger information systems used on trains and buses.
Yes, especially certifications Ari quiet.
Product dispensers, Usten retail doors displays Houston control room to the public transportation market and Touchscreens Youve asked human machine interface, well oxide Billboard printers.
We continue to look for new customers through great shows online marketing Refurbs and cold calling.
Considering all the new programs, we're working on with existing as well as new customers I'm very optimistic that we would continue growing old business, we have proven our steps to be a highly reliable versatile technology company with the ability to meet a diverse number of dismiss requirements as well as being in compliance with upcoming.
MDR.
I will regulatory review and adjust our business strategy with the go to further improving the operating performance of the division.
Maximizing cash flow is ongoing priority and we continue to focus on inventory turns and collections. We will work closely with our partners that help us reduce inventory by being able to meet the demand of our customers.
Well now turn the call back over to at.
Thanks, and congratulations on having a record quarter.
We see good momentum across all three of our business units going into the second half a death right 20.
PMT should benefit from continued growth within PMT and also with the semiconductor market improvement.
We anticipate healthcare sales will improve as our two like increases in customers gain awareness and comfort where they also sevenfifty throughout the U.S. in Europe .
Canvas is already performing well and the team continues to win new projects.
Closely monitor sales performance then make changes is necessary also stay focused on cashman.
At this smart, we'll be happy to answer a few questions.
Okay.
Right.
Thank you.
If you wish to ask a telephone question simply can't Star then one on your telephone keypad.
Have you decided to withdraw your question what has been I'm sure that start to so to ask a question. It Star then one please stand by for your first question.
Your first question comes from the line off Eric I'm, drawing the ml capital. Please go ahead your life on the call.
Good morning.
Good morning.
So Greg in EG was there any pushouts or anything like that.
No.
Our bookings were very very strong oh.
The slowdown in terms of sales.
Like I said in the past the PDG growth BMG growth, we were able to offset the decline in the silicon wafer fab business. However, we weren't expecting.
The slowdown in the two business, but that slowdown was across the board we didn't lose any market share we didn't lose any big customers and there weren't any big push outs.
From our customers that caused that it's just a slowdown in that type of my role up business across the board.
So does that does that mean in.
Quarters going forward here, we're going to have to deal with a declining EG business.
No.
You look at the book to Bill with DDG was strong in the quarter and compared to Q2 of last year bookings are up 17%.
So going forward in Q3 in Q4.
You should show growth year over year for both EG and.
Of course, DMG showing excellent growth.
Okay. So how long do you think it'll be before we before the growth and indeed, the PNG and.
And overtake any volatility in that you did you business.
I think that'll happen this year.
And that this fiscal year.
At least 2020 calendar year.
Already offset any sort of declines within these large markets for IGI like the semiconductor wafer fab market.
The slowdowns in the two business are usually single digits.
I look at the backlog for example.
Backlogs up close to 30% in PNG.
So you're going up quarter over quarter.
So.
2020 calendar year.
We should show growth quarter over quarter.
In year over year.
Okay. Thanks.
Oh.
When do you what wasn't going to field performance of the altitude so far.
Hi.
It's fairly good we're actually pleased with the result.
So there's been there's been sort of no issues with that performing.
Not up to standards, it's performing fine in other words is performing up to standards. We have had a few a handful of returns we understand what issues. Our when we get them back we quit improvements in our manufacturing and development process in place, but in general I think that the.
Field.
Patients at our customers' expectations are being met.
Today.
We played out are nearing 600 days below Thislife June and.
I can't wait to any single customer, who saying no we're not going to buy your too because we don't just the quality.
So then I mean.
Yes.
Okay, we blame though the slow start the whole slow start on the fact that there is no GE available.
Is that the sole reason that this thing is off to such a slow start.
No.
It's a part of it it is definitely a part of the reason.
You know again, a lot of the systems and I think we we've said repeatedly that at least 80% of the systems in the U.S. and possibly even higher as we get into Europe are under OEM contacts and those OEM contracts are usually multi year. So part of the slowdown is waiting for those systems to come off a contract.
And part of it as we pointed out is definitely waiting on our ability to prove that we've got long life, which I think everyday that goes by we're getting there.
So it's a combination of those access Eric.
All right. So yes, you said in the last call that the.
You got the CE Mark at the end of the last quarter and that the initial response was quote unquote very were very positive.
Are you having the same convergent issues in Europe that you've had here so the past four quarters.
It's slow as people you know again wait for equipment the come off contract. So that's still an issue.
I would still say that the reception has been good I don't see any change and that expectation.
And.
So I can't really add anything more to that Eric I think that Europe is getting started and we have a couple large customers that is committed to using our tubes and it's just now a matter of time for equipment, a fail to meet our too.
Okay.
Alright. Thank you when you add I've got sort of.
A bigger picture question here for yet obviously the quarter was disappointing.
And I know that you said many times that you believe healthcare is a future the company.
But to answer on on the outside it's hard to have confidence that this that this future is going to you.
You know that the future is much more positive in the past after quarter after quarter.
Like we're having.
I'd like to note is that any type of meaningful discussion within the company or on the board.
Any type of a strategic action that you could take.
To show your shareholder partners that there is eventually going to be some hope of creating value here.
I think that you know the board members most of them they have been Ceos that two companies in their own right.
And as you know for example, Bob crude views on our board you was.
CEO of.
There are extra or at that time it was varian.
Imaging business first since 93 somewhere in that timeframe on he came there from GE.
And.
I really feel that.
They think we're right on the edge and starting to show some good results and actually.
Anticipate that our investment is probably going to be larger than we thought it would be to begin with overall.
The results are good we're seeing competition as Wendy mentioned from from Canada, which is I think to be.
Expected. They certainly don't want to give up huge aftermarket at very high margins that if they don't have too.
But overall I think we're right on.
Line for where we anticipated to be.
So when you say that they think they're you're right on the edge.
I mean is there anything that.
That you could tell us that that gives us confidence on the outside could we obviously don't see what they're seeing but it's hard to have confidence that you're on the edge when we.
We keep seemed to sort of flailing quarter after quarter.
All right I think they're seeing the yield on the tubes.
And the yield continues to improve.
And as that happens you know we have a cost that set based upon the current yield as the yield in manufacturing improved that costs will go down and will be even more competitive so I'm pretty sure that's what they're looking at and they understand it because they've all been Ceos that to manufacturing comprehensive and their own right.
Hi.
Okay. Thanks.
Thank you very quick reminder, if you wish to ask and audio question simply case Star then one on your telephone keypad.
Your next question comes from the line of Marc Silk Silk investment Advisors. Please go ahead your life in the cool.
Thanks for taking my questions. So Wendy on the CP replacement tubes, I guess, one of the issues back in a day was.
The first one you implement did was a was.
You need time to see if they work. So the first two that you implemented it was that what's happened two years now.
It's almost 600 days.
Okay. So.
Yep.
Okay.
So how so how can you run out and so now that's not really a an excuse anymore. So I'm just kind of get my 'cause. It sounds like this is really a great growth area. So I just want to get my arms around like like you're selling strategy other boots on the ground. Their phone sales do you think if you were the CEO would you be adding more boots on the ground.
To get in front of these customers because if it could be an explosive area I would think that that's probably where the company should you know maybe put some more resources what I would just help the given some color that'd be great.
Well I like that's a good question in a fair point and we have very strong outside sales effort as well as an inside sales gain.
We've actually taken the inside sales team and Weve beef that up and added people, whose sole purpose in life is to make outbound calls to to the hospitals to the third party service engineers to really identify where all the Toshiba equipment is.
It's really now about staying in front of those customers and reminding them on a very regular basis. We've got the students in stock. So when they have a failure, whether it's a two failure or apart failure.
They know immediately or they think immediately Richardson healthcare.
We've got a good solid team we've got significant numbers.
You know do I personally think if we keep throwing more people at it it's going to change the dynamics and.
Not a lot because of the other issues. We've discussed we have to wait for the systems to come off of the OEM contract, we have to wait until Weve.
Until again, we've got a broader line with the GE too that will help convince more of those customers to take their systems are on track and it's really just having that state yeah. The stick with it power we've got to just keep calling and getting in front of those customers from a high level perspective.
Myself, Gerald Olson Derrick and help in.
The Carolinas, we have built in airline is you've got a full team of people that can go out and sit in front of sea level people high level people within the hospital organizations certainly with the third party service organization that can tell the story and give them all the good reasons why it makes sense to change from the Elliot.
Okay.
I know you're headwinds are probably not many people know your name.
But what what would be some of the Tailwinds for you guys and maybe there's other headwinds that maybe we aren't thinking of in this area.
Okay just in healthcare.
Just thinking on the CP.
The fact that but if you want if you want to.
Add more to that that's fine.
Well I'll start with health care, if the other guys want to add some they can but I think we've kind of covered what the headwinds and you know that let's start with headwind. We know what those are we've talked about again, the timeliness of getting system doctors OEM contracts, we've talked about longevity of too and so you know again, we've got some history behind us now.
And I think we'll start to see more and more of those systems being converted to go off of the OEM contracts. So I think it's good that becomes at some point it becomes the I guess kind of the tailwind you're talking about and pushing that forward.
So I don't what do continue to beat a dead.
Basically be repetitive, but what we've talked about so far are our headwinds and again, we've overcome and started really getting the name out there I don't think Richardson healthcare by the way is now kind of an unknown I mean, we've been out there now for several almost five years. If you include I am yes, and I think people know who.
Yeah.
One of the tremendous advantages we have as when we get those customers here by the way Mark.
And they can see our facility and they understand.
The investment that we put behind this healthcare organization and behind the tube manufacturing facility.
Become even more confident in more impressed so again that for me, it's truly truly about staying in front of those customers getting them here letting them see antigen feel and talk to other people who are using the to the understand that were for real and that it's a quality products and it's a viable solution to the OEM.
Okay. That's a that's good color. So add left last conference call as you had another losing quarter I kind of brought up to the fact that you know I think your salary is extremely high for a company. This losing money and you said well I didn't make money back of the dates out now it's a catch up but you also getting dividend. So you talked about this fall.
<unk> Ceos and I would think that if I was in the board. The first thing I would say is less than one as you bring your salary down until you can show consistent earnings earnings instead of losses, and then we can adjust your salary because I I don't I don't think these people are going to tell you. The upper has no close and I don't know if.
Because of the dual stock you're going to both these guys down and you get thrown off the board. So I think the right thing to do is it's reduce your salary which helps the bottom line and then when you get to be profitable because definitely profit on the stock moves up you can you you should just sort of that salary. So that's that's kind of my comment if you want to comment on that that's fine, but we're all this together right.
So if the stock goes up well I'll make money, but I just think maybe the buck stops at the top Ted maybe set an example.
Well I certainly appreciate your opinion, it's been stated before and.
The board takes all that into consideration and we move forward accordingly.
Thanks for taking my question is good luck.
Thank you gave your next question comes from the line all brought Atlanta BMS Capital Management. Please go ahead your life in the coal.
Hello, and thanks for taking my question hybrid.
Well you guys you know I guess overall, you've done if we look back there's a pretty good job.
Controlling costs and your operating at plus or minus breakeven most quarters, which is fine but I.
I mean, if we step back at this I think you're going to be honest with where what the companies doing you just have to realize that you're just not making any progress.
And the healthcare.
Is I mean.
In my opinion, it's been a box I mean, you guys are doing you've done 4.9, bringing in health care sales.
This year I don't know how many seats you tube, you're selling but it can be very many.
So while it may hold promise you might think it is you're just not making any progress has been much more difficult than you thought.
And.
It just doesn't seem like there's any incentives to really.
Taking a strategic actions to create shareholder value.
And this goes too.
I mean, I just don't a Ed do you ever think about selling this company selling off divisions, and saying Hey, This is not working what we're doing we'd be doing it for a long time.
And we're just not making a lot of progress maybe we should be selling its business to larger company, who can take out costs eliminate duplicative public company costs.
Management salaries et cetera, I mean is that even cross your mind or the board mine.
No I. It really has not you know we're absolutely committed to the healthcare business and we think we've made good progress in that area I understand you do not but every one of them is.
Welcome to their opinion the board thinks we're making excellent progress and.
As we're able to.
Bring the.
Yield improvement up across will come down makes us even more competitive in the marketplace.
We're absolutely committed to healthcare going forward.
If you look at the health care sales in that if the board thinks you're making progress your sales were 2.2 million versus 2.5 million quarter over quarter.
Thats not progress.
So.
You can say this the board we've got Axios. All this I mean, the board really has no saying, yes, you've got voting control. The board has just there as placeholders in a public company.
They are.
And I agree with the past that pass caller I'd say, we should adjust the salary I mean, if you're really in as you really want to drive shareholder value.
Salary should be much less than your incentive comp should be much higher I would pay you times as much grew if it was 20% salary 80% to incentive comp based on profitability in progress working works not making it I think you're all working hard I think you're confident people.
Probably honest people, but.
You're not making any progress shareholders are not being reward I mean, it's just it's a stagnant company.
That is just existing and it trades below net current assets for a reason because.
You are you guys are just unwilling to take steps necessary to drive value and I mean, we I mean I don't it's not like that you're trying it's just not work I mean at some point you just have to step back and say what we're doing is not really working.
We're not making any money as a company, we're not driving an increase stock price, which is baffling to me that you want to main chairs and you.
Don't want to take any actions to drive it the stock price higher status quo of existing what we're doing.
And so I don't know I think it we'd really benefit shareholders. If you could the board doesn't really have any say you would think about.
Selling this business selling off a division.
Well you know I heard your opinion before and you know it's been shared with the board and.
Fortunately, we don't think like we're absolutely committed to the healthcare business and we think we're currently you don't think like that Fortunately.
At the stock price hasn't moved forever.
Yes, I mean it unfortunately for shareholders you don't think like that I mean, it's just like.
I don't even need anymore, we think we've heard enough and shareholders are probably heard enough but.
Thanks for your time and best of luck.
Thank you.
Thank you. Your next question comes from the line of Kevin Rendino 190 degree capital. Please go ahead your lives in the call.
Yeah, Hi, it's Kevin Rendino.
Thank the rest of your team for their their comments on the business.
It sounds like very smart people that know what they're doing it I certainly appreciate.
The dialogue around that I have to just chime in here that somebody said earlier the quarter was disappointing the couldn't helped the quarter. There was disappointing is literally.
The entire tenure of your ownership of this business has been disappointing and another color sort of asked or said we were on this together we're not in this together.
Beyond 2 million shares you take out half a million dollars year, just in dividends you don't own stock.
So you don't care about first off the board doesn't own stock so they don't care about the stock.
Literally committed or.
Brought against your shareholders for a very long period of time and I think you should just be honest about all of this and instead of continuing to perpetuate this fraud over your shareholders in pretending that you care what they care about you should just take the company private and do you want as you had been doing for the last 20 years.
Sure.
Hi behind aboard the board has no say the board has no gumption, they're not doing anything that they shouldn't be doing which is looking at strategic alternatives and if you were going to be honest about all of this you should just take the company private and do what you want to do and nobody could have any voice and.
And saying are giving you any.
Opinions of what you should be doing because quite frankly had you don't care and just admit that you don't care just say it. So we can all move on thanks.
All right then you know we certainly appreciate your opinion.
We choose to disagree with it and think that what we're doing in health care is going to be our future and that's where we're making our investments thats great had been a failure that business has been a failure for 20 years, you've created no value for two decades.
You don't you should listen to other people other than yourself and the board you should welcome an investment banker to come in there and give you some advice because the advice that you're giving yourself isn't working.
Thanks.
Thank you have no further questions.
Okay Mark. Thank you very much we we appreciate it if anyone has further cross just give us a call after the call. Thanks.
Thank you that concludes your conference call for today you may now disconnect. Thank you for joining on enjoy the rest of the day.