Q2 2021 Motorcar Parts of America Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to be Motorcar parts of America's fiscal 2021 second quarter Conference call.
This time all participants are in a listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During his section of the press Star One tomorrow.
We see.
Humphrey being recorded if you require any further assistance. Please press star zero I would now be between call over to Gary Maier Investor Relations. Please go ahead.
Thanks, Denise and thanks, everyone for joining us for <unk> second quarter fiscal second quarter Conference call.
Before we begin and I turn the call over to Selwyn Joffe, The chairman President and Chief Executive Officer, and David Lee The company's Chief Financial Officer, I'd like to remind everyone of the Safe Harbor statement included in todays press release.
The private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward looking statements, including statements made during todays conference call.
Such forward looking statements are based on the company's current expectations and beliefs concerning future developments and their potential effects on the company.
There can be no assurance that future developments affecting the company will be those anticipated by motorcar parts of America actual results may differ from those projected in the forward looking statements. These forward looking statements involve significant risks and uncertainties some of which are beyond the control of the company and are subject to.
Change based upon various factors.
Company undertakes no obligation to publicly update or revise any forward looking statements, whether a result of new information future events or otherwise.
For a more detailed discussion of some of the ongoing risks and uncertainties and I refer you to the various.
<unk> filings with the Securities and Exchange Commission.
I'd now like to begin the call and turn it over to Selwyn.
To begin.
[laughter]. Thank you Gary [laughter] I appreciate everyone. Joining us today, we reported record results for our fiscal second quarter, which is particularly gratifying given the sharp impact to our business and across the automotive sector in our first fiscal quarter.
Even with the impact the impact of the global pandemic and related uncertainties, we remain cautiously optimistic as we continue to execute our strategic growth initiatives.
As I mentioned during last quarter's call we target at the end of the fiscal second quarter to complete our strategic build out in Mexico.
We formally announced the commencement of brake caliper production at this location last month.
We are dedicated and focused on our current customer commitments and we're excited by the interest we are receiving for calpers from new customers as well as new opportunities in all of our other existing product lines.
During last quarter's call I highlighted that our facility expansion in Malaysia is now complete we are extremely motivated to be able to increase capacity and productivity across multiple product lines and reduce dependence on outsourcing with a component school products as a change in geopolitical environment.
Right.
In short we are in a unique position to take advantage of our long operating history in Malaysia and Singapore.
It is important to reiterate industry statistics that I've highlighted on many previous calls in conference presentations the market size for our current categories was more than $6 billion at the retail level.
Yeah, because we'll continue to engage with approximately 280 million vehicles currently on the road.
This will fuel significant growth in the aftermarket parts replacement industry well beyond 2030.
In short a strategy before and since the pandemic has been to leverage our significant channel relationships for aftermarket parts and offer superior products and solutions to our customers and consumers.
Given the current situation, let me make a few observations.
The vast majority of consumers in our target market are unable to work from home and reticent to use mass transportation rideshare.
As a result, these workers and more dependent than ever on their personal vehicles.
We believe that personal vehicles will also continue to be the preferred mode of transportation for daily activities and vacations for the foreseeable future.
All of this bodes well for our business.
Furthermore, during the current environment and recessionary times people keep their vehicles longer accordingly, we are seeing strong demand for used cars with consumers prefer and used cars revenue with when faced with economic uncertainty.
Obviously, this bodes well for the aftermarket parts replacements replacement industry, and our non discretionary product offerings.
All of this leads to an increased age fleet, which is currently at a new record high of approximately 12 years as.
As these vehicles age the rate of replacement of pots increases substantially.
For example in cars.
The zero to three year age group.
Never placement rate for Ulta news of 2.42% compared with 6.65% in the 12 year and above age group.
Nonetheless, you kinda sales should return at some point, but regardless, we expect to benefit because used cost scrap rates are generally lower than new car sales, resulting in an increased car park and further opportunities for parts replacement.
We are also making good progress on the integration of Dixie electric and the rollout of by heavy duty program I should mention that the team at Dixie recently, we received recognition as being an outstanding supply from one of its leading OEM customers for providing services above and beyond during the pen.
Nick this.
This is a testament to the spirit and commitment when did too throughout our entire organization, which is particularly critical during these challenging times.
Uh-huh parts aftermarket program in Mexico through our new epic subsidiary is continuing to gain momentum and we have expanded our product offerings. Since the initial introduction of rotating electrical in those markets as well.
While still a small percentage of the overall business, we're excited about the opportunities.
In short all our initiatives continue to enhance our position as a valued premier supplier of automotive automotive aftermarket parts in North America.
With respect to our diagnostic business demand for our Benchtop test it continues to grow including from Mexico.
Customers are committed to upgrading their existing testers to meet the latest protocols will start as an alternative.
There are now reached the restarting expenditure programs for diagnostics, which were delayed when the pandemic began.
As you May recall these customer purchases support their mission to provide continuing trustworthy advice with regard to whether consumers alternator starters is working properly.
This helps significantly reduce a misdiagnosis of the vehicle was brought up.
Which is one of the largest reasons for return.
To complement our internal combustion business. We have also embraced the advancements of the fast growing world of electrified transportation.
Consequently, as you know we have made investments in the rapidly advancing diagnostics automotive electric vehicles and electrification of the aerospace market, including military applications.
Our offering of complete solutions for simulation emulation and production testing for the electric powertrain is regaining traction since the start of the pandemic and sales activity is greatly improving as OE manufactures resumed production.
In short the increasing global demand for electronic testing products and subscription services is encouraging and remains an important driver to creating value today and in the future.
In summary, our entire company is well positioned for sustainable top and bottom line growth.
Despite being off to a solid start for the second half of the fiscal year and optimistic that the year will be strong.
We believe it is still not prudent to provide annual guidance at this time.
We expect the number of vehicles and the prime parts replacement age will continue to grow and we are pleased to see the number of repairs and miles driven for our target customers continue to regain momentum.
Notwithstanding the human and economic impact and the uncertainty of this terrible pandemic.
The paradox for the aftermarket business is that personal vehicles are becoming increasingly important to now quote new normal daily lives. All of this supports our optimism for growth and profitability over the next several years and we remain more convinced than ever that.
But our strategy to enhance shareholder value is on target.
In fact as noted in our fiscal second quarter news release. This morning, we are resuming our stock buyback program subject to market conditions with current availability of 21.3 million under our existing authorization.
I will now turn the call over to David to review the results for the fiscal second quarter.
Thank you Selwyn to begin I encourage everyone to read the 8-K filed this morning with respect to our September 30, 2020 earnings press release for a more detailed explanation of the result.
For information about the items that impacted the result see exhibit one to five of the press release.
Let me take a moment to review the financial highlights for our record second.
Fiscal 21 second quarter.
Net sales for fiscal 21, the second quarter were 154.7 million compared with 150.4 million for the same period a year earlier.
Net sales for the quarter included 12.8 million in core revenue due to a realignment of inventory at two customer distribution centers with expected future sales benefit as product mix changes.
Gross profit for the fiscal 21 second quarter was 39.7 million compared with 36.6 million a year earlier gross.
Gross profit as a percentage of net sales for the fiscal 21 second quarter was 25.7% compared with 24.3% a year earlier.
Additional items.
Additional detailed items impacting gross profit a show in exhibit three in this morning's earnings press release.
Results for the fiscal second quarter were impacted by approximately 2 million on a pre tax basis or eight cents per share on a tax effective basis for cost of goods sold and operating expenses related to safety and health initiatives associated with cold in 19.
Approximately 1.3 million of the 2 million relates to incremental bonuses and wages paid to the companys dedicated operating employees on the front nine.
The balance relates to personal protection equipment, and social distancing initiatives.
Total operating expenses decreased approximately 32% or 7.1 million for the second quarter on a year over year basis.
This decrease was comprised of 5.8 million of foreign currency related gains which are non economic.
And a 2.3 million reduction in expenses, primarily as a result of the current cobot operating environment.
This was partially offset by higher expenses, such as a corporate related expenses of 515000.
Interest expense was $3.6 million for the second quarter compared with 6.5 million last year the.
The decrease in interest expense was primarily due to lower interest rates and lower bad debt.
Income tax expense for the second quarter was 6.1 million compared with income tax expense of $2 million for the prior year period.
Net income for the fiscal 21 second quarter.
15.2 million or 78 cents per diluted share.
Paired with a net income of 6.2 million or 32 cents per diluted share a year ago.
Additional detailed the item impacting net income or in exhibit one in this mornings earnings press release.
Net sales for the fiscal 21, six month period, where 250.1 million compared with 259.5 million for the same period a year earlier.
Net sales for the six month period ended September 32020 benefited by 12.8 million due to a realignment of inventory a two customer distribution centers with expected future sales benefits as product mix changes as noted in the quarterly sales discussion.
Gross profit for the fiscal 21, six month period was 53.1 million compared with 54.2 million a year earlier.
Gross profit as a percentage of net sales for the fiscal 21 six month period was 21.2%.
Compared with 20.9% a year earlier.
Additional details of items impacting gross profit on exhibit four in this mornings earnings press release.
Net income for the fiscal 21, six month period was 12.2 million or 63 cents per diluted share.
Compared with net income of 38000 or zero cents per diluted share a year ago.
Additional detailed of items impacting net income art exhibits you in this mornings earnings press release.
Net cash provided by operating activities during the fiscal year 21 second quarter was 16.9 million.
Paired with cash use in operating activities of $8.4 million for the prior fiscal 2022nd quarter.
Bank debt, that's cash for the second quarter was reduced by 12.3 million to 95.4 million at September 32020.
Net cash provided by operating activities during the fiscal year 21, six month period.
39.3 million compared with cash used in operating activities of 26.7 million for the prior fiscal six month period.
Bank debt less cash for the six month period was reduced by 31.1 million.
We have generated positive cash flow from operating activities for four straight quarters to.
The September 32020 quarter.
For the trailing 12 months ended September 32020, net cash provided by operating activities was 84.9 million.
Bank debt less cash for the trailing 12 months ended September 32020 was reduced by 68.1 million.
As you know there are various methods to calculate exactly return on invested capital.
For our purposes, we calculate ROI see by taking operating income and adding back non cash expenses, including depreciation and amortization right out of cores and customer shelves core buyback premium amortization.
123, our expenses.
Foreign currency, mark to market gains or losses, and certain non cash accrual.
And certain one time expenses.
We believe this metric considered together with GAAP measures provides useful information to investors and to management regarding the Companys return on invested capital.
In short we take this metric, which was approximately 73.5 million for the 12 months ended September 32020, which.
Which includes an extraordinary week fiscal first quarter as a result of the COVID-19 shutdown across the country.
And divided by the average equity and net debt balance of 421 million, resulting in a 17.5 pre tax return on invested capital.
I should point out that we are just starting to realize the benefit.
Expanding our Mexico operations and the launch of our new break categories with the expectation of increased returns from both new and existing product line.
This should result in higher ROI see as the benefits of our strategic expansion or more fully realized.
At September 32020, our bank debt balance that's cash was approximately 95.4 million total.
Total cash and availability on the revolver credit facility was approximately 118 million at September 32020, based on a total of 238.6 million revolving credit facility and subject to certain limitations.
Consolidated EBITDA for the purposes of bank Covenant calculations for the 12 months ended September 32020 was 76.6 million and our senior leverage ratio was 1.56.
Our credit arrangement for computing, the senior leverage ratio only allows up to 6 million of credit for cash I should mention that if we had to pay down the revolving credit facility further with cash on hand, our senior leverage ratio would have been 1.43 at September 32020.
At September 32020, the company had approximately 779 million in total assets.
Current assets were $397 million and current liabilities were 303 million.
For a reconciliation of items that impact results.
Non-GAAP financial measures. Please refer to exhibit one to five in this mornings earnings press release.
I will now open the call for questions and stellar will then provide some closing remarks.
Ladies and gentlemen, Tom Good question [laughter] Star and the number one on your telephone keypad well pause for just a moment at the top of acuity roster.
Your first question comes from Sarkis Sherbetchyan with B. Riley Securities. Your line is open.
Hey, good morning, and thanks for taking my question here.
Good morning in.
In the quarterly sales results just wanted to kind of clarify right. So the 12.8 million and core sales called out for the realignment of inventory a two D.C.'s can you maybe give us some help on on what that is specifically and how that relates to the expected future sales benefits.
Yes, so [noise].
We switched warehouses.
And one of the one of our customers and what happens is we reconcile the coal inventory on the shelf based on the business that you have.
That you have in this situation 12 point something million was.
The inventory on the shelf was lower by that amount. So we have to be paid that amount of money you know to to make good for the quarter. We haven't customer show and then the gains that we have any call buyback. We would do that is amortized over the over a two year period, and so you can't really Yukon drilling match them up.
12 million plus is not a regulatory record recurring revenue, but it is but it's real revenue real cash.
So so just I understand did that 12 million come out you know, 100% contribution margin for the quarter.
No no no no no. This is all that's in the ground that isn't the cost of goods is eliminated from that and thats in the gross margin percentage.
Okay, and how does that relate to the.
Three point.
I think it's $3.5 million for on the revaluation in the reconciliation can can you help me with that David sure. Yes that 3.5 million is looking out there's about a $900000 revaluation of foreign customer shelf at a 4.4 million gain.
Got it.
Okay, and just kind of you mentioned cash from ops of 17 million in the quarter what was capex during the quarter.
Capex during the quarter any one second here.
Yes, capex during Oh, what for the six month period, let me break out in total is about 8.8 million.
And that breaks out between the Mexico expansion of 7.6 million and maintenance Capex about 1.2.
Got it and you know.
Regarding kind of the new business coming online, what's kind of your expectation on.
Starting to realize the benefits of the new breed categories in kind of the ramp up there can you kind of help us understand a the.
The progress there.
Yeah look it's a the there's enormous demand for our product we have enormous commitments already.
For brake calipers, and many new commitments coming after we get the the the.
The program ramp ramped up.
It's difficult to predict exactly the timing of when all of this comes in a full effect but.
We should see certainly in.
Fourth quarter, and third and fourth quarter, we should see some nice growth.
In these categories and then going into the new fiscal year I mean, there's just a lot a lot of new a lot of new opportunities.
We have committed to us that that opening up.
Great and.
I. Appreciate why you are not you know kind of providing sales and gross margin guide here, but I guess related to your comments.
Did we optimistic.
Help us understand what that means in relation to this quarter's performance.
Well I think I mentioned that we were off to a strong start call for our third quarter, which is a which is this quarter for us.
No I mean, we said, we're not giving guidance I don't want to go further than that but we were off to a strong start and we're optimistic for the back six months.
Good. Thank you I'll hop back in the queue.
Your next question comes from Matt Koranda with Roth Capital. Your line is open.
Hey, guys, thanks, and good morning.
Just wanted to cover a breakdown of revenue by product category. If you could I don't think I heard those in the prepared remarks.
Yes, so we'll be filing our 10-Q later today so for the quarter a rotating electrical is 80% wheel hub is 12% regulated products, the 7% and others is 1%.
Got it okay very helpful and then when we think about.
The rotating electrical category David should.
Should we be stripping out the $12.8 million of core revenue that you guys booked in the quarter to kind of get you an apples to apples comparison versus last year.
Yes, I mean, yes, if you if you I think I think that makes sense, although I will tell you that every quarter. We book the under the under return of cores and customer shelves. So there's some revenue there.
But yeah, I mean, I think that we viewed as real revenue but.
Yes, I think stripping it out as conservative and make sense.
Got it okay, and I believe does that indicate that for the quarter that that we saw sales for rotating electrical.
Decelerate on a year over year basis, I'm trying to just do the quick math here.
I'm trying to get a sense for the comparable year over year.
You know as a percentage of total sales rotating was up compared to the prior year.
Gotcha, Okay, I'll get back into the math and we'll just follow up offline on that one.
And then so when we are the only other question I had on the.
The lease was.
Could you guys explained is that the tariff related adjustment that's in the cost of goods sold adjustments it looks like a tariff cost paid before price increases were effective could you just clarify that yes. So we have reduced tariffs in some product lines. We've previously.
Expense tariffs and now they've come down so we had income from tariffs.
We expect that to continue for a little bit.
Okay.
Any sense for how long that continues into the future.
Thanks for this fiscal year I mean again, you know we have no idea I mean based on the new political environment, we'll have to wait and see but things have been jumping around.
Fairly significantly.
We'll have to wait and see and again, we are when we announced our expansion of our Malaysia activities that we were able to to produce more though about requirement in our own facilities on a tax which.
His tax free not.
Not tax free, but not subject to the Chinese tariffs and the development nominal expenses, but.
Got it understood on that so we were in a much stronger position now to deal with that.
Great. Okay, and then just one more from me I mean, this just zooming out and maybe a higher level question I know, it's sort of early here.
And maybe speculative but wanted to get your preliminary thoughts on how.
Sort of widespread vaccine distribution may be.
Several miles traveled hard parts demand in the aftermarket I mean, I can see it being somewhat positive just given that theres still plenty of vehicles that are old and aging that are on the road.
You do get some incremental vehicle miles traveled from people going back to the office and whatnot.
But you also have the.
Yes, the headwind.
A lot of car types that may turn back into airline miles and whatnot. So just wanted to get your your preliminary thoughts here on how we should be thinking about the mad at him tracks in the aftermarket going forward yes.
Yes, So you know I mean, it's difficult to speculate, but let's assume that the the the vaccine as a huge success and it goes through everybody very quickly and we get back to normal. If you look at a pre covert miles driven I mean, it's significantly higher than postcode miles driven I mean, our target is less affected.
Good.
By it.
I don't believe it's going to be a I think that's positive I mean more people driving them and I don't think instantly everybody's kind of go back to mass transit that quickly, but even if they did I mean miles driven were much higher and the agent cost leads on.
In General NOI I think if you talk to certainly my perspective on the aftermarket is a lot of tailwinds, regardless of which way that all goes for the industry and at the end of the day. The more people that are out in a ramp doom and traveling on I think it's generally positive still.
Great. Thanks for those thoughts and I'll leave it there.
Thanks, Doug.
Your next question comes from Brian Nagel with Oppenheimer. Your line is open.
Hi, good morning good.
Good morning Bernie.
Thanks for taking my questions nice quarter.
Thank you. So I have a few question, maybe it's kind of love them all into one but first off just with regard to the topline clearly an improving trend here and so when the comment you made suggest very clearly that the businesses stayed solid here into the next fiscal quarter. So can you give us some idea of the sequential trends.
Through the through the fiscal period and then even then maybe even some color simply some more price precise commentary with regard to sales trends here into the next quarter.
Yes look again, you know we said we don't think it's appropriate to give guidance I don't want to say that in immediately give guidance, but in general I think the sequence of our quarters in the third quarter is generally a little softer than the second quarter and the fourth quarter is usually stronger.
As far as the third quarter goes I mean, we are optimistic we were off to a great start and as far as the fourth quarter looks from now look we're optimistic about that as well.
Just a lot of a lot of new uncertainty I mean, we had built in uncertainty previously and now we have a new administration and there is more uncertainty. So again, we surrounded with with.
High degree of optimism and.
Some great momentum within within the company now in multiple product lines and great momentum and getting now transfusion.
Completed.
And so you know we getting towards the end of what has been.
Somewhat challenging you know for people to understand in terms of our transition of the footprint.
I'm excited to say that our footprint on the future will soon become a footprint of today in fact, it is our footprint of today now.
Because we run we're in all the buildings so.
You know again, I'm I'm I'm I'm I feel optimistic our organization feels optimistic.
But we are cautious.
Yeah.
Got it.
And then also with regard to sales we've just been chatter.
It varies from various places, including including the the auto parts retailers about.
Supply chain disruptions, maybe getting better now me I guess first of all are you seeing that I mean, where is your and then the second one somewhat related to that is if you look at the demand from your core retail partners is it more restocking or is reflective of better underlying demand from their customers.
Well I think we supply in arrears. So certainly if you look at the numbers they've had they've all reported increasing numbers.
So the fundamentals of our customers a strong on and so there's a lot of restocking going on.
We're coming into winter, we're seeing some early snows, which a good coming off a hot summer that from weather perspective is good outlook for us we're left with and see how that plays out.
So I think its fundamental restocking I hope I answer that I feel like I forgot a portion of your question, Brian sort of do I hit all of that or.
No that was that was that was basically asking just kind of the need the nature of the demand you're seeing from the retailers yeah.
I mean their numbers all good and we continue to you know to be have a large market share with them and.
And so when we get to benefit from that in addition to that.
We've got some some great new business opportunities that are unfolding for us and we're excited about.
In a ramping those up and starting to ship them whether it be.
In the fourth quarter, the first quarter of next year. So we feel we feel pretty good about the development in all of our categories.
Seeing in particular, a big resurgence in the this electric vehicle space and.
And the diagnostics portion of our business on a.
Along with what our normal sort of cadence is with the hard parts.
If it all adds up it comes together at the same time, which we think good roads were looking to forward to very positive New York.
Okay.
Well. Thank you best of luck you have an extra couple quarters. Thanks. Thank you I appreciate it.
Your next question comes from Scott Stember with CL King Your line is open.
Hi, good afternoon, or I should say good morning to you guys, Yes, I think that morning afternoon.
Just to frame things on the sales line. If you adjust for the 12.8 mill I guess you guys were down a few percentage points I know you're going up against a very very difficult comparison last year.
Could you maybe just frame out nothing because again.
We hear of the the retailers and some of the other suppliers are seeing their selling rates and their sell through rates even higher.
Im just trying to see how are we missing anything here or is this some going up against a difficult comparison last year well two things first of all the orders are stuck in arrears of what the retail sales also you will see replenishment catch up pretty quickly here. The other side of it and that's what I forgot to and I was trying to answer. The last question is the supply chain headwind.
Our real and I would say that our revenues will probably negatively affected by supply chain challenges between five and 10% of total revenues. So.
And on top of that we had a record second quarter last year or so.
It's a bit of everything, but but really.
You know in the in the evolving sort.
Sort of demand profile that we see we're excited about where we are I mean, we are suffering like everybody else in the supply chain side, but but we're working through it.
And then on the Mark to market I know last quarter in that first quarter, you guys called out.
The foreign currency benefit I guess on your assets in Mexico.
And this quarter it looks like you had something similar although not to the same extent.
I don't see it in the reconciliation table, which is different than in the first quarter I'm just trying to get a sense, how we should treat this.
As a as a recurring item or non OEM partner.
Hi, Scott. So if you look at the exhibit in the back of our earnings press release under the section of items impacting the results. The last line is foreign exchange impact of lease liability than forward contracts.
So it is there and we also present that line item on the face of the income statement as the last line item in operating expense. So we've looked at that actually understates the income statement.
Okay got it.
All right and last question I have I.
I know theres, a lot being made of how the do it.
Your soft side of the business has really been outstripping.
For me side of the business.
You talk about how much exposure you do have on the do it yourself side and that.
For any reason that has had any.
Negative slapping towards your results.
Not a goal I. Thank God, we have.
We have leading market share in the DIY side in rotating electrical.
We're number one player there and number one player on D., ROI and the and the wheel hub area.
Probably the number one player D.R.Y. brake boosters and master cylinders potentially I'm not quite sure about that but.
You know, we we well represented in both.
In the market.
Well for both sides, both the professional installer and the D. R Y and I might add if you know.
If if we see a big resurgence in.
And.
The vaccination and and and and.
For commuting toward the high end part of the marketplace you should we should see a big pickup in a professional school of business as well.
So.
Yes, I think there's going to be a new model I'm not sure what the new model is kind of looks like even with the vaccine. So time will tell but I don't see a scenario where its negative for us.
Got it thank you.
Thank you.
Again to ask a question. Please press Star then the number one on your telephone keypad. Your next question comes from.
Dealing with Titan capital your line is open.
Great. Thank you I.
I was hoping to address how you would consider.
Consider your a your retailers inventory versus normal today.
I would say it's normal for the demand that they have I don't see.
Any unusual activity in with respect to inventory with the retailers okay.
Okay. That's helpful. And then also wanted to ask about the startup transition expenses that you folks have a broken out here over the last last a couple of <unk> for a while now with curious when should we expect those two to disappear as we get good wants them some color on that.
So that will continue through the end of this fiscal year and there'll be a small amount in the first quarter of next fiscal year and then it will be done.
Great I appreciate the color.
And there are no further questions at this time between the call back over to sound Jefferies for closing remarks.
Thank you in closing I want to thank all our team members for their ongoing commitment and customer centric focus on service during these challenging times.
The health and safety are a top priority and we remain extremely vigilant to protect our global team from this horrible virus.
For the most part our corporate team is continuing to work remotely as much as possible. So we remain committed to gradually and safely returning our team back to the office as conditions permit.
As a result of everyone's contributions operations have continued largely on the interrupted and I'm extremely proud of our company and all about people.
In summary, I am.
Vestments are bearing fruit, we have reached an important inflection point with strong positive cash flow solid earnings performance and meaningful opportunities to enhance shareholder value in the dynamic hundred $30 billion automotive aftermarket industry.
Our metrics include a strong balance sheet attractive price earnings and return on invested capital ratio a solid return on equity and favorable cash flow. These.
These economic metrics combined with growth opportunities from our existing and new hard parts product lines as well as our fast evolving diagnostic business provide a meaningful path for growth and profitability in an industry with favorable tailwinds.
[noise], we're proud of our more than 50 year history in the aftermarket industry and all of US are committed to our vision of being the global leader for parts and solutions that move our world today and tomorrow.
We appreciate your continued support and thank you again for joining us for the call. We look forward to speaking with you when we host our fiscal 2021 third quarter conference call in February and a virtual investor conferences and hopefully in person sometime in the future. Thank you.
This concludes today's conference call you may now disconnect.
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