Q3 2021 Lawson Products Inc Earnings Call
Or if you want a muted for Ya.
Good morning, ladies and gentlemen, and welcome to the Boston products third quarter 2021 earnings call.
[noise] call will be hosted by Michael Decatur, Lawson products, President and Chief Executive Officer, and wrong Knudsen Lawson products Chief Financial Officer. During this call they will be providing an update on the business as well as covering relevant financial and operational information.
There will then be time for questions and answers.
Note that statements on this call and in the press release contains forward looking statements concerning goals beliefs expectations strategies plans future operating results and underlying assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those described.
And additions since made during this call are based on the company's views as of today the company anticipates that future developments may cause these those views to change.
Please consider the information presented in that light the company may at some point elect to update the forward looking statements made today, but specifically disclaims any obligation to do so.
This call is being audio simulcast on the Internet via the Lawson products Investor Relations page on the company's website Lawson products Dot com a replay of the webcast will be available on the website through November 30th 2021, I will now turn the call over to Lawson products C E O like Decatur.
Good morning, ladies and gentlemen.
Welcome to the Lawson products third quarter 2021 earnings call. This call will be hosted by Michael Takeda, Boston products, President and Chief Executive Officer, and Rob Knudtson, Boston products, Chief Financial Officer. During this call they will be providing an update on the business as well as covering relevant.
Operational information. They will then be time for questions and answers. Please note that statements on this call and in the press release.
[noise].
Good morning, and thank you for joining the call. This morning.
And the third quarter.
Sure some thoughts about the state of the business.
Additionally.
The final stages of the parks Master immigration.
Oh.
The growth initiatives.
Second quarter.
Lastly, I'll comment on that.
This is Barbara.
And our confidence in the future growth.
Mark It continues to expand.
Two.
Labor shortages.
Right.
Will provide more detailed review.
Followed by your questions.
Before I begin my prepared remarks.
I'd like to comment on our progress in evaluating the schedule 13 be amended.
File by Luther King.
And may 17th 2021.
This process has taken longer than expected the special committee of the board.
The completion of their analysis, and we anticipate updating.
Shortly.
We will not be able to make any additional comments on the topic at this time.
Overall or consolidated business performed well achieving significant sales growth over the third quarter of 2020.
We benefited from the inclusion of parts Master.
As well as organic growth from Austin, including strategic.
Kept automotive and bolt supply.
We're seeing broad based recovery from last year's pandemic, however, ongoing supply chain disruption.
Related shipping issues have slowed the overall pace of recovery.
Our supply chain and sales teams are doing an extraordinary job managing in this environment.
We will continue to improve performance, while looking forward to returning to a more normal supply chain environment. However.
Our expectation that these disruptions will continue at least through the first half of next year.
At a consolidated basis, we achieved 16.9% sales growth as compared to the third quarter of 2020, including the parks Master acquisition, which closed in August 31st 2020.
Excluding the park.
Organic growth was eight 4% over the third quarter of 2020.
Sales were.
105.6 million and park Master generated sales of 13.6 million in the war.
Park slope.
Slow during the quarter, primarily due to a broad slowdown in military sales combined with a two month slowed down and two of parked master's words.
One of which two military.
Both accounts have rebounded in September and we are seeing good progress and the recovery.
Military is also showing signs of recovery overall, we are very pleased with the parks Master integration.
With our existing business and expect to realize significant additional benefits.
Medium and long term.
What supply chain disruption proved to be challenging.
Supply chain team is making progress and managing in this challenging environment.
We're working to improve item was a backwater.
And we are adding new suppliers and using product substitution when necessary.
The consolidated business achieved 9.4 million and adjusted EBITDA.
Four 8.9% of adjusted EBITDA margin for the quarter.
Oh, Austin organic gross profit margin was 58.7% versus 57.2% in the second quarter of 2021 and 58.8% in the third quarter of 2020.
Before the reclassification of service expenses.
Both the third quarter and the second quarter of 2021 were impacted by inventory reserves for a write down of P. B items.
While we were up against supply chain challenges labor shortages transportation and vendor cost inflation very pleased with these results.
While the supply chain challenges and updated our teams have made significant progress in managing through this environment, including passing cost increases along to customers.
When we discuss the biking challenges is important to include labor challenges.
It is not exempt from this however, raw labor challenges are a very large driver of our service intensive bedroom managed inventory value proposition and provides us with great opportunities.
Customers by that necessary to outsource inventory management, which has long been a key aspect of our business model and a driver of our growth.
One other aspect BMI warrants a discussion.
Many people equate b M I solely to labor and inventory put away.
As we've stated previously.
Service intensive BMI include put away, but also anticipate and manages the customers future needs.
Forward thinking service value.
That our sales reps provide greatly differentiates lawson for many others, who referred to their service.
Yeah.
No I'd like to take a moment to discuss the integration of park master and parked faster.
Wow.
The integration of parks Master.
The loss of the system is essentially complete.
The last major stage of this process is boy transitioning to our new distribution center in Dallas.
Will be completed by the end of the year.
As I mentioned last quarter.
This distribution center will how's our military business, the torrent parked washing system.
And our cryogenic treated surface hardening process.
With some final steps in the months ahead parts Masters now integrated and expensive new product training is underway to four utilize our expanded product offering.
As I mentioned, a moment ago parks master sales for the third quarter soften to due to the slowdown in military sales.
Park Master core sales were flat for the water and with the exception of two strategic account, which have begun to recover.
September strategic accounts portfolio shows modest growth.
A bolt supply business continues to perform very well achieving a 13% EBITDA.
For the war and sales growing at over 12.5% from a year ago water and nearly 2% over the second quarter of 2021.
We continue to make investments in several distribution centres, including the Dallas D. C did I just mentioned.
A new and larger Calgary D C as well as a significant technology upgrades and Suwanee GA in Mccook, Illinois.
All of these investments will add capacity and productivity to our physical infrastructure and provide us with a significant expansion capability for that.
For growth.
Now turning to sales.
Customers have responded very well to price increases and working with us to anticipate their future.
Extra teachers accounts achieve growth.
For the fifth water in a row at 4% versus the second quarter and 29% versus the third quarter of 2020.
Are kept automotive business achieve nearly seven per cent growth versus the second water and 18% as compared to the third quarter of 2020.
We added 528, new strategic account locations and the loss inside of the business and 338, new Kemp locations between the third quarter and the coming year Kemp will add several hundred new locations from new and existing auto body repair customers.
These customers have specifically commented on their labor issues, along with our operational excellence as the primary drivers to their decision to engage Kent.
We're also making good progress expanding our integrated supply customer base and recently, adding another large integrated supply partner to this segment.
This customer segment continues to expand with several customers partners, achieving all time highs in sales this quarter.
We're also winning a continued to dream of new strategic accounts. Most recently, we added an account and the highway construction and another and recreational low speed vehicles sales and service market.
Sales and our government civilians.
As compared to the third quarter of 2020. This is attributed to lower September sales of P. B.
To the K through 12, the market as compared to 2020 in fact, we experienced P. B E headwinds.
And all of our businesses.
I wasn't MRO business grew at 7.6% however, excluding the impact of P. B E sales grew at over 10%.
On our last or news call I mentioned three areas that we're investing into accelerated growth developing additional channels to market and underserved markets.
State local and educational.
And the rollout of our newly acquired torrent parse washing line of products.
We've made good progress in all three areas and we are confident that in 2022. These investments will show significant growth and fat I recently attended American than all of Association conference in which many of our construction equipment rental customers a tent.
One of the products that received significant interest in customer enthusiasm was a torrent parse washing system.
Over the coming quarters.
Adding on our progress in these areas.
A three part growth strategy remains unchanged.
Add sales reps drive sales rep productivity and make accretive acquisition.
Sales rep productivity remains a key focus area.
We realized an 8.2% improvement in sales per rep per day versus the third quarter of 2020.
Looking forward.
Never been more optimistic and confident in the lozenge strategy and our ability to profitably execute that strategy.
The company has never been stronger and our value proposition has never been more critical for our customers than it is now.
Next year, we celebrate our 70th anniversary.
For those 70 years.
We've seen many challenges, but I am 100 per cent certain that Lawson is entering an extraordinary phase of our evolution.
I am equally confident that customers suppliers teammates and shareholders will benefit from Austin's success.
Thank you to all of our team members for their commitment and driving this success I look forward, all but we will accomplish.
Now I'd like to turn it over to run for more detailed information on our financial performance.
Thank you, Mike and good morning, everyone I.
I will start with some key takeaways for the quarter and then we'll discuss some of the details keep in mind that we are now lapping. The August 20th 20 acquisition of parts Master as we compare against the year ago quarter.
A few highlights for the quarter.
First consolidated sales improved by 15.3 million to $105 6 million or nearly 17% over the third quarter of 2020 due to the inclusion of parts Master and continued recovery from the pandemic within loss and bolt supply.
For the quarter parts master generated sales of $13.6 million, excluding parts Master organic average daily sales increased by 8.4% compared to a year ago.
Second Arkansas's sedated gross margin percentage improved to 53.1% versus 52.3% a year ago quarter and 51.3% in the second quarter. Despite the global supply chain issues in the marketplace.
I'll talk more about this in a few minutes.
Third are reported operating income was $4.6 million for the quarter compared to $3.4 million in the second quarter of 2021, and 2 million a year ago and are adjusted diluted EPS improved to 64 cents for the quarter.
And for our adjusted EBITDA was 9.4 million or 8.9% of sales a sequential improvement over the eight 8 million or 8.3% reported for the second quarter.
As we reflect on the third quarter, we have continued to drive our business forward sales continue to sequentially improve in the loss and bolt business as does our sales rep productivity.
Within Arts Master, we did see a sequential decline in sales with the majority of that driven within weakness in the federal government business.
Most product categories realized sequential increases over the second quarter.
We continue to make great progress in this environment and continue our focus on driving sales gross margins cost control and cash flows.
We remain focused on supporting our customers and generating revenue in this environment, while ensuring the safety of our teammates.
As we near our 70th anniversary as an organization our services products and expertise have become more critical to our customers, especially in light of the current and anticipated future labor shortages within many industries.
As mentioned that previous calls we are performing onsite visits to essentially all of our 70000 plot via my customers.
Consolidated gross margins for the quarter came in at 53.1% compared to 52.3% a year ago and 51.3% last quarter.
On a standalone basis before the classification of certain service related costs within gross margin. The Lawson MRO margin was 58.7% in Q3 compared to 57.2% in queue too and essentially flat with 58, 8% a year.
Arago quarter.
Q3, and Q2 MRO gross margin were burned with additional inventory reserves.
Associated with the write down a PPE items in which the current market value dropped below our cost.
Excluding these reserves are MRO gross margins for 2021 were 59.2% in Q3 and 57.8% for Q2.
Let me state this a little differently. Despite all of the supply chain challenges that exist in the marketplace today and excluding the reserves for certain PPE items are Los in core gross margin percentage expanded 140 basis points over Q2 of 2021.
And 40 basis points over Q3 a.
2020.
Our gross margins are are now more in line with Q1 of this year as many of the actions that we took became more concentrated in the latter half of the second quarter.
In this challenging supply chain environment, where laser focused on growing our gross margin dollars in managing through the related inflation.
Specific actions include but are not limited to.
Putting price increases in place where appropriate identifying secondary sources of supply, including national branded products.
Reallocating, our labor resources to focus on fast moving products to ensure we fill our customers needs.
And working closely with our suppliers to gain better insight on delivery times and cross stocking certain products from mccook to our forward deceased when possible.
While we're pleased with our overall gross margin percentages or ability to get products has had a negative impact on our sales customer back orders and service global metrics.
We're adjusting our actions to manage through these challenges. However, we expect that many of the broader base supply chain challenges may exist into the first half of 2022.
For the quarter total operating expenses were $51.4 million compared to $45.2 million a year ago at $51.2 million in the second quarter.
This increase over a year ago was primarily due to the increase in sales.
Inclusion of parts Master expense of nine 1 million post acquisition.
Ah reestablishment of temporary cost savings put in place a year ago during the pandemic, which were partially offset by a 5.9 million dollar reduction in the mark to market accounting for stock based compensation.
Expenses. During this quarter also included 3.2 million related to the potential acquisitions, including the evaluation of the Luther King Capital management proposal disclosed in a schedule 13D Amendment filed on May 17th 2021.
Excluding non-recurring items adjusted operating expenses were up 1.9% compared to the second quarter of 2021, primarily driven by higher labor costs.
Are reported operating income was $4.6 million for the quarter.
On an adjusted basis, excluding non-recurring items non-GAAP operating income was $7.3 million for the quarter compared to $6.8 million in Q2 of 2021, and 7.7 million in the year ago quarter.
And adjusted EBITDA as a percent of sales improved to eight 9% for the quarter compared to 8.3% in the second quarter.
On an adjusted basis, excluding stock based compensation and other non-recurring items diluted EPS was 64 cents for the quarter versus 62 cents in the year ago quarter, and 60 cents and Q2 of 2021.
Capital expenditures for the quarter, where approximately $1.8 million, including work being performed to expand our suwannee distribution capabilities.
We expect total capex in 2021 to now be in the range of approximately six to six 5 million, including the planned upgrades to our suwannee facility and some enhancements it mccook.
To allow for increased volume in the future.
Additionally, we will be relocating or Calgary distribution center to a new location with expanded square footage in early 2022.
As an organization, we continue to make investments in the business in particular areas that have a direct impact on sales.
While continuing to respect the uncertainties and unevenness of the pandemic recovery and the related supply chain challenges, we continue to generate sequential improvement with balancing our cost structure against our sales and margin trends.
We ended the quarter and a net borrowing position of 3.2 million inclusive of making the final 33 million dollar payment for the parts Master acquisition in the second quarter.
And increasing our working capital on higher sales this quarter.
We ended the quarter with 87 4 million of availability under our $100 million committed credit facility, placing us in a great position to invest in the business and support future acquisitions.
Is Mike and I have both previously stated we are managing through this challenging time with the expectation that we will come out of this environment in a in a stronger position than how we entered it.
The integration of parts mass or into the organization is largely behind us and all sales reps are now utilizing lawson's technology systems with the order fulfillment coming from the legacy loss and distribution Center network.
Going forward certain pieces of our government business will be fulfilled from a dedicated distribution center in Texas to comply with certain federal requirements.
As with other companies his bike and I have both discussed we have experienced inflationary costs due to the global supply chain disruptions.
We are actively managing through these challenges as evidenced by our continued improvement in our results, including gross margins recovering to being more in line with our historical performance.
Before I turn it over the operator, let me think the entire team.
We've had significant activities taking place on many fronts not dimension still managing through the pandemic and more recently the global supply chain challenges.
The team continues to step up on every aspect of the business to make us stronger for our customers our employees and our shareholders.
Thank you for your efforts and your never ending commitment.
I will now turn it over to the operator for questions.
Okay.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then queue. At this time, we will pause momentarily to assemble our roster.
Yeah.
Our first question today is coming from Kevin Psyche at Barrington Research Associates. Your line is life you may begin.
Good morning, Mike and Ron Warner.
Morning, Kevin Martin Kevin.
I wanted to start off.
By asking about.
This the supply chain issues and the.
The hit the sales related to just.
Lack of.
Product availability.
Have you been able to dive in at all and kind of figure out how much of a head when that actually is where maybe the demand is there, but you just can't fulfill it I don't know if that that can be quantified or at least can you talk about it a little bit more qualitatively.
Yeah, Kevin Thank you.
<unk>, both want to jump into this various aspects.
So what we're seeing is broad based supply chain challenges that ranges from availability of product to slowdown because of labor trucking. So on and so forth. What we've done what we've done to counter that is we work with a broader set of suppliers to find alternate.
Products that fulfill the customer's needs in some cases, what we've done.
Product substitution.
And again working closely in partnership with the customer so that we fulfill the customer's needs, though it may not have been an hour or their first choice for a product, but it keeps them running.
So there are several actions we've taken in one of the challenges we see is normally for us because of the nature of our value proposition.
If there was a back order the customer never experiences it because within the one week or are technically a 10 day, calling cycle across all 90000 customers.
Generally the backwater of comes in in such a sharp at the time that the customer experience is the backwater in this environment back.
Back orders are longer and larger number so it is our belief that when backwaters.
Extended length and become numerous eventually it slows down demand. So supply can eventually work its way up to a demand the problem now the other challenge that we're all facing I think everybody in the industry is facing is that.
While we're doing a very good job and servicing our customers customers themselves are having the labor challenges raw material challenges unrelated to our vendor managed inventory or MRO. So there are multiple dimensions that we're all dealing with on the supply chain.
The customer side, our customers are experiencing the same thing now one of the things that does help us with.
Our service intensive vendor manage inventory value proposition has always been about driving in maximizing productivity of the customers and as you know there's been an acute labor shortage of maintenance mechanics diesel mechanics truck driver. So so far.
For many years unrelated to the pandemic. So that's been the cornerstone of our value proposition, it's been incredibly intensified recently and in fact cuss.
Customers very large customers were picking up lots and lots of locations where customers costs and even non customers reach out and basically say health.
Because of our core value proposition, we've been added so law all of these challenges well. They are real challenges are ultimately, helping us to cement our value proposition and cement our relationship with the existing customers, but we are certain now because we've seen it up <unk>.
Evidenced now that we're also drawing new customers.
Into us that for whatever reason, we're in the sourcing they are now turning the us to outsource because of the slow same challenges rather.
Did you want to yeah.
Even just in terms of the impact on sales, there's two pieces, Mike touched on it a little bit one we have seen an increase in our back order. So if we measure our back orders from the end of June to the end of.
Through the end of September we certainly know what the value of that is it's it's about a 1% headwind on our sales what's not included in that number. However is what Mike had mentioned and that.
His items are on back orders our customers may.
May just not place the order again, so we think we know that we've lost some of that a recurring replenishment that would typically place take place on those on those back order. So that's a pretty difficult number two.
To measure we know it's at least 1% on the increase in the in the actual back orders, but it's probably a multiple of that on the mist replenishments.
Okay. That's all very helpful commentary.
Yeah, I thought you did a nice job of improving the gross margin sequentially.
The loss in MRO business.
Can we attribute that mostly the price increase and you feel like you're going to have to implement more price increases.
In the coming quarters here given the supply chain challenges you mentioned continue at least through the first half of next year.
Yeah, Kevin This is Ryan so.
We did we did see a lift.
That helped us from a pricing perspective.
Given some of those actions taking place later in the second quarter. So we got the third quarter kind of full benefit of that but I think it's a combination also right. It's also what we're doing in the distribution centers to manage our labor.
Getting better insight into when products are coming into our into our mccook facility.
It is trying to cross stock more items to get those products out to the floor D. C. So certainly pricing helped.
But.
We've also seen improvements in just logistically, what we're doing given some of the actions that we've taken within the deceased in.
In terms of price increases in the future.
Tough tough question to answer specifically, what I would say is that we are going to continue to monitor the inflationary environment.
And if we see cost increases continued to come through whether or not that's in transportation or within our landed caused from our suppliers.
Then we will take the necessary actions to to protect our margins.
Work.
We're monitoring it very very closely as you could see from from some of the improvements that took place here in the third quarter.
Kevin just to add.
Punctuate with a data point during.
During the third quarter, there was a point where in our largest distribution center, we had 27 job openings.
And the effect of that was struggling all week to catch up and get the orders out which also meant working on weekends paying overtime and the inefficiencies of transportation at this point, we have fewer than five openings in that same distribution center. So you would expect fewer over time.
Mahler's lower cost labor because of the efficiency of the Labour. We have so a lot has happened in our ability to.
Navigate and managed through a difficult challenge so we.
We feel like we're getting ahead of both on the cost of goods sold our ability to successfully pass those cost increases along and.
And as well our ability to manage our own internal costs because of labour pressures that we feel like we're getting ahead of in the D. C. S.
Alright, that's good to hear.
So this this might be a tough question to answer too but just.
Given all the actions that you've taken to improve gross margin.
Sequentially I know, it's a very fluid environment, but you feel like you can.
At least hold gross margin.
It is going forward or at least.
Further actions in the future to hold it.
As we move forward in your.
Yeah Kevin.
That point, you're right, it's it's a really fluid situation.
And we have been saying for years that we raised price associated with cause we feel like the.
The value proposition, we offer is valued by customers customers are willing to pay us for that value proposition. So for many years now and we've been at this gross margin for a very very long time.
For many years or price increases are always associated with cost increases.
Is a little hard to predict how that's all going to play out over the coming waters of next year supply chain could become more challenging or we could finally break this log jam a little bit with the containers and trucking and so on and so forth. So.
We feel like we've got a good process in place to maintain our margin I will say that as we continue to grow strategic accounts margin percent is very critical but you take dollars to the grocery store and that percentage of the grocery store. So.
Given the choice, we usually focus on driving margin dollars and not exclusively looking at margin percent that we think that that is also an important factor going for especially in the context of our growing strategic account business or large Kent business, we've had incredible.
<unk> success.
This quarter with Kent, and very large high profile accounts coming to us.
Picking up very large numbers of new locations, both in new accounts and deeper penetration into existing accounts same thing is true in strategic accounts picking up new.
Integrated supply customers when you partner with an integrated supply company.
Really we've got a relationship with the integrated supply company put in turn they bring us into dozens and dozens of their large factories. So as a real multiplying leveraging effect when we partner with an integrated supplier and we are now doing business with a very large number of integrated suppliers are real close partnership.
So when you put all of this together, it's a long way of saying margin dollars count every bit as much of margin percent.
Right no understood that makes sense. Yeah can you just also following up on that just maybe talk a little bit more what's <unk>.
Contributing to the momentum and.
Adding new strategic account locations in new strategic account customers.
Okay.
Beyond the normal we've been at this for 70 years are broad supply chain, our footprint sales reps, we have all servicing pretty much anywhere you are in the us and Canada. We can service your location and that's very attractive to be integrated supply strategic accounts.
Army integrated supply.
<unk> accounts, interestingly, three or four Kent customers, one of very long relationship, but a geography, we didn't have specifically came to us and detailed that a net large state that large geography, they were being underserved by a competitor so they brought.
Lettuce and this is several hundred locations they brought us into into an existing customer now by contrast, several other companies came to us that were not previously customers and in all three cases, they specifically spoke about our operational excellence our reputation even the new guys, who we hadn't.
Doug business with before and they all talk about labor demographics and their challenge with their internal labor.
By the way as an aside I was out at the American rental Association.
A conference in Las Vegas, two weeks ago, and a non customer came up to us at the Booth and specifically said I can't keep my shop running I'm desperate will you come help me.
That's music to our ears I believe our market is expanding of course, it's a very large and fragmented market, but a big percentage of people buying what we sell.
Do it through customer managed inventory they in the source that is shifting and it's accelerating tremendously in this environment.
Outsource and it's my belief that as customers outsource our operational excellence and coverage will enable us to win more than our fair share of all new business. That's exactly what we are now beginning to see and I look forward in future requires being able to quantify that for our investors.
Okay, Great just a couple more quick ones here for me just.
More of a number side.
Ron do you have the trend in the.
Monthly consolidated.
The average daily sales as you move.
Through the third quarter, and maybe what what you've seen in October.
Sure. So I can give those ta Kevin so on a consolidated basis.
I'll give it to you and $81 million 60 loving in July $1 million 623 in August and a million dollars 716.
In the month of September so all in for the quarter. We ended it at $1 million 650.
What I would say relative to what we've seen here for the first couple of weeks of October is.
Kind of up slight Oh, I would say up slightly versus that 616 50 for the third quarter.
Pieces of our business are continuing to to to move right along so.
No major changes I would say from what we saw in the third quarter.
Alright. Thank.
Thank you and then lastly, do.
Do we start to.
Get past the PPA PPE headwinds a little bit more I guess in the fourth quarter.
As we are suppose we would as we move into into.
2022.
Yes, yes, we do a little bit so Mike Mike mentioned, this and it probably deserves.
To be restated in that.
We were up against some headwinds here in the third quarter relative to PPE items, and if you isolate just the the loss and kind of the legacy loss in business as Mike mentioned, we were up seven 6%.
Excluding PPE.
We were up over 10%, so so pretty significant headwinds versus the third quarter.
A year ago.
And as I look at the fourth quarter.
Still will still be up against a little bit of headwind, but not nearly to that degree.
I think the fourth quarter Pp E sales on average every month, we're about 1 million too.
And currently our current trend is.
Is kind of running and that million to range. So.
So yeah.
That's clearly not as much as as what we saw here in the third quarter.
Okay. Thanks, Thanks for all the details I appreciate you taking the questions no problem. Thank thank you.
Once again, ladies and gentlemen, if you have any questions or comments. Please press star one on your phone at this time.
We have no questions in queue. This concludes our question and answer session I would like to turn the conference back over to Mike Takeda for any closing remarks.
Thank you. Thank you.
And thank you for joining the call today.
Labor and productivity pressures are intensifying on our customers and the market in general.
Lawson's long standing and well established service intensive under managed inventory model anticipates customers future needs and enables customers to maximize the machine time utilization.
I believe the market is taking notice and we have potential customers, reaching out to us more than ever before.
Our operational excellence geographic coverage expanded product offering and nearly 70 years of experience.
Are being brought to bear on this challenging environment, and we're experiencing strong market demand for our products and our services.
Our investment in people process, and our analytical orientation or enabling us to navigate through difficult waters and further differentiate ourselves from our competition.
I believe that this environment in this environment.
Firemen will succeed in.
Converting customers and as well.
Showing neck Watson is a resilient innovative and committed practitioner of service intensive bedroom manage inventory and a trusted partner to 90000 customers.
Thank you to our extraordinary teammates customers and suppliers your actions and commitments are critical a critical component and restoring our economy to the growth we all expect.
And I look forward to speaking with you in the next call have a wonderful day.
Beyond the conference has now concluded.
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