Q3 2021 Allied Motion Technologies Inc Earnings Call
Greetings and welcome to the Allied Motion Technologies, Inc. Third quarter fiscal year 2021 financial results Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note.
This conference is being recorded I will now turn the conference over to your host Craig Mahalik Investor Relations you may begin.
Yeah. Thank you and good morning, everyone. We certainly appreciate your time today as well as your interest in Allied motion joining me on the call are exactly tailor, our chairman President and CEO and Mike Leach, our Chief Financial Officer.
Like are going to review, our third quarter 2021 results and provide an update on the company's strategic progress and outlook after which we will open it up for Q&A as part of today's Q&A. We do ask that you limit your questions to two or three in order to allow enough time for all participants you could certainly go back into the queue for additional problems you.
You should have a copy of the financial results that were released yesterday after the market closed.
If not you can find it on our website at Allied motion Dot com.
As well as we did send data released this morning on another acquisition that went out around 930, a M. Eastern time that can also be found on our website.
And let's say you also find the slides that accompany today's discussion if you're reviewing those slides. Please turn to slide two for the Safe Harbor statement.
As you are aware, we may make some forward looking statements on this call during the formal discussion as well as during the Q&A.
Statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated on today's call.
These risks and uncertainties and other factors are discussed in the earnings release as long as with other documents filed by the company with the Securities and Exchange Commission.
You can find these documents on our website or at SEC Gov.
Want to point out as well that during today's call, we'll discuss non-GAAP measures, which we believe will be useful in evaluating our performance.
You should not consider the presentation of this additional information in isolation.
Or as a substitute for results prepared in accordance with GAAP we.
We have provided reconciliations of non-GAAP to comparable GAAP measures in the tables accompanying the earnings release and flat with that please turn to slide three and I'll turn it over to Dirk to begin.
Okay.
Thank you Craig and welcome everyone.
Our third quarter results reflect strong execution from both a sales and operational perspective.
Backlog grew by 9% sequentially to a record $186 million with strong order input across the board.
Total revenue grew 9% over last year's third quarter to $103 5 million driven by continued strength across most of our served markets, but in particular, a strong recovery in our industrial markets, which were up 39%.
This was primarily led by increased demand for our applications and solutions and automation vehicle aniline electronics and oil and gas projects.
Our vehicle markets continue to outpace prior year comparisons as the third quarter was up 5% largely driven by construction and truck demand.
Power sports demand has still been very solid the moderate itself from its recent highs.
The medical markets were down year over year, given the exceptionally strong demand, resulting from the onset.
Pandemic last year, but did grow 4% sequentially as we have seen a return of more elective surgeries as well as some uptick in COVID-19 related products and solutions given various variants that have developed around the world.
A&D is continued to be challenged but we are seeing new project activity levels, increasing which is encouraging.
We are certainly not alone dealing with a unique factors of the current environment, including inflationary pressures supply chain disruptions and labor shortages.
The effectiveness of the actions we have implemented to mitigate these factors is demonstrated at our revenue growth margin expansion and increased profitability.
And Beth on both a year over year and sequential basis gross margin operating margin and adjusted EBITDA adjusted EBITDA margins have improved.
As a result, net income increased 49% over the prior year to 6 million or <unk> 41 per diluted share.
Okay.
Even though we did have a fairly significant build in inventory levels. As a result of the global supply chain challenges, we did generate positive cash flow of $3 $5 million from operations during the quarter and this enabled us to reduce total debt and further advance our growth initiatives.
On Tuesday, this week, we announced the acquisition of <unk> Systems Corporation in Rochester, New York, where they develop and manufacture mission critical electromechanical automation solutions and motion control products, including multi access control electronic drives and actuators for the automation and aerospace industries.
Details are provided on slide four.
This bolt ons fits well strategically as it strengthens our technical expertise and adds a higher level of precision motion control systems and solutions to our offerings.
Importantly, we believe we can build a scalable solution to accelerate growth by leveraging their electronic software and mechanical engineering expertise to create complete electromechanical solutions for custom automation applications.
We look forward to a bright future together and welcome Dr. Edward Chris Nikki, who will continue to lead the business as well as the entire <unk> organization to the Allied team.
Additionally, this morning, we announced the acquisition of <unk> industries, and Nevada, Colorado.
Ill refer you to the press release that crossed the wire. This morning and for those of you who have may not have had a chance to see it.
Will relay that to you now in.
In the PR like micro stated.
<unk> is well recognized for their technology slash knowhow and expertise in nanometer level positioning and we're very excited to add such high precision positioning and robotic technology solutions to our already powerful portfolio of motion solution offerings.
Equally important is the <unk> culture, and passion for innovation customer service and product quality, all trades that align well with what we have built at ally.
We expect that the business can grow rapidly as we leverage our joint channels to market and bring scale to their operations.
Press release went on to say founded it at a little bit about Elliott founded in 2001 and headquartered in Arvada, Colorado, Elio designs engineers and manufacturers nanotechnology motion systems for state of the art application.
Applications in Silicon Photonics Micro Assembly digital pathology genome sequencing laser processing and micro electronics.
Their expansive product line includes the patented hybrid hexapod, which provides for six access point precision repeatability air bearing systems linear and rotary nano precision systems with both mechanical and air bearing guys.
And systems customized for atmospheric clean room in ultra high vacuum.
<unk>.
We would like to welcome Mr. Bill NSE, the founder and President of <unk>, who will continue on with the organization as well as the entire Allied organization to the <unk> team.
In addition, I would like.
To extend our appreciation to both the internal and external support teams at Allied and getting these opportunities over the finish line.
As we move forward with record backlog and increasing order trends, we are confident in our initiatives and the strength of our business model.
At the same time, we will continue to focus on what we were doing the markets. We are serving successfully progressing our product development efforts and continuing to leverage our global footprint.
With that let me turn it over to Mike for a more in depth review of the financials Mike.
Thank you Nick as a reminder, all share and per share information in our earnings release and slides reflect the three for two stock split completed in April.
Starting on slide five we provide some detail regarding our top line.
Third quarter revenue increased 9% from $103 5 million.
This is a record high and is the third consecutive quarter of achieving greater than $100 million further demonstrating the success of our strategy and the benefit of the broad based recovery underway in many of our served markets.
In particular demand was strong in industrial improving 39% year over year, while vehicle markets improved 5% on a sequential basis industrial grew 4% medical grew 4% and vehicle was up 1%.
The favorable impact of exchange rate fluctuations on revenue was <unk> 8 million in the quarter.
Excluding FX revenue was up eight 5%.
Sales to U S customers were 56% in line with the prior year period and the balance of sales were to customers, primarily in Europe, Canada and Asia Pacific.
Slide six shows the change in our revenue mix by market for the trailing 12 months period total TTM revenue was up 11% and reflects the impact of our diversified business model.
The economic impact of the pandemic along with General program timing is reflected in the reduced demand or orders deferrals within A&D.
And though industrial faced significant headwinds from the pandemic last year, our actions and the ongoing improvement of our improving market conditions are reflected in the 9% gain on a TTM basis.
Note that on a go forward basis, the <unk> business will primarily be reflected in that in the industrial and A&D categories.
As depicted on slide seven our gross profit was up $3 9 million or 14% to $32 million.
Our gross margin expanded 120 basis points year over year, and was up 20 basis points sequentially to 39%, reflecting strong volume levels favorable mix the impact of pricing and the disciplined execution of our lean toolkit asps.
While we are not immune to the supply chain and material cost constraints as well as labor inflation, we believe that our team is managing those impact well. Nonetheless, we expect some headwinds to continue for the near term.
Though as we have stated we anticipate growing our margins over the long term.
Moving on to slide eight third quarter operating income was $8 7 million up $2 2 million from the 2023rd quarter and up 2 million from the sequential second quarter.
Operating margin of eight 4% expanded 160 basis points year over year, and 180 basis points sequentially.
We have continued to effectively manage our cost and leverage the higher volume.
This more than offset increased incentive compensation, which was aligned with the revenue and net income growth and was largely in the G&A line.
On slide nine you can see our bottom line and adjusted the adjusted EBITDA results.
Net income increased to 6 million or <unk> 41 per diluted share.
From 30 up 13 from the third quarter of 2020.
The effective tax rate for the quarter was 24, 6% compared with 25, 4%.
We expect the income tax rate for the fourth quarter of 2021 to be approximately 25%.
Excluding the discrete tax benefit of $7 4 million recorded in the first quarter of 2021.
For full year 2021 income tax rate.
<unk> to be approximately 24%.
Also I would like to point out that we continue to pursue tax planning strategies to help reduce our effective tax rate.
Adjusted EBIT for the quarter was $14 5 million or 14% of sales up 190 basis points over the prior year period.
Sequentially, adjusted EBITDA increased $2 1 million and 180 basis points.
We use adjusted EBITDA as an internal metric and believe it is useful in determining our progress and operating performance.
Slide 10, and 11, we provide an overview of our balance sheet and cash flow.
We paid down $3 million of debt during the quarter, resulting in $109 3 million of total debt at the end of the period debt net of cash was about $90 million and net debt to net capitalization was 35, 7% down 470 basis points from year end.
At the end of the third quarter, our bank leverage was two two times.
Okay.
After quarter end, we did utilized $23 million of our credit facility to fund our recent acquisitions.
We paid $9 million for our Mac more dirty of which was cash was 385000 equity component.
We paid $20 million per alio composed of $50 million and 5 million in equity.
There are potential earn out payments over the next three years based on <unk> achieving certain.
Annual EBITDA targets.
We've consistently demonstrated our ability to quickly delever our balance sheet. Following the acquisitions and is our expectation that we will continue the strategy to reload for future growth opportunities.
We generated solid cash flow from operations of $3 5 million in the third quarter and a total of $19 9 million over the year to date period.
Continued inventory builds to mitigate supply chain issues was the primary reason as to why cash flow from operations was not stronger during the quarter.
Third quarter, Capex was $3 9 million and largely focused on new customer projects as well as continued ERP implementation.
We expect our fiscal 2021 capex to range between 12 and $15 million.
Inventory turns were three six times down from 2021.
Our teams have been managing our inventory levels as well as we work to meet increasing customer demand and combat sourcing and lead time challenges are.
Our DSO increased slightly to 49 days in the quarter.
With that I'll now turn the call back over to Vic.
Thank you Mike.
Slide 12 highlights encouraging trends as customer demand and our strengthened market position again as resulted in record orders and backlog.
We have now achieved five consecutive quarters of order growth since the low point during the onset of the pandemic last year, reaching $120 million in the third quarter.
This represents a 35% increase over last year's third quarter all of our markets major market channels are contributing and our book to Bill ratio was solid at one two.
Backlog increased 9% sequentially over the second quarter and was up 50% over last year's third quarter to more than $185 million.
Approximately 90% of our backlog, 90% of our backlog is expected to convert to sales over the next three to nine months.
We estimate that $3 million to $5 million of our current backlog is the carryover due to the global oil supply and shipping challenges.
Importantly, this level has remained relatively steady from last quarter as our teams have continued to do a great job meeting our customers' demands.
As we look out industrial and vehicle demand remained strong and while most customers will accept everything we can deliver shortages from other suppliers can and may impact our shipments as well.
In the fourth quarter, we do expect some seasonality given typical holiday shutdowns and inventory adjustments.
Although we believe that in fact could lessen.
There is improvement related to the global supply chain challenges.
Demand in our medical market is expected to still be solid with the ongoing recovery of elective surgeries and potential demand from the pandemic.
While we continue to take a cautious approach with our A&D markets. We are seeing some increased quoting and project activity that we further expect to benefit from <unk> in this space in 2022 and beyond.
From an inflation and supply chain perspective, we do not foresee any significant improvements in the near term. Nonetheless, we believe we can continue to leverage the strength of our supply chain management capabilities to help navigate this dynamic landscape. We're also focused on retaining our critical talent and keeping our team focused on several new project opportunities.
As well as ensuring we meet our internal timelines to effectively launch several new growth oriented product platforms.
While we have announced a couple of acquisitions. The last two days our acquisition pipeline is still very active and we believe we have the financial flexibility to execute opportunities that meet critical elements of our strategic filter.
As always we will be prudent with our capital allocation.
Overall, we demonstrated strong execution by generating record levels of revenue orders and backlog and we have further developed our one allied strategy.
We have a high level of confidence that we have a platform that can deliver expanding margins over time, and we'll continue to drive growth in the future.
Now before we turn it over to the operator for questions I'm sure. Some of the questions are going to be.
Round, the acquisitions and Mike as stated that giving you some answers answered some questions as far as the amount we have paid for the acquisition what I will relate to you.
We'll do it in a kind of a general format here is that we do expect the combination of the two acquisitions to generate approximately $20 million plus in revenues next year.
With operating for gross margins that are well above our current average gross margins. So I think.
As part of our strategy, we talked about expanding gross margins, 1% year over year and these two acquisitions combined.
Certainly bring us close to achieving that goal for the coming year as well as taking that there is some other activities that we will be working on.
To continue to expand that gross margin so with that operator, let's open the line for questions.
At this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we pull for questions.
<unk>.
Our first question is from Greg Palm with Craig Hallum. Please proceed with your question.
Thanks for taking the questions a lot a lot of good stuff to unpack here. So maybe we will start and sorry, if I missed this but were were you able to fulfill or ship the entirety of demand that you had in the quarter or was there some impact from I don't know supply chains that may be pushed a certain amount of revenue out.
Q4 or beyond.
Yes, so there was definitely some impact Greg and I think what we mentioned is it's about $3 million to $5 million in revenue which was.
Pretty much consistent what we saw in the previous quarter. So there was some push.
And I mean, what's your view of supply chains going forward I mean, do we expect that that same sort of amount of revenue, we'll end up getting pushed from Q4 to Q1, I mean do you see any signs of easing or do you think this is going to be with us for some time still.
Great.
Unfortunately I think.
It's a challenge every single day.
And it shows up in different places at different times. So I think we're we still will have these challenges moving forward and I don't think there's any reason to expect that.
We're not going to see some delays in our ability to ship, but what I've mentioned in my script may not have been very clear is that even if we have everything we need to.
The shift product to a customer.
Many of our customers have taken on a different approach to manufacturing where the single piece flow reduced inventories just in time inventory theyre doing partial bills.
But what was the.
Components, they have and sub assemblies that they can put together with the whole state has other components show up they can complete their assemblies.
So we're impacted by that as well, which is very hard for us.
To predict when or if and when that's going to happen, but I would say to you that now.
We have the demand there.
Our customers will take.
Almost all of them and anything we can ship them and we are working very closely with them to ensure we are aligned and shipping the products that they need so they can ultimately get their product out the door, but I think those challenges are still ahead of us here too.
Yes.
That makes sense and I guess, if I could ask one more and sort of focus on this same subject, but I'm curious how you're viewing.
Your own competitive positioning with everything going on I mean lots of talks about whether its re shoring or secondary sourcing for supply chain sand.
Do you think that this is maybe an event that can drive more business to a company like like Allied motion given all your capabilities.
So what's happening I mean, we're getting.
Our receiving inquiries.
About four shipping product there.
Current suppliers are having difficulty meeting.
And again it depends on the product expense.
And what's the what the components are whether it's electronic components or whether magnetic components, whether it's mechanical components I mean in many cases, we are we are taking on some new business.
At satisfying those demands and hopefully we can retain that long term so we're doing well.
The best began to satisfy those and in some cases, though.
Youre locked and loaded with your existing backlog and existing customers and.
You may not be able to meet their needs and so but the challenges are there the opportunities are there and we are seeing them in so hopefully they do convert long term for some additional business for us.
And Dan I think we're well positioned from a manufacturing footprint standpoint, Greg.
Support the movement towards localization of supply that you see happening globally with our expanded footprint.
Capabilities as you alluded to that allow us to.
Support.
Customers at any geographic.
Locale.
It will add even further to that is that we talked about before the pandemic about.
Strengthening our strategic sourcing team and looking at localization of supply chain. So we were already down that path and we've talked about that in the past and we're continuing down that path, we believe and I think clearly what's happened here with.
Not just supply chain logistics channels and delays at ports and so forth.
I think theres going to be an increased emphasis on localization.
And we had already started down that path and we're going to continue and accelerate that.
Got it alright, thanks for all the color best of luck going forward.
Thanks, Rick.
Our next question is from <expletive> Ryan with Colliers. Please proceed with your question.
Thank you.
Say <expletive> in the Q you mentioned, the China Your China facility had some.
Shut down due to their power rationing over there can you just refresh us the impact that.
You have I mean, what what China contributes from a revenue standpoint, and how significant this issue could be going forward. If that rationing continues next year.
Well.
There is two things I mean, we have two plants in China.
One came as part of the dynamic controls acquisition Thats in Suzhou.
The other plant in Changzhou.
They do different things and our plant in Changzhou was less impacted I'll say from a rationing standpoint that our plant in Suzhou Suzhou always primarily electronics.
Electronics and drives for the rehab market.
And those products as well as some of those are delivered directly into the Asian market. Most of those were exported.
Out to Europe, and North America.
As long as.
We understand when the rationing is going to occur and its just an <unk> issue with that last minute.
And there's work around so what they'll try to do is not necessarily an oil shut certain factories down on certain days, but you may have to reschedule in order to.
Fill demand and I think it's but if they come in and they say you're going to be shut down for a week and that has a much bigger impact.
Just like the pandemic I mean, there is not much you can do about it just got to work through it.
The power comes back on the lights come back out of the facility.
Your work overtime or whatever it takes to meet the demand so from a revenue standpoint.
The bulk of our businesses in North America and in Europe in a relatively small portion.
Shifting to Asia, but as I've mentioned under our <unk>.
Usual plant some of that is export itself.
We haven't seen a push out but we haven't seen anything that we're concerned about Walter we've dealt with this in the past it doesn't just knew this isn't new they've had.
When they've had the Olympics over there they would shut down factories. It puts you on a schedule and roving schedule to reduce pollution and so forth and our teams have been pretty effective in managing that so I think.
Once we understand.
The outlook is going to be will play a way around it.
Supplying our customers.
Okay. Thank you say with the strong order flow.
Getting any sense that some of this might be double ordering or is it just.
Strength across all year end markets.
Well, if you ask our customers well I will tell you they need it.
If you ask based on my experience in the business and.
And what I've seen in the cycles I think there is definitely some double ordering as COO.
How much it's hard to tell but.
I don't think it's I mean.
Yes.
Sure.
What we feel the impacts and so forth that will adjust over time.
I mean, some of that we're seeing already for example, I mean think about automotive and they are unable to get to <unk>.
Electronic components, so that demand is just being pushed out into the future stockholder way interest being pushed out.
So I think it's there to answer your question.
It'd be.
Difficult to quantify.
But I think we will see it in that necessarily it will all hit at one site that we may see it differently based on different markets and different customers, but again, you talk to our customers they need it they need it now.
Okay.
One last one if I can on your large auto wins.
Anything in the supply chain impacted the outlook or the timing how that will flow over the next several years and can you refresh us.
How much.
Revenue would have you delivered to date and how much is in backlog.
Well I'd say to you.
It definitely has impacted.
The timing.
Because they're not building as many vehicles.
So the.
Seeing that being shifted out.
It's not again nothing's changing in terms of the.
And the overall demand it is a timing issue.
And so.
As they start building more vehicles get the electronic components, they need to build vehicles will ramp up and remember as we talked about going into full rate production.
We were talking about $40 million per year in.
In revenue coming from their.
Currently the ramp up that we've seen.
We've delivered maybe $5 million to $7 million.
And revenue so far.
But we expect that to continue to increase and move forward, but we have seen some delays.
Great. Thank you and congratulations on continued strong execution.
Thank you Dave I appreciate it.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.
Our next question is from Gerry Sweeney with Roth Capital. Please proceed with your question.
Hey, good morning, Thanks for taking my call and nice quarter.
Good morning, Jerry Thank you.
I wanted to talk about acquisitions, and maybe from a higher level.
Over time.
Allied motion has gone from maybe components to solutions.
I think youre looking at solutions to with these recent acquisitions, maybe go into higher technical.
Oriented opportunities.
I'm curious is this part of that.
You even alluded to it I think in your comments alluded to part of the gross margin structure longer term just getting into.
And to some higher value more technical opportunities.
You sort of develop your.
Menu of technologies.
Sure happy to talk about that.
Youre absolutely correct.
As you look at the evolution of the company.
As we have.
Previous acquisitions.
Component related.
We would then.
Take on the challenge internally.
Leveraging those components to come up with a more complete solution well. These two acquisitions take us to another level again and.
And what's important to understand is fundamental underneath.
The solutions that are being provided are exactly the same things. So the electronics that controls the drives the motors, but now.
The software.
Customer interface the control solutions.
From an automation standpoint, as well as well.
Looking at it from allele, let's say for example, the the stages that they manufacture so they won't ticketed corporate products that we that we make.
And as well as adding multiple access of control together and really sophisticated.
<unk> nano precision.
Positioning accuracy.
Also the we talked about the extra thought and then just encourage everybody to go look at the web sites.
That's pretty amazing technology, which they have there and repeat ability is critical and those six axis applications.
And they have that so that you kind of consider that really a robotic solution and as you see.
No. The <unk> also what youre seeing in genetic applications, and so forth and life Sciences.
It requires.
This nano precision in order to.
Due to the job from an automation standpoint or from an analysis standpoint.
They need to do and it requires this level of precision so we're pulling through our base products.
We are now at a higher level.
When we.
Looking at <unk>. They are doing complete system designed very sophisticated system design again multi access many access there.
They are multi access controller high speed synchronization up to 72 axes.
In many of their applications, where they can do complete automation systems and build it and install it right. The software support it long term and again pulling through.
Products that allied manufacturers, so and mentioned the gross margin profile.
<unk>.
We mentioned we have stated that our goal is to improve gross margins by 100 basis points of year over the next 10 years.
And that certainly gets us on target for 2022.
We think that.
Given and for an example, we said $20 million of revenues from these two is what we expect or potential in the lower gross margins.
Okay.
At the high end of where we are today in their gross margins and what we've stated the market can achieve.
Really puts us on path.
To meet that one element, but also.
The system, the element and getting more and more involved in and how all the company's products and strengths and system solutions come together here.
Perfect.
A lot of great detail I really appreciate that.
Shifting gears I didn't want to start with an inflation question, but obviously.
Sure.
So obviously, there's a lot of levers to deal with inflation right I think.
Internally, maybe externally you can manage some pricing with your customers you can maybe even paying over time internally et cetera.
And it feels like inflation is going to be here for a while it could even increase.
When you look at your <unk>.
Yes, toolbox of levers or however, you want to describe it.
How much opportunity do you still have left to manage some of these headwinds if they accelerate further or go on longer.
Well, it's such a tough question I will turn it over to Mike.
Well Laurie my early in the environment.
Certainly the environment has been supportive of.
Adjusting pricing right given the current environment I think.
So severe that even customers are more understanding although.
That's certainly a challenge.
As far as other levers story, we always focus on our lean tools.
Our asps.
And certainly we have opportunities as we've talked before about optimizing our manufacturing footprint.
We've talked about driving cost out of the businesses.
And the manufacturing sites or whether it's.
Through our other operational expenses or even at all.
Our G&A lines, so certainly that's the lever and.
Again, continuing to progress down that solutions are advanced systems sales channel away from components is continuing to move up.
The ladder in terms of precision and the capabilities here as evidenced by the last two acquisitions will lead us down that path as well so.
They get tougher the longer it goes there is no doubt about that but certainly I think we are.
Working aggressively irrespective of the supply chain environment and inflation to drive those things is our agenda.
Got it Okay. I guess you can even say your previous work and focus and culture is sort of almost prepared you for some of this as well.
Correct.
I would suggest that over time that even grown stronger our commitment to that.
As we've referenced before our investment in our global supply chain group as another lever if you will that moves us down the path. So.
Got it.
One of the things I'm sorry go ahead no go ahead Gerry.
No I was just saying thank you that's all.
Okay.
What I was going to what I was going to say is just.
Just make sure that we're clear.
Allied.
Does.
It made customer or customized components that are really an integral part of our customer systems and so I think when we talk about <unk>.
<unk>. So we're not moving away from components, we're looking at a way where we can leverage those components to a greater extent and also at the same time approaching it from I'll call. It the higher level system solution standpoint. So we are mission critical in many of our customers a lot of our customer.
With components that are designed specifically for them to meet their exacting needs and we will continue down that path not abandoning the net at all.
Im not sure what the solution side does bring to us.
As if you go back in time, and you'd say, Okay Allied was a motor company.
Allied still does make a lot of motors and is a motor company and we would approach the market from a motor standpoint, now we have the capabilities to approach the market from the top side as well from the electronic standpoint, with a control standpoint from a more complete system standpoint, and if youre looking at automation.
Items, where instead of our customers having to assemble all the individual components together, we are putting them together and we are committing too weak.
A higher level solution like nano positioning so I, just just to make that clear and I think it just opens up for us channels, new channels new opportunities from Bill.
Opening the markets up from whether it's the electronic control side Motorcyle gearing side whatever okay.
Got it that's very helpful. Thank you I appreciate that thank you.
Okay.
We have reached the end of the question and answer session and I will now turn the call over to management for closing remarks.
Well again, thank you everyone for attending.
Our shareholders' conference call here and we really appreciate your participation I think there's exciting times here at ally.
Our team worked extremely hard to get.
A couple of these acquisitions, which were very.
Strategic to us and we're looking forward to our new partners coming on board.
And we think the.
Bright future ahead for <unk> and our shareholders. So thanks again, we look forward to talking to you soon bye now.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
[music].
Yes.
Okay.