Q1 2022 Hyster-Yale Materials Handling Inc Earnings Call
Our first quarter gross margins improved from the very low gross margins in the fourth quarter of 2021.
Even though these two periods had comparable revenues.
Customer demand.
Remains healthy as evidenced by strong bookings during the quarter and a record backlog level further as we expected during the early part of the quarter material and freight costs began to moderate and we experienced a number a reduced number of individual supplier issues during the quarter. Nevertheless.
Shortages of certain critical components continued to disrupt our production levels and affect our shipments.
Our teams continue to work closely with suppliers to obtain the components, we need for production and on pricing to increase margins in our backlog and particularly for new orders further given the lift truck business record backlog levels the opportunity for increased production and supply chain bottlenecks are resolved.
Hi.
However, the Russian invasion of Ukraine has caused further inflation pressure in supply chain shortages.
The recent Covid related Lockdowns in China are also affecting <unk>.
Parts availability and have introduced additional difficulty in global supply chains both of these events.
Have affected our outlook for the second quarter and for the back half of the year, Rajiv and Ken will provide more specifics on these topics.
Now I'll turn the call back over to Christie to review the financial results for the quarter.
Steve.
Thank you Dan.
Mentioned, the lift kit market continues to be healthy and as a result in the first quarter. We saw an eight 1% increase in bookings over the fourth quarter of 2021, although we adhere bookings and then historically high prior year first quarter we.
We ended the first quarter with new historically high backlog of 114100 units.
And consolidate our consolidated revenues increased 13% to $827 6 million from $732 $2 million last year because of improved pricing in the Americas and higher unit and parts volumes in the lift truck and bus any businesses.
Offset by unfavorable currency movements as the dollar continues to strengthen.
Nonetheless, despite the higher revenues, we reported an operating loss of $18 $3 million compared with operating profit of $3 1 million in the prior year. The decline in profitability was mainly due to significant material and freight cost inflation as well as manufacturing inefficiencies, resulting from shortages due to supply chain and logistics.
Constraints and totaling $68 $6 million.
Primarily in the Americas and EMEA.
In addition, we recorded $3 2 million of charges in the first quarter related to the Russia, Ukraine conflict, primarily related to Russian inventory and receivables in the EMEA and both any segment.
These unfavorable variances more than offset the favorable impact of improved pricing of $43 9 million and higher unit and parts volumes.
Overall, we reported a consolidated net loss of $25 million compared with net income of $5 6 million in the prior year quarter due to the operating line.
The absence of a $4 $6 million gain on sale at new era, and as a result of the decision made in the second half of 2021 to record valuation allowances against certain certain losses that have resulted in zero tax benefits in jurisdictions with expected losses, but income tax expense in jurisdictions with expected income in 2000.
<unk>.
Looking at the individual segment results, our lift truck business reported an operating loss of $10 7 million compared with operating profit of $12 2 million.
In the prior year quarter, primarily due to a decrease in gross profit in all three geographic segments.
Most significantly in EMEA and <unk> as well as higher operating expenses in the Americas and EMEA.
The decline resulted from the specific factors I mentioned in the discussion of our consolidated results.
All three of the geographic lift truck segments were affected by higher costs and production delays. The Americas segment was affected the least in the EMEA segment affected the most <unk>.
The Americas was able to fully offset the increase in material cost with price improvements, whereas EMEA was not in the Americas benefited from $3 5 million of favorable retroactive U S tariff exclusion adjustments for certain imported Chinese components, which was partially offset by $2 5 million of reserves on certain Russian related assets.
<unk> first quarter revenues increased 19, 6% and operating profit improved to $2 1 million from $800000 in the prior year quarter. These improvements were primarily due to higher sales volumes price increases and a shift in sales mix to higher priced higher margin products.
Finally at <unk> revenue increased to $600000 and the operating loss decreased to $8 1 million from $9 8 million in the prior year.
These improvements were due to sales of fuel cell engines and improved margin from lower production costs in 2000 to 2022.
This completes the update of our financial results for the quarter now, let me turn to Rajiv who will provide an overview on our operations and our strategic projects. Thank you Christy.
Indicated the global lift truck market appears to have remained relatively healthy in the first quarter of 2022.
Resulting in a robust level of bookings that were higher than the fourth quarter, but lower than the historically high prior year first quarter.
And the remainder of 2022, we expect the global lift truck market to continue to decline from the historic highs of 2021 and.
In part due to the impact of the Russia, Ukraine conflict.
But still remain above pre pandemic levels.
As a result of this market outlook, we anticipate a substantial decrease in bookings at our lift truck business during the remainder of the year compared with last year.
With the rate of decrease expected to moderate in the fourth quarter.
Despite ongoing parts shortages and supply chain disruptions, which continued to constrained production of our lift truck in the first quarter, we experienced higher shipment levels than in the prior year because component availability has improved from the prior year first quarter and permitted increased.
However.
Ongoing supply chain constraints of certain critical components resulted in fewer shipments than in the fourth quarter of 2021.
With strong first quarter of 2022 booking and lower shipments.
2021 and fourth quarter.
Our already historically high backlog levels continued to increase with further extended delivery lead times.
Some moderation in the number of suppliers with shortages that occurred in the first quarter of 2022 with shortages are anticipated to continue throughout the year and could escalate again.
Our previous outlook assume moderate supply chain improvement throughout the year, but as we are speaking today the pace of supply chain improvements remains uncertain.
Since our production outlook is largely dependent on parts availability, we are closely monitoring two evolving areas that could effect.
That the potential potential for additional supply chain shortages due to the Ukraine.
Russia, Ukraine conflict and the potential impact of Covid related lockdowns in China, which could affect our production and parts availability in China.
Our most significant issue right now is managing margin in our backlog, especially on iron ore on new orders prior to the Russia, Ukraine conflict, there were signs that material cost side, Pete and in fact early in the quarter, we experienced modest improvement in commodity costs.
However, as al mentioned in his opening remarks, Russia is invasion of Ukraine cost fuel steel aluminum numerous other input cost to increase sharply once again.
As a result of significant additional material and freight.
Cost inflation is expected to keep cost of components higher than in 2021, and possibly not moderate the previously expected with commodity and freight cost trending up again.
Our team acted quickly to implement price increases increases of our businesses in the first quarter of 2022.
In addition to those implemented in 2021, however, many of the orders in the backlog slotted for production in the second and third quarter of this year are not reflected in.
Full effect of our.
Before these price increases.
On the other hand, our sales team is.
Is pricing new bookings are close to target margins based on the expected future cost at the time of.
Expected production.
I'll add that we are going out to customers and dealers to discuss backlog the material and logistic excludes experience that we have inflation.
Inflation, we've experienced and also the the level of margins in our backlog to see if adjustments adjustments could be made.
Any of those and those will be ongoing throughout the second and third quarter.
Further the renewal of tariff exclusion is expected to partly offset the anticipated higher material costs.
Inflation in the backlog over the remainder of 2022 as a result, we expect to experience lower margins in the second quarter compared with the first quarter of this year due to these increased costs.
Overall margins are expected to increase over the second half of 2022 with much stronger.
Margins in the fourth quarter win.
Higher margin already booked trucks.
Truck.
Anticipate that to be booked are expected to be produced and shipped.
Now, let me briefly discuss our strategic initiatives, which are in <unk>.
Laid out in more detail in our earnings release at a high level the lift truck business primarily.
Focus primary focus continues to be in an introduction.
Of its modular scalable products and transforming our sales approach by using an industry focus.
Yeah.
Need.
While it's only continues to work on streamlining and strengthening its operations, while increasing its Americas business and expanding its sales and marketing and.
Product support capabilities, Nevada continues to focus on ramping up demonstration quotes and bookings of 45 kilowatts and 60 kilowatt engines.
Overall, we continue to believe we have the right strategies in place for some long term financial results. Once we can achieve resolution of component shortages and relative stabilization of material and freight costs.
I'll now turn the call over to Ken for an update on future quarters and liquidity, Ken. Thanks, Rajiv as you've heard from both Allo Rajiv we continue to experience production and shipment levels, which are substantially lower than we would like due to the continued supply chain logistics constraints and component shortages and we've also been.
Faced with higher material and freight cost, we expect to continue to experience component availability constraints over the remainder of the year Nonetheless.
Nonetheless full year shipments are expected to increase significantly over 2021, given the company's robust backlog and actions put in place to mitigate the impact of the supply chain constraints and shortages, assuming no further fundamental components availability issues occur.
Significant material cost inflation and higher freight costs are expected to continue to affect the cost of production negatively in 2022.
We expect to work aggressively to manage component availability in order to increase production rates and continue to adjust prices as costs change as a result of these factors combined with the favorable factors of increased shipment volume potential of the current backlog and expected additional bookings in 2002.
<unk> enhanced pricing and renewal of U S tariff exclusions, we expect our lift truck business to have a larger 2022 operating and net loss in the second quarter than in the first quarter.
Moderating operating and net losses in the third quarter and a substantial profit in the fourth quarter.
Overall, the Russia, Ukraine conflict on a net basis has reduced the prospects for the remaining quarters of 2022, particularly in the expectation for Emea's second and third quarters that has not changed the overall pattern of quarterly improvements expected in the second half of 2022.
With the improvements expected over the second half of the year lift trucks fourth quarter profit is expected to more than offset the losses in the first nine months of 2022. This outlook is dependent upon the stabilization of product and transportation costs and continued improvement in component and logistics availability, although this could change.
<unk> as Rajiv has said if the availability of commodities <unk> components are severely affected as a result of the ongoing Russia, Ukraine conflict and the recent Lockdowns in China.
We are also anticipating the continued introduction of additional modular and scalable product families and the continued implementation of cost saving initiatives over this period and in the longer term.
Overall, our strategic programs as our strategic programs mature as cost and price come in line over 2022, and 2023 and as production volumes increase we expect our lift truck business to generate strong operating profit and net income in the fourth quarter of 2022 and into 2023.
As we indicated in our release, both Sony has a small operation in Russia, which is in the process of closing.
As a result of adjusting operations for the Russia, Ukraine conflict and adapting to the individual material inflation caused by the conflict. We expect <unk> second quarter operating profit and net income to be lower than the 2022 first quarter, but significantly higher than the loss realized in the prior year second quarter.
Also with component shortages expected to moderate and given the timing of pricing actions, we expect improving operating profit in the third and fourth quarters at <unk>, which is expected to result in sizable but moderately lower than previously anticipated operating profit and net income in 2022, compared with operating and net.
Losses in 2021.
Excluding the impact of inventory valuations and fixed asset impairment charges taken last year, we expect moderately reduced losses at Newbury in 2022, as a result of enhanced fuel cell shipments and expected lower production cost.
On a consolidated basis, given the business outlooks and lack of tax offsets against pre tax losses for the lift truck business, a new Vera we expect a larger net loss in the second quarter than in the 2020 to first quarter <unk>.
But still substantial net loss in the third quarter and a substantial net income in the fourth quarter of 2022.
However, the fourth quarter net income is not expected to offset the losses generated in the first nine months.
In general results in the remaining three quarters of 2022 are expected to be lower than what we had previously communicated last quarter, mainly due to the Russia, Ukraine conflict. These expectations are based upon the expected reasonable resolution of component shortages. Despite the recent lockdowns in China and relative stabilization.
<unk> material and freight cost.
We are carefully managing our capital expenditures operating expenses and production plans for 2022 in a manner designed to protect liquidity. We have implemented a program of strict controls over operating expenses to reduce cash outflow, including delays in timing of certain of our strategic program investments.
While we expect over time to make these capital expenditures and investments in the business maintaining liquidity will continue to be a priority.
During 2021 in early 2022, our ability to build and ship trucks was significantly constrained by part shortages of certain critical components, while the remaining components needed to build the truck were received and added the inventory, causing inventory levels to increase substantially we expect to reduce inventory significantly by using current inventory.
To build trucks for which production has been significantly delayed due to the critical critical parts shortages and receiving components as they are needed for production.
At March 31, 2022, we had cash on hand of $65 1 million and debt of 40 <unk> hundred 79.
$1 million compared with cash on hand of six the $5 5 million and debt of $518 5 million at December 31.
During the first quarter of 2022, we implemented a dealer advance deposit program and orders, which continued contributed to the reduction in debt levels.
As of March 31, 2022, we had unused borrowing capacity of approximately $218 million under our revolving credit facilities compared with $165 million at December 31.
I'll now turn the call back to al.
As we look to the remainder of 2022, we're continuing to focus on managing effectively in this challenging.
<unk> environment.
While we face short term challenges, including those of global events that have emerged over the past quarters the market dynamics in our business remains strong.
Innovative products.
And we are implementing the right programs in this highly inflationary environment. We remain confident that the actions. We are taking will enable us to return to stronger margins in the back half of the year and into 2023.
Further we continue to execute our mid term and long term strategies our strategy for the longer term. It is clear and transformative are key projects as well as the explicit objectives for the lift truck ball Zonian Numero businesses support this long term strategy.
Further expected improvement in nearer term prospects over 2022 with substantial profit in the fourth quarter and in 2023 suggest significantly improving.
<unk> at the lift truck business, despite current component availability challenges.
We also expect to improving adoption rates for key fuel cell market segments, as well as sound results and Paul Soni.
End markets are strong we have a record lift truck backlog strong current booking environment and we are currently working diligently to manage the supply chain headwinds.
<unk> going to invest in innovative products and in our key strategic projects to build a stronger long term business.
Once these challenges are behind US, we believe we will deliver solid sales and earnings performance.
I'll now turn to any questions that you may have.
<unk>.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby, while we compile the Q&A roster.
Your first question comes from the line of Steve Sarah Zani from Sidoti <unk> Company. Your line is open.
Good morning, everyone I appreciate your products so much color in the release.
Presentation of this thing, Sir sorry, very complicated and we look forward to.
When things can get a little bit simpler.
I heard a lot of notes really tried to cover some of those bigger topics.
In terms of shipping trends, which was down sequentially.
Your expectation that we see that sequentially improve through 2022, and how you're handling component shortages now because I'm hearing from other companies the issues, particularly with the electrical parts is still extremely challenging.
Yeah, So I think our plan.
<unk> currently is to increase production.
Of course, thats highly dependent on component availability.
We've seen as I've said in my remarks that we've seen a little bit of easing in component availability, but as you can imagine it takes one component outage to not build a truck fully and ship. It. So we are always very we are being very careful about.
And what were.
I'm kind of stating but.
But we see some easing we've changed some capabilities in our.
Manufacturing plants to be able to at least the very low volume build some of the components that have lead time issues.
So we're taking a number of actions to improve the situation and we see some improvement.
Of course, the more difficult one to really nail down at the moment is the impact of the.
Russia, Ukraine War and the reason that's difficult because if you look at what ships out of Russia, and Ukraine is predominantly raw material.
And so it takes more time for it to make an impact on our supply chain.
That really affects our tier three and tier four suppliers.
Initially.
We are out talking to tier one tier two suppliers to understand what that could look like.
The second one more immediate.
Covid lockdown issues in China, we have our China is an important part of our supply chain.
Most of our trucks and that one.
Monitoring and taking action.
<unk>.
But we are more concerned about that and again its impact also on our tier two and tier three suppliers.
I would just add to that.
The level of.
Activity by our supply chain team.
Is extremely high.
People are working with us.
Not just.
Giving suppliers an indication of what we'd like we're actively working with them figuring out how to break there are bottlenecks.
How to provide additional sources.
It's a very creative and dedicated program with a very large number of people. So.
I think what we've found is that we are able to find workarounds, we are able to help.
Our suppliers.
Put in.
Take capacity, increasing actions that make the ramp up.
<unk>.
At the level that we're contemplating.
Realistic over the course of 2022, but it is dependent on the factors.
Rajiv has mentioned.
We're finding as far as China is concerned that if you look more towards the south in Shenzhen in and around the Hong Kong area, where Covid moved through earlier late in last year and early this year and Lockdowns occurred, particularly in Hong Kong, but also in Shenzhen.
That situation is now largely alleviated, it's still there, but it can be managed.
At the moment as you know.
From the newspapers Shanghai has significant lockdown activity right now that's really clogging the ports, but we hope that the same thing will happen in the Shanghai area that happened in the Hong Kong Shenzhen area.
And that whatever problems there are will be.
More short lived than long live so we're aggressively working at thinking about it all the time and being very actively involved at all levels of management, including senior management effectively.
On a daily basis deep.
Deeply involved in supply chain activities.
And working closely with our suppliers at all appropriate levels to try to ensure that we get what we would really like to have.
And the component availability.
Great.
If I could also ask about bookings because I know for a couple of quarters, you've been saying you think that could start softening, but it's still a really really healthy and it was up sequentially as a seasonal aspect to that is this stronger than you were thinking maybe three or six months ago, because it still looks very strong even though youre, indicating you do.
It is going to decline at some point.
While the bookings are very strong and yes, I think they were higher than we are.
Might have been expecting and thats despite.
Efforts on our part.
To ensure that we have target margins and anything that we're booking today.
We are looking forward.
At the cost that we think will be incurred at the time, we expect to produce which is quite far out as you know because of the level of the backlog. Therefore, we have to forecast.
Material cost increases that will occur over the remainder of this year and to some.
Little or degree and the early part of 2023.
But I think.
Perhaps a more important aspect, it's not to look at the first quarter, but to say that.
We're being very cautious in our own internal forecasts and thinking.
About future bookings levels.
And frankly.
On.
If you want to call it I wouldn't call it a silver lining, but certainly a softening impact is the fact that if our bookings are lower than our shipment levels. We will finally start to bring down our lead times, which are much longer and we've had traditionally and that we would like.
And that would help us manage costs more effectively.
And help us meet customer requirements more quickly show.
Our real objective is to balance ourselves out at a production level, that's consistent with the market.
And but having brought down our lead times and a very significant.
And then of course shifts if in the in the middle term.
Costs do go down we'll moderate our pricing accordingly, we're going to make changes.
On a regular basis, depending on what happens in the.
And the cost area.
I think the only thing I would like to add to what Al said is we are seeing kind of the extended backlogs and thats not just if.
If you look at the bookings with the shipment data.
We expect most of our competitors are in a similar position and I think thats changing the customers' behavior.
And timing of when they put their orders then.
So I think.
Some of them quite a bit of that going on at the moment as well.
And if I could slip one more and its just.
The surprise to me anyway. It was a very strong lift truck Americas gross margin, obviously the tariff exclusions.
Reinstatement helped a lot are you thinking this is sustainable double digit now moving forward or was there anything particular this quarter. Because you mentioned next quarter could be a little bit I think we were very clear that.
The second quarter.
Will not be sustained.
At the level that we see.
It depends to some significant degree on the backlog mix.
And.
There are onetime factors, but as we look at the backlog that's likely to be produced in the second quarter there'll be.
The pressures.
We described in the.
In the release and I think the best way to think about them as that.
It's going to be a very tough second quarter.
Sure.
And perhaps one way to think about it is that theres been some shifting between the first and second quarters.
And looking at them as a first half than in the second half, we're expecting a third quarter that is better.
And then a really.
Good strong performance in the fourth quarter, we still see that pattern and we think that the.
The price increases that we're putting in place will.
B response here and particularly in the fourth quarter and in 2023 to even the cost increases that were.
Seeing as a result of the Ukraine.
Russia War, so it's a complicated.
Sorry, but.
I think thats, the best way to think about it yes.
Yes, I mean, the primary impact in the second quarter and probably the third quarter debt versus our plan is really coming from the inflation related to Ukraine, Russia.
And so that's been the piece that we.
And obviously hadn't predicted and when we talked last.
That's fair that's very helpful of course, thanks, Ashley Glory in EMEA, but.
I don't think you should assume that the margins will be as strong in the Americas either.
Yes.
Just look at yes.
We just looked at steel prices and the fact that European prices jumped also really reflected in north American prices jumping straight up at the same time because capacity was taken out of the system in Ukraine.
It's been a global impact on the steel side.
Okay.
Yes.
Your next question comes from the line of Chip Moore from Ian Hudson. Your line is open.
Hi, good morning, Thanks for taking the question.
And then wanted to stick with price cost.
Is it reasonable to think about the bulk of bookings sort of target margins starting to flow through in Q4.
How should we think about that timing given some of the incremental headwinds here and then really had great specifically I guess.
Last quarter I think you talked about some index protection measures. So maybe you can give us a bit of a sense of where those orders are in backlog and you also talked about the prepared remarks.
Going out to customers. So maybe you can give us some more color there.
I don't know that Theres a lot more we can give you except to say that we do expect that the margin performance in the fourth quarter and into 2023 quarters will be.
Significantly better that's the way we see it to current time.
Despite the impact of the.
Russia, Ukraine more and.
And the Covid situation in China. So.
I think we would probably leave it at that level.
We outlined it in the earnings release.
Okay. Yeah, no. That's fair you have given us great detail I wont beat it.
So maybe I can ask about <unk>.
Sort of bookings pipeline, they had some interesting announcements and partnerships during the quarter.
Particularly curious curious about Europe , given the energy dynamics over there.
What they're seeing.
Yes.
Sure maybe I'll take that one on that.
I'll take that so.
I think as we've touched on in terms of our strategic focus we are focusing on these.
Segments that we've identified.
Where we feel that lift trucks again.
Both lift trucks then.
Alight adjacent products, including on road trucks will be most likely to need.
Feel felt because of the amount of energy they need.
And so the team is really focused in on those segments and connecting with customers.
And those section segment really focused on putting that demonstration together.
What we are finding is demonstration vehicles that really show what the system can do is a big enabler for.
Both the hour.
OEM partners with customers to understand the benefit.
And the applicability of the truck so that the team is very intensely focusing on that and as you've seen we've made some releases on on those.
Kind of activities and ventures, we are following.
We have seen a jump in.
Kind of pipeline in Europe .
Certainly there is a lot more attention being paid to hydrogen.
And fuel cells in Europe , right now because of.
The issues with.
Russia kind of.
Carbon field and avoid both gas and oil so that's improved I think America <unk>.
<unk>.
Betty.
And we're starting to see a pickup in Asia as well both in China, China was already doing some slowed down a little bit by Covid, but again very active in the fuel cell area and now we are starting to see that in India.
Yes.
So those are I would say Europe has really progressed over the last three months I think.
The World was a big catalyst for it and I'm seeing the same thing in India as well.
I think that.
And then one hand niches subsequent of catalyst.
Way that Rajiv outlined it I think it's also a very significant psychological.
Impact there is a sense that.
In Europe that they simply cannot be reliant.
On the level of <unk>.
Imports.
Especially any imports from Russia.
And certainly in oil and probably in gas and in the middle term and so there.
<unk>.
A more certain sense that it isn't just about climate.
About energy security and they have to do.
More.
And thats going to involve hydrogen inevitably in our view so.
We think the.
Psychological environment for moving forward, particularly in Europe is significantly enhanced and I think edge.
One.
The area of the world settles in with applications.
That we're going to find that very quickly others of the world.
Follow along in the technology will start to be more proved out less conceptual and then as volume begins to develop.
<unk> potential economies of scale.
In cost can be unleashed shell.
That's what we're looking at and we think it is.
<unk>.
I think rajiv.
Implied that it's simply a different environment than it was even a quarter ago before the <unk>.
Russia, Ukraine more.
That's very helpful. Thanks for that.
And then just lastly for me just more of a housekeeping.
It looks like deferred rents ticked up substantially I assume thats, the dynamic of customer deposits and net dealer advance program, but maybe you can walk us through that.
Yeah.
Ken.
Yes, no I think.
The level of borrowing at the company had been decreased in the first quarter and that is primarily related to the.
Additional funds, we received under the advanced dealer deposit program. So we're able to put that to good use to reduce our debt and improve our availability quarter from the end of last year to the end of the first quarter.
But make no mistake as we look forward over the next.
The next two quarters.
The focus in the company.
With our suppliers is twofold, one is the component availability that we've discussed extensively.
The other is to make sure that they are.
<unk> that we are receiving are the ones we need in order to build so that we can work down the accumulated inventory.
That is on the books, so reducing the absolute value of inventory and getting then over time as production goes up the days on hand inventory at our traditional targets very highest priority for us.
Obviously, the inventory is all a good producible inventory supplier shortage and supply component supply shortage issues that have caused the inventory to build so there's a dual focus and with our suppliers in that regard.
Perfect.
Thank you very much everybody.
Again to ask a question you will need to press star one on your telephone again Thats Star one on your telephone. Your next question comes from the line of Brett Kearney from Gabelli funds. Your line is open.
Hi, good morning, Thanks for taking my question.
Hi, good morning.
Definitely I appreciate all the details in the release and on your commentary so far and certainly.
I certainly appreciate the.
Daily blocking and tackling going in particular on par senior management or the fire fighting involved in.
Working through these industry supply challenges curious.
Say that again it is day to day firefighting, we've got.
A fair number pretty tired people in the company and.
It's Ben.
I suppose from our point of view.
Very rewarding to see people, putting their shoulder to the wheel when it's really needed and that is exactly what they're doing so.
No.
We needed it and they've performed in that from the way you just described but it is tiring.
Certainly certainly.
Our one area, we've heard from others in the industry.
With these kind of evolving developments in eastern Europe is.
Note that a number of supplier specifically wire harnesses and steel frames are located in that area actually in western Ukraine curious on.
How you are seeing that.
That piece of the supply network and any thing Youre doing.
Around.
Managing through that item.
I would then ask Rajiv to comment on that but I'd, just say by way of introduction as you can well imagine.
<unk>.
Yes.
Sure.
The.
Okay.
The European companies have.
A lot more exposure in those areas than we do just because they're sourcing patterns tend to be different and their production locations tend to be different so.
I think that different companies in the industry youre going to have different experiences.
Based on known structure their supply chain and manufacturing locations for Rajiv.
Yes, so I think youre quite right I mean, we're working very very closely with our <unk>.
Fabrication suppliers.
In Europe to source deal.
And obviously, we have connections into the global steel the steel market, whereas.
Those suppliers are predominantly relied on European steel, which still.
There is availability, but.
The relationships.
The needed some help with that so we've worked through it.
We see.
We're working through the challenges, let's put it that way it was going to say.
We see our way clear, but but I think thats may be overstating. It a bit I think we still see some challenges, but we have made great progress we can have visibility out over the next two to three months.
It looks good.
Wire harnesses on the other hand have really suffered from component availability.
When I talk about components I'm talking about connect the shell terminal.
And that continues to be a challenge.
Our supply chain, who is not used to delving into that level of detail, we don't buy those parts.
They're heavily involved in it and I would say the same on the electronic component side.
Hood about microprocessors, but other component electronic components are also insured supply.
Our teams are working closely with our suppliers too.
Through.
Just like to emphasize the comment.
We've just made.
We are actively intervening.
Our suppliers' supply change to help them get components that they need.
So we're going beyond things.
We're engaging in activities it would not be at all normal.
For us to try to deal with these kinds of issues.
But John .
There are certain areas in wire harnesses and certainly one that are.
Constant source of focus for our team that is overworked, we're talking about before.
Okay.
That's very helpful and certainly appreciate all the work by you all.
The team, although paddling under the surface. So thanks very much.
Thank you.
There are no questions over the phone presenters. Please continue.
Thank you Al do you have any final remarks that you would like to make.
I think we've.
Laid out the situation.
In the.
The earnings release, we tried to be expansive and that level of detail that we're giving.
We've tried to give.
A little bit longer timeframe.
Some of our comments and we might normally do in the first quarter release and Thats, because obviously, there's just such a dynamic situation and we want to give our investors.
Clear and understanding as we possibly can.
Of the environment.
And.
So much of it is really contingent on the level of backlog we have it changes how we have to think about and present, our remarks and I think we've covered that quite thoroughly in the earnings release, So Christy if you'd like to close up.
Great Hi, Yes, we will close with just a few reminders every play of our call will be available online later this morning.
Also post the transcript of the Investor Relations site when it becomes available if you have any questions. Please reach out to me.
You can reach me at the phone number that's on the press release I Hope you enjoy the rest of your day.
Turn it back to the operator to conclude the call.
Thank you. So there will be a replay available of today's call starting at <unk> PM Eastern time, It will run through Monday may nine at midnight Eastern time, the dial in number is 8005 858367 and the conference I'd number is 190 9007.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Okay.
Okay.
[music].