Q4 2021 Universal Stainless & Alloy Products Inc Earnings Call
Good day, and thank you for standing by welcome to the Universal stainless fourth quarter 2021 conference call and webcast. At this time all participants are in a listen only mode. After the presentation. There will be a question and answer session to participate in that.
You will need to press star one on your telephone please be advised that today's conference is being recorded.
If you require any further assistance. Please press star zero I would now like to hand, the conference over to your host John filling the Cleveland.
Clearly Jerry I'm sorry. Please go ahead. Thank you Carmen. Good morning. This is June Phil and Jerry Com partners and I'd also like to welcome you to the Universal stainless call and webcast. We are here to discuss the company's fourth quarter 2021 results reported this morning.
With us from management are Danny.
President and Chief Executive Officer, Chris Zimmer Executive Vice President and Chief Commercial Officer, John <unk>, Vice President of administration, and General Counsel before I turn the call over to management, Let me quickly review procedures. After management has made formal.
Remarks, we will take your questions. The conference operator will instruct you on procedures at that time also please note that in this morning's call management will make forward looking statements under the private Securities Litigation Reform Act of $19 95, I would like to remind you of the risks related to these statements.
Which are more fully described in today's press release and in the company's filings with the Securities and Exchange Commission.
With these formalities complete I would now like to turn the call over to Danny Oates Denny we are ready to begin.
Thank you Jim.
Good morning, everyone. Thanks for joining us today.
Before we talk about fourth quarter results I'd like to take a moment to simply state the obvious.
Progress in the fourth quarter and in all of 2021 would not have been possible without the tireless efforts of every one of our employees and the support of their families and friends.
21 was a very challenging year with our business recovering from the pandemic, while also dealing with many unprecedented issues, including new Covid variance critical shortages uncertain schedules just to name a few nonetheless, our employees were up for the challenge all year long.
Because of their continued commitment we expect to make further progress this year and we are planning for sequential improvement in each quarter of 2022 as our markets continue to recover.
So let's talk about our results business momentum continued to accelerate during the quarter based upon a couple of different things.
Sales of $43 2 million were up 16% sequentially.
Premium alloy sales of $7 million up 19% sequentially.
We achieved record breaking vacuum melting production during the quarter.
And perhaps most importantly, as we sit here looking at 2022, our order backlog before surcharges reached a new company record high of $134 $5 million before surcharges.
The main driver behind this performance was strengthening aerospace demand, which continues today and is consistent with expectations of a recovery in aerospace in 2022 2023 and beyond.
Taking a deeper dive into the numbers.
The net sales of $43 2 million for the fourth quarter compared to $37 2 million in the 2021 third quarter and included quarter over quarter growth in each of our end markets.
Net sales increased 38% from the fourth quarter of 2020.
Premium alloy sales of $7 million or 16% of sales compared favorably to $5 9 million in the third quarter.
Our record order backlog in the fourth quarter of $134 5 million reflected solid order entry of $44 million.
More than 20% of the total backlog at the end of the fourth quarter consisted of premium alloy products.
Gross profit improved for the third consecutive quarter to $3 7 million or eight 7% of sales.
Third quarter gross profit was $2 3 million or six 2% of sales, while 2000, Twenty's fourth quarter was a loss of $5 1 million.
There were no special fixed cost absorption charges recorded given our production levels.
Q3, 2021 in Q4 2020 gross profit included fixed cost absorption charges of $1 5 million and $3 8 billion respectively.
Our progress in the most recent quarter reflects a number of benefits.
Number of positive things that occurred.
Generally higher production levels.
Positive product mix management, including more premium melted products.
Targeted pricing actions to offset inflation.
Record breaking production in our North Jackson premium melting facility.
And process improvements initiated over the last two years.
These positive factors were partially offset by three things.
First the ongoing labor shortage impacting all manufacturers continue continued and was compounded by a spike in absences related to Covid, specifically since Thanksgiving, we've experienced 10% to 15% call offs daily due to omnicom.
Fortunately it does appear the situation is slowly improving.
Secondly supply chain issues challenged a range of functions within the company.
All transportation and freight critical MRO parts delivery reliability.
<unk> raw material receipts.
Capital project completion, and basic planning and scheduling of operations.
And lastly, we experienced unplanned outages in our Bridgeville melt shop Hot mill, and a transformer, which services the entire plant.
These three outages alone reduced gross profit in the fourth quarter by $750000 or one 7% of sales.
As most of you know commodity prices have been on a bull run all year.
Compared to 2000, Twenty's fourth quarter nickel was up 19% at $9 10 per pound on December 31 is increase another 15% so far in 'twenty, two reaching $10 42.
As of this morning.
Molly and CRO more than doubled during 2000 22021, excuse me at $18 96, and $2 20 per pound respectively.
Vanadium increased in 2021 by 30% and reached $14 91 per pound and.
And lastly, scrap jumped almost 60% during the year.
In addition to these material cost inflationary pressures continue for other major consumable operating supplies maintenance parts and plant services.
We will address these issues through a combination of productivity improvements based price increases in raw material surcharges.
Towards this end, we announced four price increases in 2021 and implemented an additional base price increase of 3% to 10% on selected products effective January 10th.
Fourth quarter 2021, selling general and administrative expenses remained level with the third quarter at $5 million, but declined as a percent of sales to 11, 6% versus 13, 5% of sales in the third quarter.
We expect SG&A expenses to remain at current levels for the next few quarters.
Our effective tax rate for 2021 was 81, 3%, reflecting a benefit of $3 3 million on a pretax loss of $4 million.
The benefit includes a 21% statutory rate of $2 1 million add back for the PPP loan forgiveness gain and research and development credits, partly offset by expense from stock option forfeitures.
Our fourth quarter effective tax rate was negative 29, 2% driven by a pre tax loss.
Mark option forfeitures, and the impact of changes in tax rates on deferred tax balances.
That brings us down to a net loss for the fourth quarter of 2021 of $1 $6 million or <unk> 18 per diluted per diluted share.
In the 2021 third quarter, we recorded net income of $7 9 million or <unk> 87 per diluted share, which included a gain of $10 million due to the forgiveness of the payback protection program loan.
Before the PPP gain the third quarter net loss was $2 1 million or <unk> 23 per diluted share.
In the fourth quarter of 2020, the net loss was $7 3 million or <unk> 83 per diluted share.
There were pre tax fixed cost absorption charges in the 2021 third quarter in 2024th quarter as previously mentioned.
EBITDA for the fourth quarter of 2021 was $4 1 million and adjusted EBITDA was $4 million after adding $300000 in stock based compensation and deducting $4 million for an insurance claim settlement.
Moving onto our financial position.
Managed working capital increased $12 6 million during the quarter, reaching $136 9 million, reflecting sales and production growth along with rising commodity prices.
More specifically inventory increased by $5 $1 million or 4% to $147 million during the quarter.
The increase reflects an $8 $2 million increase in work in process inventory offset by a $2 $5 million reduction in raw materials, and a $5 million reduction in operating supplies.
The growth in work in process reflects our increasing backlog, particularly for premium products, and a $3 5 million and $3 $5 million for test material.
And the commissioning of our new vacuum arc, <unk> furnace, and an 18 ton crucible.
Virtually all of this test material has passed testing at this point and is now being applied to customer orders.
While the reduction in raw material inventory was caused mainly by heavy premium product production, we are still carrying about $1 million $5 million to $2 million in advanced raw material purchases to protect operations from potential supply chain failures.
Fourth quarter receivables increased by $1 5 million or seven 5% from the third quarter due to sales growth during the quarter.
Days sales outstanding remained unchanged from prior quarters and receivables are in great shape.
Accounts payable decreased $5 9 million or 20% from the third quarter to $24 million.
Fourth quarter capital spending totaled $4 6 million, bringing the year to date capital spend to $11 1 million exactly on the target we've discussed previously.
Depreciation and amortization totaled $19 3 million for all of 2021, and $4 8 million for the quarter.
Most of the capital spend in 2021 was for two strategic projects.
The addition of a state of the art vacuum arc re mail furnace to support growth in premium products and an 18 ton crucible for our vacuum induction melting facility to further reduce operating costs as we continued to ramp up.
I'm very pleased to report that the vacuum arc <unk> E mail furnaces, now fully installed commissioned and being integrated into our operations.
Ton Crucible as in the final stage of commissioning after a very smooth first campaign.
We're also pleased to announce today that our board has authorized the acquisition of two additional vacuum arc re mail furnaces, which are slated to begin operations in the second quarter of 2023.
This initiative is part of our strategic plan for 2022 and will support our growth and technically advanced premium alloys.
Total debt at December 31 was $69 2 million, an increase of $17 7 million from September 30.
$12 $6 million increase in managed working capital and capital spending of $4 6 million accounted for most of the increase.
Total gross availability under the revolver stood at $24 million at year end, providing more than ample liquidity for the ongoing ramp in activity.
Let's take a look at end markets, beginning with aerospace our largest market prior.
Our aerospace sales increased 16% to $26 million or 60% of sales in the fourth quarter.
Up from $22 3 million and 60% of sales in the third quarter of 2021.
KOSPI sales jumped 50% from the fourth quarter of 2020.
Full year 2021, aerospace sales were $91 5 million or 59% of total sales compared with $121 9 million in 2020, and $170 4 million in 2019.
So while our market is improving we are not back to 2019 and early 2020 levels.
However, the recovery in aerospace is gaining traction based upon improving travel activity increased deliveries a return of bookings for commercial and freight.
The freight sectors.
Single digit increases an already healthy defense spending and growing activity in general aviation.
A couple of data points for everyone to consider.
TSA traffic increased 219% versus 2020 fueling aftermarket demand.
Boeing delivered a better than expected 99 planes in the fourth quarter ending in 2021.
With 340 deliveries versus 157 in 2020 <unk>.
Airbus Similarly reported increased deliveries of 611 planes.
Gross new plane orders are increasing with Boeing at 909 and Airbus at 771.
China issued an airworthiness directive for the 737, Max a critical step in the return to service process and the increase in future build rates.
Backlogs remained strong with Boeing at 50, 136 planes and Airbus at 7082.
Airfreight grew 20% in 2021 and the outlook for freight at the freighter market is increasingly positive based on expanding E Commerce and express cargo markets.
Defense spending is expected to increase five 5%.
Business jet takeoffs and landings were up 40% in 2021 and inventory of used planes is very low.
Major airlines are highlighting strong spring and summer travel bookings and pent up demand for consumer and business travel.
And finally, the metal supply chain for aerospace is in good shape, perhaps even on the lean side in some areas.
We feel these positive trends were more than offset potential headwinds from 787 rework on the current trends.
Aircraft retirements and the related parting out and any supply chain issues, we still see an accelerating metal pull as we move through 2022 into 2023.
Certainly our growing backlog and a near doubling of our sales to <unk> in the fourth quarter supports our outlook.
The heavy equipment market remained our second largest market in the fourth quarter with strong growth in sales versus prior periods, specifically heavy equipment sales were $9 million or 21% of sales, which is 19% higher than the third quarter sales of $7 6 million and 50% higher than the fourth quarter of 2020.
Full year 2021, heavy equipment sales totaled $34 million or 22% of sales or 52% higher than 2020.
Metal fabrication demand drives our sales to the heavy equipment market the 52% increase in our 2021 sales reflects continued pickup in industrial manufacturing increased off road vehicle production and a high level of automotive retooling, our new model development.
Based on our bookings and forecast from customers, we expect our heavy equipment market sales to remain strong in 2022, even with some typical quarterly lumpiness.
The oil and gas end market was our third largest market in the fourth quarter with sales of $4 1 million, which was slightly ahead of the third quarter and represents nine 4% of total fourth quarter sales.
Oil and gas sales were up 78% from the fourth quarter of 2020 as oil prices soared in rig counts rose full year 2021 oil and gas sales were up 16% from 2020.
Oil prices remained at seven year highs in natural gas prices rose another 25% in the fourth quarter, bringing the full year increased 82%.
And both are setting the stage for continued recovery in drilling activity.
Last week Schlumberger reported strengthening activity in international markets, along with strong sequential growth in North America, driven in part by offshore and land based drilling activity.
Schlumberger expects a step up in industry capital spending in 2022 and described industry macro fundamentals is very favorable due to the combination of steady demand recovery and increasingly tight supply market and supportive oil prices.
Baker Hughes agrees with that assessment, and citing an increase of 228 rotary drilling rigs in the U S over the past year, while international rig counts were up by 169 over the same period.
Taking a closer look at the U S oil rig counts were up by 205% or 71% year over year, while gas rig counts were up 24% up 24 or 28%.
For the oil and gas supply chain more production equals more parts equals more demand for our metal while there continues to be some excess inventory in the channel we expect a pickup in our oil and gas market sales as we move through 2022, and we actually booked some very nice orders earlier this week.
General industrial market sales of $2 5 million or 6% of sales were up 18% from the third quarter of 2021, but 43% lower than the fourth quarter last year.
Full year sales totaled $9 million, which is 30% lower than in 2020.
Our general industrial market includes sales to the semiconductor medical and general manufacturing markets.
The semiconductor industry is coming off another strong year with ramped up production by chipmakers, leading to record sales and unit shipments through November .
Major investments are being made and chip manufacturing in the U S, which should benefit our customers.
Overall, we expect reasonable volume opportunities in the general industrial markets in 2022.
Power generation market sales increased to $1 2 million or 3% of sales an increase of 39%.
From 800000 or 2% of sales in the third quarter and up 24% from the fourth quarter a year ago full.
Full year sales were $4 6 million, which is 33% lower than 2020 sales.
Maintenance demand has accounted for most of our power Gen sales in recent years and it was the main driver of our fourth quarter sales, we expect that to be the case in 2022 as well, although we continue to anticipate some benefit from increased gas turbine backlogs at major Oems.
Longer term, while there is abundant discussion on what effect net zero emissions in the latter part of the century will have on the industrial gas turbine market recent reports tag industry growth through 2028 and at least the mid single digits.
So let me summarize business continue to come back in the fourth quarter, and we receive sequential sales growth of 16%, including 19% higher premium alloy sales as.
As well as a record backlog of $134 $5 million and a gross margin of eight 7%.
We also continue to narrow our bottom line loss.
Recovering aerospace demand was the main driver of our topline growth with aerospace sales up 16% from the third quarter and nearly 50% from the fourth quarter of 2020.
The latest reports on deliveries orders and build schedules at Boeing and Airbus combined with growth trends and the freight world business Jets and travel fueled.
After markets point to further recovery in demand in 2022.
Our sequential sales growth in the fourth quarter also included increases in the balance of our end markets and the outlook for each is positive in the coming year.
While there is no doubt that we will continue to be presented with challenges in our supply chain and from labor shortages and related issues, we plan to achieve sequential improvement in each quarter of 2022.
And looking to the future our strategic investments in 2021, and an additional var vacuum arc re mail furnace and 18 ton Crucible will begin lowering cost and expanding capability immediately.
Our board has now approved the acquisition of two additional vacuum arc re mail furnaces, which will further expand our product portfolio based on recent customer approvals.
Our balance sheet remains strong as we ramp up operations and invest in the future.
Our liquidity position is adequate to fund working capital needs as activity levels rise consistent with our record breaking backlog growing sales and targeted investments in the future.
I just want to repeat that none of our accomplishments will be possible without the dedication and resilience of our employees.
And add to support of our board customers and shareholders I remain sincerely grateful to all of them.
That concludes my formal remarks.
And we're ready to take some questions.
Thank you.
To ask a question simply press star one on your telephone.
Two other questions question, Pat or Harriss.
Again that is star one if you have a question one moment.
Our first question comes from the line of Phil Gibbs from Keybanc Capital. Your line is open.
Hey, good morning.
Bill has done today.
Good.
I just wanted to talk first about the raw material cost to surcharge spread in and how that impacted you one way or the other in the fourth quarter and what what Youre anticipating in the first quarter.
<unk>.
Seemingly fares deflating, but nickel and other things staying strong.
There was there was some positive misalignment, but it wasn't big enough to call out in the fourth quarter.
So as we've talked the last couple of quarters, our material costs are kind of catching up to the real market.
As we look at the first quarter you are right. We've got kind of mixed signals depending upon what you are looking at some of the commodities like nickel we continue to go up.
<unk> is trending down so our expectation is we will see surcharges continue to increase certainly we know they will for January and February already we will probably increase modestly in March.
From there, we're expecting stabilization in raw material costs in commodities, but as you know that's a wildcard.
So does that does that help you in all else equal in Q1 versus Q4 should we.
Can we anticipate that.
I hope you're aware it does get a little once you've seen a level that you gave us a modest plus in the first quarter.
Okay.
And then on the <unk>.
Syed.
Net working capital and Capex.
What's your outlook for 2022.
We would look.
We look at 2022, we expect each quarter to reflect higher sales.
As I outlined in my comments, we have some unusual things happening in the fourth quarter, because we have a fair amount of test material.
Which is now past tests. So we can now use that material.
Customer orders, which is another way of saying we wanted to melt that material in the first quarter.
So as you look at we had managed working capital over the course of this year I would expect some modest increase I'll use the modest word again.
Tracking with our sales.
And then.
Relative to the $11 million. This year I know you did some big projects, but you also have some some.
Some of our.
Equipment.
That's helpful.
Quarters.
Trying to understand how much of that.
<unk> accounted for that capital Scott, our best estimate right now would be to assume capital spending in 2022 of $20 million.
And the reason why I say that with a little bit of.
Little bit of qualification is the supply chain and when we can actually get some of these.
Projects Rolling.
And when we can expect actual receipt of equipment.
But directionally everyone should understand that we would expect to spend more capital in 2022 than we did in 2021.
We expect sales to be improving in each quarter, and we expect margins to be improving at the same time.
What's the.
What's the breakout.
The capital spending number that Youre forecasting for 2000 22022 in terms of mobile closely.
Closely.
The business with.
Broadly I would say about $89 million will be maintenance.
And the remainder would be.
The vacuum arc re mail furnaces I just alluded to.
And by maintenance I mean.
What I mean by that rate there are some high return small projects in there.
And by small I mean $5 million or less.
Okay.
I was just surprised me because I thought you all had excess capacity.
That's helpful.
Kathy.
Space for base that Youre, adding.
Now.
We're reviewing where we are going to install the vacuum arc re mail furnaces.
Agreed to install too so we're looking at where we're going to do that.
So that's another another point of variability in the $20 million.
Okay. Thank you.
Youre welcome.
Thank you and again, ladies and gentlemen, if you have a question simply press star one on your telephone.
Kim.
We have a question from Bob sales with <unk> capital.
Capital Your line is open.
Hi, Denny Congratulations again to all of you on the morning, Bob This performance.
Can you hear me okay.
Yes, yes.
Okay.
It sounds like there were some.
Headwinds on gross margins in the quarter with.
Chest materials I know you had talked in the past about chicken costs being higher it sounds like there was some inefficiency can you would you be able to peel back.
Do you think the total.
Impact of that was.
On the quarter.
While we called out $750000, which is specifically related to three incidents we had during the fourth quarter, which were unusual unplanned outages.
One was the melt shop crane failure.
Which was the mechanical issue.
And that required outside help and in this day and age is very difficult to call up and get immediate outside help so it causes to be down for an unusual amount of time.
Same thing with the transformer and the same thing with our Hot mill outage.
They were about $750000 that I can specifically identify as unusual costs in the fourth quarter that won't recur.
The other one is a bit of a wildcard in that is this whole subject of COVID-19 .
As you can imagine trying to schedule facility and run operations as efficiently as possible.
When you've got 10% to 15% of your employees kind of walking.
Going through the.
Cron five day off situation, we've been very fortunate.
That most folks have recovered from that very quickly.
But it did cause a fair amount of disruption in the operation and I suspect as you hear calls from other manufacturer you're going to hear the same thing because everyone's wrestling with.
Production over the last couple of months.
You already have a labor shortage in the country and on top of that having your existing employees.
Have a relatively high call off right.
So.
Difficult for me to put a number on that.
But it's in the hundreds of thousands of dollars clearly.
Okay.
Did you absorb any gross margin hit.
Any of the chest materials.
You were running for some of the specialty products or.
The impact on on freight that you think reverses at some point.
We tend to be pretty conservative on that so I would do is if you look at total fixed costs and forget directly we had $7 $1 million of fixed cost that hit the P&L in the fourth quarter, we had $7 $1 million with the P&L in the third quarter.
So some of those some of those factors in Bridgeville did.
And some under absorption.
As far as the test orders specifically.
If you go into an op youre trying to commission a new furnace in 18 ton Crucible.
You can't just turn those on and apply those orders, but close to those.
Pounds to customer orders.
Being an aerospace business with the validate that the equipment is working well and producing quality product, which means we have to make the product and we have to test it.
So there was extra spending by $3 $9 million I called out.
That's simply that's the variable cost of those.
Products sitting in the work in process inventory.
And there is some percent of fixed cost on those as well, but they will be fully recovered because virtually every pound turned out to be good product and that will all be applied to customer orders and be sold in due course over the first half of the year.
Okay, and then sticking with that thread on gross margins it looks like our premium alloy was 16%.
And you sound pretty confident of that as you look forward with the capital expenditures.
Can you.
Perhaps.
Joe I'll figure in the sand for us on where.
You'd like to target gross margins given.
<unk> with premium metals and other factors as you exit 'twenty two.
While we typically you don't give guidance that level of detail what I would tell you is I would expect double digit margins here as we move through the first half of the year.
In total.
Yes, yes, fair enough fair enough and expect it to improve each quarter as we go through the year.
Got it you see the backlog so we would expect these short term.
We would expect sales to improve.
By roughly the same range as you saw in the fourth quarter versus the third.
So that's what we're looking at based upon the backlog.
And with higher production and higher sales.
Sweeter mix, we would expect to see higher margins.
Got it and a longer term target as we said many times it would be up in the mid to upper teens from a gross profit margin standpoint.
Okay.
With I can't remember where.
Your premium products peaked in the last cycle.
16% when you look out to.
Sort of 'twenty, two 'twenty three 'twenty four.
What is your hope or expectation in terms of premium products as a percentage of revenue as we go forward.
While the percentage is one issue so somewhere between 20 and 25% I guess generally speaking, but I look more at the absolute dollar amount.
So with the in 2021, we were down around 26 $27 million.
I would expect that number to be well up in the <unk> in 2022.
And that product line is expect that product grouping is expected to grow very rapidly as north Jackson gives us up to speed in 'twenty 2023 and 2024.
We have said publicly many times, we think there is a $100 million of incremental revenue and premium melted products.
So we're somewhere in the $40 million range in 2022, which I think is a reasonable number.
We still have a way to go which is explains why we're making some of these investments we.
We've announced.
And that's the same playbook of positioning yourselves.
An alternative or secondary supplier to the Oems and the same quality.
Fly chain and then the qualification process that goes along with it is that.
Phil.
The strategy that you are.
Finally <unk> successfully.
Yes, we're looking at.
Areas of the premium melted market.
Where we feel there is room for us to participate from a competitive standpoint, and we have the capability of making those products.
And I think if you look at the last five or six years, we've demonstrated the ability to make those products based upon the approvals we've gotten.
We continue to get those approvals, we anticipate a few more later this year.
So that's the same game plan that we've talked about before.
Perfect, Thanks, and congratulations for.
Continuing to just really move on this.
Okay. Thank you.
Thank you again, ladies and gentlemen.
At this time press star one to get into Q1 moment.
We have a follow up from Alan.
Okay topic, Bob sales. Please go ahead.
Denny I will take the floor.
We will have the benefit of this beyond transcript youll see some calls with other people down the road.
Yes.
And then when you look at Arrow can you can you.
Again give us a figure.
I assume most of that growth now is in commercial as opposed to defense spending is that true.
Not necessarily.
Do a fair amount of defense spending.
Some of the new approvals of premium melted products would go in applications like helicopters for the military standpoint.
So it's not strictly commercial we're talking about.
Okay.
Excuse me.
I have a hard time, giving you a precise number because we don't we sell to forgers and we sell to service centers.
We don't sell directly to the Oems. So we don't have clear visibility, but we know where some of these grades of steel are used.
Yep.
And.
When you look at your pull through today in your visibility or your confidence on revenue growth as you go through 'twenty two.
Do you think the.
The majority of the poll is four.
Sort of the ongoing maintenance and reefer of existing fleets or do you think.
You're seeing more pull through for from new orders as we look at the Boeing and Airbus backlogs.
There's a base load that is aftermarket related.
I think a healthy portion of the backlog that we booked over the course of 2021 has to do with the outlook for aerospace build rates.
We used Boeing as an example, there are about 26 planes a month 730 sevens amongst now expecting to go to 31 by the end of the year and it continued to increase in 2023 and 2024 I know they've got a call later today, so that might change, but that's what people were looking at.
So if you think about that bill.
Build rates are going to accelerate later this year and into 2023, that's when it happened the parts have to be ready to the parts of that to be ready at that timeframe people are going to have to be behind the metal in the first half of the year to.
To make those parts, which means we would have had.
Need to be making that metal now.
And frankly, that's what that's a healthy chunk of what you see in our backlog.
Got it.
Okay, I think thats all I have for now.
Okay.
Thanks for the questions.
And thank you Sir.
That will conclude the Q&A session I will turn it back to Dennis for his final thoughts.
Thank you Carmen.
Once again, thank you for joining us. This morning, we're beginning 2002 and 2022 with a full focus on taking advantage of our market opportunities.
And we'll continue to press forward on our growth initiatives.
We look forward to updating you on our progress on our next call in April in the meantime be well stay safe and have a great day.
And my Dad, we conclude today's conference. Thank you for participating and you may now disconnect.
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