Q2 2022 Kimball Electronics Inc Earnings Call
Speaker 1: Good morning ladies and gentlemen. Welcome to the Kimball Electronics second quarter fiscal 2022 Ireland's conference call. My name is Victoria and I'll be your facilitator for today's call. All lines have been placed in a listen-only mode to provide any background noise. After the completion of the proposed remarks from the Kimball Electronics leadership team, there will be a question of the period.
Good morning, ladies and gentlemen, welcome to the Kimball Electronics second quarter fiscal 2020 earnings Conference call. My name is Victoria and I'll be a facilitator for today's call. All lines have been placed in a listen only mode to prevent any background noise.
After the completion of the prepared remarks from the Kimball electronics can be vicious leadership team there will be a question and answer period.
Speaker 1: To ask a question, simply press star and the number one on your telephone keypad. Today's call, February 8, 2022, is being recorded. A replay of the call will be available on the investor relations stage of the Kimball Electronics website. At this time, I would like to turn the call over to Andy Regret, head of investor relations. Mr. Regret, you may begin.
I'll ask a question simply press star and the number one on your telephone keypad todays call February eight 2022.
Recorded.
Of the call will be available on the Investor Relations page of the Kimball electronics website at this time I would like to turn the call over to Andy would go up head of Investor Relations. Mr. Greg You may begin.
Speaker 2: Thank you, Victoria, and good morning, everyone. Welcome to our second quarter conference call. With me here today is Don Sharon, our chairman and CEO , and Jana Kroom, vice president, chief financial officer.
Thank you Victoria and good morning, everyone welcome to our second quarter Conference call with me here today is Don sharing our chairman and CEO and Janet <unk>, Vice President and Chief Financial Officer.
Speaker 2: We issued a press release yesterday afternoon with our results for the second quarter of fiscal 2022. To accompany today's call, a presentation has been posted to the investor relations page on our company website.
We issued a press release yesterday afternoon with our results for the second quarter of fiscal 2022 to accompany today's call. Our presentation has been posted to the Investor Relations page on our company website.
Speaker 2: Before we get started, I'd like to remind you that we will be making forward-looking statements that involve risk and uncertainty and are subject to our safe harbor provisions as stated in our press release and SEC filings, and that actual results can differ materially from forward-looking statements. All commentary today is focused on adjusted non-GAAP results. Reconciliations of GAAP to non-GAAP amounts are available in our press release.
Before we get started I'd like to remind you that we will be making forward looking statements that involve risks and uncertainty and are subject to our safe Harbor provisions as stated in our press release and SEC filings and that actual results can differ materially from forward looking statements. All commentary today is focused on adjusted non-GAAP results reconciliations of GAAP to non.
GAAP amounts are available in our press release. This morning, Don will start the call with a few opening comments Jen will review the financial results for the quarter and guidance for fiscal 2022, and Don will complete our prepared remarks before taking your questions I'll now turn the call over to Don.
Speaker 2: This morning, Don will start the call with a few opening comments. Jana will review the financial results for the quarter and guidance for fiscal 2022. And Don will complete our prepared remarks before taking your questions. I'll now turn the call over to Don.
Thanks, Andy and good morning, everyone.
Q2 was another hard fought quarter for our company as global supply chain issues stemming from the COVID-19, pandemic persisting and adversely impacted our results.
Speaker 2: Q2 was another hard-fought quarter for our company, as global supply chain issues stemming from the COVID-19 pandemic persisted and adversely impacted our results.
Speaker 2: Component shortages continue to make it extremely challenging to obtain the materials needed to support customer demand.
Ponant shortages continue to make it extremely challenging to obtain the materials needed to support customer demand.
Speaker 2: While conditions improved modestly in December with sales accelerating, the loss absorption was significant once again this quarter. As we remain committed to retaining our highly skilled work force and anticipation of a strong second half to the fiscal year.
While conditions improve modestly in December with sales accelerating the loss absorption was significant once again this quarter as we remain committed to retaining our highly skilled workforce in anticipation of a strong second half to the fiscal year.
Speaker 2: We continue to be well positioned with record levels of backlog and we are reiterating our sales guidance for fiscal year 2022. Although we expect to finish the year at the lower end of the ring.
We continue to be well positioned with record levels of backlog and we are reiterating our sales guidance for fiscal year 2022, Although we expect to finish the year at the lower end of the range.
Speaker 2: We are revising our operating income margin guidance to reflect the difficult first half and our outlook for the balance of the fiscal year.
We are revising our operating income margin guidance to reflect the difficult first half.
And our outlook for the balance of the fiscal year.
Speaker 2: Our manufacturing facilities worldwide have been ramping up production with the expectation of running several lines at maximum capacity in the months and quarters to come.
Our manufacturing facilities worldwide have been ramping up production with the expectation of running several lines at maximum capacity in the months and quarters to come.
In many instances.
Speaker 2: we are the single source supplier for our customers. So they share our eagerness for conditions to normalize so that we can both deliver on our contractual agreements.
We are a single source supplier for our customers. So they share our eagerness for conditions to normalize so that we can both deliver on our contractual agreement.
Speaker 2: We believe transparency builds trust, and I'm proud to report our teams have faced these unprecedented times, head on with customer collaboration at levels even higher than our award-winning nor.
We believe transparency builds trust and I'm proud to report our teams have faced these unprecedented times head on with customer collaboration that levels, even higher than our award winning norm.
Speaker 2: The partnerships we form through this collaboration often lead to new opportunities.
The partnerships, we formed through this collaboration often lead to new opportunities.
Speaker 2: And I'm excited to announce our plans to expand the facility in Poland.
And I am excited to announce our plans to expand the facility and posed in Poland.
Speaker 2: This is our third facility expansion in the last 15 months and is representative of our high level of success in winning new visits.
This is our third facility expansion in the last 15 months and is representative of our high level of success in winning new business.
Speaker 2: Similar to Thailand and Mexico, the additional capacity is needed for programs with new and existing customers.
Similar to Thailand, and Mexico, the additional capacity is needed for programs with new and existing customers.
Speaker 2: We expect the expansion in Poland to add approximately 40% to existing production square footage. And we will leverage our team in Poland to support our customers based in Europe when the expansion is completed in early fiscal year 2024.
We expect the expansion and post them to add approximately 40% to existing production square footage and we will leverage our team in Poland to support our customers based in Europe . When the expansion is completed in early fiscal year 2024.
Speaker 2: We are updating our guidance for capital expenditures in fiscal year 2022, which will include early investments in Postman and additional capital related to a major win with a long-standing customer.
We are updating our guidance for capital expenditures in fiscal year 2022, which will include early investments in Posen, and additional capital related to a major win with a long standing customer.
Speaker 2: whose next generation electronic braking system will support one of the most popular vehicles in the world.
Who's next generation electronic braking system will support one of the most popular vehicles in the world.
Speaker 2: This investment is incremental to the current facility expansion in Rinoza. And similar to Poland, reflects the success we're experiencing in new business development activities.
This investment is incremental to the current facility expansion in Reynosa and similar to Poland reflects the success, we're experiencing in new business development activities.
Speaker 2: With the expansions in Thailand, Mexico, and Poland, we will expand our square footage and capabilities to support growth potential in excess of $2 billion of annual revenue.
With the expansion in Thailand, Mexico, and Poland, We will expand our square footage and capabilities to support growth potential in excess of $2 billion of annual revenue.
Speaker 2: This is critical as we look at the strength of our funnel and newly awarded programs.
This is critical as we look at the strength of our funnel and newly awarded programs.
Speaker 2: While we are disappointed in the first half and outcome driven by the material shortages, and the resulting lower forecast for operating income in fiscal year 2022, we fully anticipate returning to an annual run rate for operating income levels in a range of 4.5 to 5% of net sales as the supply chain normalizes.
While we are disappointed in the first half and.
An outcome driven by the material shortages and the resulting lower forecast for operating income in fiscal year 2022.
We fully anticipate returning to an annual run rate for operating income levels and a range of four 5% to 5% of net sales as the supply chain normalizes.
Speaker 2: In fact, we expect our second half to ramp up significantly throughout the period with a very strong finish to the fiscal year and operating income above that range as we work down the backlog of work.
In fact, we expect our second half to ramp up significantly throughout the period with a very strong finish to the fiscal year and operating income above that range as we work down the backlog of orders.
Speaker 2: Turning back to the results of the second quarter, net sales were down 2% versus Q2 last year.
Turning back to the results for the second quarter net sales were down 2% versus Q2 of last year.
Speaker 2: And while three or four vertical markets reported increases year over year, it was not enough to offset automotive, which was down 8% in the quarter when compared to the record sales level of Q2-lash.
Well three or four vertical markets reported increases year over year.
It was not enough to offset automotive, which was down 8% in the quarter when compared to the record sales level of Q2 last year.
Speaker 2: This represents the first quarterly decline in automotive in over a year. With the shortage of semiconductors, largely responsible for the short.
This represents the first quarterly decline in automotive and over a year with.
With the shortage of semiconductors, largely responsible for the shortfall.
Speaker 2: The impact of the pandemic on this industry has been well publicized with an estimated 7 million vehicles worldwide cut from production in Caledir 2021.
The impact of the pandemic on this industry has been well publicized with an estimated 7 million vehicles worldwide cut from production in calendar year 2021.
Speaker 2: While consumer demand exceeded the results, the resulting limited supply. OEMs are forecasting double digit growth as the industry looks to recover. And consumers are becoming increasingly more accustomed to longer lead times and high...
While consumer demand exceeded the results with the resulting limited supply Oems are forecasting double digit growth as the industry looks to recover.
And consumers are becoming increasingly more accustom to longer lead times and higher sticker prices.
Speaker 2: These new industry dynamics combine with the Megatron to add electronic content to vehicles through advanced technologies and expanded operating systems. Represent a meaningful, organic growth opportunity for the automotive vertical market in the years to come.
These new industry dynamics combined with the Mega trend to add electronic content of vehicles through advanced technologies and expanded operating systems represent a meaningful organic growth opportunity for the automotive vertical market in the years to come.
Speaker 2: As a reminder, many of the new applications that we support are largely the same for both electric and internal combustion engines. And the stringent production standards in the automotive industry align very well with our core manufacturing company.
As a reminder, many of the new applications that we support are largely the same for both electric and internal combustion engine and the stringent production standards in the automotive industry aligned very well with our core manufacturing competencies.
Speaker 2: Sales in the medical vertical market increased 3% in Q2, a welcome rebound to a business that has experienced ebbs and flows throughout the pandemic.
Sales in our medical vertical market increased 3% in Q2, a welcome to rebound to a business that has experienced ebbs and flows throughout the pandemic the.
Speaker 2: increased this quarter was driven by the launch and ramp up of new product.
The increase this quarter was driven by the launch and ramp up of new products.
Speaker 2: Longer term, we remain very positive on the growth opportunities in our medical business with mega trends in the healthcare industry providing an excellent setup. This includes an aging population, increasing access and affordability to care, decreasing device sizes, and connected drug deliveries.
Longer term, we remain very positive on the growth opportunities in our medical business with Mega trends in the health care industry, providing an excellent setup.
This includes an aging population, increasing access and affordability to care.
Decreasing device sizes and connected drug delivery systems.
Speaker 2: Additionally, our focus on medical markets as demonstrated by the launch of Kimball Medical Solutions should continue to drive growth in a medical vertical, supporting our goal of 30% of our revenue coming from this space.
Additionally, our focus on medical markets as demonstrated by the launch of Kimball Medical solutions should continue to drive growth in our medical vertical supporting our goal of 30% of our revenue coming from this space.
Speaker 2: The industrial vertical market also finished the second quarter with sales increasing up 6%. Similar to medical, we're glad that the industrial shows some early signs of bouncing back from today's challenging operating environment.
The industrial vertical market also finished the second quarter with sales increasing up 6% similar to medical was glad to see industrial show. Some early signs of bouncing back from today's challenging operating environment.
Speaker 2: This is an encouraging step toward returning to growth in this business, which we commonly refer to as green and clean.
Is an encouraging step toward returning to growth in this business, which we commonly referred to as green and clean.
Speaker 2: Climate control, smart metering, and new customer additions drove the increase in Q2, and represent the longer term.
Climate control smart metering and new customer additions drove the increase in Q2.
And represent the longer term growth opportunities as.
Speaker 2: as individual awareness of consumption and ultimately conservation of water, gas, and electricity increases in popularity in Europe and eventually the US.
As individual awareness of consumption and ultimately conservation of water gas and electricity increases and populated popularity in Europe , and it's actually the U S.
Speaker 2: And finally, sales in public safety were 10.8 million, a 3% increase compared to the second quarter of last year.
And finally sales in public safety were $10 8 million, a 3% increase compared to the second quarter of last year.
Speaker 2: So in summary, a challenging quarter was very good work from our team in tough conditions.
So in summary, a challenging quarter with very good work from our team in tough conditions.
Speaker 2: We are seeing signs of improvement as evidence by the higher level of sales in Q2 compared to Q1 and 8% increase with December being the best month.
We are seeing signs of improvement as evidenced by the higher level of sales in Q2 compared to Q1, and 8% increase with December being the best month.
Speaker 2: I'll now turn the call over to Janna to discuss two results in more detail. She will also review our updated guidance for fiscal year 2022. Janna?
I'll now turn the call over to Jana to discuss Q2 results in more detail.
He will also review our updated guidance for fiscal year 2022.
Jana.
Thanks, Don and good morning, everyone.
Speaker 3: Next sales in the second quarter with $315.3 million.
Net sales in the second quarter with $315 3 million.
Speaker 3: 2% debt decreased compared to $320.6 million.
<unk>, 2% decrease compared to $326 million in Q2 last year.
Speaker 3: Foreign exchange rates had an negligible impact on sales in the...
Foreign exchange rates had a negligible impact on sales in the quarter.
Speaker 3: Our growth margin rate in Q2 was 6.6.
Our gross margin rate in Q2 was six 6%.
Speaker 3: 270 basis point decreased from the second quarter of last
270 basis point decrease from the second quarter of last year.
Speaker 3: Similar to Q1, the decline was driven by lower year over year volumes and the resulting loss absorption that Don mentioned in his opening comment.
Similar to Q1, the decline was driven by lower year over year volume.
And the resulting loss absorption that Don mentioned in his opening comments.
Speaker 3: Higher material costs, increased freight, and higher weight inflation than other labor.
Higher material costs.
Creek III and.
And higher wage inflation and other labor costs.
Speaker 3: This was partially offset by lower profit sharing bonus expense and lower depreciation, resulting from a change in the estimated useful lies on surface mount technology production.
This was partially offset by lower profit sharing bonus expense and lower depreciation, resulting from a change in the estimated useful lives on surface Mount technology production equipment.
Speaker 3: Adjusted selling and administrative expense worth $315.5 million or 4.3% of net sales in the
Adjusted selling and administrative expenses were $315 5 million or.
Four 3% of net sales in the second quarter.
Speaker 3: This compares to adjusted, selling an administrative expense in the second quarter of last year of $12.7 million or 4% of net sales.
This compares to adjusted selling and administrative expense in the second quarter of last year at $12 7 million or 4% of net sales.
Speaker 3: The increase was primarily due to non-recurring charges of roughly $1 million related to executive success.
The increase was primarily due to nonrecurring charges of roughly $1 million.
Related to executive succession planning.
Speaker 3: Adjusted operating income for the second quarter was $7.3 million or 2.3% of net sales.
Adjusted operating income for the second quarter was $7 3 million or two 3% of net sales.
Speaker 3: This compares to operating income of $17 million, or 5.3% of net sales in the second quarter of fiscal 2020.
This compares to operating income of $17 million or five 3% of net sales in the second quarter.
2021.
Speaker 3: With the decrease resulting from lower, failed volume and the corresponding...
With the decrease resulting from lower sales volume and the corresponding loss absorption.
Speaker 3: Other income and expense was expense of $0.2 million in the second quarter, which compares to income of $2.4 million.
Other income and expense was expense of point.
$2 million in the second quarter, which compares to income of $2 4 million in Q2 of fiscal 2021.
Speaker 3: This change was mainly due to the impact of FX-Gain loss due to foreign currency remeasurement.
This change was mainly due to the impact of FX gain loss due to foreign currency re measurement.
The effective tax rate in Q2 was 23, 7% compared to an effective tax rate of 19% in the second quarter of fiscal 2021.
Speaker 3: compared to an effective tax rate of 19% in the second quarter of fiscal 2020.
Speaker 3: The increase resulting from favorable mix and earnings last year in jurisdictions with tax rates lower than...
The increase resulting from favorable mix of earnings last year in jurisdictions with tax rates lower than the U S.
Adjusted net income in the second quarter of fiscal 2022 was $5 1 million or.
Speaker 3: Adjusted net income in the second quarter of fiscal 2022 worth $5.1 million or 20 cents per dilute.
Or <unk> <unk> per diluted share.
Speaker 3: here to adjust the income and Q2 last year of $15.2 million for 60 cents per Work Ofhood <expletive> .
Compared to adjusted net income in Q2 last year of $15 $2 million was <unk> 60 per diluted share.
Now turning to the balance sheet.
Speaker 3: Cash and cash equivalents at December 31, 2021 were $56.7 million. And cash flow used for operating activities.
Cash and cash equivalents at December 31, 2021 was $56 7 million.
And cash flow used for operating activities. During Q2 was $48 3 million.
Speaker 3: Cash conversion days for the quarter were up 81 days, were 81 days up from 75 days in the second quarter.
Cash conversion days for the quarter were up 81 days were.
Were 81 days up from 75 days in the second quarter last year.
Speaker 3: Inventory has increased over $40 million in the quarter and over $100 million.
Inventory has increased over $40 million in the quarter and over $100 million year to date.
Speaker 3: This increase is the result of purchasing materials that are needed and available today, so that we can quickly fill customer orders when parts impacted by the component shortage are received.
This increase is the result of purchasing materials that are needed and available today. So that we can quickly fill customer orders when parts are impacted by the component shortage RFP.
Speaker 3: There is a notable correlation between the distinguishable and the absorption rate which adversely impacted our O.I. margin for the quarter.
There is a notable correlation between the inventory build and the absorption rate, which adversely impacted our NOI margin for the quarter.
When the part shortage debate.
Speaker 3: We worked down the backlog of open orders. We will likely see an inventory level.
And we work down the backlog of open orders, we will likely see inventory levels normalize.
Speaker 3: Capital expenditures in the second quarter were $15.1 million, largely in support of our facility expansions in Thailand and Mexico.
Capital expenditures in the second quarter were $15 $1 million largely in support of our facility expansions in Thailand, and Mexico and to support New business Awards.
Speaker 3: Barrowings on our credit facility at December 31st, 2021 were $103 million compared to $86.1 million at December 31st, 2020.
Borrowings on our credit facility at December 31, 2021 were 103 million.
<unk> to $86 1 million at December 31, 2020, and $72 6 million at September 32021.
Speaker 3: $72.6 million at September 30th.
Speaker 3: Our short term liquidity available represented is cash and cash equivalence plus the unused amount of our credit.
Our short term liquidity available represented as cash and cash equivalents plus the unused amount of our credit facility totaled $119 $5 million at December 31, 2021.
Speaker 3: total $119.5 million at December 31, 20.
Speaker 3: There were no shares we purchased in the second quarter of fiscal year 2022. However, as we look at our balance sheet and current capital allocation opportunities, we believe share repurchase continues to be an effective use of our capital, especially given the recent share.
There were no shares repurchased in the second quarter of fiscal year 2022, However, as we look at our balance sheet and current capital allocation opportunities. We believe share repurchase continues to be an effective use of our capital, especially given the recent share price.
Speaker 3: In October 2015, under our Board Authorized Share Repurchase Program, a total of $79.7 million was returned to our share owners by purchasing 5.3 million shares of our common stock.
Since October 2015 under our board authorized share repurchase program, a total of $79 $7 million was returned to our shareowners by purchasing five 3 million shares of our common stock.
Speaker 3: We have $20.3 million remaining on the Repurchase Program available for
We have $23 million remaining on the repurchase program available for deployment.
Okay.
Speaker 3: As Don highlighted, we are reiterating our sales guidance for fiscal year 2022, although we currently expect to finish the year at the lower end of our range of 1.4 to 1.5 billion dollars.
As Don highlighted we are reiterating our sales guidance for fiscal year 2022, Although we currently expect to finish the year at the lower end of our range of one four to $1 5 billion.
Speaker 3: Operating income margin is expected to be 3.75% to 4.25% of net sales.
Operating income margin is expected to be $3, 75% to $4 two 5% of net sales.
Speaker 3: This compares to our original guidance of 4.5% to 5% of
This compares to our original guidance of four 5% to 5% of net sales.
Speaker 3: As Dom stated earlier, longer term we expect 4.5 to 5% OI.
As Don stated earlier longer term, we expect four 5% to 5% ally margin.
Speaker 3: We are also updating our guidance for capital expenditures for fiscal year 2022 to arrange a $70 to $80 million compared to our original
We are also updating our guidance for capital expenditures for fiscal year 2022 to a range of $70 million to $80 million.
Compared to our original guidance of $60 million to $70 million.
Speaker 3: This update includes the facility expansions in Thailand and Mexico and early investment and Poland as well as the additional investment to support the new products win which we referenced earlier.
This update includes the facility expansion in Thailand and Mexico.
And early investment in Poland.
As well as the additional investment to support the new product wins, which we referenced earlier.
I'll now turn the call back over to Tom.
Thanks Jana.
Speaker 2: Before we open the line for questions, I'd like to share a few thoughts and quotes.
Before we open the line for questions I'd like to share a few thoughts in closing.
Speaker 2: The first half of fiscal year 2022 was not for the faint of heart. With the ongoing pandemic, global supply chain issues, park shortages, and rising costs, creating an operating environment unlike any other in my career.
The first half of fiscal year 2022 was not for the faint apart with the ongoing pandemic global supply chain issues parts shortages and rising costs, creating an operating environment. Unlike any other in my career.
Speaker 2: But as I highlighted in my opening comments, our team has confronted these tough conditions head on. And we are forecasting a strong second half for the fiscal year.
But as I highlighted in my opening comments our team has confronted these tough conditions head on and we are forecasting a strong second half to the fiscal year.
Speaker 2: With our backlog of open orders at record levels, up approximately 78% year over year, we expect the strength to continue into fiscal year 2023 as the parts shortage continues to improve.
With our backlog of open orders at record levels.
Up approximately 78% year over year.
We expect this strength to continue into fiscal year 2023, as the part shortage continues to improve.
Speaker 2: During these unprecedented times, we've also been very successful in winning new business.
During these unprecedented times, we have also been very successful in winning new business.
Speaker 2: which contributed to today's announcement of the Facility Expansion in Poland.
Which contributed to today's announcement of the facility expansion in Poland.
Speaker 4: We expect these investments will strengthen and add new capabilities.
We expect these investments will strengthen and add new capabilities to.
Speaker 4: to our package of value as a multifaceted, manufacturing solutions provider. And as we look to grow our business and approach the $2 billion revenue milestone in the coming years. I'm also pleased.
To our package of value as a multifaceted manufacturing solutions provider and as we look to grow our business and approach the $2 billion revenue milestone in the coming years.
I'm also pleased to share that one of those expansion the facility in Thailand is complete and we recently celebrated the grand opening with a ribbon cutting ceremony.
Speaker 4: The facility in Thailand is complete. And we recently celebrated the grand opening with a ribbon cutting ceremony.
Speaker 4: $8 million project was completed on time and on budget, and we'll add capacity and throughput to the second half of fiscal year 2022.
The $8 million project was completed on time and on budget, and we will add capacity and throughput for the second half of fiscal year 2022.
Speaker 4: From a macro perspective, conditions are improving, improving, but very slowly.
From a macro perspective conditions are improvements improving but very slowly.
Speaker 4: Sale volumes are building with December representing the best month of Q2. And while we expect this trend to continue, we run our business for the long term and have made decisions to ensure stability in our workforce so that when the disruption debate and conditions normalize, and eventually they will, we will be in a position of strength to support our customers and a solid funnel of new awards.
Sales volumes are building with December representing the best month of Q2, and while we expect this trend to continue.
We run our business for the long term and have made decisions to ensure stability in our workforce so that when the disruptions abate.
And conditions normalize and eventually they will we will be in a position of strength to support our customers and a solid funnel of new awards.
Speaker 4: Throughout this period, we have never lost sight that the health and safety of our people is our number one priority. We continuously monitor our protocols to ensure they evolve as new complexities from COVID-19 emerged. And I'm so proud of our team and their passion for doing the right thing.
Throughout this period, we have never lost sight that the health and safety of our people is our number one priority we.
We continuously monitor our protocols to ensure they evolve as new complexities from COVID-19 emerged and I'm. So proud of our team and their passion for doing the right thing.
Speaker 4: This is highlighted in our ESG report for 2021, which was recently published and is available on our corporate website.
This is highlighted in our ESG report for 2021, which was recently published and is available on our corporate website.
Speaker 4: The report demonstrates how our company has enhanced transparency regarding our policies, statements, and goals in human rights, supply chain transparency, occupational health and safety, diversity and inclusion, progress on environmental stewardship and good governance. We are truly focused on creating quality for life. if I run out of money in one step.
Report demonstrates how our company has enhanced transparency regarding our policies statements and goals.
And human rights supply chain transparency, occupational health and safety diversity and inclusion progress on environmental stewardship and good governance.
We are truly focused on creating quality for life.
With that I'd like to open the lines for questions.
Or do we have any analysts with questions in the queue.
Speaker 1: Thank you, Tom. Ladies and gentlemen, analysis may ask a question by simply pressing start for the per 1. You may remove yourself from the key by pressing start to or your dial pad. We love that if you are using speaker phone, you pick up your headset before asking a question.
Thank you Tom.
Ladies and gentlemen, and I just may ask a question by pressing Star Phillip Huang you may remove yourself from the queue by pressing star one.
But without that if you are using a speakerphone you pick up your headset before asking your question.
Speaker 1: And our first question comes from Andrew Sundestock from CWT. Please go ahead, your mind is open.
And our first question comes from Joe <unk> from Sidoti. Please go ahead. Your line is open.
Speaker 5: Hi, and thank you for keeping my questions. And my first question is going to be about the improvement just going to December in the supply constraints. How has that been trending since then? And how confident are you in your second half outlook? It seems like some other players I think is going to be a little bit more prolonged the challenging environment throughout the calendar year.
Hi, and thank you for taking my questions.
Hi, My first question is going to be about the improvement you saw in December in the supply constraints.
Has that been trending since then.
Confidence.
And second half outlook Gibson is makes some other players I think is going to be a little bit more prolonged challenging environment throughout the calendar year.
Speaker 4: Well, Agniesz is definitely dynamic. That's for sure. I think when the Omicron variant started spread through our supply chain and our supply bays, I think we did see a loss of momentum in the recovery work and lost a little wind that was developing in our sales to get to more of a confident position in terms of determining our outlook.
Well.
It's definitely dynamic that's for sure I think when the omicron variant started to spread through our supply chain and our supply base I.
I think we did see a lot of momentum in the recovery.
Work and lost a little win that was developing in our sales.
To more and more of a confident position in terms of determining our outlook.
Speaker 4: I do, I would say that the Omicon variant though was disruptive in a much shorter period of time and didn't last as long as certainly the Delta variant did.
I would say that the <unk> variant, though was disruptive.
Much shorter period of time and Didnt last as long as certainly the delta oriented.
Speaker 4: We're obviously cautious, we're optimistic about the outlook. We definitely see some signs of recovery, but this isn't something that's gonna get better overnight. We think it's gonna be a gradual improvement over a long period of time. Certainly the rest of the calendar year, but some component categories already are showing some signs of improvement. That's encouraging, but the outlook is still.
Yes.
Obviously cautious cautiously optimistic about the outlook, we definitely see some signs of recovery, but this isn't something that's going to get better overnight.
We think it's going to be a gradual improvement over a long period of time.
Certainly the rest of the calendar year.
But some component categories already are showing some signs of improvement.
That's encouraging.
The outlook is still.
Speaker 4: It feels difficult to say with confidence what the outlook will be. Certainly, it's looking better than it has in recent periods just because we feel like we're on the other side of the Omicron variant spread and things that are getting better again.
Difficult to say with confidence what the outlook will be certainly.
It's looking better than it has.
In recent periods, just because we feel like we're on the other side of the omicron variant spread and things are getting better again.
Speaker 4: So I think our confidence in being able to talk about holding.
I think our confidence in being able to talk about holding.
Speaker 4: The lower end of our revenue guidance is really based on what we think is a pretty realistic view of the component we kind of read that we expect to happen during this quarter, this quarter being the third quarter of fiscal year 2022 and the fourth quarter of fiscal year 2000.
The lower end of our revenue guidance is really based on what we think is.
Pretty realistic view of the component recovery.
That we expect to happen during this quarter this quarter being the third quarter of fiscal year, 2022% in the fourth quarter of fiscal year 2022.
Speaker 5: Okay, thank you. And then, John , you mentioned higher materials costs and increased wages, but aren't you able to pass those on? Or is there a lag in that? And how do you see that developing?
Okay. Thank you and then Jonathan you mentioned.
Higher material cost and increased wages, but how are you able to pass those on or is there a lag in back then.
How do you see that developing.
Speaker 3: So we are able to recover higher material cost typically if the bill of materials is directed. Bye.
So we are able to recover higher material costs typically ask the bill of materials. It's directed.
By our customers.
Speaker 3: but it's not an immediate recovery. And so typically there is some lag, although we're...
But it's not an immediate recovery and so typically there is some lag.
Although we're working diligently with our customers for that wage inflation I will say, though is a partnership and it's really incumbent upon us as a company to continue to pursue automation and efficiencies to make sure that we are controlling that cost as part of our gross margin.
Speaker 3: our customers for that. Wage inflation, I will say though, is a partnership and it's really incumbent upon us as a company to continue to pursue automation and efficiencies to make sure that we are controlling that cost.
Thank you Dan.
Alright.
Go ahead.
Speaker 5: Okay, and then it seemed like you're winning a lot of new businesses too. I'm talking about the sort of back club you have. How would you sort of...
Okay, and then it seems like you're winning a lot of new business is too on top of that sort of backlog do you have how would you start on them.
Speaker 5: bucket your, your, your, your pipeline or backlog in terms of what, what, what, what's sort of like backordered and what, what, what's your business win?
Dr.
Our pipeline our backlog in terms of what what's kind of like back ordered and what new business wins.
Speaker 4: Yeah, I would say that the growth and inventory from the start of this fiscal year, which is $104 million, I think is a proxy to how much backlog that we couldn't ship.
Yes, I would say that the growth in inventory from the start of this fiscal year, which is the 100 $104 million.
I think as a proxy to how much.
Backlog that we couldnt ship because of the component shortages.
Speaker 4: because of the component shortages. I say it's a prophecy, it's not an exact number because there is some ramp up material in that inventory growth number.
Say, it's a proxy it's not an exact number because there is some ramp up material in that inventory growth number.
Speaker 4: But it's a proxy to sort of look at, wow, okay, we grew inventory about $104 million since the start of fiscal year. That's a lot of inventory. Let's call it a dollar waiting on a dime so that we can ship it, build it, convert it, ship it to our customers.
But it's it's a proxy to sort of look at.
Okay, we grew inventory by $104 million since the start of the fiscal year.
A lot of inventory, let's call. It a dollar waiting on a dime. So that we can ship it build it converted ship it to our customers.
Speaker 4: So that would give you a little bit of a sense for what the size of the order backlog is that's really related to component shortage.
So.
That would give you a little bit of a sense for what the size of the order backlog is that really related to component shortages.
Speaker 4: you know in terms of our outlook you know talking about holding the billion four number you know that's that's obviously gonna mean that we got to ship somewhere around eight hundred million in the second half
In terms of our outlook talking about holding the $1 billion for number.
That's obviously going to mean that we got to ship somewhere around $800 million in the second half.
Speaker 4: ramping up through Q3 and finishing strong as we said earlier in Q4.
Ramping up through Q3, and finishing strong as we said earlier in Q4.
Speaker 4: And in that ramp up, there's not only recovery of the backlog, but we're starting to ramp up brand new programs, as we mentioned in the next generation.
And in that ramp up theres, not only recovery of the backlog, but we're we're starting to ramp up brand new programs. As we mentioned the next generation braking program, which is a new win for us. So so there is there is definitely some new product introduction.
Speaker 4: breaking program, which is a new win for us. So there's definitely some new product introduction that are ramping between now and the end of this fiscal year and the part shortage is also impacted there.
That are ramping between now and the end of this fiscal year.
And the part shortage is also impact is there.
Speaker 4: So, you know, I think as we talk about moving the company towards the next milestone of two billion in annual sales, we'll be providing some updates later, maybe at the end of the fiscal year more appropriately, when we see some of that start to materialize for us. But it is a part of our story that is really exciting. I mean, we have been very successful winning new business.
So I think as we talk about moving the company towards the next milestone.
Two 2 billion in annual sales.
We will be providing some update later maybe at the end of the fiscal year more appropriately when we see some of that start to materialize for us but it is a part of our story that is really exciting I mean, we have been very successful winning new business and so our back our order backlog really is a story of.
Speaker 4: And so our order backlog really is a story of two things. Backlog yet we should have already shipped, but also order backlog yet. New business that's been awarded.
Two things backlog that we should have already shipped but also order backlog of new business that's been awarded.
Speaker 5: And that was actually going to be my last question about the expansion. It's very encouraging to see that you are already planning the third expansion in such short time. So you must have a very good momentum in your business wins. And do you see most of that common-term existing customers who have a new logo coming on board? Or are you talking a bit about the sales momentum you have?
Yes that was actually going to be my last question about the expansion is very encouraging to see that you are already planning. The third expansion just that short time, so much to have a very good momentum and new business wins and do you see most of that coming from existing customers.
However.
New logos coming on.
Can you talk to us about that.
Sales momentum you have.
Speaker 4: Okay, it's both. It's definitely both, Anya. The new awards are coming from existing customers and new customers. So it's exciting to have both parts of our funnel hitting on all cylinders, so to speak.
Okay.
It's definitely both on the new.
New awards are coming from existing customers and new customers.
So it's exciting to have both parts of our funnel hitting on all cylinders so to speak.
Speaker 4: But we've been very successful growing in our business with long standing customers who I think even, we've became even a greater trusted partner to them during this pandemic. And so I think awarding business to us.
But we've been very successful growing.
Our business with long standing customers, who I think even.
Became even a greater trusted partner to them during this pandemic and so I think awarding business to us.
Speaker 4: uh... was the natural thing for them to do thinking about our performance over a long period time and and just looking and watching observing our team stepping it up during this pandemic and so that's very encouraging to see but we've also landed brand new customers brand new to the to the kimble portfolio that are are ramping that is also very exciting for us you know we're
Was the natural thing for them to do is thinking about our performance over a long period of time than just looking and watching observing our team stepping it up during this pandemic and so that's very encouraging to see but we've also landed brand new customers brand new to the to the Kimball portfolio that are are ramping that at all.
So very exciting for us.
Speaker 4: We're always looking to add new customers to the portfolio and we're very focused. And the developments for these customers take years, not months. So when we're landing new customers, that work started in most cases two to three years prior to that and longer in some cases. So it's very encouraging to know that to see us winning this new business during the pandemic at a rate that's very exciting for us.
We're we're always looking to add new customers to the portfolio and we're very focused and in the development for these customers takes years not months. So when we're landing new customers that work started in most cases two to three years prior to that and longer in some cases.
It's very encouraging to know that.
To see us winning this new business during the pandemic at a rate thats very exciting for us.
Speaker 5: Okay, I just want to follow up on that. Are you also winning business from other competitors so that I'm moving over to you or is it a brand new program?
Okay, and just one follow up on that are you.
And you're also winning business from other competitors that are moving over to you or is it just.
Your program.
Speaker 4: Yeah, you know, that's hard for us to see in all cases. Obviously, every time we win a new piece of business, there's at least a couple of other competitors working pretty hard to win that same piece of business. So I guess just by nature of the beast, we're winning business that our competitors are losing. I don't know that we could point to a big...
Yes, that's hard for us to see in all cases, obviously every time, we win a new piece of business. There is at least a couple of other competitors working pretty hard to win that same piece of business. So I guess just by nature of the Beast, we're winning business that our competitors are losing.
I don't know that that we could point to a big <unk>.
Speaker 4: shift in market share during this period. I think it'll take a few years to see how that unfolds. You know, very in mind, our focus on our foreign market verticals.
Shifting market share during this period I think it will take a few years to see how that unfolds.
Bear in mind, our focus on our four end market verticals.
Speaker 4: kind of makes us unique in that regard because we're really not in the rest of the market if you will the EMS market that's tied to consumer communication and computer-based products, you know. But I do think we are, we're very solid and as I said, every time we went up piece of business, we won that competition against at least two other competitors in the space, which is great news for us and our...
It makes us unique in that regard because we're really not in the rest of the market. If you will the EMS market, that's tied to consumer communication computer based products.
But I do think we are were very solid and as I said when every time, we win a piece of business. We won that competition against at least two other competitors in the space, which is great news for us and our team.
Speaker 5: Okay, thank you. That was awesome. The I'm looking forward to see if you have confidence in March. Yes. Like.
Okay. Thank you that was all from me among the consortium CSF comprehensive in March.
Yeah Likewise likewise.
Okay.
Speaker 1: Perfect. Thank you, I need for your question. Our next question comes from Mike Morales, Project Long Towson and Kay. Mr. Morales, please go ahead.
Perfect. Thank you for your question.
Our next question comes from Mike Morales telephones.
Telephone.
Mr. <unk>. Please go ahead.
Hey, good morning, Don John and Andy Thank you for taking my questions.
Speaker 6: Hey, so to make it clear by the outset, is that auto contract when you mentioned? Is that only beginning in 2024 with the expansion of the Poland facility or will it be getting to your map? Is trying to get a sense of wonder? Might see the startup margin effect on that.
Hey, so.
Maybe clarify at the outset is that auto contract win that you mentioned is that going to begin in 2024.
The expansion of the Poland facility or will it be sooner than that just trying to get a sense of when that might be the startup margin effect on that.
Speaker 4: yeah i'm sorry we weren't made i wasn't we weren't clear as we should have done their uh... my but that that program actually is ramping in the second half of this fiscal year it's it's not tied to the poll and expansion
Yes, I would tell you we werent.
We werent as clear as we should've been there, Mike but that that program actually is ramping in the second half of this fiscal year.
It's not tied to the Poland expansion.
Speaker 4: It's tied to the Mexico expansion. So maybe that I guess we got three expansions going on and they all have new business driving into a my case, you know, but that should have made it clear that that next generation breaking win is it's tied to the Mexico expansion. You know, we do pursue similar products and applications in Europe . But I just to be clear on that point, a ramps in the second half of our fiscal year, it's tied to a different expansion than for
It's tied to the Mexico expansion, so maybe that I guess, we got three expansions going on and they all have new business driving into a Mike as you know, but that should have made it clear that next generation braking win as is tied to the Mexico expansion.
We do pursue similar products and applications in Europe .
But I would just to be clear on that point and ramps in the second half of our fiscal year is tied to a different expansion going forward.
Speaker 6: That's really helpful, Donna. And I appreciate that clarity. And so maybe if you'll allow me to speculate a little bit, was this maybe a case where you, like you said, found the conversations take years here and with a facility as full of Mexico was, sometimes it can be hard to actually sign that contract before the customer can see where their program is going to go. Is that similar to maybe what you saw here with this contract and why, you know, being announced now knowing that the expansion is already underway?
That's really helpful Don and I appreciate that clarity and so maybe.
If you'll allow me to speculate a little bit was this may be a case where you.
He stepped on the conversations take years here and.
The facility is full of Mexico was sometimes it can be hard to actually sign that contract before the customer can see where their program is going to go is that similar to maybe what you thought here with this contracting wise being announced now knowing that the expansion is already underway.
Speaker 4: Yes, yes, there's no doubt, Mike. I mean, that's, I think in maybe a previous call or the call before even the last one I mentioned that, you know, it's difficult to spell into a full facility when a customer really can't see any available floor space for their program. By the same token for us, it's hard to make these large capital expenditures when you're not...
Yes, yes, there is no doubt Mike I mean that that's.
We I think in maybe the previous call or the call before it even the last one I mentioned that it's difficult.
To sell into a full facility.
When a customer really can't see any available floor space for their program by the same token for us it's hard to make these large capital expenditures.
When you're when you're not.
Speaker 4: We're not sure you're going to get the business, so it is a test of the partnership and the collaboration with the customer. I would say, in this case, a longstanding customer who's known as well for several decades, meets that conversation, gets to the point rather quickly, but they are tied together. And it's the same for what we're doing in Thailand and what we're getting started to do in Poland.
When youre not sure youre going to get the business. So it is it is a test of the partnership and the collaboration with the customer I would say in this case, a long standing customer who is known as well for.
Several decades.
That conversation.
Get to the point, rather quickly, but they are tied together and.
And it's the same for what we're doing in Thailand, and what were getting starting to do in Poland.
Speaker 4: For those factories, Thailand and Poland were also just very...
So those those factories, Thailand, and Poland were also just very.
Speaker 4: highly utilized square footage utilization. Let's just stay in the 90 plus percent range, hard to see any white space on the floor. So we think we timed them very well. Seems like it's risky to be doing three facilities expansion during this pandemic. But frankly, we've really studied the business.
Highly utilized square footage utilization, let's just stay in the 90 plus percent range hard to see any white space on the floor. So we think we timed them very well it seems like it's risky to be doing three facilities expansion during this pandemic.
But frankly, we've really studied the business case for each each one.
Speaker 4: Each one and that business case obviously includes the growth coming from the customers both existing and new and we feel like we really got well constructed business cases for all three of those expansions. That's helpful and it's good to see it.
And that business case, obviously includes the growth coming from the customers but.
Both existing and new and we feel like we've really got well constructed business cases for all three of those expansion.
That's helpful and good to see it materialize.
Maybe thinking about B.
Speaker 6: Like you said, down the conversation's taking years here. Certainly a conversation that began about a project like just three years ago was going to be very different from the discussion that you're having. Six months ago, without the world was changed.
Like you said down the conversations taking years here certainly a conversation that began about a project like this three years ago. It was going to be very different from the discussions that youre, having six months ago with how the world has changed.
Speaker 6: Have you seen your customers maybe their propensity to utilize a certain facility or a certain geography? Has that shifted to wanting to spread that around to other facilities? For example, if somebody wanted to use Mexico a lot in the past, would they now be more willing to have some of that in Poland, some of that in Mexico, some of that in Thailand?
Have you seen your customers maybe their propensity to.
Utilize a certain facility or a certain geography is that shifted to wanting to spread that around to other facilities.
For example, if somebody wanted to use Mexico a lot in the past we may now be more willing to have some of that and pulling some of that in Mexico some of that in Thailand.
Speaker 4: No, that's probably less likely, Mike. I think what we were seeing is much of the same trends that existed even before the pandemic, that it's really our customers' preferences have evolved to an in-region solution.
No thats, probably less likely Mike I think what we're seeing as much of the same trends that existed even before the pandemic that it's really our customers' preferences have evolved to an in region solution.
Speaker 4: So, you know, they would be less likely to put business.
So.
They would be less likely to put business.
Speaker 4: in a plant that's not in the region. So it's Europe for Europe , you know, North America for North America.
In a plant that's not in the region, So Europe for Europe .
North America for North America.
Speaker 4: and China for China. Those are the big market centers, if you will, that we serve. And then there are options to have, in the case, our case, a plant like Thailand, which is primarily an export facility. And we have customers that are willing to have that lengthy supply chain geographically, so to speak, and time zones.
China for China, those are the big market centers. If you will that we serve and then there are options they have.
In the case, our case, a plant like Thailand, which is primarily an export facility and we have customers that are willing to have that lengthy supply chain geographically so to speak and time zones.
Speaker 4: They're willing to have that for the benefit that that facility provides. And certainly that's the case for us in Thailand. We pretty much everything we produce in Thailand ships.
They are willing to have that for the benefit that that facility provides and certainly.
That's the case for us in Thailand.
Pretty pretty much everything we produced in Thailand ships somewhere else in the world primarily back to North America, whereas if you look at our Mexico facility, Poland, Romania.
Speaker 4: somewhere else in the world, primarily back to North America. Whereas if you look at our Mexico facility, Poland or Romania, most of what they produce stays in the region, Mexico, for North America. And I would say Europe , both Poland and Romania, in a similar fashion, are primarily servicing customers and plants upstream in Europe .
Most of what they produced stays in the region, Mexico for North America.
Yes, I would say Europe , both Poland and Romania in a similar fashion are primarily servicing customers and plants upstream in Europe .
Understood.
Speaker 6: Don, maybe switching gears a little bit to GES and particularly on these semi-conductor markets that they serve, I think we've seen over time the demand back for often visibility there seems to be.
Maybe switching gears a little bit too.
And particularly on the semiconductor.
Markets that they serve I think we've seen over time, the demand backdrop and visibility there seems to be very strong and now we're hearing more about efforts like the EU is taking to increase their domestic manufacturing capacity. All of that said can you talk to Ges performance recently and maybe how the sales pipeline.
Speaker 6: very strong and now we're hearing more about efforts like the EU is taking to increase their domestic manufacturing capacity. All of that said, you know, you talk to GES is performing recently and maybe how the sales pipeline has sort of evolved with this backdrop of strength that we have. Now we have X-D-M.
Has sort of evolved.
Backdrop and strength that we have excuse me.
Speaker 4: Yeah, well, if there's semi-conductor capital equipment space as an area that we've been working pretty hard from an overall business development standpoint, pretty much every sense we acquired the company.
Yes, well at their semiconductor.
Capital equipment space is an area that we've been working pretty hard from an overall business development standpoint pretty much every since we acquired the company.
Three years ago. So we.
Speaker 4: We've been at that pretty hard. The pandemic hasn't helped us at all as we look to collaborate with...
We've been at that pretty hard the pandemic Hasnt helped us at all as we look to collaborate with with various different customers in that space with new ideas, new technologies to solve to solve their problems provide solutions.
Speaker 4: with various different customers in that space with new ideas, new technologies to solve their problems, provide solutions in the spaces where they operate. But we are gaining traction in our semiconductor business development.
In the spaces, where they operate but we are we are gaining traction in our semiconductor business development and.
Speaker 4: You know, that's a long cycle as well, but as you know, there's a lot of capital.
That's a long cycle as well, but as you know theres a lot of capital flowing into the semiconductor space right now with capital expansions planned by almost all the majors and.
Speaker 4: flowing into the semiconductor space right now with capital extension.
Speaker 4: planned by almost all the majors. And yeah, we looked to participate in that investment cycle.
Yes, we look to participate in that that investment cycle, which.
Speaker 4: Looks to maybe it could last three to five years when all the experts and the analysts are thinking it's gonna be quite a boom cycle, just given the overall semiconductor shorty.
Could maybe it could last three years to five years. So we know what the experts and the analysts they're thinking it's going to be quite a boom cycle just given the overall semiconductor shortage. So we want to participate there.
Speaker 4: So we want to participate there. You know, the business as we bought it was primarily focused on the manufacturing tools for smart mobile devices.
Business as we bought it was primarily focused on the manufacturing tools for smart mobile devices and so that continues to be part of the growth story that we have with GDS.
Speaker 4: And so that continues to be part of the growth story that we have with GDS.
Speaker 4: We're working hard to grow that business, grow it out of its seasonality. That's been one of the challenges we've had every since we acquired the company, is it has a strong seasonality towards our fourth quarter of the fiscal year. And we've talked about that in the past, as you know, in these calls.
We're working hard to grow that business grow it out of its seasonality that's been one of the challenges we've had ever since we acquired the company as it has a strong seasonality.
Towards our fourth quarter of the fiscal year, and we've talked about that in the past as you know in these calls, but I think overall, we feel like we're well positioned with that with that business unit, especially as we get more traction and diversifying into the semiconductor.
Speaker 4: But I think overall we feel like we're well positioned with that business unit, especially as we get more traction in diversifying into the semi-conductor CAPX Mark.
Capex market.
Okay.
Speaker 6: Great. And lastly for me, you know, all the growth expected in auto and the strong backlog that you mentioned.
Great.
Lastly from me.
With all the growth expected in auto and.
The strong backlog that you mentioned.
Speaker 6: Kimball medical solution, certainly the implication there is that it will have to generate some nice, nice growth moving forward in order to remain around that target of 30% of sales. So I guess the first question is, you know, now that we're kind of over the peak of all the crime, hopefully. Have you seen elected procedures and programs time to that sort of rebound as expected? And then can you speak to any additional growth opportunities or areas that you're excited about there? Thanks for all the, thanks for taking the question.
Kimball medical solutions certainly the implication there is that it will have to generate some nice nice growth moving forward in order to remain around that target of 30% of sales.
The first question is.
Now that were.
Kind of over the peak of <unk> hopefully.
Have you seen electric procedures and programs tied to that sort of rebounded as expected and then can you speak to any additional growth opportunities or areas that you're excited about there. Thanks, Aldo thanks for taking the question.
Speaker 4: You betcha. Yes, Mike, the short answer is yes. We're seeing these elective procedures, scheduled procedures, coming back and the customers we serve in that space are very bullish about the growth outlook there, just the backlog and that was created by the pandemic. And of course, all of them wanting to gain market share as they recover the backlog, as the industry, let's say, recovers the backlog.
You bet Ya, Yes, Mike the short answer is yes, we're seeing these elective procedures scheduled procedures coming back and the customers. We serve in that space are are very bullish about the growth outlook there.
The backlog and that was created by the pandemic now of course.
While all of them wanting to gain market share as they recover the backlog as the industry, let's say recovers the backlog.
Speaker 4: You know, our medical DCMS, our diversified contract manufacturing services really is where that excitement starts to show as we think about, this is be the former medivative acquisition we did five years ago. We are servicing some market leaders in that business unit in this space and their leaders that have innovative products thatPH?
Our our medical Dcms are diversified contract manufacturing services really is where that excitement starts to.
To show as as we think about and this would be the former Metavante of acquisition, we did five years ago.
We are we are service servicing some market leaders in that business unit in this space and.
And there they are leaders that have innovative products that.
Speaker 4: You know, we were awarded in some cases several years ago, but the pandemic just paused the launch as well together. So we're really excited about.
We were awarded in some cases several years ago with the pandemic just pause the launches altogether. So we're really excited about.
Speaker 4: you know those instruments producing those instruments that have been really slow by the pandemic because you know the care priorities change.
Those instruments producing those instruments that that have been really slowed by the pandemic because the care priorities changing.
Speaker 4: So we were really excited about that part of our business. And we continue to win traditional EMS business in the medical space.
So we were excited about that.
Is that part of our business and we continue to win.
Traditional EMS business in the medical space.
Speaker 4: uh... that uh... were really excited about as well not so much i'd to elective per se uh... you know in the back what recovery there but just continuing to win new business with long time customers that i know you know well and again i i said it earlier i'd just to try to be a bit clear more clear is you know i'd i really think during this time which has been really a tough time for all of us to pass couple of years
We're really excited about as well not so much tied to elective procedures per se.
And the backlog recovery, there, but just continuing to win new business with longtime customers that I know you know well and again I said it earlier I just to try to say it can be a bit more clear.
I really think during this time, which has been really a tough time for all of US. The past couple of years I really think our customers have appreciated us even more through all of this and we've been trusted partners for a long time and they've had experiences maybe with other supply partners that during the pandemic.
Speaker 4: I really think our customers have appreciated us even more through all of this and we've been trusted partners for a long time and they've had experiences maybe with other supply partners that during the pandemic maybe got a little bit rocky or rough.
Maybe got a little bit rockier rough.
Speaker 4: I just think the way our teams have performed around the world and really sticking to it, being in the fight and doing everything we can to solve these problems for our customers, it's much appreciated. I hear it over and over again from the executives of our customers.
I just think the way our teams have performed around the world and really sticking really sticking to it being in the fight and doing everything we can to solve these problems for our customers. It's much appreciated I hear it over and over again from the executives of our customers.
Speaker 4: telling me that since so You know, I know that's had an impact on their willingness to award us new business
Telling me that since so.
I know that's had an impact on their willingness to award us new business.
Speaker 4: just because they're so confident in us as a trusted partner. So, we're winning across the board, our core EMS business leading the way, but there's some really exciting stuff coming for our medical DCMS services as well. Hello.
Just because they are so confident in us as a trusted partner. So we're winning across the board our core EMS business, leading the way, but there is some really exciting stuff coming.
For our medical Dcms services as well.
I appreciate all the insight thank you both.
Thanks, Mike.
Speaker 1: Perfect. Thank you, Mike, for your question. Another wonder if you'd like to ask a question, please press star one on your top.
Perfect. Thank you my quick question and as a reminder, if you'd like to ask a question. Please press star one on your door.
Sure.
Speaker 1: At this time, there are no other questions. And I would like to pass back over to George Sharns and finally Mark. Thank you, Victoria.
At this time to address all the questions and I would like to pass back over to Joe and John for any final remarks.
Thank you Victoria.
That brings us to the end of today's call.
Speaker 4: We appreciate your interest and look forward to speaking with you in the near future.
We appreciate your interest and look forward to speaking with you in the near future.
Speaker 4: If you have any questions in the air on, please feel free to reach out to Andy. And if you have any questions in your mind, please feel free to reach out to Andy.
If you have any questions in the interim please feel free to reach out to handy.
Have a good day.
Speaker 1: At this time, listen, listen, listen, listen, you hang up the disconnect from the call. Thank you and have a nice day.
At this time listening listeners may simply hang up to disconnect from the call. Thank you and have a nice day.
Thank you.
Yes.
Yes.
Okay.
Yes.