Q4 2021 Canoo Inc Earnings Call
Greetings and welcome to the news fourth quarter and fiscal year 2021 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note this conference.
Is being recorded I will now turn the conference over to your host Nick Cunningham. Thank you you may begin.
Welcome to <unk> quarterly earnings Conference call. My name is Nick Cunningham and I'm, the SVP of Investor Relations and capital markets I can do.
I recently joined can you after a 15 year career in investment banking and I look forward to getting to know you all better.
Shows to come in house that can you because I believe in the company.
Vision and leadership.
I'm excited by the pace and speed of activity and the mission to bring ive used to everyone.
Today, I have with me Investor Chairman and CEO Tony ocular.
And interim CFO , and Chief Accounting Officer Ramesh Mercy.
Tony will provide an update on our activity last quarter.
Ramesh will then review our financial results for the quarter and turn it back to Tony who will provide closing remarks.
Well then open the call up for questions.
Please be advised we may make forward looking statements based on current expectations. These are subject to significant risks and uncertainties and our actual results may differ materially.
For a discussion of factors that could affect our future financial results and business. Please refer to the disclosure in today's earnings release and on our most recent Form 10-Q , and 10-K and reports that we may file on form 8-K with the SEC.
All of our statements are made as of today and are based on information currently available to us except as required by law, we assume no obligation to update any such statements. During this call. We will discuss non-GAAP financial measures you can find the reconciliation of these non-GAAP financial measures to GAAP financial measures in today's earnings release.
Which can be found on the IR section of our website with that I will turn the call over to Tony.
Thanks, Nick and welcome to the team and thanks, everyone for joining us as we report the fourth quarter and the final fiscal year 2021 wrap up.
As we kick off fiscal year 2022 it is the perfect time to make clear, who we are and who we are not.
We are not a traditional OEM, we are a high tech advanced mobility company. I believe you are all starting to put the pieces together and the best is yet to come.
So I want to thank all of our supporters because you are also innovators and you see the same future we do.
We are in it to change it to build a company that is valued as a true high tech customer centric advanced mobility company.
We know this takes time sacrifice perseverance and even at times persecution by those who don't believe enough in the future and how different it will be but we do.
Those who joined can you if they have the same ethos they will make it here.
When they're home passion and mission to build a high tech cost affordable long life ecological platform that is built upon diversity and inclusion from the very beginning.
We're not looking to create the next GM or Ford.
We respect them, but.
But we have no desire to be liked them within our culture and or the long term outcome for investors that said, we want all American Oems or those working in advanced mobility to win.
For us this isn't just about competition to win.
It's about competition for American innovation and ingenuity to win.
Yeah.
Those that are looking for just a job and some stock options or like travelers passing through on their way back to Detroit, the very least we hope to lead them more inspired.
We've decided to make her home in the Heartland amongst many great founders and founding families that are innovators generation after generation that have protected the cost of living higher education, affordable housing health care and inclusion.
Blended with art culture and the adventure.
Of American nature.
We are grateful and proud that Oklahoma, and Arkansas and the Cherokee Nation are aware, we will make our platforms.
And our new home.
These three coming together allows us an amazing workforce people that understand what it's like to do what we do.
By bringing two states in the nation together, we have greatly decreased our risks and accelerated our ability to grow.
Before I get into the Big news or no news I'd like to give a few shout outs.
One.
Governor Kevin instead for the state of the state.
Beach, especially the announcement to pass a bill for veterans to not pay state income tax and his commitment to increased taxpayers and not taxes.
To the Governor Asa Hutchinson for his commitment to electric charging stations across the state of Arkansas and for the creation of the council on future mobility.
And to V D L and the vendor late family and wisdom in particular, thank you for your support and partnership as we made the decision to bring back manufacturing to America ahead of our schedule.
We remain here to help you in any way possible and we hope your new deals come together.
And especially to the team of can do.
Those members, who have embraced both the rebounding and the aggressive execution of our plan.
Bringing manufacturing back to America was an important decision as we can all tell by the geopolitical backdrop that is developing in front of us and will be with us for some time to come.
At the time I know the decision was not popular.
To many of you, but as you can see now it was the right decisive actions to take.
Just to give you one point of how it's mitigating our risk.
Those that are still focused on manufacturing abroad, and bringing products to the U S are facing rapidly growing shipping cost supply chain disruptions and risks labor cost increase due to inflation and a great amount of currency risk.
We believe many others in the coming quarters, we will have to explain our actions to mitigate increasing costs and volatility.
We believe that could be impacting by up to 25% and weeks to months of additional lead time.
We are located in the Heartland.
Where we can reach anywhere in the country and the least amount of time by road rail or water.
We believe this to be an important to arbitrage that will be significant in the years to come.
There is a reason why many of the greatest companies are quietly dug in to the heartland.
This part of the country delivers a disproportionate amount of goods to American households every day.
We are inspired by their disciplined approach to creating value for America.
So let me recap some of our key decisions, we secured a lease for our advanced manufacturing facility in Bentonville, Arkansas and broke ground on the second expansion.
40% of the equipment that is slated for bentonville has already purchased and being used for our gamma builds.
And the majority of the remaining 60% is already on its way.
70% of our machinery and tooling Capex will be located in America.
And we will continue to build upon this.
And we have started laying the foundation for our Mega Micro factory in Pryor, Oklahoma, We've begun clearing ground selected our group of partners that are helping us to execute the project I will share more details with you as appropriate.
Sourcing and supply chain manufacturing in America isn't just about assembly. It's also about sourcing.
We are grateful to be one of the first companies that is 91% partnered in sourced with American <unk> Allied countries.
750 parts of our 1800 parts and our bomb.
From the L D D.
Sourced in the U S and we will continue to bring back more to America.
We are now 93% sourced for our L. D D.
I would like to think Oh, Esa for recently hosting us in an event with more than 250, primarily American and Allied nation suppliers to explore future partnerships.
Now on to supply chain whats happening here shows the wise decision to pull forward and build in the U S. If you look at our moves are RBI speak for themselves.
As we've said before we need two to three times less parts to produce our vehicles, which puts us at an advantage compared to a typical OEM.
We are seeing some supply chain issues, but they are isolated to some of the semi conductor chips, where we are seeing a 35% increase in lead times, we will continue to closely monitor and update you on these developments.
The geopolitical and pandemic impacts have proven out our strategy to accelerate bringing production back to the U S.
For gamma build update as you know.
We are now in the middle of our game of builds and I would like to share some progress.
To date, we have built nine complete platforms and 15 ladder frames.
<unk> 411 modules in 'twenty for battery packs.
We also finished 25% of the full slate of battery pack testing with the remainder scheduled for completion in Q2.
With that said, we had hoped to build more vehicles, but January was a tough month because of omnicom.
We anticipated some of these factors the number of gamma as we announced to build was greater than the game as we need it.
This played into our favor as we navigated the impact of the virus hitting an optimum threshold for testing, but the team worked through it and we have five gamma properties undergoing critical or testing that is higher than most Oems plan for.
On the sales side and go to market.
On the sales we have signed a definitive purchase agreement for 1000 vehicles for the state of Oklahoma. This would be a stage three order by our definition with respect to our stage two orders they have now grown to 14962 units.
It's a 60% increase.
Over what we disclosed in Q2, which includes 1000 vehicles for the state of Arkansas, which we expect to move to stage III.
We remain focused on delivering three to 6000 units in fiscal year 2022, and 14 to 17000 units in 2023 for accumulative of 17 to 23000 units across this year and next.
At this pace.
As we advance sales negotiation with several potential partners, we are anticipating being oversold for our production volumes for 'twenty, two and 'twenty. Three we are now shifting our focus to customer allocation and ways, we can accelerate.
Our delivery.
On the go to market side when it comes to new vehicle launches consumers have had a consistently inconsistent and unpleasant experience. We have studied this carefully and have experience in entering new markets and scaling them quickly.
In my prior life, we achieved rolling out a new region every 60 days.
We are initially targeting our phase one rollout in the heartland itself.
Which would be Oklahoma, Arkansas, Texas, Missouri, Kansas, and possibly Tennessee.
We will announce phase two and three at the appropriate time, and these will be tightly aligned with our customer experience and our customer agreements.
Moving on to other updates.
We are in a capital intensive business and we take a disciplined approach to managing our capital our dilution and the timing of raising additional capital.
We are focused on non dilutive sources of financing to help fund our growth.
To date, we have secured approximately $400 million in non dilutive incentives from the states of Oklahoma and Arkansas.
In the quarter, Oklahoma awarded Us from the Governor's quick action closing fund $15 million to support American job creation and infrastructure development.
Continuing our focus on non dilutive capital, we are now able to access new sources of financing ranging from asset backed inventory and working capital base credit lines at the appropriate.
Preet time, we will disclose other capital raising efforts.
Before I turn it over to rematch while we had a pretty good Q4 and a decent January we continue to remain vigilant stance in these evolving times.
And now for our financial.
Ramesh.
Thank you Tony.
Our fourth quarter of 2021 results are as follows.
Search and development expenses of $88 2 million for the quarter compared to $90 million in the prior year period.
Excluding $3 1 million of stock based compensation research and development expense was $85 1 million.
SG&A expense was $50 7 million for the quarter.
<unk> to $35 7 million in the prior year period.
Excluding $15 5 million of stock based compensation SG&A expense was $35 2 million.
GAAP net loss was $138 1 million for the quarter compared to a GAAP net loss of $9 2 million in the prior year period.
GAAP net loss in the fourth quarter of 2021 included a $3 3 million noncash gain on the fair value change of earn out shares liability related to the periodic remeasurement of the fair value of a contingent earn out shares liability.
Adjusted EBITDA was negative $1 $23 million for the quarter compared to negative $42 5 million in the prior year period.
Our fiscal year 2021 results are as follows.
Research and development expenses of $2 $46 2 million for the year.
<unk> to $142 9 million in the prior year excluding.
Excluding $25 8 million of stock based compensation research and development expense was $2 $24 million.
SG&A expense was $194 7 million for the year compared to $51 6 million in the prior year.
Excluding $82 3 million of stock based compensation.
SG&A expense was $112 1 million.
GAAP net loss was $346 8 million for the year compared to a GAAP net loss of $86 7 million in the prior year.
GAAP net loss in fiscal year 2021 included a $104 4 million non cash gain on the fair value change of Ono chairs liability related to the periodic remeasurement of the fair value of a contingent earn out shares liability.
Adjusted EBITDA was negative $332 6 million for the year compared to negative $108 3 million in the prior year.
Turning to the balance sheet and cash flow.
We ended the quarter with $224 7 million of cash and cash equivalence.
Cash used in operations for the three and 12 months ended December 31st 2021 was $1 22 and $308 million respectively.
Compared to 42, and 107 1 million for the.
The three and 12 months ended December 31st 2020.
Capital expenditures were $62, six and $136 6 million for the three and 12 months ended December 31st 2021, respectively.
<unk> to $6 three and seven six for the three and 12 months ended December 31 2020.
Tony You mentioned two points earlier that I'll share more details on now.
First I'm proud to announce today that we have successfully remediated all five of our material weaknesses.
Internal controls over financial reporting.
We added to our high quality and expedient staff to accomplish this with our second 10-K filing.
I'd like to thank each member of my team.
Wider canoe teams and our external advisors for their support.
We achieved this important milestone.
And the second point I'll expand on is the deal has returned our entire capital a prepayment of $34 million.
On a constant currency basis. The return generated is equal into creating an additional 11 engineers or 30 manufacturing jobs in the heartland.
Also received an equity investment of $8 $4 million.
Turning to our guidance for the first quarter of 2022, we anticipate the following expenditures approx.
Approximately $95 million to $115 million for operating expenses, excluding stock based compensation and depreciation and approximately $60 million to $80 million for capital expenditures.
Before we open the call up for Q&A I'll turn it over to Tony for closing remarks.
Thank you Ramesh.
We are committed to bringing high paying jobs to local communities. We are honored to placed special focus on hiring veterans and native Americans and we're thankful to see that come to fruition as we move to stand up our facilities in Arkansas, and Oklahoma I would like to thank all of our.
Supporters and partners again.
We are doing something different here and all of you are incredibly important to us we will continue to keep our heads down.
And stick with our philosophy of Big news or no news as we execute on our vision.
Thank you.
Thank you Tony.
Navigate to the webcast landing page and access to the video link on the right hand side of your screen below your audio player. We will pause briefly while you watch the video.
Operator, please open it up for questions.
Thank you at this time, we will be conducting a question and answer session I would like to ask a question. Please press star one on your telephone keypad confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
Yes.
Please be mindful of the number of questions. You asked so that we may have adequate time to get to everyone. One moment. Please while we poll for questions.
Hum.
Our first question is from Craig Irwin of Roth Capital Partners. Please proceed with your question.
Good evening, I really love that video, it's pretty pretty snazzy, if a great great way to present the product.
Tony I wanted to ask if you could talk a little bit about the gamma testing, maybe if you could give us a little bit more color.
On the five properties out there.
You know I know, you'll probably bound by confidentiality about exactly who and where but can you maybe sort of.
Tease out the character of the different programs, where your vehicles are being evaluated.
Kind of companies are playing.
With the platform and.
What sort of opportunity there is with these different partners.
Yeah I think.
First of all.
Greg.
Yep.
So.
We've seen a pretty diverse group of between upcoming businesses and strong legacy businesses that are making the transformation to bring it to me I think as you saw we unveiled the LTV which has been.
I'm pretty pretty impressive and hopefully you'll get a chance to come see it in person in and write in it.
It has a tremendous amount of space in efficiency and a lot of safety for its workers.
So it's getting a lot of positives I think we're going to be an allocation.
Issue more than we are an order issue.
With the level of interest we're getting from both types of companies the emerging ones in the legacy ones.
So we'll take the allocation properly so we can.
Get the right breadth for our 24.
2024, and in 2022, and 2023 is how we'll build that bridge to those companies.
And while we're also delivering lvs.
Two customers.
That have put in their orders so.
I'd say from a square footage perspective from a performance from a density from an improvements in energy the way our packaging designs work.
We're feeling pretty good but of course.
We live in a constant state of dissatisfaction and we know we can do better.
We will continue to evolve that through the gamut testing.
But it was pretty exciting to see the vehicles come up online and when you power them up it's a pretty cool experience.
Because it is a high tech platform, it's not like you're cranking over an engine.
And they're out there in the winter testing and they're doing really well.
But we wanted to build a few more units.
In January but we had internal COVID-19 omni issues slowed us down and we had a few suppliers that suffered at the same thing.
But we we've been conservative I think you see everybody else is kind of bringing stuff down I think we've got the right mix now we just got to make sure we don't stumble than anything else, but from a customer perspective, it's been an amazing quarter of interest and advancement in those relationships.
Thank you.
My second question is about video net carbs, so congrats on that.
The return of the capital that's that's impressive.
And what's even more impressive is that they make an equity investment in <unk>.
Can you maybe talk about this partnership a little bit a little bit it was previously something.
Others.
Speculated.
Might be able to help you with design or engineering or with procurement.
Given their muscle in the global supply chains.
How do you see this partnership evolving versus new partnerships, forming and are there multiple other.
Sources of potential services potential.
<unk> support they are showing up.
Equally as strong as it can that can get you through to your initial production.
Yeah. So great question I mean, I think it goes to our philosophy of partnership.
We just recently have been communicating as part of the refining how we want to do business.
We want to be a good partner, we want to be a profitable partner, but when there's a problem we want to solve it together.
And I think with the help we got from Oklahoma and Arkansas. It allowed us to accelerate as you remember in the beginning when I took over the company.
Before had been purely focused on outsourcing.
Outsourcing manufacturing when I came in I dropped in a three phased approach we've now been able to knock that down to two phases. Thanks to the support of Oklahoma.
Arkansas and the Cherokee nation.
So that's great for America.
I think that.
What <unk> has done is really commendable right I mean, not only did they they could it kept our money if they wanted to I mean, but it's not about that it's about a relationship between the vendor like family and myself.
We have a long history in the Netherlands.
And my other entities and in my former life. So I think those those relationships really helped.
We in addition to that we bought.
Got some product from them.
On very favorable terms.
They are helpful and.
They even shielded us from the currency risk because they want us to be successful obviously.
And they did transfer a lot of knowledge to us.
And we're grateful for that so look we will continue to evolve that relationship we hope that.
Things go well for them in <unk>.
Recently speaking to them over the weekend.
No.
As we are in one of our other businesses were desperately getting our employees out of the Ukraine into Poland. So are they but they are also the many of these guys are suffering some impact because of some of the parts are made in wiring harnesses et cetera in the Ukraine for European build vehicles.
So I think we just we've made some good moves there.
That relationship will help them I mean, it's a two way street.
And I believe we have it'll be up to them to discuss that at the time, they see appropriate and.
And we will continue to you know to.
B like that with every one of our partners, whether it be panasonic or anyone else and we also are very focused on helping American companies diversify so that we're less dependent on these volatile issues.
Okay. That's good to hear so last question is kind of the big question right.
You're obviously not backing down from your production plans you are gaining a lot of traction.
Progress is really.
Easy to follow right its marketable.
But there is a capital need.
And we all know you as a very intentional guy.
I know you can't say, specifically, what you think you could do what you think you want to do but can you maybe sketch out for us the spectrum of options.
That you are looking at this quite a few different things that could be on the table.
What do you see as the opportunities for capital access to support.
The trajectory out of 'twenty, two and then into 'twenty three and beyond.
Can you, making thousands and tens of thousands of units.
Yeah. So look I think as you're seeing everybody else is doing what we did in the beginning right. I mean, you remember the first call.
And.
We just have some experience in the industry and around new product launches.
My view is we're very focused as shareholders.
As well as a management team to make sure we're using non dilutive capital for our shareholders. If you study the innovators to the slide that the team put up earlier during.
The earnings call, you'll see where we.
It takes patience right to do these things right and UK.
If you look at these great Disruptors.
There's a tough period, if you do the right thing to keep your head down your focus on IP, you find a way to do it differently and and make sure that it's great for the consumer and or the industrial users of your product and your partners.
You are going to come out ahead, so you got to kind of figure that out.
You got to have more than one option what I've learned over the years first of all every CEO out there should be focused on non dilutive capital for our shareholders, sometimes getting a bunch of capital is not the right thing to do.
And timing of it is important.
So I think we've done a really good job on demonstrating how much we're probably one of the largest ones too.
To achieve this non dilutive capital.
In addition to that we had to build up assets assets allow you to to access traditional financing.
We learned a lot from how elon figured out his way through this.
He'd probably do it a little differently, but you gave us a good roadmap.
So did others that did it wrong by raising too much capital.
Look I think a person in a company and entrepreneurs do the best when they have enough, but not too much.
And the timing of that could be very dilutive over a decade.
If you get it wrong so I.
I feel good about the ability to access other types of capital.
And while I haven't covered it but where we're building our factory is in an opportunity zone.
And many people on this call may not know what that means but.
It allows us to access other types of capital.
That is very low cost and very centered around ESG.
And the development of communities that had been dislocated.
So look I think.
As you said.
With your nice complement we're pretty methodical.
We're still proving ourselves we know the road ahead, we have options is the message I want to send clear.
I love it thanks, I'll take the rest of my questions offline.
Okay.
Our next question is from Jamie Perez of RF Lafferty. Please proceed with your question.
Hey, Good day, everybody and thanks for taking my question itself.
I want to say, it's topics a little bit maybe on the sales model.
Think we've touched upon us and if you.
Forgive me how do you plan to sell do you plan to sell it to the dealership or direct consumer maybe give us a little bit color on that and the second question.
You know what what innovations.
Expect to see India.
On the new vehicles as far as our software because I know Tony you came from a software background.
Yeah.
Amy its good to talk to you again.
Look I think the customer journey, our free cash flow per customer per year will go up for per household.
We do things differently here.
We're not trying to push deal.
If you if you listened to the poll them that describes our life and our passion.
And that video is we're leaving bread crumbs, but you know it's a competitive space, we want to make sure people don't steal too many of our ideas.
But you will see a different kind of engagement model, that's very customer intensive.
Meaning that they're engaging and of course, it's a micro transactional model.
On the software side so.
It will span beyond our own vehicles.
As you know we built the business with billions of dollars from my garage.
On creating transaction value or helping customers through the journey.
Vehicle ownership and service maintenance and repair.
We think that that's a very big business and we will announce some things in the coming period of work we've already commenced with various clients.
In addition to that.
I would say.
Other innovations Youll continue to see is for US. We believe you got to fight inflation by doing it differently.
And you got eliminate parts, you've got eliminate history that is no longer relevant to the customers experience or gave some productivity and safety.
So I think we've done a pretty good job on you know as we took the original platform team has done an amazing job.
The design team is phenomenal here you know there really dedicated I mean, they're just amazing they're very involved in R. R.
A real prototype builds we do build different kind of models.
Then.
Traditionally they do.
In addition to that consumers can basic.
Basically keep their chassis and save 22000 Bucks you know in the future.
They can upgrade the system and change the top hat so doing some things very differently will generate revenue. In addition to that the way we're accessorizing. The vehicles like these are full packages. So.
As far as go to market goes I'm not prepared to say it but I would say it will be consistent to what you have seen us do over the last year, but it will be something that will be much more consistent much more well controlled and give customers a higher <unk>.
Experience and satisfaction I mean, it's pretty tough today to get through the process, we want to make it super easy hybrid between technology and physical interventions.
So I will bring that forward.
Shortly.
And I think we'll see what people think but we feel really good about it.
Yeah, and I'm, just excited to see D D.
The the analytics and.
The info system of the vehicle because you know we thought a vehicle last year, but I'm just a little bit excited whats what do you expect from the.
From the vehicle itself.
Yeah, and we'd love to have you come out.
Yeah.
Send that to you.
Now that the.
So.
Omni is getting a little better.
You'll be able to come out and spend some time with us.
Oh Awesome, alright, well that's all that's all the question I have for thanks, Thanks, a lot Tony.
You bet.
Our next question is from Amit Dayal of H C. Wainwright. Please proceed with your question.
Thank you good afternoon, everyone. I appreciate you taking my questions.
So Tony just with respect to these are stage three orders does that involve any depositor that was just from the customer.
Those are committed purchase orders, so they'll either have deposits or they'll have so to speak binding agreements.
In other words.
Just on the credit.
Predicate, whether we want a discount or not.
The deposit or not.
So.
In certain cases, we will take them in certain cases, we won't just because of the type of buyer.
That makes sense.
Yes, yes understood.
And then they all can make transaction.
Yeah.
What's the expected mix for the 2022 target of three to 6000 vehicles between.
Lifestyle and delivery.
So we sourced it so that it can have a little bit of flexibility, but right now we're kind of 80 20.
Focused with some DVR.
Deviation capability between the LTV and the L D.
And the main reason is these larger customers you know they have.
They have long term needs and getting them more used to the product.
And how that changes their workflow.
<unk> is important so that's why we're kind of entering an allocation game.
With those customers. So so right now that's kind of the current mix capability to the extent that we need to make sure we're getting enough of the ltvs out.
Have the ability to also produce that you know I think the biggest yes.
We brought our numbers down so holding at 3000, I think somebody just recently dropped.
By a third or so.
You know, it's a tough environment you know the first year or two it tough.
But.
You know right now.
I feel like we've already done.
Aligned to what we can do we feel pretty good about it.
Still got a little stretch in there, but we got a pretty wide range between three and six.
And.
You know, we're just going to keep our heads down and knock it out and not get too big but the way things are firming up.
Going to need to find ways to accelerate our ability to deliver vehicles, which is a good problem to have I mean, where people who love to create problems, we're solving and then solving them.
So it's no fun.
Solve a problem you don't have.
Understood.
You touched on inflation, Tony you know trying to sort of control inflationary trends.
Things of that nature has has there been any change in your pricing plans for the vehicles given the inflationary environment. We are in right now.
So we just recently had a meeting with a bunch of our partners.
Suppliers and vendors and.
We've seen.
We've seen certain parts that were $3 go up to $100.
But I think.
Our view was way back when when we took over to bring the volumes weighed down is we.
Committing to 50 60 75000 units a vendor supplier is never going to believe you anyway is when you're going to start your new.
Having been on the other side.
So you kind of price it accordingly, and then and then you actually get ratcheted the wrong direction.
So I think I think a lot of them are going to be facing.
Some hurtful ratchets on their cost structure, but nonetheless, just the environment with the geopolitical and the pandemic. We've seen a few items go from a couple of dollars to $100.
But where we pass that cost along no and the reason is is with those particular vendors.
We are working with them on mitigation strategies, and we never overextended ourselves on commitments.
So we can pivot to another supplier if we have to.
And or bring it in house.
I think you know it'll be it'll be a bumpy couple of years are in this category for all of us as things smooth out and things calmed down.
But we've eliminated so many parts that's our best inflation fighters innovation.
And but we are taking hits here.
Labor costs are higher shipping costs, and then gosh, we'd be sitting here, telling you about thousands and thousands of dollars per unit increases.
If we were still bringing in a vehicle from Europe not to mention the lead time and I was talking to somebody the other day it got six containers.
Can't move.
And won't move for weeks.
So.
I think we're making the right steps I mean, there's always like I said, we live in a constant state of dissatisfaction is not a small task.
But we're not trying to win it.
In a quarter right, we're really grinding it out navigating these items, but right now we are holding the line on the pricing we've aligned with but we went into that with Cushing, it's getting to eat away.
And I do believe we're priced if you study as historically, we've always been able to bring price up a bit because the consumer access the customer boxes.
And that's a partnership and so yeah. If you look at where we were when others were at 70 Rice you know I mean, I think our Rbis kind of speak for our thoughtfulness I know many people have said why don't you guys say more.
Because you know its tough to always pull those words back I'm sure someday, we'll pull a few here and there back but you want to minimize that.
Mrs happen.
But mitigation is something we are constantly focused on here, which is allowing us to keep pushing through those milestones.
Thank you Tony Thats, all I have.
Thank you.
It works.
We have reached the end of the question and answer session and this does conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a great day.
Yeah.
[music].