Q2 2022 Universal Electronics Inc Earnings Call
Okay.
Good afternoon. My name is Cathy and I will be your conference operator for today at this time I would like to welcome everyone to the Universal Electronics' Q2, 'twenty 2022 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
You would like to ask a question. During this time simply press star followed by the number one on your telephone keypad, if you'd like to withdraw your question again press Star one thank you and Kirsten Chapman L. H, a investor Relations you may begin your conference.
Kathy and thank you all for joining us for the Universal Electronics second quarter 2002 financial results Conference call by now you Should've received a copy of the press release, if you've not please contact <unk> at 4154333 777 or visit the Investor Relations section of the website.
This call is being broadcast live over the Internet and a webcast replay will be available for one year at www Dot <unk> dot com any additional updated material nonpublic information that might be disclosed or discussed during this call will be provided on the company's website, where it will be retained for at least one year you may also access.
Is that information by listening to the webcast replay.
During this call management may make forward looking statements regarding future events and future financial performance of the company cautions you that these statements are just projections and actual results or events may differ materially from those projections. These statements include.
The company's ability to timely develop and deliver new technologies and technology upgrades and related products introduced this year, including leveraging our wireless connectivity capabilities to the smart home automation security and hospitality and our groundbreaking line of ultra low power and energy harvesting remote controls designed for sustainability that will.
Be accepted by our existing customers and attract new customers.
Our ability to manage the global supply chain issues, which includes material shortages that our industry has been dealing with particularly with respect to obtaining semiconductors as well as the effects of the natural disasters public health crises, including the COVID-19 pandemic, both of which continue to have both a direct and indirect impact on our sales.
The continued successful collaboration with existing and new customers and developing and introducing next generation products and operating systems and technologies, which result in increased sales opportunities for the company.
Management's ability to continue to manage its business inventories and cash flows to achieve its net sales margins and earnings through its mitigated mitigation efforts.
The impact of the company's financial results that it may experience due to supply chain issues material shortages and inflationary pressures, we and consumers are experiencing that.
The company undertakes no obligation to revise or update these statements to reflect events or circumstances that may arise. After today's date and refers you to the press release mentioned at the onset of this call and the documents the company files with the SEC, including its annual report on Form 10-K, and the periodic reports filed since then.
In management's financial remarks, adjusted non-GAAP metrics will be referenced management provides adjusted non-GAAP metrics because it uses them for budget planning purposes, and for making operational and financial decisions and believes that providing these non-GAAP financial measures to investors as a supplement to GAAP financial measures helps investors evaluate you yeah.
This core operating and financial performance and business trends consistent with how management evaluates such performance and trends.
In addition management believes these measures facilitate comparisons with the core operating and financial results and business trends of competitors and other companies a full description and reconciliation of the adjusted non-GAAP measures versus GAAP is included in the company's press release issued today.
On the call today are chairman and Chief Executive Officer, Paul <unk>, who will deliver an overview and chief Financial Officer, Bryan Hackworth, who will summarize the financials. Paul will then return to provide closing remarks, it's now my pleasure to introduce Paul Arlene. Please go ahead Sir.
Good afternoon, and thanks for joining us today.
Our resilient business model technological innovation commitment to service and financial discipline built a rock solid foundation.
This base sets the stage for long term growth in fact, we have successfully leveraged our wireless connectivity advantages.
To address new use cases, and penetrate additional markets such as home automation HVAC lighting and blinds.
This strategy is paying dividends as we have continued to win projects in home automation and security this year.
Our performance for the second quarter was good as revenue met our expectations and EPS was higher than expected at 66 cents per share.
Over the past few years, we have been asked some difficult questions.
When will logistics lighten up when will the chip shortage N.
When will the economy reached an inflection point.
Well, we all wish we had a crystal ball to do this to definitively answer these questions, but we don't.
Clearly consumer behavior is being impacted by rising food and fuel prices.
This leaves less of consumers budgets for entertainment merchandise and other discretionary items.
No economic factors continue to dampen near term visibility.
The exact timing of future improvements as elusive.
I will share with you what we do now.
Logistics seem to be improving each quarter.
And we are hopeful that trend will continue.
Semiconductor fabs are being re fabricated and built in the U S and across the world, which will most certainly create increased chip supply in 2023 and 2024.
As I have stated before there has been hundreds of billions of dollars committed to increased semiconductor supply.
While we are dealing with a shortage now we believe that it will dissipate in the not too distant future.
At <unk>, we continue to manage what we can control.
Which includes creating new products and engaging and supporting our customers.
This strategy has prevailed during other times of challenge and our 35 plus years and it is proving fruitful now as well.
Creating innovative industry, leading solutions that simplify our consumer's life and their home has long been our goal.
We have succeeded over our history in achieving this goal and continuing to achieve this will lead to our long term success, regardless of any short term economic headwinds.
In the last few months, we have seen a good amount of positive commercial activity by both expanding our footprint at existing customers as well as attracting new customers.
Successes keep us excited about our future growth potential.
In our home automation and HVAC business, we are gaining momentum.
We announced the new smart home controller and gateway for power view, the motorized shades and blinds system from Hunter Douglas the world's largest supplier of window coverings.
We expanded our activities with leading U S security provider vivid smart home with energy efficient connected smart thermostats and sensors.
Interest in our products and technologies continues to grow from HVAC Oems across the world as well as smart home security and hospitality service providers.
Multiple wins in these areas will fuel growth in 2023 and beyond.
Turning to our entertainment control customers, we are already serving the leaders in the markets, including Samsung and LG by spending years, winning projects impressing customers with quality and innovation.
Bedding UI technologies as must have features and increasing our market share.
We are confident that our customer roster and strong relationships are evidence of our long term commitment to growing our position.
More recently, we won projects, including our award winning energy efficient rechargeable Android TV remote control platform.
Quickset enabled extreme low power control silicon solution.
And the new Apple TV controller for TV service providers.
In addition to new project wins, we also expanded our product and technology offerings during the second quarter.
With respect to our D. K the cable industry's leading video entertainment service platform.
We introduced two new voice can troll remotes targeted at operators, who want turnkey solutions using the same technology ingredients available in 75 million products <unk> has already shipped with the platform.
In the climate control domain, we expanded our connected thermostat offerings.
Marketed in cooperation with Commscope Ruckus to help property managers and hoteliers reduce energy consumption.
This solution has garnered significant interest due to rising energy cross costs across the globe.
Additionally, our consumer brand one for all recently launched a new award winning streaming centric control solution to address the growing challenge consumers face when they have multiple subscription streaming services on multiple screaming platforms.
These are just a few examples of what our teams are working on to create solutions that address the control requirements of the leading players in the markets we serve.
Before I turn before I turn the call over to Brian I'll provide an update on legal proceedings.
As you all know we have been engaged in and continued litigation against Roku.
We have done so to protect our highly valuable and differentiating intellectual property and.
And as we have previously reported we have prevailed in our offensive actions against Roku, gaining a win through the international Trade Commission with a finding that certain of brokers core remote control products infringe one of our key quickset patents, resulting in the ITC issuing both an exclusion order and a cease and desist order.
Requiring roku to stop importing and selling the infringing product.
And this continuing effort I am pleased to report that we again obtain a very important win against Roku. This past June when we successfully defended ourselves against Roku retaliatory ITC action in which two patents roku asserted against us were found to be invalid.
And that Roku failed to prove that it had established a requisite domestic industry in order to prevail with.
With these two very important wins, we remain confident that we will prevail and the related Federal District Court cases.
Now I'll turn the call over to our CFO Bryan Hackworth for a review of the financials go ahead Bryan. Thank you Paul first I'll review the results for the second quarter of 2022 compared to the second quarter of 2021.
Net sales were $139 1 million compared to $150 6 million for the second quarter of 2021.
Squarely within guidance Q2 sales reflected a quarter without a factory shutdown or logistical issues related to the Covid Covid pandemic.
Although supply constraints still persist most notably surrounding the chip shortage, our Q3 revenue guidance, which I will provide in a minute reflects a positive quarterly trend.
Gross profit for the second quarter of 2022 was $40 5 million or 29, 1% of sales.
Compared to 35% in the second quarter of 2021.
We've experienced inflationary pressures relative to component parts freight and labor.
In an effort to mitigate the effect of inflation is having on our gross margin rate, we phased in sales price increases throughout the first and second quarter of 2022.
Operating expenses were $30 4 million compared to $30 1 million in the second quarter of 2021.
SG&A expenses decreased to $22 1 million from $22 seven.
$7 million in the prior year quarter.
R&D expenses increased $8 3 million compared to $7 4 million in the prior quarter as we continue to invest in developing innovative solutions for a range of products and multiple channels.
Internal investments have enabled us to consistently improve the user experience in our core markets as well as gain market share in new channels, such as security and home automation.
Operating income was $10 1 million compared to $15 8 million in the second quarter of 2021.
Our effective tax rate was 11, 8% compared to 15, 8% in the prior year quarter.
For the second quarter of 2022, net income was $8 4 million or 66 per diluted share.
Compared to $13 6 million or <unk> 98 per diluted share in the second quarter of 2021.
Next I'll review, our cash flow and balance sheet.
We ended the quarter with cash cash equivalents and term deposits of $54 million.
Compared to $60 8 million at December 31, 2021.
Cash flow from operations for the second quarter of 2022 was just under $1 million.
In the second quarter, we came across a fortuitous opportunity to purchase a higher quantity than originally expected of certain components.
Importantly, a specific ship, which is used across many of our product platforms.
Given the current difficulty in procuring requisite parts, we took advantage of this opportunity amounting to approximately $8 million of additional inventory.
During the second quarter, we purchased 130000 shares for $3 9 million, bringing the year to date total to 355000 shares for $11 2 million.
Now turning to our guidance as expected we've seen some improvements in the supply chain, most notably for us in transportation.
As far as the component shortage is concerned although we've been able to take advantage of specific buying opportunities relative to certain parts.
The environment has remained largely unchanged however.
However, the macroeconomic environment is more uncertain with inflationary pressure has taken a toll on consumer confidence is rising prices for essentials, such as food and gas are leaving less room for discretionary purchases.
Although we are facing these headwinds our third quarter sales are expected to continue to improve sequentially.
For the third quarter of 2022, we expect sales to range from $145 million to $155 million.
Compared to a $155 7 million in the third quarter of 2021 word.
We expect EPS to range from 70 to 80.
Compared to $1 three in the third quarter of 2021.
We reiterate our long term growth targets of sales between 5% and 10% and EPS between 10, and 20% I would now turn the call back to Paul.
Thank you Brian .
We are the global leader in wireless Universal control solutions for home Entertainment and Smart home devices.
Many times throughout our history, we have managed various economic challenges and emerge stronger each time.
We followed our vision to create smarter living by delivering high quality products with great innovative features that consumers want.
As a result, we earned our clear leadership position in home Entertainment and a replicating this success within other related applications in the home.
The fact is when today's headwinds dissipate company.
Companies that continue to invest and truly innovative products and technologies build better products that simplifies People's lives and foster strong relationships with customers will rise to the top.
<unk> has done this before and will continue to in the future.
As always stay tuned.
We can now open the call up for questions.
Yeah.
Thank you.
At this time I would like to remind everyone in order to ask a question. Please press. The star then the number one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
Yeah.
First we will go to Jeff Van <unk> of B Riley.
Hi, everyone.
Jump right into it here and just wanted to see.
I guess it sounds like a couple of moving parts.
As far as your expectations for the P&L.
Happy to see sequential improvement expected for Q3 as the overall demand picture changed at all I'm not sure it's changed a little bit, but hasnt changed overall in a meaningful way.
From the last quarter report and if so any more color.
On that and I guess, it's early but how are you thinking about.
Q4, and now the P&L progression may take shape on sales expenses margins.
Expect slight year over year to year over year growth in Q4.
Yes, Jeff.
It's Paul.
I don't think that anything has changed the projects that we have spoken about are all coming onboard.
The only thing that May have changed is just the macro environment.
I just feel like customers major companies within the industry.
We are looking at the economy with some wonderment, where it will be.
Three months from now probably two months from now, but 3456 months from now is a difficult prediction.
Right now it will inflation temper.
We'll gas prices drop.
Things begin to happen more of consumers.
Money will be able to be spent on other things. If it gets worse then it won't you have got other smaller factors. This year, the World Cup, which doesn't really affect the U S. As much as it does the rest of the world, but the World Cup for the first time is being held in the winter.
This is in some ways like Christmas being in July it's different it's difficult to determine exactly what the effect of it will be it's usually a very positive effect for entertainment. So there is that as a potential upside but there is just so months so much uncertainty right now as to where the economy will be.
Even six months out.
More than we've seen in past years.
You usually with no <unk>.
Six months out you have at least a decent prediction right now I just think it's difficult to gauge where the consumer will be.
Really six months from now we have a pretty good view of the next three because customers of course to have lead times and orders and of course as Brian said sequentially were up and we've got some new projects in there that we think are good but the effect of these things in a really good market is very strong and the effect of a new project in a weaker market is still.
Good, but not quite as strong so it's difficult to gauge where things will be.
We know there'll be okay, and again our products are on track will come out.
But in what type of environment.
Ben so burned over the last few years, not just us, but every company in the world.
Bye.
Predicted things that have happened between Covid and the.
Chip supply the economy, the gas prices et cetera.
That is just difficult to know where things will be six months from now or 12 months from now.
Sure understandable and obviously you guys had some different things come out of left field that you've had to deal with over the years.
If we can shift maybe to home control automation in HVA.
I know you spoke to some wins there extended partnerships.
You talked about 100, Douglas maybe you can elaborate a bit more on how you expect that business segment.
To develop both the near term and then longer term I realize it is a little bit longer kind of a cycle.
Yes.
The projects there are typically.
Along to develop but then the benefit is they're long lived.
So.
Tvs are typically redesigned every year.
In these markets.
Once the design is one the design can last for maybe a decade, depending on the item.
So it's important to get the win they sometimes take a year.
Sometimes more.
To get in.
But.
Even after you've won the design it can take a year to design and have the final product ready.
Not so much on our end, but on the customers because we are typically part of the system.
But again the good news on that is it's usually long lived.
And that market is undergoing change there is a lot of growth there is probably the highest growth market, particularly HVAC.
We serve the double digit growth as a market.
And our market share is not as high as it has been in home entertainment, which provides a real opportunity for us because as we bring innovative solutions to that market.
Help those customers.
Deal with IP connectivity within their units.
Bring the intelligence to the product as well as potentially connected to other systems within home, which we're specialists in.
We think it's a real opportunity it'll take a little bit of time.
But we've been winning there.
So anybody who thinks that we're not in HVAC, it's now eh.
Greater than $100 million business.
In fact, our largest customer this quarter was an HVAC customer daikon.
So.
This is an interesting area, we've already shown proficiency in it.
And we're getting design wins across the world now some of the names we can't mention yet, but we will as the next year progresses.
So thats HVAC and then again, we've mentioned Hunter Douglas this is.
Obviously, the number one window covering company in the world.
We are in a market, helping them create control products that are interconnected with the remainder of the home we are clearly a leader here.
That are our design and manufacturing capability in these markets is second to none.
And.
These customers are very interested in what we have to add to their product line.
So we think this is a good a great area for us to be.
And again these markets are growing double digit.
Type growth rates.
Okay. Good.
Well listen I'll, just say congrats on those recent wins, especially Hunter Douglas Thats great to see.
Including the <unk> throw that in as well.
I'll, let someone else jump in thanks for taking my questions and best of luck sure. Thanks, Joe.
And now we'll take a question from Steven Frankel of Rosenblatt.
Hi, Good afternoon, Paul Thanks for the opportunity to ask some questions.
I know in the past couple of Bruce your.
So customers really struggle.
Much with supply chain issues getting set top boxes as anything else, but we've also seen some acceleration in cord cutting.
Impacting virtually everybody in that space.
To what extent.
Is that affecting their order patterns with you.
Well it certainly would.
Perfect.
But the question is what are people people that really aren't watching less TV.
So with specific customers, we may see a falloff, but then we see sometimes order patterns with other customers rise.
The number one place that people are accessing.
Streaming the worldwide is through a television.
And as you know the three leading.
Companies in that market are.
In some cases long term customers of ours.
So while we're seeing a shift in behavior is probably not as dramatic as everybody may think.
In terms of the.
The speed at which it's happening, but it definitely would've does affect things under the line.
Meaning in the detail there are some customers who have whose volumes over time.
Eroded and other customers who have risen.
And then of course, you have an offset with us that HVAC has become a significant business for us. So it definitely has caused an effect for sure over time.
Okay.
I go back last quarter, you hinted about a couple of large HVAC or ship.
New wins that would ship in the back half.
<unk>.
And a significant increase relative.
Right.
Yes.
Dan and certainly our third quarter guidance implies a move in.
In that direction or are those wins still on track to ship by the end of the year.
Yes, the question will be.
With lead times the way they are still in semiconductors to the extent products are successful if you haven't ordered enough parts.
The issue will be do you have the chips to make everything that ultimately gets demanded.
So you are left in a bind you either have to order a lot of parts.
Or.
Or.
Not be ready for a lift in demand.
So we are seeing some of that there are some customers who have actually lifted orders and we're scrambling to get the parks to make the additional demand.
That's the real challenge right now is trying to predict because with our products typically.
We don't have it as bad as the example, youll see in the press is the the automotive companies because they're the most effective they have products that have 2000, plus semiconductors in them.
Our products will only have maybe five.
But the challenge for US is some of our customers that we pair with will have dozens or hundreds of semiconductors in their product.
So then there demand.
While we may be able to get the parts. After we've scrambled for them if they are missing two parks.
He then can't make as many.
They never get shut out, but they can't make as many.
So they would like to make more and their demand to us maybe more but we may not be able to deliver all of the products not just because we can't get the semiconductors, but because they can't.
So it's a relatively complex problem today as I said in the remarks and I know you know this as do many others anybody who's been around a while these semiconductors shortage issues happened from time to time I remember, particularly at Q1, we had 20 years ago.
But they pass because the.
Capacity gets built the companies who make these semiconductors of course want the sales opportunity when the demand rises.
It's happened over the last few years as the demand rose much more quickly than supply.
Right and the supply got truncated because of Covid. So it just it made a bad situation worse.
And they are catching up and they will and we've started to see some of our vendors who have increased supply.
Unfortunately, not all of them.
And we do have parts going into the back half where the demand is probably slightly higher than then we'll be able to get shifts to ship.
Now I can't say that definitively because our ops people are fighting everyday.
To get the extra parts.
A few extra chip.
<unk>, a few thousand or a few 10000 or 100000.
But it's tough out there it's not like it was two or three years ago, if you needed an extra million parts.
You could get them.
Right now it's a fight.
So, we'll probably live with this into 2023.
Where I'm, hoping we'll start to see the beginning of.
We're already starting to see it but it's the only at a leading edge.
Once these fab start coming on we will.
C.
This is hard for people to believe right now, but there is so much capacity being added we're going to get to a point again, where there'll be short term overcapacity.
It's hard to envision today, given what's going on in the world, but it's.
He is heading towards that.
It's a ways out once we get to that then.
Supply will not be an issue.
Okay and then.
On the price increases.
Well they have.
Any material.
Gross margins in the back half.
Yes, I mean with what.
We do as we phased we've raised the price increases in the first and second quarter. So.
The increases in Q1 had a full effect of those starting in the second quarter and then the price increases.
That were implemented throughout the quarter, we will have a full effect in Q3 so.
It should have.
In effect in the back half of the year more so than in the first half because it was partial quarters.
Okay and then.
Yes.
And then Comcast revenue concentrations.
Yes, Paul talked about the <unk> was actually our largest customer for the quarter came in at 15% and Comcast was at 13, 5%.
Okay.
Okay.
And then Paul you want to give us two minutes on the acquisition that you made in the quarter.
Yes, well, we bought a very small company that's involved in embedded software within the television industry.
We think it is a essentially a synergistic.
Acquisition, along with quick set so they have relationships with with a lot of companies that we.
Did not have as quick set customers and we have a lot of quickset customers that that they.
Have not penetrated so it was a very small acquisition, but a interesting company out of Nielsen that had done embedded software for televisions and it fits.
It's a small company, but it fits nicely with with what we're doing with quick set in the TV industry.
Great. Thank you.
Our next question will come from Brian <unk> of Imperial capital.
Okay.
Yes. Thank you very much a couple of quick questions.
I think last quarter call you talked about a really strong second half of the year.
I know you are giving guidance for third quarter.
And I know you don't have a crystal ball you Barry.
You stated that but how is fourth quarter potentially shaking out for you guys or the year or the full fiscal year or is it too early to tell.
Yes.
Paul mentioned earlier.
Right now Q4, we still have strong orders.
We have new customer wins that we mentioned in our last on last call for the back half of the year and we are scheduled to ship.
I mean, I think there's a couple of questions right now when you when you look into Q4 and I don't have an answer to it just yet but is there is a little bit more uncertainty today than there was say this time last quarter and that is.
Consumer confidence is one of them you are starting to see.
Consumer confidence waned a bit and then the question is does that have or will that have an adverse effect on our Q4 sales I haven't seen anything material, yet and I'm not saying it will happen, but it's an uncertainty we just don't know exactly as consumer confidence wanes that if it continues to decrease due to people start to order less in the retail space.
Does that affect our consumer electronics channel, which ultimately winds up in the consumer space and again, I'm, not saying that will happen, but it isn't uncertainty right now and the other pieces, even though we have these nice wins and we're going to ship.
Can we fill all the orders in right now.
We're starting to see some improvement in the supply chain definitely in transportation.
When it comes to the chip shortage, we were able to buy more of a specific ship in the second quarter, but there are other ships that we are having difficult difficulty getting it doesn't mean, we won't be able to procure them, but again.
It's a bit of uncertainty so I think from an order perspective, we look we look strong.
From a customer wins perspective things are going well Q1, where sales are at $132 million Q2, there were $139 million Q3 are expected to be $150 million. So I think things are the trend is positive I think right. Now. The question is can we can we fill all the orders.
And we'll.
Consumer confidence stays strong enough, where it doesn't affect any orders in the fourth quarter.
Great. Thanks for that color in terms of SG&A.
A big drop from quarter to quarter was their lay offs or is that just less sales. So therefore.
Less commissions.
No I think total operating expenses were a little bit less in Q2 than Q1, but not materially I think operating expenses for Q1, and Q2 were somewhat comparable in Q3, I don't expect it to be materially different from that.
Okay, and then last question on Roku.
When can we expect anything in the near term that we should be looking for stated a different way.
Coming out of the Roku fits.
Good question.
As far as the district court cases, they have not been on stage yet.
And that will depend on actions by the P tap on the IPR.
But obviously sometime in the next few years the all the IPR will be exhausted.
File IPR is against the patents and in some cases they were appealed when they didn't go.
The way that the party wanted.
So that takes time and once those are completed the case will be on stage.
So it's probably.
It's not in the coming months it will be in the coming years.
Is that the case will finally be heard but obviously to date.
<unk>.
The two times we've we've.
<unk> gone to court.
We've won both.
Thank you.
So when we were on the plaintiff's side and on the when we were on the defendant side.
Both patents, but were ultimately found invalid that they were suing us with.
Thank you yes.
Yes.
And again as a reminder, that is star one if you'd like to ask a question.
We'll now go to Bill It does long of Titan capital management.
Alright. Thank you would you please remind us what the magnitude of the.
Price increase was in the first quarter and then secondarily in the second quarter and how much of that was fully realized in Q2.
Yes.
Didn't do bill.
<unk>.
We were specific by customer because every customer's product is a little different.
Obviously more differentiated products.
With higher cost items in them that would have suffered from.
IRA inflationary pressure, we tried to be <unk>.
Surgical about it and fair.
<unk> products were the costs went up more would have been prone to a higher.
Cost increase.
And.
So yes, we went through it there wasn't a generalized across the board, 4% or 6% or 1%. It was essentially done product by product.
And have you.
Those numbers on a product by product basis, and aggregated them to identify what what that surgical effect ultimately ended up being overall.
Well, yes, you could do that I suppose but when you do the price increase you would then have to presume the mix of how many units of each youre going to sell.
Right.
So we didn't do that calculation.
At that time or.
But the reason it comes in over time as customers.
When you when you have a price increase sometimes they've put in orders prior to it.
That you deliver without the price increase.
If they have existing purchase orders you don't.
Increase the price on existing purchase orders it could but we do not.
And then.
So it comes in over time.
But the goal again is to and its been absorbed fairly well I mean over time the price increases in our industry are not.
Because typically we go through cost reductions.
Customers will have an expectation that you will share some of that with them.
I think customers are fairly understanding about the times, we're in and that.
Our raw materials cost more money.
And labor costs more money and everything is costing more and therefore understand.
The effect of this price increase and the goal would be again to those cost ups.
You don't typically see in materials.
They would absorb.
Those cost ups that they understand that.
No.
And then competitors would have the same cost us so.
They have largely accepted.
The price increases.
Great. Thank you for the perspective.
And with that that does conclude the Q&A session I would like to turn the call back over to Paul <unk> for any additional or closing comments.
Yes, Thank you for joining us today and your continued support of <unk>.
We'd like to say that we plan to present at the Sidoti small cap virtual conference at September .
We hope to see US see you or talk to you soon have a great day.
And this does conclude today's conference call, we'd like to thank you all for your participation you may now disconnect.
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[music].
Yes.
[music].
Okay.
Okay.
[music].
Please go ahead.
Thanks.
[music].
Okay.
Okay.
Okay.
[music].
Okay.
Thanks.
Great.
[music].
Okay.
Yes.
Okay.
Okay.
Okay.
Sure.
Okay.
[music].
Got it.
Okay.
[music].
Thank you.
Yes.
Okay.
Yes.
Okay.
Great.
Okay.
Sure.
Great.
Okay.
Okay.
Okay.
[music].
Okay.
[music].
Sure.
Yes.
Okay.
Right.
[music].
[music].
Okay.
Okay.
[music].
Okay.
[music].
Okay.
[music].
Yes.
Okay.
Yes.
Yes.
Thank you.
Yes.
Okay.
Yes.
Okay.
[music].
Yes.
<unk>.
Okay.
[music].
Okay.
Okay.
Okay.
Yes.
[music].
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Yes.
Yes.
[music].
[music].
Yes.
Thank you.
Yes.
Sure.