Q2 2022 Standard Motor Products Inc Earnings Call
Uh huh.
[noise].
Hum.
Uh huh.
[music].
Yes.
Yeah.
[music].
Well placed on hold and we appreciate your patience you have would you. Please continue to standby.
[music].
Uh huh.
[noise].
Okay.
Uh huh.
Hum.
Uh huh.
[noise].
[noise] please standby your program.
It's about <unk>.
Okay.
Good day, everyone and welcome to the standard motor products second quarter 2022 earnings call.
Do you enter full screen mode hover over the slide and click the full screen icon in the center of the viewer to.
Do you exit full screen mode click the X in the upper right hand corner of the screen.
If you require technical assistance during todays event, you can reference to help link at the top of your screen.
Please note today's call will be recorded and I will be standing by should you need any assistance.
And it is now my pleasure to turn the conference over to Tony Cristobal VP Investor Relations. Please go ahead.
Chris Good morning, everyone and thank you for joining us on standard motor products second quarter 2022 earnings Conference call I'm, Tony Chris <unk>, Vice President of Investor Relations and with me today are Larry sales Chairman of the board, Eric Sills, President and CEO , Jim Burke, Chief operating officer and Nathan.
<unk> Chief Financial Officer.
On our call today are Eric will provide an overview of our performance in the quarter, followed by Jim who will give an update on the operations and supply chain.
Nathan will discuss our financial results and Eric will then provide some concluding remarks and open up the call for Q&A.
Before we begin this morning, I'd like to remind you that some of the material that we'll be discussing today may include forward looking statements regarding our business and expected financial results.
When we use words like anticipate believe estimate or expect these are generally forward looking statements. Although we believe that the expectations reflected in these forward looking statements are reasonable. They are based on information currently available to us and certain assumptions made by us and we cannot assure you that they will.
Correct.
You should also read our filings with the Securities and Exchange Commission for a discussion of the risks and uncertainties that could cause our actual results to differ from our forward looking statements I will now turn the call over to Eric Sills, our CEO .
Thank you Tony and good morning, everyone and welcome to our second quarter earnings call I'd.
I'd like to begin as I always do by thanking all of our SMP employees worldwide.
Continue to operate in a challenging and complex environment with more unprecedented influence has been ever and our people rise to the task every day and I could not be more pressed.
Overall, we are pleased with our top line numbers in the second quarter, marking eight consecutive quarters of record breaking SaaS.
We were up five 1% over last year's record period with both divisions showing gains.
Let me review each segment beginning with engine management.
Engine management sales were up three 7% against last year's second quarter, which itself was up nearly 35% from the previous year.
The majority of the growth is attributed to sales from acquisitions made in the last year, along with the benefits of pricing actions.
Our aftermarket customer Pos remained positive throughout the quarter, even when compared to outsized growth last year and.
And this excludes our wire and cable product category, which after two years of abnormal growth has now returned to a secular decline due to where it is in its lifecycle.
So looking beyond.
But beyond looking at absolute POS information. We also received the industry data that shows that our brands are outperforming in like for like product categories.
This reflects the downstream share growth our customers have achieved due to our joint effort with the street.
Temperature control continued at solid pace sales in the quarter were up seven 5% versus last year, which surpassed the second quarter of 2020 by 47%.
Warm weather came early and strong we enjoyed some new business from various customers and here too we saw the benefits of price.
Looking at the balance of the season, although we're going up against the hottest on record last year and trying to predict the weather is a fool's errand. The heat is continue with no end in sight customer Pos has remained robust and so we're feeling pretty good about ongoing demand stream.
So let me talk for a bit about what we've been seeing in the market and how we are thinking about the future.
I'll start with our aftermarket business, which makes up nearly three quarters of our total revenue.
Looking at the overall backdrop most trends are favorable the vehicle fleet is aging the lack of new vehicle availability is causing motorists to repair and maintain the vehicles they have gas.
Gas prices peaked and are now starting to drop and what we are heading into a difficult economic times, the aftermarket tends to outperform in that environment.
Furthermore, our product categories, which are largely non discretionary and professionally installed tend to fare even better.
DIY temporarily surge during the pandemic the long term trend has been towards D ISS and.
And we believe that our strategy, which focuses on the do it for me market continues to be very well received by our customers.
Additionally, our lesser reliance on the far east for our supply of goods as a major advantage over some of our competitors. It has allowed us to ship at higher levels than many and that's helped our customers better serve their end consumers. So while there will always be challenges the marketplace and our position within it are in good shape.
Yes.
Meanwhile, our specialized non aftermarket business has remained strong and we are very excited about the strategic thrust.
This business focuses on selling custom engineered products into niche on highway and off highway end markets, such as heavy duty construction and agricultural equipment power sports et cetera.
We've been investing in its growth and with our recent acquisition activity in the space. We now enjoy a run rate of about $300 million in sales.
Not only has a diverse and end markets. It is diverse geographically with strong sales in Europe , and Asia as well as in North America.
We are now in the process of integrating all the pieces. So that we can begin to truly take advantage of the combined strength and pursue cross selling opportunities and this is beginning to bear fruit and as we look to the future we see boundless opportunities.
Next I'll briefly discuss margins, though Jim and Nathan will delve deeper along with the rest of the world. We had been experiencing elevated costs in just about every input raw materials labor transportation and so on.
The industry has largely been receptive to passing it through but there is always a lag and the cost increases keep coming.
The latest challenge, making the headlines is the increase in interest rates, which affect our receivables factoring programs at our larger accounts.
We are working diligently to continue adjusting for these costs with more pricing phased in over the second half of the year, but they will impact our bottom line for the immediate future.
At this point I'll hand, it over to Jim to review the details.
Okay. Thank you Eric from an operations perspective, I will highlight the inflationary pressures we are facing in the current environment and our action plans to address these headwinds the PPI producer price index is up 11, 2% over the last 12 months and 18, 2% for the current year.
Annualized rate.
No single material type of commodity source is significant across the basket of material purchases. However, our cumulative material purchases will be somewhat representative of the U S based producer price index.
Some of the significant drivers of these increases are transportation costs, both freight and freight out.
While international container costs have trended down in 'twenty two they still remain three times historical levels.
Local transportation costs are driven by escalating diesel fuel costs and driver shortages.
So commodity costs, such as copper steel and aluminum pivotal FP and begun to trend down but year to date averages exceed cost in 2021 and prior.
Overall material purchases are significantly off as our vendors are facing many of the same pressures plus labor inflationary costs.
Sure.
Non material purchases, including utility costs medical insurance and professional fees are experiencing double digit increases. The obvious question next is what we are doing to alleviate these inflationary pressures.
To begin we look internally for cost reductions with make first by efforts low cost vendor sourcing and also near shore sourcing to reduce transportation cost value added engineering efforts to add automation, where feasible and other areas for cost reduction.
These internal efforts produce significant savings, but are not sufficient alone to stem. The tide of these increased cost drivers and.
In combination with our internal efforts. We are also passing along price increases to our customers. We have implemented price increases in late 2021 that a carryforward benefits in early 'twenty, two and our price changes implemented in 'twenty two.
However in general our pricing actions have trailed the higher costs. We are we have incurred base.
Based on the continued inflationary costs, we are incurring for materials labor and overhead and interest rates, we plan to implement further pricing actions going forward.
Besides an inflationary pressures our supply chain logistics remains difficult due to extended lead times and delays transporting the product we have a distinct advantage with our north American manufacturing footprint, which better assist us in managing our supply chain.
Over the past year, we strategically increased inventory levels due to many of the challenges discussed, which we believe strengthen our partnership with our customers. We feel our inventory levels have peaked at the end of the second quarter and look for meaningful inventory level reductions over the second half of 2022.
While these are very challenging times it is through the dedication and determination of our employees to make S&P. The number one supplier in our industry.
You and I will turn the call over to Nathan for his financial highlights.
Alright, Thank you Jim.
As we go through the numbers I'll first give some color on sales and margins for each division.
I look at the consolidated results cover some key balance sheet and cash flow metrics and finally provide an update on our financial outlook for the full year in 2022.
First looking at engine management, you can see on the slide that net sales. There in Q2 were $241 9 million up $8 7 million or three 7% versus the same quarter last year with the increase a result of sales from acquisitions made last year and higher pricing for.
For the first six months sales in engine of $481 1 million were up eight 1% and excluding sales from acquisitions and a reduction in sales from the loss of a customer which we've now completely left sales were up two 6% with the increase driven by higher pricing.
Looking at the margin the second quarter gross margin rate for engine management was 25, 8% down from last year, but remember that last year's margin benefited from the impact of strong production to rebuild inventory levels as the economy reopened.
This aside our margin in the second quarter of 2022 was impacted by a number of things.
We had some higher customer returns, which can be lumpy in nature based on customer return patterns.
Second we had continued pressure on costs from persistent inflation.
Third we incurred some higher freight expenses, resulting from stocking higher inventory levels.
And last we continue to see a mix shift to more non aftermarket sales as we've been discussing for some time now.
Engines gross margin for the first six months was 26, 6% and was down from last year for largely the same reasons given for the quarter.
As a final comment on engine margins, while their margin is down from last year keep in mind that last year did not see the same inflationary pressures or supply chain costs now faced across the economy.
And while we did pass on higher prices to customers during the quarter. We continue to pursue additional pricing actions to offset the continued inflation in our costs.
Looking at temperature control.
Net sales there in Q2 were up $7 9 million or seven 5% and for the first six months were up $26 8 million or 15, 9% with the increase mainly reflecting our solid start to the season, so far and higher pricing.
Our gross margin rate for temperature control in the quarter was 26, 7% a decrease of <unk> two points from last year, while the gross margin rate for the first six months of 25, 8% was down six points from last year.
The slight decrease in margin for the quarter and first six months was due to inflation in our costs and some higher freight expenses related to stocking higher levels of inventory to prepare for the summer season.
Turning to our consolidated results our consolidated net sales reflected the growth we saw in each division with Q2 of five 1% versus last year and the first six months of 10, 3% versus last year.
Our consolidated gross margin rate was down for the quarter and first six months for the reasons noted before but given our year to date growth in consolidated sales. We did report higher gross margin dollars for the first six months of the year, despite a lower rate.
Moving now to SG&A expenses, our consolidated SG&A increased in the quarter and first six months as rapidly rising interest rates drove expenses from customer factoring programs higher and we had additional costs from acquisitions made last year.
Our consolidated SG&A expenses increased by $6 8 million in the quarter and included $4 $7 million of higher factoring costs and $2 9 million of additional costs from acquisitions made last year <unk>.
Excluding these items, our core SG&A expenses were down $8 million versus Q2 last year.
SG&A expenses for the first six months increased by $15 3 million.
And include a $5 $5 million of higher factoring costs and $6 5 million of additional costs from acquisitions excluding.
Excluding the factoring costs for the first six months, our SG&A as a percentage of sales would have been 18, 5% and lower than last year.
Looking at the bottom line consolidated operating income as shown here on the slide was seven 8% of net sales for the quarter and 8% for the first six months of the year and earnings per share in EBIT over lower than last year for both the quarter and first six months for the reasons already discussed.
Turning now to the balance sheet accounts receivable of $229 7 million at the end of the quarter were up $49 1 million from December 2021, with the increase typical of the seasonal nature of the business and mainly the result of higher sales during the quarter.
Inventory levels finished Q2 at $551 4 million up $82 7 million from December 2021, with the increase a result of higher sales levels. This year and a strategic investment in inventory to both make sure we meet our customers' delivery expectations and to buffer against supply chain volatility.
As the end of the second quarter marks the peak of our seasonal working capital needs. We expect a reduction in inventory for the balance of the year as Jim mentioned.
Looking at our cash flows our cash flow statement reflects cash used in operations for the first six months of $95 3 million as compared to cash generated of $23 2 million last year with more cash used for accounts receivable stemming from management of our customer factoring programs in the prior year and more cash used for inventory for the reasons noted before.
Regarding capital expenditures, we continued to invest in our business and used $13 2 million of cash for Capex. During the first six months up from $11 7 million used last year.
Our financing activities included $11 $8 million of dividends paid and another $25 6 million paid for repurchases of our stock.
Financing activities also included $139 3 million of borrowings, which were used mainly to fund our operations seasonal working capital requirements strategic investments and returns to shareholders.
While our borrowings were higher this year, we still finished the quarter with a low total debt leverage of one seven times EBITDA.
Before I leave the topic of balance sheet and cash flows I just wanted to reiterate that we were extremely pleased to enter into a new five year $500 million credit facility during the quarter.
The new facility gives our business added flexibility and allowed us to fix a portion of our interest rates with a swap agreement during a time of rapidly rising rates.
We expect to use the new facility to support our growth and continue to execute our strategic priorities, while continuing to return value to our shareholders I'd like to thank our team of banking partners for helping us put new facility in place.
Finally, I want to give an update on our sales and profit expectations for the full year of 2022.
First let me note again that it's very difficult to forecast what will happen in this current environment, where inflation is much higher than normal and we're now seeing a rise in interest rates to address that inflation.
Regarding our top line sales, we are maintaining the expectations. We put forward at the beginning of the year, which is that we expect full year sales growth for 2022 to be in the low to mid single digits.
With regard to margins you can see from our results for the year. So far that we continue to be under pressure from inflation in our costs and that inflation continued to increase during the second quarter.
Additionally, we expect interest rates will continue to rise, which will drive a further increase in our supply chain financing costs.
As such we are lowering our expectations for the year from a margin and profit perspective, and now expect consolidated gross margin will be approximately 27% and consolidated operating profit will be in the range of 7% to 8%.
While we expect our results to be lower than discussed previously. It is the result of persistent inflation and higher interest rates, both of which rose higher and more quickly than anyone had anticipated.
As always we'll look to pass higher costs onto our customers in the form of pricing, but we continue to be an uncertain economic environment.
To wrap up while we faced several challenges during the quarter. We were pleased to continue to make progress expanding our business in new markets to aid our future growth.
We also enhanced our liquidity and capital structure with our new credit facility and provide a significant shareholder returns via share repurchases. We've.
We remain confident in our ability to navigate the evolving landscape and to that end, we announced this morning that our board has approved a new $30 million share repurchase program, which will use in line with our capital allocation strategy. Thank you all for your attention I will now turn the call back to Eric to wrap up.
Alright, well thank you Nathan.
So in closing let me reiterate that we're pleased with where we're headed and we're surely acknowledged that there are many headwinds including cost increases supply chain issues and labor shortages and there is also a great deal of uncertainty due to external factors such as the lingering impact of the pandemic and various geopolitical issues.
We also understand that we are going up against some very difficult comps.
But we also recognize many favorable structural trends within our core aftermarket and exciting opportunities and new complementary markets and therefore, while there can be volatility period to period, we are excited about the future.
With that I will turn it over to the moderator and we will open it up for questions.
Certainly at this time, if you would like to ask a question. Please press star one on your Touchtone phone.
You may withdraw yourself from the question queue at any time by pressing the pound.
And once again that is star and one to join the question queue.
Our first question comes from Scott <unk> from MK and partners. Your line is open.
Good morning, and thanks for taking my questions.
Morning, Scott.
Eric can you, maybe dig a little bit deeper into the engine management.
You talked about how I guess, if you strip out the wire and cable business.
We're running a positive maybe just talk about that and what the impact from the.
The wire and cable was I think thats in the release, but maybe just talk about that a little bit.
Sure absolutely Scott.
What we did say well first of all I think it's important to note overall as we look at Pls.
The absolute dollars of Pls are very strong so it's really about going up against a very difficult comp.
Same period in 2021.
But even on top of that if you exclude the wire and cable portion of engine management.
For those that we do get a reported pls information, which is not the entire market, but its certainly representative and directional.
We continue to see engine management again, excluding wire and cable in the low single digits throughout the period.
The wire and cable piece.
Which we have historically been saying and you've been following us for very long time has been in that.
High single digit decline year over year.
Coming out of the pandemic.
Largely because of the DIY surge really started to see very strong abnormal growth that is behind us. It's return to that high single digit decline, albeit from a higher level than pre pandemic. So so it is having a drag overall in the engine management Division.
Alright got it and regarding our price increases.
Obviously.
When you're putting through price increases for factoring.
The catch up effect is even tougher right because of the fact that.
And the immediate impact and everything you have.
Factors, but just maybe just talk about the timing of these price increases and assuming.
Let's say rates were to level off here, how long would that take to be fully implemented into the income statement.
That's a very fair question and first I'd start by saying that factoring is one that is only one of the inflationary costs that we're seeing and we think about it really more holistically than that.
And and.
And frankly, a lot of the other inflationary costs also kind of hit yet.
In some ways unexpected.
<unk>.
There is always a lag between when we see the cost and when we are able to get them implemented partly because there's a certain amount of work we need to do internally and then theres always a lag for.
And effective date.
<unk> delivery.
And agreed to by the customer and that that will that can take several months before it actually.
Six effect so as.
As I believe Jim mentioned or maybe it was Nathan we did start.
Putting through some price increases towards the end of last year and.
We do have more in place to take effect over the second half of this year they are phased in.
But what we do have some that are planned and in place.
Got it.
And then on maybe on temperature control.
Obviously headlines are out there. This is obviously the highest.
Some are on record and maybe talk about how inventory is in the channel and if maybe the demand is outstripping your ability to put product in.
Sure I will.
I'll speak to the inventories in the field and Jim can speak to our ability to keep ourselves in good shape, but what we've seen over the last several months for those customers that we do have visibility into their inventory is really that their inventories are holding up nicely.
Sure.
Sell in is basically equal to the sell through the inventory is in a better position.
At the end of the quarter, which is the last data that we have and then it was at the same time the previous year. So while the heat remains elevated which is obviously very good for business their shelves are in good shape.
And Jim maybe you can speak to keeping ourselves prepared for them sure. Thank you there.
Good morning, Scott.
Yes.
We're very pleased with our performance to date, we've been filling in the mid nineties with temperature control. Obviously, you can see on the balance sheet, we do have the right inventory levels.
We feel pretty good however, we react day to day with the production the demand seems very strong, but where we're still confident where were.
<unk>. This is now entering August so.
Another two months into the season, and we feel pretty good where we are.
Got it and just last question just to clarify.
Is that the overall fundamental.
Underpinnings of the business have not changed this has obviously been inflation issue that we're dealing with them.
The.
Our fundamental outlook is unchanged.
That's absolutely the case Scott and.
And in many ways. This inventory is a very strong stable industry less inventory. This industry is a very stable industry.
And.
Even as we head into some challenging potentially economic times. This industry is terrific and those types of situations.
And.
The fundamentals of the industry is strong I think the fundamentals of S&P are even stronger because we are very well positioned to really take advantage of that do it for me market.
Which is where the growth is going to be the fact that our products are non discretionary even if people are struggling perhaps.
With their own bank accounts, they need to repair their vehicles and so they will be installing our products fundamentals are solid as they've ever been.
Got it thank you very much thank.
Thank you Sir.
Okay.
And once again for everyone that is star and wanted to join the question queue. Our next question comes from Bret Jordan from Jefferies. Your line is open.
Good morning, guys.
Good morning.
You talked about customer returns in the quarter is there anything going on specifically there around either market share or.
Meaningful shifts in inventory.
Yes, Hi, Brian it's Nathan.
News really there other than we just had some higher returns in the quarter like I said the returns can be lumpy.
We do keep our accruals up to date as you would expect but just given changes in customer patterns from time to time, we did have a little bit more come in in this quarter than others.
And then I guess on the mixed shift to obviously more of the non aftermarket specialty lines impacting the gross margin rate.
Is it still seeing sort of a comparable EBIT margin rate from that business or is that is that not the case.
Yes, that's right is still seeing a very comparable operating profit EBIT margin.
Versus the aftermarket we expect to still be in line with where you said before that said, we're seeing inflation challenges across the business as we've already talked about and so we had the same inflation pressures on that business as well.
Okay and then the last question I guess.
Five 1% year over year increase could you sort of carve out what is units versus price in and that obviously a lot of talk of inflation, but we sort of maybe try to quantify what that.
What the actual inflation contribution is to that growth rate.
And pricing.
Sure.
And I'd have to give it to you more intuitively then with data breath, but.
There is so many moving pieces and with mix shifts going around and we have some products that we sell for $1 and some that we sell for $1000. So it's really hard to say, but I would say that.
The majority of the growth would be more price.
And unit demand.
Okay, but do you think units are off or do you think units are down and this is all price I mean, it seems like at retail it's mostly price.
Thats likely down.
Would that be the same here I'd say roughly flat give or take again I don't have any information, but it's not the unit demand is not the.
The needle mover here.
Okay, great. Thank you.
And our next question comes from Robert Smith from the center for performance investing your line is open.
Hi, good morning, Thanks for taking my question.
So you mentioned that.
Awesome.
Burnley and trying to keep a branch.
Inflation in price.
Uh huh.
Increases so is there anything that you guys can do I mean through AI something too.
To meet that more robust.
<unk>.
B malls.
Current with trying to implement.
Increases price increases.
I am not sure I, you broke up a little bit that's when you're asking about AI and artificial intelligence to be able to better predict cost changes is that what you were yes, yes. So.
Get more of a handle on.
The increase is in the.
More robustly I mean.
On a cadence so to speak I just believe that we are in such unprecedented times, we've never seen anything like this with the different commodity changes supply chain costs freight transportation.
Labor, it's caused I think the whole.
Not just the industry the whole world to be reactive rather than proactive I wish we were able to be more proactive, but it's just so unprecedented that debt.
We're all just trying to keep up.
Mhm.
And.
Do you see any changes in the landscape so to speak as far as the acquisition possibilities.
Good morning, Rob This is Jim Burke.
As we've said in previous calls that are there, we're always staying abreast of opportunities that are there.
We stay focused into two primary categories that we're in.
But where we have the opportunities with the.
Non aftermarket business niche business that we picked up where the last year, we picked up from better Bill.
And that sort of business. So we're looking at we're looking at everything we have a team in place.
It's I'd say it's competitive.
Prudent and staying within our key categories.
Yeah.
What about the question of leveraging the balance sheet. I mean are you comfortable where you are and how much further might you be able to.
Sure.
Yes, Hi, Robert It's Nathan I mean, we're certainly comfortable with where we are now I mentioned, our leverage ratio of one seven times is certainly.
Still very healthy.
Jim talked about M&A.
And we've always said that if there was something very interesting that was the perfect fit for the business. We can certainly lever up to three times EBITDA, but it would have to really like I said would be the perfect fit for the business.
Okay.
Good luck going forward.
Thank you Robert.
Okay.
Okay.
And our next question comes from Daniel <unk> from Stephens, Inc. Your line is open.
Hey, good morning, guys. Thanks for taking my question.
Good morning, Daniel and I want to follow up on Scott's question earlier around the factoring cost I guess, one could we just frame up.
Quantify how much that financing costs within the SG&A were up.
Year over year.
Second quarter.
Yes, Daniel so.
Like I said, let me just get the numbers.
So in the quarter, our factory costs were up $4 7 million versus last year and for the first six months. They were up $5 5 million versus last year and then within your guidance. You mentioned you expect that headwind to increase I guess are you assuming further rate increases any help quantifying kind of what you guys are baked into that.
Guidance, just so we can get a sense of what underlying SG&A Martin is doing.
Right, Yes, and so we're looking at the forward interest rate curves like everybody else is which is now baking in the most recent fed guidance around their.
Future increases the way we tend to think about it at a high level is that we sell roughly $800 million of our receivables each year and so a 1% increase in rates would be about $8 million of an impact to us and so as.
As rates have gone up really from almost zero a.
A couple of years ago to where they are now you can start to see that impact showing up.
Helpful.
Shifting over to Vic.
The revenue guide I think you called for low to mid single digit increase and then pretty flat almost negative top line growth in the back half Nathan.
If we're passing through additional price increases, which Eric mentioned Pos trends are still up.
I guess are you just assuming a pretty meaningful volumes slow down in the coming quarters or how do we get to that back half.
<unk> revenue guide.
Okay.
So so yeah, Dan why do you think like we talked about earlier in the year.
We're still in uncertain times, I think if you listen to a lot of the.
Noise on Wall Street, right now a lot of folks are calling for Russia recession at some point.
And I think we did expect things to slow down we'd been at such high levels for our industry versus where we've been historically the last couple of years that we would expect things to sort of normalize and level off and come back down a little bit.
We also recognize where we are in the first half of the year up 10%.
A good chunk of that is acquisitions that we didn't have in last year. We've now lapped that essentially and so now that becomes apples to apples going forward.
That's helpful and then Eric maybe a last one I.
I think in your prepared remarks, you mentioned your brands are outperforming.
Can you share any data or color on how your market share is trading so within your core category, what kind of share do you have with your core customers in those categories and kind of what's left if there's anything incremental to game.
It's very difficult to quantify.
Market share in this space, especially because our categories.
So broad we have so many but with the industry associations have begun to publish is sub product category.
Comparisons, where we're able to see our.
Our demand throughout the entire customer base essentially every customers reporting and how we are doing vis vis the rest of the market in the same product category and so it basically allows you to not just look at your own Pos but it allows you to look at how youre doing vis vis the rest of the market and in most of the cat They don't do.
All of our categories, but in most of the ones that they do and they share with US we tend to be outperforming the rest of the market, which is indicative of of the share gain to us. It's very difficult to say, we are X percentage of the market because there are just so many.
Subcategory competitors and very difficult to quantify but we do believe that we are.
Making share gains.
Alright.
The color and best of luck going forward.
Thank you.
And it does appear there are no further questions over the line at this time.
Okay, we want to thank everyone for participating in our conference call. Today. If you have any further questions. Our contact information is available on our press release or Investor Relations website, perhaps you have a great day. Thanks.
Okay.
This does conclude today's program. Thank you for your participation you may disconnect at any time.
Yes.
Yes.
[noise].