Q1 2023 Richardson Electronics Ltd Earnings Call

Speaker 1: standing by. Welcome to the Richardson Electronics Earnings Call for the first quarter of physical year 2023 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ed Richardson. Good morning, and welcome to Richardson Electronics Conference Call for the first quarter of fiscal year 2023. Joining me today are Robert Penn, Chief Financial Officer, Wendy Diddell, Chief Operating Officer and General Manager for Richardson Healthcare, Greg Pelikin, General Manager of our Power and Microwave Technologies Group, and our newest business unit, Green Energy Solutions, and Jens Rupert, General Manager of Canvas. As a reminder, this call is being recorded and will be available for playback. I would also like to remind you that we will be making forward-looking statements. They are based on current expectations and involve risks and uncertainties. Therefore, our actual results could be materially different. Please refer to our press release and SEC filings for an explanation of our risk factors. We're extremely pleased with a strong performance in the first quarter of fiscal year 2023. This was our ninth consecutive quarter of sequential revenue growth.

Speaker 1: and is a great start to our new fiscal year. Sales in all our business units were up over Q1 of last year. Investments in our growth initiatives continue to pay off as we focus on pursuing exciting market opportunities that we believe will drive long-term growth.

Speaker 1: Beginning in the quarter, we're reporting a new segment, Green Energy Solutions or GES.

Speaker 1: Over the last several years, Richardson Electronics has invested in engineering and manufacturing resources to develop solutions that support a healthier, sustainable environment.

Speaker 1: As an industry leading global provider of engineered solutions

Speaker 2: us globally.

Speaker 2: Our engineered solution strategy is led by our global technology partners such as Corvo, Maycom, EnochiaWave, LS Materials, Amel GreenTech, and Fuji Semiconductor. Along with key tube manufacturers in the industry such as CPI, Talus, NJRC, NISD, and Photonus, work with us to manage our customer requirements. Again, we will continue to add partners to fill technology gaps in our offering as these markets continue to grow. We continue to invest in resources to support the growth we are experiencing in both GES and PMT business. We are in design engineers, field engineers, as well as expanding our manufacturing capabilities and technical expertise. Our growth strategy has been highly successful over the years resulting in new products, customers, revenues, and profits by capitalizing on our existing demand creation infrastructure. We still remain challenged by the long semiconductor lead times and overall supply chain. This affects both our component business and engineered solutions. We are aggressively investing in inventory that allows us to support our backlog and ensure we can meet our customers' needs while we collaborate closely with both customers and suppliers. I cannot stress enough the value of Richards Electronics' model to our customers and suppliers. Our unparalleled capability and global go-to-market strategy are unique to the power management in RF and microwave industries. We focus on the fast-growing energy solutions market. We developed a strong business model including legacy products and new technology partners that fit well with our engineered solutions capabilities. Through our steadfast and creative focus on customers, we will continue to excel by taking advantage of opportunities when they arise. Our backlog remains strong and the execution of our strategy has never been better. There's no question our customers, technology partners, and the Richards Electronics team will be there to help you. Thank you.

Speaker 3: products and support more than ever. And with that, I'll turn it over to Wendy Daddell to discuss Richardson Healthcare. Thanks, Greg. Good morning, everyone. First quarter sales for healthcare were 3.3 million, an increase of 45.5% over Q1 of FY22. Sales were higher for all product lines, including CT tubes, parts, and systems.

Speaker 3: Gross margin in the first quarter improved to 36.7% versus 24.3% in Q1 last year, reflecting steady production and reduced scrap.

Speaker 3: Margin was also helped by several credits from our suppliers in response to issues we faced in our most recent fourth quarter.

Speaker 3: This quarter is proof that it is possible to realize higher gross margins when production is constant and we don't suffer significant equipment or component issues.

Speaker 3: The number of use systems available for purchase is also improving, giving us good revenue growth opportunities, particularly in Latin America where we sell most of our use systems with Alta Tubes. Next slide, please.

Speaker 3: In May of 2022, we completed our second ALTA 750G beta and were able to do a soft launch of the tube. This is the second tube in the Canon series and it works on newer Canon CT scanner models.

Speaker 3: Our strategic market approach continues to ensure our tube performance is solid and we can adjust production processes if needed.

Speaker 3: We are still waiting to receive CE approval, which is required to sell the G-tube in Europe and Canada. As a result, we expect sales growth will be gradual.

Speaker 3: We are making steady progress on the Siemens repaired tube program. This is a series of four tube types including the Stratton Z, MX, MXP, and MXP46. The Siemens install base is considerably larger than Canon's and there are no third party replacement options for these tube types.

Speaker 3: The Stratton Z is currently in beta site testing and we remain on track to release the repaired tube later in calendar year 2022. The Siemens MX series will follow in calendar year 2023.

Speaker 3: The Siemens program is a critical element to achieving our goal of providing a positive operating contribution to the company by Q4 of FY24.

Speaker 3: Q1 was a good start to FY23, which helped improve overall company profitability as a percentage of sales in the quarter.

Speaker 3: I will now turn the call over to Jens Rupert to discuss the results for Canvas.

Speaker 4: Thanks, Wendy, and good morning, everyone. Canvas engineers manufactures and sell custom displays to original equipment manufacturers in industrial and medical markets throughout the world.

Speaker 4: Canvas delivered an outstanding performance and set a new quarterly record with sales of 10.4 million for the first quarter of fiscal 2023.

Speaker 4: Strong customer demand, primarily driven in North America, took a 23.4% increase in sales over the same period last year.

Speaker 4: Gross margin as a percentage of net sales was 31.4% during the first quarter of fiscal 2023, down from 33.4% during the first quarter of fiscal 2022.

Speaker 4: The decrease in gross margin was related to the product mix and foreign currency effects.

Speaker 4: Our backlog remains healthy, which we expect to support strong sales through fiscal 2023 and into fiscal 2024.

Speaker 4: Given the number of projects currently in the engineering stage, we are well positioned for continued growth.

Speaker 4: Our expectations assume no impact from current supply chain obstacles and demand is not negatively impacted by recessionary pressures.

Speaker 4: We continue to deal with extended lead times for selected components from our Asian suppliers.

Speaker 4: To compensate for this, our inventory on hand increased during the quarter. All our monitors are custom and our inventory is earmarked for specific customers.

Speaker 4: So we believe there's minimal risk.

Speaker 4: In some cases, customers are paying us to hold inventory above and beyond the annual usage to avoid supply chain disruptions.

Speaker 4: During the quarter, we received several new orders from both existing and first-time medical OEM customers.

Speaker 4: Some of these applications include cardiac post-field ablation, refractive surgery, radiation treatment, endovascular imaging, surgical navigation, and robotic-assisted surgery.

Speaker 4: In the non-medical space, our products are used in a variety of commercial and industrial applications.

Speaker 4: This includes Taylor prompters.

Speaker 4: Talent monitors and clocks. Used at TV stations around the world.

Speaker 4: human machine interfaces or HMI, for surface inspection systems, metal 3D and industrial printers.

Speaker 4: packaging machines, and process automation.

Speaker 4: I am so proud of our teams around the world and we are extremely pleased with the exceptional operating performance.

Speaker 4: our strong and growing customer relationships together with the backlog positioners for future growth.

Speaker 4: from the variety of customers and applications as well as the value of orders from existing and new customers.

Speaker 4: It is clear we offer our global customers outstanding products and local service.

Speaker 4: While our sales organisation stays focused on new opportunities, I stay focused on improving the operating performance of the division. Maximising cash flow and improving Canvas' profitability is an ongoing priority.

Speaker 4: We continue to work closely with our partners to meet the demand of our customers, particularly with the challenges brought by the industry-wide supply chain delays.

Speaker 4: I will now turn the call back over to Ed.

Speaker 1: Thanks, Jens. Congratulations to you and the team on a new record quarter for Canvas.

Speaker 1: It's nice to see all of our businesses are performing so well, particularly considering the economic conditions throughout the world.

Speaker 1: The credit goes to Richardson Electronics' fantastic group of employees.

Speaker 1: As we celebrate the company's 75th anniversary, I'm reminded that our employees and our culture make us uniquely positioned for success.

Speaker 1: As I mentioned in our new book, Never Give Up.

Speaker 1: It's also our ability to double our efforts and preserve through difficult times.

Speaker 1: Our team has done just that, and I couldn't be more proud of them.

Speaker 1: We're off to a great start in FY23. We're working with our customers to deliver solutions in a timely manner and working with our suppliers to overcome supply chain challenges.

Speaker 1: We're focused on the operating performance of the company.

Speaker 1: Our year-over-year revenue and profitability will be very strong. The company has never been healthier. At this time, we'll be happy to answer a few questions.

Speaker 1: As a reminder, to ask a question, please press star 11 on your telephone.

Speaker 1: Please stand by while we compile the Q&A roster.

Speaker 5: Thank you. Thank you.

Speaker 1: Our first question comes from.

Speaker 1: Anya Satterstrom with SEDOTI, your line is now open.

Speaker 6: Thank you for taking my questions and congratulations. Good morning. Congratulations on the good quarter.

Speaker 6: I just wanted to start digging into the opportunities within when the new – or not new, but you broke out the GEF segment. So in your presentation, it's talking about the GE wind turbine.

Speaker 6: opportunity in itself is 370 million, but you're also retrofitting those capacitors to fit other wind turbines as well.

Speaker 6: So the opportunity could be a lot larger than that.

Speaker 2: Yes, the original Ultra 3000 was designed for owner-operators of GE wind turbines.

Speaker 2: We started with great success with the top three, Nextera, Inver Energy, and Enel. We are the exclusive supplier to those three owner operators in North America. But since the inception of it, it's caught great notice, and we now have 17 different owner operators of GE wind turbines in North America that are buying our product or testing it.

Speaker 2: So we are now in, we have weekly calls with Siemens. We will be developing a version of the Ultra 3000 for them.

Speaker 2: In addition to, we'll be announcing in Q3 of FY23 our multi-brand, which will be used in European manufacturers of wind turbines of Nordex, Semvion, and Suvion.

Speaker 2: And we are in contact with them and we'll be doing betasite testing sometime before the end of the year.

Speaker 2: The technology we're...

Speaker 2: continue to improve on it, and we'll be adding that same product for other wind turbines and other GE owner operators.

Speaker 3: Greg, you might want to clarify it's not the capacitors that you're modifying, but the module itself.

Speaker 2: Yeah, the capacitors – it's a capacitor module. We have a technology partnership with LSMTRON for the capacitors, but we're updating and increasing and improving the power supply, the communication board, et cetera.

Speaker 6: Okay, thank you. Appreciate that clarification. And then within the electronic locomotives, since also like you're just scratching the surface there with the order you have, can you just talk about sort of the opportunity there and have you sort of put a number around that total addressable market potential?

Speaker 2: Yeah, very similar to what you saw with a number of press releases in the past quarter. We now have four different products that we're selling to the owner-operative GE wind turbines.

Speaker 2: So it started with the ultra-capacitor, ultra 3000. But so the same strategy is with the electric locomotives. We now are selling and designing four different products into that market. So right now, our partner is Progress Rail Caterpillar. They're forecasting about 50 trains over the next three years. Within that, we'll be participating inshareations to send new footage with our team alright. So thanks so much for your support, and keep your eye on us. We've had so many great Dasher companies think about all sorts of apps and machine learning trade-offs. And we know that as well as actually an high- Transformers trader who says so many different things and provides even better came from our initial success plan.

Speaker 2: the lithium phosphate iron modules that we're building here. We're also building superstructures, which includes the balance of the equipment needed for the locomotive. We're also building a battery management module that works with the batteries on the train to help manage the current and voltage going through them. We're also building a battery management module that works with the batteries on the train to help manage the current and voltage going through them.

Speaker 2: And the biggest win now is the design we're working on with Progress Rail is for a starter module. That'll be used in our diesel trains. And today they have about 7,000 trains. And we'll be producing that design sometime in Q3 or Q4 of this fiscal year.

Speaker 2: The design we're working on with Progress Rail is for a starter module. That will be used in our diesel trains. Today they have about 7,000 trains and we'll be producing that design sometime in Q3 or Q4 of this fiscal year.

Speaker 2: with 50 trains approximately, their forecast, and our content with that, we look at this being a 40 to 50 million dollar business just for the electric locomotives over the next one to three years.

Speaker 6: Okay, and you're also talking about the growing partnership with Caterpillar, right? Is that beyond the electronic locomotives?

Speaker 2: Right, one of the best things about becoming a design partner for a company like Caterpillar, Progress Rail, is you're now involved in all their designs and they're coming at us with other opportunities for other products within the Caterpillar family. I don't have anything to announce right now other than the four products I just mentioned for their electric locomotives and diesel locomotives, but there'll be other products that we'll be designing for them in the future for sure.

Speaker 6: Okay, and then in terms of the power-based stations, you've been doing some beta testing there with some carriers. How are those progressing and what can we expect from some announcements around that?

Speaker 2: Yeah, so the product is used for the replacement of lead acid batteries in the generator, bottom of every...

Speaker 2: cell tower, there is a generator. The testing is going well. We're tweaking it as the alpha site and beta site testing goes. We hope to still get production orders in Q3 and Q4 this year, but we're also in partnership with Northwestern Medical to build again the UltraGen 3000 for their generators and their critical facilities. So we're happy with the results so far.

Speaker 2: You know, with the Ultra 3000, we started on top of the mountain with the largest owner operator in North America. So this one is going probably normal than what we've seen in the past in terms of a new product introduction process. But the results so far are good. They're happy with our support and our design. And again, we hope to get production orders sometime in Q3 or Q4.

Speaker 6: Okay, thank you. And then moving on to the PMT. Lots of them.

Speaker 6: The Wafer Fabs, what do you see there in terms of the demand? And people think that maybe we are towards the end of that cycle. What are you seeing with your customers?

Speaker 2: Well, LAMB hasn't slowed down their forecast or their...

Speaker 2: bookings with us. So we look at it and consider growing pretty much at the same pace.

Speaker 2: It did last year.

Speaker 2: And we haven't seen that from them. They've told us to continue getting inventory and building as they're going to continue at the growth rate they saw over the last 12 months.

Speaker 6: Okay, thank you. And then in terms of the backlog decline, I think we have a question here.

Speaker 6: How should we think about that? Was that due to you getting the inventory if you were able to ship more of the backlog? Or how should we think about the backlog trending?

Speaker 2: Yeah, the backlog specific to PMT and GSS actually grew slightly in the quarter. The decline was mainly.

Speaker 2: Canvas. Canvas. Yeah, and again, very slight decline.

Speaker 7: Okay.

Speaker 6: And then moving over to healthcare, Wendy, for the growth margin there, it seems like you have better absorption and also the scrapping there. I'm going to put some takes there, how should we think about that going forward?

Speaker 3: As I mentioned, what worked to our advantage in the quarter is staying in full production. As far as going forward, there were a couple things that we pointed out that benefited the gross margin in the first quarter. The first quarter was 36.7%. There was some benefit from some scrap recoveries that we had in Q1, and that improved the margin by about 3.8%.

Speaker 3: And then the over-absorption improved the margins about 3.2%. So on an ongoing basis for modeling purposes, Anya, I'd still keep it right around that 30% mark.

Speaker 3: And that the things that would the things that would challenge that number would be.

Speaker 3: you know, again, if we had any component issues, any issues with the tubes, et cetera. So, I would feel comfortable in that range.

Speaker 6: Okay, thank you. I'll get back in to tune if someone else has questions.

Speaker 8: Okay, thanks, Alan. You can call us anytime. Thank you.

Speaker 1: Please stand by for our next question.

Speaker 1: Our next question comes from Ross Taylor with ARS. Your line is now open.

Speaker 9: Thank you, and congratulations on what was a really blow-awakened quarter. My hope is you can keep that up for the next three this year and then pick up on it the following year. Well, we still have a $200 million backlog, so we hope so. I hope so as well. I think that you guys have really – it looks like you should be able to build from here, so I'm pretty excited about that. With regard to wind turbines –

Speaker 9: You initially started out in the replacement business. Is that kind of how we see Siemens working as well as the other European manufacturers, the idea that you would initiate into their products with replacement of existing components? So do you see an OEM announcement from one of them soon?

Speaker 2: Yeah, it still would be replacement of the lead acid batteries in the wind turbines. That's what this product does. It replaces that.water tank trilogy!

Speaker 2: Obviously, the lead acid battery is like a car battery on the last few years.

Speaker 2: We are working with Siemens and their fleet in India. It fails every six months. They really love our product, but for now, that's the main focus of the product is to —

Speaker 2: get rid of the lead acid batteries and wind turbines and other products.

Speaker 9: But initially we would be seeing sales on a repair replacement type cycle or business as opposed to coming out of the factory with the ultra-popacitor as part of the original equipment.

Speaker 2: So, that would definitely be phase two, and yes, we're in discussions with some major manufacturers of wind turbines to make it an OEM sale as opposed to replacing the lead acid batteries that are in the field. Yes.

Speaker 9: Absolutely. Okay, that would be exciting. Looking at the locomotive business on the diesel, we saw recently

Speaker 9: Union Pacific signed a deal to modernize and improve fuel efficiency on about 600 trains, a billion dollar plus deal. That looks like it was done on diesel locomotives. Is the starter module part of what you would see in that type of move on Caterpillar diesel electric motors?

Speaker 2: Yes, that's exactly the design we're working on is for that where they they either have a goal or a mandate to take their diesel and reduce the emissions of their existing diesel engines and the current battery is a lead-acid battery and we would replace that with a lithium.

Speaker 2: So, yeah, that's all part of that program that you read about of all manufacturers.

Speaker 9: Okay, and then many of the major U.S. rails are talking about zero emissions by 2050. It would seem that you can't get to zero emissions without electric locomotives.

Speaker 9: and 2050 seems to be coming up on us reasonably quickly from the life of or the build out of locomotives.

Speaker 9: When do you think you really start to see the industry ramp its buy interest, you know, in greater activity in the electric as opposed to modifying diesel?

Speaker 2: Yeah, I think if I look at the forecast, and we have weekly calls with the Progress Rail's engineering team and our team, also their business team, I think it's going to expedite greatly at the end of 2023. If I look at their forecast and their deadlines, right now, it's a new product. People are getting used to understanding lithium and ultracapacitors across the board. But I think at the end of 2023, we're going to see a large spike.

Speaker 2: the expediting of the building and of these electric trains.

Speaker 2: Because you're right, you won't get to 100% zero emissions without having a huge part of your fleet as electric vehicles.

Speaker 9: Yeah, it does. It seems like so you really are thinking we're right on the cusp of this then and that obviously would be. A major.

Speaker 9: breakthrough for the company, for Richardson, a million to three million or something, depending on the type of locomotive it would be, that's a pretty substantial, that adds to backlog pretty fast.

Speaker 2: Yeah, I mean the timing could not be better. What's interesting is we've been working with ultra-capacitor technology and lithium battery technology for over 15 years. So we kind of have a head start internally and obviously the company has been focused on power management and power products.

Speaker 2: for 75 years, if you will. And what we're finding is, you know, we have a lot of inside information that really applies to these type of rollouts and everything's a roll out, phase one, phase two, phase three. And, you know, every time we talk to Progress Rail or another owner-operated wind turbine, they bring another opportunity to us. And, you know, we don't have a lot of standard products. I guess at the end of the day, the Altro 3000 is probably the most standard product we have.

Speaker 2: but our ability to build niche products that solve a customer's problem is really being well received right now. We picked a high-growth market, and I think the timing is great for this company and definitely our shareholders.

Speaker 9: Do these types of products, the ultra capacitors you're working on with CAT, have application to broader markets like the engines, the diesel engines they use for everything from class 8 trucks to earth moving equipment as well.

Speaker 2: Yeah, it kind of goes up and down. So with the electric locomotives, they're using lithium phosphate iron batteries. On the Ultra 3000 or the wind turbine, they're actually using ultracapacitors.

Speaker 2: We have signed technology partnerships with the two largest ultra-cap manufacturers in the world, with LS Materials is number one for larger cells, and then Venetec is number one for smaller and medium cells. So we're seeing all applications literally replacing batteries in the power management application of the product. So we're talking to drone manufacturers, lighting, charging stations, and then...

Speaker 2: As these.

Speaker 2: So, ultra-capacitor modules and lithium modules, yes. Locomotives, higher power. Even this current program, as big as it is, is a little bit bigger than the current one.

Speaker 2: is for commuter trains.

Speaker 2: The next step is to build and design a superstructure for freight trains going across the country, longer distances. One of the things they're talking about is, as they go across the country, literally stopping at a charging station in Wyoming to charge it up and keep going across the United States. We're involved in those conversations. If you join a freight train, feel free to call 888-BN-Likes.

Speaker 2: Yeah, it's just going to grow and the opportunities of people replacing every type of battery with an ultra cap or lithium is very, very strong. All this ties into what the highest and largest market is, is energy storage.

Speaker 2: And we're already looking at that, energy-storing containers that support wind farms and solar farms and other products. It just kind of all goes together and we just have a unique...

Speaker 2: technology and capability to support these

Speaker 2: applications as they go forward.

Speaker 9: So in the idea of electric, first of all, if you keep this up, you know, Ed's going to have to write a new sequel.

Speaker 2: I like to do that. Well the neatest thing is I think it's just a unique story so as you know if you read Ed's book

Speaker 2: the company started with his father selling batteries in the Land Mobile radios, I believe. The walkie talkies. And Progress Rail announced that they have booked an order for three electric locomotives with Chicago Metro. So the Metro commuter train actually stops in La Fox, Illinois, across the street from our corporate headquarters here. So 75 years later, that locomotive superstructure will be built here in La Fox. super

Speaker 2: There will be an electric locomotive going through the La Fox station using lithium ion phosphate batteries that were manufactured and designed here at Richardson La Fox, Illinois. So it's been quite a trip, but it's kind of a unique story that Ed will have to put in a second. secure in more and more places, understanding what the

Speaker 9: His second book. Now with regard to your anniversary.

Speaker 9: Well, I won't be around to read that, unfortunately. I will. You will, I won't. Different jobs.

Speaker 9: But looking at the idea of energy storage, what you're talking about is the idea that with a lot of these like solar and other wind, what we have is the problem of how do you make it available.

Speaker 2: around the clock, 365. So that's what you're talking about is addressing products that do that. Yeah, energy storage. Today the wind turbine solar farms and other products they produce energy and then sell it to the market. Well to store this energy these sites are going to need much larger what we'll call containers that they can store this energy and use it when there's a height in need for the energy or the price is better.

Speaker 2: And we're in conversations with companies like ABB and Shell Oil to design and build these energy storage systems.

Speaker 2: using both lithium and ultracapacitors.

Speaker 2: That's all I can announce today. That's the next level of our green energy program is the ESS market.

Speaker 2: is absolutely huge. It's a billion dollar market but we're looking to find niche applications for these energy storage modules and containers going forward and those will be designed and manufactured here in La Fox, Illinois.

Speaker 9: So that's I mean, the story just keeps getting better, but I'm on a ship to one area where, you know, it's been a struggle looking at the healthcare space. You're talking about the idea of getting to kind of. A positive contribution by the fourth quarter of twenty four that that's your fiscal twenty four.

Speaker 10: Yes, that's correct.

Speaker 9: Okay, and do you see that as a ramp, a steady move towards, we lost what about 5 million in that business last year?

Speaker 10: Yes, closer to six.

Speaker 9: Closer to six.

Speaker 9: Okay, I should have ordered these questions so the good ones were at the end.

Speaker 9: But you should tell them about the person.

Speaker 9: Yeah, well the other stuff is just so bloody amazing. So now we're looking at closer to six, which is basically, you're earning this kind of money losing that kind of money on this business. So

Speaker 9: looking at that do you see that that being a constant kind of a North Northwest constant move in getting rid of the loss or are we going to to see that loss disappear faster at the end of the period I mean that alone probably adds 30 plus cents to can add 30 cents to earn

Speaker 3: Ross, that is absolutely our goal, is to speed up the time frame in which we at least break even or even start providing operating contributions. The first quarter was good. We made really good progress towards our goal. If we were to annualize the first quarter, the improvement to the bottom line for the company would be significant.

Speaker 3: So, yeah, I think it'll be gradual. I can't say quarter over quarter, every quarter is going to be the same as first quarter, but I will say that we're on the right track. And when we get the semen tubes and we're going to start shipping those hopefully in the next quarter or two, starting with the Stratton Z, that puts another tool in the salespeople's bag, it puts another product into production and helps us absorb the fixed cost of the factory.

Speaker 9: Bye.

Speaker 9: you know, 25% or more from where they were last year. And then we've got all this other stuff that's going on. I mean, I know you're cautious and I know you're very conservative in how you guide, but it seems that this, we're really sitting on the launch pad for something that, and that might be a bad analogy considering how some rockets have gone off lately, but. Really just, you're looking at the next two years, three years as potentially being years ahead of the abort and the pandemic.

Speaker 1: I don't think my model tells me you could easily double or more earnings over that time frame. Well, you know, we're still seeing about 20% growth, something like that. And we're projecting about $255 million in revenue for this year. We'd like to...

Speaker 1: you know, under promise and overperform, but certainly we think not just two or three years, the next five years, if you just look at 20% growth every year for the next five years, and healthcare at least breaking even, you can imagine what the bottom line number looks like.

Speaker 9: Yeah, as I said.

Speaker 9: beyond powerful. It's really an exciting story. Okay, I've monopolized enough of your time. I'll let others go. But congratulations and Kwanzaa, thank you for the way this is setting up.

Speaker 1: Well, call us anytime. We're happy to answer your question. Thanks. We'll look forward to it. Thanks. Take care.

Speaker 1: As a reminder to ask a question, please press star 11 on your telephone.

Speaker 5: Don't turn off the place.

Speaker 1: I am showing no questions are in the queue.

Speaker 1: I would now like to turn the conference back to Ed Richardson for closing remarks.

Speaker 11: Thanks, Michelle.

Speaker 11: Well, it's obvious that we're very excited about the future and we appreciate your support.

Speaker 11: We are a very flat organization, so anytime you have any questions, give us a call. Or if you're in the Chicago area, come and see us.

Speaker 11: We're actually doing what I call a teach-in. Is it next week, Wendy? It's on Tuesday. On Tuesday, where we're inviting institutions and individual investors to come in for a tour of the factory and a lunch, and any of you are invited to come.

Speaker 11: That's Tuesday starting what? It's 10 o'clock in the morning. So give us some advanced notice so we make sure we've got a lunch for you.

Speaker 11: Anyway, we look forward to discussing many of these new programs as well as our fiscal 2023 second quarter performance with you in January .

Speaker 11: Thanks very much. Call us anytime.

Speaker 1: This concludes today's conference call. Thank you for participating. You may now disconnect.

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