Q3 2023 Motorcar Parts of America Inc Earnings Call
Good day, my name is Rob and I'll be your conference operator today.
This time I'd like to welcome everyone to the Motorcar parts of America fiscal 2023 third quarter 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. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again press. The star one. Thank you Gary Maier, Vice President of corporate Communications and Investor Relations you May begin your conference.
Thank you. Thank you, Rob and thanks, everyone for joining us.
I turn the call over to sell and geography chair.
Chairman, President and Chief Executive Officer, and David Lee, The company's Chief Financial Officer.
Like to remind everyone of the Safe Harbor statement included in today's press release.
Private Securities Litigation Reform Act of 1095 provides a safe harbor for certain forward looking statements, including statements made during today's conference call such forward looking statements are based on the company's current expectations and beliefs concerning future developments and their potential effects on the company.
There can be no assurance that future developments affecting the company will be those anticipated by <unk>.
Motorcar parts of America actual results may differ from those projected in the forward looking statements. These forward looking statements involve significant risks and uncertainties some of which are beyond the control of the company and are subject to change based upon various factors.
In particular expectations about anticipated future growth and opportunities with customers, who may not be achieved the company undertakes no obligation to publicly update or revise any forward looking statements whether as a result of new information future events or otherwise for a more detailed discussion of some of the ongoing risks.
And uncertainties of the company's business.
I refer you to the company's various filings with Securities and Exchange Commission with that said I would like to begin the call and turn the call over to Selwyn. Thank you Jarrod I appreciate everyone. Joining us today, let me begin by addressing factors that impacted our results and then I will address our expectations for the near few.
Sure.
Before I begin.
<unk> are softer than normal sales for the quarter. Let me assure you that there were no customer or shelf space losses, there were two major items impacting our sales for the quarter.
A certain customer reduced orders by approximately $14 million compared with the same period a year ago.
In addition, we were impacted by delays in new business from certain other customers, representing approximately $17 million of deferrals for the quarter.
As a result, our sales targets for the quarter and nine month periods were affected.
We are now experiencing a resumption of ordering levels in the current fiscal fourth quarter with orders expected to gain further momentum throughout our next fiscal year.
As a result of the lower sales volumes, we temporarily reduced production, which impacted overhead absorption, which in turn impacted gross margins as sales and production volume increases we expect to incrementally benefit from increased overhead absorption.
I should emphasize that in the normal course of business customer returns remain relatively constant.
As such when sales decrease returns as a percentage of sales increase.
<unk> as a percentage of sales were higher for the quarter, which in turn further impacted gross margins.
Gross margins were also impacted by inflationary costs, not yet covered by price increases.
We expect to realize the full benefit of our price increases in the current fiscal fourth quarter with further upside from expected order volume improvement.
Operating efficiencies and cost reduction initiatives that we continue to implement across the entire organization.
These initiatives, including an ongoing companywide strategic analysis of opportunities to realign our resources and cost structure to enhance profitability and cash flow.
Clearly our results were not acceptable and not what we expected when we hosted our fiscal second quarter call, primarily due to two specific customer related ordering activities and some macroeconomic headwinds as I just notice.
We experienced some supply chain challenges, primarily due to shortages for certain components, which impacted production of some products.
Fortunately sales that were impacted by supply supply chain issues last quarter are improving.
This will also help mitigate the impact on gross margins going forward.
High interest rates continue to have a significant impact on profitability, primarily due to rates related to long established customer supply chain finance programs.
Sid will discuss these items shortly.
As you know we are a major supplier of critical non discretionary automotive aftermarket parts. We are working with our customers to address the sharply higher interest rate environment, which impacts both NPA and our customers as well as companies doing business with the leading automotive retailers and it's an industry challenge that requires practical.
Solutions and further action.
Yeah.
Now, let me address our future outlook.
We expect sales to increase by $52 million annually, just from resumption of expected normalized order volume from two key customers.
Starting in the current quarter.
In addition, we expect to add incremental sales of approximately $15 million from additional committed new business.
We also expect to more than double our business for brake pads and rotors in the next fiscal year.
Equally important our gross margins will be enhanced by approximately $20 million of incremental price increases that start this quarter.
In addition, as we wrap up for an all time record fourth quarter, we expect to see margin accretion from efficiencies related to the higher volume and cost cutting initiatives.
As noted in our press release today, we have revised our annual guidance to reflect the actual third quarter results and our optimism for the current fourth quarter.
While we don't provide quarterly guidance given.
Quarterly guidance, given our revised update one can easily calculate that.
We expect record sales for the fiscal fourth quarter between 183, 6%, a $191 6 million and record profitability of adjusted EBITDA between 27, and a half and $32 $5 million.
With respect to cash flow our expectation is to continue to make progress to generate cash we are committed to maintaining strong organic growth while focused on enhancing our gross margins and cash flow.
In short as a result of all these initiatives. We believe the company is well positioned for sustainable top and bottom line growth for parts and solutions and our partnerships with our customers will be mutually enhanced.
Now, let me expand a bit further and discuss the other drivers to support our ability to achieve our longer term financial targets.
Our brake related product lines are growing with expected operating efficiency improvements as volume increases with further fixed cost absorption opportunities.
We believe our brake correlated business will exceed $300 million in annual sales above our fiscal 'twenty two.
<unk> results within the next four to five years.
We will continue to expand sales in Mexico with multiple product lines as our customers experience increased demand for aftermarket parts.
Which currently includes rotating electrical wheel hubs booster brake boosters and brake master cylinders.
All major automotive retailers are continuing the rollout of our electric bench top rotating electric bench top tester and we expect sales from this opportunity to reach a cumulative $80 million in the next four to five years.
We also expect additional revenue from maintenance and add on services.
Our electric vehicle contract testing center in Detroit, Michigan continues to attract customers, including a leader, leading agricultural and construction equipment provider and leading EV automotive manufacturers to support the design and development of electric vehicles. This contract testing as initial entry into software as a <unk>.
Elution.
In short we are well positioned to address both the internal combustion engine market and the emerging electric vehicle market with product functionality and applications across both markets.
We expect continued strong demand for ice internal combustion engine applications for decades, notwithstanding electric vehicle growth, which still represents a small percentage of the overall car park.
In summary, we have a broad line of non discretionary after market parts necessary to serve as the car population of approximately 285 million vehicles on the road, representing an uptick based on recent recently issued industry data.
We remain excited about our opportunities notwithstanding the headwinds we experienced for the quarter.
Can assure you we are working diligently every day with our customers and suppliers to meet the demand for our products as well as addressing the inflationary pressures, we're all facing that I touched on earlier in my remarks, I will now.
Now turn the call over to David to review our results in greater detail.
Thank you sell in and good morning, everyone I encourage everyone to read the earnings press release issued this morning as well as the 10-Q that will be filed later today.
Let me now provide a review of our fiscal third quarter and nine months financial results.
Net sales for the fiscal 'twenty, three a third quarter or $151 8 million compared with 161 8 million in the prior year.
Fiscal third quarter results were sharply impacted by a certain customer reducing orders by approximately $14 million compared with the prior year and.
And delays with other customers for new business of approximately $17 million.
Orders have resumed in the current fiscal 'twenty three fourth quarter and we're expected to continue.
In fiscal 'twenty, four as Selwyn mentioned earlier.
Gross profit for the fiscal 2023rd quarter was 21 million compared with $32 6 million a year earlier.
Gross profit for the quarter was impacted by noncash items as well as cash items.
Let me provide details for each and then I will provide further details on the impact on each additional line item.
And you can further understand underlying fundamentals between periods and the opportunities to enhance profitability.
The noncash items reflect core and finished that premium amortization and revaluation of cores on customer shelves.
Which are unique to certain of our products that are required by GAAP.
Total for these noncash items in the quarter was approximately $3 9 million.
A more detailed explanation of Cora County is available on our website.
Encourage anyone with questions about desktop.
The video.
We also incurred China to a supply chain disruption costs of $2 4 million compared with $4 3 million a year ago as referenced in exhibit three of this morning's earnings press release, we are in.
Courage that these costs are increasing.
Third quarter gross profit as a percentage of net sales was 13, 8% compared with 21% a year earlier.
Gross margin was impacted by two 6% from the previously mentioned noncash items as well as one 6% from the previously mentioned cash items from China trade costs related to supply chain disruptions.
While global supply chain challenges seem to be improving we are still experiencing challenges.
Turning to assess COVID-19, and global geopolitical situations.
In summary in addition to that non cash in cash out as explained previously gross margin for the fiscal 'twenty three third quarter compared with the prior year was impacted by inflationary cost not yet covered by price decreases.
Temporary lower absorption of overhead costs due to lower production volume and changes in product mix.
This margin improvement is expected to be enhanced as the full benefit of certain price increases is realized and with higher sales volumes in the current fourth quarter and fiscal 2024.
Operating expenses were down $6 4 million for the quarter to $17 5 million.
$23 9 million in the prior year period.
This included a noncash gain of $4 3 million for the foreign exchange impact of lease liabilities and forward contracts.
Third with a prior year non cash loss of 385000.
The remaining $1 7 million of operating expense decreases include cost reduction initiatives.
We reported net income of 1 million or <unk> <unk> per diluted share as detailed in exhibit one of this morning's earnings press.
Results reflect the impact of noncash items totaling 484000, or <unk> <unk> per diluted share.
Cash items that impacted results included transitory costs related to supply chain disruptions totaling $2 8 million or <unk> 14 per diluted share.
In addition to the above noncash and cash items as previously mentioned in the gross margin discussion results for the quarter were impacted by inflationary cost not yet covered by price increases.
Temporary lower absorption of overhead costs due to lower production volume and changes in product mix.
Results are expected to be enhanced as the full benefit of certain price increases is realized and with higher sales volumes and the current fourth quarter and in fiscal 2024.
I should note that we have implemented cost reduction initiatives throughout the company, including travel outside services labor costs, and overall cost saving opportunities, which are expected to enhance profitability.
Additionally results for the fiscal third quarter were also impacted by seven 5 million or <unk> 29 per diluted share of higher interest expenses, primarily due to higher market interest rates compared with the prior year.
Interest expense was $11 5 million compared with $3 9 million for last year of this increase in interest expense approximately 98% resulted from higher market interest rates.
I should further emphasize that the large interest expense incurred in the third quarter was primarily driven by a sharp rise in interest rate of four 5%.
With the prior year, but the accounts receivable discount program offered by our customers.
This increase is more than triple the discount rate the company paid in interest expense in the prior year period.
As a critical supplier of non discretionary automotive parts, we are committed to providing at a satisfactory solution to this issue.
Additionally, we are focused on improving cash flow to pay down borrowings.
Additionally income tax benefit it was $9 million compared with $1 6 million income tax expense for the prior year period.
The income tax provision reflects the expected benefit from tax losses.
I should also mentioned that the effective tax rate for the nine months was affected in part due to the inability to recognize the benefit of losses at specific foreign jurisdictions.
However, we expect these losses will be utilized against future profits, which will benefit future tax rates.
Net income was $3 1 million or <unk> 16 per diluted share in the year ago period.
There's also earlier, we impacted by noncash items totaling $4 8 million or <unk> 25 per diluted share and cash items totaling $3 7 million or <unk> 19 per diluted share primarily transitory costs related to supply chain disruptions.
EBITDA for the third quarter was $6 6 million EBITDA was impacted by 646000 of noncash items as well as a $3 8 million in cash items, primarily due to the China trade costs related to supply chain disruptions.
EBITDA before the impact of noncash and cash items mentioned above was $11 million for the third quarter.
In addition to the above noncash and cash items EBITDA for the quarter was further impacted by inflationary cost not yet covered by price increases.
Temporary lower absorption of overhead costs due to lower production volume and changes in product mix as previously mentioned.
In summary, EBITDA improvement in the current fourth quarter and fiscal 2024 are expected to be enhanced by the full benefit of certain price increases and with higher sales volume. In addition to cost reduction initiatives.
EBITDA for the prior year third quarter was $11 9 million EBITDA year ago was impacted by $6 4 million of noncash items as well as $4 9 million of cash expenses, primarily transitory costs related to supply chain disruptions.
EBITDA before the impact of non cash and cash items mentioned above was $23 2 million for the prior year third quarter.
Now, let me discuss the nine months results.
Net sales for the fiscal 2029 months period were $488 3 million, representing a three 2% increase compared with $473 1 million in the prior year, which excludes $13 3 million in core revenue due to a realignment of inventory at customer.
Our distribution centers with sale of benefits evolving as product mix changes.
Gross profit for the fiscal 'twenty, three and nine months period was $77 8 million compared with $92 1 million a year earlier.
Gross profit as a percentage of net sales for the fiscal 'twenty, three and nine months period.
Was 15, 9% compared with 18, 9% a year earlier.
Margin for the fiscal 'twenty, three and nine months period was impacted by two 4% up noncash items.
And one 8% primarily transitory supply chain disruptions as detailed in exhibit four in this morning's earnings press release.
In addition to the noncash and cash items just mentioned.
Gross margin for the fiscal 2029 month period was impacted by various items discussed previously for the quarter.
We expect gross margin improvement to be enhanced with.
With the full benefit of certain price increases and with higher sales volumes as I noted in my previous comments for the quarter.
Net loss for the fiscal 'twenty, three and nine months period was $5 7 million or 29 cents per share.
Paired with net income of $7 7 million or <unk> 39 per diluted share a year ago.
Results were impacted by noncash items totaling $9 6 million or <unk> 30 per diluted share and cash items totaling $9 5 million or <unk> 49 per share primarily transitory costs related to supply chain disruptions as detailed in exhibit two.
In addition to the above items results for the nine months period were primarily impacted by various items discussed previously.
Results are expected to be enhanced as a result of the various initiatives I discussed earlier concerning price increases and higher sales volume.
EBITDA for the fiscal 2013 nine month period was.
$22 million.
EBITDA was impacted by $12 9 million of noncash items as well as $12 6 million in cash items.
EBITDA before the impact of noncash and cash items mentioned above was $47 5 million for the current period.
In addition to the above items EBITDA for the nine months period was impacted by various items as referenced previously for the quarter.
In summary, as I discussed for the quarter.
<unk> EBITDA improvement as the full benefit of certain price increases and higher sales volume are realized along with cost reduction initiatives.
EBITDA for the prior year fiscal 'twenty two nine months period was $33 6 million EBITDA was impacted by $19 9 million of noncash items as well as $14 2 million and cash items.
Before the impact of noncash and cash items mentioned above was $67 7 million for the prior year period.
Now, we will move on to cash flow and key corporate items.
Net cash used in operating activities.
During the fiscal third quarter was $4 5 million.
The $2 2 million cash provided by operating activities in the prior year period.
This reflects working capital requirement to support year to date sales growth and expected record sales for the fiscal 'twenty, three and fourth quarter.
We expect to generate an increase in operating profit on a quarter over quarter basis for the fourth quarter supported by organic growth from customer demand.
Introduction of new product categories price increases and operating efficiencies from our footprint expansion.
I would point out that due to record sales volume, we expect our accounts receivable balance increased significantly in the fourth quarter, which will result in further enhancement to cash flow in the next in the new fiscal year.
It should be noted that our days outstanding receivable is approximately 45 days.
Our return on invested capital on a pretax basis at December 31, 2020, Q was 13, 3% compared with 23, 1% a year earlier.
As our investments bear fruit, we expect to realize further benefit from the expansion of our Mexican operations and the launch of our new brake categories with expectation of increased returns for both new and existing product line.
Our net debt at the end of the quarter was approximately $176 3 million, while total cash and availability under revolving credit facility was approximately $70 million.
Lastly, we recently entered into a fifth amendment to our credit facility to modify the covenants to match the timing of implementing price increases to address installation nearing costs and the tripling of interest rates.
For further explanation on our reconciliation of items that impacted results and non-GAAP financial measures. Please refer to exhibits one through five in this morning's earnings press release.
I would now like to open the line for questions.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Your first question comes from the line of Matt Koranda from Roth <unk>. Your line is open.
Hey, guys. Good morning, I guess I'll just start out with my traditional first question, which is David if you could provide the breakdown.
Of revenue between rotating electrical wheel auto brake products and other.
Yes, Matt for the third quarter rotating electrical was 66%.
Wheel hubs with 10%.
Brake litter products was 20% and others with a 4%.
Okay.
Got it very helpful.
And then just trying to understand.
<unk>.
It sounds like you called out two different buckets.
Of headwind in the quarter, one being delays in new business. The other being reduced orders from an existing customer is that all coming from one customer in particular and is that all in rotating electrical maybe if you could just give a little color on why exactly that.
That reduction, which looks pretty stark county year over year basis.
Yes, so it comes.
It comes from two a couple of customers predominantly I mean.
It's a mix between.
Rotating electrical.
Great calipers brake rotors and brake pads really it's so it's all of those four.
And.
Really the the good news is that.
Those orders have started coming back in in this quarter.
So we're seeing it now.
Sure.
<unk>.
If if the if the $35 million just gets to normalized reordering patterns, which we expected will.
That should just give us some organic lift next year not not about new business, just got existing business performing to our expectations.
And then the other pieces.
New business changeovers.
<unk> committed to us and we had a little bit of a slowdown in the extreme weather.
And some softening in the base, but.
That seems to be coming back as well so.
That should give us.
Again organic lift of approximately.
Approximately $17 million.
And then we've got additional business.
We've got additional business that new business that will come on board next year, that's already committed.
And quite frankly, some visibility of even even more than that so.
Okay, I guess I'm, just selling them just trying to understand in the context of like <unk>.
A decent sized customer that's reported results today and inventory it looks like it's up mid teens for them comps are super healthy.
We're seeing a reduction overall in rotating electrical revenues I'm, just trying to square the two and understand sort of why rotating electrical should be down in that context.
Again relating to one particular customer.
We cant talk about who it is or what it is or why it is but.
No market share loss, but we expect that to come back.
Really really.
I get it based on their initiatives really more than anything.
Okay sorry.
I can take the rest of that stuff offline that's fine.
Okay, and then just on the okay. So the other thing I wanted to understand is the sequential guide if I take the implied EBITDA guide at the midpoint for the fourth quarter. It is a big step up we're looking at close to 900 basis points of improvement.
Guys are guiding to maybe just if you could give us some confidence in the gross margin versus Opex split in the fourth quarter or how to think about gross margin improvement on a sequential basis.
And how much of that is coming from price versus volume.
Super helpful just to understand a little bit more about what's embedded in your assumptions.
This is David so we can talk about.
The three items be.
Called out during the prepared remarks, so the inflationary costs.
That will be addressed by the price increases that are going in the large price increase and have already started at the beginning of this quarter. So thats going to address the inflationary costs the lower overhead absorption costs that we've talked about due to lower production volume with now higher sales and growing production volumes that should also.
Dress the lower overhead reduction now we did also have prop.
Product mix, so product mix, we do expect growth in all of our categories that should help the product mix a little bit.
Other item that I want to mention was that returns.
Returns are constant with the lower sales volume in the December quarter returns as a percentage of sales was higher now back to higher sales volumes those returns as a percentage of sales will now turn back to normalized levels. Lastly, we do have one product lines.
During the December quarter was impacted by shortages of critical components.
We're already seeing that those sales are back up so with those higher volume product line that will also benefit.
The gross margins.
Okay Alright.
And then just you mentioned price David.
So on our David on this one.
Can you talk about the rounds of price increases I think last time you mentioned there was one in October it sounds like that really didnt benefit the third quarter at all really from a margin perspective and so.
There was another round that you had mentioned on the last call that was supposed to take place in January so I'm, assuming you're referring to that as kind of the philosophy around the price increases.
And that's what we're counting on the sort of improved gross margins in the fourth quarter.
Along with volume and then some of the lower return rates that you mentioned there but.
Just.
Am I understanding that correctly.
Or is there more price.
That youre embedding beyond the January actions.
Actions no so so far.
Is correct Matt.
Those are all committed price increases that have gone into effect we.
We continue to evaluate our business and market conditions.
Will.
We will evaluate what we'll do on price as we go forward, but as of now that's where we are.
And that includes the <unk> annualized.
Annualized leftover.
It is 20 million $20 million on our existing revenue base about $20 million of price increase.
And some of it just started so maybe maybe a little more there but around that thats left to go into effect on an annual basis.
Okay got it and then in the press release, I think you mentioned brake pad and rotor product line net sales expected to double in fiscal 'twenty four that's not overall brake products revenue.
Whole is it.
We shouldn't be taking the run rate around this year and doubling that for next year, but maybe just give a little color on what that implies for overall brake products growth as we head into fiscal 'twenty four.
Yes.
I think youre going to see overall brake products growth north of 30, maybe even 40%.
For next fiscal year.
We haven't really given guidance yet on that but.
The pads and rotors is fast becoming a big part of that.
We've also.
The brake related products and that is a role growing.
So we're up to continue to be optimistic that margins are starting to unfold.
We're just getting through some of that startup margin.
Headwinds and starting to get to a more normalized level, but they'll continue to improve as volume continues to grow.
Yes.
Okay helpful.
Gross milestone it guys. Thanks.
Thank you.
Your next question comes from the line of Brian Nagel from Oppenheimer. Your line is open.
Hi.
Good afternoon guys.
Hey, Brian how are you doing.
My first question.
With respect to the sales disruption in the quarter I think it's probably a follow up to some extent to the prior question, but just.
Just to get to be clear I mean are these sales in your view are these sales.
Simply delayed or is there a component that is that is lost because of this it sounds like one competitor and adjustments they've made.
I think they are lost.
Having said that I think the this customer will.
We will step up orders in.
To maintain its competitive position well I shouldn't say will are they are.
To maintain our competitive position in the marketplace and so I think we will see an elevation in our return.
With them as they as they increase their inventory levels.
But I don't think those are recoverable.
The change of our revenue that 17 million Thats just a deferral.
Okay.
Yes.
I apologize.
What's your company for a while but I don't remember something like this happening in the past. So I guess the question is does this happen as this unprecedented.
And in an event like this could it be a leading indicator of something else.
It's unprecedented that we have not seen that at this size before.
I think it's an indicator of strategy and again we.
We can talk about any of our customers and their strategies, but I think it's an indication of a short term strategy.
That's being reversed.
Got it.
Shifting gears a bit.
The supply chain. So I hear I think David you were making comments here, but just with regard to the ongoing disruptions. So I guess my question is we've seen broadly speaking supply chain Chan.
Challenges for your company for your sector more even more broadly abate with they're still sitting out there right.
We still thinking that most of the supply chain issues are.
More or less transitory in nature always getting now the point, where maybe some of these disruptions will just simply persist or do you have now become structural.
No I think they are transitory.
Seeing it getting better and better as those COVID-19 and factories become more predictable and are able to stay open on a more predictable basis, which.
We had a massive outbreak of COVID-19 in China.
Some delays.
The Chinese new year coming out of Chinese new year, but it looks like.
Sure.
By no means an expert but it looks like the COVID-19.
While the outbreaks maybe.
Voluminous.
The severity of it seems to be passed.
And it seems like again, it's not over yet, but it certainly seems like for us.
As it passes over the predictability of our factory and supply chain will get much better and we're seeing that already.
Cautiously optimistic I do.
Do feel like we have to continue to watch what happens in China in particular.
Both with.
Covid, which I think again, we were able to see it now and I think hopefully we're getting through that.
I'm not sure what the other political ramifications will be as we go down go down the road just the whole geopolitical situation the world nozzle of Crazy, but.
But I think it's stabilizing.
Freight seems to have stabilized.
Transfer onto mental trade it seems to have stabilized we still have a lot of headwind in local freight.
Then.
But hopefully capacity on the roads will catch up.
That part of the freight equation will get better.
Now that's that's that's bit of a headwind and predictability on semiconductor chips.
Some of these Chinese factories are still were still some headwinds there.
Okay.
Alright, well I appreciate it thank you.
Thank you.
And again, if you'd like to ask a question at Star one on your telephone Keypad. Your next question comes from the line of Bill <unk> from Titan Capital markets. Your line is open.
Thank you.
Relative to the $17 million of new business that was delayed did we hear you correctly that that is now coming back or or ramping up here. This quarter that has already begun.
Yes that has begun.
And we're excited about it.
<unk> continues to continues to ramp up and what category or categories is that right.
Yes, it's a mix bill I mean, predominantly brake related and electric vehicle I mean in general.
Okay. Thank you and then.
And then next relative to the delayed orders kind of $14 million.
Given that you have price increases that were taking place.
The beginning of the fourth quarter.
It would cause a customer to delay.
To delay the shipment is it seems as though theyre just instituting a price increase on the themselves by doing that.
That's a good point.
No question about that.
And again, we just can't talk about what our customers are doing unfortunately, or Fortunately I mean, it's just something that's up to them with US is just so extreme that we felt was appropriate to.
To call out so I mean, I prefer not to go down that road, but the comments that I can make a yes that orders that are coming in now will be at a higher price in the us.
The orders have resumed coming in.
We feel like they have a strong strategy going forward.
And that we should benefit from it.
And we will be keeping a close eye on it.
As it progresses.
So counter to what one would normally expect to see which had orders in advance of a price increase they just ignore that and it sounds like you did not give them.
Hey.
Special deal, where they were able to have the old price, but a later shipment.
That is correct.
Thank you and.
By the way, thank you for not giving them a special deal.
Also.
Where are you at from a back.
Back to work in the office hybrid versus work from home, where you added in that whole scheme of things.
That's.
That differs by department.
A number of people back in the office on a full time basis.
Some of the people more of the analytics and data.
Data driven people on them on.
Two days a week mandatory.
Mandatory but many of them come into the office.
And so we have flex schedules by department.
And are you at all feeling like it may be time to have people in the office.
More frequently given these external challenges.
At that are coming at you and maybe.
More.
Quickly and readily addressed it yes.
Theres more person to person contact.
Yes.
I think.
The meetings are extremely effective.
<unk>.
Promote and hybrid as people in the office, but I will say just as Covid settles in as we get through the winter months I mean, we'd be evaluating our full time return to the office.
In the spring and summer.
Thank you and if I may ask one more relative to the to the vendor finance programs.
What progress has been made at finding a finding a solution there.
Dr Kam discuss that unfortunately at this point.
Alright, well thank you for the time.
Thanks, Bill appreciate it.
And there are no further questions at this time I turn the call back over to Selwyn for some final closing comments.
Thank you very much I appreciate everybody's questions and I appreciate it.
Yeah.
The interest.
I will say that.
So to summarize where we are the notwithstanding the headwinds that I discussed. This morning, we are excited about our future. We have built a solid foundation for both topline and bottom line growth for our existing product lines and it is supported by strong demand for replacement parts and an aging car park.
In closing we have great team members and I appreciate their dedication to the company and our customers. We appreciate your continued support and we thank you again for joining us for the call. We look forward to speaking with you and when we host our fiscal 2023 fourth quarter and year end conference call in June and at Investor conferences in the future.
This concludes this concludes today's conference call. Thank you for your participation you may now disconnect.
Okay.
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Okay.
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