Q4 2023 Motorcar Parts of America Inc Earnings Call
Right.
Good morning, and welcome to the Motorcar parts of America fiscal 'twenty, 'twenty, three and fourth quarter and year end conference call.
All participants are in a listen only mode. After the speaker's presentation, we'll conduct a question and answer session.
To ask a question you will need to press are followed by the number one on your telephone keypad.
As a reminder, this conference call is being recorded.
I would now like to turn the call over to Gary Meyer.
That's net of communications and Investor Relations. Thank you. Please go ahead.
Thank you Julien.
Thanks, everyone for joining us before we begin and I turn the call over to Selwyn, Joffe, Chairman, President and Chief Executive Officer, and David Lee, Our Chief Financial Officer, I'd like to remind everyone of the Safe Harbor statement included in today's press release.
The private Securities Litigation Reform Act of 1995 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 Companys current expectations and beliefs concerning future developments and their potential effects on the <unk>.
Company, there can be no assurance that future developments affecting the company will be those anticipated by the company 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 motorcar parts of America and <unk>.
Subject to change based upon various factors in particular expectations about future anticipated future growth and opportunities with customers 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 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.
The Securities and Exchange Commission.
With that said I'd like to begin the call I will turn it over to sell thank you Gary.
I appreciate everyone joining us today, we achieved record sales levels for the fourth quarter and fiscal year, reflecting the resumption of more normalized ordering patterns by certain customers as well as continuing favorable industry demand for our non discretionary automotive aftermarket parts.
The outlook for our product demand is positive as we enter our new fiscal year.
Equally important I must recognize the contributions of all of our team members, who are focused everyday on providing the highest level of service to our customers.
With regard to gross margins, we expect improvement this fiscal 2024 evolves.
And production volume increases, we expect incremental benefit from increased overhead absorption.
Due to the increased demand for our products and the easing of that inventory reduction initiatives, we are starting to increase our production levels and.
In addition, we will realize the full benefit of price increases that have already been approved which will rollout throughout this fiscal year and enhance our gross margins.
We anticipate benefits from order volume improvement.
Operating efficiencies and cost reduction initiatives that we continue to implement across the entire organization.
These initiatives include an ongoing companywide strategic analysis of opportunities to realign our resources and cost structure to enhance profitability and cash flow. Both key areas of particular focus for our team and board in fiscal 2025.
Yeah.
High interest rates continues to have a significant impact on profitability, primarily due to rate rates related to long established customer supply chain finance programs.
Fortunately, we have made progress in getting relief from our customers and we expect to realize benefits as fiscal 2020 forward evolves.
We are a major supplier of critical non discretionary automotive aftermarket parts and we are working with our customers to address the sharply higher interest rate environment, which impacts both NPA and our customers as well as all companies doing business with a leading automotive retailers. It is an industry challenge that requires practical solutions.
Further action.
Now, let me address our outlook.
As stated in our news release. This morning, we expect sales for fiscal 2020 forward to be between 720 and $740 million.
Presenting between $5 four an eight 3% year over year growth respectively.
We expect to see margin accretion from efficiencies related to the higher volume and cost cutting initiatives as I noted earlier in my remarks.
With respect to cash flow, our expectation is to continue to make progress to generate cash.
Operating income is expected to be between 60 and $65 million before the noncash foreign exchange impact of lease liabilities and forward contracts the noncash impact of revaluation of cores on customer shelves and supply chain disruptions.
The company estimates other noncash items will be approximately $16 million, including corn finished goods premium amortization and share based compensation.
And cash expenses anticipated to be approximately $2 million.
Special EV related research and development expenses impacting operating income.
The company estimates depreciation and amortization will be approximately $12 million.
In summary.
Operating income before the impact of the noncash and cash items and before depreciation and amortization as previously mentioned is expected to be between 90 and $95 million.
In short it is a top priority in fiscal 2024 to enhance our gross margins and cash flow.
Our multiyear strategic initiatives and favorable industry dynamics bode well for the company and we are extremely well positioned for sustainable top and bottom line growth in our hard parts businesses as well as testing solutions.
As you know at the end of the fiscal year, we announced a $32 million strategic convertible note investment to enhance our liquidity and capital resources at a pivotal pivotal point in our company's evolution.
This strategic investment complements management's ongoing goals and objectives, while enhancing the company's working capital to support building sustainable shareholder value.
We not only value the investment.
So the participation of <unk> co founder, we remain diligently focused on achieving our near and long term financial targets.
Now, let me expand a bit further and discuss the other drivers to support our ability to achieve our longer term financial targets and why we are enthusiastic about our market position and the opportunities moving forward.
We experienced meaningful traction in fiscal 2023 with customers and consumers since the launch of our brake related product lines with operating efficiency improvements continuing as volume increases and with fixed cost absorption.
We are on track to exceed our previously stated goal of achieving $300 million in annual brake related product sales over a several year period since their launch.
We have continued to expand sales in Mexico with multiple product lines as our customers experienced increased demand for aftermarket parts, which currently includes rotating electrical wheel hubs brake boosters agnostic chances.
We are receiving increases increasing interest in orders for our test solutions and diagnostic equipment, which includes a bench top tester, so alternators and starters from major retailers and major global automotive aerospace and research institutions for easy mobility product development and design and their related services.
Yes.
We are returning inventory levels to more normalized levels. Following a strategic buildup to meet demand during recent global supply chain challenges notwithstanding certain brake related inventory product requirements.
These efforts throughout fiscal 2024, well greatly enable us to enhance our cash flow targets.
In short, we continue to be well positioned to address both the internal combustion engine market and the emerging electrical vehicle market with product functionality and applications across both markets.
Industry data continues to support our view that strong demand for internal combustion engine applications and a broad line of non discretionary aftermarket parts will be here for decades, notwithstanding electric vehicle growth, which still represents a small percentage of the overall car park.
Despite the global headwinds during the past few years, we and many risks respects have emerged stronger and better positioned to capitalize on our strengths.
I will now turn the call over to David to review our results in greater detail.
Thank you Sal and good morning, everyone.
I encourage everyone to review the earnings press release issued this morning as well as the 10-K that will be filed.
Let me now provide a review of our fiscal fourth quarter and 12 months financial results.
Net sales for the fiscal of 'twenty, three fourth quarter increased 18, 8% to a record $194 7 million from $163 9 million in the prior year.
Fiscal fourth quarter.
<unk> benefited from increasing product demand for the spring and summer seasons, and recently implemented price increases.
Gross profit for the fiscal year 'twenty three fourth quarter increased by.
43% to $36 2 million compared with $25 8 million a year earlier.
Gross profit for the quarter was impacted by noncash items as well as cash items.
Let me provide details and then I'll provide further details on the impact on each additional line items that you can further understand the underlying fundamentals between period and the opportunities to enhance profitability.
The noncash items reflect core and finished good premium amortization and revaluation of cores on customer shelves.
Which are unique to certain of our products and required by GAAP.
The total for these noncash items in the quarter was approximately $3 6 million.
A more detailed explanation of core accounting is available on our website and I would encourage anyone with questions about this topic to review the video.
We also incurred transitory supply chain disruption costs of $2 9 million.
As referenced in exhibit three of this morning's earnings press release.
Fourth quarter gross profit as a percentage of net sales was 18, 6% compared with 15, 7% a year earlier.
Gross margin was impacted by one 9% from the previously mentioned noncash items.
As well as <unk>, 5% from the previously mentioned cash items, partially offset by employee retention credit.
While the global supply chain situation is improving we are still experiencing challenges.
In summary in addition to the noncash and cash items explained previously gross margin for the fiscal 'twenty fourth quarter compared with the prior year was impacted by inflationary cost not yet covered by price increases.
Your per unit costs, resulting from less absorption of overhead costs as we manage our inventory levels and changes in product mix.
Gross margin improvement is expected to be enhanced as the full benefit of certain price increases are realized.
With higher sales volumes in fiscal 'twenty four.
Operating expenses were down $8 6 million for the quarter to $12 4 million from $21 million in the prior year period.
This includes a noncash gain of $6 7 million for the <unk>.
Foreign exchange impact of lease liabilities and lower contract compared with a prior year non cash gain of $3 4 million.
The remaining $5 3 million of operating expense decreases included cost reduction initiatives.
And an approximately one $3 1 million benefit from the employee retention credit.
Fiscal fourth quarter results benefited from a $5 1 million employee retention credit.
The ERC was reimbursement for prior incurred expenses during the COVID-19 pandemic.
Subsequent to the pandemic cost reduction initiatives related to employment expenses were implemented.
One with other ongoing strategic opportunities to reduce cost.
Resulting in approximately $5 million annual run rate expense reductions going forward.
We reported net income of $1 5 million or <unk> <unk> per diluted share.
As detailed in exhibit one of this morning's earnings press release.
This reflects the favorable impact of noncash items totaling $1 5 million or <unk> <unk> per diluted share.
Cash items that benefited results, including an employee retention credit.
Partially offset by transitory costs led to supply chain disruptions totaled 922004.
Or <unk> <unk> per diluted share.
In addition to the above cash noncash and cash items as <unk> mentioned in the gross margin discussion results for the quarter were impacted by inflationary costs not yet covered by price increases.
Higher per unit costs, resulting from less absorption of overhead costs as we manage our inventory levels and changes in product mix.
Results are expected to be enhanced leaning forward as the full benefit of certain price increases is realized and with higher sales volumes in fiscal 'twenty four.
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 further enhance profitability.
Additionally results for the fiscal fourth quarter was impacted by $7 8 million or <unk> 30 per diluted share of higher interest expenses, primarily due to a higher market interest rates.
Mostly related to customer vendor financing programs, representing $4 9 million of the increase.
Interest expense was $11 9 million compared with $4 million for last year.
Of this rise in interest expense approximately 80% resulted from higher market interest rates.
To further emphasize that the large interest expense incurred in the fourth quarter was primarily driven by a sharp rise in interest rate of four two percentage points compared with the prior year, but the accounts receivable discount program offered by our customers.
This increased almost triple the discount rate the company paid in interest expense in the prior period.
As a critical supplier of non discretionary automotive part our customers appreciate the challenges.
The company expects to realize meaningful annualized price increases, which will contribute to net income enhancement.
We expect that we were more than cover the fiscal 'twenty three increase in AUR discount interest expense of $17 million.
Fiscal 'twenty three and total interest expense was approximately five 8% of net sales. We expect fiscal 'twenty. Four total is expense to be approximately 7% of net sales, including approximately $3 2 million noncash pik interest assuming interest rates remain relatively stable.
Income tax expense was $10 4 million compared with $1 million for the period a year ago.
I should mention that the effective tax rate for fiscal 2003 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 loss was 322000 or <unk> <unk> per share in the year ago period.
Results at year earlier were impacted by non cash items totaling $1 9 million or <unk> 10 per share and cash items totaling $3 2 million or <unk> 17 per share primarily transitory cost related supply chain disruptions.
EBITDA for the fourth quarter was $26 9 million EBITDA.
EBITDA was favorably impacted by $1 9 million of non cash items.
And $1 2 million in cash items in.
And employee retention credit, partially offset by transitory costs related to supply chain disruptions.
EBITDA before the impact of noncash and cash items mentioned above was $23 7 million for the fourth quarter.
In addition to the above noncash and cash items EBITDA for the quarter was hindered by inflationary cost not yet covered by price increases.
Higher per unit costs, resulting from less absorption of overhead costs as we manage our inventory levels and changes in product mix as previously mentioned.
In summary, further EBITDA improvement in fiscal 'twenty four as expected as the full benefit of certain price increases realized and with higher sales volume in addition to cost reduction initiatives.
EBITDA for the prior year fourth quarter was $8 million EBITDA, a year ago was impacted by $2 5 million in noncash items.
As well as a $4 3 million of cash expenses, primarily transitory cost related supply chain disruptions EBITDA.
EBITDA before the impact of noncash and cash items mentioned above was $14 8 million for the prior year fourth quarter.
Now, let me discuss the 12 months results.
Net sales for fiscal 'twenty, three increased 5% to a record $683 1 million from $653 million in the prior year.
Prior year net sales was positively impacted by $13 3 million in core revenue due to a realignment of inventory at customer distribution centers with salus benefits evolving as product mix changes.
Gross profit fiscal 'twenty, three was $114 million compared with $117 9 million a year earlier.
Gross profit as a percentage of net sales for fiscal 'twenty, three with 16, 7% compared with 18, 1% a year earlier.
Gross margin for fiscal 'twenty three it was impacted by two 3% of noncash items and one 4% primarily by China trade 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 fiscal 'twenty, three was impacted by various items discussed previously for the quarter.
We expect gross margin improvement to be enhanced with a full benefit of certain price increases and with higher sales volumes as I noted in my previous comments for the quarter.
Net loss for fiscal 'twenty, three was $4 2 million or <unk> 22 per share.
Compared with net income of $7 4 million or <unk> 38 per diluted share a year ago.
Results were impacted by noncash items totaling $8 2 million or <unk> 42 per share in.
And cash items totaling $8 5 million or <unk> 44 per share, primarily China trade costs related to supply chain disruptions as detailed in his attitude.
In addition to the above items results for fiscal 'twenty three were impacted by various items discussed previously.
Results are expected to be enhanced as various initiatives are realized as I discussed earlier concerning price increases and higher sales volume.
EBITDA for fiscal 'twenty, three with $48 9 million EBITDA was impacted by $10 9 million of noncash items as well as the <unk>. It was 11 4 million in cash items.
EBITDA before the impact of noncash and cash items mentioned above was $71 2 million for the current period in.
In addition to the above items EBITDA for fiscal 'twenty three was impacted by various items as referenced previously for the quarter.
In summary, as I discussed earlier for the quarter, we expect EBITDA improvement as the full benefit of certain price increases and higher sales volumes are realized along with cost reduction initiatives.
EBITDA for the prior fiscal year 'twenty two.
Was $41 6 million EBITDA was impacted by $22 3 million of noncash items as well as $18 5 million in cash items EBIT.
EBITDA before the impact of noncash and cash items mentioned above was $82 5 million.
Now, we'll move on to cash flow and key corporate items.
Net cash used in operating activities during the fiscal fourth quarter was $726000 versus $22 7 million cash used in operating activities in the prior year.
I should mention the employee retention credit was cash neutral for the fourth quarter.
We expected Inc. Generate an increase in operating profit on a year over year basis for fiscal 'twenty four supported by organic growth from customer demand.
Increases in operating efficiencies from our now completed footprint expansion and generate positive cash flow for fiscal 'twenty four.
In addition to our goal of generating increased operating profit. We are diligently focused on opportunities to neutralize working capital growth, including customer product demand planning enhanced inventory management and improving vendor payment terms.
Our return on invested capital on a pre tax basis at March 31 23.
Was 15, 7% compared with 19% a year earlier.
Our investments will bear fruit and we are gratified by the ongoing success of our expanded operations in Mexico, and the growth momentum of our emerging brake categories, although with expectations of increasing financial performance for both new and existing product lines.
Our net debt at the end of the quarter was approximately $177 5 million while.
While our total cash and availability on the revolving credit facility was approximately $98 6 million after certain contractual adjustments.
Lastly, as Kevin mentioned, we entered into a note purchase investment and the sale of $32 million in aggregate principal amount of convertible notes due in 2029 at a conversion price of <unk> 15 per share.
The company is able to redeem the notes after three years additional information regarding the terms and condition of the investment is available and the related form 8-K filed on March 31, 23 and in the press release.
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.
As a reminder to ask a question. Please press star followed by the number one on your telephone keypad.
We'll pause for just a moment to compile the Q&A roster.
Yes.
Okay.
Once again to ask a question. Please press star followed by the number one on your telephone keypad.
Okay.
Our first question comes from Bill <unk> from Titan Capital. Please go ahead. Your line is open.
A couple of questions to begin with here relative to your commentary about the cost reductions.
That have taken place since the pandemic ended presumably that is is those.
Those are cost reductions that have been implemented since early may and if that is correct would you talk in more detail.
About those and how they came about and if there's any more color surrounding the $5 million annualized benefit. Please.
Yeah.
Yes. This is data so the largest part of that reduction is going to be reduced.
Labor and related costs.
So as part of.
Efficiencies and.
Including expanding gross margins.
We reduced payroll and related expenses as well as other costs as.
As well as I mentioned in my prepared remarks outside services.
Travel and et cetera throughout the organization.
Yes, I think most of the second part of the question is is this $5 million run rate I mean, we have an additional $5 million.
That.
There has not been reflected yet in the numbers for the future. So.
Well, we adjusted out the employee retention credit we do.
We expect that 5 million reflects the five mill again reflects the annualized run rate going forward that's right.
Alright. Thank you do you see additional cost.
Cost reduction opportunities similar to what you have implemented.
Here in May and June .
Well I think thats, what im referring to when I say, there is an additional $5 million of cost reductions.
Realized basis going forward so.
Yes.
So we do see some good opportunities.
Thank you and and then let's talk a little bit about the supply chain.
If you will please.
What product lines are still impacted by the supply chain issues and we've heard a number of companies reference that the supply chain is largely back to normal and so what are you experiencing that is different than then.
And then are those companies that are feeling like it's more normal again.
So I would say that our echo that I think that supply chain is coming back to normal. We've had we still have a few headwinds I mean, we've still got the leftover of.
Distributing Chinese tariff wheel hubs.
That we export.
Over in Malaysia got shut down.
Delays in shipping we are seeing an interesting phenomenon where.
<unk>.
Okay.
Freight is actually no longer an excess demand in fact, there's overcapacity and where you're seeing delays in shipments coming in because of carriers.
Unplanned starts to fill up to fill up there.
Let's fill up that capacity so that's affecting.
Our ability to get to those sales levels.
We normally would have been able to do.
We see a significant reduction.
And supply chain expenses I mean, so we do see an end to this.
The semiconductors on electric vehicle side has been a challenge power supplies in the electric vehicle diagnostics side has been a challenge.
But it appears to be getting better as we de by data.
And so my interpretation.
With your comments relative to the Chinese tariffs is it you still have product in inventory that has the Chinese tariffs on it but you will soon be working your way finished working your way through that and we'll be back to the to the Malaysian product.
That will then be lower cost and at that point the supply chain.
Which I think were roughly $3 million this quarter will be.
<unk> essentially eliminated.
Correct.
And what what quarter do you are you currently anticipating that you will.
Finished working your way through that inventory.
I think we're substantially through it now this quarter.
Great.
Graduations.
On that and then.
Would you please talk through the price increases.
That were implemented in the fiscal fourth quarter and then what you have planned.
Here in fiscal 'twenty, four and and maybe dissect that.
Whether it's by customer or product line or whether it's across the board increases.
Yes, so only increases across the board.
Very difficult bill to get into too much granular detail on that for <unk>.
Number of different reasons, including proprietary information by customer and competitive reasons, but overall, we expect to have over $20 million.
Price increases recognized in this in this fiscal year, a plus plus more of that.
On an annualized basis come into effect for the following year.
I think for now.
As David said I think it more than covers the interest rate increase.
And the discount rate. So we expect we expect to start seeing that through this year.
And clearly I think the other side.
The gross margin story there is.
Assuming supply demand continues the way it looks right now we.
We can get our plants back up and running and get back to more regular overhead absorption numbers.
Thank you and so maybe that's a great segue into the vendor finance programs and what progress have you made on that front or is it really just being addressed through price increases.
Yes, I think all of that is addressed in our price increases.
Between.
Interest costs and inflationary costs with price increases get so complicated because we had so many rounds of them. It's hard to know start breaking down which was for which any more beds.
But as I've said, we're north of $20 million of incremental price increases that will be recognized in this fiscal year and then additional growing forward.
Okay.
Okay.
The answer to your question I'm not sure I'm sorry, Ed.
Yes.
It wasn't that that cover is it so thank you for the time.
Thank you very much I appreciate the questions.
Our next question comes from Jeff <unk> from CSC. Please go ahead. Your line is open.
Good morning, Gents, just a board new shareholders. A quick question I don't think you really have to spend 25 minutes reading the press release, which was excellent and detailed and you can go right to questions. My two cents for next time, but somewhat maybe.
You talked about a couple of times.
<unk> changes for the company or I don't know if you used the word historic but no inflection point.
What sorts of things are you referring to as far as maybe how the company might be run in the next five to seven years vis vis the past and then you made reference to in addition to the gentleman with the convertible.
At the company like what other what help is he doing on the board to help.
Changes you're referencing.
Okay. So, let's focus lets break that up and lets talk about inflection.
I think you know we pre COVID-19 embarked on.
Pretty significant initiatives to launch a brake category brake products category.
I think now we're pretty much almost a full line brake supplier in conjunction with that we expanded our facilities from 300000 square feet to 1 million square feet.
Added thousands of new employees added.
The opportunity to reach what we believe is another $300 million of brake related revenue.
So as we go through the next couple of years, it's not a matter of searching for new product lines, it's a matter of maturing and existing product lines.
Leveraging our new facilities into greater operating efficiencies.
Generation was significant cash flow.
That we believe that it will come with us enhancing margins in some of the newer product lines as we get more mature.
And volume increases through these facilities.
I'm really just leveraging that opportunity for capacity I mean that should enable us.
We haven't given up.
Term, but to move us to over $1 billion in revenue.
Other side of it is is that the industry is interesting right now on the supply side I think we're in a great position.
To take advantage of.
Opportunities that may exist in the inventory and the.
Industry.
As the supply chain as generally gone through some hardships and that Leverages our.
My answer to the second part of your question is.
As we've added Doug Truslow to the board.
I think Doug brings with him.
Significant.
Industry knowledge.
Group group behind him.
He is able to continuously stay focused on that industry knowledge and keep us abreast.
From a different perspective more of a sort of a private equity perspective.
Off market opportunities.
Pros and cons of different different things so.
Well I think we've had a very strong and continue to have a very strong diverse board I think this strong private equity or industry related knowledge.
This enables us to.
To really hunker down and really building value.
Yes.
I think done a good job and a lot of areas, but we certainly have not done a good job of building value in our share price.
We want to be focused on delivering results.
Shareholders can relate to and that will drive though.
Our value in the marketplace.
So I think all of that.
All of that sort of bodes well for our future. We have a script now too to tackle what we need to tackle.
And I believe we've got.
Very exciting opportunity ahead of us.
What so with.
What is the proper.
Inventory number that you think you can.
<unk> run to balance the.
Desires of the customer base with.
Your interest in <unk>.
Reducing interest expense and creating value for shareholders.
What do you think that number is it at some indeterminate.
That period going forward.
Yes, so I'm not going to talk about a number but I will say.
I'll give you an inventory turn ratio that I think is much more indicative because we are growing them.
No.
I think if you look back historically well first of all before I start talking about that the number of Skus that we have to deliver is very significant we offer over 30000 skus.
<unk>.
So rate expectations or significant mostly in the mid <unk> and up.
The lead times from our customers are pretty short so.
Having said that.
Sure.
Yes.
Okay.
Being an all makes all models supplier, we think that the.
The historic turn rate of four times, a year for finished goods inventory as a level that we should be out and.
We've been there and when we were there we had.
Very significant fill rates.
History, leading fill rates for that matter.
As a result have incredible support from our customer base I think we've dropped.
That down.
Three and change and now we're heading back up to this four turns and I think for our near term goal for us that full terms.
As a realistic one I mean that doesn't mean that it stops there.
I think thats. The next the next level for inventory.
And have you seen I mean, what has been my last question just in general because in some ways. One could argue the shareholders have supported the desires and needs of your customers for quite some time.
What sort of.
Feedback or from either the competitive stance as you raise prices and try to extract inventory.
Back of the customer.
What's sort of.
What things are different let's say today than maybe six or nine months ago. When you were sort of the opposite mode. How has the industry changed or the reaction to your mood is different than maybe you thought.
Uh huh.
So there is not that different to what our thoughts are con really my thoughts evolve quickly and thus I think look anytime you are looking for price increases with large.
Our retailers I mean, there's always there's always pushback.
I think the opportunity to get fair prices.
No.
Is better today than it was a year ago two years ago.
I think thats in part depends on.
Really the rationality of our competitors, which I think will have similar challenges with financing.
Answering the inventory and the payables of all of our main customers.
A lot of it will depend on alternatives I mean, theyre, driven obviously too to drive their working negative working capital.
Lot of it will depend on their ability to get fair pricing in the marketplace for their products.
And rational competitors, including Chinese, including the Chinese which.
I've always been a wildcard but.
<unk>.
Look I think the industry realizes.
That's the.
The amount of financing being supplied by the supply chain is significant in that.
At some point the consumer has to pay for that.
Our customers are not going to pay for it but.
I should pass it on.
Hopefully.
We get back to irrational equilibrium, which I think we're getting close to.
Thank you very much.
We have no further questions in queue I'd like to turn the call back over to Selwyn Jaffe for closing remarks.
Great. Thanks for your great questions in summary, notwithstanding the headwinds.
I will discuss this morning, we're excited about our future as I just had mentioned.
Built a solid foundation, both top for both top and bottom line growth from our existing product lines.
Supported by strong demand for replacement parts and clearly an aging car park and this sort of recessionary environment. We're in we are committed to enhancing cash flow and profitability as our strategic initiatives evolves.
In closing one more time, we have a great. We have great team members and I appreciate their dedication to the company and our customers. We appreciate all your continued support and thank you again for joining us for the call and we look forward to speaking with you when we host our fiscal 2024 first quarter call in August and upcoming Investor call.
Thank you.
This concludes today's conference call. Thank you for your participation you may now disconnect.
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