Materion Corporation Q2 2023 Earnings Call
Good morning, ladies and gentlemen, and thank you for your patience. Your conference will begin shortly once again. Thank you for your patience the conference will begin shortly.
[music].
Greetings welcome to the materials second quarter 2023 earnings conference call.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
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Please note this conference is being recorded.
I'll now turn the conference over to your host John is erratic Chief Accounting Officer, you may begin.
Good morning, and thank you for joining us on our second quarter of 2023 earnings Conference call. This is John <unk>, Chief Accounting Officer.
Before we begin our remarks this morning, I would like to point out that we have posted materials on the company's website that we will reference as part of today's review of the quarterly results. You can also access the materials through the download feature on the earnings call webcast link.
With me today is jugal, <unk>, President and Chief Executive Officer, and Shelly Chadwick, Vice President and Chief Financial Officer.
Our format for todays conference call is as follows.
Hugo will provide opening comments on the quarter as well as an update on key strategic initiatives.
Following jugal Shelly will review the detailed financial results for the quarter. In addition to discussing our expectations for the remainder of 2023.
I'll then open up the call for questions.
Let me remind investors that any forward looking statements made in the presentation, including those in the outlook section and during the question and answer portion are based on current expectations.
Company's actual performance may materially differ from that contemplated by the forward looking statements as a result of a variety of factors.
These factors are listed in the earnings press release, we issued this morning.
Additionally comments regarding earnings before interest taxes, depreciation depletion and amortization net income and earnings per share reflect the adjusted GAAP numbers shown in attachment four through eight in this morning's press release.
The adjustments are made in the prior year for comparative purposes, and removed special items noncash charges and certain discrete income tax adjustments and now I'll turn the call over to jugal for his comments.
Thanks, John and welcome everyone.
It's great to be with you today to discuss details of our record second quarter performance.
I'm pleased to share that our team's relentless focus on delivering for our customers and driving operational excellence resulted in the 11th consecutive quarter of year over year earnings growth from China.
The second quarter also marked an important milestone for margin expansion.
We outperformed our midterm target of 20% adjusted EBITDA with a margin of 27% of value added sales.
This achievement reflects the quality of our portfolio and our team's ability to respond quickly to changing macroeconomic conditions.
More and more customers are turning to maturity on to help them solve their most technically demanding challenges strengthening our portfolio of business, even as we navigate mixed market conditions.
Our deep customer partnerships across diverse industries have allowed us to capitalize on opportunities aligned with compelling global Mega trends positioning with turning on for long term growth.
Clean energy is one such exciting megatrends driving new opportunities for us.
In previous quarters, we have discussed our multiple clean energy partnerships, including the $15 million customer funded investments to provide critical materials for power generation.
Facility upgrades for this project are near completion, and we have started to ship product to our customer.
Today, we are pleased to announce two new exciting customer projects that are on the cutting edge of clean energy development.
First we have entered into an agreement with the Idaho National lab to support the U S Department of Energy's, New Marvel Nuclear Microreactors project.
We plan to start providing material this year.
In addition, we have reached agreement to provide material for another promising next generation clean energy program in Asia.
Both of these proof of concept programs could lead to larger opportunities from a trade off in the future.
Material and its becoming a sought after provider for materials in this exciting space aligned with our targeted global Mega trends.
Focusing on our second quarter results.
<unk> sales were flat year over year, largely due to softness in the semiconductor market.
When excluding semi VA sales grew 14% driven by growth in aerospace defense Telecom and data center and the precision platform project as we continue our track record of delivering strong organic growth.
What I'm most encouraged by is that on roughly flat sales, we delivered 18% higher adjusted EBITDA up $55 5 million.
E 320 basis point expansion year over year, and a second quarter record for our company.
This record performance, including meaningful contributions from our precision Kladstrup facility. Our teams are working diligently to meet our customers' needs while working on the phase two expansion, which is progressing well.
As you know we have increased our content across new aircraft builds by more than 25% since 2019, which coupled with strong build rates and supported our year over year growth in this market for nine consecutive quarters.
The defense market was also a highlight for us as the properties of our materials are well suited for highly technical applications must perform in the most part and demanding conditions.
Our expertise and track record serving this important market continue to create new sales opportunities, resulting in multiple new customer partnerships to develop next generation defense applications.
On the connectivity front the substantial global growth of <unk> is driving up demand for connectors and undersea cables, which is a segment of the market that has been a core competency for us for years.
Growth in these markets has helped offset significant softness in semiconductor, which continued over the course of the quarter, particularly in logic and communication based devices, where we are seeing meaningful inventory correction.
We are encouraged by a number of positive signs we've seen in the broader semi market and expect that the second quarter was likely the bottom, but as chip manufacturers given these positive signs in our position in the supply chain. We believe we will start to see gradual improvement in the fourth quarter of this year.
As you know semi cycles can lead to strong upturns and ready to support that volume as it materializes.
Key to our continued strong performance is an unwavering focus on operational excellence, ensuring we deliver strong results despite macro environment.
We continue to look for ways to run our company more efficiently and to focus our resources on growth areas.
In response to the recent macro softness our teams have executed a number of targeted cost improvement initiatives. These actions have been well planned and aimed to strengthen our company while protecting our ability to deliver the strong output you've come to expect from maturing out.
With accelerating contributions from our organic pipeline, a gradual semiconductor recovery on the horizon and the benefit of our targeted cost improvement initiatives, we remain confident in our ability to execute and deliver another year of record results with that we are affirming our full year guidance for 2023.
Now, let me turn the call over to Shelly to cover more details on the financials.
Thanks, Joel and good morning, everyone. During my comments I will reference the slides posted on our website. This morning, starting on slide nine.
As jugal outlined in his opening remarks, we delivered a record second quarter for adjusted EBITDA and earnings per share.
<unk> added sales, which exclude the impact of pass through precious metal costs were $268 3 million for the quarter roughly flat with prior year.
Excluding the expected softness in semiconductor the remainder of the business was up approximately 14%.
This growth was driven mainly by strong demand across the aerospace defense Telecom and data center end markets, along with meaningful contribution from precision Plaid strip.
We delivered adjusted earnings of $1 38 per share in the second quarter up 8% as compared to the prior year. Despite roughly 12 cents of interest expense headwinds.
Moving to slide 10, adjusted EBITDA in the quarter was $55 5 million or 27% of value added sales up 18% from the prior year with margin expansion of 320 basis points.
This significant increase was driven by favorable price mix and strong operational performance offset by a slight decrease in volume our.
Our targeted cost improvement initiatives contributed to this significant step in earnings outperforming the previously shared midterm EBITDA target margin of 20%.
Moving to Slide 11, let me review second quarter performance by business segment.
Starting with our performance materials business value added sales were $165 6 million up 24% compared to prior year.
Strong results in aerospace Telecom and data center and precision Kladstrup drove the increase.
EBITDA, excluding special items was $45 9 million or 27, 7% of value added sales up 69% compared to $27 2 million in the second quarter of 2022 with 740 basis points of margin expansion.
This growth was primarily due to increased volume from our outgrowth initiatives favorable price mix and strong operational performance.
The second quarter also included the benefit from the inflation reduction acts advanced manufacturing production credit.
Moving to the outlook, we expect a strong second half led by aerospace defense and Telecom and data center.
We also expect continued strength from several of our organic initiatives.
Next turning to electronic materials on slide 12.
You added sales were $77 6 million down 27% compared to the prior year as a result of the slowdown within the semiconductor market, causing significant inventory correction across logic and communication devices.
EBITDA, excluding special items was $14 6 million or 18, 8% of value added sales in the quarter.
<unk> targeted cost reduction initiatives worked partially offset soft demand.
Despite this year over year decline, we did see a sequential margin improvement of 500 basis points, resulting from strong operational excellence and targeted cost actions.
As we look forward to the remainder of the year, we expect the semiconductor market to gradually rebound starting in Q4 as inventory levels normalize.
Finally, turning to the precision optics segment on slide 13 value added sales were $25 1 million down 15% compared to prior year.
This decrease was mainly driven by reduced PCR filter demand.
The discontinued product application and softening in the consumer electronics market slightly offset by strength in aerospace and defense.
EBITDA, excluding special items was $2 6 million or 10, 4% of value added sales.
The decrease in volume was a meaningful driver of this year over year decline offset by positive mix and the benefit of meaningful cost improvement initiatives.
Looking out to the back half of the year, we expect improvement to the top and bottom line supported by improved order rates and defense space and automotive coupled with the continued benefit of cost improvement activities.
Moving now to cash debt and liquidity on slide 14, we ended the quarter with a net debt position of approximately $424 million and $169 million of available capacity on the company's existing credit facility.
Our leverage at two times remains slightly below the midpoint of our target range.
Lastly, let me transition to slide 15 to address the full year outlook.
With accelerating contribution from our organic pipeline, a gradual semiconductor recovery starting in the fourth quarter and the benefit of our targeted cost improvement initiatives, we remain confident in our ability to deliver another record year.
With that we are affirming our previously shared adjusted EPS range at $5 60 to $6 per share representing a 10% increase from 2022 at the midpoint.
In closing we are excited for the second half of 2023 as we expect continued market outgrowth in the early phases of semiconductor rebound.
Along with the benefit of an improved cost structure will contribute to another year of record results and long term sustainable value creation for our stakeholders.
This concludes our prepared remarks, we will now open the line for questions.
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Our first question is coming from Phil Gibbs from Keybanc capital markets. Please proceed with your question.
Hey, good morning.
Hey, good morning Bill.
So just chief question does this in a broader broader based on consumer businesses.
Consumer electronics, I know, you're pointing to a fourth quarter a rebound in some of these some of these businesses, but is <unk> going to show signs that the revenues start to stabilize or do we have another quarter, where we see sequential declines.
Yes, Phil as you know in the semi market. If you look at the last eight quarters or so or even 10 quarters. Our business has done exceptionally well compared to the market. We've had a great portfolio that I think has supported a number of different markets in the SME area.
Q2, we have seen actually a deceleration of our orders in the March timeframe that continued and we were expecting Q2 to be the bottom and I would say probably is the bottom.
We probably see it as maybe an equivalent.
Q3, and then recovery in Q4, so I am not sure I would necessarily see a decline, but but some sort of a stabilization and then a recovery in Q4 I think overall, our semi business like I indicated I think has done really well over the last 10 quarters.
So we're a little later in the cycle when it comes to the declines and so we were expecting.
Our Q2 to be this way and it will just continue on a little bit in Q3 and recovery in Q4, So I think we're well positioned for the recovery.
The pick up in margins in electronic materials in the second quarter was that more so due to.
Cost reductions or was that due to the the tens and tens of one misalignment going away or was a little bit of both.
I think it's a little bit of both I mean, but our cost improvement actions.
We're weighted towards electronic materials, and our precision optics business.
Because of the market conditions are impacting those businesses.
So certainly the cost improvement actions were a factor, but other operational improvements such as the tantalum.
We are a factor as well.
And then just lastly for me.
Any update on what you're anticipating from that working capital in the second half of the year on that and anything that you could share on the on the cloud phase two commissioning I've I've missed your prepared remarks on that if he made them. Thanks.
Hey, Phil So on working capital you know you've seen where.
Generating cash from AR and AP, but inventory is still been a bit of a drag you know theres organic reasons for that some of that is cloud strip, where we're trying to actually build some inventory while we're serving the customer. So that's a natural unexpected bills also if youll recall the space propulsion system opportunity that we've talked about we have to do a little bit of raw.
We'll build there as well so we haven't seen the opportunity to really.
Bringing down inventory meaningfully I don't expect it's going to be a burn of cash burn the rest of the year, but not a not a huge cash generator either.
And then on the Kladstrup phase two you know that our expansion is going quite well and as we expected.
Our equipment is is in it's you know everything is on order and in and in the process of being set up so I think that's moving along as expected.
Yeah, I mean, we would expect that.
To continue as Shelly has indicated and as we've noted.
We would probably see a small.
Start.
At the end of 'twenty, four and then really pick up in 'twenty five full run rate in 'twenty, five and that's still our solar plants. So the team's doing a great job.
Thank you.
Thank you. Your next question is coming from Mike Harrison from Seaport Research partners.
Hi, good morning.
Hey, good morning, Mike.
So you noted this inventory correction in logic and communication applications within semiconductor I think up to this point, we've mostly been viewing the destocking is more of a memory specific issue.
Just hoping you could give us a little more color on what you're expecting here.
With some of those volume trends in semiconductor as we get into the second half, but I guess, specifically differentiate between Walter and communication and what Youre seeing in memory.
Yeah. So Mike we did see a decrease in memory as well just not to the level that we saw for logic and communication.
And really from logic and communication I think theres, a couple of our customers that happened to have some inventory that they need.
Needed to work through and so that's why we see it as just an inventory correction that was going at that happened here in Q2, and I think that'll carry over a little bit into Q3, and then we should be fine going into going into Q4.
A big part of our business frankly is in the logic area and communication area and we're very we're very glad that we have a very diversified portfolio within semi between logic power communication memory et cetera, and so you know.
I think that's one of the reasons that we have not been impacted to the level that I would say the broader semi market has been impacted over the last couple of years.
The increase happened and then I guess the decrease over the last year or so.
Because of the diversified portfolio that we have so we did experience a slowdown in memory, but more of an inventory correction I think from a couple of customers on logic and <unk>.
Communication.
Alright. Thanks, that's very helpful. And then just curious on the precision clubs strip business.
I believe you have some legacy operations there are those going to be shut down at some point as you kind of you know.
Ramp up the first and second phase of the new plant and if so what impact does that have on sales and costs as we think about the P&L impact.
Yeah. So we do we have that legacy plant, where we had started a lower volume production and then of course, we have the new facility that has picked up and ramped up on the higher volume.
At this stage that is still both facilities are continuing and the way we have operated with a customer is that.
If we have the orders will continue to operate in and if we if they feel that the transition to the new facility will will give them everything that they are looking for then we will go ahead and start producing from our existing.
Existing legacy facility, and then reallocate that capacity to other businesses. So I think in total we wouldn't necessarily see a.
A decrease in sales in fact, what I would just see is maybe more of a shift in sales at any point whenever we think the legacy facility would need to be shut down for this particular product, but as of right now the customers continuing to order and will continue to build.
Alright, and then last question I have is on the automotive market you noted a decline in.
In that business it sounds like that was kind of order timing driven.
But I believe that just from a production standpoint, Q3 is kind of a tougher comp.
Against the prior year, maybe discuss it and give us a little bit of color on how you expect automotive to trend in the second half.
Yeah, well first of all you know when you look at our automotive business. The first half of the year were up 6% year over year.
Q1 was our second highest quarter for automotive sales.
<unk> been tracking automotive so really there was a sequential decline and I think like you noted it was a timing.
And when you look at the overall first half we're up 6% and I think we would expect that trend to continue into the second half.
There is a to your point production.
Challenges that happened in the third quarter, just based on holidays and things like that but but we don't expect our order timing the way. It works I don't think we would expect any type of a negative hit based on that I think we would expect second half to be equivalent to about our overall first half.
Great. Thank you very much.
Thank you. Our next question is coming from Daniel Moore from CJS Securities. Please proceed with your question.
Good morning, Thanks for taking the questions just wanted to go back again.
Ill touch on the margins, obviously really impressive particularly in performance materials.
I think you called out advanced manufacturing production credit just talk about you know.
Any maybe nonrecurring items that might have been in there and just the sustainability of margins in that segment as we think about the balance of the year and moving forward.
Yeah, Hey, Dan Good question. So obviously, we are taking the benefit of that production credits as you know we're waiting for kind of further guidance as we fine tune that number, but we're still going with kind of the same estimate that we came up with at the beginning of the year. So that is a nice benefit performance materials. They did have a nice.
Mix in the quarter as well, so we had some beryllium hydroxide, which as rich mix and some other items that kind of beefed up those margins a bit when we talk about the targeted cost actions certainly there was nothing meaningful in performance materials is that business.
Does not have the demand issues, but we did do a couple of things to kind of tighten things up so the plants are running well and we're seeing great operational excellence, a little bit of of cost action the benefit of the production credit and then a nice mix.
Yes, Dan.
I just would note I think this is our third.
Consecutive quarter, where this business has delivered.
Greater than 25% margins and it has it has done well and were very.
We're very proud of what I think the teams have accomplished in this business both from a top line standpoint, and I think executing the <unk> program. For example, and then all the other things that are involved in our.
Our expectation is that this business.
<unk> continues to deliver around that 25% EBITDA level.
Really helpful and then shifting gears.
Clean energy you called out any sense for the size of the opportunities you mentioned in Idaho as well as new projects in Asia and just more generally are you seeing kind of an inflection point in terms of these new types of.
You know emerging technology opportunities.
Yeah energy as you know it's been a very very important market for us for a long time and has a number of different items and it clearly the oil and gas.
So we have which is a very strong business for us both on the tough met.
The material that we have the Berlin copper material that we have it's a very very strong in.
Business and we can do to have that be strong going forward I think at the same time, we're really focused on making sure that were aligning to the Mega trends as you know in general and clean energy is certainly a major trend that we're aligning too.
We've talked about a couple of.
Good partnerships in the past <unk> is one partnership that we've talked about will be a beryllium based a material that has.
Being used for a sort of a proof of concept type of a program we announced this.
Program, where we have a $15 million of customer funded 100% customer funded I might add for clean materials for power generation, we announced that a couple of quarters ago and these too.
A proof of concept partnerships that we are engaged in what I'm really excited about it as you know one is in North America, one is in Asia.
They are relatively small so I would say a few million.
Between between the two.
Items, but there are fantastic opportunities here to get into the.
Ground floor and get into the proof of concept based so that if these things are successful we would end up being.
Benefiting from the larger larger opportunities down the road. So I think it is something that is getting a lot more attention I mean, we're seeing that I think.
On the macro and the macro trend side and our materials are extremely well suited for this market and so we're making sure our teams understand that and they are really out.
They are knocking on doors and trying to figure out how we can.
How we can have opportunities for this exciting exciting.
Exciting space. In addition to the solid solid base that we have in the oil and gas side.
Just one more for me I'll jump out, but just talk about the backlog and pipeline of opportunities and precision optics, we don't talk quite as much about it.
And do you expect to return to growth by fiscal 'twenty, four and how quickly can we get back to sort of mid teens.
Margins in that business. Thanks again.
Yes, I think 24, I mean, you indicated 24 for <unk>.
<unk> as well as the margins I mean, I, absolutely would expect that.
Think that we should expect incremental improvement in the back half of this year.
Both on the top line and the bottom line is we continue to have more success, particularly in the space segment the automotive segment.
In the Defense segment, and then we would expect continued.
Improvement into 24, so that the business is.
Growing on a sustainable basis as well as delivering.
The margins that we have expected a new all have expected from this business.
So I would expect that in 'twenty four yes.
Thank you. Our next question is coming from David Silver from CL King. Please proceed with your question.
Yeah, Hi, good morning, Thank you.
Morning, David.
Good morning.
So I have a few questions I apologize this will probably be a little scattershot.
The first thing I would like to go back to the.
<unk> outstanding margin performance this quarter and as others have noted on this call I mean, it seems to be concentrated in your performance materials segue.
Segment, where you called out the cloud strip project.
And I'm, just wondering not not so much from the per unit basis, but was this a quarter, where there was an unusually high shipman.
Shipment rate for on the cloud strip project in other words was the contribution to earnings and especially our EBITDA margin.
In the performance materials segment was that kind of unduly.
Influenced I guess by maybe a temporary or a timing.
Element in terms of the shipment rate during the quarter on the on the cloud strip project I guess I'm thinking in particular, thank you.
David first of all I think on the overall margin for the company as you know we've continued to state that our objective mid term is to be north of 20% EBITDA margins and I'm extremely proud of the team to deliver that north of 20% in this timeframe and this Q2 now of course, it's one data point.
We've got to be able to do that for several quarters in a row to be able to call. It a trend and we're very much looking forward to doing that in this in the midterm and the midterm timeframe I think the other thing that I would note is that performance materials certainly.
<unk> delivered these good margins that we've talked about we also had on our electronic materials business and a 500 basis point sequential improvement from Q1 to Q2 so performance.
<unk> was definitely a positive but I think the electronic materials segment has.
As come through as well and delivered a really really good performance margin wise here in the second quarter.
When it comes to the precision cloud business.
That business continues to perform well it did not have I would say an unusual quarter, both from a topline or bottom line standpoint.
It's pretty much in line with kind of the things that we have expected and so I would not say that it had a artificial boost or a onetime boost from any type of a.
Any type of really a single project or a single program benefit.
Yeah.
Okay. Thank you.
My next question actually would be about that.
The balance sheet, okay. So when I look at the inventory levels in particular in the second quarter. It seems like they've risen quite a bit in the first half of this year and they are at record levels I think at least according to my.
My models.
And I'm, just trying to align or you know.
Put together the thinking with you know maybe a meaningful boost in your inventory levels at the same time.
Maybe your your sales or your shipment volumes are moderating a little bit.
And you know given your outlook.
You're reaffirming the outlook for the second half.
I'm just kind of wondering if sales are not really.
Reacting strongly just yet.
Overall for your company why why would you know why would you be building inventory is there a strategic element to that or timing just how should we think about that that record inventory level.
When your sales growth seems to be a little bit less.
Declining a little bit relative to the.
Strong double digit growth you've been reporting in previous quarters.
Yeah, David let me take that one.
There's a few things and we talked about the precision glass business, we need to build some inventory we've agreed with the customer we will hold some inventory as part of our range, but with them. So we've been working to build up some inventory just for that business. So that is a piece of it.
Also with the space propulsion systems as I mentioned, we needed to add some new raw materials, we've been adding that building that up so that sort of one piece that's organic growth focused.
The other item to think about is our performance materials business that inventory chain really with the backward integration nature of it is not something thats quick to adjust inventory levels and it goes through several phases.
Production and we don't normally kind of shut down quickly our start up quickly. It runs pretty consistently so you don't see big swings.
Yes, so thats been a driver and then I wouldn't say that we are building inventory where volumes are down.
Okay. So maybe for the next year or two you're business is just going to naturally become more.
Inventory intensive I guess or the inventory to sales ratio will shift to reflect the new business opportunities you're working on is that is that a fair.
What you will I mean, certainly there I'm always focused on trying to optimize those levels and so as a relationship with the business units to the CFO on the cash and the businesses need to extend the customer. So we work at being more efficient and we will continue to do so higher sales volumes do naturally improves and as.
<unk>, but we do have the inventory levels that we need.
Okay, Great last question would be on the electronic materials.
The things and in particular.
Maybe your your development programs in Newton in Milwaukee, So we're in kind of a slower patch and I think you know people who may have hoped that the inventory liquidation would have run its course, hopefully by the middle of the year I think most companies that have.
Measure to that that I have.
You know that have reported they've kind of pushing out to the right a little bit when you know.
Inventory conditions, there may return to normal.
You know I'm just you know my my.
As the cycles here were very short and you made a comment I think when things turn up it's going to turn up abruptly so.
And thinking about the timing of your expansion programs.
Being ready for when the market shifts.
Has anything changed in your thinking time wise and timing wise or.
Anything.
According to that maybe that in aligning with your customers' wishes I mean anything that's maybe pushed out those those development programs any any change in your thinking about what you need to have in place one.
Yes, David I would say that our expansion plans and our growth plans are intact.
We are we are continuing both on our Milwaukee facility as well as in our Newton facility with our growth plans.
We have good relationships with our customers. So we understand kind of where things are with those particular projects that are that are engaged in those growth plans.
And we want to make sure that we're fully ready like you said the cycles are very short and we want to make sure that we can support the customers as the uptick happens, which is not too far away right. As we indicated we would start to see an uptick here in Q4. So no. We are we are moving ahead. We're moving ahead really at the same pace that we were.
Moving at.
Before and.
We're not letting this this inventory correction or let's say.
A bit of a slowdown here.
Hold us back we want to make sure we can support our customers in a very good way.
As soon as the recovery starts to happen.
Yeah.
Okay. That's great. Thank you very much.
Yeah.
Thank you. Our next question is coming from Dave storms from Stonegate. Please proceed with your question.
Hey, good morning, good morning.
I appreciate you taking my call just hoping we could touch on capital allocation real quick it's been a couple of quarters since you've done any buybacks your debt's been in range.
Wondering if you could speak about your capital allocation priorities.
Compare that to any M&A activity, you're seeing in the market.
Yes, sure I'll take that one so.
We are very excited about our organic pipeline and as you know we've been really prioritizing our investments for growth. So capex has really been our number one priority. We did a very large deal from an M&A perspective at the end of 'twenty, one which is.
And fully integrated and we love what that business is doing for us.
We're certainly open and looking at M&A opportunities, but it's not something that we are out frantically searching for to drive growth because of the nature of the organic opportunities that we have in front of us.
The buyback perspective, that's really not a priority we have the authorization as a tool out there that we could use opportunistically, but but it's not it's not a priority for us at this time.
Very helpful. Thank you and then just one more for me there's been a lot of great conversation about.
Coming back online hopefully in 'twenty 'twenty four.
I mean, obviously you expect it to come back in for Q.
Is it too early to start talking about what your expectations might be for 2024 overall any thoughts there.
Yes, I mean, typically you know for our 'twenty four we go through a process internal to the company in let's say back half of Q3 first half of Q4 to kind of understand input with our thoughts around it and then we communicate.
Our view in February .
Paul So that is still our plan and that's what we that's what we expect to do.
That's very helpful. Thank you for the time.
Okay. Thank you.
We have reached the end of the question and answer session and I will now turn the call over to John ceramic Chief Accounting officer for closing remarks.
Thank you. This concludes our second quarter of 2023 earnings call. A recorded playback of this call will be available on the company's website mature out dot com I'd like to thank you for participating on this call and your interest in material I will be available for any follow up questions. My number is 206 334010. Thanks again.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.