Q3 2023 Allient Inc Earnings Call
Good morning, and welcome to the Allianz incorporated third quarter fiscal year 2023 financial results conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please.
Please note this event is being recorded.
I would now like to turn the conference over to Craig Mahalla Investor Relations. Please go ahead.
Yeah. Thank you and good morning, everyone. We certainly appreciate your time today as well as your interest in alien Inc. You own them.
On the call are <expletive> Rosella, Chairman, President and CEO, and Mike Leach, our Chief Financial Officer.
It can Mike are going to review, our third quarter 2023 results and provide an update on the company's strategic progress and outlook after which we'll open up for Q&A.
You should have a copy of the financial results that were released yesterday. After the market close if not you can find it at our website at Allianz Dot com along with the slides that accompany today's discussion.
If you are reviewing those slides please turn to slide two for the Safe Harbor statement.
As you are aware, we may make forward looking statements on this call during the formal discussion as well as during the Q&A. These.
These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated on today's call.
These risks uncertainties and other factors are discussed in the earnings release as well as other documents filed by the company with the Securities and Exchange Commission.
You can find these documents on our website or at SEC Gov.
I want to point out as well that during today's call. We will discuss some non-GAAP measures, which we believe will be useful in evaluating our performance.
You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP.
We've provided reconciliations of non-GAAP to comparable GAAP measures in the tables accompanying the earnings release and slides.
Please turn to slide three and I'll turn it over to Jack that again.
Yeah.
Thank you Craig.
Welcome everyone.
Before we jump into the quarter results I just wanted to remind everyone that we had our inaugural investor and analyst day at the end of August where we highlighted our expanded available markets and how we plan to leverage our proven process to ensure we achieve our future goals and objectives.
Please visit our Investor Relations website, where you can do a replay of the event or the transcript.
Now onto the quarter, we continued to execute our strategy and delivered solid topline results record gross margin and robust cash generation that enabled us to reduce our debt.
And make an acquisition during the quarter.
Once again, our industrial markets led the way with 32% sales growth over last year's third quarter, largely driven by industrial automation projects and power quality solutions focused on the HVAC.
In oil and gas end markets.
Also contribute to our industrial sales growth with continued improvements within the supply chain environment.
Which supported the shipping of some long lead projects.
Our other three targeted vertical saw contraction during the quarter. Those those numbers don't tell the whole story because there are a number of positive elements within each aerospace and defense sales reflected program timing largely within the space industry during the quarter.
On the defense side, we've experienced a high level of quoting activity over the last few quarters and we secured a large defense order, which is reflected in our third quarter orders.
We'll talk about our orders and backlog later in the presentation.
Within our vehicle market, our automotive customers are ramping up as expected. This year, although the growth was more than offset by lower demand with an agricultural vehicles, given the softness in Europe largely influenced by the Ukrainian conflict.
Lastly, medical sales were nearly flat as we continued to see a return to a more normalized sales environment focused on surgical and instrumentation related end markets.
We did experience softness in medical mobility, which largely reflects a reduction in the demand that we experienced during the last few years for those products.
Driving higher margins continues to be a focus and we saw a nice expansion of.
Our gross margin during the quarter.
The 32, 7% gross margin rate does set a new high watermark for Allianz and.
And largely reflects the favorable mix from the end markets I just highlighted.
On the operating performance you will notice we had a jump in business development costs of about $1 million year over year.
Those expenses are in support of the recent acquisition.
Some limited operations rationalization to position us to drive stronger operating leverage in the future.
Overall, we delivered net income per share of 41 and adjusted basis net income per share was <unk> 61 cents.
On a year to date basis, we generated significant cash from operations of more than $27 million as we have seen modestly improved inventory turns.
We did utilize some of that cash to reduce our debt balance by more than $11 million and to acquire Sierra motion at the end of the quarter.
Whilst the air motion is a relatively small acquisition it is very strategic.
And enhances both our application design and development efforts and our customer facing market strategy.
Sure emotion excels at providing rapid product development prototyping and low volume production to improve speed of play for customers.
We further believe we can leverage their teams skills and capabilities to advance our integrated motion solutions strategy and to expand our reach into our targeted end markets.
We also see the potential to enhance their capabilities by leveraging the Elliot global manufacturing footprint in order to provide larger scale production capabilities or to your emotion customers.
Looking ahead, we still see exciting opportunities as we expand our president and targeted market verticals.
Launch innovative solutions and further streamline our business for greater efficiency.
With that let me turn it over to Mike for a more in depth review with the financials.
Thank you <expletive>.
Starting on slide four we provide some details regarding our top line.
Third quarter revenue increased 8% or $10 9 million to $145 3 million.
The favorable impact of exchange rate fluctuations on revenue was $1 8 million in the quarter.
Excluding FX organic revenue growth was 7%.
The growth rates for our four targeted markets are noted on the slide and review the Bourbon changes within each.
The acquisition of sphere emotion did not have a material impact on sales during the third quarter.
Slide five shows the change in our revenue mix by market and Australian 12 month basis, and the drivers behind the change.
Industrial continues to be strong remains our largest market, making up 43% of total TTM sales.
That's an increase of 500 basis points since the comparable period in 2022.
38% growth in the industrial space was driven by the same market as the current quarter.
Defense program timing contributed to substantial growth and performance in A&D and the 200 basis point increase in share for the TTM period.
Medical growth has benefited from a more normalized environment and vehicle market revenue was comparable on a trailing 12 month basis as commercial automotive and power sports demand offset weaker agricultural demand.
As highlighted on slide six.
Our third quarter gross margin was 32, 7% up 50 basis points from the prior year period.
Higher volume and favorable mix more than offset elevated.
Elevated raw material costs.
Consistent with our stated objectives you can see the progress we are making by executing our strategy and the annualized chart.
Moving on to slide seven.
We delivered third quarter operating income of $11 9 million or eight 2% of sales, which was down 50 basis points.
Operating costs and expenses as a percent of revenue were 24, 5% up 100 basis points of which 70 basis points was attributable to higher business development costs in the quarter as we continued to rationalize our manufacturing footprint and execute our M&A strategy.
On slide eight we present GAAP net income and adjusted net income along with our adjusted EBITDA results.
Our net income and diluted EPS have been adjusted for certain items, which we believe provides a better understanding of our earnings power inclusive of adjusting for the noncash amortization of intangible assets.
What's the company's strategy to grow through acquisitions as well as organically.
Net income increased 1% $6 7 million or 41 per diluted share and on an adjusted basis was up 3% to $10 million or <unk> 61 per diluted share.
The effective tax rate was 23% in the quarter and we adjusted our expected income tax rate for the full year 2023, Alan slightly to be approximately 23% to 25%.
Adjusted EBITDA increased 5% to 28 million or 14, 3% of revenue.
We use adjusted EBITDA as an internal metric and believe it is useful in determining our progress and operating performance.
Slide nine and 10 provide an overview of our balance sheet and cash flow.
As a reminder, in the first quarter, we made a 6.25 million deferred cash payment for a prior acquisition, which was reflected during the cash position at the end of the third quarter.
Total debt was approximately 224 million down $11 1 million from year end 2022.
Debt net of cash was about $201 million or 48, 1% of net debt to capitalization.
Our bank leverage ratio was two nine times.
We generated $27 1 million of cash from operations year to date, a significant increase in cash usage during the prior year period.
The increase reflects higher net income and improved working capital management.
Based on our cash flow projections, we expect to continue to drive strong cash flows consistent with historical trends.
Year to date capital expenditures were $7 9 million are largely focused on new customer projects.
Due to project timing and supply chain impacts, we adjusted our 2000, Twenty's capex expectations to now range between 12, and $15 million down from $16 million to $20 million.
Inventory turns improved to three one times in the third quarter compared with 103 times last year and our DSO is at 57 days, largely reflecting timing and mix of customers.
With that I'll now turn the call back over to Vic.
Thank you Mike.
Slide 11 shows our orders and backlog levels.
Third quarter orders of approximately $155 million resulted in a book to bill ratio of one one times and our backlog.
Nearly $310 million.
Order levels were up 23% year over year, and 13% sequentially largely due to a $31 million defense market order received during the quarter.
This order was from an existing program.
Expected to convert to sales over the next two years with shipments beginning early next year.
Our backlog increased 4% from the second sequential second quarter of 2023.
<unk> defense order and strong demand for power quality solutions, partially offset by continued improvements in the supply chain environment.
This has enabled the shifting of some long lead projects as customer order patterns return to a pre COVID-19 environment.
As a result, we do expect our backlog to a decline in the next in the near term.
Book to Bill ratio drops below what.
The time to convert the majority backlog to sales.
Within the next nine months.
Turning to slide well, we expect our business for the remainder of the year to reflect our pre COVID-19 environment.
Consistent directionally with our fourth quarter results from prior years.
Yes.
This means there is a higher likelihood of seasonality for holiday shutdowns and customers managing their own inventory levels at year end.
Demand is expected to continue at relatively strong levels within our industrial markets and to benefit from our increased market presence around industrial automation material handling and power quality solutions.
Our other targeted markets are expected to exhibit puts and takes on the end markets similar to this past quarter.
Driving cash conversion and paying down debt is a priority and we will continue to focus on this area as we round out this year and move into 2024.
Our debt reduction efforts are expected to support our planned M&A activities, which is a key element of our overall growth strategy.
As always we are actively grooming potential opportunities and building out our M&A pipeline.
The increase in global unrest, you're all experiencing as the potential to present additional challenges in our day to day operations, but we are confident that the allianz team has the experience and dedication.
And navigate through these uncertainties.
Still remaining focused on executing our long term strategy.
Overall, we are excited and confident in our future and we believe we are well positioned to create additional value for all of our stakeholders.
Lastly for those that didn't get a chance to see our investor day presentation. The image on the left is what we call the Hudson Valley.
It is a refined structure that layers out a strong vertical market focus on top of our key technology pillars motion controls and box.
This is the basis of how we plan to accelerate our future success.
With that operator, let's open the line for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad. If you were using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question today is from Greg Palm with Craig Hallum Capital Group. Please go ahead.
Hey, Thanks, good morning, everyone. Thanks for taking the questions.
Thank you Greg.
Maybe just starting with the outlook you know early November you know normally you don't have great visibility in our yearend inventory management shut downs et cetera, but yeah sort of directionally guided for.
Kind of that you know decent size seasonality you know versus Q3. So I'm just kind of curious is that you know kind of what your visibility levels. All your confidence around that is that kind of what you're hearing from customers or is it more you know on the basis of what gets you know pretty uncertain macro environment out there or any or just.
You know wanting to add a maybe an extra level of conservatism in there.
Well, that's a lot of stuff that we added to their own.
I think.
Yes.
As we know and maybe for <unk>.
Shareholders.
And I've been to Europe.
Over several years.
Well the reason why we highlight it pre COVID-19 environment as debt.
We have in prior years gone through.
Seasonality in the fourth quarter would reflect that.
Many times the fourth quarter was a crapshoot because.
Especially our some of our larger customers would conserve cash and would hold.
Gold shipments until after the first of the year and so forth and so.
So that comes into play and we really don't know what that impact is and how that how much of that is going to affect us literally late in December.
With regard to.
Our visibility.
We see what we would call a normal.
Pre COVID-19 environment with some seasonality.
So we're being a little bit we are going to be cautious and we're going to say that we cannot.
Dissipate what might happen later in December.
But given what we have in our backlog today.
Fourth we do we do see some of that seasonality coming into play.
And let's just call it the normal environment that we've operated in prior years.
Understood that.
That makes a lot of sense and in terms of the quarter itself. You know one of the highlights was was gross margin and I know you talked about mix, but I'm, hoping you can go into a little bit more detail around it because you know if we look at mix by end market.
You know in Q3, it doesn't differ a whole lot versus what the mix by end market was in either Q1 or Q2, but you know under a slightly lower level of revenue you still improve gross margins quite a bit by either of those quarter. So maybe just help us understand.
A little bit of the the Delta there.
Mike do you want to.
Thank you John.
Sure well currently I think we've spoken before that within our four market verticals right. There's.
Niche markets and I would say margins can differentiate.
Significantly you know within industrial I think we've highlighted in the past areas like.
Automation oil.
Oil and gas.
I mean, those errors that we enjoy some premium margins and I think were particularly strong.
Have been strong but were particularly strong in Q3.
And then from an a and a.
And a deep respect to again, there's differentiation between what markets, we sell into within A&D, whether it's space or defense and as we've been highlighting the beginning.
More defense orders has it recently and.
You've had an uptick in shipments and.
Think we've done a good job to protecting ourselves from a pricing standpoint.
We have been opportunistic with some of those orders as well and that has helped with margins as well but.
From a general perspective, we continue to drive from a strategy margin improvement whether that's.
Footprint rationalization or.
Driving cost out from a global supply chain approach or the like I would.
Standards underlying current or those activities behind the mix as well.
Yes, and I think Greg.
Really says it all is that.
We have a goal.
Wide variety of customers.
Wide range of end markets and certainly.
The solution set that we offer.
Mike talked about premium pricing.
Mitch I would say it's more of a.
Yes.
Pricing that reflects the markets and applications that we're working on and well.
It so happens that in those markets that we've seen accelerated shipments over prior quarters and prior years.
Those do happen to be.
<unk>.
Provide some.
Enhanced margins versus some of the other product lines that we would have shipped in the past.
Again, it's a continuous process that we're working through.
And as we.
We talked about delays in getting price increases through and so forth.
The impact of those and some of that came into play as well, but it is primarily.
The reflection of the shipments and the mix that we did have in the quarter.
And our emphasis on some of those markets.
We've had in the past and.
Acquisitions and investing in current.
Operations Okay.
It makes sense I will I'll leave it there best of luck going forward. Thanks.
Thank you Greg.
The next question is from Ted Jackson with Northland Securities. Please go ahead.
Thanks, Good morning.
Good morning, guys good morning.
So just a Greg hit actually on some of the things I really wanted to drill into but I'll ask a few with the ones around it. So let's just start with Capex. So you've taken capex down what they think about capex for.
24, I mean would we be thinking that you would go back to kind of your sort of more like $16 million to $20 million ish range or are you going to you know kind of on a go forward basis, you know keep it a little.
Closer to the trunk of the tree, if you would with regards to some of your expenditures.
And that would be my expectation, Ted I think again as high as highlighted Brian.
I mean the reason.
Didn't hit what we originally projected I would say is driven by customer patterns and behaviors in terms of driving projects projects that havent gone away, but just in terms of <unk>.
Tumors engineering resources available to drive some of those things and then supply chain right. There's just it's harder to get some of this material.
Capital equipment, and it just tends to slow the process down as well so combination of the two I think the environment continues to get better as I said. These projects are still in line to take off here in the future.
B capital needs to support those projects as we expect we will just pushed somewhat into 2024, but still be in line with that range you described.
That's kind of a target internal target manager.
Our capex expense that range that you referenced.
Yes.
But that said as that might give you directionally, where we should be and I would say to you that there's a real emphasis internally.
Looking at the.
The return on investment.
The opportunity that we have internally so.
Theres been some caution.
But we do see that there are significant opportunities to continue to reinvest in our operations and with a stronger focus on ensuring that the.
The investments, we're making are in the high value programs and encouraging in that actually so.
I would just add here and told you that I would expect our capex investments that may be slightly down next year.
But I would also say that we are seeing some real opportunities internally to enhance our operating performance and those require some investments that we're absolutely encouraged that.
<unk> change being that as we continue to grow as a company and refine our systems and processes. We're really are looking at.
Funding those opportunities that provide provides the best return.
<unk> always done that but I'm talking about from a corporate standpoint, there's a certain amount of discretionary capex up to a certain level at each of our units, but then when you get to the corporate level.
Investments become larger our focus and emphasis as we line those up is that really the high value return.
But generally for a really long term projects, but more where we can convert it much more quickly.
Thank you for the answer.
Does it kind of just sort of a macro issue question, maybe around industrial scene. I mean, if you I mean Rockwell reported this morning, and I haven't gone through the release stocks down. So clearly you know there was some.
Happiness with something that came out of those numbers.
And then they clearly you know Rockwell most of the bigger kind of integrators like that Rockwell and Emerson and such I wouldn't say that the last quarters for them.
Homeruns, either I mean, we're definitely in an area and you're highlighting it yourself <expletive> that.
People are.
I mean every every company I listen to everything that I pay attention to everyone's cautious with regards to 2024.
But if I think about say like a rockwell and Emerson and companies like that.
Is it fair for me to infer from kind of their commentary that you know it's it's.
Part and the same in terms of kind of what's the what's impacting their businesses as you know it's the headwinds for you as well and it's a fair inference that.
That you in.
What I'm, saying is that youre kind of for better for worse, you know tied to them like how do I think about that in terms of our relationship.
Those companies like that Valeant.
Yes, great question.
Well first off.
Yes, a conscious effort.
We made many years ago was to diversify our business.
Yes.
And we think that diversification has served us well so that.
I'd love to see today.
When everything's firing.
Full cylinders here.
And we're seeing.
Everything.
And expanding and very positive manner, but that's not the reality you always see that there is.
While we see certain of our markets that are growing and expanding and exhibiting certain success with and even go back to Covid I mean, our medical markets and some of the instrumentation that we provided.
We saw consistency that many other companies didn't you saw there is that we're really heavily focused on that group fast, but they drop just as fast. So I think we take great pride in our.
Our efforts to diversify our business and to minimize the impact of any one.
We've set our goal.
We could set a goal here for four key markets, we identified will.
25%, each we'd be very happy.
That's 25% each maybe over a long term may occur, but we still have additional investments to make in some of those markets to increase our share.
<unk> not necessarily decreasing our topline in the other markets, but growing the business in order to achieve that so yes.
Our major customers feel impact I mean, we will certainly feel it as well, but I will say to you that it's because of our diversification that we feel more confident that we can ride through some of these downturns in any one individual market.
I agree with all of that.
Sticking on kind of individual market themes.
Going over to the vehicle market.
You had of our important customer in that area and they are clearly facing their own macro headwinds.
They also though what we're seeing you know they have they have had a bunch of new product launches as well.
Given the give and take that kind of the aggregate market in Canada.
You know the <unk>.
Sports vehicle Margaret if you would is weak, but theres a bunch of there's new product going out there how do we think about that.
Vertical and as it relates to Allianz.
Sure.
Have a good great question.
From the standpoint of.
Looking at that particular market, we have to mentioned that when we talked about sports utility vehicles and so forth.
Much of that.
Is used in the industrial marketplace or commercial applications. So there was the consumer side of it.
And there's a business side of it let's call. It so I do think depending on the sentiment that you might see some downturn consumers.
The larger share of that business for us is really driven around the commercial and industrial end users.
I would tell you that yeah.
Yes.
We don't see any significant impact there, we see pretty stable year over year.
And Thats, maybe for a couple of reasons continue to expand our reach into that market and expand our customer base as well as.
The emphasis or focus more on the commercial or industrial product versus the the consumer product.
So in other words.
Of course, we could be impacted by it we will be impacted by it we're not driving the demand in the end market.
The diversification of our business and the impact that it could have today versus let's go back 10 years ago. It's a much smaller percentage of our business today than it was back then.
And to answer part of your question, specifically when we have it.
Have been and continued to be active participants on new product launches with those customers.
Okay that was a superb answer I got two more for you and there are a lot more fun.
One is you have this new defense win congratulations on that.
You know a lot of investors have wondered if youre going to see some.
Pickup in activity within aerospace and defense with all of you.
Conflicts going on in the World.
And just to the extent that you can I mean, I guess could you provide a little more color in terms of the application that drove that win and then.
Are you seeing.
Further.
Pick up.
Strengthening in terms of activity projects within that vertical.
That you know.
Could could prove to provide some growth or strength as we think about kind of coming.
Quarters or year.
Sure. So let's first of all we will talk about in the coming quarters and year and sit there and say.
We mentioned increased quoting activity and part of that increased quoting activity not just the quantity of those but.
The volumes that we're seeing that that win was in munitions. Okay. So munitions are being consumed at a pretty high rate.
And we are on many of those programs. So we fully expect that.
This will continue with other programs I mean, they're being so and they need to be replenished.
Yes, there were stockpile, which surprised us how big stockpiles have been and been able to reach into the stockpile, but they do have to be replenished.
So from ammunition standpoint.
We are designed into many applications.
We fully expect that that over the coming quarters and gear will.
We will see some increased activity in some orders that need to get in place what we are hearing as well.
The what.
Perhaps.
Delaying some of those orders is not because of our ability to deliver we're faster than other.
Other suppliers can be for the end products. So what's delaying some of this is the inability for the other suppliers of other content to provide their products and the solution so as that catches up.
We will see but we fully expect to see that the demand will continue to increase in the volumes will increase and these are long long term programs that we've been designed in for years.
It's not a matter of if it's a matter of wet.
On the other side, let's call it the other side of the defense business.
And some of the trends that are occurring daily that are much that are longer term, but we do see some acceleration and we think we're very well positioned.
We acquired FPH.
In Canada. They are key core technology is light weighting.
Light weighting.
<unk> and technologies as well as the ability to do.
Application engineering and assembly of electromechanical system. So the combination of electromechanical systems with light weighting technologies.
Especially now driven towards the electrification of the vehicles and wake becomes.
A major element of that we are well positioned and we're seeing some activity. There we're seeing programs that quite frankly, we're.
Moving along at a snail's pace, which is not unusual for those programs starting to accelerate so we might see some short term activity but longer term.
We believe we are very well positioned to capture a decent share of that market and we are it's one of those markets, where we're strongly emphasizing and investing internally and we do see some excellent long term growth there as well.
We're uniquely positioned as a company to provide not only.
Composite light weighting and structural side of it this is where we focus and emphasize as well as.
The electromagnetic and mechanical solutions as well as all the other technologies that Alistair could bring to bear and this is one of the areas where.
<unk> highlighted out the house with Valeant and said, here's our key technology pillars in motion controls and power and we've talked about the further emphasis.
Articles and bringing the power of value to that market and thats one of them.
Hi.
I would tell you that.
I would fully expect that we're going to see a ramp up.
In munitions side of the business and we're also going to see a slower but very strong growth opportunities in the future here longer term beyond the one year in the electrification.
Route based defense vehicles.
Well I'm going to plug your Investor day, because I can tell you very enthusiastic about the composites in the electrification because you were just as enthusiastic in New York. So I will look forward to seeing what happens with in that business because it's you're clearly are fired up about it.
My last question is just again funded more simple is just talking about the M&A pipeline you know congratulations on the acquisition I know, it's a very important part of the growth for the company and obviously a key driver of getting to your long term growth.
The goal of $1 billion in sales.
Whats the environment like with regards to the M&A front I mean as you know can you give some color around the pipeline around kind of what youre seeing with valuations.
I mean.
The competition with regards to other competitors or P E. Given what's happening with cost of capital just basically just kind of paint me.
In broad brush strokes, a picture of what Youre seeing and kind of how we should think about.
The opportunities for you to execute on something in the next say 12 to 18 months.
Thanks.
Sure.
No.
M&A is an ongoing process for us and I mean of course, we have a balancing act here to play.
Understanding the capital markets.
How we're going to fund the use of what we're going to do well.
We had a big flurry in the recent past and we brought out a tremendous amount of technology here that we have not fully leveraged yet and we're working on leveraging.
I will say to you that we are very focused on certain opportunities. We are building longer term relations for other opportunities and we are very selective in that process, but it's ongoing.
We fully plan to continue to.
No.
Manage our business.
Those areas from an M&A standpoint, consistent with what we did in the past, we're not going to overpay, we're going to pay a.
Fair price, that's going to have to be additive in certain areas and we do take a long term view.
Some of the acquisitions that they don't necessarily come out of the chutes delivering firing on all cylinders, but.
Getting them aligned within the company using taking advantage of the talent that we're bringing on board as well as looking at the new end markets and opportunities that we have for continued growth. So I would say to you that's where emphasis or focus thats been in the recent past. We also say to you that looking at the Investor day, and really highlighting out.
Elliot.
The change to Elliot the three pillars is that it does expand our opportunity to look at.
True value added strategic acquisitions in areas beyond motion and we're and so we do believe we have several viable opportunity here that all has to come into the balance understanding where we are in the capital markets understand where the environment, we're in and understanding the impact it can have on the future growth and success of the <unk>.
And we will continue to do that we mentioned.
If we acquire something in the past we acquired a company that said Hey don't expect much of this but the long term impacts of this is very strategic and very strong and without going into details is absolutely.
Absolutely turns out to be the case and positions us extremely well in key markets, where the necessary investment was there.
Pat.
Proved to benefit the bottom line budget at that time. So it's active we continue to grow we continue to groom we have a team in place.
The beauty of that is just like the team growing everywhere else.
See it develop and see the relationships.
And the expanded team can build to help us in that area I mean this policy.
I'd like to talk about you mentioned in our most recent acquisition of <unk>, but we happen to be just for our shareholders to understanding we happened to.
Ill.
Take our board meetings out into our facilities not just in the corporate office each quarter and meet there.
But we'd like to take a look at our board likes to visit our facilities.
So we took the opportunity to visit we Havent expanded facility in Tulsa, which is really state of the art and represents and reflects the positive.
That we've seen or buy in Tulsa.
And prepares us for future growth opportunities as well so our new acquisition CRM motion, we have the management team come in at the same time get a chance to meet the board gets a chance to spend time with the team in Tulsa, which is where there is a really tough.
Significant opportunity.
And the synergies that we see between the two that we mentioned CRM Ocean front and the ability to really respond and react quickly.
Project development and program development.
And but also take it up another level from a systems integration, which we've been talking about for many years your assistant solutions. So the bring those two teams together to have do you see the excitement.
Yes.
Each of them recognizing the quality of what the other brands in terms of their product designs or technology production capabilities their ability to get to the market quickly experience levels.
And two.
And that led our board see that and say hey, what we've talked about.
Making investments in setting the stage for the future the excitement that it comes around that comes with that so.
Our acquisitions.
See our promotion is something we've been talking to the key leadership for.
A couple of years here now and we both just kept saying that there is such a great fit and it gives us an opportunity to leverage the strengths.
Both to really grow this business. So we will we will continue and M&A. We are very excited about.
The M&A that has happened and we're very excited about leveraging some of the skills of the strengths of the teams that are coming together here to help us continue to execute the strategy in the future.
Hopefully that gives you some color and tell you that yes, we are in the market.
Alright. Thanks.
Thanks, very much Nick I'll talk to you later.
Thank you Ted.
Again, if you have a question. Please press Star then one.
Please standby as we poll for questions.
Okay.
Showing no further questions. This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.
Well. Thank you everyone for joining us on today's call and for your interest and Elliot.
We will be participating in two upcoming conferences.
The Baird Global Industrial conference on November 9th in Chicago.
And then the Roth Technology Conference on November 15th in New York City.
As always please feel free to reach out to us at any time and we look forward to talking with all of you again after our fourth quarter 2023 results.
Thank you for your participation and have a great day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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