Q4 2023 Core Molding Technologies Inc Earnings Call
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Operator: Thank you for watching. Please subscribe, www. CoreMolding.com Pottery Barn, www.mytrendyphone.co.uk ENTERTAINMENT WEEKLY Hello, and welcome to Core Molding Technology's fourth quarter. This is a pre-financial results conference call. All participants will be enrolled in http://TheBusinessProfessor.com's Specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone. Press the Star key.
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Sandy Martin: As a reminder, at this conference, I would now like to hand the call to Sandy Martin, our three-part advisor. Please go ahead. Thank you and good morning everyone. We appreciate you joining us for the Core Molding Technologies conference call to review fourth quarter and full year results for 2023. Joining me on the call today are the company's president and CEO, Dave Duvall, and EVP and CFO, John Zimmer. This call is being webcast and can be accessed through coremt.com via an audio link on the Investor Relations Events and Presentations page. Today's conference call, including the Q&A session, will be recorded. Please be advised that any time-sensitive information may no longer be accurate as of the date of any replay or transcript reading.
As a reminder, this conference is being recorded.
I would now like to hand, the call to Sandy Martin three part advisors Sandy. Please go ahead.
Thank you and good morning, everyone. We appreciate you joining us for the core molding technologies conference call to review fourth quarter and full year results for the 20th twenty-three joining me on the call today are the company's president and CEO, David Wall, and EVP and CFO John Zimmer.
This call is being webcast and can be accessed through core M. T Dot com the audio link on the Investor relations events and presentations page.
Today's conference call, including the Q&A session will be recorded please be advised that any time sensitive information may no longer be accurate as of the date of any replay or transcript reading I would also like to remind you that the statements made in today's discussion that are not historical facts, including statements of expectations or future events.
Sandy Martin: I would also like to remind you that the statements made in today's discussion that are not historical facts, including statements or expectations about future events or future financial performance or forward-looking statements, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, by their nature, are uncertain and outside of the company's control. Actual results may differ materially from those expressed or implied.
Or future financial performance are forward looking statements and are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Forward looking statements by their nature are uncertain and outside of the company's control actual results may differ materially from those expressed or implied please refer to the earnings press release issued today for our disclosures on forward looking statements. These factors and others risks and uncertainties are described in detail.
Sandy Martin: Please refer to the earnings press release issued today for our disclosures on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Core Molding Technology assumes no obligation to update or revise any forward-looking statements publicly.
In the company's filings with the Securities and Exchange Commission.
For molding technology assumes no obligation to update or revise any forward looking statements publicly.
Sandy Martin: Management will refer to non-GAAP measures, including adjusted EBITDA, adjusted EPS, debt to trailing 12-month EBITDA ratio, free cash flow, and return on capital employed. Reconciliations to the nearest GAAP measures can be found at the end of our earnings release. Finally, a copy of the press release has been submitted to the SEC on Form 8K. Now, I would like to turn the call over to the company's President and CEO, Dave Duvall. Thank you, Sandy.
Management will refer to non-GAAP measures, including adjusted EBITDA adjusted EPS debt to trailing 12 months EBITDA ratio free cash flow and return on capital employed reconciliations to the nearest GAAP measures can be found at the end of our earnings release finally, a copy of the press release has been.
Submitted to the FCC on form 8-K, and now I would like to call turn the call over to the company's President and C E O Dave Duvall, Dave Thank.
Thank you Sandy and thank you all for joining us to review, our 2023 annual and fourth quarter volts 2023 was an exciting excess successful year for the company significant achievements both in terms of executing our strategic initiatives and progressing on our long term transformation journey.
David L. Duvall: And thank you all for joining us to review our 2023 annual and fourth quarter results. 2023 was an exciting, successful year for the company with significant achievements, both in terms of executing our strategic initiatives and progressing on our long-term transformation journey. We're proud of our team's hard work and exceptional accomplishments in 2023.
Proud of our team's hard work and exceptional accomplishments in 2023.
David L. Duvall: We stated on March 23, one of our key strategic goals for 2023 was specifically margin improvement. This was driven through our must-win battles to improve both our operational performance and working through product line profitability on some of our larger customer programs to achieve what we see as market-based pricing. We have done exactly what we said we would do. I believe this is an important statement to make.
We stated in March of 'twenty, three one of our key strategic goals for 2023 was specifically margin improvement there.
This was driven through our must win battles to improve both our operational performance and working through the product line profitability or some of our larger customer programs to achieve what we see as market based pricing. We have done exactly what we said we would do I believe this is an important statement to make.
David L. Duvall: Within 2023, we have significantly improved our overall business model. The result of this accomplishment is directly reflected in our gross margins for the year, which increased by 410 basis points. This is the result of a summation of many improvements attributable to a high-performing organization executing on a defined strategy. What I find most exciting is that we're now in a much better position to focus on growth, which is just our next challenge to overcome. As a quick review, these are some of the 2023 highlights that demonstrate our disciplined approach and commitment to achieving organizational goals. We successfully executed the company's strategic initiatives and operational must-win battle projects.
Within 'twenty to 'twenty three we have significantly improved our overall business model. The result from this accomplishment is directly reflected in our gross margins for the year, which increased by 410 basis points. This is the result of a summation of many improvements attributable to a high performing organization executing.
Two a defined strategy what.
What I find most exciting is that we're now in a much better position to focus on growth, which is our which is just our next challenge to overcome.
As a quick review these are some of the 'twenty to 'twenty three highlights that demonstrate our disciplined approach and commitment to achieving organizational goals. We successfully executed the company's strategic initiatives and operational must win battle projects, we made targeted operational improvements in key plants that significantly improve.
David L. Duvall: We made targeted operational improvements in key plants that significantly improved product line profitability and created more capacity with the existing infrastructure, as originally discussed in March of 23. We formalized and implemented our company-wide continuous improvement systems, leveraging our expert knowledge across the organization to embed a culture of continuous cost and efficiency improvement. We continue to invest in developing our organizational capabilities by expanding our leadership development, technical training programs, internships, and government training grants. This is an ongoing process which is foundational to our organization. Creating a culture and environment where it's easier to succeed is the cornerstone of our current and future success. We issued CORE's inaugural sustainability report in 2023, focusing on advancements in corporate citizenship and our environmental stewardship of the company. The second publication will be in April.
The product line profitability and created more capacity with the existing infrastructure.
As originally discussed in March of 'twenty three.
We formalized and implemented our company wide continuous improvement systems, leveraging our expert knowledge across the organization to embed a culture of continuous cost and efficiency improvements, we continue to invest in developing our organizational capabilities by expanding our leadership development technical training programs.
Internships and government training grants. This is an ongoing process, which is foundational to our organization.
Creating a culture and environment, where it's easier to succeed as the cornerstone of our current and future success.
We issued for his inaugural sustainability report in 2023, focusing on advancements and corporate citizenship and our environmental stewardship of the company. The second publication will be in April.
David L. Duvall: We were honored with the Material and Process Innovation Award nomination for our development of the Seedu Hall for BRP, which underscores our culture of innovation and core molding. At the 22nd Annual National Industrial Meeting, our facilities in Matamoros and Monterey were honored for their commitment to high ethical standards, practices, and sustainability in our Mexican plant. The result of our disciplined execution resulted in full year record net income and earnings per share, strengthened the balance sheet, and generated record cash flow. These accomplishments and the company's inclusion in the Russell 3000 Index last year were the direct result of Core's dedicated team.
We were honored with a material and process Innovation Award.
<unk> nomination for our development of the C do haul for ERP, which underscores our culture of innovation a core molded.
At the 22nd annual National Industrial meeting our facilities in Matamoros in Monterey, we're honored for their commitment to high ethical standards practices and sustainability in our Mexican plants.
The result of our disciplined execution resulted in full year record net income and earnings per share strengthened the balance sheet and generated record cash flows.
These accomplishments and the company is inclusion in the Russell 3000 Index last year were the direct result of Core's dedicated teams operational performance, winning culture and dedication to driving shareholder value.
David L. Duvall: Operational Performance, Winning Culture, and Dedication to Driving Shareholder Value. Now, turning to a review of our top-line financial results, as we previously signaled, annual net sales of $358 million were down 5%, primarily due to changing market dynamics and a tougher 2022 comparison. Gross margins for the year increased by 410 basis points to 18%.
Now turning to a review of our top level financial results as we've previously signaled annual net sales of $358 million were down 5%, primarily due to changing market dynamics and tougher 2022 comparisons gross margins for the year increased by 410 basis points.
To 18%, we also generated over $42 million and adjusted EBITDA or 11, 8% of sales, resulting in meaningful free cash flows of 26 million for the year.
John P. Zimmer: We also generated over $42 million in adjusted EBITDA, or 11.8% of sales, resulting in meaningful free cash flows of $26 million for the year. Operational performance metrics improved for the full year, exceeded our target of 20%, and created the additional capacity we originally stated. Given tougher prior-year comps, we expected softer sales in the fourth quarter of 2023 and cautioned in the third quarter conference call about industrial and utility customers continuing to work through inventory. Although the fourth quarter is always challenging due to fewer workdays and customer shutdowns during the holidays, we still improved gross margin and adjusted EBITDA margins for the quarter compared to a year ago. Again, this is a result of our organizational ability to execute and deliver on improved product line profitability in the quarter and for the full year, as we had stated at the beginning of 2023.
Operational performance metrics improved for the full year exceeded our target of 20% and created the additional capacity. We originally stated.
Given tougher prior year comps, we expected softer sales in the fourth quarter of 2023 and caution in the third quarter conference call about industrial and utility customers continuing to work through inventories, although the fourth quarter is always challenging due to fewer workdays and customer shutdowns during the holidays, we still improved.
Gross margin and adjusted EBITDA margins for the quarter compared to a year ago.
Again. This is a result of our organizational ability to execute and deliver on improved product line profitability in the quarter and for the full year.
As we had stated at the beginning of 2023.
John P. Zimmer: Lastly, yesterday we announced that our board has authorized a new stock repurchase program, authorizing the company to purchase, from time to time, up to $7.5 million of the company's common stock at current market prices. This buyback program is important because it allows us to opportunistically purchase core molding stock, which we believe is a critical component of the company's capital allocation strategy. With that, I'd now like to turn it over to John to cover the financials in more detail. Thank you, Dave, and good morning, everyone.
Lastly, yesterday, we announced that our board has authorized a new stock repurchase program authorizing the company to purchase from time to time up to $7 5 million of the company's common stock at current market prices. This buyback program is important because it allows us to opportunistically purchase.
Core molded stock, which we believe is a critical component of the company's capital allocation strategy.
With that I'd like to now I'll turn it over to John to cover the financials in more detail.
Thank you, Dave and good morning, everyone.
John P. Zimmer: As Dave mentioned, we accomplished our 2020-23 full-year profitability targets during a changing demand environment that normalized more typical seasonality as the year progressed. We also had a backdrop of difficult sales comparisons in 2023 versus 2020. Our 2023 total net sales were $357.7 million, down 5.2% compared to a year ago, and product sales were down 3.2% compared to the prior year. Product sales were pressured by softer demand for building products and the industrial and utility very. During the first half of 2023, higher customer demand levels finally resulted in customer inventory levels returning to optimal levels, or in certain cases, becoming overbuilt. In the second half of the year, customers slowed demand as they worked through the excess inventory level.
As Dave mentioned, we accomplished our 2020 'twenty three full year profitability targets during a changing demand environment that normalize to the more typical seasonality as the year progressed. We also had a backdrop of difficult sales comparisons in 2023 versus 2022.
Our 2023 total net sales were $357 $7 million down five 2% compared to a year ago and product sales were down three 2% compared to the prior year.
<unk> sales were pressured by softer demand for building products in the industrial and utility verticals.
During the first half of half of 2023 higher customer demand levels, finally resolved and customer inventory levels returned to optimal levels or in certain cases, becoming overbuilt.
In the second half of the year customers slowed the slow demand as they work through the excess inventory levels. We continued to see customers primarily in the industrial and utility markets worked through the inventory coming into 2024.
John P. Zimmer: We continue to see customers, primarily in the industrial and utility markets, work through the inventory coming into 2025. As building products and industrial and utility sales rebalanced their demand levels, product sales were strong for medium and heavy-duty trucks throughout the year. Our 2023 sales mix for the full year shifted to 52% truck sales compared to 44% truck sales in 2020. In the past, the increase in truck sales would have had a significant negative impact on gross margins, but that impact has decreased over the past several years as we have worked with our truck customers to improve the profitability of their business and return it to a healthy position. The 2023 full-year gross margin was $64.5 million, or 18% of sales, an improvement from 13.9% in the year-ago period. These margin improvements were primarily due to production efficiencies, favorable net customer pricing, and raw material cost. Gross margin was negatively impacted by lower fixed cost leverage for the full year as sales decreased and, to a lesser extent, by unfavorable foreign currency exchange fluctuations.
As building products and industrial and utility sales rebalanced their demand levels down product sales were strong for medium and heavy duty trucks throughout the year.
Our 2023 sales mix for full year shifted to 52% truck compared to 44% truck sales in 2022.
In the past the increase in truck sales would've had a significant negative impact on gross margins, but that impact has decreased over the past several years as we have worked with our truck customers to improve the profitability of their business and return it to a healthy position.
But the 2023 full year gross margin was $64 $5 million or 18% of sales an improvement from 13, 9% in the year ago period.
These margin improvements were primarily due to production.
Production efficiencies favorable net customer pricing and raw material cost.
Gross margin was negatively negatively impacted by lower fixed cost leverage for the full year, our sales decrease and to a lesser extent by unfavorable foreign currency exchange fluctuations.
SG&A expenses were $38.0 million compared to $34 $4 million in the prior year period, primarily driven by higher labor and labor and incentive costs professional fees and a onetime severance expense of $570000 for the year.
John P. Zimmer: SG&A expenses were $38.0 million compared to $34.4 million in the prior year period, primarily driven by higher labor and incentive costs, professional fees, and a one-time severance expense of $570,000 for the year. Operating income for the year was $26.5 million, up 47% from the 2022 level. Our four-year operating income as a percentage of sales increased to 7.4% compared to 4.8% in 2020. One of our long-term financial goals is operating income in the 8 to 10 percent of sales range. This year was a positive step towards that goal. Net interest expense was $1 million in 2023, down 48% from the year earlier.
Operating income for the year was $26 $5 million up 47%, 47% from the 2022 levels are four year operating income as a percentage of sales increased to seven 4% compared to four 8% in 2022.
One of our long term financial goals as operating income in the 8% to 10% of sales range. This year was a positive step towards that goal.
Net interest expense was $1 million in 2023 down 48% from the from the year earlier.
John P. Zimmer: The benefit of the company's refinancing of its credit facility in the second half of 2022 and lower debt balances in 2023 are being reflected in the lower overall interest cost. Another favorable 2023 comparison was against the 2022 loss due to the extinguishment of debt of $1.6 million. Our 2023 effective tax rate was 21%, comprising the weighted tax costs of the three tax jurisdictions where we operate.
The benefit of the company's refinancing of its credit facility in the second half of 2022 and lower debt balances in 2023 are being reflected in the lower overall interest cost.
Another favorable 2023 comparison was against the 2022 loss due to the extinguishment of debt of $1 $6 million.
Our 2023 effective tax rate was 21% comprising the weighted tax cost of the three tax jurisdictions, where we operate.
Our net income totaled $23 million or EPS of $2 three $2.31 per diluted share.
John P. Zimmer: Our net income totaled $20.3 million, or EPS of $2.31 per diluted share, up over 60% compared to $12.2 million per diluted EPS of $1.44 in the comparable year period. We also delivered a strong 2023 adjusted EBITDA of a record $42.3 million, or 11.8% of sales, an increase of 330 basis points from 8.5% in 2015. Now turning to the fourth quarter results. Net sales were $73.8 million compared to $86.4 million a year ago, and product sales were down 12.9% on a difficult comparison to 2022 products. We had indicated at the end of the third quarter that we were seeing a return to normal seasonality and customer demand reductions due to inventory levels. We anticipated this decrease in the fourth quarter. Gross profit for the fourth quarter was $10.9 million, or 14.8% of sales, an improvement compared to 13.4% of sales in the prior year.
Up over 60% compared to $12 $2 million or diluted EPS of $1 44 in the comparable year period.
We also delivered a strong 2023 adjusted EBITDA, a record $42 3 million or <unk> 11 per 8.8% of sales an increase of 330 basis points from eight 5% in 2022.
Now turning to the fourth quarter results.
Net sales were $73 $8 million compared to $86 $4 million a year ago.
Product sales were down 12, 9% on a difficult comparison to 2022 product sales.
We had indicated at the end of the third quarter that we were seeing a return to normal seasonality and customer demand reductions due to inventory levels. We anticipated. This decrease in the fourth quarter.
Gross profit for the fourth quarter was $10 $9 million or 14, 8% of sales and an improvement compared to 13, 4% of sales in the prior year.
In Q4, the company reduced its material labor and overhead costs as demands demand decreased the company's ability to react quickly to reduce variable cost, which is about approximately 70% to 75% of sales its critical to maintain our profitability and cash flows.
John P. Zimmer: In Q4, the company reduced its material, labor, and overhead costs as demands demanded. The company's ability to react quickly to reduce variable costs, which is approximately 70-75% of sales, is critical to maintain our profitability and cash flow. In Q4, the company was able to reduce costs quickly, which provided for higher gross margins than in 2022, even with lower sales. Fourth quarter SG&A expenses were $8.4 million compared to $8.6 million in the prior year. Q4 operating income was $2.5 million, or 3.4% of sales, flat against last year's 3.4%. However, operating income as a percent of sales did not benefit similarly to gross margin percentages.
And the Q4 in Q4, the company was able to reduce cost quickly, which provided for higher gross margins than in 2022, even with lower sales.
Fourth quarter, SG&A expenses were $88 $4 million compared to $8 6 million in the prior year.
Q4, operating income was $2 $5 million or three 4% of sales flat against last year's three 4%.
Operating income as a percent of sales did not benefit similar to gross margin percentage as we lost leverage on fixed and SG&A costs due to lower sales.
John P. Zimmer: We lost leverage on fixed and SG&A costs due to lower sales. As we proceed in 2024, the company will monitor its fixed and SGA costs and adjust the costs if necessary based on sales. The company is focused on long-term growth and will retain the infrastructure required to grow the company. Net interest expense decreased by 61% compared to the year-ago quarter due to debt paydowns from last year.
As we proceed in 2020 for.
The company will monitor is fixed and FCA costs. It was just the costs if necessary based on sales levels.
The company is focused on long term growth and will retain the infrastructure required to grow the company.
Net interest net interest expense decreased by 61% compared to the year ago quarter due to debt pay down from last year.
John P. Zimmer: This year's focus on operational improvements generated free cash flows that allowed us to eliminate borrowings and earn interest income on cash reserves. For Q4, net income was $2.2 million, or $0.25 per diluted share, versus last year's diluted EPS of $0.57. Recall that we reported a $2.4 million income tax benefit from reversing cumulative valuation reserves related to NOLs last year. Excluding the 2022 tax benefit, diluted EPS last year would have been $29,000.
This years focus on operational improvements generated free cash flows allowed us to eliminate borrowings and earn interest income on cash reserves.
For Q4, net income was $2 $2 million or 25 per diluted share versus last year's diluted EPS of <unk> 57 cents recall that we reported $2 $4 million income tax benefit from reversing cumulative valuation reserves related to Nols last year.
Excluding the 2022 tax benefit diluted EPS last year would've been 29 cents per share.
John P. Zimmer: The adjusted EBITDA for the quarter was $6.5 million, or 8.9% of sales, up 190 basis points from the prior year's EBITDA margin of 7%. Based on our actions and strategic initiatives, we are pleased with our year-over-year improvements in gross margin and adjusted EBIT. Our GAAP to non-GAAP reconciliation tables are at the end of our presentation.
Adjusted EBITDA for the quarter was $6 $5 million or eight 9% of sales up 190 basis points from the prior year's EBITA margin of 7%.
Based on our actions and strategic initiatives, we are pleased with our over year over year improvements in gross margin and adjusted EBITDA.
Our GAAP to non-GAAP reconciliation tables at the end of our press release.
John P. Zimmer: Turning now to the company's financial position, starting with a discussion of cash flow, 2023's focus on operational improvements resulted in higher profitability and significant cash flow generation. The company's cash provided by operating activities was $34.8 million for 2023, which compared favorably to $19 million in 2021. Capital expenditures for the year were $9.1 million, and free cash flows for 2023 were $25.7 million, compared to $2.4 million in 2022.
Turning now to the company's financial position, starting with a discussion of cash flow.
2023 focus on operational improvements resulted in higher profitability and significant cash flow generation.
The company's cash provided by operating activities was $34 $8 million for 2023, which compared favorably to $19 million in 2022.
Capital expenditures for the year with $9 $1 million and free cash flows for 2023 were $25 $7 million compared to $2 4 million in 2022.
John P. Zimmer: We expect capital expenditures in 2024 to be approximately $13 million. We ended 2023 with total outstanding liquidity of $74 million, which includes cash and cash equivalents of $24 million and $50 million available under the revolver and capital credit line.
We expect capital expenditures in 2024 to be approximately $13 million.
We ended 2023 2023 with total outstanding liquidity of $74 million, which includes cash and cash equivalents of $24 million and $50 million available under the revolver and capital credit lines. The company's term debt balance was $23 million at the end of the year and our debt to Trey.
John P. Zimmer: The company's term debt balance was $23 million at the end of the year, and our debt-to-trailing 12-month EBITDA ratio was less than one-time. Our working capital continues to be well managed and netted to $57 million at the end of the year. Finally, our return on capital employed, a pre-tax return metric, was 16.4% on a trailing 12-month basis, which exceeds our targeted range of 14 to 16. Today, we want to share.
All in 12 months EBITDA ratio was less than one times.
Our working capital continues to be well managed and netted to $57 million at the end of the year.
Finally, our return on capital employed a pretax return metric was 16, 4% on a trailing 12 month basis, which exceeds our targeted range of 14% to 16%.
Today, we want to share we want to share our 2020 for outlook for sales.
John P. Zimmer: We want to share our 2024 Outlook for Sales. These estimates combine industry projections, customer forecasts, and price changes, as well as expected new program launches and a material program end. We expect 2024 annual net sales to decrease by 10 to 15% compared to 2020.
These estimated these estimates combined industry projection customer forecast and price changes as well as expected new program launches and a material program Ed.
We expect 2024 annual net sales to decrease by 10% to 15% compared to 2023.
John P. Zimmer: Our sales outlook includes a cyclical demand slowdown in truck, stabilizing customer inventories, as well as a consumer demand environment that is more consistent with pre-pandemic levels. Also, beginning in the second half of 2024 and continuing through 2026, Volvo is transitioning from an existing truck model to a new model that Core is not part of. Notwithstanding this Volvo transition, we are actively bidding on new Volvo business and believe we are well-positioned to secure future programs outside of the current program. We have a good relationship with Volvo and remain highly focused on new programs from Volvo and new projects from other customers. We will continue working on profitability initiatives with a focus on additional continuous improvements across all product lines, which we forecast will allow us to maintain full-year gross margins in the targeted range of 17% to 19%, with some quarterly gross margin levels outside of this range due to seasonality and one time. I'll let Dave further discuss our plans and outlook for this year. With that, I'd like to turn it back to Dave.
Our sales outlook includes a cyclical demand slowdown in truck stabilizing customer inventories as well as consumer demand environment that is more consistent with pre pandemic levels.
Also beginning in the second half of 2005, four and continuing through 2026 Volvo is transitioning from the existing truck model to a new model that core is not part of.
Notwithstanding this Volvo transition we are actively bidding on <unk> business and believe we are well positioned to secure future programs outside of the current programs.
We have a good relationship with Volvo and remain highly focused on new programs from Volvo and new projects from other customers. We will continue working on profitability initiatives with a focus on additional continuous improvements across all product lines, which we forecast will allow us to maintain full year full year gross margins in the targeted range of <unk>.
17% to 19% with some quarterly gross margin levels outside of this range due to seasonality and one time events.
I'll, let Dave further discuss our plans and outlook for this year with that I'd like to turn it back to Dave Dave.
David L. Duvall: Thank you, John. In 2024, we're focused on offsetting certain end market headwinds, trough cyclicality, and end of life programs. Industry projections for 2024 in North America's Class 8 truck market, which still makes up half of our revenue, call for a cyclical correction in 2024 compared to 2023, with expectations for truck demand to rebound in 2025 and 2026. We have seen a slowdown in demand for power, sports, and industrial utilities, which are interest rate sensitive and are seeing some return to pre-pandemic levels.
Thank you John.
For 2024, we're focused on offsetting certain end market headwinds trough cyclicality and end of life programs industry projections for 'twenty 'twenty, four and North America class eight truck market, which still make up half of our revenue calls for a cyclical correction in 2024 compared to 2023.
With expectations for truck demand demand to rebound in 2025 and 2026, we have seen a slowdown in demand for power sports and industrial utilities, which are interest rate sensitive and seeing some return to pre pandemic levels, we've aggressively ramped up our lead generation and quote.
David L. Duvall: We have aggressively ramped up our lead generation and quote-to-cash processes to offset slowing demand and grow our business. Same as with our 2023 commitments, this is another opportunity that we will drive to success. We've already won $17 million in new business that will launch at the end of 2024 through 2025. These wins are in addition to wins for new business that replaces existing business as programs come to end of life.
The cash processes to offset slowing demand and to grow our business same as with our 2023 commitments. This is another opportunity that we will drive the success. We've already won 17 million of new business that will launch at the end of 2024 through 2025. These wins are in addition to wins.
For new business that replaces existing businesses programs come to end of life.
David L. Duvall: We also have a new business opportunity pipeline of over $150 million, which we're actively pursuing. Our sales strategy remains intact, with the primary driver being to continue to diversify our customer base through technical solution sales that provide our customers with unique solutions to their challenges. Our process offering capabilities provide lightweight, durable, low-cost, recyclable solutions that strategically position us to benefit from current market conditions such as infrastructure spending, manufacturing reshoring, and overall growth in the industries we serve. Continue adjusting our cost structure to match current sales projections while sustaining operational improvement. The operational and product line profitability improvements we made in 2023 and cost structure changes in 2024 put us in a better position in 2024 to maintain solid gross margin levels even with lower customer demand.
We also have a new business opportunity pipeline of over 150 million, which were actively pursuing.
Our sales strategy remains intact with the primary driver being to continue to diversify our customer base through technical solution sales that provide our customers with unique solutions to their challenges are.
Our process offering capabilities provide lightweight durable low cost recyclable solutions that strategically position us to benefit from current market conditions, such as infrastructure spending manufacturing reassuring and overall growth in the industries we serve.
We continue adjusting our cost structure to match current sales projections, while sustaining operational improvements the operational and product line profitability improvements, we made in 2023 and cost structure changes in 2024 put us in a better position in 2024 to maintain solid gross margin levels.
Even with lower customer demand.
Our operational improvements to date and in the future and make our asset utilization more efficient resulting in additional capacity.
David L. Duvall: Our operational improvements to date and in the future will result in additional capacity. We believe we now have capacity in place that can generate between $425 to $475 million of annual product revenue, which will allow us to continue growing the company and continue to manage our capital allocation strategy, which includes evaluating M&A opportunities. We have prioritized revenue and customer diversification as part of our acquisition strategy. This includes adding capacity and process offerings and expanding our footprint in North America to new areas where we see good opportunities for future growth. Size and Price of an Acquisition Matter. We do not plan to over-lever the company or overpay for an opportunity, especially in a choppy demand environment. We will plan to deploy capital carefully and prudently. Our 2023 must-win battle successes helped us gain sustainable margin improvements and prepare us for growth, which was the plan from the beginning. We have now scaled our operational excellence systems across the organization, and we've created an organization that can execute well.
We believe we now have capacity in place they can generate between $425 million to $475 million of annual product revenue, which will allow us to continue growing the company.
Continue to manage our capital allocation strategy, which includes evaluating M&A opportunities.
We have prioritized revenue and customer diversification as part of our acquisition strategy.
This includes adding capacity and process offerings and expanding our footprint in North America to new areas, where we see good opportunities for future growth the size and price of an acquisition matters, we do not plan to over lever the company or overpaying for an opportunity, especially in a choppy demand environment.
We'll plan to deploy capital carefully and prudently.
Our 2023 must win Battle success has helped us gain sustainable margin improvements and prepares for growth, which was the plan from the beginning.
We have now scale of our operational excellence systems across the organization and we've created an organization that can execute well.
David L. Duvall: The foundation and technical resource capacity is prepared for growth as we look to invest capital to support our long-term growth plan. We will continue to manage the business with discipline and purpose as we navigate internal and external factors impacting our business, although 2024 will reflect some choppiness at the top line.
Foundation and technical resource capacity is prepared for growth as we look to invest capital to support our long term growth plans.
We will continue to manage the business with discipline, our purpose as we navigate internal and external factors impacting our business.
Although 'twenty 'twenty four will reflect some choppiness at the top line. We believe we built a resilient organization that is well positioned for growth and long term shareholder value creation.
David L. Duvall: We believe we have built a resilient organization that is well-positioned for growth and long-term shareholder value creation. We appreciate the continued support from our customers, employees, shareholders, and board members. With that, I'd like to open the line for questions. Operator.
We appreciate the continued support from our customers employees shareholders and board members.
With that I'd like to open the line for questions operator.
Thank you very much we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.
Operator: Thank you very much. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the button. Dryer, Press star, then.
Withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Operator: At this time, we will pause momentarily to assemble our office. Today's first question: Tim Moore with EF Hot News. Go ahead.
Today's first question comes from Tim Moore with E. F. Hutton. Please go ahead.
Thanks.
Timothy M. Moore: Thanks. John and Dave, nice work on the strong pre-calc plan for the year. That was impressive, even considering the decrease in the CapEx. I like the gross margin expansion. But, you know, regarding your 2024 sales decline guidance, how much annual sales is that Volvo's new model that you won't participate in, you know, the one that you currently do, that we'll be rolling off? Yeah, so Volvo will be a phase out. It's actually several different programs that are part of different product families. It'll only be about eight to 10 million this year, and then the remaining would phase out over 25 and 26. The total sales in 23 for Volvo were just over $50 million.
John and Dave are nice work on the strong free cash flow for the year that there was impressive even considering the decrease in the capex.
Gross margin expansion, but regarding your 2024 sales decline guidance.
How much maybe annual sales is that bomber a new model that you won't participate in you know the one that you currently do that will be rolling off.
Yeah, So <unk> will be a oh, a phase out it's actually several different programs that are part of different product families.
It'll only be about maybe $8 million to $10 million for for this year and then the remaining would phase out over 25 and 26.
The total total sales of one three for valvo was about just over $50 million.
No that's good.
John P. Zimmer: No, that's good. So when you kind of talk about, you know, the following two years, 25 and 26. If it's 8 to 10 million this year, how much do you think it'll be combined the following year? It'll be about $8-10 million this year and then probably 70% of that in 2025 and then the remainder in 2026.
So when you kind of talk about you know the following two years 'twenty five 'twenty six.
So the $8 million to $10 million, how much do you think it'll be combined the calling tier.
It'll be about eight to 10 million this year, and then probably the 70% of that and 25 and then the remainder in 'twenty six.
Okay that makes sense, then well still have some Tim will still have some business with them at the end, we still do some programs that are not on their on the major model, that's changing out and so we will still retain probably you know somewhere around $10 million of bid right.
David L. Duvall: Tim, we'll still have some business with them at the end. We still do some programs that are not on the major model that's changing out. So we will still retain probably somewhere around $10 million in business. I figured that. And yeah, because they had the Mack truck strike, right? That had a little bit of an impact in the fourth quarter. Yes, and also the Bronco strike in the first quarter affected us a little bit.
I figured that and yeah, because they had the Mac the Mack truck strike rate that was a little bit of an impact in the fourth quarter.
Yes, Yep and also the Bronco strike one of the first quarter I mean, if I could just a little.
Months.
Okay, No that's fair.
David L. Duvall: Good. That's helpful. I want to just kind of touch on a little bit more. I think you just explained the difference, maybe what I was expecting for this year versus the Volvo impact. But are there any other end-of-life phase-outs this year that are impacting you that are notable? No, not really.
Helpful.
Just I wanted to just kind of touch a little bit more I mean, I think you've just explained mostly the difference maybe before you know what I was expecting for this year versus the volatile impact but are there any other end of life phase outs. This year that are impacting here that are notable.
Oh no.
No not really I think the bigger thing with this year as we're seeing.
John P. Zimmer: I think the bigger thing with this year is we're seeing, you know, the first two quarters of last year were really high quarters. Customers, especially personal watercraft, ATV, utilities, were still building that inventory. You know, and this year, I think we're going to see those levels come back to normal levels.
The first two quarters of last year were really high quarters customer, especially personal watercraft a T V utilities. They were still building that inventory you know and you know this year I think we're going to see those levels come back to normal levels and so some of our guidance is more about those industries probably for the first half.
John P. Zimmer: And so some of our guidance is more about those industries probably coming back to a little bit more normal levels and burning through some of that inventory that they build up over time. And then the second half of the year is probably a little bit more reasonable from a comp standpoint because it seemed like most people had figured out what they were doing with their inventories by about June 30th of last year or sometime in the third quarter. So really, most of that's going to be the first half of the year, really tough comps, and then I think it kind of evens out as the year goes on. Yeah, at the beginning of 23, it was really build and deliver at all costs on a lot of the, especially truck, personal watercraft, as they were filling the pipeline and industrial. That makes sense; it's a commercial vehicle.
The year coming back to a little bit more normal levels and burning through some of that inventory that they built up over time and then the second half of the year is probably for us a little bit more reasonable comp standpoint, because it seemed like most people had figured out what they were doing with their inventories by about June 30 last year or sometime in the third quarter. So.
Really most of that's going to be the first half of the year, a real tough comps and then I think it kind of evens out as the year goes on.
Yes.
Yeah at the beginning of 'twenty three it was really building and deliver at all costs on a lot of the especially on truck personal watercraft as they're filling the pipeline and industrial.
Yeah that makes sense to commercial vehicle I cover are mayville engineering, and I know they're guiding for.
John P. Zimmer: I cover medieval engineering, and I know they're guiding for the commercial vehicle truck area to be down. I've just done restocking and normalization, but um, you know, I like when you mentioned the 70% to 75% cost structure. So it seems like, you know, you gave the 17% to 19% gross margin guidance. Would I be off base by thinking, you know, you're facing, you know, easier comparables in the second half of the year? Maybe the sales won't be down as much in the second half as in the first half, depending on when that Volvo starts rolling off. But, you know, with your cost structure being so variable, should we forecast or model, you know, second half gross margin better than first half?
The commercial vehicle trucking or needs to be tweaked down just on restocking of normalization, but I liked when.
You mentioned, the 70% to 75% cost structure. So it seems like now you gave the 17% to 19% gross margin.
Guidance would I be off base by thinking you're you're facing.
Easier comparables in the second half of the year, you know what maybe the sales won't be down as much in the second half as the first half depending on that barbell starts rolling off.
But you know with your cost structure being so variable shall we got because we forecast or model second half gross margin better than the first half.
Yeah.
John P. Zimmer: You know, I think you hit the model right on the head. Our job, and it's always been this company's job, is that with variable costs somewhere between 70-75, it's how fast we react and get rid of the cost. And so, you know, I do think, you know, yeah, I would say the second half of the year will be a little bit better than the first half. I think even, you know, the second quarter would probably be maybe even better than the first quarter, just because we've already reacted very quickly to a lot of that.
You hit the model right on the head is that you know our job and it's always been this company's job is that with variable costs somewhere between 70 to 75 as to how fast we react and get rid of the cost and so you know.
I do think.
Yeah, I would say the second half of the year will be a little bit better than the first half I think even you know second quarter would probably be maybe even better than first quarter.
Just because we've already reacted very quickly to a lot of that some of the severance costs. You saw that we mentioned in Q4 was us are changing.
John P. Zimmer: Some of the severance costs you saw that we mentioned in Q4 was us changing ship structures at our plants, plants that were running 24-7, now back to 24-5, those types of things. And so we've been moving quick, but yeah, I would kind of think that way, the first quarter might be the softest, and then, you know, second goes up, and then third and fourth, other than fourth being normal seasonality with shutdowns and everything else, but the middle of the year probably being a little bit better than the first half of the year and the first quarter of the year. That makes sense. That's a really good color.
Chip structures at our plants the plants that were running 24, seven now back to a 24 five those types of things and so we've been moving quick but yeah I would kind of think that way is that the first quarter might be the the softness and then you know second goes up and then third and fourth are the fourth being normal seasonality with shutdowns and everything else, but the middle of the year probably be it.
A little bit better than the first half of the year first quarter heavier.
That makes sense, that's really good color Dave mentioned I think you said 150 million dollar customer pipeline are there any new Oems qualifying. This year, you know and if it's not there are any big ones are looking to do a big line with you.
John P. Zimmer: You know, Dave mentioned, I think he said $150 million customer pipeline. Are there any new OEMs qualifying this year? You know, and if not, are there any big ones looking to do a big line with you?
Yeah, we have several new customers, we've got a new customer in the truck area that we just won this year. We also have I think really two big programs that we're looking at and are quoting on right now in the pipeline for industrial for.
John P. Zimmer: Yeah, we have several new customers. We've got a new customer in the truck area that we just won this year. We also have, I think, really two big programs that we're looking at and quoting on right now in the pipeline for industrial for either the lids or the vaults that get buried in the ground for data transmission or energy transmission. Oh, that's great. That could probably be pretty big.
Either the lids or the vaults are that get buried in the ground for the data transformation or the energy transmission.
Oh, that's great that could probably be a pretty big and then my last question not to hog the limelight here.
David L. Duvall: And then my last question, not to hog the limelight here, but I believe you mentioned there's 425 to 475 million sales capacity in place, but just regarding acquisitions, are press releases still the top priority, or is there anything else you're looking at in the funnel when you rank it? Yeah, I don't think, I really think the work that we've done as far as getting the capacity out of what we have, plus the capacity that we installed in 23, I think we're where we need to be with capacity for, at least for most of our parts. Really, for the M&A strategy, we're really looking at industries with the growth of our current sales channels to be able to build that with all the other processes that we have.
I believe you mentioned, there's 425 to 475 million sales capacity in place, but just just regarding acquisitions are our press is still the top priority or is there anything else you are looking at the funnel.
When you're ranking yeah, I don't think I really I think the work that we've done to as far as getting the capacity out of what we have plus the capacity that we installed in 'twenty three.
Yeah, I think we're where we need to be with capacity for at least for most of our parts are really for the M&A strategy really looking at industries with.
Growing our current sales channels to be able to build that up.
With all the other processes that we have.
David L. Duvall: Getting into more industrial, water treatment, and construction projects, those sales channels to strengthen those so that we can then grow the wallow chair with that sales channel and our other processes. Yeah, Tim, one of the things that we keep running up against is the Build America, Buy America challenge. You know, with the infrastructure bill, there's a requirement that stuff is built in America. You know, we do have one of our processes that we do not currently do in the United States. So we are actively looking for ways to get that process into the United States. Would it be better to acquire into it or to try to buy some presses and get them up and running?
Getting it in more industrial water treatment and construction projects are those sales channels to strengthen those so that we can then grow the wallet share with that sales channel with our other processes.
Yeah, Tim one of the things that we keep running up against is the build America buy America challenge with the infrastructure Bill There's a requirement to stuff is built in America, United States. Yeah. We do have one of our processes that we do not currently do in the United States. So we are actively looking about how do we get that process in the United States.
Would it be better to acquire into it or or to try to by some presses and get them up and running so we're definitely looking at how do we take advantage of the build America buy America all of our other processes, we do in the United States for the most part so we're good there.
David L. Duvall: So we're definitely looking at how we take advantage of Build America, Buy America, all our other processes we do in the United States for the most part, so we're good there. And then I think we'll also look at a little bit of our footprint. We still are a company that makes large parts, so where you're located is very important. So some of our strategy might be to continue to build up a little bit in the southwest and see how we can maybe get across the United States a little bit more with all different processes and have additional locations, maybe more in the southwest.
And then I think we will also look at a little bit of our footprint. We still are a company that make large parts, so where youre located is very important.
And so some of our strategy might be to continue to build up a little bit southwest and see how we can maybe.
Get across United States, a little bit more with all different processes and you'll have additional locations may be borne in the southwest.
David L. Duvall: Great. That's really helpful. Granularity and color.
Great. That's really helpful granularity and color Yeah, No I wish you luck with the year you know actually.
Timothy M. Moore: Yeah, no, I wish you luck with the year. You know, I actually think, like the other company I cover, you know, hopefully you're being conservative on sales guidance and, you know, when you get to the fourth quarter, lapping things, you know, that the stocking could be done and maybe some normalization so you could have, maybe, a decent, you know, second half of the year on the top line at least. So thanks a lot. Thanks, Tim. Thanks, sir. As a reminder, to ask a question, you may press star then 1. The next question comes from Bill DeZellum with Teton Capital. Please go ahead.
I think like the other companies I cover.
Hopefully you're being conservative on sales guidance.
When you get to the fourth quarter lapping things you know the destocking to be done and maybe some normalization. So we can have a maybe a decent second half of the year on the topline at least so thanks a lot appreciate it.
Thanks, Tim.
Thank you very much as a reminder to ask a question you May Press Star then one.
The next question comes from Bill <unk> with Teton Capital. Please go ahead.
Thank you would you would you please.
Bill DeZellum: Thank you. Would you please discuss the building products revenue decline from $5 million last year, Q4, down to $2 million or so this year? Yeah, it was quite an abrupt change for us.
Discuss the building products revenue decline.
Yeah from 5 million.
Last year Q4 down to 2 million or so this year.
Yeah. It was a quite an abrupt change for US we were actually had several programs that were getting ready to launch and we were already supplying product.
John P. Zimmer: We actually had several programs that were getting ready to launch, and we were already supplying product. And a lot of the customers were basically saying, "We'll take everything that you can build." And when we did that, I think they had a lot of areas to store inventories, whether that's in their warehouses or at job sites. So you'll see a lot of the large stormwater drains, vaults, lids, things like that that are already outside.
And a lot of the customers, we're basically saying, we'll take everything that you can build and when we did that I think they have a lot of areas to store inventories, whether that's in their warehouses or at job sites.
So you'll see a lot of the historic large storm water drains faults lids things like that that are already outside they storm outside and I think when they started seeing some of the volume decline they looked at their inventories and reevaluate their inventories.
John P. Zimmer: They store them outside, and I think when they started seeing some of the volume decline, they looked at their inventories and re-evaluated their inventories and really put a slowdown on consuming that inventory near year-end and into the beginning of this year. We've talked with really every customer as far as when they expected demand to come back. Right now, they're telling us sometime near the end of Q1.
And really put a slowdown on consuming that inventory near year end and into the beginning of this year, we've talk with really every customer as far as when they expect the demand to come back right now, they're telling us sometime near the end of Q1.
And Bill I think maybe you mentioned building products kind of in that concept Oh. So our building products is primarily one customer that I was talking to industrial and utilities and so I think you've kind of said building products, which kind of they've got a good explanation on that one on building products, we deal with one customer are they.
John P. Zimmer: And Bill, I think maybe you mentioned building products kind of in that concept, you know, so our building products are primarily one customer that we... Yeah. I was talking about industrial and utilities. Yeah. And so I think you kind of said building products, which Dave did a good explanation on that one. On building products, you know, we deal with one customer that does big box retail. And so we're a little bit subject to, you know, the programs they have at the big box retailers. Again, we produce their lattice, so we have all their lattice, and it really is, you know, their structure, their sales throughput with the big box retailers and how many stores they have and those types of things. And so, you know, at this point, I think there's been a little bit of a slowdown in that area.
That does big box retail and so we're a little bit subject to you know the programs. They have at the big box retailers and again, we produce there ladder. So we have all of their latest and it really is you know their structure their sales throughput with the big box retailers and how many stores they have and those types of things and so.
You know at this point I think there's been a little bit of a slowdown in that area and I.
John P. Zimmer: And I'm not totally clear, but I'm sure our, you know, the person we sell to has, you know, different situations going on with the building or with the big box and what they're selling and those types of things. But we're still selling lattice to that customer, Universal Forest Products, and still have a really good relationship with them. And so we really count on them to drive sales. They drive sales into the big box.
I'm not totally clear, but I'm sure. Our you know the person we sell to a dealer has no different situations going on with the ability or the big box and what they're selling and those types of things, but we still are.
So it allowed us to to that customer to Universal forest products, and so have a real good relationship with them and so we really count on them to drive the sales they drive the sales into the big box, we produce the parts for.
John P. Zimmer: We produce the parts for them. Okay, just to be clear, then your utility business that saw the slowdown, really that abrupt decline as they reviewed their inventory, and then Universal Forest Products was the one that had the slowdown, basically, as a result of the Home Depot lows, is seeing their sales slow. Did I interpret those pieces correctly?
Okay, just to be just to be clear.
Then that your your utility business.
That I saw the slowdown really abrupt decline as they had reviewed their inventory and then universal forest products.
What is the one that had to slow down basically as a result of the home depot Lowe's.
<unk> seen their sales slow it did I interpret kind of those pieces correctly.
John P. Zimmer: Yeah, that's correct. Yep. Okay, excellent. And that, just to be clear, that would be under the Industrial and Utilities category, the first answer, not in the All Other category, which saw a pretty big decline from Q3. Is that correct? Yes, the specific inventory adjustment was for industrial and utilities.
That's correct Yep.
Okay excellent and that just to just to be clear that would be under the industrial and utilities.
Degree are the first answer.
I'm not in the all other category, which saw a pretty big decline from Q3 is that correct.
Yes, yes, the specific inventory adjustment was industrial and utilities. Okay. Excellent. That's that's helpful. And then I am going to just jump back to the all other category, where revenues declined from Q3 at 12, and a half million or so and.
John P. Zimmer: Okay, excellent. That's helpful. And then I am going to just jump back to the all other category, where revenues declined from Q3 at 12 and a half million or so and then went to Q4, more like five, six. That was also a pretty, a pretty abrupt decline. Would you walk through that phenomenon for us, please?
And then he went to Q4 are more like a five or six that was also a pretty a pretty abrupt decline would you walk through that a phenomenon also forrest please.
Yeah, I mean really what we see usually in the Q4 time period as the all other will be from seasonality standpoint, when you look at Q3 and Q4, what we usually have a normal slowdown.
John P. Zimmer: Yeah, I mean, really, what we see usually in the Q4 time period is that, from a seasonality standpoint, when you look at Q3 to Q4, we'll usually have a normal slow down. You know, a lot of those will be where we're doing programs for customers that were overflow business on those types of things. And as they slow down in that quarter, they'll pull back from us.
Lot of those will be where we're doing programs for customers that were overflow business on those types of things and as they slow down in that quarter, they'll they'll pull back from US you know from that standpoint, we see those types of sales coming back slowly over time, because we are in the all other and certain situations over.
John P. Zimmer: You know, from that standpoint, we see those types of sales coming back slowly over time because we are in the all-other, in certain situations, overflow motor. And so as they start to ramp back up in the Q1 Q time period, we'll start to pick up from that standpoint and pick up some of their business back up. That's really helpful, John. And what are the products that see that seasonality?
Flow motor and so as they start to ramp back up in the Q1 time period, we'll start to pick up.
From that standpoint, and pick up some of their business back up.
That's really helpful, John and and and and what are the products that see that that seasonality.
John P. Zimmer: So some customers, like, you know, a customer with what we disclose as Orbis, will do packaging for the auto industry and, you know, during that time period, and when I say packaging, returnable packaging, big crates that are returnable packaging and used in the industrial market, those types of things, those will be where they mold some of themselves, but they also outsource to us some of their molding. And again, during Q4 is usually a very slow time period for them anyway. And so, you know, at any given time, we'll have tools going back and forth between us and them, and they'll send us over tools and ramp them up for a quarter or two, and then kind of, you know, take a tool back and then give us some additional tools. And so stuff like that, where Q4 by nature in those industries is just slow, we don't see a lot of tools moving back and forth.
So some customers like you know your customer with what we disclose is Orbis you know they'll do packaging for the auto industry and you know during that time period, and when I say packaging returnable packaging big created a returnable packaging and used in the industrial market those types of things.
Those will be where they mold some themselves, but they also outsource to us some of their molding and again. During Q1 Q4 is usually a very slow time period for them anyways and so you know at any given time, we will have tools going back and forth between us and them and they'll send us over tools and a ramp up for a quarter or two and then kind of you know take.
The tool back and then give us some additional tools and so stuff like that where Q4 is by nature. In those industries are just slow we don't see a lot of tools tools moving back and forth. We kind of are just kind of at that point are doing what's left and then like I say they start bringing those tools back to us Oh.
John P. Zimmer: We kind of just kind of at that point are doing what's left. And then, like I say, they start bringing those tools back to us, you know, Q1, Q2, as the year goes along, those types of things. Great. Thank you both for the time.
Q2, Q1 Q2 as the year goes along those types of things.
Thank you both for the time.
Thank you.
Thank you. This concludes our question and answer session I would now like to turn the call back over to Mr. <unk> for any closing remarks.
David L. Duvall: Thank you. This concludes our question and answer session. I would now like to turn the call back over to Mr. Duvall for any closing remarks, www.
Operator: CoreMolding.com, Thank you for your continued interest in our company. We'll be participating in the upcoming Roth Conference in March. If you're interested in a meeting, please contact your Roth representative. We look forward to providing an update on our progress when we report our first quarter results in May. So, have a great day. Thank you. The conference is now over. Thank you for attending today's presentation. You may now disconnect. www.thevenusproject.com. Thank you for watching! www.coreMolding.com. Please see the complete disclaimer at https://sites.google.com or at https://www.google.com. If you have any questions or other problems, please post them in the comments. Thank you for watching, and please subscribe, Like, Share, and Comment.
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The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
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