Q4 2023 Ascent Industries Co Earnings Call
Yeah.
And good afternoon, everyone and thank you for participating in today's conference call to discuss our sense financial results for the fourth quarter and full year ended December 31 2023.
Joining us today are a sense.
<unk> chairman of the board.
Rosensweig CEO, Brian Kitchen, CFO, Ryan couple of Oscar and the company's outside Investor Relations Advisor Cody Cree.
Following their remarks, we'll open the call for your questions before we go further I would like to turn the call over to Cody Cree as he reads the company's safe Harbor statement within the meaning of the private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward looking statements Cody.
Please go ahead.
Excellent. Thank you before we continue I'd like to remind all participants that the discussion today may contain certain statements pursuant to the safe Harbor provisions of the federal Securities laws. These.
These statements are based on information currently available to us and are subject to various risks and uncertainties that could cause actual results to differ materially.
Santa Advisors all of those listening to this call to review the latest 10-Q and 10-K posted on its website for a summary of these risks and uncertainties.
<unk> does not undertake the responsibility to update any forward looking statements.
Further the discussion today may include non-GAAP measures in accordance with regulation G. The company has reconciled these amounts back to the closest GAAP based measurement.
The reconciliations can be found in the earnings press release issued earlier today and posted on the investors section of the company's web site at a spring cold and dotcom.
Please note that this call is available for replay via webcast link that is also posted on the investors section of the company's website with that I'd like to turn the call over to a sense executive chairman of the board and Ben Rosenzweig.
Thank you Cody and good afternoon, everyone.
Macro environment proved to be a challenge for much of 2023.
Specifically the fourth quarter was more difficult than originally expected as we navigated the impacts of some poor execution on our part including unplanned downtime at our Bristol facility, along with continued destocking trends throughout the segments.
Despite this we continue to make notable progress towards our long term strategic goals. Most importantly, we feel very good about our management team, both strategically and operationally Chris.
Chris There has been a fantastic strategic leader for the organization.
Turnover, we experienced in 2023 showed that we did not have the right operational team in place to fully complete the execution of our strategic vision that began in 2021.
In a short time, Brian and Ryan have proven that they not only share our vision, but it can execute at the highest levels and extended to future value creation.
We must make sure that the mistakes that the organization has made in the past did not cloud our judgment or patients from turning it into the business. We all know it can become.
I expect that we'll begin to see some tangible progress in the coming months with meaningful improvement in results during the back half of the year as key components of our cost reduction and product line management efforts take hold that easy.
These efforts do not rely on our strong market recovery, nor a significant strategic shift in either segment. So we're confident in our ability to produce improving results in line with these expectations.
The fourth quarter, we completed the sale of specialty pipe and tube or SPT within our tubular segment.
This was an all cash transaction for a purchase price of approximately $55 million, which we used to fully pay down our line of credit.
Our improved balance sheet will provide us with the necessary financial flexibility to invest in opportunities that are better aligned with our long term strategy.
We're certainly proud of what we were able to accomplish with SPT under our stewardship and it proved to be a valuable asset over the past three years within our tubular segment.
However, we believe the inherent cyclicality in its operations makes it a better fit for the private markets and we're pleased that we were able to achieve a favorable outcome for all parties involved while delivering significant value to shareholders.
The remaining assets within our tubular segment include Bristol tubular products, which is the largest domestic manufacturer welded pipe from stainless steel.
Oregon, stainless tubing, which is a producer of premium ornamental stainless steel tubing.
While these businesses have not been performing at acceptable levels over the past 12 months, which is a combination of both difficult market conditions and shooting ourselves in the foot, we're working tirelessly to replicate and implement strategies that we believe can positively impact the near term results.
Our top priority remains capitalizing on attractive long term growth opportunities in the specialty chemicals segment. Our competence. In this segment grows every quarter and we continue to believe this industry and deliver more profitable and predictable revenue streams, resulting in better value for our shareholders over the long term.
Our capital priorities for 2024 and beyond remain unchanged, we have been repurchasing shares in the open market as much as possible and we'll continue to do so as long as our stock trades meaningfully below our expectation of the company's intrinsic value.
It can be five program that we implemented in Q3 has allowed us to continue our repurchases and our board is also evaluating other options to accelerate accretive capital deployment.
In terms of M&A, while we remain opportunistic on this front our resources and focus are currently dedicated towards stabilizing both of our segments.
We firmly believe that we have to get our own house in order before we embark on pursuing additional larger acquisitions. So while we continue to believe there is a large accretion opportunity through inorganic growth M&A is not a near term priority.
The 2023 was a major challenge operationally and some of that difficulty has bled into the opening months of 2024, we feel the sale of SPT at an attractive price and recruitment of Brian and Ryan are both things that move the needle in a big way towards cementing durable shareholder value creation.
We now sit here with no debt ample availability from our revolving credit facility and actionable plan underway to return to positive and growing EBITDA.
As always we deeply appreciate the patience of all of our stakeholders and we look forward to delivering results.
Now I'd like to pass the call over to Brian to provide in depth details on our operations across both segments I'll be available later on to answer any questions Brian over to you.
Thanks, Brian and thank you all for joining today's call. It's a pleasure to be on my first earnings call as CEO of a sense and I am eagerly anticipating our conversations in the years ahead when.
When I first joined just sent in September of 2023, I saw a strong foundation in the specialty chemicals segment, a foundation that bus multi decade relationships with blue chip customers and untapped product portfolio.
<unk> manufacturing capabilities and redundancy across our sites that provide incredible reliability for our customers at the same time I knew the transformational change was going to take both time and reinvestment in talent processes tools and capabilities after.
After digging in over the past six months I am pleased to report that theres, even more value to be unlocked.
With our success in identifying attracting and recruiting top talent my confidence in our potential grows every single day.
Before I dive deeper into the progress, we're making within our specialty chemicals business I wanted to give you a bit more detail on our current stabilization initiatives within the tubular product segment.
There is no doubt that our tubular segment has faced a number of challenges over the years, but it's been talked earlier, we're proud of the value we are able to generate through the sale of SPT.
The rest of the segment faced challenges during the fourth quarter as we were still heavily affected by destocking and customers being over inventoried.
These macro trends combined with our made to order focus significantly impacted the profitability of this segment.
While the initial rationale to pursue a make to order model had some validity we found ourselves chasing demand for lower margin higher volume products.
The lessons were learned but our efforts will shift towards a more profitable and a more predictable business model moving forward.
Coupled with that we are seeing signs of optimism throughout our end markets and it seems like destocking trends are beginning to reverse within our <unk> business, we're even starting to hear that some of the downstream markets for premium ornamental steel like the marine industry are slowly beginning to bounce back we are seeing positive signs that indicate that we have turned the corner.
And the macro environment. So we're focused on positioning this segment to profitably capture the right opportunities.
Our team is attacking all aspects of our cost structure, while working to optimize our product mix.
Through these efforts, we believe that we will start to see an improvement in our operational margins and see a more stable year for the tubular products segments.
Looking at the bigger picture our primary objective is to stabilize the business, while preferentially allocating our capital to pursuing growth within the specialty chemicals segment.
Delve into that segment next.
Much like the tubular segment, we encountered challenges stemming from inventory Destocking and a general downturn in industry demand. However, we managed to implement widespread price increases mitigating some of the decline in demand and ongoing cost escalation operationally, we've established and activate it.
Very strong cost reduction pipeline throughout the segment set to bolster our profitability in 2024 and beyond.
While there is considerable amount of work ahead, we are identifying numerous opportunities both commercially and structurally to achieve substantial cost savings.
As we think about our long term positioning, it's our mission and specialty chemicals to become a natural extension of our customers' operations.
Consistently delivering high quality products on time and at a reasonable cost.
In order to do so we're recapitalizing our segment level SG&A to unleash the fullest growth potential of our current asset base, while working with our current customers to improve the quality of our existing book of business.
Without question, we have pockets of capacity that are not fully utilized however, our goal is not simply to fill up this capacity much of our current demand driven challenges stem from a strategic choice between volume and value.
Our goal is to occupy our capacity with healthy margin business. This requires a deliberate shift in our product sales mix moving more towards a ratable and predictable branded product sales.
Fortunately, we're not starting from scratch, our starting point is to dust off our current branded product portfolio, rather than needing to invest heavily into R&D. Our new team is beginning to develop an exciting pipeline of new opportunities across both branded product sales and custom manufacturing or beginning to spread the word and I look forward.
Tissue and positive updates with you throughout 2024.
Overall across our entire business, we are working diligently to continue stabilizing our core foundation before we embark on any other inorganic growth initiatives, we are committed to creating predictable reliability for our customers.
Our shareholders and our employees.
While transformational change does not happen overnight I firmly believe we are on the right path and have the potential to create significant value over the long term through measured and focused approach.
I look forward to serving you as CEO going forward and unlocking the true potential of a sense.
I'd like to now turn it over to our CFO rank I will ask us to walk us through our fourth quarter and full year financial results in more detail Ryan the floor is yours.
Thank you, Brian and good afternoon, everyone. It's a pleasure to be participating in my first earnings call as CFO.
I am truly excited about the opportunity to contribute to our company's journey and look forward to engaging in meaningful conversations with all of you in the years to come.
Thank you for your trust and support as we continue to navigate forward together.
Before we jump into it on March 18th we filed for a 15 day extension with the SEC to file our 2023 annual report.
We currently expect to file by end of day Monday in compliance with that deadline, so be on the lookout.
Now, let's talk about our financial results, starting with the fourth quarter.
Net sales from continuing operations were $41 2 million compared to $54 2 million in the prior year period.
This decrease was primarily due to lower end market demand and destocking trends across both segments.
Gross profit from continuing operations was negative $2 1 million compared to $4 9 million in the fourth quarter of 2022.
While gross margin was negative five 2% compared to 9% in the prior year period.
The decrease was primarily a result of unfavorable product mix and working capital initiatives.
Net loss from continuing operations in the fourth quarter was $7 5 million or negative <unk> 73.
Diluted loss per share.
Compared to net income from continuing operations of $4 5 million or <unk> 43 diluted earnings per share for the fourth quarter of 2022.
The decrease was primarily attributable to the aforementioned lower net sales.
The decrease was primarily attributable to the aforementioned lower net sales.
Unfavorable product mix.
Along with increased investments related to efficiency optimization efforts.
Okay.
Adjusted EBITDA in the fourth quarter was negative $5 9 million compared to $1 7 million in the same period last year.
And adjusted EBITDA margin was negative 14, 4% compared to 3% in the same period last year.
The decrease was primarily attributable to the aforementioned lower net sales.
Now turning to our full year 2023 results.
Net sales from continuing operations for $193 2 million compared to $262 million in 2022.
The decline was primarily due to decreases in volume throughout the year as a result of industry destocking trends in challenging end markets, resulting in decreased selling prices.
Gross profit from continuing operations was $1 5 million.
Compared to $43 3 million in 2022.
Our gross margin was <unk>, 8% compared to 16, 5% in the prior year.
The decrease was primarily attributable to the aforementioned decline in net sales across both segments.
Along with increased input and labor costs, and an unfavorable product mix compared to the prior year.
Net loss from continuing operations was $34 2 million.
Negative $3.37 diluted earnings per share compared.
Compared to net income from continuing operations of.
$17 6 million or $1 69 diluted earnings per share in the prior year due to the aforementioned decline in net sales and gross margins.
Adjusted EBITDA was negative $15 9 million.
Baird to $25 6 million in the prior year and adjusted EBITDA margin was negative eight 2%.
Compared to nine 8% in the prior year.
The decline is primarily attributable to lower operating margins across both segments compared to the prior year.
Lastly, looking at our liquidity position as of December 31, 2023.
Ended the year with zero outstanding debt and access to $61 8 million in availability under our revolving credit facility.
We were able to fully pay off our debt with the proceeds from the sale of SPT in late December 2023.
During the year, we also repurchased a total of 143108 shares for approximately $1 3 million through our share repurchase program.
None: With that I'll now turn it back over to the operator for Q&A.
Thank you Sir.
None: To ask a question you will need to press star one one on your telephone to remove yourself from the queue Press Star one again.
Please standby, while we compile the Q&A roster.
Our first question.
Comes from the line of Vincent Anderson of Stifel. Please go ahead Vincent.
Yes, thanks, good evening gentlemen.
So I just wanted to kind of talk about the fourth quarter sales cadence you had a pretty good sequential reduction in inventories yourself. So if I think about your commentary on Destocking.
None: Was there anything proactive on your side as well to kind of.
Correct your own inventory levels, and maybe some of that created more one time pressure in gross profit margins than we would've seen otherwise.
Yes, I mean, we.
We definitely took a look at our inventory over over the year and we made a concerted effort to.
Either commercially attack some of the aging inventory had ore write it off so we did see some margin compression in the fourth quarter due to kind of cleaning up some of the inventory we had on our books. So.
Going forward.
And I will take a look at exactly what these inventories need to look like when we shift some of our commercial strategies, but.
Some of the cleanup efforts definitely had margin compression in the fourth quarter.
Okay, Alright, Thats helpful. And then you might have touched on this already so I apologize if I missed it but the topline on chemicals I think when we get the K, we'll see volumes versus price.
Yes, we had some pretty easy volume comps in the fourth quarter.
Was there a bit more of a mix towards price coming back in with raw materials and volume stabilizing in <unk> or was it still mostly driven by volumes.
Volumes definitely played a larger role in the compression in the fourth quarter, we did see some some pricing.
None: Pricing.
Headwinds, but it was largely a volume volume related.
Okay, and then just kind of sticking with chemicals that I mean, I know, it's tough but everywhere else. We look the commentary on end markets is generally stable right I mean still some first half weakness in crop chemicals, a little bit of weakness in care chemicals, but nothing nothing too dramatic.
More or less the feedback that you're getting from customers.
Year end working capital management.
Right.
And if so are you expecting better visibility on order patterns as we move through 2024.
Yes. This is Brian Vincent so overall from a from a market perspective, we're seeing a favorable tick up related to AG. We are seeing a favorable pick up related to water treatment, we're seeing what I would say stabilized demand in comparison to Q.
Q4.
Looking out into at least the first half.
2024.
None: Okay excellent.
None: And then Brian you actually you brought it up already but branded products. So it sounds like you.
You like the impact on capacity utilization relative to the SG&A investment or headache, depending on how you look at it but how should we think about where the low hanging fruit is in the existing portfolio, especially if we're talking about like speed to market.
Brian: Access to distribution or if these are going to be direct product sales I know, it's early but I'm guessing you've seen something in the portfolio already that you're talking about it.
Yes, I mean, when you look at it from an overall sales cycle time standpoint for custom manufacturing a toll manufacturing youre looking at.
Six months to 18 months from the time, you uncover a prospect to when you actually commercialize that opportunity certainly there are exceptions, but that's generally the north from a branded product sales standpoint, the qualification timeline is much much smaller.
It's much shorter so that could be in the range of one month to three months.
The interesting thing about our existing portfolio that we that we have is it has a runway into a wide array of different market applications and so things like water.
Water treatment things like oil and gas things like textile chemicals and these are all capabilities that we have inside of our business today.
And we just need to breathe a little bit of life back into it alright in terms throw up an increase in SG&A allocation as well as a reallocation of SG&A as well to really pivot and go after that book of business, because along with that not only will we see improved and improving margin profile, but that rate ability and that predictability.
<unk> is often much better when we're in control of our own branded product sales.
No fair enough.
If you think about your.
Kind of your contract business are those logical customers to bring branded products to right away or kind of coming back to that sales channel question, what what's kind of your easiest path to market with what you have right now, yes, it's really market.
Dependence right and if you look at it.
We're focusing initially there's not a lot of overlap with our existing customer base and therefore, there's not a lot of complex either.
Brian: So thats really where were running and gunning right out of the gate.
Looking forward to reporting more favorable outcomes here in the coming quarters on that.
Alright, beautiful and then actually you already addressed in the M&A strategy quite clearly so I won't.
That alone.
I think thats all from me.
Thanks, Alright, great. Thanks, guys.
Thank you as a reminder to ask a question you will need to press star one on your telephone again Thats Star one one on your telephone to ask a question to remove yourself from the queue. You May press star one again.
Our next question.
It comes from the line of private Investor David Siegfried Your question. Please David.
Hey, Congratulations Brian and Ryan on your appointment to the management team.
Thanks, Tom. Thank you yeah, so impressive paydown in debt this year.
David Siegfried: $92 million in debt reduction Thats really good.
I give the team flexibility to reinvest where you need to.
Without extra expense.
Yes, I'll take this one it does right I think it allows Brian.
Kind of refocus and I think a lot of what we're looking at right now is how do we get back to the fundamentals across both segments.
How do we reallocate some of our capital to growing and growing and re stabilizing the business so coming in with a clean slate on the debt side definitely gives us a lot of options as Ben alluded to M&A as far out in the future. We think we have a lot to do to kind of stabilize things and get the business to be more predictable.
More ratable as we said so having that slate clean right now it does allow us to strategically reinvest internally.
<unk> and things like that so.
We will look at the opportunities there, but yes, having a clean slate is definitely helpful for us right now.
Okay.
I know last year, a spat with streamlining tubular operations with.
Are being cut.
Cut out and things being streamlined over at Bristol. So is there a lot of work left with tubular to get that humming along or is that something where we can begin to see some profitability rather quickly.
Yes, really there is kind of two to three main areas, where we're focusing our time and energy right now David with respect to tubular.
Beyond stabilization a couple of key components for us.
As we think about stabilization is.
Cost reduction right. So there is still a significant amount of cost that can be extracted.
Out of that business.
Given back.
David Siegfried: <unk> to net income and we believe that that can happen in the near term. So we're working feverishly on pulling those levers without jeopardizing safety or compliance in.
In the near future look to signal is the other area that.
We're working hard at hard on is what I would call core product line management, and taking a really deep analytical look at the products that we're making and where are we making money and where we're not making money.
That analysis is not complete yet, but we look forward to be completed inside of the second quarter.
Along with actions being taken as a result of that.
Okay.
David Siegfried: And now you mentioned in the comments and Vincent its questions talking a little bit about branded product with the chemical segment.
Is that the famous proprietary product that.
The company has been working on for the last couple of years that you can.
David Siegfried: Okay.
It's something that would have a higher margin is that something that is that the focus when youre talking about branded product.
Correct, correct, Okay, and again from a branded product or proprietary products perspective.
We have again in our portfolio today is set of branded products that can be taken out into a wide array of <unk>.
<unk> markets and we can do that without significant.
R&D.
Dollars being invested into it so existing products into existing markets into existing applications.
None: Okay great.
I think one of the biggest.
None: Challenges that I've seen since 2000 Twenty's since the board was refreshed.
It's just turnover.
On the management team there.
Ben.
<unk>.
I would say maybe limited follow through just no one's sticking around to see results.
And that's all we six months away the results.
So.
Do you think that you and Brian and Ryan can do something special.
What we have but just the assets that we have without even an acquisition.
So that we look back on a couple of years when we have.
Something special here.
Yes. This is Brian so from my perspective, the answer is absolutely, yes, so Brian and I have worked together for a number of years.
Brian: Outside of a sense that we've been a part of turnarounds in the past I firmly believe that we can build something incredibly special within the existing asset base I'm a big believer in.
And organic growth a big believer in unleashing the fullest potential of the enterprise in order to do that you've got to get the best talent on the planet working together and making each other better every single day and we're starting to build that momentum David we're just starting to build that momentum and it's really exciting.
To see what's happening and what we believe we will continue to happen in the near term.
Okay. Good to hear and then I know with M&A months off whatever but.
I guess my question is is there a risk that.
As you build the foundation and chemicals and get tubular streamlined whatever that.
The pricing you could miss an opportunity because.
The chemical market recovers and all of a sudden we're paying more for an acquisition.
Sure David I would say that that is a risk, but I would also say that our efforts towards.
Fixing the foundation right to stabilizing the enterprise.
That's going to have a massive ROI in the future, especially as we look at integrating.
Properties down the road, if we were to go out and acquire a company today, we would not get the full benefit of.
Brian: Contemplated synergies.
Okay.
Yes.
So looking kind of my rough math it looks like in the last two years 'twenty, two and 'twenty three.
There was about $2 6 million spent on buybacks.
253000 shares at an average cost of $10 27. According to my my.
My Records.
So it would seem like the $10 range.
The <unk>.
Do you still feel like it's a good deal considering.
What we have in front of us earnings power out of us.
Yes, I mean, David it's Ben so.
The most important thing is to not be dogmatic about things like Thats right. We live in a dynamic environment and information is very fluid. So we're constantly reassessing. So it's not just something where I said, we picked 10 or 11 Bucks a share call. It two years ago. When we started buying back stock and that's just going to be our number into the future we're constantly processing.
<unk>, we have we get the we the real time Readouts of what the businesses are doing and we act on that information I think you can see.
Just in the past quarter, we have been buyers of the stock I think at an average price of high nines or so so that will give you some insight into where we believe the intrinsic value is very recently and a good deal of north of that but we're going to continue to be flexible and obviously, we think that there is the potential for that to be very accretive use of our.
Capital.
Yeah, and obviously with no debt you do have firepower.
That's right yes.
Okay. So just one last thing I just want I mentioned.
I know.
No.
One thing I love about the board they have there.
They are heavily invested right so.
I think some of US shareholders all of us would like to see.
There are three things I'd like to see going forward just timely reporting.
Our quarterly reports.
I would like to see a comprehensive plan.
Articulated to investors, which I think today with a really really good call for that.
Also I would like to see perhaps at some point.
Our management team, which I could tell Brian Ryan our Intouch and if Youre really in touch then we should be able to get guidance at some point is that something that you think we could be given at some point, maybe next quarter or following quarter after that or.
As you get more comfortable.
I think from the Board's perspective, David the answer is there's always going to be.
I think a path towards directional guidance given with the knowledge that that the volatility in the earnings has made it very difficult for investors to be able to get confidence in what the business can and should be doing at any moment in time, and so we want to obviously smooth out the volatility, which we've worked very hard to do as it's been.
Brian: Disruptive to the business and be able to provide.
Much more I'll say solid directional guidance.
The view that of the business the size that providing.
Much more quantitative guidance with specific numbers or even specific number ranges is never a fruitful exercise of our business the size, but it's our goal to be a lot more transparent in what we're seeing and what we think we can do over any given time period, and we're certainly going to move towards that over the coming quarters and you'll see.
With Brian in line very much.
Great.
Well. Thank you guys. So I appreciate the time and good luck on the future.
Thanks, David.
Thanks, David.
Thank you.
Our next question comes from the line of Matt Schwarz.
<unk> investments.
Your question please Matt.
Thanks for taking my question Ben that you.
Mentioned that there is no near term M&A plan.
But you also said as Scott evaluating other strategies for capital deployment. So.
I guess following up on the previous caller's questions around share buyback.
Because I know you've been out in the market doing it.
Regularly.
Smaller amount, but would you consider doing something more aggressive on that front, whether it's a dutch tender or something else considering your views on.
Feature intrinsic value.
Yes, we would consider it.
Do you have any.
Any color on that type of firepower, you would have to do something that with the current balance sheet.
Medium term outlook.
None: Well, that's what we're evaluating right I mean, I think the number one thing is to make sure that on an operational level, we feel very good about where we sit right at the end of the day.
Any sort of analysis is only as good as the inputs you put into it right. So it's garbage in garbage out, but we want to make sure that the inputs are very solid so that whatever decision. We do make we feel very confident about that so we're going to be very fairly prescriptive in how we evaluate it I mean, it's certainly very much talked about at the board.
Level, and it's something that I think I can contribute to and we all think we have very specific.
Our view is about making sure the processes is solid but I think our goal is.
Whether it's the next time were talking to you or shortly after that to be able to be a little bit more specific.
Our confidence in the inputs that we're getting.
As the landscape evolves.
Our ability of that to begin allocating capital right because I think.
Having having no debt.
<unk> is not necessarily the most optimal capital allocation. If you think that your shares are trading below intrinsic value. When you think you are in.
Our business is highly fragmented and has the opportunity to.
To be value add so we think we're well positioned from an opportunity standpoint, but I think as David alluded to also we don't want to be sitting here 12 months 18 months from now not having allocated capital to anything because I think that would have been missed opportunity.
Okay.
I'm sorry, if I missed this earlier I jumped on a little late but.
I heard you talk about.
Cutting some costs or recapitalizing some of the cards segment level.
G&A on the chemical side of the business.
Is there anyway.
To frame up or maybe it's a bit too early to talk about what you view as the margin opportunity in the chemical.
Segment from on a normalized basis.
I think it's a little early still and then I'll, let Brian speak a little bit to it but we're still kind of evaluating the ongoing potential right. We know the margins are compressed right.
Right now and I think there's opportunities to buy better to go out to market with better pricing.
So in the near term actions.
I think it's early to say, what we're targeting X margin percentage at this segment.
We just know it's compressed right now we have an idea of.
Maybe a ballpark.
Right now I think the main focuses that we've got to get to right size, our cost structure invest strategically by better price better on those are kind of some of the main themes were looking at and I think Brian can extend.
Alright, and I think you hit the nail on that we have a lot of runway that too.
Generating additional gross margin additional EBITDA through cost down initiatives, alright costs down from a raw material standpoint packaging overhead labor across the board. There are a lot of levers that we have at our disposal levers.
Haven't been pulled off in the past to their fullest ability.
I'd say stay tuned.
Probably a little bit too early for guidance around what to expect in the near term, but certainly from a long term standpoint high double digit EBIT.
EBIT margins is certainly within reach.
Alright, thank you.
Thank you at this time. This concludes our question and answer session I would now like to turn the call back over to Mr. Kitchen for closing remarks.
Great. Thank you Latif, we'd like to thank everyone for listening to today's call and we look forward to speaking with each of you again, when we report our first quarter 2024 results.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
None: Okay.
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None: Okay.
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None: Okay.
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