Q1 2024 Core Molding Technologies Inc Earnings Call
Good morning, everyone welcome to the core boating technologies first quarter fiscal 2024 financial results Conference call.
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Now I'd like to turn the call over to Sandy Martin three part advisors. Please go ahead.
Sandy Martin: Thank you and good morning, everyone. We appreciate you joining us for our core molding technologies Conference call to review first quarter results for 2020 for joining me on the call today are the company's President and C E O, Dave Deval, and EVP and CFO John Zimmer.
Sandy Martin: 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.
Sandy Martin: 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 or future financial performance are forward looking statements and are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act 1995.
Sandy Martin: By their nature forward looking statements are uncertain and outside of the company's control actual results may differ materially from those expressed or implied please refer to today's earnings press release 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 six.
Sandy Martin: And Exchange Commission core molded technology assumes no obligation to publicly update or revise any forward looking statements management will refer to non-GAAP measures, including adjusted EPS adjusted EBITDA debt to trailing 12 months EBITDA ratio free cash flow and return on capital and <unk>.
Sandy Martin: Lloyd reconciliations to the nearest GAAP measures can be found at the end of our earnings release. Finally, this release has been submitted to the SEC On form 8-K, now I would like to turn the call over to the company's President and CEO, Dave Duvall. Thank.
David L. Duvall: Thank you Sandy and thank you all for joining us to review our 2024 first quarter results I want to start today with some positive highlights related to our core molding team in the first few months of 2024.
David L. Duvall: Spring core was presented with the ERP is gold supplier award related to exceed new boats and personal watercraft models.
Sandy Martin: <unk> or Bombardier recreational products as a global leader in power sports vehicles, all land water and snow.
Sandy Martin: I'm proud of our team and we are.
Sandy Martin: Are honored to be one of <unk> key suppliers for the sea Doo personal watercraft industry do switch our team has been awarded this prestigious recognition for Kors manufacturing and logistics excellence high quality products and processes and superior customer service being recognized as a gold supplier is a culmination of that.
Sandy Martin: Complete business transformation that we've been executing and communicating over the past several years I am proud of what the team has accomplished and the magnitude of this accomplishment can be seen in our tremendous improvements in our basic metrics.
Sandy Martin: For safety, we reduce our incident rate by 44% in the last few years and are much better than the industry average for people, we continually improve our focus on individual and organizational development, which is reflected in our low turnover of salaried team members now less than 12% annualized.
Sandy Martin: We've implemented annual leadership development programs organizational and career development programs technical certification programs, along with many other training and employee engagement initiatives employee development is and always will be a key focus area for core molding.
Sandy Martin: And quality, we've reduced our customer P. P. M by an incredible 89, 6% in the last four years and 17% in the last two years and.
Sandy Martin: In delivery, we improved our on time delivery by 21% in the last two years and are now at 99% on time delivery.
Sandy Martin: We have reduced scrap and rework costs by over 51%.
Sandy Martin: We increased our production capacity by over 20% with existing assets and made strategic investments in our plants and increase capacity through efficiencies automation facility improvements, which increased our total current capacity so between $425 million of $475 million in annual sales, we first significant.
Sandy Martin: <unk> improved our customer support and service levels, which then enabled us to make the necessary changes to our pricing to bring prices back in line with market rates, which provides the financial resources necessary to continue to improve our operations and customer service levels as a company I believe we are in the best.
Sandy Martin: Overall business operating condition in company history.
Sandy Martin: Our focus has been on implementing robust business systems throughout.
Sandy Martin: The transformation.
Sandy Martin: I am confident that our improvements are sustainable and that we have some of the highest service levels in the industry.
Sandy Martin: The company has the organizational capability operational infrastructure and financial stability in place to drive revenue growth through new programs acquisition opportunities and existing programs as demand levels rebound.
Sandy Martin: We have prepared the organization for growth the engineers ready and now we're at the invest for growth phase or better stated our must win battle is now invest for growth, which I will talk about later.
Sandy Martin: I'm also excited to share that we have published core second sustainability report, which showed solid progress from last year. This comprehensive report published on our website offers an overview of our sustainability strategy and provides all core stakeholders with a view of our progress against established goals and commitments.
Sandy Martin: Sustainability is embedded into our values and business and is instrumental in driving organizational change that reduces both enterprise risk and costs.
Sandy Martin: Also important is that our sustainability systems allow core molding to be a part of something bigger than ourselves by providing a structure for our organization to support environmental stewardship.
Sandy Martin: Our second annual report details accomplishments in 2023 and progress on our important 30 by 30 targets, we intend to reduce our companys energy consumption greenhouse gas emissions and landfill waste by 30% by the end of 'twenty 30, and we think this is a sustainable goal.
Sandy Martin: To attain.
Sandy Martin: Turning to a review of our top level financial results, we signaled a few weeks ago. During our year end earnings call that 2024 sales expectations were lower than 2023 today, we reported sales of 78 million down 21, 5% due to challenging 2023 comparisons.
Sandy Martin: And end market headwinds that will we will discuss more in a moment.
Sandy Martin: When we look at sales sequentially compared to the fourth quarter of 2023 sales for the first quarter of 'twenty 'twenty four increased by five 9%.
Sandy Martin: Gross margin for the 2020 for first quarter was 17% compared to 17, 8% in the prior year first quarter and up 220 basis points from 14, 8% in the fourth quarter of 2023.
Sandy Martin: Anticipating lower sales the company reacted quickly and leaned on the operational improvements made over the past several years to offset lost fixed cost leverage.
Sandy Martin: We also generated $8 8 million in adjusted EBITDA or 11, 2% of sales and we reported positive free cash flows.
Sandy Martin: In summary for 2023, we completed the second must win Battle initiative and the results are improved operational efficiencies and a solid foundation for continuous improvement in all of our plants.
Sandy Martin: That work allowed us to operate with much more stability consistency and translating to more stable margins and improved product line profitability.
Sandy Martin: Our intense focus or must win battle is all sales this year and our business fundamentals remained strong we continue to work on landing a diversifying into new business and increasing our opportunity pipeline with that I'd like to turn it over to John to cover the financials in more detail.
John P. Zimmer: Thank you, Dave and good morning, everyone as Dave mentioned earlier, our total net sales for the first quarter were $78 $1 million down 21, 5% compared to a year ago and sequentially. Our net sales improved by five 9% up from the fourth quarter sales of $73 8 million.
John P. Zimmer: Audi and mix shifts produce growth from Q4, and we believe that including sequential performance comparison allows us to explain recent changes in customer demand.
John P. Zimmer: As expected first quarter sales reflected tough prior year comparisons notable mix shifts and rebalancing of customer inventory levels.
John P. Zimmer: Q1 medium and heavy duty truck sales shifted from 50% of sales in 2023% to 55% this year and power sports shifted from 22% of sales last year to 25% in the first three months of 2024.
John P. Zimmer: In addition, other industries, including building products and industrial and utilities continued to produce soft sales.
John P. Zimmer: The first quarter gross margin was $13 3 million or 17% of sales compared to 17, 8% in the year ago quarter with lower sales versus prior year fixed cost operating leverage was negatively impacted in the first quarter by approximately 170 basis points.
John P. Zimmer: Due to the operational improvements and pricing changes, we were able to offset a significant portion of the lost fixed cost leverage.
John P. Zimmer: Before our operational improvements volume decreases and mix shifts historically created more volatility in gross margin.
John P. Zimmer: However, we now have better operational efficiencies and profitability across all our plants, which allows us to offset fixed cost leverage decreases and maintain more stable margins and changing demand levels as was demonstrated in this quarter. We continue to expect gross margin to be in the 17% to 19% for the full year with the potential for gross margins.
John P. Zimmer: A quarter outside of this range.
John P. Zimmer: SG&A expenses were $8 6 million compared to $9 7 million in the prior year, primarily due to lower bonuses labor and benefit costs and favorable foreign currency translation.
John P. Zimmer: Operating income for the quarter was $4 7 million or six 1% compared to $8 1 million or eight 1% in a year ago period.
John P. Zimmer: Net interest expense was $82000 in the first quarter down from 356000 in the prior year quarter.
John P. Zimmer: Netted in the 82000 net interest expense in the first quarter of 2024 is 252000 of interest income from our accumulated cash balances.
John P. Zimmer: The quarterly interim effective tax rate was 21, 5% comprising the weighted tax costs from the three tax jurisdictions, where we operate.
John P. Zimmer: Our net income totaled $3 $8 million or diluted EPS of <unk> 43.
John P. Zimmer: Compared to $5 9 million or diluted EPS of <unk> 66 in the comparable year period.
John P. Zimmer: Our first quarter adjusted EBITDA was $8 8 million or 11, 2% of sales compared to $12 2 million or 12, 3% of sales in the prior year quarter.
John P. Zimmer: When we refer to our GAAP to non-GAAP reconciliation tables are at the end of the of our press release.
John P. Zimmer: Turning to the company's financial position, we ended the quarter with $26 $6 million of cash and cash equivalents.
John P. Zimmer: The company's cash provided by operating activities was $5 $1 million for the first quarter, which compared favorably to the $4 6 million in the 2023 first quarter.
John P. Zimmer: For the first three months capital expenditures were $1 9 million and free cash flows were $3 2 million an improvement from the $2 5 million in the prior year.
John P. Zimmer: We currently expect 2020 for capital expenditures to be approximately $13 million for the year.
John P. Zimmer: As of March 31, 2024, total outstanding liquidity was $76 6 million, which includes cash and $50 million available under the revolver in capital credit lines.
John P. Zimmer: The company's term debt was $22 7 million at the end of the quarter and our debt to trailing 12 months EBITDA ratio was less than one time.
John P. Zimmer: Our working capital continues to be well managed and netted a $61 million on March 31 2024.
John P. Zimmer: Our return on capital employed a pretax return metric was 14% on a trailing 12 month basis.
John P. Zimmer: Our capital allocation strategy remains consistent with prior guidance includes investments in organic growth share buybacks acquisitions and repayment of debt.
John P. Zimmer: Now we will provide an update on our 2024 sales outlook.
John P. Zimmer: Nothing has materially changed from our comments a few weeks ago, and we expect 2024 annual net sales to be down 10% to 15% compared to 23.
John P. Zimmer: Our sales outlook includes a cyclical demand slowdown in truck stabilize and customer inventory as well as consumer demand environment returns to more normal seasonality.
John P. Zimmer: Customer inventories are leveling down in certain end markets like power sports, which may be impacted by fed rates stayed higher for longer as a reminder, Volvo is transitioning from its existing truck model to a new one that core is not part of beginning in the second half of 2024 and continue through 2026, we have a good relationship with Volvo.
John P. Zimmer: An active bids we believe we are positioned to secure programs outside the current programs we.
John P. Zimmer: We'll continue working on profitability initiatives, focusing on additional continuous improvements across all product lines.
John P. Zimmer: I'll, let Dave further discuss our plans and outlook for the year with that I'd like to turn it back to Dave Dave. Thank you John.
Dave: We are highly focused on offsetting certain end market headwinds trucks cyclicality and the end of life programs as John mentioned, we have seen inventories rebalancing down for power sports and the industrial and utilities markets. Even so we are seeing a return to pre pandemic levels, we have aggressively ramped up.
Dave: Lead generation by partnering with a professional sales agency added sales resources ramped up Tradeshow presence and we are streamlining our quote to cash processes to maximize our organic business growth.
Speaker Change: Actually this week I'll be supporting our sales and marketing team and our display at the <unk> show in Orlando.
Dave: We are also in the process of vetting potential acquisitions that meet our strategic growth criteria for sales channel growth and footprint expansion.
Dave: Our current sales opportunity pipeline is over $200 million and I'm excited to report that we've been awarded over $25 million in new and replacement business that will launch near the end of 'twenty four through 2025.
Dave: We know that in our industry that quote to cash is over a year. So efforts today are most likely going to start delivering results in 2025 and beyond.
Dave: We are also prepared for the ACP or Americas commercial truck research forecasted truck increase in 2025, and 2026, which is driven by the 2027 emission regulations.
Dave: Even though our customers are currently in a reduced demand period, our business is well positioned as we serve blue chip customers was sole sourced products that are foundational to our customers' long term growth plans, we remain focused on continuous improvement to lower overall cost and prepare for higher demand levels our tech.
Dave: <unk> solution sales approach provides our customers unique solutions for the highly specialized needs and we have never been in a better position to benefit from our extensive portfolio of prosper presses processes and industries served our engineered solutions allow us to work on new environmentally friendly and sustainable products and we are.
Dave: Seeing opportunities in 2024 from the infrastructure build that core molding is well suited to provide including projects driven by the buy America build America, where Babar Act.
Dave: We have built a resilient organization well positioned for growth and our strategy supports the creation of long term shareholder value our must win battle in 2024 is invest for growth and that is what we're driving today, we appreciate and I want to thank our dedicated core molding team our team is our competitive.
Dave: We also.
Dave: I appreciate and I want to thank our customers shareholders and the board for their continued support.
Speaker Change: With that I'd like to open the line for questions operator.
Speaker Change: Thank you we will now begin the question and answer session. As a reminder to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys. If you would like to withdraw your question. Please press Star then two at this time we will.
Speaker Change: Pause momentarily to assemble our roster.
Speaker Change: And today's first question comes from Chip Moore with Roth N. K M. Please proceed.
Chip Moore: Good morning, Hey, Dave John and everybody. Thanks for taking the question.
Chip Moore: Hey, Joe.
Chip Moore: Good good to hear your voice I wanted to ask.
Chip Moore: Your comments, Dave around the engine is ready for growth investing in growth maybe just start there if you can expand on.
Chip Moore: Some of the organic and inorganic efforts.
Chip Moore: That you're going after this year.
Joe: Yeah, we've done a lot to really drive the lead optimization as far as all the leads that we've already had in the system business, maybe that we had looked at in the past. So a lot more on the lead generation side as well as on the immediate or short term working with customers on contract molding our transfer molding.
Chip Moore: When we're looking at customers in the trough personal watercraft ATV UTV those are more longer term design phase. So we're already partnering with customers in those products. Some of those we've already won that would be part of that $25 million.
Chip Moore: And then really driving into industrial and utilities and packaging.
Chip Moore: Areas on being able to either develop the new products for conversions working with them currently and developing products, where we can transfer the molds.
Chip Moore: It's a lot more on the lead generation side and continuing on to our industrial and utilities and still growing our ability in those areas.
Speaker Change: Understood that's helpful. David.
Speaker Change: Maybe the opportunity pipeline.
Chip Moore: Boosted quite a bit this quarter.
Chip Moore: Since when we talked fairly recently.
David: Talk about the composition of that pipeline is that shifted with some of the changes.
Chip Moore: In the end markets that you're seeing right now.
Chip Moore: And then you know.
Chip Moore: What are you seeing in some of the same.
Chip Moore: Some of the newer areas growth opportunities.
Chip Moore: Yeah, we're still seeing some opportunities in the automotive side as far as under bodies and tailgate type work. So we're looking at that we're still working on the automotive side. Some of those are little longer starting in 'twenty five 'twenty six.
Chip Moore: Also some of the newer truck programs that we're looking at and power sports, we do have probably about 30% of up in the industrial and utilities area.
Speaker Change: Got it that's helpful.
Speaker Change: And just one on the just the heavy duty market right given that its size.
Speaker Change: Sizable piece of your business can you expand on the <unk>.
Speaker Change: 27 initiatives drivers when you might see that.
Speaker Change: Maybe youre seeing some of it already.
Speaker Change: It's a trickle through in terms of pulp.
Speaker Change: Pull forward or demand in print.
Speaker Change: Some of those regulations.
Speaker Change: No. That's a really good question and we are starting to see that with our customers and talking with them as well as in the a C T.
Speaker Change: So last year 23, the volume was about 340000 class eight this year. It was increased from 285 to three or four next year. We're looking at about 323 30, and then 26 is the peak year of 346. So what we're seeing is that as the emissions come in this.
Speaker Change: Twenty-seven emissions are a costly one so what.
Speaker Change: Companies are doing that are going to start preordering prior to the 27 cost increase and when they start feeling build slots. So then you start seeing them come in earlier and earlier into the 'twenty four 'twenty five timeframe.
Speaker Change: And that's what we're getting prepared for now and talk with customers about.
Speaker Change: Perfect that's helpful and maybe last one.
Speaker Change: Maybe for you John on the gross margin side, you know that 17 to 19, 19% range for the year, maybe just talk about baseline assumptions there.
John P. Zimmer: Get you towards the higher end is it sort of the volume dependent I assume and then just remind us any any quarterly dynamics to keep in mind here with seasonality and some of the other one offs impacts. Thanks.
John P. Zimmer: Yeah, So seasonality is probably not going to hurt us as much. This year is some of the mix has changed.
Speaker Change: See better seasonality in Q2 and Q3 Q.
Speaker Change: Q4, guys as always got holidays in it and everything else and so it's always the most challenging. So my expectation is Q2, and Q3 would be a little bit higher than what we're at today.
Speaker Change: One of the big pieces that drive us to the 17 to 19 as you know I think in at year end, we kind of our test.
Speaker Change: In March for the year, and we talked about how a lot of the utility Guy said.
Speaker Change: Had gone away and it wasn't really ordering anything from us so are getting a little bit more volume back from those guys are we won't be adding any fixed cost leverage at all in order to do that and so we can see just a little bit of a pickup in the sales side.
Speaker Change: We really should see the margins.
Speaker Change: Head towards that 19% and so.
Speaker Change: That's the real key is as you know, we get a little bit of a rebound in the revenues as we go into the second half of the year.
Speaker Change: Very helpful. Okay. Thanks, a lot appreciate it.
Speaker Change: Yep.
Speaker Change: The next question comes from Bill does L M with Teton capital. Please proceed.
Bill: Thank you specific to the building products.
Bill: Category would you talk about the impacts versus the Q1 of 'twenty three and then what drove the increase versus the Q4 of last year.
Bill: Yeah, So building products for us as primarily a couple of different customers and so there's not a lot of customers.
Bill: From last year.
Bill: We know our UFP sales are down.
Bill: UFP sells through big box retailers, and so you know as they.
Speaker Change: Half program changes with big box retailers that eventually comes through to us.
Bill: And so we do know that they've been ordering less and we expect that something to do with you know who they're selling to this year versus last.
Bill: From an actual quarter realization standpoint.
Bill: Q4 is really a slow period for building products Q1, Q2 are usually a little bit stronger.
Bill: As people start to put lattice and those types of things in the stores to for people to.
Bill: Start doing building products in March and April and are building projects in March and April and May and so that's normally kind of a seasonality but year over year.
Bill: Our business, primarily with Ufp's, just down and I think that's just a difference in their sales mix that they have to their end customers.
Speaker Change: Great. Thank you and then.
Bill: Relative to acquisitions would you. Please talk about the pipeline and how you were thinking about acquisitions now.
Speaker Change: Yeah. So we would look at an acquisition right now.
Speaker Change: Anywhere between about $20 million to $40 million.
Speaker Change: <unk> acquisition really we're looking at footprint customer and industry diversification, our sales channel development I think focused processes really in the U S that we also need when we look at some of the infrastructure and the Baba is really structural foam deal F T or large part injection molding I think the big thing for us when we look at foot.
Speaker Change: And we look at sales channels everything is it has to be a technical or large part not small part.
Speaker Change: So really the big driver is what we're looking at is footprint sales channel development and industry diversification.
Speaker Change: With specific processes.
Speaker Change: One of the questions, we get and we've been doing a lot of work on also in this areas is what we what are we seen for valuations.
Speaker Change: We've met with probably 25 different bankers that really are in the <unk>.
Speaker Change: In this industry.
Speaker Change: I know cell.
Speaker Change: Resin based products.
Speaker Change: It's kind of I kind of compare it to the housing industry, even though cost of financing has gone way up.
Speaker Change: The multiples Havent change that much you know, we're hearing about 7% to eight for kind of a normal deal not a specialty medical or something like that.
Speaker Change: And so one of the things that we are going to be very disciplined on that.
Speaker Change: If you're buying at seven to eight times.
Speaker Change: Enterprise value.
Speaker Change: How fast can we get synergies.
Speaker Change: From the from that acquisition, either cost synergies or sales synergies as you guys are aware again as Dave made a comment as were big part manufacturer. So our strategy is not usually to go in and.
Speaker Change: By a plant and shut it down and consolidate the plant and have all kinds of savings from that it's actually to expand our footprint. So we're being diligent from that standpoint, obviously interest rates are a lot higher than they were over the last 15 years to finance them and so.
Speaker Change: We're definitely looking for opportunities that can get us to that 8% to 10% EBIT return on capital employed was 16% in and drive synergies pretty quick out of the gate, so being a little selective on that because we haven't seen the valuations come down as much as we probably would've hoped to do with higher financing costs.
Speaker Change: And is your sense that there are.
Speaker Change: Maybe address the quantity.
Speaker Change: The acquisitions that you see out there.
Speaker Change: More or less.
Speaker Change: What's your view.
Speaker Change: Yeah listen our industry. So like I said, one of the things we've talked to a lot of the different bankers in this industry.
Speaker Change: Lessen this industry.
Speaker Change: Theres still P guys play in the game, they still have money to play and so but from an overall.
Speaker Change: I think the challenges is there's a lot of sellers that still want that 789, 10 times multiple and Theres a lot of buyers that have gotten a little bit more diligent and said that's just too high with the financing rates, where they are today and so when we did talk to you know over the last couple of weeks I mean, we had lunch with one of our bankers, our P&C capital markets and they said that they've seen.
Speaker Change: A slowdown in this industry also at this point.
Speaker Change: So we're seeing a little bit of a slow down because I think sellers are keeping their prices high and buyers are being more rational as they as I go through this.
Speaker Change: Great. Thank you both.
Speaker Change: Yep.
Speaker Change: As a reminder, if you do have a question. Please press Star then one.
Speaker Change: And the next question comes from Tim Moore with Es. Please proceed.
Timothy M. Moore: Thanks, Greg.
Timothy M. Moore: Great to see the gross margin EBITDA margin come in pretty impressively for the quarter. Despite the sales decline so kudos on that cost savings and efficiency fronts.
Timothy M. Moore: So maybe I'll just start off because two of my questions were already answered.
Timothy M. Moore: You know just kind of curiously you know during your last earnings call. You mentioned I believe it was 425 to 475 million in sales capacity in place.
Timothy M. Moore: I'm trying to wrap my head around some of the earlier comments about is it.
Timothy M. Moore: Class eight truck volume it could be up to the peak in 2026, when you kind of look out for your sales capacity and then maybe let's call. It 425 to 475.
Timothy M. Moore: You think it could be starting to fill that towards the end of 2026 and get those customer qualifications.
Timothy M. Moore: In terms in place by then.
Timothy M. Moore: It seems like a desk for rebound next year, obviously on sales, but just trying to wrap my head around maybe when you'll start to fill that capacity.
Speaker Change: Yeah, I think with some of the new wins that we have.
Timothy M. Moore: The $25 million, we talked about and it's probably somewhat conservative, but we're looking at 2025, where we will start seeing that ramp up the truck demand will start picking up pretty quick because the installed capacity in the product lines are already there.
Timothy M. Moore: So we constantly have customers asking if we're going to be able to meet their peak demand coming up here in 'twenty five 'twenty six are already looking at it.
Timothy M. Moore: For sure 26 is going to be a high year for us relative to truck as well as the additional programs that we got from the wins this year and the wins last year.
Speaker Change: Great that's helpful.
Timothy M. Moore: I live in the past that you need it.
Timothy M. Moore: No no. It seems like that's really going to give them very efficient additions and yeah, I can't imagine you're going to be bumping up against at least 2026 27.
Timothy M. Moore: Just one thing I want to kind of clarify I know you talked about the Volvo program that one.
Timothy M. Moore: Maybe that one or two programs phasing out and I mentioned in February.
Timothy M. Moore: Are there any kind of additional sales ones one off of customers renewals you know over the next year or is there anything else that could maybe unwind a little bit or be attitude.
Timothy M. Moore: Oh of the wins that we just talked about about 40% of that is replacement business. So we're constantly we know ahead of time when the programs would be ending and when they'd be coming back I think the challenge with the Volvo. It was that decision was actually made three years ago.
Timothy M. Moore: So, but we have as John said I think we have a great relationship with although now and we're working with them we're actually.
Timothy M. Moore: Talking with them about that new program and being able to actually provide those parts as well or at least part of those programs.
Speaker Change: Yeah great.
Speaker Change: To follow up we really don't have any other visibility to any other sales programs falling off like Dave said, you know one of our goals is is that we're actually you know big business two or three years out we have several of those programs that we've mentioned last year and this year there are wins, which is replacement business three years out.
Timothy M. Moore: And so we really don't have any.
Timothy M. Moore: Like a Volvo out there that we're aware of I think our customer relationships are good and all of those areas and I think the original comments that Dave made about.
Timothy M. Moore: Where we are operationally, we really do think operationally in this industry, we're pretty strong compared to some of our competitors.
Timothy M. Moore: They have gone through some challenges and so I think we're.
Timothy M. Moore: Really placed right we got to go win the business and Theres really no other major programs that we know of that.
Timothy M. Moore: Or have been awarded way at this point or anything like that.
Speaker Change: Okay, great. Thanks, a lot of what we worked on was really getting the business model right being able to get our execution in place as far as our cost as well as what we talked about on the market market pricing.
Speaker Change: Preparing the organization and now looking at what we need to do to invest for.
Speaker Change: To drive growth.
Speaker Change: To have the peak of the season come in and not be ready for that.
Speaker Change: <unk> seen what that what that does in the past in 2018 19.
Speaker Change: Great well, thanks for the color on.
Speaker Change: The customer outlook and the visibility that you have there that's really helpful and congratulations again on just being very good if you're managing gross margin, especially your guidance for the year I appreciate that thanks.
Speaker Change: Yeah.
Speaker Change: And at this time, we're showing no further questioners in the queue and this does conclude our question and answer session I would now like to turn the conference back over to David involved for any closing remarks.
David: Thank you for your continued interest in our company, we will participate in the upcoming East Coast ideas Conference in New York in June and we look forward to providing an update on our progress when we report the second quarter results in August. Thank you very much and have a great day.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Hum.
Speaker Change: Yes.
Speaker Change: Yeah.
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Speaker Change: Yeah.
Speaker Change: Hum.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
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Speaker Change: [music].
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Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Hum.
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Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yes.