Q1 2025 Malibu Boats Inc Earnings Call
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Speaker Change: Good morning and welcome to Malibu Boats Conference call to discuss the first quarter fiscal year 2025 results.
Speaker Change: At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time.
Speaker Change: Peace be advised that reproduction of this call in whole or in part is not permitted without written authorization of malibu boats.
Speaker Change: and as a reminder, today's call is being recorded.
Speaker Change: On the call today from Management, our Mr. Steve Menneto, Chief Executive Officer.
Speaker Change: Mr. Bruce Beckman, Chief Financial Officer, and Mr. Richie Anderson, President.
Speaker Change: I will turn the call over to Mr Beckman to get it started. Please go ahead sir.
Bruce Beckman: Thank you, thank you for morning everyone. Joining me on today's calls are CEO Steven Menneto. On the call, Steve will provide commentary on the business and I will discuss our first quarter of fiscal year 2025 financials. We will then open the call for questions.
Bruce Beckman: A press release covering the company's fiscal first quarter 20-25 results was issued today and a copy of that press release can be found in the investor relation section of the company's website.
Bruce Beckman: I also want to remind everyone that management's remarks on this call may contain certain forward-looking statements, including predictions, expectations, estimates, and other information that might be considered forward-looking.
Bruce Beckman: and that actual results could differ materially from those projected on today's call.
Bruce Beckman: You should not place undue reliance on these forward-looking statements, which speak only as of today. And the company undertakes no obligation to update them for any new information or future events.
Bruce Beckman: Factors that might affect future results are discussed in our filings with the SEC, and we encourage you to review our SEC filings for a more detailed description of these risk factors.
Bruce Beckman: Please also note that we will be referring to certain non-gap financial measures on today's call, such as adjusted EBITDA, adjusted EBITDA margin, adjusted fully distributed net income, and adjusted fully distributed net income per share.
Speaker Change: Reconciliation of Gap Financial Measures to Non Gap Financial Measures are included in our earnings release. I will now turn the call over to Steve.
Steve Menneto: Thank you, Bruce. Thank you all for joining the call. Before we dive into the results, I would like to comment on the hardships caused by the two hurricanes.
Steve Menneto: Our heart goes out to all those affected. At Malibu, the safety of our people, customers, dealers and communities is always paramount.
Steve Menneto: Our Fort Peer facilities experience some delays, but we have implemented measures to minimize any disruptions to production and distribution. However, some of our partners have asked the delay statements for a short amount of time as they work through operational challenges.
Steve Menneto: We have incorporated that into our plans and expect no impact on our outlook for the fiscal year.
Steve Menneto: Puring to the first fiscal quarter, as expected, we navigated a challenging market environment driven by continued macroeconomic factors and slower retail demands.
Steve Menneto: Net sales decreased by approximately 33% year over year as we maintain our focus on reducing channel
Steve Menneto: While we are encouraged by the recent move in interest rates, we will need a sustained cycle of rate cuts, bring back payment buyers into the market.
Steve Menneto: Re-sell the man remains challenging and will likely remain challenging until payment buyers return to the market.
Steve Menneto: As stated, our key focus has been on maintaining discipline control over dealer inventories by adjusting production levels.
Steve Menneto: As expected, do one show its sequential improvements in inventory aligned comparison quarter four, positioning us well for the coming quarters.
Steve Menneto: In addition, our margin performance in the first quarter also improved compared to prior quarter, which align with our expectations as promotional support for turn to more normalized levels.
Steve Menneto: This tailwind, coupled with our resilient business model, highlighted by our variable cost structure, enables us to adapt quickly to changing market conditions and maintain financial stability.
Steve Menneto: Adding to this ability of our business, we are bringing the Tommy's Matters to closure.
Steve Menneto: The trustee has liquidated nearly all of their remaining new Malibu in access inventory.
Steve Menneto: As mentioned in prior discussions, our newly authorized dealers are up and running, selling boats and providing great service to our customers.
Steve Menneto: and following the legal settlement announced earlier this month which covers all impacted locations. We are now turning our full attention to supporting our dealers and restoring and ultimately improving our market share in these important markets.
Steve Menneto: Turning to our Maldi year 25, we are excited to answer the boat show season.
Steve Menneto: where we will showcase our newest models, including the recently launched All-New Malbu M230 in the Cobalt R-30W.
Steve Menneto: The All-New N230 exempt-blast are commitment to luxury and advanced functionality.
Steve Menneto: This model features the State of the Art Malibu Command Center and hands with the new Malibu operating system, which allows for seamless wave control and pre-set water sport options.
Steve Menneto: Other notable design elements include the EasyStas Ford Locker and Max Relax Sun Deck, catering to both casual users and serious water sport enthusiasts.
Steve Menneto: We are also thrilled to introduce the all new global R31. So, latest addition to our global lineup.
Steve Menneto: This luxury dayboat is designed to embody the exceptional quality and innovative features that have become the hallmark of the Colbal brand.
Steve Menneto: We look forward to showcasing our lineup at the Fort Lauderdale International Boat Show.
Steve Menneto: Early feedback from dealers has been very positive, reinforcing our confidence in our industry leading innovation, further solidifying our leadership in premium features and customer experience.
Steve Menneto: Separately, as the testaments are industry leading innovation, we are pleased to announce that our 2024 Malibu wakes at our 23 LSB as once again, and recognize by Wake World Riders Choice Awards as Wake Surf and Wake Board both of the year.
Steve Menneto: Marking a fifth consecutive year we have received this honor. This award reflects our consistent delivery of performance and quality that our customers have come to expect, reinforcing our leadership position in the TOLBO segment.
Steve Menneto: We can continue to see positive markets here against across our brands. On a trailing 12 month basis through June, mobile continues to gain share. Led by our Stern-Drize segment gaining 200 basis points.
Steve Menneto: with in Colbowl's 22-24-foot model segment, which are now being produced in our new Rowan County Tennessee facility, we have gained over 250 bases points of share.
Steve Menneto: and lastly Pathfinder, which is represented by our dayboat segment, has gained 400 pieces points of share.
Steve Menneto: We continue to make great strides in our verbal integration initiatives.
Bruce Beckman: Bruce. Recently, we completed the move of Malbu Electronics in our now fully producing wiring harnesses out of our new Roni County facility. This fully integrated and consolidated footprint enhances our operational efficiency and positions us for the growth as market conditions recover.
Bruce Beckman: As we discussed two months ago, we have taken the necessary actions to reset the business.
Bruce Beckman: Therefore, we are maintaining our full-year guidance. Heal inventory levels are aligned with historical averages, allowing us to better align wholesale shipments with retail demand.
Bruce Beckman: Our capacity expansion projects are also complete, giving us the ability to increase shipments to the retail market return to growth, students and anticipated.
Bruce Beckman: We expect to see sequential improvement throughout the year in the top and bottom lines of social shipments pick up.
Bruce Beckman: As I continue engage more deeply with the business, I am pleased to announce that we are planning to host an investor day in Calgary Year 2025.
Bruce Beckman: At this event, we'll discuss our long-term strategy and outline our approach to sustain growth, operational excellence and product innovation.
Bruce Beckman: I look forward to sharing more details soon and excited about the future of our business.
Bruce Beckman: Now turn the call over to Bruce for further remarks on the quarter.
Bruce Beckman: Thanks, Steve. Our results in the first quarter were slightly above our expectations.
Bruce Beckman: Net Sales decrease 32.9% to 171.6 million dollars, and unit volume decrease 39.7% to 1,024 units.
Bruce Beckman: The decrease in net sales was driven primarily by decreased univoliums across all segments, resulting primarily from decreased wholesale shipments, partially offset by favorable model mix and modest inflation driven year over year pricing increases.
Bruce Beckman: The Malibu and Axis Brands represented approximately 37.5% of unit sales, saltwater fishing represented 29.3% and Cobalt made up the remaining 33.2%.
Bruce Beckman: Consolidated Net Sales per unit increased 11.2%. To $167,559 per unit, primarily driven by favorable model mix and modest inflation driven year-over-year pricing crisis.
Bruce Beckman: Gross Profit decreased 50.3% to 28.2 million dollars and Gross margin was 16.4%.
Bruce Beckman: This compares to a gross margin of 22.2% in the prior year period. The decrease in gross margin was driven primarily by lower net sales associated with a nearly 40% reduction in univoling.
Bruce Beckman: Costs of sales decrease 28% in a period where revenues decline 33% demonstrating our operational excellence and highly variable cost structure in line with our historical range of 80 to 90%.
Bruce Beckman: Sequentially, Bruce margins improved by 850 basis points. Primarily due to a return to more normalized levels of promotional support as expected.
Bruce Beckman: Selling and Marketing Expansed Decrease 15.4% in the first quarter. The decrease was driven primarily by lower event costs.
Bruce Beckman: As the percentage of sales selling and marketing expense increased versus a prior year by 60 basis points to 2.8%.
Bruce Beckman: General and Administrative expenses increase 31.6% or $6.5 million.
Bruce Beckman: The decrease was driven primarily by an increase in compensation related expenses and higher legal fees, inclusive of the $3.5 million legal settlement with the trustee for the Tommy's estate, previously mentioned by Steve.
Bruce Beckman: As a percentage of sales, DNA expenses increase 780 basis points versus the prior year to 15.9%.
Bruce Beckman: GapNet income for the quarter decreased 124.8% versus prior year to a net loss of $5.1 million.
Bruce Beckman: Adjusted EBDA for the quarter-decrease 74.6% to $9.9 million and adjusted EBDA margin decreased to 5.8% from 15.2%.
Bruce Beckman: Non-Gap adjusted fully distributed net-income per share decreased 92.9% to 8 cents per share.
Bruce Beckman: This is calculated using a normal IC corp tax rate of 24.5% and a fully distributed weighted average share count of approximately 20.6 million shares.
Bruce Beckman: for reconciliation of gap metrics to adjusted EBITDA and adjusted fully distributed net income per share. Please see the tables in our earnings release.
Bruce Beckman: Turning our attention to capital, we continued to execute on our capital allocation priorities by repurchasing $10 million of stock in the quarter.
Bruce Beckman: Capital expenditures in the quarter were $8.6 million. Putting us on track to our expected $30 to $35 million in capital expenditure levels for the fiscal year.
Bruce Beckman: Our strong balance sheet and ample liquidity gives us the ability to invest in our core business and pursue value creating acquisitions.
Bruce Beckman: Turning our attention to the full year, our view of the market has not changed since we last updated you during the Q4erings call in late August.
Bruce Beckman: The market continues to be challenging. The long anticipated interest rate cuts have begun, which is a positive. But time will tell how many more cuts are required for payment buyers to return to the market.
Bruce Beckman: As discussed previously, we expect there to be a continued decline and retail demand for the remainder of the fiscal year. albeit at a reduced rate of the decline from last year.
Bruce Beckman: We also continue to expect our dealers to maintain the heightened focus on reducing their inventory below historical levels.
Bruce Beckman: We remain confident in our ability to execute our long-term strategy despite the near-term uncertainties. Therefore, we are keeping our fiscal year 2025 outlook unchanged.
Bruce Beckman: For the full fiscal year, we continue to expect a year over year net sales increase of low single digit percentage points.
Bruce Beckman: For Q2, we expect Net Sales to be up sequentially, but down high single digit percentage points on a year-over-year basis, given a challenging prior year comparison.
Bruce Beckman: This is our last challenging comparison of the year and we expect our sales to return to growth in the back half of the year.
Bruce Beckman: We continue to expect consolidated adjusted e-pidomargin for the full fiscal year to range between 10 to 12%.
Bruce Beckman: For Q2, we expect adjusted Epetom margins of mid-single digit as we maintain modest production levels in a focus on dealer inventories.
Bruce Beckman: Our performance in the first quarter came in as expected, underscoring our progress on reducing channel inventories and normalizing promotional spending. We expect this progress to continue and provide tailwinds for the remainder of the year, particularly in the back half where comparisons ease.
Bruce Beckman: We are encouraged to see the recent interest rate cuts and given the strength of the innovation we are bringing to market, we are eagerly anticipating the boat show season.
Bruce Beckman: We remain optimistic about our competitive positioning in the industry and our prepared to support a surgeons in demand when the market recovers.
Bruce Beckman: Until then, our Rebuilding Business Model, Flexible Cost Structure, and Vertical Integration Strategies, allow us to generate strong cash flow and execute on our capital allocation priorities.
Bruce Beckman: We are confident that our strategies, combined with our strong brand portfolio and dedicated team will drive long-term growth and value creation for our shareholders.
Bruce Beckman: with that, but don't be up to call for questions.
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Bruce Beckman: Thank you.
Speaker Change: As Reminder, do ask a question you will need to press star 1 on your touchdown telephone.
Speaker Change: If your question has been answered, or you wish to withdraw your question, press the star 2 key
Speaker Change: Police Stand 5, while we compile the Q&A roster.
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Speaker Change: The first question comes from Eric Wald with B Riley Securities.
Speaker Change: Please call her.
Speaker Change: Thank you, good morning everyone.
Eric Wald: Couple of questions from me, and just first of all, maybe dig in a little bit more into the strength of AST's in the quarter and how sustainable you think these levels can be going forward. You know, it's for any coming orders.
Eric Wald: From the dealers now that inventory has normalized, are you seeing?
Eric Wald: and then you're going to upward downward shifts in kind of options and what not based into the models or ordering. And then as payment buyers return to the market, how would you expect that to skew ASP's if it'll never fall up?
Speaker Change: Yeah, well, good morning Eric. What I would say is it's really driven.
Speaker Change: A lot by the mix and just where the market is right now. So it's the premium cash buyers that are driving the market.
Speaker Change: and we have a lot of premium offerings that we're bringing to market right now. Particularly this year in Malibu, the new models that we're introducing are all in the Malibu line.
Speaker Change: and they're very premium models. So within the quarter, that's really, you know, it's been a big driver of our, you know, SP's was at skewing towards the metal room models.
Speaker Change: Um...
Speaker Change: Yeah, and a soul water as well, you know, continues to be driven by the, you know, by the larger pursuits and we've invested in the Kobe product line as well, which are driving the mix there as well. So pretty strong, pretty strong mix and Q1.
Speaker Change: and I know where the start of the boat shows season right now. You can mention that your margins were benefited by your promotional activity, and I were turning to more normalized levels. All you've to do is to select a C.
Speaker Change: at the boat shows. What are you seeing from competitors in your markets right now, and from their promotion, activity? And how do you think that kind of plays out as you move the boat shows you, is there still a little bit too heavy inventory in the markets?
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Speaker Change: Yeah Eric, we expected to be a competitive environment. I mean we saw it sequentially our promotional spending improved as expected because we invested so heavily in Q4 to get our inventories.
Speaker Change: in a good spot. They were lower in Q1, but they were not lower on a year over year basis. We continued to expect it to be a competitive retail market.
Speaker Change: Thank you very much.
Speaker Change: Thank you.
Speaker Change: The next question?
Speaker Change: is from Craig Kenneth and with...
Speaker Change: with Bad, please go ahead.
Craig Kenneth: Hey, good morning and thank you for taking my questions. Steve, it's been about a hundred days since you've been in that chair and I'm just curious, you know, what observations you've made about opportunities or challenges now that you've had a chance to.
Craig Kenneth: Meet a lot of people and then assess operations.
Craig Kenneth: Gerard.
Steve Menneto: Operations, you know, really decor the business, I think.
Steve Menneto: If you look at the history of Malibu's then particularly strong aspect of our business
Steve Menneto: Being able to jump into a deeper with Richie and learning a lot from him.
Steve Menneto: and you really solidifies what I thought going in, which is that's, you know, pillar of strength of our business. So that was good to see. The market dynamics, you know, are our challenge.
Steve Menneto: You know what the current customers and how we look at payment buyers and so forth as we alluded to earlier in the call.
Steve Menneto: So we'll continue to, you know, monitor the industry, monitor the consumer, you know, look to how do we sharpen our game, you know, on how to, you know, drive demand to our stores and help and work with our dealers to maximize retail.
Steve Menneto: for the fullest potential, you know, while we're in this kind of, we're in this down cycle a little bit.
Steve Menneto: When it returns, you know, and those buyers recover, I think we're in work position well to do well.
Steve Menneto: So the company's in good position, I've got more confidence in where we're going. We have operational strength then now.
Steve Menneto: will continue to work on our commercial side of our business to us.
Steve Menneto: You know, to meet the man and to end you up.
Steve Menneto: to help our dealers maximize retail.
Speaker Change: Thanks and I'm wondering, you know, you came from the Power Sports World, you know, just the nature of that distribution channel.
Speaker Change: That seemed to be, they're seem to be an incentive for OEMs to take up as much showroom space as possible, otherwise they would lose share. Is that dynamic similar in both? Do you feel like you have more?
Speaker Change: Partnership, arrangement with your boat dealers such that if you got...
Speaker Change: a key brand in a category. You don't have to act irrationally with respect to how you plan inventory for that dealer.
Speaker Change: Yeah, I think there is a difference between Marine and Power Source clearly. I think the size of the unit.
Speaker Change: itself, right, creates opportunities for sure or for, but the relationships of how they represent the brands. Some of the marine segments, you know.
Speaker Change: The dealers are only carrying one brand in a particular segment so far so the dynamics are different But partnership is at the core in both industries right and partnering with the dealers is at the core and next what we plan on doing and
Speaker Change: We're heading to our Malibu dealer.
Speaker Change: The other show here in a couple days.
Speaker Change: and we'll meet with the dealer council and continue to meet dealers.
Speaker Change: across the business, I've been to the Perceut dealer meeting, I've been to the Colvaalt dealer meeting and continue to really engage dealers and learn from them.
Speaker Change: and understand what challenges and what opportunities there are in their businesses and how we can be a better OEM. So it's been educational, it's been different in power sports, which is noted and will continue to work to make sure in the marine space where we're a OEM that dealers want to be part of our business in.
Speaker Change: He'd be a partner with as we grow our business together.
Speaker Change: Great, thanks, Steve.
Speaker Change: Thank you.
Speaker Change: The next question comes from Joel Aldebello with Raymond James, please go ahead.
Joel Aldebello: Thanks, hey guys, good morning. I think it's first question for you Steve, in your Fred and March, you mentioned, the quarter was a little better than you expected, and maybe kind of at a high level, what drove that it seemed like sales were better and more just better. I assume that's related, but what was the positive surprise in the quarter?
Steve: The positive has been the new products been doing really well. The innovation continues to...
Speaker Change: Hey, often terms of driving shares as buying customers.
Steve Menneto: Those are the votes both Malibu, what we've seen in Perceus, have been helping us in the first quarter. And it's again, been the core of this business, and so that's kind of really where it mainly has been.
Speaker Change: Okay, got it. And just to follow up on that, I was a little surprised to hear that the promotional environment sounds like it's easing a little bit. How much of that is seasonal, you know, as we enter the winter months here.
Speaker Change: I think it is a little bit seasonal, it's also, you know what?
Speaker Change: Us having our inventory is on a control, smartly working with the dealers to get those in the right position
Speaker Change: As we're entering the boat show season as we said, we'll monitor, you know, wear promotional environments go.
Speaker Change: We're encouraged right now that as we kick off of Fort Lauderdale, we're optimistic about the boat show, but we'll tell you all the weekend.
Speaker Change: So right now I think it's a little seasonal, I think it's some other competitors working through reduction.
Speaker Change: of Darym and Torries, but we're a pretty good shape and I think we'll continue to monitor what's necessary to be competitive.
Speaker Change: Okay, super, thank you.
Speaker Change: Thank you.
Speaker Change: We have the next question from Noah Zappkin with Keybank Capital Markets, please go ahead
Speaker Change: Hi, thanks for taking my question. Maybe just one on the kind of MNA front. I guess the thought process kind of remained the same or changed around potentially kind of pursuing pontoon.
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Speaker Change: I leave, go ahead Bruce, go ahead, go ahead, Steven
Speaker Change: The Sun Cross has changed, you know, if there remains an option for us.
Speaker Change: The...
Speaker Change: What we've said previously is that we're looking for value creating MNA opportunities. If we get the right opportunity, we'll take a look and if it makes sense for our business, we may move forward, but Pantune's continue to be an option for us if it makes sense.
Speaker Change: Thanks, and not to but to find a point on it, but you have you given kind of like unit expectations for the fiscal year in terms of industry retail units.
Speaker Change: and then I guess relatedly like, maybe within your plan, how you're thinking about number of thoughts and and magnitude. Thanks.
Speaker Change: Yeah, we don't give specific unit guidance, but we have shared that we expect the retail market so we participate in to be down in the mid-singled digit range. We have shared that and that's what we continue to believe.
Speaker Change: Thanks and then just on Recuts in the plan, how you're kind of thinking about that.
Speaker Change: Yeah, what I'd say is we don't speculate on interest rate cuts. We don't build a forecast on interest rate cuts.
Speaker Change: So, you know, we just deal with the cards that we have visible in our hands and that's, you know, factoring into the industry down in the mid-singled digit percentage range.
Speaker Change: Alphabelle.
Speaker Change: We would love to be pleasantly surprised at some point in the future. There are enough cuts to rekindle that activity of the payment buyers.
Speaker Change: and so that's given how we schedule our factories and how we have the ability to ramp and respond with the capacity that we have in place. We're confident we can support and upturn in the environment if that materializes.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: The next question comes from Griffin Ryan with DA David. Please go ahead.
Griffin Ryan: Good morning. So, it seems like retail for September specifically with a steel wake category. It looks pretty good relative to the rest of the categories. I just kind of like what do you attribute this to? Is there any indication that this continues through October?
Speaker Change: Yeah, what I would say is, you know, we...
Speaker Change: There always seems to be a little bit of a lag of when...
Speaker Change: We see things kind of an internal warranty registration and when some of the boats flow through SSI I mean, so I think what you're seeing is some of our Q4 promotion activities showing up in the numbers as well as the Tommy's liquidation event
Speaker Change: Really kicked into high gear in the September timeframe. So those boats are starting to flow through the SSI numbers as well.
Speaker Change: Got it. And then with the hurricane impact, there are any early signs that, you know, there will be sizable insurance plans that can help with some dealer-de-sauceing for your products specifically.
Speaker Change: That's that's uh
Speaker Change: County not insurance companies to pay quickly enough to get people to have the cash in their pocket to buy new boat, it's not something I want to base my eye
Speaker Change: My, my guidance on it. We would, you know, we hear anecdotally that there would likely be some, you know, some replacement activity that takes place, but I wouldn't really want to speculate on the exact time you know that of that activity.
Speaker Change: 100 cents, thank you.
Speaker Change: Thank you.
Speaker Change: Hey guys, it's Fred Wyman on for Greg. I just wanted to come back to the hurricane impact. I think you made a comment at some of the shipments.
Fred Wyman: The dealers are asked for some delays or deferrals in shipments tied to the storms. I'm wondering if if that in any way showed up in the reported one key results, if that's more of a shift to the back half of the year versus how you sort of thought the year would shake out initially and if it could just help us with.
Fred Wyman: and what if any of the timing shifts might be?
Speaker Change: Gad, yeah, right high.
Speaker Change: George Bruce.
Speaker Change: Yeah, I would just say it's minimal, it's a minimal ship from what we might have shipting in Q2 to what into the back half, but it's a modest impact.
Speaker Change: Okay, that's helpful. And in the past, really last quarter you would talk about some market care impact from those impacted tomis markets. I'm wondering if you're still seeing those former tomis markets under performer lag from a share perspective or if it's kind of closer to what you're seeing.
Speaker Change: Broccoli.
Speaker Change: Yeah, I mean, the Tommy's markets are starting now to see that liquidation activity go through those markets and up until that time, it's been a pretty big drag on us. I would expect.
Speaker Change: That is going to be a tailwind for the next couple of months, so it's both flush through SSI and then...
Speaker Change: When we get back to kind of a more normalized where our new dealers are the ones that are competing and in shared markets, your battles in the respective markets.
Speaker Change: Thank you.
Speaker Change: Next question comes from Jamie Cat, with...
Speaker Change: with Morningstar. Please go ahead.
Jamie Cat: Hi, good morning. I want to ask about the line in your press release where you guys are particularly, but you're seeing some encouraging signs from a macro perspective. I think the rhetoric was a little bit...
Jamie Cat: Different in the commentary and so I'm curious that maybe that's something beyond just the start of interest rate cuts and OEMs behaving better.
Speaker Change: I think it's really that started being to illustrate cuts. I mean, we've been talking about them for a long time. They've actually now started to happen. I think that was the spirit behind that comment.
Speaker Change: We're also like, like we've been commenting on, we were card to help our dealer partners get their inventory back in line at the end of last fiscal year and so we feel like we're going into the whole show season.
Speaker Change: where the interest rates now started to come down with a great model lineup and a pretty healthy inventory roster going into the show. So that's probably...
Speaker Change: Maybe that's a little more color on that spirit of optimism.
Speaker Change: Okay, and then can you give us some color on input cast inflation?
Speaker Change: I'm thinking about, you know, does that improve with higher throughput through the back half of the year, you know, or there's some great points that may be helped. Is any input cost inflation you guys are seeing? Just sort of what to expect there. Thanks.
Speaker Change: Yeah, I guess what I would say Jamie is that, you know, we're seeing, you know.
Speaker Change: Very modest inflation, certainly it's come down quite substantially from where it was in the peak of COVID.
Speaker Change: Not really seeing it come down though, I mean, it's not turned into deflation and I wouldn't expect that that will be where we'll see, you know, tailwinds on margin, I would say, you know, we'll get...
Speaker Change: As the volumes increase, it will be more of a volume leverage on more of our fixed costs within the cost of sales line where we will see the benefits.
Speaker Change: Great thanks.
Speaker Change: Thank you.
Speaker Change: I am not chewing any further questions at this time
Speaker Change: This is the truth today, it's gone from school. Thank you for participating, you may now disconnect.
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Director of Photography, Michael Hooks, Bruce Beckman, Steven Menneto, Jack Springer, Unknown Executive