Q2 2025 Motorcar Parts of America Inc Earnings Call
Yes.
Operator: Thank you for standing by.
Nova: Thank you for standing by my name is Nova and I'll be your conference operator today at this time I would like to welcome everyone to the Motorcar parts of America, Inc. Fiscal 'twenty 'twenty five second quarter conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be.
Operator: My name is Novi, and I will be your conference operator today.
Operator: At this time, I would like to welcome everyone to the Motorcar Parts of America Inc. fiscal 2025 second quarter conference call and webcast. All lines have been placed on mute to prevent any background noise.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again.
Speaker Change: A question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star. One again. Thank you I would now like to turn the call over to Gary Maier, Vice President of corporate Communications and Investor.
Gary Maier: I would now like to turn the call over to Gary Maier, Vice President of Corporate Communications and Investor Relations at Motorcar Parts of America. Thank you, Novi, and thanks everyone for joining us for our call this morning. Before I turn the call over to Selwyn Joffe, Chairman, President, Chief Executive Officer, and David Lee, the company's Chief Financial Officer, I'd like to remind everyone of the safe harbor statement included in today's press release.
Gary Maier: <unk> at Motorcar parts of America.
Gary Maier: Okay. Thank you.
Speaker Change: And thanks, everyone for joining us for our call. This morning before I turn the call over to sell and Jonathan Chairman, President and Chief Executive Officer, David Lee The company's Chief Financial Officer, I'd like to remind everyone of the Safe Harbor statement included in today's press release, the private Securities Litigation Reform Act of 1995.
Gary Maier: The Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements, including statements made during today's conference call. Such forward-looking statements are based on the company's current expectations and beliefs. Discussing future developments and their potential effects on the company. There can be no assurance that future developments affecting the company will be those anticipated by Motorcar Parts of America. Actual results may differ from those projected in the forward-looking state. These forward-looking statements involve significant risks and uncertainties, some of which are beyond the control of the company and are subject to change based upon various factors.
Speaker Change: <unk> provides a safe harbor for certain forward looking statements, including statements made during today's conference call.
Speaker Change: Forward looking statements are based on the company's current expectations and beliefs.
Speaker Change: Future developments and their potential effects on the company there can be no assurance that future developments affecting the company will be those anticipated by motorcar parts of America actual results may differ from those projected in the forward looking statements. These forward looking statements involve significant risks and uncertainties.
Speaker Change: Some of which are beyond the control of the company and are subject to change based upon various factors in particular expectations about anticipated future growth and opportunities with customers may not be achieved the company undertakes no obligation to publicly update or revise any forward looking statements.
Gary Maier: In particular, expectations about anticipated future growth and opportunities with customers may not be achieved. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Speaker Change: Whether as a result of new information future events or otherwise for a more detailed discussion of some of the ongoing risks and uncertainties of the company's business.
Gary Maier: For a more detailed discussion of some of the ongoing risks and uncertainties of the company's business, I refer you to the various filings with the SEC that we.
Speaker Change: Refer you to the various filings with the FCC.
Selwyn Joffe: I will now turn the call over to Selwyn Joffe to begin. Thank you, Gary. I appreciate everyone joining us today. We are gratified by our continued record sales performance for the quarter and six months. We were excited by the opportunities we see on the horizon and remain optimistic about the second half of fiscal 2025 and achieving our full year target. We reported record gross profit for the quarter and six months and gross margin metrics showed continued improvement, which David will discuss in more detail. We generated approximately $23 million of cash from operating activities, primarily due to strong operating results.
I will now turn the call over to selling Jonathan.
Speaker Change: Again, our call. Thank you Gary.
Speaker Change: Appreciate everyone joining us today.
Speaker Change: Im gratified by our continued record sales performance for the quarter and six months.
Speaker Change: Excited by the opportunities we see on the horizon and remain optimistic about the second half of fiscal 2025, and achieving our full year targets.
Speaker Change: We reported record gross profit for the quarter and six months and gross margin metrics showed continued improvement, which David will discuss in more detail.
Speaker Change: We generated approximately $23 million of cash from operating activities, primarily due to strong operating results.
Selwyn Joffe: Our initiatives to enhance profitability and neutralize working capital are progressing well. The result of these initiatives is to increase profitability and cash flow, which will enhance shareholder value. We are particularly excited by the operational efficiencies we are realizing from our emerging brake-related products, which have grown to be our second-largest category. New brake business commencing in January will further enhance our product production efficiency. which should result in consolidated margin improvement. Clearly, our accelerating brake-related product sales are contributing to efficiencies from both purchasing and production. Our team is doing an exceptional job to enhance performance metrics, and we look forward to continued growth and gross margin accretion for our important non-discretionary products.
Speaker Change: Our initiatives to enhance profitability and neutralize for working capital are progressing well.
Speaker Change: The result of these initiatives is to increase profitability and cash flow, which will enhance shareholder value.
Speaker Change: We are particularly excited by the operational efficiencies. We have realized we are realizing from our emerging brake related products, which have grown to be our second largest category.
Speaker Change: Brake business commencing in January will further enhance our product production efficiencies, which should result in consolidated margin improvement.
Speaker Change: Clearly our accelerating break related product sales are contributing to efficiencies from both purchasing and production.
Speaker Change: Our team is doing an exceptional job to enhance performance metrics and we look forward to continued growth in gross margin accretion.
Speaker Change: For our important non discretionary products.
Selwyn Joffe: There are various factors related to our financial performance that are non-cash and beyond our control, particularly the current sharply unfavorable non-cash mark-to-market foreign exchange laws from Mexican lease liabilities and forward contracts. A strengthening dollar versus the peso results in large, non-cash, mark-to-market expenses, which we internally eliminate when evaluating underlying results. We are continuing to look at opportunities to minimize these non-cash expenses, including funding our Mexico operations with pesos from sales in Mexico. As our sales in Mexico continue to grow, we will purchase fewer forward contracts to meet our peso obligations, which will lessen the impact of non-cash foreign exchange expense fluctuations.
Speaker Change: There are various factors related to our financial performance that are noncash and beyond our control, particularly the current sharply unfavorable noncash mark to market foreign exchange laws from Mexican lease liabilities in foreign contracts.
The strengthening dollar versus the peso resulted in a large noncash mark to market expenses, which we intend to eliminate when evaluating underlining results were.
Speaker Change: We are continuing to look at opportunities to minimize these noncash expenses, including funding our Mexico operations with vessels from sales in Mexico.
As our sales in Mexico continue to grow we will purchase fewer forward contracts to meet a peso obligations, which will lessen the impact of noncash foreign exchange expense fluctuations.
Selwyn Joffe: Obviously, interest rates, particularly applicable to vendor finance programs utilized by our customers, are a headwind. On a positive note, interest rates are headed lower, which will have a meaningful impact on profitability moving forward.
Speaker Change: Obviously.
Speaker Change: Asleep interest rates, particularly applicable to vendor finance programs utilized by our customers are a headwind on a positive note interest rates are headed lower which will have a meaningful impact on profitability moving forward.
Selwyn Joffe: From an operational standpoint, results in the first half of fiscal 2025 were impacted by one-time severance expenses related to strategic cost reduction. This strategic relocation will generate expected annual savings of approximately $7.1 million. Approximately 90% of these savings will reduce the cost of goods sold, and the remainder will reduce operating costs. As I noted last quarter, this culminating action was part of a multi-year relocation process to reduce costs. utilizing our low-cost global footprint and will facilitate further operating efficiency. We are actively exploring additional initiatives to further reduce cost of goods sold.
Speaker Change: From an operational standpoint results from a first half of fiscal 2025 were impacted by one time severance expenses related to strategic cost reductions.
Speaker Change: The Street this strategic relocation will generate expected annual savings of approximately $7 1 million.
Speaker Change: Approximately 90% of these savings will reduce the cost of goods sold and the remainder will reduce operating costs.
As I noted last quarter. This culminating action was part of a multiyear relocation process to reduce costs utilizing our low cost global footprint and will facilitate further operating efficiencies. We are actively exploring additional initiatives to further reduce cost of goods sold.
Selwyn Joffe: Let me take a moment to highlight a few key near-term strategic objectives that support our favorable outcomes. With respect to generating cash, we remain diligently focused on improving profitability and increasing margins. In addition, as the fiscal second half evolves, we expect our working capital metrics to gain momentum. We have implemented initiatives to enhance inventory efficiencies and have also implemented processes to extend days outstanding on accounts payable. Our supply chain finance program is ramping up nicely and being enthusiastically accepted by our suppliers. Most importantly, we continue to evaluate allocation of capital to maximize shareholder value. Another positive ongoing initiative is the acceleration of new part number introduction.
Let me take a moment to highlight a few key near term strategic objectives that support a favorable outlook.
Speaker Change: With respect to generating cash we remain diligently focused on improving profitability and increasing margins.
Speaker Change: In addition, as the fiscal second half evolves, we expect our working capital metrics to gain momentum.
Speaker Change: We've implemented initiatives to enhance inventory efficiencies and have also implemented a process to processes to extend days outstanding on accounts payable.
Speaker Change: Our supply chain finance program is ramping up nicely and being enthusiastically accepted by our suppliers.
Most importantly, we continue to evaluate allocation of capital to maximize shareholder value.
Speaker Change: Another positive ongoing initiative is the acceleration of new part number introductions Togo.
Selwyn Joffe: Targeting at least 800 per year, as supported by the introduction of 505 additional new part numbers announced last month, covering 302 million vehicles on the road. This maintains our leadership position in the categories we supply, which meets the needs of consumers and adds organic growth to our sales. Not only are we growing organically, but we have secured meaningful new business commitments across all of our products. With respect to our diagnostic business, as I previously mentioned, we expect to sell more than $100 million of diagnostic equipment within the next three years, with further opportunities pending. We expect additional service revenue as more testers are deployed.
Speaker Change: Targeting at least 800 per year as supported by the introduction of 505 additional new part numbers announced last month.
Speaker Change: Mm 302 million vehicles on the road.
Speaker Change: This maintains a leadership position in the categories, we supply, which meets the needs of consumers and adds organic growth sales base.
Speaker Change: Not only are we growing organically.
Speaker Change: We have secured meaningful new business commitments across all of our product lines.
Speaker Change: With respect to our diagnostic business as I've previously mentioned, we expect to sell more than $100 billion of diagnostic equipment within the next three years with further opportunity spending.
Speaker Change: We expect additional service revenue as more testers are deployed we also expect more opportunities outside the United States as the business evolves.
Selwyn Joffe: We also expect more opportunities outside the United States as the business improves. With regard to our heavy-duty business, we continue to leverage our reputation and industry position in this market, particularly with regard to supplying alternators and starters to our channel partners who are leaders in the heavy-duty aftermarket. Our growth opportunities continue to gain momentum across multiple platforms. such as agriculture, Class A trucks, refrigeration, construction, material handling, and transit motorcoats. A Dixie brand is also evolving as an important supplier for the heavy-duty original equipment service for manufacturers.
Speaker Change: With regard to our heavy duty business, we continued to leverage our reputation in the industry position in this market.
Speaker Change: Particularly with regard to supplying alternators and starters to our channel partners, who are leaders in the heavy duty aftermarket segment.
Speaker Change: Our growth opportunities continue to gain momentum across multiple platforms, such as agriculture class eight trucks refrigeration obstruction material handling and transit motor coaches.
Speaker Change: Dixie brand is also evolving as an important supplier for the heavy duty original equipment service for manufacturers.
Selwyn Joffe: In the second half of the current fiscal year, we will remain focused on sales growth, profitability, and neutralizing working capital. As I noted earlier, we expect that sales and profitability will continue to grow organically and new businesses gaining solid traction. From a strategic standpoint, we will continue to leverage our strengths, including great products manufactured at state-of-the-art facilities. Solid Customer Relationship, Industry-Leading SKU Coverage, and Order Fill Rates. Not to mention our value-added merchandising and marketing. Our hard part sales in Mexico continue to gain momentum as we're experiencing increased demand for our aftermarket parts. The rate of growth in this market is exciting, and we are well-positioned to utilize our footprint to meet the growing demand.
Speaker Change: In the second half of the current fiscal year, we will remain focused on sales growth profitability and neutralizing working capital.
Speaker Change: As I noted earlier, we expect that sales and profitability will continue to grow organically and new business is gaining solid traction.
From a strategic standpoint, we will continue to leverage our strengths, including great products manufactured at state of the up facilities solid customer relationship and the steel industry, leading SKU coverage and order fill rates not to mention our value added merchandising and marketing support.
Speaker Change: Our pod sales in Mexico continued to gain momentum as we experienced increased demand for our aftermarket parts.
Speaker Change: The rate of growth in this market is exciting and we are well positioned to utilize our footprint to meet the growing demand.
Selwyn Joffe: We are focused on increasing share in this region. We continue to benefit and grow sales via our relationships with U.S.-based retailers and warehouse distributors who are gaining a presence in this emerging market, as well as through independent Mexican distributors. Favorable long-term industry dynamics continue to bode well for the company and we are extremely well positioned for sustainable top and bottom line growth in our hard parts business as well as our testing solutions. We are focused on growth across all product lines, including our quality built brand, which is gaining market share within the professional installer market.
Speaker Change: We are focused on increasing share in this region.
Speaker Change: We continue to benefit in gross sales by our relationships with U S based retailers and warehouse distributors, we're gaining a presence in this emerging market as well as through independent Mexican distributors.
Speaker Change: Favorable long term industry dynamics continue to bode well for the company and we are extremely well positioned for sustainable top and bottom line growth and our hard parts business as well as our testing solutions.
Speaker Change: We are focused on growth across all product lines, including our quality build brand, which is gaining market share within the professional installer markets.
Selwyn Joffe: This includes our most recent additions to our portfolio of brake calipers, brake pads, and rotors. I reiterate that as we grow these product lines, we expect overall gross margin accretion. We are beginning to see the benefits of it. In short, we have the capacity and capabilities to support our customers increasing demand across multiple product lines.
Speaker Change: This includes our most recent recent additions to our portfolio.
Speaker Change: Portfolio of brake calipers brake pads and rotors.
Speaker Change: I reiterate that as we grow these product lines, we expect overall gross margin accretion.
Speaker Change: We are beginning to see the benefits of this.
Speaker Change: In short, we have the capacity and capabilities to support our customers increasing demand across multiple product lines.
Selwyn Joffe: Our positive cash flow has enabled us to reduce net debt by $22 million during the quarter and will allow us to pursue opportunities to further enhance shareholder value. It is worth highlighting that 98.8% of the U.S. car park is comprised of hybrid and internal combustion engine vehicles. Non-discretionary off-the-market parts for the internal combustion engine market will be here for decades, an outlook supported by recently updated industry data showing that the average age of vehicles is not 12.8 years. One of our key competitive advantages is our ability to offer a broad range of applications for all makes and models.
Speaker Change: Our positive cash flows enable us to reduce net debt by $22 million.
During the quarter and will allow us to pursue opportunities to further enhance shareholder value.
Speaker Change: It is worth highlighting that 98, 8% of the U S car Park is comprised of hybrid in internal combustion engine vehicles.
Non discretionary aftermarket parts for the internal combustion engine market will be here for decades, and the outlook supported by recently updated industry data showing that the average age of vehicles is not 12 eight years.
Speaker Change: One of our key competitive advantages is our ability to offer a broad range of applications for all makes and models.
Selwyn Joffe: We remain focused on new model applications and our ability to meet expected demand as these vehicles enter the replacement market.
Speaker Change: We remain focused on newer model applications, and our ability and our ability to meet expected demand as these vehicles into the replacement market.
David Lee: I will now turn the call over to David to review our results in greater detail. Thank you, Selwyn, and good morning, everyone. I encourage everyone to read the earnings press release issue this morning, as well as the 10-Q that will be filed later today. Let me first reiterate key financial performance metrics for the fiscal 2025 second quarter that we highlighted in this morning's news release. Net sales increased 5.9% to a record $208.2 million. Gross profit increased to a record $41.3 million, impacted by certain one-time expenses of $2.7 million for onboarding new business and $1.3 million of transition expenses related to the recent strategic relocation of certain operations with expected annualized savings of $7.1 million.
Speaker Change: I will now turn the call over to David to review our results in greater detail.
David Lee: Thank you sell in and good morning, everyone I encourage everyone to read the earnings press release issued this morning as well as a 10-Q that will be filed later today.
David Lee: Let me first reiterate key financial performance metrics for the <unk>.
David Lee: Fiscal 2025 second quarter that we highlighted in this mornings news release.
David Lee: Net sales increased five 9% to a record $208 2 million.
David Lee: Gross profit increased to a record 41 3 million impacted by certain one time expenses of $2 7 million for Onboarding new business.
David Lee: And $1 3 million of transition expenses related to recent strategic relocation of certain operations with expected annualized savings of $7 1 million.
David Lee: generated cash from operating activities of $22.9 million and reduced net bank debt by $22 million. Results were impacted by non-cash items totaling $10.6 million, as detailed in the exhibit. Net sales for the fiscal 25 second quarter increased 5.9% to an all-time record $208.2 million from $196.6 million in the prior year. Gross profit for the fiscal 25 second quarter increased to a record $41.3 million from $41.1 million a year earlier. I should mention that gross profit for the quarter was impacted by non-cash expenses. The non-cash expenses reflect core and finished good premium amortization and revaluation of cores on customer shelves, which are unique to certain of our products and required by GAAP.
David Lee: Generated cash from operating activities of $22 9 million.
David Lee: And reduced net bank debt by $22 million.
Results were impacted by noncash items totaling $10 6 million as detailed in the exhibit.
David Lee: Net sales for the fiscal 'twenty five second quarter increased five 9% to an all time record $208 2 million from $196 6 million in the prior year.
David Lee: Gross profit for the fiscal 'twenty five second quarter increased to a record $41 3 million from $41 1 million a year earlier.
I should mention that gross profit for the quarter was impacted by non cash expenses.
David Lee: The noncash expenses reflect a core and finished good premium amortization and revaluation of cores on customer shelf, which are unique to certain of our products and required by GAAP.
David Lee: The total for these non-cash expenses in the quarter was approximately $3.8 million or 1.8% impact to gross margin. A more detailed explanation of core accounting is available in a video posted on the company's website. Gross margin for the fiscal 25 second quarter was 19.8% compared with 20.9% a year earlier. In addition to the non-cash expenses previously explained, as detailed in Exhibit 3 of this morning's earnings press release, gross margin was also impacted by a one-time $1.3 million, or 0.6%, of transition expenses in connection with a recent strategic relocation of certain operations. with expected annualized savings of $7.1 million.
David Lee: The total for these noncash expenses in the quarter was approximately $3 8 million or one 8% impact to gross margin.
David Lee: A more detailed explanation of core accounting is available in a video posted on the company's website.
David Lee: Gross margin for the fiscal 'twenty second quarter was 19, 8% compared with 29% a year earlier.
In addition to the noncash expenses previously explained as detailed in exhibit three of this morning's earnings press release gross margin was also impacted by a onetime $1 3 million or 6% of transition expenses in connection with our recent strategic relocation of certain operation.
David Lee: With expected annualized savings of $7 1 million.
David Lee: Additional to the items detailed in Exhibit 3, gross margin for the fiscal second quarter was impacted by a certain $2.7 million or 1.3% one-time expenses for onboarding new business, as I highlighted earlier. Aside from higher sales volume, particularly from certain of our newer product offerings, which supports increased absorption of costs, we're also focused on other initiatives to enhance growth markets. due in part to a $5.4 million non-cash, mark-to-market foreign exchange loss. compared with a $4.8 million non-cash, market-to-market foreign exchange loss in the prior year. Operating expenses were $28.8 million compared with $27.2 million last year.
David Lee: Additionally, the items detailed in exhibit three.
David Lee: Margin for the fiscal second quarter was impacted by certain $2 7 million or one 3% one time expenses for Onboarding, new business as I highlighted earlier.
David Lee: Aside from higher sales volume, particularly from stern of our newer product offerings, which supports increased absorption of costs. We're also focused on other initiatives to enhance gross margins.
David Lee: Due in part to a $5 4 million noncash mark to market foreign exchange loss.
David Lee: Paired with a $4 8 million noncash mark to market foreign exchange loss in the prior year.
Operating expenses were $28 8 million compared with $27 2 million last year.
David Lee: For those of you who are not familiar with our operation. Our leases in Mexico are U.S. dollar denominated leases. However, the leases are recorded in pesos at our Mexico subsidiary. As a result, the fixed U.S. dollar leases, which are paid in U.S. dollars, are re-measured at the end of every period to reflect the current exchange rate, resulting in a $4 million non-cash foreign exchange impact of lease liabilities for the second quarter. Additionally, the company purchases forward peso contracts, which are also re-measured at the end of every period to reflect the current exchange rate, which resulted in a $1.4 million non-cash foreign exchange impact of forward contracts for the fiscal second quarter.
David Lee: For those of you who are not familiar with our operations our leases in Mexico are U S dollar denominated leases.
David Lee: However, the leases are recorded in pesos at our Mexico subsidiary.
David Lee: As a result, the fixed U S dollar needs, which are paid in U S dollars a re measured at the end of every period to reflect the current exchange rate.
David Lee: Resulting in a 4 million noncash foreign exchange impact of lease liabilities for the second quarter.
David Lee: Additionally, the company purchases forward peso contracts, which are also re measured at the end of every period to reflect the current exchange rate.
David Lee: This resulted in a 1.4 million noncash foreign exchange impact of forward contracts for the fiscal second quarter.
David Lee: I might add that we are in the process of analyzing reducing exposure to the foreign exchange impact of lease liabilities and the impact of foreign currency forward contracts. I should note that excluding these non-cash items above, operating expenses increased by $878,000 to $23.3 million, compared with $22.5 million a year earlier, primarily due to the timing of certain expenses. Interest expense for the fiscal second quarter decreased by $1.2 million to $14.2 million from $15.4 million a year ago, primarily due to lower average outstanding balances under the company's credit facility and lower interest rates. Interest expense includes accounts receivable discount program interest of $9.4 million for the fiscal 25 second quarter, compared with $9.7 million for the prior year period.
David Lee: I might add that we are in the process of analyzing reducing exposure to the foreign exchange impact of lease liabilities and the impact of foreign currency forward contracts.
David Lee: I should note that excluding these noncash items operating expenses increased by 878000 to $23 3 million compared with $22 5 million a year earlier.
David Lee: I'm merely due to timing of certain expenses.
David Lee: Interest expense for the fiscal second quarter decreased by $1 2 million to $14 2 million from $15 4 million a year ago, primarily due to lower average outstanding balances under the Companys credit facility and lower interest rates.
David Lee: Interest expense includes accounts receivable discount program interest of nine $9 4 million for fiscal 'twenty, five second quarter, compared with $9 7 million for the prior year period.
David Lee: For the second quarter, income tax expense was $912,000 compared with $46,000 income tax benefit for the prior year. The effective tax rate for the fiscal second quarter was due in part to the inability to recognize the benefit of losses at specific jurisdictions. However, we expect these losses will be utilized against future profits, which will benefit future tax rates. Obviously, there are various factors impacting the tax effect. Net loss for the fiscal 25 second quarter was $3 million, or $0.15 per share, impacted by non-cash expenses of $8 million, or $0.40 per share, and one-time cash expenses of $1.1 million, or $0.06 per share, compared with net loss of $2 million, or $0.10 per share a year ago, impacted by various items detailed in Exhibit 1 in this morning's earnings question.
David Lee: For the second quarter income tax expense was 912000 compared with $46 an income tax benefit for the prior year.
David Lee: The effective tax rate for the fiscal second quarter was due in part to the inability to recognize the benefit of losses at specific jurisdictions. However, we expect these losses will be utilized against future profits, which will benefit future tax rates. Obviously, there are various factors impacting the tax effect.
Net loss for the fiscal 'twenty five second quarter was 3 million or <unk> 15 per share impacted by noncash expenses up $8 million or <unk> 40 per share and one time cash expenses of $1 1 million or <unk> <unk> per share compared with net loss of 2 million or <unk> <unk> per share per year.
David Lee: Go impacted by various items detailed in exhibit one in this morning's earnings press release.
David Lee: In addition to these items, as previously explained, results for the current quarter were also impacted by $2.7 million or $0.10 per share, a certain one-time expenses for onboarding new business. As previously explained, higher sales volume and operating efficiencies will further improve results. EBDA for the fiscal second quarter was $14.7 million, reflecting the $10.6 million impact of non-cash expenses, and $1.5 million in one-time cash expenses, detailed in Exhibit 5 of this morning's earnings press release. EBW, before the impact of non-cash and cash expenses mentioned above, was $26.8 million for the second quarter, despite the impact of certain one-time expenses of $2.7 million for onboarding new business.
David Lee: In addition to these items as previously explained results for the current quarter were also impacted by.
David Lee: $2 7 million or <unk> 10 per share a certain one time expenses for Onboarding new business.
David Lee: As previous explained higher sales volume.
David Lee: Operating efficiencies with further improved results.
EBITDA for the fiscal second quarter was $14 7 million, reflecting the $10 6 million impact of non cash expenses.
David Lee: And $1 5 million in one time cash expenses detailed in exhibit five of this mornings earnings press release.
David Lee: EBITDA before the impact of noncash and cash expenses mentioned above was $26 8 million for the second quarter. Despite the impact of certain one time expenses of $2 7 million for Onboarding new business.
David Lee: Now, let me discuss the six-month results. Net sales for the fiscal 25 six-month period increased 6.1% to a record $378.1 million from $356.3 million. Gross profit for the fiscal 25 six-month period increased to a record $70.5 million from $67.7 million a year earlier. Gross margins for the fiscal 25 six-month period was 18.6%, compared with 19% a year earlier. Gross margin for the fiscal 25-6 month period was impacted by $6.9 million or 1.8% of non-cash expenses. and 1.3 million or 0.3% of one-time cash expenses as detailed in Exhibit 4. In addition to the items detailed in Exhibit 4, gross profit for the current six-month period was also impacted by $2.7 million, or 0.7% of certain one-time expenses for onboarding new business.
Speaker Change: Now, let me discuss the six months results.
Net sales for the fiscal 'twenty five six month period increased six 1% to a record $378 1 million from $356 3 million.
Speaker Change: Gross profit for the fiscal 'twenty five six month period increased to a record $70 5 million from $67 7 million a year earlier.
Speaker Change: Gross margin for the fiscal year 'twenty five to six month period was 18, 6%.
Compared with 19% a year earlier.
Speaker Change: Gross margin for the fiscal 'twenty five six month period was impacted by $6 9 million or one 8% of noncash expenses.
Speaker Change: And $1 3 million or 3% of onetime cash expenses as detailed in exhibit four.
Speaker Change: In addition to the items detailed in exhibit four.
Speaker Change: Gross profit for the current six month period.
Speaker Change: Also impacted by $2 7 million or 7% of certain onetime expenses for Onboarding new business.
David Lee: Net loss for the fiscal 25-6 month period was $21 million, or $1.07 per share, impacted by non-cash expenses of $17.4 million, or $0.88 per share, and one-time cash expenses of $3.3 million, or $0.17 per share, compared with a net loss of $3.4 million, or $0.17 per share a year ago, impacted by various items detailed in Exhibit 2 in this morning's earnings press release. In addition to these items, as previously explained, results for the current six-month period were also impacted by $2.7 million, or $0.10 per share, of certain one-time expenses for onboarding new business. EBDAA for the fiscal 25 six-month period was $13.6 million.
Speaker Change: Net loss for the fiscal 'twenty five six month period was $21 million or <unk> <unk> per share impacted by noncash expenses of $17 4 million or 88 per share in one time cash expenses of $3 3 million or <unk> 17 per share.
Compared with a net loss of $3 4 million or <unk> 17 per share a year ago impacted by various items detailed in exhibit two in this morning's earnings press release.
Speaker Change: In addition to these items as previously explained results for the current six months period were also impacted by $2 7 million or <unk> <unk> per share a certain one time expenses for Onboarding new business.
Speaker Change: EBITDA for the fiscal 'twenty five six months period was $13 6 million.
David Lee: EBDAA was impacted by $23.2 million of non-cash expenses, as well as $4.4 million in one-time cash expenses, detailed in Exhibit 5 of this morning's earnings press. He beat out before the impact of non-cash and cash expenses mentioned above was $41.3 million for the current period, despite the impact of certain one-time $2.7 million of expenses for onboarding new business.
Speaker Change: EBITDA was impacted by $23 2 million of noncash expenses as well as $4 4 million in one time cash expenses detailed in exhibit five of this mornings earnings press release.
Speaker Change: EBITDA before the impact of noncash and cash expenses mentioned above was $41 3 million for the current period. Despite the impact of certain one time $2 7 million of expenses for Onboarding new business.
David Lee: Now, we will move on to cash flow and key corporate items. The company generated cash of approximately $22.9 million in operating activities during the Fiscal 25 second quarter. We anticipate an increase in operating profit and gross margin on a year-over-year basis for Fiscal 25, and the generation of positive cash flow for the year, supported by organic growth from customer demand and operating efficiencies from our global footprint expansion. In addition to our goal of generating increased operating profits, we are diligently focused on opportunities to neutralize working capital, including customer product demand planning, enhanced inventory management, and further extending our vendor payment terms. We expect increasing financial performance from both new and existing product lines, including our emerging brake categories.
Speaker Change: Now, we will move on to cash flow and key corporate items.
Speaker Change: The company generated cash of approximately $22 9 million in operating activities during the fiscal 'twenty five second quarter.
Speaker Change: We anticipate an increase in operating profit and gross margin on a year over year basis for fiscal 'twenty five.
Speaker Change: In the generation of positive cash flow for the year supported by organic growth from customer demand and operating efficiencies from our global footprint expansion.
Speaker Change: In addition to our goal of generating increased operating profits. We are diligently focused in opportunities to neutralize working capital, including customer product demand planning enhance inventory management and further extending our vendor payment terms.
Speaker Change: We expect increasing financial performance from both new and existing product lines, including our emerging brake categories.
David Lee: Net bank debt was $114.3 million at the end of the quarter, compared with $136.3 million at June 30, 2024, and $114 million as of March 31, 2024. Total cash and availability was approximately $105 million. I should mention that for every one point reduction in interest rates, interest expense for accounts receivable discount programs offered by customers is reduced by approximately $6 million.
Net bank debt was $114 3 million at the end of the quarter.
Speaker Change: With $136 3 million at June 32024, and $114 million as of March 31, 2024.
Speaker Change: Total cash availability was approximately $105 million I should mentioned that for every one point reduction in interest rates interest expense for accounts receivable discount programs offered by customers is reduced by approximately $6 million.
David Lee: For further explanation on the reconciliation of items that impacted results and non-GAAP financial measures, please refer to Exhibits 1 through 5 in this morning's earnings press release.
Speaker Change: For further explanation on our reconciliation of items that impacted results in non-GAAP financial measures. Please refer to exhibit one to five in this morning's earnings press release.
Operator: I would now like to open the line for questions. At this time, I would like to remind everyone, in order to ask a question, press star, then the number 1 on your telephone keypad. We will pause for just a moment to compile the Q&A roster.
Speaker Change: Now like to open the line for questions.
Speaker Change: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Speaker Change: We will pause for just a moment you can pile the Q&A roster.
Speaker Change: Okay.
Bill Dezellem: Your first question comes from the line of Bill Dezellem with Tyedon Capital. Thank you.
Speaker Change: Your first question comes from the line of Bill does along with Titan capital.
Speaker Change: Alright. Thank you first of all would you please walk us through the.
Selwyn Joffe: First of all, would you please walk us through the increased guidance for operating income from that $62 million to $67 million range that you had originally and now $79 million to $84 million, and what changed to lead to that increase? Thank you for that question. So there is no change in the net operating income because previously, we gave the guidance, as you mentioned, 62 to 67, but we also highlighted there will be 17 million of non-cash items. So what we did was we combined the amounts. So if you add 17 million, the previous 62, and 67, it results in the 79 to the 84.
Speaker Change: Increased guidance for operating income.
Speaker Change: And from that $62 million to $67 million range that you had originally and now 79 to 84 and and what what changed to lead to that increase.
Speaker Change: Thank you for that question. So there is no change in the net operating income because previously we gave the guidance as you mentioned 62 to 67, but we also highlighted that would be $17 million of noncash items. So what we did was we combined the amounts so EUR 17 million.
The previous 62.
<unk> 67 and results in the <unk> 79 to 84.
Bill Dezellem: Does that make sense? It does.
Speaker Change: Does that make sense. It does okay. Great. Thank you and then secondarily I believe in the release you had referenced.
Bill Dezellem: Okay. Great. Thank you.
Bill Dezellem: And then secondarily, I believe in the release you'd referenced ordering activity was gaining momentum.
Speaker Change: Ordering activity with gaining momentum so I'm looking for a little more perspective behind that.
Selwyn Joffe: So I'm looking for a little more perspective behind that. Were there specific customers that that's referring to? Was it specific product lines? Is this counter to – it seems like this is counter to the normal seasonal inventory declines that your customers have. So some perspective behind that, please.
Speaker Change: Were there specific customers that that's referring to was it specific product lines is is this counter to it seems like this is counter to the normal seasonal inventory declines that your customers have so some perspective behind that please.
Selwyn Joffe: Yeah, I mean, we've seen You know, in our two main categories, we're seeing, you know, pretty vibrant demand. We've had a strong start to this quarter as well.
Speaker Change: Yeah, I mean, we're seeing.
Speaker Change: Two main categories, we're seeing.
Speaker Change: It was a pretty vibrant demand.
Speaker Change: We've had a strong start to this quarter as well.
Selwyn Joffe: And I might add, Bill, that this is in light of a pretty soft market out there. I mean, we've just come back from the apex, and I think it's fairly unanimous that people generally experiencing softness. I'm excited to be able to say that.
Might add bill that this is in light of a pretty soft market out there I mean, just come back from the apex and I think it's fairly unanimous that people.
Speaker Change: Generally experienced experiencing softness I'm excited to be able to say that the main I think.
Selwyn Joffe: I mean, I think that if the market was stronger, we'd even Great opportunity. I think our product lines are holding them, you know, they're non-discretionary and they're holding their own and in particular in the brake caliper line. Just the programs that we offer are very strong and I think they're picking sheer. So that that continues on.
Speaker Change: The market was stronger we really see.
Speaker Change: Great opportunity I think our product lines.
Speaker Change: Holding them, even though the non discretionary and they're holding.
Speaker Change: Holding their own.
Speaker Change: Particularly on the brake caliper line.
Speaker Change: Just the programs that we offer are very strong.
Speaker Change: They're picking share.
Speaker Change: So that continues on.
Selwyn Joffe: I, you know, we're, we're seeing a bottom out as well, I think. I think, you know, we, what I'm hearing the industry say within the next This is a February time frame. It seems like there's a bottom out in the opportunity on the tire replacement and sort of the brake category, I think, has bottomed out, and so we should see a further pickup there. So lots of updates in terms of, you know, we're introducing new part numbers, so a lot of that activity.
Speaker Change: Sure.
Speaker Change: Seeing a bottom out as well I think.
Speaker Change: <unk>.
Speaker Change: What I'm hearing the industry say within the next.
So the February time frame.
Speaker Change: Seems like there is a bottom out and the opportunity.
Speaker Change: On the tire replacement on some of the brake category.
Speaker Change: It has bottomed out and so we should see.
Speaker Change: We should see a further pickup there so.
Speaker Change: Lots of updates in terms of <unk>.
Speaker Change: Introducing new part numbers, so a lot of that activity.
Selwyn Joffe: So in general, I think despite, you know, a relatively soft market, which by the way, I think is very temporary, all the statistics continue to be positive. We're holding our own and we expect tailwinds to change and tailwinds to keep furthering.
Speaker Change: So in general I think despite a relatively soft market, which by the way I think is very temporary all the statistics continue to be positive.
Speaker Change: We're holding our own and we expect we expect.
Speaker Change: <unk> and <unk>.
Speaker Change: The wins to change until rents to further increase those.
Bill Dezellem: Great, thank you.
Speaker Change: Great. Thank you and then just a little more color on the on this if you would please are you finding it's pretty much across the board customer.
Selwyn Joffe: And then just a little more color on this, if you would, please. Are you finding it's pretty much across the board, customer-wise, that you're having this order momentum? Or does it tend to be with one or two customers? You know, our top five customers are huge. contributors to all of the, you know, all of our trends. So I would say in the majority of that top five, we're seeing that coming from different categories within. You know, what we supply to those top five customers.
Speaker Change: Why is that you are having this.
Speaker Change: Order momentum or does it tend to be with the one or two customers.
Speaker Change:
Speaker Change: No.
Speaker Change: Five customers those are huge.
Speaker Change: Contributors to all of the or all of our trends so.
Speaker Change: I would say in the majority of that top five we're seeing that are coming from different categories within.
Speaker Change: What we supply to those top five customers.
Selwyn Joffe: So. I think different customers are experiencing different success with different initiatives. So, but rotating electrical and brake callipers in particular, the stance.
Speaker Change: So.
Speaker Change: I think different customers are experiencing different success with different initiatives.
Speaker Change: Uh huh.
Speaker Change: And so but rotating electrical breakdown.
Speaker Change: Brake calipers and particular standouts.
Bill Dezellem: Great. Thank you for the color and perspective.
Speaker Change: Great. Thank you for the color and perspective.
Operator: Thank you. Again, if you would like to ask a question, press star 1 on your telephone keypad.
Speaker Change: Thank you. Thank you.
Speaker Change: Again, if you would like to ask a question press star one on your telephone keypad.
Speaker Change: Okay.
Bill Dezellem: Our next question comes from Bill Dezellem with Tide and Capital. Thank you.
Speaker Change: Our next question comes from Bill does along with Titan capital.
Bill Dezellem: I'm going to jump in with a couple more if I may now, please. So you had the $1.3 million of transition costs. Would you talk about what operations were moved from where to where? Yeah, so the last from, you know, for a long time, we talked about how we got affected from COVID when Malaysia was closed down for 30 days, and we had to take in um, taper-bearing wheel hubs into the USA because we didn't want to be the importer of record into into Mexico. So, um, So, um... You know, moving moving out of that out of the Torrance, the Torrance facility.
Thank you I'm going to jump in with a couple more if I if I may now. Please so you had the.
Speaker Change: And the $1 3 million of transition costs would.
Speaker Change: Would you talk about what our operations were moved from where to where.
Speaker Change: Yes, so the last.
Speaker Change: From.
For a long time, we talked about how we got affected from Covid.
Speaker Change: When Malaysia was closed down for 30 days and we have to take in.
Speaker Change: Tapered bearing wheel hubs into the USA, because we didn't want to be the importer of record it too into Mexico. So.
Speaker Change: So.
Speaker Change: Moving moving.
Speaker Change: That out of the tolerance.
Speaker Change: The Torrance facility.
Selwyn Joffe: was the last step in getting through that release. So a lot of margin accretion will come to the wheel hub business as a result of that. And then in addition to that, there were ongoing special order. uh... activities uh... relating to rotating electric mostly in conjunction with supplying our original equipment service program. to some of the OE, the big OE manufacturers, and so we were able to get that relocated as well. So we're now in the process of evaluating. the sub-leasing alternatives. for the space. We'll see how the market is and what happens. But we're optimistic.
Speaker Change: It was the last step in getting through that.
Speaker Change: So a lot of margin accretion will come.
Speaker Change: So the wheel hub business as a result of that and then.
In addition to that there were ongoing special order.
Speaker Change: Activities relating to rotating electrical.
Speaker Change: Mostly in conjunction with supplying.
Original equipment.
Speaker Change: Equipment service program.
Speaker Change: To some of the OE the big OE manufacturers and so we were able to get that relocated as well.
Speaker Change: So we're now in the process of evaluating.
Speaker Change: The sublease of sub leasing alternatives.
Speaker Change: Yes.
Speaker Change: For the space.
Speaker Change: We'll see how the market is what happens.
Selwyn Joffe: We have a below-market rental, and so we think we have a good chance.
Speaker Change: But we're optimistic we have a below market rental.
Speaker Change: So we think the most opportunity.
Selwyn Joffe: That's helpful. And Selwyn, what is what is remaining in Torrance now in terms of operations besides office? Well, we do, we still have our engineering operations. So a lot of Testing and Diagnostic Center, and our Content Development Center remains in Torrance. So definitely for new product, new part introductions, we do. Significant quality testing on our products, way beyond... In my opinion, what the aftermarket... We're in the levels of an OE type player on our quality levels, and we're proud of that. And that's helped separate us. That happens in Torrance. And then in addition to that, we have a tech center and they go hand in hand with each other.
Speaker Change: That's helpful and so on what is what is remaining in Torrance now in terms of operations Besides offices.
Speaker Change: Well, we do well.
Speaker Change: We'll have.
Speaker Change: Our engineering operations.
Speaker Change: So a lot of.
Speaker Change: Testing.
Speaker Change: Diagnostic center.
Speaker Change: And our content development center remains at times so.
Speaker Change: Definitely for new product, a new part introductions, we do cigna.
Speaker Change: Significant test quality testing on all our products.
Speaker Change: Beyond.
In my opinion, what the aftermarket.
Speaker Change: We're in the levels of an OE type type player when we on our quality levels, we're proud of that.
Separate us.
Speaker Change: That happens in Torrance and then in addition to that we have a.
Speaker Change: It Tech center and they go hand in hand, with each other but our Tech center as.
Selwyn Joffe: But our tech center is where we develop many of our training materials. and videos, and 3D content, and... One of the things that we do is we do live installs, so... You know, we're continuously checking applications against live vehicles. So it's one, you know, our testers are very reliable, but we embellish that with testing on the actual vehicle.
Speaker Change: Is where we develop.
Speaker Change: Many of our training materials.
Speaker Change: And videos and <unk> content.
Speaker Change:
Speaker Change: One of the things that we do is we do live in stores. So.
Speaker Change: We are continuously checking applications against live vehicles. So it's one.
Speaker Change: Test is a very reliable but.
Speaker Change: But we embellish that with testing on the actual vehicles. So we have a service center.
Selwyn Joffe: So we have a service center. That is a full-blown Education Center with stadium seating. and an ability where our customers can see examples and demonstrations of different installations, procedures, and that's all in Toronto. and just our regular corporate headquarters as well.
Speaker Change: That is a full blown.
Speaker Change: Education Center with stadium seating.
Speaker Change: And our ability where our customers can see examples of demonstrations of different installations.
Speaker Change: Procedures and that's all in Tara Tara.
Speaker Change: Just a regular corporate headquarters as well.
Speaker Change: Don't switch.
Bill Dezellem: Great, thank you. And then this quarter, you specifically called out $2.7 million of one-time expenses to onboard new business. I don't think I have seen expenses tied with onboarding of new business in the past.
Speaker Change: Great. Thank you and then.
Speaker Change: This quarter, you, specifically called out $2 7 million.
One time expenses to onboard new business I don't think I have seen expenses tied with onboarding of new business.
Selwyn Joffe: Would you detail what that was and what product line and the circumstances around it, please? Yeah, so it's a new rotating electrical business and, uh... with a significant customer, and that'll begin shipping. Normally, there are these expenses in conjunction with... with the start of business. This was a little in advance, so that business will start in January. And it's good business, the return on capital on that. certainly in the 40 to 50% range or higher.
Speaker Change: In the past would you detail what that was and what our product line and the circumstances around it. Please.
Speaker Change: Yes.
Speaker Change: New rotating electrical business.
Speaker Change: With a significant customer.
That will begin shipping normally there these expenses in conjunction with with.
Speaker Change: With the startup businesses is this this was a little in advance so that.
Speaker Change: That business will start in January.
Speaker Change: And it's good business to return on capital in that businesses.
Speaker Change: Certainly in the 40% to 50% range, So, Ohio, So we're excited about that.
Selwyn Joffe: So we're very excited.
Bill Dezellem: Is this with a new customer? Existing New Business with an Existence.
Speaker Change: This with a new customer.
Speaker Change: Existing customers new business with an existing customer.
Bill Dezellem: Great, thank you.
Speaker Change: Great. Thank you and then one additionally, we're actually getting to the point Bill where we have a lot of customers now so most of the new businesses.
Bill Dezellem: And then one additional question. We're getting to the point, Bill, where we have a lot of customers now, so most of the new business... is worth existing customers, so. I had one specific one in mind that I was wondering about.
Speaker Change: Existing customer so yes.
Speaker Change: I had one one specific one in mind that I was wondering about okay. Thank you and and relative to price increases you've had several are there additional rounds of price increases that are in place now.
Selwyn Joffe: Okay, thank you. And relative to price increases, you've had several. Are there additional rounds of price increases that are in place now?
Selwyn Joffe: We have one one price increase that we're expecting in January. But the market today is Stabilized on that. I mean we continue to fight for price. I mean, I think When you have weakness in the industry, it becomes much more challenging to get the price increases that perhaps you deserve. But we, you know, we continue on and we're excited about margin accretion opportunities. And I think as we Get into the next quarter.
And we have won one price increase that we're expecting in January.
Speaker Change: But the market today is stabilized on that I mean, we continue to fight for price I mean I think.
Speaker Change: When you have weakness.
Speaker Change: And the industry it becomes much more challenging to get to get the price increases that perhaps you deserve.
Speaker Change: But.
But we will continue on and we're excited about margin accretion opportunities and I think as we.
Speaker Change: Get into the next quarter, we will start outlining them go in a little more detail for everybody but.
Selwyn Joffe: We'll start outlining them a little in a little more detail for everybody but We're making some great progress on IMOGEN. And Selwyn, the magnitude of that price increase, really trying to gauge the impact on the total business. Yeah, I think it's all in the guidance right now, Bill, I'd rather not get into the details of that at this point, but it's all in the guidance numbers and certainly as we give you more visibility on tonight. The next fiscal, you'll see more.
Speaker Change: We're making some great progress on emerging are emerging.
Speaker Change: New product lines that will help margins.
Speaker Change: And so when the magnitude of that price increase really trying to gauge the impact on the total business.
Speaker Change: Yes.
Speaker Change: I think it's all in the guidance right now bill I'd, rather not get into the details of that at this point, but it's all in the guidance numbers and certainly as we give you more visibility onto next.
Speaker Change: That's Frisco will rule Youll.
Speaker Change: Youll see more of that.
Bill Dezellem: Okay, that's fine.
Speaker Change: Okay. That's fine I'll, let you take a pass on that one if you will.
Selwyn Joffe: I'll let you take a pass on that one, if you will, give a little bit more perspective on or an update on the individual that you hired here several months ago, who has lots of experience in the professional installer business. so Not sure what to comment but that that business is growing. We further added to our team there. And we're seeing, to use a pun, you know, great traction from that business.
Speaker Change: Give a little bit more perspective on or an update on the individuals that you hired.
Speaker Change: Here several months ago, who has lots of experience and the professional installer business.
Yes.
So.
Speaker Change: Not sure what to comment but.
Speaker Change: That business is growing.
Speaker Change: We further.
Speaker Change:
Speaker Change: Added to our team there and we're seeing.
Speaker Change: To use a palm great traction from from that business.
Speaker Change: Yeah.
Speaker Change: Okay.
Selwyn Joffe: I will now turn the call back over to Selwyn Joffe, CEO, for closing remarks. Okay, I think Bill may have got cut off there, I'm not sure, but yeah, okay, but thank you. In summary, we're bullish, I'll restate, we're bullish as we begin the second half of the fiscal year, we are laser focused on further efficiencies and fully benefiting from a not easily duplicated global platform to meet demand for non-discretionary products as well as from our diagnostic testing capabilities. We are leveraging our expertise in solid customer and supplier partnerships. This includes our supply chain vendor finance program that benefits our suppliers.
Speaker Change: I will now turn the call back over to Kelvin Jaffe.
For closing remarks.
Kelvin Jaffe: Okay, I think bill May have got cutoff, there I'm not sure but.
Speaker Change: Okay. Thank you in summary, we're bullish <unk>, we're bullish as we get in the second half of the.
For the fiscal year, we are laser focused on further efficiencies from fully benefiting from a not easily duplicated global platform to meet demand for non discretionary products as well as from our diagnostic testing capabilities.
Speaker Change: We are leveraging our expertise in solid customer and supplier partnerships. This includes our supply chain vendor finance program that benefits our suppliers.
Selwyn Joffe: Our liquidity is strong, and we have the resources, capacity, and professional expertise to capitalize on significant market opportunities in all of our products.
Speaker Change: Our liquidity is strong and we have the resources capacity and professional expertise to capitalize on significant market opportunities in all of our product lines.
Selwyn Joffe: In closing, I must recognize the contributions of all of our team members who are continuously focused on providing the highest level of service. We are all committed to being the industry leader for the parts and solutions that move our world today and in the future.
Speaker Change: In closing I must recognize the contributions of all of our team members, who are continuously focused on providing the highest level of service.
Speaker Change: We are all committed to being the industry leader for the <unk> solutions that move our world today and in the future.
Selwyn Joffe: We also appreciate the continued support of shareholders and thank everyone again for joining us on the call.
Speaker Change: We also appreciate the continued support of shareholders and thank everyone again for joining us on the call.
Selwyn Joffe: We look forward to speaking with you when we host our fiscal 2025 third quarter call in February and at various investor conferences and meetings this fall. Thank you very much.
Speaker Change: We look forward to speaking with you when we host our fiscal 2025 third quarter third quarter call in February and at various investor conferences and meetings. This fall.
Speaker Change: Slash.
Speaker Change: Thank you very much.
Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining.
Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.
Operator: You may now disconnect.
Speaker Change: [music].