Q4 2024 Myers Industries Inc Earnings Call
Hello and welcome to the Myers 2024 fourth quarter and full-year results. My name is Elliot and I'll be your coordinator today. If you would like to register a question during stage event, please press star one on your telephone key card.
I would not like to hand over to Meghan Beringer, Senior Director of Investor Relations. Please go ahead.
Thank you, operator. Good morning, everyone, and thank you for joining Myers Conference call to review 2024, fourth quarter and fourth year results. I'm Meghan Beringer, Senior Director of Investor Relations at Myers Industries.
Joining me today are Aaron Chopper, our new President and Chief Executive Officer, and Grant Fitz, Executive Vice President and Chief Financial Officer.
After the program remarks, we will host a question and answer session.
This call is being webcasted on our website and will be archived, along with the transcript of the call shortly after this event.
Now please turn to slide three of the presentation for our safe harbor disclosures
I would like to remind you that we may make some forward-looking statements during this call.
These comments are made pursuant to the safe harbor revisions of the Private Security's litigation reform act of 1995.
Such statements are based on management's current expectations and involve risks on certain teeth and other factors which may cause results to differ materially from those expressed or implied in these statements.
Further information concerning these risks, uncertainties, and other factors are the support of the company's periodic SEC filing.
Also, please be advised that certain non-GAAP financial measures such as adjusted growth profit, adjusted operating income, adjusted EBITDA, and adjusted EPS may be discussed on this call.
Speaker Change: Please turn to slide five of our presentation as I will now turn the call over to Aaron Schopper.
Erin Shopper: Thank you, Megan. Good morning, everyone, and welcome to our call.
Erin Shopper: It's my honor to be addressing you as the CEO of Myers. I would like to begin by thanking the board for trusting me with the leadership of our company at this critical time [inaudible]
Erin Shopper: I also want to thank Dave Basque on behalf of the board and the rest of Myers Global Team. Dave has done a tremendous job as the interim CEO during the transition period and I look forward to working closely with him as he resumes the special projects role. Thank you very much for your time.
Erin Shopper: Building on the plans already in motion, there remains a lot of work we need to do to reach that potential. So let's get to it.
Erin Shopper: Myers is a company with a long proud history. We have strong brands and innovative products built over years of product development and strategic acquisitions, trading the diversified industrial company that we are today.
Erin Shopper: Our Products Deliver Protection from the Ground Up in Array of Applications
Speaker Change: Cepter provides lighter, safer, and battle proven solutions for transporting ammunition, fuel, and water for the defense industry.
Speaker Change: Signature System provides composite mats that provide sensitive ground from damage while providing safe access for vehicles, equipment, and personnel. Concord sustainable packaging solutions offer improved food supply protection.
Speaker Change: Myers Tires Supply serves the under vehicle industry for fleet professionals, tire dealers, auto dealerships, retreaders, and government and school systems, ensuring the safe delivery to products and people.
Speaker Change: This is a small sample of our attractive businesses that provide critical protection delivering outside value for our customers.
Speaker Change: Many of our businesses are performing well as evidence by our fourth quarter results. For those, we want to accelerate their growth while enhancing their performance. Other businesses in our portfolio are not currently performing to our expectations.
Speaker Change: For those we will act quickly and decisively to make meaningful improvements
Speaker Change: Prior to joining Myers, I spent 13 years at Belmont Industries, leading large divisions in the infrastructure and agriculture and markets, also serving as a chief strategy officer. I established a successful track record of building high performing businesses that consistently delivered results.
Speaker Change: Even during challenging economic conditions. I'm energized by the opportunity to bring my experience to Myers, extending that track record of success by driving significant improvement in our financial performance.
Speaker Change: We are already taking decisive action by launching a focus transformation, outline of slide 6. Our approach is focused.
Speaker Change: Meaning we will prioritize the critical few. We will focus on what we do best and ensure we are applying our resources where they have the greatest impact on market opportunities that best align with our core competencies. [inaudible]
and on key strategic priorities to drive results.
Speaker Change: This is a transformation because we need to change course and chart a different path to deliver better results Some tough decisions and difficult trade-offs will be required to truly transform Myers into an even better company that I know we can be
Our Leadership Team is up for the challenge.
Speaker Change: Focus Transformation is designed to achieve results by attaining the following four outcomes.
Speaker Change: We would drive performance by establishing a culture of execution and accountability. We could no longer be satisfied with simply a good effort. We must be focused on achieving results.
Speaker Change: I will hold the manager's accountable for doing what they say they will do just as the board will hold me responsible for achieving our commitment
Speaker Change: That is my promise to our employees, customers, and investors. Myers will be a company that does what we say we will do consistently and reliably.
Speaker Change: Second, I'm actively engaged with our executive management team to deep dive into each of our businesses and understand their value proposition.
Speaker Change: Working together, we will create clear strategies to improve the profitability of each business in our portfolio. This process will identify action plans on which businesses are performing well and what we need to do to accelerate growth at expanded margins.
Speaker Change: At the same time, we will address those businesses that are underperforming and what actions are needed to get them on track. We will develop specific internal KPIs for all our businesses to elevate performance, track progress and create accountability.
Speaker Change: Our third objective is to deliver consistent and reliable results across the organization by effectively controlling what we can control.
Speaker Change: To get us started, we are announcing restructuring plans to deliver annualized cost savings of $20 million primarily in SG&A by year end 2025
Speaker Change: This represents a reduction of about 10% of our SG&A spend.
Speaker Change: However, this is not simply a move to cut costs and improve margins.
Speaker Change: The strategic restructuring will enhance our performance by improving efficiency, eliminating redundancy, and elevating the ability for management decision making. Our core values of delivering results and continuous improvements will be hallmarks of this approach now and in the future.
Speaker Change: Finally, a Discipline Capital Allocation Deployment Framework is an essential element of our focus transformation. Our approach includes investing in growth while returning cash to shareholders, enabled by a strong balance sheet.
Speaker Change: As our performance improves, we will be able to grow cash flow generation through expanded margins and prudent cash management, providing additional flexibility to fund our capital deployments.
Speaker Change: Today, we announce a new $10 million share repurchase authorization. The new program reflects our confidence and the strength of our business and our commitment to return cash to shareholders.
Speaker Change: We will continue to invest in organic growth and plan to maintain our capex target of around 3% of sales with a focus on opportunities that offer the best growth and highest returns building on the strength of our branded products portfolio [inaudible]
Speaker Change: As we take action to achieve these objectives, we'll adapt and adjust where needed to ensure we deliver on our commitments.
Speaker Change: We will be transparent so you may assess our status and judge our progress over the coming weeks. I'll be meeting with many of you as I work to hear directly from our customers and stakeholders regarding their views on how we can fully deliver on our potential.
Speaker Change: As we watch our focused transformation, we are temporarily suspending our practice of issuing formal annual guidance. We want to take some time to complete our action plan so we can offer you a more fully informed outlook.
Speaker Change: This decision is not the result of an emerging negative outlook on our business. On the contrary, we are encouraged by the overall sales trajectory of our business and confident in our ability to continue driving margin improvement in 2025. It is our intention to resume providing guidance as soon as possible.
Speaker Change: In conclusion, we are moving forward with purpose, transforming Myers with speed, agility, urgency, and always acting with integrity. Our focus is to create a culture built on accountability. That fulfills our commitment and delivers results with continuous improvement mindset. [inaudible]
Speaker Change: Myers has a strong platform and a rich history to build upon [inaudible]
Speaker Change: I'm incredibly excited about our company, our employees and our customers.
Speaker Change: I'm privileged to be here at the start of what I know will be a very bright future for our company. I believe you'll be pleased with what we are able to achieve. With that, I will turn the call over to Grant to discuss the financial details of the company's fourth quarter and full year results.
Speaker Change: Thank you, Aaron, and welcome to the team. I'm very excited to partner with you as we watch our focus transformation program to drive and prove results by creating a high performance culture.
Speaker Change: Turning to slide 8. We ended 2024 with a solid sport quarter achieving improvement on many important measures. However, there are still much more work to be done.
Speaker Change: 4th quarter net sales were $203.9 million dollars, an increase of 6.7%. We had 4th quarter sales growth of 33% in our consumer and market driven by sector fuel cans and 13% growth in the industrial and market driven by sectors military ammunition packaging.
Speaker Change: Infrastructure Sales from Signature at at $30.9 million of grills. The year-over-year revenue increases were partially offset by lower seed box volume and our food and beverage and market and 20% lower distribution segment sales.
Speaker Change: Adjustment gross margin increased 210 basis points to 32.2% should be largely by the acquisition of signature and favorable product mix partially offset by lower pricing and volume.
Speaker Change: Adjusted operating income improved at $17.6 million or 8.7% of sales compared to 8.3% of sales last year.
Speaker Change: As the higher gross margin was partially offset by higher SGNA. The higher SGNA was primarily due to the signature acquisition and clean amortization and was partially offset by reduced variable compensation. [inaudible]
Speaker Change: 4th quarter, adjusted to EBITDA, was up 26.2% and adjusted EBITDA margin was 13.5% compared to 11.4% last year
Speaker Change: Deluted adjusted earnings per share was 19 cents compared to 29 cents in 2023 with the difference due primarily to increased interest expense.
Turn to Slide 9
Speaker Change: Net sales for the material handling segment increased 20.3% compared to the prior year.
Speaker Change: Additionally, sales of our septic products exceeded the prior year by 48%. We are proud that our septic and signature products help with storm recovery efforts in the southeast after significant storm damage this past fall.
Speaker Change: We also began to see some stabilization within the vehicle and market in Q4. We saw growth in our marine sales, but this was offset by little volume of bulk container sales to automotive manufacturers.
Speaker Change: Material Handlings, Adjusted EBITDA, increased 22.3% to $34.7 million, resulting in a 30 basis point increase in Adjusted EBITDA margin.
Speaker Change: to 22.7 percent. These improvements were attributed largely to the signature acquisition in Safter partially offset by Lorde's sales volume and our bought car in business.
Speaker Change: Distribution segment net sales decreased 20.2% due to low volume and pricing.
Speaker Change: Adjusted evidout decreased $1.5 million to loss at $300,000, primarily due to lower gross margin partially offset by lower S.G.N.A. Continued efforts to reduce our distribution cost structure includes the consolidation of a fourth distribution center earlier this year.
Speaker Change: We turn to slide 10 to review our full year, 2024 financial result.
Speaker Change: Net sales increased 2.9%, $836.3 million, with the contributions from our signature systems acquisition and strong sales from our software brand, with going sales of lightweight military ammunition packaging and increased fuel can demand due to storm activity.
Speaker Change: This is partially offset by low little buck corn seed box volume in the food and beverage and market and low volume and pricing in our distribution segment.
Adjusted operating income improved by $8.4 million, or 11.1%
Speaker Change: Adjusted EBITDA improves $24.2 million over the prior year or an increase of 24.7% and adjusted EBITDA margin improved 250 basis points to 14.6% proven by positive mix and reduced variable compensation.
Speaker Change: We also continue to achieve success in our e-commerce channel with $36 million in sales across the business growing 12%. This will continue to be a focus area for us.
Speaker Change: In addition, the team is on pace with the Synergy Cost Targets for the signature acquisition. In total, these results show a diluted adjusted earnings per share of $1.04.
Turning to slide 11
Speaker Change: We generated free cash loan of $20.2 million in the fourth quarter and $54.9 million for the year.
Speaker Change: We reduce working capital as a percentage of sales is quarter down 160 basis points, sick flexionally, as we work through seasonal inventory and we're successful and reducing past due accounts receivable. Thank you very much.
Speaker Change: We invested $7.1 million and CapEx during the quarter, bringing the full year total to $24.4 million, which was 2.9% of sales.
Speaker Change: We also used our cash flow generation to reduce total debt by 26 million since March 31, of 2024, and after the acquisition of signature systems. Our net leverage rate ratio was 2.7 times.
Speaker Change: Cash on hand at the end of 2024 was $32.2 million. This provides us with additional flexibility to update our capital allocation priorities, which I will discuss on the next slide.
Please turn to Slide 12
Speaker Change: As mentioned by Aaron, we announced a new share repurchase program of $10 million to complement our ongoing dividends. Purchases will be opportunistic with narrow parameters.
Speaker Change: As the current share price of our shares do not, in our opinion, we reflect our true value. We believe one of the best investments is in us.
Speaker Change: This discipline share read purchase program will begin as early as March 10th
Speaker Change: As noted in the prior slide, we made progress in reducing our debt, bringing our net leverage ratio to 2.7 times.
Speaker Change: In general, we are targeting a ratio 1.5 to 2.5 times. With our strong cash generation and balance sheet, we have ample liquidity to continue investing in growth and at the same time return cash to shareholders.
Speaker Change: Turning to slide 13 while we are not providing formal guidance at this time, we didn't want to share some high level qualitative expectations for the year. We continue to see balanced risk and opportunities for the business for both revenue and margin, with continued internal focus to improve our cost structure through our focus transformation program. .
Let me share our expectations by a market.
Speaker Change: Signature growth to continue with strong infrastructure project spending supported by material conversion from Wood Matting.
Speaker Change: Within industrial, depleted inventories will drive continued strong growth in military products. Additionally, we expect low single-digit growth in our bulk container and organizational products.
Speaker Change: In our consumer end market, a more normalized storm season will likely result in low single digits revenue decline for fuel container sales.
Speaker Change: Food and beverage and market, including agriculture, is projected to be flat. The vehicle and market, which includes RV and Marine, is stabilizing. Automotive aftermarket, also known as distribution, will continue to stabilize as we improve our cost structure.
Speaker Change: As Aaron mentioned, we are also committed to a $20 million or approximately 10% annualized cost reduction, primarily an S-GNA by the end of 2025 to our focus transformation program.
Speaker Change: We believe this will right side the organization for the business that we have today and prepare for growth tomorrow.
Speaker Change: Imclosing, I would also like to address the topic of tariffs.
Speaker Change: Given that our manufacturing supplier footprint is primarily based in the U.S.
Speaker Change: Our current expectation is that terrorists will have some impact on the business.
Speaker Change: But this impact will likely be limited in the near term in the near term.
Erin Shopper: However, in similar to the rest of the industry, the overall macroeconomic impact for new tariffs is uncertain. I would now like to turn the call back to Aaron for some closing comments before we take your question.
Erin Shopper: As they gain more clarity on the moving parts of our strategic plans and operational capabilities will develop more detailed priorities and define specific initiatives to move us forward.
Erin Shopper: As we do, I commit to being transparent with you to gain your trust. I look forward to meeting many of you in the coming weeks. With that, I'd like to turn the call over to the operator for questions.
William Dezellem, David Basque,
Speaker Change: Thank you. If you would like to ask a question, please press staff all about one on your telephone keypad. If you would like to withdraw your question, please press staff all about two.
Speaker Change: First question comes from Christian Zyla with Keke Hoppe. Your line is open, please go ahead.
Dr.
Thank you. Good morning, everyone.
Speaker Change: Aaron Moore, I know it's one of the 30 middle, but can you just give me...
Speaker Change: Did you just give us a light of the line for your first 65-ish days, just specifically on your view of the overall portfolio and any portfolio optimization actions you would take?
Speaker Change: The reason I ask is you generate solid margins and free cash flow in half or three quarters of your business and then post 2% margin in the other part So just any thoughts from you there on the other side of your portfolio?
Speaker Change: Yeah, so you know, kind of like looking at before there's some things that have been really surprising as
Speaker Change: There, we have some businesses that are performing well and generate a lot of cash and are, you know, doing very well in the market and so
Speaker Change: As I look across the portfolio, I'm going to take some time and understand how to reinforce those really strong portfolio businesses and then also spend a lot of time understanding why we have other businesses that are underperforming [inaudible]
Speaker Change: And really deep dive into those. And by what I mean by deep dive, it's not only spend time with our employees, but also spend time with our customers, both of the customers that we have, customers that we've lost.
and understand what's going on with those.
Speaker Change: You know, I believe heavily in portfolio optimization, I believe that [inaudible]
Speaker Change: The simplicity of understanding what each portfolio is going to do, what their customer is and what employees are going to do in each of those businesses is critically important. So as we kind of look and we look at both our S.G.A. savings and the portfolio, we make sure that everyone is focused.
Speaker Change: and a simplified of an organization as we can get in each of those businesses.
Speaker Change: So, you know, right now, early on, you know, I can't give you a definitive answer on those that I have been pleasantly surprised at some parts of our portfolio and the strengths of it. And then on those weaker sides, we're going to really look hard both at cost structure and making sure that we're offering value to the customers.
. . . . . . . .
Great. Thank you. Just-
for Q.
Speaker Change: Mark the ninth quarter of consecutive organic sales, desolation and material handling. So my question is how much of that is share loss versus secular decliner versus maybe just week and market demand. And I'm thinking outside of two to three gallon gas cans, where are you seeing the biggest declines on the material hand on side. Thank you very much.
Yeah, I'll take their question on the screen.
Speaker Change: Overall, people are actually outside of Buckhorn and distribution business. The rest of the business is really performed very well. So we saw it really in all of our business and that's what I think.
with the exception of our current distribution.
Speaker Change: Buckhorn continues to really be facing the headlines with the feedback declines that we had after really strong 2023.
Speaker Change: We do have plans that we're working on to basically offset that. We have some continued market shareings that we'd like to get in our manufacturing containers as well as in our bulk containers. Thank you very much.
Speaker Change: And so we're going to continue to monitor this, particularly with the, you know, macroeconomic industry, sort of economy and they have the cultural space.
Speaker Change: But I think that overall, I would say we're starting to see more.
Speaker Change: Lights of potential pick up in some of the markets that have been difficult for us in the past.
Speaker Change: particularly in the RV and Marine, and so that's some good to see that. I think we're definitely at the crop level, but we do start to see some pickup with that. Now with the new administration, all the issues with tariffs, that's the other kind of unknown that we're working through. But I was really probably limited at this point in time question largely to what we've seen with our currency boxes and with distribution.
Great, very helpful. And I'll just ask one more.
Speaker Change: Leading to my next question, just on tariffs. How much of your direct cogs or material costs come from Canada, Mexico and China? And then what about any indirect impacts? I know it's early, but have you taken mitigation steps or what steps are you looking to take to kind of offset those? Thanks so much.
Speaker Change: Yeah, thanks, Christian. In general, as I mentioned, the presentation, we don't have a large percentage of our material that comes from China or Mexico or Canada. We do have some exposure with some of those fuel cancels that we have.
in, in sector, which is located in Canada.
Speaker Change: In those view, we also have production facility in the U.S. So, recognition is a good opportunity to basically balance over production between the two facilities.
Speaker Change: And so we have an anticipation of some of the terrorists. We did hold some of the inventory that we had from Canada into the US so that we can get a essentially mitigated in the short term nature from that. And so we have an anticipation of some of the terrorists in the short term nature from that.
Speaker Change: But I would say overall, you know, our exposure on just pure material costs is probably in a 10% range and, you know, we think that we've got hit abilities to potentially manage to do that with pricing if we do see some some longer term impacts from the terrace. [inaudible]
Great. Thank you.
Speaker Change: We now turn to Anna Jolly with Gabelli. Your line is open, please go ahead.
Carolina: Hello, it's Carolina. I just, a good morning, a couple questions to start. If you could just, uh, give us a brief.
Speaker Change: Yeah, so you know, I'll start with that and then Grant can chime in because he's been working a lot of the integration last year. So from my standpoint, you know, it's been great to work with it signature team. You know, as we as as we go and integrate the things I'm concerned about is kind of the bigger cultural pieces, especially when we go look at our core values on delivering results. [inaudible]
and continuous improvement. The management team there at Signature are very like-minded with-with-with.
Those kind of core values that we're really working for.
Speaker Change: And so from an integration standpoint and a management standpoint, that's gone very very nicely . . .
Speaker Change: And so, and even a lot of the tools that they use for process development and for report outs are similar tools that I'd use in the past. So really, from an integration standpoint, from our new direction of Myers, it's been a pleasant surprise.
Speaker Change: that they're using those management tools. And so from from my standpoint, as I'm entering into the business, it's been a really good working relationship. And as far as the back end, I'll turn it over to Grant to talk about how the. And I'll turn it over to Grant to talk about how the.
Senator Dezellem, have done. Hi, Charlie.
Speaker Change: Just in general, it's been a really good acquisition. I think it's Aaron in the case and I think that with cultural systems very good.
Speaker Change: Signature had a very strong key form. It was, you know, significant growth over the prior year, and then additionally, you know, they had a record year for the Megadex product, which is a big driver of the overall financial performance.
Speaker Change: And we do see on the synergies, you know, that's very much on track. We actually probably have some upside opportunities on the synergies, which we're continuing to leverage. [inaudible]
Speaker Change: And I think that overall in terms of the different, you know, transactions I've had from my career, this one's been, you know, very much a very good and smooth, smooth transition so far.
Speaker Change: Perfect, thanks. And then on the second question, just a distribution business. Can you discuss a little?
Speaker Change: What is happening there? Is it continued integration issues on Mohawk or the market issues and is there a scale issue in that business where?
Speaker Change: that maybe it's difficult to compete the size of the current business.
Yeah, so, you know, I'll be spending [inaudible]
Speaker Change: Spending time with distribution, spending a lot more time with distribution to give you a better answer for it. But after my first two months here, I would say it's a mixture of both end market issues. There's a lot of consolidation, a lot of things going on in the back end with our customers. And then it's also an issue of we've made mistakes ourselves. So it's really a mixture of both things. [inaudible]
Speaker Change: Now, those the mistakes that we've made, we are absolutely determined to fix and we've already made management changes and looking at the structure of the business to make sure that we're offering the right
Speaker Change: in a structure to the market to make sure we had value. But I think it was a mixture of two different things.
Speaker Change: Obviously, some of the acquisitions between Tuffy and Mohawk and the integration of those didn't help.
Speaker Change: But once again, we are, you know, look, when we make mistakes, we will admit it. We've made some mistakes on this. We're going to get it fixed and we look forward to sharing the results with you.
Thank you.
Speaker Change: As a reminder, if you'd like to ask a question, please press star one on your telephone keypad now. We now turn to William Dezellem with Titan Capital Management. Your line is open, please go ahead.
William DeZellum: Thank you. I'd actually like to come back to tariffs, but from the perspective of your competitors across the businesses, is it your sense that their supply chain is more susceptible to tariffs or less susceptible and I recognize we have a lot of businesses here that that question would address but if. [inaudible]
Speaker Change: If you look at that from an aggregate perspective, that would be helpful. And then I do have a couple others.
Hi, girls, Grant.
Speaker Change: It's difficult to know exactly when all of our competitors are at in terms of their exposure with tariffs, but I would say [inaudible]
Speaker Change: Good, in general, I think Myers is in a very good position with being largely US-based.
Speaker Change: and also having much of a material that comes from the U.S.
Speaker Change: as well too. I don't have specific facts to say, you know, is that better than what a competitors are, but I do think that we are in a very good position with this particularly in the short term. [inaudible]
Speaker Change: We have looked at some of our specific products in, you know, in particular with Canada. As I mentioned, we've shift some fuel containers from Canada into the U.S. for sales.
Speaker Change: We have you look at some of our competitors and they do have some some content that comes from overseas as well with we think we'll partially offset some some of the competitive aspect of that but we feel we're in a pretty good position right now and I would say in general. So
Speaker Change: You know, my, my, the action is that we're probably going to live without a condition than the rest of the industry.
Speaker Change: Great. Thank you. And then I'll let me jump to RV and marine. I think a couple times within your prepared remarks today, there was a reference to green shoots that you're seeing in the RV and marine markets. Number one, did I hear you all correctly? And if so, would you dive into a bit more detail on what it is that you're seeing just given that the
That has been a real headwind area for you all.
Speaker Change: Yeah, I'll go ahead and take that one. In general, you know, the RV industry is in a trough for 2023 and 2024. We don't have the final market to report yet on 2024, but in November , the RV industry was reporting, you know, basically the projection is that they're going to be flat.
Speaker Change: And, you know, within that, you're seeing, you're seeing as far as the market goes.
Speaker Change: that the total units are up year-over-year from 23 with the 24th
Speaker Change: But the motorhomes are down, and so those two are basically offsetting each other.
Speaker Change: The channel, we're trying to get some further information into the channel, I'm in Toor, and where that sets, but it looks like that has
Speaker Change: Started to to come down some particularly from the high lows that we had in 23 . . .
Speaker Change: And so overall, you know, we are seeing what I would say are maybe potentially some like at the end of the tunnel.
Speaker Change: But there's so much uncertainty, I would also add with just the general, you know, issues with the tariffs and things of that nature and just overall interest rates. I think we're just in a holding pattern to see how, how quickly that could go in terms of any changes with the results of some of those macroeconomic indicators. Thank you very much.
and what if any?
Speaker Change: Share pickup opportunities or changes in designs that would potentially lead to an improvement in your in your sales opportunities.
Speaker Change: Yeah, you know, as RVs and marine, there's always a good pickup when there's a new design that comes through. So as they kind of work through their new, you know, lines that they rolled out, there's there's always great opportunity for us to redesign so that we can get a better both.
Speaker Change: Construction, Margin Profile. So we're always welcoming the new designs that they come through.
Speaker Change: Yeah, and I would just add, though, and we have been working closely with the marine customers, and in particular, we have been working on some marine design changes that really helped to benefit them. And so I think there's some opportunities there to really go back to, you know, what Aaron talked about. I'm being customer focused as a company and it's really working with our customers on ways that we can make their businesses better. Thank you.
Thank you both.
Speaker Change: Never follow up from Christian Zyla with Key Corp. Your line is open. Please go ahead.
Christian Zeiler: Great, thanks for letting me sneak another one in. Just a follow up on distribution.
Speaker Change: Last quarter, and I think in today's prepared remarks, we talked about making footprint changes in distribution, but also adding salespeople and reinvesting in that business.
Speaker Change: So how should we think about profitability for the distribution segment in 2025, just I guess qualitatively, presumably you're adding sales people to grow that business, but then the new initiative looks to reduce SG&A costs, so can you just frame those two for me?
Speaker Change: Yeah, I would say Christian you were continuing to work as we haven't provided from guidance as we really have this this focus transformation project that we're working on which we think
Should really have been proven all of our constructors. [inaudible]
Speaker Change: The distribution clearly will be, business will clearly be part of that as well too you
Speaker Change: I would say, you know, we mentioned about we have both another distribution center without having any impact on our ability to serve customers and the needed timeframes. So that's been something that we will see some pickup with the cost structure in 2025.
Speaker Change: Additionally, we are doing non-new sellers. We do have a new video as we've talked about in the past. It's a very disciplined, taking a very disciplined approach. I'm looking at our sales coverage and our territories and also really starting to accelerate some of the efforts that we have for e-commerce.
particularly with our MTS Express app.
Which makes it easier for customers to order from us [inaudible]
Speaker Change: and then also just in continuing to enhance our website so that we can get more online activity to our website as well too.
Speaker Change: I would say we'll have more to come on the overall cost impact as we work this plan over the next quarter. And we'll certainly provide additional updates in our next earnings fall on that.
Speaker Change: Ladies and gentlemen, we have never further questions, so this concludes our Q&A and today's conference call. We'd like to thank you for your participation. You may now disconnect your lines.