Q4 2024 Standard Motor Products Inc Earnings Call
Operator: That's all I have to say. Good day, everyone, and welcome to the Standard Motor Products fourth quarter 2024 earnings call.
Yeah.
Speaker Change: Good day, everyone and welcome to the standard motor products fourth quarter 2024 earnings call.
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Speaker Change: At this time all participants are in a listen only mode.
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Tony Cristello: Please note this call is being recorded and I will be standing by should you need any It is now my pleasure to turn the conference over to Tony Cristello, Vice President of Investor Relations, please go ahead. Thanks, Nicky, and good morning, everyone, and thank you for joining us on Standard Motor Products' fourth quarter 2024 earnings conference call. With me today are Larry Sills, Chairman Emeritus, Eric Sills, Chairman and Chief Executive Officer, Jim Burke, Chief Operating Officer, and Nathan Iles, Chief Financial Officer.
Speaker Change: Please note. This call is being recorded and that will be standing by should you need any assistance.
Speaker Change: It is now my pleasure to turn the conference over to Tony Crystal Lu Vice President of Investor Relations. Please go ahead.
Speaker Change: Thanks, Nikki and good morning, everyone and thank you for joining us on standard motor products fourth quarter 2024 earnings Conference call with me today are Larry Sills, Chairman Emeritus, Eric Sills, Chairman and Chief Executive Officer, Jim Burke, Chief operating Officer, and Nathan Iles Chief financial.
Tony Cristello: On our call today, Eric will give an overview of our performance in and Nathan will then discuss our financial results. Eric will then provide some concluding remarks and open the call up Q&A.
Speaker Change: Officers.
Speaker Change: On our call today, Eric will give an overview of our performance in the quarter and Nathan will then discuss our financial results. Eric will then provide some concluding remarks and open the call up Q&A.
Tony Cristello: Before we begin this morning, I'd like to remind you that some of the material that we'll be discussing today may include forward-looking statements regarding our business and expected financial results. When we use words like anticipate, believe, estimate, or expect, these are generally forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they are based on information currently available to us and certain assumptions made by us, and we cannot assure you that they will prove correct. You should also read our filings with the Securities and Exchange Commission for a discussion of the risks and uncertainties that could cause our actual results to differ from our forward-looking statements.
Speaker Change: Before we begin this morning, I'd like to remind you that some of the material that we'll be discussing today may include forward looking statements regarding our business and expected financial results when.
Speaker Change: When we use words like anticipate believe estimate or expect these are generally forward looking statements. Although we believe that the expectations reflected in these forward looking statements are reasonable. They are based on information currently available to us and certain assumptions made by us and we not assure you.
Speaker Change: They will prove correct.
Speaker Change: You should also read our filings with the Securities and Exchange Commission for a discussion of the risks and uncertainties that could cause our actual results to differ from our forward looking statements.
Eric Sills: I'll now turn the call over to Eric Sills, our CEO. Well, thank you, Tony, and good morning, everyone, and welcome to our fourth quarter earnings call. It's good to be with you today. But overall, we're pleased with our performance in the quarter, making for a solid finish to a strong year. Top line showed growth overall, not including the contribution of our new acquisition, which I'll discuss shortly. And we saw the trend of an improving bottom line continue with adjusted diluted earnings per share of 27% in the quarter and 8.6% for the full year.
Speaker Change: I'll now turn the call over to Eric Sills, our CEO.
Speaker Change: You, Tony and good morning, everyone and welcome to our fourth quarter earnings call. It's good to be with you today.
Speaker Change: Overall, we are pleased with our performance in the quarter, making for a solid finish to a strong year.
Speaker Change: Top line showed growth overall, not including the contribution of our new acquisition, which I'll discuss shortly and we saw the trend of an improving bottom line continue with adjusted diluted earnings per share up 27% in the quarter and eight 6% for the full year.
Eric Sills: Let me discuss each segment separately as each has its own story. Our vehicle control business in the quarter increased by 4.9% over last year, allowing us to post a 3.3% increase on the full year, setting a high watermark for the sector. We believe we benefited from a product offering that's largely nondiscretionary in nature as these types of categories tend to outperform in difficult economic conditions. And as our products are mostly professionally installed, we believe that our reputation for high quality has technicians seeking them out in the market. Lastly, we are seeing an incremental ongoing investment in inventory by the larger distributors as they add locations and increase store assortments, recognizing that the best forward deployed inventory wins in the marketplace, and we expect this trend to continue.
Speaker Change: Let me discuss each segment separately as each has its own story.
Speaker Change: Our vehicle control business in the quarter increased by four 9% over last year, allowing us to post a three 3% increase on a full year setting a high watermark for the segment.
Speaker Change: We believe we benefited from a product offering that's largely non discretionary in nature as these types of categories tend to outperform in difficult economic conditions.
Speaker Change: And as our products are mostly professionally installed we believe that our reputation for high quality has technicians seeking them out in the marketplace.
Speaker Change: Lastly, we are seeing an incremental ongoing investment in inventory by the larger distributors as they add locations and increased store assortments recognizing that the best forward deployed inventory wins in the marketplace and we expect this trend to continue.
Eric Sills: Our Temperature Control Division continued the strong trend it has been enjoying all year. Sales were up 30% in the quarter, though the fourth quarter is always the smallest in the seasonal category. But for the full year, we were up 12.5%, far and away the best year for the season. In addition to the non-discretionary nature of the products discussed in vehicle control, this category is also highly weather dependent, and 2024 set all records. It got hot across the country early and stayed that way all year.
Speaker Change: Our temperature control Division continued the strong trend it has been enjoying all year sales were up 30% in the quarter. The fourth quarter is always the smallest in the seasonal category, but for the full year, we are up 12, 5% far and away the best year for the sector.
Speaker Change: In addition to the non discretionary nature of the products discussed and vehicle control. This category is also highly weather dependent and 'twenty 'twenty four set all records it got hot across the country early and stayed that way all year.
Eric Sills: With such outsized demand, we are very pleased with our distribution and operation folks who are able to keep up throughout and we thank Within our engineered solutions segment, although our full year sales were up slightly over the prior year, we did experience softness in the course. As you know, this segment provides parts to new vehicle and equipment production across various end markets. As we discussed in our third quarter call, certain of our customers began to slow their production schedules as their demand softened, which in turn dampened their purchases from their suppliers like us. It's important to note that our volume reduction is solely due to these slowdowns.
Speaker Change: With such outsized demand, we are very pleased with our distribution and operation folks who are able to keep up throughout and we thank them.
Speaker Change: Within our engineered solutions segment, although our full year sales were up slightly over the prior year, we did experience softness in the quarter.
Speaker Change: As you know this segment provides parts to new vehicle and equipment production across various end markets.
As we discussed in our third quarter call certain of our customers began to slow their production schedules as their demand softened, which in turn dampened their purchases from their part suppliers like us.
Speaker Change: It's important to note that our volume reduction is solely due to the slowdowns, we have not lost any business.
Eric Sills: We have not lost any business. And as we have always said, this segment could be more volatile than the aftermarket, but still has great potential and a long-term trajectory of growth. We are a small player in a vast global marketplace, and as we are getting known as a capable player, we are gaining new business awards. As such, we remain very bullish on the segment and truly believe that while it can be temporarily impacted by the cyclical nature of the market, it has a tremendous potential.
Speaker Change: And as we've always said this segment can be more volatile than the aftermarket, but still has great potential and a long term trajectory of growth.
Speaker Change: We are a small player in a vast global marketplace and as we are getting known as capable player. We are gaining new business awards as such we remain very bullish on the segment and truly believe that while it can be temporarily impacted by the cyclical nature of the market. It has a tremendous future.
Eric Sills: Lastly, I'll speak about our newest piece, Nissan's Automotive. Having cleared all regulatory hurdles, we consummated the deal on November 1st, and for the two months that it was part of S&P, it performed as expected, recognizing that these are typically low months for a business that's semi-seasoned. First, let me remind you a bit about the Nissens is a leading aftermarket player in Europe and go to market with similar strategy as S&P with overlapping product categories and complimentary They are largely in thermal management systems, both air conditioning and powertrain cooling, and in the last few years have made strong inroads in categories that fall within our vehicle control portfolio.
Speaker Change: Lastly, I'll speak about our newest piece <unk> automotive.
Speaker Change: Having cleared all regulatory hurdles, we consummated the deal on November 1st and for the two months that it was part of S&P. It performed as expected recognizing that these are typically low months script business that semi seasonal.
Speaker Change: First let me remind you a bit about the business. This is as a leading aftermarket player in Europe and go to market with similar strategy as S&P with overlapping product categories and complementary strengths.
Speaker Change: They are largely in thermal management systems, both air conditioning, and powertrain cooling and in the last few years. It made strong inroads in categories that fall within our vehicle control portfolio.
Eric Sills: They have a strong record of growth, both through market share gains and expansion of their offerings, and generate mid-teen EBITDA. We are now heavily engaged in integrating the business, seeking the benefits that the combination of our two companies provide. On the cost reduction front, we have teams working closely together to seek best cost across a host of The biggest areas for savings is product cost, identifying supplier consolidation and leverage, make-first-buy opportunities, and so on, but there are many other areas of savings. As we stated at the time of the acquisition, we are targeting $8 to $12 million in run rate cost reduction synergies within 24 months and remain very confident in that.
Speaker Change: We have a strong record of growth both through market share gains and expansion of their offerings and generate mid teen EBITDA.
Speaker Change: We are now heavily engaged in integrating the business seeking the benefits of the combination of our two companies provide us on.
Speaker Change: On the cost reduction program, we have teams working closely together to seek best cost across a host of inputs.
Speaker Change: The biggest areas for savings as product cost identifying supplier consolidation and leverage make versus buy opportunities in seller, but there are many other areas of savings as well.
Speaker Change: As we stated at the time of the acquisition, we are targeting $8 million to $12 million and run rate cost reduction synergies within 24 months and remain very confident in that number.
Eric Sills: As we look to help each other, these improvements will be reflected across all segments, not just this. From a product offering standpoint, we've begun fleshing out each other's catalogs. In addition to filling holes in common product groups, we are identifying complementary product categories to add on either side of the ocean. And lastly, from a commercial standpoint, we've begun discussions with each other's accounts to identify potential opportunities, and these discussions are going quite well. We're still in the early days, but are more bullish than ever. The two teams are well-aligned, partnering to make both companies stronger, and the enthusiasm is contagious.
Speaker Change: As we look to help each other these improvements will be reflected across all segments not just networks.
Speaker Change: From a product offering standpoint, we've begun flashing out each other's catalogs. In addition to filling holes in common product groups. We are identifying complementary product categories to add on either side of the ocean.
Speaker Change: And lastly from a commercial standpoint, we've begun discussions with each others accounts to identify potential opportunities and these discussions are going quite well.
Speaker Change: We're still in the early days, but are more bullish than the two teams are well aligned partnering to make both companies stronger and the enthusiasm is contagious. So we look forward to keeping you abreast of our success so with that I will turn it over to Nathan who will provide more details.
Eric Sills: So we look forward to keeping you abreast of our success.
Nathan Iles: So with that, I will turn it over to Nathan, who will provide more. All right. Thank you, Eric. And good morning, everyone. As we go through the numbers, I'll first give some color on the results for the quarter by segment and then summarize results for the full year at a consolidated level. I'll cover some key balance sheet and cash flow metrics and finish with an update on our financial outlook for the full year of 2025. First, looking at our vehicle control segment, you can see on the slide that net sales of $187.4 million in Q4 were up 4.9%, with the increase driven by solid demand for our product.
Nathan Iles: Alright, Thank you Eric and good morning, everyone.
Nathan Iles: We go through the numbers I'll first give some color on the results for the quarter by segment and then summarize results for the full year at a consolidated level.
Nathan Iles: I'll cover some key balance sheet and cash flow metrics and finish with an update on our financial outlook for the full year of 2025.
Nathan Iles: First looking at a vehicle control segment you can see on this slide the net sales of $187 $4 million in Q4 were up four 9% with the increase driven by solid demand for our products.
Nathan Iles: Vehicle controls adjusted EBITDA in the fourth quarter was down from last year, driven by a lower gross margin rate, but partly offset by better leverage of operating costs. The gross margin rate was impacted by higher cost inputs, as well as some differing product myths, but given higher sales, our gross margin dollars increased over Q4 last year. The improved operating expense leverage was also the result of higher sales volume, and we were pleased to see factoring costs decline as a percent of sales as interest rates are slightly lower than last year. Turning to temperature control, net sales in the quarter for that segment of $58 million were up 30%.
Vehicle controls adjusted EBIT in the fourth quarter was down from last year, driven by a lower gross margin rates, partly offset by better leverage of operating expenses the.
Nathan Iles: The gross margin rate was impacted by higher cost inputs as well as some different product mix, but given higher sales our gross margin dollars increased over Q4 last year.
Nathan Iles: The improved operating expense leverage was also the result of higher sales volume and we were pleased to see factoring costs decline as a percent of sales as interest rates are slightly lower than last year.
Nathan Iles: Turning to temperature control net sales in the quarter for that segment of $58 million were up 30%.
Nathan Iles: The fourth quarter benefited from another year of favorable weather patterns that started early in the season and continued through the summer, with demand staying elevated into the fourth quarter. Temperature controls adjusted EBITDA increased in Q4 to 9.5% as higher sales volumes led to higher gross margin rates and improved operating expenses as percent of sales for the quarter. Sales for our engineered solutions segment in the quarter were down 7.9% and were impacted by slowing customer production schedules as they react to softness across various markets. We've noted the markets we serve can cause lumpiness in our sales in a given quarter, but we were pleased to see our sales for the full year increase one percent as new business wins with both existing and new customers offset some of the market soft.
Nathan Iles: <unk> fourth quarter benefited from another year of favorable weather patterns that started early in the season and continued through the summer with demand staying elevated into the fourth quarter.
Nathan Iles: Temperature control as adjusted EBITDA increased in Q4 to nine 5% as higher sales volumes led to higher gross margin rates and improved operating expenses as a percent of sales for the quarter.
Nathan Iles: Sales for engineered solutions segment in the quarter were down seven 9% and were impacted by slowing customer production schedules as they react to softness across various markets. We've noted the markets. We serve can cause lumpiness in our sales in a given quarter.
Nathan Iles: We're pleased to see our sales for the full year increased 1% as new business wins with both existing and new customers offset some of the market softens.
Nathan Iles: Adjusted EBITDA for engineered solutions in the quarter of 8.5% was up from last year, as we saw a better mix of products sold, which improved the gross margin rate and operating expenses remained well under control.
Nathan Iles: Adjusted EBITDA for engineered solutions in the quarter of eight 5% was up from last year as we saw a better mix of products sold which improved the gross margin rate and operating expenses remained well under control.
Nathan Iles: Last but not least for operating segments, let me talk about Nissan's Automotive. We closed on the acquisition of the business on November 1st, as Eric noted, and have included two months of sales and profit in our reserve. Nissan's added $35.7 million of net sales in the quarter and $3.2 million of adjusted EBITDA. The business is performing as expected, but I should point out that it does have a seasonality aspect to it, similar to our temp control segment, given the nature of certain products. As you know from being familiar with the seasonal business, the fourth quarter can be and usually is different from a full year.
Nathan Iles: Last but not least for operating segments, let me talk about Nielsen's automotive.
Speaker Change: We closed on the acquisition of the business on November 1st as Eric noted and if included two months of sales and profits of sales and profit in our results.
Speaker Change: <unk> added $35 7 million of net sales in the quarter and $3 2 million of adjusted EBIT.
Speaker Change: The business is performing as expected, but I should point out that it does have a seasonality aspect to it similar to our temp control segment, given the nature of certain products.
Speaker Change: As you know from being familiar with the seasonal business the fourth quarter can be and usually is different from a full year. So timing of our acquisition coincided with the slowest months of the year in November and December.
Nathan Iles: So timing of our acquisition coincided with the slowest months of the year in November and December. We expect sales volume EBITDA to pick up as we go through 2025, in line with prior expectations, which is that Nissan is about a $260 million business in sales annually with mid-teams EBITDA. One other point regarding NISN's gross margin and SG&A expenses, you'll notice a different profit profile than our other segments. As this is more of a distribution business and manufacturing, we'll see higher gross margins, but also some higher distribution expenses in SG&A, that when combined will result in an adjusted EBITDA in the mid-teens range for the full year, as I noted.
Speaker Change: We expect sales volume EBIT has picked up as we go through 2025% in line with prior expectations, which is that Nissan just about a $260 million business in sales annually with mid teens EBITDA.
Speaker Change: One other point regarding missions gross margin and SG&A expenses, you'll notice a different profit profile than our other segments. As this is more of a distribution business and manufacturing will see higher gross margins, but also some higher distribution expenses and SG&A that when combined will result in an adjusted EBITDA in the mid teens range for the full year as I noted.
Nathan Iles: Putting the results all together, across the four segments for Q4, consolidated sales increased 18.1 percent and adjusted EBITDA increased to 8.4 percent of net sales, while non-GAAP diluted earnings per share were up 27 percent versus last year. Turning to our full-year consolidated results, you'll see we turned in a solid overall. Net sales were up 7.8% and when excluding Nissans were up 5.1% with sales up across all segments. Our gross margin rate increased to 29.1% on the strength of our temp-controlled business and the addition of NIST. While consolidated SG&A expenses, excluding factoring, were up for the year, the year contained additional costs related to the Nissan's business and startup of our new distribution center.
Speaker Change: Putting the results altogether across the four segments for Q4 consolidated sales increased 18, 1% and adjusted EBIT increased eight 4% of net sales while non-GAAP diluted earnings per share were up 27% versus last year.
Speaker Change: Turning to our full year consolidated results, you'll see we turned in a solid overall performance.
Speaker Change: Net sales were up seven 8% when excluding <unk> were up five 1% with sales up across all segments. Our gross margin rate increased to 29, 1% on the strength of our temp control business and the addition of Mrs. <unk>.
Speaker Change: While consolidated SG&A expenses, excluding factoring were up for the year the year contained additional costs related to the Nissan business and startup of our new distribution center exclude.
Nathan Iles: excluding $14.2 million of Nissan's SG&A and $4.6 million of DC's startup costs. SG&A's percent of sales would have been 18% showing improved performance on higher sales.
Speaker Change: Excluding $14 2 million of missions, SG&A and $4 6 million of D. C startup costs SG&A as a percent of sales would have been 18% showing improved performance on higher sales volume.
Nathan Iles: On the bottom line, sales growth, margin improvement, and well-controlled operating expenses helped us achieve an 8.6% increase in non-GAAP diluted earnings per share for the year. Turning now to the balance sheet, accounts receivable were $210.7 million at the end of the year, higher than last year due to the addition of Nissan's receivables of about $38 million, and higher Q4 sales for the legacy business. Inventory levels finished the year at $624.9 million, up from last year, mainly due to the addition of Nissan's inventory of $92 million, and also higher levels needed to satisfy increased sales volume.
Speaker Change: On the bottom line sales growth margin improvement and well controlled operating expenses helped us achieve an eight 6% increase in non-GAAP diluted earnings per share for the year.
Speaker Change: Turning now to the balance sheet.
Counts receivable were $210 7 million at the end of the year higher than last year due to the addition of <unk> receivables of about $38 million and higher Q4 sales to legacy business.
Speaker Change: Inventory levels finished the year at $624 9 million up from last year.
Speaker Change: Due to the addition of <unk> inventory of $92 million and also higher levels needed to satisfy increased sales volumes.
Nathan Iles: Our cash flow statement reflects cash generated in operations for the year of $76.7 million as compared to cash generated of $144.3 million last year. Please note the cash generated in operations last year was aided by a reduction in inventory balances that did not recur this year after we brought inventory levels back down to normal. Our investing activities show capital expenditures increasing this year to $44 million, but that includes $20.6 million of investment related to our Shawnee Distribution Center. Financing activities show payment of $25.3 million of dividends and $10.4 million of share repurchases, as well as borrowings for the year of $392.6 million, which were used primarily to fund our acquisition of Nissan.
Speaker Change: Our cash flow statement reflects cash generated in operations for the year of $76 7 million as compared to cash generated of $144 $3 million last year.
Speaker Change: Please note the cash generated in operations last year was aided by a reduction in inventory balances that did not recur this year actually brought inventory levels back down to normal.
Speaker Change: Our investing activities capital expenditures, increasing this year to $44 million, but that includes 26 billion of investment related to our Xiaomi distribution center.
Speaker Change: Financing activity show, a payment of $25 3 million of dividends and $10 4 million of share repurchases as well as borrowings for the year of $392 6 million, which were used primarily to fund our acquisition of Mrs.
Nathan Iles: Our net debt of $517.9 million at the end of Q4 was higher than last year after borrowing funds for the act. We finished Q4 with a leverage ratio of 3.7 times EBO. But keep in mind, this includes just two months of results from Nissan's. And pro forma for 12 months would mean leverage was actually under three times EBO. While we may see a slight uptick in leverage in the first half of 2025 due to seasonal working capital needs, we expect our leverage ratio to improve as we add EBITDA from NISNs into the ratio and pay down debt in 2025.
Speaker Change: Our net debt of $517 9 million at the end of Q4 was higher than last year after borrowing funds for the acquisition.
Speaker Change: We finished Q4 with a leverage ratio of three seven times EBIT, but keep in mind. This includes just two months of results from <unk> and pro forma for 12 months would mean leverages actually under three times EBITDA.
Speaker Change: While we may see a slight uptick in leverage in the first half of 2025 due to seasonal working capital needs. We expect our leverage ratio to improve as we add EBITDA emissions into the ratio and pay down debt in 2025.
Nathan Iles: We continue to target leverage of less than two times EBITDA by the end of 2026.
Speaker Change: We continue to target leverage of less than two times EBITDA by the end of 2026.
Nathan Iles: Before I finish, I want to give an update on our sales and profit expectations for the full year of 2025. Regarding our top line sales, we expect to see percentage growth in the mid-teens for the full year, which reflects growth from the addition of Nissan's automotive and continuing favorable North American aftermarket dynamics. but also a slight headwind from the sale of our ACI product line, which was about 50 basis points of consolidated 2024 sales, and sales and engineering solutions, which are currently soft as end markets remain lower and customers reduce production to work through them.
Speaker Change: Before I finish I want to give an update on our sales and profit expectations for the full year of 2025.
Speaker Change: Regarding our top line sales, we expect to see percentage growth in the mid teens for the full year, which reflects growth from the addition of <unk> automotive and continuing favorable north American equity market dynamics.
Speaker Change: But also a slight headwind from the sale of our ACI product line, which was about 50 basis points of consolidated 2024 sales and sales in engineered solutions, which are currently soft as end markets remained lower than customers reduced production to work through inventory.
Nathan Iles: We expect our adjusted EBITDA for 2025 to be in a range of 10 to 11 percent, and that includes growth from Nissan's automotive, as we'll have 12 months of results versus two months in 2024. In connection with our adjusted EBITDA outlook, we expect interest expense on outstanding debt to be about $32 million for the full year, our income tax rate to be 27%, and depreciation amortization to increase to $40 to $45 million as we amortize NISN's intangibles and place distribution center investments in service. Regarding operating expenses, keep in mind these expenses are incurred more relatively across the year but do have some variability with sales and as such will fluctuate the seasonality in the business.
Speaker Change: We expect our adjusted EBITDA for 2025 to be in a range of 10% to 11% and that includes growth from this in automotive as we will have 12 months of results versus two months in 2024.
Speaker Change: In connection with our adjusted EBITDA outlook, we expect interest expense on outstanding debt to be about $32 million for the full year, our income tax rate to be 27% and depreciation.
And amortization to increase to 40% to $45 million as we amortize missions intangibles and place distribution center investments insights.
Speaker Change: Regarding operating expenses keep in mind. These expenses are incurred more ratably across the year, but do have some variability with sales and as such will fluctuate with seasonality in the business.
Nathan Iles: We anticipate total operating expenses, inclusive of factoring, and additional emissions expenses will be approximately $97 million to $103 million each quarter in 2020.
Speaker Change: We anticipate total operating expenses inclusive of factoring in additional missions expenses will be approximately 97 million to $103 million each quarter in 2025.
Nathan Iles: Finally, please note that our 2025 outlook does not include any impact from the recently announced and potential tariff action. U.S. government continues to announce potential actions, but things change constantly, creating uncertainty in the market. Whatever the impact is on our business, we plan to address higher costs by passing them through in price dollar for dollar.
Speaker Change: Finally, please note that our 2025 outlook does not include any impact from the recently announced and potential tariff actions.
Speaker Change: Government continues to announce potential actions that things change constantly creating uncertainty in the market.
Speaker Change: However, the impact is on our business, we plan to address higher cost by passing them through in price dollar for dollar.
Nathan Iles: To wrap up, we were very pleased with our sales growth in both the quarter and full year of 2024, as well as our earnings growth. Given our results, we were pleased to raise our quarterly dividend to $0.31 per share, an increase of almost 7%, continuing a trend of increases over many years. We're also happy to have the NISMS team on board and are looking forward to working together, creating exciting opportunities for 2025 and beyond.
Speaker Change: To wrap up we're very pleased with our sales growth in both the quarter and full year 2024, as well as our earnings growth.
Speaker Change: Given our results we were pleased to raise our quarterly dividend to <unk> 31 per share an increase of almost 7% continuing a trend of increases over many years.
Speaker Change: We're also happy to have munis and his team on board and are looking forward to working together, creating exciting opportunities for 2025 and beyond thank.
Nathan Iles: Thank you for your attention.
Speaker Change: Thank you for your attention I'll turn the call back to Eric versus final tunnels.
Eric Sills: I'll turn the call back to Eric for some final comments. Oh, thank you, Nathan. So to close, let me just spend a minute on how we're thinking about this. Needless to say, we are in complex times, making things difficult to predict. But overall, we believe that our business largely resides in the sales department. The aftermarket, which represents over 80% of our business, tends to be highly resilient in times of instability. As people across the globe feel a sense of uncertainty, they tend to resist major purchases. The car park tends to age during these cycles and motorists have no choice but to make the necessary repairs to keep their cars operational.
Speaker Change: Thank you Nathan so the close let me just spend a minute on how we're thinking about the future.
Needless to say, we are in complex times, making things difficult to predict but overall, we believe that our business largely resides in the same partner.
Speaker Change: The aftermarket which represents over 80% of our business tends to be highly resilient in times of instability.
Speaker Change: As people across the globe feel a sense of uncertainty they tend to resist major purchases.
Speaker Change: Car Park tends to age during these cycles and motorists have no choice, but to make the necessary repairs to keep their cars operational.
Eric Sills: We've seen this to be the case here in North America and with our exposure in Europe with Nissens, we expect similar dynamics.
Speaker Change: We've seen this to be the case here in North America, and with our exposure in Europe with lessons, we expect similar dynamics.
Eric Sills: We're also headed into a period of uncertainty related to tariffs. Only time will tell which get implemented and to what extent, and as such, as Nathan said, we have not accounted for them in our 2025 outlook. But with history as our guide, we anticipate the ability to pass these through at cost, and as we largely sell non-discretionary repair items, we would not expect any disruption of demand. Meanwhile, if tariffs increase the cost of new cars, we would expect that to dampen new car sales and thus benefit the aftermarket further.
Speaker Change: We also had in this period of uncertainty related to tariffs only time will tell which could implemented into what extent and as such as Nathan said, we have not accounted for them in our 2020 outlook with history as our guide we anticipate the ability to pass these through a cost and as we largely sell non discretionary repair items, we would not expect any disruption.
Speaker Change: The demand.
Speaker Change: Meanwhile, if tariffs increase the cost of new cars, we would expect that to dampen new car sales and thus benefit the aftermarket further.
Eric Sills: Our engineered solutions business can experience different. Certain end markets and customers will perform well, while others may see temporary contraction. And while we are experiencing some near-term headwinds, we expect the long-term trend for us to be favorable as our new business awards take shape. Meanwhile, we continue to implement many initiatives to make us a stronger and more diversified global company, and we have the best group of people to make it all happen. And so we do feel very good about the future.
Speaker Change: Our engineered solutions business can experience different trends certain end markets and customers, we will perform well, while others may see temporary contraction and while we are experiencing some near term headwinds we expect the long term trend for us to be favorable as our new business Awards takes shape.
Speaker Change: Meanwhile, we continue to implement many initiatives to make us a stronger and more diversified global company and we have the best group of people to make it all happen and so we do feel very good about the future.
Operator: That concludes our prepared remarks.
That concludes our prepared remarks at this point, we will open it up for your questions.
Operator: At this point, we will open it up for your questions. And at this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may withdraw your question at any time by pressing star 2. Once again, to ask a question, please press star and 1 on your telephone keypad.
Speaker Change: And at this time, if you would like to ask a question. Please press the star and one on your telephone keypad.
Speaker Change: You may withdraw your question at any time by pressing Star Q.
Speaker Change: Once again to ask a question. Please press star one on your telephone keypad.
Bret Jordan: We'll take our first question from Bret Jordan with Jeffries. Please go ahead, your line is open. Hey, good morning, guys. Good morning, Bret. Good morning.
Speaker Change: We will take our first question from Bret Jordan with Jefferies. Please go ahead. Your line is open.
Bret Jordan: Hey, good morning, guys.
Speaker Change: Good morning, Brad could you talk about I guess, how you see the <unk> contribution to your guided growth for 25 are there synergies in the North American business from adding that product to the portfolio.
Eric Sills: Could you talk about, I guess, how you see the Nissan's contribution to your guided growth for 25? Are there synergies in the North American business from adding that product to the portfolio? Yeah, Bret, thanks for the question. So, as we look at 2025, and I think we've said some of this before when we signed the deal last summer, we expect some of the cost synergies to roll through in terms of just looking at product cost across the different portfolios. But in terms of revenue synergies, it will probably take a bit longer to come, and that would be further out.
Speaker Change: Yeah, Brett Thanks for the question. So as we look at 2025 and I think we've said in some of this before when we signed the deal last summer, we expect some of the cost synergies to roll through.
Speaker Change: In terms of just looking at product cost across the different portfolios, but in terms of revenue synergies is it will probably take a bit longer to come.
Speaker Change: And that would be further out.
Eric Sills: And I guess just to remind you, Eric mentioned the synergy target that we were looking at. That was more around the product costs than the revenue synergies themselves. And to add to that, because it is largely about product cost reductions, there can be a timing lag before it hits the P&L as you have vendor lead times, then it has to go through the balance sheet and so on. So while we're getting a lot of the decisions made and making nice progress, there is an offset in timing. So we don't expect a tremendous amount of it to hit, certainly not in the near term, but hopefully we'll see some towards the end of the year.
Speaker Change: I guess, just remind you Eric mentioned the synergy target that we were looking at that was more around the product costs, then the revenue synergies themselves.
So just to add to that.
Speaker Change: And to add to that because it is largely about product cost reductions there can be a timing lag before it hits the P&L as you have.
Speaker Change: Vendor lead times and has to go through the balance sheet and so on so while we're while we're getting a lot of the decisions made in making nice progress. There is an offset in timing. So we don't expect a tremendous amount of it to hit certainly not in the near term, but hopefully we'll see some towards the end of the year.
Eric Sills: Okay, and could you talk about the sort of POS data at the customer level versus your sell-in, obviously a very strong temperature control, is that product, could you talk about customer inventory levels there, and do you see any of that being purchasing ahead of potential tariffs, just given a lot of that product comes from Mexico, or is it really sort of aligned with what the underlying demand is? So, just to be clear, you're obviously asking about the North American aftermarket business. And what we've seen with POS and related inventory, I'll talk about the two divisions separately.
Speaker Change: Can you just talk about sort of Pos data at the customer level versus your sell in obviously, a very strong temperature control is that product could you talk about customer inventory levels. There and do you see any of that would be being purchasing ahead of potential tariffs just given a lot of that product comes from Mexico or is it really sort of aligned with what the underlying demand is question.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: So just to be clear Youre, obviously, asking about the north American aftermarket business and what we've seen with with.
Speaker Change: With Pos and related inventory I'll talk about the two divisions separately vehicle control, what we saw in the quarter was basically flat Pos.
Eric Sills: Vehicle control, what we saw in the quarter was basically flat POS from the big guys. And so, as you saw our sell-in being slightly higher than that, that was really what I was inventory expansion as they're adding hundreds of stores and broadening their assortments. And again, those trends we would expect to continue. On the temperature control side, we saw strong POS in the fourth quarter, but not quite as big as the 30% growth we saw in sell-in. That was a bit of a rebuild of their inventory because it had been such a strong selling season throughout that that was the beginnings of them preparing for 2025.
Speaker Change: From the big guys.
Speaker Change: And so as you saw our sell in being slightly higher than that that was really allows referring to as kind of this ongoing inventory expansion as they are adding hundreds of stores and then broadening their assortments and again those trends we would expect to continue on the temperature control side, what we saw we saw.
Speaker Change: Strong pls in the fourth quarter, but not quite as big as as the 30% growth. We saw in sell in that was a bit of a rebuild of their inventory because it had been such a strong selling season throughout.
Speaker Change: But that was the beginnings of them preparing for 2025 and as we look at the pre season orders continuing.
Eric Sills: And as we look at the preseason orders continuing right now, we see it as roughly comparable to the last few years. As it relates to whether there is a pull forward of any purchases ahead of the potential impact of tariffs, we're not seeing that per se. We think that the purchasing is still pretty rational.
Speaker Change: Right now we see it is roughly comparable to the last few years as it relates to whether there is a pull forward of any purchases.
Speaker Change: Head of.
Speaker Change: The potential impact of tariffs, we're not we're not seeing that per say, we think that it's that the purchasing is still pretty rational.
Eric Sills: Okay, and then one last question, I guess, how do you see inflation, X tariffs, what would you sort of think same skew inflation looks like in 25? Yeah, let me take it from the cost side, Bret. I guess we see inflation across the markets, just as everyone else is seeing. You know, expect to offset that price where we can, but I think the inflationary environment is largely back to normal standards tariffs. Okay, I mean, most of your customers have been talking about 1%. Is their expectation is that sort of aligned with where you're So that's reasonable.
Speaker Change: And then one last question I guess, how do you see inflation ex tariffs what would you sort of think same SKU inflation looks like in 'twenty five versus 24.
Speaker Change: Yes, let.
Speaker Change: Let me take it from the cost side, Brett I guess, we see inflation across the markets just as everyone else is seeing.
Speaker Change: Expect to offset that price, where we can.
Speaker Change: But I think the inflationary environment is largely back to normal standards tariffs.
Speaker Change: Most of the your customers have been talking about 1% is there expectation does that sort of.
Speaker Change: Line with where Youre thinking.
Speaker Change: And you say that's reasonable it'll be in that very low single digit range. Okay. Great. Thank you.
Eric Sills: It'll be in that very low single-digit range. Okay, great.
Eric Sills: Thanks.
Operator: Thank you.
Speaker Change: Thank you. Our next question comes from Scott <unk> with Roth MK Emma please.
Scott Stember: Our next question comes from Scott Stember with Roth MKM. Please go ahead. Your line is open. Good morning, guys. Thanks, Scott.
Speaker Change: Please go ahead your line is open.
Speaker Change: Hi, good morning, guys.
Speaker Change: Thanks Scott.
Speaker Change: Regarding tariffs I know this is obviously, a hot topic and nobody knows what's going to happen, but could you just remind us.
Eric Sills: Regarding tariffs, I know this is obviously a hot topic and nobody knows what's going to happen, but could you just remind us... where your exposure versus all the regions are versus Mexico, Canada, China, and Europe just so we have an idea of how things could unfold if things accelerate on that front. Sure, I'm not going to get into specific details, but we are, as you know, we're a global company. We have manufacturing across multiple continents here in North America, as well as a significant amount in Europe and in Asia, as well as a supply base that is global.
Speaker Change: Where your exposure.
Speaker Change: Versus all the regions are versus Mexico, Canada.
Speaker Change: China and Europe, just so we have an idea of how things could unfold if things accelerate on that front.
Speaker Change: Sure.
Speaker Change: Get into specific details, but we are as you know we are a global company, we have manufacturing across multiple continents here in North America as well as a significant amount in Europe and in Asia as well as a supply base that is global so.
Eric Sills: So as we think about both the announced and potential future tariffs, we see exposure throughout, but not necessarily overly concentrated in any particular area. And even then, you know, a lot of the details have been, are still being developed in terms of how tariffs are even going to be accounted for in places like Mexico. So we're staying nimble on it while we pay very close attention to the announcements that are being made. And as we said, in the prepared remarks, the intent will be to pass them through. There may be a bit of a timing offset as the tariffs get announced, and we then have to, you know, work it through our inventory.
Speaker Change: So as as we think about both the announced and potential future tariffs, we see exposure throughout but not necessarily overly concentrated in any particular area and even then a lot of the details have been.
Speaker Change: Are still being developed in terms of how tax or even going to be accounted for and in places like Mexico. So we're staying nimble on it while we pay very close attention to the announcements that are being made.
Speaker Change: And as we said in the prepared remarks, the intent will be to pass them through there may be a bit of a timing offset as the task and announced and we then have to work.
Speaker Change: Work it through our inventory, but the plan is as we did in 2018.
Eric Sills: But the plan is, as we did in 2018, to accommodate it, we'll work with our suppliers as well to say, how can we share in some of the pain, but to largely pass it through, basically. God, that's helpful.
Speaker Change: Sure.
Speaker Change: Accommodated and we'll work with our suppliers as well to say how can we share in some of the pain, which are largely passenger.
Speaker Change: Please go ahead.
Speaker Change: Got it that's helpful and then with the New addition of Nissan maybe just go through the three individual segments air conditioning engine cooling and energy efficiency, just remind us what each one is doing and how each is performing I guess from a.
Eric Sills: And then with the new edition of Nissans, maybe just go through the three individual segments, air conditioning, engine cooling, and energy efficiency. Just remind us what each one is doing and how each is performing, I guess, from a sales perspective. I know that this is the first quarter, but just give us a sense of how each segment is performing on a year-over-year basis, if you could.
Speaker Change: Perspective, I know that.
Speaker Change: This is the first quarter, but just give us a sense of how each segment is performing on a year over year basis, if you could.
Speaker Change: Okay.
Eric Sills: So first, in terms of the split between the three categories, engine cooling is the largest of the three, and it has various product types in it, but the single biggest needle mover within it is radiators, which is a very big and healthy business over in Europe. Air conditioning being the second biggest category, roughly a third of the volume, that's very much of a similar offering as our temperature control division, and the last being what they call engine efficiency, it's what we would call vehicle control.
Speaker Change: Well first in terms of the split between the <unk> between the three categories engine cooling is the largest of the three.
Speaker Change: And it has various product types in it but the single biggest needle mover within it as radiators, which is very healthy.
Speaker Change: Healthy business over in Europe.
Speaker Change: Air conditioning being the second biggest category roughly a third of the volume that's very much of a similar offering as our temperature control division and the last being what they call engine efficiency.
Speaker Change: What we would call vehicle control. This is a newer business for them.
Eric Sills: This is a newer business for them, and so it's one that they have been adding, as opposed to going wide like our vehicle control, it's subcategory by subcategory, began with turbos where they've done very well, after that they launched EGR valves, and now are getting to electronic throttle bodies, so they're looking really subcategory by subcategory where they believe they have something to sell, and where they believe that the market has an opening for them, and it's really been very impressive to us, their ability to launch these and gain scale in that subsegment, where really they were unheard of not more than five years ago.
Speaker Change: So it's one that they have been adding as opposed to going wide like our vehicle control subcategories by subcategory began with turbos, where they've done very well after that they lost ETR valves and now are getting to electronic throttle body. So they are looking really subcategory by sub category, where they believe they have something to sell and would they be.
Speaker Change: I'll leave that the market has has an opening for them and it's really been very impressive to us their ability to launch these and gain scale in that.
Speaker Change: Subsegment, where really they were unheard of not more than five five years ago.
Eric Sills: All three of the categories are performing well, performing as expected, the temperature control, the air conditioning one being the most seasonal of the three, so right now it's in the off-season, but there's every expectation that it'll perform as ours does, rise and fall to a degree with the weather, but they are a significant market share player in Europe, and are doing very well with their legacy categories, and are now seeming to do very well with their engine efficiency as well. Got it, very helpful.
Speaker Change: All three of the categories are performing well performing as expected the.
Speaker Change: The temperature control the air conditioning, one being the most seasonal of the three so right now it's in it's in the off season, but there is every expectation is that.
Speaker Change: And it will perform as ours does rise and fall to a degree with the weather, but they are a significant market share player in Europe and are doing very well with their legacy categories internationally to do very well with their engine efficiency as well.
Speaker Change: Got it very helpful and then last question.
Jim Burke: And then last question, just to give an update on the new facility and movements over in Kansas. Okay, hi Scott. Yeah, yeah, hi. Yeah, we're progressing very well there. The automation, we're doing the installation there. As recall for everybody, we're expanding our capacity. We're within a few miles of our existing Edwardsville, Kansas distribution center there. But we're putting product in from both vehicle control, temperature control, and then moving the wire from our Edwardsville facility, which gives us much more risk avoidance that we have in there. The automation is going in, we believe, by the end of 25.
Speaker Change: Just give an update on.
Speaker Change: The new facility and movements over in Kansas.
Speaker Change: Okay got it.
Speaker Change: Okay.
Speaker Change: Yes, hi.
Speaker Change: Yes, we're progressing very well there the automation.
Speaker Change: Doing the installation there.
Speaker Change: Recall for everybody.
Speaker Change: We're expanding our capacity.
Speaker Change: Within a few miles of our existing Edwardsville, Kansas distribution center, there, but we're putting product in from both vehicle control temperature control and then move into wire from our Edwardsville facility, which gives us much more.
Speaker Change: Risk avoidance that we have in there.
Speaker Change: Automation is going in we believe by the end of the 25, we'll be prepared to move the final pieces in there and then we'll be schedule to put.
Jim Burke: We'll be prepared to move the final pieces in there, and then we'll be scheduled to put the existing facility in Edwardsville, Kansas, which we own, on the market, and then we plan to exit that hopefully early 2026. Got it.
Speaker Change: The existing facility in Edwardsville, Kansas, which we all on the market and then we plan to exit that hopefully early 2026.
Speaker Change: Got it that's all for me thank you.
Operator: That's all for me. Thank you. Thanks, Scott.
Scott: Thanks Scott.
Operator: Thank you. And as a reminder, it is star and one on your telephone keypad if you would like to join the queue.
Speaker Change: Thank you and as a reminder, it is star one on your telephone keypad, if you would like to join the queue.
Carolina Jolly: We will move next with Carolina Jolly with Cabeli. Please go ahead. Your line is open. Good morning. Thanks for taking my call. Just to start, with your guidance of mid-teen growth, obviously, we were to include the contribution from Neeson. Can you talk a little about maybe some of the puts and takes of the growth there, and are you expecting growth in your underlying?
Speaker Change: We'll move next with Garlina Jolly with Gabelli. Please go ahead. Your line is open.
Garlina Jolly: Oh good morning, Thanks for taking my call just.
Speaker Change: <unk>.
Speaker Change: Just to start.
Speaker Change: With your guidance of mid teen growth, obviously, where we're at.
Speaker Change: To.
Speaker Change: Exclude the country.
Bret Jordan: Contribution from Nathan can you talk a little about maybe some of the puts and takes and the growth there.
Bret Jordan: There and are you expecting growth in your underlying.
Eric Sills: Vehicle Control, Business Good morning, Caroline. It's Eric.
Bret Jordan: Vehicle control business.
Bret Jordan: Alright.
Bret Jordan: Good morning, Caroline it's Eric.
Eric Sills: give you some flavor, but we typically don't give guidance at the segment level. But yeah, so Nissan's obviously being the majority of that mid-teens growth, just in that it's new business for us. And as we look at the basic market trends within our other three segments, we see on vehicle control side, we had a good year last year, trends, it's early days, but as of now, trends seem to be continuing along those lines, and the market remains healthy for this non-discretionary category. On the temperature control side, what we see is, as Nathan mentioned, we're starting with the absence of the ACI business, the window lift business that we sold last year, which is a few percentage points backwards, just to start with, and going up against a very strong season, we have expectations it'll get hot again, but as you know as well as we do, it's going to rise and fall a little bit, depending on when it gets hot and how hot it gets.
Bret Jordan: We'll give you some flavor, but we typically don't give guidance at the at the segment level, but yes, so Netherlands, obviously being the majority of that mid teens growth.
Bret Jordan: Just as in that it's new business for us and as we look at at the basic market trends within our other three segments.
Bret Jordan: So we see on.
Bret Jordan: On vehicle control side, we had a good year last year.
Bret Jordan: Trends, it's early days, but as of now trends seem to be continuing along those lines in the market remains healthy for this non discretionary category.
Bret Jordan: The temperature control side, what we see is as Nathan mentioned, we're starting.
Bret Jordan: With the absence of that.
Bret Jordan: <unk> business the window lift business that we sold last year, which is two percentage points backwards, just start with and going up against a very.
Bret Jordan: Strong season.
Bret Jordan: Expectations, it'll get hot again, but as you know as well as we do it's going to rise and fall a little bit depending on on when it gets hot and how hot it gets.
Bret Jordan: Engineered solutions is starting the year as it ended last year. So you could really say all three of these segments are kind of the trends have continued coming out of the fourth quarter, but it can be very.
Eric Sills: Engineered Solutions is starting the year as it ended last year, so you could really say all three of these segments are kind of the trends have continued coming out of the fourth quarter, but it can be lumpier, and so we hope that we'll see some bounce back of certain end markets, it's difficult to predict, but we're assuming that we can see some level of softness as the markets continue, as their end markets continue on their trajectory. So I realize that's a long-winded answer that says that we see different puts and exits. not even the end of February yet, so we'll see how the year rolls out.
Bret Jordan: It can be lumpier and so we hope that we'll see.
Bret Jordan: Some some bounce back of certain end markets its difficult to predict.
Bret Jordan: But we're assuming that we can see some level of softness as the markets continue as their end markets continue on their trajectory so I realize that.
Bret Jordan: A long winded answer that says that we see different puts and takes it's not even the end of February yet. So we'll see how the year rolls out, but overall, we think that our legacy business continues to be healthy as a whole.
Eric Sills: But overall, we think that our legacy business continues to be healthy as a whole.
Nathan Iles: Perfect, thanks. And then just a quick follow up on the guidance. I just want to make sure this is right within the 10 to 11% EBITDA forecast. There are some costs that are will be attributed to Shawnee that aren't going to necessarily be adjusted out. But you would expect to. to, I guess, improve in 2026 once there's no duplicate of costs. Is that kind of correct to think about? Yeah, yeah, I can answer Nathan. That's correct. We continue to have some of those startup type costs in the numbers and we're not going to adjust them out.
Speaker Change: Perfect. Thanks, and then just a quick follow up on the guidance.
I just wanted to make sure. This is right within the 10% to 11% EBITDA forecast there are some costs.
Speaker Change: Or will it be attributed tis shiny that arent going to necessarily be adjusted out.
Speaker Change: But you would expect to.
Speaker Change: To.
Speaker Change: Improve in 2026 months Theres no duplicate of costs okay.
Speaker Change: Correct to think about.
Speaker Change: Yes.
Speaker Change: Yes, Hi, Caroline it's Nathan.
Speaker Change: That's correct. We continue to have some of those startup type costs in the numbers and we're not going to adjust them out, but we think it is still a couple of million dollars in 2025, and then this will come out in 2026.
Nathan Iles: But we think it's still a couple million dollars in 2025 and then this will come out in 2026.
Nathan Iles: Great, thank you.
Speaker Change: Great. Thank you.
Robert Smith: And your next question comes from Robert Smith with the Center for Performance Investing. Please go ahead. Your line is open. Thanks. Good morning. Thanks for taking my questions. Morning.
Speaker Change: Thank you. Our next question comes from Robert Smith with the center for performance investing. Please go ahead. Your line is open.
Robert Smith: Thanks, Good morning, Thanks for taking my questions.
Speaker Change: Good morning, good morning.
Jim Burke: I know you're opportunistic, but is it fair to say that at this point in time that you would Not be too interested or aggressive in further acquisitions until you pay down some of your debt. Hi, Robert. This is Jim Burke. Yeah, that's a fair assessment. While our plans are and the capital allocation, our intent is to pay down the debt levels. I think Nathan may have talked where on a pro forma basis, we're at the year 3X today. And by the end of 26, we expect to get down to 2, 2.0. But with that said, we always stay abreast of what's in the market, nothing to announce, nor do we have any initial plans.
Speaker Change: I know you're opportunistic but is it fair to say that.
At this point in time that you would.
Speaker Change: Not to be too.
Speaker Change: Just another question.
Speaker Change: Furthermore, acquisitions until you pay down some agreed that.
Jim Burke: Hi, Robert This is Jim Burke.
Jim Burke: That's a that's a fair assessment, well, where our plans are.
Speaker Change: The capital allocation, our intent is to pay down the debt levels I think Nathan may have thoughts where on a pro forma basis were at tier three three X today and by the end of 2006, we expect to get down to 220.
Speaker Change: That said, we always stay abreast of what's in the market.
Speaker Change: Nothing to announce nor do we have any initial plans are immediate.
Jim Burke: Our immediate intent there is to pay down the debt, maintain our dividends. Yeah, and by the way, thanks.
Speaker Change: Intense there is two.
Speaker Change: Pay down the debt maintain our dividend.
Speaker Change: Yes.
Eric Sills: Thanks for the dividend increase. Could you describe... Can you describe how you're examining... efficiencies from artificial intelligence and perhaps who you're working with or I know it's your early stage, but how are you approaching it? Well, I think that we are looking at where the potential applications can be, whether it makes us a more efficient company or helps us with our product offering or our future. So I think we're looking at it similar to a lot of other companies in the space. What are the different tools at our disposal that can be relatively easily deployed to seek a benefit?
Speaker Change: Great. Thanks, Thanks for the dividend increase.
Speaker Change: Could you just.
Speaker Change: Could you describe how you are examining.
Speaker Change: The potential efficiencies from artificial intelligence.
Speaker Change: Perhaps who you're working with her.
I know, it's early stage, but how.
Speaker Change: How're you doing how are you approaching those.
Speaker Change: Well I think that we are looking at here is a potential applications can be whether it makes us a more efficient company or makes us.
Speaker Change: It helps us with our product offering or our future. So I think we're looking at it similar to a lot of other companies in the space what are the.
Speaker Change: One of the different tools at our disposal that can that can be relatively easy to easily deploy to seek benefit we have a handful that are underway. Some of them for example, within our demand planning, which frankly never used to call. It artificial intelligence, but thats basically what it was it was predicted.
Eric Sills: We have a handful that are underway. Some of them, for example, within our demand planning, which, frankly, we never used to call it artificial intelligence, but that's basically what it was, it was predictive analytics, has now gotten much more sophisticated in its algorithms. And so we continue to deploy that sort of artificial intelligence to make us a better company. So a lot of different small pieces, no giant advancements, but we're working on that, which makes sense for us. Are you working with any particular company or program at this present time?
Speaker Change: Analytics is now gotten much more sophisticated and its algorithms.
Speaker Change: And.
Speaker Change: So we continue to deploy that sort of artificial intelligence to make us.
Speaker Change: A better company so a lot of different small pieces no giant advancements, but we're working on that which makes sense for us.
Speaker Change: When you're looking at with any particular.
Speaker Change: Company a program at this present time.
Robert Smith: We work with various third parties, but none that I would feel comfortable advertising. and Understood. All right, thanks so much. Good luck. Thank you, Robert.
Speaker Change: We work with various third parties, but none that I would feel comfortable.
Advertising.
Speaker Change: Okay understood alright, thanks, so much good luck.
Speaker Change: Thank you Robert.
Operator: Thank you, and there appear to be no further questions at this time.
Speaker Change: Thank you and there appear to be no further questions. At this time I will turn the call back to our presenters for any closing or additional remarks.
Operator: I will turn the call back to our presenters for any closing or additional remarks. Thanks, Nicky, and we want to thank everyone for participating in our conference call today. We understand there was a lot of information presented, and we'll be happy to answer any follow-up questions you may have. Our contact information is available on our press release or Investor Relations website. I hope you have a great day. Thank you.
Speaker Change: Thanks, Nikki and we want to thank everyone for participating in our conference call. Today, we understand there is a lot of information presented and we'll be happy to answer any follow up questions. You may have our contact information is available on our press release, our Investor Relations website I Hope you have a great day. Thank you.
Operator: And this does conclude today's program. Thank you for your participation. You may disconnect at any time.
Speaker Change: And this does conclude today's program.
Speaker Change: Thank you for your participation you may disconnect at any time.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
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