Red Cat Q2 2023 Earnings Call Transcript

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Provided by Quartr
August 3, 2023

There are 6 speakers on the call.

Operator

Good morning, and welcome to the Park Ohio Second Quarter 2023 Results Conference Call. At this time, all participants are in a listen only mode. After the presentation, the company will conduct a question and answer session. Today's conference is also being recorded. If you have any objections, you may disconnect at this time.

Operator

Before we get started, I want to remind everyone that certain statements made today on today's call may be forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward looking statements are subject to risks and uncertainties A list of relevant risks and uncertainties may be found in the company's earnings press release as well as in the company's 2022 10 ks, which was filed on March 16, 2023, with the SEC. Additionally, the company may discuss adjusted EPS, Adjusted operating income and EBITDA as defined on a continuing operation or consolidated basis. These metrics are not measures of performance under generally accepted accounting principles. For a reconciliation of EPS to adjusted EPS, operating income To adjusted operating income and net income attributable to Park Ohio common shareholders to EBITDA as defined, please refer to the company's recent earnings release.

Operator

I'll now turn the conference over to Mr. Matthew Crawford, Chairman, President and CEO. Please proceed, Mr. Crawford.

Speaker 1

Good morning, and welcome to our Q2 2023 conference call. Pat Fogarty, our Chief Financial Officer, has joined me here this morning as usual. I want to touch on 3 things this morning before I turn the call over to Pat to discuss the details of the quarter. First, Park Ohio achieved record revenue in the recent quarter. This is an important milestone as we strive to meet our goal of $2,000,000,000 in annual revenue, but also makes important points about 2023.

Speaker 1

Our philosophy of building our business on long term partnerships has benefited us meaningfully. Many of our key relationships date back decades, And I often repeat the story that one of our best relationships dates back to a highly engineered product we've been selling to a customer for almost 100 years. Servicing these customers has been difficult and expensive recently, but we emerge a stronger family of companies. Our record sales also are the result of tremendous effort in overcoming labor and supply chain challenges, which are stabilizing, but still are requiring tremendous daily effort Thank you to those on our team who are rising to the challenge every day. Lastly, Like all businesses, we have worked tirelessly to address the inflationary environment and want to thank many of our customers who have supported price increases when absolutely required.

Speaker 1

We appreciate your business and support and are here to help you succeed. Secondly, our recovery in gross margin to 16.4% or up 190 basis points is still below our long term expectations, but is a significant step forward. As discussed on every call recently, we have undergone significant restructuring beginning in 2019, which has affected every corner of our business and lowered our cost to serve our current customers as well as positioning us to achieve our new business goals. Additionally, we're beginning to see the benefit of significant CapEx Lastly, we have moved up our 2023 revenue guidance to an increase over 2022 of between 10% 15%. That implies some deceleration from the first half, but still near record performance.

Speaker 1

The second half is buoyed by As mentioned on our prior call, we see these not only as short term trends, but also as promising long term As our country invests in manufacturing, both privately and through government stimulus, ongoing recovery and growth in aerospace, Now I'll turn the call over to Pat.

Speaker 2

Thank you, Matt. Our second quarter results reflect continued improvement in sales gross margins and operating income, both year over year and sequentially across most parts of our business. Once again, this quarter, we achieved record consolidated sales from continuing operations. Our sales in the quarter resulted from strong customer demand in each of our 3 business segments, increased product pricing and the benefit of the sales from positions made last year. Year over year sales growth was seen in each business unit within each of our 3 business segments across a very diverse Our consolidated net sales from continuing operations were $428,000,000 Up 16% compared to $370,000,000 in the Q2 of last year.

Speaker 2

And for the first half of this year, Our sales have increased $124,000,000 year over year, representing a 17% growth rate. We estimate that approximately 50% of our growth was volume driven and the remainder was driven by material and value added price increases implemented Based on our record revenues in the first half of this year, continued strong backlogs across each business segment And expected continued strong demand in most of our end markets throughout the second half of the year, we have increased our full year sales growth outlook to 10% to 15%, Up from our previous announced guidance of 5% to 10%. In addition to the strong sales quarter, We were pleased with our gross profit margins from continuing operations, which improved 16.4%, 16.4% gross margin is our highest gross margin percentage since the Q4 of 2019. SG and A expenses were up $6,000,000 year over year and similar to Q1 levels, primarily due to SG and A from our 2022 acquisitions, Higher sales levels and increased personnel costs. As a percentage of sales, SG and A was 10.9% Compared to 11% in last year's quarter.

Speaker 2

Consolidated operating income from continuing operations was $19,200,000 Compared to $13,800,000 a year ago, on an adjusted basis, which excludes restructuring and other one time charges, Operating income totaled $23,300,000 and was up 77% compared to the Q2 of last year and 6% sequentially compared to the Q1. Most notably, adjusted operating income margins in our Industrial Equipment business We're approximately 10% in the 2nd quarter, an improvement of 2 40 basis points compared to the 1st quarter. Also adjusted operating margins in our supply chain business and assembly components businesses showed significant improvement compared to the Q1 And we're up 70 basis points and 140 basis points respectively. Our 2nd quarter improved operating margins reflect the positive impact Interest expense was $11,100,000 in the quarter compared to $7,600,000 a year ago. Of the $3,500,000 year over year increase, dollars 2,900,000 was driven by higher interest rates, with the remainder due to higher average borrowings year over year.

Speaker 2

Income tax expense was $2,100,000 in the quarter for an effective income tax rate of 24%. This is in line with our expectations for the full year 2023. GAAP EPS from continuing operations for the quarter was $0.57 per diluted share compared to $0.52 in the Q2 of last year. On an adjusted basis, diluted earnings per share was $0.83 per share in the 2nd quarter compared to $0.49 per share last year, An increase of 69%. On a sequential basis compared to last quarter's $0.72 per share, Adjusted earnings per share was up 15%.

Speaker 2

Our EBITDA from continuing operations as defined Was $35,700,000 in the 2nd quarter compared to $26,100,000 a year ago, an increase of 37% And up 13% sequentially.

Speaker 1

On a

Speaker 2

year to date basis, EBITDA from continuing operations was $67,000,000 An increase of 42% compared to $47,000,000 a year ago. During the second quarter, we generated approximately $1,000,000 of operating Cash flows up significantly from a use of $33,000,000 in the Q2 of last year. On a year to date basis, our free cash are seeing the benefits across most of our businesses. As a result, we continue to expect free cash flow for the full year To be in the range of $30,000,000 to $40,000,000 Our liquidity continued to be strong at the end of the second quarter and totaled $169,000,000 Which consisted of $53,000,000 of cash on hand and $116,000,000 of unused borrowing capacity Under our various banking arrangements, which included $24,000,000 of suppressed availability. Turning now to our segment results, Supply Technologies net sales were a record $197,000,000 during the quarter, up 12% compared to $76,000,000 a year ago.

Speaker 2

On a year to date basis, sales in this segment have grown 14% to a record $393,000,000 The average daily sales in our supply chain business were up 11% year over year. The sales increase was driven By higher customer demand in most key end markets, customer price increases realized and the sales from the acquisition of Southern Fasteners, which was completed in August of last year. During the quarter, the largest end market increases were powersports, heavy duty truck, Industrial and Agricultural Equipment and Civilian Aerospace. The few end markets which declined year over year were isolated in certain consumer related end markets, which represent approximately 10% of segment revenues. In addition, our Fastener Manufacturing business continues to perform well And achieved sales growth of 20% over the Q2 of last year, driven by higher customer demand for our proprietary self piercing quench products as well as last year's acquisition of Charter Automotive.

Speaker 2

Operating income in this segment totaled Approximately $15,400,000 compared to $12,700,000 a year ago, an increase of 21%. Operating margins were up 60 basis points year over year as the profit flow through from higher sales levels was partially offset by higher operating costs. Our focus on price action strategies and initiatives to grow our higher margin industrial supply business is reflected in our improved results in this segment. We expect this segment of our business to continue to perform well throughout the second half of the year and strong demand will continue across wide range of end markets and customers. Despite the strong demand expected for the rest of the year, we do expect the second half Greater growth to be lower than our first half growth levels, primarily due to customer plan shutdowns, which are typical during the second half of the year And continued softness year over year in certain consumer related end markets.

Speaker 2

In our Assembly Components segment, sales for the quarter were a record $1,000,000 compared to $95,000,000 a year ago, an increase of 17% year over year. Sales from each of our product categories, which include our molded and extruded rubber and plastic products as well as our fuel related products, Grew significantly year over year and sequentially compared to the Q1 as a result of business launched in the last This year, an increased customer pricing realized during the quarter. Segment operating income increased significantly to $8,400,000 in the second On a year to date basis, operating income has improved $18,000,000 year over year. The significant increase in margins year over year has been With respect to our aluminum business, which has historically been included in this segment, the sales process is ongoing. During the Q2, the net loss incurred from this business was $1,700,000 net of tax and EBITDA was a loss of $1,600,000 We continue to believe the automotive OEMs initiatives around light weighting, electrification and on showing certain products for key auto platforms will benefit this business over the long term.

Speaker 2

Moving now to our Engineered Products segment. Sales in the 2nd quarter were a near record $119,000,000 up 20% compared to $99,000,000 a year ago, driven by strong customer demand in both our capital equipment Business and our Forged in Machine Products business. In our capital equipment business, sales of new equipment and aftermarket parts and services were both up 27% compared to a year ago. Revenues increased again this quarter in every region as our strong backlogs are being converted into sales. Induction, heating and melting bookings remained strong and totaled $51,000,000 in the quarter compared to a quarterly average of $50,000,000 last $52,000,000 in the Q1.

Speaker 2

Our backlog as of June 30 was $170,000,000 an increase of 4% Compared to the end of last year. In our Forged and Machine Products business, sales in the quarter were up 5%, driven by Increasing customer demand in several key end markets, including rail and aerospace and defense as well as from new business awarded over the past several quarters. During the quarter, operating income in this segment was $3,200,000 compared to $7,100,000 a year ago. On an adjusted basis, which excludes plant consolidation and other restructuring actions, operating income was $6,100,000 compared to 7.9 $1,000,000 last year. The lower profitability in the second quarter was driven by operating losses in our forging business, which more than offset strong results in our capital equipment business.

Speaker 2

In the capital equipment business, as I mentioned, operating income margins were approximately 10% And we're at the highest level since 2018 2019. In our forging business, equipment downtime and continued labor challenges impacted our results in the quarter. We have taken action to resolve the equipment downtime, which occurred in our forging plant in Arkansas and are seeing improved labor efficiencies in our Canton, Ohio facility as sales ramp up as part of the integration of our Crop Forage business. On a year to date basis, sales in this segment were $236,000,000 an increase of 25% year over year And adjusted operating income was $13,000,000 compared to $10,000,000 last year to date and which reflects a 30 improvement in this segment year over year. We continue to quote new capital equipment opportunities And win new business to support the increased production of electrical steel used in battery technologies and certain munitions During the Q2, we received over $50,000,000 in induction related and forging press equipment orders Directly related to these market trends and believe this part of our business will continue to benefit.

Speaker 2

And finally, with respect to our full year sales guidance, we are increasing our sales growth outlook to 10% to 15%, driven by the current strong customer demand in each segment. We also continue to expect year over year improvement in adjusted operating income, EBITDA is defined free cash flow and adjusted EPS as a result of higher sales levels and improved operating margins in each segment. Now I'll turn the call back over to Matt.

Speaker 1

Great. Thank you very much, Pat. We'll now open the line for questions.

Operator

Thank you. We will now be conducting a question and answer session. A confirmation tone will indicate your line is in the question Our first question is coming from Steve Barger from KeyBanc Capital Markets. Your line is now live.

Speaker 3

Hey, thanks. Good morning.

Operator

Good morning, Steve.

Speaker 3

With this nice updated sales guidance, if margins hold up, then 2 half earnings are going to be nicely above first half, it looks like, which has not been the pattern for the past couple of years. So first, is that how you're thinking about it? And second, how much of that is the profit

Speaker 2

Steve, good morning. This is Pat. I think the second half, although we see some volume declines relative to the first half growth rate levels, We are going to see improvement primarily in our forging business. I think margins And most of our other business will remain intact compared to first half levels. Most of The improvement that we're going to see in margins as we move not only into the second half of the year but into Next year is really going to result from the improvements in flow through and absorption That will result from all the consolidation and all the heavy lifting that's been done over the last year.

Speaker 2

As we mentioned in The first quarter call, we consolidate over 6 facilities, almost 1,000 square feet of Manufacturing space, this will provide the opportunity to get better flow through and better absorption rates and therefore increase our gross

Speaker 3

Yes, understood. I got it. So it sounds like if you see I know you don't point that you're kind of at the sustainable run rates given the profit improvement programs you've put in place?

Speaker 2

No. As Matt mentioned in his opening comments that we are pleased with the 16.4% gross margin, but believe there's upside Because we haven't fully realized the benefit of all the consolidation activities as well as some of the capital investments that we've made To improve margins.

Speaker 1

Steve, this is Matt. I would only add to Pat's comments by saying that We saw a nice bump here. Our long term, even our mid term goals are to improve upon that. We think there's some opportunity for improvements around the investments we've Both continuous and restructuring, we've seen a big bump from those things, but we continue to operate in a pretty choppy environment. Supply chain constraints, particularly in our equipment business, labor constraints across the board, these are not gone.

Speaker 1

So we tend to quarter to quarter try to be awfully careful what momentum looks like. So while we're really pleased With the direction of the Q2 and believe there's gas in the tank across the board and also in mix as we see some recovery in the forged business, In particular, managing a 3, 4, 5 month outlook is pretty difficult in this environment.

Speaker 3

Understood. Can we talk about capacity? I mean, 2023 is going to be record revenue. I know you've done these consolidations that you've talked about, made investments as well. Where are you on plant utilization in general and which businesses, if any, are kind of up against Capacity could require further investment.

Speaker 1

Yes, it's a great question. And what we don't talk probably often enough about, We talk a lot about the restructuring. We talk a lot about the almost 1,000,000 square feet. We Closed move touched in many ways. We don't talk often as much about the cost And I don't just mean in terms of the actual costs.

Speaker 1

I mean the cost of retraining, higher scrap rates, Etcetera, onboarding turnover, I could go on and on. So Our capacity constraints, the restructuring has enhanced our long term profile around profitability And our ability to compete hard stop. In the current environment, we have seen some challenges. As Pat mentioned in his comments, the Forge Group is Exhibit We are very excited about what was done there. Had we not made some of the moves we did, we probably would be getting more product out and making less money.

Speaker 1

So we've had some trade offs here. We have facilitated and built and grown And invested in some new areas of excellence centers of excellence in our automotive business. We're absolutely world class. We've closed or downsized a couple of plants that were high cost. We have a very exciting future.

Speaker 1

I can only tell you onboarding 1,000 people, training them, getting them to come to work, getting them to come back to work is expensive And Premium Freight and Scrap, so I would tell you that I don't believe we have structural capacity issues. I think we've got ongoing capacity issues around I was going to promise not to say COVID on this call, but the legacy of COVID, Yes. The loss of really good people, the turnover continuing turnover at the direct labor level. So That I believe is really what our bottleneck is on capacity and we try to get better at it every day. And I can assure you the kinds of things that our management team is focused on every day is inside out, how we can make Our warehouses at Supply Tech more efficient, right?

Speaker 1

How we can make how we can resolve some of the issues we have on technical labor in a number of the businesses. We don't have we could sell a lot more stuff in any period we have this year with the backlogs we have and we could solve for that. So we do have capacity constraints, particularly in Engineered Products, I would highlight. We got some supply chain constraints, Although they're lessening in supply tech, we've got some so we've got constraints, but we're working through them. And I view those As 2023 issues, hopefully not 2024 issues, but we'll see.

Speaker 3

Great. And I'll ask one more on Engineered Products, Near record revenue, margin still mid single digit. What percentage of that portfolio is structurally not profitable or let's just say Significantly lower margin. And would you consider divestitures to kind of upgrade that segment margin overall?

Speaker 1

I'll give Pat a minute to think and say the following. Steve, you know this company well. Engineered Products Has been, should be and will be again our highest margin business, led by their commitment, strategic commitment to aftermarket. So That is has been in the cards, will be again. So that is a mix positive for us As we improve a number of things we've just talked about and benefit from the restructuring.

Speaker 1

So, I would say that. I would also say we are fully committed to those businesses. We love, as you know, the induction heating business. We love where we are in the forge business. We've invested in that 2nd line down in Arkansas, we've invested in consolidating, creating a center of excellence on large forgings and hammer operations in Canton, no, no, no, no.

Speaker 1

We've made some commitments here and some bets. And as goes the margins in that segment, We'll go our consolidated margin. So that's part of the mix story where we see upside.

Speaker 4

Got it. Okay. Thanks. Yes.

Speaker 2

No, my only comment, Steve, is I fully agree with what Matt said. But keep in mind, the quarterly results, The losses in the forging business were isolated in the 2 plants. And in Arkansas, the Downtime was a result of a very unusual infrequent breakdown, which has been fixed. And on the Canton side, Yes. We're we consolidated CropForge into Canton and their startup costs associated with it.

Speaker 2

The long term outlook for Both businesses is fantastic and we're going to see it through because our investment wasn't a short term investment. It's clearly a long term

Speaker 3

That sounds good. Okay, thanks.

Operator

Thank you. Next question today is coming from Yoma Abbibi from JPMorgan. Your line is now live.

Speaker 4

Thank you. And just one question for me, and good morning. On capital allocation, perhaps if you can remind us, You're generating you're going to generate $30,000,000 to $40,000,000 of free cash flow this year. If things trend as expected that should grow next year. How do you think about capital allocation?

Speaker 1

I think, I think, Yelma, you were kind enough to invite us to your conference. And I spoke about, I think a change how we think about prioritizing allocation of capital. And the absolute, I'd like to say first horse at the trough is providing capital internally to our best businesses, Providing capital to our best managers and helping them succeed in what we call value drivers, you can call it Continuous improvement, highlighting investments that we believe will not only pay off in the short term with good ROIs, But that is second to how it enhances the strategic profile and competitive profile of the business long term. So we have created and invested in Some super things this year that incidentally have good returns on investment, but only as a byproduct of really enhancing our competitive positioning. So That is number 1.

Speaker 1

We have used the opportunity of COVID and slowing down on the deal side to think about the business inside out, To think about our organization, to think about hiring great people, I've mentioned that a lot on prior calls, and we continue to make traction on that front. I'll begin by saying that's number 1. So I'll pause there and maybe let Pat continue with that, but that's 1st at the trough. And by the way, I would want to stop and note, The pending sale of General Aluminum General Aluminum is a wonderful business, but it does change our capital expense profile. So as you think about the business, Yalma, understand that as a pro rata amount Sales, general aluminum has always been a little bit more expensive as has our forging business and others.

Speaker 1

It's not our only capital intensive business, but it's one of them. So we would anticipate, I think, improvements in CapEx, but again, identifying and continuing to invest in some of our

Speaker 2

Yes, we agree with what Matt said. I think the goal for the second half of the year is when we Enter into 2024 is the deleverage of the balance sheet. That will happen based Don, how we currently view the second half, we believe that a net debt leverage ratio below 4 It's very achievable over the next year and a half, and but that will not sacrifice the investments that we will make

Speaker 4

I guess maybe to that point, in terms of the deleveraging path, Are you expecting an absolute debt pay down or is the deleveraging path mostly driven by EBITDA growth? It will be a combination

Speaker 2

as always, but as we look at the short term, meaning the second half of the year, It will result in a pay down of the debt of our revolving credit agreement.

Speaker 1

Yoma, it's important to note And I know that we've had some pressure on cash flows again in the first half of this year. But the business, If I include for the moment, GAMCO, the business from the bottom of the business cycle, Which I think during COVID is about $1,300,000,000 to where we are today, which is a run rate of 1.9 That's $600,000,000 of incremental revenue that we've added since the trough, a couple of $100,000,000 Above our all time revenue record. So whether it be some of the investments we talked about Relative to our best products and businesses or whether it be about just funding the growth in the business, that's where we've seen some pressure. So we think Truly think that, that hump as sales moderate for better or worse, right, as sales growth moderates, excuse me, And we can harvest some of the working capital. We're on the backside of that as we speak today.

Speaker 1

So we do anticipate a nice glide path on the pay down side and you've seen the progress we're making on the EBITDA side, so both.

Speaker 4

Thanks very much. That's all I had.

Operator

Thank you. Next question is coming from Dave Storms from Stonegate. Your line is now live.

Speaker 5

Good morning.

Speaker 2

Good morning.

Speaker 5

Just hoping to touch on the backlog real quick. It still seems like it's Really strong. Could you break that down on if that's a product of new client acquisitions, current clients, just taking on more volume as demand remains strong? Is that a byproduct of all the restructuring and maybe some downtime in productivity? Any guidance there would be great.

Speaker 1

I'll comment sort of generally. As you know, Dave, we think about our We're managing demand by the ships, by the day, by the week. So demands there are that's less of a backlog driven business. Our demand picture there, again, I think would be consistent with how we've talked about our overall business. I think restocking is still supporting and buoying some opportunity for strong demand in supply tech, but that's moderate.

Speaker 1

I mean, that is has improved, I think, from a customer perspective, not across the board, but in many cases. So that will be less of a tailwind going But again, new business opportunities, etcetera, some strong end markets that continue to be strong. Again, we are in some places that Right, recent spending stimulus. On automotive, a lot of activity in the EV space. And also, I think from a production standpoint, continues to be some restocking.

Speaker 1

I don't know that You hear a lot about the OEMs not wanting to return to where they have the types of days of inventory they have had historically. But one thing they do need to do is get the breadth of product back on those lots. Those of us that follow the industry know that they spent a lot of time and energy building their most Profitable units during COVID, and I think now you're seeing a much better breadth of product, which is good for us. It's Good for margins. It's good for operations.

Speaker 1

It's the way these programs were sold and tooled up by suppliers like us. Lastly, I would speak to the Engineered Products Group. That truly is where Pat addressed very robust backlogs In the capital equipment business and those are near record highs and continue to be. And those are firm orders. And of course, you asked the question as it relates to new business.

Speaker 1

Well, those that's all new business because for better or worse, You sort of start with your order book. After you ship something, you start with 0 revenue and try and get the next job. So that gives us a really good sense of the next 12 to 18 months in terms of What we're seeing out there, and that continues to be very strong. And again, I think that's the business that is largely impacted Not only by some of the supply and labor constraints, so as those clear up, we'll benefit a little more in clearing some of that backlog, but also benefits, I think, Again, I mean, we are seeing discrete orders in defense, in EV, in green energy. Again, I talked in past calls about these megatrends.

Speaker 1

I can't we can't always connect the dots to where the governments write the check, but we know these are all areas of interest. Steelmaking, advanced steelmaking, a real priority, I think, both on the private and public side here in the U. S. So those are not Those are significant buoys to the long term potential. Breaking those are all new because once you ship something, it's new.

Speaker 1

But does that help at all?

Speaker 5

That's incredibly helpful. Thank you. One more if I could. Just you mentioned pricing Being a great tailwind for you, I know in the past you've mentioned that you're kind of one of the last segments that gets to raise pricing. How do you see that going forward just with inflation moderating?

Speaker 5

Do you think there's still the ability to push pricing? Or do you think you're at a fair level with your customers and we should expect that to moderate going forward?

Speaker 1

Yes, That's a good question. It has been, I mentioned in my opening comments, I thanked many of our customers who have supported us. We are a vital supplier All of our customers, much of our business is sole source. We were the shock absorber during the downturn. I mean, we lost Tens of 1,000,000 of dollars on contracts that were not set up for what happened during COVID.

Speaker 1

We're not set up for lack of labor. We're not set up for In fact, many of the contracts had productivity and cost downs. So we spent 1,000,000 to try and support our customers because that's the kind of business we run. We have we've been asking for help and we've received a lot of help. But let me remind ourselves that we're still operating well In the middle single digits of EBITDA margins.

Speaker 1

So we've continued to have our work cut out for us To get paid for what we do. Having said that, we're very appreciative of the support we've gotten from certain customers. We also believe that we come out of this as the best positioned supplier they have. We believe our restructuring and our continuous improvement in our investments Make us the choice going forward. As I'm apt to say a lot, a customer, a good customer doesn't give you a price increase, Particularly if they don't have to, because of what you did for them last year, they give it to you for what you're going to do for them next year.

Speaker 1

So we want to be a great partner to these people and those that Have helped us when we needed it just to achieve modest profitability and that's really where we are. It's appreciative and we're going to certainly reward them and hope to We'll continue to build on our, again, sometimes 100 year relationships. So but no, I think that you raised some good points. Commodities In that some cases have rolled over. So that's has been a tailwind.

Speaker 1

We continue to focus on finding prices. I think the crisis management phase of managing commercial side of the business is coming to an end. But clearly, we're going to have to address that. And I think we've got the team. I think we've got the operations, and we've got the supply chain to manage those requests.

Speaker 5

That's very helpful. Thank you for the question taking my question and congrats on the quarter.

Speaker 1

Thank you very much.

Operator

Thank you. We have reached the end of our question and answer session. I'd like to turn the floor back over to management for any further or closing comments.

Speaker 1

Great. Thank you for the great questions. Thank you for the support. We have a lot of work to do, but We do think we've made some real progress here. And again, I can only leave by saying that we are a vastly better business Organizationally and product wise and business wise than we've been in a long time.

Speaker 1

As I compare ourselves, not just to the past couple of years, but to pre COVID. So thank you to everybody who's done an endless amount of work, and thank you again to our customers and suppliers. Have a great day.

Operator

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

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