Unifi Q4 2023 Earnings Call Transcript

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Provided by Quartr
August 24, 2023

There are 8 speakers on the call.

Operator

Good morning,

Speaker 1

and thank you for attending Unifi's 4th Quarter Fiscal 2023 Earnings Conference Call. Today's conference is being recorded and all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Speakers for today's call include Al Carey, Executive Chairman Eddie Engel, Chief Executive Officer Craig Criatoro, Chief Financial Officer and A. J.

Speaker 1

Ecker, Treasurer. During this call management will be referencing a webcast presentation that can be found in the Investor Relations section of unifi.com. Call is now available at the Investor Relations section of the call. I will now turn the call over to Al Carey. Call is being recorded.

Speaker 2

Thank you and good morning everybody and thank you for dialing into the UNIFY 4th quarter earnings call. I'd like to take a couple of minutes telling you about the environment call is today's call. We're operating in because I have to say it's one of the most unusual I've ever seen. And then when I'm done doing that, I'll turn it over to Eddie Engel, our CEO. Call is being recorded.

Speaker 2

So you've seen the sales and EBITDA numbers for Q4 and you can see that they look very similar to Q3. And that's because volume remains depressed call is

Speaker 3

being recorded in North America, which drives

Speaker 2

a low level of EBITDA because we're not getting the throughput we needed to leverage our fixed assets. Call is now most of you are probably saying what is going on with your business and I fully appreciate that because Q2, Q3 and Q4 have been weak. Call. Let me cut to the answer and then we'll work backwards into the details. Inventories at retail have been massively high starting last call is still high today.

Speaker 2

The retailers are working them down, but until they come down, call is being scarce. So you may ask when will the inventory be done, Mount? Call is probably the end of the calendar year. That's what we hear from our retail partners. When will orders begin flowing back into Unifi?

Speaker 2

Call is probably around the October timeframe. How big will the ordering be and how fast will it come back? Call is being recorded. I don't know there's still a fair amount of uncertainty, but listening to retailers, I'd say it will probably be conservative at first

Speaker 3

call is being recorded

Speaker 2

as they're going to be cautious when they start back ordering and especially after they just came out of a troubled time of heavy inventories. Call is being recorded. The other question you may be asking is what about these sales trends on apparel? They've been off for a whole year and in the last two quarters they've been down 7% call is being recorded. So what's going on there?

Speaker 2

My observation is that over the last 12 months, the consumer has spent call is a great portion of their income. And again, the average consumer who makes probably $55,000 a year, call is being recorded. They're spending their money on important basics of food, fuel, housing, all at higher prices.

Speaker 3

Call is being recorded. So the discretionary income they have left

Speaker 2

seems to be allocated to things called experiences call is primarily Travel and Entertainment leaving a lot less money for things like apparel. Now we feel certain that there'll be a rebalancing call is being recorded between goods and services here soon. We're already seeing some of that begin. At the same time that that's happening, the inventories will rebalance back to a more normal level. Call is being recorded.

Speaker 2

And then we can expect to see some steady state in our half two of fiscal year and at the beginning of 2024 for the rest. Call is being recorded. So I think you can say that this synopsis that I gave you is probably accurate because it's compilation of speaking to the majority of our customers, our partners, our mills and analysts that follow the marketplace.

Speaker 4

Conference call is being recorded. So is

Speaker 2

there any good news for Unifi in all this? And the answer is yes. Since we're at the front of the supply chain, we can feel the conference call is being a pain first, but we typically catch the tailwind first. We began feeling the difficulty of this situation last summer call is now 1 year later, we're beginning to see some green shoots in terms of improved orders for volumes in and around the October timeframe. Call is being recorded.

Speaker 2

Also, during the last 12 months, we didn't waste the crisis. Our teams have been working on several initiatives that are going to make our company better in the long run. The first call is being recorded. The first thing I'd mentioned to you is that we have begun to get traction on building a business call is in categories that are outside of apparel, categories such as home, auto, industrial and packaging. Call is now available to our current sales portfolio and they also have much higher margins than the apparel categories that we sell today.

Speaker 2

Call is being recorded. The second thing our teams have been working on is an activity based costing capability that allows our sales and operations people to conference call is being recorded very closely looking at our inputs, true costs, capacity utilization, so that we can call is to optimize pricing for better profitability and also improve our market share. And I'll mention a third. We've developed several REPREVE product innovations. Call is available on the call.

Speaker 2

They offer consumer benefits that allow us to offer a premium on reprieve, but always use recycled material. So I would say call is being recorded. Given this current difficult environment, we can now kind of see where things are going. And I would say that we feel optimistic about what's going on and I'm very proud of our teams and the way they've worked through all this. And I believe that when we get on the other side of it, our company is going to be a lot stronger than it was when we started the journey back before the pandemic.

Speaker 2

So with that backdrop, let me turn it over to our CEO, Eddie Engle, call will take you through the details of our performance.

Operator

Thanks, Al, and good morning, everyone. Our 4th quarter results conference call reflects the pressures of continued demand weakness, as Al mentioned, across the apparel and textile supply chain as call is being recorded in the Q4. Call is being recorded for everyone on the Unified team across the globe. And once again, I want to thank them for their unwavering commitment and hard work. Call is being recorded.

Operator

While we recognize that globally our business is suffering alongside others in the textile space call is being charged towards normalcy. While you look at Slide 3 in the presentation, I'll make some comments on our overall performance at a high level. Call is being recorded in Q4, we recorded $151,000,000 in net sales, which was a modest decline when compared to the Q3 and not unexpected, I might add. Call is being recorded. We believe our underlying performance has stabilized through a difficult market and challenging operating environment, which is a byproduct call

Speaker 3

will be a few external factors and strategic actions we've taken.

Operator

One of these factors is that for the last two quarters, we did not see any of the erratic increases in call is being recorded in input costs that we've seen in the prior calendar year and are currently experiencing a period of low volatility in raw material pricing.

Speaker 3

Call is being recorded.

Operator

As a result, we're in a solid position from a pricing standpoint and this stability will serve as a catalyst for a quick rebound in performance when demand recovers. Call is being recorded. Bail bottle prices, which have been really challenging in calendar of 2022 for us, have also been stabilizing to seasonally normal levels.

Speaker 3

Call is being recorded.

Operator

As a reminder, the price we pay for Bail bottles in the U. S. And the yields associated with the recycling process are the most important input costs to our Americas conference call is being recorded in the Q4 of 2019. This reduction has been a welcome relief and will play to our advantage as the REPREVE demand opens up call is being recorded in the coming quarters in the U. S.

Operator

And Central America. From an operations perspective, we have taken several actions to maximize productivity and drive call is being recorded in the quarter, including diligently managing our costs through several cost containment measures. We have also reoriented our capital spend to preserve cash call will be recorded and bolster our liquidity position to further solidify our balance sheet and we will highlight a few of these actions in a few minutes. Call is being recorded. I should also mention that we are not backing off on developing new innovative products during this period, call is now available, which I hope to be able to talk about as we move through the fiscal year.

Operator

Our focus on innovative technologies with REPREVE at the core call is now much more driven by the pairing of commercial opportunities with performance attributes that are responsive to the consumer demand that we're seeing. Call is now open. Turning to Slide 4 to discuss reprieve and marketing. During the Q4, reprieve sales were 44 point $5,000,000 or 29 percent of all sales compared to $49,600,000 and 32% of sales in the preceding quarter. Call is primarily driven by an economic slowdown in China's textile exports and we do not view it as a rebuke of sustainability call is based on our ongoing commercial conversations.

Operator

Any improvement at all in China sales will drive a commensurate rebound of our presales.

Speaker 3

Call is now open. Moving to marketing.

Operator

We continue to drive reprieve awareness globally. Ongoing media outreach including plant tours call and an influencer event in Los Angeles has resulted in a meaningful increase in media coverage based on our internal metrics. Call is being recorded. Beyond the U. S, we continue to execute marketing initiatives tailored for specific markets.

Operator

And this ranges from the launch of call is reprieve in Brazil to partnerships with local brands in China. During Q4, call is being recorded at a variety of trade shows globally and interest in sustainability was high across all shows and particularly Textile Take Back, call is being recorded in the Q4 of fiscal 2023 earnings conference call. Today's call is being recorded in the Q4 of fiscal 2023. Call

Speaker 3

is now open. Now as

Operator

we close out fiscal 2023, we are happy with the progress made on the marketing front and look forward to building on that momentum in 2024. Both the industry and consumers call is now very well positioned to capitalize on this opportunity. Call is now open. So before I pass the call to Craig for his financial review, I want to take a moment to thank Craig for his service to Unifi. Call will be his last earnings call.

Operator

And as we noted in our SEC filing on July 26, 2023, he is moving to pursue another CFO opportunity. Call is now open. Craig has been a great partner for me and has helped us build a well rounded finance team. So Craig, thank you for that

Speaker 3

call is being recorded

Operator

and for all the work you put in. Beginning next week, A. J. Eker will serve as our Interim CFO. We are fortunate to have call is a strong industry veteran like A.

Operator

J. Who has had almost 10 years of service at Unifi in addition to his public company audit experience with a big four firm.

Speaker 3

Call is now open.

Operator

And we have a great financial team to support us and A. J. As well. I'll now pass the call over to Craig. Thank you.

Speaker 4

Call is now open. Thank you, Eddie. I want to say thank you to both Al and you as well as the rest of the Board of Directors for allowing me to be a part of the UNFI leadership team for the last call is being recorded for 4 years. We're in a good spot to make a CFO change. A.

Speaker 4

J. Has long been a valued member of the Unifi team and he is someone who call is being recorded for the future. My comments today will be shorter than normal, so we can give A. J. Time to make some financial commentary is owned during this call.

Speaker 4

Let's move into the financial results beginning with Slide 5. We have provided the year over year comparison on net call is being recorded for the Q4. As expected, consolidated net sales were 30.6% lower from Q4 fiscal 20 call is from 20 2 to Q4 fiscal 2023, primarily resulting from the weak demand environment and the associated decline in pricing. Call is now open. Fortunately, as you will hear from Eddie, the expanded ship and flake product line sales are enhancing the portfolio in the Americas segment, call is now available on the call,

Speaker 3

which also contributed to

Speaker 4

the lower average selling prices in the quarter for the segment. The Brazil segment call continues to maintain strong volume levels throughout fiscal 2023, but experienced pricing pressures from competitive Chinese imports call

Speaker 2

is being

Speaker 3

recorded in

Speaker 4

connection with the lower utilization levels in China driving down the average selling prices of their exports to countries like Brazil. Call is being recorded. The Asia segment was most impacted by apparel weakness driving lower sales volumes, but it maintained a strong pricing and margin profile, thanks in call is being recorded

Speaker 3

in part to Unify's innovative pipeline.

Speaker 4

From a gross profit perspective on Slide 6, the volume call is being recorded in the Americas and Asia segments, along with the selling price pressures in Brazil, negatively impacted gross profit. Call will be recorded from Q3 to Q4 of fiscal 2023. On the whole, sales performance was generally flat across the segments during the noted call is now in the 6 month period. Although Americas segment experienced yarn volume declines that were mostly offset by chip and plate sales, call will carry a lower fixed cost absorption factor. Slide 8 demonstrates the change in gross profit, call

Speaker 3

is being recorded,

Speaker 4

which is predominantly characterized by weaker fixed cost absorption in the Americas based on the lower yarn sales concept we just covered. I conference call is now open.

Speaker 5

Thanks, Craig. As we move away from the segment analysis, I'll remind everyone that we incurred an impairment charge in this 4th quarter in connection

Operator

conference call

Speaker 5

is being recorded in the quarter with a highly specialized asset for which the investment was fully returned, but carried a longer original useful life The impairment was recorded in operating income outside of gross profit with noncash and non tax call is now available at the end of the call. Now let's spend a moment discussing our balance sheet and liquidity position on Slide 9, where I will cover the high level points conference call is now open for questions.

Speaker 3

Before passing the call back to Eddie for

Speaker 5

his closing commentary, we're pleased to have refinanced our asset backed credit facility in October 2022, conference call is being recorded, where we continue to have significant liquidity available to complement our global cash on hand. Our diligence around working capital and cost control conference call has been critical in our ability to produce operating cash flows in the suppressed fiscal 2023 environment, and we've made an immediate impact on free cash flows conference call is being recorded by delaying elevated CapEx spend until the demand environment is much more amenable. Accordingly, we're confident our business remains well positioned for realizing profitable growth opportunities when the apparel industry and its supply chains normalize. Call

Operator

is now open. Thank you, A. J. I'd like to take a moment to review call will be recorded in some of our new key commercial and operational initiatives we have implemented in the Americas business. As we move through the fiscal year, we expect to see continued recovery call is being recorded in revenue and profits growth from our commercial initiatives beyond the normal environment we're seeing today.

Operator

Call is being recorded. We can already see some of the operational initiatives beginning to reduce manufacturing costs and we expect this benefit to increase call will become more reflective in our financial results as we move through the new fiscal year as our volume levels normalize. Those are outlined on Slide 10. Call is open. And as you can see from the slide, the commercial initiatives center around growth and improving the commercial process.

Operator

As we face the hard reality of a longer demand challenge environment, call is being recorded. We look for areas of opportunity within the business where we could really drive near term growth in volumes and diversify our portfolio. Call is being recorded. The first phase of such commercial diversification was the expansion of our chip and plate business into the nonwovens, specialty films and packaging markets. Conference call is being recorded.

Operator

Now while Unifi has been selling REPREVE resin and flake for quite some time, we traditionally have seen these products mostly as a feedstock to our REPREVE yarn business.

Speaker 3

Call is being recorded.

Operator

And I'm pleased to say that the team responsible for this initiative has had some meaningful wins here. In the Q4, reprieve resin and flake sales conference call is strong and represented more of the Americas quarterly sales mix than ever before. And we will continue pursuing this revenue opportunity along with our high quality pre VYOND products. Call is being recorded. In addition, there are continued efforts to build what we call our Beyond the Power business, which we are finding to be a margin accretive.

Operator

Call will be recorded. Further, we've implemented new sales processes that support Unifi and improve our customers' experience. Lastly, call is being recorded. We are spending more time with customers to find ways in which we can bring more value to them. It's a long road, but we feel that we are well on our way to implementing changes call will drive long term value.

Operator

I'd now like to detail some of our other operational priorities. Despite the pause in CapEx call will be posted on the call to expand towards new EVO installations. A significant number of these machines are already in place and the benefits are positively impacting our underlying results with call will be recorded in the quarter. Some of our other key operational initiatives include continuing to manage our headcount conservatively call is not sacrificing quality lead times or long term performance. Following customer production activities, for example, like Like many of our customers, we shut down during the production for the week of July 4th and focusing our attention on working capital through effective planning and staying closer to the conference call will be available on the Investor Relations website.

Operator

Now let's turn to Slide 11 of the presentation to discuss our expectations for the upcoming September quarter. First, call is being recorded. Our forecast for the Q1 of fiscal 2024 includes sales and profitability performance that is about the same as call is being recorded in the Q4. Sales volumes are not expected to change significantly in any of our business segments. And on the tax fronts, call

Speaker 3

is now open. We are expecting continued volatility

Operator

in the effective tax rate. Capital expenditures will continue to trend down, a clear benefit of our conference call is being recorded on the spending measures that A. J. Mentioned earlier. As we move through fiscal 2024 and anticipate the demand environment to improve in calendar 2024, call is being recorded.

Operator

Our plan for the full fiscal year is very much weighted towards the back half of the fiscal year. We are confident in our position as the partner of choice to brands and customers across the globe and we believe we have the right short and long term strategy to drive value for our stakeholders. Conference call is being recorded. With that, we will now open the line for questions. Thank you.

Speaker 1

And our first question comes from the line of Anthony Lebiedzinski Cockey from Sidoti and Company. Your line is open.

Speaker 6

Good morning and thank you for taking the questions. So first, call is now open. Craig, it's been a pleasure to work with you and best of luck going forward. And Eddie and A. J.

Speaker 6

Look forward to continuing to work with you and the rest of the UFI team. And call is now open. Al, it was also great to hear your synopsis at the beginning of the call. So I guess I wanted follow-up first about one of the points you said, you're seeing some green shoots in the business. And in the release, you also talked about call is some positive recent market share development.

Speaker 6

So, wanted to start off with that and I'll have a few other questions as well.

Operator

Call is Yes, I'll take that Anthony. Like we said, all of us throughout this call, we're still in this environment where conference call is being very challenging. And the green shoots we're talking about, we're talking about green shoots in new product launches that we're making call is that we're sort of cheating out to the marketplace and we're getting a lot of interest in that. The 4 markets that Al talked about auto, call is being recorded in the home space. They are a key focus of ours.

Operator

And in the home space, we are call is being recorded. We're seeing already lots of interest in the new products that we're launching. We have some placement in REPREVE our Ocean in conference call is a leading mattress brand and REPREVE ChillSense, which is our climate control yarn out there. And so call is being recorded. Alongside the growth that we've had in reprieve resin and reprieve flake, these yarn opportunities that we're seeing are these call, what we call, Rupri Plus opportunities that are really starting to show call is being recorded.

Operator

So, more on that as we go through the fiscal year.

Speaker 2

So, Anthony, just I'll add to it. You've spoken to many customers and they're all I would say most of them are lining up indicating that the orders will begin. Call is being recorded. I don't know how big they'll be. I think some of these retailers made some big errors on ordering last year, and I don't think they want to get themselves back into high inventory.

Speaker 2

Call is being recorded. But I expect that we'll start seeing that in October and with a little luck maybe earlier. Call is now open. But then there's a fair amount of new business that Eddie just talked about, but there's lots of interest in some new products in this new space called we're call it beyond apparel. So it's energizing to finally see something happen in there and we're excited about

Speaker 3

it. Call is open.

Speaker 6

Thank you for that perspective. And then so just to quickly follow-up as far as the segments beyond apparel, call is now open. Which ones out of the ones that you listed that you think have the most near term potential?

Operator

Yes. Right now, we're seeing a significant interest in the home space call is on the value added side and also the regular part of that business. We do as Al mentioned, we're expecting to see call is going to be able to talk about that starting October. So by the next earnings call, we'll be able to give more specifics. But to answer your question call is in the home market that we're seeing a lot of interest and also in the packaging space because of a pre resin.

Speaker 3

Call is open.

Speaker 6

Got you. Okay. All right. And it sounds like you have some other new products in reprieve, so that's great to hear. As call

Speaker 3

is open. As far as Chip and Flake, you mentioned that you're seeing strong adoption. Can you talk about I don't know

Speaker 6

if you want to give out specifics, but maybe just broadly speaking, conference call is, what part of your sales that is and what's the margin profile of that product?

Speaker 3

Call is

Operator

The margin profile actually is quite healthy. We're very pleased with that. It's above our normal margin profile from a gross profit point of view. Conference call is being recorded. What's nice about it also is the fact that we're not just selling into one market, we're selling into the nonwoven space, into the film space and into the specialty call is very diverse and the story really is all about sustainability and the innovation that we can bring and some of these end users are also very interested in our call is our Utrust verification system and the fact that we have a tracer in there that can verify it is recycled materials.

Operator

So call is going to play out well to the REPREVE story that we've been working on the fiber side that seems to be translating nicely over to the packaging side. And One other thing, we design our resins to perform at a very high level in our yarn business. Conference call is being recorded. I tell people we make yarn at 3,000 meters a minute. And these product attributes that we have are surprising us because they're playing the clarity of our resin, the purity of it is playing well into these new markets.

Speaker 6

Call is open. Got you. Okay. And then in terms of the pricing, it was down in the Americas and Brazil, but up in Asia. I call is being recorded.

Speaker 6

I think part of that is the chip and flake increases, but how do we see that going forward here as far as the dynamics call is on the near term as far as pricing, would like to get your thoughts on that?

Operator

Yes. In Brazil, it's conference call is really driven by the very depressed pricing from China of the competitive products, call is coming in. We are seeing just in the last few weeks some opportunity to raise prices down there, but it's still early days yet. We do expect once call is going to be a very positive trend. China really returns back to normal production levels as the supply opens up.

Operator

They're very reactive to pricing and that will result in higher prices in Brazil. On call is mostly driven by the higher sales of call is the packaging that we talked about or resin pre resin in the packaging space. So the yarn business, the prices are more are pretty much stable.

Speaker 6

Okay. That's good to hear. And then in terms of the competitive environment in Brazil, have you Seeing any changes there lately?

Operator

Yes. We did have one competitor call is actually moved away from the markets and that's we're looking forward. They still have inventory in the call is being recorded. We do expect that opportunity to bring us some increased volumes as we move through the end of this calendar year. Call is now open.

Operator

And again, I think we'll be able to talk more about that and the impact in that in our October call.

Speaker 6

Got you. Okay. That's good to hear. Conference call is being recorded. And then longer term, how should we think about the path back to profitability?

Speaker 6

So I mean, if I look back to fiscal conference call is being recorded in 2017. Revenue those years was a little bit higher than what you just reported for this year, but certainly conference call. The operating margins back then were closer to 7%. So how do we how do you guys think about call is now returning to being EBITDA profitable or just EPS profitable. I know you guys talked about some headcount reduction as well call is being recorded.

Speaker 6

You've done, but just maybe kind of if you could walk us through like how you see this playing out? Call

Speaker 5

is Sure, Anthony. It's A. J. Volume is definitely our biggest piece here that will get us back to profitability. Call is available on the Investor Relations website.

Speaker 5

You're aware of the EVO installations that we've completed over the last couple of years and they're very

Operator

much a

Speaker 5

path to profitability as well. Call is being recorded. When you think about the long term, we still very much believe that the underlying drivers that we've spoken over the last few years will contribute to

Speaker 3

call is being

Speaker 5

recorded in the manufacturing space across our facilities as well as our SG and A structure. So we do feel confident that that path call to profitability does still rely on the underlying drivers that we've talked about over the last couple of years.

Speaker 6

All right. Thanks, A. J.

Speaker 3

Call is

Speaker 2

Anthony, this is Al. I just wanted to add to that as the beyond apparel categories become a bigger part of our mix

Speaker 3

conference call is open.

Speaker 6

Got it. Okay. Thanks. And then, as far as your debts, obviously, you refinanced that last conference call, which was terrific. Now I assume that you're well in compliance with your debt covenants.

Speaker 6

I just wanted to make sure that That's not an issue that you see anytime soon?

Speaker 5

Yes, Anthony, it's A. J. Again. Absolutely still in compliance from a debt perspective. As you mentioned,

Speaker 3

conference call

Speaker 5

is very favorable that we were able to refinance the facility just under a year ago, providing us great runway both call will be recorded in this constrained environment as well as positioning us for growth as we head into the next couple of years. On top of that, we still have a significant balance of global cash that we can help assist with that liquidity and we haven't had to institute any extreme measures at this point. So call is still feeling quite comfortable from both the compliance perspective and the remaining liquidity.

Speaker 6

Call. Got you. Okay. And just to quickly follow-up, I know the vast majority of your cash is outside the U. S.

Speaker 6

If needed, can you call is going to be easily repatriate that or like how should we think about that?

Speaker 5

Sure, Anthony. You'll note in fiscal 2023, call is being recorded. We did repatriate almost $20,000,000 from our operations in Asia. Part of that was connected with conference call is being recorded. We still believe those processes, those procedures to repatriate cash are still applicable call is available and relevant as we move forward.

Speaker 5

We still believe that everything would be just fine in terms of repatriating as needed call comes from those subsidiaries.

Speaker 6

Well, all right. That all sounds good. Well, thank you very much and best of luck. Call

Operator

is now

Speaker 1

open. Thank you. Thanks, Anthony. Call. Your next question comes from the line of Chris Reynolds from Neuberger Berman.

Speaker 1

Your line is open.

Speaker 7

Good morning and thanks for taking my call. Call is A question for you on Hi, Chris. Hello. A question on sort of reshoring of call is on the line of apparel production, that's been a long term trend that's benefited you. Are you still seeing that as a positive call is open.

Speaker 7

And perhaps maybe just an update on how your company has integrated with the CAFTA treaty call is For your apparel customers that produce in the Caribbean area.

Operator

Yes. The 2 major pieces of legislation that benefit us and our location really CAPTA as you mentioned and also conference call was NAFTA and now USMCA. It was very interesting for us call is being recorded. Before this destocking occurred, our volumes in Central America were growing significantly. We have an operation in El Salvador.

Operator

It was really benefiting from that. Call is being recorded. It seems like the biggest, the most forceful destocking part of the whole process of these retailers has impacted conference call is Central America more than other regions. But I think what we're still seeing from these brands or retailers that they're very interested in sorting out of call is being recorded in the quarter and we're getting an increased conversations around how can we get product made in Mexico, which also has that compliant yarn agreement and benefit to us. So bottom line, it's not going to weigh reshoring call is still happening.

Operator

You just can't see it because of this destocking phenomenon.

Speaker 7

Okay. Just one follow-up question on question that was asked before about some of these new categories that you're moving into. Do you have to hire a different salesperson call is being recorded to sell into Zeta Home or auto market. I know you've had limited exposure there in the past and call is open. Are there upfront investments in marketing that you need to make to capitalize

Operator

on some of these new opportunities? Call is now open. Yes. We've done a, as A. J.

Operator

Mentioned, a super job on managing our SG and A over the last year as our business call is being recorded. However, we are to your point investing both in Asia and here in the U. S. On hiring some new talent call can help us accelerate the growth needs of those markets.

Speaker 3

Thank you. Call is

Operator

being recorded. Thank you, Chris.

Speaker 1

And this ends our question and answer period

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