XPEL Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 9, 2023

There are 7 speakers on the call.

Operator

Greetings, and welcome to the XPEL, Inc. 2nd Quarter 2023 Earnings Call.

Speaker 1

Call.

Operator

Please note this conference is being recorded. I will now turn the conference over to your host, Mr. John Nesbitt of IMF Investor Relations. Sir, you may begin.

Speaker 2

Good morning, and welcome to our conference call to discuss XPEL's financial results for the Q2 of 2023. On the call today, Ryan Pape, XPEL's President and Chief Executive Officer and Barry Wood, XPEL's Senior Vice President and Chief Financial Officer, will provide an overview of the business operations and review the company's financial results. Immediately after the prepared comments, we will take questions from call participants. I'd like to take a moment to read the Safe Harbor statement. During the course of this call, we'll make certain forward looking statements regarding XPEL Inc.

Speaker 2

And its business, which may include but are not limited to anticipated use of proceeds from capital transactions, expansion into new markets and execution of the company's growth strategy. Such statements are based on our current expectations and assumptions, participants are subject to known and unknown risk factors and uncertainties that could cause actual results to materially from those expressed in these statements. Some of these factors are discussed in detail in our most recent Form 10 ks, including under Item 1A Risk Factors filed with the Securities and Exchange Commission. XPEL undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information, in the future events or otherwise. Okay.

Speaker 2

With that, I will now turn the call over to Ryan Pitt. Go ahead, Ryan.

Speaker 1

Thank you, John, and Likewise, good morning, everyone. Welcome to the Q2 2023 call. Clearly and obviously Q2 is another great quarter for us, record revenue, gross profit, participants are in the range of $1,000,000,000. Revenue for the quarter grew 21.9 percent to $102,200,000 This is our first have a quarter where we exceeded $100,000,000 in revenue, which is a great symbolic milestone for us, especially for those of us who were here when we had a quarter was $3,000,000 in revenue, so great quarter. The U.

Speaker 1

S. Region had another solid participants are in the range of $1,000,000 and we expect to continue to see the 16% and about 15% over our previous high quarter for the region, which was Q3 of last year. New car inventories have continued to improve, benefiting are in the range of $1,000,000 Our dealership services business and OEM production has improved with the OEMs that we're attached to. So that's helped the OEM business. And the new car sales overall have performed well in spite of interest rates, which is good for the business overall and good for the aftermarket participants probably illustrate some element to pent up demand from the past few years, which many had expected.

Speaker 1

July was another good month for new car sales. So we see that participants are continuing. I think it's fair to say that we're probably off the fever pitch from a year ago in the aftermarket, But it's really not showing in the results. So all that to say that, if we were 1 year ago, I think you would see even better results we see today, but hard to pick apart what's happening in the business. So we're very happy with it.

Speaker 1

All of our regions, really excluding China, had record or near record quarters in the case of Latin America. In most cases, these record revenues significantly exceeded their previous high. For example, the Continental Europe finished at $9,700,000 for the quarter, which was just under participants are 22% higher than the region's previous high. China performed consistent to our expectations for the quarter. As we've talked about, I I think in the last call, revenue was up 2.5% over Q2 2022.

Speaker 1

We thought maybe it'd be down a single digit, so a little bit better than that, but Not significant, but obviously that's an easy comp for China as we were in the throes of the challenges in the prior year. So that's all to be expected. Sequentially, China was up 22% to $8,100,000 which like I said is where we expected. The macro news out of China hasn't really changed much. I think it's still mixed for those of you sort of following it.

Speaker 1

And so our outlook for the region for the rest of the year hasn't changed and that we expect are sequential quarterly increases in Q3 and Q4 with total year total revenue for the year relatively flat to last year, but that improving performance as we go through the year and in the back half of the year, like we've been talking about now for a few quarters. And as I mentioned previously, we're in the process of putting our corporate team in China for better visibility to assist the distributor and also for a more Asia focused positioning in general to give the whole region more focus, but inclusive of China are demonstrating what we think we can grow in China by doing that in China. Timing of the China orders versus deliveries will be important in terms of how the final two quarters of the year shake out. Participants are continuing dynamic for us where we have larger deliveries that can shift from one period to another participants are in the market. Expectations for new car sales seem to be mixed for the rest of the year really when talking about the U.

Speaker 1

S. Market. If we take a rather conservative view of that, which we haven't seen in the results, but some are talking about it along with uncertainty in terms of China deliveries, our expectations for Q3 revenue will be right around or slightly above Q2. However, if business remains more robust like the first half of the year And or the timing of the China deliveries are favorable, then we would expect Q3 to be higher than Q2 revenue by several $1,000,000 So I think there's some uncertainty as to the timing of that still for the rest of the year, but should be solid either way. And our estimated total annual growth for the year Right now, it's around 22%.

Speaker 1

So we're still in that 20% to 25% range and the difference plus or minus to that is probably going to be expansion remains a top priority and a priority for reinvesting our cash that we're generating. We've had tremendous wins in Australia since acquiring our distributor. Participants The business is now 2 to 3 times larger than it was, obviously off of a small base, but in under a year. And we plan to take our labor programs to Australia within the here. So you kind of see all facets of our business.

Speaker 1

We think there are for the most part equally applicable in all regions of the world. So while Labor has really kind of dominated U. S. And Canada. We see no reason to limit it in that way.

Speaker 1

Other points in Asia, Latin America, India also, these are priority markets for us for deeper investment and engagement using everything we've learned in the other markets where we've gone direct and in China as a particularly interesting comparison, especially when looking at strategy for a market like India. So This is an area of tremendous work for us and we actually expect to reorganize the company in a substantial way around these priority markets sort of in the are in the next half of year. So, we see tremendous opportunity in these. And in a lot of these markets, there is a core business that if we're present, the business comes to us. And then obviously, we have to work much harder after that core, but that core exists and it's a very healthy thesis for why we should invest and be direct in many markets in the world.

Speaker 1

We had nice gross margin performance in the quarter, gross margin coming in at 43%. I'm very pleased with the gross margin initiatives that we've had and the results. We continue to see reductions in build material costs for some of our products, which is one of the biggest contributing factors to this gross margin expansion along with channel mix where we're growing in more profitable channels and then product mix where some of our new products are higher gross margin. Have also been a good partner to our suppliers and that's benefited us in the gross margin line in terms of negotiating discounts and other concessions participants As the global supply chain continues to recalibrate and we sort of get out of the position that everyone's been in over the past 2 years, so that's a contributing factor as well. Participants It remains possible that we'll finish the year a bit higher than our forecast of 42%.

Speaker 1

But we're still holding to that view, not initially participants at 43%, although it's possible. We do have expectations of driving gross margin incrementally higher from that 42% in the next years. And this is in part based on the future revenue mix. We've got an increasingly complicated mix of revenue, each with their own drivers, and that's going to be a driver of what that sort of terminal gross margin can be, but we do see it going higher than where it is kind of over the next 24 months, I would say. We continue to see great leverage in the business during the quarter, EBITDA growing 30.5 percent to $22,400,000 net income growing are 32.3 percent to $15,700,000 These are both records for the company.

Speaker 1

EPS was $0.15 a share for the quarter. And as Barry will mention later, Excluding costs related to our dealer conference, which was very expensive, but also very amazing in the quarter, which was out a period in the compared to the prior year, EPS would have been $0.61 for Q2, so really good number there. This year, we've really been investing heavily in our team, specifically software, technology, product and marketing, really in the sort of SG and A line item. And this is to deliver new products in new services over the coming years. So I think you're seeing the overall growth of that cost structure, So we're more than offsetting it with gross margin improvement.

Speaker 1

And some of that SG and A growth is actually benefiting the gross margin profile of the business as we operate better. But some of it is just net investment that's just offset by the incremental gross margins we're generating. So either way, we found this had to be an important year to double down on our investment in these key areas to set us up for the future. And we've not altered participants Any of those plans that we had coming into the year looking at the macro or anything else. So you're really seeing sort of the full level of investment for us.

Speaker 1

Some of this probably shifted towards the back half of the year, second quarter on just with timing of new hires and things. I think we talked about that on the Q1 call, But that just reflects the timing of scaling the headcount and scaling those positions more than it does a lack of desire or a change participants will be able to make those investments. Barry will talk more about later. We generated almost $27,000,000 in operating cash for the quarter. Inventory levels are not growing like they were, days on hands are reducing modestly through the year and then some of the just timing issues, timing items with the other elements of working capital we saw in the Q1 sort of reverse.

Speaker 1

So I think that this has been a big question over the past few years as we've Inventory levels ramp and the question of well, did they keep growing or how much do they come down? And we've said that we'd be very happy if they stayed came down modestly, so long as we saw some reduction in days on hand. And I think you're seeing that now. And so you're seeing this trend of consuming massive amounts of cash in the inventory reverse. So we're generating lots of cash even without reducing inventory in a dramatic way.

Speaker 1

There's one thing we know that we don't want to do in this business is to run out of inventory because the wheels fall off the line quickly if that happens. So couldn't be happier about that. We do expect that to continue going forward. Our acquisition pipeline is full. We remain very active on this.

Speaker 1

And as we get asked, we do expect to be able to utilize all this cash to reinvest in the business and primarily on these acquisitions and to a lesser much lesser extent on Some additional CapEx that we think could drive further gross margin performance. But given the small scale of the acquisitions that make up most of what we consider, which limits the sort of existential risk to the company, we're looking at these acquisitions on an equal footing to internal reinvestment in the business, Because from a practical and financial standpoint, there's a little difference. An acquisition strategy predicated on much larger bets, we would have a different are in the range of $1,000,000 because it would be a completely different game. So in any event, we do expect to be able to use this cash certainly out the next 18 months, 24 months without issue. Speaking of one area we've been investing in, our DAP Next, our new version of our DAP platform will be completely migrated to the new platform by the end of Q3.

Speaker 1

And then all the new features that we're adding, which are related to business operations, pricing, marketing, these will all are only being released in this new platform, obviously. Customer responses has been great and we really see this as an important tool to help our customers increase their profitability, to give them the confidence to grow and reinvest in their business and then to allow us to serve them better. Part of what we're doing here is just setting ourselves up to success to be definitely best partner to them in addition to what we can do for their business. So really great quarter for us. Participants Thanks to our whole team.

Speaker 1

Everyone pushes really hard here and there's never a down moment and have delivered outstanding results. I'm thankful that I'm thankful to all of you and to all of them for all of your contribution. So With that, I will turn it over to Barry and then take questions. Barry, go ahead.

Speaker 3

Thanks, Ryan, and good morning, everyone. Just a couple of comments to add on revenue. From a product line perspective, combined paint protection film and cut bank revenue grew 16.7% in the quarter and was up sequentially a little over 14%. Our window film product line revenue grew 28.7 percent quarter over quarter to $20,300,000 which represented 19.9 percent of our total revenue, which was a record for quarterly revenue window film revenue and just about participants are just a little under 29% higher than our previous high. Included in our window film product line is our architectural window film product branded as Vision.

Speaker 3

Revenue for the Vision product grew a little under 52% to $2,400,000 which represented approximately 12% of total window film revenue and 2.4% of overall revenue, so really good performance there. Our OEM business had a nice quarter with revenue growing a little over 62% versus Q2 2022 to $4,300,000 which was up sequentially 22.5% versus Q1. Our Fusion Ceramic represented just under 2% of total revenue for the quarter. And finally, our total installation revenue combining product and service grew 31.5% in the quarter and represented 16.9% of total revenue. And on a year to date basis, total revenue grew 20.8%.

Speaker 3

Our Q2 SG and A expense grew a little over 38% to $23,800,000 and represented 23.3 percent of total revenue. And as Ryan alluded to, included in our Q2 SG and A was approximately $1,500,000 in net costs for our annual dealer conference held in April, which was out of period for comparative purposes As our 2022 conference was held in Q1 2022. And if you normalize for that, SG and A would have grown approximately 29% for the quarter, representing approximately 22% of total revenue. And Ryan talked about the good leverage we saw in the quarter and that was even with the dealer conference net cost factored in. EPS was $0.57 for the quarter and on a year to date basis, EPS was $0.98 And if you normalize for the dealer conference in the quarter dealer conference costs, EBITDA would have grown 39% quarter over quarter and net income would have grown approximately 42%.

Speaker 1

And on

Speaker 3

a year to date basis, EBITDA grew 36% $39,500,000 and net income grew 37.9 percent to 27,200,000 Cash flow from ops for the quarter was $26,700,000 which was obviously a very solid cash flow performance. As we discussed on our last call, we expected positive impacts to our operating cash flows as our inventory levels normalized and we certainly saw that in Q2. We saw a nice improvement in our cash conversion cycle for the quarter, owing mainly to our improved inventory days on hand, and we ended the quarter in a net debt zero position, which is a function of our strong cash flow in the quarter. And I should also mention here that we're certainly not opposed to some modest leverage, especially for deals with very favorable valuations like we've been able to do in the past. So we'll continue to optimize our capital structure as we go are in a very strong financial position to continue to execute on our strategy.

Speaker 3

So another really good quarter for us and we look forward to closing out are in the second half strong. And with that, operator, we'll now open the call up for questions.

Operator

Certainly. The floor is now open for questions. And the first question this morning is coming from Steve Dyer from Craig Hallum.

Speaker 4

Clearly, over the last couple of years, your ability or the desire from dealers to preload this on inventory, I'm talking primarily about paper protection film, but I suppose also Windows 10 maybe in some instances. That was obviously a big driver. Are you seeing kind of with inventory sort of a little bit more normal? Are you still seeing the same appetite to do so or any changes there?

Speaker 1

Participants Yes, Steve. We're really not. And if you look at paint protection film, the vast majority of that for us has not been preloaded. It's actually a relatively small percent owing to the level of aftermarket sales that drive that. The window tint business is slightly more preload focused in terms of what we've seen.

Speaker 1

But we've not seen that trend change. And in fact, we've seen an interest in preloading maybe continue or even accelerate in some cases as the market adjustments and Sort of the freewheeling nature of the business over the past 2 years with the short inventory has become more challenged and the margins just aren't quite there like they were. So we haven't seen that change, but we're not overly exposed to it. And I think our approach in terms of participants are working with dealerships and our whole aftermarket network working with dealerships is we really want to meet them where they are. And for some, a preload option is good.

Speaker 1

For some, that's not the right answer. And then they may want to sell it on the back end. And then in some cases, they want to do both. So I don't see that as a huge driver for us or a huge risk at this point.

Speaker 4

Got you. That's great. Are you seeing just, I guess, over the last couple of years COVID inventory changes, etcetera. Are you seeing any change in how much of the vehicle clients or customers are wrapping? I know sometimes it's put into like a certain package with front of the hood and front bumper and backs of the mirrors or something like that.

Speaker 4

But sort of larger change in how much they're wrapping?

Speaker 1

Well, there's no question that we've seen the average coverage, as we would call it continue to increase. The product for paint protection film, even on a high end vehicle was once just part of the hood. And what that does is leaves a line that's not visible unless the car is dirty or there's some contrast to see it, But that's actually a common objection to the product. So over time, we've seen that coverage increase covering the full hood and that type of thing. And so we're really trying to strike a balance between participants are offering smaller coverage to get more people introduced to paint protection film at a lower price point, while simultaneously trying to push for that increased coverage because we actually think it will increase customer adoption because you're taking away effectively the last objection to the product.

Speaker 1

There wouldn't be price focused. So we're kind of doing both things at once, but in terms of our strategy, but the net effect is that that coverage and the amount of the vehicle covered has continued to increase are on average over time and we would expect that to continue.

Speaker 4

Got it. Okay. And maybe I missed this, I don't think so, but any sort of update on your progress on the OEM front?

Speaker 1

Participants Yes, we had good growth in OEM. I think Barry covered it. I think we like 60 something percent growth over the prior year. This continues to be an area of interest. The programs we have have been growing.

Speaker 1

I would call them all successful at this point. And our approach to this is that this is complementary piece to the rest of the market, one that's bringing new consumers into the fold for paint protection film, But we also want to see any of these programs that are done, that they're done successfully and that they're not too ambitious. And so we've been pretty good at managing that. So I would say everything that we've done has been successful. Most are in some type of discussion for expansion, which is what we want, start small and expand.

Speaker 1

And then we've got, I would say, a full pipeline of additional opportunities. The sales cycle on these type of things is much longer than the rest of our business. So this are kind of looking out 6, 12, even 18 months, but we expect that to grow as a part of the business and ultimately be beneficial to driving the rest of the business. The attach rates are low enough and the awareness is still low enough that This is not an exercise in cannibalization of one segment of the market to the other. This is growing at saturates and then may be more importantly growing awareness for future purchases of the channel.

Speaker 4

That's great. That's helpful That's all I have. Thanks, guys. Good luck. Yes.

Speaker 4

Thanks, Steve.

Operator

Thank you. Your next question is coming from Jeff are Sundaram from B. Riley. Jeff, your line is live. Please go ahead.

Speaker 5

Hi, good morning, everyone. Just wanted to touch on gross margin for a minute, running really strong there. And just wondering if you could speak a little more about the long term outlook for gross margin, the drivers you're seeing around that, maybe touch on what you're seeing with some of the new products that have higher margin. And then also a lot of I apologize, there's a lot of questions and one question here. The new dealer software as part of that discussion and perhaps maybe also if you could just delve more into the service revenue component?

Speaker 1

Sure, Jeff. Yes. So what we've seen in terms of participants are in the range of $1,000,000,000. So Like I mentioned, just as an anecdote, the business in Australia, it's now growing much faster than it was since we bought it and also at a much higher gross margin. So we're seeing growth in geographies and elements of the channel with higher gross margin.

Speaker 1

And then as we've added new products, Some of our sub product lines with paint protection film in terms of our ultimate fusion product or elements of our architectural film line or coatings line and things like that, these products are accretive to gross margin. So as they become a larger percentage of revenue were benefiting from that. And then more broadly speaking, the service revenue tends to be accretive to gross margin as well. So you've got the channel mix and you've got the product mix. And then simultaneously, we've been working very hard on the supply chain elements across all of our products in terms of the actual bill of material costs of the products and then also the ancillary costs participants did go into gross margin that are related to making, buying, shipping, converting, whatever it might be, excuse me, the all of our products.

Speaker 1

And so all three of those things are driving it. The last item in terms of are participating in the process of managing the bill of material costs and other components of cost of goods, probably the most consequential at present, just part of where what we don't know is relatively speaking, what do we see in terms of growth in the different geographies and What do we see relatively speaking in the product lines? And so that makes it a little harder for us to pin that down. But I kind of think we've got 3 avenues to win in terms of continuing to increase the gross margin beyond the fiscal year 2023. We really only need 2 out of the 3 to work in order to be able to do that.

Speaker 1

So while we don't know exactly what that means, I think it sets us up pretty well-to-do that. And you asked about the software, the DAP software. Software for us years ago was not inconsequential sequential portion of our revenue and obviously that's changed as the business has grown. One of our questions and objectives as we do continue to enhance the DAP platform. Can we get software revenue growing from that again?

Speaker 1

If there are payments revenue or ancillary revenue we can get are not only helping our customers and helping the business, but it's also another source of high gross margin revenue. I think a little bit premature to try and characterize that, but that's an obvious conclusion obvious question to draw from thinking about what we're doing. So that will be a factor too. And I think you had one last question, but I don't remember what it was, Jud.

Speaker 5

Participants No, that's okay. I actually just wanted to follow-up on the software. What kind of feedback are you getting from dealers on the benefits that they're seeing to their business.

Speaker 4

Well, I think it's

Speaker 1

I think what the feedback we're getting now is, participants Wow, this is great. This is the largest investment, the largest set of changes we've ever seen XPEL do even if we've been are a customer for a long time. So they're clearly noticing the change and they're noticing our investment in something that's very important to us. Participants. I think that's probably the extent of the feedback that we have and it's probably going to take a little bit longer to get the feedback that says, hey, I use sort of the playbook that you guys have instituted here on how to run my business and I've seen my business grow as a result.

Speaker 1

That's the outcome that we want, but I would probably check back in a year for that type of parties start to come through.

Speaker 5

Okay, fair enough. And then one thing that we've noticed is that some dealers, we talked a lot about preloading, but noticed that some dealers are preloading ceramic coating more. I'm just wondering what you're seeing there?

Speaker 1

Well, I think it's similar to the broader question on preloading. You have Some dealers that like that as a business model and some that don't. And then of those that do, they might like it for one type of product or another, ceramic coating being 1 or window tint being 1 or paint protection being 1 could depend on their prior experience or their customer base or What lines they're carrying. So that is an element of it. And I think the part of The broader push there is that these are real tangible products that we're selling that provide demonstrable value and they aren't predicated upon having a warranty or insurance attached to them to be useful.

Speaker 1

And in many respects, in our view, that makes them better products and a lot of the other things that are sold are preloaded. So that's kind of the underlying thesis. And then obviously from a retail dealer standpoint, we've got to show them they can make an equal or greater amount of money doing this or get more consumer acceptance. But I think you're seeing that happen and we expect that to be the case across the product line, everything we're doing and then anything we might add in the future.

Speaker 5

Okay, great to hear. Thanks for taking my questions. I'll take the rest offline.

Speaker 1

Thanks, Jeff. Are ready to take questions.

Operator

Thank you. Your next question is coming from Tim Moore from B. F. Hunt. Tim, your line is live.

Operator

Please go ahead.

Speaker 6

Participants. Thanks, Ryan and Barry. Terrific continued execution and EBITDA margin expansion in the first half was amazing. 3 of my questions were already asked, but I have 2 remaining ones. Your scale and operating leverage benefits have been phenomenal over the past few years and the gross margin expansion is very good this year.

Speaker 6

I just want to delve more into the gross margin potential beyond this year. Participants I know Ryan gave us a little bit sneak peek in the prepared remarks. But Barry, I'm just wondering, was maybe half the gross margin expansion this year from purchasing power and scale and is the other half maybe from the new products mix that Ryan was talking about and you actually lapped a lot of those Caribbean delayed start up costs in the first half of this year, were a bit of a drag last year. So I guess, I was really kind of wondering, should we think of 42% to 43% as the floor on gross margin? Or do you think it could dip a bit if China sell through accelerates

Speaker 3

Yes. Tim, how are you doing? Yes, I think that to answer your first question, the gross margin expansion Thus far, obviously, mix and product mix in that played a part in that, but it's been primarily participants The efforts we've made around the supply chain, so that continues to be the case. And I think that as we go forward, I don't know that we would expect Gross margin to dip, how high it can go remains to be seen. But certainly, We certainly don't think that 43% is the cap by any stretch, but there'll be a lot of factors.

Speaker 3

And as Ryan was alluded to, participants There's we have we feel good about our prospects there, and it's hard to say at this point how high it will go.

Speaker 1

And I think, Tim, I would add to that, relative to China is the good news, bad news, but participants there was a point where China on a percent of revenue basis was much larger. And so, yes, it is a lower gross margin region for us, but participants are in the range of $1,000,000,000 as a percent of revenue with how the rest of the business has grown, it's just not as impactful now even when we see that rebound relative to offset in a substantial way this other work that's done. So the risk of China fundamentally Altering margins at this point is pretty low. And if that were to happen, which we don't think it would be a result of some spectacular performance out of China, which we would gladly take if that happened, but it doesn't seem likely that that's going to be the case.

Speaker 6

Participants Sure. That's helpful color. Yes, I remember it's been a couple of years. I mean, I think it was 18% of sales a couple of years ago before the lockdowns. That's good.

Speaker 6

That's really helpful color and it seems like that is a permanent purchasing power and supply chain effort. I know you changed the suppliers a bit last year that really helped. My second and last question is, how are dealership service is progressing. I know you did that small acquisition a couple of months ago. And just on a high level, Ryan and Barry, participants is the number one limiter to installation and distribution target acquisitions or dealership services, your integration team, because it's clearly not your cash and liquidity, but obviously you have to spend a lot of your time on the core business and don't want to get distracted.

Speaker 6

So I'm just wondering, are there any limitations on the integration side for pickup and acquisitions?

Speaker 1

Well, I think that the limitations we have are probably less in that realm are probably less related to actually integrating an acquisition and more, we're trying to ensure that Everything we're already doing at the scale we're doing it that we have the infrastructure to support it and to keep doubling down on that. Participants We've added our headcount has grown substantially as we've added various programs that are more human capital driven. And so as we do that in a decentralized way and add more countries, you just need more infrastructure to do that. So I don't perceive The actual integration of acquisition is a limiting factor. And I think for us, we want the right deals at the right price.

Speaker 1

And the downside upside of doing the small deals that we do, that sometimes you can get great deals and sometimes you can run into just a wild pricing asymmetry, if you will, given the profile of the seller. And so we just have to be patient and flexible and if we if it doesn't work today, we're still there tomorrow. But no, I don't think the integration is holding us up and I just don't see an issue with employing the cash we're going to generate. It's just a matter of The timing of when that occurs.

Speaker 6

Great. And that Australia acquisition seems like a grand slam given how much you've already grown sales. But thanks, and that's it for my question.

Speaker 1

Thank you, Tim.

Operator

Thank you. There are no further questions in queue at this time. And I would now like to turn the floor back to management for closing comments.

Speaker 1

Thank you all for joining us and thanks to our team for a great quarter and a lot of hard work to deliver these results. We're very appreciative of it and look forward to another quarter. Thank you. Thank you.

Operator

This does conclude today's conference call.

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