Kimball Electronics Q2 2024 Earnings Call Transcript

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February 6, 2024

Key Takeaways

  • Q2 Sales Decline and Stable Margins: Net sales fell 4% year-over-year to $421.2 million, but gross margin improved 40 basis points to 8.2% thanks to favorable product mix and lower material costs.
  • Updated FY2024 Guidance: Full-year sales are now expected to decline 2%–4% (versus prior flat outlook) with operating income of 4.2%–4.6% of sales, while capital expenditures remain unchanged at $70–80 million.
  • Segment Performance Divergence: North American industrial grew strongly (+low double digits overall, +7% industrial) powered by charging systems and climate control, while automotive slipped 2% on European softness and medical dropped 14% due to a $100 million recall from one major customer.
  • Working Capital Pressure: Cash conversion days rose to 117 (from 97 a year ago) driven by higher days sales outstanding and contract assets, as inventory was right-sized to match reduced demand.
  • Long-Term Investments and Recognition: Despite near-term headwinds, Kimball maintained its capex plan to fund organic growth and won top industry awards for dependability, technology and quality based on direct customer feedback.
AI Generated. May Contain Errors.
Earnings Conference Call
Kimball Electronics Q2 2024
00:00 / 00:00

There are 9 speakers on the call.

Operator

Good morning, ladies and gentlemen. Welcome to the Kimball Electronics 2nd Quarter Fiscal 20 24 Earnings Conference Call. My name is Drew, and I'll be the facilitator for today's call. All lines have been placed in a listen only mode Today's call, February 6, 2024, is being recorded. A replay of the call will be available on the Investor Relations page of the Kimball Electronics website.

Operator

At this time, I would like to turn the call over to Andy Rigut, Vice President, Investor Relations. Mr. Huguht, you may begin.

Speaker 1

Thank you, operator, and good morning, everyone. Welcome to our Q2 conference call. With me here today is Rick Phillips, our Chief Executive Officer and Jana Krum, Chief Financial Officer. We issued a press release yesterday afternoon with our results for the Quarter of Fiscal 2024. To accompany today's call, a presentation has been posted to the Investor Relations page

Speaker 2

on our company website. Before we

Speaker 1

get started, I'd like to remind you that we will be making forward looking statements that involve risk and uncertainty and are subject to our Safe Harbor provisions as stated in our press release in SEC filings and that actual results can differ materially from the forward looking statements. Reconciliations of GAAP to non GAAP amounts are available in our press release. One other housekeeping item to mention. Starting this quarter, we have added a page of other financial metrics to the press release, which includes depreciation and amortization, stock based compensation, cash conversion days and open orders for the relevant periods. These additional disclosures are in line with our commitment to providing you with enhanced transparency into our business operations and key performance metrics.

Speaker 1

This morning, Rick will start the call with a few opening comments. Jana will review the financial results for the quarter and updated guidance for fiscal 2024, And Rick will complete our prepared remarks before taking your questions. I'll now turn the call over to Rick.

Speaker 2

Thanks, Andy, and good morning, everyone. As we expected, the Q2 of fiscal 2024 was hard fought with our team navigating a challenging operating environment. Global macro headwinds, including pressure from elevated levels of inflation, higher interest rates And geopolitical uncertainties have persisted and the consumer is pulling back. The markets we serve are experiencing demand softening and our customers are changing production schedules and delivery date requirements. Sales in Q2 declined compared to the same period last year with manufacturing output in the quarter being reduced to meet the lower demand as our customers work through elevated inventory levels.

Speaker 2

Margins, on the other hand, remained stable, thanks in part to proactive measures taken to align our cost structure with slowing sales. We expect industry wide pressures for the remainder of fiscal 2024 and have updated our guidance for sales and operating income for the full year to align with these trends. Based on what we know today, it seems likely the macro environment will remain challenging for some time. Despite this near term choppiness, we did not change our guidance for capital expenditures in fiscal 2024 as we continue to invest in long term growth opportunities. With a strong funnel of new business supported by favorable industry megatrends, We're deploying a balanced capital allocation strategy focused on driving organic growth, global expansion and long lasting customer relationships.

Speaker 2

Turning back to the results for the 2nd quarter. Net sales totaled $421,000,000 a 4% decrease compared to the Q2 of last year. From a geographical perspective, the top line was strong in North America, up low double digits with particularly good results in our industrial vertical market, offset by declines in Asia and Europe. The decline in Asia occurred in Thailand, which was heavily impacted by our major medical customer that is involved in an FDA recall, while Europe appears to be a region of the world where the general economic slowdown is more significant compared to other areas of the globe. One vertical market, industrial, posted year over year growth in the quarter with net sales totaling $113,000,000 a 7% increase compared to Q2 last year and 27% of total company sales.

Speaker 2

The strength this quarter was concentrated in charging systems, climate control and public safety products. We frequently refer to our industrial business as green and clean and in some respects we're our own best customer With products that reduce environmental impacts, promote energy efficiency, safety, carbon neutrality and the responsible use of natural resources, We specialize in heating and cooling systems, factory automation, optical inspection, electronic locking devices and charging stations. Next is automotive, where Q2 sales totaled $200,000,000 a 2% decrease compared to the Q2 of fiscal 20 23 47 percent of total company sales. The decline this quarter was driven by weakening demand in Europe, partially offset by incremental strength in China. Longer term, we continue to see a strong runway for growth in the automotive vertical, driven by the industry trend toward incorporating more electronic content to vehicles, specifically in steering and braking systems.

Speaker 2

Our proven expertise manufacturing safety critical products that meet the stringent regulatory requirements of the industry ideally positions us to support further advancements in these systems. As a reminder, most of our automotive business is currently in steering and braking, And it doesn't matter what's under the hood, whether it be an internal combustion engine, electric motor or a hybrid of the 2. Essentially, the architectures are the same for these vehicles, which is important as consumer preferences and adoption rates evolve and the industry transitions toward EVs. Finally, Medical with net sales of $108,000,000 a 14% decrease compared to Q2 last year and 26% of total company sales. This result was in line with our As I alluded to earlier, our annual guidance reflects a $100,000,000 reduction in sales with a major customer in this vertical, partially offset by growth in other programs.

Speaker 2

We expect these growth opportunities to continue to emerge as the population ages, Access and affordability to health care increases, medical devices get smaller in size and require higher levels of precision and accuracy and connected drug delivery systems become more common. Our manufacturing capabilities extend beyond electronics and printed circuit board assemblies and include, but are not limited to operations involving precision injected molded plastics, complete device assembly for drug delivery systems and sterilization and cold chain management. The business development team focuses on leveraging these capabilities with higher level assemblies or HLAs, which as a category represent an opportunity for more value added content. So in summary, a solid quarter in a difficult operating environment and an updated outlook for fiscal 2024. I'll now turn the call over to Jana to provide more details on the financial results for Q2 and review our guidance for the full year.

Speaker 2

Jana?

Speaker 3

Thank you, and good morning, everyone. As Rick highlighted, net sales in Q2 were $421,200,000 a 4% decrease compared to the Q2 of fiscal 2023. Foreign exchange had a 1% favorable impact consolidated sales year over year. The gross margin rate in Q2 was 8.2%, A 40 basis point improvement compared to the same period last year with the increase being driven by a favorable product mix and lower material costs compared to 12 months ago when we were dealing with global shortages impacting the electronics industry. We are also aligning our costs to the current macro environment.

Speaker 3

Adjusted selling and administrative expense in the 2nd quarter were $17,300,000 compared to last year's adjusted Q2 results of $16,400,000 with the increase being driven by a $2,000,000 allowance for credit losses. Although the customer associated with this charge is not in bankruptcy, We determined it was appropriate to consider the age of the outstanding amount, the creditworthiness and payment history of the customer and the timing of expected payments. As a percentage of sales, adjusted selling and administrative expenses were 4.1% or 40 basis points higher than the Q2 of last year. Adjusted operating income for the 2nd quarter was $17,100,000 or 4% of net sales, which compares to last year's adjusted results of $17,800,000 or 4.1 percent of net sales. Other income and expense was expense of $5,300,000 compared to expense of $3,300,000 last year.

Speaker 3

The increase was a result of higher interest expense year over year, a product of our elevated debt levels and the current interest rate environment. The effective tax rate was 26.5% in the second quarter compared to 24.5 percent in Q2 of fiscal 2023. Adjusted net income in the Q2 of fiscal 2024 was $8,300,000 or $0.33 per diluted share compared to adjusted net income in Q2 of last year of $11,000,000 or $0.44 per diluted share. Turning now to the balance sheet. Cash and cash equivalents at December 31, 2023 were $39,900,000 And cash flow used by operating activities in the quarter was $30,700,000 Cash conversion days were 117 days compared to 97 days in the Q2 of fiscal 2023 and 103 days last quarter.

Speaker 3

As a reminder, we have started including customer advances in our CCD calculation. The results from fiscal 2023 reflect this change. The increase in CCD this quarter compared with Q2 in the prior year was driven by an increase in days sales outstanding and contract asset days and a reduction in accounts payable days. In addition to a focus on inventory, we are also looking to significantly improve our cash conversion days as we more actively and aggressively manage its components. Inventory ended the quarter at $455,700,000 compared to $487,500,000 at the end of Q2 2 in fiscal 2023 $482,000,000 last quarter.

Speaker 3

We expect this number to continue to decline as we work with customers to right size inventory to match the current demand outlook. Capital expenditures in the 2nd quarter were $13,200,000 supporting organic growth, maintenance requirements and investments in automation and efficiency. Borrowings on our credit facilities December 31, 2023 were $321,800,000 compared to $273,500,000 a year ago and $296,700,000 at the end of Q1. Our short term liquidity available represented as cash and cash equivalents plus the unused amount of our credit facility totaled $105,700,000 at the end of the second quarter. It is important to note that on January 5, 2024, we amended our short term credit facility to provide additional domestic liquidity for investments needed to meet working capital and other operating needs.

Speaker 3

The amendment increased the borrowing limit to $100,000,000 from $50,000,000 and changes the maturity date to January 3, 2025 from February 2, 2024. There were no shares repurchased in the Q2 of fiscal 2024 Since October 2015, under our board authorized share repurchase program, a total of $88,800,000 has been returned to our shareholders by purchasing 5,800,000 shares of our common stock. We have $11,200,000 remaining on the repurchase program. As Rick highlighted, we are updating our guidance for fiscal year 2024 with net sales now expected declined 2% to 4% versus fiscal 2023, which compares to our previous guidance of flat with the prior year. Operating income is estimated to be in the range of 4.2% to 4.6% of net sales compared to our previous estimate of flat with the prior year.

Speaker 3

The guidance for capital expenditures did not change with the range of $70,000,000 to $80,000,000 I'll now turn the call back over to Rick.

Speaker 2

Thanks, Janet. Before we open the lines for questions, I'd like to recognize our team for once again being honored by Circuits Assembly Service Excellence Awards. In November, we achieved the highest overall customer ratings in the categories of dependability and timely delivery, technology, value for the price and manufacturing quality. These awards are based solely on direct customer input. I am very proud of our team's consistent focus on building long term relationships with Regardless of whether they are new or customers we've worked with for a decade or more, they consistently recognize the Kimbell team, our culture and a common set of priorities that allowed us to continuously improve and keep our promises.

Speaker 2

I'd like to congratulate and thank our team worldwide for receiving this recognition. We are winning together the Kimball way, And I'm excited about what's ahead for our company.

Operator

Ladies and gentlemen, analysts apologies. Ladies and gentlemen, analysts may ask a question Our first question comes from Derek Soderbergh from Cantor Fitzgerald. Your line is now open. Please go ahead.

Speaker 4

Yes, good morning everyone. Thanks for taking the questions. I wanted to just touch on the current environment by end market. It seems like industrial has pockets of strength, medical sort of tracking as expected. Can you talk a bit about where the incremental weakness is coming from by end market that's sort of leading to the revision in the outlook.

Speaker 4

I would imagine you're feeling some of the impact of the UAE strike. Is the incremental weakness you expect for this year largely in automotive? Or really is it broad based?

Speaker 3

Hey, good morning, Derek, and thank you for the question. So let's start off with medical because that is probably the cleanest and easiest to understand. Medical is tracking exactly as we expected, which is we're going to see $100,000,000 decline come through related to 1 large customer offset by some new product launches that we have in roughly the $50,000,000 range. And so that one is going exactly as expected. Industrial, we are seeing significant weakness in Europe, particularly related to the smart metering product line, it is being offset by growth that we're seeing in North America, specifically related to charging stations and also some benefit that we're seeing come through in the HVAC market.

Speaker 3

Automotive is really a mixed bag because what we're seeing is softening in the European market. I will tell you Europe across the board is just really tough right now. And if you're looking at generally speaking where the declines are coming from, It is very clear in Europe. Automotive in North America is holding in relatively flat. We saw minor disruptions as a result

Speaker 5

of the

Speaker 3

UAW strike, we don't anticipate seeing any more disruption come through for the remainder of the fiscal year. And in China, we also had Some nice pockets of strength in the automotive business.

Speaker 4

Got it. Got it. And just on Yep.

Speaker 3

Go ahead.

Speaker 5

Go ahead. You can take

Speaker 4

it. No, you take it, John.

Speaker 3

In North America, but in China, those sales have been Really strong.

Speaker 4

Got it. And is any of the weakness in Europe? I know you Obviously, you have operations in Poland. You just expanded. In the prepared remarks, you mentioned some geopolitical uncertainty.

Speaker 4

You've got a conflict in the Red Sea there, shipping rates are up. I'm wondering if That played sort of a quantifiable impact to how you're thinking about the rest of this year. And if that's not the case, I guess, Janna, what are you seeing in the out quarters leading to the lower operating income guidance?

Speaker 3

So we have seen disruptions in the Red Sea. We actually ended up sending letters to all of our customers related to that impact. It's incumbent upon us, the suppliers, to be able to ship and distribute products to the customers who are actively waiting on it. So We are doing our best to find alternative opportunities for freight. I'm not going to blame it on What you are really seeing now is a true slowdown in Europe.

Speaker 3

A lot of it has to do with what we saw in 2022 and 2023. And if you'll notice, we took out the language of push out as we had described it last year relative to customers pushing out demand. This feels more like, took on a lot of inventory. There was a shortage and scarcity of product availability. They took as much as they could from us And now they're sitting on a lot of inventory that they've got to work through.

Speaker 3

And so we know that that will correct itself over time, But what it's causing is just some temporal near term choppiness as they've got to get that inventory pushed through to the end market And then we resumed what I would refer to as a normal steady state cadence of growth. Our CCO likens it to the toilet paper debacle of COVID 2021, where There was a scarcity of toilet paper. Everybody ran out and bought as much as they could. And then you have to work through your toilet paper supply and then you sort of get back to a steady state growth period.

Speaker 4

Yes. Well, I appreciate the detail. If I could just squeeze one more in. Rick, you mentioned some strength North America around industrial, you did mention clean and green, some HVAC charging stations seems like That's a growing opportunity for you guys. Is there any way for Kimball to sort of play in the manufacturing tax credits tied to the Inflation Reduction Act, would you have to re shift manufacturing to Jasper for that?

Speaker 4

Is that a real opportunity for you guys?

Speaker 2

It's certainly something that we talk about, yes. We We see and we like the strength in North America around those areas. We're Proud as you know of our North American manufacturing network and we have customers that want to talk to us about it all the time. So This is certainly an opportunity that we're continuing to explore and could be upside.

Speaker 4

Awesome. Really appreciate it. Thanks.

Operator

Our next question today comes from Griffin Bath from B. Riley. Your line is now open. Please go ahead.

Speaker 6

Hi, Rick, Jenna. Thanks for taking my questions. So first on the working capital front, we saw a material step up in days sales outstanding in the quarter. Just curious what your expectations are going forward for this year and then longer term as it relates to receivables?

Speaker 3

And so I'll take that question. Good morning, Griffin. We have a lot of work to do here, right? And it's in partnership with our because as you know, we were ordering according to the demands our customer placed on us and it was in CMR. So everything we ordered 52 weeks ago, 39 weeks ago, 26 weeks ago, it was showing up.

Speaker 3

And as the demand forecast is moving out from us, That inventory is continuing to build. We're working through it with customers in a variety of ways, right? So some of it is going to be Cash deposits from customers, some of it is going to be consignment of inventory for customers. Some of it is carrying charges on the inventory, although my preference right now is not carrying charges, it's cash, which as you know in this type of environment is key. I would expect that our DSO and our PDSOH need to come down.

Speaker 3

As I previously said, it's a pendulum that it swings too far. And so we really got to work on the aging of our receivables and get that more in line with our contractual agreements with our customers. Working capital is a laser focus right now, right? And so it's relieving the inventory, but seeing it all the way through to the end, which is the impact that it would have on her balance sheet in terms of debt relief.

Speaker 6

Got it. Okay. Thanks, Jenna, for the color there. And then so just turning to medical, I understand obviously the fiscal year 2020 4 guide accounts for the $100,000,000 reduction in sales related to that FDA recall of a major medical customer. So you just remind us, I'm not sure if you said in the past when you expect that recall to be remediated?

Speaker 6

Does the program start to hit the top line again in 1Q 2025? Or is it later in 2025 or is that do you not have that visibility?

Speaker 2

Yes, we really don't. What we've tried to be, Griffin, is really conservative about that. As I think we've said before, we continue to have a great relationship with that customer. We're discussing multiple opportunities at any point in time and we stand ready to support. But we've tried to be really conservative and not build that into our expectations.

Speaker 2

One point on medical outside of that customer that you can probably do the back math on, but As Janice said, we're really on expectations overall and haven't changed those expectations for 2024. And our medical growth in Q2 would have been high single to low double digits outside of that reduction from that one customer. So we are making progress. We continue to see wins coming in and we're really optimistic about medical long term. But to directly answer your question, we've not built in any expectations related to that program restarting.

Speaker 6

Okay. All right. Fair enough, Rick. Well, thanks for the color. Appreciate you guys taking my questions.

Speaker 2

Thank you.

Operator

Our next question comes from Jaeson Schmidt from Lake Street. Your line is now open.

Speaker 7

Hey guys, thanks for taking my questions. Understanding that there have been push outs here just given the macro, but just curious if you're seeing any issues with decommits cancellations within your backlog?

Speaker 3

We have seen, yes, Decommission cancellations come through with our backlog, which as you know is not usual in this business. Normally, we've got firm orders, we've got volume, you can see it out far away. Now they haven't been huge, and they have been geographically focused, but we've actually seen them. A good example is Europe Industrial, where we saw significant shifts that were quite honestly unexpected. And so we work with the customer on what that looks like and we partner through It's really interesting because we've had a solid ramp of new program launches and NPIs Where we're seeing some of the softening come through, our existing programs that have been in places for years where we're seeing decommissioned, canceled and some push outs.

Speaker 7

Okay. That's really helpful color. And then just following up on that. I know you just gave the example of industrial, but are those Decomitcer cancellations concentrated in one of your segments or is it pretty broad based?

Speaker 3

Medical is actually tracking really well. And so it's strange to us because one of our peers highlighted medical As a softening vertical for them, for us that's actually going exceptionally well. Industrial is really where we're seeing more of softening and struggle. And so I think it depends on and each vertical sort of where you play In automotive, again, that's really a result of just the economy and what they're experiencing there in North America is chugging along as

Speaker 7

Got you. And then just last one for me and I'll jump back into queue. With all the dynamics your business and maybe some mix shifts here and there. At a high level, how should we think about gross margin through the remainder of calendar 2024?

Speaker 3

Yes, that is a great question. We're working through product mix for the remainder of the year right now and really understanding where our materials and labor costs are going to shake out as a percentage of net sales. If you look at our guidance range for the full fiscal year of 4.2% to 4.6%, what that tells you is Our gross margin is going to be somewhere in the range of where you've seen it for the last two quarters And that mid-eightish level, we're certainly going to do everything that we can to bolster it in terms of cost containment and alignment. And then I know you didn't ask about SG and A, but laser focus there, reducing all the costs Where we can and where appropriate without sacrificing long term growth. We just got to hunker down and get through it is the bottom line.

Speaker 7

Okay. No, I really appreciate all that color. Thanks a lot guys.

Speaker 3

One thing I will note that Jason didn't ask about, but I I would like to say on the open mic, It was a very thoughtful decision by the leadership team to align cost to the current environment. What we have told you is we're not going to talk about bifurcated or stair stepped or we're not going to have any of those conversations anymore where we just take the absorption and don't respond. We really felt like it was incumbent upon us to make the decision to the cost where we could and not just let the margins slide into the abyss. And so we are working significantly on that.

Operator

Our next question today comes from Anja Soderstrom from Sidoti. Your line is now open. Please go ahead.

Speaker 8

Hi, and thank you for taking my questions. So I have some follow ups on the questions. So in terms of the medical customer where they're remediating a product, Are you exclusive with that customer on that product? Or could you be working if this is going to be prolonged and their competitors share. So you're going to be able to work with the competitors on that?

Speaker 2

Yes. We are we do have other customers in the oxygen

Speaker 5

and ventilator business, who

Speaker 2

we are working with. And and ventilator business, who we are working with and are seeing an increase in intake. So, yes, do work across that part of the business with multiple companies.

Speaker 8

Okay. Thank you. And Janne, you were talking about the weakness in Europe and you mentioned the In the prior adjustments there, is that mainly the reason for the weakness there or do you also see a broad economical weakness?

Speaker 3

It's broader economical weakness. The broader economical weakness is just exasperating the inventory We are seeing some Coming out in the near future, but we're getting data daily.

Speaker 8

Okay. Thank you. And one last one is related to the taxes and the revenue mix That's the North America was doing better than the other regions. I noticed the taxes are higher. Should we expect those to continue to be higher as North America might continue to be stronger?

Speaker 8

Or how should we think about the taxes going forward?

Speaker 3

Yes. And you nailed it. The tax rate is really a direct impact of just the mix of where Sales are coming through geographically. We expect to control that as much as we can through Tax arbitrage is an opportunity, but I would say an effective tax rate in the mid-20s is what you should expect to somewhere in that point 4 to 26 range.

Speaker 8

Okay. Great. Thank you. That was all for me. Thanks,

Operator

Our next question comes from Tim Moore from EF Hutton. Your line is now open. Please go ahead.

Speaker 5

Jana, thanks for adding the open orders amounts to the press release going forward. So I was wondering maybe just on the backlog, open orders. You mentioned EV chargers, we got the HVAC climate control, the public safety. But can you, Rick, maybe just highlight any other areas are going well? I remember last time What the towing systems for EV trucks and SUVs to not drain the battery?

Speaker 5

If you can just maybe shed light on anything else that's growing pretty good or you're seeing pretty good interest on orders?

Speaker 3

Yes. So you nailed a lot of it. We're seeing in terms of Charging station, new medical customers, that's going well. Automotive, North America steering and braking Going really well. Also automotive in China, going well for us.

Speaker 3

We've got some new products and program launches that we're going to see there that are encouraging and exciting, offset by just some inventory that we've got to work through and softening in Europe.

Speaker 5

Great. That's helpful. And then just shifting gears maybe, I'd love to hear maybe what Rick's appetite and your appetite is for M and A, is there still willingness maybe to do medical as the priority near term? I know you've got the corporate development team in place. Has anything changed around that for your kind of appetite and potential timing?

Speaker 2

Yes. I think our thinking probably hasn't significantly of late, Tim. It's obviously something we never ignore and we continue to monitor opportunities. We do see a really healthy funnel, as Jana mentioned. And As we look forward in the out years, the lead time on wins, I mean, we see some really nice wins.

Speaker 2

We like the places that we're playing. And so we think the organic growth opportunities are really robust. And as Janus said, we also are working on the balance sheet to free up and create flexibility for the future. So I wouldn't say we're ever out of the game, but we're really focused organically right now and we think that's the right place given the balance sheet and given the opportunities that are coming our way.

Speaker 3

Yes. Tim, if you

Speaker 5

were to

Speaker 3

see us in some, it would be one of our customers deciding that they don't want to produce a particular program or book of business and they want us to take on a higher level assembly They're going to drop out that business and we're going to take it over. And in some cases, the current Macroeconomic environment is interesting because it causes our customers to evaluate their own margin improvement opportunity and ways that we can partner with them to solve that. So if you were to see us do something on that front, it would be in that thing.

Speaker 5

And, Jenny, you beat me to it. That was exactly going to be my next point. That's why I was asking the question because I know I've talked with you and Rick about that before. You've actually had some Customers come to you, I mean, I don't know if they've been proposing it themselves, but it would seem like you have a lot of organic or hybrid opportunities in the medical front taking some work off other people's plate where it's not a big focus for them because they might have higher margin businesses that they care about or allocating capital to. And That's good.

Speaker 5

That's good. And then I just got one last question. Regarding your Investor Day, you think you might be doing 1 this year, do you Still planning on maybe laying out the dollar amount range and maybe the rough timing of global capital expenditures for plant expansion, Cadence by year, or is that maybe on hold a little bit due to the macro slowdown? And do you have any rough range of when maybe your Investor Day might be, is it going to be the spring?

Speaker 3

So the Investor Day wouldn't be this spring. If we were going to do the Investor Today it would be this fall. And the only reason for that is we need more data, right? And so as we continue to look at FY 2025, 2026 and beyond, we really need the market to settle out, and to see sort of where we're shaking out in terms of growth trajectory. In terms of growth expansion, Internally, we certainly have a blue plant and a strategic plan for future expansions.

Speaker 3

Quite honestly, Tim, if I were to come out to you right now and tell you that I'm expanding another region of the world, You would not be happy with me. You know what I'm saying? Make this

Speaker 5

That's why I was asking. That's why I was asking. I'm glad it got moved out.

Speaker 3

So yes, well, again, certainly we have that strategic plan and we've put a lot of effort into it. We also recognize that in this current environment, what we've got has to work harder before we add on to it in the future.

Speaker 5

Great. That's really why I'm watching here. I'm glad it's not going to be in the next month. Yes, no, it makes sense. Just wait it out.

Speaker 5

It happens to all. A lot of other companies, you're not the first one in this boat and Slowdowns pretty much globally now in some pockets. So, that's really great. I'm looking forward to the Investor Day in the fall or whenever it is, and I'm glad it's not next month. So, Yes.

Speaker 5

Yes. We had our first child born yesterday afternoon, a baby boy and mom's doing well and so is the baby. Thanks for asking.

Speaker 2

Congratulations. It's wonderful.

Speaker 5

Thanks, Shannon, Rick and Andy. Take care.

Speaker 2

All the best.

Operator

Thank you, everyone. That concludes today's Q and A portion of the call. There will be a replay available after today's call. The details for this are as follows.

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