Motorcar Parts of America, Inc.

Thank you. Ladies and gentlemen, thank you for standing by and welcome to the Motorcar Parts of America's fiscal 2021 second quarter conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to turn the call over to Gary Muir, Investor Relations.

Please go ahead. Thanks, Denise, and thanks, everyone, for joining us for our fiscal second quarter conference call. Before we begin, and I turn the call over to Selin Joffrey, Chairman, President, and Chief Executive Officer, and David Lee, the company's Chief Financial Officer, I'd like to remind everyone of the Safe Harbor statement included in today's press release. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward looking statements, including statements made during today's conference call. Such forward looking statements are based on the company's current expectations and beliefs concerning future developments and their potential effects on the company. There can be no assurance that future developments affecting the company will be those anticipated by Motor Car Parts of America. Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve significant risks and uncertainties, some of which are beyond the control of the company and are subject to change based upon various factors. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether a result of new information, future events, or otherwise. For more detailed discussion of some of the ongoing risks and uncertainties, I refer you to the various filings with the Securities and Exchange Commission. I'd now like to begin the call and turn it over to Selwyn to begin.

Thank you, Gary. I appreciate everyone joining us today. We reported record results for our fiscal second quarter, which is particularly gratifying given the sharp impact to our business and across the automotive sector in our first fiscal quarter. Even with the impact of the global pandemic and related uncertainties, we remain cautiously optimistic as we continue to execute our strategic growth initiatives. As I mentioned during last quarter's call, we targeted the end of the fiscal second quarter to complete our strategic build-out in Mexico, and we formally announced the commencement of brake caliper production at this location last month. We are dedicated and focused on our current customer commitments and are excited by the interest we are receiving for calipers from new customers, as well as new opportunities in all of our other existing product lines. During last quarter's call, I highlighted that our facility expansion in Malaysia is now complete. We are extremely motivated to be able to increase capacity and productivity across multiple product lines and reduce dependence on outsourcing, whether components or products, as the changing geopolitical environment requires it. In short, we are in a unique position to take advantage of our long operating history in Malaysia and Singapore. It is important to reiterate industry statistics that I have highlighted on many previous calls and conference presentations. The market size for our current categories is more than $6 billion at the retail level. Vehicles will continue to age, with approximately 280 million vehicles currently on the road. This will fuel significant growth in the aftermarket parts replacement industry well beyond 2030. In short, our strategy before and since the pandemic has been to leverage our significant channel relationships for aftermarket parts and offer superior parts and solutions to our customers and consumers. Given the current situation, let me make a few observations. The vast majority of consumers in our target market are unable to work from home and reticent to use mass transportation or rideshare. As a result, these workers are more dependent than ever on their personal vehicles. We believe that personal vehicles will also continue to be the preferred mode of transportation for daily activities and vacations for the foreseeable future. All of this bodes well for our business. Furthermore, during the current environment and recessionary times, people keep their vehicles longer. Accordingly, we are seeing strong demand for used cars with consumers preferring used cars over new when faced with economic uncertainty. Obviously, this bodes well for the aftermarket parts replacement industry and our non-discretionary product offerings. All of this leads to an increased age fleet, which is currently at a new record high of approximately 12 years. As these vehicles age, the rate of replacement of parts increases substantially. For example, in cars in the zero to three-year age group, they have a replacement rate for alternators of 2.42%, compared with 6.65% in the 12-year and above age group. Nonetheless, new car sales should return at some point. But regardless, we expect to benefit because used car scrap rates are generally lower than new car sales, resulting in an increased car park and further opportunities for parts replacement. We are also making good progress on our integration of Dixie Electric and the rollout of our heavy duty program. I should mention that the team at Dixie recently received recognition as being an outstanding supplier from one of its leading OEM customers for providing service above and beyond during the pandemic. This is a testament to the spirit and commitment we adhere to throughout our entire organization, which is particularly critical during these challenging times. Our hard parts off-the-market program in Mexico through our new EPIC subsidiary is continuing to gain momentum, and we have expanded our product offerings since the initial introduction of rotating electrical in this market. While still a small percentage of our overall business, we are excited by the opportunities. In short, all our initiatives continue to enhance our position as a valued premier supplier of automotive off-the-market parts in North America. With respect to our diagnostic business, demand for our benchtop tester continues to grow, including from Mexico. Our customers are committed to upgrading their existing testers to meet the latest protocols for starters and alternators. They are now restarting expenditure programs for diagnostics, which were delayed when the pandemic began. As you may recall, these customer purchases support their mission to provide continuing trustworthy advice with regard to whether a consumer's alternator or starter is working properly. This helps significantly reduce a misdiagnosis of the vehicle's problem, which is one of the largest reasons for a return. To complement our internal combustion business, we have also embraced the advancements of a fast-growing world of electrified transportation. Consequently, as you know, we have made investments in the rapidly advancing diagnostics for automotive electric vehicles and electrification of the aerospace market, including military applications. Our offering of complete solutions for simulation, emulation, and production testing for the electric powertrain is regaining traction since the start of the pandemic, and sales activity is greatly improving as OE manufacturers resume production. In short, the increasing global demand for electronic testing products and subscription services is encouraging and remains an important driver to creating value today and in the future. In summary, our entire company is well positioned for sustainable top and bottom line growth. Despite being off to a solid start for the second half of the fiscal year and optimistic that the year will be strong, we believe it is still not prudent to provide annual guidance at this time we expect the number of vehicles and the prime parts replacement age will continue to grow and we are pleased to see the number of repairs and miles driven for our target customers continue to regain momentum notwithstanding the human and economic impact and the uncertainty of this terrible pandemic The paradox for the aftermarket business is that personal vehicles are becoming increasingly important in our, quote, new normal daily lives. All of this supports our optimism for growth and profitability over the next several years, and we remain more convinced than ever that our strategy to enhance shareholder value is on target. In fact, as noted in our fiscal second quarter news release this morning, we are resuming our stock buyback program subject to market conditions with current availability of $21.3 million under our existing authorization. I will now turn the call over to David to review the results for the fiscal second quarter.

Thank you, Selwyn. To begin, I encourage everyone to read the 8K file this morning with respect to our September 30, 2020 earnings press release for more detailed explanations of the results. For information about the items that impacted the results, see Exhibits 1 through 5 of the press release. Let me take a moment to review the financial highlights for our record fiscal 21 second quarter. Net sales for fiscal 21 second quarter were $154.7 million compared with $150.4 million for the same period a year earlier. Net sales for the quarter include $12.8 million in core revenue due to a realignment of inventory at two customer distribution centers with expected future sales benefits as product mix changes. Gross profit for the fiscal 21 second quarter was $39.7 million compared with $36.6 million a year earlier. Gross profit as a percentage of net sales for the fiscal 21 second quarter was 25.7% compared with 24.3% a year earlier. Additional detailed items impacting gross profit are shown in Exhibit 3 in this morning's earnings press release. Results for the fiscal second quarter were impacted by approximately $2 million on a pre-tax basis or $0.08 per share on a tax-effective basis for cost of goods sold and operating expenses related to safety and health initiatives associated with COVID-19. Approximately $1.3 million of the $2 million relates to incremental bonuses and wages paid to the company's dedicated operating employees on the frontline. The balance relates to personal protection equipment and social distancing initiatives. Total operating expenses decreased approximately 32%, or $7.1 million, for the second quarter on a year-over-year basis. This decrease was comprised of $5.8 million of foreign currency-related gains, which are non-economic, and a $2.3 million reduction in expenses, primarily as a result of the current COVID operating environment. This was partially offset by higher expenses, such as COVID-related expenses of $515,000. Interest expense was $3.6 million for the second quarter compared with $6.5 million last year. The decrease in interest expense was primarily due to lower interest rates and lower net debt. Income tax expense for the second quarter was $6.1 million compared with income tax expense of $2 million for the prior year period. Net income for the fiscal 21 second quarter was $15.2 million, or $0.78 per diluted share, compared with a net income of $6.2 million, or $0.32 per diluted share, a year ago. Additional details of items impacting net income are in exhibit one in this morning's earnings press release. Net sales for the fiscal 21 six-month period were $250.1 million, compared with $259.5 million for the same period a year earlier. Net sales for the six-month period ended September 30, 2020 benefited by $12.8 million due to a realignment of inventory at two customer distribution centers with expected future sales benefits as product mix changes as noted in the quarterly sales discussion. Gross profit for the fiscal 21 six-month period was $53.1 million compared with $54.2 million a year earlier. Gross profit as a percentage of net sales for the fiscal 21 six-month period was 21.2% compared with 20.9% a year earlier. Additional details of items impacting gross profit are in Exhibit 4 in this morning's earnings press release. Net income for the fiscal 21 six-month period was $12.2 million, or $0.63 per diluted share, compared with net income of $38,000, or $0 per diluted share, a year ago. Additional details of items impacting net income are in Exhibit 2 in this morning's earnings press release. Net cash provided by operating activities during the fiscal year 21 second quarter was $16.9 million compared with cash used in operating activities of $8.4 million for the prior fiscal 2020 second quarter. Bank debt that's cash for the second quarter was reduced by $12.3 million to $95.4 million in September 30, 2020. Net cash provided by operating activities during the fiscal year 21 six-month period was $39.3 million compared with cash used in operating activities of $26.7 million for the prior fiscal six-month period. Bank debtless cash for the six-month period was reduced by $31.1 million. We have generated positive cash flow from operating activities for four straight quarters through the September 30, 2020 quarter. For the trading 12 months ended September 30, 2020, Net cash provided by operating activities was $84.9 million. Bank debtless cash for the 2012 months ended September 30, 2020 was reduced by $68.1 million. As you know, there are various methods to calculate return on invested capital. For our purposes, we calculate ROIC by taking operating income, and adding back non-cash expenses, including depreciation and amortization, write-down of cores and customer shelves, core buyback premium amortization, FAS 123R expenses, foreign currency market-to-market gains or losses, and certain non-cash accruals, and certain one-time expenses. We believe this metric, considered together with GAAP measures, provides useful information to investors and to management regarding the company's return on invested capital. In short, we take this metric, which was approximately $73.5 million for the 12 months ended September 30, 2020, which includes an extraordinary weak fiscal first quarter as a result of the COVID-19 shutdown across the country, and divided by the average equity and net debt balance of $421 million, resulting in a 17.5 pre-tax return on invested capital. I should point out that we are just starting to realize the benefits of expanding our Mexico operations and the launch of our new break categories with the expectation of increased returns from both new and existing product lines. This should result in higher ROIC as the benefits of our strategic expansion are more fully realized. At September 30, 2020, our bank balance left cash was approximately 95.4 million. Total cash and availability on the revolver credit facility was approximately 118 million at September 30, 2020, based on a total of 238.6 million revolver credit facility and subject to certain limitations. Consolidated EBITDA for the purposes of bank covenant calculations for the 12 months and the September 30, 2020 was 76.6 million and our senior leverage ratio was 1.56. Our credit arrangement for computing the senior leverage ratio only allows up to $6 million of credit for cash. I should mention that if we had paid down the revolving credit facility further with cash on hand, our senior leverage ratio would have been 1.43 in September 30, 2020. At September 30, 2020, the company had approximately $779 million in total assets, Current assets were $397 million, and current liabilities were $303 million. For the reconciliation of items that impact results and non-guest financial measures, please refer to Exhibits 1 through 5 in this morning's earnings press release. I will now open the call for questions, and someone will then provide some closing remarks.

Ladies and gentlemen, to ask a question, please star from the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Sarkis Sherbetwan with B-Reilly Securities. Your line is open.

Hey, good morning, and thanks for taking my question here. Good morning. In the quarterly sales results, just want to kind of clarify, right? So the $12.8 million in core sales called out for the realignment of inventory at two DCs. Can you maybe give us some help on what that is specifically and how that relates to the expected future sales benefits?

Yeah, so we switched warehouses at one of our customers, and what happens is we reconcile the core inventory on the shelf based on the business that you have that you have. In this situation, 12 point something million was, the inventory on the shelf was low about that amount, so we had to be paid that amount of money, you know, to make good for the cores that we have in customer shelf. And then the gains that we have, any core buyback that we would do there is amortized over an eight-year period. And so, you know, you can't really match them up. The $12 million plus is not a recurring revenue, but it's real revenue and real cash.

So just to understand, did that $12 million come at, you know, 100% contribution margin for the quarter?

No, no, no, no, no. The cost of goods is eliminated from that. That's in the gross margin percentage.

Okay, and how does that relate to the $3.5 million on the revaluation in the reconciliation? Can you help me with that, David? Sure.

Yes, the $3.5 million is looking at about a $900,000 revaluation of floors and customer shelf and a $4.4 million gain.

Got it. OK, and just kind of, you mentioned cash from ops of $17 million in the quarter. What was CapEx during the quarter?

CapEx during the quarter, give me one second here. For the six-month period, let me just break out in total, it was $8.8 million. And that breaks out between the Mexico expansion of $7.6 million and maintenance CapEx of about $1.2.

Got it. And, you know, regarding kind of the new business coming online, what's kind of your expectation on, you know, starting to realize the benefits of the new break categories and kind of the ramp up there? Can you kind of help us understand the progress there?

Yeah, look, there's enormous demand for our product. We have enormous commitments already for brake calipers and many new commitments coming after we get the program ramped up. It's difficult to predict exactly the timing of when all of this, you know, comes in at full effect. But we should see certainly in our fourth quarter and third and fourth quarter, we should see some nice growth in these categories. And then going into the new fiscal year, I mean, there's just a lot of new opportunities that we have committed to us that are opening up.

Great. And, you know, I can appreciate why you're not, you know, kind of providing sales and gross margin guide here. But I guess related to your comments, you know, guardedly optimistic, help us understand what that means in relation to this quarter's performance.

Well, I think I mentioned that we're off to a strong start for our third quarter, which is this quarter for us. You know, I mean, we said we're not giving guidance. I don't want to go further than that, but we're off to a strong start, and we're optimistic for the back six months. Good. Thank you.

I'll hop back in the queue.

Our next question comes from Matt Crandall with Roth Capital. Your line is open.

Hey, guys. Thanks, and good morning. Just wanted to cover a breakdown of revenue by product category, if you could. I don't think I heard those in the prepared remarks.

Yes, so we'll be planning our 10Q later today. So for the quarter, rotating electrical is 80%, wheel hubs is 12%, brake-related products is 7%, and others is 1%.

Got it. OK, very helpful. And then when we think about the rotating electrical category, David, Should we be stripping out the $12.8 million of core revenue that you guys booked in the quarter to kind of get to an apples-to-apples comparison versus last year?

Yeah, I mean, yes, if you – I think that makes sense, although I will tell you that every quarter we book the under-return of cores and customer shelves, so there's some revenue there. But, yeah, I mean, I think that's – we view it as real revenue, but – Yeah, I think stripping it out is conservative. That makes sense.

Got it. Okay. And I believe, does that indicate that for the quarter that we saw sales for rotating electrical decelerate on a year-over-year basis? I'm trying to just do the quick math here. I'm just trying to get a sense for the comparable year-over-year.

You know, as a percentage of total sales,

uh rotating what's up compared to the prior year gotcha okay i'll go back and do the math and we'll just follow up offline on that one um and then so when we the only other question i had on on the uh release was could you guys explain just the the tariff related adjustment that's in uh the cost of goods sold adjustments it looks like a tariff cost paid before price increases were effective could you just clarify that

Yeah, so we have reduced tariffs in some of our product lines. We've previously expensed tariffs, and now they've come down, so we have income from tariffs. We expect that to continue for a little bit.

OK. Any sense for how long that continues into the future?

I think for this fiscal year, I mean, again, you know, we have no idea. I mean, based on the new political environment, we'll have to wait and see. But things have been jumping around fairly significantly. So we'll have to wait and see. And again, we are, you know, we announced our expansion of our Malaysia activities that we were able to to produce more and more of our requirement in our own facilities on a tax, you know, which is tax-free. Not tax-free, but not subject to the Chinese tariffs. I mean, they do have their own nominal taxes, but... Got it. Understood on that front. So we're in a much stronger position now to deal with that.

Great. Okay. And then just one more from me. I mean, this is just zooming out and maybe a higher-level question. I know it's sort of early here and maybe speculative, but I wanted to get your preliminary thoughts on how a sort of widespread vaccine distribution may impact vehicle miles traveled, hard parts demand in the aftermarket. I mean, I can see it being somewhat positive, just given that there's still plenty of vehicles that are old and aging that are on the road. You do get some incremental vehicle miles traveled, people going back to the offices and whatnot. But you also have the, I guess, the headwind of a lot of car trips that may turn back into airline miles and whatnot. So just wanted to get your preliminary thoughts here on how we should be thinking about demand and contracts and the aftermarket going forward.

Yes. You know, I mean, it's difficult to speculate, but let's assume that the vaccine is a huge success and it goes through everybody very quickly and we get back to normal. If you look at pre-COVID models driven, I mean, it's significantly higher than post-COVID models driven. I mean, our target is less affected by it. I don't believe it's going to be I think it's positive. I mean, more people driving and I don't think instantly everybody's going to go back to mass transit that quickly. But even if they did, I mean, miles driven were much higher and the aging car fleet and in general, you know, I think if you talk to certainly my perspective on the aftermarket, there's a lot of tailwinds regardless. which way that all goes for the industry. And at the end of the day, the more people that are out and around and doing and traveling, and I think it's generally positive still.

Great. Thanks for those thoughts, and I'll leave it there. Thanks. Thanks.

Your next question comes from Brian Nagle with Oppenheimer. Your line is open.

Hey, good morning. Morning, Brad. Thanks for taking my questions. Nice quarter. Thank you. I have a few questions. Maybe I'll just kind of lump them all into one. But first off, just with regard to the top line, clearly an improving trend here. And so in the comments you made, it suggests very clearly that the business has stayed solid here into the next fiscal quarter. So can you give us some idea of the sequential trends through the fiscal period, and then maybe even some more precise commentary with regard to sales trends here into the next quarter?

Yeah, look, again, you know, we said we don't think it's appropriate to give guidance. I don't want to say that and then immediately give guidance. But in general, I think the sequence of our quarters, the third quarter is generally a little softer than the second quarter, and the fourth quarter is usually stronger. As far as the third quarter goes, I mean, we're optimistic. We're off to a great start. And as far as the fourth quarter looks from now, look, we're optimistic about that as well. Just a lot of new uncertainty. I mean, we had built-in uncertainty previously and now we have a new administration and there's more uncertainty. So, again, we surround that with a high degree of optimism and some great momentum within the company now in multiple product lines and great momentum in getting our transition, you know, completed. And so, you know, we're getting towards the end of what has been somewhat challenging, you know, for people to understand in terms of our transition and our footprint. I'm excited to say that our footprint of the future will soon become our footprint of today. In fact, it is our footprint of today now because we're in all the buildings, so, you know, Again, I feel optimistic. Our organization feels optimistic, but we're cautious.

Got it. And then also with regard to sales, there's been chatter in various places, including the auto parts retailers, about supply chain disruptions maybe getting better now. I guess the first one is, are you seeing that? And then the second, somewhat related to that, is, as you look at the demand from your core retail partners, is it more restocking or is it reflective of better underlying demand from their customers?

Well, I think, you know, we supply in arrears, so certainly if you look at their numbers, they've all reported increasing numbers. so the fundamentals of our customers are strong and and so there's a lot of restocking going on um coming into winter we've seen some early snows which are good coming off a hot summer that weather perspective is good outlook for us we'll have to wait and see how that plays out um uh so i you know i think it's it's it's fundamental restocking i hope i answered that i feel like i forgot a portion of your question brian sorry did i hit all of that or

No, that was – I mean, I was basically asking just kind of the nature of the demand you're seeing from the retailers.

Yeah, I mean, their number's all good, and we continue to, you know, to be – have a large market share with them. And so, you know, we get to benefit from that. In addition to that, you know, we've got some great new business opportunities that are unfolding for us, and we're excited about – you know, ramping those up and starting to ship them, whether it be in the fourth quarter or the first quarter of next year. So, you know, we feel pretty good about the development in all of our categories, seeing in particular a big resurgence in this electric vehicle space and the diagnostics portion of our business and, you know, along with what our normal sort of cadence is with the hard parts. You know, if it all adds up and comes together at the same time, which we think it will, we're looking forward to a very positive new year.

Well, thank you. Best of luck here for the next couple quarters.

Thanks. Thank you, Brian. Appreciate it.

Your next question comes from Scott Sender with CLK. Your line is open.

Oh, good afternoon, or I should say good morning to you guys. Yeah, thanks. Morning, afternoon. Just to frame things out on the sales line, if you were to adjust to the 12.8 mil, I guess you guys were down a few percentage points. I know you were going up against a very, very difficult comparison last year, but could you maybe just frame out, because again, we hear the retailers and some of the other suppliers are seeing their selling rates and their sell-through rates even higher. I'm just trying to see, are we missing anything here, or is this just a case of going up against a difficult comparison last year?

Well, two things. First of all, you know, the orders are slightly in arrears of what the retail sales are. So, you know, you'll see replenishment catch up pretty quickly here. The other side of it, and that's what I forgot when I was trying to answer the last question, is the supply chain headwinds are real. And I would say that our revenues were probably negatively affected by supply chain challenges between 5% and 10% of total revenue. And on top of that, we had a record second quarter last year. So, You know, it's a bit of everything. But really, you know, in the evolving sort of demand profile that we see, we're excited about where we are. I mean, we're suffering like everybody else on the supply chain side, but we're working through it.

And on mark-to-market, I know last quarter in the first quarter you guys – called out the foreign currency benefit, I guess, on your assets in Mexico. And this quarter, it looks like you had something similar, although not to the same extent. But I don't see it in the reconciliation table. Was this different than the first quarter? I'm just trying to get a sense of how we should treat this as a recurring item or a non-recurring item.

Hi, Scott. So if you look at the exhibits in the back of our earnings press release, under the section of items impacting the results, the last line is foreign exchange impact of lease liabilities and forward contracts. So it is there. And we also present that line item on the face of the income statement as the last line item in operating expenses. So we've broken that actually on the face of the income statement.

Okay, got it. All right, and, you know, last question I have. I know there's a lot being made of how the do-it-yourself side of the business has really been outstripping the do-it-for-me side of the business. Can you maybe talk about how much exposure you do have on the do-it-yourself side and if for any reason that has had any negative slanting towards your results?

Not at all. I think we have... We have leading market share in the DIY side and rotating electrical. We're number one player there and number one player in DIY in the wheel hub area. Probably the number one player in DIY and brake boosters and master cylinders potentially. I'm not quite sure about that one. But we're well represented in both in the market well for both sides, both the professional installer and the DIY. And I might add, if we see a big resurgence in the vaccination and more commuting for the high-end part of the marketplace, we should see a big pickup in the professional installer business as well from that. No, I think there's going to be a new model. I'm not sure what the new model is going to look like even with the vaccine. So time will tell, but I don't see a scenario where it's negative for us.

Got it. Thank you. Thank you.

Again, to ask a question, please press star then the number one on your telephone keypad. Your next question comes from Matt Dean with Titan Capital. Your line is open.

Great. Thank you. I was hoping to address how you would consider your retailer's inventory versus normal today.

I would say it's normal for the demand that they have. I don't see any unusual activity with respect to inventory with the retailers. Okay.

That's helpful. And then I also wanted to ask about the startup transition expenses that you folks have broken out here over the last year. couple, for a while now. We're curious, when should we expect those to disappear as we get, want some color on that?

So that will continue through the end of this fiscal year, and there'll be a small amount in the first quarter of next fiscal year, and then we'll be done.

Great. I appreciate the color.

And if there are no further questions, we'll get it for this time. We'll turn the call back over to Phil and Jeffrey for closing remarks.

Thank you. In closing, I want to thank all our team members for their ongoing commitment and their customer-centric focus on service during these challenging times. Their health and safety are a top priority, and we remain extremely vigilant to protect our global team from this horrible virus. For the most part, our corporate team is continuing to work remotely as much as possible, though we remain committed to gradually and safely returning our team back to the office as conditions permit. As a result of everyone's contributions, our operations have continued largely uninterrupted, and I'm extremely proud of our company and all of our people. In summary, our investments are bearing fruit. We have reached an important inflection point with strong positive cash flow, solid earnings performance, and meaningful opportunities to enhance shareholder value in the dynamic $130 billion automotive aftermarket industry. Our metrics include a strong balance sheet, attractive price earnings, and return on invested capital ratio, a solid return on equity, and favorable cash flow. These economic metrics, combined with growth opportunities from our existing and new Hotpots product lines, as well as our fast-evolving diagnostic business, provide a meaningful path for growth and profitability in an industry with favorable tailwinds. We are proud of our more than 50-year history in the aftermarket industry, and all of us are committed to our vision of being the global leader for parts and solutions that move our world today and tomorrow. We appreciate your continued support, and thank you again for joining us for the call. We look forward to speaking with you when we host our fiscal 2021 third quarter conference call in February and at virtual investor conferences and hopefully in person sometime in the future. Thank you.

That concludes today's conference call. You may now disconnect. Thank you. Thank you.