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spk_0: the day and thank you for standing by welcome to the rbc bearing fiscal two thousand and twenty two third quarter conference call at the time operatives offense or analysts and only mode after the speakers presentation there will be a question and answer session to ask a question during the session you know the press dar one on your telephone please be advised to date conferences been recorded if you require any further assistance please press start and zero i would now like they held a conference over to your house today might come in with alpha i are please go ahead
spk_1: my thank you for joining us for rbc bearings fiscal two thousand and twenty two third quarter earnings conference call with the on a call today are doctor michael j artemis german president and chief executive officer daniel a persia on director vice president and chief operating officer and robert solvent vice president and chief financial officer before beginning today call let me remind you that some of the statements made today will be bored looking and are made under the private securities litigation reform act of making ninety five actual results may differ materially from those projected or implied due to a variety of factors were for you'd rbc bearings recent bylines with se si for a more detailed discussion of the risk that could impact the company's future operating results in financial condition dispatchers asked to describe in greater detail in the press release and under companies what in addition reconciliation between gap and non gaap financial information is included as part of the release and is available on the company's website would that have turned to call over the doctor heart
spk_2: okay they can like in a good morning tall and welcome
spk_1: this is our first quarterly report after completing acquisition of dodge industrial products division from as they around that area switzerland on november first two thousand twenty two
spk_2: too much of dies operational performance are included in this report the three months of financial drag was experienced as we work through the acquisition mechanics through october and acquired the company november first we are pleased and excited to welcome the dutch businesses and teams and to rbc bearings family and look forward to and can fully visualize a long fruitful and yet mutually beneficial relationship for our investors employees customers and suppliers the gods businesses materially strengthen our industrial offering and prince positions as very favorably relative to large and important base of customers with an exciting new platform of products and i'll talk more about this later
spk_1: in summary rbc bearing net sales for the third quarter of fiscal two thousand twenty two were two hundred and sixty seven million dollars versus a hundred and forty five point nine million for the same period last year
spk_2: an increase of eighty three percent dutch sales were hundred and ten million over the two month period for the third fiscal quarter of two thousand twenty one sales of industrial products represented sixty five percent of our net sales with aerospace products
spk_3: representing thirty five percent
spk_2: adjusted gross margin for the quarter was one hundred and three hundred point three million or thirty seven point six percent of net sale this compares to fifty six point four million or thirty eight point seven percent to the same period last year adjusted operating income was forty four point eight million sixteen point eight percent of net sales compared to last year's twenty seven point nine million and nineteen point one percent of net sales either darfur the with seventy one point four million or twenty six point seven percent of net sales compared to forty one million and twenty eight point one percent
spk_3: a seventy two point eight percent increase
spk_2: as others have reported and we concur the industrial demand
spk_3: today is to the roof
spk_2: while industrial sectors we serve are performing demand for industrial products in many cases exceeds our capacity mostly as a result of supply chain constraints particularly at the dutch businesses we had worked through these constraints with vigor over the past nine months and see improvements ahead that it's a problem that will linger and continue to bite our ankles
spk_3: at least for the first half the fiscal two thousand twenty three
spk_2: a sample of important sectors we serve with their strengths are mining sand and gravel attack and i have surface and subsurface
spk_3: the us shortages today drive said you know substantial demand here for our products construction a strong
spk_1: aggregate has a very strong outlet for eight is currently and eight in eighteen months we expect the increase in order flow from the infrastructure bill
spk_3: for highways and bridges which has been
spk_4: the typical the black
spk_3: equation and that them in that sector
spk_1: food and beverage proteins beef cattle turkey chicken canning continues to grow with increased demand for new crowd our new product offerings oil and gas is very strong and i'm sure everyone knows the story here that when you fill up your tank
spk_5: and warehousing
spk_2: it's a great rushed to build for film and centers to supply the last mile to support last mile strategies underway by amazon tractor supply home depot walmart target etc
spk_3: our products are well integrated into these into the so these new businesses
spk_2: semiconductor machinery very strong billions for new plants have fun have been announced by intel samsung can't taiwan semiconductor him many others
spk_1: in an industrial distribution as a result of of all the demand for the previous sectors mentioned continues to be strong and it in that sector is consolidating to summarize we're making as much as we can and if he had every site where we have induction industrial production turning out to aerospace and defense or third quarter of fiscal twenty two net sales were up by three point five percent led by aircraft oh oh yeah which is up by ten point five percent week defense sales held down the expansion these can be lobby quarter to quarter depending can build schedules and milestone achievements in our plants but we expect these to normalize by the end of year
spk_2: was also postponement of the seven eighty seven production the up and the oh yeah emirate capping it at the ten point five percent previously mentioned
spk_1: i backwards for the sector is up over eighty million dollars and we're planning for a major volume expansion beginning next year
spk_3: it's boeing and airbus expand build rates for their single our planes and dream or dreamliner production resumes import near frames in our line up or the seven thirty seven max seventy seven triple seven x the triple seven the a three twenty and the a three fifty
spk_1: where where visited often by the major plane builders to make sure that we have enough capacity in or plants to service the demand that is
spk_3: the head in the m seceding quarters
spk_6: so
spk_2: regarding our fourth quarter know we're expecting sales of between three hundred and forty and three hundred and fifty million dollars in total and i'll now turning crawl over to indiana and route for more details and the financial performance
spk_1: thank you mike expanding on gross margin and mike already covered gross margin for the third quarter of fiscal twenty twenty two with affected by a seven point zero million dollars inventory step up related to the dodge acquisition fourth quarter of fiscal twenty twenty two gross margin is expected to be affected by a six point eight million dollars in the a step up related to that acquisition as dna for the third quarter of fiscal twenty twenty two was forty three point two million compared to twenty five point seven million for the same period last year excluding twelve point zero million and costs for from the dodge business the increase is primarily associated with an increase in personnel costs year over year has percentage of net sales as cheney was sixteen point two percent for the third quarter of fiscal twenty twenty two compared to seventeen point six percent for the same period last year other operating expenses for the third quarter of fiscal twenty twenty two totaled thirty five point eight million compared to three point three nine for the same period last year
spk_5: for the third quarter of fiscal twenty twenty two other operating expenses included twenty three point five million of cost associated to dodge acquisition twelve point one million of imitation of intangible assets
spk_1: and zero point two million of other items other operating expense for the same period last year consisted mainly of two point six million of amortization of intangible assets zero point five million restructuring costs related items and zero point two million of other costs operating income was fourteen point four million for the third quarter of fiscal twenty twenty two compared operating income of twenty six point five million for the same period of fiscal twenty twenty one and adjusted basis operating income would have been forty four point eight million for the third quarter of fiscal twenty twenty two compared to adjusted operating income of twenty seven point nine million for the third quarter of
spk_2: school twenty twenty one
spk_1: other not operating expense was extensive one point four million for the third quarter of fiscal twenty twenty two compared to income of zero point one million for the same period last year the quarter of fiscal twenty twenty two other non operating expenses were comprised of zero point nine million of charges associated with the elimination of a domestic depth is hillary zero point four million of post retirement benefit costs and zero point one million of of other items for the third quarter of fiscal twenty twenty one other not operating income was comprised of zero point five million of gains a marketable securities partially offset by zero point two million a foreign exchange loss in zero point two million of other items for the third quarter of fiscal twenty twenty two the company reported a net loss at zero point one million compared to net income of twenty one point six million for the same period last year on an adjusted basis net income was twenty six point one million for the third quarter of fiscal twenty twenty two compared to twenty two point seven million for the same period last year net loss available to common stock holders for the third quarter of fiscal twenty twenty two was five negative five point eight million compared to net income of twenty one point six million for the same period last year on an adjusted basis than income available the common stock holders a third quarter of fiscal twenty twenty two was twenty point three million compared to twenty two point seven million for the same period last year adjusted cash net income available to the common stock holders for the third quarter of fiscal twenty twenty two was forty two point two million compared to thirty three point nine million for the same period last year diluted earnings per share with negative twenty cents per share for the third quarter of fiscal twenty twenty two compared to eighty six cents per share for the same period last year on an adjusted basis that looted dps for the third quarter of fiscal twenty twenty two or seventy cents per share compared to adjusted allergy the as of ninety cents per share for the same period last year talib cassie vs was an adjusted dollar forty six per share for the third quarter of fiscal two thousand twenty two compared to the dollar thirty five per share for the same period last year adjusted cash net income and adjusted cash earnings per share exclude noncash expenses for depreciation and amortization of kicks in intangible assets stock compensation in amortization of deferred financing fees none of their income tax impact we believe that the dusty cash net income and adjusted tas earnings per share useful in a so singer our financial performance by excluding items that do not affect the cash available to common stock holders turning the cash flow the company generated forty point zero million in cash from operating activities for the third quarter of fiscal twenty twenty two compared to thirty six point one million for the same period last year and one hundred thirty three point four million in cash from operating activities for the nine month period fiscal twenty twenty two compared to one hundred and ten point six million for this
spk_7: a nine month period last year
spk_1: capital expenditures were fourteen point nine million for the third quarter of fiscal twenty twenty two compared to two point eight million for the same period last year approximate approximately six point two million of capital spending this quarter was related to the dodge acquisition
spk_2: and that summit in they were submitted posts causing purchase price adjustment costs
spk_1: total that as of january first two twenty two was one billion seven hundred ninety million and cash on hand was two hundred and fifty five point five million i would now like to turn the call back to the operator for the question and answer session
spk_0: thank you if you have a question at that time since passed star than one on your touched on tell us on it's your question has been ancillary was can lose yourself in the queue please press the pound key and i first question comes online as peacekeepers key west elm back to global your line as often please go ahead
spk_8: yeah you mind as well
spk_9: mike i admit that will be did you say god gives you the hundred million in sales in the corner or one ten i miss that
spk_10: it was one ten winter one time okay how okay
spk_9: it and can you give us what they contribute in in terms of backlogs you could back on was subsequently pretty pretty meaningfully
spk_11: it was about fifty million
spk_8: becoming a guy a guy on so did you did your organic industrial sales rise because it is enough zelda giving going great guns where did he have any issues on that slow your organic industrial fails them off
spk_2: no i'm in organic industrial sales or or up every everything's up
spk_1: yeah like gonna see industrial business was was opposed to twenty six percent
spk_12: kind of guy
spk_13: i'll look at that ah mike so when we ask one more there there's a kind of a perception of their i think in the broad market that your eyes and pm eyes and of diplo sixteen of maybe lot of a gross girl their combined with inflation rising yeah you're not it it sounds like me you're not seeing any kind of a growth scare in your industry
spk_1: market you're talking about adding capacity and and
spk_10: the now fell the you have some some visibility that as well that that a fair characterization
spk_2: well as you know i think we were young we we have have the capacity to nice to meet demand if we could get the supply chain to to support us with the with the materials we need to take to execute it right now the the an accidental a bit out of balance in them so although all the work is going into
spk_1: you know
spk_2: fixing that their supply chain problem and and everybody has their problem sir
spk_11: if so you know as i've listened to the other conference calls or else they're all talking about it
spk_10: and we we have a clue
spk_9: yeah mocha understood it though i
spk_1: maybe one for robs the so this is the segmentation going for is gonna be is can be aerospace and industrial and oh really good kind of a you now the historic for you know a point where you know up twenty one percent for those for the new segmentation you'll see in the queue that comes out this afternoon and nine month period year over
spk_10: year for be aerospace defense forces industrial and then he did ya that a lucky down the line as you'd expect and then a year and you'll see the full twelve month picture
spk_0: okay okay okay they've got it
spk_14: thank you and i next question cousin line of his team will make with morgan stanley carolina's open please go ahead
spk_15: he guys good morning
spk_1: putting and me
spk_2: congratulations and closing on a dodge deal upon can you provide an update in terms of how integration is going so far i know it's a little bit early here but what are you most focus on in the near term ah that we should watch out for and has or it is is there anything unexpected the has come up so far well i would you know there's always the unexpected lived with her
spk_16: with regard to a acquisition
spk_2: and i would say the unexpected here is not has been material it's just been sort of fun
spk_3: not normal to to love
spk_1: to changes in in the in origin so on
spk_2: i iraq i i think i think one of the one of the things that we've had to deal with in the year
spk_17: in the acquisition is that the
spk_2: they they basically a move their entire corporate headquarters to another site i'm sort of in december and and and into january and they're still sort of are settling out that site today so you know that's that's not a normal thing that we we you know
spk_15: experience with with an acquisition and critically one of the size so that was some that was a little bit challenging you know i think also the yeah just getting
spk_1: come our computer systems in place in the currently we ever and agreement with a bb to support us with their computer systems until ours are in place and so that's that's taking a lot of from a lot of of focus and and effort in and be to use in the and or is it will we're we're working through it in it's it's making the progress that should make think that that have full color and then i'm thinking and that's provided of ah revenue outlook for next quarter has we think about the gross margin makes their because you know you've got your volume makes that we've also got some the acquisition arm noise how should i think about the that normalized level of course my
spk_15: john so i think for next causes damn for the poor for the fourth quarter we should expect to see gross margins be at least one percent better than what we experienced and que three and then i expect to see that again in in their first quarter of the following year but will be ah to give you more color on that on que one and cute to
spk_2: to up next year once we get on the conference call at the end of the year but i just keep in mind that for dodge it's two months in there and like rbc it's the to worse months of the year raider was no hepburn december which is packed full of holidays and the least amount of production days as the and and just to are confirmed said that the one percentage point increase in gross margin sequentially next quarter vs this quarter right that's not a year the your number yes okay great and then if i could see than one more on what do you guys seeing from my supply chain and inflation standpoint on what are you seeing in terms of are expected price increases and how are you able to or to what degree are you able to pass it to your customers
spk_1: well are you know that the supply chain
spk_15: four november and december on
spk_2: kicked dodge right in the shin and erm so it that that that impacted them their gross margins no i don't think anybody expected to see what we saw in them but it it was what it was and wheatley rectify the situation jailer
spk_3: while sookie goes up provide a little bit more color in terms of what you had to do to rectify that and you know what gives you the confidence of out one percentage point gross margin increase next quarter because it's a pretty meaningful i jump especially with the when you mentioned well i'm the only would we we did a few things what are the things we did was
spk_2: increase prices
spk_15: and the next thing we did was
spk_0: do some account management the them
spk_1: the
spk_18: would serve we thought
spk_19: could lead to significant improvements
spk_1: great think that i'll pass off the the next person i appreciate the time guys thank you and our next question kushner line of channel richie with goldman sachs your line of open please go ahead thanks they're good morning everyone
spk_2: you know
spk_1: he the maybe this that and i give it simpler an arrow ha trends as quarter i'm curious like have had a had a your emerald business trend this quarter and then he really give us a little bit more insight on the defense business but you guys call that added being a little bit weaker and yeah
spk_2: like we're hearing from from from severe company to recover yeah that us defense is probably going to be a little bit weaker but throughout twenty twenties when a guy that be out album okay so ago was your first question
spk_1: how is really about the arrow aftermarket emerald business and how to how that isn't that it's got a while we we don't you know we don't have much business in the early aftermarket the the arab aftermarket that we do have
spk_2: is doing quite well in so that that that businesses is up in the and
spk_1: and approaching pre pre pandemic levels isn't there yet
spk_3: but we can see it getting there
spk_19: it's do is doing very well a lot of our our called what they call after market is really it really aircraft distribution and that aircraft distribution is through his ears
spk_1: both aftermarket and also the aircraft distribution supplies wall
spk_2: and maybe not so small hum
spk_1: sub contractors to the major builders
spk_2: and so that they're gonna wax and wane with with build rates
spk_1: got it that that makes sense and what about on the defensive i'd is the commentary run us defense oh ya that the feds business here it would you know we have we have pockets of weakness in pockets of great strength
spk_19: and i'm
spk_2: and normally they were we have to and in the where we have pockets of great strength we have very complex products that are are not easy to make and that's why they come to us to make them
spk_1: and sometimes they don't go out the door when they're supposed to go out the door or into our plan and that's what happened in the quarter and we expect to rectify a good part of that in the and in the fourth floor planet okay that's that's helpful in many one one laugh when the me on the a being being an then the new person on the block of bring you guys that i'm just curious if in terms of the disclosure for them and and now that you've got you know industrial an arrow out yeah
spk_19: much bigger businesses like it is there any thought around providing a little bit more detail been hilarity around like the margin the tennessee as a defeat your kind of like the knicks impact going forward
spk_0: the little bit easier
spk_1: well i guess if you got a guarantee our competition wouldn't read that report we would be happy to give it the of it yeah it's an hour it sat in as it's forty three confidential
spk_20: yeah night we guarantee that i'm i'm sure they'd be interested in it
spk_1: you will we get within the segment you know for know you'll get the definition of the aerospace defense vs industrial and we will have the gross margins reach a segment said you'd expect belgian they take out of that not thank you and again ladies and gentlemen as he has a question at this time please press start than one and our next question comes from the line of michael steamily with trust security carolina south and please go ahead i hate good morning hours thanks for a kitten the questions i get one first what it looks like looking at the segment level data ah for industrial on arrow on the trailing basis he made some adjustments to last year's number what what new data of bomb i get the industrial segment and in the aerospace if the biggest company moved to move microsd memory business by the marine businesses historically class climate in industrial but the defence ah products so it was moved over with aerospace and defense
spk_10: okay got it
spk_1: okay that makes sense and then or are you guys planning to give us any more detail on you know our ongoing costs here for modeling purpose i mean i enter your had that the transaction costs you spelled out the amortization but but the have an expectation of of what we can expect for dog gration cause you know that the for sort of amortization were there any any other fair about each step up your could begin to plan to disclose that just that the car help us with modeling your yet as we mentioned earlier elegant and about another six point eight million in the step of amortization of the him and tory i cannot come out in the next quarter you know we've we've incurred i would say that the majority of the one time acquisition cost there will still be you know it's a half ninety nine of additional costs and and the fourth quarter and a one time cost there and an idiot say costs reply expecting another four and a half million next quarter and those you know abridged out over the twelve months after the acquisition close date of eleven one and are slowly fall off so i'm more colored offer on the next call the depreciation a real time strategy as hundred and ten million nets rights the depreciation amateurs asians going to be just hundred million
spk_0: next quarter again
spk_21: total okay got it got a bomb and are you guys you know what would you downstairs you talked about seventy eight dollar you know he p s range i guess cash gps i guess i'd never seen anybody add back depreciation and if i get an apples to apples i mean you guys paid seven dollars and fifteen cents and in fiscal twenty adding back depreciation adding backstop comp i mean it seems like that that seventy eight you know that it you know again heading back appreciation you trying to get a cash cap there are cash number but it probably should the doctor cat backs
spk_2: almost seems like it's a free cash for number i mean what what's the that and i've just never seen that before just wondering what the i thought process there was
spk_1: it's just started it is dan it's just our view of catchy yeah so just a car net income available to shareholders and we didn't have thought these noncash items tax effect it won't be the as gps number so we define it in the press release we gave you a breakdown exactly how it's
spk_2: calculated and it's just a way that so we're measure and our performance on our cash gps number thank you enter next question comes on line estes park here with keeping capital markets yeah mine as often please go ahead a morning guys
spk_1: i got on the call little late so hopefully as a redundant but drilling twelve month revenue for dodge was around six hundred and twenty million if i'm remembering right
spk_2: i think that's what we basically track to this quarter for the for the to my contribution how should we think about organic growth on that trailing twelve month base are trailing quarter based in for q and how does that compare to roll organic for industrial oh well
spk_1: i think you know i think they're organic growth is to some some
spk_3: extent muted
spk_21: by supply chain
spk_2: and there are good at growth could be
spk_22: sort of were a roles organic growth is
spk_2: we don't have the kind of supply chain issues that they have for were a little bit more vertically integrated and as a result of that we have some of that so you know that there
spk_23: they're they're of organic growth will certainly be up double digits and probably be in a low double digits that it could be it could be better than adequate
spk_24: if they can get on the other side of supply chain issues
spk_23: and did you say what you expect for your you know the the legacy business for lack of better term will do and organic growth for for por que
spk_1: are we didn't say it but
spk_2: would you like to ah well yeah it's gonna be in the in the upper arm single digits i that will modeling
spk_21: so so dodge will actually do better a i thought you said low double digit there and you're saying up or single digits for your the legacy business yeah
spk_2: okay
spk_23: i'm
spk_2: get our and and how are you seeing growth forests and say have so much after market exposure what they're after market growth rate versus oh iam is that is that growing fast faster for them
spk_21: you know it's it's sort of an eighty twenty three angler eighty percent of their businesses that is where they call after marketer or work
spk_23: distribution market come so it's sell it so biased towards that a percentage of the twenty percent doesn't them
spk_25: doesn't create much sway and in the certainly the
spk_2: that the difficulty right now is surfacing that eighty percent and servicing it well right and in i know in general dodge as good margins but are there any product lines you need to reprice or exit there now that you've gotten and to look at the at the whole portfolio it was short answer there is yes
spk_21: is that a sizable portion of the portfolio or is it is that pretty small it's you know
spk_23: it's not small but it's it's the if you know relative the size of that is not materially either
spk_1: right and now that you've you've been through the factories more in detail of dc opportunities for automation a robotics to drive some efficiency or productivity or are they pretty well optimized in terms that kind of historical callbacks for
spk_26: for programs
spk_1: i'm there they're there you know for for the most part i would say you know
spk_21: no seventy five percent of their factories are pretty pretty pretty optimized there's still twenty five percent that that
spk_0: that that can do better and or that that basically they just haven't gotten do
spk_13: you know them and they've been working through at one factory to time so by first there's still some upside there
spk_8: ah gotcha and and just last one i know there's always a lot of charges and adjustments when you're integrating a big acquisition
spk_9: but just i guess you know supply chain notwithstanding when would you expect that we start to see what we can consider more normal free cash flow from the complete portfolio
spk_1: i would say says we we enter into the first quarter next year you'll start to see it i think to for be pretty clean to yeah i'm so i think you should her f c pretty clean slate and coupons and class and can you remind us what do you expect the entire portfolio a run in terms of a free cash flow margin or just what you convert free cash flow from revenue
spk_7: there we haven't given that a little be haven't given that number but the i
spk_1: we definitely well at the and the name of we're talking about this we're twenty twenty three and we ever a full year dodge bacon our forecast in a full year of rbc dayton or i get thanks
spk_10: thank you and we have a silent question from the line of pete it's keep us olympic global your line has often please go ahead
spk_0: yeah just a couple other marlin questions on the the inventory stop up the he gave the third quarter and the fourth quarter that that that is day and income same and for you know kind of that mid term palmer gonna time horizon from that that six seven i have of a level milk that albeit after the fourth quarter we should be all set without one
spk_15: oh god that that's gone in others in terms of yeah you guys put out that adjusted ebitda margin goal of the my mother was in the mid thirties i believe can he keep the have a sense of what the components of that or is it you know half and half gross margin as dna improvements are and any maybe could walk as your little bit of i intend to reach those goals
spk_2: i don't have that exact match the tiber of i can tell use that as ghana looted you were expecting steady strong gross margin improvement in a the coming quarters which is going to you know bleed right into that and ng you know the the as dna you can see the consolidated as teenagers quarter at sixteen percent has we start you kill another full quarter of of dodge in their the the percentage of as shitty as years percentage of sales will continue to doubly down to that even a line and really benefit of that number so on that kind of directional will start to take us where we want to get him and p i think a recurrence also the for you know the the synergies out we were anticipating on the business and i'd say i was pie broken down sixty forty sixty impact in sales cogs and forty and packed in
spk_1: as je ne
spk_2: and all those programs which started that's only been two months and right so ah but i think we're we're more than well on target for what we thought fiscal year twenty twenty three would be anarcho are synergies so i think our api be it ahead of the game for while we anticipated for the first year on synergies and double what we put more and that i'm on the fourth quarter linda we have thought more from numbers and and would talk about grand prix good god thank you thank you and i next question comes from a line and pristinely back with mike and stanley carolina open them please go ahead he guys i think for i taking my follow up on on my girl are you mentioned in my my question about unexpected things that you found a dodge i guess like were saw the supply chain issued a inflation issue being solved the already arm and now you guys have had time to look at all the factories thoroughly in the is there reason to change or is there a change in he in terms of your expected run rate synergy of seventy to one hundred million annually by the fifth year of the acquisition close you see potential upside to that number or or downside to that number from what you've seen so far oh well you know what will where we we got through the factories and in the and got a sense of of rome you know
spk_1: where the where the where the easy synergies are and or so ago when a line those up first
spk_2: the i think the consideration here is if we decide if we decide to use traditional rbc classic manufacturing capacity what it's like is the best use of their capacity is it is it to love is it to improve the gross margin which is there some very obvious things that we could we could do if we embarked upon that path
spk_15: the that we identified and and and i think that i think they'd be another alternative an early consideration is there says some growth opportunities in some of their products
spk_2: if they had a more cost effective way of getting those products to market the right now those products are somewhat throttled state based on no cost price pressure
spk_15: and and so on
spk_2: he
spk_27: they
spk_0: promote them lightly
spk_1: i'm and in there's there's a lot of upside in the marketplace if is gone if those products could be manufactured with a better class picture so yeah i mean if you do we want to do we want to chase the expansion in gross margin or he wanted tasty expanse in sales because once you once you commit to one of those paths the on deacon it to the other one so what we're trying to return to make sure that we use we we make of best decision possible on
spk_2: on what we can do to improve the operating results of the entire company
spk_28: i see i mean does not have that right is either through the gross margin expansion or revenue growth you get to get some of these energies either through costs energy the revenue synergies so my my ah my neck question would be on net basis is that seventy to one hundred
spk_1: doable or is it looking like he could do a lot better
spk_2: ah well you know we're
spk_28: if i say we're going to do a lot better gonna make it two hundred
spk_3: i live coverage you go for a long time he always lead expectation sell i'm just trying to find out where that happy medium as but ah our enemy be too early and all other you know you can't hurt it can't hurt to try and ass great effort at yeah i think let's let's say let's leave the goalposts you know where they are right now and and he always was we're still working on the first place
spk_11: great thanks guys
spk_3: thanks
spk_29: thank you on her next follow up question cousin of line of michael c or moly with a securities your line as open please go ahead
spk_0: hey guys just them to vote more on the supply chain and know and he talked about them
spk_2: from the show yet dodge you know that the two hundred million of component costs per year has as any other tightness and bottlenecks and supply chain give you the opportunity to accelerate you know it sounded like initial your intellect contract sort of run their course but you know presumably with all suppliers dealing with extended be times and higher prices have you thought about accelerating the insourcing of those components well it on the major the major
spk_0: issue it issues are are anything that we produce emily on they'll make steel and right now the industry has as a a real problem getting stale and so you know everywhere and advocacy and to a lesser to them guys were movingly times out because
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