MPAA
#Well, again, it is an unknown.
<UNK>, I would love to come out and say we're going to grow 20% nonstop.
But I think over long periods of time, when you look at the annualized and I am comfortable that that can happen, quarter-to-quarter is a little more tricky.
We are lapping now some significant new business we got last year.
So that factors into it.
And then the timing of the orders of the customers.
So, yes, I think it is conservative.
We prefer to be conservative than more aggressive.
Again, I think that the outlook as we go down through the next fiscal year, we will continue to grow this business pretty significantly.
And we would not be targeting under 20% growth on an annualized basis.
The quarters are going to fluctuate up and down.
Again, I am not implying that we have a weak quarter on our hands.
I am trying to be conservative.
I don't want people to get ahead of their skis.
I think we're going to have a strong quarter, but let's see.
Yes.
I think if you looked ---+ if you look at our internal discussions of where we need to be as a company, we think we are in the near-term, over the next couple of years, a 20% growth company.
But it is not going to all come in one quarter.
It is not going to all come organically.
There is going to be all sorts of different things happening.
We have a lot of opportunities, and we are just managing through capital allocation and infrastructure to deal with growth.
And we feel like the industry, again, there is $106 billion, at least, of opportunity out there.
And we are trailing 12 months ---+ I am not sure what our revenue is, but [$360 million] or something.
[$370 million].
[$370 million] trailing 12 months.
We are a baby in terms of the opportunities this Company is going to have.
And as long as we keep our service levels up and our integrity up in dealing with the customers with the right product quality, we are going to see this growth for a number of years.
Yes.
I think it's a similar profile to a master cylinder, is probably somewhere between master cylinders and wheel hubs, it is a great product line.
We already have customers signed up for it.
And I think it is a nice margin product line as well.
So, we are excited.
We think the return on capital is going to be good there.
We have a number of other product lines that are being evaluated for launch.
So, we think there is a nice pipeline there.
And we think we have got a nice acquisition pipeline and we think our organic growth from new customer share is going to be strong.
And we think our organic growth from new customer share in all categories will be strong.
So, we have invested a little bit, <UNK>, in some incremental G&A, I think, to support our acquisitions group.
We have some new technology that we are working on that will help with our backbone and our customer support.
And so our marketing backbone has been increased.
So we have got a little bit higher G&A expenses, but it is all because we anticipate the growth coming in the future.
I think it is going to be a little bit higher.
Again, we have added and expanded the marketing department significantly.
We have got new R&D efforts that will go along with new product launches, and we have got a full-time dedicated Acquisitions Group that are working as well.
And then we have got a full-time dedicated new Products Group.
So I think we are sort of at levels now where I think you will see it stable.
We have ramped it up a little over the last 120 days.
But it's ---+ I think it is now at a rate that is a stable rate to be able to handle the next wave of growth that we expect.
Yes.
I think we get into the end of all that, thank God.
And yes, I would expect that to go down significantly.
In terms of legal expense, you mean.
Go ahead, <UNK>.
This is <UNK>.
So in our reconciliation tables, we actually back out those litigation expenses.
So, in the past, we have been averaging a few-million dollars per quarter.
This past December quarter, it was [a little under $109,000].
So we are already seeing it coming down.
But we do adjust for that in the reconciliation tables already.
Yes.
So that is ---+ I mean, if you are looking at it, <UNK>, there is always going to be some legal, but obviously you are picking up $2 million, $2.5 million a quarter, at least, in opportunity.
You know, the ---+ I think, Jim, you may be getting a little ahead of ourselves.
I mean, I think we are going to see growth in all of our product lines this year.
We certainly feel like our momentum on picking up new market share is strong, and we think that the organic growth in [pesos] we have will continue on.
So, I think that you are going to see a nice organic growth, whether that is going to be a third of it, a half of it, or 1% or 2%, I don't really know.
The acquisition front is much more hard to forecast what that percentage will be.
I mean, there are acquisitions of companies in the hundreds of millions of dollars and we are looking at acquisitions of companies in the $5 million.
You know, so ---+ which have strategic opportunity for us going forward.
So until a deal happens, we don't know.
And the new product launches will continue to be strong.
I mean, they gain momentum as they get launched.
Generally, we launch with one or two customers exclusively in the beginning and then several leading them out.
But I can tell you that, on the acquisition front, on the organic front, and on the new product front, there is lots of opportunities right now for the Company.
We are busy sorting through what the right things are to do and the right capital allocation, and being cautious that we manage the growth in a profitable manner.
So, I wish I could give you more granular data.
Maybe next quarter we can focus on that.
But overall, lots of momentum in all of the areas.
Yes.
Well, on the first part of that question, I think there is a new owner.
It is still early to tell what they are going to do or not going to do.
So nothing I could really talk about there.
On the second part, I mean Pep Boys was acquired.
There is a new owner there.
We do supply 100% of Pep Boys.
We think we have a good program, have been a great supplier to Pep Boys for a lot of years.
What they do there is, I think, somewhat of a mystery to the industry right now.
You have got a company that is focused on the professional installer business now entering into the retail arena.
I think they have announced that they intend to keep the retailers as well as the commercial business ---+ the bays.
So, we wait to see.
I think that the owner is now financially strong.
They have, it looks like, a good management team in place and, hopefully, they will continue to appreciate the great services we do and we'll have some more growth opportunity with them.
Sure.
So it is going to be working capital.
It is going to be mostly inventory growth ---+ to fund the growth.
Yes.
We have a ---+ look, we have a lot of new business coming in, and we are building inventory and we are busy.
And so, the cash flow is deployed really in growth, other than the legal settlement that we had, which took some cash and we recovered some of that.
Any weakness in what business.
Not at all.
No.
Our business is fundamentally strong.
I mean, it could be stronger if the weather were more extreme, but it is strong either way.
All of the elements that are out there right now, whether it be potential recessionary ---+ pullback in the growth of the economy or recessionary economy, fundamentally lead to good opportunity for us.
Every indication are out there in our marketplace that people are continuing to keep their cars longer.
As you keep those cars longer, the replacement rates go up.
The average complexity of our parts continues to go up, so that average price point over time will go up.
The interest rate outlook, we think, we are comfortable with.
The new car sales, it doesn't really matter.
They can sell a lot of cars and they don't have to sell a lot of cars.
All we care about is that, fundamentally, the car population continues to grow and that is what is happening regardless.
Currency translation is all favorable for us.
Our footprint is favorable.
I mean, we are doing business in low-margin countries.
You know, our fundamentals are exceptional.
And whether ---+ again, I don't want to be too euphoric, and that is why I am trying to keep a lid on it, but our fundamentals are all good.
We think, as an entity ---+ we have just come off our planning meetings; as an entity, we have lots and lots of opportunity to really grow this business over the next couple of years to be a significant growth company.
No.
we don't ---+ no.
Not that I am aware.
I mean, generally, it is the opposite.
We have excellent relationships with our customers.
(multiple speakers) And our suppliers for that matter, which is equally as important.
So I mean, again, I said the other day and I ---+ and certainly the markets do whatever they do and that is nothing we control.
But our fundamental business is, on all fronts, positive.
I mean, there is always challenges with the business, but our business is fundamentally good.
<UNK>, do you want to comment on that.
So, historically, Q4 has been a little bit higher, but I think we are seeing ---+ it really depends on customer order patterns and timing of shipments.
Yes.
Q4 ---+ again, there is no reason why Q4 won't be strong.
I do think weather is affecting it a little bit, but ---+
No.
So it just ---+ it depends on the patents and replenishment orders.
And there's just so many variables.
The problem that we have in terms of giving guidance is that one order, as a percentage of the potential revenue for a quarter, could significantly affect a quarter.
If that ships on the first day of the next quarter or two days earlier, in this quarter, you have a variance in what your cut-off is.
So, it is very difficult until you get much more deep into the quarter.
Now, back orders and all the update orders, and all of the activity that are happening is positive right now.
We thought a $380 million year would be a fantastic year, and certainly we feel that that is going to happen and hopefully we will do better.
Thank you.
I'll take it ---+ it's <UNK>.
And, first of all, I want to thank everybody for the continued support.
I know the market conditions and the public markets are tough at this point, but, as an entity, we continue to focus on our knitting, which is doing a good job for our customers and supplying high-quality product on time.
And we look forward to updating where we are as we go down the road.
We look forward to speaking with you when we host our next conference call, which will be our year-end fiscal 2016 conference call sometime in June, and at various conferences in the interim.
And we thank you again for your support and we appreciate your interest.
