Core Molding Technologies (NYSEMKT:CMT) reported its financial results for the third quarter of fiscal 2024 on October 30, 2024. The company, led by President and CEO Dave Duvall and EVP and CFO John Zimmer, announced a sales figure of $73 million with an adjusted EBITDA of $7.5 million, marking a 10.3% margin of sales. Despite a challenging macroeconomic environment, Core Molding delivered a net income of $3.2 million, or $0.36 per diluted share. The company also highlighted a robust year-to-date free cash flow that exceeded $23 million and total liquidity of $92.3 million.
Key Takeaways
- Core Molding Technologies reported a decline in product sales by 11.9% and total net sales by 15.8% year-over-year.
- The company appointed Alex Bantz as Chief Commercial Officer to drive strategic sales and marketing initiatives.
- Third-quarter gross margin slightly decreased to 16.9%, while SG&A expenses were reduced to $8.7 million.
- The company repurchased 112,000 shares at an average price of $17.62 under its share buyback program.
- Core Molding anticipates a full-year sales decrease of about 17% and expects gross margins to remain within the 17% to 19% range.
Company Outlook
- Core Molding is focusing on enhancing customer relationships and expanding its product offerings, particularly in high-value solutions.
- The company aims to increase wallet share with a strategic focus on cross-selling thermoplastics and thermosets.
- Core Molding's "Invest for Growth" strategy includes sales force development, technological enhancement, and potential acquisitions.
Bearish Highlights
- The company faced a decline in demand in the truck market and is managing the transition to new Volvo (OTC:VLVLY) models, which may impact sales through 2025.
- Core Molding is experiencing a slower-than-anticipated transition with Volvo's commonizing part numbers, with the phase-out expected to continue into the next year.
Bullish Highlights
- Core Molding secured over $45 million in new business, with a pipeline exceeding $270 million.
- The company is breaking into new markets, such as EV bus battery trays and medical equipment, and is optimizing costs through technical advancements.
- Core Molding has stabilized its workforce with an employee turnover rate of less than 9% and has been recognized for operational improvements.
Misses
- Core Molding reported a decrease in sales and net income compared to the previous year, primarily due to reduced demand in the truck market.
Q&A Highlights
- Dave Duvall discussed a significant win in the healthcare sector, with a contract for a hospital bed support structure that is expected to enhance design and reduce costs.
- John Zimmer indicated that the benefits from recent cost management actions would materialize in the current quarter, with full impact expected in the fourth quarter.
- The company is in the midst of transitioning to a new program with Volvo, with further updates to be provided in the fourth quarter results report in March.
Core Molding Technologies continues to navigate a complex macroeconomic landscape while maintaining a strategic focus on growth and cost optimization. With significant new business wins and a cautious optimism from its clients, the company is positioning itself for long-term success despite near-term challenges. Core Molding Technologies will participate in the Southwest IDEAS Conference later this month, anticipating further engagement with industry analysts and investors.
InvestingPro Insights
Core Molding Technologies' recent financial results reflect a company navigating through challenging market conditions while maintaining a focus on operational efficiency and strategic growth. According to InvestingPro data, the company's revenue for the last twelve months as of Q3 2024 stood at $313.66 million, with a revenue decline of 15.32% over the same period. This aligns with the company's reported decrease in sales and the anticipated full-year sales decline of about 17%.
Despite the revenue challenges, Core Molding Technologies has maintained profitability. InvestingPro Tips highlight that the company has been profitable over the last twelve months and analysts predict it will remain profitable this year. This is consistent with the reported net income of $3.2 million for the third quarter.
The company's financial health appears stable, with InvestingPro Tips indicating that liquid assets exceed short-term obligations and the company operates with a moderate level of debt. This financial stability is reflected in Core Molding's robust year-to-date free cash flow and strong liquidity position, as mentioned in their earnings report.
While the company faces headwinds in the truck market and is managing transitions with key clients like Volvo, its strategic focus on expanding into new markets such as EV bus battery trays and medical equipment aligns with efforts to diversify and grow. The InvestingPro Tip noting a strong return over the last five years suggests that the company has a track record of creating value for shareholders, which may provide confidence in its current growth strategies.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights that could provide a deeper understanding of Core Molding Technologies' financial position and future prospects.
Full transcript - Core Molding Technologies Inc (NYSE:CMT) Q3 2024:
Operator: Good morning, everyone. Welcome to the Core Molding Technologies Third Quarter Fiscal 2024 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] As a reminder, this conference call is being recorded. I will now turn the call over to Sandy Martin, Three Part Advisors. Please go ahead.
Sandy Martin: Thank you, operator, and good morning, everyone. We appreciate you joining us for the Core Molding Technologies conference call to review third quarter results for 2024. Joining me on the call today are the company's President and CEO, Dave Duvall; and EVP and CFO, John Zimmer. This call is being webcast and can be accessed through coremt.com via an audio link on the Investor Relations’ Events and Presentations page. Today's conference call, including the Q&A session will be recorded. Please be advised that any time sensitive information may no longer be accurate as of the date of any replay or transcript reading. I would also like to remind you that the statements made in today's discussion that are not historical facts, including statements or expectations or future events or future financial performance are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. By their nature, forward-looking statements are uncertain and outside of the company's control. Actual results may differ materially from those expressed or implied. Please refer to today's earnings press release for our disclosures on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Core Molding Technologies assumes no obligation to publicly update or revise any forward-looking statements. Management will refer to non-GAAP measures, including adjusted EPS, adjusted EBITDA, debt-to-trailing 12 months EBITDA ratio, free cash flow and return on capital employed. Reconciliations to the nearest GAAP measures can be found at the end of our earnings release. Finally, this release has been submitted to the SEC on Form 8-K. Now I would like to turn the call over to the company's President and CEO, Dave Duvall.
Dave Duvall: Thank you, Sandy, and thank you all for joining to review our 2024 third quarter results. Before John and I summarize our third quarter results, I want to share some exciting updates on our Invest for Growth strategies. First, we announced on October 28 that Alex Bantz has joined the company as our new Chief Commercial Officer. We understand that strong capable leadership is fundamental to the successful execution of any strategy. And appointing Alex to this newly created role is an important step in our sales and marketing transformation of accelerating Core's revenue growth. Alex brings an impressive track record of over 25 years executing successful industrial sales and marketing programs. He is the ideal person to lead the charge based on its commercial sales expertise and long tenured roles at building relationships, driving revenue programs and aligning market strategies with a customer-centric approach. I want to quickly provide an update from last quarter on our participation in trade shows, customer lunch and learn events and sales engagement opportunities as we continue to make progress pursuing new end markets. We exhibited in our first Mexican composite trade show at Poliplast in Monterrey, Mexico, which I think is a demonstration of our strength of our Mexican team. We also attended the battery show in Detroit which is North America's largest and most comprehensive battery event. This event showcases emerging markets and technologies in the automotive, medical, aerospace, commercial and industrial applications. Turning to a summary of the third quarter's financial results. We continue to face macroeconomic headwinds in some of the industries we serve, but we continue to maintain our profitability. Our third quarter sales were $73 million, and we generated $7.5 million in adjusted EBITDA or 10.3% of sales, which contributed to a year-to-date free cash flow of over $23 million. Our net income was $3.2 million or $0.36 per diluted share. We continue to drive profitability and our entire organization is preparing for the next chapter of growth. We are investing cash in organic and inorganic growth as well as technical capabilities and manufacturing infrastructure. High return investments are possible based on our disciplined business execution over the last 24 months, which strengthened our balance sheet and generated higher cash flows on fewer sales dollars with more consistency and stability. Now I want to turn the call over to John to cover the financials in more detail.
John Zimmer: Thank you, Dave, and good morning, everyone. Our product sales and total net sales were down 11.9% and 15.8% respectively, for the third quarter compared to a year ago. Truck sales declines were as expected to lower demand and the start of the Volvo transition we have discussed on prior calls. The truck market is currently in a normal cyclical downturn, but is expected to transition to a cyclical upturn in the second half of 2025 and all of 2026, due to upcoming environmental regulation changes in 2027. As previously discussed, the Volvo transition has started and is impacting the second half of 2024. The majority of the transition will occur next year, which will negatively impact sales in 2025. We are currently quoting several new opportunities with Volvo, with one program we are currently bidding on launching as soon as early 2026. In other markets, power sports and building products continue to be impacted by macroeconomic pressures and post-COVID resets, while industrial and utilities are being negatively impacted by two customer in-sourcing – customers in-sourcing of certain products we were producing in 2023 as overflow molders. We are seeing some leveling off in the non-truck markets and believe that next year we will begin to see some rebound in these markets. Our third quarter gross margin was $12.3 million or 16.9% of sales compared to 17.6% in the year ago quarter. Gross margins on a year-to-date basis were 18.1%, which is within our long-term full year target range of 17% to 19%. As we have previously discussed, the majority of our cost of sales is variable and our ability to maintain our gross margins within our long-term range is based on how efficient we are reducing – are in reducing the variable costs in times of lower revenues. Our operational team has been out in front of the revenue slowdown and has done a great job reducing the variable costs in the past two quarters. As a result of their efforts and our ability to reduce raw material pricing, and achieve better customer pricing, we have been able to partially offset the 150 basis points of lost fixed cost leverage in the third quarter. SG&A expenses were $8.7 million compared to $9.4 million in the prior year, primarily due to lower bonuses, labor and benefit cost, offset by severance cost of $228,000 and $612,000 of unfavorable foreign currency translation. As we disclosed in our earnings release, we completed a fixed cost and SG&A reduction in force during the third quarter and is expected to generate annual savings of approximately $2.6 million moving forward. This rebaseline of course, fixed cost at our headquarters and plants were partially driven by the decrease in Volvo business, but also to better position our cost structure going forward when revenues begin to rebound. Operating income for the quarter was $3.6 million or 4.9% of sales compared to 6.8% of sales in the year ago period. Net interest income was $144,000 in the third quarter, which included $440,000 of interest income on cash balances. This was an improvement from $187,000 of net interest expense in the prior year quarter. Quarter's effective tax rate was 18.7%, comprising the weighted tax costs from the three tax jurisdictions where we operate. Our net income was $3.2 million or diluted EPS of $0.36 compared to $4.4 million or diluted EPS of $0.49 in the comparable year period. Our third quarter adjusted EBITDA was $7.4 million or 10.3% of sales compared to $9.8 million or 11.3% of sales in the prior year's quarter. Please see our earnings release for GAAP to non-GAAP reconciliation tables. Turning to the company's financial position. We ended the quarter with $42.3 million of cash and cash equivalents. Strong cash flows resulted from our ability to convert earnings to cash. The company's cash provided by operating activities increased by $9.2 million this quarter to $30.2 million for the first nine months of 2024, and year-to-date capital expenditures were $7 million. This resulted in strong 2024 free cash flows of $23.1 million through the third quarter of the year. We expect full year capital expenditures to be approximately $11 million to $13 million. As of September 30, 2024, total outstanding liquidity was $92.3 million, which included $42.3 million of cash plus $50 million available under the revolver and capital credit lines. The company's term debt was $22 million at the end of the quarter, and our debt-to-trailing 12-month EBITDA ratio continues to be less than 1x. We have optimized our working capital efficiencies, which netted $67.6 million on September 30. Our return on capital employed, a pretax return metric was 10.8% on a trailing 12-month basis. Excluding accumulated cash available for future investment, our return on capital employed was 14.4% which aligns with our long-term targets of 14% to 16%. Our capital allocation strategy remains consistent with prior guidance and includes investments in organic growth and infrastructure, share buybacks, acquisitions and debt repayment. We continue to be disciplined while not rush into an acquisition that is not strategic – a strategic fit or doesn't fit our financial hurdles. We also understand that both organic and inorganic growth for Core Molding will provide long-term growth, enterprise value expansion and strong cash flow generation. Under our previously announced share buyback plan, we purchased approximately 112,000 shares in the third quarter at an average price of $17.62 per share. We expect full year 2024 sales to be down approximately 17% compared to 2023, which is slightly lower than our previous projections of a full year net sales decrease of approximately 15%. The adjustment is primarily due to customer demand schedules changing during the less predictable upcoming holiday season. For the full year, we continue to forecast gross margins in the 17% to 19% range. As we have previously discussed on earlier calls this year, Volvo’s existing truck model transition began this quarter and will continue to pressure sales through 2025, with most significant impact expected in 2025. We are encouraged by Core’s fit on Volvo programs and continue to work hard to earn future programs at Volvo and with other customers. With that, I’d like to turn the call back over to Dave.
Dave Duvall: Thank you, John. We are developing new relationships and new industries, yet our surest way to meaningful growth is through working with our large customers to expand our product and process offerings. A key part of our strategy is to grow wallet share and continually develop the resources to solve customer problems with a high-value Core Molding solution. We want to continue to be first in the customers’ mind to industrialize their designs. We also want to take full advantage of our large portfolio processes and support customers with cost-saving opportunities. Cross-selling of thermoplastic and thermosets allows us to offer customers a unique and in many cases, lower cost overall solution with higher – as a higher value alternative. This is another cornerstone of our sales and marketing initiatives. We know that strengthening our sales and marketing resources and continually improving our customer-focused systems such as solutions and applications engineering are the next and final step of our business transformation. As we’ve stated, our must win battle is the development and integration of our front-end business processes to leverage the execution improvements we have made throughout all internal areas of our business. This is what we’ve discussed since the beginning of our business transformation four years ago. I thought it would go faster, but we did have some unprecedented times over the last four years with COVID, significant rate interest rate increases, supply chain shortages, rapid inflation, to name a few, not an excuse, just a fact. So I would like to take a few minutes to outline the business strategy we’ve been implementing from the beginning in 2019 to today. I hope this will put some more color around what we have achieved and where we’re going with the company. In 2019, when we started this transformation, Core lost $11.5 million in EBIT on $284 million in revenue. When I look at today, year-to-date Q3 2024, we generated $15.8 million in EBIT on $240 million in revenue. We improved our basic business performance by $27 million on $40 million less revenue. I say this because as we’ve consistently discussed, our focus up to this year has been internally focused on creating a strong team and business model that can execute and serve current customers better than the competition. A strong team operating with strong execution systems should always be a prerequisite for driving growth. We communicated this externally through our must-win battles of operational turnaround first and then the product line portfolio rationalization that we did after that. Our next step is investor growth to now leverage the execution engine that we have created, growing a profitable business that can serve the customer needs better than our competition and is a highly trusted supply partner to blue-chip companies is and always has been our strategy. Core produces complex large and ultra-large specific used composite parts. We are able to offer our customers unique manufactured solutions supported by our expertise and wide portfolio processes. Most of these are large programs working with large customers that are single source and do require a varying level of validation prior to product launch. This creates a business model with a revenue stream that is characterized by long-term programs, large complex single-source solutions and directly tied to the success of our large customers and their markets. The three steps in priority order of our five-year Invest for Growth strategy is directly linked to optimizing that business model. Number one, sales force development. We are investing in our sales function to be closer to our customers and improve our knowledge of the markets. We are focused on growing wallet share with our large customers and our wide portfolio processes. We are advancing our technology functions really further enhancing our expertise to solve customer problems and three, acquisitions and diversifications, expanding sales channels, complementary technology and resources and footprint expansion. So in 2022 and 2023, we experienced a surge in demand, partly fueled by the COVID bump, where limited travel led consumers to invest more in products across our key markets, power sports, truck, industrial. I’m incredibly proud of how our team rose to the occasion during this period, quickly ramping up production and seizing overflow business that others couldn’t manage. It was a remarkable demonstration of our capacity and capability. We do believe that the markets we serve are stabilizing to a more normal cyclicality and demand level. So far this year, we’ve secured over $45 million in new business and our pipeline is thriving with over $270 million in active opportunities. Currently, more than $100 million is in the final pipeline stage of negotiation. This reflects – we believe this reflects the cautious optimism among customers as they prepare for significant investments. We’re confident that we’re nearing the bottom of the market dip and there are promising signs as customers’ begin to accelerate program launches. Our competitive edge is more visible now than ever with some large competitors facing challenges, further expanding our opportunity pipeline. Our initial growth efforts and investments are already yielding wins, not only with existing customers but also in exciting new markets. We’re breaking into areas like EV bus battery trays, hospital bed frames in the medical industry and large turf care protection plates for construction, just to name a few. We’re thrilled about the possibilities in these emerging verticals and look forward to introducing even more products in the coming months. We also anticipate a peak in the truck market by 2026 with early signs emerging as soon as mid-2025. The Power Sports Industrial segment remains robust, and we see substantial opportunities with current customers to expand our offerings in both thermoplastic and thermoset solutions. As part of our Invest for Growth strategy, we’re actively rebalancing assets and optimizing costs for long-term success. Our technical advancements and infrastructure investments in Core sheet molding compound infrastructure have already cut annual costs by over $1 million. It’s a testament to the effectiveness of our improvements. This SMC initiative has allowed us to produce a more consistent, higher-quality product with a longer shelf life, leading to an additional $500,000 in savings across the organization. Importantly, this advance enables us to enhance our SMC formulations for external customers, opening doors to new revenue streams and material sales. I believe we’ve proven that we’re a team that follows through and executes, especially in challenging times, and our track record speaks for itself. Simply stated, we first invested in making Core a better place to work and grow your career, significantly improving our employee retention and stabilizing the business. Our employee turnover is now less than 9% annualized. We then completed a company-wide operational turnaround with major investments in capital and people to drive our ability to better meet customer demand and quality expectations. Success is demonstrated by being awarded the BRP (NASDAQ:DOOO) Gold Award and the PACCAR (NASDAQ:PCAR) 10 PPM award. We then rationalize our entire product line portfolio to capture a fair market value for the solutions we provide. The next step, where must-win battle is our Invest for Growth strategy. I’m confident that our Invest for Growth initiatives will be equally as successful and allow us to fully leverage the exceptional capabilities we built at Core Molding. This is where the true excitement begins. This is why we’ve done it all. Our momentum is growing with a strong pipeline of new opportunities in the truck market, including quotes for the major programs like Volvo. Increased customer engagement and our presence at trade shows are creating valuable connections across new industries. Our approach to transformational change has been pivotal in getting us to where we are today and it’s aspiring for everyone at Core Molding to witness the impact of our efforts. Our next step in this journey is Invest for Growth, and we’re fully committed to making this phase as successful as the last. I am grateful for the hard working collaborative team at Core and want to thank the entire team for embracing the significant change throughout our transformation and the successful execution of our must-win battle initiatives each year. I want to also thank our customers, shareholders and the Board for their continued support. Finally, we plan to participate in the upcoming Southwest IDEAS Conference in Dallas later this month. With that, I’d like to open the line for questions. Operator?
Operator: [Operator Instructions] Our first question will come from Chip Moore with Roth MKM. You may now go ahead.
Chip Moore: Hey, Dave and John, good morning. Thanks for taking the question. I wanted to ask about that – I think you said $100 million plus in your pipeline that’s moving further along. Maybe just expand on that sort of where that business lies in terms of mix and I assume your expected win rate there would be higher, but any thoughts.
Dave Duvall: Yes, for sure. And really, when we look at it, and we go through it relative to the team here, and the pipeline is somewhat inverted. So you’re seeing it move through to different phases, and we’re seeing it at the last phase. And a lot of what we hear from customers is they’re waiting on when they’re going to launch a program, when they’re going to spend a program. So it’s a little bit of bottleneck in that phase. They are large programs. A lot of the work that we see in there is in different industries. So we have a lot of programs that are in what we call the construction or Con/Agg area as well as truck and power sports. But we are seeing customers may be slow down a little bit on launching these programs. And usually for a customer, it’s pretty large tooling programs that they have to spend and approve when they launch the program and source us with the program. So that’s usually what we see right now. Whereas a year and half ago, it was rush as fast as you could do it and get it out there.
Chip Moore: Got you. Yes. And I imagine having some more certainty on the political environment doesn’t hurt as well.
Dave Duvall: Yes. I hear that, it’s got something to do with it as well.
Chip Moore: Yes. We’ll stay tune. I guess any thoughts on volumes next year just given that Volvo program transition and some of the newer programs you have set to ramp any way to help frame that or too early?
John Zimmer: No. Again, I think we kind of talk through the Volvo piece, the Volvo will transition out next year. And so that will negatively impact our sales as we’ve been saying. Right now, we’re kind of early in the process of looking at next year, we kind of – our customer gives us forecast, but we track what they’re saying to the outside world probably more than we do inside what they’re telling us. And most of our customers, BRP, Polaris (NYSE:PII), Generac, UFP, all those guys are have been pretty silent on next year at this point. So I think there’s a lot of our customers trying to figure out, again, not just the political environment, but how fast interest rates are coming down, those types of things. And so probably a little bit early for next year at this point. Volvo is the one piece we know that’s happening. The truck market, ACT does say is a little bit softer next year is where they’re at and then a real strong rebound in 2026. And so I think truck market will see some softness. Everything else, we’re kind of in a wait-and-see mode at this point.
Chip Moore: That’s helpful. That’s helpful. And Dave, I think you called out a win in, I guess, it was in bedding structures in health care. Any – it seems like a new market, maybe not, but it’s sounds like…
Dave Duvall: Yeah, that’s pretty exciting one. We’ve been trying for that one. I think we went back through it. It’s been eight years talking with that customer. Right now, we are – it’s on a hospital bed. So the support structure for the hospital bed, which – that’s our first program to win. Right now, the customer is delighted with the timing and everything that we met. So I think that can be another growing diversification channel for us.
Chip Moore: Great. Great. And maybe a last one for me just on the cost side. You talked about some actions you’ve taken. When do we see that benefit fully roll through, John? And are we done with sort of the one-time cost is that all this quarter? Thanks.
John Zimmer: Yes. So most of the benefits – I mean, we did it at the end of the quarter, maybe actually a little bit into the fourth quarter to tell you truth, there was a little bit of timing on when it happened. And so there will be a little bit more cost that comes through in the fourth quarter. But most of the benefits you should – we should be starting to see the benefits as early as this quarter. It was primarily labor cost. And so we’ll see the benefit coming through this quarter and moving forward and pretty much a full impact in this quarter – in the fourth quarter.
Chip Moore: Got it. Okay. Awesome. Appreciate it. Thanks.
Dave Duvall: Thanks, Chip.
Operator: [Operator Instructions] Our next question will come from Bill Dezellem of Tieton Capital. You may now go ahead.
Bill Dezellem: Thank you. I’d like to start with the hospital bed. Would you please kind of walk us through exactly what it is? Can you help us visualize what it is you’re actually doing on the bed? And then secondarily, how that process worked over the last eight years to win that business and what the hurdles were for your customer and for you to ultimately decide this was the right way for them to make the bed?
Dave Duvall: Yes. We had originally had contact with this customer. It was probably an initial contact about 8 years ago through our sales agent group. We started working with them on an opportunity they had here, I would say, about 1.5 years ago. What we're producing and what we designed with them is they're changing from a sheet metal part and the part that is underneath the bed that holds the structure of the person is what we're making is that platform underneath the entire bed holding the structure to people. So the bed would sit on top of that. And really, it's going through the validation, the development, changing the material. We were able to use a – I think, a higher value, lower cost option for the customer and design features in that molded in features that you couldn't do with steel. So I would say the actual development from initial concept today, where we're actually tooling going into production is probably about a year.
Bill Dezellem: And not to oversimplify this, but the underneath the person sounds very similar to the underneath of a – of a golf cart or of a water track..?
Dave Duvall: I agree. I completely agree that the concept and the structure that we did on the bed was very similar to the concept and structure that we had looked at on the golf cart application, that we were originally quoting. We still have other golf cart opportunities. And you also see that on ATV, UTV as well. We won the skid plates on all the ATV, UTV, so the new regulation coming next year to where you can't – when you're riding, you can't have something for true through the bottom of the vehicle and impale the driver or passenger that's a new regulation. So that's a big part of the wins as well. Same process, same structure as well.
Bill Dezellem: Great. Thank you. And then shifting to Volvo for a moment, would you please update us on their process of moving that business versus their original plan of moving that business where they're at on a…
Dave Duvall: Yes. It would depend on what original plan. So this was originally two years ago that they were looking at transitioning. So right now, they are in the middle of the transition to the new program, it ramps down. There's different models. So what they're doing is commonizing their Volvo and Mack programs. So right now, they are separate. So as they phase in, phase out, it depends on whether it's a Volvo or Mack volumes. So what they're doing, you'll start phasing out at the end of this year and through next year and into the beginning of the following year. It's quite a long phase out time frame because there are so many part numbers going to a common part number.
Bill Dezellem: And is it your sense that, that process is moving slower or faster in line with what they were thinking, let's say, earlier this year?
Dave Duvall: I would say everything always moves slower than people plan.
Bill Dezellem: Great, thank you.
Dave Duvall: Thanks.
Operator: It appears there are no further questions. This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.
Dave Duvall: Thank you for your continued interest in our company. We look forward to providing an update on our progress when we report the fourth quarter results in March. Have a great day. Thank you.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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