MotorCycle Holdings Limited (MTO) Earnings Call Transcript & Summary

Good day and thank you for standing by. Welcome to MotorCycle Holdings FY '23 Results Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker today, David Ahmet, CEO and Managing Director of MotorCycle Holdings. Please go ahead, David. Thank you.

Thank you very much. Good morning, everyone. My name is David Ahmet and I am the Managing Director of MotorCycle Holdings and it's my pleasure to bring you the full year investor presentation for MotorCycle Holdings. As expected, 2023 brought its fair share of challenges and generally tougher trading conditions. However, we've taken steps to reduce our exposure to discretionary retail by diversifying into other parts of the motorcycle market. In particular, we've added the importing of new motorcycles to the business with a focus on supplying the agricultural and farming industry. I believe the purchase of Mojo Motorcycles has proven to be a good move strategically in the short term and also promises to be in the long term as well as it opens the door to other growth opportunities. Firstly, I'd like to run through some of the key financial numbers for the year. Revenue for the group is up 25%, driven by recent acquisitions. On a like-for-like basis, revenue is down just 1%. Our gross profit rose 17% to $154.6 million and our underlying EBITDA rose 13% to $55.3 million. NPAT remained steady at $23 million and net assets rose 27% to $197.6 million. Our Board has declared a dividend for the half -- for the half year of $0.12 per share, taking the total to $0.20 per share for the full year, which is in line with the previous year. Now I'd like to talk about some operational highlights through the year, which include a very strong top line growth of 25%. We've cemented our position as the market leader to now command a 14.3% of the total market in new motorcycle market. We achieved these results against the backdrop of rising interest rates and increasing costs causing significant pressure. The right timing of the strategic acquisition of Mojo Motorcycles which makes us less reliant on discretionary spending and gives us more exposure to the agricultural industry. Now let's have a closer look at the profits. As mentioned, total income was up 25%. Cost of sales was up 29%. We're finding the market more competitive and the gross profit margin has come back from the highs of 29% to a more sustainable 27%. Operating expenses are up 19%, which leaves us with an underlying EBITDA of $55.2 million for the year or a 13% increase. The AASB 16 lease standard resulted in an increase in expense of $13.8 million, up from $12.1 million in the previous year. This creates an underlying EBITDA of $41.4 million when compared to last year's accounting the same way as the last year -- of last year. Additional expenses for the year include acquisition expenses of $1.5 million relating to the acquisition of Mojo Motorcycles. Depreciation and amortization of $5.4 million was up 43% on the previous year and bank interest of $1.9 million was up from $220,000 of previous year. This gives us a net profit before tax figure of $32.5 million, the same as last year and net profit after tax figure of $23 million, also in line with the previous year. If we have a look at the business on a like-for-like basis, excluding the likes of Mojo Motorcycles and several other dealerships, we have a total income of $452 million, down just 1% from $454 million. Gross profit of $123 million, down 5% from $129 million. Operating expenses were up 7% for the year. These expenses were up 12% after the first half. So if we look at the second half in isolation, there's been no increase in expenses effectively. This is due to a focused and disciplined approach to a cost reduction and expected to flow into the new financial year. The underlying EBITDA like-for-like is $36 million, down from $48 million. If we move onto the balance sheet now. We currently have $25 million in cash and a bank facility of $50 million, so net debt of about $25 million. Inventory has grown by 45% to $155 million. This is due mainly to the acquisition of Mojo Motorcycles and new motorcycles becoming freely available. New bikes bailment has increased to $48.5 million, up from $24.9 million and this reflects the increase in new bike stock and availability. Total assets have grown by 46% to $410 million and total liabilities by 70% to $212 million, as with [indiscernible] net assets up 27% to $198 million. The market value, as of the 30th of June, the share price was $1.45, down from $2.08 the previous year. As part of the consideration for Mojo Motorcycles, we issued 11.9 million shares to the previous owners, taking our total number of shares on issue to 73.6 million shares. We've maintained our dividend for the year of $0.20 per share. Earnings per share is $0.341 down 9% from a year ago. This with a price-to-earnings ratio of just 4.2x and a dividend yield of 13.8% with 100% franking. I'm pleased to see the share price has risen somewhat from June 30. Revenue growth. So MotorCycle Holdings has a track record of continued growth and over the last 5 years with a compounded growth rate of 14%. It's the same story with our EBITDA, with '21 and '22, and having had JobKeeper assistance. Our NPAT results have shown consistent growth and is now 3x what it was in 2018. Diversifying our earnings. We've added new income stream to the business, and that is the wholesale of new motorcycles. Most segments performed well across the group, with used bikes being down the most, 13% decline in gross profit as margins moderated and valuations declined. Used bikes will be the focus in 2024 as we believe it has the potential to grow the most. New bikes retail performed well given the market was down 17% in unit sales. Gross profit was actually up 1%. Our service department showed the most growth with a gross profit increase of 15% and F&I continues to improve, up 8%. There's been quite an adjustment in new box sales for the year. Unit sales down 17% for the national market and we're back to 2019, 2020 levels. However, MotorCycle Holdings held up well and was down just 2% of its record highs the previous year. If we look a bit closer at the result, we can see that the market was down 25% in the first half, while MotorCycle Holdings was only down 8%. And then in the second half, the market was down 8%, while MotorCycle Holdings was actually up 5%. So it looks as though the market is actually recovering to some degree. This positive trend is further reinforced with exceptionally strong last 3 months where we've been up 25% in the last 3 months of last year. The used market is the opposite. In the first half year sales were up and the second half came off about 8%. Growth for the year was down 13%. So we've definitely seen a degradation of margins. However, some of that was due to the actions taken to reduce aged stock. We've seen these margins recover to some degree in recent months. I believe we can increase our business with used, with greater focus on borrowings. Overall, despite what is clearly a softer market, our retail segment has stood up reasonably well. Inflation repercussions clearly cost us some profit in the first half. However, in the second half, we spent reducing those expenses with the cost reduction program now completed. We remain ready to make any further changes should the market show any signs of further decline. We completed the acquisition of Mojo Motorcycles on October, 31 last year and effectively took over the management the following day. Having said that, the previous owners stayed on and continued in their previous roles. The integration went well and we needed, we set about, collaborated together to create more business for the Mojo business, as well as increasing the focus on the Mojo brands in our existing dealerships, we've also established a greenfield dealership with immediate success. We now have Mojo products in 7 of the MotorCycle Holdings dealerships. Mojo has continued to benefit from the strong aged market and performed better than expected for the financial year. [indiscernible] sales have also grown strongly with a flurry of new motorcycles due to be released over the next 12 months, we remain confident that Mojo can grow further. The Mojo Advantage. The acquisition of Mojo creates the opportunity for new avenues of growth. Importation of new bikes not only brings diversification to our business, it also brings scale. It gives us access to a very professional manufacturer from China, which is growing rapidly. We also import motorcycles from France and Taiwan. Mojo is the sole importer and distributor for CFMOTO, SHERCO, KYMCO and LANDBOSS in Australia and New Zealand. Our accessory business in New Zealand is already assisting with logistics in New Zealand and a little bit further when we open our new distribution facility in Auckland next year. The acquisition of Mojo is opening the door to new opportunities and further expansion. MotorCycle Holdings will help lift the profile of Mojo brand to increase demand. Wholesale Accessories. Now incorporates Cassons, the Cassons business; Forbes & Davies, New Zealand; Mojo parts and accessories and what was a business called [indiscernible] wholesale. Supply chain delays have moderated and inventory restored to normal levels. The strong competition and a weak Australian dollar is putting pressure on our margins. Management has maintained a strict cost control over expenses. Operational efficiency is expected as new operating system and warehouse management system is introduced in the coming months. Previously, very high trade expenses have normalized for this year. We've added new brands and products in recent months and expect them to provide additional sales for the coming year. A quick update on our finance joint venture. Increased cost of funds has led to our margins being reduced, resulting in a decrease in profit for the year. Profit was down to $900,000. Overdue accounts and losses are within our KPIs and not a major concern. Looking at our financial year 2024. We expect the high interest rates and high inflation to keep a little growth. Higher operating expenses will continue to be a challenge going forward. Used bikes identified as a segment with the most potential for growth. Recent acquisitions, including Mojo will make full year contribution. E-commerce is expected to continue to deliver significant growth for retail accessories and new business to business, potential for lift in profits by improving operational performance in some locations, more acquisition opportunities becoming available, vendor expectations are high, though. However, there are lots and lots of drivers -- business has come on the market. So that pretty much wraps up our presentation for MotorCycle Holdings for 2023. Happy to throw it open to any questions now here.

[Operator Instructions] Our first question is from Jared Gelsomino from Morgans.

Great result. Just interested in understanding how the trade ended for the second half over the prior year, specifically in the ex Mojo business. I know you called out a moderation in demand. But I guess just can't understand if you're starting to see that core business stabilize?

Yes, that's a good question. It really was -- it changed about May, June when there's sort of an uptick in sales. So the first quarter was quite subdued in sales. April was a very tough month and May, June was outstanding. So we've got this upward trend happening at the moment from May on.

That's great. And then maybe just on the margins, like great outcome in terms of the cost control on OpEx half-on-half. I'm just interested. I know you've given a little color in the years, looking for a more positive performance in the year ahead but just interested to see what sort of incremental GP uplift -- GM uplift you could get in that segment going forward?

Yes. Sure. So if we look at used bikes, we identified the aged stock issue growing during the half, which I think I flagged earlier. So we've got fairly aggressive with reducing that ag stock and that did cost us some margin around March, April. However, from May, June, we saw those margins start to recover. And they're not back to where they were at the peak of COVID but we're only 10% off that. So we've seen a slight increase there towards the end of the year. I'm pretty happy with where the margins are at the moment. So if we can maintain that next year, that will be good going. So margins are certainly off with used a little. They were down quite a bit but recovered. New, they're down a little bit across the board there, not significantly but they're certainly down, maybe 10%. So probably 10% was used as well. So generally speaking, better than pre-COVID but not as good as the peak of COVID.

Understood. And maybe just a couple more. Just on the Mojo side of things, I think you mentioned 7 -- in 7 dealerships now. Just interested in how many incremental ones you could put stock in, in the year ahead? And I guess how that business is faring given sort of back up in the current ag sector?

No, I can't put a figure on the number that we could increase it to at this stage. We've only -- we've increased it from 2 to 7. So I don't know whether they'll be any more greenfield sites, there could be. We don't have any planned at this stage. We will get the first one, then certainly operate it properly first. Yes, I would like to put it into more dealerships, particularly in the southern states. So that's a matter of wait and see. We've got considerations of existing dealers that we have to be careful of their territory. We can't just open a new dealership on top of them. So that's a work in progress, that one. I wouldn't commit to a number there. And what was the second half of that question, Jared?

No, that's probably fine there, David. We're just probably interested in that demand piece -- sorry, just interested in the Mojo [indiscernible] the half, but I think that was enough color. And maybe just one final one, in terms of the acquisition side. I think you called out vendors looking to come to market a little bit further there here in your opening comments, I guess, interested in what the next acquisition would be. And obviously, you've got your hands full but whether that would be a further distribution agreement similar to the Mojo side of things? Or would you go back to looking at dealerships?

Look, if you're asking what part of the business will have the most growth in the next few years, I would say probably Mojo. The opportunities are coming thick and fast with new product or additional products for us to distribute in Australia. We've certainly gained a lot of attention globally with moving into that distribution. So there's opportunities there. I think the brands that we're representing -- represent a lot of opportunities as well as CFMOTO in particular. It is a fantastic product out of China and the company is on fire. It's just producing a whole bunch of new models due to be released over the next 12 months. So particularly in the motorcycle part of the business, I see really quite substantial growth over the next 5 years. So it will grow there. They're moving into a whole range of new products, including electric. So we'll have loads of new product added to that Mojo business and I think over the next -- even in the next 12 months to the longer term. Retail was, yes, it's more vendors out there and businesses of all sorts and we are very much selective on the ones that we would buy. The [indiscernible] are the ones that I think have got a really solid performance, a history of performance and have to have some form of management that's committed to staying so that we can keep continuing on the profit. So very selective but it's a good business in the [indiscernible]. That's for sure.

Our next question is from James Ferrier of Wilsons.

Thanks. Good morning, Dave. Thanks for your time. Can I just -- just following on from Jared's question here about Mojo. I assume almost all the revenue is flowing through the wholesale segment. Or I guess, is there some coming through in retail now, given you've got the product range in 7 of the MotorCycle Holding dealerships?

Yes, we've only just got to that point. We had 3 initially before we did the deal with them. We just opened a greenfield in May, June, I think. So it's only been trading for 2 months. And the last 2 [indiscernible] been trading for 1 month or 2 and [indiscernible] hasn't started trading yet. So from a retail perspective, not much will really come from the likes of Mojo at this stage, a little bit but not much. But establishing new dealerships and focusing on the brands, we certainly have listed out the share of the Mojo business [indiscernible] and we expect that to continue to grow. We expect to underpin it to some degree going forward.

Got it. Okay. That's good. Now looking forward, what's the impact on Mojo as an importer distributor. What's the impact on margins from a lower Aussie dollar? .

Bob here, look, it's [indiscernible] there's a lot of it in U.S. dollar. So that's [indiscernible] seems to work. So again we have the U.S. dollar certainly it's $0.64 or $0.65, it trades reasonably well. The results that we've achieved mainly based on that $0.65 to $0.67 bracket. So if it's anywhere around there, we can get a good result. I'd like it to be $.070 to $0.75 [indiscernible] but it correlates directly to our profit, obviously, early signs, makes a direct impact on our profit. We buy everything there in U.S. dollars.

Yes. Okay. But I guess the outcome of that is the dollar is at $0.64, $0.65, whatever, you don't turn around and change the pricing that you're selling at to try and preserve your margins, you just, you basically [indiscernible].

$0.63 or $0.64, we won't. At $0.60 we will. We can handle the current exchange rate without too much trouble. But if it drops another 5% today, I think we would pass that on. And we've got the ability and capacity to do that as we see it fit.

Yes. Got it. Just thinking about the product and the demand. So it's obviously hugely popular product, really well priced, attractively priced. When we look at demand and the outlook for demand, the 2 things that we're interested to hear your view on is, to what extent the cessation of the ATO's instant asset write-off scheme is having an impact on demand? And Jared sort of touched on it previously but to what extent lower livestock prices and the impact on farm profitability is impacting demand within Mojo as well.

Sure. No, we're not seeing an impact on demand at this stage. So maybe if it gets drier and drought conditions come in, farmers will spend less. So we're definitely subject to that. Drought conditions probably have the biggest influence over that farm spending. I think your question was around the 4 wheelers, the change in legislation, as to what happened there. Is that right, the 4-wheelers...

It was more about the tax office's instant asset write-off.

Okay. Yes, of course. Yes, it doesn't affect us greatly because that write-off is still eligible for up to $20,000, which virtually all of our products, very little is above $20,000. So with that, 100% write-off continues for our products going forward. So it does -- it certainly handy for things above $20,000 but it doesn't really affect us that much. We expect that to have no material impact on our business.

Okay. That's very helpful.

90-plus percent would be around that $20,000.

Yes, yes. No, that's good clarity. You are the wholesaler there, obviously. What's your observations on inventory levels across the Mojo dealership community? Are they pretty tight, low on stock, are they pretty well supplied?

There has been, for 2 or 3 years, they have been and they've been more than fairly aggressively. I think they've got full stock now. We've been able to supply stock fairly well. China has been very aggressively supplying stock as required, better than the other suppliers. However, the other manufacturers have got stock now. We've had sufficient stock to have put product on the floor with most dealers. So they're all carrying stock. They might be backing off a little, rather than 10 of 1 model, they're now carrying 3 of a model there. But they've all got stock and we've got stock. So it's good business as usual now there.

Yes, yes. Got it. That's very helpful there. On the used bike outlook. What interested us there is, just your comments that you cleared some aged inventory, which had a temporary impact on margins through that second half period. The used bike sales volumes still declined 5,000 units, basically they're down to 4, 500. So what's -- I get your comment about the margins and the more recent improvement there. But what's your take on the demand outlook we used and the prospects for volumes?

I always think that business is still out there. If I look at the total registrations and the transfer registrations in the transport department, the volumes still is okay to me. I think there's a lot of business that is private to private. So I think there's a lot of potential to take that part of the market back into the dealer market. So overall volumes are holding up okay. They're about level with last year. So I think that decline is probably more operational management related than it was market-related in the second half. We produce that inventory -- so I'll just clarify that a bit more. To reduce our aged inventory, we'd stop purchasing to pull that stock to dealers. So the stock inventory came down. And I think that held us to some degree as far as volume goes but we had to clear that aged stock that was important because the values were starting to deteriorate, come off, it's a process we had to go through but it did cost us without a doubt last year and hardly in a little better shape now this year.

A little bit of reset for the business.

Exactly, yes. So we're tracking the dealers and whatever we have to.

Our next question is from Sarah Mann from Moelis Australia.

Okay. Good. I just wanted to ask a question on Mojo. Obviously, we've discussed a little bit about the market becoming a little bit more difficult from the aged getting a bit more challenging. Are you still taking market share from the other OEMs? Or has that similarly kind of plateaued and you're kind of maintaining market share growth now? Will just kind of be in line with the market? Or is there still more market share gains you think you can kind of take there?

No, we're maintaining our market share through 2023, which is a very high level, I might add. But we're maintaining a high level of market share. It's not increasing, it's not decreasing, it's plateaued, that's with the ag product.

Yes, got it. So used motorcycle growth is now going to be in line with the market. And then the upside comes from whatever you can do in the small retail growth?

That's in motorcycles. Exactly, spot on, yes. And I think there will be growth in motorcycles due to the fine number of new exciting models that are competitive. So and I think it will be difficult for us to grow the 4-wheeler market much more than the market now. I'm not saying we can't -- we certainly can. It's a product that is flavor of the month. There's no doubt about that. And as more dealers and people become aware of the brand I'm sure we'll be able to sell more. But by and large, that massive growth that we've seen over the last few years has probably reached a peak to some degree but still the potential is with motorcycles there. And that's where we've got it coming, let's say full time.

Got it. And I mean, in a weaker market, are you seeing more demand for better-priced motorcycles in the retail space? Like is that [indiscernible]

Yes, not really. No. I mean the bettered price was the learner-approved bikes. And Mojo have got some cracker, really good learner-approved bikes, so they're really generating some volume at the moment. So that's a good thing. But overall, there are premium bikes that do sell well. We've seen he likes of BMW, Triumph and Ducati. They're still selling well. Harley does well, when we've got stock. We've still got some problems there. But generally speaking, it's across the board.

Got it. And then just liked the comment on trading conditions. It sounds like you exited the period pretty well, like across Mojo. Just wondering if that trend kind of continued into July and August and any color or updates around that?

Okay. It's strange. It's like [indiscernible] it was down so much last year, we had 24% in the first half and really kicked the ramp. And then when started in the second half, it was down a reasonable amount and now suddenly we've had this U-turn and that's continued the strong finish to the year. At the beginning of the year, there's really strong uptake that's happening. So very hard to -- I wouldn't have predicted that and I don't think that many people would have. I thought retail was going in the other direction but a significant rate in new bike sales in the last few months.

Yes. Got it. Okay. Interesting. And then in terms of like the cost out, so you've -- it sounds like you pulled out costs in the second half. How long were they in the period for like, is there kind of like a annualization there? So we should be thinking about [indiscernible].

Well, I think it started about February or March. So the expenses that we did pull out, a little happened in the last 4 months, wasn't completed until June, June 30. So I think there's a reasonable amount of cost that has come out of the business in that half. So it will be hard if they come back in again, just as quickly, if you're not careful. So it remains to be seen but we're certainly starting this year with a lower cost base than we did last year. So we're in a good position to maximize. I think we've got caught out a little bit with inflation. The overheads went up so quickly in the first half last year, they rampaged the way before year. So we had to jump in and make adjustments fairly quickly and we did. So we're well positioned both in cost-wise, expense-wise to tackle this year. I won't put a figure on all of that because it changes every day.

Sure. That makes sense. Okay. And then just in F&I. So the GP was up in the period. Just wondering if you could run through the drivers behind it because that seems like a solid result.

It's better. Yes. Look, it's better but it's -- I still think there's more of it. I don't think -- I'm not satisfied with that result with F&I. As you know, we came off a few years ago and it's been a very slow process of rebuilding the profit per unit there. And that number is increasing next year. Year-by-year, we are improving that profit per unit. But it's a slog, it's taking its time. So an 8% increase, yes, that's okay but I'm looking for more than that. I think we need to do better than that.

Got it. Okay. And then just lastly on used bikes. Obviously, you cleared that excess inventory. You're comfortable now that, I guess, market pricing is right for you to buy more inventory and kind of need to come off the horse before you start buying.

Certainly, I've introduced a bit more discipline into that process and there's more focus on aged stock and turning that stock more quickly. Used is always a battle with aged stock. We always have to be managing that. There always will be bikes that don't sell and become aged. And the name of the game is to realize and turn them in and move on. I think during COVID we developed some bad habits. We could get -- margins were so good and stock was so hard to get that we told the dealers or the market for the dealers to hold onto the bike and you'll get out of it eventually. I think that's great and that's fine. But that was always going to change one day. The cars probably haven't seen it yet because there's still a strong order book for new cars but there isn't for motorcycles. We satisfied that order book back in December of last year. So we've got a -- that aged used market has come off and is back to some kind of normality now, values have dropped and we were always going to get caught on that for the time of when there is a normalization of new bikes and used bikes. So values were going to drop, aged bikes were going to become a bigger problem. And I wanted to react quickly to that. I made that call early, which is early in February, March of this year and decided to get into it then -- so we took [indiscernible] medicine and had a couple of more months as far as profit goes for these bikes. So buying less to focus on the stock that we had. And then we've gone through that now looking at margins that are increasing again. So it looks like our stock is better. It's mortgage pressure. We still have problems there. There are still bikes that need to be sold. There's still too many aged bikes but that always be an issue. That's not a new problem but certainly in better shape than it was a few months ago. But I'm encouraged by the fact that our margins are starting to creep up again and that stock is looking tidier. So I'm readying now to still invest more capital into used bikes. I don't know, if I can just run a tighter ship there. I am a bit closer to the action myself than it was last year and all the bit more disciplined when it comes to how to run used bikes. So I think we can buy more bikes and sell more bikes today. And that's why I've identified these bikes as a growth opportunity. It's the overall part of the business, so I think we can make a difference.

[Operator Instructions] Our next question comes from James Ferrier from Wilsons.

Just a couple of quick follow-ups. In terms of the inventory levels and the payment drawdown from MotorCycle Holdings and I guess this is inclusive of Mojo now, do you think you're at target levels now? Or do you want -- and I guess, particularly your comments through this call on used, do you want to have more inventory in the business as the FY '24 year unfolds?

Yes to used, no to new. I think we're over stocked with new bikes. Basically, all the manufacturers came good with supply around the same time and flooded this with new bikes. So I think we've got too much inventory with new and I think we could do with a bit more with used. I think to increase our sales with used, we'll need that inventory and I'm ready to buy that now. But new, the opposite, I think we had too much supply with demand softening. So we've ended up with an oversupply to some degree of new bikes. So rationalizing that now. And consequently, you can see that in our bailment costs, you'll see that it's $1.8 million for the year, up from $200,000. So that's a big increase in interest costs for new bikes. And that's because we literally got flooded with new bikes around December, January last year. So that's part of the process of rationalizing the stock. So that's going to come back down and used will sort of go up. But of course, we use our own money for used bikes and it's borrowed money essentially for new bikes.

Yes. I was just going to ask that, you use your own new corporate debt facility, not bailment that you used.

[indiscernible] That's right. But I'm only talking a $2 million or something like that.

Yes. Okay. That's good to know. And then lastly, with the wholesale accessories business, you've got a weaker Aussie dollar but you've got lower freight costs. When you think about those 2 variables, what's the outlook for margins?

Well, look the dollar has the biggest impact by far. That's -- we trade a heck of a lot better at $0.70-plus there. We've got some money hedged and we've had money hedged the whole time. So we're getting a little better than $0.64 at the moment, probably closer to $0.67. That's how it is. If it deteriorates much worse, in the low $0.64, I think we've got to look at price increases again. We've been passing on increases all the way along. The freight cost, well, the [indiscernible] containers particularly were very expensive during COVID. Shipping containers could be USD 10,000 to USD 12,000. We were paying under $1,000. Now it's gone right back down to below pre-COVID costs. So surprising but none the less, there's some savings there. But generally, my main concern is margins. Is the margin and volume is okay. It's -- competition means that we're having to come up with specials more regularly. The bicycle part of our business has really collapsed compared to how it was during COVID. But we're similar to where we were pre-COVID, smaller part of our business, so not pretty good but margin has come off there. Yes, really, it's -- a stronger dollar would help us. We've got new product there, which we've added to the range just in the last month or 2, which is a really good range there, which I think will add volume. So I'm not too concerned about our sales volume, I'm more concerned about how to build that margin up a bit.

Yes. Okay. Very good. Thanks for your time.

Thanks, James.

I see no further questions at this time. Thank you for attending this morning's call. This concludes today's conference call. Thank you for participating. You may now disconnect.