Gary Maier - Investor Relations Selwyn Joffe - Chairman of the Board, President, Chief Executive Officer David Lee - Chief Financial Officer

Matt Koranda - ROTH Capital Partners Steve Dyer - Craig-Hallum Jimmy Baker - B. Riley & Company Bob Sales - Lmk Capital Management

Thank you, Kelly and thank you everyone for joining us for Motorcar Parts of America's fourth quarter and year-end call. Before we begin and I turn the call over to Selwyn Joffe, Chairman, President and Chief Executive Officer and David Lee, the company's Chief Financial Officer, I would like to remind everyone of the Safe Harbor statements included in today's press release.

The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for certain forward-looking statements, including statements made during the course of today's conference call. Such forward-looking statements are based on the company's current expectations and beliefs concerning future developments and their potential effects on the company.

There can be no assurance that future developments affecting the company will be those anticipated by Motorcar Parts of America. Actual results may differ from those projected in the forward-looking statements.

These forward-looking statements involve significant risks and uncertainties, some of which are beyond the control of the company and are subject to change based upon various factors. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

For a more detailed discussion of some of the ongoing risks and uncertainties of the company's business, I refer you to the company's various filings with the Securities and Exchange Commission. I would now like to begin the call and turn the call over to Selwyn.

Okay. Thank you, Gary and I appreciate everyone joining us today.

As we begin a new fiscal year, our position within the rotating electrical market continues to grow and gain momentum. With recent new business gains ramping up in January, February, actually starting towards the end of January.

In addition, moving ahead we anticipate contributions from a post year-end tuck-in acquisition and other opportunities in all of our categories. We also expect to benefit later in the fiscal year from an ongoing focus on another new product line that complements our success over the past two years in wheel, hubs and most recently in brake master cylinders, which are categories that still have significant growth potential.

As David will discuss in a moment, net sales on an adjusted basis for the past fiscal year climbed 23.3% to $320.7 million from $260.1 million a year earlier. Our net income on an adjusted basis climbed 52.3% to $32.9 million or $1.87 per diluted share from $21.6 million or $1.41 per diluted share a year ago which is also after a 14.9% increase in the diluted weighted average shares outstanding.

With favorable economic conditions, increased miles driven, along with the growth and the aging of the car population we expect strong demand for our products to continue. As I have highlighted on previous calls, industry data shows the average age of vehicles is 11.4 years.

In addition, as the number of cars in the 12-plus year old category continue to grow, the replacement rates for these vehicles increase is significant. Current expectations are that the average age of vehicles will continue to increase to approximately 12 years, just by 2016.

This continues to bode well for us since we focus on non-discretionary parts that require increased levels of replacements as vehicles age. To put our overall potential in perspective, industry sources estimate the market size for our products to be approximately $3.8 billion at the consumer level with the remaining market for hard parts to be approximately $106 billion in the United States.

We are proud to provide service and quality levels that exceed expectations and believe this allows us to successfully grow our business in existing and future categories. Our ongoing success and accomplishments are due to all our team members and their commitment and customer-centric focus on service with exceptional pride in all the products we sell.

Today, we supply more than 23,000 stores and our customers continue to gain share in both the DIY and the professional installer markets. We expect this will continue to grow as we further leverage our award-winning customer service and product quality to enhance market share gains with a growing line up of non-discretionary categories.

In short, the company's growth perspectives continue to be very positive. Business is strong and we expect our solid growth to continue.

I will now turn the call over to David to review the results in more detail and then end with my perspectives on our outlook and then we will take some questions. Thanks.

Thank you, Selwyn. In summary, adjusted net sales for the fiscal 2015 fourth quarter was a record high $90.9 million compared with $76.7 million for the prior year fourth quarter, which represents an increase of $14.2 million or 18.5%.

Adjusted net income for the fiscal 2015 fourth quarter was $9.9 million compared with $7.1 million for the prior year fourth quarter, which represents an increase of $2.2 million or 39.7% and adjusted earnings per share for the fourth quarter were $0.53 compared with $0.45 for the prior year fourth quarter despite an 18.9% increase and fully diluted shares outstanding. Adjusted EBITDA was $20.1 million compared with $15.5 million for the prior year fourth quarter which represents an increase of $4.6 million or 29.7%.

On a comparative basis, the fourth quarter results reflect continued benefit from the introduction of the new brake master cylinders line in late July 2014 and the addition of rotating electrical business that started in January 2015. Additionally, the fourth quarter results were impacted by various factors including core purchases and return accruals for new business starting in the fiscal 2015 fourth quarter which I will discuss further when I review the financial results.

Let me now review the financial results for the fourth quarter. Net sales were $83.9 million for the fourth quarter compared with $76.7 million for the prior year comparative quarter.

Fourth quarter results were impacted by core purchases of $5.7 million in connection with the new rotating electrical business. Net adjustments to return accruals of $621,000, primarily related to new business and customer allowances related to new business of $628,000.

To further expand on core purchases related to the new rotating electrical business that began shipping in January 2015, MPA purchased the core portion of finished goods at the customers locations. The difference between the purchase price and our carrying cost of the core is treated as a customer allowance reducing sales.

If MPA were to terminate its relationship with the customer, the customer would be required to repay MPA for the amount of the original purchase. After adjusting for the previously mentioned items, net sales increased by $14.2 million or 18.5% to $90.9 million for the fiscal fourth quarter compared with net sales of $76.7 million for the prior period a year earlier.

The increase in adjusted net sales of $14.2 million was due to an increased in rotating electrical net sales of $8.8 million or 13.6% to $73.5 million for the fourth quarter compared with $64.7 million for the prior year fourth quarter, primarily due to the additional business that started shipping in January 2015. An increase in net sales of wheel hub assemblies and wheel hub bearings of $3.8 million or 32.1% to $15.8 million for the fourth quarter compared with $12 million for the prior year fourth quarter primarily due to new customers and sales of new brake master cylinders product line of $1.6 million which was launched in late July 2014.

The gross profit percentage was 24.9% for the fourth quarter compared with 31.2% for the prior year, adjusted for the previously mentioned core purchases in connection with new rotating electrical business, return accruals primarily related to new business and customer allowances related to new business, and as well as non-cash lower cost for market revaluation charge for cores and customer shelves and other costs of $345,000. Adjusted gross margin for the three months ended March 31, 2015 was 31.1% compared to 31.2% for the prior year.

Adjusted for the various items was previously explained, gross profit for the fourth quarter was $28.2 million compared with $23.9 million for the prior year fourth quarter, which represents an increase of $4.3 million or 18.1%. General and administrative expenses decreased $182,000 to $6.3 million after adjusting for non-cash mark-to-market net gains and losses, expenses related to discontinued subsidiaries, severance, FAS 123R non-cash stock compensation and certain cash incentive compensation expenses and other non-recurring expenses.

Sales and marketing expenses decreased $152,000 to $1.9 million. Adjusted operating income for the fiscal 2015 fourth quarter was $19.4 million compared to the prior year fourth quarter of $14.8 million which represents an increase of $4.6 million or 31%.

Adjusted EBITDA for the fourth quarter was $20.1 million compared with $15.5 million for the prior year fourth quarter which represents an increase of $4.6 million or 29.7%. Depreciation and amortization expense was $657,000 for the fourth quarter.

Interest expense was $3.1 million for the fourth quarter compared with $3.2 million for the prior year fourth quarter. Income tax expense was approximately 40% for the three months ended March 31, 2015.

Adjusted net income for the fourth quarter increased $2.8 million or 39.7% to $9.9 million or $0.53 per diluted share compared with $7.1 million or $0.45 per diluted share a year ago. Earnings per share reflects the 18.9% increase in the weighted average number of diluted shares outstanding due to the public offering of 2,760,000 shares of common stock, which raised approximately net $67 million in September 2014.

We will now highlight the results for the 12-months ended March 31, 2015. Adjusted net sales increased $60.7 million or 23.3% to $320.7 million compared with $260.1 million for the prior fiscal year.

Net income adjusted for the items previously noted and summarized in the financial table exhibits of this morning's earnings press release was $32.9 million or $1.87 per share compared with $21.6 million or $1.41 per share for the prior fiscal year , which represents a net income increase of $11.3 million or 52.3%. Adjusted EBITDA was $69.5 million for the 12-months ended March 31, 2015, compared with $52.9 million for the prior fiscal year which represents an increase of $16.5 million or 31.2%.

Results for the 12-months ended March 31, 2015, include recognition of net revenue related to cores of $12.6 million, which was previously deferred which had a $3.9 million gross profit and EBITDA impact and $0.12 earnings per share impact on the third quarter. At March 31, 2015, we had an $84.5 million term loan, zero borrowings on the revolver credit facility and approximately $61.2 million cash resulting in net bank debt of approximately $23.3 million.

There was availability of approximately $37.8 million on the $40 million revolver credit facility, reflecting approximately $2.2 million of outstanding letters of credit. Earlier this month on June 3, MPA entered into a new $125 million credit facility with PNC Bank consisting of a $100 million revolver and $25 million term loan.

Loans outstanding under the new credit facility bear interest at the company's option, at the domestic rate or at the LIBOR rate plus, in each case, an applicable per annum margin. The current applicable LIBOR interest rate for both the revolver and the term loan is 2.94%, consisting of LIBOR of 0.19% plus a margin of 2.75%.

The new credit facility replaces a previous credit facility, comprised of an outstanding $82.4 million term loan and an undrawn $40 million revolver. The applicable LIBOR interest rate for the previous term loan was 6.75%, consisting of a LIBOR floor of 1.50% plus a margin of 5.25%.

Post-closing, the company had net debt of approximately $27 million. At March 31, 2015, the company had approximately $422 million in total assets.

Current assets were $182 million and current liabilities were $115 million. Cash flows used in operations during the 12-months ended March 31, 2015, was approximately $9.5 million, primarily due to the building inventory for new business and the introduction of the new brake master cylinders product line.

I will now walk you through the income statement exhibits in our press release distributed this morning, which we believe will make it far easier to understand the various expenses and adjustments for the fourth quarter ended March 31, 2015. If you can take a moment to turn to the income statement exhibits in the press release starting with Exhibit 1, we can begin.

So when you eliminate the effect of all expenses related to discontinued subsidiaries and other normalizing adjustments and non-cash expenses highlighted in today's earnings press release, for the three months ended March 31, 2015, adjusted net sales was $90,899,000. Adjusted net income was $9,919,000.

Adjusted diluted earnings per share was $0.53, adjusted gross margin percentage was 31.1% and adjusted EBITDA was $20,066,000. Exhibits 2 through 7 are the reconciliation tables to reconcile the reported results to the adjusted results, including net sales, net income, earnings per share, gross profit, gross margins and EBITDA.

We will now go over the adjusted net sales calculation for the fourth quarter, so please turn to Exhibit 2. Starting with reported net sales of $83,904,000 for the three months ended March 31, 2015.

We adjust for customer allowances related to new business of $628,000 and core inventory purchases, returns and stock adjustment accruals related to new business of $6,367,000, which results in adjusted net sales of $90,899,000. We will now go over the adjusted net income calculation for the fourth quarter, so please turn to Exhibit 3.

Starting with reported net income of $3,102,000 or $0.16 diluted earnings per share for the three months ended March 31, 2015. We adjust for customer allowances related to new business of $628,000, core inventory purchases, returns and stock adjustment accruals related to new business of $6,367,000, non-cash lower of cost or market revaluation charge for cores our customers' shelves and other costs of $345,000, discontinued subsidiaries legal, severance and other costs of $2,967,000, share-based and certain cash incentive compensation expense of $2,514,000, mark-to-market non-cash gains related to warrants and forward contracts of $1,772,000, and tax effect of the above of $4,232,000, which results in adjusted net income of $9,919,000 or $0.53 earnings per share.

Exhibit 4 is the adjusted net income calculation for the 12-months ended March 31, 2015 of $32,858,000 or $1.87 earnings per share. Exhibit 5 is a reconciliation of adjusted gross profit and gross margin percentage for the three months ended March 31, 2015.

Starting with reported gross profit of $20,909,000 or 24.9% gross margin percentage. We adjust for customer allowances related to new business of $628,000, core inventory purchases, returns and stock adjustment accruals related to new business of $6,367,000 and non-cash lower of cost or market revaluation charge for cores on customers' shelves and other costs of $345,000, which results in adjusted gross profit of $28,249,000 or 31.1% gross margin percentage.

Exhibit 6 is the adjusted gross profit and gross margin percentage calculation for the 12-months ended March 31, 2015 of $101,194,000 or 31.5%, respectively. Finally, we will go over Exhibit 7 which is the adjusted EBITDA reconciliation.

Starting with reported net income of $3,102,000 for the three months ended March 31, 2015. We add back interest expense, income tax expense, depreciation and amortization, customer allowances related to new business, core inventory purchases, returns and stock adjustment accruals related to new business, non-cash lower of cost or market revaluation charge for cores on customer' shelves and other costs, discontinued subsidiaries' legal severance and other costs, share-based and certain cash incentive compensation expenses, and mark-to-market non-cash gains related to warrants, which results in adjusted EBITDA of $20,066,000.

In the same Exhibit 7, using the same calculation of adjustments, adjusted EBITDA for the 12-months ended March 31, 2015 is $69,453,000. I will now turn the call back to Selwyn.

All right. Thank you, David.

As we begin our new fiscal year, we are extremely excited about the transformational growth in our business. We ended fiscal 2015 with solid new business gains and strong traction for our products.

We expect to continue to gain share in our various existing product lines as we continue to actively work to introduce new product lines. Along with a well managed growth, we continue to solidify infrastructure and our resources.

Our financial position is strong and our capacity for further growth is excellent and very scalable. We appreciate your interest in MPA, Motorcar Parts of America and welcome your questions.

So just wanted to talk about the outlook for FY '16, if we could start out there. I know you guys have already talked about sort of 10% to 15% top line growth being achievable over the next several years.

But could you talk about maybe what would be the biggest contributor to that growth during FY '16? If you could kind of break it out between the core rotating electrical business and new [model] [ph] businesses?

Yes. It's hard to break it down.

I will tell you we are experiencing good growth rates in everyone of the categories. We expect them all to grow.

And I think the percentages certainly in master cylinders and wheel hubs will be higher than the percentages in rotating electrical not just because the base is smaller but I can tell you that the outlook and the preliminary outlook for the start of the year, there is a lot of new business that’s coming on board in all categories. We gave also revenue guidance of $380 million and we are still comfortable with that.

Okay. Great.

And then in terms of the new product introduction. How does that factor in to your revenue guidance?

Can you just help us understand the latest thing around the new production introduction, maybe...?

Yes. I think we probably it will be -- close to the end of the year, I don’t think the new products are going to be a significant contributor.

I think the $380 million we expect to come from our base business. New products will set us up.

We have some strong lineups for new products towards the end of this fiscal year and for the following fiscal year. So we are active.

We have got some new people on board. We think we are getting better at being able to identify and execute and we have had some good reception on the products that we have and some good reception on what we intend to launch.

And so we are overall optimistic. We think the fundamentals of the aftermarket are very strong and the fundamentals for our customers are strong.

So the fundamental demand for these aging vehicles continues to grow and I think we are on the right part of the market.

Okay. Great.

On the gross margin front, in the core rotating electrical business, it does seem to, at least the results here seem to buy some strength going on in the core rotating electrical business. Did you talk about gross margins in rotating electrical?

Are you seeing any lift from increased utilization in Tijuana? Anything to comment on there?

You know there are so many variables. I mean I think our productivity is more efficient.

We continue to have some pricing pressures which is [accounted] to that. We have good currency opportunity.

So I think on an overall basis, we expect gross margins just to be stable. We don’t expect to see growth in rotating electrical margins.

We think they will remain stable.

Okay. Great.

Last one from me here on the acquisition front. Are there other acquisitions in the pipeline similar to OE Plus or do you see an opportunity in any other distribution type businesses that would be more attractive to pursue.

If you could just talk about your latest thing here on that.

Yes. I think the OE Plus acquisition we are excited about.

We think our return on capital is going to be significant there, maybe close to 100% for the first year. We like the small acquisitions out there.

We don’t see too many of them unfortunately. I would like to see more of them.

But we are very active. We have changed our infrastructure.

We have a head of business development now as 100% focused on acquisitions. And a new VP of Marketing and product development team have been separated from him.

So I think on both fronts we will have a much more efficient and more effective look at what's out in the marketplace both in doing acquisitions and introducing new product line. So we expect results from them.

We have a great team of people. And certainly acquisitions is part of our growth story.

We are not looking to make acquisitions in any risky companies. I mean companies have to be profitable.

And hopefully we will see some more developments in that but, again, nothing imminent.

I am wondering, and David maybe I missed it, did you breakout revenue by product line? If not, would that be possible?

Yes. We did provide that.

Do you want me to give it to you now?

That would be great if you could.

Sure. Okay.

So for the fourth quarter rotating electrical net sales were $73.5 million, wheel hubs were $15.5 million, and master cylinders was $1.6 million for the fourth quarter.

Great. Thank you.

And I know you talked about revenue guidance for fiscal '16 and you don’t provide it on a quarterly basis. But I guess anecdotally, what can you tell us about how the June quarter is tracking or how you feel about that given that we are two weeks from being done there?

I mean the quarter is strong. It continues to be strong.

Business continues to be strong. It is seasonal so the quarter is sequentially, comparatively speaking we think will be strong.

I think sequential analysis is much more difficult. But overall the business, the business is strong there.

Some challenges here and there as they always are but fundamentally things are good.

Okay. And the bulk of the new business, rotating electrical business with the new customer that you have talked about.

Is that sort of fully up and running on all cylinders now?

You know we think it can do more. I don’t think it's fully up and running on all cylinders but it's strong.

We think it will gets strong as time goes down the road. And we have additional new business in that category coming on board so we are optimistic again about our position in that sector.

But we think it could be stronger. We think the opportunity is certainly out there to be stronger.

Great. And then last question just on your recent debt re-fi.

My math is on an annualized basis, it's something like $0.14-$0.15 accretive based on the rates and what you said you did with it. Is that consistent, David, with how we should be thinking about it?

The way that we are looking at it is, at the end of the fiscal year at March 31, 2015 our term loan was $82.4 million. So it was an interest rate of 6.75%.

At the closing of the new facility, its 2.94%. So we are looking at the savings being different than the interest rate.

So the debt balance can fluctuate.

I think if you assume the outstandings that we had year-end, that’s probably an accurate number, Steve, but obviously that’s going to fluctuate as we move down the road. I mean the great news is that we are not stuck with the term loan for the majority of the financings.

So when we are not utilizing our capital, we are able to pay down that debt and then certainly have the ability to ramp right up as we can deploy capital. But I think on a stable basis that’s correct.

Can you just remind us how long is the supply agreement for the new rotating electrical business you won at the major retailer that began ramping here in the March quarter? Is that a three-year agreement?

Four years.

Four year. Okay.

Great. So aside from the allowances that are backed out of the non-GAAP figures, you have this $37 million new accrued core payments liability on the balance sheet.

Can you just talk about, will you be servicing that liability over the four year life of the supply agreement? I understand that I you lost the business, you will be entitled to that value but just want to understand the capital requirement to run the business and the cash impact going forward?

Yes. The cash is accretive.

It will come out of -- yes, it will be paid over the remaining four years of the contract. The incremental cash flows is greater than the cash needed from that business.

So you essentially make, call it just under $10 million cash attainments a year to buyback those [fours] [ph]. Is that the way to think about it?

That is correct.

Okay. And then could just give us the total amount of receivables back in the quarter.

Maybe it's a question for David, what you would normally disclose in the filings?

That will be shown later in the 10-K that it's filed. It's approximately $260 million.

$264 million for the full year?

Yes.

So call it $62 million in the -- okay. So about flat sequentially.

I am just trying to understand, what generated the $15 million of cash burn in the quarter and then how we should think about use of cash or generation of cash going forward.

That was going to be primarily the inventory build to serve the additional business that we started shipping in the fourth quarter.

So some of that cash will come back. As we started shipping those inventory levels will start coming down as they normalize.

Okay. So can you just help us understand, let's say the expected delta between your net income from free cash flow in fiscal '16 or do you expect working capital or inventory to be a meaningful usage of cash again?

As the company continues to grow the topline, we will be using working capital cash or inventory and a little bit of accounts receivable.

In a flat environment where we don’t have to build inventory, net income is cash, and cash maybe better than that. In a growth environment it's difficult to predict because it depends on how fast we can grow.

And the key use of capital there is basically financing receivables and financing inventory.

Okay. Understand.

Lastly just given your expectation for possible up to 100% return on capital out of a [indiscernible], could you just speak of the accretion that you are assuming or that we should assume for fiscal '16 now?

Again, we haven't sort of broken down that. I think it's all in the $380 million of revenue guidance.

Same part of our margin guidance. So we really haven't broken down the details of that.

Small, but just another, equivalent to another good customer.

I just want to understand a little more the granularity with the inventory purchase adjustment and maybe within the context. I think last quarter you had $12.6 million of previously differed revenue that you recognized and what I am trying to understand is, does the inventory purchases from the customers relate to that and are the inventory purchases that you made during the quarter is something that you will recognize as revenue going forward.

Okay. So let me -- David, you can get him more granularity but let me try and sort of set the stage.

The deferred revenue and the purchases are completely unrelated. Different customers, completely unrelated.

So the deferred revenue situation is gone. I mean we now have current revenue.

So we don’t have that situation with deferred revenue on cores buybacks anymore. That was sort of a onetime pickup in revenue that was not recognized in the previous quarters.

Then relating to this, when you get new business in the rotating electrical remanufacturing arena, the customer has inventory on his shelf, finished goods inventory in this shelf that has two components of value to them. It has the finished good value and it has the core value.

The core value remains on the balance sheet of MPA and the finished goods value remains on the balance sheet of the customer. When you get new business, the incumbent customer who loses it gets reimbursed for the core value of the inventory that they were holding and we take over that obligation.

If we haven't lost that business, we would get that money back as well. So it's like a deposit for the new business.

Got you. But how is those cores then sold back as manufactured products into the customer.

Given that they were 100% cost essentially in the quarter, are they then -- when the revenue is recognized in the backend, are they basically -- is it kind of free cost to goods sold because those cores you have already recognized across for them?

Yes. There will be a complete reversal.

So it will be a big again if we haven't lost the business. So hopefully we won't lose it.

But, yes, there would be a big gain if you lost the business. That’s correct.

And in the meantime while you are doing business with them, the cores just on your balance sheet as deposit and a deposit refundable. And only cores that are never going to be returned will be booked as income which is very immaterial in the big picture.

Understood. Okay, great.

And then so on the rotating business, it looks like you have been very successful in winning new business. How would you describe the health of rotating business as you look forward predicated on new wins versus just the organic base of business that you have?

Yes. So let's just talk about -- [indiscernible] the fundamentals for rotating electrical is not going away.

It remains there. I think we see about a 3% organic growth in the total industry.

I think the customer base that we have in the mix of product that we sell is above that. And with the aging car fleet, rotating electrical replacement rates more than doubled when the cars get above 11 years.

So if you look at the forecasts that have gone to over 12 years average age by 2016. It's all good.

And if miles driven continue to be strong, the miles driven ratio today is actually prerecession levels. People are driving again.

And that's based on two things. I mean unemployment -- the economy is picking up, unemployment has ticked down and fuel prices have come down.

So the two major variables are very much in favor of the aftermarket. And in particular rotating electrical which is just fundamental alternators and starters have to work for your car to work.

So we are optimistic about it. Whether we pick up new business or not I think the category is a good one.

It's a big one and it continues to grow. Having said that, I believe we will continue to pick up new business as well.

I think we have a great product offering and we need to keep performing. That's certainly we expect to continue to gain share in the marketplace.

That was a quick turn. In the wheel hub business, can you -- it sounds like you have line of sight towards further growth in that.

Can you just describe the nature of that business and what is enabling you to grow that from the current base?

Yes. The key to wheel hub, it's the mechanism that attaches to the axle that holds the wheel on to the car, but embedded in that wheel hub is an anti-lock braking system which has a number of bearings and sensors.

That product is still aging. Originally it was introduced with disc brakes on the front wheels.

So really the core aging hasn’t really reached above 11 years. So interesting enough if you look at the replacement rates for wheel hubs, you see them go down for vehicles over 11 years which shows that the wheel hub antilock braking mechanism haven't really reached peak aging period with any replacements.

But they are coming. And then in addition to that, a lot of the cars today have it on all four wheels and going forward we expect all cars to have it on all four wheels.

So not only is the aging coming into being but the number of wheels in application is going to double. We have a great offering.

Our performance levels in supplying that product, 99% to 100% fill rates. And we feel like we have got a great spot in the marketplace and we are optimistic we have a lot of new business coming on wheel hubs already signed up.

So we are optimistic that we will become one of the major players in that category.

And the margins in that business are consistent with rotating?

No, the margins are much lower. I think the original guidance we gave on that is, it's a 10% EBITDA business.

So while we don’t see any erosion in any of our product line margins, the mix of product may affect gross margins. But the dollars should be there.

It's more of a distribution business. Even though the product is made to specifications and engineered but we don’t own own factories in that area.

Well, I appreciate everybody's time and we look forward to not in, not too distant future reporting again due to the nature of the timing of the year-end and the first quarter. I appreciate everybody's interest in the company.

We remain optimistic and we thank you for listening in.