Good day, and welcome to the Key Tronic first quarter fiscal 2024 conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Brett Larsen. Please go ahead. Thank you. Good afternoon, everyone. I am Brett Larsen, Chief Financial Officer of Key Tronic. I would like to thank everyone for joining us today for today's conference call. Joining me here in our Spokane Valley headquarters is Craig Gates, our President and Chief Executive Officer. As always, I would like to remind you that during the course of this call, we might make projections or other forward-looking statements regarding future events or the Company's future financial performance. Please remember that such statements are only predictions. Actual events or results may differ materially. For more information, you may review the risk factors outlined in the documents the company has filed with the SEC, specifically our latest 10-K, quarterly 10-Qs, and 8-Ks. Please note that on this call, we will discuss historical, financial, and other statistical information regarding our business and operations. Some of this information is included in today's press release, and a recorded version of this call will be available on our website. Today, we released results for the three months ended September 30th, 2023. For the first quarter of fiscal 2024, we reported revenue of approximately $147.8 million, up 8% from $137.3 million in the same period of fiscal 2023. The increase in revenue reflects the continued ramp in production for new programs, particularly those produced in our U.S. facilities. Revenue is down sequentially from the fourth quarter of fiscal 2023 due to the customer's redesign of a large outdoor power equipment program. But we estimate that program to come back online later in fiscal 2025. The company's gross margin for the first quarter of 2024 was 7.4%, and operating margin was 2.2%, compared to a gross margin of 7.6% and an operating margin of 2.4% in the same period of fiscal 2023. The margins in the first quarter of fiscal 2024 included severance costs of about $0.6 million as we reduced our workforce by over 100 employees in Mexico and in the U.S. The workforce reduction reflects some softening demand for a number of different programs for the next few quarters in Mexico and is expected to reduce operating expenses by more than $5 million on an annualized basis. Excluding these severance costs in the first quarter of fiscal 2024, gross margins and operating margins would have been approximately 7.8% and 2.6%, respectively. Our recent production efficiencies, strategic labor cost reductions, and the gradual stabilization in the supply chain and labor markets has been largely offset by the strengthening of the Mexican peso relative to the US dollar in recent months. However, in the second quarter of fiscal 2024, we are beginning to see the peso weaken to the US dollar, which may translate into improving conditions moving forward. For the first quarter of fiscal 2024, net income was $0.3 million, or $0.03 per share, compared to $1.2 million, or $0.11 per share, for the same period of fiscal 2023. The year-over-year decline in earnings was primarily due to a $1.1 million increase in interest expense on higher interest rates and an unanticipated severance cost of $0.6 million, or approximately $0.04-$0.05 per diluted share. Net income continued to be adversely impacted by the strength of the Mexican peso. Turning to the balance sheet, we ended up the first quarter of fiscal 2024 with reducing inventory by approximately $43 million, or roughly 25% from the same time a year ago, primarily reflecting increased shipments and a concerted effort to drive inventory reductions. Total inventory turns increased to 4.4x in the first quarter of fiscal 2024, up from 3.1 turns a year ago. We are pleased to see our inventory levels start to become in line with our current revenue. At the same time, the state of the worldwide supply chain still requires that we look out much further in the future than in historical periods. We are still recovering from the COVID supply chain chaos as our customers have revamped their forecasting methodologies, and we have significantly modified and improved our material resource planning algorithms. As a result, we should be better equipped for future disruptions in the supply chain, even as we continue to drive inventory down. During the first quarter, we also reduced accounts payable, leasing obligations, and overall debt by a combined amount of $22.7 million during the quarter. At the same time, accounts receivable remained relatively flat on increased revenues year-over-year, with DSOs at 81 days, down from 91 days a year ago, which we believe reflects some improvement of certain customers with respect to disruptions from supply chain issues. Total capital expenditures were about $0.4 million for the first quarter of fiscal 2024, and we expect total CapEx for the full fiscal year to be around $8 million. While we're carefully keeping an eye out on capital expenditures, we plan to continue to invest selectively in our production equipment, SMT equipment, and plastic molding capabilities, utilize leasing facilities, as well as make efficiency improvements to prepare for growth and add capacity. For the second quarter of fiscal 2024, we're seeing a continued increase in demand for programs based in our U.S. facilities and some softening of customer demand for our Mexico-based programs. As previously announced, the large program with a leading power equipment company is now expected to resume materially in fiscal 2025 rather than 2024, with a customer redesigned product. For the second quarter of fiscal 2024, we expect to report revenue in the range of $135 million-$145 million, and earnings in the range of $0.05-$0.10 per diluted share. In the second half of fiscal 2024, we expect increased demand for our Mexico-based programs and continued growth in the U.S. and Vietnam. We also have a strong pipeline of potential new business. Over the longer term, we believe that we are increasingly well-positioned to win new EMS programs and continue to profitably expand our business. That's it for me. Craig? Thanks, Brett. During the first quarter of fiscal 2024, we continued to ramp many new programs produced in our U.S. facilities and remain profitable despite a temporary softening of customer demand for our Mexico-based programs. We're also pleased to see our inventories be more in line with current revenue levels and other improvements made on the balance sheet. Over the past four years, we have seen a 9.4% CAGR of revenue, largely driven by an increase in new programs, predominantly in North America. During those same four years, we have seen our total number of new customer programs grow by approximately 100% from the number in fiscal 2020, while revenues increased by 31% over the same period. This has led to less concentration in any single customer and has enabled us to be less financially dependent on any single program. During fiscal 2023, we had only one customer that represented over 10% of revenues, and they represented only 12%. Meanwhile, our U.S. sites have added over $60 million in new program wins in the past 12 months as a direct result of continued onshoring. Moving into fiscal 2024, we continue to see the favorable trend of contract manufacturing returning to North America. As a result, we continued to expand our customer base and won new programs involving security equipment, sporting goods, environmental solutions, and industrial control systems. Global logistics problems and China-U.S. geopolitical tensions continue to drive OEMs to examine their traditional outsourcing strategies. We believe these customers increasingly realize that they have become overly dependent on their China-based contract manufacturers for not only product, but also for design and logistics services. Over time, the decision to onshore or nearshore production is becoming more widely accepted as a smart long-term strategy. As a result, we see opportunities for continued growth. Moreover, a growing number of potential customers are actively evaluating a migration of their China-based manufacturing to our facility in Vietnam. In the coming years, we expect our Vietnam facility to play a major role in our growth. While China growth has slowed and many companies have decided to take risk mitigation steps with their China manufacturers, the fact remains that many components must be sourced from China. Our procurement group in Shanghai, which serves the entire corporation, remains important for managing the China component supply chain on an ongoing basis. The combination of our global footprint and our expansive design capabilities is proving to be extremely effective in capturing new business. Many of our large and medium-sized manufacturing program wins are predicated on Key Tronic's deep and broad design services. Once we have completed a design and ramped it into production, we believe our knowledge of a program's specific design challenges makes that business extremely sticky. We also invested in vertical integration and manufacturing process knowledge, including a wide range of plastic molding, injection blow, gas-assist multi-shot, as well as PCB assembly, metal forming, painting and coating, complex high-volume automated assembly, and the design, construction, and operation of complicated test equipment. This expertise may set us apart from our competitors of a similar size. As a result, a customer looking to leave their contract manufacturer will find a one-stop shop in Key Tronic, which is expected to make the transition to our facilities much less risky than cobbling together a group of providers, each limited to a portion of the value chain. In fact, most of the new customers we have onboarded take advantage of this one-stop-shop capability that we provide. We believe global logistics problems, China-U.S. political tensions, and heightened concerns about supply chains will continue to drive the favorable trend of contract manufacturing, returning to North America, as well as to our Vietnam facilities. We continue to see improvement across the metrics associated with business development, including a significant increase in the number of active quotes with prospective customers. This unprecedented increase in demand for our unique mix of skills, location, and people has enabled us to negotiate more favorable pricing terms and business parameters than in the past, as well as to be much more selective in the new customers we bring on. While this shift in leverage will not manifest in the short term, its effect on our long-term performance should be profound. We move into fiscal 2024 with a strong pipeline of potential new business, and we're seeing some improvement in our gross margins. Production delays and softness in demand in Q2 and higher interest rates and a strong peso will continue to dampen our growth and profitability in the near term. Nevertheless, we're very encouraged by our progress and potential for growth in fiscal 2024 and beyond. This concludes the formal portion of our presentation. Brett and I will now be pleased to answer your questions. Thank you. If you would like to signal with questions, please press star one on your touch-tone telephone. If you're joining us today using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one if you would like to signal with questions, star one, and we'll pause for just a moment. Our first question will come from Bill Dezellem with Tieton Capital. Thank you. First of all, let's start with the normal. You had four wins. What was the size of each of them, please? And then any commentary and discussion around each of them would be appreciated. Let's say security equipment, about $12 million, sporting goods, $10 million, and then hopefully another $8 million, environmental solutions, $4 million, industrial control systems, $3 million. And, would you kind of walk through each of those for us, and just in terms of whatever additional information you can share besides the name, the industry that they're in? Sure. All of them take advantage of multiple capabilities that we have, so they're not just, not just board stuffing. All of those are actually in the U.S. sites rather than in Mexico, and three of them are return quote opportunities from a couple of years ago, which is interesting. I'm not sure if I can draw a conclusion from that, but we call them boomerang accounts, boomerang quotes. And all of them, four out of the five are PCBs and final box build and some mechanics along with it. And so talk a little bit about those. I like the term boomerang. The boomerang quotes and wins, the dynamics there. Is it your understanding they went somewhere else and another CM failed, or that they kept with their current situation and finally decided to make a change? What happened? Well, that's why it's a little bit hard for me to draw a conclusion, because there's a whole bunch of different stories behind each of them. So a couple of them we've been talking to for years, and the programs we quoted on were new development programs that never went anywhere. And the other one awarded the business to somebody else. It didn't work out well, and they came back. Thank you. Then, Craig, in your opening remarks, you referenced that the number of customers versus four years ago, it has doubled or is up 100%. How- Yes. How do you think about that? Because there's this trade-off between less customer concentration and yet the challenges of managing the smaller pieces of business. What are the dynamics around that, as you think about it? Well, there's a lot of different aspects to that situation, and it's hard to draw a real generalized conclusion other than the ones I've stated, that it does tend to improve our leverage with the customer in negotiations when the customer knows they're not 15% of our business. We don't see a big delta in cost between running a $5 million program and a $40 million program, in terms of support costs and overhead. It's actually a little bit easier to manage when it's on the smaller side because you don't have such massive amounts of parts that you're trying to keep your arms around. It's also easier in that many times these programs were not part of a big corporation, that we can't get to somebody who will listen to the situation at hand and respond logically. So even though it seems like with a $50 million program, you should have a lot more ability to talk to people who have the power to make decisions, oftentimes that $50 million program is part of some billion-dollar corporation, and you can't get to somebody who you need to talk to, to make logical sense out of what's going on. So we don't, we don't see what's classically taught in the business schools, that the smaller programs are less profitable. We probably see at least parity between them, and probably an advantage going to the $10-$20 million program compared to a $50- $ 80 million program. That doesn't mean we're not always looking for the $50- $ 80 million program, but if you look back in history, other than a couple of them that have been long-standing, they tend to be more flash in the pan than you would hope. So we are happy with the fact that we're growing in the $5- $ 20 million programs on a steady basis and much faster in that realm than we were 3-4 years ago. That's, that's helpful. Thank you, Craig. And then, you referenced a couple of times, I think you both did, that the U.S. based customers, let me phrase that different. The customers with, that you are, manufacturing for in your U.S. facilities are showing strength, whereas the customers that are in your Mexico facilities are, are showing some weakness. Is there any, any conclusion to draw, from the location at which you are manufacturing and the, relative strength? I'm struggling to do so. I would like to be able to give you an earth-shattering revelation on why, at this point, Mexico is down and U.S. is up. I think it has to do with the fact that there's so much growth and new programs coming into the U.S. sites, that although they have seen downturns in some of their customers, those downturns have been swamped by all the new business coming on board. The business in Juárez was unexpectedly dampened by the power equipment business having to go on hiatus while the customer redesigned the product. And so what should have been new business that was swamping out, other small decreases in the other business in Juárez, is not there right now. I think that set of just individual circumstances is the driver rather than any kind of market or business overarching trend that you can point to, or at least that I can point to. That commentary is appreciated, even though it's not the revelation that you had hoped you'd be able to share. I did hear, or we heard, of another company that saw weakness right after Labor Day. Curiously, it did correspond with Hamas attacking Israel, and then things two or three weeks later returning to normal. Have you seen anything similar to that peculiarity that that company saw? No. When we talk about the positive to negative phone calls we get from our customers and the ratio of those, we had a little bit of a dip four or five months back that we thought we were worried was the signal for a broader-based, oncoming recessionary freight train. Then that ratio flattened out, and we started to get hopeful. And then a couple months ago, the ratio went bad again, but it has now once again flattened out. So if you look at it, it was a small step down, a medium step down, but now it's flat again. So I can't give you any... We're typically a front-end predictor of what's going to happen, and right now, I can't give you any good indication that it's going to continue to get worse, it's going to stabilize, or it's going to get better. ... All right, great. Thank you. I will step back in queue and re-enter, so others have an opportunity. Okay. Our next question will come from Sheldon Grodsky with Grodsky Associates. Good afternoon, everybody. Hi. I have two questions that are unrelated. Start off with that power equipment manufacturing problem. That sounds like a pretty big disaster if it's gonna be kind of held in abeyance for a year. Does that relationship with bracket intact? I mean, what. I know you, you're not supposed to say bad things about your customers on these calls, but did they handle all the design, or were you in it together? The way that many of our programs work is that we contract to provide design services, and that was the case with this customer. In that situation, the customer will say, "I would like you to design this bracket. It needs to be this strong, and it needs to withstand this many flexes." We say, "Okay." Our engineers sit down at the CAD station, and we design that bracket to meet that load and that number of flexes, and we put it on our test equipment, and we prove that it meets that load and that many flexes, and customer approves the design, and we go out and we buy tooling, and we manufacture it. When the product hits the market, and it turns out that the performance specifications that our customer gave us were underrated in some way, and the part begins to fail, usually the situation is clear enough that we remain friends with our customer, and the business goes on. And in many cases, the relationship is strengthened because as we go through the troubleshooting, to determine what the problem has been and why, our engineering team proves its mettle under challenging and time-constrained conditions. And that, that's the situation that we're in with this customer today. I believe we are in a better position from a relationship standpoint than we were previously, and, things are moving forward, and we are actually continuing to design the next generation product while this current generation product is being tweaked. I have an unrelated question. I want to tell you, Sheldon, that I never did that- Yeah. I want to tell you, I never explained that that way before, and I'm pretty proud of that. Yeah, it was pretty good. That was pretty, that was pretty good. So I hope that helps. It's with regard to China, one little company that I follow has been having interesting problems suddenly getting export licenses- Yep. Which kind of leads me to believe that the trade war or the Cold War between the United States and China is heating up. Have your people found situations where they either can't export to fulfill orders because of new requirements coming from the local communist officials or anything like that, where that it's becoming a significant impediment to operations? The reason that many of our new customers are new customers is that they have run into exactly that type of problem. So the trade war, you know, you can read about what our president has said to their president and all those kind of things, but what really matters is what's happening to our current and prospective customers as they try to source product and do business overall. That means get new designs designed, get ramps either up or down, send engineers in there to help. All that has gotten dramatically harder in the last three, four years and continues to get worse. It's not static. It's actually continuing to get worse. And it's making... What's interesting to us is that it's making the people that were more or less on the fringes of, "Should we be in China or not?" The people who don't have big money to throw at a problem when suddenly they can't get parts out of there for a day, or a week, or a month. It's making those people change their approach earlier than the folks who are bigger and have the wherewithal to kind of withstand the buffeting of the, of the Cold War, as you call it. So that's why we see a lot of these $ 8- $ 10, $20 million wins that are happening for us, because those are the people that are on the fringes and are the most severely impacted without the financial wherewithal to manage those impacts on a timely basis. Okay. I thank you. Yep. ... And as a reminder, if you would like to signal with questions, please press star one on your touchtone telephone. Again, that is star one. And our next question will come from George Melas with MKH Management. Thank you. Hi, Craig. Hi, Brett. How are you? We're okay. Good. Okay. A follow-up to Bill's questions on the smaller customers. You are sort of suggesting or telling us that you think that from a management perspective... That—maybe let's think about it from a numbers perspective. I think you're suggesting that from a gross margin perspective, they might be a little bit better because you have a little bit more leverage. From an SG&A perspective, maybe they are equal to their larger peers as a percentage of revenue. So first of all, is that correct? Is that the right way to interpret that? Yep. Additionally, customers that are on the very small end that have proven not to fit that model, we have been actively disengaging with. So there's been a, Okay. There's been a trade of customers, specifically in our U.S. sites, where those sites were struggling to maintain the revenue base that they had, where those sites are now struggling to service the new growing revenue base that they now see. And as a result, we've been circling around and taking the bottom of our list of customers, and some of them we part ways with because they're just small, and they have a much, much worse ratio of listings and overhead compared to the revenue base that we're enjoying with them. Some of them we walk away from because they have proven to be untrustworthy, and we don't have to deal with it anymore. And some of them we walk away from because we don't see any type of future, and we're concerned about their financial health. But that's a change. Okay. We haven't done any systemic pruning of our customer base since I've been with the company. We've done some a little bit here and there, but nothing as overt and as... What's the right word? I don't know. Anyway, we haven't done this before. It's purposeful. Like, so you really sort of have- Right. Yep. Right. Yep. That is part of your strategy now. Yep. It's not sort of occasional or opportunistic or because somebody really pisses you off. It's just a process of pruning. George, I would never make a decision based upon how pissed off I am. I wouldn't want you to, because I think you can be pretty tough, so I don't know. Okay. All right. From a working capital perspective, these small customers, you tend to do a lot for them. They take advantage of a lot of your capabilities. Basically, it means a lot of parts. And, how does that impact you from an inventory perspective and also from an AR perspective of these small customers? Are you able to get slightly better terms? Well, that's the interesting part of it, or interesting aspect of it. I didn't want to say parts, because parts are coming into it here. The... If you've got a customer who represents 15% of your business, and that customer starts pushing you around in the sense of dumping a big forecast on us, demanding that we buy to that forecast, and then misses that forecast, and then forces us to spend six months to a year in negotiating whether or not they're actually going to conform to the contract they signed and pay for those aged parts, that's a lot different than a $10 million customer who knows that they're a $10 million customer and are going to behave as, out of necessity, as if they are in this together with us, rather than taking advantage of our, our neediness. So even though more smaller customers results in a bigger parts catalog, it results in a lot more rational behavior in how we are forced to buy parts and how we can react when those parts do end up being excess for some time period. We have a lot more of ability to enforce, and I'm not saying that we're egregiously mean to these smaller customers. I'm just saying that we're in a lot better position to keep the relationship on a even fair and as anticipated in the contract basis, than we sometimes are with a customer that's 10%, 20% of our business. Okay. So that's part of why we made the dramatic improvements in inventory that we see and we expect to continue to see. And the other part of it is that as COVID came and went, as the supply chain got horrible, and now is just kind of horrible, a lot of the standard behavior among our customers was challenged, and a lot of them have made great improvements in how they think about forecasting and inventory. Because the sequence went along the lines of, "Now we're just going to keep driving, keep trying to buy parts because we know we're going to need a lot more." And then, parts became available, demand started to shrink after COVID, and the response was: "Well, we're just going to not pay Key Tronic because we can't, they can't make us." And then when it turned into that, "Well, Key Tronic isn't going to be quiet, we're going to have to pay them," that drove some of these customers to look at their processes and say: "Well, wait a minute. If we're going to have to actually live up to the provisions in our contracts, we need to be a lot more mindful about how we forecast and order." And so that has changed for the better in a number of our customers. And then at the same time, I've talked about how we have dramatically improved our material resource planning based upon what happened, which was out of the norm for the past 20 years during COVID. So those two factors, I think, are going to continue to drive our inventories down, down, down to where we get to some pretty decent turns, which is massively important when money's no longer free, like it isn't today. Right. So maybe can we try to put a number to that? What do you think your inventory turns, what would be your goal in the next 12 months? Well, I have a goal, but I'm not making you a promise, so I rarely give you any kind of a forward-looking number, but I'm going to under that proviso. So I'm, I'm taking a note, George. So a year from now, if you start badgering me about this, I'm going to say it was only a goal. Okay, sounds good. So, yeah. I want to get us to over six turns. Oh, wow! We're at four now. We went from 3-4 Yep. That's my goal. I don't know much about how you manage MRPs and inventory turns and … What, what would enable you to get there? You're talking about better forecasting from your customers, better MRP algos on your part, but what, what could, because that, that would be really an improvement in the model that would be dramatic. Yeah, and I think both of those things are dramatic. So everything I laid out in the past 10 minutes of me talking, when you add all that up, that is a dramatic change in how all of this works. And we've just started to see it really drive things down from January through today, and our projections are that it's going to continue to do that. There may be some bumps and hiccups as we go. Yep. But overall, we continue to see that... I mean, there are programs. We've got programs, George, big programs, that we've got running so well, they're turning over 20x a year. Okay. So mathematically, you should be able to get somewhere better than four if you can just keep all the... You know, inventory is kind of a story of one damn thing after another. You know, you can look at the top 25 customers and everyone that's not turning at s i x, there's some damn reason why it's not. And it's not the math- Sure. And it's not the process, it's something that happened. And so beyond the math and the process, there's the institutional discipline to look at every one of those damn things that happened and say, "All right, we're never letting this happen again on any of our customers, not just this one customer." And as you start to drive the policing of making sure those one-offs never happen again, that starts to add up, as well as all the process changes. Might I add that at the point in time, one of those customer programs continued to be on the list of those that are turning at far less than s i x turns. That's also the point in time when we are purposefully looking at: Is this a good fit for Key Tronic? Right. Okay. So we're going back to customers and saying, "You're turning it 2x. That either changes or you need to find somebody different. That is also, again, drastically different than how we've operated in the past. How we could operate in the past. Okay. Correct. Because we were too desperate to keep every customer we had. Okay. So I think that's some dramatic changes. It feels like always you've done so much for the customer. You have so much breadth of capability. You've spent a lot in CapEx to be able to do all these different things, but never were quite comped enough by the customer for all that you could do. So maybe now things are changing somewhat. I think that's true. Okay. Another quick question. Well, that's certainly not a quick question. You said you write that you see gross margin gradually improving. What do you mean by that? Because in this quarter, they didn't. So I just want to understand what you mean by that. Well, this quarter we didn't because we got hit by... It was a triple whammy. Sure. So we got hit by the sudden hack of the power equipment program. We got hit by the peso suddenly getting a lot stronger because our government keeps printing money, and we got hit by the fact that interest rates have gone up dramatically because our customer keeps printing money. So those three unexpected events, or not unexpected, events out of our control drove the gross margin this quarter down lower to where we wanted it to be. That's. We had to respond quickly with the layoffs, and we took quite a bit of charge for inefficiencies as we had extra people around, beyond just the severance cost. So this quarter was a bit of an anomaly in that three things combined, without a lot of warning, to hammer us. Okay. So where do you see gross margin going in, I don't know, let's think far in the future, fiscal 2025, what do you think they could be in terms of gross margin, I mean? We've always said we could be at nine. We've been there every now and then, but again, it's one damn thing after another. But we believe nine is achievable and should be able to get there. Okay. And then, Brett, quick question on OpEx. OpEx is pretty low this quarter. Is there some explanation for that, or? There was a small gain on insurance. I think it was $300,000-$400,000, George- Yeah. which dropped raw OpEx. My expectation is OpEx should be fairly flat in our second quarter. Okay, but if we can just SG&A to simplify, to make it easier to think about it, it was 5.8 this quarter. Is that a run rate? Let's see here. You've got SG&A of 5.8. Last year was roughly 5.7. Sequentially, it's down quite a bit. Yeah. In our Q4, as we had mentioned, there was some bonus calculation that went through the quarter that propped up Q4. But my expectation is that Q2 should be flat to Q1, and a slight increase in Q3 and Q4 of G&A. Okay, great. Okay, thanks a lot, guys. Appreciate it. Yep. Thank you. We'll take a question from Bill Dezellem with Tieton Capital Management. Thank you. I want to come back to the inventory turns for just a moment. If we roll the clock back a decade, back in 2013, inventory turns were up north of that, north of 6x, even up into the sevens. What is... and, pardon me for lack of memory here. What is different or what was different back in 2013? Fewer customers, and you had an infinite supply of parts. Whereas now, the supply chain and the challenge of getting parts in the door has created havoc. Yep. All right. And we're suffering it from... The company's inventory position has kind of got long COVID, in that what happened during COVID has taken almost until now. In fact, we still have some parts around that are a result of COVID. So what happened during COVID, we're still working our way through. And that was, we've talked about this before, is that back, back in the teens, you could get just about any part you wanted in six weeks. And so the MRP systems were all designed to run with that as one of the variables. And then when COVID hit, it was the opposite of that, and none of the MRP systems actually had that as their governing variable. I shouldn't say none. I'm sure there were some somewhere, but ours certainly didn't, and a lot of our customers didn't. And so that's what drove our inventory turns down as low as they went, and that's why we're thinking we can get them back up to six, even with more customers and longer lead times for parts. ... And Craig, you may have just touched on something that you had mentioned much earlier in the call relative to system upgrades, and I think you referenced your system upgrades and maybe even customer system upgrades. Does this all tie into what you're talking about right now, or are those two totally different things? No, that's exactly the same thing. And so the upgrades that took place in the systems that are planning out inventory is making the lead time actually a variable rather than a constant? The lead time always was a variable, but it wasn't driving the algorithms as if it was a constraint as much as it should have been. All right. And- That's... Go ahead. More, more, more importantly, the way people understood the system and managed those lead times were not driving the system the way it should be working. So I, I'm not going to go into it. You can call me later, and I'll give you an MRP lesson if you want. But the bottom line is that the way we use the system and the way we've configured the system is much different than it was before we went into COVID. And the way our, many of our customers configure and use their system now is much different than it was before we went into COVID. And do you- I'll try to give you an example. So when we were in the midst of COVID, it took almost a year for many of our customers to actually revamp their thinking and realize that it wasn't a possibility to call us up and threaten and yell and abuse, and become the squeaky wheel and get their parts. That used to work. And so it was a big eye-opener for many customers that there was actually nothing that could fix this other than time. And no amount of yelling or degrading or threats or payments, you know, some type of speed-up payment, none of that was going to work. And that was a massive, massive realization for everybody in the industry that had spent most, many of them, their entire careers operating under the assumption that you could always get your parts in at least, you know, at most eight weeks, if you made enough noise. And so if you then take the ramifications of that and spread them back through the planning process and the algorithms that you use in your planning process, that's a profound change in thinking. That's helpful. And then you, you referenced the, customer systems. Is it your sense that the customer systems, generally speaking, have now taken this into, into account, and so kind of that, that heavy lifting is done? Yeah. Many, many of our customers are now investing money in having us stockpile some of the troublesome components for them. That was... People used to give that lip service before COVID, but I can't think of anybody that actually did that before COVID. Even though we would talk about it every time there was an event when they couldn't get a product and they needed it, and there would be this kind of relationship, challenging situation, and we'd be yelling at each other on the phone, and we'd be flying out to see each other, and we'd talk about, "You know, God dang it, if we would just, you know, take these scary parts," I remember the title of it. We had a scary parts list. If we just take these scary parts that are on this list, and you guys would invest $100,000 out of your $40 million spend, if you put $100,000 into this, you guys wouldn't have this situation crop up again and again and again. The response was always: "Well, we're not going to do it. You do it." We always say, "Well, we can't afford to do it. You do it." Then it would never get done. That has changed. We've probably got 30%-40% of our customers who are in some type of standby inventory situation with us, where they have realized that in order to ensure their supply chain, they need to invest wisely in one, two, three, or four parts that are their customary problem parts on their bill of material. That's a really big change. They're paying for those parts? Yeah. Great. May I ask one more question, completely unrelated to this? You made reference to the strength in the pipeline of business for the Vietnam facility. Would you talk around that a little more? And is the actual number of programs potentially moving to Vietnam from China higher than it was three months ago? No, it's actually the potential of programs moving from the States to Vietnam and skipping Mexico. So talk a little bit more about that and your comment, I think, that you see Vietnam as part of the future growth of the company. ... Yeah, so Vietnam is less expensive than China and less expensive than Mexico. And Mexico continues to legislate higher and higher wages, and as they do that, more customers that were looking solely at Mexico as a way out of China are now willing to look at Vietnam and India. We haven't made a decision on India as of yet, but Vietnam is pretty close to India pricing and far ahead of the various supply chain issues that you see in India. So we have a number of big opportunities cooking for Vietnam. Vietnam got stalled out during COVID and is restarting in terms of business acquisition, so this is on the front end of it. But we're predicting that a year from now, there'll be a couple, three big wins to increase the size of what's going on in Vietnam for us. These would be new customers to you, Craig? Yes. Yep. How about business moving from China to Vietnam? What are you seeing there? Our business or business in total? Business in total. We don't see as much as that as you would think, because people tend to think of, "It's all Asia. We need to get out of Asia. Interesting. Okay. Thank you both for the time today. Yep. That does conclude the question and answer session. I'll now hand the call back over to Mr. Craig Gates. Okay. Thank you, everybody, for participating in our conference call today. Brett and I look forward to speaking to you again next quarter. Well, thank you. That does conclude today's conference. We do thank you for your participation, and have an excellent day.