Jun 14, 2018 • 01:00 pm ET



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David Lee

through 7 in this morning's earnings press release.

At this time, I would like to detail the components of the $301.7 million long-term core inventory on our balance sheet as of March 31, 2018. As disclosed in the Company's filings, long-term core inventory consists of four categories including used cores held at the Company's facilities of $53.3 million; used cores expected to be returned by customers of $13 million; remanufactured cores held in finished goods of $34.2 million; and remanufactured cores held at customers' locations of $203.8 million, which represent a core portion of the Company's customers' finished goods at the Company's customers' locations.

Of these four categories of long-term core inventory, it should be noted that the Company directly manages only the sum of used cores of $53.3 million and remanufactured cores of $34.2 million at the Company's facilities, less allowance for excess and obsolete inventory of $2.5 million, totaling $84.9 million or 28% of the total balance.

The remaining balance of $216.7 million or 72% represents a core portion of finished goods at the customer's locations of $203.8 million and used cores expected to be returned by customers of $13 million and is tracked by the Company to ensure that we either get a core back or receive payment for the core as a result of a non-returned core, but the Company does not directly manage if or when that core will be returned. We know that many of you have viewed our recently produced video on the Company's website discussing the dynamics of the core exchange program. We encourage those that haven't to take a look.

We will now open the call for questions.