Q3 2019 Earnings Call
Presentation, there will be a question answer session.
Ask a question during the session you will need to press star one telephone. Please be advised of todays conference is being recorded if you require any further assistance. Please press star zero I would now like to Honda conference over to her house today relationship to guard. Please go ahead sorry.
Thank you prints.
Good morning, and welcome to Glatfelters 2019 third quarter earnings Conference call.
This is remains shut a guar vice president of Investor Relations and corporate Treasurer.
On the call today to present, our third quarter results are Dante Parrini, Glatfelters, Chairman and Chief Executive Officer, and Sam Hillard, Senior Vice President and Chief Financial Officer.
Before we begin live nation I have a few standard reminders.
During our call. This morning, we will use the term adjusted earnings as well as other non-GAAP financial measures.
A reconciliation of these financial measures to our GAAP based results is included in today's earnings release, and Andy Investor slides.
We will also make forward looking statements today that are subject to risks and uncertainties.
Our 2018 Form 10-K filed with the FCC and today's release.
Both of which are available on our website disclose factors that could cause our actual results could differ materially from these forward looking statements.
These statements speak only as of today and we undertake no obligation to update them.
I will now turn the call over to Dante.
Thank you remain.
Good morning, and thank you for joining us today.
Apologies for the raspy voice.
In the third quarter the business delivered solid results continuing the trend of consistent performance.
Since the divestiture of the specialty papers business.
Revenues for the quarter were $233 million well adjusted EBITDA was $28 million.
Adjusted EPS of 22 cents was ahead of expectations.
Driven by a strong quarter for Airlaid materials excellent progress on overall cost reduction and a favorable tax rate.
Which more than compensated for softness in composite fibers.
Airlaid materials posted another record quarter with sales of $105 million and adjusted EBITDA of $17 million.
The while revenue was up over 50% in constant currency.
Including the benefit of the Stein for an acquisition.
Our legacy business again posted double digit sales growth.
Overall EBITDA margin it Airlaid expanded 80 basis points to just above 16% when compared to the second quarter.
Because momentum we're on track to meet or exceed expectations on legacy volume growth and staying for operating profit for the here.
In composite fibers results were negatively impacted by challenging market conditions and the effect on market related downtime.
[noise] shipments for the segment declined 11% in the quarter, while revenues were lower by 4% on a constant currency basis.
However, with relentless cost control, we were able to mitigate the EBITDA margin impact 200 basis points when compared to the second quarter.
At the enterprise level corporate costs this quarter were $4.2 million lower when compared to last year as we made excellent progress toward our cost reduction initiatives.
The ongoing reshaping of our overall cost structure further contributed to improved earnings and cash flow generation for the quarter and enabled us to reduce our net leverage to 2.9 times.
At this point I'll turn call over to Sam to provide a more in depth review of our third quarter results. I will then offer some additional commentary as part of my closing remarks before opening the call for your questions Sam.
Thank you Dante.
Third quarter adjusted income from continuing operations was $9.7 million were 22 cents per share.
The approximate 10 million dollar improvement from third quarter of last year was driven by continued strong growth in our Airlaid materials segment accelerated progress in our cost reduction initiatives and a favorable tax rate for the quarter.
Slide four shows a bridge of adjusted earnings per share from the third quarter of last year of zero cents to this years third quarter of 22 cents.
Composite fibers results reduced earnings by one cents as lower shipments increased market downtime and operating costs were not fully offset by favorable input costs and higher selling prices.
Airlaid materials results increased earnings per share by seven cents.
Legacy blamed growth and the addition of the Stanford acquisition to the portfolio.
Corporate costs improved results by five cents as we made meaningful progress toward reducing our corporate overhead following the specialty papers divestiture.
Net interest expense improved earnings by two cents from lower borrowing costs throw debt refinancing earlier in the year.
And taxes and other items improved results by nine cents, driven mostly by a significantly lower tax rate.
Slide five shows a summary of third quarter results for the composite fibers segment.
Total revenues were 4% lower on a constant currency basis compared to last year due to a net volume decline of 11%.
Metalized products shipments were down 20%, well nonwoven wall cover and composite laminate shipments were down 17, and 10% respectively.
Claims and food and beverage as well as technical specialties were essentially flat when compared to the year ago quarter.
They'll coffee volume growth continued to be strong it was largely offset by t. shipment declines as customer demand was subdued across all regions.
Overall raw material prices were favorable primarily driven by wood pulp price reduction with partial offset from rising a backup prices.
Operations were negatively impacted by increased machine downtime of $1.3 million to align inventory levels with lower demand.
Well labor and general inflation also impacted operating costs by an additional $1.2 million.
The impact of foreign exchange hedging in the third quarter relative to last year was favorable to the piano by $800000.
For the fourth quarter shipments and selling prices are expected to be in line with the third quarter.
We also expect raw material prices to remain flat sequentially as wood pulp prices continue to trend lower but our neutralized by higher a backup prices.
We plan to take additional market related downtime and expect a resulting fixed cost absorption penalty of approximately $1 million as we continue to proactively managing inventory levels.
Slide six shows a summary of third quarter results for the Airlaid materials segment.
Including Stein for total revenues for the quarter approached $105 million, a 51% increase on a constant currency basis, while shipments grew 49%.
The legacy business, excluding staying for also recorded strong volume growth of 16% with revenue up 14% on a constant currency basis.
Well all product lines experienced growth on a year over year basis. The increase was driven by tabletop volume, which more than doubled and shipments of wipes, which rose 36%.
This quarter concludes the first full year of Stein for operations being part of the Glatfelter portfolio.
The business posted very impressive results driven by solid operations and synergy realization.
The third quarter results underscore this facility is ability to deliver at the upper end of the previously communicated operating profit range of $7 million to $9 million for the full year in 2019.
Selling price declines, resulting from contractual pass through arrangements with customers were more than offset by the underlying raw material and energy price improvement.
Operating profit for this quarter more than doubled driven by the Stein for an acquisition and strong legacy business performance, including our Fort Smith facility.
Overall, EBITDA margins expanded 350 basis points when compared to the third quarter of last year as our growth investments within this platform have continued to drive margin accretion.
For the fourth quarter, we anticipate total shipments to decline between three and 5% sequentially, primarily driven by seasonality and tabletop products relative to the third quarter.
But we expect the financial impact of this to be fully offset by operating efficiencies and cost control.
Selling prices are expected to decline slightly but will be offset by raw material price improved.
[noise] on a full year basis, we expect growth in our legacy volumes to be at or slightly above the top end of the previously communicated range of 8% to 10%.
And for Stein for we remain on track to meet or beat our operating profit target.
Slide seven shows corporate costs and other financial items.
For the first nine months of the year corporate costs declined by $12.5 million when compared to the same prior year period, and this was driven by headcount rightsizing reduction in spending across the board.
And costs reimbursed during the transition services period.
Given the accelerated pace of progress and adjusting our cost structure. We're pleased to report that we are once again, reducing our 2019 full year corporate cost estimate now expected to be approximately $20 million.
We expect fourth quarter corporate cost increased slightly compared to the third quarter due to the drop off any transition services reimbursements and timing of certain expenses.
And we remain on track to take $14 million to $16 million of cost out by the end of 2020 relative to 2018 levels.
Slide eight shows our free cash flow.
During the third quarter cash flow was $26 million higher compared to the third quarter last year, driven primarily by increased earnings and lower working capital usage.
We expect total capital expenditures to be between 23 and $28 million for 2019, consistent with our prior estimates.
Depreciation and amortization expense is also projected to be $52 million for the year.
We continue to expect significant improvement in our free cash flow profile going forward as earnings grow and all major capital projects have been can [laughter].
We're also now projecting a full year tax rate for 2019 of approximately 34% compared to our previous estimate of 38%.
Slide nine shows some balance sheet and liquidity metrics.
We achieved a significant reduction in net leverage finishing the third quarter at 2.9 times, and we had available liquidity of $173 million.
This was accomplished through improved earnings and strong cash flow generation, allowing us to meaningfully reduce net debt relative to earlier in the year.
Net debt on September Thirtyth was $295 million and we expect our liquidity and leverage profile to continue improving by year end 2019 as earnings and cash flow increase.
This concludes my prepared prepared remarks, I will now turn the call back to Dante.
[laughter].
Thanks, Tim.
As we exit the third quarter. After another solid performance, we're acutely focused on delivering a successful completion to the first full year of our business transformation and setting the stage for continued success in 2020.
Year to date revenues were approximately $700 million, a 14% improvement while adjusted EBITDA was $81 million, a 35% increase over 2018.
Overall, a significant improvement on a year over year basis.
[noise] Airlaid materials is expected to finish the year strongly and we're confident the business will deliver on the growth and profitability targets previously committed to for the full year.
Both Fort Smith and sign for it has been extremely successful additions to our airlaid portfolio with a highly accretive track record of new customer acquisitions.
Production optimization and synergy realization.
The teams are doing a great job.
In composite fibers, we're aggressively working to reduce costs leverage leading market positions and build upon strong customer relationships in response to the challenges and some of our markets concurrently were intensified efforts to improve asset utilization levels and our wall cover facility to the identification and development of new products.
In addition, we're strengthening the commercial in innovation teams to bring new perspectives to this part of the glatfelter portfolio.
I believe these initiatives will enable us to better address the near term business challenges and find creative ways to grow revenues and enhance profitability as we work to make our business more resilient to varying market dynamics and economic cycles I.
Ill now open the call for your questions.
Thank you as a reminder to ask a question you will need to press star one of your telephone. So withdraw your question, perhaps the pound key please standby all the compiled the Kenny roster.
Our first question comes from work well the from Bank of Montral. Your line is now open.
Morning, Dante Sam.
Morning, Mark Mark.
Can you help us out just in understanding that 400 bips drop in the tax rate between what you'd guided do and what you're now guiding to.
Yes, sure. So I would say, it's three things one there's discreet items that are hard to predict the timing of such as federal statue closures, which we saw in Q3. The second is a variation in earnings mix by country.
As composite fibers earnings are primarily in Germany. If they are below expectations that Germany is the highest rate that we pay taxes and.
And then I would say that third thing is the U.S. tax valuation allowance, which is sensitive to a variety of factors that are hard to predict including things like FX gains driven by currency fluctuations that we saw this quarter as well.
Okay, Alright, so that's one second one I had that.
Of the FX hedging gain is that $800000 that you gave us is that a net of the hedging gains said again the.
Drag from a from a currency movement.
So just to be clear that number was just for composite fibers. Okay.
And I'm, sorry, you're you're asking so you mentioned so you mentioned in the release a.
Couple of things and.
You say here currency.
Favorably impacted by 800 million compared to year ago, reflecting hedging instruments that matured more than offsetting the impact of lower euro translation rates I'm, just trying to figure out if the $800000. There is a net of the too.
It is it isn't that of the too.
And how big is just the hedging gain.
I don't have that number in front me do you very much I don't I don't have to pull that mark we can take that offline with you feel like afterward, Okay. All right. That's fine next on that day for you can can you just talk with us about sort of game plan and timeline for kind of fixing both metalized and wall covering.
Sure.
So these are clearly to the areas that have been most challenged in most volatile over the last several quarters.
Metalized Q3 and for wall cover both of these businesses across all of composite fibers actually Q3 was our toughest comp versus last year, but that notwithstanding.
Metalized did have sequential quarter growth of a couple of percent.
And we had talked about the new customer acquisition and the delayed qualification process that qualification process was completed in Q3.
So we expect full run rate volumes in Q4, so that will have we believe.
Substantial impact on the overall performance of the Metalized business.
So this is up.
The lower margin converting business as you may recall, and it's less than 10% of total composite fibers revenue. So it is a less material impact on overall profitability.
Notwithstanding the.
Frustration that we might have experienced over the last few quarters. So I believe.
Looking at our footprint managing our cost now that we've got this large piece of new business fully qualified and we're shipping to multiple locations, we feel better about the impact of.
Those new volumes on asset utilization and we'll continue to work aggressively on optimizing the footprint.
And the cost structure, so that we can get reasonable EBITDA and more consistent EBITDA.
Well move to Wallcover, yeah sure.
Sure. So again this one has a lot of exposure to the former Crs countries, we've talked about that quite extensively.
And again tough comp and the.
The Ukrainian customer base had a pretty weak Q3 as they continue to find ways to cope with the Russian Federation span on imported goods from Ukraine that include wall cover.
We are intensifying our efforts to develop another product for the Dresden facility, we're continuing to address the cost structure as well our new operating model, which has no global functions is going to bring more resources and greater focus to commercial excellence and innovation solutions for.
For this particular facility because we'll have the resources of the entire organization.
Now focused on overall commercial excellence.
I do want to comment that the EBITDA margins for the Dresden facility, which is where we produce all of our wallcover.
Even with its headwinds still remains above composite fiber average for a year to date through Q3.
Okay.
And then I wondered same can you just talk a little bit about potential Brexit challenges for you you've got the I think.
Like three facilities in the UK. So I'm, just curious about sort of what the challenges might be in what you're doing to pair for them.
Yes, sure so similar to what we talked about on the call last quarter, it's not a huge factor for AMBI fairly materials. There is no no facility is there no material exposure for composite fibers. As you know we do have the two facilities in the UK and we've seen a temporary.
Increase in some raw materials and finished good inventory levels as we start to prepare for that.
I think we've also done a good job developing alternative sources of supply if we need to and keep in mind we've got.
Production for similar assets in in Germany, and France, if we need to ship production, if there becomes delays or or or issues with that I think the biggest thing is just having a you know enough planning a fore sight with some extra inventory in raw materials on hand, because we do expect to have a little bit of delays.
UK customs as they start to have to.
Process things going in and out of the he you that they previously didnt have to do so we've increased our inventory levels, a little bit, we'll probably have a little bit more uptick in Q4, but as you know the timing on this continues to shift and it's difficult to predict okay. All right and then last one from me right now just.
You had big Big increases in a couple of those categories and.
Airlaid and I drew just trying to get a sense of how big like categories. Like tabletop are right now what's behind the increase and then also whether that Airlaid business has seen any benefit from the Chinese.
Trade dispute.
In other words less imports coming in from from China.
So mark I'll address the import export.
Topic.
As you may recall, the Airlaid materials don't travel great distances quite as efficiently.
Yes, so they tend to be a bit more regional and their nature. So.
No material impact from.
China other than we're seeing some additional inquiries coming from Asia Pac.
For us to serve out of our European operations.
In terms of the volume growth by segment, something like tabletop, it's reflecting having Stanford and.
Fort Smith capacity in the mix this year versus last year, and so that was a big factor.
And then I think Mark your asset.
How big it's become as a total piece of the pie yes.
So I was 105 million or revenue were we reported for airlaid for the quarter Nineteena that wasn't tabletop and you'll see those figures disclosed.
It comes out later today.
Okay, Alright sounds good.
Thats helpful I'll turn it over.
Thanks.
Your next question comes from Steve Chercover from Davidson. Your line is now open.
Thanks, Good morning, everyone. So I had a number I had another question is actually on Airlaid and first of all can you sustain the growth in the legacy business in high single digits.
So as you might recall as we talked about 2019 expectations, we had very aggressive goals and we were going to grow substantially above market as we brought forward smis new capacity.
Up to full speed and this is due to a combination of events that range from.
Great support from sponsoring customers for this particular investment to improving some of the performance features some of our product offerings.
And bringing better quality and better value to the market.
So the combination of having a world class very efficient new facility strong sponsorship from major customers.
Leveraging the scale and the combined talents of our new Stein front colleagues to come up with some performance enhancements on some of our existing and some new products all of those combined for rather significant growth through the course of 2019 now as you look at our overall.
Utilization rates.
They have crept up each quarter and so.
Which is a good thing and when we announced the Fort Smith facility opening we said within two to three years, we'd have that facility full and we're tracking to that so we still expect to grow.
At or slightly at the high end of the market for 2020, we're not giving.
Annual guidance, but.
The substantial double digit growth that you've seen in 2019 is more manifestation of the things I just outlined not necessarily an indication of what the future is going to bear. Nonetheless, we're very pleased with this business, we see a long runway for growth, we clearly established leadership position here.
As we continue to build scale, we're learning more we're sharing best practices across the platform, we're getting better benefits both on cost and productivity to product performance and so we're feeling very good about this particular part of the business.
Okay. So you can still expect 8% to 10% growth for 2020.
And after that is it fair to assume that you'd be having to contemplate.
Perhaps twinning the Fort Smith line because.
I guess, if you can maintain those growth rates that will be third year, you should be close to sold out I would think just to clarify I didnt say, 8% to 10% growth for the business again next year, so thats going to slow down.
And we're not prepared to give guidance for 2020.
But.
I would think more around the range of what typical market growth rates are for these businesses and we say most of the segments. We serve are growing in the 4% to 5% range.
And then as it pertains to supporting continued growth of our customers in the market.
As a leader in this space, we're prepared to do that and so that can come through a range of options that include organic and inorganic growth.
Not prepared to speak in any greater specificity today about that other than we'd like this business, where asserting ourselves as leaders in we're prepared to continue to invest in it.
Okay, two more quick ones on Airlaid first of all just is the price declines that directly associated with a pass through of pulp.
Yes, as you know.
The the current Airlaid portfolio has about 70% raw material pass through.
So if you see pulp prices drop than you're going to see revenue drop.
And this is also why we called out continued improvement in overall EBITDA margin for the business.
Okay and.
What were the sign for synergy targets and.
Our there's still some to come in 2020.
Yes, so when we announced the acquisition, we said that there are $6 million worth of synergies, where you're going to attack over a 36 month period, and we said 2 million to that will come in 2019, and then the other for will come 2020 and 2021. So we're on track to meet.
Our synergy targets for 2019.
And.
I guess on our next quarterly call, we can talk a little bit more specific about with the expectation for side for contribution in 2020 might be.
Okay, and then one other.
We ended up question for me, you and I'll pass it back.
With respect to corporate costs. If you annualize. The Q3 savings you hit that high end of year 14 to 16 million dollar target and I think you also said that corporate expense in 2018 is going to be 20 million, which the same as your 20.
20 guide so does that mean that any other benefits from the new functional structure will accrue to the operating segment.
Yes, so so a couple of things first I would note that.
You know this year's number Steve does include some cost to reimburse from the transition services period, which rolled off in Q3, which is why we're seeing a slight uptick in Q4.
So I.
I don't think it's fair to say that we fully arrived there when you when you back that out or what when you look at 2020, we still have some reductions to get to get to our target.
Okay. Thanks for that clarification.
Oh is it three thank you.
Okay.
Our next question is from Debbie Jones from Deutsche Bank. Your line is now open.
Hi, good morning, Thanks for taking my question.
I should have good morning, guys three questions on the first is on your Capex target for the year, while the the range.
Only 5 million that you've already got two months last.
Thank you.
You are at the low end of the range would react.
And at that moves higher.
2020.
So I would say were 18 million through the third quarter. So when you annualize that that's 24 million in our ranges 23 to 28, so annualizing that were within the range I think it's still a little bit tough to tighten up the range just because you don't always know when the exact cash flows are going to go out sometimes you experience.
Issues with suppliers and delays on their end. So I think this is the range, we're comfortable committing to and on an annualized basis, where we're in that range right now and we're not prepared to talk about 2020 figures just yet.
Okay. Thank you my second question correctly.
You are seeing tremendous growth, but the guidance for Q4 is down 3% to 5% I wonder.
Actually I just want to understand now that you.
Grip on your total business with the acquisition and the ramp up what is the seasonality in that business. You know kind of working from Q1 Q4 is it not really meaningful oriented type you know missing it but if it's was down in Q4, how would you characterize it.
So I would characterize it on a couple of dimensions there is some.
Seasonality across different product categories. So our.
Hi, gene business can be a little bit more.
Seasonal at the end of our second quarter.
And some of this has to do with the synchronization of the fiscal year end from some of our larger customers.
You look at the addition of Stein for product line to the portfolio with things like tabletop and some additional wipes tabletop does have some seasonality as you get into the summertime for picnics and things of that nature. So.
We will have a little bit of seasonality mid year for hygiene.
And really the first couple of quarters tend to be the busier quarters from a table top point of view, but our our attempt is to build a portfolio that's more stable and more predictable and has a lot less volatility period to period.
Okay. Thanks, that's helpful. One more on that just how much visibility do you have in airlaid into.
Order patterns that your customers, a how how close out today.
Put their ordering lithium how isolate receive it.
So we have a sales and operations planning process like most companies would and our demand forecast typically looks out 18 plus months and then we have a reconciliation process every month. So we tend to have reasonably good.
Outlook through the course of a quarter.
Recognizing that some of our product categories are.
Less subject to short term changes.
Versus some of that may be serving some of the broader convenience markets for consumers. So let's say, we generally have a reasonably good.
Purview for a quarter and then we tighten things up.
Each turn of the crank with Sanofi process.
Okay.
Thanks, and then last question I went on to get your thoughts on your pricing strategy and composite fibers at this point.
Thank you fully recovered.
What you were attempting to do in 2019 and do you go back out in 2020 and try to do that.
Has there been any change in the way you across your contracts in general for that business.
Yes, just some high level comments and Im sure you can appreciate perhaps the lack of transparency because we've done.
Dynamic and competitive market environment, but clearly we.
Take a number of factors into consideration that range from.
Overall competitive operating rates.
Customer demand patterns.
Sectors of raw material pricing.
Asset utilization and so we're in the process of Recalibrating all of those variables with our new commercial and innovation organization to make sure that we find a way to optimize asset utilization for composite fibers given the the data that we have and the outlook that we have for these markets. So.
I think I feel very confident in our commercial team.
We'll find a way to leverage our leading share positions are strong relationships with long term customers. The fact that we've got the largest portfolio of inclined wire asset strong technical know, how and deep fiber capabilities and a leading buyer of a bucket in the world and producers. So like we have all the pieces of the puzzle here and again, we'll give.
More of an update on our next quarterly call as we think about the outlook for 2020, and just one thing to add to that Debbie you know as you know we put out a target there last year, which we have fallen short house, but a lot of that I think it's safe to say is driven by the decline in what's called price and the other thing I would say it's difficult to talk about these things in the aggregate.
It's very specific on the product line and even more specific on whether that product line is as.
[laughter] painter of either what Paul or a backup. So it's you know it's been tough in this environment with the declining what Paul pricing, but it really just depends on which product line and what the content we're talking about us.
That's that's very fair, but the that back outlet and outlook is there anything you can comment on there because I had been offsetting some of the soccer pulp pricing.
So we continue to work on leveraging our expansive network in the Philippines, Costa Rica, and Ecuador to make sure that we have a variety of qualified fiber traders and farmers.
In our portfolio.
The team's doing very good job at adding.
The new suppliers to that so we were hopeful that that will help to mitigate at least level of pricing and maybe we see a little bit of relief, but you also may recall that these types of crops are are more susceptible to things like typhoon season, and can be disrupted if there's another counterparty that may come in it and by a bunch of back a pulp on it.
A short term basis for a project outside of our respective industry, we've seen that happen with central banks around the world at times doing new banknotes or we see some other technical specialties from time to time pop up in that market, but overall for us it's about controlling the controllables and it's leveraging our vast network and not.
Celledge and access to these outlets and making sure that we've got a variety of people qualified so that we can have the right quality and quantity at the right cost and that's what the teams focused on.
Okay. Thank you thanks for taking my questions and good luck in the quarter.
Thank you thanks semi.
We have a follow up question from Mark will be from bank of Montreal. Your line is now open yeah, Sam I just wanted to get a little clarification you talked about.
Composite fibers having.
Million dollars downtime in the fourth quarter is that incremental to the 1.3 million that you had the third quarter.
Yes, I just.
So you're going to basically go from 1.3 to 2.3 is that right.
Thats right.
Okay, all right and that clarifies it and then.
Come back on these.
Businesses that are.
Struggling a little bit I'm, just curious do you think about sort of the metalized.
Paper business in the same way, you think about kind of food and beverage or the a the non woven wallcovering I mean, it seems to me those are all businesses, where you're creating kind of a specialized matt fibers, whereas this metalized businesses just.
Putting a metal coating on paper that you're buying on the outside.
Yes, so I think those are all accurate observations the metalized business at the very different business than the rest of our composite fibers business.
Converting business and its margin profile is different and the competitive landscape is different and the profit pools are different. So just like we do with all parts of our business. We consistently go through a review of our portfolio.
We identify.
The short list of highest value, creating activities that we can resource and execute with great precision and have good outcomes and then we look at ways to mitigate some of the smaller areas that might be.
Performing below where we would ultimately like to see them. So.
We've also demonstrated a willingness to to prune and reshape a portfolio we took a very dramatic.
Step last year, but taking half of our revenue out so right now I'm very pleased with the progress that we've made year to date as I stated earlier, both slide in the appendix that really illustrates the progress of new Glatfelters, making that's a far less volatile more cash generative.
More predictable business focused on engineered materials, and we're going to continue to take all of the necessary steps in the right sequence with the right prioritization and the right resource allocation to make sure that we are aggressive at addressing performance and at the same time pragmatic about not overloading an organization that's doing a heck of a good job at them.
Yeah I just that's a good answer I think that the more you can do to kind of stabilize the earnings and cash one of the business the more you're going to be rewarded in terms of your valuation.
Yes.
I couldn't agree more okay. Good luck in the fourth quarter and thank you into next year.
Thanks Mark.
We have a question from Craig hearing girl from wealth of capital management.
Ask your question.
Oh good morning.
Pumped on late so I don't know for this was already addressed but.
Can you give us an update on any progress regarding your so turia battery innovation group license.
I know that takes a while to get designed into products, but.
Maybe you're seeing some products come to fruition in the near future.
Hey, Craig how are you hi.
I would say no no no meaningful update there.
This stuff is very early it's in startup mode No no meaningful revenue to speak out there.
But it is in the design in.
Men are right now I mean are you getting any feedback potential users.
Yes. So this is Don say I can add a few comments there so and for those who are following along.
We've made an investment in a company called Dream, we for several years ago, and we have rights to intellectual property around next generation lithium battery.
Battery separator materials that can also be using super capacitors E bikes and things of that nature.
And as you might imagine what comes with new technologies and startups, an early stage development.
The winners and losers haven't been sorted out yet and so we continue to work on our electrical portfolio, which is in composite fibers. We have identified a couple of areas, where we think there may be a better fit in a nearer term.
Opportunity for us to see some benefits.
In the Super capacitors space, knowing that a car batteries ticket very long time to get qualified in the auto industry can be quite cyclical so.
We're still working on it and we still think it's a very unique set of intellectual property and technology and we don't have anything very immaterial to speak to at the moment, but it's still part of the inner workings of our commercial and innovation.
Projects.
Super Thanks, Doug.
There are no further questions I'm, turning the call over to Dante Parrini.
Okay, well. Thank you everyone for joining our call today, and we look forward to speaking with you again next quarter have a great day.
This concludes today's conference call. Thank you for their participation you may now disconnect.