Q4 2019 Earnings Call
Greetings and welcome to Simpson manufacturing Co., Inc. Fourth quarter 2019 earnings conference call. At this time, all participants are not listen only mode. A question answer session will follow the formal presentation. If any what's required operator systems. During the conference. Please press star zero when your telephone keypad. Please note. This conference is being recorded I would now.
Let's turn the conference over to your host Kim Orlando with Investor Relations. Thank you you may begin.
Good afternoon, ladies and gentlemen, and welcome to Simpson manufacturing companies fourth quarter full year 2019 earnings conference call on this call. The company May discuss forward looking statements such as feature plans innovate.
Looking statements like any prediction of future events involve risks uncertainties assumptions that could cause actual results to differ materially from the state.
Some of these factors in cautionary statements are discussed in the Companys public filings and reports, which are available on the FCC, where the company corporate website.
Please note that the Companys earnings press release issued today, it's approximately 415 PM eastern time.
Earnings Press release is available on the Investor Relations page of the company's website at Cincinnati NFG Dotcom.
Today's call is being webcast a replay will also be available on the Investor Relations page of the company's lets say.
Now I would like to turn the conference over to Karen Colonias says, its president and Chief Executive Officer.
Thanks, Kim and good afternoon, everyone I'm pleased to discuss our results with you today.
Let's begin by reiterating our commitment to positioning Simpson her long term sustainable and increasingly profitable growth.
To that end, we made significant progress both operationally and financially throughout 2019.
Our net sales improved 5.4% over 2000 $18 billion to $1.14 billion driven by higher sales volume.
Despite the adverse weather conditions experienced in the first half of the year and lapping the benefit of higher selling prices going the price increases we implemented in mid 2018.
This combined with our focus on rationalizing our cost structure resulted in a 100 basis point improvement in our total operating expenses as a percent of that sales <unk>.
The 27.9%.
Versus last year inline with our expected range.
In addition, our tax rate decreased 24.9% from 26.4% last year.
As a result, we generated strong earnings of two doors and 98 cents per diluted share up 9.6% over 2018.
Importantly, we continue to make progress towards the aggressive targets, we unveiled as part of our 2020 plan in order to maximize operating efficiencies and drive long term stockholder value.
Accordingly by the end of year, we expect to do the following.
Achieved an organic net sales compounded annual growth rate of 8%.
Reduce our total operating expenses as a percent of net sales to a range of 26% to 27%.
Resulting in an operating income margin of approximately 16% to 17%.
Improve our return on invested capital to a range of 15% to 16%.
Prove our concrete business gross margin to approximately 42%.
And finally improve our European operating income margin to be within the range of 8% to 9%, excluding sep severance and goodwill impairment.
As a testament to our competence and execution against the 2020 plan. We were pleased to have returned $101.1 million to our stockholders in 2019 through share repurchases and dividends.
I'd now like to spend a few minutes discussing highlights from our fourth quarter financial results as well as an update on our operational initiatives.
Fourth quarter net sales increased 8.5% year over year to $262.5 million.
Primarily due to both higher sales volume and average unit prices.
Compared to third quarter of 2019 or net sales were down primarily due to reduced shipping volume related to the typical Q4 seasonality we experience as a result of fewer shipping days from holiday related closures and a slow down in construction activity due to the winter months.
Okay.
Partially offsetting the seasonal impact was the volume that shifted into the fourth quarter. Following the resolution of the labor strike, we experienced through most of September at our Stockton facility.
U.S. housing starts grew 20% in the fourth quarter versus the comparable period last year, notably in the west and South where we provide a meaningful amounts of content into home starts grew 27% and 16% respectively year over year.
As a reminder, U.S. housing starts are leading indicator for approximately 60% of our business.
That said our results of operations do not typically reflect the impact from trends in housing starts until at least three to four months later.
Looking ahead into the first quarter. It is also important to remember that our volume will be impacted by the typical Q1 seasonality we experience as a result of slow down in construction activity during the winter months.
Although U.S. housing starts experienced double digit growth in Q4 over a lighter fourth quarter last year for 2020, we continue to expect low single digit growth in U.S. housing starts.
Our fourth quarter gross margin of 41.9% remained under pressure as such our 2019 for your gross margin of 43.3% was slightly lower than anticipated.
Aside from the factors impacting gross margin in 2019 included increased material labor factory and overhead costs and to a lesser extent sales mix.
We continue to hold one of the highest margin profiles in the industry.
We do this by continuing to effectively manage elements within our control, including maintaining the best in class customer experience high quality trusted products.
And deep industry relationships.
As Brian will discuss more in a moment, we expect our gross margin will range between 43.5% to 44.5% for the full year of 2020.
I'd now like to update on our key operating initiatives, which focus on growing our market share rationalizing our cost structure in an effort to improve our profitability without sacrificing our competitive edge and improving our technology and systems.
To continue providing exceptional service to our customers.
In Europe, our 2019 net sales of $155.1 million decreased 2.4% year over year.
Primarily as a result of the negative 9.2 million dollar impact from foreign currency translations.
In local currency Europe's net sales increased 3.5% over 2018, primarily through a combination of volume improvements and higher selling prices.
Throughout the course of 2019, we also made substantial progress on our lean initiatives and three phase SKU reduction program to rightsize our product offering.
Today since year end of 2016, we have removed over 7000 skews.
As of December 31st 2019, our inventory balance was $251.9 million.
24.2 million or 8.8% compared to levels at December 31st 2018.
When looking at the decrease in pounds on hand, we've reduced our product inventory in North America, which is the bulk of our total inventory by almost 5% in terms of pounce on hand, including finished goods, which have come down by approximately 8%.
Compared to December 31st 2016, we've made good progress aggregate inventory pounds on hand in North America have decreased by nearly 8%, including finished goods, which has come down over 17% well dollars had increased approximately 5%.
Inventory turns for our company has improved to almost 2.5.
As we continue to focus on improving our inventory balance through careful inventory management and purchasing practices.
As it relates to improvements to our technologies and systems or a C.P. rollout has continued on plan.
Our remaining North America branches are scheduled to be onboarded by the end of the first half of 2020 at which time approximately 85% up or revenue will have been transitioned.
We have been enjoying various positive benefits of the S.J.P. implementation, including stronger forecasting tools and overall enhanced production efficiencies.
We're working towards a companywide completion around the end of 2021.
In summary, 2019 was a year of solid operational execution, helping us to achieve organic growth enhancing operating efficiencies and improved profitability.
Through our efforts, we are excited to be delivering even more value to our stockholders.
Before I wrap up I'd like to thank all of our employees for their passion and commitment to our customer service and safety.
Simpson, we value the safety of all employees and continually work to minimize employee exposure to any potential risks.
I'd now like to turn the call over to Brian will discuss our fourth quarter financial results as well as our 2020 outlook in detail.
Thank you Karen and good afternoon, everyone I'm pleased to discuss our fourth quarter financial results with you today.
Before I begin I'd like to mentioned that unless otherwise stated all financial measures discussed in my prepared remarks today, we'll be referring to the fourth quarter of 2019.
All comparisons will be year over year comparisons.
Since the fourth quarter of 28 team.
Now turning to our results.
Total net sales were strong increasing 8.5% to $262.5 million.
Well then the North America segment, net sales were up 11% to $226.8 million.
HM two bowl increased sales volume and higher average product prices.
In Europe, net sales decreased 4% to $33.5 million.
Mainly due to the impact of negative foreign currency translations, resulting from.
Europe currencies weakening against the United States dollar in local currency.
Net sales were down only slightly from the quarter.
[noise], what construction products represented 83% of total net sales compared to 84% in concrete construction products represented 17% of total net sales compared to 16%.
Gross profit increased by 12% to $110.1 million, resulting in a gross margin of 41.9%.
Our gross margin increased by 130 basis points, primarily due to lower factory and overhead costs on increased production.
Along with a slight decrease in raw material costs.
On a segment basis, our gross margin in North America improved to 43.9% compared to 42.2%.
All in Europe, our gross margin declined to 29.9% versus 31.7%.
From a product perspective, our gross margin of one products slightly decreased to 40.8% compared to 41.1%.
However, our concrete products gross margin increased substantially to 44.0% compared to 31.7% due primarily to the impact of a price increase we implemented in August on certain.
Although products I mean, you us.
To a lesser extent concrete gross margin benefited from lower material costs, as well as lower factory and tooling and labor costs.
Now turning to our fourth quarter cost in operating expenses.
Research and development and engineering expenses increased 15% to $11.8 million, primarily due to increased personnel costs due partially to the shift of employees from general and administrative expenses into R&D.
Selling expenses increased 7% to $20.1 million, primarily due to higher personnel advertising and promotional costs.
On a segment basis selling expenses in North America were up 6% send in Europe, They increased 11% due primarily to.
Advertising and promotions.
General and administrative expenses decreased 13% $39.3 million, primarily due to reduced legal and professional fees.
Including the settlement of a pending legal matter and 2018.
That's what was a reduction in amortization expense.
These decreases were partially offset by higher personnel expenses and bad debt reserves.
On a segment level general and administrative expenses in North America decreased 13% in.
In Europe gene and decreased by 10%.
Let's turn highlighted we're pleased with the progress we've been seeing as a result of our continued focus on cost control.
Total operating expenses were $79.2 million decrease from $2.3 million or approximately 2.8%.
As a percentage of net sales total operating expenses were 30.2% an improvement of 350 basis points compared to 33.7% last year.
Included in our fourth quarter operating expenses were Sep implementation support costs of $33.8 million compared to $2.1 million in the prior year quarter.
Since the projects inception, we've capitalized $19.3 million in total inexpensive $25.8 million of the costs associated with the S&P project that was of.
Decemberthirty one 2019.
As you progress further into the Sep implementation, we are no expense you more of our costs versus primarily capitalizing them.
Income from operations increased 94% to $36.6 million compared to $18.8 million.
From operations for the fourth quarter of 2019 included a $5.6 million gain on the sale of a selling and distribution facility.
Fourth quarter 2018 income from operations included an $8.8 million gain on the sale of a facility.
As well as a goodwill impairment charge at $6.7 million related to the Europe segment.
In North America income from operations increased 138% to $36.8 million.
Due to the higher net sales lower operating expenses and the sale of the aforementioned facility.
In Europe loss from operations was $2.8 million.
In the fourth quarter of 2018, Europe loss from operations was $8.7 million, which included.
6.7 million dollar goodwill impairment charge.
On a consolidated basis, our operating income margin increased by approximately 610 basis points to 13.9%.
The effective tax rate decreased to 22.3% from 29.3%.
And as a result, net income totaled $28.1 million or 63 cents per fully diluted share compared to $12.8 million or 28 cents per fully diluted share.
Now turning to our balance sheet and cash flow.
At December 30, Onest 2019.
Cash and cash equivalents were $230.2 million, an increase of $70 million compared to our levels at December 31.
2018.
We remain debt free with only a small amount of capital leases.
As a result of our improved profitability and effective working capital management, we generated cash flow from operations of $56.4 million for fourth quarter of 2019.
An increase of 8%.
For the full year 2019, we generated $205.7 million in cash flow from operations, which increased nearly $45.6 million or 28% compared to 2018.
Our fourth quarter capital expenditures were approximately $8.2 million, which included a minimal amount from our ongoing Sep implementation project.
For the full year of 29 team capital expenditures were approximately $32.7 million inline with our expectations.
As we have seen stated since mid 2016, we have been committed to returning a minimum of 50% of our cash flow from operations on an annual basis to our stockholders in the form of share repurchases and dividends.
Since then we have returned over 75% of our cash flow from operations to stockholders far exceeding that threshold.
In 2019, specifically, we were pleased to have paid $40.2 million in dividends, including $10.2 billion on the fourth quarter.
In addition, we repurchased 972000.
2337 shares of our common stock in 2019 at an average price of $62.65 per share for a total of $60.8 million.
This includes approximately 118000 shares that we repurchased during the fourth quarter of 2019.
At an average price of $79.49 per share for a total of $9.4 million.
As our authorization for repurchases of common stock expired at year end on December nine our board of directors authorized the repurchase of up to $100 million of our common stock, which went into effect on January one 2020 and runs through December 30, Onest 2020.
In addition, I'm also pleased to announce.
That on January 21st 2020, our board of directors declared a quarterly cash dividend from 23 cents per share the dividend will be payable on April 23rd 2020 to stockholders of record as of April 2nd 2020.
Finally, I'd like to skip discuss our 2020 financial outlook.
For the full year ending December 30, Onest 2020.
We are initiating guidance as follows.
We expect our consolidated gross profit margin to be in the range of 43.5% to 44.5% given our current expectations regarding material costs and housing starts.
The effective tax rate to be in the range of 25% to 26%, including both federal and state income taxes.
Depreciation and amortization expenses to be in the range of $39 million to $41 million.
Page $33 million to $35 million is for depreciation of fixed assets.
Capital expenditures to be in the range of $40 million to $43 million, including approximately 35%, which will be used for maintenance capex.
In summary, we made significant progress in 2019 through execution on our strategic operational and financial objectives to position Simpson for long term sustainable growth.
We strongly believe in the value proposition of our company.
And believe our efforts through our 2020 plan toward even more efficient operations will help deliver enhanced value for the benefit of all our key stakeholders.
Thank you for your time and attention today now I'd like to turn the call back to Karen for closing remarks.
Thanks, Brian.
Before we turn it over to Kuni I'd like to extend my thanks to Ricardo Revolution for his 20 years of service to Simpson, including his most recent role as Chief operating Officer. If you will be retiring in mid February we're in the midst of a formal search for kardos permanent successor as COO.
We think Carter for all his many contributions to Simpson over the years and wish him the very best in his retirement.
Operator, you may now open the floor for questions.
Thank you at this time, we will be conducted a question answer session. If you will not to go first if you like does question. Please press star one on your telephone keypad. The confirmation to indicate your line is in the question Q you mean for start to view Whats. Your move your question from the Q for participants using speaker Clemens it may be necessary to pick up your handset before person Starkey our first.
She comes a lot of Daniel Moore with CJS Securities. Please proceed with your question.
Kind of Brian Good afternoon, thank for taking the questions.
Hey, Dan.
One focus I guess first on gross margin and the outlook the.
Finished the year up gross margins and although the 43.
0.3% somewhere in that ballpark I'm, a little below expectations that you described the guidance essentially flat to up 100 Bips roughly.
I'm just wondering why you wouldn't expect to see a little bit more recovery are you.
Expecting incremental steel price pressures any changes in mix or you know just kind of simply be conservative. So we start the year.
There's a couple of pieces that Dan.
Certainly.
As we've talked about.
We'll start get into a little bit better.
Steel.
And we've seen in the last last part of the year steel prices go down and now we're seeing steel prices go up again.
So really we're just basing on what we've got from a steel inventory standpoint, and what we're looking at from those low single digit housing starts.
Those are really the main elements that are impacting that gross margin certainly we're very comfortable with labor factory to lean, but those two elements are really the ones that are driving it.
Got it and then as it relates to those housing starts and the outlook for for 2020 of low single digit.
You alluded to earlier to kind of the easy comp you had a tough weather in the first half of of 19, creating.
And that should set you up for a little bit easier comp and stronger starts to exit you know.
Late in Q4 of 19 so.
He is there upside to that guide as we look out for the next quarter or too.
From a for your expectations or would you expect it to be relatively flat over the course fear.
No I think that guidance is it would be pretty flat over the course the year based on just what we're getting from lot of ER market information I think this low single digits is pretty consistent I mean, we certainly had a nice bump in the Q4 comparables, but again that was a very very.
The very soft to 18.
Whether is looking a little bit better than it was a this time last year. So so that might help us, but I think it's too early to make any any adjustments beyond that low single digit.
All right so no major delta as far as the cadence over the quarters is concerned.
That's correct okay.
Maybe sneak one more in <unk>, obviously returned to help the amounts of over 100 million to shareholders in fiscal 19, including over 60 million of buybacks.
Stock stays with you know in and around current levels.
Do you expect a similar amount of share repurchase activity next year.
Just any commentary there would be helpful. Thank you.
Dan It's Brian So we review our capital allocation strategy on a regular basis with our board.
And as of now we don't have any changes to announce but we'll be reporting any updates as we go through the year.
As we've talked in the past.
We do have that goal to returned 50% of free cash flow from operations to shareholders.
However, we've been utilizing a bit of a mix of.
I'm trying to be opportunistic as well as meeting that 50% number.
Looking at the.
Current price and the return that we get at at various levels and we'll continue those analysis. So.
Don't have have much more of other than that but youre right with the.
The current prices as it is today and Uh huh, that's far exceeds the average price that we were able to acquire stock back compare in 2019.
Well, we'll have to look at that but we we are mindful of the the return at the current pricing.
As I mentioned will continue to have those capital allocation discussions with the board and and see if we.
Making the adjustments there but.
Those are.
Those are ongoing.
Very helpful color high class problem, either way I'll jump back in queue with any follow up thanks.
Thanks, Dan.
Our next question comes on line of Josh Chan with Baird. Please proceed with the question Hi, Good afternoon, Karen and Brian.
Josh Josh Hi, I'm, just a question on the on the housing starts I'm. So am I right. Then interpreting that you know you talked about the strong starts in Q4.
That you you haven't quite seen it fully impact your numbers, yet and you know what it doesn't make sense that you know Q1 would be off to a better start just because you're starting to see those housing starts number flow through.
Yeah, we talk a lot about the sort of the lag between the housing start number and when we might start to see our our product again some of its going to go into the concrete foundations.
And then the majority of it into framing and we typically discussed that there could be anywhere between a three to four month lag it just depends on how well the.
Particular areas prepped for all the infrastructure plumbing and electrical and all those sorts of things so.
Certainly it was encouraging numbers in Q4.
But I think we have to remember that that increase was against a really really soft 2018, but yes, I would anticipate we should see some of that.
And the in the upcoming amounts.
Alright, and then question on your kind of a lot long term guidance for 2020 or do you expect to achieve basically every element of that Oh the guidance because [laughter]. Yeah. There are certain elements that you may not need to achieve [laughter] a in order to and you can still had they own.
Overall, you know EBIT margin targets. For example, so you might not have to hit the European margin [laughter] or even the Opex reduction. So I was just wondering if you didn't clarify for US you know how are you expecting the heat hit every element or [laughter], you know, what some elements be easier than others.
Yeah, you know, we put the targets out in the third quarter of 2017 with the full intensive being able to hit all those targets I think they're very important.
For the growth of the company as was the profitability of the company's so as we stated in this earnings release, we're working extremely hard to be sure that we can still hit.
All of those targets as.
As you mentioned, we might be able to hit targets without hitting others, but that's not our our goal is to be sure that we put the people in the resources in place to try and hit all those targets.
All right Yeah, that's helpful and then.
Last question for me, maybe on inventory, so kind of a decent improvement in inventory turns over the last couple of years any thoughts in terms of where that could potentially go in Ah Tony Tony.
Yeah. As we mentioned we are inventories gone from two to two and a half turns and more importantly from a pretty significant reduction in our pounds of finished good.
Certainly what our manufacturing branches are working out is still being able to bring that pounds down to be more efficient.
And if we get some normalization in steel we would also be able to work on bringing down our raw material inventory. So we don't have a target set for twentytwenty, but we do have all of our manufacturing group working continually everyday to be the most efficient they can be and when.
Those things go in place, we'll start to see that target increase.
Okay, great. Thanks for the time in a good luck in a in the first quarter.
Thanks, Josh.
Once again, if you about does question. Please press star one on your telephone keypad. Once again, if you will notice question. Please press star one on your telephone keypad. Our next come. Our next question comes on line of Julio Romero with Sidoti. Please proceed with your question.
Hey, good afternoon, everyone.
Hello Julio.
So my first question is on the North American segment.
So pretty significant lower operating expense year over year is there maybe a more recent reduction you've done there or maybe something unusual you'll up from the prior year quarter.
You did mentioned the DNA in that segment was was lower by 13% I mean, I was there something kind of.
Unusual there and maybe how much more runway for cost reduction in that segment do you kind of foresee going forward.
Julio it's Brian So in 18, we had.
Recorded a.
Settlement for a legal matter.
And we also had.
Success based fees for.
Management consultant that Didnt neither of those repeated in 19.
So there is there a those are the primary drivers that we're seeing.
In the North America.
Comparisons.
We're going to continue to focus on.
Oh green lighting projects and initiatives that utilize STN a cost you in a cost and the like.
But I don't know how much more significant reductions we'd be looking at it because we did have those.
2018 items that I mentioned that did not repeat in 2019.
Got it understood and on the European segment.
Called out.
Relatively flat sales year over year if you.
On a constant currency basis, but can you just maybe talk about you know maybe price volume mix I think was there.
An increase in one and decreasing the other one any color that would help.
Yes, as we've mentioned I think on Oh, no local currency they were up 3.5% for the year.
Europe tends to do up.
Cadence of a couple of price increases so typically there's.
January in June type of thing so that well that's helpful.
Also I think the changing management there had put in some price increases that maybe had been delayed a little bit.
So that was certainly helpful.
And I think we're starting to move a little bit more of our fastener volume.
On that standpoint.
Helpful. And then maybe last one from me here is a on the Capex of 40 to 43 million off for 2020, I think it implies a little bit more growth capex.
For this year I mean can you talk maybe it's about but some of the initiatives you have planned Didier.
I would not to go into specifics, but there are some.
Some growth projects in there that are.
Not necessarily the.
The maintenance type capex is or that that kind of annual run rate that we've had.
Well historically I think if I recall the last few years, we've been calling out.
[noise] capex in that.
Call. It 30 to 33 million range for the last few years. So yes, we've got a couple a.
Additional projects in there that Uh huh.
We'll be looking to initiate this year that are more on the growth side.
Understood. Appreciate you taking the questions and best of luck in 2020.
Thank you actually.
Our next question comes a lot of Steve Chercover with D.A. Davidson. Please proceed with your question.
Thanks that was not good on jeopardy in the star one.
But.
Just a couple of questions in there there are somewhat follow ons. So it does sound Brian like there is gonna be some new wants to the the repo 'cause I mean, it was a 27% difference between what you paid in Q4 and what you paid for the full year. So it's not just automatic right.
Correct correct not at this time in <unk>.
As I mentioned.
That's the the conversations that we have.
With with our board around.
Looking to utilize both opportunistic versus.
Just share reduction count a mix and.
Looking to continue that until Weve.
Pivoted off of that position.
And you know.
What is it could.
I mean push you off presumably not returning the targeted 50% of cash flow to shareholders, but I.
I mean, presumably your children to get through some sort of return on capital lens into it you know what are other items.
Could rise to the front.
Well I think you've touched on it see the current screening if you will or the evaluation is.
The returns.
Today's price for for those.
For that capital.
And not to say that we're doing this but versus.
Looking to reduce share count regardless of price and finding if there is a different balance.
So those two elements today, we very much you utilize the return wins as we're looking at the.
Share repurchase.
And as you've noted.
It's at a much higher priced today than what we saw as an average through the year.
In 2019 so.
Oh again, continuing to evaluate the return that obviously the return for the 2019 repurchases would be a much better than they would be at today's level and just making sure we're taking not not lens into account.
Do you have any capital projects it would be.
Significantly large enough to soak up some of that capital that could particularly to the top or I mean is your.
Property plant and equipment pretty much where you want it to be in where you want it to be.
That's a good question as I noted to.
On the question a moment ago for Capex is is planned to be a little bit higher in 2020 and 29 team.
Although.
All right, we're generating a fair amount of cash to be able to fund those with internal internally generated cash.
With the the manufacturing footprint as we noted that we sold one of our.
Smaller facilities, but I don't know that there would be any significant change to or real estate portfolio mix from where it stands today, but.
As we evaluate.
And operation and if they need something thats different than what they have today, we evaluate the the the by new HVOR by again versus leasing.
And it goes on the case by case basis.
But today we are.
Generating the cash to be able to beat you know those additional capex projects, we we'd like to find some.
Some larger areas, where we can invest in that create returns that enhance our shareholder value.
And that's that's always the goal is putting that cash to use for improving the business.
With the the dividend and then the share repurchase as the other elements certain capital allocation.
With that said as you may be contemplate M&A or bolt ons.
You know we've already gone through that over the years I can't imagine.
What it would take for that to be to really move up the hierarchy.
If you kind of refined you're focused on wouldn't concrete.
Fair.
I think that's there, but we also want to make sure that.
There's we have a push too.
Fine.
Austin or acquisition that would help our or U.S. domestic north American business.
But you're right in that as part of the 2020 plan, we scaled back some of the areas that we're looking to invest in print in with M&A, particularly around.
Concrete repair type products.
But with.
Product line extensions or intellectual property or other other.
Assets that could enhance our business and we want to make sure. We're taking a look at those we've not sound you know anything of size.
Really recently, but we're constantly looking for things that can help us.
And our strategic initiatives.
Okay, and I might've missed it but.
It is the S.J.P. project coming towards its conclusion.
We have got Vicki.
Another major facility in the U.S. that we're expecting to come online here.
Early in the year and then a couple of smaller operations here in North America, and then that will complete.
North America, which is about about 85% of our revenues, but we still have.
Europe and Asia Pac to do so we anticipate my around the end of 2021 to have the rest of those locations.
Completed.
Okay and final one.
You know just by walking back a couple of elements it looks like you've come.
Pretty close to achieving your 2020 targets so.
I goes without saying, you're probably thinking I'm seeing 2023 or five your plans would you share those with us in due course.
Yes see that's.
You never really common question.
I think that the key is to not take our eye off the ball, we still have quite a bit of work and we want to be sure everybody. A employees are engaged in meeting our 2020 goals. There is still quite some aggressive things that we're working on.
But as you can imagine from the management team and the board standpoint are already looking at what some three to five your strategies would be and will most likely get those of refined a bit more I'm probably be sharing them.
I would imagine around third or fourth quarter.
All right well look forward to Halloween Okay. Thank you both.
Thank you.
We do have a follow up question from the line of Daniel Moore with CJS Securities. Please proceed with your question.
Thank you again, just mostly housekeeping, but I missed the cash flow from operations number for the full year Brian.
The me pools that was.
Okay.
205.6 million for 2019.
And then the S&P implementation costs.
Let's see is Q4, a reasonable run rate to think about for the next few quarters.
[noise] HM lets it really good question I would say the as we shift from.
North America to focusing on rest of world.
Got it might be in the in the ballpark I mean, we continue to refine the plan on.
Who is going where and when using local consultants and the like to complement our existing team.
But.
So maybe it's a little too early to call on that one right now I mean, we're really focused on getting that boot those remaining locations that I referred to just a moment ago <unk> up to you know we expect those to be done in the first half of this year.
[noise], there's been a lot of focus on on prepping and getting.
Getting ready for those sites so.
I think Q4 might might be a decent run rate quarter.
Helpful. And lastly, you called out the 5.6 million nonrecurring gain in the quarter the any other facilities or.
Assets that you might consider monetizing over the next year or so.
No nothing nothing in the plan right now.
Helpful. Thank you again.
Thanks, Dan Thank you Dan.
Ladies and gentlemen, we have we seen in the bar question answer session as well as today's conference call. We think for your participation. You may now disconnect. Your lines at this time and have a wonderful day.
[laughter].
[music].