Q4 2019 Earnings Call

[laughter] Casey.

Technologies fourth quarter.

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Right.

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Good question.

And.

Keep to withdraw your question.

Registrar.

Yes.

Oh, sorry to Joe.

Right.

Hello, everyone.

So in today's call.

Oh, sorry, President and Chief Executive Officer right.

Yeah.

Chris.

Yeah.

Alright.

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Are available on our website.

Download obviously.

P.G. Dawn.

On the investors.

[laughter] today, maybe forward looking statements in the U.S. Federal Securities laws.

Actual results may differ materially from those projected himself.

Right.

Certain non-GAAP financial measures, which are described in more detail our earnings release and honor.

Because forward looking statements and non-GAAP financial measure supply.

The margin enter the QNX.

References to either refer to adjusted EBIT and references to merger mushroom adjusted gross margin for adjusted EBIT margin as defined in our press release.

Oh revenue and associated birth rates for this discussion are stated comparable constant currency basis, what you just for the impact of foreign currency.

With that cold and Randy good morning, everyone.

C. P continued to show positive business momentum in the fourth quarter or sales of $261 million adjusted EBIT of $30 million met our expectations I'm pleased with our results and our ability to deliver on the financial commitments, we set for 2019.

There are a number of items from the quarter there like to highlight.

Each demonstrates the positive outcome, we can produce when we focus on what we can control.

These highlights include the following.

Installed or new organizational structure.

We completed our best your price captures a public company about 3% for the year, which more than offset inflation.

We approved or gross margin by 110 basis points in the quarter and 140 basis points for the year, despite reduced sales volumes.

FCC significant improvement in profitability continued with segment operating margin, Oh 430 basis points.

This is a fourth quarter in a row the margins have improved by at least 200 basis points on a year over year basis.

Verifies positive momentum continued with 56% year over year growth in our installed truck base and 53% sales growth in the core.

For the year sales grew 32%.

We made progress implementing our new SPM strategy.

Later in the call Marine will discuss key insights into SPM did a leading global consulting firm has helped us develop.

We're excited to share that with you.

We continue to execute on or restructuring programs as planned resulting in $27 million and savings in 2019.

And we grew our adjusted free cash flow by 14% in 2019 due to our focus on working capital management and better forecasting.

As a result, or adjusted free cash flow as a percentage of sales and as a percentage of adjusted EBIT continued to improved.

We achieved these results despite the challenging conditions faced by SPM project driven product lines in 2019, the we've shared with you before.

Looking forward I'm confident we're on the right track. So we know we have more work to do.

Our management team in employees are focused on are key priorities for 2020, which include returning SBM to sustainable growth.

Further optimizing fccs operating model.

Continuing to build out our verify franchise.

Delivering on or announced restructuring programs as well implementing additional efficiency programs and a few which I'll take talk about later in today's discussion.

By executing on these focus areas, we will build a more stable and predictable business with the potential agreed substantial value for all of our shareholders and we'll talk more about these priorities later on the call.

I'd now like to turn the call overdone rain for an update on Sps and following drains comments Craig will review the Companys financial performance for the quarter and our guidance then I will discuss our other focus areas for 2020, including or SCC business and a little more detail. So wondering.

Thank you Randy and good morning, everyone. That's the outperformance in the fourth quarter was consistent with previous quarters in 2019, while sales were down 5% year over year. The decrease was smaller than what we saw in the second and third quarters, primarily due to an improvement in residential sales as a result is stabilizing demand and.

Inventory levels.

This residential improvement was offset by continued softness in large project activity for building on below.

As expected, we did see a smaller year over year decline in North American building on billet sales compared to earlier in the year.

However, this was offset by more challenging environment in the Asia Pacific region for building on below.

As Randy mentioned, we have completed our analysis that that's the EMS market segmentation channel strategy and innovation approach with the goal of optimizing and growing the business.

This work confirmed that SPM remains positioned for success with strong product brands technology advantages and field technical service that remain industry benchmarks for quality and installed performance.

Core building blocks will remain the foundation of our commercial success and longevity in the market.

Historically as we have discussed we have done well focusing on the premium segments of the commercial and residential markets.

Our revenue and profitability have been weighted to our differentiated technologies, including pre approved pitcher thing and ice in water shield and to select geographies in North America, including the northeast and West Coast.

Our near term focus for SPM is centered around restarting sustainable organic growth, particularly in our north American building on below and residential product lines by increasing our presence in additional segments and markets geographies that are profitable and growing.

We expect SPM sales to increase 4% to 6% in 2020 with grid weighted towards the second half of the year based on year over year improvement in our pipeline in North America in particular as well as the implementation of the following growth plans.

First we are enhancing our commercial and residential go to market strategies.

For our commercial building on below products, we're increasing our investments and deploying targeted resources to complement our historically specification led business for large projects to one that expands our focus from architect to include contractors and applicators.

This will enable us to capture additional share in certain geographies and in the mid tier and lower risk project segments.

These investments include additional sales team members contractor programs and improved marketing of our product portfolio for these segments.

These efforts target important and sizable market segments and ones in which we can provide value added customer solutions, while driving strong returns for us overtime.

For the residential segment, we are making targeted headcount additions in key geographies inside and outside of our traditional strength in the northeast and redefining our residential product offering.

We are improving our overall value proposition with supported marketing campaigns investing and distributor and lumberyard incentive program and importantly building closer relationships with contractors through loyalty program and through our product dealers.

We believe that these programs supported by the optimization of our distribution footprint can extend our market position nationwide and drive growth and returns in this segment.

Second we identified that while we have strong customer NPF or net promoter score and strong product performance course within our current market segments, we can expand our product portfolio awareness to larger and adjacent market segments.

In addition to investing in our sales coverage, we are making targeted investments and loyalty and digital marketing programs certified contractor and distributor training and improved product bundling and warranty programs to increase customer conversion and win more projects.

Finally, particularly with the benefit of our new organization structure, we are accelerating the launch of new an accessory products for the premium and mid tier segments.

This year, we expect to launch multiple new product to further strengthen our foundation waterproofing and air barrier portfolio.

Commercial water proofing accessory products.

And selected products for the infrastructure market.

Importantly, we're directing additional investment.

Generation technologies for our core segments that will yield new offerings over the next 12 to 24 month.

We believe that this plan will restore SBM to sustainable organic growth and we look forward to providing updates on our progress on future earnings calls.

I'd now like to turn the call over to Craig who will discuss our financial performance and guidance.

Thank you know rain and good morning, everyone. Just a reminder, all revenue and associated growth rates in my comments are on a constant currency basis.

In the fourth quarter GCP is consolidated revenues declined 6% to $261 million half of the revenue decline was expected from planned FCC market exits with the balance primarily due to lower project activity in SPM.

We have substantially completed the cost reductions associated with our FCC market exit program, which has produced strong FCC earnings growth and there are some trailing customer commitments that we expect to lap in the first half of this year.

We were successful capturing price in both FCC and SPM in 2019 to offset the inflation, we saw in 2017 and 2018.

Capturing 3% in price shows that we can receive appropriate value for the product and services that we provide.

As communicated it usually takes around two quarters for us to recover inflation on raw materials.

Currently inflationary pressure is not as high as it has been in previous years.

Adjusted gross margin increased 110 basis points year over year to 37.6%, primarily due to improved pricing the favorable impact of exists exiting unprofitable markets within FCC and supply chain initiatives on savings, which more than offset.

Unfavorable product mix and as of yet.

Adjusted EBIT margin.

11.6% in the fourth quarter was unchanged as an increase in Fccs adjusted EBIT margin was offset by reduced operating leverage due to the lower sales volume that we expected in SBS.

Looking at the performance of this segments.

CC sales were down 6% to 147 million two thirds of that decline was the planned market access.

The other third primarily due to lower activity in Asia Pacific, resulting from tighter credit conditions in the second half of 2019 of which Weve privileges previously discussed the strategic actions. We have undertaken in FCC continue to have a positive impact fccs gross margins were up 430.

Basis points, primarily due to the favorable impact of restructuring activities.

And exiting unprofitable geographic markets.

As well as improved pricing and raw material deflation.

Segment operating income grew 63% compared to last year's fourth quarter as we delivered improved gross profit on lower sales and reduced our operating expenses as a result on the restructuring actions.

Sdns revenues was down 5% year over year as improved pricing and an increase in residential volumes were more than offset by a decline in building envelope volumes due to lower project activity, both in North America and Asia Pacific.

SBM gross margin declined 320 basis points compared to the fourth quarter of 2018 due to unfavorable product mix and expected lower volumes year over year.

With price increases offsetting higher raw material costs.

SPM segment operating income was down 26%, primarily due to lower sales volume.

Impacting operating leverage lower gross margin and an acquisition related settlement related to Sterling Lloyd recognized in the prior year period.

Turning back to GCP.

As a whole.

As Randy discussed we are executing on our restructuring programs as planned in 2019, we realized realized restructuring savings of about 27 million, which helped US improved our gross margin by 140 basis points for the year and reduce our operating expenses by $10 million.

These restructuring savings were offset primarily by lower sales volume compared to our original plan for 2019.

Corporate costs of 6.5 billion were similar to last year's fourth quarter.

Adjusted free cash flow generation was solid in the quarter, resulting in $50 million for the year compared with $44 million in 2018.

The increase in 2019 was due to improved demand and supply forecasting greater focus on working capital and lower cash paid for interest payments.

We have a number of initiatives in place that are designed to improve the management of our receivables inventory and payables program process through increased transparency into our regional and individual country operations. We expect these initiatives to substantially improve our efficiency and cash flow over time.

Turning to our outlook for 2020.

From a regional perspective, we assume that total North America construction spending modestly declined this year in 2020 versus 2019 based on the overall third party market data.

With route Rep relative improvement in the residential and nonresidential segments compared to last year offset by a weaker infrastructure market.

We assume modest construction growth both in Europe, and Latin America. We also currently expect modest growth in construction spending in Asia Pacific for the full year end 2020, despite factors such as the new Cobot 19 virus trade tensions and the continued political unrest in her.

On call. We also expect the tighter credit environment in China to continue.

Like all companies, we're closely monitoring the impact of the Cobot 19 virus as you know we operate on a global basis.

With North America, representing more than a little more than 50% or 53% of our 2019 annual sales followed by Asia Pacific at 22% and EMEA at about 19%.

China has historically been about 5% of our total revenues the globally.

Given that the situation is changing daily the ultimate impact of the cobot 19 by risk on construction spending in the region in Asia and globally is unknown at this time.

In 2020, we assume the price capture more than offsets the impact of inflation.

And based on these assumptions, we expect 2020 sales growth for GCP of approximately 2%.

We expect approximately 3% growth.

Excluding exit country.

We expect further savings in 2020 of approximately $28 million from our restructuring programs.

These savings will partially offset by investments and verify and the SPM investments that in the rain has discussed to drive growth in 2020 and beyond as well as annual merit increases and incentive compensation based on our 2020 financial targets.

Our forecast for adjusted EBITDA.

The $148 million to $163 million.

Or growth of approximately 7% at the mid range point.

In our forecast for adjusted EBIT is 100 million to $115 million or growth of approximately 6% at the midpoint of the range.

Our adjusted tax rate expectation is between 27.5% to 28.5% with adjusted EPS.

Between 79 cents to 95 cents for the full year.

For adjusted free cash flow, we expect approximately 50 million to $65 million full year as we continue to refine our working capital management processes and capabilities.

Looking at FCC and SPM in more detail.

For FCC, we expect sales to be approximately flat in 2020 with growth in verify and cement additives offset by some remaining market exits, we expect sales excluding market exits to be up about 2%.

For verify we expect sales growth to be approximately 50%.

We expect segment operating margin improvement for FCC between 50 to 100 basis points as a result of higher gross margin and restructuring program savings.

Turning to SPM as in the range mentioned, we expect 2020 sales growth of 4% to 6% compared to prior year due to improved volumes, primarily in North America, We forecast segment operating margin to be similar to 2019 with more favorable mix and higher volumes off.

By the targeted investments, we're making in sales and marketing to restore SBM to sustainable growth.

We expect SPM sales and segment operating income to be weighted to the second half of 2020 compared to results in 2019, given the timing of Invensas investments and consequent impact on revenues.

As a reminder, the first quarter is our seasonally slowest quarter January and February have met our expectations.

Milder winter has contributed to solid performance in North America, while the Asia Pacific Region has had a slower start to the year due to the ongoing economic deceleration.

As well as the impact of the Cobot 19 virus as always our performance in March will be key to the first quarter as the construction season in most markets typically ramps up in this month.

Based on the information we have available at this time.

We expect to historically typical 8% to 10% of expected 2020, adjusted EBIT in the first quarter of the year.

Earnings performance, improving as the year progressive due to the higher sales volume in the second half and the continued positive impact of our restructuring initiatives.

With that I'll turn it back over to Randy.

Thanks, Craig So as I look back at 2019. It is clear that the second quarter was the trough of our performance with the third and fourth quarter, showing nice improvement as expected.

Simply put when we focus on what we can control put the right organizational structure in place and focused on our cost we can execute on our strategy meet our financial commitments and as I said before we still have more to do.

And as I look to 2020, we are focused on the following priorities.

Returning specialty building materials sustainable growth in the rate laid out or plans to do this.

Continuing to build on the momentum and success, we've had in we've achieved with verify.

Further optimizing fccs operating model and challenging our go to market strategy, which I'll talk about in a minute and advancing our restructuring plans and implementing additional efficiency projects to make GCP a stronger company.

Let me talk first about FCC.

We will continue to prioritize profitability in FCC by emphasizing core markets in modernizing our operations, which includes our service model to become more efficient.

Our strategy for FCC includes three elements.

First we plan to reinvigorate our core admixtures business by continuing to refresh our product portfolio and optimizing our service model.

We have plans to introduce next generation admixture technologies, such as strengthen he answers as well as new specialty fibers for our durability products.

We are optimizing our service model by implementing a more integrated approach to supply chain management.

One component is to introduce digital tools to improve our supply chain processes.

GCP plus our new online order and tracking tool is an example of this approach.

Secondly, we are driving the adoption of verify by current and new customers.

Since verifies closely related to our admixture business. Our strategy is to grow the data portion of the business with additional truck installs in the process gain additional admixture business than we otherwise would not have without verify.

We also plan to expand verify sales by increasing revenue per cubic yard with new Aiotv powered functionalities.

Our goal is to evolve from in transit management to an end to end solution provider.

The third element of our FCC strategy is to expand our specialty segments, which include our cement pre cast and engineered foreign products.

We plan to strengthen our go to market approach with new product introductions in the pre cast in engineered flooring systems segments.

With cement additives, which is a business we have historically done very well in.

We're focusing on expanding our market opportunity by developing new products that address industry challenges, including carbon dioxide emission reduction and the shortage of supplementary some cementitious materials.

We also recently introduced a new product selection tool for cement additives, which we've named GCP dash.

The tool uses a proprietary algorithms to select cement additives the meet specific customer needs.

Which in turn reduces the time and operating costs involved in the selection process through accelerated and more accurate qualification customer needs.

Now, let's talk about GCP as a whole.

Taking a look at our corporate restructuring efforts, our cost and efficiency initiatives are working as expected.

In 2019, our restructuring programs yielded about $27 million in seeds and as Craig said, we are targeting $28 million and savings in 2020, and approximately $80 million in annualized savings by 2022.

Our efforts continue to be focused on our operations in running a best in class customer focus supply chain organization.

Ensuring we have effectively matched our internal services with the needs of our business and remaining diligent about our spending.

Another source of expected savings for GCP is the tax optimization project that we discussed on last quarter's call.

The project is designed to optimize our tax rate to provide additional earnings over time.

We selected an external partner who is completed an initial assessment.

And based on their analysis, we believe we had the opportunity to reduce our tax rate by two to four percentage points over the next two to three years and for GCP each tax rate percentage point represents about $1 million in earnings.

We will continue to look for ways to become more efficient how we operate to drive improved profitability.

So before I conclude I would like to comment on a few additional topics.

First as we've discussed previously sustainability is an important part of what we do enter the priority of mine.

We not only aimed to manage our physical footprint in the sustainable manner, but we also want to be proud of the fact that our GCP products and services help create safer more durable and more efficient structures.

And I'm happy to report that we expect to publish our first sustainability report this spring around Earth day.

The report will outline our philosophy and our contribution to more sustainable construction practices and structures.

Next our search for a permanent CFO is continuing.

So we have no specific timeframe, we are working to appoint a permanent CFO as soon as possible. We will provide an update at the appropriate time.

Turning to capital allocation as I've mentioned in previous calls.

We recognize it or balance sheet is in great shape.

Our board and management team regularly discussed capital allocation and we continue to believe that it is our best interest at the moment to preserve our financial flexibility.

We will continue to discuss capital allocation with their board and we'll update our approach as appropriate.

Lastly, you may have seen Starboards announcement has nominated director candidates for election at our 2020 annual meeting.

CP is committed to maintaining an independent diverse and experienced board and we maintain an active dialogue with our shareholders.

The purpose of today's call is to discuss the actions, we're taking to deliver on our commitments and to execute on our strategy to read value for all shareholders. So we will not be making any further comments on the nominations for our shareholder conversations at this time.

I would like to wrap up my comments by thanking our employees personally and on behalf of my leadership team for all the hard work in effort. They continue to devote to the implementation of our plans together, we're moving the company the direction we need to go.

2019 is behind Us and I look forward to seeing the positive impact in 2020 of all of the changes that we've made to make GCP a stronger more profitable company.

So thank you for joining our call today, and we look forward to taking your questions.

Thank you at this time, we will open the floor for questions. If you would like to ask your question. You May Press Star then one on your Touchtone phone. If you are you seeing speakerphone. Please pick up your handset for pre pressing the keys.

To withdraw your question. Please press Star then chance at this time, we'll pause from its really just simple our roster.

My first question comes from.

Kelly Chief Research.

Good morning, Thank you.

I was wondering if you could just show even more in more detail on the unfavorable mix saw SDN.

The margin drop substantially so.

What.

Happened in 2019 in one can wait what can we expect can 2020.

Rosemary This is all right I'll start and I'll, let Craig also add.

The building on below business as we've talked about there is a focus towards large projects and we have seen a fewer number of those and that did continue through the course at 2019.

The reduction of the building on below business contributed significantly to the margin reduction as well as the overall mix and so that was the primary factor and while there was an uptick in residential which which does help the driving factor with indeed to building on below.

Business.

[laughter] either.

Im sorry go ahead.

Thanks.

No I would just going to make the point that it was an unusually unfavorable mix historically, we've definitely had a better mix than that too to arrange point about that larger projects, where they're high tech and high margin.

Products on those and we expect the better mix moving into 2020, particularly starting in Q2.

So it sounds as though some marching on the large projects.

Yes, he is substantially higher than that.

Small to medium sized projects and yet you are pushing too [laughter] in order to target those smaller to medium sized checks in the kitchen. So should we anticipate that the margin will continue to decline.

So we are in that intermediaries stage, where were making those investments in that and that middle tier and it does take some time to realize the benefits of that so we have been making the appropriate headcount adds and ship we've been making those.

Right marketing moves, but as we've talked about I'm expecting the benefits of those investments to come in over time and while the result of the work we've done I believe will continue to deliver value.

The results of the fourth quarter.

Our still related to the fact that from a year over year basis, we have seen a fewer number of these larger projects that as Craig mentioned as we move into 2020 I do expect to see the benefits of the investments that we're making and have middle tier.

Alright. Thank you and then looking at JV site, and I apologize if I missed it.

How big that business currently how many tracks on I think you said that you anticipate did it keeps cheap centsfive sealant did I hear right gross in 2020.

Yes, it's Craig yes, 50% increase we had over a 50% increase in 19, we expect another 50% increase in 2020.

We've got contracted customers for over 5000 units today, and we anticipate that to be up 50% by the end of 2020.

In Rosemary this is Randy we've committed to having sales generated through the verify program of 50 to 75 million, but into 2021, which includes not only the data in the materials management, but also as we noted in our remarks were located increase admixture sales, which would not have gotten without the verify technology. So we're holding to those numbers.

Alright, Thank you and one last question, if I may well material, it's flat to declining do you think set you I'm going to need to get back some of the pricing you got 22 in 2019.

It's Craig no, we don't anticipate and we have not build in giving back pricing, but our price increases in 2020, we expect to be very moderate.

And that is built into the plan very moderate price increasing due to the lack of inflation during 2020 that we anticipate.

Thank you.

Our next question comes from.

<unk> of Jefferies.

Hi, guys. It's 10 Rizwan Florence how are you.

Thanks, So for for verified I forget did you charge more for truck more per pound of concrete is I mean.

How does that kind of set up.

The model is set up that it's up on a usage basis.

That.

Honda poured concrete but generally.

It's generally.

On a on a daily basis, it's a it's a it's a very great model.

We're very proud of the way, we set it up and we actually charted the customer on a daily basis on how much concrete poured and use the system and generally the usages around 90% to 95% on a daily basis of their concrete pours if they have a unit on a truck.

Okay.

It's helpful and then the.

I guess, the gap and pricing for verify versus not as its an expanding or just stable. I mean are you continuing to talk more or borrowing.

It we're looking at it on a customer by customer basis, and we're trying to optimize our pricing model, we integrated verify last year into the FCC business and so we're utilizing the same resources in the same individuals', but we also added some value sellers to be able to help our customers better utilize the system, So where we can utilize verify in contracting.

She Asians, where we can utilize verified as I said before to get admixture, new admixture sales absolutely we're doing it.

Okay and then finally just for I think you said, you're going to do a 28 million savings in 2020, what's the cost of that.

In terms of cash cash cost.

But generally we've been running above one for one on a dollar basis, but in 2020, we anticipated slightly lower lower than that.

And we were a little higher in 2019.

Thank you very much.

Our next question comes from Chris Shaw Monness Crespi.

Good morning, and one idea.

Good morning, good morning.

The first but I think you characterize the 2019 construction market globally is down modestly or something like that I think yourselves on organic basis, we're probably down more than that maybe just for Randy but is that just oh.

Is that this illustrate a loss of market share and if so what would I know you're weren't there the full year, but what what do you think the reason for that lost market share was.

Is the biggest driver as we've outlined is SPM within SP in our large project driven portion of the business and we looked at the number of large projects in 2019 and compared them to years past, we saw a decline in those numbers not only the numbers, but also the size of those projects. So that was the biggest contributor in 2019 to where we saw challenges.

And as marine pointed out looking into 2020. Some of these projects, we see opportunities for those who is larger opportunities to come back.

But when you combine that with the SPM initiatives that we outlined dumb, we're pretty confident that we'll see a turnaround in SPM in 2020.

We lose here in the large projects or was it that the large projects grew slower than small projects and so the overall market you were just.

Represented a slower growth side of it.

It's an array and I was actually going to make a comment on that so within the large projects segment. We believed that our share base has been pretty stable.

It is just as Randy was saying a fewer number of projects and as I look at our wins in 2018, we had a higher number of large projects, which has contributed to the overall revenue base that we just did not see in 2019 and we also witnessed.

Delays and certain projects in 2019 that would benefit us moving into 2020, and 2021 and it is a challenge as being in.

A project business, where you do see the lumpiness, but overall within that particular segment.

I feel confident that our share basis remained stable.

And then looking forward on a SBM I know you are a lot of 4% to 6% the topline growth for the year. That's it's back half weighted my question is though do you have that business booked yet or is it you know that business, you're hoping to one at this point me how does that play out.

Yeah.

Great question, it's a bit about.

So we do track our product pipeline very vigorously and.

Within our secured business.

Within the pipeline.

We do see a number of projects, particularly in North America, which will which will add.

But within the open pipeline that piece on a year over year basis.

Within North America again is stronger than what we saw last year. So we are expecting a bit of an improvement in 2020, which combined with a lot of these growth initiatives that we went through.

Leads to the overall, 4% to 6% growth that we've talked about.

Got it thanks a lot.

And as a reminder, she would like to ask a question. Please press star key followed by the one key that was star one.

Next question comes from my kitchen.

Guarantees.

Hi, good morning.

Good morning.

Okay.

That's.

Growth plan.

Talking about.

Our focus is bad historically in the northeast and on the West coast and you're going to be.

Moving into some new geography is keep just help me understand.

Areas, where you have some relationships with maybe some national.

Regional customers.

You feel pretty good that you're going to get that customer pool in those regions.

As you increase your presence.

More of a situation, where you're going to increase your presence.

And you have to be aggressive and going after competitors business.

Really tapping into those markets just just help me understand maybe.

The competitive environment and the strategy as you look to expand the geographic exposure.

Sure.

So within the geography is where we have had strength.

The strategy has been to focus on large projects.

Within those geographies, we do see an opportunity to get into that middle tier as we call. It and we are expanding our presence both through headcount as well as extending the relationships with our customers to be better position and we feel.

Very confident of our ability to do that within well established geography and other parts of the country I think it's a little bit of both of what you said, where we have the customer relationships that we have focused a bit more and larger projects and sometimes in those geographies those larger projects just aren't there and were.

Focusing more on that middle tier so we have.

The relationships where.

Aiming to put our overall portfolio together to better attack that segment.

We realized that it is a a different opportunity and we need to work to fit here that business, but the plans are in place with our sales team our marketing as well as technical service to be able to penetrate that middle tier.

All right and then.

One of the also asked.

For thoughts on what gets you to the high end or the low end.

2020 outlook or maybe what do you see in some of the wild cards that are either in your control or out of your control.

Yes, so it's Craig Mike.

So to get to the high end, we obviously need to.

Execute on the SPM project that program strategy that in the range that line.

FCC needs to its fairly stable and were really confident in FCC and how it's performing so thats not too much of a risk and obviously it has just got to continue doing that.

And then the third one we do still have the restructuring programs that we have to execute there's still work to do on those so I would say the high end is that we get all those done and the market at least as modest based on our expectations.

Theres no decline or no substantial impact as we move through the year on the market, but generally.

We think we can get all three of those done so.

We're not we're not suggesting that the high end isn't possible because it is for sure and we've got all the plans in place to get it done.

Pretty detailed plans on the low end I would say either the restructuring doesnt get executed just quite as quickly we do have quite a bit of DNA restructuring, which sometimes is a little more difficult to get at but we've got some detailed plans.

And then of course, the programs were a little bit weighted in the second half on SPM.

And I think to some of the questions.

I think we've tempered that two to the back half because we do think maybe there's some upside in Q2 as we move move early in the in the program take but you know that's what risk also I mean, you could slide on that a little bit. So that's a little bit of an unknown because its three to six months out, but we were pretty confident that we've moderated.

So that's kind of though the bookends other than the market, which we really don't have any control over.

Let me just said too we talk a little bit the remarks about China in that situation in China and obviously, we're monitoring this on a daily basis is most companies are number one priority. Obviously is the fact, our employees are safe and as of today, none of our employees have been impacted but would that focus on China. We do have manufacturing there, but the manufacturing predominantly serves China.

So we're watching that and we don't really see as Chris pointed out a material impact. So we'll continue to monitor it will continue to to look at the situation and inform you accordingly.

Understood. That's a that's good color and then the last question.

I think there was an earlier question about verify I don't believe you disclosed what the current revenue run rate businesses.

No as Mike, we do communicate how many contracts and trucks, we have out in the market, but not generally the revenue.

And we havent as of yet and we'll let you know when we do.

All right thanks very much.

Thank you ladies and gentlemen at this time. This concludes our question and answer session and I would now like to turn over back to today's speakers.

Thank you everyone for participating in our call me look forward to speaking with you on our first quarter call spread.

Ladies and gentlemen. This concludes today's teleconference. You may now disconnect.