Q3 2020 Earnings Call
Ladies and gentlemen, thank you for your patience holding these kids need to holding companies will begin momentarily.
[music].
Good day, everyone and welcome to <unk> quarterly earnings results Conference call. Today's call is being recorded at this time I would like to trying to call over to Mr. am I can't say executive Vice President and Chief Financial Officer, Sir Please begin.
Thank you and good evening, Thanks for joining US Tonight with me as Paul I learned since <unk> Vice President Treasurer.
I'll discuss our third quarter results for fiscal 2020.
The private Securities Litigation Reform Act is 1995 provides a safe harbor from Civil litigation for forward looking statements. This conference call contains forward looking statements to reflect the company's current views as to future events and financial performance. These forward looking statements are subject to risks and uncertainties, which.
Cause actual results could differ materially from those we made its Scott.
I refer you to the discussion on these points contained in our most recent filings with the FCC.
Before discussing the financials I want to say that our thoughts go out to all of those impacted by to covert 19 Corona virus.
So the challenging time for all of Us and we can't think enough. Our partner. So we are employees. When we called partners, who are doing all that they can to keep our customers placed as a business clean safe and ready for the work there.
We currently find ourselves at the peak of uncertainty as it relates to the Pandemics impact on the economy. The response of our country in each state evolves daily.
A week ago, we haven't seen much impact to our business.
We're expecting to date increased revenue and EPS guidance based on our year to date results in fourth quarter outlook.
However, much has changed in a matter of days and more changes are likely to come.
Due to this uncertainty, including the severity and duration of the pandemic, we're not providing guidance for the fourth quarter of fiscal 2020 at this time.
We certainly remain focus, though on the safety and well being of our employee partners and the care of our customers.
So let's move to providing our third quarter results and then we will open it up for questions.
Our fiscal 2023rd quarter revenue was $1.81 billion, an increase of 7.6% over last year's third quarter.
Earnings per diluted share worry P.S. from continuing operations were $2.16, an increase of 17.4% over last year's third quarter adjusted for GSK integration expenses.
Free cash flow for this years third quarter was $300 million an increase of 17.2%.
The organic growth rate, which adjusts for the impacts of acquisitions foreign currency exchange rate fluctuations and differences in the number of work days was 5.7% for the third quarter fiscal 20.
Your organic growth rate for the uniform rental and facility services operating segment was 4.8% any organic growth rate for the first aid and safety services operating segment was 12.5%.
Gross margin for the third quarter of fiscal 2800 $24.4 million increased 9.2%.
Gross margin as a percentage of revenue was 45.5% for the third quarter of fiscal 20 compared to 44.9% in the third quarter of fiscal 19.
Operating income for the third quarter fiscal 20 $314.7 million increased 13.1%.
Operating margin was 17.4% in the third quarter of fiscal 20 compared to 16.5% in fiscal 19.
Net income from continuing operations for the third quarter of fiscal 20 was $234.5 million and reported earnings per diluted share were $2.16. Excluding the GK acquisition integration expenses in fiscal 19, EPS increased 17.4%.
In addition to a solid financial performance, we continue to generate strong cash flow and commit to effectively deploying cash to increase shareholder value third quarter free cash flow was $300 million, an increase of 17.2% compared to last year.
The third quarter of fiscal 20, we paid an annual dividend totaling $268 million.
The dividend to $2.55 per share was an increase of 24.4% over last year's annual dividend.
In addition to the annual dividend, we purchased $393.1 million, it's been tough stock in fiscal 20 to date, including $200 million in March.
The amount remaining under our buyback authorization is $1.1 billion.
And our third quarter with fiscal year to date revenue growth of 7.2% and inorganic growth rate of 7.1%.
Operating income excluding last year's TNK integration expenses increased 14.7%.
EPS adjusted for last year's special items increased 22.2%.
Finally free cash flow for the third quarter year to date increased 61% our employee partners. It really done a great job this year.
With that I will turn the call over to Paul for additional details for our third quarter results. Thanks, Mike We have two reportable operating segments uniform rental and facility services and first date and safety services. The remainder of our business is included in all other all other consists of fire protection services and argue.
Form direct sale business.
First aid and safety services and all other our combined Didnt presented as other services on the income statement.
Uniform rental and facility services operating segment includes the rental and service thing of uniforms, Madsen towels, and the provision of restroom supplies and other facility products and services.
Segment also includes the sale of items from our catalogs to our customers on route.
Uniform rental and facility services revenue was 1.4 or $5 billion, an increase of 6.6%.
Excluding the impact of acquisitions foreign currency exchange rate changes and the difference a number of work days the organic growth rate was 4.8%.
Our uniform rental and facility services segment gross margin was 45.8% for the third quarter compared to 44.9% than last year's third quarter, an improvement up 90 basis points.
Gross margins have strengthened for many reasons, including strong revenue growth and realization of cost synergies from the acquisition of gene Kay.
Our first date and safety services operating segment includes revenue from the say I want to start by saying a first they products safety products and training. This segment's revenue for the third quarter was $170.5 million the organic growth rate for this segment was 12.5%.
The first day segment gross margin was 48.0% in the third quarter compared to 48.2% in last year's third quarter.
The difference in gross margin was due to revenue mix in the quarter, which consists of service product sales and training the strong organic revenue growth benefited from more safety and personal protective equipment product sales, which generally have lower margins than any other revenue categories.
Our fire protection services and uniform direct sale businesses, our reported any all other category.
Our fire business continues to grow each year at a strong pace.
One of direct sale business growth rates are generally low single digits and are subject to volatility such as when the installing multimillion dollar accounts.
Uniform direct sale. However is the key business for us and its customers are often significant opportunities to cross sell and provide products and services from our other business units.
All other revenue was $192.1 million an increase of 9.9%.
The organic growth rate was 7.1%.
The fire business organic growth rate was 4.1%.
Fire revenue was weighed down by the loss of a struggling national accounts in the retail sector that recently disclosed the closing of over 100 stores.
By mild winter weather that resulted in less sprinkler repair service revenue from freezing in bursting water pipes and by a decline in sales rep productivity through the Christmas and new year's holidays.
Uniform direct sale business organic growth rate was 11.1% and benefited from additional sales from the roll out last quarter of carhartt branded garments to a fortune 100 customer.
All other gross margin was 41.3% for the third quarter of this fiscal year compared to 42.3% last year.
Selling and administrative expenses as a percentage of revenue were 28.2% in the third quarter fiscal 20, and 28.3% and the third quarter fiscal 19.
DNA labor expense as a percent of revenue improved year over year.
Our effective tax rate on continuing operations for the third quarter fiscal 20 was 18.9% compared to 20.1% last year.
The tax rate can move from period to period based on discrete events, including the amount of stock compensation expense.
Our cash and equivalents balances at February 29th was $234.4 million of that amount to $144.7 million was in United States in unrestricted.
Capital expenditures in the third quarter were $63.2 million, our Capex by operating segment was this fall it was $50.2 million and uniform rental and facility services $10.1 million in first date and safety.
And $2.9 billion and all other.
Year to date free cash flow was $745.2 million, an increase of 61% compared to the prior year period.
Free cash flow increase because of strong earnings growth and improvements in working capital, particularly accounts receivable inventories uniforms and other rental items in service and accounts payable.
As of February 29th our balance sheet remains strong our leverage leverage was 1.7 times debt to EBITDA.
We have an untapped credit facility of $1 billion no debt maturities in the next 12 months and no material debt maturities in the next two years.
That concludes our prepared remarks, we're happy to answer your questions.
Thank you Sir.
This time well open the floor for question.
I would like to ask a question you may do so by pressing star on your telephone keypad.
And first we haven't Manav patnaik with Barclays capital.
Good evening gentlemen, you know just maybe in like US you know all this stuff going on that perhaps you could help us.
With a little bit more details in terms of where you exposure like you know, whether that's restaurants lodging and so forth. Just me at least no you know magnitude US you know what percentage of revenues I I really at risk, which is though is that you know could go.
You don't like 50, 50 or whatever it is I was hoping you could help us with a little bit more color there.
Oh sure amount of you know, we're as I mentioned, a a bit earlier.
We're really at a a peak of uncertainty or were as a week ago, we didn't really see much impact to our revenue.
And and so we're going about I'm trying to get a better understanding of that as we go through this weekend and into the future, but let me remind let me remind you we have a very diverse customer base about 30% of our revenues from interest industrials.
70% from a service providing a that's sort of spring businesses that includes health care retail distribution centers foodservice hospitality and all of these are being affected in different ways. If you think about health care for example, a they really need US now there are we.
They need our scrubs, they need our micro fiber wipes, they need or cleaning chemicals, they need our fire protection.
If you think about restaurants sports summer closed some are opened only carry out and we're we're learning as we visit them. This week, what what are their needs and they they may still need.
Chef works, some hygiene products first aid safety, but but we're going to its going to take a little bit of time to understand what those needs our office environments, a they're looking to stay clean more than ever and and so we're seeing some nice movement a there in terms of our first aid and safety our personal.
Protective equipment like gloves.
And or and then you think about hotels casinos arena arenas or they are doing very much business right now and so we're in the midst of better understanding the collective impact to the business model and gosh. We're we're so early in that.
Process that it's really hard to break it down.
Because in addition to the details that I, just provided and keeping in mind.
If you think about three digit makes codes.
Don't have revenue of greater than 10% than any of those three digit makes codes.
But also keep in mind as I talked about revenue per vertical.
It is quite different from geography to geography to to today. So if you think about some of those different businesses that are on the coast or they may be impacted more severely use and then those same kind of businesses in the in the same verticals.
In the middle of the country and so.
This is it's going to take I'm, a little bit of time for us to really get clarity on the collective impact to the business and we're just not there yet.
Thank you.
Next we have a question from Andrew.
RW Baird.
[laughter].
Great. Thanks.
The question that we've gotten a lot. This week is how or customer closures or work in how they affect you.
And what the contract says when when such things happen.
I know, there's probably different ways to treat different categories of customer small customers large customers, maybe even by end market.
But but from for those customers that are shutting down I mean are shutting down.
How do how does that get treated by Synta.
And what is the impact to your financials.
Yeah, that's that's a a it's a great question, Andy and we're as I said, we're still working on gaining clarity there but as.
It is gonna be all over the board right. This is this is not a normal environment in a normal environment.
We may have a a business shut down for a week and we still may be charging the rental of garments and other products. That's a main holiday <unk> manufacturing shutdowns are a good example of that semester breaks at schools a good example of that.
What we're talking about right now is quite different and and so we have to understand from our customers.
How how long do they think they will be closed and many of them right now don't know.
But but how long do we think they're going to be closed and what are the needs of the business today.
Versus maybe where they were a couple of weeks ago.
And and so it's gonna be all over the board Andy from from small businesses to large businesses and different kinds of verticals and in different geographies and and and as I've said. It. We're we're working through that to gain clarity.
Thank you.
Our next question will come from Andrew Steinerman with JP Morgan Securities.
Hi, Mike Let me give it to try so my sense, you know I've been doing this for over a decade looking at destined to us in the group and my sense is that the uniform rental business really it's kind of cyclical on a delay like when you look at your fiscal 2008, whose acts.
Oh it Wasnt until 2009 in 2010 fish goes did you have kind of moderate declines about 5% organic per year for those two years. So my question really is you know do you think that the impact a they've experienced now will be more immediate or do you think it's good to be.
We are a delay like I described last recession.
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Yeah. Andrew this is not a this is not in a normal recession or even like the great recession, and so I think there's gonna be there's gonna be a more immediate impact.
Simply because we have we have so many businesses that have been.
In order to close right.
We've got a.
40 states of close their schools I think another to over 20 states a close their restaurants, that's I mean, that's unprecedented and and its not like our customers are going out of business over time or even had the chance to reduce their workforce.
They're they're kind of closing.
Many of them on on orders of municipalities.
And and so.
You know, there's going to be a little there's gonna be certainly a more immediate impact what is that impacts look one of the reasons that we did not provide guidance is it's really hard to tell we've never been through a pandemic and and in this pandemic.
We're seeing things that we really haven't seen then in the 90 years of of sent US a of running the business and and so were we need a little bit of time for clarity.
As I said, we haven't seen much of an impact as of a week ago, but there if there's going to be an impact coming and and that's why that's why we did not provide guidance because it's just too hard to tell right now.
Thank you.
Next question will come from Seth Weber with RBC capital markets.
Hey, good evening, guys I I guess, maybe just following up on that line of questioning you know I think in 2010. Your your decremental margins were sort of mid 30%.
I guess, Mike as you know just kinda <unk> trying to read between what you're saying you're the it seems like the impact could be slightly more of a shock here near term them. So.
From the decremental margin framework should we think about you know levels above kind of where you were in the last you know when there was in the last really tying it organically. It was down is that kind of what your messaging. Thanks.
Well can you just got so actions yeah.
Sure sure. So so do you think about you know the.
The fixed versus variable and how can we how will we manage the business right through this through this disruption.
And right now there's a fair amount of uncertainty is I've as I've mentioned, a number of times and.
You know it we need a little bit more clarity and the clarity and and as it relates to this is really around what's the what's the depth of this what's the breadth of this how long will this last what's the severity in duration.
If we if we start to believe that the a the that for example, the severity is is is pretty high.
But we don't expect the duration to last very long. Then then we may we may not be as aggressive because we don't want to harm the long term opportunities and the performance of the business as we move into next fiscal year as we go into this if we feel like the.
The duration is gonna be longer.
Then then we may take different steps to pull down some of those variable expenses.
And so we're we're going to need a little bit a time.
To understand what our best ex expectations are for severity in duration and we'll manage accordingly to that I can tell you, but as we as we sit here today you know we are generally yet we haven't been for a long time.
In up mode of growing that business, and adding routes and adding laundry capacity.
And as we sit here today.
I would expect we have not or at least we've we've slowed capex for example to.
To only those things that are essential and so in other words were not looking to add routes right now that will reduce capex, we're not looking to expand capacities in a wash allergies.
Add extra I'm proud to open new processing facilities, that's going to reduce capex, we along those lines that means a we likely won't be hiring or people to staff those new routes to staff to be the added capacity and so those are.
There are certainly things that we can do today.
To say, we're we expect to get into a period, where the growth isn't going to be what it was in the first three quarters and so we can we can pull back on that a little bit and that's that's certainly is going to help the the cash flow.
But as it relates to then being more aggressive we are we're here for the long term and if we if we'd be feel like this is a short duration disruption will likely treat that a little bit differently than a longer term duration.
Thank you Sir.
Our next question will come from George Tong with Goldman Sachs.
Hi, Thanks, good afternoon.
Oil prices have constructed sharply in recent weeks what are your expectations for your industrial and manufacturing verticals and what factors could potentially costs in talks to perform differently. During this energy downturn compared to the prior 2014 to 2016 downturn [noise].
Well I think a you know Georgia, if we were if we were looking at this only in the lens of the of the oil and gas vertical then I'd say a couple things one it's a smaller piece of our business than it was at the beginning of that last downturn.
And and so it will do that will not have as big of an impact on us as it did last time and the lower gas prices will certainly help us today and so if we're just looking into lens of that particular.
Or maybe a few verticals I think we fair really well during that and we did several years ago as well, but this is broader this is a this is certainly broader than that just that one lens and and so.
It's gonna be really hard to tell.
Exactly how do we think we performed in that one vertical compared to what's going on in the rest of the United States.
Thank you.
Our next question comes from carried that with Bank of America Merrill Lynch.
Hey, guys.
Oh.
No.
Yes.
Actions, you referenced variable versus fixed that actually.
Yes, I missed it give us a.
So the two can you take a shot and maybe just at a high level. If you do decide this is.
Longer duration.
What are the kind of actions you would take.
Is it just head count and there are other actions you would take too.
Reduce costs.
Yes.
Well, so so Gary if you think about our business. There there are many variable costs in the business. The question is.
A you know are they variable to the point, where we can turn them off.
Immediately and do we want to turn them off immediately that's the biggest question that we're dealing with and it's really I think it'd be irresponsible of me to give you a percentage.
Just a total variable costs because.
Because we have to manage the business and we're managing for the long term and so I'm not I don't want to throw out some some variable number where you think we will cut to the bone our business. So so let me give you. Some examples though a you know when you think about the.
The the material cost of the business, we've got a lot of cost of disposable products like paper soaps. We we have a direct sale like our catalog business those are highly variable and if we're not selling them. We don't have those costs. We also have.
Gas water and energy.
The gas for our our our trucks or the water and energy for running the facilities. There certainly is a variable components of that.
But there's also a bit of fixed and it just depends on on a how how much of that capacity, we may decide or not to pull back on then if you think about the the a laundry capacity.
There are a lot of different pieces that go into that in including Labor and then when you think about our route capacity. You know you. We've got the cost of up our drivers and so you know there are a lot of variable costs. Our goal is to make sure that.
Our business remains strong for the long term and and so if we start to see a longer duration or then there are certainly some things that we will do like a pull back even a little harder on capital expenditures and and other growth.
Pieces of a of what we do a we may or we may do some things through attrition.
And and we'll have to make sure we understand the capacity utilization.
And knowing that we want to manage to that if you go back to own nine and 10, we did a we did close facilities, but that was a little bit or that was a little bit different than that it was a longer period of a recession. This is potentially deep, but but we just don't.
No the duration and we do not want to we do not want to.
Impact the business for the long term until we really have to.
Thank you Sir our next question comes from I'm, sorry, Jeffrey.
Good evening. Thank you.
Mike If you could just provide a just a little more detail on your contract structure and what I mean by that is you know if look if a customer goes bankrupt you know clearly you see that right away. If it's a close your apart, but how quickly do y'all contracts or just do you know permanent headcount changes.
Just any sense that's true.
You know how defensive your portfolio as a but specifically you know what's the lead lag do you know headcount changes there that maybe form and then I realize absences don't don't impact your business.
Yes, I mean, our contracts.
Our generally five year contracts and they they provide for a steady stream of revenue and and generally there is some minimum level of revenue that we require.
But hamzah, we're in a little bit of a a different time today and ER and and so there's going to be a customer by customer conversation about what makes sense and that's going to take a little bit of time to get through this is.
Again, this is not a normal kind of ramping down so a trending down of the business. This is kind of an abrupt.
Closure of a lot of different customers, but but let's let's remember something else about our business as I mentioned, a little bit earlier, there are a number of a there are many businesses that really need our products and services and and I don't want that to up.
Be lost there have been a couple municipalities any areas within the country, particularly on the coast and we haven't been identified as an essential provider and so even though other businesses, maybe shutting down we are operating because.
Our customers need us and and we're gonna I'm, we're going to over the course of the next few weeks, we're going to understand that collective impact.
But but lets keep in mind that.
While some of our customers are going to be impacted negatively there are others that really need us we're seeing an increase in what they need and and we're gonna do everything we can take care of them. So it's a mix and we're going to its it's going to take a little bit of time to understand that and get Sinclair.
Yeah.
Thank you Sir our next question comes from Kip Tindell, Ronnie with William Blair.
[noise] [noise], yeah, good afternoon I understand the.
The slow down very different Mike, but if you go back to the last recession I can't remember if you broke this out or not but how did customer retention.
Look through that period I'm trying to figure out how much of that mid single digit organic decline and own nine and 10 was was due to a deterioration in retention rates versus new customer sales or pricing for example.
Yeah. The a their retention was not negatively impacted that much it was more about.
Customers, reducing their head count, we certainly did have more customers than normal periods go out of business and so that that contributed to a little bit of a higher lost business number, but but generally speaking our retention was really good that and I think our return.
And outside of a possible businesses that that actually have to go out of business I think our retention is gonna be very good here. It's gonna just there's gonna be some period of disruption that we have to work ourselves through.
You know.
I think it's I think we have to be careful about comparing this to a prior recession. This is this is a pandemic. That's that's a that's quite different than the disruption is is is gonna be.
A little bit more abrupt and immediate or the question is how long will last and boy if we can get through this as a country.
In in the next 60 90 days or you know, we look forward to getting back to normal operations, but we got to see what that looks like first.
Thank you Sir actually had a question from Shlomo Rosenbaum with Stephens, Inc.
Hi.
<unk>.
HM can you talk about how many of your contracts, we see were for percentage wise. They can first he didn't safety or there was primarily consumption based contracts for or the contracts that are I'm kind of a recurring revenue you know you charges for about per month can you go into that a little bit more 'cause. It first if you didn't safety.
He has been a very good gross a portion of this.
So just wondering how those contracts work.
Yeah generally those are based on it there are some recurring revenue streams.
I would tell you the bulk of that is consumption based and it's a business is performing very very well right now as you can imagine with the need for.
Sanitizing personal protective equipment.
That's a business that is performing very well it has for the whole year and.
We're getting a lot of customer requests for for more more ways to help.
You know when you think about the needs of of many businesses today, the cleanliness and the safety aspects have really risen and we've got a lot of products and services that can help in those areas and and and those have been you know there's a bit asked for.
For quite a bit over the course of the last couple of weeks and I expect that those kind of things will perform well.
Thank you Sir our next question comes from Kevin Mcveigh credit.
And then make sure <unk> yeah. Good. Thank you. So much he can you give us a sense of.
Not only to the client mix, but.
What was the revenue trends the last week or so just to get a sense of how much the business came off in and then just <unk>. He is there any wouldn't think about a geographically 'cause it sounds like you know, California, New York washed and maybe that's been a little bit weaker than the carrier, but just any thoughts on I'm kind of trends last week or so.
And then is there anyway to kind of just frame it out within a little more context geographically.
Yeah, and unfortunately, Kevin or it's through last week, we didnt see much disruption to the revenue we in our direct sale uniform direct sale business.
We did start to see.
The incoming orders start to come down.
And and so that was that was probably the the early signs.
But Ah that's three last week not a lot of impact they're there has been certainly some impact on the coasts.
And so for example, all of our customers a new Rochelle.
They're hard to get too as you can imagine with the National Guard patrolling the streets there that's been difficult.
There are others that have been difficult on the west coast as well.
But collectively it wasn't that big of an impact I expect that we will start to see some impact as we go through the rest of this weekend and certainly then in next week and that's when we're gonna start to be able to or get a little clay.
Parity on what's the initial response of our customers and what might there needs to be as we move as we move to and like I said, they're gonna be some customers where their needs that really increase.
There are gonna be others, who have who have closed and and we're going to be talking about a different there's a different conversation there.
We need to get through all those conversations though.
Thank you Sir.
Our next question comes from gosh, coming in but that with Oppenheimer.
Oh, Thanks, Good afternoon, guys and thanks for taking the questions. I guess, you know you alluded to Capex a few times just looking at it year to date, you're trending I think.
Your guidance at the midpoint. This year was the same is what you did last year, but you're trending about 17 million Boe from my numbers I. Just curious if we could delve into capex, a little bit more and I think you'd said you'd already taking some actions with regard to what you've been seeing over the last weeks or months. So just just kinda delving.
A little bit more on what you would be thinking about on a go forward basis as well. Thanks.
Sure when I when I mentioned that we've made some decisions to to reduce capex. That's a very very recent type of conversation. A we you know look we are when we think about Capex, we we love to grow the business and we.
Our we haven't been expanding the ralph's as necessary and expanding capacity, but we've also keep in mind, we've gotten some capacity through the gene K deal and a we've gotten some efficiency through projects within the facilities and our route.
Yes, or the revenue per route has been growing and so we've become a little bit more efficient and.
And so where we've been.
Pretty efficient and that's a prudent in capex throughout the year, but having said that going forward you. We've been we've been out Oh, let's call. It a 60 to 65 million dollar quarterly clip and a and certainly that's going to come down probably by half.
Now I don't have a very I don't have a scientific measurement, but but it's going to come down quite a bit as we think about the fourth quarter.
Beyond the fourth quarter.
It's going to get back to our expectation for the severity and duration of this.
Thank you.
Our last question in the queue comes from Toni Kaplan with Morgan Stanley.
Thank you saved the best friend last.
[laughter].
That's right.
[laughter] I'm going to take the <unk> rose less traveled and asking a question about the corridor did you talk about the organic growth deceleration within the uniform rental space sounds like it wasn't related <unk> Corona is Irish since you hadn't really having an impact from that yet.
So I guess what are the main driver I should have a deceleration like in rental thank you.
Yeah, well you know we've talked a little bit over the last two quarters about the choppiness that we've seen in industrials and we certainly saw that or pick up a little bit you end up in our third quarter now.
Whether that has to do with a with the China in the early parts of the quarter.
I'm not sure or the uncertainty around this that's where that's really hard to to put our finger on but we certainly did see some choppiness in that side of the of the business and and the that contributed to a a little bit of a deceleration there pricing was up.
But a more aggressive in the quarter, we talked a little bit about that in our second quarter and and that remained a here in the third quarter and I'm you know the holidays. So I I mentioned this in the second quarter call back in December the holidays or are tough when you've got to holidays on a Wednesday.
Generally speaking our salespeople have a really hard time of setting appointments and so you. If you think about a two week period of time, where you've got you've got many customers because it's on a wednesday taken the whole week off for in and out it's really hard to set appointments and so we saw.
Are we did see.
Some impact to our sales rep productivity as Paul mentioned in fire and also in rental and that was a bit of a contributor as well. So the cook collectively those things were what we saw in the third quarter Oh, let's set aside the pandemic.
The business has been operating at a very healthy pace than we've we've really liked the execution of it and you know while the disruption is coming we think we're poised pretty well to manage through that and get back on to.
Two to our business or once this once we get through this.
Thank you Sir that concludes the question answer session call and I would like to turn call back over to Mr. Hansen for closing remark.
Thank you and before handing the call we'd like to leave you with a couple a final comments first I want to say again that our thoughts remain with it was impacted by the covert 19 krona virus as our country works to get through this difficult situation as quickly as possible.
But secondly, our businesses performed well very well over the course of the last 10 years with strong revenue income and EPS growth in fact, we've grown our sales and profits in 48 out of the last 50 years and although we're entering a period of disruption, we and all Stuntaz partners remain excited about the future opportunities of our business.
And look forward to getting back to business as usual in the meantime, we are well positioned to enter this period of disruption with a strong cash flow a very solid balance sheet and an untapped 1 billion dollar credit facility. So we feel good about our ability to manage through this and and and come out the other side.
And with a very strong business. So thank you again for joining US Tonight will issue our fourth quarter financial results in July and we look forward to speaking with you again at that time.
Thank you ladies and gentlemen.
Telecom and you may now disconnect you enjoy the rest.
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