Q4 2019 Earnings Call
[music].
Good morning, My name is Marcellus and I will be your conference operator today.
At this time I'd like to welcome everyone to this severe area corporations Q4, and full year 20, Nitrini conference call.
All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you'd like to ask a question. During this time simply press star number one on your telephone keypad, if you'd like to withdraw your question press the pound key.
This call may contain forward looking statement, which are subject to the disclosure statement contained in severity as most recent press release issued on March 25th 2020 with respect to its Q4 2019 results. Thank you Mr. for US you may begin your conference.
Thank you very much much at all.
So.
I am would I have with me, Okay, if I would always cheerful Sebastian and that and you called out there.
Thanks, again, where you could cause isn't a.
19 have he's a great deal for a sorry, yeah why do you have a b like for best Icesave, Okay. Lou What 30, 37, 38 revenue, 30% gross profit 34.
ER that they're doing had just a decade and steady if it does listed a few 37% that's great great number that's.
The participation of all our our people.
For integration.
So it's very good.
So you'll have the time give me I would be substantially more on the thing about the outlook looking what could we see you'll keep coming what we are okay, and ER and very happy what I've seen since the beginning of the year.
We have new projects.
So we have the venue I'm very optimistic in Florida for 2020, but I was personally pass the line okay to my although our ship.
Hi, thank him or selling the yes, thank him or so.
Good morning, everyone.
Well start what a general overview of our financials before moving onto operations.
The Corporation generated revenue of 374.3 million in 2019, 88.3 million or 30.9% compared to 2018, mainly due to acquisitions be corporations accessibility segment. The grew organically by 3.2% while revenue within the patient handling and adapted vehicle segment.
Contracted all in line with management's expectations.
Gross profit and gross margin stood at 125.3 million and 33.5% in 2019, respectively compared to 93.4 million and 32.7% in 2018. The increase in gross profit was in line with the increase in revenue gross margin as a percentage of revenue increased mainly due.
To a combination of a better consolidated product mix and supplying to synergies.
Adjusted EBITDA and adjusted EBITDA margin for the year stood at 55.6 million and 14.9%, respectively compared to 40.3 million and 14.1% for same period in 2018. The increase in adjusted EBITDA was in line with the increase in revenue mainly due to acquisitions made in 2018 and two thirds.
As a 90.
The increase in adjusted EBITDA margin was due to the integration related improvement in and get up into lifts standalone adjusted EBITDA margin as well as an improvement in patient Handlings adjusted EBITDA margin due in part to the exit from spends custom products market segment, and an increase in patient lift revenue.
The adjusted EBITDA and adjusted EBITDA margin to ride from Soberly acquired on July 1st 2018 also had a positive impact on the patient handling reportable segment adjusted EBITDA metrics as a whole.
Now moving onto operations revenue from the accessibility segment stood at 265.7 million for the year up $97.1 million or 57.6% compared to 2018 due in large part to the acquisitions of Gary the lift made in Q3, 2018, and Florida lifts in Q1 two three.
I wasn't 19.
Organically revenue grew by 3.2%, mainly due to an increase in core residential elevator unit sales in line with managements expectations.
Adjusted EBITDA before head office costs was 44.2 million for 2019, an increase of 14 million or 46.4% compared to the same period in 2018.
This increase in adjusted EBITDA before head office before head office costs was mainly due to acquisitions made in 2018 and 2019 I.
Adjusted EBITDA margin before head office costs at 16.6% compared to 17.9% in 2018.
The decrease in adjusted EBITDA margin before head office costs was due to the blending of get revenue lists operations, which have a higher structural cost base when compared to legacy scenario.
Got it into live Standalone adjusted EBITDA margins before have gross cost stood at 10.6% for the year steadily improving from 7.3% in Q1, 2019 and inline with expectations.
On a standalone basis, and excluding the favorable impact of the adoption of Iflorist 16 leases. The legacy so very accessibility reportable segment generated an adjusted EBITDA margins before head office costs of 21.8%.
Revenue from the accretion handling segment stood at 86.9 million for the year, a decrease of 2.9 million or 3.3% when compared to the same period in 2018, mainly due to lower revenue from spent custom products market segment.
Partially offset by civilly acquisition related revenue.
The lower revenue from spends custom products markets might segment was in line with management's decision to exit that segment effective Q3 2018.
Adjusted EBITDA and adjusted EBITDA margin before head office costs were 12.1 million and 14% in 2019 compared to 9 million and 10% respectively. In 2018, the increase in both adjusted EBITDA before head office cost metrics was due to a better product mix from span.
The contribution from our similarly acquisition and the continued cost containment efforts on a standalone basis, and excluding the favorable impact of the adoption of I for a 16 leases adjusted EBITDA margin before head office costs would have been 13.5%.
Cost and provisions pertaining to the corporations decision to exit from spends custom products market segment totaled 1.6 million use lower than the corporations initial estimated costs of 2 million use.
Revenue from the adapted vehicle segment was 21.8 million in 2019, a decrease of $5.9 million or 21.2% when compared to 2018. The decrease in revenue compared to previous fiscal year was due in part to the termination of a nonprofit organization.
As a vehicle accessibility program at the end of 2018 as well as the non renewal of the province of Qubec subsidy program for Adeptus vehicles in 2019.
Adjusted EBITDA before head office costs for the segment decreased from 2.2 million to zero point Ninemillion inline with the drop in revenue.
Adjusted EBITDA margins before head office cost was 4% compared to 7.8% in 2018.
The decrease in adjusted EBITDA margin before head office costs was mainly due to reduced fixed cost absorption.
Excluding the favorable impact of the adoption of our for 60 leases adjusted EBITDA margin before head office costs would have been 2.2%.
Operationally 2019 was a transitional year Corporation continued its integration of get event, the lift and exited spends low margin custom product segment, leading to an improved consolidated adjusted EBITDA margin profile.
From a strategic perspective, the two tuck in acquisitions made during the year, Florida lifts and similarly.
The increase of the corporations market presence in a key accessibility segment, the geographical area and added a complimentary product line and new distribution channels to its patient handling segment.
Were very strong balance sheets, and a net interest bearing debt to adjusted EBITDA ratio of 0.2 times. The corporation is on solid ground to take advantage of growth opportunities.
Turning to the current worldwide covered 19 outbreak.
We're closely monitoring developments surrounding it and have taken the steps needed to protect our employees and stakeholders. The corporation is and will continue to align itself to guidance being provided by the various levels of government agencies pertaining to this outbreak until it's resolution.
Marcel might view.
Very good them out always getaways there.
Phase here, but it's not always fun to on you have some good number up gets down to our people and you have it making a very good jet so and let's go to hear what the our people.
As to ask.
Okay.
Fair enough.
[laughter].
I always there first one.
Yes.
Okay Marcia.
Okay. At this time I'd like to remind everyone in order to ask a question. Please press star and the number one on your telephone keypad. Your first question comes from the line of Michael Domain. Your line is open.
Hi, Michael Hi, Good morning, Hey, good morning, everybody.
Lets I'll start off on congratulate you on a quarterly year in.
Obviously, we're all trying to grasp what the future holds.
Most economists calling for a pretty severe contraction in Q2.
I'm reading housing starts to decline by more than 10% to us 2020.
So for each of your accessibility sub segments.
I understand they have different sensitivities to the cycle, but can you just give us a rundown of how to think about the businesses.
As we as the potentially go into account during the next two quarters.
Okay I accept pleasure talking for sure. Okay, We had a company okay, who have.
The most important on the residential elevators. So that's like in Ben Eric and it's a bit that's where in many different territory.
But for sure. Okay, that's very important for us spat, who have an opportunity to grow okay on the mystical side.
And when I see to advocate a diversification and everything I feel very positive about 22, any but you are right. Okay. There is that Joe elevator can be.
As it did this contraction in this access or business X men for for US Tabasco I do want to add something yes, maybe and it's important to join US and also we have some new products launched this year, we've been using it to residential home delivery at or wherever you are loulo attraction that everetts or which were the first on them.
But in North America to have that we have in many of you live which we have a lot of old wondering if you live is just a smaller version or would you existing view lift or that's something we're going to launch in Europe in or in North America.
And now maybe some of our dealer our working a bit more from home, but then next week, we have like five webinars with over 100 architect bidders in these areas just talking about those new products.
We still see a lot of orders coming in into the factory and maybe some order that talk bus falling a bit later, but stood as of right now or may in fact, we are working except detailee into Montreal car conversion.
Divest or mainly location.
At this time.
Okay. Thanks for the comment.
So just only elevators and thank you gave pretty good color you know, obviously macro decline some share gains potentially.
Hey, Shandling.
Sounds like it's set up to actually gain from.
From what we're going through just any comments on stimulus.
And the platform class.
And then just comments on Italy as well.
You alluded to.
So best.
So basically telia, where we have a struck down okay for the next two weeks.
But we have been able to provide all or delivery toward defender direct office. So that they can put you to work in the next few weeks.
So would we see what would happen in 30, but at what point that's important.
The country as to shut down a bit just like what they did in China in China did a very good job and do you have a shutdown occurred during the Chinese new year and then.
Two and two and half weeks more port for a case, where our Bakken production. Since February 19, It did that China did not cause any disruption and all our supply chain because we've been able gotta go straight to join our finished goods, which is three weeks in North America three weeks in China and at the beginning of dire virus, we have decided to ship olive finished goods for North America to make sure will have no.
Disruption so as of today, China is back up and running at 95% we'd be at 100% next week you just did a good job with other precaution that they have to do the same thing has to happen in steady and this is what they are going to do in the next two weeks.
Hopefully you have to that things would come back to normal gradually.
So thats a bit after that started lift and that's something that the last year. We did kind on this trial. If we wanted this year. That's it that's a focus for US we want to whoever growth onerous to live. So we have put some sort of some curve straight into production in Vancouver and Intelli. At this is something that's for that Buster to grow in the future and again, we have a lot.
Okay on or many of you will if I think thats whats going to add bookie, we don't need construction, we can put that into existing housing. So we're going to try to make sure. We can generate some marketing growth, which some new products and as you say would expand them any color. That's an opportunity is about to request for beds.
Right now, we're working hard in Venezuela to increase or capacity and even were going to make some parts of beds into or iluvatar effect doing brinton just to support a key or bed factory. So we're very committed to that Susan sling and Nick will talk more later, but we have put a lot of energy this year to date would that into production in Greenville.
Thank you will see a good ramp up into the spring sector or this year.
And just for a full had been add financial question, Okay, and we yeah. When China go back Okay to production for US, Okay, well lucky to be asset in China. So we see what's happened in China. Okay. So February 19 back there roughly at the 90% okay.
And with zero case of.
Got it has various okay and as a chance city okay.
And most of what are the percent of the people are back Okay. And then we'll case so no. There's no okay. Okay in our factory Okay from February to today. So we can see that analysts to money said, okay, what 10 VLP.
The two an area that has to America, okay, but I assume.
The people. Okay. This is Glenn it's very easy to put in in North America, Dan in China, because that's two different kind of people, okay and that's good to see that if we are very disappointing. Okay. Let me get gas that how does that but that's overnight, but it's that's it's something that would be.
It is just one day. Thank you very much for your question.
Okay.
Your next question comes from the line of Nick Accosting. Your line is open.
Yes, good morning, good morning.
So first of all let me give you guys compliments on managing the your supply chain. I think you guys have been doing a really good job, obviously with China, Italy, and now now the buyers flow into North America again close on that front just to try to understand the obviously you're pulling the guidance. So just wanted to understand how Q1 you indicate.
Hated it inline with your expectations can you give some color as to what you were seen on the demand side, so on sales and for that matter installs.
In Italy, starting with Italy, and then more recently in North America as as most of this cost at a 15 quarantined.
Okay, just can be may be more or less excuse me as than I am I went back to add that to divest and thats no longer very much like our operation.
So basically for sure we saw the first two months was pretty good or the last month of the quarter is always a push so marches on finished we're working hard to a to push them XOMA so far.
Even to the like on Monday, we had a very good deal border order coming in maybe some dealers are staying at the at home and the pushing all their orders for the next a few weeks because they want to make sure. It would go to production.
You tell you.
Yes, close for two weeks, but they do they're going to go to first start of the year together they have some new products that the making put into production.
So.
That sounds quite a big change also in 2019 forgot haven't Oh no store has been profitable in 2019, So we start with 2020 without much solid base.
Just had been a big change of culture within the got haven't took congratulation to all our general manager and Mr. Vincent what is that true. So I I think were going into right direction and we continue with a lot of insensitive just too to build on that.
Okay and.
Just looking at I guess your patient handling segment.
Sales are ramping up so that's good to see I think you guys gave commentary that you know list is gaining momentum, but this quarter, we saw the margins come down quarter over quarter any color there as to how we should be it looks like you've got a better product mix, but on the other hand margins were down any color there.
Yeah, we have our species here Mr. In there.
Yeah, Hey, Nick.
So in terms of margins in the quarter. Thank you.
When you say go down that was at 14.9% versus maybe 15% and a in the prior quarter. So I would probably say that's more inline with what it was in Q3 as opposed to necessarily a decline.
We're talking about no 0.1% of.
The difference there.
So overall I would say now that we've exited the custom products and we look at kind of the back half of.
The back half of 2019, but we also had the contribution that came from similarly, there again you know there's a ramp up that's involved silverleaf, we fully expect that Q1 and going forward, it's going to add to that says that margin improvement. So as you look at kind of 20 2020 as a whole no last year, we accomplished 14% for the entire year.
Expectations. This year of course is to get better than that given that we don't have the custom products, which kind of were a drag on the first part of 2019 numbers. So we fully expect to go above and beyond what we were doing last year.
Again.
What that means we'll figure that out as the months and quarters progress, but I mean can fully expect the 14, 15% I mean when increase off of last year is expected in the patient handling segment.
And don't forget it went from 2018 at a 10% to or 14%. So four points change is there a lot of a steam afford from all the spend team and from Jim or president over there. So it's a allover work to go from 10 to 14.
Well no I I give you guys compliments and certainly on the care about the side you guys are.
Good job on the on the margins front, there patient handle and just trying to understand if there's any if you're coming up against any any resistant.
I was like a that's not the case that just keep plugging forward.
Just last question on the on the Q1 and care event typically a seasonally weak order a is that the way we should be looking at again or or have there been things that you guys have put in place over the last year and certainly pushing more more into North America or with the care about their product lineup.
Into Italy is a seasonality that we saw historically less of a factor this year and I'll leave it there. Thanks.
Thank you I think okay, but that.
Yeah, I haven't I'd have to me is about to what the glass. Okay. So far in the quarter, Okay, and Sebastian isn't really come back okay. When Vince okay.
And that maybe you can take it as if it's a buck. This question is the best so for sorry, if you look at Gavin Turkey, a lot less and the last year, where we went from a dozen anything from a 5.9% of EBITDA to the average of a year or 10.6.
It is but it has been a continuous improvement from the beginning to the yen winter I know, we said it on our original lot joke with Q1 should mirror last year Winter is winter construction is slowing down. So I think will always be our tour reset that is the first quarter, but definitely we should continue to see a improve.
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20 year for government of starting from Q1. Two finished Q4, we hope this year, we getting pulled by 2% on government, though by continuous improvement on our purchasing.
On their poor activity in effect to eat to be more efficient and just to continue to bid on all our stores to be profitable and we also have some new product introductions like demand, even if a new about forget haven't though.
So I'm still live that scrub make a similar but there you are that we are doing that in Vancouver. So I'll just product mix should continue to add government or food 20 twond.
Okay, great. Thank you.
Okay. Thank you nicotine and I'd just add something okay. There are many of you and is it something okay incredible working for people around the world. Okay. Even then maybe three weeks of four weeks, Okay. I would put one in my house. It in Georgetown, Okay that the my to do you have all will be an accessible and it would be.
Perfect. Okay inside of my around Seth. So this project is its magic ages, two and style.
And you need just a little bit they pay or if you don't have basically you put the ramp up gave me I decided not to have them. So I just said what the all okay. So then they're all and and it's it's amazing so you'll see that became one that we pause that and then maybe four weeks okay. What is.
So from you know okay would put.
House accessible okay, just pay at the right place. Okay. So it's a fantastic so much I know.
Your next question comes from the line of Frederic Tremblay. Your line is open.
Well go for the Derek.
Although come on.
First question on a on Greenville, I'm, just wondering if you could provide an update on the ramp up of manufacturing for a patient Smith and loan and curious to know as well ultimately what would be a.
The revenue capacity or that facility for further I know you were talking about $20 million target.
Per sale by like 2021, so just curious to know that ultimate capacity on that then that the company.
I will ask okay to submit okay, and then any color. Okay to answer this question, Florida for me.
The next you start.
Yeah I'll start.
So first we'll start with the sling so so the swings.
We mentioned I guess on our last call, we're transferring production or certain production to two Greenville.
So we're ramping up there in terms of equipment that we have so equipment specialized delinquent that's been installed.
We have.
Many cutter, we have sling testing machines.
So we're slowly ramping up right now what we're probably doing around 100 slings a week or so that's a nice ramp up from from zero just a few months ago. So we're seeing a steady increase there from sling production and seeking that ramp up.
Initial targets are in that kind of 400, 500, slings a month and.
And then ramping up from there and as demand states.
As it relates to the ceiling with portion of it there again and we do hit its important to note that we produce the lift in both facilities and so in Greenville ended maybe in Greenville, It's primarily dedicated for the U.S. market in May Doug primarily for the Canadian and European market.
It's we're optimistic I guess cautiously optimistic that we're seeing a pretty good ramp up in sales of ceiling lifts you know when that first year. They can you talk to quite a bit about this going from having that one portable product we sold a million dollars worth in in 2017.
And then going to $3 million and 2018, as we kind of expanding the product category last year $5 million and so we fully expect a ramp up in those numbers as well in 2020 at the same time, we're adding sling. So the mix right. So we think about the slings that that's contributed by.
I still believe we're talking about $8 million. This old swings. So when we're thinking about you are $20 million there I mean, it's very realistic.
Ramp up incident lifts ramp up in sling sales to the North American channels.
They did their 2021 I think it's a it's a very realistic target for us.
And just in terms of capacity, we've said it in the past Greeneville, we removed.
Custom custom products right. So theres caught a 40% of that facility is that freed up so I'm not saying that we're going to fill that entire because that's a lot of square footage record 180000 square feet in Greenville, So I'm, not saying that all be filled up with with slings and with list. We're also building a showrooms. There. So there is other kind of improvements that we're making.
They are in Greenville, as well, but in terms of capacity, we're very well.
We're able to ramp up so there's no increases that are necessary in terms of footprint.
To get to that $20 million.
So basically what you do in the business Bill.
Basic and beams Vanderkaay, a as says bits earlier, we're ramping up their production so because of all the demands of beds.
We are looking to working seven days a week for 24 hours a day.
Sending my I production direct or were there towards the next few weeks to two had them to ramp this up and we're going to make some beds parts in or Brampton factory to get a richer one.
Well, so we have some new product this year, which is important to talk we have a new bed with scale.
We can monitor the weight of the showed a person into bed.
Steep and after that we have some new products what us for the sitting live like bariatric lift which is up to 1200 pounds, which at the I guess capacity on the markets. We have some new gates product that.
Fix a lift can go from one room to the other revenue range of scaling. So I think there's a lot of different activities, which is happening to support it just spend a group.
Maybe just one last thing left in there I started Nick.
Sorry, Fred as it relates to the the investments also mean, we've talked a bit about certain personnel that we've hired so we're increasing I guess on the sale side as well our reach into expand primarily as you may recall as a long term care focused or post acute care focus. So we have put investments in there to tackle some of those kind of acute care accounts. So that's something else that we're kind of trying to push.
Towards as we move between 20, which will increase some of our sales in that in that segment. So just expanding a little bit broader than just long term care in home care, we're trying to penetrate the acute care market as well.
Hi, Thanks.
Dr Pepper is right.
You bet and yet.
Or any color.
No. We had we haven't you guys from our wholly right.
Yes, we we have a a person so listen I guess, a couple of people that we've added onto the team there that have experience in that segment and that also have.
I guess, a corporate account type backgrounds that will be able to open the doors for us.
Primarily in the acute care side of things. So that's also something that we're we're very excited about as we look to 20 20.11.
To grow that segment of the market as well for a product.
Thanks, Eric and if you looked at a your outlook for raw material costs, given the current environment, how does that look going forward.
Okay.
We always on the case, Scott as you know, Okay, Oh sure. There's no capacity increases so far this year and that this morning, when I was traveling to the office a very early I started the gas price was going down so let's say for my purchasing manager maybe it's time to review every price I'm just seasonal but we always on top of the game to make sure we review.
If there is a good cost saving apportion the.
It was transferred some new parts of China do we work in house to be more productive what does that crossover the and trends so what that wherever you proactive on the sports.
Okay, and then last question for me or maybe from US, though and you mentioned the past that you would look to be active on the acquisition front in 2020.
The current situation I'm sort of ship that.
Priority.
And I'd tell you that we want to add some questions. If you add description that some people, okay and we pushed that they paid by the end of focus to continue in negotiation okay. If.
It's there and it went when you look at the you know I'm always seen it good tied to have some pain. Okay. That's my nature and I am I think I'd that's out of this nature and.
Well our average active forward to wasn't 130, okay, but the idea located.
Or later this week, okay I puts on.
Forward looking for two years out 240 do.
So you can imagine okay that's that.
That's a again next seek some very good diminish in okay. When it will go back full time okay.
Yeah.
That's okay. When you collect that 242, that's not too bad.
Thank you.
Thank you put it Nick.
Your next question comes from the line of Zachary Oversea. Your line is open.
Okay.
More rural congrats on the quarter.
Thank you.
First question for you and we've touched on this little bit, but I just wanted to clarify with the situation evolving very quickly even in the last few days have you seen a noticeable step change in demand.
No.
Thank you.
And next [laughter] advise big is that we feel much if you have the follow up anybody myself to speak too much of it so no.
[laughter].
Is your business listed as an essential service in each of the geography as you were again.
Yes.
Okay and then this one will get a little bit more in depth how much of your revenue is from installations outside of residential so in public spaces.
I hope that's one of the good question. So when I say good question I like that set us.
Yes, so basically.
Turning to add something.
And then just give you an example about two onto okay. Okay Jim.
You are asking me.
Okay. Yeah, you about me, okay like indoor outdoor okay, well what is good about maintenance. Okay. That's an it's essential services and where were classified would advocate by Canada or by Quebec, Okay. So and our revenue okay. It's like 20%, so I am a and with right.
Out of waste was stuff game that maintenance contracts, okay to all our face okay, even with with our data is okay. So leased out only is good I see that you have something that's come back nonsense demands, okay and the margin is very good on that and the people need density.
He joined the building, Okay, you need an innovator in function, Okay, and we get gies, Okay service, Okay 24 seven.
So with poised to advocate and I think our customer I appreciate that.
Yeah, maybe I'll just jump in here or is that as it relates to the breakdown here I mean.
I guess a lot of focus for severity and rhythms elevators are important for us, but as Mark pointed out I mean, you generate 15, 16% of our accessibility revenues do come from parts maintenance services.
And then outside of that it was sort of products or more commercially oriented. So of course resin for elevator. You know is the residents, but if you look at some of our wheelchair lives most of the wheelchair lifts our installed and commercial setting and again. This is for 80, a compliance as you look at the various building codes throughout the Western Canada.
I also have no I guess, our lula elevator as well, which is more geared towards the commercial setting. So I would say what were the balance there as it relates to residential versus commercial installs onto the on the accessibility from.
And then you've got to think that we also have that span business, which is 25% of revenues and then again isn't necessarily impacted by certain.
Downticks and housing starts or anything of that nature I mean, that's more geared towards the current healthcare environment, which at the time is actually quite quite positive I mean again negative covered that T. I don't want to downplay that but in terms of our sales. The we're pressing sales that are helpful. In this current environment.
That that actually than really well my next question, which is if this pandemic response extends into a month or if we see a recession afterwards, how dependable do you think that patient handling revenues under pressure.
Well this is a very.
It's a unit type of recession. This is.
Not only want to go into that I'm, not an economist but.
The idea that if we get pushed into recession I mean, this would be geared we would be kind of driven by.
This virus the scope of 19 virus that we're talking about as opposed to and you sort of other financial bank related recession.
So for US I mean, I I would say that our revenues would be holding up pretty strong here I mean in terms of of demand gets going to know much much detail as to what impact it might happen, it's quite early to tell but for sure there is a.
A lot of interest around our beds and services I mean, there's as you. Just you will are aware, there's a shortage there's a there's a bed shortages in hospitals and various healthcare facilities.
There's a surge that may or may not becoming so to the extent that happens I think we are.
Quite well positioned with our product category of beds of mattresses and of swings.
Lift is links.
That's great. Thanks, and just one last one from me.
On on the front of protecting employees and putting in place a more measures to make sure that everyone safe and expecting hygiene, what kind of cost do you think are associated with those initiatives.
The Sebastian.
I don't think that crosses a very very eyes, because but for sure. We have put another measure in place proceeds to follow the government arrears Alicia regulation do some isolation of a when people are sick or coming back from travel now maybe just one no more trouble, but there was a two weeks ago. Good hygiene or can you talk about more.
So more of the sensation station right now we're looking for sensitize older effectively in the next few days.
We remain at people for goods sold distance I will see maybe the biggest cost. So my second talk about it to you had a great a great a memo last week for your employees.
Oh, Yeah, that's nice again I don't know if you read to advocate, but we participate with that wantonly, good or bad news, Okay, we'll have data with them and I decide the last week, okay to gain the H. employee okay from the Guy who are which is the in their shipping art as VP.
Yeah. It gives them a PD $1000, Okay, and you should see agreed to the tanks that that received from my people. Okay. It's just a few that's chlorine hey, Turkey.
It's great to receive the money, okay, but that's creating more appetite and then separately upset about yet that the look at does it say hey, when it comes that ERP is doing for us and I decide a pea that you are in this day. It's are you just changes to your currency, Okay and you see that just take it will be said seven this event and so then.
Under it but in China, you know with the RMB and when you received that.
It seems that that would be the prime minister.
I don't know Jana, Okay, everybody loves so much done there and it's just a good thing is that we plan to speak teamwork.
And you very much I'll leave it there.
Thank you.
Yeah.
Again, if you like to ask a question. Please press star and the number one on your telephone keypad. Your next question comes from the line of Marcia Your line is open.
Hey, good morning.
[music].
Good morning, and congrats on a quarter.
During my questions have been answered you said a couple of here.
First is.
Well I know you talked about a potential impacts from corporate 19, but I guess I'm more interested on.
Hearing from you guys, how much on expense reduction side.
Can be done.
If there's any any further stoppages or disruption related.
But.
The Betsy.
Especially it isn't that.
Yeah. So basically yeah I think we're as it was a bit to all are integral UK. We Gore data time would try for sure. We tried to done in advance, but we just see what is happening in every states in every country because what we are at many different place and since we tried to update their employees every week about what does any measure that if we can put in place. So we.
Do you have to go.
One we kept the time to see which new measure we can put in place to put take or people I think so far we have tried to be very proactive.
Example, like wherever you made the excess doors for home just by a special appointment.
And we try to use of women are with our customers away I think thats a bit to what the best we can do for now and was Super time. All is the situation and we are not the only company and this is the same for every company.
No for sure great.
And then and then just a final one from me I'd like you had alluded to it pretty much.
Let me during the call, but just wondering if there's anything.
Additional color you can provide you guys are a company that obviously has operations in Italy, and China hire somebody early markets that same back from a call that just wondering if there are kind of any learnings from being in those markets that are you guys think you can incorporate into oh, the other markets are and that seems like.
Are set to face that's got some of our disruption so I'll leave it at that thanks.
And you got a horse a mess.
Nick.
And.
Yes, I mean Stephens. Please please fill in if I Miss out here, but maybe you're absolutely correct I mean, there was.
We were able to I mean, unfortunately no experience this through if you're trying to first and the measures that were able to in China and kind of whether it be from writing mass hydrogen stations with documenting employees.
You know really to the sort of separation I mean, these are things that we've been able to kind of.
Spirits. Unfortunately, first hand in China cold months ago, and so those are things that we are looking to to learn from as we.
No plan for a potential similar kind of consequence here in our factories in North America. So so I would say we have learned from those experiences I mean, you're setting might be able to speak to some certain specific examples, but but that is kind of a benefit that we were able to kind of go through China's myself said earlier you know in February 19th we're back into production now we're back at 95% proof.
Section a few weeks later.
And so yes, it did take too much but we are back at full speed now.
From our experience there in China, so sort of Sebastian if you have any specific details you Wanna mention but what we might be able to learn from that no. I think again is just a discipline people have to be discipline.
And ER, we see that slowly a once everything gets under control life is coming back to normal when I'm speaking to my people in China before starting to go back to their restaurants, starting to go back on the street starting to think about to buying elaborate or is it again. Okay. So we'll just go into one step at a time, but first is to be discipline. That's what would the best we can do from them.
Thank you.
You have something else.
<unk> entrance.
Again, if you like to ask a question. Please press star and the number one I know telephone keypad.
So thanks, everybody yep. Thanks, everybody, Okay that there you answer and then separately yeah.
Okay, you will see okay that we are well would benefit the tier one service kitchen IP on territory and products. Okay. One is a tough data yet okay. We are I think as there have been stage of with many people and I repeat again with the good to get into the rate. That's just a good you asked rate okay.
You had very well positioned for the future. So thanks again to get to.
Okay. So very up so much Jenna thank you very much.
Okay.
This concludes today's conference call.
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