Q4 2020 Earnings Call
This time all participants are in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question Jordan, especially the press star one on your telephone if you require any further systems. Please press star one zero I wouldn't electric is real serious garbage called Mr. Johnson you may begin.
Thanks, Thank you Kevin Good morning, and welcome to Apogee enterprises fiscal 2024th quarter earnings call with me today or Joe push Us Apogees, Chief Executive Officer, and Jim Porter, Chief Financial Officer.
I'd like to remind everyone that there are slides to accompany todays remarks, which are available in the investor Relations section of Apogees website.
During this call we will reference certain non-GAAP financial measures definitions of these non-GAAP measures and a reconciliation to the nearest GAAP measures is provided in the earnings release, we issued this morning, which is also available on our website.
I'd like to remind everyone that our call will contain forward looking statements, reflecting management's expectations, which are based on currently available information actual results may differ materially.
More information about factors that could affect apogees business and financial results can be found in our FCC filings and with that I'll turn the call over to you Joe.
Alright, Thanks, Jeff and thank you everyone for joining us this morning I.
I hope all of you your families and your colleagues are safe and healthy during these challenging times.
Going to make a few comments about our fourth quarter and how we closed fiscal 2020.
And I'll spend some time updating you about the events that have happened since the end of our fourth quarter and how apogee is responding to the covert 19 crisis and its potential impact on our business.
Jim will provide some additional details around the results and our financial condition and then I will take your questions.
Let me start with the fourth quarter results. We ended the fiscal year with a solid quarter earnings above our guidance range led by continued strong performance in architectural services segment, yes, all of our businesses met or exceeded expectations and we also benefited from some favorable discrete tax items in the quarter.
We continue to win new business and expand our backlog architectural services grew its backlog by over $50 million to a new record of $660 million end the year.
Backlog also increased 14% in architectural framing systems.
In order flow in our short lead time U.S. framing businesses.
Remain strong as well.
Cash flow was particularly strong in the quarter, Jim will provide more details on our financial condition, yes, I'd like to highlight the year over year, increasing cash flow from operations and free cash flow, where we delivered over $50 million of operating cash flow in the quarter.
We use this cash to continue our balanced capital deployment approach investing in our business returning cash to shareholders.
And very importantly, reducing our debt I'd also like to point out that we took action.
To provide further financial flexibility by extending the maturity of our term loan which Jim will discuss in addition, we made good progress during the quarter on our key strategic initiatives, our new automated glass.
Architectural glass facility to serve the small projects market is fully operational.
We made significant progress on our animal enterprise wide procurement savings program.
And we advanced efforts to improve execution drive synergies and reduce costs in architectural framing systems, we maintain line of sight to achieve $30 million to $40 million, an annual cost savings target. When these initiatives are fully implemented in expect substantial benefit this fear.
Full year once again, Jim will provide additional details about these cost savings.
So overall is good quarter, we delivered on our commitments above our guidance in close the fiscal year in a strong position. We entered fiscal 21 with positive momentum in our business and a path to deliver significantly improved performance.
We were executing a plan that would deliver mid single digit topline growth in more than 30% increase in operating income compared to fiscal 2020.
In the weeks since our fourth quarter ended the world as seen unprecedented events and is responding to the cobot 19 outbreak, which has become the primary focus for all of us.
As a company we are stepping up to this challenge.
Want to acknowledge the tremendous efforts of everyone on Apogees team.
Our employees have worked tirelessly over the past several weeks to adapt our operation. So we can take care of our people and customers in this rapidly changing environment.
Thank you all have apogees employees for your contributions during this most challenging time.
Page five in our slide deck outlined some of the key actions in our Cobot 19 response plan, we've assembled a cross functional team to lead our response.
In everything we do the health and safety of our employees is our top priority.
We've implemented robust site prevention activities, including social distancing.
Massively increased hygiene standards restrictions on travel restrictions on visitors and meetings in remote work to the maximum extent possible. We've also established business continuity plans to maintain essential operations in the continue to serve our customers.
We've stepped up our communications with the customer so we can understand and accommodate their requirements and we're working closely with our supply chain partners to ensure the flow of critical materials.
The situation is evolving very quickly as you all know.
Given this high uncertainty environment, we have decided not to provide financial guidance for fiscal 21 at this time, however, I would like to share some observations about what we're seeing in our operations and end markets and how we're positioned to respond to the situation.
First almost every day, we're receiving new directives from federal state and local governments in locations, where we operate.
We're working to assess these directives and ensure we comply to support health and safety requirements. In most cases construction related activities have been deemed essential according to federal cease the guidelines on critical infrastructure.
And are continuing to operate.
At this time Apogees three architectural segments continue to operate ship products and serve our customers, while taking necessary precautions to ensure the health and safety of our amazing workforce.
Overall demand for architectural products and services has been very steady.
We are responding to rapidly changing customer schedules and requirement and some projects had slowed a few have been put on temporary hold and this will impact results. However, most projects continue unabated again I'd like to thank all of Apogees employees for their efforts to keep our facilities operational.
At this difficult time, I'm very proud of how our company is pulled together to support our nation and ensure critical infrastructure projects continue to move forward.
Our large scale optical segment, which is primarily a consumer products business has seen more significant impact from the pandemic.
At this time the segments two primary manufacturing locations are close to comply with state government directives and many of the retailers that sell our products are currently close.
We will work hard to resume operations as soon as possible and I'm confident that the L.S. owes segment will return to its normal high performance level.
I want to emphasize that we remain positive about the long term prospects for all of our business segments with our market, leading brands strong customer relationships and significant backlog were well positioned once we emerge on the other side of this cobot 19 situation.
Looking at our cost structure, we are fortunate that we entered this period of uncertainty with a robust set of cost out initiatives already underway. We expect these initiatives will deliver significant savings in fiscal 2021.
We're also evaluating additional actions to manage costs and capacity as necessary.
Finally, we finished fiscal 2020 with very strong cash flow and a healthy financial position.
As I noted Jim will provide details on those actions that we are taking to maintain our financial position and liquidity.
So as we look at the current situation I think of the key takeaways number one we're facing this period of uncertainty starting from a position of strength.
We are continue to operate servicing our customers, while taking necessary actions to protect our troops.
And we're confident that we have the team and resource in place to navigate this situation. We entered the global Cobot 19 pandemic from a position of strength will come out the other side in a terrific position thanks to that.
With that I'll pass it over to Jim will provide more details on the quarter in our financial position and then I will return with a few brief comments and ready to take your questions Jim.
Thanks, Joe and good morning, everyone.
To start I'd like to Echo Joe in extending my sincere gratitude to all of Apogees employees as we come together to deal with the effects of the cobot 19 epidemic.
All you should be proud of what we accomplished to keep our facilities safety and operational so that we can continue to serve our customers and support critical construction projects.
Turning to the quarter consolidated results on page seven of our earnings presentation.
Total revenue came in at $337 million down from last year's fourth quarter. As we had expected primarily due to lower sales in architectural framing systems and architectural glass, partially offset by increased revenue in architectural services.
Operating margin was 4.6% compared to negative 4.3% in last year's fourth quarter. The prior year quarter included project related charges in an impairment charge.
On an adjusted basis fourth quarter operating margin was 5.2% compared to 9% in the prior year.
Adjusted EBITDA was $29.8 million compared to $42.4 million in last year's fourth quarter, primarily reflecting the lower revenue and lower margins in architectural framing systems and architectural glass.
Net interest and other expense decreased to one and a half million dollars with lower debt balances and a lower effective interest rate, resulting from the debt refinancing we completed earlier in the fiscal year.
The tax rate of 15.3% was down from last years level as we benefited from the reduction in state tax reserves and some discrete tax matters.
Finally, our diluted share count came down to 26.7 million shares from $27.1 million last year, primarily due to our share repurchases over the past year.
Putting this all together earnings were 45 cents per diluted share in the quarter and $2 in 32 cents for the full year.
On an adjusted basis fourth quarter earnings were 51 cents per share and $2.38 for the full year above our guidance range up to 15 to $2.30 per share.
Now I'll turn to the segment results, which are on slide eight.
Architectural framing systems results were in line with our previous guidance.
As we expected framing systems revenue was lower in the quarter at $153 million compared to $171 million last year as segment revenue was impacted by some customer driven schedule delays that we had discussed last quarter. This primarily affected our longer lead time curtain wall and window business.
This was partially offset by higher revenue in our short lead time use framing businesses.
Framing systems operating income was $2 million with an operating margin of 1.3% compared to adjusted operating margin of 5.6% in last year's fourth quarter.
Operating margins in the quarter were impacted by leverage on the lower volumes.
And the impact of the operational difficulties in a couple of businesses that we discussed last quarter.
These operational issues have been addressed through several actions and we have seen significantly improved execution today and continuing forward.
Importantly, the segments, our momentum with new order activity, winning several new projects during the quarter, which drove a 14% increase in backlog compared to last quarter.
Architectural glass revenue was $98 million down 5% from last year's strong fourth quarter as we continued to see lower large project volumes, resulting from increased competition from overseas suppliers.
Operating margin was 3.9% compared to 7.1% last year.
Fourth quarter glass segment margins were negatively impacted by about 160 basis points from startup costs related to the new manufacturing facility for the small projects growth initiative as well as some higher insurance costs and reduced leverage from the lower volumes.
These were partially offset by improved operational performance in our factories, which has seen strong productivity gains throughout the year.
For the full year, we incurred four and a half million dollars of startup costs related to the new facility in line with what we had been projecting throughout the year.
This facility is now fully operational and is expected to contribute to segment revenue and income as we move through the year ahead.
Architectural services continued to have great success with several new project wins during the quarter, increasing its backlog to a new record of $660 million.
Services revenue grew 11% in the quarter on higher volumes driven by favorable project timing.
Operating income was $8.5 million with operating margin of 11.6%.
These were very strong results with very good project execution.
As lower than last year's fourth quarter, which saw a record level a quarterly profitability that was driven by a favorable mix of several mature projects that came to completion during the prior year quarter.
Finally, large scale optical revenue was $21.5 million down from $24 million in last year's fourth quarter with lower sales to use retailers, who had a shorter holiday selling season compared to the prior year.
Despite the lower revenue LSL is operating income was roughly flat to the prior year, reflecting strong cost management and increased factory productivity.
I'll touch briefly on our cost savings initiatives.
As Joe mentioned, we made significant progress on the cost savings initiatives that we had announced last quarter.
First with our procurement savings project, we've completed our work with our outside consulting firm on the initial phases and are beginning to see benefits flow into our results.
In January our new Chief Procurement Officer came on board. The is now actively leading this initiative as we transition into future phases of the project and continue our journey to build out a world class purchasing organization.
Within the framing systems segment, we took actions to reduce salaried headcount and controllable cost and operations in SGN eight.
We've also developed plans for further optimization of our facility footprint, which we plan to implement during fiscal 2001.
To drive further efficiencies and cost reductions.
As we move through the year, we'll continue to execute our roadmap to build a more integrated inefficient framing systems business.
Touching on a cash flow and balance sheet, turning to slide 10 in our presentation, we had strong cash flow with $54 million of cash from operations in the quarter.
For the full year, we generated $107 million of cash from operations up 11% over fiscal 2019.
Full year capital expenditures were $51 million down from $61 million last year.
The higher cash flow the higher cash from operations and lower Capex, Joe full year free cash flow of $56 million well above last years level of $36 million.
During the quarter, we used our free cash flow to pay down $33 million of debt, which reduced our total debt to $218 million from $251 million at the end of the third quarter.
We closed the fiscal year with a leverage ratio of 1.6 times debt to EBITDA well below our covenants.
We continued our balanced approach to capital allocation, returning cash to shareholders investing inorganic growth and productivity initiative and reducing debt.
For the full year, we returned $44 million of cash to shareholders through dividends and share buybacks.
As Joe mentioned, we are taking actions to maintain our financial position and liquidity. During this time of increased uncertainty.
We will continue the aggressive cost savings plans that we already had underway and we'll consider additional cost savings actions as necessary and appropriate.
For the time being we're also restricting capital expenditures to essential maintenance and safety projects and have suspended share repurchases at this time in order to preserve cash.
Additionally, we've worked closely with our bank group and we have received commitments to extend our $150 million term loan moving the maturity to April 2021.
We expect us to close within the next two weeks potentially as early as next week.
At the end of the fiscal year, we have close to $200 million of unused capacity on our total credit facility, which along with our cash flow. We believe provides significant liquidity to fund our operations.
To wrap up we had a solid quarter and ended fiscal 2020, having made strong progress on our initiatives with a solid financial foundation to be well positioned for the future.
We are taking proactive steps to manage our resources and to ensure the long term health of our business.
With that I'll turn the call back over to you Joe.
All right. Thanks, Jim even as last several weeks ago presented challenges that none of us anticipated I've been encouraged by what I've seen both here at apogee in across the markets, where we operate in the US Canada and Brazil people are coming together to fight our way through this cobot 19 crisis and I am certainly proud that apogee.
He has been able to play a key role in supporting these efforts.
Again, I want to emphasize the ensuring the health and safety of our employees is our top priority. During this time and I am grateful for everything our team is doing to serve our customers in that environment. We're certainly dealing with a period of unprecedent uncertainty, but there will be light ahead, and I'm very confident that together, we will emerge from this city.
Duration poised for great success.
As soon as we have more clarity about how the cobot 19 pandemic will play out and how it will impact our business. We will look forward to providing updated guidance and financial targets for fiscal 2021 as rapidly as possible.
Thank you again to our employees customers suppliers and other business partners for your contributions at this time.
With that I'd like to open up your question So Kevin if you could.
Inform the audience Hot ask questions. Thank you.
Ladies and gentlemen, if you have a question or comment at this time. Please press Star then one key on your Touchtone telephone. If your question has been answered you wish to move yourself from the Q. Please press the pound.
Our first question comes from Chris Moore with CJS.
Hey, good morning, guys.
And Chris Good morning.
Started on framing.
You had talked about the on the short lead time framing orders still.
Look like they're relatively strong can you just maybe remind us in terms of the breakdown of on framing from kind of short lead time to the more longer lead time curtain wall window stuff.
Yes, it's about 50 50, Chris between book and Bill in the quarter and.
Orders that take longer than that so 50 50.
Gotcha.
You just.
Kind of from where you are sitting today.
If you look at the three architectural segments.
Which of those probably.
Is the most.
Has the most uncertainty near term.
Well all of them have uncertainty like everyone.
But we I mentioned the CDC guidelines, you all know what ceases nowadays.
I just give you. One example, viral ICANN our glass business alone has.
Orders in the current pipeline over to orders from orders to be shipped over the next eight weeks for 56 hospitals and 20 different state we have an equal number of healthcare projects in the future and that's just biocon or other businesses support hospitals and health care as well.
We are.
Feeling really good about the architectural businesses right now but of course as a nation, we all worry about.
What's next but so far so good.
Got it appreciate that.
In terms of the 30 to 40 million annual cost savings just trying to get a little better sense of timing is the goal to be at that kind of run rate by the end of fiscal 21 or.
I understand absolutely.
Absolutely and our team is working on.
Contingency plans how to even at that up in that event that if volume does contract. This year for our industry. How we can continue to drive additional savings, but we still feel very very good about the procurement savings are up or identified are outside partner.
Sure has completed their work as Jim highlighted I hired.
A new chief procurement officer, whose.
Fully owns the execution of the project and.
This is not blue Sky, we have identified by part number across our company where the savings are so we feel very good about it and that is it ended the year run rate, but again this year there's.
Substantial impact in the fiscal year as well.
Got it last question for me just on LS. So so it sounds like you only probably had 15 days worth of.
Business, so far in the quarter.
Is the Ilissa orders they tend to be.
A back half loaded in quarters or is there any pattern there.
It it first quarter is always our.
Low quarter, because it follows the holiday buyout in Q4.
So that's the good news the facilities are in states that have.
One facility.
So closures till the end of April the other one.
The closure is only tool April 10.
That one's in Minnesota and did the set the one that.
Possibly could open sooner, but the reality is.
It's my expectation that the month of April will be up both facilities will be closed they add.
Inventory.
To ship for our customers.
I expect that market to rebound nicely in fact.
Many of the arts and crafts stores in that industry are seeing booming business right now as people are looking for things to do win in their house realizing.
The things they could.
Cover with our amazing product for a custom framing so I'm confident up a strong rebound in as you know that is an amazing.
Marketing Juggernaut, our LSRT business and.
They know how to address costs. So they are working on.
Substantial cost actions as we speak and Chris as you are asking a bit about order trend.
In the last 10 days as many of our retail customers have had to close we've seen significant drop off in the order activity.
Got it makes sense.
I appreciate it guys ill jump back in line, Thanks, Chris talked earlier.
Our next question comes from Eric starting with Craig Hallum.
Okay.
Yes.
Layer.
Good morning, So just would love your thoughts you touched on this a little bit, but I mean in terms of.
Nationwide and construction.
It seems like it's pretty hit or Miss some areas to that said no construction can move forward, but the vast majority of them that it I mean as much as it can be business as usual so would love to just kind of get your thoughts on.
Where are your businesses, our strongest most exposed to and in those markets. What are you seeing in terms of.
Projects being able to move forward.
Or whether it is putting a moratorium on any construction activity.
Eric Thanks, Good question listen in most states construction and the related activities have been deemed essential.
The overall the situation is surprisingly normal.
All of Apogees architectural businesses are operating in shipping product and.
Under the.
Prime directive that taking the precautions to ensure health and safety of our workforce.
In a few markets there are more limitations on construction activity.
They frankly happened to be where we're not that strong so there and there's been some project slowing down or put on temporary hold and we're working closely with those customers.
Sure, we'll see some negative impact in the near future, but Bob the word I would use is.
Construction activity is surprisingly normal right now in fact.
At the end of the day I'm, hoping that this.
Crisis will make folks realize that long logistics supply chains can be dangerous.
And.
There is nothing like home cooking.
Yes.
It is.
As Joe said I mean generally things are moving forward, we don't have any geographic concentration across our total company you will see individual businesses that maybe have some aspects. So you know like the Boston market has been a little bit more significant in terms of its impact in San Francisco on a more spotty basis.
Overall, we don't have any geographic concentration in those areas.
Okay got it.
Maybe just turn into backlog I mean, it doesnt sound like it but just to confirm so no no cancellations and backlog I mean, maybe some shifting and timing.
I mean is there.
Kind of using I mean, it goes way back that use in the past as a guide is this something that you would expect it to have to go on for quite some time before you start to see cancellations or kind of whats the thought process on them.
Yes.
We've had a very small number of cancellations I don't think anything out of backlog was out of our awards. One was the Carnival cruise line project, if I'm not mistaken.
Jim.
No surprise, there some delays but.
The pipeline remains robust in our longest lead time business our services segment.
Is having a another strong quarter I.
Hi forecast.
For expect that backlog will increase again in Q1 and services, which is our longest lead time.
Got it Okay, and then lesson for me you mentioned.
Just capex that you are.
Just doing whatever only what is deemed absolutely necessary can you just kind of frame that or remind us.
Yes that capex is frozen except for safety and maintenance right at this time, even good productivity projects, we'll wait and see yeah and that.
Kind of that level at that level on maintenance capital as if the $15 million to $20 million range for the year.
Okay very helpful. Thanks, a lot.
Thanks there.
Our next question comes from Brett Feldman with D.A. Davidson.
Hey, Thanks, good morning.
Hey, Brian.
Hey.
When it come back to LS. So you mentioned it sounds like you are shifting a little bit here from prohibitory understand the factor. So it is concerns is that.
Hi, guys give us any sort of your paper.
The gravity of the decline in March so just kind of kind of Glenn the short term sales impact there were some expectation around it.
Yeah, I would expect again March we add I think.
Eric or Chris mentioned, probably 15 days of traditional order volumes, it's dropping off precipitously because most of the customers for that segment retailers and independent.
Custom framers our shutdown at this time.
So we were not going.
Due March results on the phone, but that business is being hit pretty heavily.
I expect April will be but equally.
Soft month, and we're hoping to come back online for the month of May, but again, thats and I'm, hoping and projecting that when we do come back in the stores opened they'll see robust business.
Yes, but it'll definitely be the most impacted business in Q1.
Sure no understood.
No I heard you know Brent Brent I'd also say that.
We're obviously taking cost actions not just in outlet so but across the company. It's surprising how much money you save when you're not traveling you're not in hotels you are not.
Having food at restaurants et cetera.
As a business we can someday when the world comes back, though some sense of normalcy.
I want to business were never visiting our customers but.
The favorable cost implications of this situation is fairly substantial.
There are to that point I mean, the margins were really high during the February quarter, even for that business was there some component of that to the quarter.
Yes cost yes, yes.
Yeah Okay.
Joe heard a lot from kind of other contractors costs throughout the key people sit in the field, which is obviously critical.
I suspect that's true for your services business here kind of going forward, how do we think about that impact and the margins have been.
Stick in that business.
Maybe how we kind of think of that impact to margins in the near term and.
Is your I'm sure you're doing the same.
Brad It's Jim.
At this point, it's still kind of evolving as we speak.
On the services side of the business.
Out in that field I mean, there's a pretty fair degree of social distant team by its nature that kind of R&D takes place on these job sites, there's a little bit of it inefficiency in terms of kind of managing how many people can go up the.
Construction elevator at a time some different aspects like that.
But at this point, we don't see it to be a material impact but.
As evolves day by day in terms of what specific job site or general contractor requirements are in terms of the workplace environment. So not material at this time construction workers are just as worried about the health of themselves and their families. As every other citizen, but there are pretty tough lot and.
If you're a hanging off the side of the building 50 stories up you you know how to handle fear and.
And toughness and so we're making sure these folks are wearing proper.
Masculine nearing an elevator if needed.
But so far again, the workers have been pretty amazing.
Yes, okay.
Okay.
And then Joe just on that.
The backlog I mean for either segment, but I guess kind of thinking about the longer lead times it services.
Can you remind me or or talk about how much of that gets awarded.
Prior to a job starting construction altogether.
Meaning awarded to US before there is a whole underground.
Thats right that's right.
Well that would be more or glass segment, where we get specified before even at GE Si has been selected.
Again, our orders in our glass business and awards remained normal our services segment.
Our installation business season order theres already on the ground.
And we're not as we said we're seeing those projects continue.
I think inevitably.
Is this crisis drags on projects that haven't started construction, we'll probably see.
30 to 90 day delay, but that hasnt impacted our business yet.
Okay. That's helpful and then maybe this one for you.
So you were able to push the maturity and 150 million in term debt how the year.
You get 50 million in cash today.
Your your generate some cash this year, maybe just kind of discuss your options for addressing that.
It's a year away, but that the hunt.
Yes, well I mean, just in terms of our capital structure.
As you can imagine actually we were actively working with our bank group on the extension of the term loan and were actually up until about three weeks ago working on a three year extension to that term loan.
Before that credit markets.
Kind of really got disrupted but that said, we really do believe I mean, we generally the receivables is our key working capital component.
Generally even if things do slow down we harvest a significant amount of cash we have lean rights on all of our project. So we feel good about our liquidity and our cash flow, but that said is as things calm down in the credit markets will continue to evaluate capital.
Structure options and and looking at how we might want to structure things for the longer term.
Okay guys. Thanks, Thanks for taking the questions.
Our next question comes from fully were marrow with Sidoti and company.
Hey, good morning, everyone.
Good morning oil.
Just taking a step back.
What are your thoughts on how this environment could potentially drive a structural change to office construction demand.
In the long term given the acceleration in maybe false working from home.
Unknown.
I feel it's too early to understand if there will be a piece as you say structural change in our end markets.
The.
Well the office office sector slowed down under work from home I.
I don't think so I think ultimately people need to.
Do their jobs I.
I want my people back in the office as soon as possible we're more effective.
Leaders are more effective and so I think that will continue we continue to evolve as a service economy.
And I think that bodes well for the office sector as well and of course healthcare and education I believe we'll continue to boom. So I also hope that.
This situation leads to a little bit more resiliency or reliance on us based partners in this country and.
We're able to respond faster than anyone else and I'm, hoping that turns the tied a little bit for us we entered this period Julio.
And where we've been really through the cycle is a very balanced environment in the office sector in terms of the balance between employment growth and.
New square footage coming on line and so thats really important and very little spec building.
Even as of today that professional and business services employment levels have pretty much maintain and then in terms of longer term trends as Joe said, it's really uncertain, whether you're going to see any structural change in terms of increase work from home.
I don't expect that the sector that has already been maybe under a little pressure is that co working space, but just a reminder, that's a very small like 2% of total.
Office utilization so.
Under the current environment, we don't expect a significant structural change.
Understood I really appreciate the color you gave there.
And.
In fiscal 2000, I know you had a step up in corporate costs that you did call out around the time last year that would happen.
There's a lot of uncertainty, but is there any way to maybe.
Thinking about what a fair estimate for that dollar amount in fiscal 21 would be.
In terms of day corporate costs.
Correct.
Yes.
We would expect that did come down a bit we had a few million dollars of.
Kind of higher legal and consulting fees.
In fiscal 20.
We would expect to largely go away.
Helpful. Appreciate the color and stay safe and healthy thank you.
Thanks Julio.
Our next question comes from Barry Haimes with Sage asset management.
Good morning.
Thanks for taking my question.
Just a couple of questions around working capital you mentioned or sorry free cash flow you mentioned the.
15 to 20 million number for maintenance Capex just curious if.
Before the full quota situation hit if you had Uh huh.
What your normal Capex budget would have been.
Just to get a flavor for what.
Normal year Capex number for this year maintenance, then and then second question.
Working capital I'm guessing once a source and in the last fiscal year, if so how much and you know again ex the virus. If we were just looking at your normal budget with wood working capital.
Source use or a neutral for the new fiscal year. Thanks.
I'll answer to Capex number Jim will answer your source.
20.
Where we would have been guiding in the $55 million range that probably $50 million to $60 million range for Capex in fiscal 20.
Trying to work towards the lower end of that range, we've been paid some pretty big investments in in glass recently and other segments. So let's just say in the 50 to 55 range would have been.
And you know from a working capital perspective.
As me.
I guess the cancer you I mean for it.
Fiscal 20 in fiscal 19.
We actually had favorable working capital environment, but it was somewhat offset by negative working capital required to service the.
Acquired projects work that was happening as we look to fiscal 21, our expectations were to see favorable trend line in working capital and that as I mentioned. It you know if we were in a situation, where we would see a slowdown traditionally we would see a real.
Contributor to cash from working capital as we had harvest receivables.
Hi, Thanks, one maybe just.
One more.
The 30 to 40 million cost sees you mentioned run rate by the end of the year correct any feel for the range of how much would actually hit in this fiscal year and then therefore by definition the.
The balance would probably be next fiscal year, just to get a feel for the split thanks.
Yes, so excuse me I mean, we're starting to see the savings on that right now.
We will see more of that material savings are going to be from procurement as they ramp up through this year and.
Start on their procurement savings probably by the middle of fiscal 2001, we should ramp up.
The annualized level and then on our other cost out initiatives, that's going to we've got a number of steps throughout the year, some of which actually have some cost to execute and put in place in fiscal 2001 to deliver the savings from that so so we'll see some nice contributor is we haven't given specific guidance and quantify this specific.
In fiscal 2001, but we'll see some really solid contributions during the fiscal year.
Okay. Thanks I appreciate the help thanks, Barry Thank you very.
Again, ladies and gentlemen question or comment at this time. Please press Star then one key on your touched on telephone.
Our next question comes from Bill Bezel on the Titan capital.
Thank you I have.
Good question is first of all would you help us understand.
The hospital orders that you have I think you mentioned you had something in a 56 of them.
Yes.
My perception would be that there are not 56, new hospitals being built.
Turning to talk to us about that if you would place.
Yeah, that's just a snapshot in time, we had glass orders I mentioned for over 50 hospitals in 20 states that are actually in our current backlog to ship.
And then our.
Beyond the backlog, we've got awards and throughout the healthcare sector.
Not every building as new construction, there is renovation and there's additions and expansions of facilities I don't.
Bill I'd have to do like work to find out how many are new buildings versus extensions, but there is warm.
Absolutely normal course or is this is not new news. This a typical profile of that business. Yes, it's just going to add as Joe said, it really is a mix of.
New hospitals.
As well as expansions to hospitals.
And really kind of diverse geographically.
That is helpful. Thank you and then.
You'd mentioned that.
Future orders at some point.
Our activity maybe pushed out.
60 90 days.
Would you anticipate from your business perspective, and bookings or backlog when would you see the impact.
From a from that order.
Slippage or gap, however, we would want determined.
Don't know yet.
Again this is a waiting game to right now as we speak construction remains robust across most of the country. There are a couple of pockets.
I would have put more restrictive guidelines in place at the state level.
If that expands side than I would expect some delays I right now a month to three month delay in the and in a couple of pockets across the U.S., our logical we're not seeing that.
Again, our current.
Activity is.
Robust very normal.
I'm just looking at the obvious trends across the us at the stay at home orders continue to expand if states.
Start to take a more aggressive approach to commercial construction, we're not seeing that.
National Association of manufacturers, which I'm a member of I was working very hard to make sure we.
Keep the engine running and taking care of our employees and.
The business partnerships, we have public.
Partner public private partnerships as a.
Heavy endpoints as well so the answer is bill we can't predict that.
Great. Thanks, Joe and then from a Capex perspective.
Given that you said to full year safety maintenance level would be 15 to 20 million would it be appropriate to think that's first quarter somewhere in that three to 5 million for Capex, where will it be different for some reason.
It could be probably more like five to seven just we add a couple of projects that were in process as we came into the quarter.
Okay. Thank you and then.
Go ahead, Jeff.
Doesn't say I'm Bill I'll I'll be managing Capex with the tight best and tried to be on the low end of.
Traditional maintenance level.
Right now my focus is safety.
Second maintenance.
And then third everything else that will keep the spec it turned off on for the time being.
Great. Thank you and then lastly.
Well update you have for us relative to as the acquired ESCO project in any remediation or compensation coming back to two you'll.
We continue to wrap up the while most of the all the projects we acquired had been closed.
The big one we've talked about that we took a fairly substantial charge on a year ago is.
It's getting close to completion I believe we are properly accrued for that project and we continue to our accounts and lawyer continue to work to resolve financial matters.
But our our.
Quarter, and if we are providing guidance I mentioned, where my guidance was going.
Before this crisis included.
All the assumptions on cost to complete and.
I really don't bank on recoveries, but we continue to try to see recovery.
It's not substantial at this point, where we're almost on with the Big project.
Okay. Thank you both and thanks good luck.
One thing is coming at you.
Yes. Thank you Bill I appreciate it.
Ladies and gentlemen includes securing a portion of today's call I turn the call back through Joe pushes for closing remarks.
Okay. Thank you operator and everyone for attending many of you we will talk to over the coming days and weeks.
And we'll be doing it obviously remotely and safely as you are as well.
We're fighting.
We're fighting a war on two fronts as individuals and as leaders personal front.
And a business front and as I.
I'd like to tell people wall personal as far more important businesses more imperative at the moment if your family of safe. So we will operate under the condition that every decision we make during this time when we look back we will be proud of the decisions we made both for our customers.
Mostly our employees and other constituents in the communities and of course, our shareholders as well so we understand the balance and I can assure you.
We plan to be proud of every decision I make when we come out the other end of this and I do believe as I said, we entered in a very strong position.
And feel we have certainly right at our ship well and look forward to getting through this crisis I. Thank you, we'll look forward to talking to some of you offline have a great day say thank you.
Ladies and gentlemen, just conclude todays presentation you may now disconnect and have a wonderful day.