Q2 2020 Earnings Call

Dead dead. Good morning. My name is Nick and I'll be your conference operator today.

This time I'd like to welcome everyone to Lindsay Corporation second quarter fiscal year 2020 earnings call. All participants will be in listen-only mode.

So you need assistance, please signal conference specialist by pressing the star key followed by zero.

After these presentations will be an opportunity to ask questions. Please note the event is being recorded.

When is call management may make forward-looking statements that are subject to risk and uncertainties which reflect Management's current beliefs estimates of future economic circumstance industry conditions company performance and fiscal Financial results.

Forward-looking statements include the information concerning possible or assumed future results of operations of the company and those statements preceded by followed by wage or including the words expectation Outlook could make sure or similar expressions for these statements. We came the protection of the Safe Harbor for forward-looking statements contained in the private Securities litigation Reform Act of 1995. I'm not like to turn the call over to mister Tim passenger president and chief executive officer of please go ahead.

And thank you for joining our call with me on today's call is Brian Ketchum our Chief Financial Officer. I feel it's prudent to mention that Brian and I are sitting together in a conference need more than six feet apart and hearing the social distancing guideline this quarter in the domestic irrigation business. We saw the resolution of various trade disputes been putting downward pressure on Farmer sentiment the market facilitation payments administered through the USDA did significantly contribute to farming come home prices did not fundamentally change given the uncertainty that existed in China's expected commodity purchases until the recent wage covid-19 impact we had observed an incremental Improvement in customer sentiment.

We continue to make progress on our Innovation and collaboration strategies for Field net and field devices are pennant penetration rates with our Telemetry technology is a fifty plus percent versus the prior-year to enhance the opportunity for Farmers to gain access to Lindsay's office technology. And in this case pivot watch Lindsay will be offering this product on Amazon later this spring given the do-it-yourself nature of pigs watch. This option will enhance penetration with Growers want to go online to buy the product and install it themselves also in connection to our collaboration with them. They recently announced their twenty-twenty SmartWater offering that includes access to feel meant and field met advisor for their customer base.

Early indications are positive based on their customer acceptance and feedback.

And the international business the global project Market remains active but largely uncertain regarding type in Brazil. We continue to see growth and we have made several Investments to enhance our commercial capabilities or infrastructure growth in the road zipper business continues to gain momentum in a quarter. We were awarded a contract from highways England for supply of a Google barrier system for use in tenth United Kingdom Highway England England plans for the entire system and related traffic management scheme to be fully operational by December 31st, 2020. The total value of the contract as awarded is approximately 28 million dollars. Also, we have secured another order from our partner in Japan Mexico least for New Year's.

active tension barrier

Used with their existing Road zipper systems that order value is approximately ten million dollars and we will begin deliveries in our fiscal third-quarter.

These are great examples that we are successfully addressing the need to grow this business and reduce the lumpiness last quarter. I shared that are over all sales final projects based on a 50% probability of success. Is that the highest level it is never been along with the number of machines being leased On Target to be the highest level ever as well. One additional point. I'd like to share is that we now have potential projects in our sales funnel in more countries were before we stated more than two years ago when we launched the foundation for growth initiative that for the road zipper business. He wanted to increase our leasing business be active in more countries and increase the overall sales. We are achieving these three objectives and his business is moving off.

Positive direct regarding our foundation for growth initiative. We continue to see that the margin Improvement projects. We implemented our delivering as expected.

Lastly I'd like to address the impact covid-19 had on our second-quarter results and the associated forward view in our second quarterback covid-19 did have an impact on product flow in some cases related to schedule shipments to and from the affected areas in addition our plan in China was temporarily shutdown a line to the country man at the end of the quarter this plant resumed operations and is fully operational overall A disruption and quarter to was not material to our overall results.

Looking forward a primary focus is to ensure our employees are safe and to mitigate the various risk connected to the covid-19 demek impacting our business to the best of our knowledge. We have not had any confirmed cases of employees with covid-19. We proactively put a number of measures in place to promote employee safety including eliminating non-essential business travel implementing return-to-work restriction wage for employees returning from travel and evaluating whether meetings may be postponed or held virtually our company has moved to a work-from-home direction for something that can be done it for roles that require an employee to go to the site. We have implemented work restrictions a line to CDC and Department of Health recommendations dead.

according to strict social

For distancing guidelines that are being deployed in all our sites are businesses and products are generally considered business essential to support Agriculture and critical infrastructure activities. So our plants will remain operational as long as we have demand for our products.

Are allowed to remain open by local governments and can provide for the safety of our employees at the present time. We have temporarily ceased production in our South Africa irrigation facility for three weeks due to a government mandate. However, we remain open to support the Service Parts business.

In order to manage the ongoing challenges a rapid-response team structure is in place across the company to address issues that arise and identify ways to mitigate potential risk to the business going forward. I would like to take this opportunity to thank our employees to continue to keep main factoring facilities operational and allowing us to deliver on our commitments to our customers, but also like to thank our employees who are working from home supporting all the other functions of our company. I'd like now to turn the call over to Brian to review our second quarter results.

Thank you, Tim and good morning. Everyone. My comments regarding second-quarter comparisons will refer to adjusted results for the prior-year which emit the impact of foundation for growth costs that were incurred in that. Adjusted results for the prior-year are detailed in the regulation G disclosure at the end of the press release No adjustments were made to correct. Results.

Total revenues for the second quarter of fiscal 2020 or a hundred and thirteen point eight million dollars compared to 109.2 million in the same quarter last year. I was for the quarter were five point five million dollars or $0.51 per diluted share compared to net earnings of $200,000 or $0.02 per diluted share in the same as last year irrigation segment revenues for the second quarter of fiscal 2020 were ninety two point 1 million dollars compared to ninety five point eight million dollars the same quarter last year.

North America irrigation revenues of 65.7 million increased eight million dollars or 14% compared to fifty Seven point seven million in the same quarter last year the increase resulted primarily from a higher sales of replacement parts increased irrigation equipment unit volume and higher revenue from engineering project Services average selling prices for irrigation equipment were slightly higher compared to the second quarter last year.

Sales of replacement parts for due to the timing of deliveries under our fall restocking program as we saw a shift in a portion of our sales from first quarter to second floor dead in the international irrigation markets revenues were twenty six point four million dollars compared to thirty eight point 1 million dollars in the same quarter last year did the issue is resolved to primarily from a large project sale in a developing Market in the prior-year that did not repeat.

In addition approximately 1.1 million dollars at a decrease resulted from differences in foreign currency translation grades.

As previously mentioned current year project sales and developing markets have been impacted by delays and start dates and are now being further impacted by delivery constrain created by travel restrictions as well as border closings in them countries as part of efforts to contain the spread of the Coronavirus.

Total irrigation segment operating income for the second quarter of nine point six million dollars was 2.1 million dollars higher than the prior-year and operating operating margin improved to 10.4% compared to 7.9% in the prior year operating income and margin Improvement resulted from higher America sales and from improved cost and pricing performance.

These improvements were partially offset by the impact of incremental costs of approximately 1 million dollars incurred during the quarter including Severance and Commercial development expenses dead.

Infrastructure segment revenues for the second quarter of fiscal twenty twenty or twenty one point seven million dollars an increase of 8.3 million dollars or 62% compared to the same quarter last year.

Increase resulted from higher Road super system Sales and Lease revenues and an increase in sales of Road Safety Products compared to the prior-year.

Infrastructure segment operating in income for the second quarter was six point four million dollars compared to an operating loss of $400,000 in the prior-year operating margin was 29.3% of sales.

Operating income and margin Improvement resulted primarily from a from increase sales in higher-margin product lines and from improved cost and pricing performance package in addition operating income for the quarter included a gain at one point two million dollars on the sale of a building that had been held for sale.

Turning to the balance sheet and liquidity.

Lindsay is well-positioned with a strong balance sheet and sufficient liquidity as we faced the uncertainty and challenges presented by the global coronavirus pandemic our table available liquidity at the end of the second quarter was $170 with $120 in cash equivalents and marketable securities and fifty million dollars available under our revolving credit facility. Our total long-term debt was a hundred sixteen point five million dollars at the end of the second quarter and of that amount $150,000 matures in 20-30 at the end of the quarter we were well within the financial covenants of our borrowing facilities, including a funded debt-to-ebitda m e o of two point zero compared to a covenant limit of 3.50.

At this time, I would.

Like to turn the call over to the operator to take your questions.

When I'll begin the question-and-answer session to ask a question. You may press * the one on your touchtone phone for using a speaker phone. Please pick up your handset before pressing the keys wage. Draw your question, please press * then two.

At this time, we will pause momentarily with simpler roster. First question comes from Brian drop William Blair, please go ahead.

Are you there?

Is your line on mute?

We'll move to the next question.

Comes from Mister Nathan Jones of seafood, please. Go ahead.

Good morning, everyone.

I guess I'll start with the question on on everybody's mind and that's the impact of of coronavirus. I know you guys, you know, gave some updates on the the impact in the second quarter, but things haven't really ugh, you know started to pick up at all then, uh, you know, our checks of your yours are plenty yours in Belmont stealing Network page. It shows that the deal is are not expecting domestic irrigation dealers are not expecting much of an impact from coronavirus on demand. Could you maybe talk a little bit about what you saw in March specifically if you know if there was a change in the demand patterns relative to what you'd expected or is if there was a change in the demand patterns as we went through the month.

Yeah, Nathan, this is Tim in this is an important question. So let's talk about it in a broader sense and it will come to exactly what we're seeing relative to demand as a result of that. But we did move to a work-from-home direction as I'd mentioned and and then for the roles that are with employed and needs to the site We are following the CDC and health official recommendations the the business impact that we had four second quarter. We put his less than 1 million dollar operating income income. So your point we were on the front edge of the covid-19 at that point in time currently wage, um part of our nine manufacturing plans eight are still fully operational and the one in South Africa this plant is continuing to dead.

Support replacement parts and service. Now when we evaluate whether to keep a plant running, we really look at three key questions is there a month is the what's the current demand level is the business classified as business essential and are the safety guidelines that are in place wage being followed and then that determines whether we continue to operate that plant. So in terms of what we're seeing from a demand standpoint speak to what you're saying is overall, I would describe the farm community hasn't felt the impact as what the urban areas has from a reality show me from a just a concern of perception standpoint right now. We would describe as on the outside more concerning would be the the lower commodity price dead.

That are across.

most of the major ones

any do you see any I mean, I guess we'll do do the whole portfolio in March. Did you see any deviations relative to what you'd expected to see specifically from covid-19.

We we we would describe our demand pattern without going into forward-looking comments here Nathan to say we've been encouraged by what we've seen so far.

Okay, I guess my next question is you and everybody else is starting to put you know practices into your facility that are likely to create an official that mean if you make people say six feet away from each other and all those kinds of different things that you put in in place within those facilities. I would imagine that that causes immune deficiencies back to reporting increases costs to some extent. I'm sure it varies by different locations it maybe you could talk about the impact that that those things are having on your own operations wage. Well, the first of all types of activities that we've implemented referred to as strict social distancing which leads to things like redesign a break rooms doing staggered shifts of taking staggered break those types of activities. Definitely that brings a another level of birth.

Flexity and typically complexity can bring some additional cost but at this point time they said I wouldn't describe it as meaningful in the cost side. Okay. That's very helpful. I'll pass it on thank you. Next question comes from Mister Bryant of William Blair, please go ahead.

All right. Good morning. Can you hear me?

Okay, good morning. Thanks for taking my questions. So kind of building on some of the concerns. Is there is there any chance that the outbreak or social distancing will affect interactions between dealers and customers or or is it I guess Tim you just mentioned a kind of the perception and concern regarding covid-19 in in the more rural areas where the deals are being done just it's not really hindering the off the interactions as much.

But I wouldn't say it's not having an impact on interactions because social distancing obviously brings again. I'll use the word complexity a level of that to to the the interactions that are going on. But I think the key here is will impact demand. And at this point in time, I I we don't have signs of saying that if a farmer wants to move forward with a purchasing decision that the social distancing guidelines are getting in the way of that transaction occurred.

Okay.

And I I was thinking about this and I would imagine that potentially the outbreak has more of an effect on some of the smaller Growers versus some of the corporate office like, you know, Frito-Lay Etc. Can you comment at all about what your exposure is to you know, the larger corporate Farms whether that's a majority or minority of irrigation sales.

Yeah Brian, this is Brian Ketchum. Yeah, I think you know we have a

Large part of our business it is, you know directed towards more of your large corporate Growers. I think to your point on, you know companies like a Frito Lay off. It also speaks to the pressure that's being put on right now on commodity prices relating to potatoes as an example with you know, restaurants and schools being closed off. I think there's some downward pressure of potato prices. There's also some downward pressure on Dairy, but you know, I get I guess given the time of year that we're in a lot of you know purchasing decisions for this year have already been made. I think that the big you know unknown at this point is you know, how long does the situation continue and what is what is the, you know impact on commodity prices as we you know, get into next fall and post-harvest time.

Okay. Okay. Thanks. And then if I could just has to two questions on the infrastructure side, can you give us any any sense for the the timing of the the revenue and you know, how much will come in each quarter from the this UK Road zipper project?

Yeah, so, you know, we're we will begin deliveries probably in April picking up in in May. Our expectation is that we will have this in place, you know by the end of our first quarter next year. But if you you know, there's some variables in and assumptions in regard to you know, people being able to to work on the project and things like that which at this point, you know, we we, you know feel comfortable with that situation. So I think if you know if you divide that 28 million over a six-month period that that'll give you a general flavor for for how that would fall.

Okay, is it fair to think I guess see if I have the quarters right? Cuz I mean you have a am a quarter right June July August June in the May quarter, maybe 20% August quarter 40% And then the November quarter 40% Is that a rough even in the ballpark of roughly how to think about Thursday?

It's yeah, I think it's in the ballpark. I think the main quarter would be probably a little less than that. Just because of you know, we're you know, the startup will be later in April and then into me so you're probably off, you know, maybe five or six million in the quarter five or six in the May quarter. Did you say five or six million? Okay, and then last question is about how excited are you about the prospects for a major infrastructure bill?

How would that affect your business?

Brian we we definitely believe there. There is the potential of that we're monitoring that closely. We do see that as a a significant opportunity for our business office. There is a level of excitement here of what potential that could bring. All right. Thanks very much and good luck.

Thanks.

Next calls from Ryan Connors of blowing Scattergood, please. Go ahead.

Hey, thanks. Good morning. So what did his probe a little deeper on the issue of commodity prices? I mean, I appreciate you know, the the optimism and and the idea that maybe this could be purchased a transitory impact but you know, I know the usda's been out there was some pretty aggressive forecasts on planted acreage for for corn as you as you alluded to Tim. A lot of those decisions were made, you know before this all came out and and they're saying that you know restaurant demand is down in terms of food and so forth so you can paint a pretty dire picture as we get into the fall if the if the weather co-operates and and this is less than transitory on the demand side. You can paint a pretty dire picture of what Commodities could look like, you know, 6 9 12 months down the road. So I guess I'd frame it this way to talk about foundation for growth and your margin targets and that sort of thing, you know, when you laid that out you you kind of said look that's with no help from the cycle, which is appropriate to manage the business independent of birth.

But if we've how do you how do you frame those the foundation for growth? The Morgan margin targets etcetera in light of what could be not only a lack of help from the cycle. But you know with you know, some some some damage so to speak from the the cycle, right? And this is Kim we're going to continue with what we said at the very beginning that I'm going to expectation and commitment that we could deliver 11:00 to 12 % in a market similar to 2017 to your point commodity prices have definitely met seemed downward pressure with what we're seeing in the in the near-term here having said that we feel very good about what we're delivering on foundation for growth. We're quite open about saying that we are delivering on the projects that we laid out example, the Highlight is in Rhode zipper and the shift lodging we fell off.

How about what's happened? So we're going to stay with the positioning that we laid out a couple of years ago, but bring proof points of how we're doing along the way and one of the keys off you continue to hear us focus on is what we're doing on the shift left strategy with this is is really the adding a lot of value to the company.

Got it. Okay, and then one more more specifically as it relates to Foundation for growth initiatives and and just restructuring the business in general. I mean, I guess one of the benefits of having gone through Thursday that you enter a rougher patch maybe with with you know, a leaner shop, but I guess the flip side of that is maybe there's fewer levers to pull going forward. So if we look at some of the fixed lines and not like like G and egg and things like that I mean have is there is a room there to make more moves if you have to if the market head south or or do you risk getting into bone there?

These products genuine and what I find very positive about our foundation for it hasn't been a case of just the original project and get the invitation are continuing to build a funnel of other ones coming forward. So this starts to become part of the culture to run another thing. I want to highlight and I think this is really critical is we put down $48 in place into our company two years ago and as human in this new environment those new behaviors are really helping us manage the business in this rapidly changing environment. It is helped us a lot in how we've communicated and how we've structured what we call our response back on. So in total, we we believe foundation for growth and Lucas in this environment, and I wouldn't say that we're going home.

We're continuing to find new price to put into the into our funnel going forward.

Great. Well, that's very helpful. Thanks for your time today.

Next question is from Joseph Mondello Saddam and Company, please go ahead. Good morning.

I was wondering I just sort of wanted to ask another question sort of related to commodity prices. Just maybe in a different way. How much do you guys anticipate such as like corn demand there to be affected by this downturn. I know ethanol is a big component of corn consumption and then obviously there's the you know the food aspect of demand.

And relative to what you just posted in the North America part of the irrigation segment, which was better than I was looking for. You know, how long is that sort of just totally in the past and really, you know, it looks good that things were trending in the positive but things have changed so much since the February quarter. Could you maybe frame sort of with that kind of a context you asked specifically address that problem right now, I'm past would say that we're going to have the most planted Acres on corn since twenty. So there's definitely a large interest gravitate towards that took a downward pressure on the on the front one is clearly ethanol on the other side is the fade China trade deal. We have some dead.

I'm China on corn which is helping there. There's some optimism Could That Could phase one also include ethanol. So he that is a key question is a lift will come from the China phase one trade deal. But definitely there is downward pressure across the board on on the key, they dropped.

All right, and then I guess I should ask since no one did I don't think it's probably going to be overly significant but the South African plant closure how significant is that to your overall wage?

Today we are working assumption that it will be a three-week temporary closing and with that assumption Joe. We would not call it mean I'm assuming that continues to play as we've described here.

all right, and a couple of questions on the infrastructure segment first off that Japan Road zipper $10 delivery that you're expecting in the third quarter was that in the backlog and can you talk about how just the overall infrastructure segment some sort of Outlook is in a scenario of a severe just overall recession, you know, the challenges are how how effective that business would be or not be just to give us

Yeah, this is Brian both the UK project and the ten million dollar. Japan order were added to the backlog prior to the end of the quarter. So they took they are in the back lot and you know, I think in terms of the infrastructure business, but we're being told is you know, and especially with these two projects. They are definitely High priorities for the universe Japan and they can expect to continue to go forward, you know, in spite of the coronavirus situation when you look at the the US and the the. That we've talked to you know, they do their planning on a New multi-year Horizon. So, you know, they they want to continue to move forward with projects that they've got planned this year. If not, you know, it causes a you know significant dead.

Option in the you know, their entire planning process. So what what we're being told today is in the projects that we've got planned and you know are are looking for this year are going to continue to go forward.

All right, and then one last question just in terms of the actually two questions first off capex was a little light in the second quarter. Are you still expecting that 15 to 20 million like you're originally anticipating and number two on the on the balance sheet just given the strength of the balance sheet. I probably would assume that you're going to be a little conservative in the near-term but sort of more thinking about long-term with foundation for growth, you know largely completed. How were you thinking about sort of utilizing the balance sheet is Acquisitions off part of your strategy going forward or just could you give us an update on that for sort of long-term strategy?

first of all in regard to

Catholics yeah use the first six months we've only spent about five point three million we still and the and the reason for the time being a little bit lower than expectation is that some of that capex activity was planned to build barrier and machines for the roads of released weight and that spending was temporarily diverted em, you know building up inventory, you know to supply the the UK project as well as the and project but in the second half of the year, we are still expecting I will spend between ten and fifteen million in the second half which will get us into that 15 to 20 million range for the year.

Just in in general yard to Capital allocation. I would say the priorities remain the same. I think right now given the current uncertain environment off the quiddity and capital preservation is important, you know, we at this point, you know would continue to probably be in a a little bit of a holding pattern when it comes to share repurchase. Um, and in terms of Acquisitions, we continue to have a you know, a number of discussions with potential Tom. I think one thing we are seeing in that regard to is is a little bit of a, you know, wait-and-see situation with some sellers right now.

Okay. Thanks a lot. Appreciate it.

Next question is from John brats Kansas City capital, please go ahead morning Jim Brian on the international wage. Obviously the covid-19 impact really began began having a bigger impact. I should say in in March and in in in in April, when you look at the international irrigation a business, would you expect to see added pressure to that piece of the of the business and maybe even more difficult second half than what we saw in the first half.

And the area in the international business that I would highlight to address that part of the question is the Middle East we had started to ship a a large project order into that market wage and that order had been put on hold due to border closures which was tied to covid-19. We do expect the shipments to continue into late Thursday and then 2 to 4, but that's assuming the border crossings are allowed. Um, we see signs of good project demands that will be tendered later this year, but not likely for fiscal year 20 delivery. That's where I would describe the biggest impact of covid-19 at this point in time. The other area I would like is South Africa given the fact that our plan is temporarily see production that's due to an overall country mandate. So that's one area of birth.

We do tivity will be slow.

But also due to this.

Okay. Thank you. Tim. Brian one question on on the income statement. There was a million-dollar other expense item in the quarter. What was that?

Yeah, John in the it was in the irrigation and the primary drivers there was you know, there were some Severance costs both in the same international business due to Workforce reductions. There was also commercial development activities in the US some marketing initiatives around our technology products in Brazil with someone dealer development expenses with uh, new dealers that were added during the quarter. Okay? Okay is the month the workforce at the at the level that you would like. It's like it to be or would we see we do you anticipate any other Workforce reductions?

And I would describe that at this point time. We feel good about where we're at. But we're still there's always a continuous Improvement mentality. So I'm trying to say there won't be changes at this point. We feel good about where we're at recognizing that there is more unknowns in this environment going forward due to covid-19. All right, Tim. Thank you very much.

Next question comes from Chris Shaw the bonus crispy, please. Go ahead.

Good morning, everyone. How you doing? I can ask any irrigation sort of more broadly. No go back and historically you guys were dead. They're very tied to corn prices. It seems like you know going back a decade or so. I was just wondering given that you know, the when you give when you've given the percentages of new irrigation system versus parts and all that and more recently that that's really gone down in terms of new irrigation systems. It's just looking now is is the correlation between sort of cord prices maybe and yep, you're in sales not as correlated just because you know because new new systems and such a lower percent at this point and mostly replacement parts or other kinds of irrigation, maybe Thursday or crops and and actually is corn that big is that is that really is that shrunk as a an actual End Market for you?

Of course, this is Brian to your first question. I mean just in the in the most recent quarter new irrigation or new irrigation for the first time was up 34% of the total sales. So it's It's Still Remains within you know, that range that we've talked about in the past of of a third, you know in dry land conversion replacement. But you know, we bought a different parts of the country that are still new to vote going on in the US, you know to your question on corn I think, you know, we definitely you know, there's a strong, you know, if she drives a lot of irrigation but there's you know other markets, you know with what we've talked about the tail market very Market, um, you know other different types of crops, you know Southeast in other areas, but, you know corn still definitely a driver of the overall business.

Do you have a percentage?

of what the corn and Market is for your overall irrigation sales in the US at all, or

no, we really don't and part of the reason is even you know with the potatoes and some of the other crops corn is still a rotational crop. So it it's still important in summer. It's Market as well. We don't it's not really clearly defined.

That makes sense and then just quickly and infrastructure the UK project in Japan project are both they're both sales. There's no there's no leasing involved in either of those is there.

That's correct. Yeah both sales.

All right. Got it. Thanks a lot.

Can I be of a question, please? Press * then 1 or next question is a follow-up from Nathan Jones of Steve. Hold please go ahead. Hey guys took a follow-up question on the parts sales during the quarter. If I recall correctly. There was an absence of part sales in you know, the first half of calendar 2020 with all the flooding that that went on last year and the anticipation was that some of it would be caught up last year and some of it would be caught up this year. So can you comment on you know was this am on normal level of birth part sales that you saw this year versus last year or are we at an elevated level of parts house catching up from some of the damage that was done in the flooding last year.

Nathan this is Brian the parts sales in our first and second quarters are generally going to be more of you know, driven by the restocking program that we put in place close Carlos and you know, as you recall in our first quarter, we were down in parts sales year-over-year and we attributed that to timing of the deliveries this year. And and so Thursday, we saw that happen in our second quarter. So I would say overall year-to-date. Our parts sales are are fairly similar to where we were a year ago. I think the flood impact is, you know, we're probably in that period of time now when it floods, you know, really started to impact and then into the summer when some of those machines, you know, never, you know, some of the farmers didn't plant and so the machines didn't run off last year but so far, you know, year-to-date they were on far away where we were a year ago.

Like I said, potentially some year-over-year increases the sales over the next couple of quarters. Just one more on the on the infrastructure business the roads if a business you talked about having a funnel was bigger than it ever been last quarter. It clearly converted a couple of big orders this quarter. So I'm sure it's it's smaller than it was a quarter ago. But can you talk about the pipe of opportunities? Um, you know how much your those things are how much more cultivating they need and and when you would, you know think you might be able to turn some of those into mortgage.

And Nathan, this is Tim.

Without giving numbers what was described that has been a part of the foundation for growth? We've got a lot more. I'll describe it as sophisticated sales funnel different stages and we're tracking how long it takes to move to each age. What we're really excited about is that we're getting a higher percentage of our business as we continue to go forward into this shift left category and that is bringing an additional opportunity for demand that we hadn't had before. So not only are you seeing better results immediate in terms of the sales that we're getting but we're able to look back several, you know years that were able to look forward. I should say several years into the future here and wage good activity and then we're tracking each of those stages how long it takes for those projects to move forward. So that's why I'm able to say that we we have the best sales funnel that we've birth.

At this point. It isn't just because of the near-term. It's it's in totaled.

Okay. Thanks very much and stay safe.

Thank you. Thank you.

This time there appear to be no more questions Mister Haslam here. I'll turn a call back to you for closing remarks.

This concludes our second-quarter earnings call. Thank you for your interest and participate. Have a great day and be safe.