Q1 2020 Earnings Call
Good day, everyone welcome to the trying <unk> first quarter 2020 earnings call Today's conference is being recorded.
At this time I turn the conference argument Sherry Lauderback. Please go ahead.
Thank you and welcome to try not corporation first quarter.
What.
What he earnings call participating on the holiday or Tom Amato try not to president and CEO and thought it was ski Earthlink Chief Financial Officer. After prepared remarks on our results. We will open the call up for your question.
In order to access would review of our result, we have included the press release and Powerpoint presentation on our company website I try not to Corp. dot com under the Investor section. In addition, a replay of this call will be available later today I Colleen 820 311 wants to.
With a replay code out one seven won seven seven to seven.
Before we get started I would like to remind everyone that her comments today, which are intended to supplement your understanding and try not may contain forward looking statements that are inherently subject to a number of risks and uncertainties, including impacts cobot 19.
Please refer to our form 10-K, and our first quarter conclude that will be filed today, but lets the factors that could cause results to differ from those anticipated and any forward looking statements.
Also we undertake no obligation to publicly update or revise any forward looking statements except as required by law. We would also direct your attention to our website were considerably more information may be found.
In addition, we would like to refer you to the appendix in our press release issued. This morning are included as part of this presentation, which is available on our website, where the reconciliations between GAAP and non-GAAP financial measures used during this conference call today the discussion on the call regarding our financial results will be on an adjusted.
Basis, excluding the impact, especially now with that I will turn the call over to kind of model trying not to president and CEO Tom.
Good morning, Thank you for joining our fourth quarter earnings call.
First what could take a moment to think or try and its employees around the world for their commitment dedication.
These challenging time.
Okay, I want to acknowledge that the exemplary upwards of health care professionals on the front line.
We are grateful for all the sacrifices being made to keep US help you see during these uncertain time.
As we reflected the started 2020.
We need to look back more than a decade to find the time of such on predictability.
In late January when news is it's a known by we're starting to emerge we began picking mitigation steps to manage through what we anticipate it would be supplying that worked disruption.
A few weeks of corn quarantine restrictions in China in early February Unfortunately have now turn into the global good dynamics that exist today.
Let's turn to slide three.
We wanted to highlight the current situation related to cope with my team and the impact in our operations.
Trying to ask at 37 facilities in 11 countries on three continents, we have approximately 3500 employees.
During this period I.
I have never bad as proud as I am today to be so to be part of such a dedicated team.
We're adjusting new work rules and properties that promote social distancing and accrued cleanliness and hiking virtually all of our production facilities operated through this crisis period, while experiencing only temporary disruption.
For the health and safety of our employees remains a top priority for try me.
As I noted, we have implemented new rules and processes to increase social different thing and approved coming up and hiking and our facilities. In addition to following local regulations and guidelines.
During this period of governmental quarantine actions virtually all of our production locations that benzene essential. This is the result of affects the products. We manufacture go into applications that help twice the spread of germs or used in medical military defense food and beverage or other end markets such as aerospace.
Which are essential markets to national economy.
In addition, our balance sheet is strong and we have adequate liquidity, we believe to withstand this crisis and position prime assets right during the future recovery.
Bob will cover this topic in more detail on a few slot.
Finally, we have had some business is experiencing very high demand and we are adding in shifting capacity to different parts of the world to meet this demand.
We also have some businesses that are experiencing severe flowed out.
Well this present some challenges to navigating trimesters this unprecedented period.
Our position in a diverse set of end markets also provides our shareholders with Dallas to withstand a shock such as what has occurred from this fantastic.
Turning to slide four I don't plan to go through each of these points, which are available for you to read and ask any questions.
However, I wanted to assure our shareholders, but given early warning signs in Asia, We took swift actions to change your protocol and subsequently implemented more defensive actions as a pandemic moved through Europe, and it's in North America.
Also protect our employees our businesses and trying there.
Turning to slide sorry.
I would like to provide a little more detailing our businesses and end markets.
As a reminder.
We completed a sizable shift in our business portfolio at the end of 2019.
Reducing exposure to the oil and gas end market from approximately 25% to now less than 3% of our total revenue.
Currently approximately 55% of our revenue and a larger share operating profit is in our packaging segment, where we manufacture products that go into beauty and personal care home care pharmaceutical nutraceutical food and beverage and industrial application.
You'd think about these packaging end markets you can quickly get a sense of the activity we have experienced over the past quarter given that many of our products are used in application to defend against the spread of germ and support increased cleaning activity.
Trying to <unk> Aerospace segment represents 2700 or percent of our sale and we supplied to commercial military defense business jet end markets through a complex supply network.
The balance of our business in specialty products segment, where we predominantly supply fuel cylinder into a wide variety of end markets, including welding in age back medical and military defense as well as engines and compressors you'd in oil and gas.
Again, our diverse end market presence is also key to our success as we believe it provides balance in our ability to deliver long term cash generation and therefore value to our shareholders.
It also highlights during the prior periods, we have experienced a broad array of impact across each of our businesses and facilities.
Let's now turn to slide six and cover the result from the first quarter.
On a consolidated basis the quarter was essentially on plan, although the product sales mix for the quarter was different than expected.
Overall sales adjusted for currency were up 6% largely driven by acquisitions in our packaging and aerospace segment.
Operating profit was 22 million for the quarter relatively flat as the impact of higher sales was offset by product mix and production scheduling inefficiencies related to operating under this crisis period, we are in.
Yeah for the quarter 34 cents per share an EBITDA was up by 2 billion to 35.3 million and was that 19.3% of sales.
The overall in light of the challenges navigating through the first quarter through the dedication and commitment of our global workforce, we were able to deliver solid results for our shareholders and improve our position as we move forward into the year.
If we turn to slide eight I'll take a through our segment results.
For our packaging segment net sales were up 13.7% net of currency to just over 100 million driven by acquisition related sales inorganic growth of 5.3%.
Operating profit was essentially flat, while the <unk>, while the margin percentage was down as a result of higher sales of certain lower margin dispenser products in the beauty and personal care and into food and beverage end markets as well as lower production efficiencies during the period.
Well the product mix was different than anticipated related to the current demand environment for personal hygiene and cleaning products. This quarter's higher sales level allowed us to achieve higher absolute EBITDA versus the prior year quarter. Despite temporary idle facilities in early February.
We are experiencing a high demand for many of our beauty and personal care at home care products, such as foaming pump, So Paulo, lotion pump and sanitizer pump and closure products.
Simultaneously, we are actively shifting and localizing capacity to meet customers' demand to improve the overall supply chain.
We expect the increase attention a personal hygiene and cleaning all to help quite the spread germs will emerge as a long term secular trends that they're trying to have packaging group is positioned to support well in the future.
As such we plan to continue adding capacity globally.
Before wrapping up the section I did want to note that in mid April we completed the acquisition a rate back which is a 30 million annual revenue and provider of Bakken box products, using Gerry soda smoothie and winding applications as noted on prior calls this is an asset parabolic transaction.
We still have several months to complete the separation and integrating the try mask some of which we have to do remotely with that said, we look forward to the long term contributions rate tech team will make the try massive packaging group.
Turning to slide nine I'll update our trying to get there. Please.
Sales for the quarter.
7.3% to 48.9 million driven by acquisition related sales.
Operating profit was slightly down versus the prior year quarter and operating margin was lower due almost entirely to production scheduling inefficiencies and a cold and 19 related matter, which ever for caution we took steps to par production and deep clean one of our manufacturing facilities.
EBITDA was up slightly due to higher sales versus the prior year quarter.
[laughter] approximately 90% of crime at aerospace sales go into the commercial or business, yet end markets through a very complex supply network. The balance of Prime Minister of paces business is in defense and military.
During the first quarter the rapid falloff in air travel activity did not yet impact trimester of leases sales. However, as we move into the second quarter and assess our customers activity levels, we're planning for demand to be off significantly.
As such we are taking mitigation steps to flex for the lower volume activity.
While we are unable to predict with any precision the depth and duration of this down downturn, we believe the commercial and business jet end markets will continue to be under severe pressure at least for the next few quarters.
That said the aerospace market overall remains critically important to national economies as we work through this crisis period, we anticipate trimesta aerospace to ultimately rebound to previously previous performance levels.
If we turn to slide 10.
We'll review our specialty product segment.
The overall 5.2 million or 13.2% not surprisingly driven by lower sales of products that are sold into oil and gas and lower fuel cylinder sales at certain end markets install to start 2020.
Operating profit was at 3.4 million for the quarter down 1.3 million versus prior year quarter and need to be was at 4.4 million down to like a mile.
Despite this segment being hit, particularly hard I would like to highlight that our Norris cylinder business install a process to expedite production cylinder for use in oxygen and breathing air applications. We believe sales of filters for oxygen related applications were about 3 million for the quarter, which helped otherwise.
Offset even lower demand.
As we look forward, we have already restructured or operation that serves oil and gas end market. For example, running weekly production at a one shift three day rate.
With respect to our field filled or facilities, we anticipate further slowing in Q2 and are planning. Accordingly. However, we also anticipate our Norris cylinder business will be one of the first to recover from an uptick in the U.S. Academy as manufacturing and construction comes back online.
With that I'll turn the call over to Bob's to take us through try messes balance sheet liquidity Bob.
Thanks, Tom I'll begin my comments on slide 12, with a discussion of crime asked the strong financial position.
Trying to have exited 2019, with an enviable capital structure and an extremely strong balance sheet.
More than 450 million and cash in the aggregate availability under our revolving credit facilities low leverage and a solid track record of free cash flow generation trying to ask is well positioned to continue executing on its balance capital allocation priorities of reinvestment in our highest return businesses program at.
M&A and share repurchases.
On February 27th we completed the acquisition of our Assai engineered products, which generated more than 30 million in revenue in 2019 and is now part of trying to ask aerospace.
We also closed the acquisition of rate Pat on April 17, which generated approximately 30 million in sales and 29 team and which has been added to our trying to ask packaging segment.
During the first quarter, we also repurchased 1.25 million shares of our common stock for approximately 31.6 million in a continued return of capital to our shareholders.
As Tom highlighted earlier midway through the quarter as it became increasingly evident that the coven banking crisis was fast becoming a global pandemic, we took swift actions to enhance our liquidity.
In addition to suspending our share buyback program to preserve cash we proactively do down 150 million on our revolver to protect against any future potential credit market uncertainties.
Given that the duration and consequential impact of this unprecedented prices are not now we anticipate maintaining a significant amount of cash I'm book grew out to defend against unforeseen business risks and economic uncertainties.
Turning to slide 13, I would like to remind you of how crime absence business model and capital structure position us to Nat gas navigate the impacts of the cobot 19 crisis from a liquidity standpoint.
Historically trying to ask has consistently generated positive free cash flow a key characteristic of crime. After a strong cash generation profile is that our businesses are not capital intensive.
And more challenging economic times like we're now facing this attribute allows us to scale back spending the mission critical maintenance capital or key growth programs only further protecting free cash flow.
From a capital structure standpoint cash interest expense on our long term bonds is six at approximately 14.6 million annually, but as a result of currency swaps, which provide a net benefit to try math our cash fixed interest expense is reduced to 11 million for 2020.
And as our bonds do not mature until 2025 and have no annual amortization, our free cash flow is not hampered by any significant fixed debt service obligations.
And as you would expect in early February we took swift action in response to the looming crisis to reduce third party expenses eliminate all nine of central business travel and related expenses and implement proactive monitoring of our customer account balances, we generated free cash flow of.
1.8 million in first quarter, 2020, which was consistent with our plans expectations.
More recently at the crisis impact customer and end market demand, we are flexing cost structures of our operations. Accordingly, you maintain free cash flow.
We ended the quarter with cash and attribute availability under our credit facility of 337 billion of which 206 million with cash on book.
Our leverage ratio as computed under the credit agreement was 2.2 times as compared to our covenant requirement of four times.
And our net financial leverage after normalizing for the credit agreement draw was well below two times.
In summary.
Our solid capital structure enables us to fund key capital allocation priorities in the first quarter 2020, while maintaining a continued strong financial position and in anticipation of the challenging times ahead.
This concludes my remarks than ever will turn the call over two times to wrap up now.
You bet.
Turning to slide 15, as we consider updating our out what's the trend there we have approximately two thirds of our sales into end markets, which we are able to model based on brought assumption, but there's no further disruption even during this uncertain period.
This includes the majority of our packaging related end markets military defense, and even oil and gas, which we don't see getting worse than it is today.
However, we have one third of our sales which are into commercial and business jet welding in each day, and even general industrial end market for which we cannot model with any precision we extended the downturn or duration of this crisis.
Therefore, we have decided to withdraw our current guidance and suspend updating until we have a better assessment of this portion of our business, we hope to be in a position at the end of next quarter to provide you with the forecast.
Turning to slide 16, we do continue to remain optimistic about the long term growth and positioning of try math and our family of businesses as we navigate through this uncertain period. It will be our goal to take appropriate realignment actions to mitigate against lower volumes, while also taking strategic man.
With that shrink stuff. So we in turn May take early leads when certain end markets start to recover.
This strategic approach to recovery would be in addition to what we believe has emerged as a secular trend in certain packaging end market for would try mass is well positioned.
Additionally, given the years of work to reposition try man and reduce our financial leverage. We believe we are poised to take advantage of M&A opportunities that may emerge from this crisis period.
Finally on slide 17, we continue to rely on the prime its business model, even more so now as a reminder, our target business model provides us with a standardized platform for strategically and proactively managing their businesses escalating issues, which are then resolved with a high sense of urgency.
Thank you and with that I'll turn the call back to share Sherri. Thanks.
At this point, we'd like to open the call up to your question.
Thank you, ladies and gentlemen, if he would like to ask that question. Today. Please press star and then one if you are using a speaker phone it might be necessary to pick up your handset or do you press your mute function. So the signal can reach our excitement.
Again that is star and then one actually would like to ask a question today.
And we'll pause for just a moment to give everyone a chance the signal.
Okay.
And we will take Andy Casey from Wells Fargo.
Hi, Thanks, a lot good morning.
Good morning, everyone organic.
A couple of questions.
First on visibility slide kits team.
Early indicators third revenue is hard to forecast.
I'm wondering is the uncertainty in Q2 or is it beyond Q2.
Is what I would say mid late Q2 and beyond.
I mean for example, I'll I'll take one business I mentioned in my script.
Is our Norris cylinder business, we do believe that that could be a very nice leading indicator for try mass as to when orders start coming in because we do anticipate that at some point hopefully.
Later this year, we'll see an uptick in H. Sachs and construction related activity and usually that should pull through some steel cylinders. So that's something that we're going to watch closely as the order intake within our north operation.
Okay. Thanks.
With respect to that could you.
Yeah, qualitatively I guess talk about order trends through the first quarter.
But you may have seen in April.
So so through the first quarter, we'll we'll stick principally to that.
In our packaging segment, we saw incredible demand and.
This probably occurred what I would say a little bit towards the mid late part of the quarter continuing obviously into April as you would expect.
Predominately for the beauty and personal care products that we sell.
And one of the challenges we have there is up is he is leading the demand. So these are we're taking capacity steps not only with our own manufacturing locations, but also with our strategic supply network.
Clearly want to make sure we're positioned to.
Supply into the demand that we're seeing.
With respect to our next largest segment our aerospace segment.
Although we were seeing and reading.
Clearly the news everybody else was on retail travel being down in flight being down.
Given the complex supply network that exists within.
Aerospace as it relates to our products.
We didnt quite see any fall off yet in Q1.
We're expecting to see that we're starting to see.
What are called we call Pushouts when a customer calls they will have a.
Deal when the system something we'll be scheduled for production and various customers My call and say look we would like to defer that a few months or so whats. So we're starting to see that cadence pick up but nonetheless, we're planning for that business to have lower volume, what I would say sort of mid.
Good late Q2 it into Q3.
And then a specialty products, we have a couple of different.
Businesses and various end markets, there sort of a mixed bag, but to start the year oil and gas just never never took off and.
It's been beaten down pretty pretty bad that being said is such a small part of trying to ask at this point.
That's only it's concentrated in one facility for us.
Okay. Thanks.
I'm just wondering.
On Slide 15, you put industrial packaging.
Yeah predictable column.
General industrial in there.
Other ones.
Let me make a difference between the two.
Makes sense.
But that's that's a good question and when we talk about industrial as it relates to packaging were predominantly talking about.
Oh ball petrochemical sales it might go into a 55 gallon drum or products that might go into a.
Paul America of five gallon tail and what we have seen and that is in those types of products actually is a tick up in activity modest pickup in activity that we believe relate to sanitizer chemicals that would go into sanitizer cleaning type products.
Okay and general industrial.
Is is a for the purposes unpredictable relates to our ignores business. We have a number of very end markets that are.
Would almost overlap construction and more more general economic driven.
Okay. Thank you.
Last question is more working capital.
[laughter] this kind of wondering about the equation.
Receivables decreased and tables and balance sheet associated negative impact on cash flow.
Could you help us understand maybe how much that.
And then related to portfolio change in how much that took them end market satish operational.
I think it was more operational so if we look at the accounts receivable side from a.
Packaging point of view as Tom mentioned sales for very strong and a lot of those sales occurred in the month of March so the balances while elevated.
We're all current or very much occurrence.
And as it relates to payables I'll, probably the biggest driver there Andy was in our extended supply network, particularly again and packaging were relying on key suppliers. We wanted to make sure that we kept that continuity of supply and so.
Of the relative payment there versus the prior a year or the prior quarter was a bit more timely.
Okay. Thanks, and then just a follow up on that but.
On the payables piece and as part of question.
The supply chain.
Deal that billions seeing any.
Significant impacts either I'd say Mexico's shutdown or.
Some potential liquidity issues.
She kind of.
Maybe open people Smith.
Hey, I'm sorry, when you are you talking about now from a supply side or from our customers in that in Mexico.
A year.
Players.
You know, we really haven't seen other than initially at the outset of the.
Of the pen down back in China, where certain of our facilities as well as that of our suppliers were shot due to quarantine actions, we really haven't seen I don't think widespread.
Impacts to our supplier networks.
Okay, but again, it's still early days in terms of the impacts of the of the of the crisis certainly in terms of availability of supply, but demand is very high and with demand being high.
There is dislocation that that enters the freight and as Bob mentioned.
We are taking whatever steps, we can to protect the supply of our products and this is something that that we manage.
More than you know more than daily we have teams of people that are working with our strategic supply network confirming peos confirming shipments confirming what goes into the system. It is a it is a.
A robust activity, we haven't place to try to protect our supply.
And one other item on the working capital Andy is.
As a result have been both take last acquisition the acquisition of virus say.
Relative to a year ago, those working capital of those entities were not in the comparative balances.
Sure. Okay. Okay. Thank you very much and keepsakes.
Thank you too.
And we'll move on to our next question from Steve Byrne from Keybanc capital.
Hey, good morning, guys. It's a 10 Newman on for Steve Hope you guys are healthy and happy.
Thank you Ken.
Yep.
Hey, Thanks for the commentary on April trends on the prior questions but.
I didn't want to circle back to aerospace.
You know I'm, just trying to get a better sense as a potential magnitude.
For aerospace impacts.
So even though that.
Bone facilities has started to open back up so maybe just any color on the conversations around build rates or the phase demand.
Over the next few months and been having with your customers.
[noise] well that the the.
Build rates were anticipating or not different than what you're seeing publicly as well and you know that they're lower than originally envisioned even as various sites come online.
So our.
As I mentioned the.
Probably the the challenge for us.
Given the nature of where we're situated in the supply network and the complexity to that supply network, which goes direct goes to tier ones goes to the distributors.
That's a little bit little bit like a spring we're attention. This spring can elongate compressed.
On one end and you don't really feel the effect for little while so we do anticipate that.
That is either as some of our customer facilities come back online elbit. It at ultimately customer facilities come back on line LP at it.
Lower rates of production that Theres still will be when it comes to our products and four companies Similarly, situated as ours.
Volume metric impacts until things get imbalance again.
And I don't know as I sit here today I don't we don't know what the ultimate demand will be.
And we don't know the length.
Jack duration of how long it will take to bring things and balance and that's just a function of the aerospace supply network. It's not just in time type of market.
Right I completely understand that.
It kind of lead into minutes question, which is I guess, a still a difficult topic given all the demand uncertainty right now, but you know obviously with all the moving parts and re segmenting and Aero and specialty I know you, making investments into some capacity for north American facilities and.
Did you mention some investments so capacity.
Within packaging.
He's going to give us a framework at a higher sneaking about the operating leverage or what operating leverage is done through April just wanted to make sure that we kind of getting right size of.
Framework in terms of what margins to really look like with the volumes kind of being in flux here.
I would say that again, that's at the challenging question, depending on which segment of the business we're in.
Oh, we have a bit more clarity with packaging, obviously because demand levels are higher but again the demand levels. There are mixed by the different types of products and what facilities there manufactured and so.
Yeah and from an operating leverage standpoint, I think it's being impacted currently by the production inefficiencies we see.
Due to you know whether it's a S&P has scheduling you know disruptions with customers are suppliers. So.
It is it's really hard to.
Specify what that would be it and then I think in our other two major businesses.
Well spacing and Norris cylinder.
Because we're in the early phases of how the man. This is declining it's hard to know exactly where that well will bottom out and accordingly, alphaville flex cost structures to two to align accordingly, so I'd I'd say, that's a long way of saying it's probably.
Too soon to tell and those two segments.
Yeah, I understand I'm always worth asking the question, even though I know, it's a it's really difficult at this point.
One more for need.
In terms of the packaging you called out the the margin.
Headwind between mix and some of the inefficiencies.
Anyway that you could kind of quantify what was more mix versus what the margin headwind was from those.
Operational efficiencies.
[noise] really isn't a way to do that effectively I would say in in terms of mix.
You know the acquisitions uptake class did.
Contribute to a portion of that that mark margin decline.
That's something that of course, we anticipated at the time.
Add beyond that I would say you know maybe one third two thirds in terms of mix for are up inefficiencies versus next round numbers.
Oh, that's very helpful. Thank you.
And once again, ladies and gentlemen, if she'd like to ask a question Chang. Please press Star then one.
And it appears we have no further questions I spoke to sound, we have a follow up questions I'm steep part at Keybanc.
Hey, guys. Thanks for taking my my follow on here I'm. Just curious do you have a capex target for 2020, I know that you're expecting to reduce it for the year.
Well, we had a capex target, but as Bob mentioned were certainly going to flex some of that as we.
Look it at some of the actions, we want to take and see lower volume in our business, but that being said, we're certainly going to stay with our cadence to add capacity in North America, there's actually even within the aerospace segment. Some steps, we're taking where we have a facility that that justice.
Too small for us and we have to relocate to another facility and actually will take a period like this and will accelerate that type of relocation, which otherwise would have been you know oddly enough very difficult to do in high volume environment. So.
So we will take advantage of this period of time, where volume is a little bit offer will be off and we'll take some strategic footprint manufacturing steps to position us for an eight a. up a rebound a that that will gain us operating leverage on the on the other side.
Right.
So total subsequent to year to your specific question I Didnt I Didnt answer that on the target I think we originally guided around 4.5% I.
I think it's probably closer to three three and a half and we'll take 100 gets out easily.
And we'll sort of be in that range.
That's helpful.
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Last one on packaging or do you just remind us how much of packaging sales are to those health beauty and home care products that are.
Seen some increases due to the pandemic and now I'm just curious about your thoughts about how you view maybe you. This as a potential just a pull forward and demand that maybe gets more offset once some of these pandemic issue subside.
Yeah it.
So it's a good question. It's one that we talk about internally that we have it's it's a it's not an insignificant amount we look at just our beauty and personal care products and if we throw a what I'll call pharma nutraceutical in with debt and home care home care in with that so if you look at beauty and personal care.
Pharmaceutical or health whatever you want to poet in home care starts to approach nearly 50% of our sales is just under shy side of that so it's a it's a major part of our business and.
It is I consider what I'll call a a a shift in secular trend of a secular trend emerging from the I just think people it doesn't matter if you're in the developed country or in an underdeveloped countries.
Your your.
People are going to wash their hands more they're going to consume more so products that then leads to the need for more lotions, because now your hands or dryer I think all of us or are getting a knuckles that are driving washing your hands 20 times a day. So those are all products that we supply I don't think that.
That is something that although there was a blip that occurred during this particular crisis. There was also an inability to get those products to consumers. So there's still the they're still in my opinion is a demand out there that you know not yet satisfied. Moreover, I think as you talk to the larger CPG companies.
They are preparing for a long term trend in this area as well at least that's what they're asking us to prepare for in addition to that I think when it comes to home cleaning when it comes to industrial cleaning I believe people will be taking paying more attention to that these are not trends that are just related to.
The first and second quarter related to corporate banking I do believe.
The World has changed forever and the attention to these things have changed forever. We're suited particular, we're positioned particularly well for those trends today and we'll continue invest those products that we can beat our customers demands.
No. That's a good points and I guess is a fall into that I mean, do you think about what new normal could look like after the the pandemic kind of passes.
How much visibility do you have into channel inventories and know how do you kind of think about balancing inventories versus potential over supply for some of these products.
Granted maybe there isn't a structural permanent increase in demand for some of these.
For for much of trying to get this business of packaging and aerospace that's a very challenging question for us to to get it.
I I would say with in the packaging segment.
It does not feel to us yet like there's a ton of oversupply.
Based on the order intake in demand levels were saying if there is if there's an oversupply I'm not sure quite where it is ours is going you're looking at product on the commercial right right right.
Yes that makes that makes sense I I guess, we're always kind of thinking about who stockpiling and then.
The the need to rebuy for a few months.
Yeah, I mean, the the customers that that we predominantly sell to in this space, our larger CPG type customers and I, just think that they're selling what they can what they are what they're taking from us filling assembling putting into a beautiful.
Oh package, it's getting on the shelf is going on E commerce, and that's getting out to the customer.
Got it. Thanks, Thanks again for all the color.
Thank you.
Oh.
[noise] and as a final reminder, that is star one if you like to ask a question today.
Yeah.
And it appears we have no further questions I would like to turn the conference back over to our speakers for any concluding remarks.
So thank you for joining us on our earnings call and we look forward to update you again next quarter. Please everybody stay safe and healthy we'll talk to you soon thank you.
And once again, ladies and gentlemen that does conclude today's conference. We appreciate your participation today.
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