Q1 2020 Earnings Call
[music].
Ladies and gentlemen, thank you for standing by welcome to the Teledyne first quarter earnings Conference call at this time all.
Participants are in a listen only mode. Later, we will conduct a question and answer session instructions will be given at that time, if he should require assistance during the call. Please press Star then zero I would as a reminder, this conference is being recorded I would now like to turn the conference over to your host Jason Vanwees. Please go ahead.
Thank you very much grade.
Good morning, everyone as Jason Vanwees Executive Vice President and I'd like to welcome everyone to organize first quarter Twentytwenty earnings release Conference call. We released our earnings earlier this morning before the market open.
Joining me today are teledyne's executive Chairman, Robert Moravian, President and CEO Al Pichelli Senior Vice.
President and CFO, assuming and senior Vice President General Counsel, Chief compliance Officer in Secretary, Melanie sort of it.
After remarks by Robert.
And Sue will last for your questions. However, before we get started our attorneys have reminded me to tell you that all forward looking statements made this morning are subject to various assumptions resscan.
Yes.
Noted in the earnings release, and our periodic SEC filings.
And of course actual remotes results may differ materially.
In order to avoid potential selective disclosure this call simultaneously being webcast and a replay bolt via webcast and Ireland will be available for approximately one month.
It was Robert.
Thank you Jason Good morning, everyone and thank you for joining joining guard earnings call.
Before discussing guard results and no I want to talk very very funny about our people. Our response to his call that 19, and our business portfolio as or more.
Our first priority remains to health and safety, our party employees and their families.
Employees use tasks can be done outside have been instructive to work from home and currency.
40% of our total person now are working remotely.
Our corporate offices as being added remains open and all of our 17 manufacturing sites worldwide, our operational but we are maintaining social dispensing enhance cleaning protocols and usage on the person on protest do that.
Let's move on where appropriate.
Our businesses can remain open because they serve critical infrastructure sectors, such as the defense industrial base watered out wastewater healthcare and property count.
Teledyne's business portfolio also remains.
Additionally, well balanced across end markets and geographies.
Mission.
Approximately one half of our businesses are longer cycle more predictable and supported by a record ending.
Quarter ending backlog.
Looking back.
Back to the first quarter.
We did not suffer any widespread reduction in customer demand impact orders exceeded sales in each month, including large at quarter end backlog was a record both at approximately 1.8 billion.
Likewise, we did not incur any significant negative impact to our supply chain.
Nevertheless.
There were some first quarter operational challenges in manufacturing and shipping products due to our policy of maintaining the appropriate employee density.
The work less balancing employee absenteeism.
And the availability of our customers to accept product.
These operational and HR matters, along with some demand and supply chain issues likely reduced our first quarter revenue by approximately.
$18 million Nevertheless.
Organic sales growth was positive and overall first quarter revenue increased 5.2% from last year.
GAAP earnings increased 7.4% and despite $10.4 million.
As a pretax charges GAAP operating margin are selling trees.
Finally.
Revenue earnings and operating margin.
Third records or any first quarter period.
Now looking forward.
To the second quarter and a full year.
The operational challenges in content into first quarter remain.
However, there is no uncertainty regarding customer demand in the 50% of teledyne's businesses that are shorter cycle, and generally tied to corporate capital expenditures and the global economy.
On the has a hole in addition.
Some end market such as commercial aviation.
Also just 6% of sales in the first quarter will be impacted.
Beyond the next few quarters and 2020.
While many other industrial companies.
Have withdrawn Twoq 2020 earnings guidance.
Our total company has had relatively.
And I emphasize relatively high NGL predictably credit visibility.
Stability Nevertheless.
In the current environment.
We are trying.
The prudent to both large and widen our prior expectations for revenue and earnings that we provided on January 22nd 2020.
Our current outlook is based on the following assumptions.
First.
At the lower end.
Our earnings range in the second quarter, we've assumed overall revenue contraction of approximately 6%.
As well as year over year declines in each up close to three and quarter to quarter, although moderating by year end.
This would result.
Ill.
Overall.
Full year over year revenue decline of approximately 2%.
Second.
At the high end up our earnings range in the second quarter, we've assumed overall revenue contraction of approximately 4%.
More.
This contraction in Q3.
About flat year over year sales in Q4.
This would result in roughly flat year over year.
Overall sales.
And by segment.
For instrumentation, which is our short this cycle business group.
We expect on overall revenue change in the second quarter, ranging from negative 5% to flat.
At the midpoint of our locations, we expect full year segments sales to be flat, including incremental sales contribution up about 60 million.
And dollars from gas on flame and Oak Creek OEP gate acquisitions.
We expect digital imaging to be more resilient.
As nearly half of this segment's serves defense space healthcare unscientific markets.
This segment.
Also has greater exposure to now quote back at work unquote customers in Asia.
Plus.
Given the weaker 2019 indoors digital imaging businesses, serving semiconductor inspection and factory automation.
We have an easier comparison.
In 2020, hence, we expect to achieve positive, albeit low single digit.
Segment full year sales growth.
In the other two segments that is aerospace and defense electronics and engineering systems.
We continued.
Just to see our defense businesses in this segment growing at mid single digits rates, perhaps even high single digits.
Despite the ongoing operations related challenges mentioned previously.
Hollywood.
We are forecasting at collapse.
In commercial aviation in the aerospace portion of our aerospace and defense electronic segment.
While less than 6% of our total sales in the first quarter.
We are expecting at 40% plus year over year declining commercial aviation due to both.
Significant.
Our transport or EM and aftermarket declines.
As a result, we expect total year over year segment sales decreased approximately $90 million.
Before turning to allow to report on the first quarter performance.
Once by segment I want to emphasize the following.
We do not know the depth.
And duration.
Of the economic to decline or the pace of the recovery.
But as we have repeatedly shown in the past.
We know how to be disciplined.
Performed well in challenging environments.
We are aggressively managing variable costs, capex and cash flow and quickly permanently reducing costs, where prolonged down cycle is anticipated such as in aviation.
Yes.
Finally.
Our balance sheet is exceptionally strong with over 230 million of cash and cash equivalents, a more than 600 million available under our credit facility maturing in 2024.
Given.
Our ample liquidity.
And the resilience of our business portfolio, we continue to review and pursue acquisition opportunities.
I will now comment on the performance of our flow business segment, followed by soon main who will give further financial details.
Yes.
And present our outlook.
Thank you Robert.
Instrumentation segment overall first quarter sales increased 11.2% from last year.
Sales of marine instrumentation increased 3.9% organically in the quarter.
Backlog.
Changes to the goal and I was asked the highest levels through early 2015.
In addition, operating profit improved significantly.
As a reminder, long marine includes products sold in the energy industry. We expect this market to directly accounted for just over one third.
Third of total marine sales in 2020, or approximately 150 million an annual revenue compared to almost 400 million in 2014.
In the environmental domain sales increased 26.5% as a result, our acquisition.
To gas and claim detection business.
In addition, we received we achieved organic sales growth of certain laboratory instrumentation products, but this was offset by lower sales other industrial instruments.
Sales of electronic test and measurement systems increased two.
0.5% due to the acquisition of both gate.
Nevertheless, organic sales were flat given continued strong demand for our protocol test and instrumentation.
Overall instrumentation segment operating profit increased to 27.3.
Back into first quarter.
And margin increased 226 basis points with margins, increasing for test and measurement and marine instrumentation.
Excluding the gas and flame detection acquisition and related purchase accounting margin was flat for environmental.
Limitation.
Turning to digital imaging segment.
First quarter sales increased 6.2% and included higher sales as infrastructure and per rep sectors for defense applications, Mems products and X Ray detectors for life Sciences.
Sales along machine vision products collectively decreased slightly, but nevertheless, stabilized with improved orders and sales for advanced inspection camera systems.
GAAP segment operating profit increased 19.7%.
And margin increased 201 basis points generally as a result of increased sales volume.
In the aerospace and defense Electronics segment first quarter sales decreased 6.2%.
As positive 9% growth in sales of defensive.
Electronics was more than offset by a 35% decline and sales of commercial aerospace products.
GAAP segment operating margin decreased due to lower aerospace sales.
But also 525 basis points of charges for severance.
Facility consolidations and certain contract cost adjustments.
And the engineering system segment first quarter revenue increased 7.6% with greater sales related to marine space and nuclear programs as well as.
Tronic manufacturing and turbine engines.
Partially offset by lower sales for missile defense programs.
Segment operating profit increased 468 basis points, largely due to higher sales and greater mix of our higher margin.
Manufacturing programs.
We'll now turn the call to Sue who will offer some additional commentary regarding to first quarter and our 2020 outlook.
Thank you and good morning, everyone I'll first discuss some additional financials for the quarter not covered by rather going out and then I will discuss our second quarter and full year.
2020 outlet.
In the first quarter cash flow from operating activities like $76.5 million compared with cash flow of $80.1 million for the same period of 2009 tool.
Cash provided by operating activities in the first quarter 2020 reflected the timing of accounts receivable.
Ken partially offset by the impact of higher operating income lower income tax payments and incremental cash flow from recent acquisitions.
Free cash flow better cash from operating activities less capital expenditure, Hey, let's $56.2 million in the first quarter of 2020.
Compared with 58.8 neural Dolly in 2009 full.
Capital expenditures were $20.2 million into first quarter compared to $21.3 million, but the same paid at 2009 coal.
Appreciation and amortization expense were $29.3 million in the first quarter.
Thank you $27.6 million for the same period of 2009 pull.
We ended the quarter with $618.3 million net net debt that is $849.7 million of debt less cash of $231.4 million for a net debt to.
Capital ratio of 18.3%.
Stock option compensation expense was $7.4 million during the first quarter 2020, compared with $8.9 million into first quarter of 2000 level.
Turning to our outlook.
Management currently believe said GAAP earnings per share in the second quarter.
2020 will be in the range of $1.90 cents to $2.05 per share.
And for the full year 2020, our GAAP earnings per share outlet at $9.30 to $10.
The 2020 full year estimated tax rate, excluding discrete items is expected to.
22.8%, a 220 basis point increase compared to full year 2009 pool due impart to less R&D tax credits.
In addition, we currently expect significantly less discrete tax items in 2020 compared with 2018.
Please note that the.
We estimate for second quarter, and full year 2020, GAAP diluted earnings per share exclude any future potential charge related to as excellently satellite I'll now pass the call back to website.
Thank you assume.
Greg.
If you are ready to proceeds.
Good question and answers. Please go ahead. Thank you, ladies and gentlemen, if you'd like to ask a question. Please press one than zero on your telephone keypad. You me withdraw your question at any time by repeating the one zero command, if you're using a speakerphone. Please pick up the handset before passing the numbers. Once again, if you have a question. Please press one then zero at this.
Time than one moment please.
Your first question comes from the line of Greg Conrad. Please go ahead.
Good morning.
Just wanted to start with something that's maybe a little more topical I think there was a release out of Dol side.
Last week on thermal.
Cameras for non contact fever screening.
How big is an opportunity is that and what type of interest are you getting just kind of what's going on in the world.
First Greg Good morning to you also the the cameras are.
Our long way of lending for.
Camrose there.
Made with our own sensors that are produced.
On a wafer level packaging there.
640 by for a deep.
17 micron.
Pixel size.
And we're just beginning.
In fact tuning of those cameras as we announced.
We.
Our getting interest from a large number of manufacturers.
And.
Well, it's Steve speculative aware positively.
I wanted to increase production of those cameras as to how big an opportunity these too early to tell.
Thanks, and then I mean, you kind of talked about.
The size of the oil and gas market within marine, but given oil price fluctuations and capex.
And on the part of customers I mean have you seen any change to expectations or push out of shipments in that market.
Not yet the short answer is not yet.
But I have to put that in perspectives.
The marine businesses today.
Our.
Really.
And we expect in the midpoint to be over 400020 $5 million only a 150 of that or 35% inbound.
Is in offshore oil exploration offshore oil production very little.
On land or so.
Mark So most of our marine businesses, the others see 65% is in defense construction and other areas.
Going back to the oil and gas we do have good good orders so far.
For the year, it's over long its.
1.1.
And we don't see any cancellations, yet having said that.
13, the oil production in the oil exploration, we're seeing a little better softening.
Both waste in our grow.
Orders and considering the price of crude on what's happened to grant we think that.
We expect to have some.
Softening later in the year, so we're taking that into consideration.
In our guidance, but the good part these.
There is a good part to the for us.
We're since 2014 when oil collapsed in 15, and 16 is that at that time.
The majority of our marine sales were in oil and gas today totaling 35%.
Thanks, Glenn just.
Last one for me can you update us on expertise expectations for margins for the year and given your report on a GAAP basis and had some restructuring Q1 do you have any other restructuring contemplated in the guidance for the rest of the year.
Yes.
Let me, let me start to move from the ladder.
Product ocular drought question, which is do I expect more restructuring.
In the first quarters.
We had about 21 cents self restructuring.
When we were doing a little cost take outs right now in the second quarter and we.
That.
If things don't change get worse, we'll have to take some more out we think that overall.
Over the years, including first quarter.
Ken and range between 40, and 50 cents 40 cents on the shows on the lower.
Right.
The margin effect is very.
Interesting.
We are margins.
On the midpoint damages will always worked with the midpoint of our guidance which would.
Greg would be about.
Ninesixty five.
In earnings as and about.
Creative on for role in revenue.
With that.
With those numbers I think instruments margin in the instruments segment should increase slightly maybe as much as 15 basis.
Points.
Digital imaging year over year, we believe margins can go as high as 90 basis points above last year.
Indeed, aerospace and defense.
Have a different issue defense is gonna do okay.
But aerospace is going to.
Down significantly and Thats, one of our highest margin.
Businesses. So we think margins over year over year would go down as much has 700 basis points.
Engineered systems will go up.
Probably 75 to 80 basis points, so overall segments will.
So down because of aerospace primarily a little over 100 basis points and maybe a 110 10, well we have cost control in the corporate.
Domain. So overall in the midpoint, we think margins can go down as much as 80 basis points.
But that.
Of course is preliminary data on everything that we node right now.
Thank you.
Thanks, Greg.
Your next question comes from the line of Jim Ricchiuti. Please go ahead.
Hi, Thank you.
Good morning, and thanks for the detailed outlook.
I'm not I'm not sure there are many companies in a position to offer that in this environment.
Question I had a Robert was.
Regarding the defense business.
There have been at least we're seeing more reports of supply chain disruptions in the defense market and I guess where water is.
Is there any.
Potential risks as you look at that business in the second half way there that could be an issue for you or even the broader government business normally have a pretty good line of sight there.
Yes.
There are we're seeing a little disruption right now, especially.
In.
Our drought printed circuit board.
Specialized printed circuit board supply chain.
[music].
The flipside outfit is while we have hiccups, we had a very strong procurement initiative underway that started.
Two years ago actually.
To reduce procurement costs and they're shifting that emphasis to working with our suppliers to ensure that we do have a reasonable supply chain hiccups, yes, I expect that we'll have more so far nothing very serious.
What's a little traveling on the defense side is the availability of some of our customers which will improve.
[music].
Product.
That weird.
Delivering to them for example, just a simple example in our.
Shadow.
Water combat Submersibles, which are the boats, we made for the special ops.
We have the boat.
Ready to test, but because of the restrictions called covert restrictions are diverse and the government divers can't test them.
So they can take delivery completely how we're not getting paid completely so that those kinds of things happening all over but you know.
And going back to something I said, Jim earlier.
We know how to deal with these issues we've done it before we did it in 2015.
16, when oil coal as we did in 2008 and 2009 when the financial crisis. So are we taking this into consideration we don't guide.
Got it and thanks the.
Question on the industrial machine vision business.
You talk about stability it sounds.
Like you've seen some.
Pickup maybe on the semi side I'm. Just wondering is this is.
Is this more of a case easier comparisons or is there some improvement that you're seeing in some of these markets, including the factory automation, which seems a little surprising but just curious.
Is that that.
Yes, let me start with the first part which is.
Last year.
We had.
Good morning Windows.
Cases that.
Bouquets, usually we said things like you know, we have a tough comps or with prior years last year.
Semiconductor and factory automation and routing general relatively weak so our comps this year against last year are better.
Let me start.
We think.
Machine vision this mission vision systems part of our.
Overall.
Digital imaging.
Should be flat this year within going all digital imaging will increase.
But I think the vision system will be flat then there's some good good gives and takes our flat panel display orders are pretty good.
All right now.
Our scientific cameras are doing well.
Semi is catching up we do have some incremental sales from acquisitions that we made the side came from Roper and micro line.
In Canada, which makes Mems products.
So.
I think some of the other stuff is gonna do when our aerospace and defense businesses in machine vision are doing well and we expect expect them to continue so overall I'm going to say.
The semi and.
Did you automation, we're lucky because last year, we had said.
Weeks revenues so the comps.
Easier the others Mizuno King.
Okay. Thanks very much.
You bet.
Your next question comes from the line of Joe Giordano. Please go ahead.
Hey, good morning, guys.
Morning job.
So rubber for businesses.
It was like commercial aerospace and energy, which are like more.
Obviously much more challenge now.
You're taking actions.
There seems to be kind of debate or confusion.
Around when these things actually bottom so like our these markets now given what's happening in the time it takes to kind of flow through our these markets that are likely.
Worsened 21 than they are in 20 or is this something that how do you have you characterize the likelihood of recovery in these markets over the next 12 to 24 months.
Let me start with energy.
First if I may as I mentioned before on the oil and gas part of our business.
It's about a $150 million and thats less than 5% off our revenues today.
In does market the products that we make lag the overall market that is.
Our orders presently are good and will continue for.
For the next two quarters, where we can kill softening Q4, so while I love. The primes are softening today I think up are suffering with competitive delay days at the same happens with the recovery if the recovery income, which would obviously depend on so overall economy.
We will lagging the recovery, having said all of that.
In the overall marine businesses, which we kind of look I didn't solar energy businesses, we have really strong programs in the defense area, both vehicles and other areas.
Like mine countermeasures et cetera, So we see some downside for us.
Recovery as to when either bottom I don't know, but I think recovery for us will come later.
And we will suffer the consequences of the current downturn.
Perhaps later in the year going to commercial aerospace I can't get Seabright nights again, we're lucky it's 6% of our sales we have a 90 million dollar decline that we project Inc. from last year through this year from about 200.
Than 11 to understand 20 or so.
And again, we also there also.
Lag the market.
After 911 in 2001.
In addition didn't really recover until 2003, so that was a two year hiatus.
And we saw offers that consequences of that.
So if you if that said indication of how long it probably before things button.
Start turning.
Turning up you'd be another two years before we see a recovery and frankly, that's the way we're treating these businesses.
Weve, taking cost out the Joe permanently.
Very we've taken almost 20% off our folks are in that business a plus the other.
People are on furlough and another thing so the long on cities.
The recoveries in both segments, the aerospace should be longer.
Timeframe than energy in my view.
We want software much from the energy we are taking it from the aviation.
No that's clear and it's very helpful.
On the free cash flow side can you talk about your expectations for the year I mean, let's let's not forget strip out the potential for Oneweb breakdowns and things like that but just a outside of that how do you were looking at your working capital performance outlook for the year I. When you think about a conversion.
Well you guys be able to.
Kind of accelerate cash, bringing cash in as you kind of liquidate backlog and things like that this year.
Let me start by saying because of our obviously, we're lowering our earnings right now.
So our free cash should be a little lower than last year.
Here, we had about.
$400 million, we think this year to be about 375, maybe even a little less now having said that.
We are taking very strong action now.
To reduce our inventories across our businesses.
Our successful we see will depend on how well we execute if we do all the things that weve laid off out to do we my teeth last few street free cash Norbert.
The other thing that happened is if you look out 2009.
Versus 2008.
In 2000 acre free cash flow was fairly no. It was like a 110 $11 million.
In 2009, when we came out upbeat.
Our free cash flow through almost doubled to $190 million. The same thing happened in the 15 16.
In timeframe free cash flow went from 110 60 million in 2015 to 250 million in 2016. So the answer is dish.
I think we'll do okay. This year, if we execute we'll we'll hear on 375, maybe a little better.
But if history is a lesson will come out at this much stronger next year because of our ability to the disciplined our capex is going to be lower this year than last year.
Let's kind of controlling that almost project by project justification.
I think we should be all right and we do have cash in the bank.
And maybe last from me can you just touched a little bit more on what you're seeing out of China for their respective businesses like test and measurement and some of the environmental businesses there.
Okay on.
Let me if I may Jody.
Skis, but I think in the.
Machine vision business, thanks, very much better.
Because of this back to work quote unquote.
Framework.
We also in that in the mission is but but being machine vision healthcare products.
We are doing okay. There.
Were in that test and measurement.
We are lagging a little bit on the other hand, our protocol in our test and measurement businesses at two two legs to a point of it as a similar SGOCO unaffiliated.
Systems for job looking at the.
Electronics.
Hardware as the other part the protocol returns the standards by which.
The in digital imaging systems communicate.
That area, we are doing really well.
Well, both here and in China and.
So I think our PNM test and measurement, while we expected to be.
Essentially flat this year, it's probably going to be a little down because of.
But we do have acquisition there so you might be done three or 4%, but China is not our problem. Our problem is really right NYSE Europe and North America.
Moving to environmental that's a different story.
We're seeing some compression there in China two reasons one.
We make a lot of a product that.
Growing air quality monitoring and measurements of air quality continuous monitoring as well as measurement.
And we see weakness is there the second thing, which is a little even more troubling is.
Chinese government emphasis that Chinese companies by Chinese made product.
That's not as much discussed in the United States.
We've had initiatives like by America initiatives true previously, but there's a strong.
Emphasis there to do that and frankly, I don't mind assembling products there.
I don't want to manufactured products there because of other issues. So we're seeing some compression there.
And.
That's a little worrisome, but we do our new products and.
Welcome.
Compete with everybody in.
We get our share of the market in that business.
Thanks, guys.
Sure.
Your next question comes from the line of Andrew Buscaglia. Please go ahead.
Hey, guys. Thanks for taking my question.
Of course, Andrew.
Can you can you dig into the thermal sensor for the skin application.
Skin temperature monitoring.
And that yeah, again gotten or do you guys talk about this much before so can you remind us where are you fall in the spectrum of your capabilities for that.
Is that a handheld.
Scanner is that something that good.
Scan crowds.
Yeah, just maybe a little more detailed on that and then secondly, how fast do you think you can ramp production given all the other supply chain issues.
Yeah, Let me start with the latter part of the question Andrew refund may as I mentioned unlike.
The other companies that are making such devices.
We make the sensors ourselves in our.
Mems foundry in Canada in Bromont.
And we make it on the labor wafer level packaging scale, so we aren't.
Our own supply chain. So that's the good part.
The cameras are called caliber.
And we've been making various versions of the caliber conroe for about a year or longer.
The ones that we're talking about our handheld there our newest product.
Ted just being manufactured.
I I cannot tell you how fast we can grow that but obviously, we're going to do that our best to increase production as fast as we can our cameras are also.
Lastly, the sensors that we use that we make our vanadium based vanadium oxide based sensors.
Really nice sensors 17 micron pixels.
Whereas a lot of the other products around the world are made from amorphous silicon and so we can quickly.
We have a niche there.
Yeah, I know I know, there's some other companies that I've had a really.
Turn off publicity because of this domain I don't know whether this is kind of move the needle in a $3.2 billion revenue company.
Okay.
Got it.
Okay.
And can you.
Hello.
Yes can you hear me.
Yes.
Okay.
You talked about the potential photonics acquisition, yes, the rationale behind it and then where you sit set with the.
And ministry and getting that approved.
Yes, let me start with the rationale.
That's it that's easy right.
Photonics, primarily makes night vision.
Products for the war fighters and they do it for.
Almost the rest of the world that.
Just to have an eye to our free product.
Whereas our two companies in this country to have lighter restrictions the second part of that business.
Related again is in life Sciences, Batavia, 80% of their businesses.
In defense.
Now what what they do have is said very nice product.
Nice processes, but what they have lacked because theyve been supportive.
In by private equity what their contact is the ability to.
Significantly invest or acquire digital imaging companies that would complement it almost everything we do in our digital imaging is complimentary to what they had including the infrared sensors I just mentioned so we think we will.
Digitization is obviously the future, though that domain as well so we think we make some significant.
<unk> so that product.
Yeah.
<unk>.
Unfortunately.
On March 31st.
We <unk>, we were department be notified the foreign investment healthy so France.
That they were going to have a negative opinion.
By the minister of economy.
I shouldn't be saying, there's going to vetoed the transaction.
Everything's gone quite since then.
There are some indications that the minister of economy, maybe reconsidering, we don't know.
Ultimately.
One or two scenarios can develop.
They were removed from the from about veto.
We have to have at eight and a response from them because our agreement with the people were buying it from you search that.
Everything is in escrow until.
A final decisions being made so what once we get it would be kind of agreements wouldn't be one of the following he doesn't have rejected which is the same as their verbal or.
They'll come back in M.G.
Two a transaction, but put certain conditions on it now.
We already used to certain conditions, because we bought two businesses in France or have operations in France, firstly to v.
Which was about seven years ago or last year, we bought a gas on playing detection business from <unk> in both of those cases, there were certain conditions in terms of because they were supplying product the French government et cetera.
How long we kept the businesses et cetera, and we agreed to those conditions because frankly there were also in our best interests. So we haven't really good relationship with the ministry of economy, and he's offices in that relation in that domain that we have a good track record with them.
So if the conditions are not owners.
They could be owners, then we could live with it on the other hand, if the conditions are onerous that would damage our ability to run the company.
And we won't be able to complete the transaction. So that's a long way of getting give the best answer I have and I, we expect to hear from them.
I don't know it could be shortly already could be a couple of months.
Okay, great. Thank you.
Huh.
If there are any additional questions. Please press one zero.
[noise] [noise], Okay right. There are no further questions. Thank you and.
If I may I'll ask J. seminars to conclude our conference call.
Great. Thank you Robert and again, thanks, everyone for joining us. This morning, if any follow up questions mine numbers on the earnings released please feel free to call me and of course, all our news releases and.
I guess, you see filings or on on the web and available so.
And Greg if you can skip the replay information to the audience, we'd appreciate it and we shall sign off now but I.
Thank you ladies and gentlemen, this conference will be available for replay after 10 A.M. Pacific time today through May 22nd you may access T.A.T. and T. executive replay system at anytime by dialing 186, 620 710 form one in entering the access code nine 5049 to five.
Five.
Numbers. Once again are 186 620 710 for one with the access code nine 5049 to five that does conclude your conference for today. Thank you for your participation in for using A.T.N.T. teleconference. You may now disconnect.
[laughter].