Q1 2020 Earnings Call

Good day and welcome to the Ultralife Corporation fourth quarter 2020 earnings release Conference call. As a reminder, today's call is being recorded at this time for opening remarks in introductions I like to turn the call. We'll let you Miss Jody Burfening. Please go ahead.

Thank you clean and good morning, everyone and thank you for joining US. This morning for Ultralife corporations earnings conference call for the first quarter fiscal 2020.

On today's call, Unlike populates, Ultralifes, President and CEO, and Phil Fain, Ultralifes Chief Financial Officer.

The earnings press release issued earlier. This morning anyone has not yet received a copy I invite you to visit the company's website www Ultralifes core dot com, where you'll find the release under the Investor Relations.

Under Investor Relations news any Investor Relations section.

Turning the call over to management I would like to remind everyone that some statements made during this conference call contain forward looking statements based on current expectations actual results could differ materially from those projected as a result at various risks and uncertainties. These include potential reduction in revenue from key customers uncertain global economic conditions.

An acceptance of new products on a global basis.

Company cautions investors not to place undue reliance on forward looking statements, which reflects the company's analysis only as of today's date.

The company undertakes no obligation to publicly update forward looking statements to reflect subsequent events or circumstances.

Further information on these and other factors that could affect Ultralifes financial results is included in the company's filings with the Securities and Exchange Commission, including the latest annual reports on form 10-K and away. This quarterly reports on form 10-Q.

In addition countries call manageable refer to certain non-GAAP financial measures management considers to be useful metrics and differ from GAAP non-GAAP measures should be considered supplemental to corresponding GAAP figures.

With that I would now like to turn call over to Mike Good morning, Mike.

Good morning, Jody and thanks, everyone for joining the call.

Today I'll start by making some overall comments about our Q1 2020 operating performance, including the impact of Kobin 19, and then turn the call over to Phil will take you through the detailed financial results.

After Phyllis finished I'll provide an update on the progress against our 2020 revenue initiatives.

Then open up for questions.

Well the first quarter of 2020.

Total company revenue increased 37% year over year.

Driving leveraged operating profit top 171%.

And GAAP earnings per share up 151%, despite significant headwinds from the cobot 19, pandemic, which caused an extended shutdown of our China aberrations and other supply chain disruptions.

The teams delivered a Q1 organic revenue growth rate of 8% in the core business led by communication systems executing existing contracts under the U.S. armies network modernization initiatives.

Communication systems first quarter revenues were up 75% year over year.

And it would be any revenues were up 30% year over year with Beanies suite acquisition contribution more than offsetting the core revenue softness in China.

The increase in communication systems revenue and favorable mix.

Combined with the addition of a suite acquisition and overall company based cost operating leverage.

Resulted in the approximate two and a handful increase.

Operating profit in earnings per share year over year.

As we continue to monitor the evolving impact of a cobot 19 pandemic.

We are taking the necessary steps to safeguard the health and wellbeing of our employees in accordance with the protocols established by federal health organizations and state and local public health departments, while ensuring an uninterrupted flow of our mission critical products, serving our medical device first responder public seems.

The energy and National security customers.

Based on several state and federal government mandates.

Ultralife Corporation falls under the criteria being essential supplier its products and services.

That's has maintained normal work operations.

Across all its locations during the covert 19 emergency response.

In a few minutes I'll give you further information on a revenue initiatives, but first I'd like to ask talks like CFO, Phil thing to take you through additional details of the first quarter 2020 financial performance Phil.

Thank you, Mike and good morning, everyone.

Earlier. This morning, we released our first quarter results.

The quarter ended March 31st 2020.

We also filed or form 10-Q, one form 8-K with the FCC. This morning.

Update at our Investor presentation, which you can find in the Investor Relations section of our website.

I would like to thank all those that helped make this happen.

For the first quarter consolidated revenues totaled 25.8 million, representing a 6.9 million worth 36.7% increase over the 18.9 million reported for the first quarter of 29 chain.

Overall commercial sales increased 47.9%.

Hosted by southwest Electronic Energy Corporation or suite.

Which we acquired and they first 2019.

Government and defense sales increased 24.1%.

I'm favorable performance by our communication systems business.

Excluding the contribution from suite.

Sales grew 7.9%.

Revenues from our battery and energy products segment were 20.8 million.

An increase of 29.8% over last year.

Attributable to a 5.4 million revenue contribution from suite.

Which offset a point sixmillion reduction in our core commercial business.

And by the month long shutdown of our China facility and supply chain disruptions caused by cold It 19.

Including sleep.

I'll split between commercial and government and defense was 70 129.

Compared to 63 37 for the 2019 first quarter.

Yeah, the domestic to international split was 50 545.

Impair to 47 53 last year due primarily to higher domestic sales of medical and public safety batteries as well as the addition of suite.

Revenues from our communication systems segment were 5.1 million, an increase of 2.2 million or 75.2% over last year.

The increase primarily reflects shipments a beautiful amplifier adapter systems to support the U.S. armies network modernization initiatives announced in October 2018.

And shipments a vehicle amplifier Melanie.

When l. like country Prime defense contractor.

On a consolidated basis, the commercial to government and defense sales split.

50 743.

Versus 50 347 for the year earlier period, demonstrating the continued success of our revenue diversification strategy.

Our consolidated gross profit was 7.3 million compared to 5.1 million for the 2019 period.

As a percentage of total revenues.

Consolidated gross margin was 28.4% versus 26.9% for last years first quarter.

An increase of 150 basis points.

Gross profit for a battery and energy products business.

Trees, 20.5% 5.3 million.

4.4 million.

Gross margin was 25.6%.

A decrease of 200 basis points from 27.6% reported last year.

Due primarily to unabsorbed overhead costs associated with the February government mandated shutdown of our China facility.

For communication systems segment.

Gross profit was 2.0 million, an increase of 1.3 million or 200%.

Compared to point Sevenmillion for the year earlier period.

With the transition of vehicle amplifier adapter systems for the U.S. army into higher value in production.

And the costly reworks due to late cycle product changes now behind us and aided by favorable sales mix.

Gross margin grew to 39.9% compared to 23.4% last year.

Operating expenses totaled 5.8 million compared to 4.5 million last year.

An increase of 1.3 million or 29%.

The increase was attributable to the addition of 1.2 million related to the acquisition of suite.

In an 11.8% increasing core engineering and technology expenses.

For new product development and testing.

As a percentage of revenues operating expenses were 22.7 per cent compared to 24.0% for the year earlier period.

Improvement of 130 basis points.

Operating income for the first quarter of 2020 was 1.5 million compared to 8.5 million for the 2019 period.

Representing a 171% increase.

And operating margin was 5.7% for the 2020 period.

It is 2.9% last year, driven by the 150 basis points improvement in gross margin.

And 130 basis point leverage and operating expenses to sales.

Adjusted EBITDA defined as EBITDA, including non cash stock based compensation expense was 2.5 million.

Hi, or 9.8% of sales an increase of 109.5% over the 1.2 million or 6.4% for the first quarter of 2019.

On a trailing 12 month basis, adjusted EBITDA is 12.3 million or 10.8% of sales.

Our tax provision for the first quarter was 319000 compared to 41000 for the 2019 period computed it statutory rates.

Well, excluding our net operating losses and tax credit carry forwards for GAAP reporting purposes.

Accordingly, I reported tax provision for the first quarter is based on an effective rate of 22.9%.

While utilization of our deferred taxes will drive the tax provision down to 77004 or 5.5% when we pay our taxes.

We expect the net operating losses and tax credits included in our deferred tax assets will offset U.S. taxes for the foreseeable future.

Including the interest expense on debt into her to fund our 2019th we acquisition and using the 22.9% effective tax rate.

Net income was 1.1 million or seven cents per share on a diluted basis for the 2021st quarter.

This compares to net income point, fourmillion or three cents per share diluted basis for 2019th.

We utilize adjusted EPS to reflect actual cash taxes paid or to be paid.

And define adjusted EPS is GPS excluding the provision for non cash use tax is expected to be fully offset by our net operating loss carry forwards and other tax credits.

As noted in the supplementary table in our earnings release adjusted EPS on a diluted basis was eight cents per share for the 2021st quarter.

<unk> to three cents for the 2019 first quarter.

We estimate that cold at 19 adversely impacted net income by approximately $500000 or approximately three cents per diluted share for the quarter.

The company's liquidity remains solid.

With cash on hand of 6.1 billion working capital of 54.6 million in a current ratio of 3.9.

Subsequent to the quarter close we began to collect a larger U.S. defense related receivables, which will be used to invest in test equipment to meet the increased demand for our power supplies for ventilators respirators and infusion pumps.

And to reduce our debt related to this we acquisition.

We continue to carefully manage our liquidity to fund organic new product development strategic capital expenditures and M&A.

In summary, the actions, we're taking to drive profitable growth.

Sure ample liquidity remained our highest priorities.

As we navigate through these challenging times, we are well positioned to weather the storm.

While continuing to invest in growth initiatives and staying focused on releasing the full leverage potential for our business model.

I will now turn it back to Mike.

Thank you Phil.

As a reminder, our strategy is to drive revenue growth opportunities through diversification.

Expansion of markets in sales reach.

New product development, and strategic Capex and potential acquisitions.

Looking at the battery energy products business marketing sales reach expansion has been about diversifying more into the global commercial markets.

International Government defense markets to lessen our revenue fluctuation as result of Lumpiness in the U.S. government defense markets.

An example, just one year ago, we acquired southwest Electronic Energy Corporation, or suite, which serves the oil and gas exploration and production and subsea electrification markets.

For the recently completed Q1, its third complete quarter as part of the Ultralife portfolio. This we acquisition was once again EPS accretive.

And provided 26% of total beanie sales.

This compares to be in these other end markets, a medical which represented approximately 25% of total Q won't be any sales and U.S. government defense, which was about 27% a total Q1 being used sales.

These end markets share focus on mission critical niche applications competitive differentiation based on quality and reliability and long term high value proposition customer relationships.

We'd like to individual and market risk mitigation, the fairly equal weighting of overall sales Mitch mix each of these key markets brings.

In addition to the diversification play another key benefit of this we acquisition was that we obtained a highly valuable technical team a battery pack and charger system engineers and technicians to add to our new product iPhone based revenue growth initiatives in our commercial end markets.

As part of our integration plan, we launched a global engineering council to more fully leverage our worldwide technical or manufacturing capabilities.

Share best practices.

Common technical problems and accelerate customer responsiveness.

Now a current crisis cause catalyst like the cobot 19 pandemic has provided an opportunity to put this concept into action.

And we will execute a recently received 1.4 million dollar contract for a medical battery pack supporting your respirator Affrication under a short cycle turnaround and serving the cobot 19 response.

This contract is expected to ship throughout Q2.

Looking at Q1 2020.

Core business key medical device battery and charger shipments were made for a wide range of applications, including breeding devices infusion pumps digital X ray and surgical robots.

Also received new delivery orders for existing customer blanket and our multiyear agreements.

Which totaled over $5.2 million.

Continue to grow in Q2.

In response to the global Cobot 19 pandemic, we receive projected increases from several medical customers for applications such as ventilators.

Respirators.

Digital X ray and infusion pumps.

We have made immediate and accelerated capex investments to increase our test capability to respond to that added volume requirements and we'll continue to supports the best of our ability.

Expediting efforts of our customers.

Looking at other non medical commercial international government defense end markets. Some examples of specific transactions in Q1 2020 included $700000 in orders from an international oil and gas customer for custom primary batteries for logging while drilling applications.

$900000 in orders from another international oil and gas customer for custom primary batteries for directional drilling and measurement while drilling applications.

In a charger order from a global OEM Prime for an international Defense Force.

Lastly for Beanies U.S. government defense customers in Q1, 2020 revenue was flat year over year with a $4.9 million outstanding 50, 390 sparked by award originally expected to start shipment in Q1 now to deliver in Q2 in Q3 due to component supply chain disruptions.

Separately.

Final first article testing for the next Gen 50, 390 primary battery under a $21 million deal by deal a idea Q is scheduled for the beginning of May.

And for the 57 nine you battery under the $49 million de La Q at the beginning in June.

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I would be any new product development during the first quarter 2020 activity continued on numerous projects.

Including beginning shipments of our first public safety radio batteries with two additional public safety batteries and new product development going your production in Q2 in Q3.

Receiving a production purchase order for a new digital X Ray battery with production expected to begin in Q2.

Entering the final testing for a new military communications backup battery.

Completing validation of a new ventilator battery pack.

Receiving good customer feedback on Suisse drill data to gauge released in the fourth quarter 2019, and now into designing phase or use at five key customers.

And shipping preproduction samples.

But then sell product brand new medical vital signs monitoring applications.

Lastly regarding strategic Capex, we continue to attack on two fronts. The manufacturing introduction of new products that will serve the internet of things applications. The rapidly growing wireless devices market as well as next generation three will smoke alarms asset tracking devices and metering.

In our New York, New York USA facility low volume production is underway for the new premium three volt product.

In Q1, we continued design for manufacturing activities and adjusting items mentioned equipment to achieve more reliable higher volume production in preparation for ramp up activities in 2020.

This new product provides customers with world class product performance safety and a competitive price value proposition.

As well as the supply chain proximity of being made and USA.

Interest remains high for this news revolt product with Q1 in Q2 factory business by several large customers postponed due to the Coburn 19 situation that expected to be reschedule has recovered 19 restrictions are keys, and we implement appropriate protocols.

Separately in China, we have also a new locally manufactured lithium manganese dioxide three of also which is now shipping to global customers.

We continue to make progress on our Atlanta chloride sellers upgrade project in China evolving numerous process improvements, which will help us expand our total available market with newly identified commercial and industrial applications.

Also included our updates to our self formations and designs.

Shipment and facilities.

Our goal is to produce the highest value proposition best quality and safest products in whichever one of our global locations.

Our supply chain of a particular end market and or the OEM customer.

Regarding communication systems in Q1, 2020, new product development revenue from products less than or equal to three years old represent approximately 65% of com systems revenues.

MS included additional vehicle amplifier adapters.

Yes armies network monetization initiatives.

Vehicle amplifier mouse for an international customer.

US armies handheld mantech small form fit and leader radar programs continued operational test and evaluation with follow on contract opportunities anticipated later in 2020.

With regard to system integration of cutting edge server technology discussed during last earnings call.

Communication systems has developed three variance to support a broad range of operational requirements from small technical team support to full command center integration.

One example is the development this year of capability for dismounted operations, providing a high computing solutions set not previously available which could enable on the individual processing is our data for the most realtime response available.

We continue to be optimistic in this new growth area and OEM relationship as expected product demand increases throughout 2020.

Communication system engagements, we may join Prime contractors remained strong in support of new product development for integrated systems and amplifier platforms product support for field of products and.

New business development to meet emerging radio capabilities being feel the globally.

Our continued investment in resources includes skilled personnel bitumen.

Test equipment development.

Product support facility upgrades.

Affords us the flexibility and responsiveness to meet customer requirements.

As many companies are working through the issues of Cobot 19.

Medication systems has a few critical suppliers, which have limits that are closed operations for a short duration as preventative measures.

Our stocking levels do provide some GAAP insurance with a minimum impact current backlog.

We anticipate a quick resumption of normal operations as conditions improve.

Cannery covers and supply chain shortfalls are remedies.

In closing.

In Q1 2020.

First and foremost.

We're thankful for the continued safety of all of our global employees.

Who have experienced very limited personal health impact so far.

As a result of the cobot 19 virus.

This continues to be.

Our number one priority.

Review, we review it daily.

We're also grateful that our teams were able to stay focused despite the significant distraction.

Deliver solid single digit organic revenue growth.

Double digit overall revenue growth.

And triple digits operating profit EPS growth.

And at the end of Q1.

Total company backlog has increased by 18% since year end.

Without including any other presently untapped potential from $84 million of existing delay IDR cheers.

The Cobra 19 breakout continues to create new challenges and opportunities each day.

Obviously, there is a significant amount of uncertainty given the impact on the global economy.

Our specific end markets in the worldwide supply chain.

Whereas at this time it would be impossible to predict how this all plays out.

We will work to overcome any hurdles.

Continue to strive for another year of profitable growth in 2020.

Looking forward.

That being any we're seeing near term surge and medical revenue.

Due to the Cobot 19 response.

Which is helping offset the impact.

Oil price collapse on our oil and gas related business.

Well, we don't know.

Is how long the medical Serge will last.

Relative to the reduced oil price.

Throughout 2020, we're also expecting to see the impact of other new revenue streams coming online.

Such as from New public safety radio battery packs.

The new three volt product line, the new year product line and several other new sensor medical and subsea electrification applications battery packs.

Also activity levels overall from the various defense department contracting channels and global OEM primes remained steady.

At communication systems, we continue to complete shipments under our current US Army program and other existing contracts.

During several other new customer integrated system products and projects and pursuing follow on and New program Awards.

As a total company.

Our strong balance sheet.

Cash flow from operations and discipline adherence to our business model provide resiliency.

And afford us the opportunity to simultaneously pursue organic revenue growth through new product development.

Yes, and strategic Capex for competitive advantage and seek out bolt on acquisitions.

Operator. This concludes my prepared remarks, I'd be happy to open the call for questions.

Thank you, Sir ladies and gentlemen, if you'd like to ask a question. Please take note by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure your mute function. It turned off July your signature, which our equipment.

Yeah, Matt is stock line, if he'd like to ask the question and we'll pause for just a moment, so while I think quite an opportunity.

Question.

And once again that is star one we will take our first question from Gary Siperstein Eliot Rose wealth management. Please go ahead.

Hi, Mike can feel good morning.

Good morning here.

Congratulations on a kind of strong first quarter.

Mike can you.

Give some color on.

I couldn't great experience and you talk so it's in Britain could very busy as a lot going on as a lot of areas.

So the.

You mentioned that sweet.

$1.4 million or respirator order.

I didn't know suite is doing and on the medical side can you give us a little more color on that.

Sure when we when we did the original acquisition one other things are so excited about where all the additional people are bringing on board. The people that were the experts and.

The battery management systems, and charger system et cetera, and knowing that our overall medical business continue to grow one of things, we stated that even though we recognize oil and gas business was cyclical.

But as long as it wasn't an exact same sex cycles that the government defense businesses that have been over other thing for smoothing out over our revenue so.

We've been involved as I mentioned in my prepared remarks and sharing.

Second capability and best practices throughout the engineering teams.

The team there is very used to doing a very sophisticated battery packs and we think about the conditions that they're used to having to perform under.

Extremely high pressure is extremely high temperatures shot by these kinds of things.

When we saw this opportunities there was a battery pack that short cycle delivery.

It would seem to be a terrific opportunity.

To have our suite business operates on that contract and so we're really excited.

And people talk about.

Having flexibility from facility the facility.

But I think this over 19 situation caused catalyst.

That created a strong pull as well as a push in terms of expanding our capabilities in medical battery packs and in more than just or existing facility. So I'm very excited about.

Seeing how sweet performs in this.

It's a reasonably simple battery pack.

Well go through all the same testing quality checks, so we'd have anywhere else, we make it but just as a really.

Good thing to be able to have a flexibility to buildings in different facilities.

Super Thats Thats good to know you also mentioned that ER.

Backlog I guess increased close to 10% sequentially, you mentioned 5.2 million in new orders.

In the second quarter about 5.2 million how much was due to this medical crisis and how much was just base business.

That's a good question we got.

Every quarter, we try to comment about.

Quarters.

Orders against annual agreements will they be blanket or other types of awards.

I remember correctly and I could be wrong as you normally it seems to be like two or $3 million range. So.

This came across as being a higher level.

We've seen.

In previous quarters for similar type of.

Annual.

Increases in blankets or.

Other purchase orders.

And then.

Without giving specific information.

We're going through a lot of exercises with our medical customers.

They're asking us what's the most we can do and they give us high numbers.

And then they go in check all the other members of the supply chain and then they figure out what they are they able to produce and their facilities and what are they look at parts for from other suppliers not just us and that's resulted in a nice uptick of the overall revenue for US that's helped us increase our backlog some of them.

Companies are going to have a higher revenue this year than it did last year.

Just purely based on the Cobot 19 type response, I think it's too early to give specific numbers what that incremental amount will be.

Somewhat balancing sort of a surge requests from medical which I think is having some favorability against some of the push outs.

As such as medical industry is seeing elective surgeries and those kinds of things being delayed there is a little bit of subtraction on medical side, but overall.

Good as a net gain but I think would be premature to really give you some kind of quantitative amount for what exactly would be at this time.

Positive direction.

Okay. Thank you and then.

You talked about the Q I'd like to serve the 21 million in the $49 million starting testing or just the 21 million you mentioned.

49 million.

Historically, how wrong for those products. So how long does the testing last before it goes into production and the government starts exercising those IDR kids.

Yeah. That's a good question I think we get originally got these contracts in 2017.

So it seems like it's taken forever.

As mentioned in previous calls, how we haven't receiving spot buys along the way.

One thing about these kind of contracts is that certainly technically.

The government military pushed the envelope. So this testing is extremely important.

Many times you go through a couple of rounds of testing and improving the concepts out in some successes and failures and then you're sort of go back to the drawing board makes some changes and then goes we're testing going and.

What I'm trying to represent in the comments I made today.

We feel like we're sort of in that last round of testing.

If we could finish that testing starting in May and June next quarter too.

So the other requirements, then we'd sort of being the batters box for any future delivery orders against those contracts and thats. The stuff that you want to get to do all this work just to get to where that you're in a position to be allowances.

Execute on delivery orders in the meantime.

Especially as it relates to 50 390, I also mentioned.

Recall in December last year, we received a spotlight for 53 nineties.

Hope to start shifting some of this stuff in the first quarter. There was some delays do some global supply chain disruptions.

That will ship in Q2 in Q3, so if you think about it which it does in Q2 in Q3.

And we can finished the first article testing in.

Totally signed off.

It could be really good timing for the next generation 50, 390, and we would hope is 50 790, which is a cfx blend version of our three nine type battery would be available. Shortly thereafter. So we're excited about finally getting those in physician to where we might go because revenue cancels contracts.

Okay. Okay. So that was from 2017 from the Nickel award and pretty sure final sensitive.

Correct.

Final testing.

For the rest of this year, Serbia possibility, we could get all signed off on that could be 2021 revenue going forward and then starting the flies in the process.

Yes.

Okay Super our men.

Earlier this week that concludes going.

I will create higher risks announced a 95 million dollar.

I will repeat award.

On the radios from 12.7 billion dollar IDR Q.

This is so this was the third according to the news release this was the third.

Hello Grip award.

You know and continued testing so.

Again, I know you're not the prior to the prime but.

Is that.

And it said specifically in the release.

This third LRIP Award.

Testing on the $95 million of radios.

We'll inform you know going in Paris.

Instead of our production I guess, hi, hi, reproduction credibility accurate answer for drilling into full production can you give us any color on that.

And like we said before we keep those specific details of individual customer relationships very private and confidential, we're dealing with a number of different Oems in the marketplace and so our respect for their privacy and confidentiality, we don't discuss those but I will make a general comment that we do make.

Batteries for handheld radios, we may batteries for manpack radios, we make amplifiers for for radios as matter of fact, if there is no radios, there's no need for the amplifiers. So.

Anytime one of the large global Oems gives a good contract like that.

It's a good day for us.

Okay, that's fair and.

How about this based on history.

The after after it hurt elrick order that usually Rita regular production.

Because the big specifically said this will inform final production in the news release, and then secondly on that.

They talked about that bid work 12.7 billion with a five year I'd argue in five years. Following so if you assume that goes the full 10 years and if you assume the government buys the entire 12.7 billion.

That's a over a decade, that's a you know 1.2 billion a year and my understanding is it's just too to contractors.

Chris and tell us.

So are you seeing from whats public I know you don't want to talk about what they tell you privately but from what is already out there probably does that usually lead to.

You know full production.

After this last test and then finally.

You know I saw the release on the 95 million Brlthree Harris I Havent seen anything on releases for talus have they similarly gotten similar orders from the government if they are the coal.

Supplier.

Yes, I really would be appropriate made a comment I mean, those details I don't have.

Access to a lot of the transactional details and.

I just know if my own experience as we just talked about with some of these these I'd accuse it takes a long time to go through all the different processes to get things through low rate production the highway production.

Yeah, I could say is.

And outside Laminates server as it seems like you're making through the important milestones who get closer to having high rate production and.

Meeting revenue streams, but other than that I I really couldn't commentary.

Okay, not that's there and this current rebalancing so.

It's a correct and then your line of credit in the quarter.

No. There was there was no use of the line of credit additional use of the line of credit and if you go to the Q.

The the form 10-Q, you'll see in the statement of cash flows that we pay down the term loan in the neighborhood of $343000. So no increase whatsoever.

It's going to start going the other way.

Okay, and so in the scrip dividends and I think it looks like we finished the quarter with a 35 million.

Accounts receivable you mentioned the script there are some collections and in April.

And then you didnt use that there to pay down the long term debt.

It was a $2 million $3 million can you give us any color on there.

Gary I would absolutely love to but I'll leave you have in a bit a suspension you'll have to wait for our next conference call and.

Okay.

So you see.

Our success with this.

Okay and then.

In terms of bright inventory.

29 million.

That's the expectation of a proper level on the with backlog up 20% and all these different projects and Mike talked publicly scripts.

Which we'd look for going forward is that fair can you dented anymore. Despite higher higher sales or is that kind of start to trend up with a higher sales.

Gary I would never I would never publicly say that our inventory has had an idea level you always want to take the inventory lower but when we look at the components of that for example that makeup raw material again, you'll see in our in our 10-Q that.

That 63% of our inventory is raw materials and then we then go through what those raw materials are and based on what the backlog as one of those situations, where you can say thank god.

So.

Field feel pretty good about where we are overall with the components in our.

Our raw materials, I think they'll they'll do us well the service to backlog, but also it gives us opportunities.

Pretty good opportunities to continue to reduce inventory levels, which certainly as our ultimate goal.

Okay and so also in the script you mentioned that.

The China shut down and Kroger disruptions or costs. The first quarter three cents is that correct.

That's exactly what I said, yes.

So on an adjusted basis the first quarter.

Without without that would have been 11 cents.

I'm sorry.

So that's pretty good congratulations on that and then not to be a.

Uh huh.

At the repeat myself, but.

And I know, it's a different environment out there with the social dispensing and and a lot downs, but.

But.

Have you guys. So our work to do anything on the IR parent, that's new and different because we haven't had any success in the past getting an area analyst coverage and with you guys.

Being fully opened are doing well and having a quarter where earnings are up over 100% bearing backlogs up 20%.

Plus all the things Mike talked about.

You know with a 675 685 book.

And 40, 45 cents and and trailing adjusted earnings.

It just seems like we have a very cheap stock price so it'd be nice to tell the world about that.

Gary I agree with your assessment of of our stock price when compared to the the net tangible book failure, let your numbers are spot on and what I will say is that.

We are getting numerous calls and we're making numerous calls so.

It's not like we're not doing anything on the IR front, we have been very active we continue to be very active and you always look forward to getting more and more being more and more transparent getting more and more information out there.

To satisfy the ultimate goals of IR, which are to.

Increase shareholder value.

Alright, Okay. That's all I got thanks, guys. Congratulations again on the strong quarter and keeping everyone healthy Im sorry.

Thanks, Gary Thank you here.

So.

And ladies and gentlemen, again as a reminder, that a star one if you'd like to ask a question again saw one last.

I'll begin thermo.

And at this time, we have no further questions I'll turn the call conference back over to my for any additional for closing remarks.

Alright, Thank you very much well. Thank you once again for joining us for our first quarter 2020 earnings call.

We look forward to sharing with you our quarterly progress in each quarters conference call in the future.

As Bill mentioned offs like you mentioned that the updated investor presentations on the web sites and check it out and everybody. Please have a very safe day. Thank you very much for your participation.

Thank you and ladies and gentlemen that does conclude today's conference. We thank you for your participation you may now disconnect.

So.

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Oh.

[music].

Okay.

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