Q1 2020 Earnings Call
At this time, all participants are in listen only mode.
Later, we will conduct a question answer session and instructions will be given at that time.
Now I'd like to turn the call over to several lover, Chief Financial Officer of death Douglas dynamics. Please go ahead.
Thank you welcome everyone and thank you for joining us on today's call.
Before we begin I would like to remind you that some of the comments that will be made during this conference call, including answers your questions will constitute forward looking statements.
These forward looking statements are subject to risks that could cause.
Actual results to be materially different those rents can include among other matters that we have described in yesterday's press release and in our filings with the FCC.
Joining me on the call today, as Bob Mccormick, our President and Chief Executive Officer.
In a moment Bob will provide an overview of our performance then I'll review, our financial results and our thoughts around guidance after that well open the call for your question.
With that I'll hand, the call over to Bob.
Thanks Sarah.
Good morning, everyone.
Before we begin I'd just like to note.
That today marks the 10 year anniversary of our IPO.
Our company has evolved significantly over the past 10 years and we are proud of the changes we've implemented and the growth we produced over that time.
Outside of the stock price increases we're proud of the diversity of our business the exciting new markets. We now serve and the long term prospects for growth. We've made a lot of progress in the past 10 years, but there's a lot more to do.
I'm confident that we are all aligned and focused on expanding our leadership position in the truck equipment markets.
Ultimately driving the long term plans, we outlined last year.
Our strategy is sound.
Our balance sheet is strong.
And our talent is second to none.
While the pandemic will undoubtedly impact our timeline it won't sway us from our task and we have the right team in place to achieve our goals.
Now turning to the near term.
Everyone is going to remember this quarter, which presented both familiar challenges and unique challenges that no one could have predicted to start the year.
These challenges impacted our financial results and the ability to operate effectively in the first quarter.
For the quarter, we generated sales and earnings lower than our internal expectations due to three main factors.
Significantly below average snowfall.
Chassis supply constraints for class four through six trucks.
Like everyone else, the operational and economic impact of the covert 19 pandemic starting in March.
Let's start with a topic that is top of mind for everyone.
The pandemic.
Our business model is built on dealing with and adapting to significant business drivers outside of our control, namely snowfall.
So while the Corona beverage pandemic is a unique and challenging situation.
Our teams have been able to respond in a measure thoughtful and disciplined fashion.
In early March when it was clear that the U.S. wouldn't be impacted by the pandemic or senior leadership team met and quickly established three priorities that would serve as guide posts.
Protect the health safety and financial security of employees.
Provide seamless service to our customers.
And exit this situation stronger than when we enter.
As you probably saw we temporarily closed all of our U.S. facilities on March 18 to protect the health and safety of employees partners and the surrounding communities.
Knowing that it would take time for government assistance programs to reach our employees, we provided them financial security by paying all full time employees through the end of March.
Additionally, we paid the employee portion of health insurance premiums through April.
To ensure employees and their families would utilize the health care system, while waiting to return to work.
We did this because it was the right thing to do.
And because people matter at Douglas Dynamics Trust me.
Decisions like these will strengthen our culture and further enhance the already strong relationship we have with our employees.
As soon as a shutdown was complete we began preparing for a safer turned the work environment for all 20 facilities.
Over the past weeks, our team, putting countless hours planning and adapting our facilities to the new reality to create a safe and productive workplace for everyone.
To provide seamless service to our customers, we began bringing people back to the facilities and ramping up production levels in mid April.
We have several hundred people back at work in our facilities today meeting the essential service needs of our customers.
At this point, we're confident we will be fully staffed and 100% operational by the end of May.
We will also remain focused on our development projects and making the necessary investments in the business that are critical to delivering our long term profitable growth plans.
When coupled with the DD Monter Montral getting better every day, we fully expect to emerge from this situation stronger than when we enter.
Now, let's look at each segment.
First the attachment segment.
Sales were down year over year, as we expected them to be given the portion will fall in Q1.
In fact, the 2020 snow season marked the second lowest snowfall in the past 10 years and was the second consecutive year of below average snowfall.
As we've stated before low snowfall two years in a row, usually has a multiplier effect and increases the negative impact on our pre season.
Our pre season started two weeks later than normal with and with the overall economic disruption from the pandemic, our dealers will be capital constrained and probably more conservative when placing their pre season orders delaying some purchases until Q4 when the snow season begins.
On a positive note our new product launches are being well received in the market specifically, our hapten V plow offering.
Orders for these products are exceeding expectations and this bodes well for driving incremental growth in the attachment segment over the long term.
Reacting to the portion will fall our attachments team was already flexing its business model down and putting short term cost cutting measures in place in March before the Corona virus and pandemic hit.
Remember the mindset and business model for attachments is built to change rapidly every year responding to factors outside of their control.
This year, we will be doing so because of the pandemic as well as snowfall.
While 2019 was a banner year for attachments, clearly 2020 will not be.
But that can happen when navigating to significant headwinds snowfall and Corona virus long term, our attachment segment will rebound protecting and growing our market leading.
Improving our already robust levels of profit through Dms.
In work truck solutions as we mentioned last quarter class four through six chassis supply has been increasingly constrained recently due to tight supply lines and component shortages at most of the truck Oems.
These issues will only be compounded by the pandemic and at the current time, all the Oems remains shut down and the ability to effectively source equipment and components for up fits is also unknown.
While more than 50% of the dealerships, we work with on the East coast and in the mid Atlantic regions are open for business today, most of them are operating with skeleton crews well below their usual capacity.
While they wait to see when and where demand will return.
In our class seven and eight focused operations at Henderson.
Our order book backlog end demand was strong going into the pandemic and so far the long term contracts, we have in place or not being canceled.
If we are able to procure the supply of chassis equipment and components, we need we anticipate performance for the second half of the year will be solid overall.
As world waste to return to work there will undoubtedly be delays at Oems and come component suppliers, which we cannot accurately foresee today.
We will have an impact on our ability to meet customer demand.
However that will be true of all companies and the good news is that going into mid March the solution segment was in good shape.
Giving us confidence in the long term prospects for these operations.
With that complete I'd like to turn or cash usage priorities.
We announced an increase in our dividend on our last earnings call. The 12 increase in the past 10 years.
The dividend has always been a top priority for capital deployment and I want to take this opportunity to firmly reiterate our commitment today.
We also remain committed to make the necessary investments in the business that position us for sustained success and are critical to delivering long term profitable growth.
While the pandemic may impact the timing of some of these projects it won't change the approach and long term direction.
Finally, we have the financial flexibility to pursue strategic acquisitions that will add important products and services to our portfolio in the years Ed.
And we'll continue to carefully explore the market for attractive opportunities at logical valuations.
Our team is more than capable of navigating through this adversity and while we cant accurately predict how this will play out we have full confidence in our ability to overcome this unique combination of external headwinds.
We believe that we're better positioned than many companies to thrive during a downturn.
Most companies simply batten down the hatches and tried to weather the storm.
Thats not our mindset.
To be certain we have pulled out our short term cost cutting playbook, and then fairly short order have pulled levers to maximize cash flow.
But our Dms mindset means we quickly embark on finding creative solutions to the unique problems that confront us it's simply part of our DNA.
At the same time, we focus on expanding our competitive advantages.
Wind down on driving continuous improvement initiatives, which improved quality and shorten lead times.
In conclusion, I am proud of our team and a leadership they have demonstrated in responding to this unique set of challenges.
While navigating this situation we remain laser focused on serving our customers and getting better every day.
Bottom line, we'll exit stronger and be positioned to drive long term profitable growth.
With that I'll hand, the call to Sarah.
Thanks, Bob.
Near term, we're clearly facing a significant financial impact.
However, our financial strength will allow us to continue to invest for the long term and emerged from this situation stronger than we went in.
The first quarter when the tough corner for three main reason.
The headwinds we predicted as we exited a record year in 2019.
The conclusion of a very low snow season, and then the cobot 19 pandemic.
The decision to shop, our facilities and March created a significant financial impact.
But the long term wellbeing of our employees far outweigh the short term financial implication.
We maintained partial shutdown status through April and into May.
At this time from a financial perspective, our focus on balance.
On one end, we're maintaining our strong balance sheet preserving cash through our income protection plan, which have involved from the low snowfall playbook to cover all of our businesses.
On the other end, we're committed to maintaining our dividend and investing in our long term growth projects.
Now, let me walk through the first quarter and our plans related to guidance.
For the first quarter 2020, we generated net sales of 68.2 million and gross profit of 11.7 million.
Our gross profit margin for the quarter was 17.1%.
Compared to the first quarter of 2019, net sales decreased 27% and gross profit decreased 49%.
We have predicted in February our sales and margins were impacted by the significantly below average snowfall and attachments.
And class four through six chassis availability in solution.
And then layer on the late March impact on the temporary shutdown across all facilities as a result of the covered 19 pandemic.
Volumes were negatively impacted in solution as shipments were minimal during this time and both of the segment's margins were significantly impacted by the shutdown.
During the quarter. We also received a 1.2 million benefit from the care that.
As we paid our employees during the March shutdown, we were eligible for an employee retention credit, which favorably impacted our cost of sales.
As Gionee expenses were 19.9 million compared to the 19.4 million recorded during the first quarter of last year.
The increase reflects the investments, we've been making and talent and Resourcing, our long term growth plans.
As a result of the aforementioned lower volumes across both segments plus the additional cost associated with the shutdown adjusted EBITDA for the first quarter was negative 1.7 million compared to 9 million for the first quarter of last year.
This leads us to a GAAP net loss of 10.1 million or negative 44 cents per diluted share for the first quarter 2020.
Compared to a net loss of 300000 or negative one cents per diluted share in the same period of 2019.
On an adjusted basis net income was negative 7.8 million or negative 34 cents per diluted share compared to adjusted net income of 300000 or one cents per diluted share for the first quarter of 2019.
For context, we estimate the impact of the pandemic and the first quarter was approximately 15 to 27 and adjusted earnings per share for the last two weeks of Mars, including both shutdown costs and related lock volume.
Another notable and unusual item in the quarter was that our interest rate swap became effective.
Due to the unprecedented drop in the forward LIBOR curve.
Interest expense was 5 million for the quarter, which was slightly higher than the 4.2 million incurred in the same period and the prior year as included a 1.4 million mark to market noncash expense.
This now the interest savings due to the reduction to the principal balance of our term loan credit agreement based on the 20 million voluntary prepayment we made in January.
We have excluded the mark to market non cash expense in our adjusted earnings per share.
The effective tax benefit was negative 24.4% compared to negative 60.9% for the first quarter 2019, the effective tax benefit decreased due to lower excess tax benefits related to stock compensation.
Let me briefly comment on each of the segment.
For the first quarter attachments recorded revenue of 19.1 million and adjusted EBITDA of negative 2.1 million and the same period last year, the segment's revenue and adjusted EBITDA were 25.8 million and 2.3 million respectively.
The decreases are primarily attributable to lower volume, resulting from significantly below average snowfall through mid 2020 snow season.
And the Coven 19 pandemic.
To provide context this year snowfall with not only the second consecutive below average snowfall season, there was putted, particularly low snowfall again in the northeast region, which is an important region for us.
In fact, the season snowfall total was approximately 25% below the 10 year average across North America, and the lowest snowfall we've seen since 2012, which you may remember once the lowest total in 50 years.
Turning to work truck solutions, which reported net sales of 49.1 million and adjusted EBITDA of 400000 for the first quarter in the same period last year. The segment's net sales and adjusted EBITDA was 67.4 million and 6.7 million respectively.
Both net sales and adjusted EBITDA and work trucks solutions were negatively impacted by increase chassis supply constraints for class four to six work truck coupled with the Kobin 19 pandemic and the related shutdown of our facility.
Next let's discuss the balance sheet and liquidity thing here.
We exited 2019 with strong free cash flow, allowing us to pay down more debt in the first quarter and our leverage up 2.5 time in well within our targeted range I say all that as in times like these cash is king.
We recognize that and we are comfortable that we have a clear path to manage through these unusual circumstances that will also impact our balance sheet leverage and liquidity.
In the first quarter cash used in operations increased 3.5 million negatively impacted by operating results of 9.9 million driven by the lower volumes from Cowen 19, snowfall and chassis supply.
It's somewhat offset by favorable changes in working capital of 6.5 million.
The favorable change and working capital was higher collection on accounts receivable of 12.9 million offset by growing inventory of 5.2 million.
As a result of this plus an increase in capital expenditure of 1.5 million free cash flow for the first three months of 2020 declined 5.1 million negative 11.4 million versus last year.
Total liquidity of 86.3 million at the end of the first quarter comparison liquidity of 54.9 million at the end of the first quarter of last year.
Liquidity increase due to our strong free cash flow from 2000, 1980, lower voluntary payment on our debt plus higher collection of accounts receivable.
Capital expenditures for the first quarter 2020 totaled 2.3 million higher when compared to 800000 during the first quarter of 2019.
The increase relates to the ongoing investments in the business. We are finding the right balance between methodically determining which expenditures are essential in the near term, while still remaining committed to our long term projects.
Following the additional 20 million payments that we made on our debt during the first quarter. We ended the quarter with net debt of 255.3 million.
As it stands today, we maintain net debt leverage ratio of 2.5 time and believe we are in a much better positioned than most companies to manage through a recession.
It's also worth mentioning that our term loan as covenant Lite and we're not at risk of violating any of the terms of our obligations in the foreseeable future.
Our revolving borrowings are due to mature on June Thirtyth 2021, while our term loan credit agreement is set to mature on December 31st 2021.
Now I'd like to outline our thoughts regarding guidance.
Like many companies at the moment, where withdrawing our 2020 financial outlook because of the pandemic.
Internally, we have adjusted our budget and created various scenarios.
Contingency plan using our income protection plan.
Across the company.
While we are used to creating budgets for recession like conditions on a regular basis for our attachments business.
So we have a better idea of how the overall economy as reacting to this unprecedented situation there too many unknown variables for us to provide projections with any amount of confidence.
In addition, it is good news, but 95% of our customer base qualifies as an essential service and can operate today, but many are also located in densely populated area was heavily impacted by the pandemic, which may mean, the they're not able to operate effectively in the near term.
For our attachment demand is being impacted by low snowfall and the pandemic, but on a positive note. Our end user landscapers are still able to work and most state.
We delayed the start of pre season by two weeks and as dealers are likely cash constrained at the moment, we expect the fourth quarter can be much more important this year.
At this stage almost supply chain for attachments won't be impacted by the pandemic. It's important to remember we have a lean well established supply chain with long standing partnership.
You mean Douglas will be at the front on the line.
For solutions demand has obviously being impacted by the pandemic, especially as many of our location are in the hard hit East Coast region.
Our municipal focused boat business should see less of an impact given we have long term contract at Henderson.
Between the chassis OEM and the hundreds of component suppliers, we rely on for up at the supply side of the equation of solution is probably the biggest on known at this point.
For now what we can say is we expect to be in varying stages of shutdown for six to eight weeks during April and May which will have a very significant impact on our second quarter earnings.
Finally, I want to close with that.
Bob stated, we remain committed to funding the dividend as we sit here today, we do expect to generate the earnings and free cash flow in 2020 to fully fund our dividend.
Now, we'd like to open the call for QNX.
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Your first question comes from online Orion's six deal with Craig Hallum.
Great. Thanks, guys for taking my questions.
What to start with a work truck attachments.
It's feeling about channel inventory and then what are you hearing from today dealer and then also and customer sentiment I know you talked about.
Away more orders, probably the Q4, but what are you hearing from the channel.
Yeah.
The less.
Dealer inventory that we took was at the end of January.
And we were quite pleased with the results.
In this environment of too low snowfall years in a row, you would expect so inventories to be accelerated or or increase but they were relatively flat. So that was a good sign.
When it comes to dealer sentiment.
As I as I mentioned before.
Most of our most of our dealers.
Well there the there the creamer the crop in terms of truck equipment, they're the best in biggest than most of the M. assays that we operate in there's still considered a small business by normal standards and so this pandemic into shutdown.
Certainly has them capital constrained.
And our early take.
That is wise for them.
Due to be more mindful of the size of pre season order that they place and also when they will take shipment of those orders. So not only is the reduce snowfall two years in a row going to have initiated a negative impact overall on the pre season.
We expect that.
Dealers will probably take that down EBITDA levels further and wait until the fourth quarter snow season to start showing itself and then place some accelerated increased orders at that point in time. The other the other points that I would make is that while it's still early in the in the ordering process.
We would expect to see more of our pre season ship in Q3 versus Q2 again, we just kind of see this thing lengthening out a little bit as the calendar year progresses.
And then you mentioned kind of financial constraints. Among some of your customers are you guys extending any.
Greater payment terms than you historically due to try and help them.
No no we're not Ryan we have our typical pre season terms and I'll tie I'm relatively pleased thus far that those that have.
Optus or cash term historically have remained with cash turn so thats one good sign that we've seen.
Last question for me and then I'll turn it over.
That's what capital allocation firmly reiterating the dividend.
After the dividend.
Given the current environment give any changes to kind of a temporary or near excellent capital allocation between.
And investments in the company hunkering down stock buybacks et cetera.
Yes, so the way we think about capital allocation has not changed in this environment, maybe it's weak here and there I mean, we are focused on the dividend I'm fully committed to that we expect that we will generate free cash flow to cover the dividend for the year Secondly, we've been focused on paying down debt.
Of which we made a 20 million payment in Q1, and we are at leverage that we're comfortable with today.
And then third investing in business.
In fact into our business and then acquisition I'll make the comment on Capex.
In this environment I'd say, we are committed to continuing to invest in our long term growth projects.
Hi, whatever.
We are also going through each capital requests again.
And re approving it I'll say as we navigate through the year and I still expect that this will be in investment year.
Capex around 3% of sale.
We are just being very diligent on making sure we invest in the right right areas.
Let me just let me just add on to that just for one for one moment I mean, one of the one of the things to remember about Douglas.
As we were we have a balance sheet that is almost always in great shape. It's a high free cash flow generation business model, even when things get tough it is certainly better than most so while we do pull levers to trim back capex as Sarah suggests we have the ability and we have the mindset.
To make sure that we're still making appropriate investments that will support the long term growth initiatives. We have so it is a very balanced approach for short term cuts at those at the same time, making sure we don't lose momentum against our long term goals.
Great. That's it for me thanks, guys. Good luck.
Thank you.
Your next question comes from the line of Tim will bear.
Hey, everybody good morning.
Good morning, well [noise].
We'll be are too yeah. Thank you.
Maybe just.
First question.
On just maybe just kind of a normalized decremental margin.
How would you think of kind of unit Detrimentals as you look at maybe the second quarter into the third quarter.
Kind of recognizing this has been kind of a normal situation, but how do you think the margins can flex or what can you flex.
You know just given expectations of more sluggish volume.
Yeah, Great Great question Tim.
You know when I think about our business and a typical decrement margin.
We've always been around that 35% range.
And and that has evolved obviously from our commercial knowing where we are much more variable cost structure.
To the additions of our acquisition.
With a little bit more fixed costs.
But from that standpoint, that's that's a good.
Place to think about in normal times.
Clearly Q1 was higher than that with the speed and severity that we solve this.
Come at Us in March.
Take takes a bit longer to react and we have the overhead overhead costs related to our shutdown for two weeks in Q1, and then when you look at Q2. So we're we're half the corridor.
So when you think about Q1 I estimated the impact being 15 to 20 cents of adjusted earnings per share based on the coven 19 impact.
You can look to Q2 will I'm not too weak being more half a quarter, which is clearly going to have an increase to the drucker Mann, but I see that improving then sequentially through the end of the year.
Okay. Okay, Yeah that was going to be my second question it sounds like.
We used kind of the 15 to 20 cents that you called out for Q Q3 Q1.
It sounds like we could you maybe triple that intend to use that as as a baseline what the impact to Q2 might look like.
Absolutely Okay, Okay and then.
I was just going to reiterate those are those are shutdown impact.
We've been working hard on getting back to work and ramping back up during those periods. So we will start to come out of that here in may and into June.
Right, Okay, Okay I understand there.
On on that day, John as side of things how would you characterize on the backlog there it sounds like Henderson held up pretty well and there hasn't really been any contract cancellations is that's the same Indiana.
Well I was I would say, we haven't seen cancellations there, but as you as you can imagine if you think of where does your andas market leading positions are it's on the east coast admitted Atlantic and so they're right in the middle of this thing.
And so we've seen a we've we've we've seen orders drop off as we would expect I made a comment earlier.
The truck dealers that we work with in those areas half of them are open half of them are close the ones that are opened are pretty well downsized at this point and I guess, Tim what I would leave you with his although we will certainly be first in line for chassis is when the Oems get back up and running probably the biggest.
Wild card, we have looking forward from a demand perspective is what's the economy look like and what's the end user sentiment look like in that region of the country when all the dust settles okay. Okay understood.
And then I guess just last week.
I guess could you kind of update us on how you're thinking about just kind of maybe extending the revolver or how you're kind of.
Looking at because I think before you I talked about maybe trying to refinance and so any sort of kind of update on pushing out some of the maturity and getting a new agreement there.
Yeah, absolutely as you know the credit markets have been challenged we're very fortunate in our banking partnerships that we've had we've been working closely with.
I still expect us to be able to refinance.
It could be as early as Q2, we may opt to wait until the back half of the year. We're just staying close to the market. We have a lot of different approaches we could take I mean, we're currently I'm in a in a term loan b. There are other other ways for us to refinance that wouldn't be open to us.
So I'm not concerned about the ability to refinance I think the expectation now is it's going to be a little more expensive than it was before those pandemic head.
Okay, Okay, well, it's good it's good that needs the ability still there. So okay. That's that's what I have I'll hop back in queue and good luck on on Q2 here guys. Thanks. Thanks.
Your next question comes from a line of Chris Mcginnis with Sidoti and company.
Good morning, Thanks for taking my questions in a couple statements of hope of let's say some doing well.
Just wanted to start maybe off with.
Just in response to covert use maybe talk about some of the.
You know the safety measures and maybe changed in manufacturing and any projected thoughts at that may hurt the margin going forward I know Youve. Obviously spent a lot of time runs DBM us, but just any issues around profitable profitability, but you know margins being hurt by.
Huh.
Measures to combat the.
Yes.
I think I think Sarah service speaks appropriately to the short term financial hits that will take during shutdowns and ramp up so I'm not going to speak to that element of it I will say that that's as I mentioned earlier the.
Safe returned to work teams that we put in place as soon as we shutdown have been going through all of our facilities, whether it's a 400 person location for manufacturing or a 15% location for upsetting and we are putting.
All the logical safety measures in it and in in place from a cleaning perspective from a from a social distancing perspective, I would I would tell you that.
That initially I had a concern.
That.
Some of the long term solutions that we may have to put in place might impact productivity.
Because people might be spaced farther apart.
But then again.
Yes, you can't.
You can't.
You just can't imagine the work that these people do when they are faced with the crisis and so some of the unique solutions people have found already.
There's nothing short of incredible the other thing that I would suggest to you is.
You give an engineering and operations team.
A completely shut down facility.
So to stand there and look at and Dream about what's possible I mean quite frankly, you never get an opportunity to showed a location down and look at a blank sheet of paper and say what can we do differently. If we've got 30 days to do it and so some of the continuous improvement initiatives that have come out of this I think are really cool.
So I would expect the long answer shorter I would expect that long term when we're back up and running 100% operational.
At the safety measures, we've put in place should not have a negative impact on our long term margins at all and in fact, we may see that some of those some of the momentum that we have gained will actually accelerate some of those margin improvements.
Great. Appreciate that includes and then maybe moving on to Henderson I know you you didnt own it in the past session but.
This is season local budgets is starting to be impacted by cobot any risks there on the Henderson backlog.
Yeah, that's a that's a terrific question I'm, a while we purchase Henderson.
On the on the.
Other end up coming out of the last economic cycles, we were always very proud to say that even up through the acquisition Henderson continue to grow through the most significant economic downturn in our life lifetime. So I think.
Thats that says all we need to know about the impact on municipal budgets do those budgets get cut back during the down downturns, absolutely, but one of the last things to get caught.
Snow and ice control removal because of the significant impact it has on commerce and tax collections. So while you know every environments is a new situation unto itself history says that Henderson should not be significantly impacted from that perspective.
Thanks, and then last question just around the competitive environment loosen.
You can you talk about the strength your balance sheet, maybe just talk about the opportunity you possibly.
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Disruption is causing across the country in office in these new does.
Little bit growth.
No.
Maybe both.
Yes, that's the certainly that's that's something that were that we're exploring but I guess, what I go back to his.
If you can.
Think about.
Your average size outfitter Youre Youre your truck equipment dealer.
It's probably five to 10 million dollar operation It is a small business okay.
I think some of those businesses are going to be challenged longer term have into whether this environment.
To a large degree those businesses word and we're not in our not on Douglass short term acquisition target list.
Okay.
So we were one of the one of those things we will not do is make a modification to the acquisition strategy to accommodate a situation. We have a list of blue chip targets out there most of them are medium to larger sized companies will certainly be keeping our eyes open.
For opportunities that may be present themselves coming out of this other end of it.
I. Unfortunately thinks that if theres fallout is likely to be in the smaller.
Companies, which which are not a large part of our go forward strategy.
I appreciate that thanks, very much will come through and good luck.
Thanks, Chris.
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<unk> President and CEO.
Thank you and thank you for your time today.
We hope that you are all staying healthy throughout these difficult times and as always we are very appreciative of your ongoing interest and Douglas dynamics and we look forward to updating you on any new developments in the months ahead as we work through this situation together [noise].
Have a terrific date.
Ladies and gentlemen. This concludes today's conference. Thank you for participation and have a wonderful day you may all disconnect.
Yeah.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may all disconnect.
[music].