Q1 2020 Earnings Call
Good day and welcome to nasal Engineering company first quarter 2020, <unk> earnings Conference call.
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At this time I would like to turn the call over to Nathan Oh, well Investor Relations. Please proceed.
Thank you.
Welcome everyone and thank you for joining us on todays call a few quick items before we begin.
First please note the some of the information that you will hear during this call book consist of forward looking statements within the meaning of section 21 eight of the Securities Exchange Act of 1934 as amended.
Such statements Express our expectations anticipations beliefs estimates intentions plans I'm forecasts.
Because these forward looking statements involve risks assumptions and uncertainties, our actual results could differ materially from those in the forward looking statements.
More information regarding such risks and uncertainties. Please see our filings with the Securities and Exchange Commission, including a filing on form 10-K for the period ended December 31st 29 team.
We assume no obligation and do not intend to update any such forward looking statements, except as required by federal Securities laws.
Second this call will involve a discussion of certain non-GAAP financial measures reconciliation of these measures to the closest GAAP financial measure is included in the earnings press release, which is available at the Mac inks Dot com.
Joining me on the call today is Bob come past, Chairman, President and Chief Executive Officer, and taught books, Chief Financial Officer, and Ryan Reiber Executive Vice President of strategy sales and marketing.
First Bob will provide an overview of outperformance then Todd will review, our financial results and guidance.
With that I'll hand, the call over to Bob.
Thank you Nathan a good morning, everyone and welcome to our first quarter 2020 earnings call.
Well the first quarter of 2020 got off to a positive start.
And we were on track delivering results in line with our internal expectations through January and February.
Of course, a March introduced a whole set up new covert 19 pandemic related challenges, which impacted our performance.
But overall, we generated net sales of one of <unk> point, Sixmillion and adjusted EBITDA of 11.4 million.
These figures also speak to the preparation and adjustments late last year and into this year to continuously realign our cost structure would know demand levels and managing the ongoing production schedule changes or marquee customers in the commercial vehicle construction.
In an agricultural markets.
I'm encouraged by the strides a we made to improve our operating performance on a sequential basis despite market demand challenges.
We've been able to effectively adjust their cost structure and coupled with a small sequential improvement in demand.
Helped us generate a 700 basis points increase a manufacturing margin.
From this quarter and this quarter compared to the fourth quarter 2019.
We're also realizing tangible benefits from last year's capital investments and automation and technology, which have already led to stronger labor productivity.
I've said this before but that's especially true now we are committed to focus our attention on factors within our control.
Positive impacts of these investments reinforce our confidence that they will be important to best position Mac for sustained future success.
The new challenge for every one at 2020 is how we navigate the ongoing impact of the coal that 19 pandemic.
At Mac were used to responding to change agility adaptability and realignment are part of our business culture.
This crisis has created a broad sense of uncertainty and complexity for our customers that we must and will respond to as their plans unfold.
On the topic of controlling what we can I'm, especially proud of how well our company wide safety and operations teams have executed to ensure precautions and procedures have been implemented to protect the health of our employees at our facilities across the U.S.
While we must remain vigilant in our efforts I'm pleased to say that we have not had any Mac employees test positive for coal that night and at this point in time.
From the first stage as of the of the breakout.
We have steadfastly communicated with our teams as we've implemented safety protocols and emphasize the extreme hygiene.
This means that all of our 20.
One facilities across the U.S. for me and operational, albeit at lower production levels.
Our employees are able to social distance somewhat naturally as result of being separated in their respective work cells and with the increased use of technology and automation, which means fewer people are needed and social distancing is naturally accomplish we have made every effort.
To increase cleanliness, and our and our workstations in common areas and have cleaning crews on called ready to disinfect any equipment or facilities when an as needed.
Of course, everyone, who can work from home is doing so well.
Well being of our employees will continue to be one of our top priorities as we navigate through these challenges.
As Mac has proven time and time again over the years, our agility and adaptability, coupled with our commitment to succeed by providing service quality and reliability to our customers along with a strong balance sheet is what will help us weathered the storm grow our market position Inc.
The other side stronger over the long term.
However, as you would expect this pandemic will continue to impact our performance in the months ahead.
In the first quarter, specifically, our net sales were negatively affected by the customer shutdowns related to coal bed during the last two weeks of the quarter.
Nevertheless, Mac and many of our customers remain.
And continue to maintain the essential services designation and we stand ready to assist our customers in any way that we can as we have over the past 75 years.
We continue to be attentive to our customers needs and remaining constant communication with them.
However, there is no doubt that as a result of the uncertainty our customers are facing there's much more uncertainty regarding production schedules.
Combined with the overall Mark economic uncertainty, we are temporarily withdrawing our 2020 guidance.
At this time, our aim is to provide updated guidance as the economic outlook becomes clearer from our customers.
Scott will discuss our expectations related to guidance in more detail on a couple of minutes.
While we lacked the usual level of certainty from our customers, we still have visibility.
And then the near term and it's important to remember that our orders follow production schedules and no contracts or customer relationships have been lost that means when our customers volumes come back our volumes will come back with them and we are ready to service their needs.
Despite the short term disruption, we made positive traction across our end markets during the quarter.
We want to take a few moments to update you on the progress, we're making with several key programs and customer relationships.
We continued to see increased volume with certain military projects for light vehicles, and we are encouraged by the order flow so far and 2020.
Last quarter, we added a new blue chip customer era and are assisting their team.
The warehouse conveyors and package of management I'm pleased to say that we continued to grow and expand our relationship with this customer.
During the first quarter and are excited about the long term potential of this partnership.
We were also able to launch quickly the outsourcing project secured from one of our largest power sports customers at the end of 2019.
Overall, we continue to see growth and outsourcing opportunities as a result of reassuring efforts by our OEM customers.
The manufacturer and source products and components, where they are sold and avoid supply disruption.
The pandemic has placed pre existing supply chain disruption directly on the spotlight and we will benefit from that.
In the commercial vehicle market our customers are focused on their next generation products are active involvement in this process helped us secure some key wins late in 2019 to position our organization to grow market share over the long run.
While the commercial vehicle and market part to in particular had presented us with its fair share volume challenges the long term upside potential of this market for our organization remains very positive.
Our commitment to cross selling and both 2020 and in future years has not changed and we look forward to the opportunity of utilizing the greater organizations extensive capabilities over the prior DMP customer base.
With the legacy Mek business and DMP business now operating as one company I'm excited about the long term growth proposition for our entire organization.
So all the current pandemic has added the extra level of complexity in the short term I.
I'm very encouraged by the opportunities and the long term potential to expand market share and form new partnerships with new customers in new industries as a result these endeavors.
Throughout our industry Cobot 19 has already had a wide reaching impact.
Especially on our small competitors.
As such we will maintain our open attitude towards potential M&A opportunities.
Our approach remains the same.
We will carefully evaluate and maintain our disciplined approach.
Examine both current and future market dynamics and assess each potential opportunity with a rigorous ROI focus.
On the Capex front and in light of the current economic environment. We continue to find the right balance between methodically determining which capital expenditures are absolutely essential in the near term while remaining committed to our longer term vision of implementing flexible redeploy a whole automation.
For our competitive benefit.
As a reminder, and as a result of implementing the higher than normal capital expenditures related to investment and automation and technology. During 2019, we had previously forecasted lower capital expenditures and 2020.
As you also know last fall, we announced a share repurchase program for up to $25 million through 2021.
We have already begun to utilize the capital available under this program, but we'll exercise caution related to share buybacks in order to conserve cash as we navigate through this short term adversity.
Finally, I just want to reiterate that we maintain a very strong financial position.
The new five year credit agreement, we completed in September 2019 provides ample liquidity for a strong balance sheet.
The combination of a strong financial help.
The solid free cash flow that our business generates and the benefits that we continued to see from our capital investments means we're better positioned than most to whether this and any economic storm.
Now I'll hand, the call to tied to discuss our financial results and guidance.
Thanks, Bob I'll begin with the look at our first quarter financial performance before providing commentary on our balance sheet liquidity and our thoughts on guidance.
As noted in our press release, we recorded first quarter net sales of 108.6 million as compared to 143.7 million. The same prior year period, a decline of approximately 24%.
This decline was mostly attributed to the continued impact that market demand changes, which began last year and where most evident in the commercial vehicle agricultural and construction end markets are.
In addition, net sales were adversely impacted during late March due to certain customer plant shutdowns caused by the covert 19 pandemic.
Manufacturing margins were 11.8 million for the first quarter of twice as many as compared to 19.6 million for the same prior year period.
The decline of 7.8 billion with mostly driven by lower sales volumes due to the aforementioned market demand changes.
Impact of customer shutdowns at the end of March along with inventory and health care reserves specific to the estimated potential impacts of the cold at 19 pandemic.
These factors were modestly offset by strong labor productivity improvement driven by our recent investment a new technologies and automation as well as our cost reduction efforts completed in 2019.
Manufacturing margin percentages were 10.9% of net sales for the first quarter of 2020.
As compared to 13.6% for the same prior year period, the direct impact of lower net sales. The manufacturing margins was approximately 780 basis points driven largely by under applied overhead of fixed costs due to the aforementioned declined and market demand and the impact of cold at 19.
This detrimental impact was largely offset by strong labor productivity gains created through our investments in new technology and automation.
Hi, improvements and a 2019 cost cutting measures.
Which combined.
Certainly impacted manufacturing margins by 510 basis points.
Additionally, manufacturing margin percentage increased 700 basis points, when compared to the fourth quarter of 2019.
Significant sequential increase is attributable to them in proved sales demand in the first quarter as compared to the fourth quarter of 2019, coupled with the company's effective cost reduction actions.
Depreciation expenses were 5.6 million for the first quarter of 2020 as compared to 5 million for the same prior year period.
This increase was driven by the accelerated investment and new technologies and automation.
And in 2019.
Amortization expenses were 2.7 million for the first quarter of 2020, which are equivalent to the same prior year period.
Profit sharing bonuses and deferred compensation expenses were 1.3 million for the first quarter of 2020 as compared to 1.8 million for the same prior period. The decrease was driven by lower bonus accrual and modest declines in deferred compensation exercise.
Other FCX <unk> expenses were 5.6 million for the first quarter of 2020 as compared to 6.7 million for the same prior year period.
The first quarter of 2019 included 1.8 million of onetime IPO and DMP acquisition related expenses.
Excluding these one time items other FG and H increased by <unk> point 7 million, primarily due to the costs associated with being a public company, which were slightly offset with synergies achieved through the integration of DLP.
Interest expense was point 8 million for the first quarter of 2020 as compared to 2.8 million for the same prior year period, the $2 million decrease is due to our overall lower debt level at the end of the first quarter 2020, coupled with substantially lower interest rates obtained from the more favorable credit agreement we entered.
Due in September of 2019.
Income tax expense was point 7 million for the first quarter of 2020 as compared to <unk> point $8 million for the same prior period.
Federal income tax expenses will be offset against our net operating loss carryforward of approximately 13 8.8 million until foetal utilize.
Yeah, well, which does not expire is primarily driven by the onetime IPO and DMP acquisition expenses incurred in 2019.
We continue to anticipate our long term effective tax rate to be approximately 26%.
EBITDA and EBITDA margin percent were 9.8 million and 9.1% respectively for the first quarter of 2020 expert at 13.7 million and 9.5% respectively for the first quarter of 2019.
The $3.9 billion decrease in EBITDA was primarily driven by the decline to net sale due to the aforementioned declines and market demand changes.
Slightly offset by cost reductions and synergies.
Adjusted EBITDA and adjusted EBITDA margin percentage, which exclude stock based compensation were 11.4 million and 10.5% respectively for the first quarter of 2020.
As compared to 16.8 million at 11.7%, respectively for the same quarter in 2019.
Now I'd like to address our balance sheet and liquidity figures.
Cash flow provided by operating activities was 2.6 million during the first quarter of 2020.
As compared to 1.5 million used during the same prior year period.
4.1 billion dollar cash flow increase was primarily driven by lower increase in our accounts receivable balances as compared to the first quarter of 2019.
Capital expenditures were 2.4 billion during the first quarter of 2020 as compared to 8.2 million for the same prior year period.
The decline was mostly driven by the timing of certain new technology and automation investments that were pulled ahead into late 2019. After originally being scheduled for the first quarter of 2020.
Capex for the full year is still expected to range between 12 million and $15 million, which is significantly lower than a 26 million in capex for 2019.
Total outstanding net debt was 74.8 million as of March 30, Onest 2020 result in a leverage ratio of approximately 1.6 times, which is significantly lower than our covenant threshold of 3.25 times under our credit agreement.
This five year agreement provides access to $200 million on liquidity through revolving loan plus an additional 100 million through an accordion feature.
Additionally, at the end of March the company drew down on the revolver and deposit at $13 million into a money market account to ensure short term liquidity and the most extreme circumstances.
Now I'd like to briefly discuss our outlook for the fiscal year 2020.
Based on the uncertainty of the overall economic climate do the coal that 19 pandemic and consistent with most of our top customers. We are withdrawing guidance, while we can't say today is that based on the disruptions we've already seen and expect to continue at least until the summer means that our bottom end of our original guidance range is no longer it.
The bubble.
At this time, our goal to bright updated guidance when the economic outlook becomes clear.
With that said I'll now turn the call back over to buy for closing remarks.
Thank you Todd.
Despite the ongoing market demand.
Pandemic related challenges, we are encouraged by the strides that we were able to make during the quarter to continually realign our cost structure and explore new business opportunities. We're confident in the long term strength of our business model.
The combination of our market, leading position, our strong financial footing and our domestic focus will be instrumental in our organization emerging from this situation and a stronger competitive position.
Although the situation is providing new and unique challenges for our team Max longstanding track record of agility, adaptability and providing service value and reliability to our customers has enabled us to navigate all manner of difficult situations. During our 75 years of op.
Operation.
We will weathered the storm as we have all the others, we take pride in our business being considered essential and we stand ready to help our customers in any way that we can in the months ahead.
Our team is thinking about all of our stakeholders.
And shareholders during these difficult times, where all in the US together and we will stay strong and get through this short term adversity.
With that said, we'd like to open the call for questions. Operator. Please go ahead.
We will now begin the question and answer session.
As a reminder to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys.
If at any time. Your question has been addressed than you would like to withdraw it.
Please press Star then too.
At this time, we will pause momentarily to assemble our roster.
Today's first question comes from Mig Dobre with R.W. Baird. Please proceed.
Hey, good morning, guys, It's Joe Grabowski I'm from Mig this morning.
Good morning morning more morning.
Yeah, I guess my first questions probably on everyone's mind can you tell us how April trended sales order intake any any color you can give us on April.
Sure I can tell you that the with the employee or a customer shutdowns that have gone on especially significant in the month of April and some bleeding into may.
We saw probably less than half of our.
Capacity being utilized by our by our customers.
So.
It was a tough month it will be I think the worst month that we will see.
But nonetheless.
We weathered through it quite well we did the.
Yes.
Okay.
Layoffs furloughs.
Occasion, all types of but cost conserving measures certainly in the supply side the.
Indirect spending that goes into a business we've watched our our pennies very closely air and that.
I think we'll wind up doing.
Okay and the month of April.
I believe you said in fourth quarter, you think you your overall utilization with around 70%. So is that kind of the way to think about it if you're going to fourth quarter with 70% in April with less than 50%.
I would put that the April number probably at a more than 40% range.
Okay. All right now that's helpful. And then sort of a related question I know normally you guys have several months of visibility.
Into production schedules from your customers.
Has that changed in the current situation has [laughter] has sort of the visibility into your crossers customers production schedules Ben.
Truncated just maybe based on their lack of visibility or plant shutdowns or anything.
No I guess the right way to to answer that is our visibility is still the same.
And it's long at its its good problem as the things are changing very rapidly.
So the tool is still there the tool is still being utilized.
But the data is changing and from our customers pretty rapidly.
No I make sense.
[laughter], certainly or unusual time, right now and I got I guess just my my final question you guys compete against the loudest small fabricators are you hearing anything about maybe some of your.
Smaller competitors, having financial difficulties or maybe kind of when we come out on the other end of this so.
There will be a consolidation market share opportunities or anything along those lines, yes, it's probably a little too early for to predict that however.
We do believe that with the additional support that the government is given to small businesses that probably extended their life glad.
Short period of time, we still think that we will see that shakeout happening.
But with the benefits coming from the federal government.
That's probably been delayed by a little bit.
But we're not seeing we're seeing edges of that happening.
Got it okay. Thanks for taking my questions. Good luck.
Well thank you.
Our next question comes from Stephen Volkmann with Jefferies. Please proceed.
Great Good morning, guys.
I'm sorry, Steve.
Can you tell me just triangulate this right. So that we don't get a too far off in one direction or noted you're talking about kind of running things maybe 40% of.
Capacity in April.
What would that have been in the first quarter or as fourth quarter or just some some sort of way to.
Start to judge that.
Yeah, I think I think at first quarter, probably would be in the 60 ish range.
And.
That's great and then.
A lot of your customers that we cover or talking about things kind of starting to ramp up as we speak here do you see that kind of instantly or would there be a couple of weeks of a wide because there's some inventory work in process or something.
What what we are seeing is even though some of them are starting up there still ramping up during the first weeks and I still think.
Perhaps there is some.
Supply disruption from others that they're dealing with.
So as as their opening up they're dealing with a lot of smaller issues, they're not jumping right up to the former volume levels.
Right Okay.
And then.
Maybe this is more of a Todd question, but you talked about a number of different cost saving measures that you've done.
Just how should we think about the decremental margin on the lower production in the second quarter.
And when you look at detrimental margins and any strip on some of the impact of volume, we're actually seeing some historically I say that that number was 17.5%.
We're seeing actually that decremental margin be little bit lower on a normalized situation because of all the cost saving measures, but know that the second quarter will be the one it's a bit unique being that as bought stated April kind of low low water point meeting not that allows our customers are shut down or were at 40% capacity and we've done layoffs and other costs.
Preventative measures.
I would put that probably in and more on that maybe 20% to 22% range for the second quarter, but as you look at decremental going forward I do believe because of the cost structures weve already made and more on the way if you'd as we've kind of work our way through this.
I think Lafayette, better decremental margin going forward.
Okay. Okay. That's helpful. And then just one final quick one more broadly Bob have you seen people come to you over the last say few weeks and say we need another source of supply or we need a closer source of supply or are those conversations actually happening already yeah.
I'm going to I'm going to let Ryan rubber answer that he works with that everyday Hey, Steve.
We definitely have seen that I think it started.
Probably about a month ago.
Filtering kind of the issues that were happening and specifically, China and India.
So we did we did so some short term Boyd swing lets say material was delayed on the water kind of pre OEM shutdown that allowed us to kind of supplement.
[laughter] supplement their demand.
But in the recent times, we've seen not only I'll say the re shoring type activities of the potential to shorten that extended supply chain, but also.
You know as Oems ramp back up as Bob alluded to we don't feel like we've seen before effects of what that might be doing to some of those small competitors. We have so it's the quote flow in the quote activity for us has been stronger I'll call. It in the last six weeks than we had going back into Jane.
During February and even into the fourth quarter.
Great that's great. Thanks, guys.
The next question comes from Andy Kaplowitz with Citigroup. Please proceed.
Hey, good morning, guys. It's a led bystricky on Andy how are you.
Good morning, good morning.
So you know that's good color on how things are evolving.
I guess one thing we've heard from from some of the industrial companies and then sort of hearing views in terms of re ramping when the time is right and make it through their supply chains are ready and able to handle that so so given that focus that Oems have <unk>, how does the nature of your conversation.
And with your customers changed over the past few months and.
Given the changes they're seeing in their low visibility that has impacts on you look what information are they giving you and what can you do.
To be prepared for a return to call it normalizing production over time.
Sure well.
We've been getting updates continuously.
Including.
Plant shutdowns that are happening quickly.
ER or ramp ups that they would like to they're typically telegraphing ramp ups with more more time lead time.
We have an excellent communication program, we've set up internally here for our people some of whom are on furlough and when that ramps up but they know that to watch the board at at our a in trodden now that Mac to see what's happening and whether they need to report to work the very quickly.
So we're using our internal communication to be really effective.
I guess, a any any points Ryan that Youd Wanna add around yeah change, yes, what we are can in continuous communication with our customers and that can be over email I would say for the most part at least though but weekly touch touch point I thought leadership level.
Obviously looking at things like hard shutdowns, but as importantly, now what is the ramp up plan.
When they return to work so they've been pretty transparent about build rates are kind of pre cobot postcode.
Were as Bob said really reviewing that on a daily basis amongst the sales and operations teams and adjusting the workforce and capacity accordingly, it tends to be a pretty dynamic situation right now there's potential for supply chain constraints that many of the Oems talk about that we're keeping a watchful eye on that this.
Point, we have not caused any problems and in many cases have been able to.
I'll say bail them out in some of urgency situations with a prototype capability, but that's a sometimes daily hourly conversation that were habit.
Okay, and it really X or something that we're really exercising our agility story internally our production planning process, our communication with our shop floor with our supply base.
It's it's been showing all the strengths that we hope that would.
That's great to hear.
Sounds like you your customers are well served is just I'm.
Thinking about cash flow I know, you're not providing guidance at this point, but.
Can you give us some color on just how you're thinking about free cash flow conversion in this environment.
You know previously I think you talked about.
50% plus conversion of adjusted EBITDA and free.
The cash conversion target so.
Directionally, how should we be thinking about free cash conversion just given all the moving pieces here.
Well.
When you look at the free cash flow conversion I really do not expect to see much change off of that 50%.
Yeah, you know utilization and the reason being is as these changes happen certainly receivable come down.
Done for all of which is a cash favorable impact on our payrolls rail to pull back on the capital as Bob mentioned on the call. You know, it's really taken electra through as to when we spend capital. So we're able to preserve that cash flow and really should represent again about 50% or better of EBITDA for the full year. So I think.
All the levers are in place for us to continue to execute very well I'm certainly, though the amount of free cash flow will be they've managed by the decline in our EBITDA.
That's great. That's helpful. Thanks, guys I'll get back in Q.
Thank you.
Our next question comes from Jon Braatz, with Kansas City Capital. Please proceed.
Thank you everyone.
Good morning.
Bob a question you've talked a little bit about furloughs and lay offs and and obviously, we're continuing to spend money on automation and so on.
When things returned to normal.
Hopefully to return to normal soon but how would the level of workforce of your level of your workforce be compared to maybe where you were last year are you going to be able to come out it how does this.
This cobot 19 with.
Oh.
Fewer employees fewer and fewer people on the on the on a manufacturing line.
Yes, I get that that's why we invested in the automation.
And.
We're seeing the benefits we expected.
Including the benefits of I'll say, taking up a smaller footprint, allowing even more throughput in our factories with the less floor space utilization. So that raises some interesting things considerations to look at four even even further opportunities.
Okay, any any any any of the.
Number you want to you you could provide us with how much you might think the or the employment roes might be might be down or is it too too soon to I think it's too soon to say that but oh, we that's one of the reasons that we invest yep sure.
Talking about thank you much.
You're welcome John.
Again, if you do have a question. Please press Star then one.
The next question comes from James Maxwell of.
So coville. Please proceed.
Morning.
Hi, James James Good morning.
Question about the working capital I guess I was surprised to see stuck to use of working capital in the third quarter and I'm wondering whether you can get that back in the second quarter and.
Whether that cash flow will be stronger in the second quarter because of that.
Yeah. So certainly I mean, the first quarter was really driven by receivables.
Failed increasing from the fourth quarter of last year and as you look at you know into second quarter I would expect to see the positive inflow from for a lot. The receivable balances certainly we'll see a little decline, we think of accounts payable to because purchasing and things of that nature are going to decline, but in general we should see a very favorable.
All cash conversion here in the second quarter because of all those factors.
Put together coupled with all the cost saving measures we put into place.
Okay, Great and I, just want to make sure it sounded like maybe M&A activity was ongoing yet the share repurchase had been the spend it is.
I would think.
Obviously with the share price, although the it it.
The return would be would be better on the.
Repos sharing repurchasing your own says than.
Making acquisition.
Sure well, let me address that a minute I guess I'm the repurchase.
Of shares we've.
We we have a but the.
30% of our shares in the float grade 20% to 30% so.
We we don't want to reduce that flowed by much the rest of it is on the for a one k. where employees can buy or sell and then.
Portion locked up in the Aesop yet so we're we're kind of taken at careful approach to that it doesn't mean, we won't do any but oh, we also want to preserve our cash to see if theres better returns out there and and comparing those returns to some of our.
Internal investment returns as a one of the previous questioners asked about those and returns we see very good returns on that capital spending as well, especially with automation. So we were trying to measure all of those savings, including I'll call. It a opportunities that.
Nice bolt on small acquisitions might have.
In this in this.
Period of time, so it's trying to balance all of that but I would say, we're we're looking at all of that but we're not looking at doing nothing on any of it so.
Little bit everything okay.
And a lot Luckily it is there any more detail you can provide on the blue chip customer how potentially large this customer could become a little what they do what industry therein.
Sure Ryan you want to add to that I mean, we've got quite a few new opportunities that are that are in the works and all say definitely more than one.
Outside of the traditional markets that we would we would publish so one of the benefits of the agile capacity in assets. We have is there not dedicated to a given market. So things like the packaging in warehouse management that we talked about obviously, we think the current.
Endemic probably drives additional online ordering and other things that will drive.
That into the future we've had some health care opportunities that we've been able to.
Secure in recent time and in the topic kind of re shoring. There are folks that are reevaluating the those extended supply chains as they come from the Asia market kind of going back. Originally if you think about the impacts of the tariffs of last year now we roll into this pandemic, there's been a lot of stress.
Introduced into that that space, where I think folks are finally kind of coming to grips that they like the domestic supply chain the improvement in lead time and having somebody.
In your backyard is certainly have benefit so it's been a strong first quarter and really a strong past six weeks.
Here on on the quote flow and new customer new industry opportunities.
Okay. Thank you.
Yes.
At this time, we are showing no further questioners in the queue and this ends our question and answer session.
I would now like to turn the conference back over to Bob Kamphaus, Chairman, President and CEO for any closing remarks.
Okay, well I'll just close by saying Thank you all for your time today.
We look forward to updating you on our progress in the months ahead, a everybody stay healthy unsafe and thanks for following Mac.
Oh.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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