Q1 2020 Earnings Call
And gentlemen.
Operator.
And Copels conference call with again momentarily at approximately.
10 32.
Time again, the conference will be fairly thank you.
[music].
Good day and welcome to Ampco Pittsburgh Corporation first quarter 2020 earnings results Conference call.
All participants will be.
[music] did you need assistance, please say telecom specialist by pressing star keep followed by zero.
After todays presentation there'll be an opportunity to question.
So that's the best is being recorded.
I'd like to chemical spill over to Melanie.
Director of Investor Relations. Please go ahead.
[music].
Thank you Sarah and good morning, everyone <unk> first quarter 20 Twond.
I'm joined by rare for Chief Executive Officer, and Mike Mcauley, Senior Vice President Chief Financial Officer and Treasurer.
Joining us on the call today.
[music].
You know corporation, and Harry Kenney President Eric.
[music] before we begin I'd like to remind everyone that hurt.
Call May make statements or comments that are forward looking may include financial projections or other state Corporation.
<unk> expectations.
These matters involve certain risks and uncertainties many of which are outside corporation control.
Corporations actual results may differ significantly from those projected or just any forward looking statements.
Right.
[laughter] corporations, most recently filed form 10-K.
The quick filings with the Securities Exchange Commission, we do not undertake any obligation to update or otherwise released publicly any revision to our forward looking statement.
A replay of this call will be posted on our website later today.
For two weeks following the.
All right. That's the earnings release, when a webcast replay please consult the investor section on our website AERCO P.G.H. bass.
With that I'll turn the call over to Brian rare Ampco Pittsburgh.
[music].
Good morning, welcome to our call.
The core values of our business just like to say, how far employees and to ensure that we protect the environment communities, where we operate.
Our environmental record continues to be outstanding is we maintained our answer pre trend 320, 19 and into the first quarter. This year.
Additionally, our last time right in our recordable injury rate improved in the quarter decreasing by 15% and 40% respectively.
I'm excited about the actions, we're taking further improve our performance.
Dedication of our poised to help us create injury free workplace.
Our business than that of our customers are considered essential the guidelines established by the department of Homeland Security.
We continue to follow the requirements.
Practices outlined by government.
And local officials, where we operate around the globe.
Oh boy.
Their families and our vendors and customers.
We are grateful, but not surprised by the gauge what about poised to work safely during these unusual and challenging circumstances.
As I've noted in previous calls [laughter], we've taken many actions to improve the profitability of ampco Pittsburgh, including divestitures.
You should see improvements cost reductions across all areas.
These efforts returned our business to profitability in the fourth quarter of 2019.
Many actions still in progress we further improved our performance in the first quarter. This year recently announcing an earnings per share of 33 cents.
Crewmate in operating income of 43%.
Quarter four of 29 gene to quarter one this year.
Excluding unusual items, our adjusted operating income from continuing operations improved by 85% sequentially.
Mike Mcauley, our CFO will share more details regarding our results later in the call.
I'd now like Terry can't eat prisoner bear and liquid system.
Sam lie and President of Union electric steel to share the improvements in their groups performance very.
Thank you Brett and good morning.
First quarter sales for the air and liquid processing segment increased slightly when compared to the same period last year.
The growth in sales up heat exchangers, and custom air handling equipment was partially offset by a minor decrease in sales centrifugal pumps.
Segment operating income for the quarter improved by 20% compared to the same period last year.
Favorable results reflect the impact of increased sales prices improved product mix and savings generated by the process improvement efforts at all three businesses.
Eric Wood processing segment backlog increased to $57.4 million led by strong orders for heat exchangers and centrifugal pumps.
This backlog is the highest in more than 10 years.
The threed businesses that make up the air and liquid processing segment have continued to manufacture throughout the cobot 19 pandemic.
This is possible only through the hard work dedication of all of our employees.
The focus of all three businesses is to keep our employee safe well servicing our customer needs and continuing to drive process improvements and cost reduction efforts.
Thank you Terry I will now turn the call over to San Juan Sam.
Thanks, Brett and good morning, [laughter] throughout the first quarter. Our focus continues on safety cost reductions in the U.S. in Europe and restructuring activities in the UK in Sweden.
Our operation can swing turned a profit for Q1 this improvement.
Along with record operating income in Arslanian operations and strong performance from our operations in the U.S. and try to allow the segment to deliver an income from continuing operations a $4.6 million in the quarter.
Excluding insurance proceeds operating income was 3.8 million in the first quarter versus 2.7 million.
In Q4 of 19 on the same basis. This operating income was achieved with $5 million lower revenue.
Now I'd like to highlight some improvements that we made in the U.S. and Sweden during the quarter.
In the U.S., our focus is on maintenance and the cost for quality.
Our actions in the quarter resulted in the 800000 dollar reduction in maintenance spend when compared to the last year.
We achieved this reduction by taking a more proactive approach and our activity.
Year to date, 45% of our maintenance tasks were planned versus 20% prior year.
We have assembled a team focused solely on this activity. They look at the most critical assets and analyze their potential and the impact of that failure.
Items determined to be most at risk our reworked.
We're mitigation plans are put in place such as critical spares I'm very excited about the potential of this effort.
From a quality perspective, several large issues a better fruit on we're running at a $1.7 million favorable annualized cost to quality rate when compared to the prior year.
Like the maintenance team the critical quality issues were identified and resolved and corrective actions were put in place.
I will now move to the improvements in our Swedish operations.
In prior calls I stated that we had identified $2 million of a criminal activities exclusive of the reorganization of the sales and operations teams in Europe.
These improvement activities targeted raw material savings process improvements and the cost the poor quality.
The first quarter the team delivered over 1.3 million of savings when compared to Q1 of 2019 at 800000 dollar savings when compared to Q4 2019 far exceeding their original goal.
The majority of the $2.9 million a restructuring savings will start to be realized during Q2 this year.
Looking ahead to the next two quarters, we expect to complete the restructuring of our European operations, and we'll continue to focus on our maintenance and quality improvements, we continue to address the safety and well being of our employees and vendors as we can provide the new and changing realities of operating in the current covert 19.
Environment.
We will also be laser focused on cash due to the uncertainties in the market, we have already taken steps to conserve cash, including the implementation of first in the United States.
Okay, well Greenya, Sweden, taking advantage of the social security tax deferral in the United States Deferring Merit increases in the UK and deferring growth Capex in the U.S.. We expect these actions will save over $10 million in 2020.
Thank you Sam It this time, Mike Mcauley, who will share more detail regarding our financial performance for the quarter Mike.
Thank you Brett.
My commentary today includes the use of certain non-GAAP financial measures I refuse for you to our disclosure regarding non-GAAP financial measures and the related non-GAAP financial measures reconciliation schedule included or not Q1 2020 earnings release issued this morning.
Q1, 2020 could continue that in fact improved upon the returned to profitability for ampco Pittsburgh from last quarter.
The first time dating back to 2014 that the corporation has reported positive income from continuing operations four consecutive quarters.
Echoes net sales from continuing operations for the first quarter of 20, Twond where $91.1 million.
This compares to net sales from continuing operations for the first quarter up 2019 up $107.5 million.
Net sales in the forcing cast engineered product segment of 68.8 million again for the first quarter up 2020 declined approximately 19% compared to the prior year quarter due to a lower volume of shipments of no roles, both forged and cast.
And forged engineered products.
Net sales for the air and liquid processing segment for the first quarter up 2020 up 22.3 million.
Increased slightly compared to the prior year theory.
Gross profit as a percentage of net sales was 23.0% for the first quarter up 2020 versus 16.1% for the first quarter of 2019.
The improvement is primarily attributable to the forged and cast engineered product segment.
Which is benefiting principally from a lower cost structure due to the sale of the and more facility last year.
Lower raw material costs, and improved manufacturing and operating efficiencies.
Additionally, the horse in past engineered product segment received business.
Business interruption insurance proceeds.
Point $8 million in the first quarter of 2020 from a 2018 insurance claim.
These insurance proceeds were recorded as a reduction to cost of products sold in the current quarter.
For the air and liquid processing segment gross profit increased slightly benefiting primarily from changes in the product mix and cost efficiencies.
Selling and administrative expenses of $11.8 million or 13% of net sales for the first quarter of 2020 were down compared to $13.9 billion <unk>, 0.9% net sales for the first quarter 2019.
We were able to deliver approximately 15% year over year reduction and SGN I expense for the quarter, principally due to lower employee related costs in part due to completed reduction enforced actions from 2019.
Lower professional fees as well as lower volume related commissions expense.
Depreciation and amortization expense of 4.7 million tolerance for the first quarter 2020.
Was down compared to $5.3 million.
For the first quarter of 29 King.
Principally due to the 2019 divestiture of the up in more cast roll plant.
Income from continuing operation on an as reported GAAP basis for the first quarter of 2020 was $4.4 million, including the point 8 million dollar benefit for the business interruption proceeds.
This compares to a loss from continuing operations in the prior year quarter up $12 million, which included an impairment charge of $10.1 billion.
Point $9 billion up restructuring related costs.
And approximately $2.2 million in excess carrying costs of the ever more P.A. Castro facility divested in 2019.
Excluding the unusual items as defined in the non-GAAP financial measures reconciliation schedule included with our earnings release.
Non-GAAP adjusted income from continuing operations for the first quarter of 2020 was approximately $3.6 million.
This reflects an improvement of approximately $2.3 million compared to the prior year quarter on the same non-GAAP basis.
The improvement is principally attributable to the implementation of manufacturing and operating efficiencies.
Along with the completion of selected reduction enforce actions across the organization.
Other income expense net worsened for the first quarter of 2021 compared to the prior year quarter due to higher foreign exchange losses, and unrealized losses on Rabbi Trust investments, which are principally due to market disruptions caused quite a call that 19 pandemic.
The income tax benefit for the first quarter of 2020 <unk> includes a benefit of approximately $3.5 million due to the expanded tax loss carry back provisions made possible by the care to act.
We have already filed for that refund.
Although we have this benefit on the tax line.
The net effect of cobot 19 related items to out our Q1 PNM was about neutral.
The foreign exchange transaction loss, the unrealized loss on Rabbi Trust investments.
Certain bad debt and slow moving inventory reserves, which we increased in the quarter in the forged and cast engineered product segment.
And some lower sales in that segment towards the end of March were all related in whole or in part to market impacts driven primarily by cobot 19.
Collectively these items approximately offset the tax benefit from the Paris Act.
At the bottom line the Corporation reported a GAAP net income attributable to ampco Pittsburgh of $4.1 million or 33 cents per carton per common share for the first quarter of 2020.
This compares to a net loss of $15.1 million or $1.21 per share for the first quarter 2019.
Included in impairment and restructuring related expenses totaling 88 cents per share.
Plus a net loss from discontinued operations last year of 18 cents per share.
Here's some detail on business segment results in the Fortunately cast engineered product segment Q1, 2020, net sales of 68.8 million declined approximately 19% versus prior year due to a lower volume of shipments of mill roles, both forged and cast and force engineered and ports engineer.
Your products.
Offset slightly by a more favorable product mix.
However, the segment's operating results improved significantly for the first quarter of 2020 compared to prior year, which included the impairment charge in the excess carrying costs of anymore.
Additionally, the current year quarter benefited from the proceeds from the business interruption insurance claim.
Manufacturing efficiency improvements for a lower cost structure and actions taken in the prior year as well as raw material costs and lower commissions expense.
Partially offset by the effect of the lower sales volume and reserves established for anticipated bad debts and slow moving inventory for certain of the segments oil and gas customers linked in part with expectations associated with the cobot 19 pandemic.
Net sales of 22.3 million for the air and liquid processing segment in the first quarter of 2020 were slightly higher than the comparable part prior year period.
Sales for the air handling and business and heat exchange businesses were higher than a year ago as a result of higher volume of shipments.
Sales of pumps were slightly below the prior year period due to lower shipments to us Navy ship builders.
The segment's operating results improved for the first quarter of 2020 compared to prior year, primarily due to more favorable product mix and cost reductions.
Backlog at March 31st 2020, approximated approximated $278 million a decrease from $321 million at December 30, Onest 2019.
The decrease was principally due to lower backlog for cast rolls in a decline in foreign exchange rates used to convert the backlog corporations foreign subsidiaries subsidiaries into the U.S. dollar.
Lower exchange rates at March 30, Onest 2020, when compared to the earlier period reduce backlog by about $10 million.
Backlog for the air and liquid processing segment improved due to strong order intake for heat exchangers instant critical pumps.
Next year are a few balance sheet and calculated items for continuing operations.
Accounts receivable of $75.2 million at March 30, Onest 2020 decreased by $6.6 million compared to December 30, Onest 2019.
Primarily attributable to lower sales in the latter part.
First quarter 2020.
Parents, the latter part of fourth quarter 2019.
Improved collections.
And an increase in the corporations allowance for doubtful accounts provision.
Inventories of $82.4 million at March 30, Onest 2020 were flat compared to December 30, Onest 2019.
Accounts payable of $36.2 billion at March 30, Onest 2020 increased by $2.9 million compared to March 30, Onest 2019.
Capital expenditures for the first quarter of 2020 were $1.9 million, primarily for the portion cast engineered product segment.
Cash and cash equivalents for continuing operations up $13.9 billion.
At March 30, Onest 2020 increase compared to the December 30, Onest 2019 balance.
Net cash flows provided by operating activities was a strong $12.2 million for Q1 2020.
Drawings on the Amco revolving credit facility with $31.5 million at March 30, Onest, 2020, which is down $2.8 million.
Versus December 30, Onest 2019.
The decrease in revolver borrowings reflects improved operating results lower investment and trade working capital.
Total debt at March 30, Onest 2020 was $68.2 million and this down 2.6 million from the December 30, Onest 2019 balance in line with the revolver decrease.
At March 31st 2020 in addition to the cash balance.
Corporation also has remaining availability on the revolver of about $31 million.
An improvement of approximately $4 million compared to availability at December 30, Onest 29 team.
I will now turn the call back over to Brett for some closing remarks.
Thank you Mike.
Our improvement actions are continuing throughout the year, as we simplify and right size or business for long term and sustaining profitability.
We continue to identify new leverage points is staying in our positive trajectory.
I'm excited about the actions that are currently underway.
The impact of Coven 19, it's difficult to predict at this time, however, we know the coming quarters will be challenged.
Our leaner cost structure and the improvement actions, we are continuing to implement.
Positioned us to better weather the evolving effects of the pandemic going forward.
Thank you at this time, we will now take questions.
We will now begin the question and answer your question.
You asked the question you May Press Star then one.
Yes.
If you're using of speakerphone, please pick up your handset before pressing the Keith.
What's draw your question. Please press Star then too.
Please limit yourself to one question and one follow up.
At this time, we'll pause momentarily to assemble our roster.
My first question comes from barcode.
Got it with Stonegate capital market. Please go ahead.
Good morning, Thank you for taking my questions.
Oh I'm sorry.
Hey, I was wondering if you can maybe talk a little bit about.
The cadence that you saw through the quarter just.
What's sort of happening with the booking revenues in terms of the disruption as you may achieve some corona virus and then also if you can maybe talk a little bit about what your order book looks like today and how that kind of came to us is coming along.
Yes. This is Sam.
The majority some of our bigger customers were delayed in placing their 2021 allocation even prior to the koby 19 situation and so they were that would typically have been in our backlog and that's not and then when covered 19 happened there are reassessing their needs for the remainder of this year.
And then what will push into 2019. So that's really the reason why the the backlog is lighter than typical.
Got it Okay, and then maybe I think you touched on this little bit with with the balance sheet and the cash flow.
Pretty strong in the quarter, but maybe if you can just talk a little bit more about your expectations for cash flows for this fiscal year not necessarily looking for guidance, but just kind of getting the trying to get a better sense as far as what your liquidity situation looks like what you might be expecting from maybe a base case type scenario.
And if you can discuss your expectations on on working capital in Capex expense expectation for the coming fiscal year.
Okay Marriotts, Mike Yeah. Good question.
You know that.
As we as we entered into as we end Q1.
We're in a pretty solid liquidity position.
Availability on the revolver is up we ended Q1 with a strong.
Sales month in March.
Increasing.
Collateral on the accounts receivable on the line.
You know we were getting.
We have done things to respond to the.
To the impact in the second quarter.
We've curtailed some operations temporarily and we have we have we shut some plants temporarily to to manage through in the early part of Q2.
That has basically you know.
We've been able to match successfully managing our cash flow and in the first part of Q2, we've been harvesting cash and we've been using that to pay down the credit line. So we've been actually very effectively managing cash.
In the early part.
Of the quarter I feel pretty solid right now and that as we look forward into the future.
What's hat you can just basically follow the our largest customers and what's happening on this in this on the steel side.
You can imagine some some demand just getting pushed out we're trying to manage that with our customers, but I do believe what we're going to see us less working capital.
Demand and I think we're going to as I indicated we're going to be liquidating some working capital.
We are managing our cost structure against that.
As well so you know I think we have as we get into the second half of the year.
Visibility becomes even more difficult like most companies and so we we don't give earnings guidance, especially most most companies are pulling earnings guidance that used to give it because there's so much uncertainty our view.
Is that we we will see an impact here in the second and third quarter.
But we are managing our cash and our working capital should come down and I put your question on Capex, we have definitely.
Reduced our.
Our spending on Capex and our expectations for the year given the pandemic are to significantly reduce our capital expenditures and focus.
Those are those dollars on.
Maintenance requirements basically.
Sustaining type and investments in the machinery.
Got it I'll jump back in queue. Thanks.
Your next question comes from Justin.
Sure with key research. Please go ahead.
Good morning.
Good morning, Jeff how are you Brad how are you Mike I'm good.
Okay.
First question just is on the benefit into the cares Act so.
Given what I've heard from other companies. So that 3.5 million includes both the benefit from the reversal the valuation allowance and sort of the markup of.
Noel's booked at 21% to the 35% that you can look back against.
Correct me, if I'm wrong, there and then what is the in the cash refund you're expecting from the care Zach this year.
And potentially early next year versus that three and a half million.
Well.
Justin.
Basically the Paris Acs has enabled the.
Carry back of an additional two year still it goes up to a five year carry back allowance, which means that if you had net operating losses on that you were carrying forward you can now to pause and take a step back and look look back five years and when we do so we take our 2018 results and go back to 2000.
Our team we are profitable we have to uncertain normally it's a two year carry back.
Opportunity in normal times, and we've used that effectively over time, but as we look where the opportunity lies for us if we take our 2018.
Losses and apply them reach back five years week, we can harvest submental wells of about three and a half million.
If we can reach goes back to our 2013.
Period, when we had profit.
And.
So we've already filed for that refund. So that's free a half million, we think we may get that.
We're estimating here, but it may take say 90 days were so from filing the refund and we already have found that refund. So.
Case, maybe trying to wrap this out when when that money might come in probably we're guessing around July maybe if things go well with them with the government and the IRS and maybe a 90 day estimate might not be unreasonable. So that's one piece of it the other piece of it is that the cares Act also allows for some.
Other benefits that are that to accelerate some other benefits like alternative minimum tax.
Refunds that you are eligible for but you have to you have to wait.
The carriers act allows those to be.
Refundable now.
It's pretty small for US couple hundred thousand so we're expecting that to add and that's part of our refund request as well so when thinking about 3.7 million get ourselves should come in in the summer.
On the refund.
Thats all that plays out.
And as so and we're basically we get to record the benefit on the in the current period.
Tax provision because we believe that a current receivable for it.
Okay. That's helpful. So I guess, yeah. So the tax benefits sort of the cash benefit matches that 3.25 million to it to ahead.
Yes, the other question I well two more questions I guess next would be.
You talked in prior calls about pursuit of sort of new business and in new end markets I realize it's a tough tiny pursuing new business any updates there.
Yes.
On the portion catheter products side.
Where we were heavily relied on oil gas and as you all know thats pretty well debt at this point with.
I mean, the rig count from a year goes down 56% at this time.
From 994 way and we're actually starting to see that increase.
As we are predicting of the prior calls we'll start to see activity increase in January February lot increase coming at a now that is not but the same time, we've really been going after our distribution markets and infrastructure and industrial gearing type of markets and we have enough opportunities in there to really and trials being.
On to offset what we were expecting in oil and gas so yet to be seeing that the trousers successful, but we do have a lot of activity occurring.
Tethadur 10 to 12 different customers.
Okay, great. Thank you for that color.
And then lastly, or the other question related just the restructuring you talked about a 2.9 million benefit I think from restructuring Europe.
How much of that has you said I guess 1.2 million of savings have been realized year on year.
Is that all Sweden related or is that mainly Sweden related how does that break out across facility.
The 1.3 million is just cost savings related on raw materials and process efficiency. So there's nothing to do as restructuring the restructuring.
We probably have already seen.
You know of $500000 of it.
Thats an estimate so.
Really the reason why not done at this point, it's a difficult in Sweden more difficult, Sweden too.
Severance period, and how long you have to get warnings and dealing with the unions, but all of that complete and most of the people start coming out in May may and June timeframe, it'll be pretty well completed and the majority of that remaining in Sweden.
Okay.
Thanks for taking my questions.
Thanks, Thank you.
Again, if you'd like to ask a question. Please press Star then one.
Next question comes from David Wright with Henry investment.
Please go ahead.
Good morning, Brett.
Yes, that's relations to you and your team continued to make the progress that you said you're going to make and it's a good report. This morning. So thanks for the good job.
He does.
Question for a question for Terry.
Just remind me.
On the pumps did you make for.
The us Navy, which ships do you make pumps for.
Mhm Buffalo pumps has some.
Services on virtually all of the.
Combatants in the U.S. Nate.
The combatants specifications are significantly more severe than the cargo ships in the tankers into supply shifts and that's where our focus is so where are virtually all of the combatants.
There's her construction today surface ships only correct that is correct. Okay. Thank you.
Two for Sam.
Just for clarification you alluded to is something you guys talked about on on the last call, which was role customers not having placed a full year orders.
Do you think that those orders are going to be placed store or just won't be any this year because of all of the disruptions.
Okay.
I wish I knew the answer to that.
Listening to the earnings calls of our customers.
Like Arcelor Mittal for example in the U.S. is heavily relied on.
Automotive, so that's obviously, but slow to restart and we're seeing deferrals.
Nucor steel dynamics are more in the construction space and that has not slowed down at this point in time, they're not as big a customers for us but there.
Still out there so we're starting to see Italy open back up others period of time, where we weren't shipping any rolls are still be in operation ships quite a bit in Italy and that has started again. So it will certainly be lighter and I think there'll be deferrals from 20 to 21.
But that will be yet could be seen over the next two or three weeks as our customers assess their inventory.
And.
And what they need for the remainder of the year in early next year.
When you say over the next few weeks or or.
Is there sort of.
An order period that if you don't make orders by X that there were going to be Andy.
No.
Let me for for most of our.
For a lot of our products where in the.
Three or four month to be able to deliver if we got order today. The large roll says further out but were booked pretty solid on large rolls through.
Through.
Most October November so there's still time.
They're just everybody sits assessing as you can imagine.
What their order book is and what their needs would be and they're also.
Trying to manage their cash just like we are so at a rules.
Capital item for many of these these customers.
But they're going through that analysis currently.
Okay, and then second question for you Sam.
We've had a lot of shutdowns and some announce as permanent and will be restarts.
Can you characterize between North America, and <unk> and Europe.
Has the impact on on your your role business spin.
Different in one geography versus the other or is the experience pretty identical.
It's pretty it's pretty identical other that space I mean Europe was first.
Probably two three weeks ahead and then the U.S. is.
Lagging, but again the one bright spot in the us is.
Construction.
And that that kind of a general economic downturn construction lags because all those products are already started.
And.
And then believe it or not Tim Tim.
Used for cans and things like that people are using a lot more of that so volume there is stable to up.
But again, the big sectors, such as automotive in white goods are taking a pause.
Okay, and then one for Mike the the Rabbi Trust do they relate to asbestos reserves or something else.
Not David.
Rabbi Trust is in place to cover the Nonqualified Serp plan that's in place.
So I would say nonqualified entire retirement plan and we have an athlete trust in place.
For and it's relatively small about $4 million for saw its down because of its heavily in.
Because of the asset mix as a lot theres, a fair bit of that in equities.
And what they would be at with the equity market, taking a hit.
Largest especially.
The value of that we have mark to market with a mark to market that.
Asset because it has a corporate asset subject to the credit risk operation. So it becomes a corporate at that even though it's a trust its dedicated for the use of certain old Serp plan.
So we you know under the accounting guidance, we have to mark those assets to market rather than the further mendo Seattle.
Okay, Great alright, thank you very much.
Yes.
Our next question is a follow up from barcode regas, what's Stonegate capital markets. Please go ahead.
Hi, Yes, I just wanted to pull up in regard to the European restructuring.
I think you mentioned on prior answer two part question.
Recognized about a half coming.
And in savings from the restructuring European adjustments I believe in the past you had forecast for about a 4 million dollar annualized run rate in fiscal 20.
And if I heard you correctly.
You should realize that come.
Keep Q2 Q3.
This year.
Q2, the $3 million to $4 million was restructuring plus.
Million dollars in kind of quality avoidance cost savings.
Issues, and we've actually been able to do more on the quality side.
And that also restructuring piece was close to $3 million on its own.
But the majority of that two thirds or so forth recourse that will start to be realized in Q2.
Got it and if you can also remind us the phase one reduction plan that you are looking to take our $2 million on expenses that has been completed and then also you could talk little bit about.
Last quarter, you talked about reducing corporate expenses in the ballpark of 10% to 15% or are we hitting that target yet or is there some more room to grow there.
The 2 million on the.
Raw material process improvement quality.
Yes, we achieved that was supposed to be 2 million annualized and we achieved 1.3 million in the first quarter. So we're seeing a much bigger.
Impact now that will be.
Tamped down and Q2 in Q3, because the volumes are significantly down.
In the Sweden, and the sweet plant, but that wasn't ramps back up we will we'll see more like.
Three or 4 million dollar kind of annualized savings from those improvements.
I'll, let you guys, yes, yes, Marcos Mike on the on the corporate saving the corporate.
We ended the year, we said that we expected 2020 days corporate expenses corporate estimate to be down about 10% to 15% and we are definitely right in line with that right now.
Got it thanks, guys appreciate it.
Thanks.
This concludes our question and answer session and the conference is also now concluded.
Thank you for attending today's presentation you may now disconnect.