Q1 2020 Earnings Call
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But they can lock onto the end and incorporated first quarter 2020 earnings Conference call. Today's conference. It's being recorded at this time by by cuts on the conference <unk>. Please go ahead.
<unk> money never won and thanks for joining us Mark Fuhrman, Vice President Charger any investor relations like.
Like walking you <unk> 2020 audience conference call.
This morning, we'll be president and Chief Executive Officer, one adult men and Tom the bio senior Vice President and Chief Financial Officer.
Anyone need to copy the press release or the supplemental presentation. Please contact abernathy Mcgregor at your 12371 50 999.
Before we began I got that you take take take notes of the culture and language regarded forward looking statements contained in today's press release supplemental presentation and then the rest factor section <unk> annual report on foreign 10, K. for the fiscal year ended December 31st 2019 <unk>.
The companies quarterly reports on form cue for the three months ended March 31st 2020.
Language applies comments made up today's conference call, including a training session as well to lives web cast.
Oh presentation today will contain form looking statements regarding sales margins foreign exchange rates cash flow tax rate acquisitions synergies catching cost savings future operating results performance over worldwide markets in packs of the current dividers pandemics on the company's financial condition.
Other topics.
Statements abuse with caution.
In our subject the various risks and uncertainties vehicle, which are outside the company central.
Presentation will also.
Also includes certain nongaap measures as defined by S. receivables.
<unk> such Nongaap measures is contained in the tables and the final section of the press release and the supplemental presentation.
Tom will provide a business update the word yard results and then we will open up the line for questions. At this time old tend to follow up to one belt met president and see.
[noise] Bank marketing good morning, everyone.
There's every one of the where there's been substantial changes in the world can laugh conference call two months ago at that time, the current a virus the rat had not significantly impacted our but isn't it just outside of China, but today all of our operating segments and geography had that have been adversely impacted by the Kobe 19 pandemic.
I'm proud to say the end end employees had written into neat one of the greatest challenges of our generation our employees have adapted to numerous workplace challenges changes.
Required to combat the spread of the Corona virus and have maintained a safe working environment for all the pain. They continued to meet our customers volume requirements, while at hearing to the high quality standard that is a trademark of all went and facilities.
Before I start my prepared marks on a quarter I want to express my sincere. Thanks for their collective effort over the last three months. Thank you.
We'll start with an overview of the first quarter on page four.
Given this economic uncertainty caused by Kobe 19, we took immediate action to react to what we've used would be a threat to the health and safety of our employees.
<unk> and potentially <unk> prolonged reduction in our sale.
Our planet's focused in four major areas, one keep our employees safe to meet our customer requirements, three flux variable costs and reduce fixed costs and for <unk> are liquidity.
For many cost containment standpoint, our operating groups are focused on reducing variable cost commensurate with our sales volume reductions. These costs would primarily include material imperishable, two lane direct labor and outsource related costs. Unfortunately to accomplish this objective we have for a lot of both direct and indirect and.
Boys were customer volume have been dramatically reduce.
We have also take an action to reduce some six manufacturing and ASCII and expenses I will review at summary of those actions later in the presentation.
What a fine art liquidity is the Supreme importance to that and then prior to the ended up first quarter, we drew down 60 million under our revolving credit facility and we have a 79.2 million and cash as March 31st 2020.
Polluting 57.2 million in the United States.
We will also overview other actions, we are taking to retain as much liquidity as possible during the balance of 2020 later in the presentation.
Will be not a financial performance in the first quarter are fields were 199 million for the quarter down 13.5 million or 6.3% from the prior year. After consideration of corny exchange differences are life Sciences group recorded field of 84 million down 2 million or 2.3% for me.
<unk>, it's decrease as a result of reduce customer demand within the orthopedic and market driven by the time in a product launches and the impact of the Kobe 19 pandemic.
<unk> sales were 69.9 million a year over year reduction of 8.2 million, primarily due to lower demand within the global automotive markets, resulting from the 19 pandemic, especially during March.
Our power solutions group reported feel that 46.4 million in comparison to see all the 49.7 million a year ago.
Reported <unk>, excluding goodwill and parametric Q1, with 16.2 million and adjusted the bit that was 30.4 million.
Just to be that was slightly down from the first quarter a year ago due primarily to the year over year declining sales off at like six costing S.G.N.A. reductions our life Sciences group reported either dot excluding goodwill 17.8 million, while mobile solutions in power solution, each reported 6.2 million for the quarter.
The first quarter operating lots of 245 million.
Primarily due to the right off to 139.7 million of goodwill during the quarter. This action resulted in a write off of 100% of the power solutions goodwill in 146.8 million a goodwill associated with our life Sciences group.
Right off also in adversely impacted our report it E.P.S. as we reported a lock that $5.96 per share versus the lost at 47 cents per share a year ago tumble discuss the accounting rationale associated with the good will impairment later in the presentation.
A free cash flow for the first quarter would they use of 1 million and improvement of 15.7 million from the first quarter a year ago.
As we discussed last quarter, we expected an 8 million dollar benefit in the first quarter do we do too heavy maintain our trade payable in a better age position at December 31, 2019 versus December of 2018.
Remaining improvement is due to cost reductions, we've implemented lower capital expenditures and improved working capital management.
Lastly, we previously announced a strategic review, where the company will evaluating broad range of operational financial and strategic options with the goal of reducing leveraging enhancing shareholder value. This process is ongoing and it is clear to us that despite the current economic environment. There continues to be a.
Santo number of potential buyers for high quality at the end businesses as.
As we have said before we have a great company and really good businesses and Moreover are organizational structure allows for good flexibility as we continue our strategic review and look to enhance shareholder value.
The extent of our disclosure in comments regarding this process as always we appreciate your understanding and patience as we continue to pursue alternative associated with this important initiative.
Circling back to our overall covert 19 plan page five summarizes somebody actions regarding maintaining a safe work environment for our employees.
We have taken measures to enhance employee communication and education surrounding the Corona virus and employee driven preventative actions.
We have also coordinated the standard response protocol with local health officials based on C.D.C. recommendations and are conducting daily temperature screening of on site personnel and visitors.
Issuing appropriate personal protective equipment, and performing frequent and responsive workplace cleaning and disinfection.
I pay six we presented the summary of our efforts to further reduced costs improve liquidity.
All of these actions are in addition to our previously previously announced school of improving cash flow by $32 million annually that goal has been achieved.
Given the out of certain in regarding the cultivated crisis, we feel that immediate action was required to reduce additional costs and preserve our liquidity. We have already implemented cost reductions. Then include temporary salaried options for all executive management team members of 20% to 25% and temporary reductions for others.
Salary personnel of 5% to 15%.
Significant cost reductions include reduction been employee benefits, including the suspension of the four one k. matching and playing games sharing programs.
<unk> noncritical travel and further streamlining of our indirect in S.G.N.A. labor costs. These new cost reductions exceed 20 million annually.
As it relates to the liquidity enhancement measures, we have reduced our capital expenditure expectation to below 35 million within extreme biased towards authorizing only maintenance cap action items going forward. We also expect could benefit from certain provisions under the cares Act.
The ability to increased appreciation and interest expense adoptions in 2018, and 19, along with new carry back provisions will allow it to carry back 2018, 19 losses back to 2017 to recover taxes paid in those years. In addition, we will be deferring the.
Boyer portion of Fyke attacks until 2020 and 22.
Including the costs actions, we have or in the process of implementing actions that should provide over 45 million cast savings from our pre go Kobe business plan.
Turning to slide seven which details our first quarter by saying that.
Consolidated basis total revenue decrease 6.3% versus the prior year due primarily to issues associated with the current a virus pandemic are China operations for life Sciences in both solutions were impacted throughout most of the quarter and the mobile solutions operations in Europe, and North America, We're <unk>.
Personally impacted in the latter part per score.
Now I'd like to turn it over to time to bias of Popken provided more Indepth review, our financial performance for the quarter Huh.
Thanks Warren.
Please turn to slide day, which includes our first quarter results on a gap non gap, excluding special items and a total adjusted Noncat basis.
We break down our adjustments into two categories.
One category is special items, which are one time unusual expenses.
The second category is transition and integration expenses. The company has six doors plea captured due to the number of acquisitions and integration activities made over the past few years.
Couple of points on the slide first gap operating profit was impacted by a noncash charge for the right off of goodwill.
239.7 million.
This was driven by a decline in our market capitalization that was less than our netbook value of our shareholders equity.
And then market capitalization, roughly 75% was a triggering event that cause us to perform a goodwill impairment analysis as of March 31st.
Right off of the goodwill.
Second sales were down 13.5 million for 6.3%.
<unk> variable margins are approximately 42% to 45% therefore expected operating profit decrease would be about 5.7 million to $6.1 million.
Operating profit on a non gap, excluding special items was only down year over year 800000 circled on the right side of the page.
It shows that the businesses flexing results lower volumes to cost cuts and managing production levels.
Let's go to slide night.
Which provides a bridge was more granularity between reported gap non gap, excluding special items and total adjusted non gap.
There are few moving parts on this page that I would like to discuss.
Burst that's focus our attention on upper portion of the bridge.
Tax affected asset right out of 3.8 million primarily related to the elimination of the lease obligation for a major portion of the corporate headquarters building.
That's previously mentioned there was a non cast charged for the impairment of goodwill of 239.7 million impacting the results.
The discrete tax item of 11.9 million, primarily relates to the tax rate impact of the goodwill impairment as well as the impact of the terrorist Act legislation.
In the prior year, the large tax affected special items.
2.1 million related to the right off of an advertise debt issuance cloth and a discrete tax item 6 million related to the toll charge for the repatriation of foreign Marines through 2017.
Now, let's turn our attention to the lower section of the bridge.
Q1, 2020, the tax affected non operational adjustments relating to.
Pasadena capabilities development professional fees and integration and transformation, we're down 2.4 million year over year.
Affected foreign exchange on inner company was pop point 9 million and the amortization of Tangibles was down point 6 million year over year.
Turning to fly town.
Working capital at the end of the first quarter was 187.6 million compared with 199.4 million in the prior year, a decrease of 11.8 million.
Working capital turns were 4.3 turns in both years.
Yeah, so improved versus prior year by 4.3 days in mentor. He turns were the same in both years in the accounts payable decreased that's left inventory was brought in.
Please turn to slide 11.
Net debt at the end of the first quarter was 768.9 million versus 848 million in the prior year, a decrease of 79.1 million.
Keep it a measured by the credit agreement to fund it that was 4.89 times versus 5.1 time in the prior year during the quarter, we drew 60 million on a revolver for liquidity purposes.
Our credit agreement leverage racial steps down from 5.25 times at the end of the first quarter 22, five times for the remaining quarters of calendar year 20.
Due to the uncertain economic environment related to the cold at night team. We are in constructive discussions with our banks. They have been supportive of our efforts as we continue our strategic review process.
Although we have tangible step taken tangible stops to improve our liquidity and improve and implement clustered auctions given the uncertainty the economic environment or.
10, Q. for the first quarter of will show us as a going concern.
[noise] slide 12.
It was our free cash flow for the corridor free cash flow short of cash use of a million dollars during the first quarter of 2020.
Paired with the cast use of 16.8 million in the prior year a significant improvement.
It's worth noting that the first quarter of 2020 represent the fourth consecutive quarter of positive and that cash provided by operating activities as showing on the grass.
Right 13.
Summarizes our capital spending depreciation and amortization trends.
Dash capital expenditures were approximately 11.3 million in the first quarter compared with 14.1 million and the prior year for the for the court at the Cat companies capital spending was 5.6% sales down from prior years percentage of 6.6%.
Many as quite as capital spending forecast from 45 million to 35 million in response to cope with 19.
What's that altering the call back to warrant.
Thanks time.
We have presented additional information for each of our operating grouped starting with a life Sciences H. shit.
In spite of the year over year sales reduction or life Sciences Rip continues to perform while it's evidence by the expansion of operating profit, even die and adjusted EBITDA as a percentage of sales.
Either die, excluding goodwill impairment with 1.9 million over a year ago due to our continuous process improvement efforts and indirect labor and S.G.N.A. cost control activities.
<unk> backlog is it 163 million 15 million dollar increase from Q. for 2019.
In spite of this increase we are cautious regarding future demand given the significant reductions in elective orthopedic surgery is caused by the current a virus pandemic are focusing Q2 and you three is on flux productivity and cost control given we expect customer demand will be significant reduced.
First quarter levels.
The mobile solutions business summary is included on page 16.
As I've indicated the mobile solutions group was hardest hit by the current a virus pandemic during the first quarter. It sales were down 10.5% from one year ago.
Even die declined to 10 million and even that declined from 10 million in do you want 2019, two 6.2 million.
2021st quarter due to the feels reduction and operational inefficiencies experienced with a sharp volume reduction that occurred in mid March.
We expect that volumes will be substantially reduced over the next couple quarters do <unk> Oh, when you have shut down that started in mid March and will extend to mid may.
What's up and running production will likely remain below normal capacity for a period of time.
If the Europe, and North America recovery models that I'm in China.
Yeah, we'll take up to two months to return to normalize production, assuming <unk> consumer demand returns.
Our focus in mobile solutions will be on cap X. containment.
Working capital management and flux productivity.
Moving on to power solutions on page 17.
Powers first quarter sales decrease 6.6% year over year is due primarily to lower sales caused by coping 19 uncertainty and delayed customer approvals associated with moving production do drugs and silly closure.
Reported even die, excluding goodwill and Paramount with negatively impacted 1.4 million due to the sales loss and sales mix.
Power has <unk> has been relatively resilient to the crime virus attack, we expect that sales will be negatively impacting cute to execute you will have a full quarter of corona virus impact, but it's a likely effect will be left then that experience by our mobile solutions in life Sciences groups.
As with other groups are power management team will be focused on flux productivity working capital management and cost reductions.
Normally I would conclude my commentary by providing guidance for the next quarter in year. However, as you were out where do you did a covert 19 impact we withdrew our sales and earnings earnings guidance for the year and do not planned to reinstate any guidance until we have a better view of how the industries in which we operate and world economy.
We'll recover.
Sad I'd like to provide some additional insight and how we use the remaining portion of the year.
Given its concentration an orthopedic products our life Sciences group is dependent on elective surgeries, such as those for <unk> as as those for joint replacements.
Surgeries I've seen a massive reduction over the last two months and are just now starting to be performed as a result, we expect our life Sciences group will have reduced sales from Q1 levels over the next two quarters would they recovery recurring after that and through the first quarter of 2021.
We expect the recovery for our mobile solutions group will be longer than that and lifetime.
Expect that European and North American automotive volume's will gradually ramp up their production over the next eight to 10 weeks with consumer demand being the ultimate determinants of overall production levels given the extreme levels and recent unemployment and then certainly regarding economic growth coupled with a significant purchase price of and then I'll autumn.
<unk>.
Believe that a return to the pre covitz production levels will not happen until the second half of 2021.
They stated previously I believe the power solutions path will lie somewhere in the in the middle.
Would be more dependent on economic growth in improving and consumer confidence.
We believe the Q2 Q3 volume or adoptions will not be as severe as either life or mobile and the <unk> recovery path will likely not be as sharp as life sciences or as long as the mobile solutions recovery.
As a reminder, my comments on market trends and revenue estimates do not represent guidance.
Tended to be illustrated for illustrate of purposes only as there are many uncertainty surrounding however, coven 19 prices will impact the man and wrap.
That concludes our prepared remarks, and I will now turn the call back to the operator for questions.
Yes, if you'd like to ask a question on today's call that a star one on your telephone keypad.
[noise] [noise] well good question from Dan more let's say.
<unk>.
Hi, This is actually lead you go to for Dan. This morning, good morning.
Right.
So just you did a pretty good job outlining you know the outlook for the various segments as I look at the cost cutting measures measures you've taken how should we think about sort of you know.
Levels of you would die either flighty, but the or perhaps growing you, but given all the cost you've already taken out and your outlook for these segments.
Yeah, I think that there are not yeah, sorry, I think are even it clearly is gonna be depending on where to sales volume and and as I indicated it's really tough for us to provide guidance on that given how uncertain. It is at this point in time so.
We're we're focus more on providing the guidance as it relates to overall sales and where we think rationally that's going to go at this point in time, you know I would I would encourage you to continue to use the rule of thumb you know that Tom indicated in his prepared remarks that typically when sales fluctuate.
You see a fall through a variable caught variable margin excuse me at about 42% to 45% of the sales change and we expect that to continue going forward I think our teams have done a extremely good job over the last couple of month laughing.
Our businesses consistent with the change in the sales volume.
Okay, and then just switching to the liquidity.
And you kind of give us a view of your current level of liquidity reminder, for the ending your term debt maturities and then kind of give us a refresher on the piece of paper that you took out I guess like last year, you know, we've in a private placement and how that impacts b. or both.
Interest expense and and liquidity needs going forward.
[noise], Yeah, I'll like you know I'll talk about the the preferred stock that we use you'd and the fourth quarter. The one of the primary benefit.
That issue when it was that it didn't create any demands on our liquidity or cash position that any the interest associated that was pick and that's one of the reasons that we pursued that instrumented. It gave us some flexibility from a liquidity standpoint.
Do you want to address some of the comments as it relates to where our cash and liquidity position is today.
Sure. So we have about 4.5 million do every quarter.
Oh principal payment.
So that is that's ongoing.
As we speak.
And right now you know warranted mentioned, how much cast we add on the balance sheet and at least we show at March 31st and we have roughly 75 million of cash.
The day, that's including overlap.
Overseas cash.
Didn't answer your questions Yeah. It does thank you very much. Thanks.
Thank you.
Well go to our next question from Steve larger, but Keybank capital markets.
Hey, guys [noise].
Warning.
I'm trying to think about the magnitude of revenue decline in mobile into Q.. We we know Giants, we started to some degree but north American auto plants are gonna be shut down for half a quarter, probably it's slow Ram is down 50 per cent of good proxy for how we should think about that rather do decline.
Is that not enough to extreme.
<unk>, here's the data points, here's the data points that I'll give you as it relates to our performance in April Okay. The noble solutions group in comparison to the trend that we had in the first quarter. So in comparison to first quarter volumes <unk> mobiles fails.
In April robbery in at about 45% of what we did in the first quarter power was it about 80 per cent in life was that 90%.
Oh, that's great.
But that gives you some sort of indication of what we've seen so far.
Right no. That's that's really helpful. Thank you.
So it revenues down whatever pick a number 30 $40 million into Q. <unk>, what percentage of that revenue loss would be released from working kept could it be you know 10 or $20 million.
Yeah, we <unk>, we do our modeling on that we typically look at somewhere around 20%.
Working <unk> of the sales change, we should be able to pick up and working capital it's between 15 and 20%.
Yeah.
So if you met out why you think happens and two q. from around you standpoint versus the working cap and cost action standpoint, do you burn or generate cash in two q. and at what level.
Well I I think <unk> you know, we've modeled out a lot of different scenarios as you might imagine and and certainly if we're down you know 30% from our plan on an overall company wide basis. There. It is a there is.
Cash burn, okay, but for consideration and even after consideration of some of the working capital pick up that we would get.
It it any way to to frame the size of the cash burned into Q., Yeah, I could talk and then when we looked at our liquidity. We're we're we're very comfortable that with 30 per cent down case scenario over the next two quarters.
With a slight recovery in the fourth quarter that that are liquidity will definitely hold up through the end of the year, that's not an issue for us.
Meeting you continue shipping product meeting you're interested in other obligations based sort out you can see through the year.
Correct.
One last question for me on the impairment I've no accounting, so I'm sure I don't understand this but you know my thought is that impairments typically relates to the future value of cash flows falling below the carrying cost of goodwill. So does the life science impairment inherently suggest a lack of profitability in that segment or can you just talk.
Through the mechanics of that.
Sure.
I'll take that one.
<unk>, so I'm sure, it's all related to our market capitalization.
Price went from let's say at your round, our measurement time of like above $7 down to a Buck 50 March 31st and so it was just clearly a function of that our market capitalization went down below or books.
Value of our shareholder equity and we have to do a reconciliation of that and.
The result is that you know with the market capitalization going down 75% roughly 225 million. We have we had we had.
Do you have to write off goodwill.
And you do you know otherwise would have just to such an extreme premium on our discounted cash flows out of our businesses that it that the market's not accepting so it's it's an accounting.
Estimation I don't agree with it but.
It is what it is.
That's a that's a helpful explanation. Thanks, okay.
Okay you bet.
And as a reminder to ask a question on today's call for this star one on the telephone keypad.
Well the next to Robert Brown replace streak capital markets.
Good morning.
Oh, My sinuses business in particular, obviously, it's it's a tough environment right now, but how much visibility do you have when things start to improve how does it take to sort of.
Two or three within your business as as procedure start to happen.
Well.
<unk> I would tell you that that we're in we have been in constant contact with our customers on that life Sciences side as it relates to their expectations for demand through the end of let's call. It through the end of this summer.
Our view is that you know I just gave you the statistics as it relates to April in that business held up reasonably well in April given the fact that there hasn't been any major <unk> there hasn't been significant amount of elective surgeries that had been done you know.
Over the last six or seven weeks right and so that means our customers is still been taking product in what we're trying to gauge right now.
Is where their inventory levels that and when will they dial some of that back they clearly believe that and most of the data that we looked at.
<unk> <unk>, there's an expectation that.
The recovery of elective surgeries will happen reasonably quickly so none of our customers want to be laughing a situation, where they don't have the inventory on has to be ready for a surgeon volume when that occurs so I think that during a read there probably you know reasonably good condition.
Bad at this point in time, so now they're planning their schedules for the summer and that's why when we talk about where we see the whole than the life Sciences business.
More in the the late May June early July time frame, then right now because our customers are trying to make sure. They have the inventory in place for potential future volume and then they'll dialect back once they see how the recovery occurs.
So I I wish I could give you a more definitive response from that but that's what we're seeing and those are the conversations we're having with our customers today.
Pretty colors. Thank you turn it over.
Well the next two young.
<unk>.
At partners.
[noise] guys, yeah. Thanks for taking the question.
I know you discuss a little bit several cooking, maybe a little more detail.
Far as how the conversations are going with the a revolver lenders.
Right.
You know getting pretty close against the covenant, So maybe this or any more detail on on that topic it as far as getting a waiver.
You want to take that one <unk>.
Sure. So we're we're we're an act of discussions with our.
You know I left fleet Bank Truest, and you know that they're very supportive of what we're doing the you know we've gone through the all of our cost reduction actions. We've gone through all of our liquidity. We've we've shared forecasts with them and you know we're just we're just working together they want to see us through the strategic alternatives, we want to get through.
That process too you know to deliver the balance sheet as we've discussed before and you know we we're we're just.
You know, it's going to be a few weeks down the road that you know, we're going back and forth and it's it's been productive.
Okay.
I really think about the the strategic alternative discussions like.
Those go out there.
Yeah.
Oh really tough time to to pursuit of opportunity so how she would like.
Well I'll start out with that I mean, we have three great businesses, absolutely fantastic businesses. They all have generate positive free cash flow, they're they're good businesses, you know and that and.
They're sought after assets so I mean I'll, let Warren comment on his he said he didn't really want to comment any more on it but.
No.
You know everyone should just remember that we have great great businesses and that are.
That are valuable.
Yeah, I I think the answer to that I think the answer that question is that certainly <unk>. It's a difficult time, given where did that markets are and we've had to be create it in the way that we're we're we're talking to people and we're trying to.
Evaluate opportunities.
And but I I think overriding point is is that in spite of that and in spite of where the debt markets are at the day that we haven't had what we consider to be a reasonable amount of success. Good success I mean, continuing on with this process.
So you answer your question. It is still ongoing and we expect that it will continue we will continue on with that process in spite of what's going on in the markets today.
At this point.
But.
I also like just goes back to fourth quarter.
I remember there were some commentary about casual it being a little bit weaker.
Because that's where head on the table. So that you expected that the benefit cash flow and one q. yet working capital will still negative <unk> flow through first quarter result.
<unk>, Yeah, I I mean.
Oh go ahead go ahead. Once you know I go ahead. One. Please. Please go ahead sorry, we're not in the unfortunately, we're not in the same room and we can't see each other so there's a I'm trying to transition. This is with as we can.
And the fourth quarter, we did indicate that our our coffee table, where in much better position and we expected that we would benefit from that in the first quarter and we believe that we have when you look at our performance in the first quarter or a year ago, we had I use the gas at 16.8 million. This year it was used.
Of 1 million. So we're up 15.8 million versus a year ago. Certainly the fact that we were in better shape on our payables at 12 31 contributed to that but in addition.
You know the fact that we've cut costs in some of the other things that we've done in the business do improve liquidity has resulted in not being in a better situation. Today. Clearly then we were a year ago and actually met our expectations. If you go back to look at the guidance that we've provided.
For the first quarter as it relates to gas generation free cash flow, we're we're pretty much in the middle of the range that we provide it.
<unk>. This one more familiar you know on the on the cost savings activities, they're going to be to the cash.
Component to that number.
<unk>.
Right.
The <unk> the calf savings over the 20 million that we've item I doubt. It is the the cost reduction that all cash.
Yeah, I guess is there a cast component like in that cash outlay that you're going active.
Oh no accomplish.
There could be there could be some minor minor severance a mouse the biggest cash outlay that we had was associated with the termination of our lease on.
Almost two full floors in Charlotte and that is already that cash number that Tom provided earlier, which was 75, knowing that cash that we have on our balance sheet than we are currently have they have to after actually pain made four point form.
Million dollar termination fee.
To terminate Billy's for the Charlotte often so that was the biggest item or hurdle that we had in order to accomplish some of our cost reduction efforts. The things that we're doing today, there's there's very little friction costs related to accomplishing knows.
Thanks for taking the time, it because I'm sure sure.
And at this time there no further questions.
Okay I I could just thank everybody for their support can for their time. This morning, once again, a big shout out in thank you to the employees a man.
And everything that they've done for the organization over the last three months really appreciate it not only by me by our whole management team.
I'm proud to be a leader of that group and thank you again for your time today.
Just ask includes today's call friends, we thank you for your participation.
Yeah.
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