Q4 2020 Earnings Call
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This time all participants are in listen only mode. After the speakers presentation. There will be a question answer session asked a question during his section you'll need to press star one on your telephone.
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I'd now like to turn the conference over to your first speaker today, Michael Higgins Vice President corporate strategy Investor Relations. Thank you. Please go ahead Sir.
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These statements in the future we disclaim any obligation to do so you should not place undue reliance on these forward looking statements which people.
Lastly press release, we issued earlier this morning.
Stimulations actions on our website.
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The case study the.
A replay of this conference call available via webcast on the company's website.
I'll turn the call over to Scott.
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Thanks, and good morning, everyone. Thanks for joining us on todays call.
I Hope you and your families are healthy unsafe during these difficult circumstances.
Yes, the nibble trader or central business as part of their construction supply chain.
So with that said, we're very fortunate that demand for our products and services.
To be able to deliver to our customers, we must be able to provide a healthy and safe environment that our employees are able to work and wants to come to work out.
The people that our factories in distribution points, the drivers unloading personnel as a transportation and logistics that work.
Our customer service financial engineering personnel.
Let's start an extraordinary job and adapting to the new health and safety protocols and changes into location.
Processes, they use execute their responsibilities each day.
So I connect the dots would the organization all the time in this way.
We're fortunate to have a stable demand environment right now.
We are providing a safe and healthy work environment.
Our employees to execute their jobs.
We must deliver products to our customer sites.
See safe and onside matter.
And by doing these things well, we're navigating our way through this very unusual set of circumstances.
Scott I see it I will discuss in more detail, we've been able to execute pretty well and deliver good performance in a very strong fourth quarter in fiscal 2020.
Despite the regional differences in state provincial directives and pace.
Demand for our products, it's been relatively stable through April and May.
Allowing us to continue executing on our long term strategic initiatives to drive sales margin expansion in cash flow generation.
Well various markets may weaken in the future we feel we have the white programs in place.
Made the necessary adjustments to adapt as market as market conditions on the ground change.
We executed well on our priorities underneath these strategic initiatives.
We drive profitability and cash flow agreements, which in turn allows us to protect our balance sheet do these uncertain times.
Because ats infiltrator are categorized as essential businesses.
We remain up and running through the last few months the states issued varying degrees of shut down the waters.
From a health and safety standpoint, we're taking all the necessary.
They should and social just something protocols at our facilities.
Where possible, we transitioned employees to working from home to limit physical interaction.
We're also using a thorough case management process towards or any potential cases, which is further limited exposure within our employee base.
I'm very proud of our teams response to support our businesses our customers and their communities. They served.
From a market perspective, we're closely watching quoting activity order pace and shipments.
Demand has remained fairly stable overall in the into the first quarter in April net sales increased mid single digits in both the U.S. and international.
Underneath that the agriculture and residential construction markets sales showed strength.
Nonresidential construction market differs by state and we have seen weakness in the states were shut down the orders were more restrictive like Washington, Michigan, Pennsylvania in California.
However, construction activity was strong in such stages, Florida parts of the southeast and the Carolinas.
Similarly in May we are seeing solid sales activity with good demand in the same areas. We're encouraged to see states. They were weaker in April starting to come back as restrictions loosen.
Today may construction sales are improving both year over year and sequentially in agriculture continues to be robust the that business was seasonally slow down as we get into June.
The Dan demand environment may weaken and we're prepared in the event market conditions become less favorable in the second half of the year.
Accordingly, we have implemented a prudent cost reduction and mitigation program to protect our profitability with an initial 10 million of savings implemented.
Out of an abundance of caution we also drew down 100 million for my revolving credit facility in March.
Right now we're very focused on the first half of the year and running our sales and operations planning process twice monthly so that we're able to execute effectively in the stable demand environment, which just which does have some variability by region segment.
This planning takes us out into the September timeframe.
I want to go through a couple of cycles of the monthly economic forecasts on non residential construction and housing starts before we spend a lot of time developing a point of view on the second half demand and firming up our production planning schedules and material.
However, we're not waiting to take mitigation actions and are taking the prudent steps shareholders expect of us to ensure we are prepared for what May lie ahead, and we feel confident we will emerge from this pure stronger business in terms of our focus and execution capabilities.
Moving to the fourth quarter results, we had a very strong quarter at both Ats and it'll trader water technologies.
Ats organic sales were 15% was driven by our key sales programs, including material conversion water management solutions and key states.
Favorable weather conditions in the fourth quarter contributed approximately 10 million to the top line sales gross.
Additionally, we believe there was about 10 million of pre buying in March attributable to the cobot 19.
Contractors getting jobsite materials delivered ahead of any potential closing or disruptions.
So net net there's about 20 million a fourth quarter sales due to pull ahead and weather.
Absent this sales growth would have been 8% in the quarter, which is still on pace with what we were experiencing before covert 19.
Infiltrator sales were up 4% year over year performing ahead of our expectations.
With strong growth in tanks and chambers due to execution on their material conversion strategy in the residential onsite septic market.
We achieved our fiscal 2020 synergy targets that are on track to achieve our synergy targets in year, two and three.
Fiscal 2021 projects related to materials recycling procurement transportation and logistics are all underway.
Over 40% of the synergies today are from material based projects and we think that will grow as those programs gained traction and good should be part of full year basis.
The fourth quarter. Adjusted EBITDA was also strong with margin expansion of 590 basis points overall, and 160 basis points organically.
The strong fourth quarter results in execution in fiscal 2020 has put us in a favorable position coming into the current environment.
Over the last eight weeks, we've learned a lot about the way we can do business a large portion of our employees and customers can effectively work from home a testament in part to the technology investments we made over the last several years.
We also stood up new processes in our plants not only around health and safety, but also in customer interactions as well as in production in inventory planning work, which are making our operations more efficient.
Like many of you we spent time thinking and analyzing how the non residential construction markets will change post covert 19.
Nonresidential construction is 52% of our domestic sales. So we are highly sensitive to how when these changes occur.
Sub segments like warehouses in data centers.
Good markets radius, we'll continue to have strong demand other segments like hospitality and restaurants, we expect to be weaker.
I believe we are well positioned to leverage our high coverage high touch national sales and distribution model to pursuing close on the most promising segments and geographies.
Our HP products, which are good products for growing geographies like Florida are doing very well.
This is the tip of the spirit for us to further penetrate large diameter stormwater applications. Additionally partnered with infiltrator increased our exposure to the residential end market, which we think will recover more quickly than nonresidential due to both the shortage of housing and the post covered 19.
Reference for single family housing.
Finally in our operations, we view this as an opportunity to drive our continuous improvement programs working capital initiatives and programs related to transportation and logistics.
Using this opportunity to improve inventory planning to management, which will position us well when construction activity strengthens.
As we continue to adjust to the circumstances in front of us our priority remains a healthy and say place for our employees to work.
Our key strategies are still very relevant including delivering on operational improvements executing our material conversion and water management solution strategies and expanding the key states where construction growth remains active.
No we are facing new challenges our long term objectives remain the same sales growth margin expansion in cash flow generation, all what's driving healthy balance sheet.
Furthermore, we are working to strategically positioned the business to respond to changes in demand as well as them as well as ensuring we remain on offense with our strategic programs that focused on high pressure high priority states Allied product growth and new products, particularly at ample trigger.
With that I will turn the call over to Scott to trail to further discuss our financial results.
Thanks, Scott on Slide six you will find a summary of our results for the year as compared to our most recent guidance ranges.
Net sales adjusted EBITDA and adjusted EBITDA margins for the year all exceeded the high end of our guidance range.
Our outstanding financial results for the past year allowed us to hit our long term adjusted EBITDA and cash conversion targets. One year ahead of plan well also keeping us on track to achieve our long term revenue growth targets.
On slide seven we break down our sales growth by end market as shown on this line our sales grew substantially above our domestic end markets.
Above market growth was driven by continued execution on our conversion strategy and are focused on growth and keys days. We also saw sales and our domestic agricultural market increased by 35% as we capitalize on favorable industry dynamics by successfully implementing organizational changes introducing new products and better exit.
Fusion.
Sales in our residential construction end market increased 76%, which includes the results from infiltrator as well as 60% growth in our legacy Ats business.
We expect housing starts to decline in calendar 2020 due to the impact from the cover 19 pandemic. We believe the residential end market could recover more quickly than our non residential end market and is well positioned.
Moving to slide eight as Scott has already discussed the revenue performance I will go right to the drivers over a year over year profitability.
Organic adjusted EBITDA increased $11 million from the prior year quarter, resulting in a 160 basis points of margin expansion.
The improvement was driven by sales growth in both our pipe and allied products favorable material cost and disciplined pricing. This favorability was partially offset by an increase in manufacturing overhead costs related to building out our operational excellence programs and an increase in selling general and administrative costs due to investments our strategic growth.
Initiatives as well as higher incentive compensation expense due to our outperformance this year.
During the quarter Infiltrator water technologies contributed an additional $25 million to adjusted EBITDA, resulting in 440 basis points of improvement in the consolidated adjusted EBITDA margin on a standalone basis, the adjusted EBITDA margin of the infotainment water technologies business was 33.5%.
As a result of the strong Ats legacy and infiltrator results, our consolidated adjusted EBITDA increased 95% to $72 million from the prior year and our consolidated adjusted EBITDA margin increased 590 basis points to 19.4%.
Our excellent fourth quarter results contributed to a record year for the company as shown on slide nine.
Organic net sales increased $122 million were 9% from the prior year with an increase in all of our domestic end markets, including 7% growth in nonresidential, 16% growth in residential 6% growth and infrastructure and 35% growth in agriculture, we're very proud of.
Our sales and operations teams, who made this happen.
And we'll turn to contribute to contributed $211 million to our net sales during the eight months since the acquisition brand consolidated net sales to $1.7 billion, an increase of 21% over the prior year.
Organic adjusted EBITDA increased $56 million, increasing our margin 230 basis points to 19.1% for the full year well ahead of the 16.8% margin last year and a full year ahead of the 18% target we communicated in November 2018 at our Investor Day.
The margin improvement was driven by sales growth in both our pipe and allied products favorable material cost as well as disciplined pricing.
This favorability was partially offset by an increase in manufacturing costs. Although we expect this trend reverse and turned positive on a year over year basis in fiscal 2021, as we realize the benefit from our continuous improvement initiatives selling general and administrative expenses increased primarily due to the factors I already mentioned, including investments.
And our sales team and higher incentive compensation expense due to our performance this year.
And we'll try to water technologies contributed $76 million to adjusted EBITDA for the eight months since the acquisition, increasing our consolidated adjusted EBITDA margin by an additional 250 basis points on a standalone basis. The adjusted EBITDA margin of the infotainment water technologies business was.
36.2%.
Including the results from Infiltrator, our full year consolidated adjusted EBITDA increased 56% to $362 million, resulting in 480 basis points of margin improvement.
Moving to slide 10, we highlight our very strong free cash flow performance during fiscal 2020.
Business generated $239 million of free cash flow. This year, an increase of $131 billion over the prior year. This increase was driven primarily by higher profitability as well as a significant improvement in working capital.
The improvement on working capital was driven by improved receivables performance year over year as well as lower inventory driven by greater inventory turns a reduction in slow moving inventory as well as lower resin costs and finally, we've been able to extend payables through negotiations with our vendors.
While we have made great progress on working capital initiatives in fiscal 2020, there's still significant opportunity for further improvement in front of us.
Moving on to Slide 11, we highlight our pro forma 12, trailing 12 month leverage ratio of two and a half time.
We are extremely focused on preserving liquidity and driving free cash flow. We have previously communicated our guard rails of two to three times Levered and build is even more important than ever that we take proactive and prudent steps and actions to protect our balance sheet and liquidity.
We ended the year in a very favorable liquidity position was $174 million in cash at March 31st 2020, and $239 million available under our revolving credit facility, bringing our total liquidity to $413 million. The actions. We took this past year to make favorable changes to our capital.
Structure has also resulted in no significant debt maturities until 2026.
Finally, due to the uncertain economic environment, we currently find ourselves and we will not be providing guidance for fiscal 2021 at the time that being said here a couple of data points to consider as we enter into fiscal 2021.
The favorable resin cost trends, we've experienced in fiscal year 20 have continued into fiscal 2021 like the rest of the economy. However, there are a lot of unknowns and hence why we're not providing any guidance around resin costs at this time.
Lastly in fiscal 2002, 121, we will continue investing in safety quality productivity as well as innovation as a result, we expect capex spending to be between 60 and $65 million.
With that I'll open the call for questions operator, Please open the line.
Thank you if you'd like to ask a question. Please press star followed by the number one on your telephone keypad, well pause for just a moment to compile the kuni roster.
Your first question kind of something Mike Halloran from Baird. Your line is open.
Hey, good morning, everyone, who they want to well.
So good well, let's start let's start with some of the commentary around April June some of the Ford commentary just so I can understand the perspective, you guys have here.
So seem pretty stable trends in April and May here the commentary in the prepared remarks press release talked about more concern a couple of quarters out.
Just wanted to try to understand the Genesis of that is that just tracking that this up to co bid 19 in just a broader market uncertainty or is that customer commentary customer thought process and maybe a typical cycle dynamic as you work through things just just a little bit more color and what that with the implication areas from here.
Perspective.
Hi, Good morning, Michael the Scott got were I would say gun colored more about that it's more on the.
Economic uncertainty.
And how like the.
I will change as we rolled the non residential and housing start forecast over the next couple of months.
And burst its customer commentary or or or anything specific.
You know like project cancellations or anything like that.
Essentially right now I think what were experiences is two things some states very much pre covered 90 behavior.
And a pretty good backlog ahead of those states.
Other states once it went down hard Washington, Pennsylvania, you know taxes the northeast.
That pent up demand is now probably back at some kind of pace right. Now. So we're we're executing on that in there's probably a backlog behind that soon once you get some of that pent up demand and it's just not clear to me when we get through all that.
And did once you chew through that.
However, long that might take didn't you begin to experience whatever the ramifications are from projects that are pushed out or cancel them that that visibility has not developed yet.
So we.
Just trying to summarize we focus a lot on on forecast. The you know I like I said, we're doing or as you know p. twice a month now to really make sure we had complete fidelity between now and September.
And then once we go through a couple of spends on the the economic forecast I think we'll be able to get a better look.
Yeah, what might be developing in terms of.
Thats a go forward projects that might be downside.
Objects that might not you know.
Go right now, but go in a couple of months because of one one reason or another or things that are just can't.
That's not cleared all right now.
Perfect that that was the color I was looking for it. So so you also talked about mitigation measures to address the environment you know maybe some context then.
What things might be how much is structural in nature of this more traditional temporary.
And you know thinking more broadly what do you think you would need to see too to really go after some of the broader structural changes whether its footprint or some other things.
The forward basis.
For the 10 billion to date is is what you would call temporary.
I Wouldnt delayed hiring you know no merits all that all that kind of stuff probably yeah, there's like very very little of any structural in there.
So what Scott and I are working on with our team now is what would be those structural things you would launch.
In the second half.
Yeah.
You know you saw see deteriorate really really bad.
And so will we got that play look we know we know what we're going to go to on that frankly, right now I need all the best Yeah, Yeah, they're kind of service system. So we're we're running pretty hard to tell you the truth.
So I wouldn't have to take any structural work.
Into that second half when the demand really fell off and allowed me to go do that.
If I could you had one thing to that which I think you know you'll appreciate we really taking this is an opportunity to execute more sharply on a lot of things in in the four wall of the manufacturing and in that transportation logistics.
And while those things are you know process related and and in day to day management related.
I would put those is permanent.
Pipes of capabilities that are going in place, which we will continue to see benefits from now that's not even ddos mitigation actions, but but but I think you know there they're Regan to register right now along with the synergy programs that were working on undergo a pretty well.
Hi, WT.
Would it would trigger skewed.
Yes, and last one from me when you when you think what the infiltrator piece.
Maybe just some commentary around somebody was first answer.
Where maybe just talk about how that cycle plays out because it's probably going to be a.
A little more quick turns let's put less projects that are forward facing are outpacing. So maybe just thoughts on how that cadence for book.
Well today and some variability if you look forward.
Yeah, definitely a shorter cycle business that ROI and it will trigger guys operate.
Then the or more project based business Ats, So we kind of because it is more of a v.
Or maybe a little bit of it you add in accordingly, Boyd pulled back pretty quick.
And and is beginning to see some things you know better than he anticipated I wouldn't call up to be yet, but that's why we want to get through a couple cycles about alley, and probably I the way I I kinda talk about it might use you know you residential might be more but b I think the nonres, but maybe more.
Yeah.
Because of just all the different segments that the ABS projects activate in.
So we'll be good some won't be so good.
And in that will make that more of a smooth versus the.
As we go forward.
Thanks for the context appreciate it.
Great. Thanks, Michael Thank you.
Your next question comes from Matthew Bouley from Barclays. Your line is open.
Hey, good morning, everyone. Thanks for taking the questions I Hope you guys are all while the the comments you made a scott be about the kind of longer term disruption the nonresi and some of those verticals.
You know better off than others, I guess number one could you remind us how much of your Nonresi exposure is specifically new.
Non resin prices aren't our and number two I guess is there any kind of difference and product mix or product intensity I guess for some of those stronger verticals that you mentioned relative to the weaker ones like.
Okay. So good morning, good good Vicki for participating today.
And we all we are all well here, we all got mask and things like what we're doing we're doing pretty well so I think on the.
The ones you take the person Mike Higgins on the non nonresidential.
Yeah, Matt nonresidential construction, we pretty much view everything.
And so it's going be heavily weighted to.
New construction, whether that's breaking new ground or taking existing site developing it.
Yeah, It all looks new and then on the intensity.
I think the way I would answer that is our nonresidential has a very high allied product intensity.
Most of our Allied products are sold into the nonresidential commercial construction construction segments.
Various degrees around that.
But but but that is something that we are looking at is is how bad intensity could affect us.
In those different segments as they go through this move.
Pattern that we think is going to develop over the next months or years couple of years.
The pipe is very heavy in the infrastructure very few allied products in that.
You see the agriculture, very very heavy pretty much pipe only.
So that is something that we continued to analyze and feel that.
Okay got it that's helpful. Thank you for that.
And then secondly, I guess asking about decremental margins a little premature.
So running positive revenue growth quarter date, but I guess Im just wondering if you could provide any additional framework on that just given you are providing some cautious commentary around a second half of fiscal 21, just you know how we should think about perhaps decremental margins in an environment, where revenues are potentially turn negative.
Yeah, Matt Scott the here, a little bit dangers to do that absent resin and mitigation actions, but generally probably something in the 45% to 50% range is probably the right way to look at that from a detrimental margin perspective, again, though that would be pretty mitigation and.
Or any benefit we get from lower diesel lower resin or other other of those are the those cost pressures, we normally see when things are going the other way, we likely see those if we get some relief from those as it goes back the other way, but that's the way I think about it absent whatever assumptions you put into your mom.
Model for those items are becoming favorable but I would just add and add on that that the way way. We've been doing. This is you know it's painful in it hurts. So we bring it down to 50% and we start working like cat.
To pass back you know to that you know 40 to 35% to 30% depending on how many things. We can go in Grad quickly, which is part of the reason.
We we did the $10 billion mitigation actions early even while business is good so that we're we're able to put a little bit away. When the decorate comps were already on a head start with that along with the things were were put in our playbook that I answered on the previous question.
Got it thanks, so much and stay while everyone.
Hey, Matt.
As a reminder, if you'd like to ask a question. Please press star followed by the number one. Your next question comes from Jon Let alone from Bank of America. Your line is open.
Hey, guys. Thank you for taking my questions as well.
First question is you know and appreciating that you're not giving official guidance here, but typically we would see your business accelerate sequentially fourth quarter to first quarter as we stand today is there any reason other than the 20 million pull forward sales at the shouldn't continue this year for both the legacy business it infill trader and along those lines.
What segments did the pull forward sales impact.
So I.
Scott be so don't pull forward was 10 million of agriculture that was weather related I didn't 10 billion basically nonresidential construction business.
Okay, guys wanted to get materialized job sites before.
Hello broke loose [laughter].
So it kind of came in those segments John.
And I would tell you right now given what we've seen in April and May our normal sequential seasonal topline is behaving as you would expect.
Okay, Great that's helpful.
On slide seven you guys calculate a 2% year over year market goes through residential construction, just curious how you're coming up with that number. It seems like starts may have been a little bit higher than that I buy our calculations and maybe more importantly, how are you able to so you know handily beat the market like.
Segment.
You were talking about Ross, sorry, residential right John correct, Yes, correct.
Yes, a couple different factors there, we really kind of look at total housing starts which were kind of relatively flat year over year, but theres a bit theres a lag there too so lot of the activity. We're seeing is kind of pre that house going up on the on the block right said before they do a new sub division our new community.
Maybe to come in and put in kind of the roads and streets, they're able to access that.
And then on the infiltrator side.
There really on a kind of a six month lag create the housing start happens and then kind of roughly six months later, it's kind of what an onsite septic system because stalled.
Got it Okay. That's helpful. And then finally I think there were 5 million of cobot related expenses in the quarter or is that it is at a reasonable run rate over the next couple of quarters and Doug just where in the PML did those hit.
Hey, John got control here, mostly in Cogs and related to a program we put in place with our hourly workers that allow them up to two weeks pay for any kind of leave for childcare or illness or any any reason to be honest with you.
And we accrued for those and that entire program here in the fourth quarter, but most of that was in cost of sales.
Great. Thanks, a lot guys.
Yes.
Your final question comes from Josh Pokrzywinski from Morgan Stanley. Your line is open.
Hi, Good morning, all hope you're all well.
Just wanted to start off I guess first on you kind of the natured business on the non that'd be side I would imagine that you guys participate more and I guess black and about a term horizontal construction so kind of bigger plots of land you know the 50 story building that matter so much as.
You know maybe to the before as Donald square footage.
Does that tell us anything about kind of the verticals that would be most yeah. Most prominent in the portfolio I guess I think of like big box retail in warehouses being bigger drivers there, but you know anything that you guys can point to that there may be Austin helpful parameters around some of the Verde.
Falls within not less [noise].
Yes, So I think your assumption there about where nonres is better for us when its horizontal versus vertical that is accurate in terms of the various project types of we have norm in a normal situation, we would do very well with all of those.
Going back to the comments we.
She said earlier I think where we've seen strength there has been in kind of warehouses distribution data centers those have been strong in the past couple of years. Those are expected to stay relatively strong kind of through this pandemic, where we would probably see more weakness and they would probably be smaller type.
Developments are smaller type structures would be around kind of restaurants.
Small retail centers, maybe hotels, obviously are going to take a hit and that's going to take some time for them to come back.
But also to we did very well in institutional.
Project, So think about education.
And other type of business health care.
Community centers nursing homes things of that nature. So it indicates a balance I pricing kind of on the kind of trade commercial side, which would be restaurants and retail it and hotels.
Those are going to have some struggles as we move forward on the flip side that things around distribution data centers education health care those should remain strong so our sales team and engineering team, we'll work hard to identify those projects and their individual geographies and they're going to work like heck to get a product specified.
Quoted in Seoul.
Got a that's helpful. And then just following up on becoming made earlier about.
Some of this kind of backlog of activity or things that need.
Nice job sites, we opened say three open yeah.
How how large do you think that is and.
What a win win does that kind of get worked through the system is it a month or two or perhaps something longer.
But I thought this is Scott the thought about it this way.
So yeah, you know maybe states that it didn't work.
Or work did you know greatly reduce pace or 30 to 60 days.
So that work has to get completed.
And then the market was running pretty well.
Before all of this call it up until the middle of March and our customers were telling us they had 30 or 60 days a backlog of work.
Ahead of them.
So it's not going to be perfect, but I've got to do all that math that I see I see things kind of running.
Muscling through it like we are right now to what extent and I'd say that because of not we must lead through from execution, but just how the demand is high.
Highly variable across the states that we look at every day.
You know that kind of takes us maybe through the summer and that's why we have such intense focus on that twice a month.
Sales and operations planning cycle.
So we're just kind of keep it keeping on top of that right now because I know, we've got to execute maker money right now.
I really don't know, what's going to happen in that second half.
So that's what it kind of looks likes to me right now in terms of.
That that that kind of call it level of activity for awhile.
And we spend a lot of time and resources and analysis time looking at it but oh I'd be less than really frankly, if I didn't tell you it could be cloudy some base.
To figure out what's going on.
But all that said you know I think we're we're operating pretty well right now.
Your question around horizontal construction in the segments that are moving the where we were talking with our sales team every day about pursuing the right jobs.
And your time pursuing the right jobs.
All segments are created equal right now I think this is where our high touch.
National footprint really helps us.
A lot as a company.
We're really spread out nicely geographically I don't think that's always the case with our competitors.
In storm water management, whether they be plastic or alternative materials.
So.
We have some nice.
The cards to play here and that's what we that's where we're going to continue to work on you know given some of this uncertainty.
Got it that's helpful. If I can just sneak one more in on some of the market outgrows, the 600 basis points this quarter.
Obviously pretty impressive and higher than I guess, we would normally do how should we think about that as being something that yeah. The deal is kind of structural and repeatable versus maybe something that would be perhaps more of a one off for a big project something like that [noise].
That.
Maybe we go back to that the normal rate.
Yeah.
Our normal rate gain one or two points and market share.
I think right your was with kind of extraordinary don't know Sandia for another 600 600 basis point gain in market share.
But we will continue to kind of pursue that 100 200 basis points a year I think thats the right way for us. They are we go through this there wasn't one big job that drove it.
There was it just one stated drove it I really think it's this focus on priority states.
Dr. most of the construction work in the country, you've heard me talk about the Crescent.
Is that focus on allied product attach rate, we want to sell more you know more dollars.
Of Allied products on every job, we can drill holding up a assigned to be saying don't forget our HIV product line, which is the polypropylene product line.
Focus on the large diameter, which has been a strategic focus scores for the last two and a half years, we had really nice gains in that in that in many geographies.
So I kind of tickets that program. Just you know some years is going to go better than others, but consistently it's going to grind out 100 basis points.
Got it that's helpful. Appreciate it bus Lucky yes.
Right.
We have no further questions I would like to turn the call over to Scott Barber for closing remarks.
Alright. Thank you. Thank you all for those questions and a very helpful for us to be able to provide some color because I know, it's not easy out there right now and we appreciate you taking the time.
And then as I said in Blue we talk about this every day, we will continue to focus on the health and safety of our employees.
Because if they're helping state.
They feel good about come into where we have demand we can service that as central storm water management and onsite sceptic waste water solutions for our customers in our communities that they serve municipal we do we'll continue to protect our profitability the balance sheet and the cash flow even.
Due to economic uncertainty.
Coping 19, and we feel confident will come through this was stronger company I think the initiatives that we're working on right now some of them as I mentioned, our structural it will carry that forward. So I want to thank our employees again for all their hard work dedication they've done a great job over these last eight weeks in a very.
Difficult environment.
And we appreciate all of your participation today.
Operator that concludes our call.
Ladies and gentlemen. This concludes today's conference call you may now disconnect.
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