Q4 2019 Earnings Call
[music].
Greetings and welcome to the Limbach Holdings Q4 full year 2019 earnings conference.
At this time, all participants total listen only mode. A question answer session will follow the formal presentation.
People back to ask a question during today's conference. Please press star one on your telephone keypad.
I don't watch require operator assistance during the conference. Please press star zero on your telephone keypad.
A reminder, today's conference is being recorded and it's now my pleasure to introduce your host Mr., Jeremy Hellman out the equity group. Thank you Sir you may begin.
Thank you very much and good morning, everyone yesterday afternoon, Limbach Holdings announced this 2019 fourth quarter results from filed its form 10-K for the fiscal year ended December 31st 2019 today. The company will be reviewing those results in providing an update on current market conditions.
<unk> Company May also referred to a slide presentation accompanying this earnings call. It presentation can be funny investor section of the company website at Www Dot Limbach Inc. Dot com.
The company encourage everyone to review the forward looking statement disclosure on slide two of the presentation with that I'll turn the call over to Charlie Bacon see you only bought holdings and Jayme Brooks the company's Chief Financial Officer. Please go ahead Charlie.
Thank you Jeremy good morning, everyone and thanks for joining us.
I'll be addressing the 29 chief financial operating results weighed on the cool, but first I want to comment on current market conditions, and then it's Jamie to address well number related issues.
Critical importance to all the company's stakeholders, including employees investors balance sheet border subcontractors and vendors.
Well that eight weeks of passed since the onset of the cobot biting began to widen your packed <unk> economy industry No community. So the company.
There's been no shortage of challenges triumphs difficult decisions and it's hard for me to accurately describe the dedication focus and commitment although employees over these past week.
It's been humbling.
It was an experience that has made all of us very proud you're the book.
We are stronger company today for having been tested.
That's it has been since the middle of March I'd like to applaud our employees for their effort pursuing the three critical priorities and acted in response to the pandemic.
Stay safe get cash debt work.
We cannot lose sight of these objectives the operating warm it continues to evolve and hopefully improve even as we pivot to the future executing our immediate and long term strategic objectives.
The company's commitment to safety of our employees and their commitment to each other as deeply ingrained in Lubbock culture for decades, we will not deviate from that commitment.
The team's ability to source or distribute personal protection equipment modify workplace to accommodate social dismissed.
Otherwise react to this new reality has been impressive.
We are of course grateful that among our wedding.
Well were only a limited number of colleagues with direct exposure to the virus.
Flicked employees have recovered fully recovered well.
So with that I'd like to bought her perspective on current market conditions, which we've also tried to communicate visually by way of the table on slide four.
This reflects traditions and each of our markets as of March 31st.
No markets have experienced the further tightening since then and we're just now see positive developments towards a broad reopening it Michigan in the near term we hope.
We continue to be challenged in new England as you can see activity levels and working conditions vary by market and by segment.
But in the aggregate we remain busy.
This is an improvement over the conditions a bit more choice state and local jurisdictions worry shrink broad conflicting stay at home orders the walked in ambiguous as it related to the construction activity in those regions.
Much of that confusion result was resolved quickly and the majority of our services or projects were deemed to be central.
Other than in our new England, and Michigan operations I would describe your barbet today as more normalized but oh.
I want to also add that we did see an uptick in emergency health care worked in March and April including the conversion of the suburban collections show place and no like Michigan Poor Convention center into a temporary hospital facilities for the Army Corps of engineers.
That being said even in markets that were broadly unrestricted we do have customers, who have decided to slow the pace of projects already in process work decided to connect temporary project suspension, well, taking a wait and see approach to the spread of the virus and working conditions.
I was the remaining stay at home orders lapse. This modes and we all become accustomed to this being the new normal we expect a gradual returned to full activity over the next couple of quarters ultimately, reaching the point at the end of the third quarter. Even then we do continue to expect to be impacted by certain field.
Mission seized resulting from the need to maintain a safe working environment.
We are solely documenting those impacts and developing approach to seeking compensation for those incremental cost the properly protect the balance of the company's balance with the companies are trust.
With the construction segment, we have not been notified of any customer will facility owner of any cancellations of any active projects or any projects booked into backlog, which are not yet started.
As we look back over multiple economic cycles, and significant national and global events. There have been limited data points to suggest we should expect widespread project cancellations in this current environment.
Again, however, we could experience some delays.
Well, there's been a slowdown in recent weeks in sales activity related to large construction opportunities manage more general contractors and construction managers. We also continued to pivot away from the market segment to smaller opportunities and older direct projects.
So we expect any slowdown pause in proposal activity at large project Oh market jumped limited impact on future revenue did it might have had last year Warner earlier periods.
It's our intent to continue to focus resources on the older direct market, which is typically characterize sports smaller project opportunities.
In the service segment, which as a reminder includes not only our preventative maintenance work, but also small special projects and other older direct work, we're experiencing somewhat of a dichotomy.
Some orders have taken advantage of temporary vacancies to accelerate repair and maintenance work and small capital projects.
Well the rooms of restricted building access to everyone for any reason, which impacts revenue in the current period.
We have also been notified by limited number of owners that they'd like to suspend maintenance contracts for several months.
We expect these trends to be temporary and then ultimately there will be a need to address any maintenance that's been deferred during this period.
One of a primary conclusions from observing the cobot environment.
Is that facility owners will be called acutely focused on the design and functioning of the mechanical systems in order to maintain adequate airflow and uptime.
I've missed this backdrop, we've also been leveraging our design and engineering capabilities, particularly to serve the urgent needs of our healthcare clients with innovative solutions. That's generated some amount of unbudgeted revenue and gross profit, which has helped offset the impact of project deferrals.
We also see the demand from customers across all industries for retrofit work to improve air flow in general.
So as we surveyed your barber today, we're currently optimistic that conditions will continue to stabilize if not improve in the near term, but we think it's prudent to maintain a crisis mindset given the continued uncertainty as we look forward to balance the balance of the sheer and next year.
So long our top priority since the beginning of the year and in particular over the last few months have been to maximize liquidity and to improve working capital management.
Effort extends beyond the corporate it branch finance teams to local project managers and everyone else with a customer interface and the results have been impressive as you can see on slide five it has been a great team effort.
It's more aggressive inconsistent invoicing billing and collections as well the conversion of unapproved change orders the company's liquidity position has actually improved since year end, but minimal concessions from vendors.
This march 16th the average daily cash balance has been just more than 15 million and the average daily revolver draw has been less than 600000.
As a reminder, our total revolving loan commitment is 14 million and our most recent borrowing base because the full access to that commitment net outstanding letters of credit of approximately 3.5 million.
Ultimately provide for approximately 10.5 million of availability. So the April thirtyth, the sum of cash on hand, and the under an undrawn availability under the revolver was 23.5 million as compared to 19 million as of December 31st and only 10.6 million as of September Thirtyth.
At this time, we have not seen any slowdown in collections and have not identified any new credit risk the matter customer base and as a reminder, we had virtually no credit exposure to the energy restaurant, a retail sector and minimal exposure to small commercial landlords.
The on more aggressive working capital management, we have also executed a significant cost reduction initiatives and we estimate this initiative will generate ongoing cash savings throughout the remainder of the year.
These cost reductions include temporary salary and benefit reductions for senior leadership team, our local management teams and the board and approximately 18% reduction in salaried headcount since December 31st.
Only a limited number of these reductions relate to furloughed employees. Additionally, another 16% of de salaried workforce is currently operating on a reduced schedule.
In addition to these actions all of which had been implemented already we're also in the early stages of a broad base initiative to reduce both direct and indirect costs across the organization.
We're exploring all expense categories from credit card processing fees to waste management equipment rentals and office supplies.
This process began in January and will take several quarters to fully developed and implement but we anticipate that the savings will be impactful, we expect to realize benefits starting in the third fiscal quarter.
Finally, we have a deferred all non critical capital expenditures and we have explored and where possible implemented temporary rent concession arrangements that are landlords.
Thanks, Slide five from a debt capital structure perspective, we've been in frequent communication with both our revolver lender citizens bank and with our term loan providers, which includes called the capital.
We are in compliance with all our loan covenants as of December 31st and remain in compliance as of March 31st.
Let's turn mom begins to amortize the ended the Sears third quarter, but manageable rate over a million dollars per calendar quarter until the term loan facility expires in April 2020, cheap. So we have plenty of runway unlimited amortization obligations in the interim.
Before we pivot to recap 29 team I want to address the ongoing process resolving claims and change orders principally in the mid Atlantic in Southern California markets.
We've always expected it can get communicated that this was a process of wood ebb and flow based on the often unpredictable pace of and formal negotiations between principles and more formal dispute resolution procedures.
We've been working these opportunities aggressively notwithstanding the broader market environment and we continue to believe in the merits of our positions and the suitability about carrying values, which you've had to support without water.
As a reminder, these values are reflected on the balance sheet at a discount to the amounts were seeking I believe we are entitled to.
Previously we had anticipated a resolution of certain disputed items in the first half of the sheer we're continuing to work toward that goal, but remain cognizant of the complications that distractions presented by cope with my team and expect the current discussions may not result, and final resolutions of payments in the next 60 days at this point, let's turn to twice.
Hi, cheap.
Let me first start by commenting on the 2018 audits, which was my first since joining Limbach October 1st from a technical accounting perspective, this year's smoothly.
[noise] ultimately complicated the form 10-K filing process and required the company to take advantage of the filing extension provided by the FCC, let's assessing the potential impact of Copel 19 on our financial forecast and whether or not we believe we can meet the future financial covenants set forth in our loan agreements in the last mix of March and early weeks of eight.
For all events were moving very quickly and circumstances were changing by the day.
Just the end of economic disclosure government pronouncement or consulting study about the state of the economy generated a modification to the company's forecast.
It wasn't until the situation began to stabilize in mid to late April that we were able to get ourselves and the auditors comfortable with our financial projections.
None of these delays, however related to an accounting or controlled issue or any unresolved disagreement between the company and its auditors.
We've also taken advantage of filing extension provided by the FTC for first quarter form 10-Q, so that the company can continue to analyze the future impacts killed the 19 to have on the company. However, after our first quarter filings. It remains our goal to accelerate the quarterly and annual closing process and you file our FPC statements.
Then the standard reported deadlines.
At this point I'd like to recap 2018, which is summarized on slide seven to 10 of the presentation.
In 2018, the business demonstrated modest growth in consolidated revenue of 1.2% as compared to the prior year.
Construction revenue was essentially flat year over year, which was the result of a concerted effort to manage you project sales in the mid Atlantic operation.
We undertook a successful change at the local leadership in that market in the fourth quarter 2018, and we were careful in pursuing new opportunity there last year.
We also experienced project timing issues in the Michigan, and Ohio markets in 2018, which depressed revenue growth year over year. Both of those operations were particularly active in 2018 and experience more moderate activity in 2019 simply due to timing considerations both locations having meaningful.
Backlog and have been active this year.
Revenue growth in the service segment exceeded 6% it was driven by stronger small project and owner direct sales as well as success in driving stronger pricing on capital project opportunities.
That pricing improvement was attributable to a long year effort to drive higher margin and we're pleased with results.
Consolidated gross profit grew substantially year over year due to improved execution as well as not having the negative impact in 2018 of the execution challenges in the mid Atlantic market.
Gross margin expanded from 10.9% to 13% an increase of 210 basis points.
Gross margin in 2019 would have been several hundred basis points higher but was adversely impact by performance in the Southern California region.
For perspective in 2018, the average realized gross margin across all branches I live in southern California was an excess of 16%.
Notwithstanding that overall improvement we firmly believe there is opportunity to expand our gross margin through an improved service mix and continued improvement in execution.
Growth in Sq Nay of 10.6% for 2018 was primarily the result of increased salaries and benefits related to additional headcount to support continued growth in service segment as well as in certain corporate departments investment in its corporate departments was predicated on realizing certain operating leverage.
That would benefit branch operations overall.
This included head count increase in compliance I T and then my Ass training safety and Treasury.
As I noted previously however, we've recently completed a dramatic reduction in headcount across the company.
Although we anticipate some headcount increase down the road as economic environment stabilizes and as we invest to support the continued growth in the service segment, we remain committed to maintaining this new form a favorable cost structure.
Additionally, the broader cost reduction initiative I introduced previously should contribute significant incremental run rate savings, we as we progressed through 2020.
Looking forward I believe we can further reduce cost and streamline operations through improved workflow processes, creating efficiencies at both the corporate enbridge level.
Adjusted EBITDA for the year was 16.8 million a dramatic improvement for 2018 when results were depressed due to the performance in the mid Atlantic markets.
Well the year over year improvement was encouraging we continued to be challenged by the southern California operations, which incurred write downs of 9.9 million last year.
In a meaningful proportion of which was attributable to the loss the LDX midfield project.
Elliott May feel was approximately 9% complete at year end and we anticipate substantial completion by the end of Q2.
On a slightly enforces committed substantially this year and we expect it will continue to contract over the next several months.
And finally, I'm happy to say that we have remediated the remaining material weakness, which was identified in our 2018 10-K now I'll turn the call back to Charlie.
Let me further address the LTX real midfield situation. This has been a challenging project for every one on site. Many of the contractors have been impacted in various ways and also pursuing remedies to get paid on impact claims.
We have faced numerous laser project, which caused which was caused by other.
Situations basically by others and that impact impacted our ability to redeem our original budgets. We continue to have discussions with our customer and have made some progress.
We will continue to take the appropriate actions to maximize our recovery. However, we don't expect there would be a quick resolution.
As Jamie noted a minute ago. The majority of the actual work on site will be substantially complete in late June with the remaining work being startup and commissioning of the installed systems into Q3.
So as we look forward here's what I'd like to share first we finished 2019 with backlog of 561.2 billion, which provides revenue visibility for the current year, notwithstanding cobot 90 related project impacts.
We've already seen and continue to expect that certain projects will experience delays and that will impact or ability to build record by certain revenue this year.
Those projects will get pushed to the right. We have no evidence to suggest that these delays will become cancellations nor that any meaningful portion of the yearend backlog, we canceled out right well anything is possible that has not been our experience in past episodes of market stress.
We're also carrying meaningful amount of work and backlog that was not scheduled to open built the sheer anyway. We expect some of the backlog would be converted to revenue in 2021 at a small portion into 2022.
We do expect further slowdown in new major project opportunities to be clear proposing on work right now, but the evidence suggests that owners will increasingly focus on delaying funded capital investment and expansion plans. We do believe there will be an increased demand for our special projects that vision of becoming bonds as our healthcare education and.
Need an office clients figure out how did you will social distancing and improving airflow.
Our sales teams are very active right now, making our customer base, where the various services, we could provide to start building spec Gulf sheltering your place comes towards the end as well as engineered solutions to assist with social distance.
Having said that we expect to see a choppy market at least through the third quarter.
When it comes to the pursuit of New project awards will not be compromising our pricing margin or customer quality. We've worked diligently over the past year to develop and implement improved risk management.
Processes, and we're committed to adhering to those principles.
Second we made a lot of progress on overhead costs generally, but there's more opportunity and we're pursuing those reductions aggressively we're committed to resetting the baseline for as today at this new lower level, we need to remain nimble and better aligning our cost structure with market conditions and to achieve better operating leverage in the future.
Third we are confident as ever that our strategy of aggressively pursuing a transition to older direct and service opportunities.
We've all talked about growing service business unit.
Evan aggressively growing down a path to achieving a 70 30 revenue balance with the construction segment.
Over the last six months, we put in place the leadership structure and processes required to accelerate that transition and we look forward to achieving segment revenue parity well beyond the next several years.
Well have more to say about that and our strategic strategy generally or next call.
But either out 29 cheap performance, nor the current market environment has fundamentally altered our thinking on this.
If anything we're further convince that's the right thing to do in response to the structural or industry and the long term trends with respect to labor and technology.
Again expect to hear substantially more for most well listen we're coming weeks.
Fourth and finally, it's nearly impossible to provide any definitive financial guidance in this current environment.
Circumstances continue to change the mix several weeks and months could well present, new macro challenges. So in this environment will focus on those things, we can control, including spending and project selection.
We remain focused on liquidity working capital improving execution accelerating the growth of our service segment.
With progress in those areas, we should be well position to capitalize on the inevitable dislocation that will impact the industry over the next several quarters.
I thought it would that we'll open up the call to questions.
Thank you.
My question, if you would like to ask a question. Please press star one on your telephone keypad at this time.
I can tell indicate your line is the question Q.
Our two term of your question from the Q participants using speaker equipment.
Your handset before pressing the star keys.
Once again that star one to register questions at this time.
Our first question is coming from Brent Thielman of D.A. Davidson. Please go ahead.
Hi, Thank you good morning.
Good morning.
[noise] I just wanted to clarify that that work in southern California that that be completely done in the third quarter is that is that right.
That's correct.
Okay ROE were wrapping up the wrapping up the construction.
During the month of June and then we'll have some commissioning work to do post the substantial completion, we expect to complete that by the end of the third quarter.
Okay great.
And.
I guess that hurt from others in the in the industry.
Services, then pretty materially impacted just difficulties getting people in and out of buildings and so what do you just for additional precautions that.
Well, what you're seeing today well Charlie.
Brent we've seen yes, we have been impacted we've seen some of that but you know what was interesting about how we approach. This in early March we started out a daily calls where senior management team and I presented three key areas of focus stay safe.
Cash get work and we had daily calls around that on the get work part it was amazing what we saw happen.
We rallied around.
Fire sales team.
First to reach out to all of our customers. The told them. There were open we're ready to service you weren't a central business will hope you anyway. We can and then we really started truing up with some innovative ideas, including we came up with the concept of converting hotels into acute care patient facilities, I actually said that to the white.
House on a Friday the received it over the weekend. The Army Corps of Engineers must have received it and they announced on Tuesday. The following week that this would be a great idea if we need it I'm happy to report we didn't do any of that worked I think that's good for society.
We also went on to create something called virtual Tech.
And the virtual Tech, we launched we actually were using it and it's basically where we don't have to go into we're building, but we use things like basic zoom or other services, but it's called X or Y technology, where we have our technician in our building and we're actually connecting with the building engineer.
In the building and explaining to them what they need to do to take care of a problem and we charger.
Service fee for that.
And.
We're pretty excited about that we think that virtual tech is really going to take off.
It actually we're playing with this before the crisis hit, but we decided to hit it for both with the crisis steel staring us in the face that we believed it would you.
Good response to customer needs and its back that's starting to take off.
We also came up with some other things we ended up doing it terms of one customer reach out there was about negative air pressure machines still could we locate any and they weren't such high demand, we decided let's do a prototype and see if we can manufacture them ourselves. So we ended up showing the customer what we created they loved it.
They ordered units and we have now many other customers ordering those negative pressure, we're seeing so the point I want to make is that yes, we've seen some pullback by certain customers restricting goes for going in buildings. We actually created I think some innovative solutions that customers are picking up on which is allowing us to see some.
Expansion, which services that we weren't providing before for that matter of equipment.
Finally, we've also seen other service customers take advantage that their buildings are empty and actually accelerate its in capital projects. So it's been an interesting mixed Brent, but I think you know because of our Swift action around you don't stay safe casket work.
Actually the get work part that's that's working out okay.
Okay. Okay. That's good I guess.
Another question Charlie would just be I think about your your reason than unfortunately, there's sort of in these areas that.
Had been hotbed for that the virus is there a way to couch sort of how much of your business has been.
You know the percentage of the company how much of the business has been materially impacted your in terms of delays and enable that you're actually execute work is it 50% 60%.
Then I guess, a follow up to that would be that.
Have you are you considering taking any sort of them.
Yes.
And that could projects I understand that the matter of a couple of weeks.
Yeah. That's that's one thing we were delayed but if it is indeed longer you consider taking charge it today sort of a conservative.
That does delays get extended.
So Brent on the first part.
Where we really hit the wall was in Boston.
Finally, the cities of Boston, Cambridge, We had a couple of projects going.
Interestingly enough.
We have a ton of prefabrication when those projects so while the actual construction sites shut down.
We actually brought up more people back into our production facility and really got ahead on prefabrication. So once those sites open back up we think we're going to be the more productive in the field because less field assembly more prefab always helps us with.
Reducing labor costs, so we actually I think smartly executed what we could.
Including we've got some other couple of major projects that were just starting up the planning aspect, meaning where we do the building information modeling we continued with that that did not stop so while physical construction the fuel yeah, there's going to be an impact there on revenue up in Boston, We actually still continue to see some revenue come in.
The prefab as was the planning.
The other markets that we took some hits on in Michigan.
We had a similar situation.
But we're very busy up in Michigan, and we did exactly the same thing planning and prefabrication, just really became the focus.
And our customers were very supportive of that and also in Michigan. There were some projects that were deemed essential and they were allowed by the state of Michigan to open back up, namely the healthcare projects that we're building.
Oh, no you know kind of putting a percentage on the impact of that I'm, not really able to say, it's an exact amount just yet I think we're still digesting that but it's namely those two locations the rest of our markets pretty much continued.
We did see some pullback I should add this we did see some pull back quite a couple of.
Customer specific customers that pull back just because they were concerned about the virus and they told US let's should our projects down for the time being let's get organize them, we'll start back up in the future, but again, we've seen some other business come in that's offset a bit of that so it's kind of been an interesting environment on the contingency.
Or youre, taking a charge. If this continues when we looked at our forecast.
We're looking at our forecast each month.
We're kind of putting in some contingency in those numbers to try to true.
You see some problems.
Productivity, we actually have a team that's working with the branches that are.
Trying to its kind of hard to.
Capture really that the time detainees, taking the extra Washington hands, or maybe taking a stairs not the elevator. So we have a team that's working through that right now with our branches on every specific project to train capture what is but it's true that impact.
We also the team which has several people they're talking to each of the branches once a week, making sure we're probably properly noticing our customers by our contract terms to recruit impact expenses. So were I think were heavily to source smartly.
Okay.
Okay.
Last question quickly.
Your market.
In the backlog today, I think not all non resin equally in the you know whatever coming.
Got it but you know office sector that in hospitality sectors I think there's some worried erad.
We maybe what what percentage of the backlog is that today versus healthcare and the data center work, they do and Charlie think things like that.
Yes.
I think we're fortunate that.
We have very little in backlog in terms of kind of commercial type space.
We will do a lot of that lot of what the company doesn't work in the commercial market is isn't material fit out work and skin any get out there's no major bigger.
Office buildings or anything like that.
We are doing some work up at Michigan for bed rock, but that's still progressing.
So at this point, we're not seeing any we're not really overly concerned about our backlog.
It's good strong backlog with.
You know quite frankly, I think segments that aren't going to be dramatically impacted by.
A pullback now I'll comment just I think we've done a really strong job at kind of the tactical execution of give me with the virus.
But during this period once we saw that we were stabilizing what we need to execute and I think we executed extremely smartly back at March made the cuts we had to make we moved quickly.
But when we saw the window of opportunity the senior management team actually you've had three virtual offsite sessions talking about post.
You know the virus crisis, when things start to stabilize where do we focus so we're continuing.
Our exposure should said, we're going to be accelerating our older direct push which has been part of our strategic plan for several years.
But we're going to accelerate that we'll be talking more about that on our next call.
But when you look at sectors that we believe will be healthy coming out of this includes healthcare and we're already seeing some reprogramming going on an existing facilities in case, the virus comes back and before.
Well, there's just a resurgence of it.
R&D facilities mean, we biotech and pharma.
Especially able to Boston area, we're doing some of that work, but we think that will expand.
And then data centers with everything that's growing virtual.
At market right now.
Especially understand it as a $50 billion to $70 billion.
A year investment by the likes of.
They spoke Google Amazon and the other majors.
That includes both Newbuilds and we're enjoying one major project right now up of the Ohio market.
But really nothing about that as they've already contracted with us for stuff that we finished back in 19 to renovate those facilities. We just finished.
And that's direct with that particular customer so we see the data center market as another fertile market for us to continue to expand it to.
Beyond that.
We think industrial might be an attractive sector, we dabble in it today.
We believe that we could try to grow into that sector be it through organic we're through acquisition at some point in the future, but in the near term, but we're looking at that industrial sector, mainly on the manufacturing side.
As people try to China as usual.
Moving production back to the United States for critical critical needs of the country.
So we're thinking that could be another attractive market for us to continue to study and move into and also just finally add that I've said this for years of the key to success in our business like ours in the construction industry you'd see space is diversity, we have no heavy concentration of any one segment. So.
Diversity allows us to whether an economic stress storms like this and put our resources to work, where we see growth potential.
Brett does that does that answer your question.
Hey, Mike I. Appreciate you taking the question. Thank you guys best of luck.
Thanks, Brett.
Once again, ladies and gentlemen that is far one to register a question at this time.
Our next question is coming from Jerry Sweeney of Roth Capital. Please go ahead.
Hey, good morning, Charlie Jamie Thank you for taking my call good monitoring.
Just a follow up a little bit more on what you're just discussing with Brent.
And maybe from a different pack look at maybe utilization right. So lot of projects are all going out there there's probably different.
Rules put in place in different markets, but.
Just generally.
Social dispensing space.
Projects.
Do you have any idea what maybe utilization rate.
Assets out in the field or manpower on projects today versus maybe pre coated.
Do you have the ability to sort of flex up that manpower to manage some of that.
Most likely lower utilization.
Oh, Jerry what's what's interesting about what just happened.
In previous calls I think everybody knows we've been very concerned about human capital assets, not having enough of them and that that caused us some problems of the past.
This is causing and if we already pulled back you know in mid Atlantic, we slowed down our business, Southern California, which slowed down our business to catch our breath and get back on track.
But right now I think the overall industry.
It's going to be able to catch it's breadth and really look at the deployment of assets differently.
Thank you know the slowdown was going to be beneficial to the industry I think there'll be improved execution by just really channeling.
The human capital appropriately and the slowdown of the construction market I think right now will allow the general contractors to have better teams on their projects and the likes of your specialty contractors like limbach.
Also deploying our your assets appropriately and quite frankly see better margin production come out of it.
So I don't I'm not sure them fully answered your question, but yes.
I was actually look at it from my perspective, let's just a normal.
Normal project at 100 people on it.
You know post covered just because of.
Okay. Thanks.
Like 80.
25% less people.
That could shift and can you sort of.
Flex your workforce to me.
You don't want to be carrying 100 people on that project.
Maybe 75 rate it could be on a project haven't given thought that's sort of what I was getting I don't want the long gates.
Backlog as well because maybe some projects take longer et cetera, I'm, just trying to figure out yet on that front, if that make sure you're right I had a call last week with a customer and.
One of our major customers the CEO Corbett wanted to have a chat about.
Our stored up processes. This EPS to be the Michigan market as he ramps up is projects again now that Michigan started to give us a green light.
How are we going to approach. It so we talked about the issue of social distancing and things like a buck hoist right. The big voice. The roaming outsides buildings, you can only have a couple of people versus say 50. So the idea of your perhaps staggered shifts.
Sure. So historically in the morning, you wrap up in the afternoon, you've got the second shift come in the afternoon, and obviously the summer hours with more daylight. That's that's fantastic we could execute that.
I think what we're all going to have to do is kind of continue to study what's going on.
And I have another closure in several weeks Jerry with the Q1 results.
Our team that's working on protecting us in terms of making sure we're noticing or customers about impacts. There were also doing the data analytics study on what is this truly.
How's it impacting us I think we'll have more information for the next call Jerry I'll remember this question and I'll.
Perhaps better geared to respond to it you have to think now I guess it yes.
12 month manpower schedules that we really lay out so that's part of what other branches are looking in anticipating as how that impacts.
And our outlook for those schedules and how we lay out the number of people on jobs.
Okay, Great I appreciate it that's it from me, but Oh good luck.
Okay. Thank you. Thanks sure. Thank you.
Once again, ladies and gentlemen that star one if you would like to register a question what mobile please hold we pull for any additional questions.
At this time I'd like to turn the floor back over to management for any closing comments.
I just want to thank everybody for joining us today, we look forward to help you know the cold here is a very near future.
For the Q1 results and we'll we'll speak receiving thank you.
Ladies and gentlemen, thank you for your participation. This concludes today's event you may disconnect. Your lines are log off the webcast at the time and have a wonderful day.
[noise] [noise].
[music].