Q2 2020 Badger Meter Inc Earnings Call
And during the session. He will need to press star one on your telephone if you require any further assistance. Please press star zero. It is now my pleasure to turn the conference over to your Speaker today, Karen Bauer, Vice President of Investor Relations strategy and Treasurer. Please go ahead.
Good morning, and welcome to the Badger meter second quarter 2020 earnings Conference call I Hope Youre, all healthy and staying safe and we certainly appreciate you joining our call today on the call with me are can Bockhorst, Chairman, President and Chief Executive Officer, and Bob Brocklin's, Chief Financial Officer.
The earnings release unrelated slide presentation are available on our website quickly I will cover the safe Harbor reminding you that any forward looking statements made during this call are subject to various risks and uncertainties. The most important of which are outlined in our press release, an FCC filings.
Today's call, we will refer to certain non-GAAP financial metrics, our press release and slides provide a reconciliation of GAAP to non-GAAP financial metrics, you with that I'll turn the call over to come.
Thanks, Karen and thank you for joining our second quarter earnings call. Let me start by expressing my sincere appreciation to our global team for their extraordinary commitment during this unprecedented times.
We made every effort to keep our employees and other stakeholders safe as Weve navigated the Kobin 19, pandemic and I'm very proud of the collective roll our team members plate and supporting our customers in the critical water industry.
We continue to follow all health and safety measures. According to health organization recommendations and local government regulations.
Our sites key actions have been taken.
To include steps to ensure employees are practicing social distancing onsite temperature monitoring use a face coverings and hands cleaning and sanitation efforts and staggered production schedules.
All of our manufacturing and distribution locations, our operational the majority of our Nonproduction employees continue to work from home.
As you read in this mornings release, our financial results reflect the resiliency of our critical in a central product lines the potential for order delays in operations and supply chain disruptions that I mentioned during last quarter's earnings call gradually diminish throughout the quarter.
We remain encouraged by the backlog in funnel of project opportunities and our balance sheet is in excellent shape to whether whatever lies ahead recognizing conditions and potential business impacts are continuously evolving.
Bob will walk you through the details of the quarter and after that I'll come back and talk further about the market outlook and what we're hearing from customers in the current environment.
Thanks, Ken and good morning, everyone.
I'll begin by stating it is incredibly difficult to quantify the specific impact of covert 19 on our financial results on the corner clearly it was far reaching in terms of customer order patterns supply chain logistics and capacity interruptions and ultimately costs, including the various implemented cost savings actions. So somewhere to the release my comments will not include that breaks.
I wanted a level of granularity.
If you turn to slide four or you can see the total sales for the second quarter were $91.1 million compared to 103.5 million in the same period last year, a decrease of 12%.
Given our sales concentration in the U.S. market. It is not surprising that the month of April Mark the low point for us in terms of both orders and sales as the vast majority of states were under government locked down restrictions customers were definitely taking a pause in determining the impacts to their operations.
Operate remotely how to continue with projects and how long the restrictions would last municipal water demand began to improve to become less worse. If you will as the lockdowns began to be lifted in mid may into June.
In municipal water overall sales decreased 9% with April representing the largest year over year decline with sequential improvement off of that bottom to a more stabilized level as the quarter progressed I.
I would not characterize it as back to normal, but definitely off of the April bottom with relative consistent.
In addition backlog grew as orders exceeded sales in the quarter due to a number of factors. These included manufacturing disruptions from stay at home orders in the U.S. and Mexico higher rates of intermittent employee absenteeism, an early supply chain challenges all of which combined to limit output at certain of our manufacturing facilities.
Additionally, the sequential demand ramp impacted order timing and our ability to convert orders into sales late in the quarter.
On a positive note revenue mix trends toward adoption of smart metering solutions, including Beacon service revenue along with ultrasonic meter penetration continued.
In contrast flow instrumentation sales declined 22% year over year with April again, representing the most difficult demand level.
As expected demand trends improved from April from the April low, but at a very modest pace reflective of the significantly challenged industrial markets served and are continuing view of this product line being lower for longer compared to the more resilient municipal water trend.
Operating profit as a percent of sales was 13.9% 60 basis point decline from the prior year, 14.5%.
As we discussed on our last call in mid April we enacted a number of temporary cost containment measures to mitigate the impact of the rapid sales decline to both profitability and cash flows.
These included reductions in discretionary spending hiring freeze reduced work, our furloughs and executive salary reductions among others, while the reduced work our in salary reductions were initiated initially targeted for five weeks, we did extend those reductions for an additional four weeks through mid June.
The combined to actions helped to contain the decremental operating margin impact from the rapid sales declined to approximately 20% in the quarter.
Gross margin for the quarter was 39.3% up 40 basis points year over year. Despite the sales decline and once again in the upper half of what we would call our normalized range of 36% to 40%.
The implemented cost actions helped to offset lower production volumes. Additionally, positive sales mix, notably the overall trends of ultrasonic meter adoption and higher Beacon service revenues, along with lower commodity costs benefited gross margins in the quarter.
I see a expenses for the second quarter were 23.2 million down 2 million year over year, resulting from the net benefit of the implemented cost actions, partially offset by higher investments in certain business optimization initiatives.
The income tax provision in the second quarter of 2020 was 24.3% slightly higher than the prior years, 23.8% rate.
In summary, EPS was 33 cents in the second quarter of 2020, a decline of 15% from the prior years earnings per share of 39 cents.
Working capital as a percent of sales was 22.9% inline with the prior sequential quarter.
Free cash flow of 20.1 million was just 700000 below the prior year comparable quarter. Despite lower earnings and was due primarily to the working capital differential between corners, and deferral of our quarterly federal income tax payment under the cares Act.
We continue to monitor customer cash receipts and supplier payment terms and we have not experience any significant collectability or other issues.
We ended the quarter with approximately 85 million of cash on the balance sheet and a net cash position of approximately $81 million. In addition, we haven't untapped credit facility of 125 million. We believe we have ample liquidity to fund operations, our dividend and other capital allocation priorities under a wide range of potential economic scenarios.
With that I'll turn the call back over to Ken.
Thanks, Bob we participated in a number of virtual investor conferences during the quarter. So I thought I'd start by addressing the common questions and themes from those discussions so.
Let's start with the current environment as we discussed in the release and in our earlier remarks, we do believe we are entering the new normal after the shack in April in early May when most of the U.S. was shut down.
Well some of the municipal water activity never stop there was definitely a break as our customers like all of US had to figure out how to navigate the covert 19 pandemic and the rapid pace of change in government rules and requirements globally. Once that settled a bit agree and gradual reopenings occurred we started to see activity improved off the April bottom I can't say were comply.
Really back to normal but activity as steady and on a relative basis customers are requesting in person meetings and site visits mid tenders and awards are proceeding some projects have accelerated despite others being temporarily deferred we have not experienced any outright cancellations as it relates to supply chain and logistics, we commented last quarter that it.
Could predict potentially create operating challenges, while there was and still has a significant amount of active management. It was not a major factor.
As Bob noted, we did however experienced manufacturing disruptions from the stay at home orders in the U.S. various government mandates in Mexico related to vulnerable populations and intermittent employee absenteeism as well as early logistics and supply chain glitches, all of which contributed to slightly lower than expected output at our manufacturing to say.
All of these these impacts in tax continued to lessen in severity and we expect them to be behind us shortly barring any new currently unforeseen developments. We previously outlined a series of temporary cost reductions that were instituted in mid April and as Bob mentioned, we did extend the reduced work our in salary reduction measures into mid June.
Not surprisingly, we continue to manage hiring and discretionary spending action given continuing market uncertainty.
While painful in the short term we believe these steps were both unnecessary and adequate to responsibly manage the cost structure of the company during the worst of the impact.
We obviously continue to stay close to the rapidly changing implications of the pandemic and are prepared to take additional actions that they become warranted.
Turning to the outlook, while the economic environment appears more stable there is certain market data and sentiment that points to the potential for a protracted recovery from Colgate 19, and this continued uncertainty could weigh on customer demand and municipal budgets moving forward, we cannot confidently predict the degree or duration of impact. So therefore, therefore, we continue to focus on the.
Items, we can control.
We are actively investing in and launching new products. An example of which is our recently released E series ultrasonic plus meter with integrated control valve.
Which allows water utilities to remotely restrict water flow with multiple valve positions, the safe humane and efficient solution to controlling water service in residential applications improves utility efficiency expenses and safety and addresses one of the to longer term trends, we believe could accelerate as a result of Kobin 19, the other being accelerated.
My adoption.
Our operations teams are adapting manufacturing processes to increase output, while optimizing safety, we do expect to recover the majority of the backlog built in the second quarter. During the third quarter, we're managing cash flow in working capital with 85 million of cash on the balance sheet and 125 million a revolving credit available to fund capital allocation priorities in.
Including the dividend.
Finally, we continue to pursue pursue strategic tuck in M&A that will expand our offerings in a tree attractive adjacent sees serving our critical and essential markets in summary, I'm pleased with the resilience of our business model and our financial performance in relation to the economic severity of this unprecedented crisis.
Our organization has prepared and well positioned to successfully manage the on certain days ahead remaining nimble and reactive to our market trends with that operator. Please open the line for questions.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound or hash key please standby will be compiler gionee roster.
And our first question comes from the line Nathan Jones from Stifel. Your line is open.
Good morning, everyone.
Nathan.
I'm going to start with a few questions on the margin side and expense side with the volume declined and the friction in the system from from coded and stuff that 20% Decrementals, obviously really good performance.
As a few things I can say that that maybe are headwinds going forward that I'd like to get your thoughts on so you had temporary cost actions in the caught up I know some of those things that have expired and you put people back to two full work wake said, that's going to bring some expense back.
Copper prices of everything pretty stately out of the last few months.
Maybe you could talk about.
Are you able to offset some of those things we price are there other cost actions that you're taking to offset some of the expenses coming back in.
And any if you if there's anything you can help us with in terms of what kinds of Decrementals, we should be expected going forward.
Yes, sure Nathan I'll go first I'm sure Bob will have some things to add on this but first and foremost the actions that we took in the second quarter. When when this came on really quickly we felt and still feel were adequate for managing through the second quarter and over a very pleased with the financial results.
Additionally, other cost actions that that we've taken a we feel are adequate for how we're viewing.
The near term going through the rest of the year. So we have certainly put more actions in place.
On the flow side, we were we expect to be lower for longer. We did we did go forward with a I, what I would call small surgical costs cost action, there to better align with that business, but we feel generally good there on the copper front I think it's important to remember that as our business continues to.
Evolve and some of the mix changes that I think most on the call are aware of not everything we're selling anymore. So tied to copper as it used to be so for example, there is no copper and radios. There is no company copper and in a beacon revenues. So so were not as dependent on it so perhaps maybe we didnt benefit from an as much as you thought.
In the past and perhaps it isn't going to bother us as much in the future and from a pricing point of view the markets are still pretty rational with what we're seeing and price before we get to that question. So so we're not seeing any significant issues there and we feel like our pricing abilities remain as strong as they've been in the past or to recover costs.
Bob I think the other thing we've we've seen at least in the second quarter and as we look forward is that well. There's obviously a conscious cost actions that were taken there was actually other elements of what I'll call natural cost savings that come from the environment, we're in whether that be.
Travel and entertainment or convention expenses that are considerably lower and so I think as we continue in this remote work arrangement and corporate travel I think takes on a completely different form a in this environment. While the conscious actions have been ceased at least as it relates to work hours and salary reductions those natural cost savings.
Continue to a crew as we as we move forward at least in some reduced capacity as it relates to the specific question on incremental or decremental margins I don't think anything's changed from what we've said for the last six to eight quarters in terms of those incremental decrementals being in that 25% range, we just happen to be able to do a little.
Bit better that that in this environment, which obviously the mix dynamic in margin helped us achieve that there's going to be outliers, obviously quarter to quarter, but that's the the term the trend overtime.
I think thats very helpful. Thanks, and then maybe just.
Good.
Give us a little more detail of Medicaid.
As you went through the quarter I mean, I know you said April was.
What must think got sequentially better.
Is there any color you can give us on kind of which was what the exit rate was this where we're heading into the second quarter nature of the business.
Yes. So so we're being two specific if you think through how our revenue lays out with with utility being such a large part and then 98% of our utility business being U.S. focused and 95% of all Americans on stay at home orders I think it's.
Pretty fair to just say April was was really I struggle and that the there was a significant step change in about mid may which corresponded you know as you might expect with when some of the stay at home orders started to expire. So the first six weeks were very depressed the second six weeks, where we're certainly.
And much more encouraging.
Okay. Thanks, very much I'll pass it on.
And our next question comes from the line of Andrew Buscaglia.
From Berenberg your line is open.
Thanks for taking my question.
Sure.
So you saw that you guys stated.
In the press release, some economic data that's meant that getting a little bit.
Well that caution ahead.
I mean, it's about municipal budgets will look like you know and that is the kind of it and discussion out there about potential lag.
I'd be seeing here in the water industry.
If you comment on some of this data that you're looking at the sentiment that you're you're you alluded to I imagine customer conversations and kinda talk about your customers are thinking I'm going forward over the next six months.
Yes, so let's start with that so what what the direct customer conversations that we haven't as I'm sure. You can imagine we are in constant communication with our customers about what they're seeing not just in the short term, but how they're thinking about budgets next year and where this is all going to fit and and we're still receiving you know relatively positive data.
Where people are saying, we're still going forward with our projects.
You know anything that we're doing is more deferrals, they're not cancellations.
It's encouraging that that customers are talking about multiyear projects. These aren't just the turn in Q3.
Book in turn in Q3 Q4 people are still talking about long term projects. We had long term project awards in the quarter. So so from a direct talking to customers point of view.
That hasn't changed since we did the the virtual investor conferences or from our last call that that still feels positive.
You know I think I think the reason we strike the cautious tone is right because coal that 19 still has some certainly some horns do it and causing challenges.
It's unprecedented what we're seeing in terms of budgets. So so striking a cautious tone, but it's really not different than the tone that we had in Q1 I think if you read our press release. There. We also talked about Colgate impacts and some of the budget concerned. So we haven't really changed more negative and the things that we're hearing are the same.
What I feel great about is and I think we showed this in Q2 is that our organization is is executing very well and we're positioned to be able to handle whatever environment comes.
We're focused on controlling what we can and a and I feel great about how we did that.
Do you any discussions they do they bring up there at the upcoming U.S. election.
Potentially changing there you know how there yes things are any hesitation ahead of that.
Have you kind of data in the past that.
That would give you pause there.
No we're not expecting any any political issues in terms of the election, having an impact on demand or not.
Okay.
Well just one last one your free cash flows then again with again really strong.
The question is.
There can you keep that you're doing free cash flow and close to 20 million a corridor.
Yeah for the last six or eight quarters now, though it is there anything that.
Yes that would change near term, but that you can't continue deliver on that or do you still had.
More to go on that working capital management.
I think we've continued to say that you know year to date I think we're at 228% free cash flow conversion to earnings that's elevated to think that we're going to sustain that moving forward. I don't think is realistic us predicts, particularly when you think about the third quarter, obviously, a part of the free cash flow in the second quarter was deferral of the.
Federal income tax installments, so that'll double up in Q3, So I would expect Q3 free cash flow conversion or to be lower than what we've experienced but I think over time. You know the objective is continue to convert free cash flow in excess excess excess of earnings I still think theres runway.
But yeah, I think we're going to sustain it to 28, where we're at now is just not realistic.
Right.
Hey, guys.
And our next question comes from the line of Rich Eastman from Baird. Your line is open.
Yes, good morning.
Hi, good morning right.
Just a couple of things one is if you play around with the.
Maybe the revenue cadence by month in the second quarter.
And you see if I wouldn't take the third you know the third month, the quarter say June and I take my kind of revenue estimate.
For June.
I'm, assuming you're no worse better better type of scenario for the second quarter.
If I wouldn't take that and just.
Forecasted into the third quarter.
And quite frankly kind of play with the seasonality is what did we [laughter] son of a reasonable assumption.
That unless things.
Great from here that the second half of the year on utility business.
Could be up a few percentage points.
And it if it's really a cadences you and then a seasonality but.
But that's maybe how the math.
Suggests the back half of your could play out unless we have a.
Total cold itself.
Is that reasonable.
Okay.
Well, so so I think I sorry.
I think yeah, I think the biggest challenge and you pointed that out at the end. There is so so barring coveted set back right. So take that out of the equation.
I think.
The business as you've always known can tend to be lumpy here in there.
We've said it on the virtual Investor calls that we feel like heading into the second half were back into a new normal and operating at a condition that that we feel pretty comfortable with.
So you know I think I think normal normally how you think about a third quarter I think is relatively fair.
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In the.
Utility business could you just maybe suggests how there or let us know how the up the commercial <unk> meter business to was commercial.
Sure.
And then what I'm getting at is.
Are you seeing any slow sluggishness in the commercial construction market itself impacted commercial utility.
Her business or now I know.
Is there more this access issue in coated.
I think it's more the access issue uncovered because we saw that roughly the same rate as residential I think while we're on that 0.1 of the things that that we are excited about it in that space as we continued to see adoption of our new three and four inch ultrasonic meter so seeing good conversion there, but in terms of revenue down at the same right.
Okay. Okay fair enough and then just one last question again, given some of the you know the for a little the salary.
Cost savings that you generated in the second quarter.
You did say your extended that that expired your when I looked at look at the sneaker expense going forward into the third quarter.
Presumably you'll stay type.
The control, but I would think from a dollar perspective.
Bob.
For.
You know is it a is that a million a half is a 2 million box.
You know into the third quarter, where you're seeing the steps up given some of those very temporary.
Cost actions that kind of match the topline in the second quarter third quarter.
The do better.
Just give us some sense of absolute dollars, maybe what's the magnitude of that increase in sneaker would be.
Yeah. So then the intent wasn't to size that not surprisingly I will tell you that yeah, you're exactly right that the temporary work work reduction and the salary reduction did end in June so that obviously comes back in a in the third quarter I would similar to what I said earlier I would anticipate some of those.
Discretionary spend items that did you know accrue to savings year over year in Q2 would continue in Q3, I guess the way I would answer the question without sizing it Rick is that.
I would expect our sta, even with the return to normal conditions to aggregate to you know a similar level of history as a percent of sales.
As we move forward and they do your earlier question on the earlier questions on what is the second half looked like obviously, we think it can you know it's getting back to a more normal and that's why we did phase the cost reductions the way that we did close to rightsize the cost structure to the immediate onset impact and then to get back to you know a more normal obvious.
Mostly to the extent that doesn't play out or to the extent. These reopening setbacks continue and have a demand continuation will act. Accordingly, it's the same comment we made in the releases to remain nimble and reactive to market trends and we'll do the same thing on the cost side, but I would I wouldn't model it any differently than sort of historic Sta levels.
Hi, guys private jets claims more normal in terms of water I I want to reiterate well, it's it's certainly lower for longer but when you talked about more normal yeah right run rate to its on the municipal water side.
Yes interest to you know just to piggyback on to that for a second I mean, there's just last question. It was when you look at dusk wool business.
To give us the sense of what.
Hi, This is Ben to the gross profit margin line.
Probably industrial flow business I know you know on a trailing basis typically when industrial flow is growing.
It is accretive gross profit margin.
That may or may not be the case now utility mix, but I was not how's that.
For the first six months of the year as the.
As it has nothing to drag on the gross profit margin.
I would think of despite historic results. If you look over the last couple of years the gross margin.
Performance of the two lines of business are actually very similar so they're right on top of each other quite frankly, and so there isn't an outsized gross margin impact as one grows or one declines I would think of those being more on par.
Okay, great. Thank you and those work on a on the technical side here.
With that second quarter revenue, there's a lot of dog peddling behind under the surface. Thank you yeah absolutely.
Our next question comes from the line of Ryan Connors from Boenning and Scattergood. Your line is open.
Hey, Ryan Thanks for taking my questions. This morning sure.
So I want to actually revisit the couple of questions back.
On the political side not so much from an election standpoint, but obviously, there's no debate that some of these stayed locals are under some pressure, but a lot to talk about potential bail out for state and local governments, whether that comes in the form of a have a direct injection or infrastructure bill.
Yeah. When you look at the Big picture for your business heading into next year, how how do you handicap that first of all I know you don't have a better crystal ball than anyone else, but but how do you handicap that and how do you. How important do you think that is to this continued trajectory back to normal see I'm getting some kind of federal support.
So so let's start with the infrastructure piece that you brought up for so so in general you would always believed that in infrastructure bill in the water space would be helpful. And it is if that infrastructure Bill is clear and past quickly and the funds are generally made available.
If it drags out in some long political debates, where Democrats and Republicans fight about it for a long time people might wait given the current conditions before moving forward with a with spends because they think they might get free money. So infrastructure Bill is helpful. If its executed clearly and quickly.
The second piece about the infrastructure build that we think we're uniquely positioned to take advantage of is typically an infrastructure bill emphasizes shovel ready projects. So when you think about our cellular deployed am I infrastructure free system nothing is more shovel ready then just buying or.
Radio and hooking up to a meter or replacing the meter to collect the non revenue water, which is obviously critical to municipalities plus putting the meter on it which that makes them more efficient unsafe or because they don't have to go out and read meters. So so when we talk about potential long term Tailwinds you know.
We think of this business we run it as you know for the long term over the five year period. We think those are positive tailwinds for us what we don't you know what we really don't want to see as a long protracted government fight over potential infrastructure.
Okay, and so in terms of I mean.
What does your preferences your preference to have something funded federally or a bottoms up funding from the local level. In other words, you would think that if utilities are having to pay for everything themselves that means they're having a bill for it which means we're having a meter for it whereas if they're getting you know some kind of top down federal or even state injection that's.
It's less.
Maybe takes away some of the cash register type dynamic I mean can you just comment on your.
Reference for.
Government versus bottoms up organic funding.
Well. So my first reaction to that is any funding is good you know I think any way that.
Municipality, a utility funds itself is great and if there's government injection that's fine too.
I do believe in the fundamental nature of the cash register the capturing the non revenue water the efficiencies the conservation aspects of it so even if it comes from a federal point of view I don't believe that would blackout the meter from still being a very extremely essential part of the distribution system.
Got it Okay and then my last one just this is more.
Kind of Big picture nature, I mean, you mentioned kind of the business historically can be lumpy at times.
Obviously, it's not unreasonable to think that we may have a downside lump out there somewhere in the next 12 18 months, but yet you know the company has always had a a very pretty standard view on you know not providing guidance and so forth.
You know with the multiple still pretty high.
Heading into that kind of uncertainty given historical Lumpiness is there any thought you have on how you might.
Think about things like either either interim updates in between the quarters or different you know a different way of kind of providing updates to make sure that those lumps if and when they come.
Aren't aren't a total shock.
Yeah. So it's interesting you know we've never provided guidance because I don't think it because of that uneven or lumpy nature of the business. We don't always feel like that isn't the best interests of investors I think your point makes sense, but but if we hadn't done in the past it doesn't quite feel like the right time to do it now when things are.
Most uncertain.
Okay. That's fair it thanks, a lot for taking my questions have a good one yeah. Thanks. Thank you.
And again, if you'd like to ask a question that star one on your telephone keypad. Our next question comes from the line of Tate Sullivan from Maxim Group. Your line is open.
Hi, Thank you. Thanks, Good morning, Hi, Dan for Hey, more I think I think I missed the comment did you talk about recovering some of the backlog lost in Twoq and Threeq what was that.
Yeah, Yeah. So so some of the you know some of the inefficiencies caused by the particularly the that shutdowns in the U.S. and Mexico and with you know how I Express the.
Way the orders came in second half of the quarter loaded versus the first half the quarter, we do expect to ER to recover that in Q3.
Okay.
And then became I think you did mention Beacon a couple times during your remarks, but can you just update I.
I think it was it ended last year, you talked about a five year target and can you given that can you give an update of you can as a percent of revenue or any other beacon updates that you can provide.
Yeah. You know this is something that we're extremely pleased with if you just go back a few years ago. It was less than 1% of our revenue fast forward to 2019, it was 4% and we have seen significant growth in the first half of this year.
So so our target is still my target is I would like it to be a minimum 10% within five years. So we're at four and trending up feeling good about it.
And then what can you just remind us what that what are the drivers of the beacon sales as a usually new ultrasonic mic replacement meters or what else no expanded requests from clients.
Well so it's it's it's am I projects large medium and small right. So that's when someone buys a meter or they already have a meter and they they buy one of our Orion cellular radios every time they buy into Ryan cellular radio it comes with a software as a service subscription. So it's all tied to the endpoint <unk>.
Okay. Thank you and then I I don't think you commented and I apologize.
You mentioned flow instrumentation flow lower for longer but I can you comment on international do you see international sales weakness in line with what you saw in flow. If you can comment please well, maybe we break it down into markets a little bit. So the two markets that have been the most resilient that that we are also most excited about for the long term event a waste.
Water and H.B.A.C., so whether its global or domestic though is to have have responded better than say the oil and gas is or automotives or other pieces.
Globally, obviously the way coded worked Asia has opened up sooner Europe back on its feet kind of at least more so than here now. So I mean, we've we've seen that same wave, but you know again, we will certainly point out that that will be lower for longer and that's why we aligned our costs.
Actually there on a more you no longer term focus rather than how we did on utility did the other way to the other way to say it in the quarter the rate of decline in sales for international flow instrumentation was a little less worse than it was domestically still still blending to that down 22, but international was down a little bit less.
Okay.
Thank you for that have a good rest the day.
I think state.
We have no further questions in queue turn the call back over to the presenters for closing remarks.
Great. Thanks, everyone for joining our call today are you planning purposes, our third.
[laughter].
Hey.
Okay.
Oh.
Okay.
Ladies and gentlemen, this concludes today's conference call. Thanks for participating you may now disconnect.
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