Q2 2020 Albany International Corp Earnings Call
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Ladies and gentlemen, thank you everybody for a whole, they're walking to Albany International Conference call.
A second quarter call fruits and at this time.
All participants are listen only mode. We would have a question and answer session. Other later time, which instructions will be provided.
At this time, let me go ahead and Trust Your conference call John Hobbs Director Investor Relations go ahead.
Thank you Ernie and good morning, everyone.
As a reminder for those listening on the call. Please refer to our detailed press release issued last night.
Our quarterly financial results with particular reference to the notice.
And in the text that the really.
Our forward looking statements in the use of certain non-GAAP financial measures and associated reconciliation to GAAP number.
For the purpose of this conference call so stay.
But also apply to our verbal remarks this morning.
Where we will make statements that are forward looking.
That number of risks and uncertainties, among which are the potential effects of the cope at night.
Well our operations.
Yes, we serve.
Actual results.
For full discussion, including a reconciliation of non-GAAP measures rebate you thought this call for their most comparable GAAP measures. Please refer.
The earnings release, as well as RCC filings, including our 10-K.
Now I turn the call over to Bill Higgins, President Chief Executive Officer will provide some opening remarks bill.
Thank you John Good morning, everyone. Welcome. Thanks for joining our second quarter earnings call.
On multiple fronts Albany completed an outstanding second quarter and this pandemic environment. We continue to operate with health and safety is our top priority, we drove continuous improvement and efficiencies throughout our operations, we managed to supply chain with discipline and adaptability. We continued to do a great job for our customers with outstanding performance and on time.
Delivery and quality and we delivered record gross margins and adjusted EBITDA margins in both segments.
Stephen I will provide more detail the first I want to extend my gratitude to our employees around the world.
Our teams have written to the challenge in delivered great results, while keeping health and safety at the forefront of everything we do and this pandemic is not over unfortunately, we have to considered a marathon, which requires stamina and resiliency.
I'm proud of how our teams have responded and how they continue to work together to get the job done for customers and shareholders make no mistake. It was a challenging quarter and I. Thank every member of the team for the extra efforts great job in a great quarter.
Last quarter I'd spoken at length about our management and operational response to global pandemic today, our top priority remains maintaining the health and wellbeing of our employees.
Our covert 19 task force continues to meet on a regular basis reviewing each locations situation upgrading safe procedures as we learn more and sharing best practices across the company.
We've been relentless to ensure a safe working environment and cannot become complacent, particularly since a number communities where our plants are located have become recent hotspot.
I'm extremely proud of the omni team in the outstanding operational and financial performance and the second quarter, We reported GAAP EPS of one dollar per share this quarter down 5% from last year's second quarter, our adjusted EPS of $1.90. It was unchanged from last year's results. This is commendable considering a significantly lower revenue from the lead program during Q2.
And the challenges of Covance 19.
Improved operational performance across our machine clothing in engineered composites business played an important role and mitigating the impact from the lower lead revenues in the quarter.
In the machine clothing segment, we have a seasoned leadership team and workforce that has demonstrated time and again it knows how to manage it a tough marketplace. They simply hit it out of the park. This quarter gross margin adjusted EBITDA margin expanded 270 basis points and 460 basis points respectively.
As a result, adjusted EBITDA grew $6.5 million or 11.5% on flat revenue to a record adjusted EBITDA margin of 41% simply a great performance.
This segment stellar performance benefited from our strategy to be the preeminent leader in machine clothing globally, which is built on years of investment and new technology global repositioning of our factories and a focus on higher growth value added markets, such as tissue and packaging.
We take advantage of our global footprint can serve customers locally we continue to invest to develop a best in industry product portfolio and back it up with technical sales and service support.
We work hard to apply lean and continuous improvement tools.
Proof capacity utilization and operational efficiency.
While the overall market has been challenging in terms of topline growth our market positioning technology leadership and product improvements are focused on delivering value to our customers. So they can improve their plant efficiencies.
In response to the long term decline in publication grade, we've made special investments in packaging and tissue technology.
Packaging and tissue at a higher long term growth prospects and now comprise almost 60% of our revenue on publication grades have declined to less than 20%.
We expect long term erosion in the printing and writing paper markets not only continue but to be accelerated by the cobot endemic and the accompanying shift to digital media and video conferencing.
While we still expect long term GDP driven market growth in non publication grades are starting to see cove. It affected changes in order flows from our customers in different regions of the world.
On a positive note Chinese order activities on the upswing after weakness earlier in the air China has rebounded.
The other hand, and the rest of the world, including the rest of Asia, Europe, and the Americas, we've seen order slowing down.
Some customers who placed incremental orders early in the early days of the pandemic as risk mitigation to ensure their supply chain continuity I push those order so right.
Fine with a sharp contraction and economic activity, we've witnessed globally, we expect topline headwinds during the second half of 2020 and into 2021 to the machine clothing segment.
Additionally, we expect to see pressure on margins driven by lower volumes and mix shifts away from some of our higher margin markets.
Our engineered composites segment also performed exceptionally well, particularly in driving profit to the bottom line. Despite managing through cobot 19 challenges and the ongoing temporary closure of our lead production facilities, which accounted for the majority of our year over year sales decline.
Last quarter, we discussed the strength and resiliency of our military defense programs. We're in good solid military programs, which now make up over a third of our annual revenue in the engineered composites segment.
Here, we continue to invest to improve our technology products and operation.
But she record levels of on time delivery performance this quarter and based on our growing reputation for reliability in terms of quality service and delivery. We continue to pursue additional work with these key customers to grow this portion of our business.
As reported earlier this year, we have increased our work scope in the F 35 program, which is even more encouraging long term is Japan is set to acquire this who acquire over 100 F 30 fives.
Commercial aerospace industry has been hard hit hard by covert pandemic as you'll recall earlier this year, we announced the temporary closure all three of our lead production facilities in New Hampshire, Mexico in France, due to the Boeing 737 backs and Airbus Athree hundred Twentyneo production delays and reductions.
We've also had to undertake a reduction in force primarily at those three leap facilities, but also including other SGN, adding personnel production personnel lot regrettable. This move is required to balance our workforce with our expected revenue as a market recovers.
Third quarter should see the gradual resumption of lead production operations at these facilities.
We continue to work very closely with SAP run to assure a safe and efficient restart to production.
During the third quarter, we'll start to see the impact of Boeing announced cuts and 787 production.
We expect our production rate of 787 components in the back half of the or could be about 50% of the rate at which we were producing in the first half a year.
Longer term, we're happy to announce that we've been awarded a contract to expand our production of 787 fuselage frames and begin and expect to begin producing 77 after section fuselage frames beginning in late 2021.
This new business is further evidence of the great work. Our teams are doing serving our commercial aerospace customers with complex composite components.
Now, let me make a few comments about our priorities going forward first our top priority will be the safety and well being of our employees.
Second we will continue to drive operational improvements to achieve efficiencies within our plants and to deliver great service to our customers.
And third we're maintaining our focus on new product and technology development.
The changes this pandemic will bring will create new opportunities for our customers and for our products and technologies such as next generation material doubts for tissue production and advanced Threed woven composites for commercial and military aerospace applications.
We had a solid balance sheet and plan to continue to use it to invest and promising new technologies processes in products that will benefit our customers and add value for shareholders.
And now Steagall will provide more detail on a quarter and outlook Steven.
Thank you Bill good morning to everyone.
I'll talk first about the results for the quarter and then about our revised outlook for our business for the balance at the year.
For the second quarter total company net sales were 226 median.
A decrease of 17.5 per cent compared to the 273.9 million delivered in the same quarter last year I.
Adjusting for currency translation effects net sales declined by 16.9% year over year in the quarter.
In machine clothing also adjusting for currency translation effects net sales were flat year over year with growth in tissue pulp and packaging grades almost completely offset by declines in publication grades and in engineered fabrics.
Engineered composites net sales again after adjusting for currency translation effects declined by 39% primarily caused by significant reductions in leap and GE nine ex program revenue, partially offset by growth on the F 35, and CH 50, Threek hate platforms and to the.
Acquisition of Saar comp.
Second quarter gross profit for the company was 103 million reduction of 2.1% from the comparable period last year.
The overall gross margin increased by 720 basis points from 38.4% to 45.6% of net sales.
Within the M.C. segment gross margin improved from 51.8% to 54.5% of net sales principally due to foreign exchange impact Nixon deficiency games and reduced depreciation expense.
Within eight you see the gross margin improved from 20.9% to 26.7% of net sales driven by a favorable mix and program revenues and the net favorable change in the estimated profitability of long term contracts, although for 7 million this year compared to 5 million.
Dollars in the second quarter of 2019.
Second quarter, selling technical General and research expenses declined from 50 million in the prior year quarter to 47.4 million in the current quarter, but increased as a percentage of net sales from 18.3% to 21%.
The reduction in the amount of expense was driven primarily by lower travel expenses, partially offset by a higher expense for revaluation of non functional currency assets and liabilities in the most recent quarter.
Total operating income for the company was 52.7 million down from 54.2 million in the prior year quarter.
Machine clothing operating income increased by 7 million driven by higher gross profit and lower SPG and our expense.
While eight you see operating income fell by 9.4 million caused by lower gross profit and higher restructuring and STG and our expenses.
Other income expense in the quarter netted to an expense of 1.1 million compared to an extent of 0.9 million in the same period last year.
The income tax rate for the quarter was 32.1% compared to 29.6% in the same period last year.
The higher rate in Twentytwenty was primarily caused by the generation of a higher share of our global profits in jurisdictions with higher tax rates.
Net income attributable to the company for the quarter was 32.4 million a reduction of 5% from 34.1 million last year.
Reduction was driven by the lower operating income and the higher tax rate.
Earnings per share was one dollar even in this quarter compared to one dollar and five cents last year.
After adjusting for the impact of foreign currency revaluation gains and losses restructuring expenses and expenses associated with the Sarcom acquisition and integration.
Adjusted earnings per share was one dollar a nine cents in the second quarter each year.
Adjusted EBITDA grew 1.7% from last year to 73.7 million for the most recent quarter.
Machine clothing, adjusted EBITDA was 62.9 million or 41% of net sales this year.
Up from 56.4 million worth 36.4% of net sales in the prior year quarter.
Eight you see adjusted EBITDA was 22.8 million or 31.4% of net sales down from last years 28.6 million or 24% of net sales.
Turning to our debt position.
Total debt, which consists of amounts reported on our balance sheet as long term debt or current maturities of long term debt declined from 491 million at the end of Q1 Twentytwenty to 435 million at the end of Q2, Twentytwenty, while cash declined by about 19 million George.
During the quarter.
Resulting in a reduction in net debt of about $37 million.
Under the definition of leverage ratio used in our credit agreement, which limits us to 65 million if cash netting against gross debt. We finished the quarter with the leverage ratio of 1.48 down from 1.69 at the end of Q1 or both.
Oh, well under the cap of 3.5 allowed for under the credit agreements.
Just regarding the limitation on cash netting results in absolute leverage ratio of 0.95 down from 1.09 at the end of Q1.
The reduction in total debt during the quarter was principally caused by the repayment of the 50 million that we had drawn down on our credit facility near the end of Q1.
The reduction in net debt was principally caused by strong operating cash flow in both segments.
I would like to note that in engineered composites widely ship very little product on the leap program during the quarter due to the ongoing shutdown of our three leap facilities.
We did collect during the quarter payments for some deliveries made in Q1.
Those cash collections will not be repeated in Q3.
Capital expenditures in Q2 Twentytwenty.
About 8 million down from almost 15 million in the same period last year.
Due principally to reduction of capital expenditures on the leap program and lower capital expenditures in the machine clothing segment.
Looking forward to the balance of Twentytwenty.
We now believe we have sufficient insight into our expected performance to reinstate financial guidance.
Despite the ongoing pandemic, our reinstated profit guidance compares favorably to our original subsequently withdrawn guidance.
In the machine clothing segment, we've witnessed a reversal of the strong order position, we called out last quarter.
After Q1, we had noted that orders were up over 3% from the prior year. While during Q2 orders were down about 7% compared to Q2 of 20 1990 year to date basis orders the down almost 2% compared to the first half of 29 team.
A publication grades which represented less than 18% of our revenue in the most recent quarter continue to show the greatest declines. We also saw year over year declines in orders for packaging grades and engineered fabrics during the quarter.
This is not unexpected.
Sales of publication and products have seen due partially to the effect of the current work from home environment and acceleration of the multi year decline in that market sector.
While packaging grades and engineered fabrics are two sectors, we serve which are susceptible to the impact of changing macroeconomic conditions.
As we have also pointed out before there's typically a lag effect of a few quarters driven by does replenishment cycle for our products.
Between downturns, and those and product market and the impact on our business.
This is being borne out by recent results.
Notwithstanding the macroeconomic downturn that is accompanied the current pandemic the machine clothing segment Q1, and Q2 revenue performance was strong.
However, we expect the recent trend in lower orders to manifest itself in the lower machine clothing revenues in Q3, and Q4, both on the sequential and year over year basis, and ultimately into 2021.
For the full year Twentytwenty, we're now guiding segment revenues of 545 to 555 million.
From a margin perspective in machine clothing.
We continue to see a very competitive market. We also enjoy during the quarter the benefit to the very favorable mix of business and a very favorable exchange rate.
However, we are beginning to see signs of relative weakness in some of those markets with stronger profit margin and over the last few months, we did see some signs for recovery in start in exchange rate, most notably the Mexican peso and Brazilian real.
Where the weakness of those currencies has benefited our bottom line.
As a result of those effect and lower fixed manufacturing cost absorption. We expect the segment gross margins to return closer to a 50% level during the balance at the year down from the mid Fiftys, we delivered during the first half of the year.
We also expect but the impact of absorbing fixed SGN a expenses over a lower revenue base will cause additional compression of EBITDA margins in the back half the year.
For the full year, we're now guiding segment adjusted EBITDA of 190 200 million.
Turning to engineered composites as expected second quarter revenue was challenging.
Despite the impact of adjustments to long term contract profitability, which generated not only additional profit, but also some additional revenue.
The reduction in revenue in the quarter was primarily caused by the Albany Safran Leap program.
Which generated only 15 million of revenue in Q2 compared to almost 60 million in Q2 2019.
During the recent quarter, we did to meet customer demand, partially opened one of our three A.S.C. lease facilities for a few weeks. However, all three of those production facilities.
In New Hampshire, Mexico, and France were closed during the bulk of the quarter and remain close today due to depressed demand caused by the ongoing Boeing seven threemacs situation and the lower rate of production by Airbus of the Athree 20 Neo family.
I will file we will see a staged reopening at those facilities in Q3, we do not expect to materially different revenue from the ASV Leap program in Q3 compared to Q2.
For the full year, we now expect the ASV lead program to generate less than 100 million in revenue and we also expect it to be several years before demand for our leap component component approaches the level, we witnessed in 2019.
At our Salt Lake City City facility. We will also see in Q3 Q4 and beyond an impact from Boeing's reduction in the build rate for the 77 program and from ongoing weakness in demand for both new build and aftermarket waste water tanks.
The wind of additional content in the 77 that bill referenced will not begin to deliver revenue for us until very late in 2021 or early twentytwenty too.
From a positive perspective, we do expect our defense programs, which represented over 45% of our Q2 revenues.
Continue to perform well this year and into next.
At the age you see segment level overall.
We expect at best modest sequential revenue improvement in Q3.
With some further recovery in Q4.
For the full year, we're now guiding segment revenues of 325 to 335 million.
From a profitability perspective as already noted engineered composites benefited from an extremely high level of net favorable adjustment adjustments to estimated long term contract profitability in the quarter.
This net adjustment was driven partially by the close out of a multiyear project and by a reduction in the loss reserves for certain program.
Those portions of the adjustment will not lead to improved future performance on other ongoing programs.
For the full year, we're now guiding segment adjusted EBITDA of 75 to 85 million.
Turning to the company level, our reinstitute the tax guidance has increased from the initial guidance provided earlier in the year caused by three factor.
First in Q1, we recognized a significant loss on the revaluation of non functional currency balances, which occurred in the jurisdiction, where we are not recording the potential benefit of loss carry forwards.
Second we are recognizing ongoing losses, driven by operational performance and interest on the intercompany loans in the same jurisdiction and these losses are similarly non deductible.
Third we are now generating a somewhat larger share of our global profit in jurisdictions quite the tax rate is higher than the average rate. We initially projected.
Turning to the balance sheet, we feel very good about our net debt position and the improvements we have demonstrated in the most recent quarter.
Based on market needs, where the pace of program development and projected build rates dictate a lower level of investment in growth oriented projects. This year. We're further trimming our capital expenditure forecast for the year to a range of 45 to 55 million.
Of the remaining investment this year about 20 million is for sustaining investment went file the balance is for returns Tiki investments.
In future years, we would expect to spend more on return seeking investments as end markets recover.
But we also will likely sustaining investments rise in the future as growth oriented capital improvements made over the last five to 10 years required refurbishment or replacement.
I.
The last quarter, we expect to generate significant free cash flow this year.
This quarter's results for out the cash generating strength of our business with over 40 million of positive free cash flow over 25% higher than our net income for the quarter.
At the total company level, we are reinstating twentytwenty guidance as follows.
Revenue up between 870, and 890 million compared to original guidance of 970 to 1.01 billion.
Adjusted EBITDA of between 220, and 235 million compared to our original guidance of 210 to 235 million.
Effective income tax rate of 36% to 38% compared to original guidance of 26, 28%.
Depreciation and amortization at between 70, and 75 million in line with original guidance.
Capital expenditures in the range of 45 to 55 million compared to original guidance of 75 to 85 million.
GAAP earnings per share of between $2 and 26 and $2.51.
Compared to original guidance of $2, a 68 and $3 an eight cents.
And adjusted earnings per share between $2.85 $3.10.
Pair to original guidance of $2 to 75 and $3.15.
I'd like to point out, but there is some additional unusual risk related to our revenue forecast for the balance of the year.
Why we have obviously incorporate in our forecast what we do know about the ongoing pandemic any additional macroeconomic shocks from the crisis could lead to further reductions in demand for our product.
There are also risks to our operation.
At any point in time, we've seen an impact to our operations from the pandemic in terms of workers being out sick or self parente eating at home all of our principal machine clothing facilities are currently operational as are our non ASV facilities and engineered composites.
However, several of our facilities across both segments are located in areas, where the number of detected cobot 19 cases continues to rise.
Increasing the risk that there could be more significant operational impact in the future.
Returning to the presence there was a very strong quarter with both segments performing at a high level. Despite the ongoing pandemic and the resulting impact on our end markets.
I'd also like to note that as will be described in more detail in our 10-Q during the quarter. We performed our standard annual impairment test of goodwill and determined that that no impairment provision was warranted.
With that I would like to called opening the call for questions Ernie over to you.
Well, but in my mind, Thank you everybody.
So.
Just a question answer session here. Please if you have a cushion press one then zero.
Using a speaker phone we.
But as you do a remove your handset in a press one zero so to accept your tones.
Now, let's see we have any questions. Please.
Okay, and we have a question from a Caitlin.
Dundee. Please go ahead.
Good morning, guys, given the structural downturn and the significant headwinds that we're all seeing and the entire industry and commercial aerospace facing possibly for the next several years.
Is there any change to how you're thinking about the growth strategy or the trajectory for AC you plan to shift what type of programs and new business you pursue or is there any change in your thinking there.
Yeah. Good morning, Caitlin. Thanks for the question. It is a challenging time and of course, we're looking at the strategy, we have a fundamental belief and.
The benefits that we can bring with our advanced materials and how we apply them. So the question is you know where are the end markets, which end markets going to being a higher gross market going forward, where can we add benefit for our customers. So so yes, we're continuing to look at our strategy our technology in our product development and.
With the strength of our balance sheet, we're going to continue to develop new materials and work on programs for the future. So in commercial aerospace it'll take longer to get there with with new aircraft new platforms coming online also pursuing a military and defense side as well as we develop a what we can be the next generation believe it can be the next generation.
Thats composite.
Okay. Thank you that's helpful. And then just going back and see a little bit can you talk about and provide a little bit more color on the demand environment, how it played out over the quarter.
Typically across the end markets did you see any tailwind and tissue demand and that they're going to be de stocking trends that kind of like you're talking about just looking for a little bit more color and he said the trends that you mentioned.
Yeah, I can add a color than as people who wants to give some commentary what we're seeing what's the mixed picture if I start with tissue.
Tissue in general has been good and particularly at home business, but as you know the away from home business, where people aren't going into offices and.
And building schools, so far that that business even flow, we sort of both we serve both markets in fact, it across the the end markets. We serve all of them. So things shift in one market to another or we can benefit from that but the the away from home market for tissue, obviously hasn't been as strong as the the at home market, which has been very strong.
Around the world. It's it's a it's a different you know things are behaving differently I would say.
Publication.
Is it is hurting a as you can imagine the acceleration with the video conferencing media as we mentioned.
Publications going down strong.
Very similar we think so far to what we saw in 2009 publication.
Just an acceleration of the downturn, we'll see where that settles out a we're watching with all of our customers.
Machine time <unk>.
If machines are going down a longer down for closures, we are seeing a kind of the pace in Europe for his Americas versus China.
Packaging has ER has slowed down in some places in China.
Kind of gone through change, where where there was slow earlier in the year, but thats picked up a little bit so we see a little bit more strength in China, but on the rest of the world, but it's a mixed picture and we do I think a C orders start to fall off in the middle of a quarter several watching as we go through the end of this quarter into Q3.
You know you want to answer that.
Thank you and our next question comes from a garden Cano. Please go ahead.
Yeah you guys. This is the this is Dan on forgot thanks for the question.
So.
Yes, I was wondering if you could shed some light on what programs are driving E fees.
At a easy.
And I'm guessing it's it's.
Mostly defense if not all defense programs.
Is that true.
Sure Kevin you want to take that one.
You can you maybe on mute.
And can you hear me now.
Yeah, we can all right.
I Hadnt <unk> it was a variety problems down across all all of our operations in the in eight you see.
It was not just defense programs, although defense programs as a portion of it if it was actually a both the mix of commercial and defense programs as so when that what we're not going to get down into the for a program level of detail on on any specific ramps, but it was that it was several programs that.
Not just one or two.
Okay understood that's going to now and then are you guys able to quantify in any fashion the additional content on the new 787 agreement.
I think where her efforts.
Yeah, what where we're not in a position to two to disclose a.
Just last frames, we add to that now some significant.
Content in the App fuselage, app, but but I can't give you a new dollar number.
Okay. That's fair I'm, sorry, just one more than <unk>.
So what's the process for when the leap facilities come back online.
As far as like hiring and retraining goes and then I know, it's it's going to be a slow ramp up but kind of what's the what's the lead time on.
Getting those processes back to.
No up to speed and working efficiently again.
Yeah, Hi, I take that when the the leap three facilities were temporarily closed we did have one facility come up.
The short period of time, a manufacturer specific product line left in the last month.
And that was a great learning experience for us on how to restart how to restart effectively it and went very very well. So the employees that are running those processes. The technical know how all those folks or you know on furlough. So what does some of them may come into the plant now and then depending upon their role.
But we haven't we have a plan to ramp up or some of it and.
This quarter the rest of it in the beginning.
Probably September October timeframe so.
We.
We feel like we have a good manufacturing process to restart we don't expect there to be a large learning curve and <unk> as you can imagine the volumes are a high volumes like we were running out last year. So we feel like we're in good pretty to place to start back up and looking forward to it.
Okay. Thanks very much.
Okay. Thank you and our next question comes from John Franzreb [noise].
Hi, guys good morning [noise].
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To school market as we head into what are.
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[noise], Yeah, maybe I, just a bit of color there I mean, I've already already been very weak. So we just given order decline and.
Publication.
You know that started earlier in the year with just the slowdown everywhere. So we don't expect that to get better soon.
If that's your question.
Yeah. So good job so John <unk>, Yeah in in Q1 publication orders were down effectively double digits year over year, we saw a repeat for a day, we're well into double digit decline in in Q2.
At.
Some of that and it could be exacerbated as we get back into the fall as we get a return to school and we really able to full insight into that yet, but as our expectations are for continued decline of the publication markets throughout the balance of the year.
Okay, and one paper company I was talking to yesterday had sizable margin benefit.
Ms sponsored programs country.
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[noise] Oh, we we lost shifted tail end of that John but I think you're asking about government sponsored programs and if we receive any benefits.
Yes, I'm not aware that we have yeah as you know on the aerospace side on the French have offered US a package that I think.
Well benefit aerospace companies in France, but we haven't seen anything on me and seaside nothing I'm aware or no.
Okay. I guess one last question if you can understand me.
Starting on conversions from White paper packaging paper or are you seeing any acceleration and your customer base.
Versions of production equipment.
[noise] Oh, we're watching we're watching for their conversions of equipment as you probably know it very expensive and time consuming to convert machine.
<unk> from one grade to another and then you have to look at what the.
Capability. The machines are the size of the machine the with from the machines as well as whatever it is you know virgin pulp or recycled pulp depending on what they're making a white paper or.
Let me with recycled paper, so we're watching that it's very expensive. It takes time, so it probably will happen out there, but it's not easy to do.
Okay. Thanks, guys I'm, sorry about the connection.
Yeah.
At this time, we don't have any more questions. If I may ask everybody if you'd have a question. Please press one then zero.
Yeah.
Gentlemen at this time, we have no questions.
Thank you already and then I'll make some closing remarks like thank everyone for joining us on the call. We appreciate your continued interest in Albany International as we noted earlier or these are challenging times and this pandemic is not over.
I'd like to think of it as a marathon where are we all need to find our own stamina to remain diligent demonstrate safety acres, whether at work or at home or in our community put that all of you and your families are helping save.
Now I'd like to conclude today's call by recognizing the entire Albany team for another strong quarter performance in a challenging environment and thank them for their continued focus on health and safety.
Thank you everybody.
This concludes our conference for today. Thank you everybody for joining in for using any TNT telecom firms have a great day.
[noise].
Yeah.
We're sorry your conference is ending now please hang up.
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