Q2 2020 Luxfer Holdings PLC Earnings Call
Good morning, My name is Lori and that'll be your conference operator today welcome to <unk> 2022nd quarter earnings Conference call.
All lines have been placed on mute after the speakers remarks, there'll be a question and answer session now I'll turn the call over to marry read it from luck for to begin Mary. Please go ahead.
Thank you Lori welcome to look for second quarter 2020 earnings call. We're happy to have you all with us today.
I'm Mary read from law prefer and with me today is a local mascara, Chief Executive Officer, and Heather hurting our Chief Financial Officer.
On today's call we will provide details on our second quarter 2020 performance has outlined in the press release issued yesterday.
Today's webcast is accompanied by a presentation that can be accessed it looks for dotcom.
Please note any references to not get financial or reconciled India appendix of this presentation.
Before we begin a friendly reminder, that any forward looking statements made about the companies expected financial results are subject to future risks and uncertainties <unk>.
Please refer to fly two of today's presentation for further details now let me turn to call over to a milk.
Thanks married that'll welcome everyone.
I hope you and your family's us being safe and enjoying the summer months.
Much as possible.
We are operating and unprecedented times and I want to start by expressing my gratitude to our customers employees and supply partners, who continue to support not for operations.
The safety of our employees, our customers and the communities and which we work and live remains our number one priority.
With appropriate safeguards, we continue to operate all our facilities to serve the current and evolving needs off our customers.
I'm proud of our team relentless adherence to operating procedures and commitment to being a part of building a high performance culture. During this time of unprecedented chain and so uncertainty.
This is enabling us to safely up right off the C. D. 's, while also aligning our cost structure to demand levels as we contend with the impact of cool with 19 on various and markets.
I want a tank hour 1500 employees around the world.
For their dedication and hard work as we navigate the current landscape.
[music] in today's cause I want to highlight creaky messages that some of our quarterly performance and strategic focus.
One <unk>.
While the Corbett pandemic created significant challenges during the second quarter, we were able to deliver a strong cash flows and photo strengthen our balance sheet.
Two we have taken several proactive and aggressive actions to mitigate the impact of cool with 19, including rigorous expense management at every level.
And three wildly the main vigilant on maintaining an appropriate cost structure for the current environment, we are making charvat at strategic investment in our business to ensure that blocks for Israel position to capture grilled and certain markets today I'm in the future as older Huh.
Go ahead markets recover.
I have an address these teams in more detail and then our CFO had the holiday we'll review our financial performance in greater depth and shared guideposts for the remainder of 2020.
Now these turn to slide three for a summer you have a second quarter financial results.
[music] Lockfast second quarter 2020 financial results were impacted by the challenging mackerel caused by the corvette pandemic.
Total sales, excluding the impact of non code check recycling divesture decline 21.1%.
Our second quarter, EBITA decline, 49% $210.4 million as we were able to partially offset the gross margin impact of lower sales with cost reductions.
Our adjusted diluted E. P. S for the second quota was 17 cents down 61%.
During the quarter, we sequentially reduced on net debt my $9.1 million 282.4 million by generating strong operating cash while maintaining a regular quarterly dividend.
Our <unk> that too EBIDTA ratio was 1.5 times at the end of the quota, which is significantly lower than the level, where all covenant become relevant.
Our balance sheet remain strong providing a lot of financial flexibility.
Now please turn to slide for for an overview of how long for adopting to the new normal.
I'll make the changing market environment brought on by the health risks associated with cold with 19.
And more recently.
Racial unrest across our blue.
[noise] have made many changes to rapidly react to the market circumstances and maintain business continuity.
Like many others, we have increased the level of transparency and frequency of communication with our customers employees and shareholders.
In addition, we have also retooled our manufacturing operation to ensure social distancing and are investing in a firstly DS to enhance hygiene, especially in high traffic common area.
The company's leadership has come together doing this difficult time to lead by example, and have voluntarily deacon for loose and temporary because in solidarity with all of our employees and to improve our financial results.
We recognize that the current downtown and volatility is likely to impact demand levels and operations over an extended period.
Many of the recent procedures implemented are likely to result in more permanent change to our operations.
The way we work in other areas is also changing.
And I believe these changes will benefit lost for over the long term.
For example, we foresee a long term production in certain cost as we learn how to work more efficiently from home and certain traveled across the organization becomes obsolete.
Also there will be increased access to talent is location becomes less relevant and technology would continue to enable connectivity.
So why they remain overhangs, which we will continue to navigate we are also embracing the new way of working which I'm confident will benefit looks for.
Let's now review the related revenue impact and market on slide five.
As a reminder, our current sales can be classified into three approximately equal and user segments.
Defense first response in health care.
[noise] station.
An industrial.
Before we reviewed the performance of each end user segment, let me give you a sense of the shifting demand patterns during the quarter.
C as in April and me or substantially lower as many of our customers factories will shut down due to government orders.
Or working at reduced capacity due to supply chain constraints.
The sales decline experience in April and me was better than a worst case scenarios and we saw some recovery in June as government restrictions east.
As such we continue to upgrade the company with the expectations that the recovery will be long and challenging.
C. As in Defense first response in health care declined five 9% for the corner.
As higher sales of a disaster relief products, but more than offset by reductions in magnesia alloys for countermeasure players as military training exercises would redefined due to cover it.
S. C. B S sales were marginally lower primarily due to timing and cool weird related supply chain deceptions.
C as in transportation declined 29.1 per cent in the water.
Demand from luxury passenger auto manufacturers worse than during the quota and we also expedience decline in aerospace application.
Alternative fuel cells declined ear over a year due to supply chain disruptions, but demand levels remain strong and we expect these products to return to growth in the back half of the year.
Even with alternative feud products is improving.
Expect to see continued declines in transportation for the remainder of the heel as demand for auto and aerospace is likely to remain week.
In industrial segment sales decline 27.1 per cent in the corridor ask covered further impacted industrial production in April and me I've seen by lower I S. M. P. M I index.
Sales decline was broad based and impacted most of our industrial products.
As expected there were actually no salt EMACS sales during the quarter, but we do you mean optimistic about the long term potential for this product.
That's crazy colors.
Now please don't dislike six for an update on some growth investments.
Two of our successes recently highlighted include the growth alternative fuels correct line and the grilled and Ah decontamination and testing kids supplied to the U S military.
In the alternative huge space wild growth and systems and cylinders for compressed natural gas continues we are experiencing accelerated and meaningful road in our hydrogen product line.
This growth is driven by looks for 20 years of industry, leading experience in hydrogen storage design prototyping and manufacturing.
We are investing in expanded capacity for this product line and expect groups to continue.
D 's across the we'll continue to replace the legacy bus fleets with environmentally friendly C N G or hydrogen base waco's.
Supporting the grilled Lodge fleet companies like U P S waste management, and Amazon continue to invest in environmentally friendly alternative fuels delivery trucks.
For chemical response kids, we are enhancing our capabilities at our newly expanded Cincinnati physically D, which also manufacturers' flameless ration heaters anhedral meals.
Wild Corbett created some limitations and ramping up production and the second quarter. We have overcome most of these challenges and remain confident about delivering incremental sales in 2020.
Be fulfilled the recent award from the U S military.
We have a strong value proposition for these products and we remain optimistic about the grilled of this product line for the remainder of 2020 and beyond.
More broadly we are driving differentiated grilled by increasing innovation and push you in commercial excellent.
On innovation, our goal is to increase percentage of revenue from new products to greater than 20 per cent by 2024.
Commercial excellent we are targeting to improve customer's satisfaction as measured by net promoter school to greater than 60% by 2024.
Now please turn to slide seven for a review of our multiyear transformation plan, which has benefited us during this environment.
Launched in 2018.
Course transformation plan is delivering greater value for our shareholders through simplification productivity growth and portfolio optimization.
We have completed the simplification fees of the transformation plan, which resulted in our shares being included in Russells Smallcap index funds.
To our productivity effort, we have delivered significant neck cost savings and remain confident can delivering our goal of colors.
The next phase of our transformation plan will create additional shareholder value through grilled lean continuous improvement and portfolio optimization.
While some of the portfolio optimization initiatives have been delayed by the corporate pandemic, we remain confident that we will create significant shareholder value.
We execute the next phases of a transformation plant.
In summary, we are facing unprecedented conditions, but remained confident that we will continue to strengthen the company for the long term and emerged stronger through this environment.
Now, let me turn the call over to Heather Hardy left first Chief financial Officer for details on the transformation band results and a detailed summary of a second quadro financials.
Thanks, a lot oak and good morning, everyone. Thanks for joining us.
Following awoke to review of the strategic elements of our multiyear transformation I wanted to summarize the financial impacts of the plan on slide eight.
Focus on cost reductions in waste elimination cause that is $16 million of net cost savings to our profitability through the second corner.
The continuous improvement mindset, when our workforce positions as well to maintain our cost initiatives during the back half of the year and realign operations as conditions involved in summary, we remain on track to deliver are committed $24 million a night cost reduction by the end of next year.
Now, let's walk through the second quarter financial results summary, five nine.
Second corner reported sales of $89.5 million declined 23.2 per cent, primarily due to covid related impacts in our transportation and industrial segments.
Excluding the impact of the check recycling divestiture in June 2019.
Of course sales decline 21.1 per cent.
Putting a 1.3 per cent impact of foreign exchange as a reminder, this'll be the last quarterly comparison impacted by the check divestiture.
Consolidated adjusted EBITDA off with a quarter of pinpoint 4 million went down 49% first is the prior year.
Despite the volume decline the company executed on the transformation plan and deliberate approximately $700000 net cost reductions.
While the organization executed cost actions worth one $6 million.
These reductions were partially all set like $500000 a fire remediation at our Madison, Illinois, graphic arts location and approximately $400000 incremental Cove. It really gets expensive to ensure a safe operating environment for all our employees.
Three deeper dive into the two products segment results, let's turn to slide 10.
Electrons sales are 39 $1 million declined 29, 3% from the prior year.
Sales decline is primarily do the weakness and catalysis magnesium aerospace and transportation products.
Fortunately all set my strength and heater meals and chemical response cats.
Lowered sales performance, what's the primary contributor to a 60% decline in EBIDTA at a $5.3 million.
Gas cylinder segment sales declined 13.3 per cent to 50.4 million, it's cold it impact your transportation and industrial and pockets.
Resulting EBITA 5.1 million declined 28 per cent.
Now, let's review, our keep balance sheet in castle metrics fly the 11th.
We ended the second quarter with a strong balance sheet.
<unk> that improve by $9.1 million to 82.4 million by the end of the corner leading to a net debt to EBITA ratio of 1.5 times.
Second quarter operating working capital remained flat prior year.
This is like the initial results up are working capital initiatives, primarily focused on the lining inventory to current demand level.
We expect these working capital initiatives to drive additional cash flow and the second half and a year.
We generate at 12.1 million three cashflow for the corner using approximately $1.6 million in cash for restructuring activities.
This compares favorably to our prior year second quarter performance of consuming 11 7 million in cash.
On a trailing 12 month basis, we deliver 12 seven per cent R O iced tea from adjusted earnings.
Our balance sheet remains solid we have returned to generating positive free cash flow and we remain well positioned for strong cash conversion in 2020.
And the interest of providing transparency as we will not be reinstating formal 2020 guidance.
Let me provide our views on some of the key assumptions for the remainder of the year on slide 12.
But challenging current <unk> a market environment continues to have a significant impact on our business.
Cause they full year, we accept R. N first response in health care product sales to be flat to slightly down.
His supplies of modest improvement from are cute to run right.
Continued growth and MRE and chemical response kids will be partially offset by weakness and fire extinguisher countermeasure players and S. T D anything else.
Darkness in transportation and industrial is expected to continue.
With a full year, we expect transportation and industrial to be down 20 to 25 per cent, which is similar to first half performance.
We do accept alternative fuel perfect returned to correct and the second half however, a passenger auto aerospace in general industrial softness will likely continue.
We remain focused some cash preservation and cash generation put a year.
We continue to insure working capital and capital expenditure plans are aligned to current conditions without sacrificing investment in future growth and productivity opportunities.
The resulting free cash flow, excluding cash needed for restructuring would convert at approximately 100% for the year.
No I'll turn the call back over to a vote for wrap up.
Thank you Heather.
I wanted to wrap up with a brief review of our downtown playbook on slide protein.
We have been driving success by implementing Oh don't don't playbook that we shared during the coupon earnings call.
Recent actions have resulted in approximately 10 per cent lower head count as compared to last young and a 30 per cent reduction in executive compensation.
By maintaining a strict freeze on discretionary expensive.
Really main on track to deliver incremental savings to offset go read related operating cost.
An important part of our playbook, because how are we deployed capital during this downturn.
As a castro generation remains strong.
You have chosen to maintain a regular dividend.
We are maintaining the decision made last quarter to temporarily suspend charity purchases.
To provide flexibility should the environment take a dramatic don't for divorce.
We finding a transformation cost savings initiatives, while investing in important grilled opportunities that will strengthen the company for future success.
We continue reviewing a portfolio for divesture opportunities as well as maintaining a pipeline of potential acquisition targets.
Although that is greater unsweetened tea around the timing of any activity given the market environment.
Overall I'm pleased with our execution during these difficult times and feel confident the last four would be a stronger company when the macro conditions improve.
Please turn to slide 14th put a wrap up.
Let me back up by recapping that resolve attractive niche markets with proprietary products that technology.
Sure transformation plan has delivered results and will continue to make a positive impact for the next few years.
After the transformation plan is complete we have plenty of runway to create even more shareholder value.
Behind the left for business excellent standard to Kid to drive operational excellent and improvement and grilled <unk> productivity.
Once again I Wanna. Thank all our employees around the war for safely operating R. A C D 's, while maintaining our steadfast commitment to serving our customers forest.
Thank you for listening, we will not take questions.
Thank you at this time I would like to inform everyone. If you would like to ask a question. Please press Star then the number one on your telephone keypad. If your question has been answered and you wish to remove yourself from the queue press the pound key once again to ask a question. Please press star one.
Your first question comes from the lineup, Chris more of C. J F Securities.
Good morning, guys.
Good morning, so it sounds like June showed some sequential improvement.
From what you've seen so far is that trend continuing in July.
Yeah I'm in July as Tony got similar to where June was maybe a shade better.
But thank you don't know massive reshaped strong recovering watching all we see the June try and kind of continuing until July.
Got it so it sounds like right now kind of it.
Sent.
Forest reduction.
Can you maybe just split that between you know layoffs and furloughs and then talk about you know, which plants still having the biggest issues and are those you know more demand driven or or more protection related.
Sure. So the 10th person number that I mentioned, that's kind of Fortunately all in addition, we have kind of depending on the week 15 to 25 per cent of our workforce on for no salt. That's in addition to the 10% until the 10 per cent is more for money introduction.
And that's consistent with that kind of just how we manage we would rather.
Actions to bring the crosstown sooner and then added back when it comes.
From Ah.
Facility perspective, Crisp you know majority of the first need to use when they're working introduced capacity gets demand driven.
And because you know, we do have significant capacity and quite a bit golf leave a to serve our customers and the amount on a tuesday needs to be so.
There are pockets like in Cincinnati, where we are having challenge in attracting killzone right kind of labor force as we try and cramp up production.
So that so they won't be a few cases, where reduce capacities driven.
Operational challenges are you able to trying to put the majority of the factories or I could use capacity because on command.
Got it very helpful and can I just wanted to let me just.
It should be chemical kit side.
Yeah, I know you don't give specifics, but I'm trying to get a sense extra revenue standpoint has has more than half of what you expected and just go 20th yeah already been bookstore, yeah. Just in terms of you know kind of it.
The the kittens Sir.
Sure sure when we started the you're on that Chris.
That's what I mentioned that this would be more back half loaded, but we weren't expecting cute to be add similar lemon S. Q Q4, Q1 being just Donna.
In reality Q2 turned out to be week or.
And that's where someone at the production or <unk> like in the labor challengers that I had mentioned came in so no I would say less than half is kind of an.
Same side orders that on the books alrighty. So just a matter of fulfilling goes orders give that that'd be more back have noted.
Terrific. Thank you guys.
At Christmas.
Your next question comes from the lineup Craig Irwin abroad capital partners.
Good morning, and thanks for taking my questions. So look in your prepared remarks, she talked about waste management and Amazon.
And what they're doing an alternative fuels.
But one of the one of the very big opportunities. It's also and hydrogen for you I believe.
Bam for the C E O of right bus is out there.
Walking about doing 3000 feel so buses before 2025.
You know if I'm remembering correctly, it's 20 to 60000 from US for you. So that's a huge opportunity it's M as big as $180 million on the high end.
What should we be looking for to see you know.
The right at which this revenue opportunity is likely to materialize and how how well do you see looks for his position to continue to serve this business opportunity.
Sure Great question pregnant. Thank you the first of all I'm Gonna have to talk from your last question. We are very well positioned to solve this opportunity you know from our technology perspective, 425, three and diet four cylinders.
You know we are like you know.
[noise] widing customers with manufacturing prototype design, all sorts of collaboration and frankly, I mean, we woke with dual band, Florida right first very very closely.
Hydrogen buses and city of London to ride bus, Yeah, all being supplied with all products.
That's one reason we made the comments in my bedroom house.
So what are you excited about the opportunities we clearly very focused only on buses on trucks. So unlike some of our competition, we're not going off for a passenger uncle are smaller when he calls you already much focus on the larger vehicles.
And demand there is right now I'm thinking of very good on the projections, even better as you pointed dog.
So when you say what you should look for I think we are looking forward to put the new success.
From companies like right bus companies like Nicola.
You know hydrogen fuel cells.
Game change your for the industry and we are definitely part of the ecosystem in fact, a major part of that ecosystem.
Excellent. Thank you for that so just on the same on the same lineup line of.
Question <unk> talks about.
Having supply the accident modules for 760 killed tell buses.
And just this week I heard.
One of the industry consultants talked about you know about 5000 buses out there.
Obviously, including China, which would be more than half or well over half of.
Oh that 4000, but can you maybe talk about the the experience.
It looks her in these feel sell bus fitsville truck opportunity is this.
Do you feel that you've supplied more than a 25 per cent sure well more than a 20 per cent sure if they can district.
Did I I.
Wouldn't want to give numbers, but I mean, I would say well you've supplied.
Our fair share them more than a fair chance now some of the market's like China, which I'm not don't have the stringent D O T type regulation.
We don't apply as much alright, now, but I think as regulations improve in those markets and they adopt more I'll go University D. O D standards, and I think I'll value proposition that increases.
But even in China of your wrapping up capacity right now for a composite just going to drink.
Beyond that you know if you'd look at from wherever you are supplied whether that's.
<unk> bus passes or even creams and <unk>.
100 fuel cells base trunks hearing you asked mostly on the experimental side.
<unk>.
Fair should definitely more than a fair share indoors market.
But I didn't know the market's evolving pretty rapidly.
It's gonna be your question off like a success in terms of an option.
Do you mean, very confident do not technology and no value proposition there.
Thank you. So so my <unk>. My next question is about the preservation of earnings power. So obviously this was again another great corner, where you did preserve that earnings power to give us E. P. S ahead on the on the bottom line, but as we look into 2021 2022.
Which is where most investors or focus these days.
If we assume that the automotive ketolysis demand is back up to where it has banned in car sales are are similar.
To what to what they what they were not too long ago. What are the other key items that you think investor should be most focused on to understand where the rebounding earnings language is going to come from in 2021 and beyond.
Sure. So I think it's gonna be.
All around market recovery that you've mentioned I mean auto cat, there's a small portion of my business, but yeah, that's gonna be critical and for us to look at.
The biggest factor for us is gonna be on the industrial recovery because you can always one code off our fans.
Quite profitable Sam submit a complaint to transportation or uncle calculus banking business.
So I think that closely monitoring the I S. M. P. M. I index, just general industrial recovery Bulletin Europe out in the U S.
That's gonna be the key drive or.
Alright, and you were right because of our exposure to defense enforced response.
That'd be aggressive cost measures, we've taken in the past.
You too big.
We do.
Feel confident.
Alrighty.
Minimum would be under cute too levels unless things really.
They could go in front of dramatic worse.
No from that perspective V for your confidant on.
Get a going forward pieces and industrial recovery would essentially change.
The current status and go to the back to being a more normal operating environment.
Okay, and then last question if I may so the durable goods orders yesterday, where it encouraging with with a nice rebound does that have you increasingly optimistic about.
Potential for strengthening it looks here in the second half.
And.
Do you feel that high frequency datasets like this are are good metric for external observers to to have a feel for where things are heading for luck Sir.
You know from our perspective, you definitely prepared for a recovery, but at the same time.
You know data is pretty confusing, where there's durable good orders or even though.
Okay.
B M I index for Jew, I mean, they are showing signs of bullishness.
So I'm, hoping divorces behind us, but at the same time, we also have to be prepared back.
[noise] could remain stagnant, especially with the number of Corbett cases going up.
But yeah, I mean, those are encouraging signs, but some of it also has you look at sequentially. There is pent up demand level because of the April may shut down.
So I'll look for those numbers to hold far too.
Three reporting cycles.
For weekend to Polish on those could I do for you that June July so I'm, just gonna be pent up demand.
A factory Shardana supply disruptions.
That'd be gotta watch out for what happened.
Excellent well. Thank you so much for taking my questions in a.
<unk> for the the <unk> the strong execution in this difficult environment.
Thanks, Craig appreciate it.
Once again, if you'd like to ask a question. Please press start then the number one on your telephone keypad. Your next question comes from the line of Sarcous sure about chin of be Riley.
And look another how are you guys.
<unk> Goodbye.
He just wanted to kick off the question with the free cash so it looks like for the quarter receivables collections was fairly strong and that's surprising kind of given the environment. So kudos on that and then just kind of looking at the working capital items right do you expect inventory to be more significant source of kind of cash for.
The second half of the year.
Yeah. The morning sockets I'll take that one so uhm when you look at our inventory profiling and we did talk a little bit about working capital obviously at our last Q1 called we do expect to have additional improvement and working capital primarily inventory in the back half <unk>.
We looked at least out here I guess, roughly 90 days ago, and we're clothing, you know Q1 and communicating that we certainly there was a lot of uncertainty right. We were making sure. We had the right raw materials to keep T. You know products going et cetera. So in addition to the safety of our employees business continuity was something that we were very.
Focused on so when we look at inventory. We spent the last 90 days you know realigning some of our working capital initiatives around inventory to make sure that we can meet our customer needs and yeah cause you've alluded to we do expect inventory to continue to to really have improving in the back improvements in the back cat.
That will drive additional working capital and free cash lab.
Thanks for that so so with that line of thought I mean would you expect kind of to have some of those key raw materials on hand, despite maybe kind of working down you know the inventory in the back off I mean, how how are you plan for that.
Yeah, we looked at some of the key raw materials, especially those that have a longer lead time or you know from a supply chain perspective, we certainly wanted to ensure that we had those on hand and by and large the organization has done a great job identifying nose and coming up with solution. So at the end of Logan talked about from from a production person.
<unk> you know some location.
The issue has been more around that retaining a talent skilled labor that will continue to to run our production inventory availability has not been a major concern for cell phone.
Great. That's helpful and if we kind of step back in and I know, it's maybe too soon to talk about recovery, but given just kind of a significant cost auctions, especially as it relates to head count.
Should recovery materialize a bit quicker than you know maybe what most folks are planning for how would you respond to you know, maybe bringing him back the workforce or or the talent.
Can you maybe give us some insight on on your plans around that.
Sure I'll take that soccer's, so as I mentioned, we do have.
About 20 per cent of our workforce on farnell and they've been very understanding and very supportive.
On.
Those are obviously folks we'd like to bring back fast and I'm sure. It would it be very successful in bringing goes back quickly. So I'm not too worried about that and that should take care of any.
Recovery protections. In addition, thinking Oh, we obviously wanted to drive productivity through this process. So the 10% reduction that we have done.
Don't see us, bringing goes back as fulltime beloved asleep.
I need to bring some more temporary workers.
Zappa production it depends on the 15th time.
So from my perspective, no that's not a concern at this moment.
Especially given doesn't have enough high unemployment, that's going on within the U S. M U K.
Yep understood. Thanks for that and just finally I notice on slide for under a recent actions you kind of highlight how your enhancing customer communication.
To support the kind of a supply chain requirements and gain some insight on demand trends can you maybe drive a little bit deeper into that you know what does that mean for the organization today than potentially on the go forward basis, how does that <unk>.
Improve your processor workflow.
Sure so multiple pieces right. So it is our salespeople off more working from home versus being on the road.
Salesforce Dot com is being used locked mall.
Implemented lost T R. Nothing during this period, we're seeing.
Would you usage become the only tool that we used to communicate and totally regarding Sam tomato, there's opportunities and pipeline.
<unk> stepped forward as stinker, we have full you adopted Microsoft team and so have many of our new customers.
When I gave it to them anyway existing customers, so they've gone to new which was.
[noise] worse than the previous time, a salesperson may be getting there. Once every month, maybe once every two weeks now they have.
Microsoft Deem session, maybe every week for sure and sometimes twice a week.
Because we want to understand their demand backgrounds and customers want to ensure their supply bass and get there.
Understanding on the supplier base house and those are become way more efficient and then somebody driving six hours for one hour meeting.
So we have put more cadence more like large customer weekly updates on demand supply planning.
And we think that's going to continue and that's going to need us too much closer collaboration and make it harder for customers to switch.
They want a reason to.
Good that's helpful. And then just one final one if I may yeah as far as.
The end market color and commentary that's super helpful. I guess.
Any areas, where you see kind of stability or or you know kind of consistent opportunity or you know kind of.
More weakness to follow aside from what you've mentioned on the earnings commentary.
Yeah, I think from a stability perspective <unk>.
Military sales.
Remains table I mentioned, some lower training exercises came back thing in the short.
But beyond that I see doctor convening stable. So that's kind of one sort of our business that'd be a forecasting back to.
Glad to down for the euro, which means that it'd be slightly up for the second half.
We don't expect many changes man that's stable.
Oh Hot day imagine a situation like demand will get worse than any of the areas.
Some places like auto more than the customer factories were shocked 462.
10 weeks doing cute too so I would be surprised if something into much worse, but he never seen Netherlands. If it does we will be prepared for it.
But.
I think we solve worst of the demand backgrounds and cute too.
We don't have back much exposure to commercial aerospace, but that's one space, where I do feel that if things could get worse.
Might be the one where people are still flushing too long to them orders and demand backgrounds.
And maybe there'll be more weakness there.
I think I'll do we have for their dog in the supply chain and we don't want experienced changes there as quickly like some of the other product lines.
That'd be the only go along with that would leave with.
The places I do think no dog dog.
Experiencing to dwell wants to low point.
Great. Thanks for that and wish you guys continued success.
Thanks August.
Thank you and encore recording of this conference call will be available in about two hours telephone numbers to access the recording will be available on the looks for website at www Dot box for Dot com. Thank you for joining US today. The next regularly scheduled call will be in October of 22.
<unk> when the company discusses it's 2023rd quarter financial results. This ends the Luxor conference call.
[music].