Q2 2020 ARC Document Solutions Inc Earnings Call
Tony Please enter.
[music].
Ladies and gentlemen, thank you for standing by welcome to the Arc document solutions 2020, Q2 earnings report call.
This time, all participants on a listen only mode. After the speakers presentation. There will be question answer session.
Asked the question during his section you will need to press star one of your telephone if you're acquiring any further assistance. Please press star zero I would not be on the conference over to David Stickney, Vice President of Investor Relations.
Thank you can read and welcome everyone on the call with me today, our Suri Suriyakumar, Chairman, President and Chief and our Chief operating officer deal or would you Syria, and Georgia follows our Chief Financial Officer.
Our second quarter results for 2020 were publicized earlier today in a press release the press release. Another company materials are available from our investor relation pages on arc document solutions web site at IR Dot E. dash eight RC Dot com.
In today's earnings announcement arc offered expanded supplemental disclosures to provide shareholders and analysts with additional information in advance of our quarterly conference call disclosures are largely historical and will not be read on today's call.
Please note that today's call will contain forward looking statements that fall within the safe Harbor provisions of the private Securities Litigation Reform Act of 1995, such statements are only predictions based on information as of today August 4th 2020, and actual results may differ materially as a result of risks and uncertainties.
That we highlight in our quarterly and annual less SEC filings.
This call will also contain references to certain non-GAAP measures, which are reconciled in today's press release and in our form 8-K filing I'll now turn the call over to our chairman President and CEO Suri Suriyakumar sorry.
Thank you, David and welcome everyone and.
As I highlighted he knows the preliminary announcement last month, depending demi coast left.
A devastating effect auto industry.
Many of these effects will be reversible.
Extended shutdowns and the widespread acceptance of remote work having your funds.
Permanently changed how old customers print and distribute documents and information.
In addition, the pandemic as Forestar customers, who previously the assisted the use of technology to adapt to that I'd give solutions.
Two men age and shared documents in digital before.
That's sort of thought it became clear that several aucs existing revenue segments and business models would permanently being bad.
Therefore, it was necessary that we identified these segments immediately.
And to got shouldn't to eliminate the redundant cost and infrastructure related to these services.
Why do you doing this.
We also recognized that printing and we surely making services.
Continued to remain a valuable service.
Both being private and public sector business.
You know pools pandemic, you know we're already experiencing the important rule.
You should be majoring services play.
Especially in influencing social distancing, the longest vendor and safety practices in workplaces schools shopping malls et cetera.
We thought would domain knowledge and the national footprint, we aim to unique position to develop products and services do so these needs and take advantage of these opportunities.
It is also building on that the secular headwinds you know business have been eroding our revenue streams for years.
Considering that we have been exploding a business transformation.
We saw this as a perfect opening to remind you now have a company.
The difficulty be fierstein fast was tight.
Declines in revenue would rapid and losses could be easily endanger our business continued.
We needed to act fast and reengineering every aspect of the company.
Why did challenging.
This data was also exciting.
The new revenue opportunities V. I didn't do flight.
While smaller will vibrant and had greater potential.
Dan always turn it 'cause business lines in terms of growth, especially given the existing infrastructure and deep domain knowledge, we already persist in the industry.
To make the most of these opportunities.
We made significant changes.
Hello entire company in sales and marketing operations Finance technology.
And you would have a corporate function.
Our goal was to build a strong and rule.
With what pension for new growth and remove all of the doesn't than capacity assets and infrastructure.
[laughter] themselves have been gratifying to see at least.
We were able to realize extraordinarily reductions in costs, making significant operation operating change changes.
And position now see to take advantage of future opportunities in record time.
And we also did so without any additional disruption.
Dan was all going to be being said it from the pandemic.
More importantly, we were able to produce and operating strategy that will deliver a greater percentage of EBITDA and cash on revenues.
I'm pleased to announce that we were able to exceed our previously announced expectation in terms of EBITDA and cash.
Generating $10.7 million of EBITDA on roughly 64 million in sales during the second quarter was an example of what we think is sustainable going forward.
Generating $23.5 million in cash and cash flows from operations in the second quarter is an exceptional dissolved.
And once the product a vote.
As principal operating model as well as.
A number of one time efforts in the light of depend there.
If I could leave you with just one impression from this quarter. It is that we're not looking back.
Today, we added digital print and graphics imaging consultants for the next generation.
Our kids at $260 million company with growth opportunities.
I knew it I just to adjusted EBITDA generation of.
In excess of 15% cash generation will be consistent then we'll remain as strong as it was prior to the appendix.
The strategy, we have developed is sound and we're very confident in our ability to build on it.
To give me an idea of what.
That looks like in practice I will now ask deal and then George to provide details.
And concrete examples of arc.
We'll be operating in the future.
Hello.
Thank you sorry.
Before I dive into the details I must mention that a company like ours, who thought can possibly so while the prices of this nature.
Not for the hard work and commitment from our highly skilled and can you know stuff.
The onslaught of restrictions due to the pandemic made operating conditions difficult and risky and yet our teams are those two location and I remain intensely products to.
While the pandemic was a blow to all industry and our customers I believe to be nimble and a giant gave us the opportunity to make quick changes to the baby do business and adapt to the customer and bad news social media.
You know some other ways.
That's some of that are we sort of the key changes they put into place immediately.
We couldn't what did most of folks think ordering systems to the of it that mobile apps.
You restructured the pin centers to think high volume Govies graphics.
He changed over delivery systems to accommodate customers new didn't really quiet month, but just curbside pickup contact us deliveries and digital distribution of spreads throughout North America.
He developed and released technology to connect customers to their home office at Oxford does nationwide.
You can relieve touchless printing using our existing occupant app.
The food on the graphics consulting skills I'll follow sales reps <unk>.
<unk> Crazy, that's one thing that will that social and the marketing campaign.
Put simply we were able to create new revenue lines by I need to find opportunities that had been caused by dependent.
As a result, although revenue lines that changing and we have reengineered the company to take advantage of the new demand, which in turn opening up new verticals for us.
The robust cat lumps of health and safety signage introduced us to health care and image of the Soviets.
Well, the social does something finding services schawk is off to grocery stores banks car dealerships and many retail customers of all kinds.
Yep restaurant coffee shops, and I'm, not foodservice clients to reopen and manage that newly configured to go business.
And then she companies that could not close their doors, but needed a vehicle managed documents printing equipment that document workflow found that you could not only have there, but you do that.
Efficiencies.
Critical benefit.
Few people if they all pizza.
The same services have been applied to C D and multiple government out because I was about.
And with the disruptions affecting it Lucasian School district in every state enough old signs of that 32 of these great numbers for all the expertise and production capacity to help them reopened and see if we manage students from kindergarten majors through University and graduate level programs.
And of course every employee that he's working with documents from home needs a vendor who can offer project consultancy and national print textbook Highquality, playing with quick turn around and cloud and mobile enabled.
So he says.
Yeah that company, who kept strongly capitalized on these needs and be that vendor for large multinational customers as well as gino and local businesses.
Well the sales performance in the last Gordon is a perfect Testament to this.
There's not a b as customers return to work over the next couple of months.
Yeah benefit they have to go all or whatever new lines from that you would almost.
Investments and our primary focus on Neal sales will continue to be directed and support in support of the following service categories.
That's exactly imaging services. These are all things.
Hi, Engrafted services, there would be provide for project consultancy.
Design and installation services and support all customer verticals.
Onsite print services.
Yes equipment supplies and services.
And digital services.
Manny indexing archival and other technology based document management services.
During the last four months old policy has been to keep probably employees and customers say, if like supporting the new industry both chose.
Even continued to focus on the fundamentals and keep the company is strong and position ourselves for future growth for now I turn the call. It would go on C F <unk> George outlook George.
Thank you do alone.
Picking up on service comments about not looking back I want to point out how we are positioning art for the future.
We assume that many of the changes we saw in the marketplace would become permanent.
We were very clear eyed about live was likely to come back and whatnot and we realize quickly the holding onto business line processes and resources in hopes of a rabbit economic recovery was not the right answer.
Well sales will almost certainly grow and new opportunities will arise as a virus comes more firmly under control.
Our customer base is likely to be permanently diversified.
New customers, who are demanding or services now are likely to stay with us.
And they may replace legacy customer Likewise, we think work from home practices were under pass any pandemic and touchless delivery some forms of social distancing and other health and safety practices that affect our business are not likely to go away anytime soon.
With that in mind, we acted very quickly and accomplished most of the following changes early in the quarter.
There are certainly more to do as we work out the details but in summary.
We looked at our direct cost of sales as well as our selling general and in a minute administrative expenses in light of our perspective on a post covert environment.
And rightsize, our cost structure for the future.
The execution of our plan with challenging but our goals were simple.
Maintain gross margins above 30%.
Improve our EBITDA margin.
Maintain or strong cash flows and further strengthen the balance sheet and capital structure.
The urgency we assigned to the changes we made produced an immediate impact most of which are obviously as we report the second quarter results.
Our gross margin was nearly 32% for the quarter.
We reported adjusted EBITDA of $10.7 million on $64 million of sales for the period.
Our EBITDA margin of 16.6% is a 200 basis point improvement from the second quarter 2019.
Sales that were down nearly $35 million year over year due to the pandemic.
Cash flow from operations for the second quarter were $23.5 million.
More than $7 million higher than prior year.
And most importantly throughout all this we increased our cash balance from $38.1 million on March 30, Onest 2000, $20 million to $58.4 million on June Thirtyth.
That's more than a 20 million dollar increase in just three months.
All coming from cash generated from operations. None of it was the result of loans or acquiring other forms of debt.
All of these accomplishments helped contribute to the reduction of our net debt leverage ratio from two times EBITDA to 1.75 times.
I, sorry pointed out earlier.
We did take measured in the second quarter that will not be repeated in future quarters differing equipment lease payments landlord negotiation and a few others.
But our performance demonstrates the importance, we put on creating an environment, where we could not only withstand the economic disruption of the pandemic, but create opportunities for growth and the creation of value in the future.
At this point I'll turn the call back to Suri sorry.
Thank you George upgraded yeah now available for all of this next question if there any.
And at this time into I've asked that question that start wondering your telephone keypad star one to ask a question.
And we do have a question from Stephens Schuster with Green Street.
Okay.
Oh, yes, I'm good afternoon gentlemen.
Hi.
I'm, just trying to figure out sort of what the company.
His I'm going to look like on a going forward basis, there's a lot of moving parts here seems like.
For some reason you used the pandemic tends to finally.
Make a lot of changes yeah, because I I look at a five year charter the company stock and it's gone from the ski slopes down from $7 to a dollar. So you know, it's it's nice to see that yeah. So you're finally doing something.
To.
Improve the business, but on a going on a going forward basis.
What what should we expect let's say in in the next quarter or you I heard something along the lines. They some some things won't be repeated or this or that like what what is.
You know what is are supposed to be looking like on a on a going forward basis.
And then I just would like to follow up after I get a little more clarity.
Sure maybe you didn't quite follow what George said, but I think he clearly said that you know this is the solves we produced fall this quarter and we are confident bad daddys. The bases on mutually agreed to operate going forward well be okay.
Okay. So when do you all right. So one deal any color. Let me finish on do you any color you don't have discussed tying to discuss the passed in the historical data we don't do that.
All the V is saying is we have reengineered the company to be able to generate a certain amount of EBITDA cash based on the expectation that maybe drives a certain amount of revenue. So many I thinking about it at the New company, let me finish and once you know once we know there.
We have done one quarter.
We're confident that do you expect to operate on the same basis go here. Okay. So okay. Thank you. So so are the base revenue is around in the mid Sixtys millions that sound my base that I says, yes, yes people, calling it out okay.
Okay, and then finally in Florida.
Okay, and then and then EBIT or my base EBITDA, it's gonna roughly be that the 10 seven.
Going going forward and then to be building off of this as this space. This is my base.
Yes, that's exactly what George said, you know whatever Josh said, if you're following those numbers I can be period, if you want.
Okay, and then and then or so.
In terms of the the cash so now too.
If we're if we're now in a so we generated 20 million of cash.
And where we're doing 40 plus million an EBITDA.
What what happens.
I mean, there's good management care about the equity value this management care about equity.
The equity price I I don't understand what you're seeing so be generating cash we had your leading products made about 80 do value. There's nothing we can do about they could do value, we're not going I'm the judge down.
Well, you're well yeah, well you can I. It you can buy psaki can initiate you can start paying out you know a very nice steady dividend you can start doing things. So that gives price the stock price wouldn't be at this level.
So you can.
If you're interested.
So if if if you really want to talk in detail. That's a different discussion on the earnings call. We don't talk long and you don't have long discussions we have been paying dividends in case, you didn't know that but we have temporarily put that on the pool because of Kuwait. These extraordinary circumstances, we are living Andrea.
The pandemic and recon, possibly be very predictive as to how the market is going to react to like all companies. We have put the payments of dividends on horse, but we actually are currently have already decided NB had paid two quarters of dividend in case you didn't know.
So well that's.
We're putting the past behind this this is new new a this is arc to point out. So we don't talk 2.0.
What what is I guess.
What's what's the plan for our 2.0.
We don't know that we just going through one quadro unbelievable business conditions, and we are happy to report the of lead you need a company and he's looking strong so I feel you've done a very good job in making sure. We survived this spend damage and put the company on a strong putting now going forward.
But to say that to you right now as to what our plans would be obviously you know we will consider that going forward as to what the best lines of actions helped but that is something they'd be gone pretty we NDS peeling the middle of a pandemic.
Okay, but would it so I guess, what I'm trying to say is am I supposed to be optimistic or am I supposed to not be optimistic as well you know I I'm glad you. So we already do abbey life.
I can judge how you're going to feel I can only I can only announced the south so that's really job Vietnam seem to solve and it's so you judge the company based on what it sounds to me even understand meeting we have announced incredible to saws. That's all I can say.
And what's that free cash flow after the equipment leases and capex.
And interest.
In regards to the free cash flows I mean, it's all on the on the financial statements butter.
Our capital leases payments were only 1.7 million in the quarter and our cash Capex was 1.5 million for the quarter.
Okay, So well why it would what.
What would it take.
For.
The management to be confident enough to.
You know sorry to a return some of the cash back to to shareholders.
Like the other order like then another quarter like this.
Look we become predict that we're in the middle of a pandemic I'm not going to make predictions or projection in an earnings call.
I am saying he has I'm not add into many different direction I'm asked I'm asking you kind of philosophically yeah, I believe I can discuss philosophy on any color I'm, sorry, I apologize.
No what I'm, saying is we have had two quarters.
Oh dividend payments, we have paid we have put bid on pooled for now and we have produced at its obviously a pretty loose and every time, we feel that these results are going to be consistent you'll definitely be stuck that.
Yeah, right right. So I'm trying yeah, so I'm trying to understand.
What does it take does it take two quarters like this for either be confident.
Three quarters like this what does it take.
It all depends on business conditions, I can't predict that right now a you know I could go to one two quarters and then you could have a situation where they spend they make is coming back I don't know all those things, but if we find business conditions are back to normal things are going very well and we feel like they can be consistent you obviously wanted to be consistent.
And then we would restart the dividend program, we have no troubling restarting the dividend program. We have the cash we just have to make sure that is consistent.
Okay, but it it doesn't it doesn't sound like you're.
I mean, there are lot of other companies that suspended their dividends and then read a brief stated it it doesn't sound like you're confident and really confident in what you're doing that you're you're going to sustain that you're there do you think it's sustainable what you've done I'm not going to answer that question, we're very confident given what you're doing right now I mean it.
So obviously, it's up to you did judge as to what you think our confidence level is but I think our numbers are phenomenal envy you got to have to continue to perform and at the appropriate patent will make the decision.
Well it sounds like you had one good quarter it doesn't sound like you're very confident or is that your that it's gonna be sustainable or else. You would you would reinstate you agreed state that dividend.
If we if we find that is consistent and we are performing very well be definitely reinstated the dividend.
Okay. Thank you.
Sure.
And our next question comes from Ugly in Prime Mac.
Oh good afternoon.
Oh man.
I like they are not looking back.
Kind of thing and I like the 30% plus.
Well its gross margin.
And the EBITDA trends.
How much time do you have.
So in order to to get a.
The maintain your.
Listing.
Oh, Yeah. So can you guys have changed here Decemberthirty December you sympathetic right.
We'll go over 30 days consistently above EUR 30 day average over a dollar than that gets taken off before that so we're offering right around.
Got it and then.
Given the really.
Difficult circumstances out there just and Oh and the economy have the other printers. The smaller guys that you know.
Or have they gotten pack impacted more.
Given that you're you know your national can handle people all over the place.
Well, so well something in the in the sector go away and you can you know.
Pickup.
Pickup marketshare.
Yeah. So we've seen quite a bit of pain, obviously disdain was very bad because of the fact bad luck lots of the business was shut down. So I think there will be substantially weakened I'm not sure gain about going away.
This business is also transforming because it you know what used to be coffee shops, and you know signage companies days the range of businesses.
No overlap with what we do but I think the fact that we have the national footprint and we have the ability to do what we've been doing traditionally it certainly gives us a leg job too so larger customers off a bigger scale very comfortably so I think days definitely in it.
R&D and the fact that we have completely the engineered the company puts us on a very strong putting in terms of yobbo capital structure and our operating structure. So I feel this has been.
Buffer.
Okay, and then on the the new.
You know segments of the economy that you can.
Good after whether it's like health care or.
Public schools or.
No what I would say retail because that's just given kind of pummeled, but but would you have the ability to have a national contract with someone like.
Let's take it was in your backyard dignity.
Further signage that saying that that's like a real one but I'm just saying could you go to a hospital that's in.
Colorado, and California, and Nevada, and say Hey, we got all your.
Your signage, taking care of American service that four yeah.
Is that if that's something that you're working on or is that doable.
Sure I mean, we working with some really large signage opportunities where you know I know you shows that grandsons is people, who would not bad being able to deliver a that kind of you know what do you.
For example, we have had customers. We are we literally have could you just yet you know hundreds of thousands of Ah signage pieces literally within weeks or that kind of stuff. He's very hard for small and finance company to put off.
With school districts, all colleges and universities or healthcare facilities shopping malls. All of these you know large customers who have large properties require.
Hey, you know health and safety signage now that they are opening up and that's a really becoming a significant part of our.
Our business strategy as well, but what we see that either no they'd be Scott's everything these customers are not necessarily restricted to a specific industry Glenn even the law school actually spread out moving into other industries in other words. He goes that we have previously not being.
Okay, and so it's safe to assume that I don't think you break out like the riot group, but I'm guessing the right groups still around because they used to do a lot of stuff with.
Restaurants in creative things that are with national companies that that would be fit like a glove with.
Yeah, well show our newly.
Absolutely definitely we are doing a lot more detail what do you like to give a little more color on that yeah, and Ah different already Bonnie low tide.
[laughter] like that the the the ride a segment of the business is a very busy so it but you have super thankful for that group because they produce very high quality signage and also we have stopped for very good did project management, but I really do you say you know looking working with customers on understanding what they need that and creating.
Solution.
For all their location them. So what you mentioned earlier the Oh systems. Other technologies is something that's old systems, a pretty much good to managing the customers think assets, you know central platform and distribute them, but so during the call we signed or you know everybody good went into a shutdown.
Some of the largest a property managers they don't fit up national accounts with up to keep all that the fine age assets in one platform and make it available for all their building right. I mean go to manage companies manage that one building Oh, Oh, we jump multi tenant buildings that are some up large campuses.
Well there one company occupies the whole building, but so we've been supporting those type of companies, we find edge all across the U.S., so definitely the footprint I lakes with using understanding.
The got fixed according to your friend thing and the cloud platform helped us to secure those type of regional and national customers.
Okay, Great and so then as you have the new reporting calorie group gory. So I guess riot someone that's good to be in consulting them.
Just had to yeah that theyve, there that that will because that I consultant to fees as designed for using more read any of these companies schools. They like to design demographics with their school emblem school color themselves also days a design nearly one consultation lately when they think anybody the insulation component as well so.
The baby look at it was any comes to think thing from a customer can be fine is predicting it could be construction related but thing, but all those design and consulting services. They all falling to one bucket right. So a bit of same customer base in different ways at different times 20 foot of needs. So IDH two well she had the.
Diet portfolio. So he's just spoke with these large customers and get them to use all in all across the U.S.
Okay.
So so.
Even given this horrible backdrop, you guys have the ability potentially if there's not like.
You know unforeseen other storm clouds said that come in there that you could probably grow off at this level.
I think.
Hi, I'm, not saying like in the near term like one quarter to quarter three quarter, but given that you have more markets that you can serve.
And.
You've made the necessary investments in the past off a cloud and mobile and that stuff.
Yes.
You know you could get bigger versus a shrinking.
Yeah, I mean, that's definitely you know given this poor Colgate based on how we Reengineered the company.
That's exactly what we were trying to say now that company is reengineered and he is poised to you know structured in a way that we can grow. So we're definitely looking forward to grow up from where we are given the fact that we all walks you need is that you know going into other verticals.
When do you does allowed us to actually.
Go into markets that we have not.
Meaning before and so we certainly think that's an opportunity to grow.
Okay great.
And part of the reason I asked is at the prior question was like Hey, what are your do with Ah the cash and how are you going to grow because if you can grow if I just what five times on 40 million that would get me kind of north of $3 on the stock price stuff that you'd be satisfied with that but it's just given what you're doing.
Ah yes.
Yes, if everyone just a rose the boat in the same direction.
The dollar prices kind of silly.
Right I mean, you know obviously, they're small I mean, you probably don't we're just want to go and buy it all back because your public company and then on be able to like buyer stock. That's your like right on the other side link liquidity will always be an issue, but what we really think you know all their ability to de lever that the kind of.
Dbi and cash we delivered this quarter into so you know what George described is something very sustainable we feel good about that Oh.
Okay, and George how hard is it could it be for you to report on the new groups because in that last or can you got things a little bit I think for reporting or something on the.
I know weakness is that am I did I read something wrong there.
Yeah, you, probably where we gotta clean opinion from a socks and reporting standpoint, but okay regards to do lines right now as well below and superior describing right now is how we're looking at the company operationally, how we're running it operationally I have some constraints of how I have to report the revenue line for FCC reporting so that may lag a few.
Orders, but nonetheless, that's how we're running the company I think was the main point, we wanted to make.
Okay.
Okay, well, you're obviously going to live so.
[laughter], so I mean, because you've already always generated cash and so now you're still generating.
Yes, you've just you think you've said.
A floor that you can grow off road.
Exactly yes, we only increased cost what do you really glad it wasn't that much [laughter], alright, and all right I'll, let someone ask a question.
Okay excellent.
And our next question comes from Walter Schenker with M. A C partners.
Thank you the deferrals of lease payments and rentals.
Those are deferrals, which means they have to be paid at a future date.
His question, it's all related secondly, could you give us some idea or of the magnitude of that and if it does have to be paid at a future days and thirdly, what's the accounting when you don't make a lease payment for rental payment.
So I'll start with the first a question in regards to the accounting treatment you still have to record the expense that doesn't change because could you get it the timing of when you make the payment has no bearing on the expense. So all the expenses related to facility leases equipment. It's reflected in our to enter Q2 results I wanted to.
First start there make that clear in regards to the deferment, we did have about $3 million of capital lease payments deferment Windows are gonna get get paid back what we negotiated with our manufacturers is.
We're gonna just add on two or three month at the end of the lease terms as you know, we probably have six to 8000 different equipment leases out there that are in individual leases. So if it to do in a year from now do three years from now you just tack on two months at the end of that lease term. So that's gonna be spread out that 3 million over.
Three three to possibly four year period in regards to the landlord leases, probably an equivalent number there, where we deferred about $3 million and payment and that'll get paid out over 2021 Ratably. You know 112 every month for 12 months.
Okay. Good how helpful. Yes, I was exactly helpful.
And then just one other question comment to maybe a little long winded.
<unk> point of fact, the stock over a multiyear period has performed relatively poorly the company has indicated over a period of time that given that the business I realize it's a lower base now does not have tremendous growth industry impact has been consolidate.
Dating.
That one avenue would be to return capital to shareholders either through dividends or buybacks I know you bought back stock in the past, including the first quarter and you paid a dividend in the past so I understand you're done some of that.
However, the question that I want to raises.
This is a company, which generated $20 million and cash flow and felt it was imprudent to pay a half million dollar dividend I'm trying to understand how strong and you can stories, a meaningful shareholder, but you know you own from stock how meaningful that commitment to.
Returning capital to shareholders is if in fact, youre concerned about a half familiar under half a million dollars a penny under half million dollar expenditure on dividends is when you're generating $20 million of cash.
Right.
So what so to answer that question, it's real simple, it's not because we lack confidence obviously days and they had a lot of unknowns in view of only gone through one single quarter.
And what TV, what do you like we did during this period of time is unprecedented won't go. So he is another way to think about it because our business got even bad so badly.
We didn't lose we.
You know when we Reengineered the business, we started over the clean sheet of paper right and we identified all of the needs of customers have two day and likely to have in the next few years right. We identified all those segments and Dan.
Rebuilt the company two feet to sell doors customer needs.
So what do we have done he is unprecedented we have reengineered literally every part of the company from cooperate from 80 operations sales.
Literally every part of the company.
And so you need itself, it's such a extensive exercise.
Right at the time, we started doing this you do is just doom and gloom because literally every location was Chad I would revenues were seeing significantly low and you've been able to overcome that by the engineering the company in going after these new revenue segments very quickly by pivoting and adapting our south.
Now I'd be have generally to de lever. The dissolves we feel good about there was suppose to remember the good news it shouldn't be too to food dividends on who was immediately after the pandemic, we want to make sure that Vietnam.
You will recall.
Too much in a hurry Oh, you know too or are you know, making changes immediately we don't really understanding so I think.
Yeah, if we continue to produce quarters like this and we really feel very good about the fundamentals, we having pace, especially the business trends V. S. C suite. So all about a business trends. So we are unlike in the past literally.
Watching business on a daily basis, our daily sales you know how to hold the trends are moving on so we want to make sure ER.
That when we're making those decisions, we're making those decisions on really good fundamentals. So we have had a good quarter.
And if we have happened to have moved Florida like that.
Obviously, we have excess cash in will be very very happy to.
You know.
And to make the decision to pay the dividend like you said, we did buy back stock, we did actually slowed down paying back the debt back to the bank and we did pay TV. So we just not like we didn't try that you did that for two quarters and certainly something that you wanted to do but the been Danny is not over yet so.
Being that'd be a very mindful, though right in there so the signs in the marketplace with regard to what's happening in the marketplace and what's happening with the pandemic you still not settled I'm sure everyone will agree with that.
So we just want to make sure bad we are making those decisions.
Well, we'll well talk about decisions, it's not because we lack confidence obviously be had the cash and we've seen very good about it and this is even without getting any federal government assistance.
Cash generated by the parent company borrowings nothing no bearing business, which is phenomenal performance.
We've been able to pull out and we feel very good about it and I think if this trend continues there's no reason why do you mean won't be worth that decision and start paying dividends back.
Oh, Okay, what my comment that doesn't deserve because you've answered. It you do a great job I mean like do you ever was surprised and <unk>.
You know you deserve kudos for the great job, you build restructuring and saying the company on a new Pat.
However, and the penny dividend doesn't make that much of a difference one way or the other.
Again, it's what you do and not just what you say, what you're doing that was reported good quarter.
I don't care, a lot about a penny dividend, but it is a very visible action taken by your company, which says yes, we're comfortable and confident especially when it is approximately 2% of your cash flow, but you know your water reinstated and show people that you really have to competence that you did a great.
Dropped like we all except that Ah. Thank you. So no I I totally agree with you I mean, I, you know point, well accepted and obviously didn't take that into consideration and it's not something that if we didn't think about we obviously want to be very prudent when you're making decisions during times like this and don't want to jumping to conclusions and then regret our decision.
But we feel very good about how the quarter.
You know ended and he's just not the quota in that we feel very good about the trends we experienced in them up in place. That's why we are confident about the results even out and obviously.
You know, we preannounced because we felt good about it but we were able to still exceed those expectations simply because the trends were good and we hope that continues.
Thank you very much.
Well thank you.
And we have another question Glenn Prime Mac.
Two quick ones is there anything or that you can do it the cash to consolidate.
Other operators are you pretty much.
Got it enough organic opportunities in front end, where you don't need to us.
You don't need anything you have very unlikely, we'll do that Glenn because this may not be the right time and you know those operators, we maybe thinking about consolidating may be made themselves be experiencing a lot of Ah you know nobody in the ocean. So it may not be a good time to acquire company and we don't need their capital there.
Yeah, Okay, I just want to make sure that was out of away because at some point when you do reinstate dividends.
And as zero percent rate World I think that would be attractive to people like Oh My gosh. This was a 4% yield and I get zero today.
Right right.
All right.
Thank you have totally agree thank you.
[noise] [noise] and there are no further questions at this time.
Thank you Kevin. Thank you everyone for joining us. This afternoon. We appreciate your continued interest in the company and we look forward to talking with you next quarter take care have a good evening Goodnight.
That does conclude today's conference call. Thank you for your participation you may now disconnect.
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