Q2 2020 Heritage-Crystal Clean Inc Earnings Call
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Corporation second quarter 2020 earnings conference call.
Today's call is being recorded.
This time all college microphone and you did you will have an opportunity at the end of the presentation Pat's question.
Okay, well be provided at the time for you to queue up your question.
Next I'll call it lends itself to one or two questions.
Some of the comments you made today are forward looking generally the words mm anticipates believes could estimates expects intend may plan project should well be well continue will likely result.
Good and similar expressions identify forward looking statements.
These statements involve a number of Wisconsin teams that could cause actual results could differ materially from both interest paid it bodies forward looking statements.
These risks uncertainties and could a variety of factors some of which are beyond our control.
Forward looking statements speak as opposed to today and you should not rely on them as representing our views in the future.
We undertake no obligation to update these statements after this call.
Please refer to our FCC filings, including our annual report on form 10-K as long as earnings release posted on our website for more detailed description of risks that this and the effect of results.
So these documents may be obtained from the FCC or by visiting Investor Relations section of our website.
Also please note that certain financial measures with me on this call such as anything before interest taxes, depreciation and amortization for EBITDA and adjusted EBITDA or non-GAAP measures.
We see our website reconciliations of these non-GAAP financial measures to GAAP.
More information about our company. Please visit our website at Www Dot Crystal dashed Green Dot com.
With us today from the company Arda, President and Chief Executive Officer, Mr., Brian Mercado I'm, the Chief Financial Officer, Mr., Mark Davita at this time I like to turn the call on the burn Ocado. Please go ahead Sir.
Thank you Shannon.
Good morning, everyone and thank you for joining us today.
This morning, we'll begin with an update on the impact of the pandemic Scott's her second quarter results I'm sure our third quarter outlook.
Like most companies since the end of March we face many challenges as a result for the global covert Nike pandemic.
That's our company in many of our customers have been d. the central businesses.
I've worked hard to adapt to the challenging operating environment. The pandemic has created.
Safeguard the well being of our employees and decrease the spread of the Coburn 19 bars.
We implemented the ball winch steps during the second quarter.
Provides additional personal protective equipment sanitizers.
Utilize the staggered work schedule to increase soulful distancing.
Allowed high risk or other impacted individuals the war come home when possible.
Early cleaners, and disinfectants some of our facilities.
Temporarily close less than 10 of our facilities, none of which would close for more than three to four business days at a time.
These steps along with cooperation of our employees have allowed us to limit the number of confirmed or suspected cases of copel nightly amongst our employees.
During the second quarter total loss dropped from employees off the job due to covert 19 related health issues was approximately 5000 hours companywide.
From a customer standpoint during the second quarter, we experienced situations, where some of our customers temporarily closed their businesses.
Well, others remained open but limited our access to their facilities, which curved our ability to fully service those customers.
Other active customers have had a decrease need for our products and services due to the economic downturn.
We continue to encounter these same conditions in the early part of the third quarter.
In addition to taking steps to ensure the safety of our employees during the second quarter. We also executed several actions to ensure the health of our business.
Some of these actions include but are not limited to the following.
Implementation of salary reductions for all levels of management.
Implementation of furlough and a reduction important programs.
Implementation of reductions of cash compensation for members of our board of directors.
Elimination of four one Cape Wind company match.
Reduction of capital expenditures.
Suspect you to mergers and acquisitions activity.
Elimination of non of central travel implementation of a hiring freeze.
Thorough assessment of vendors to ensure continuity of critical supplies and materials.
And lastly, the tightening up customer credit controls.
Although we have restarted our mergers and acquisitions activities. Many of the other initiatives are just much and are still under frac today.
During the second quarter, we also launched the covert 19 decontamination service.
To help our customers and implement a return to work strategies.
We will continue to offer the service, we see a need for it in the market bullish.
I would now like to spend a little to I'm talking about our oil business.
During the second quarter, there were significant drop in demand for crude oil and all refined products due to go to the covert Nike pandemic.
This deflated demand scenario came on the heels of a battle for market share.
Between two of the world's largest oil producing countries, Saudi Arabia and Russia.
This market share Battle led to historic oversupply crude oil.
On the supply demand dynamics push the price of crude oil and finished products to all time lows during the quarter.
While crude pricing has rebounded from historic lows.
Lower demand as result of the economic slowdown has resulted in an ample supplies of crude oil in the market today.
The shelter in place orders, which were widespread during the second quarter led to a drastic decrease in driving at lower levels of manufactured activity.
This in turn has led to a decrease need to replace finished lubricants such as engine or hydraulic oil.
Well, that's all changes made less used ought to be collected in the less demand for finished lubricants.
As most of you know base old is the main ingredient finished lubricant.
As the demand for finished lubricant plummeted.
This led to a decreased demand for our base oil as well as downward pressure on the price for our product.
Early in the third quarter, we've seen an easy enough to shelter in place orders in many parts of the country, which increase to the bad for finished lubricants and base oil.
This allow base oil producers, including heritage Crystal clean gradually increase prices during the early part of the third quarter.
However, the recent resurgence in covert 19 cases and areas, which were the earliest are essentially ultra in place orders.
Has the potential to limit the level of improvement, we will see in base oil demand and pricing.
The steep decline in the price of crude oil during the second quarter, which I mentioned earlier led to a decline in value across the oil commodity complex.
That's provided us an opportunity to move from a slight pay for oil position during the first quarter two.
To a significant charge for oil position during the second quarter.
On on that basis from the first quarter, the second quarter fiscal 2020.
We saw net improvement of 48 cents per gallon at our charge for oil program.
As the price of crude oil has come off historic lows, we have seen increased pricing pressure related to used oil collection charges and the early part of the third quarter.
Due to lower demand for our base oil as well as a soft pricing environment, we decided to move up a scheduled extended turnaround from the beginning of the fourth quarter fiscal 2020, and the second quarter.
We also executed the turnaround at a more deliberate pace.
The limit overtime, another labor cost, which would normally be incurred during the turnaround.
As a result of the extended turnaround the re refinery was down for approximately three weeks, which led to base oil production of 6.5 million gallons.
Our 57.2% of base oil capacity.
During the second quarter compared to 11.8 million gallons in the year earlier quarter.
During the early portion of the third quarter re refinery is performing well as we increase production to be growing base oil demand.
We're also experiencing increasing availability of feedstock, which will improve our plant operating performance and utilization.
We are projecting base oil production to be an excess of 11 million gallons for the third quarter provided we're not faced with additional shelter in place orders because of accelerating cobot 19 bars cases.
As we move forward, we estimate on the third quarter. The environmental services segment will see year over year revenue performance slightly better than what we saw on for the second quarter.
In addition, we estimate the environmental services segment operating margin percentage will be two to three percentage points better than our second quarter operating margin percentage.
From an oil business segment perspective, we estimate third quarter revenue will be down 25% to 35% from the prior year quarter, and we estimate our operating margin will improve sequentially quarter over quarter.
We believe we have seen the worse or the impact of the co would 19 pandemic on our financial results.
However, recent surges in Kobin 19 infections in certain parts of the country could bring new or additional shelter in place orders, which could directly or indirectly negatively impacted demand for our services the health of our workforce in our future financial results.
Well our results for the remainder of 2020 and into 2021 are hard to predict one thing I am confident others. Knowing all of our employees are determined to continue to provide the high level of service our customers have come to expect from us in a safe manner as possible.
I'm also pleased that we have maintained our strong balance sheet.
And our in a good position to take advantage of improving market conditions.
However at this point, we're unable to predict the ultimate impact the Golden 19 pandemic will have on our business results of operations financial condition, then cash flows.
With that Mark will now walk us through our second quarter financial results.
Thank you Brian.
Good morning, everyone.
Revenue for the second quarter, 2020 was 79.5 million compared to 105 million for the same quarter 2019, a decrease of 24.3%.
Net loss attributable to common shareholders for the second quarter was 2.7 million compared to net income of 7.1 million in a year earlier quarter.
Basic loss per share with 11 cents compared to basic earnings per share of 30 cents into your go quarter.
Turning to in the current quarter were favorably impacted by 20 cents per share as a result of an adjustment to an accrual established during the fourth quarter of 2019 related to a settled class action lawsuit.
Excluding this accrual adjustment.
Predictable to common shareholders would have been 7.3 million or 31 cents per share.
Moving onto environmental services.
Accorded segment revenues of 59.8 million compared to 70.2 million in the second quarter of 2019.
The 14.8% decrease in revenue was mainly due to covert 19 related volume declines in most of our product and service lines.
Partially offset by favorable pricing variances in our parts cleaning containerized waste and antifreeze lines of business.
Environmental services profit before corporate SGN expense was 8.3 million compared to 19 million in a year ago quarter.
Operating margin declined to 14% from 27% in the second quarter 2019.
But we were pleased with our overall operating performance in this segment given the very challenging economic conditions.
Oil business segment revenues decreased 43.3% to 19.7 million compared to 34.8 million in the second quarter fiscal 2019, as the covered 19 pandemic unrelated shelter in place orders led to a significant decrease in the demand for finished lubricants which directly.
Back to demand for our base oil products.
Pandemic impacts also led to a significant decline and the generation of used oil, which negatively impacted used oil collection and feedstock volumes you've done every refinery.
As Brian mentioned earlier these headwinds, let us to move up the timing of an extended turnaround at every refinery into the second quarter.
These unfavorable conditions resulted in our oil business generated negative operating margin of 28.2% for the second quarter.
During the second quarter, the weighted average increase in our net charge to customers to collector used oil was 48 cents per gallon compared to the first quarter 2020.
From a baseball standpoint, we sold 7.1 million gallons during the second quarter and our netback declined 65 cents per gallon compared to the first quarter 2020, and 61 cents per gallon compared to the second quarter of 29 team.
Our overall corporate us Trina expense increased slightly by point 4 million compared to the second quarter of 29 team.
DNA expense as a percentage of revenue was 15.3% compared to 11.2% from the year go quarter.
This percentage basis increase was mainly driven by lower revenues.
And higher severance and bad debt expense, partially offset by lower travel expenses share based compensation and legal fees.
EBITDA for the second quarter was 2.9 million compared to 13.6 million in the your goal quarter.
The company's effective income tax rate for the second quarter fiscal 2020 was 8.7 per cent compared to 23.1% in the second quarter fiscal 2019.
The rate decreases principally attributable to the opposing effect on the tax rate from changes in year to date earnings in an income quarter as compared to a last quarter.
At the beginning in the second quarter, we closed on an acquisition of an environmental services business focused on field services and waste water treatment for 10.1 million.
This acquisition provides us our first wastewater treatment operation in the mid western U.S. as well as the ability to use internal labor to perform various field services projects, albeit in a limited geography.
We ended the quarter with 50.8 million of cash on hand.
This balance represents a decline of 9.9 million from the end of the first quarter.
In addition to the cash outlay for the acquisition I. Just mentioned, we also paid out approximately 4.5 million during the quarter second quarter excuse me related to the legal settlement I previously mentioned.
The payments made during the second quarter represent all material amounts owed by the company related to the settlement.
For the quarter, we were able to generate 7.6 million an operating cash flow and we were also able to generate free cash flow of $4.3 million during the second quarter.
Spike the many challenges presented by the covered 19 outbreak we maintained a strong balance sheet, a net cash cash position as of the ended the second quarter.
We do not expect the impact of pandemic to force us to exercise any portion of our still unused revolving loan in the coming quarters.
As we move forward. We've reached noted are acquisition related activities during the third quarter as we look to leverage our strong balance sheet to execute on opportunities, which we believe can create value for shareholders.
In conclusion, given the challenges presented by the corporate 19 pandemic, we're pleased with the execution of our team during the second quarter and we believe we are well positioned for the challenges we may encounter during the third quarter remainder of the year.
We hope everyone stay safe and healthy and as always we appreciate your continued interest in our company.
Taking a questions and I'm.
Glad to hear that your employees are safe and know all in all okay.
Michael.
Our things on your end.
We can't complain with some point anyway right.
[laughter], we're here to listen.
[laughter] I, just want to tease out a little bit of your.
Your outlook for Threeq Cuda try I understand the pieces when we think about what was the rate of change of down in say environmental services. You know parts cleaning is down almost 16 bought back it was down a little over 20, but field services is up any freezes down in mid two.
Twentys, how do I think about those pieces.
In Threeq two given.
The rolling reopening of economies and where are your branches are located.
Well, let me talk to what we're currently seeing and maybe more could review some additional Q2 history, but.
We are beginning to see you know gradually increasing revenue performance from most of our branches obviously, Michael the oil field is empaque Oldfield branches, we have.
14 that are impacted more severely than the rest of our networks. So there.
You know current run rate, we're seeing those branches in the you know down 18% to 20% year over year, the rest of our network.
You know running into Tempur said clip down year over year, and we're pretty happy with that obviously, we're seeing hot spots of covert 19 around the country and that may impact some branches going forward more than others right now, Florida is pretty hard, Texas or we're seeing.
Little bit of a slowing some of those branches only because it covert 19, but overall thatll give you some color on what we're seeing currently.
And Michael if you looked at from a Brian talked at the geographic impacts if you look to the overall line of business impacts you called out the three most important ones.
If you look at parts cleaning compared to vacuum and our containerized waste business is as you just outline those businesses. The latter too were impacted from a negative standpoint about had about twice the decrease on a year over year basis that our scanning business that and that really makes sense I think if you think about.
Logically the parts cleaning business has a schedule routine business and you would expect that that compared to businesses, where the waste pretty much as connected to production or activity more directly anyway that you'd see a quicker more drastic downturn. So I think on the way back up when you think Brian.
Mentioned getting.
Some a couple percentage points increase from.
Last quarter's performance in the segment overall, I'd, probably say, maybe two thirds of that from the vacuuming containerized waste business combined in a third of that from parts pain, because parts cleaning has that much less further to that come back from as opposed to those two other businesses and we don't expect to see any quarter over quarter improvement.
In field service is one of the projects that we performed in Q2 were already teed up Michael That's why you didn't see any erosion in revenue and field services as well will begin to see some of that filtered through the income statement in Q2 and theory coming in field services, there's about a little more than a million dollars.
So if you look at on a quarter basis, you, obviously have looked through our Q you got that breakdown, it's close to not quite close to 25%. Other revenue is kind of coal had covered related.
That's the decontamination work.
Yeah, Yeah, we're obviously doing it for our manufacturing client base smaller client base. So it's not to the level of some of the other industrial service contractors, but fits what we do really well because we're supporting our customers and helping them get back open.
Okay, and then if I, if I switch gears to oil.
Sure that you thought you'd be at 11 million gallons of production that that's a very high capacity utilization I mean I'd put yet.
Approaching 100% utilization.
Yeah, that's provided Michael the feed stock continues to be available like it is today.
I think outside.
Prepared remarks, he did and I wanted to sort of tie that in which is so yes vehicle miles traveled based on gasoline supplies seem to be back up about 70% from the bottom.
So I'll, just say a little higher than that based on what I'm rating, but yeah.
Definitely way up from where it was.
And and therefore oil is back in supply at the other part of that question. It has its the oversupply of base oil.
Been corrected so we've rebalanced the market relative to the current level are driving.
Yeah, I'm not going to go as far as saying, we've rebalanced base oil I think as you know a lot of refineries have.
Reduced production, including us and some of the other refiners, which obviously took some some base oil out of the marketplace.
What way less fuel in distillate demand, which I think you'll keep.
The refineries that lower capacity utilization. So for now we feel pretty good about a supply demand on base oil.
And I'm projecting at least as we.
But put our numbers together for a for our board over the last couple of days were projected relatively flat base oil pricing near term expecting it to be balance and obviously, we'll hit a.
Yeah, the fourth quarter, which is a slower base oil period, we'll see where it goes from there, but near term, where we're projecting flat base oil price you did pretty good demand. We haven't had trouble move in the base oil that we've been producing we feel pretty good about the 11 million gallons and if you look good.
Our past performance last year I think we were at 11.7 million gallons from the plan so getting back close to.
100% capacity not all the way they have to close.
You know in pretty good demand from our third party suppliers, so I know.
Everybody's a scene.
Increased use Motorola activity based on what I'm hearing from the third parties, including US. Our route density on our trucks has picked up quite a bit since the.
The worst part of the covert pandemic, which was April 1st part of my.
Okay, and and just so I'm clearly when you say a flat base oil price, that's flat sequentially or flat year over year, it's got to be down year over year as it yeah no sequentially I'm talking just spoken on rates yeah sequentially.
In a way the out year over year, and if you know.
Yeah.
And just so we're not how.
Relative spread sequentially.
Has been materially enhanced by the charge for oil.
And within your collection business, so that is that correct.
Yeah. We're we're happy maybe were happier with where her spread is today I'm not a.
Not where I want to be but we've made a lot of progress with our charge for used motor oil significant progress. We obviously got a you saw motiva price increase that we got to a price increase on on base oil, which helped our spread so between the two were pleased committed don't know if it gets us all the way where we need to.
I believe it up my much happier than I was in Q2, which is why we're producing base oil.
Okay, and then mark that capital spending reduction what do we what should we be modeling for capital spending as we sort of worked for cash flow statement.
Yeah we've.
We weren't as successful as he wanted to be we spent a roughly from a cash basis a million and a half more than what we had forecasts and I talked to the market on and and.
I'd, rather just conservatively, especially since our cash position you know we were able to from an operating basis produce a better results than we thought we're probably going to put out.
And forecast another three and a half million for Q3 in Q4 in Q4 I know it's.
An outsized calendar quarter, but say try and shoot for another 7 million total and the second half of the year.
And hopefully we can beat that I I really hope so.
It's a matter of when Brian and I get people come in.
They needed so they need that trying to make sure we do the right thing.
Looking a lot of it Michael was rolling stock I mean, you've heard us on calls before were.
We're buying a lot of our power these days and especially on our specialty drugs because we.
Last longer it reduces our maintenance costs.
We like having the asset we could re purpose the ancillary equipment associated with it so it makes sense for us.
We pushed a lot of it off but at some point. We know this market is going to recover our balance sheet strong.
We want to get ourselves into a position due to have these plants optimized and have our rolling stock in good shape. So we can hit the ground run into 2021.
Okay, and then the last couple around that cash subject, so clearly cash collections for good.
Bad debt provisions seem like they were not bad on a percentage of total revenues.
I mean, how do how do we think about where that trend will add overall trend is.
Yeah, I think we take an extra special care on bad debt, especially with the new accounting rules.
I think that the Cecil standard.
But the accountants call it but.
To not just do our normal I'm looking at specific accounts, which we do have some things, which is therefore, but ramp up that bad debt. So I really think outside of some specific account.
Hey, good count reserves, which I always hard to predict we're probably seeing the worst of it or hopefully both of which to fit into our allowance right now.
Things could change if shelf in place orders. It you know hit extra hard again, and maybe we'll have a different outlook, but right now I feel pretty comfortable that we're not going to have any additional big shocks that we're gonna have to absorb and the PNM that our allowance is in good shape.
You know you always worry Michael as you move from a slight pay for used motor oil to a charge and that's a lot of smaller customers.
Never easy to collect to collect money from those guys.
Right.
Right, Okay fair enough. Thank you for taking the questions appreciate it.
Thank you appreciate it take care.
You too.
Your next question comes from Jim cities with Needham and company. Your line is nothing.
Hey, Jim I, Thank you Hello.
Good morning, if I look like.
The good morning marketing cost reductions.
In that we saw in.
Q2.
How much of that is is it would you characterize is temporary in nature I don't know tiki, if he could size that because I guess, what I'm also trying to get too is you know how should we think about that expands being layered back in as you do start to see the business improves.
I think a vast majority of it it's temporary the layering in I'm, you're not going to probably like my answer because we don't have been kind of clarity there certainly at the beginning part of the third quarter, you're seeing those same savings you know in place and I would say that forcing through almost halfway.
Down most of the third quarter, they're probably going to be in place in that into the fourth quarter is when you'll see some some of those costs come back into frame I can't tell Ya how much how quick that's about as granular as I can get but we're already at big spring halfway through and we're we're holding the line.
And you know Weve taken advantage, we haven't done any large reduction in force, but weve.
Oh selectively pruned the tree there had been some some permanency and some of the cost reductions, but most of that we hope will or won't bring back, but we're dependent on activity increasing Brian do you have anything at all just seconds out I mean, obviously, we hope that we can bring these furloughed employees, but so.
Sooner rather than later, but right now we're not seeing them.
The revenue increased to justify bringing them back we feel like we're staffed fairly well in some markets, we may need to bring people back because as though.
The restrictions have eased to like in the Midwest and northeast, we're seeing more rapidly recovery revenue those were the hardest hit areas early on because of the locked down we're seeing improving conditions. There. So we may selectively again to bring people back geographically, where we see an increase revenue.
Got it and then guys you know again with with respect to some of the areas, where we've seen the flare ups in in recent weeks within the U.S. business.
Are you seeing some some noticeable impact or is it just a case. So you know the opening of these states has his outweighed.
What we're seeing.
Yeah, I think I mentioned this.
Michael Lasser similar question initially we saw a greater impact in the Midwest and northeast because it shut down sooner.
Obviously, the a lot of the southern states continued to operate although not at 100%, but certainly at a greater percentage than Midwest and northeast, we're kind of seeing a reverse today a lot of the southern states have had the flare ups.
And we're seeing a little more caution out in the fuel from our customers where there.
You know pushing back on not wanting us to have access to their plants and people. So I would say if you look at what's happened the last few weeks probably about.
Little more of a lesser activity in the southern stage better in the Midwest and northeast, but overall our branches in general are running at about 90% cliff compared to 2019.
Well, the heavier NPAC down south and less of a Midwest northeast because it.
Increased activity as result of them going back to work.
But they are probably maybe even in these areas that are most affected some of the southern states, it's a and again.
I'm just trying to get a sense, it's not anything close to what we saw it sounds like a earlier about when we were seeing in the north eastern somebody other states I really shutdown no you're absolutely right at lesser vocational and it certainly.
We're still getting there John is harder.
I think it just a reflection of.
I think the general economy, Jim is getting a little bit more used to navigating with it it might not be that much better the situation medically, but I think we're a little more prepared incrementally more prepared as an economy.
Okay and.
Thanks, and just on the M&A side, the idea that your restarting some of the activities there.
What's driving that or are you seeing some potentially more attractive valuations out there.
Or are you just saying Hey, this is time, we should be doing it was kept balance sheet, let's let's start you know refocusing on that.
I think it's it's certainly a combination of it too.
I don't think people were going to put their companies into place near term doesn't make a lot of says when your EBITDA run rates for as long as they order today based on historical performance.
But it but it takes time to Gen up these opportunities and we think starting now will get us in a position to close some strategic deals in 2021 very important component of our overall business strategy as we talked about on many calls we've done quite a few tuck ins in three years, we still think that strategy works for us.
Yes, we'd like to do bigger deals.
It may or may not developed because of.
Struggling balance sheets, and 2021 coming out of this pandemic. So we're going to focus on the tuck ins first and then look for these big strategic opportunities certainly with a focus on the US continued focus on the us.
Continued focus on waste water treatment, because it fits our vacuum truck business well its type of industrial customer that we like to call on so really nothing has changed we just think the opportunities will begin to develop in 2021 way to get after it now.
At it and last question for me I know it was a fairly small acquisitions, but I'm just curious on that coded 19 service revenue stream.
Is that showing signs of.
Contributing in any.
Somewhat meaningful fashion in the current quarter of that or how should we think about that.
I don't have.
Quarter to date information right at my Fingertips, Jim, but I would think you can basically you know look forward and whatever your forecast is for you know to return to work approach would be the way I would try and forecast what this business would do personally I think is there's more education around the virus how.
How long it lives on certain services, we're not planning on this growing much more than kind of around where I sat and if it does if its way bigger than fantastic. It's a way to help keep our people engaged and obviously offset the headwinds from the other lines of business lot at low.
Lot of people in the business, Jim I mean, our focus was to protect their client base really we want to make sure. Our customers are taking care of and can get back of work and we want to be the wants to help them.
I'm sure that it makes sense okay. Thank you. Thank you.
Our next question comes from Canada, Sankey with Barrington Research Your line open.
Hi, Kevin learning, Kevin Hey, good morning.
Hey, So I wanted to ask you start off by asking about your expectations for the environmental services.
Operating margin third quarter, you said I.
I believe two to three percentage points better.
Then the second quarter, what or how should we think about that improvement incurred occurring is it because you said.
You know maybe revenue decline will be slightly less are you taking up more cost what's kind of driving that expected improvement in the all all her Tom I'll offer a little commentary, let more give more detail if necessary, but yeah, it's driven by both a slight uptick in relevant to which we talked about.
And a full effect of the cost reductions obviously.
Pandemic happened and started really in earnest in March April and we.
Worked on our cost reduction plan to cost weren't pulled out of the system until mid second quarter. So it'll be the full effect of the cost reduction so little bit above yeah, I can't I have not nanda perfect.
Okay. Good and then you called out.
Ah severance in bad debt.
Ah impacting the corporate as she any expense is there any way you could.
Quantify that impacts so we can kind of getting 90 of you know what it was in the quarter in what we might expect for an up next couple of quarters, if those items will be.
Impacting going forward as well.
Yeah, we're not Oh go ahead, just from a color standpoint, we're not expecting any additional.
Severance or meaningful but that changes for Q3 human absent.
Failure of a customer.
Forecasting that yeah severance in its kind of area the backup our our press release it was.
A little over 300000 in the quarter.
Specifically.
And then that bad that I can follow up with young I meant detail.
Okay.
Thanks, and then.
You mentioned you started to see some pressure on.
Used oil collection charges given commodity prices are rebounding.
What's the state of that the competition. There in terms of you know used oil collectors, a that you would think they're under pretty significant pressure.
Given the current environment also.
I am low 2020, you know what.
Are you seeing any competitive failure is there any less competitive pressure overtime I mean, whats you know what's the outlook there in terms of the competitive pressures on collection charges.
Yeah, I think our comment on on pricing I mean, obviously, we have corporate accounts or that's index to the.
Commodity itself, so that that's going to drives some of the price change for.
He is Motorola what we're certainly seeing a lot of the smaller third party. He is Motorola collectors under pressure, there's not a robust or AFFO market at least.
This time of the year certainly in the winter, there's more opportunity to move our AFFO, which is why our phone is ringing and then our supply has has increased quite a bit from.
The wars.
Hi frame in the pandemic, so we feel pretty good about supply and yes, I'll take the you know the streets fairly stable.
As of right now absent any meaningful commodity price change I don't expect to see.
Much.
Deterioration in our charge for oil over the next a couple of periods I Kid.
As you know oil is so volatile I'm not going to go beyond that certainly near term, we feel pretty good abele.
Competitive pressures and pricing being relatively stable over the near term.
Charge for oil, but just just to be clear you know we have seen some deterioration from our weighted average for the quarter. So.
The trend was.
Downward on on our charges and as.
Price of crude goes up I mean, obviously, that's going to impact our corporate pricing structures.
Okay got it just following up on a year M&A activity.
What's kind of what's most attractive to you.
In this environment.
In terms, the environmental and building out the environmental services footprint if you.
You know are able to provide any color on that at all.
I think.
I can talk to a generically I don't really want to spell out what were looking news a lot of competition for acquisitions already but as you know, we really want to focus on the environmental side of our business.
You know drawn collections drum waste management wastewater treatment.
Light field service type companies that don't and are not asset heavy that fit with our small to midsize industrial customer base anything you know back truck companies that service those types of customers. So we're really focusing on the customer and then looking for acquisitions that fit.
In terms of what they do historically.
Yeah, that's something we've always done Kevin you know, we try and leverage that that customer base that we already have that's one of the.
The key pillars that for you and just general screens are high level screens of opportunities so that that has.
That doesn't change and then we need we need density out west as we've talked about on a few of our phone calls.
Trying to build up our branch network capabilities in the western half of the U.S.
Right. Okay got it that's that's helpful. Thanks for taking the questions.
Thank you they said Kevin.
Thank you ladies and gentlemen, this concludes today's comments Oh. Thank you for participating you may now disconnect.
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