Q4 2020 Unifi Inc Earnings Call
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Ladies and gentlemen, thank you for standing die and welcome to the Q4 Twentytwenty unify Inc. earnings conference call.
At this time, all participants are any listen only mode.
After the speaker presentation, there will be question and answer session to ask a question. During this session. You want me to press Star one on your telephone keypad. If you require any southern assistance. Please press Star then zero.
I'd now like to hand, the conference over to your Speaker today, AJ Eckert Vice President Finance. Thank you. Please go ahead.
Thank you operator, and good morning, everyone on the call today is now carry executive Chairman and Eagle Chief Executive Officer, Tom Coburn, President and Chief operating Officer, and Craig <unk> Executive Vice President and Chief Financial Officer. During this call management will be referencing a webcast presentation that can be found a unified dotcom and.
Clicking the fourth quarter conference call weight management advises you that certain statements included in today's call will be forward looking statements within the meaning of the federal Securities Law management cautions that these statements are based on current expectations estimates and or projections about the markets in which unify offerings. These statements are not guarantees of future performance and involve certain risks there.
Nickel to predict actual outcomes and results may differ materially from what is expressed or forecasted or implied by these statements. You are directed to disclosure is probably the FCC on you'd find forms 10-Q NK regarding various factors that may impact. These results also please be advised that certain non-GAAP financial measures such as adjusted EBITDA adjusted net income adjusts.
As adjusted working capital and net debt maybe discussed on this call lastly, please be advised the in consider is Oh I'm sorry in consideration of could 19 safety measures. The speakers today are utilizing multiple telephone line efficiency for this call may be impacted I'll now turn the call over to out Gary.
Well good morning, everyone and thanks for joining us.
I'm going to use for my remarks are going to use slide three in the presentation is a bit of a backdrop for my comments. So I'll start by telling me a little bit about the first three quarters of fiscal 2020, we feel we're progressing extremely well prior to the economic shutdowns from growth in 19, it's happened it coincided at the beginning of.
Our fourth quarter, and we made very good progress on the four big priorities that we identified last summer.
Those were a terrific growth in our Asian business, which is that asset light model and we began to pick up market share and sales in North America due to the anti dumping regulations that we spoke about quite a bit and finally began to materialize.
Repreve continued to have momentum from our customers since they were very focused on their E.S.G. goals.
We continued our cost reduction measures successfully so that's the status going into Q4.
And at that time was the beginning of the crisis pandemic in apparel and automotive customers either shut down or were significantly curtailed operations at that time.
And then we saw a corresponding significant drop off in sales and it negatively impacted our operating income as well.
So with all that going on our team decided lets control what we can control and our management team took on the task of protecting our liquidity and also prioritizing cash generation.
And I think they did a very good job with both of those the sale of our share of the Parkdale joint venture allowed us to pay down a significant part of our debt we generated cash during a quarter of significantly low demand and we reduced our operating costs and we took down inventory levels. So all of these moves I believe we're going to set.
So for us, becoming a stronger company wants the cold it ends.
Now while sales were hit hard we have seen sequential improvement every single month. Since March April was the low point may improve from April June better than May in July was the best and even the first two weeks of August have seen another improvement, but it's difficult to accurately forecast how fast things.
On to come back as far as the topline goes because of the uncertainties are the pandemic, but we're very confident that we're going to be able to get the topline and profit momentum to return to the momentum that we had through the first three quarters of 2020.
The last thing I'll say is I feel very good about strong team that we've developed at unified since last summer. Some of you may remember, we went through quite a bit of change.
In September we had Craig Korea toward joining us and he is doing an excellent job in a short period of time.
And Eddie Ingo has joined US on June 15.
As our new CEO.
And his return to unify has been applauded by all of our people and it's not like we Havent new CEO. He has a 30 year background at unify which is really coming in handy already.
And with all this going on Tom Carter Cobble is retiring he's on the phone with US today it will be answering some questions, but he is retiring after an exemplary 40 year career at unify but we get a chance to hang onto Tom for some time to take advantage of his experience and wisdom for the next year.
So I believe we're very well positioned for the future and I'll turn it over now to our new CEO Eddie angle to take you through some of the materials.
Thanks, Al and Hello, everybody.
I'm very excited to be rejoin unify at such a pivotal and unusual time at the company.
And then in the short time that I've been in the office I've already settled backend and orientation that.
Obviously, I know, so well kind of quality, we connected with the leaders in my friends and colleagues.
It's almost like coming back on.
I'm very grateful for the supportive handover of the range by Tom and his continued support for me as as a CEO of the company.
Well the last couple of months.
How many people widened high return and our turnkey unify.
Basically because of my stead path leaf people.
Its innovative mindset and into core value the everything we do here at unified before they could have tomorrow.
Among other things prior to leaving unify I was heavily involved in the process of introducing.
And growing our sticking to your performance fibers repreve.
And today more than ever.
I believe sustainability is the cornerstone have unifies future growth.
And our innovative culture. It makes us the partner of choice for leading global brand around the world.
Seeking to meet their own sustainability goals.
A unified would take pride in our efforts to eliminate waste and waste of resources and we'll continue to invest in expanding the reach of our innovative sustainable solutions.
Now why this pandemic has created much uncertainty I am confident.
And one of unifies core strength and that that is the ability to adapt.
Over the 30 years I've spent with the company had seen our people to just to changing markets and very difficult circumstances.
And then every instance rise to the occasion.
Time, and time again are keeping a proven their resiliency.
And adjusted to evolving market dynamics and history shows that after every crisis, we come out stronger.
And it is because our people effects of old nimble and I've learned like I said had with that.
I can see from our Q4 results, which Craig will describe in detail next set the cobot 19 pandemic resulted in a 52% drop in sales.
However, we see this is a temporary situation and there are many reasons why.
First the consumers are rapidly adapting to the new normal.
And in certain end markets are ignoring the pandemic and utilizing their new cash reserves to buy big ticket items.
A prime example, this is the bounce back in the U.S. car sales, which were down around 35% in April.
And 5% in May but June 2020 sales peak June 2019 sales.
During this period the automobile inventories grew and then quickly dropped to normal levels as a result at the closure of plants.
And we hope that there these are signs of stabilization in the industry, but of course, we will continue to monitor these developments with our customers.
In addition in this market we are seeing renewed interest in some of our new innovative yarns made with the pre.
As each automobile company tries to differentiate themselves in the markets.
This is very much driven by innovation.
And the disruption caused by the electric vehicle markets, where new brands have shown that things can change the auto industry much faster than anybody ever thought possible.
And that surprisingly is translating into new demand for sustainable offerings with a plus one performance or aesthetic benefit.
Through this crisis unify has been able to deliver on the most arduous of performance for Christmas incorporated into our Repreve yarns and I'm pleased to note that already in July we've experienced an increase in our pounds sold into the automotive market.
The second point I'd like to make is that consumers are finding new ways to buy products, especially in the sports apparel and footwear.
With most retailers and brands reporting record online sales.
We've seen from the financial results of the leading sports and apparel brands that they too had a difficult June quarter.
However, there sentiment around a rapid recovery that sales volume.
At the beginning of July we restarted our operations in El Salvador, and once again began servicing the we opened branded apparel central American markets from that facility.
We also saw the demand both in China, and Brazil, beginning to call the way back towards pre cobot levels and we are assuming that this is driven by the brands beginning to fill the supply chain.
As the consumer hated it gets back to business.
Third point I want to make is in the area personal protective equipment or PPD.
In the U.S., there's no drive to go the stockpile of PPD some of which was led by the U.S. government have however, much of it was also driven by the private sector.
While the first round of government programs are coming to an end the production cycle.
There are additional beds being offered to the market as we speak.
And we're expecting our customers to when many of these programs, which should in turn benefit unifying.
From the April July period, just to give you a bit of color, we estimate that 10% to 15% of our north and Central America revenues were coming from some form of public or private pp programs, which is up from an estimated 2% to 3% pre covered.
Fourth point.
That has been a commercial focus of ours is a non on business.
They're not in business was impacted more cities on our polyester business. However, we did see some bright spots in the pp market also.
Many of the protective reusable mask sold in the market, having made using on them and we were quickly able to supply that new markets.
We also saw some benefit in the medical markets, if textured not uncovered not on yarns go into.
It comes as no surprises that our ladies hosie business slowed down considerably during the quarter, a social gatherings were reduced weddings council than many of the opportunity to where ladies hosiery disappeared.
This was offset in part by increasing our stock markets and in July we've seen a slight increase for some of the apparel and footwear market to not on business held consume.
And looking back several years.
As a non on market decline some would say the not on power market has been starved of innovation and wherever there is a growing interest in our pre not an offering both in the U.S. and in Asia.
And I believe this is an indication of the consumer brands remembering the softness and strength of the OCC not on yarns that make them an ideal next skin products.
The last point that I want to cover is around the consumer experience for the April to June period.
When our customers, where the most fearful of the health of their business their employees and their customers, we stood by them and our team delivered at customer experience for the second to none.
I'm proud of our people for not getting distracted netting our own equally different environment environment impact, how we treated our customers because that I'd like to publicly sanction.
Like most companies are visibility beyond the near term that being the next one to two months remains restricted.
We are focused on controlling what is within our ability.
And as Al has already pointed that naturally we have reduced costs, where possible, ensuring we have ample liquidity as well as a strong balance sheet to whether these uncertainties.
Visibility of volumes for our Q2 in Q4 period as narrow but based on the recent uptick in volumes that we're seeing and the published reports from some of the brand.
Along with the belief that a vaccine could be available in the next six to nine months. We've seen a reason why our run rate per revenue and profitability should not returned to normal pre cobot levels by the end of our fiscal 2021.
We do expect it to be a steady uphill climb as we move through the fiscal year, but we had the right balance sheet to protect us should the demand flip for some reason through this terrible events.
And with that I will turn into the color with Craig. Thank you.
Thank you ready and good morning, everyone like the rest of the team I'm excited to have Eddie at unify and look forward to growing the business together.
Is that you noted and as we forecasted in our call on May Onest 2020. The cobot 19 pandemic has had a significant impact to demand around the globe and for the textile industry and especially apparel.
In this environment of stifle demand our U.S. operations are challenged by lower fixed cost absorption butter model in Asia proof strong through with agility.
Alan maybe provided a great overview of fiscal 2020, and I would like to add just a few thought.
Our efforts in fiscal 2020 refocus on improvements over fiscal 2019, which included a lower as she may run rate better raw material cost environment in the first signs of success from our recent trade actions.
Fiscal 2020 was shaping up to be a great year from income statement perspective until demand and economic activity drop quickly due to the covered 19 pandemic.
Despite the Pandemics headwinds, we generated significant operating cash flows in both the fourth quarter and the full year of fiscal 2020.
We've been drilled down that that even further with our divestiture of part of the Parkdale America business.
Although we described this transaction in our last earnings conference call. It closed during the fourth quarter and is reflected in this quarter's financial result.
Lets walk through that transaction briefly on slide five.
We received $60 million in cash improving our net debt by the same amount in Q4, and we apply at approximately half of the proceeds directly to debt pay down.
The proceeds from this transaction allowed us to eliminate all borrowings on our eight Palmer.
With this transaction completed we can focus our full efforts on expanding our leadership position in recycled and synthetic polyester and nylon fibers are providing additional flexibility and liquidity for both long term opportunities and short term needs. During this pandemic.
While our joint venture relationship with Parkdale incorporated has seized after 22 years, we continue to have other business interactions with Parkdale incorporated.
On slide six I will provide an update on our liquidity position.
[noise] compared to the end of fiscal 2019, our liquidity position has improved substantially as noted by the phone.
The ABL revolver balance was recently reduced to zero.
Total debt principal fell below $100 million.
Cash and cash equivalents rose to $75 million.
Revolver available availability was $56 million and we have not requested any changes were concessions to our debt covenants or payment terms.
This all resulting in net debt position below $25 million level and seen in many years and liquidity in excess was $100 million.
After strong operating cash flow generation and the Parkdale divestiture on June 28, 2020, approximately 54% of our $75 million of cash were held by our domestic operations.
This improved from zero percent at the end of fiscal 2019.
This provides us reserves for weathering the rest of the economic uncertainty surrounding pandemic.
Now I'll turn to slide seven of the presentation and review the net sales performance for the fourth quarter.
Consolidated net sales declined from $179.5 million in Q4 fiscal 2000 $19 million to $86.1 million for Q4 fiscal 2020 at 52.1% decrease almost entirely a result, stifle demand for textile products independent.
Polyester segment experienced a revenue decline on 46.2% primarily attributable to lower volume, including a price in sales next decline of 16%.
The average selling price decline primarily follows the year over year decline in polyester raw material costs.
The Asia segment experienced a revenue decline of 49.7% of which 50.8% was attributable to lower sales volume. However in had strong pull through on settlement programs during the fourth quarter driving a sales mix benefit despite lower polyester raw material costs.
The Brazil segment experienced to start decline in economic activity. During the June 2020 quarter, along with heavy foreign exchange pressures generating an overall revenue decline at 72.8%.
Lastly, the nylon segment experienced a 56.6% revenue decline.
We note that both the nylon segment and the polyester segment benefited from fabric face mask and down production or many customers. However, this pp demand was not enough to offset the decline in overall global apparel.
Finally, we will discuss gross profit performance.
Consolidated gross loss of $9.5 million in fourth quarter fiscal 2020.
Was due to a significant significant decline in demand, which led to the fixed cost absorption for our capital intensive operations in the U.S. in Brazil.
Conversely, the Asia segment demonstrated strength and agility in that region contributing positive gross profit.
Even though we quickly took numerous actions during the just completed quarter, including rolling production curtailments in the rest in Brazil, as well as temporary and permanent human power reductions. These actions could not overcome the full financial impact of volume reductions.
The polyester segment was impacted the most from cobot 19 as is the largest and most asset intensive segment.
When production volume decline declines and levels, we experienced in Q4, some cost can no longer be allocated in summary, therefore cost of sales increased at a higher per unit rate compared to a normal production period.
Polyester segment, Accordingly reported a gross loss of $9.4 million.
The Asia segment showed strength in the quarter.
Although sales volumes were significantly reduce the segment experienced a richer sales mix with greater filament pull through.
The Asia segment achieved gross profit of $2.3 million.
For the Brazil segment margins decreased as demand fell with a local economy in gross profit was zero point $2 million.
Lastly, nylon segment was impacted similarly to the polyester segment as to the low sales volumes in Q4 did not allow for adequate fixed cost absorption, resulting gross loss of $2.5 million.
I'll now pass the call back end to discuss our transition to reporting Repreve fiber sales on slide nine along with our assumptions for fiscal 2021 on slide 10.
Thanks, Craig.
We spent a great give time educating everyone on the value of we're pleased.
And how it aligned so many sustainability goals present today.
I will state area I was integral veining were paid to life with the team more than a decade ago.
Spent much of my prior Tony if I, establishing the brand the supply chain and its growth.
But in an effort to better align our reporting of sales growth. We're pleased we're transitioning from reporting to proportion of premium value added or PVA sales as a percentage of consolidated revenue to reporting the proportion of a pre fiber sales as a percentage of consolidated revenue.
As you know unify has long been a textile hybrid leader and reporting repeat fiber sales are that allows for better tracking against our goal of growing the global share of the previews in apparel and on the other end markets.
Slide nine provides the current and historical view of a pretty fiber and PVA sales percentages.
Now turning to slide 10 of the presentation.
As we look ahead.
It is important to understand the medium to longer term underlying fundamentals that drive our business remain in place.
Barring no significant government shutdowns, driven by a rise or resurging in pandemic activity.
We believe that the near term should exhibit the following.
Secondly, we will have pressure on immediate sales and profitability given the slow rate recovery in our core end markets.
Quarterly growth to be in line with most of our end markets we.
We do anticipate quarter over quarter sequential improvement in our results for fiscal 2021.
And working capital to naturally increase as a recovery takes hold.
Looking past the pandemic and more long term, we believe sustainability is here to stay.
And the current environment will accelerate these trends are they going to generation demands accountability.
We expect repreve to grow globally as companies work to meet existing and new sustainability goals.
We already support the world's leading progressive brands and we continue to have daily conversations with potential new customers, but recognize the immediacy of the situation.
The benefits of agreed.
As Craig mentioned, our recent trade actions currently in place.
It should provide benefits to sales volumes and cost absorption in the U.S. for an extended period of time.
We believe the sum total of these concepts should view returned to growth by the end of fiscal 2000 to anyone.
I am incredibly pads, we backed unify and look forward, leading this company towards achieving its growth potential.
We have the right team the REIT focused at the right footprint in place to drive long term growth and shareholder value.
Im looking forward to taking advantage of the opportunities that lie ahead for all of us. Thank you.
Finally, we will now open the lineup for questions.
At this time, if he would like to ask your question. Please press Star then the number one on your telephone keypad.
And your first question comes from the line, Dan Moore with CJS Securities.
Hi, Good morning, it's actually lead you go to for Dan.
Hello Accordingly.
So just starting can you walk us through on both the polyester side and maybe on the Asia side, just the cadence of volume declines in the improvement you saw in April May and June and maybe now into July and then just following up on that.
You know how far below pre pandemic levels from a volume standpoint are we in July versus you know again prior.
Now I'll take that question. Thank you.
You know as Al said in his script, we did see significant.
Shortfall in revenue in April that was our worst month and as we went into may it improved.
In June it improved and of course, we've seen in improving in July. So every month since April we've seen a significant proven enfinitas, it's been across the board I can point to the three regions that we sell into.
I'll start with Brazil, because that was down in the most at 73% as Greg pointed at.
We're seeing that business bounced back to I wouldn't say normal levels, but and much closer to normal Evans, we'd expected and four or.
Simple reason invested.
The volatility in the exchange rate scared off in the traders and we were being local able to supply the increase in demand that occurred when the retail environment opened backup in Asia as particularly in China. It passed the pandemic and business. There has returned back to normal Thats why you so our gross.
Profit.
Much stronger than than any other region and we're seeing the volumes of course, they are down but.
They are also coming back in July is significantly better.
On June in that region also.
Now turning to the U.S. we have.
Two parts of that business.
We have U.S. and we have Central America as I said in my statement Central America much of Central America was shut down throughout that April May June period, and we saw in July a huge increase in our revenues there and it's it's been driven from our facility out of Central America, We had been shipping some yarn.
Central America from U.S., but with our El Salvador plant opening backup again.
And the demand opening up as the supply chain.
Needing to be failed, but the power brands down they.
So a big bounce back so hard to give you exact number but if we.
I would say.
Going into August we expect always to be slightly better than July and don't really have much visibility yet in September but certainly it's positive. Thank you hope that answers your question.
It's very helpful. Just I am just following up on that I'm, assuming that August does shape up incrementally better than July and I guess for ease of discussion, let's assume that volumes in September stay around the office August level is that enough volume to get you back to you.
Breakeven or above or do you still need improvement to absorb more of those fixed costs.
Lead this is Greg I think.
I think any property framed it up pretty well I think we see what's ahead of us for the next few weeks I think the wildcard in that is the September but again, all signs continuing to point out positively.
We definitely feel like we will make significant strides forward relative to the quarter. We just completed which again was a combination of obviously the lower sales, but as we mentioned both in the script and also in released today, taking on some of those additional costs and not being able to absorb them or put them into inventory.
So we think that will continue at these lower rates at least through the we believe through the end of the calendar year.
But we definitely will make progress and I think it will really come down to that last month of the quarter figuring out where we shake out and how good how good of an improvement over this quarter Q1 about my 21 it.
Okay Fair enough one more for me and I'll hop back in here, just Eddie from more of a strategic high level perspective.
Once the pandemic kind of gets passed us and we get back to some sense of normalcy what are the things on your list of things that you plan to do differently or better or.
Then predecessors to make this thing a better business.
Thanks for that question, let me answer that by personal attending a bit about who I am.
I am in numbers Guy, but I'm not here on this call to talk about the numbers Craig did a fantastic job thats.
I'd like to described three different points.
I do have a growth gross mindset I wasn't brought back in to maintain the business. So you will see over the coming years as we look to the future surfing the opportunity to grow we're going to take any opportunities defined and much of those opportunities where the organic although there may be some M&A down the road, but first of.
Well I'd like to stress, we are a company that's going to grow.
The second point is that.
Innovation is at the core of unify we are a technical company.
Curious company and my mindset to fit into that.
We've seen.
Our business grow not because we are growing commodities that recurring technical solutions given solutions to our customers.
And for the last point I'd like to make for me personally is people development.
The.
Companies say people make a difference and in our company certainly is true.
And we will be investing our people in the coming years to make sure they reach their full potential and all those three things growth innovation people development. It's all going to be focused on one thing and that is for the good of tomorrow as we'd like to say it uniquely.
We want to grow this business, we want to do it in a profitable way value creation and give value to our customers and we're going to do that through the team that we have.
Thank you.
Thanks very much.
And again to ask your question. Please press Star then the number one on your telephone keypad. Your next question comes from the line of Marco Rodriguez with Stonegate capital.
Good morning, guys. Thank you for taking my question.
Hey, Mark.
Hey, I was wondering if you guys can talk a little bit about.
The.
Strategically reduced cost that you maybe tech taken out here in this last quarter.
If you can maybe talk through where those costs kind of came out by by segment would be I would be helpful.
Sure.
Good question Marco I think it really was a combination of several things I think there were some both temporary cost that needed to be taken out.
As we talked about.
We were able to do some rolling outages as customer demand.
Dictated at various sites, we have the benefit of we did not need to really completely cut to shutdown any sites here in the U.S.
We were able to take that we're strategically piece by piece grew by group Department by Department line by line and think about it that way and really it's a credit to not only our management for being able to pull that off at our workforce to be flexible in that regard we did have to make some permanent head count reductions as well and we.
We just feel like that was necessary for the level of business that we were at not lot of discretionary reductions as well.
Obviously doing things that we need to do to protect the balance sheet and too.
On to reduce discretionary spending some of those happen naturally because people weren't traveling as much some of them took more effort and.
Some discretionary things around and I would say finally, we also then I know, it's not an expense direct expense item, but we also took a more conservative approach to our capital spending during his just completed quarter. We had we did invest in areas we needed to be we kept those focused on maintenance.
And safety items and I'm not only did that help us as we ended F. why 2020.
That sets us up nicely for not having a lot of the projected capital that we noted in the press release that for F. By 21 22 million. It is definitely more in the second half of your rather than the first half I'm going ask Tom Carter to add some comments to two that from for for a better answer Marco. So go ahead Tom.
Marco we were very careful as well.
We do not impair our ability to service our customers.
Through these efforts.
But we did we took on significant cost across all areas as a company in the.
We are able to.
Maintain all of our facilities here in the us running and able to meet our customer needs.
We were very fortunate in that regard and.
We feel very.
Now the factor we're here to service our customers throughout this band then.
Situation.
Got it very very helpful.
Maybe you can discuss a little bit of some of the dynamics between the retail customers.
Presumably obviously.
As a very difficult quarter for everybody involved just given the fact that.
A lot of the brick and mortar places where shot.
Before pausing, maybe some of their spending obviously it sounds like that is hiring to come back for you guys, but just kind of wondering.
Based on the conversations you're having with your closing clothing retailers.
How does the pricing situation kind of looking are are they is trying to extract more pricing pressures from you guys are are you.
As you willing to work with them because they're yet are important clients. It just any sort of color around the pricing dynamics would be would be helpful.
Yeah I'll take that.
Thank you with a question.
It is interesting noted.
Much of the retail environment the shutdown during the period of April May savvy about open back up in June for many states in the U.S.
Of course, China opened up much before that and Brazil started opening up in July so.
The at the same time as I said in his script.
As all of US do we shop more online and that sort of opened up some of the opportunities to consume also.
But going back to your question on pricing, we we have actually I'm not had a lot of pricing pressure right now people have been.
Really really supportive of.
At each other in this environment and I'm sure.
It's going to happen, but right now everybody is focused on making sure that they get product they need when they need it's more than anything else and we as Tom said, we've been there too to supporting.
But the pricing pressure has not.
In an issue right now thank you.
Got it and then maybe you can maybe talk about I mean, I understand that you've been triggers for a little bit of timing and.
I heard your answer to the prior question in terms of your.
Sort of your your background your outlook, but are there any savings that you might be looking at from a sales and marketing position to maybe do something differently when marketing were pre.
Yes, thanks to the question.
We we've been on the repeat journey for for over a decade, now and one of the things that keeps on coming up and it's come up actually more voracity in the last couple of months and that is around the circular economy.
And you will see us invest in developing solutions circular solutions for the brands. So they can.
Take more that product can put it back into the system. We've had a text I will take back program for quite some time and I expect if we can.
And we developed that further it will add another layer of defensibility to the Repreve brand and also.
Provide another much needed solution for the brands. So you can you'll hear more about that I won't go into a timothy toward you, but expect that.
Down the road.
Broken answers your question.
That's helpful. Thanks, and last quick question.
Just from a cash flow perspective for fiscal 2001 can you maybe kind of walk us through your expectations and assumptions for cash flow from ops, and then maybe free cash flow.
Yes, I think we are Marco.
We realized that we did take a lot of costs out of business, especially in the second half of a fly 2020.
We will need to find the recovery of our customers by increasing our investment in working capital.
Specifically in accounts receivable. So we expect that to grow has the sales growth returns. We are continuing to keep up our focus in bigger are around keeping our inventory levels at a at a better level and we think we've achieved a lot and what we have some room to improve yet as we.
Enter into effort by 21.
I think it's a period, where we are.
You are going to continue to be careful with.
Working capital investments broadly speaking and I think overall, we're expecting it to be a.
Good cash flow period.
It's a period that we are as we look out into EPS by 21 at least on the near term horizon, We don't see any see bombs that would need us to.
Take advantage of additional liquidity or credit that we have we like the position that we have.
We like having nothing borrowed on revolver and at least in our review it looks like.
At least for the next few quarters at least we should be able to keep that so I think you can expect us to continue to.
Generate good working capital we're very very.
Good in F why.
20, with generating $53 million of of cash from operations, keeping a capital spending it at a reasonable level. So I think we're looking at all those factors and expecting that we should continue to some of the good trajectory that we exited.
And we should have as we go into half by 25 21 answered by 21, we should continue some good things that we didnt up by 20.
Hi, Thanks, a lot guys I really appreciate the time.
Thank you.
Marco.
And again to ask your question. Please press Star then the number one on your telephone keypad again, let us start that may number one.
And there are no further questions.
At this time I would now like to turn the call back over to management for closing remarks.
Thank you branding with no further questions, we would like to thank everyone for participating today. Our next earnings release for the first quarter fiscal of September that ends September 27, 2020 is tentatively scheduled for Monday October 26, 2020 after the market.
The conference call to follow the next morning Tuesday October 27, 2020 at 830 Eastern time. Thank you for joining today's call.
This concludes today's conference call you may now disconnect.
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