Q3 2020 Ampco-Pittsburgh Corp Earnings Call
Part of me, ladies and gentlemen, this is the conference operator, the Ampco Pittsburgh Corporation call will begin momentarily and we ask that you. Please continue the whole again todays conference will begin momentarily. Please continue to hold thank you.
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Good day and welcome to the Ampco Pittsburgh Corporation third quarter of 2020 earnings results Conference call Conference call.
Participants will be in the listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero. After todays presentation, there will be an opportunity to ask questions to ask the question. You May Press Star then one on the Touchtone phone to withdraw your question. Please press Star then two please that this event is being recorded I would like now.
The conference I've heard of Melanie Sprouts, and Investor Relations. Please go ahead.
Thank you, Matt and good morning, everyone joining us on today's third quarter 2020 conference calls and.
And by Britney Greer, our Chief Executive Officer, and Mike Mcauley, Senior Vice President and Chief Financial Officer, and Treasurer, Oh, the joining us on the call today are Sam Lyon President of Union Electric Steel Corporation and carried Penny President of Air and looking for for the Corporation.
Before we begin I would like to remind everyone that participants on this call may make statements or comments that are forward looking and may include financial projections or other statements of the corporation and plans objectives expectations or intentions. These matters involve certain risks and uncertainties many of which are outside of the corporations control.
Operation of actual results may differ significantly from those projected or suggested and any forward looking statement beauty for variety of factors, including those discussed of corporations. Most recently filed 10-K and subsequent filings with the Securities and Exchange Commission.
We do not undertake any obligation to update or otherwise release publicly any revision to our forward looking statements.
A replay of this call will be posted on our website later today the access the earnings release for the webcast replay. Please consult the investor section of our website and Amco P.G.H. dot com with that I'll turn the call over to Britain, and rare Ampco, Pittsburgh CEO right like.
Like the Melanie good morning, and welcome to our call.
I'm proud of our team and the work that caught up with some of the past quarters each of our businesses continue to execute ours teach you can this.
The work is even more impressive when you take into account the geology of schools each of our business and have faced with the global pandemic.
As I've stated previously the health and safety of our employees or at the forefront of everything we're doing.
The onset of COVID-19 has introduced the new risk and to our businesses and.
We're taking extraordinary steps the safe guard, the well being of for our employees and their families.
For customers and suppliers and.
For those and the communities where we operate.
We continue to make positive improvements toward the goal of an injury free workplace as we choose the lowest lost work day rate for the year and the third quarter.
As we did and the second quarter this year.
We initiate the plant shutdowns and furloughs to meet the reduced customer demand experienced in the forged and cast and your product segment.
Our air and liquid processing segment also completed the outages during the quarter to perform proactive maintenance.
We remain relentless and our efforts to improve our efficiency and cost structure to further grow our business.
Our team members continue to identify and attack new opportunities to celebrate our progress.
I want to thank all of our employees for their outstanding work during this challenging period.
We reported of positive earnings per share of seven cents per diluted share of for the third quarter. Despite the impact of the COVID-19 pandemic.
On end market demand.
As the result of our equity offering completed during the third quarter, we raised $19.3 million and gross proceeds of allowing us to improve our balance sheet and began our capital improvements to further consolidate our manufacturing footprint.
And once again, thank our shareholders for your support.
Our debt to capital ratio have from December 31, 2019, and our total debt was reduced by 54% or $38.3 million.
Our strength and balance sheet and significant liquidity and the operating leverage has ampco Pittsburgh well positioned to respond to a recovery of our end markets.
I'd now like Terry Kenney, President of Air and liquid systems, and Sam why President of Union Electric steel the share of the improvements and their segments performance Terry.
Thank you Brett.
As we have mentioned before the health and safety of our employees remains a major focus I would like to recognize the employees at the Aerafin Division and at Buffalo pumps, the vision for having zero Osha recordable injuries during the third quarter. Thank you for your efforts.
Unfortunately, we had for Osha recordable injuries, and our Buffalo Air handling division in the third quarter I am pleased that all for employees returned to work immediately after receiving minor of medical treatment.
As always we conducted detailed investigations of these accidents and have put in place procedures and process changes to reduce the possibility of these injuries occurring in the future.
The air and liquid processing segment third quarter sales were below the prior year. However, operating income approximated that of the prior year as the result of the favorable product mix and successful process improvement efforts and all three divisions.
On the year to date basis sales for the segment, our 2.6% below prior year, while income from operations. Our is our 4.3% ahead of 2019.
Orders received for the third quarter were strong for custom air handling equipment and specialty centrifugal pumps, while orders for custom heat exchangers were negatively impacted by the effect of cobot, 19, and commercial and industrial building utilization.
The backlog is good for Buffalo Air handling and Buffalo pumps, with some softness experienced and the Aerafin Division.
We continue to concentrate our efforts to and improving our efficiency and all aspects of our businesses, while providing quality products to our customers.
I would like to take this opportunity to thank all of our dedicated employees for their hard work during these trying times.
Thank you Terry I will now turn the call over the Sam lie and Sam.
Good morning.
Our focus has remained consistent for the last two quarters for.
First I would like to recognize our Slovenia or Valparaiso, Indiana operations for.
Keeping zero lost time accidents year to date.
Our overall recordable rate ticked up in the third quarter of remains lower than 2019.
Our number one focus will always be the well being of our team members.
We continue to be highly focused on our liquidity and of had great success here, which Mike Mcauley will cover in more detail shortly.
We have challenged our teams to reduce the inventory to levels not seen for many years our.
For weekly team meetings review, our inventory positions receivables and payables.
I personally sit on the biweekly calls with each sales associate through the past due receivables and drive actions for collection.
We've improved and this area year to date by over $12 million.
We also deferred capital spending by over $7 million without jeopardizing performance through improved proactive maintenance and by shifting production to our most efficient reliable equipment.
These actions have resulted in strong cash flow for the business.
Our operations continue to run on a reduced.
Hi, Joel with the ability to be flexible when demand increases.
Government programs of the UK, and Sweden, and been able to keep and people employed so that when demand returns production can be ramped up easily with little training.
For the U.S., we adjust our work scheduled to align with the man by taking out for weeks of production, rather than reducing staff and operating a lower daily output.
Our Slovenian plant is currently running on a four day schedule.
This operating philosophy allows us to rapidly flex our production and cost with the man.
Looking ahead, we anticipate the additional two weeks of shutdown and our U.S. plants and Q4 when compared to the prior quarter.
Our 2020 cost reduction plans for sweetener complete we're tackling our plans for 2021.
The number one focus and the U.S. plants continues to be on equipment reliability. The team has delivered over $2 million and savings and reduced maintenance spending when compared to prior year.
We have improved our proactive maintenance from about 50% and 2019 to over 75% and Q3 of 2020.
This improvement is also a pair of reduced operating costs as the outages or play and and manpower can be scheduled accordingly.
Pushing the sales I would like to highlight a few key successes.
We won and we'll be shipping the initial provisioning for the new steel dynamics sit and Texas Cold Mill and Q4.
We're proud to be a part of the state of the art complex.
We have secured orders for the first time with the <unk> steel.
We've also just received multiple orders and for the oil and gas market, which will ship in Q1.
The first orders, we have seen and several quarters.
Even though we are seeing signs of recovery from our customers due to the lead time of our products. These improvements will not be realized and our volume till the second half of the 2021.
I'd like to close by thanking the entire Union electric global team for their hard work and dedication through these difficult and uncertain times.
Thank you Sam at this time, Mike Mcauley, our Chief Financial Officer.
The share more detail regarding our financial performance for the quarter Mike.
Thank you, Brad and good morning to everyone on the call today.
I'd like to focus my comments on the current quarters results today commentary on year to date results as the available in our earnings press release issued yesterday as well as and art form 10-Q, just filed.
As for indicated the two main themes this quarter our sustained positive net income despite the magnitude of the sales contraction, we experienced growth related to the pandemic.
And the completion of our successful equity offering which significantly improved our balance sheet and enhanced our overall liquidity position.
We thank our shareholders for their participation.
With EPS of seven cents per share of for the third quarter of 2020.
Ampco Pittsburgh continued to remain profitable on a net basis for the fourth consecutive quarter.
And sequentially higher than Q2, 2020 bps, despite the negative impact of the COVID-19 pandemic on our end markets.
And of course net sales from continuing operations for the third quarter of 2020 for $75.7 million.
This compares the net sales from continuing operations for the third quarter of 2019 of $90.9 million.
Net sales and the forged and cast engineered product segment of $54.5 million for the third quarter of 2020 declined approximately 19% compared to prior year.
Principally attributable to a lower volume of shipments due to customer deferral of deliveries and the flat rolled steel and aluminum markets primarily in response to the global pandemic.
Along with reduced demand for other forged engineered products due principally to depressed conditions and the oil and gas industry.
Net sales for the air and liquid processing segment for the third quarter of 2020 of $21.2 million decreased marginally compared to the prior year.
Gross profit as a percentage of net sales was 21.4% for the third quarter of 2020 versus 16.9% for the third quarter of 2019.
The improvement is primarily attributable to the forged and cast engineered product segment.
Which is benefiting principally from a lower cost structure due to the restructuring and issued initiatives, which have been completed and implemented and lower raw material costs.
This improvement was partly offset by the impacts of lower shipment volumes and net unabsorbed costs from the temporary idling of capacity caused by the pandemic.
For the air and liquid processing segment gross profit was comparable between the periods.
Selling and administrative expenses of $11.4 million for the third quarter of 2020 declined the point $9 million compared to prior year.
The decline was primarily driven by lower sales commissions expense and the benefits from restructuring initiatives implemented.
Depreciation and amortization expense of $4.5 million for the third quarter of 2020 was flat compared with the third quarter of 2019.
The Corporation reported income from continuing operations for the quarter of point $2 million, which compared favorably to the $1.3 million a loss from continuing operations and the prior year quarter.
Prior year quarter included approximately $2.7 million and excess carrying costs of the of a more Pennsylvania cast roll facility divested and 2019 Andrew.
And restructuring related costs of of Pocs and of approximately $2.6 million.
Additionally, although the current year quarter benefitted from lower raw material costs, and reduce SG and <unk> expense. These impacts were approximately offset by the pandemic driven effects of the lower shipment volumes and net unfavorable absorption due to plant downtime and the force and cast engineered product segment.
Other income expense net improved for the third quarter of 2020 compared to prior year.
Primarily due to the timing of dividend income and the current year quarter from one of the corporations Chinese joint ventures.
At the bottom line. The Corporation reported net income attributable ampco, Pittsburgh of $1 million or seven cents per diluted share for the third quarter of 2020 and.
And to a net loss of $5.1 billion for 40 cents per diluted share for the third quarter of 2019.
Which included a net loss from discontinued operations of 27 cents per diluted share.
Here are some highlights regarding business segment results.
And the force and cast engineered product segment.
Q3, 2020, net sales of 54, and a half million dollars declined approximately 19% versus prior year due to lower volume of shipments of mill roles, both forged and cast as.
As a result of customer deferral of orders and response to the pandemic and.
And as I indicated reduced demand for other for to engineered products pricing.
Pricing and product mix for relatively comparable quarter to quarter.
Operating results for the forged and cast engineered product segment improved significantly for the third quarter of 2020, when compared to prior year.
While the segment was adversely impacted by the lower volume of shipments during the quarter the.
Current year quarter benefited from a lower cost structure attributable to restructuring efforts lower.
Lower raw material costs, and some lower commissions expense associated with the reduced volume affords engineered product sales.
And the air and liquid processing segment net sales of $21.2 million and the third quarter of 2020 were marginally below the comparable prior year period with slightly lower sales and each of the three businesses the.
The air and the processing segment's operating income for the third quarter of 2020 was comparable to prior year.
Next here are a few balance sheet and cash related items.
Accounts receivable of $56.1 million at September 30 of 2020 decreased by $25.7 million compared to December 30, Onest 2019 per.
Primarily attributable to lower sales from the market contraction, we have experienced and improved collections.
Receivables decreased $6.8 million compared to June Thirtyth 2020, due to lower sales and the current quarter.
Inventories of $78.4 million at September 30 of 2020 decreased by $3.9 million compared to December 30, Onest 2019, but.
Well the increased slightly compared to June 30 of 2020.
Accounts payable of $28.8 million at September Thirtyth of 2020 decreased by $4.4 million compared to December 30, Onest 2019.
But increased slightly compared to June 30 at 2020, consistent with the modest inventory of growth.
Capital expenditures for the third quarter of 2000 $22.7 million and our $6 million year to date, primarily for the forged and cast engineered product segment.
Cash and cash equivalents for continuing operations of $18.3 million at September Thirtyth, 2020 increased $11.3 million compared to the December 30, Onest 2019 balance.
And the increased $2.4 million compared to the June Thirtyth 2020 balance.
Drawings on the Immco revolving credit facility were zero at September Thirtyth, 2020, which is down by $34.3 million compared to the balance at December 30, Onest 2019.
The elimination of revolver borrowings reflects improved operating results and lower investment trade working capital for the year as well as the initial usage of the net proceeds from the equity offering.
Total debt at September 30 of 2020 of $32.6 million day.
Decreased $38.3 million for a 54% from December 30, Onest 2019.
And decreased $19.7 million or approximately 38% from June 30 of 2020.
During Q3, we retired a 4.1 million dollar industrial revenue bond.
And paid off the remaining borrowings on the credit facility.
At September Thirtyth 2020. In addition to the cash balance. The Corp. Also has remaining availability on the revolver of approximately $56 million.
Which is an improvement of approximately $29 million compared to availability at December 30, Onest 2019.
And we'll now turn the call back over to Bret for some closing remarks, Brett and thank you Mike I am extremely proud of the employees and the how they in the face of very difficult obstacles delivered positive results for the third quarter.
We will continue to take aggressive steps to further improve our profitability.
I'm excited about and Cook Pittsburgh's future. Thanks.
Thank you we will now take your questions.
We will now begin the question answer session to ask the question you May Press Star then one on your Touchtone phone if you're using the speakerphone. Please pick up your handset before pressing the keys. If at any time you question. That's been addressed and you would like to withdraw. Your question. Please press Star then two please limit your inquiries to one question and one follow up 10 true.
Everyone may have an opportunity to ask the question at this time, we will pause momentarily to assemble our roster.
Our first question comes from Justin Bergner with GE Research. Please go ahead.
Hi, good morning brick and mortar Mike.
Morning for money Justin.
Two questions sort of what are your expectations for Capex.
And 2020 and on the more normalized basis.
Oh, Hi, Justin it's Mike.
Yeah, we are running a bit lower the unusual we.
And now we would normally spend on it and a typical year or or if we look back to our business plan for 2020 something of the range of $12 million.
Most of which would be sustaining capex.
But you know as Sam indicated and maybe Skus and thoughts, but the Sam indicated we've been really focused on cash flow and we've been finding ways to operating equipment.
And kind of channel production to the most efficient equipment and their thereby kind of reducing our our needs. So we've been very creative.
Oh, you know up to now, especially through the period in which it prior to the conclusion of the equity offering.
The you know as we move for we have more flexibility now.
Great that's helpful and.
Oh, sorry I was.
And the.
Yes, the NAD, just and that obviously you know we talked about this and our equity raise.
In the very key step for us that we're focused on of the process of is the.
Continued consolidation of our manufacturing footprint and here in the U.S.
And with that we've initiated some activities to move is for the down the path.
Were looking exactly how that's been will play out right now, but that's something we are keenly focused on excited about.
Okay, great that actually answered my second question your additional comment there. So thanks for taking my question.
Our next question comes from David Wright with Henry Investment Trust. Please go ahead.
Yes, sorry, good morning, I I have to come and the corporation the way you've turned the balance sheet around.
The debt to equity ratio improvement and.
The increase and availability it's really.
Really helps the foundation for.
The next steps of good job there.
Thank you.
Do you have any comments on how the proposed combination of.
Cleveland cliffs, and Arcelor Mattel's, North American steel operations.
What impact if any of that has on your old business.
Yes, David this is Sam.
We don't think it will have any impact and we have very good relationships with the purchasing group that arcelormittal as well as AK steel, which the you know kind of eclipse flooded the steel prior so we don't really see.
We haven't seen anything nor do we really expect to see any impact positive or negative.
Okay, and staying on that vein, the the backlogs down on order deferrals and.
Lack of booking of new orders.
Because of the pandemic some steel lines of been shut down some new capacity speed and built.
Is it is it possible for you to characterize how much of the backlog of the backlog shortfall.
Is from sort of.
You know just a cobra and timing things versus.
Potentially from.
And we lost business.
It's the majority of its timing and and.
Hate to use the word uncertainty for uncertainty and we as a matter of fact, we're going to get the orders for.
Two of our largest while our two largest customers in the United States for Q2, and Q3 of next year.
This week, which normally we would have had the entire next year.
Understood, but they're they're holding orders until the very last minute what is happening though is that the.
The automotive businesses and the U.S. are running and over 90% of free cash flow bid in Europe for running you know.
Same or higher so there's things extremely strong rebound.
Yeah and barring a.
Stuck and total shutdown and you are for the U.S.
We're hearing favorable things.
To the order book versus what we have and our plan for next year. So we're seeing more upside the downside depending on what happens with the virus.
Okay and that kind of rules into my next question, which is obviously is the roll business is long lead time we.
We've had quite and increase and HRC prices since the beginning of the quarter.
Weekly capacity utilization for steel production goes up the little bit each week.
Is there any correlation you mentioned you got next year's orders coming in next week.
Is there any correlation between kind of short term whats happening and this market coming back from where it was and its impact on the on you getting more orders and have you seen more business. This quarter is the result of that.
For bookings.
Not more bookings, but more favorable comments from the purchase and community that you know they will need we're seeing some short term fast quarter items that we would not normally of scene and I'd say the biggest their price when you look at.
The beginning of next year the very.
The the larger rules the backup roles and more capital of tests of rules. Those orders are down one of the work rules are up so the.
That can only go and for so long, though because you have to have a backup role to actually.
Run the mill, so there's been a deferral or push out of the higher capital intensive items, but the we're seeing a rebound and the actual working role items and will be.
The squeeze one more and here.
One of the objectives of the capital raise was.
To to try to get one or two new pieces of equipment and some of those I guess of long lead times, but just is there any update on what you might be doing with that I'm, having completed the capital raise.
Oh, we're doing the.
A kind of a capital study looking at what Weve of buy and where we would actually place and but we're working with machine builders and looking at lead times and so we have a placed an order yet, but we're going down the path.
Okay. Thanks very much.
The.
Our next question comes from Brian powers with Crawford the United Please go ahead.
Thanks, Hi, Brad Hi, Mike.
And back to capital expenditures of.
The current research on the company indicates that.
Capex spending will run at about $15 million per year over the next five years.
I wanted to get some color on whether that whether that is correct and how that money will be spent the bits and your current businesses and then I've got a quick follow up.
Yeah, Brian and thank you.
I think that you are looking back at the just historical.
Capex and I think part of that is.
If we strip off the focus that we have on some.
Use of the equity of the equity raise proceeds to make some.
Very specific machine tool acquisitions and.
And just look at like kind of the sustaining level of Capex, yeah, you're right about 12.
12, 15, it bounced around but maybe average 15, we did the kind of have and our business plan something like 12 for for this year of the before we knew about co, but so we're in that ballpark.
So yeah, you're right about that but we had credit indicated we did have an ambition to not only the handle our sustaining capex needs, but also to focus on additional.
Additional investments to kind of modernize and and.
And add new multiple for multi purpose machine tools, which would be an extra layer of.
Going forward looking on top of that.
And then as we depending on the the course of that.
The that that would then alleviate some of the of sustaining capex requirements beneath it.
Okay. That's helpful. Because I was looking at the equity research that the it looks like going up to $15 million going forward as opposed to looking backwards, but the so the so if that's somewhere between 60 to 75 million over the next five years.
Yes, any color and where that will be spent and the weather will limit the company's ability to make acquisitions.
The deal this is for it.
The majority of the the capital is going to be focused towards the the ports and cast and your products group. Although we have some clearly define the opportunities in the air and liquid systems group that we're going to go after.
So the you know again the majority of the in the force and Kasinger products, you know just back to the sustaining capital piece and just something I want to reiterate that really kind of changes the.
Creates a new normal for ampco Pittsburgh is that through the work the team has done on and.
And if could improvements from the efficiency and productivity standpoint.
We have now part of machines that we heavily relied on in the past to to manufacture of goods and products.
And so we were able to focus on the higher efficiency machines running those better than we have before and the past.
And that's really changes our needs from the capital perspective, and so we're reinventing what baseline and looks like as we speak and the team continues to push and make positive progress and continue to change that equation for us. So the goal is to to run the only what you know.
Need to run to be successful and then you know we have the opportunity for backup machines now that are sitting idle that we can pull back in the service is necessary.
But you know a tremendous amount of focus is on the the modernization of the consolidation take that in the next big leap from a from a cost structure perspective to allow us to grow at a much more rapid pace.
Now that's a that's helpful and I guess then the last piece of it is if the with with that level of cash going to ongoing capital expenditures of Theres room, and the plans for any of future acquisitions.
You know the opportunities right now we see within our current asset base are so great.
That we're heavily focused on pursuing those at this point in time.
And for potentially a we will look at opportunities, but there's so much opportunity still exists and this business and we believe we've we've not even come close to the maximizing.
What we can can do with the current asset base.
Hi, Thank you very much for taking my questions.
And.
As a reminder, if you have a question. Please press star then one to be joined into the queue. Our next question comes from Marco Rodriguez with Stonegate capital markets. Please go ahead.
Oh good morning, everyone. Thank you for taking my questions.
Brad I was I was wondering if maybe you could talk a little bit more.
With what you can on.
The plans for income circling back from on the capital range and the expectations of the manufacturing footprint, making middle and the more effective and then equipment purchases can you perhaps jets the.
The get put down a finer tooth and.
And on when some of these timing issues will come to fruition of where you're expecting these things the kind of come through and were there any other you could refresh our memories any of their.
The projects and initiatives.
That you expect to kind of accelerate from restructuring aspects and the from from the capital range itself.
[noise] TV can you repeat the last part of the question again, yeah. The other initiatives. The if you can remind us from from the capital range side.
Aside from obviously, the new equipment and the.
The shrinking of the manufacturing footprint, one of the sort of initiatives.
Are you expecting the kind of the implement here in the next 12 months for 18 months forms try to accelerate.
The restructuring efforts and improved profitability for so so for you really the <unk>. The question and part of the reason why we have not pulled the trigger on the final orders for multi purpose machines to facilitate the consolidations. The lead times are not except for right now and so.
Hi, Sam talked about we're looking at some different iterations of a capital investment to allow us to accelerate faster. So these negotiations the machine manufacturers are a critical part of determining the timing.
You know we've targeted the three year time period, two to achieve the consolidation, but again, it's going to be dependent on the on the.
What the these machine builders are going to be able to do support you know that that the timeline.
You know in terms of other initiatives, obviously beyond the continuous work, we're doing Marco on improving the current assets, we have in place and figuring out a different and in new ways to to run the business.
And one of the examples Sam talked about those are inventory levels for taking too.
Level, we've not had before in the past.
We're we're we're able to now accelerate.
Flow time through of businesses able to capture upside of shorter sales.
The we wouldn't be able to cash flow before just because of the time it takes for products and to move through a process.
Taking out equipment and steps and the operations have allowed us to.
Develop a of product that's.
That is just as good if not better and but actually goes through the plant much quicker.
The other piece of that is.
Is around the FTP side of the business.
We mentioned before that we want to grow that side of the the open die forging opportunities.
We've engaged with some new customers and are excited about orders that are coming in now.
And we have some some more opportunities and that open die forging segment and that are going to be important for us.
And moving forward, and then and the air and liquid systems business.
We continue to see some opportunity.
And in that market to no as we are restructuring our costs in that segment to be able to grow.
And and be able to wind projects that the otherwise we might not have been able to win and just because of our current or past cost position. So those are some of the the of I guess once the that the ore up front right now.
Understood and can you help us understand the the lead time issues right now just in terms of the.
What is normal and and you mentioned that there are pretty extended right. Now can you kind of give us and then do you as far as what goes those look like.
Yeah. This is Sam I mean, he's got the machines. There is a lot of engineering upfront and that's really of the actual constraint and then the machine building on top of that so I mean, they are out to two and a half years.
For delivery of a custom machine.
And that's the extended lead time lot the normal the time.
And the lead time and the.
We were initially looking for this we were thinking more 18 to 24.
Probably.
Almost a year longer than what we originally looked at.
Got it.
And then in terms of your affords backlog of obviously I understand the headwinds of Cove and and.
The impact on your particular customers and their inventory levels and I was wondering if you could perhaps give us.
Thanks share again.
What the inventory of the goals might look like at your customers and I understand and some timing issue mentioned on the call debt you're expecting some.
Some orders coming here from the two largest customers, but if you could also give us a sense.
One of your expectation and backlog of might look like at the end of the Cisco If you think that you.
And you see growth versus the lease.
Q3, and then maybe Q1 of this fiscal year and any sort of color on that would be helpful.
Well the obviously are forward looking comments, because I don't know but.
The hour.
I would expect it to be higher the.
No. They don't like the by rules of they're trying to conserve money because it's an expense of item. So well they were shut down for two months.
The automotive kind of people for their shut down they are not consuming any rules and then the come back and a lower utilization rate, but if youve listened the steel dynamics for nucor, they're running and access of 85%. So even though the U.S. is down and the seventies per side.
And the mill guys are running it and much higher utilization and they're seeing higher demand and what they expected and that's true of of the European our larger European customers as well.
Is that they're saying you know things continue and we should be ready for more.
The more as opposed to the less orders.
Got it thanks, a lot guys appreciate your time.
And.
Huh.
This concludes our question and answer session, which will also include conclude today's conference call. Thank you for attending today's presentation you may disconnect.
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