Q1 2021 Daseke Inc Earnings Call
Good morning, everyone.
Thank you for participating in today's conference call to discuss <unk> financial results for the first quarter ended March 31st 2021, but that's the day or Jonathan KEPCO interim CEO and board member, Jason Bates, EVP, and CFO and Jonathan Michelle VP of Treasury and Investor Relations after.
Our prepared remarks, the management team will take your questions.
As a reminder, you may now download a PDF of the presentation slides that will accompany their remarks made on today's conference call as indicated in this press release.
We issued earlier today.
You may access the slides in the Investor Relations section of our website.
Before we go further.
I would like to turn the call over to Jonathan Michelle VP of Treasury, and Investor Relations, who will read the company's safe Harbor statement within the meaning of the private Securities Litigation Reform Act of 1995 that provides them why don't you caution regarding forward looking statements. John Please go ahead.
Thank you Kathy Please turn to slide two for a review of our Safe Harbor and non-GAAP statements. Today's presentation contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Projected financial information, including our guidance outlook are forward looking statements.
Forward looking statements, including those with respect to revenues earnings performance strategies prospects and other aspects of baskets business for <unk>.
Based on management's current estimates projections and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections.
I encourage you to read our filings with the Securities and Exchange Commission for a discussion of the risks that can affect our business to not place undue reliance on any forward looking statements. We undertake no obligation to revise our forward looking statements to reflect events or circumstances occurring after today.
As a result of new information future events or otherwise, except as may be required under applicable securities laws.
During the call. There will also be a discussion of some items that do not conform to U S. Generally accepted accounting principles or GAAP, including but not limited to adjusted EBITDA adjusted operating ratio adjusted operating income adjusted net income or loss free cash flow and net debt.
Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the appendix of the Investor presentation and press release issued this morning, both of which are available on the investors tab of the desk website www dot <unk> dot com.
In terms of the structure of our call today, Jonathan will start with a review of our business operations and the progress we're making as we execute against our key strategic priorities. Jason will then walk through our financial review of the quarter.
And finally, Jonathan will come back to wrap up our remarks with a few closing comments before we open the line for your questions.
I'd like to turn the call over to desk as interim CEO, Mr. Jonathan ship them John.
Thank you John good morning, everyone.
I'd like to start off today's call by taking a moment to make mention of a noteworthy accomplishment by our company.
This quarter will mark the fourth consecutive quarter in which our team has successfully executed against our internal and external expectations what's more.
This accomplishment has been realized in the midst of not only comprehensive transformational overall within our organization, but also strong headwinds from a global pandemic.
Our results continue to reflect the hard work and commitment of all of our employees and the benefit of our unique business model.
Which remains supported by diversity across our customer base as well as the industrial end markets that we serve.
Our unique model, which at its core is constructed around an asset right fleet, serving a well diversified portfolio of end markets geographies and customers.
<unk> been able to ask you to better weather volatility across market cycles.
It offers a unique advantage in that it allows us to reposition and flex our resources to take advantage of the highest and best use opportunities available to our fleet at any point in time.
And our strong performance. This last quarter was underpinned by these very attributes and recaptured the reflation in numerous markets such as steel glass construction and manufacturing that are approaching and in some cases exceeding our pre pandemic levels.
Let's begin our discussion on slide three.
You outlined a few of the notable takeaways from the first quarter.
We had $334 million of revenue during the period and nearly $36 million from adjusted EBITDA.
These transformation over the last year and a half has been focused on operational excellence and improving our cost structure in order to drive performance reduce costs and achieve greater efficiency.
We've held true to those last few priorities and we are working hard to ensure continuous improvement remains part of our culture.
And we believe we are making solid progress as evidenced in our results as our adjusted operating ratio of 95, 6% was a 140 basis point improvement on a consolidated basis and our free cash flow was $34 million for the quarter.
Our business performance in Q1 was clearly supported by the improving economic landscape across the broader industrial economy, which is driving a healthy rate environment for.
Those of you not familiar with the seasonality of open deck transportation.
I would like to know if maybe a slightly different seasonal pattern that our friends in dry van we traditionally see improved fundamentals in the second and third quarters with the first and fourth quarters being seasonally slower that said the strength of the market for the last two quarters.
Which should have been or off market quarters has been unprecedented and has it's highly encouraged about the continued prospects for stronger performance in the second and third quarters with that I will now turn the call over to Jason Bates to review, our first quarter financial performance Jason.
Thank you Jonathan.
I will start by briefly addressing the 10-K that we put out last night.
As outlined in our press release on April 22nd.
Last month, the FCC issued a statement concerning the accounting for warrants issued by companies that went public through specs.
We did go public through a spec vehicle, which involved the issuance of warrants that process was completed over four years ago as outlined in our 10-K.
We have restated our previously issued financial statements to reflect the warrants as a liability with subsequent changes in their estimated fair value recorded as non cash income or expense. These correction the correction in the accounting for these warrants was non operational and non cash and thus had no impact on our revenue operating income.
Operating ratio adjusted EBITDA, adjusted EPS or free cash flow in prior years for moving forward.
So with that I'll now turn our discussion to the consolidated results from the first quarter, which can be flat, which can be found on slide four as Jonathan mentioned at the top of the call our results reflected our expectations of improving broader market dynamics, particularly on the flatbed side.
These were partially offset by an expected normalization of demand in selected specialized markets specifically wind energy.
And the uptick in certain operating costs, particularly stemming from the insurance markets.
Q1 results were driven by the various ongoing operational improvements we have undertaken combined with improving market demand.
Uplifting construction related vertical such as lumber roofing steel and glass combined with strengthening initiatives gain momentum in the first quarter.
And there is growing demand combined with a tighter market capacity led to a strong rate environment in the first quarter.
Consolidated revenues were 330, $33 9 million for the quarter down 15% compared to revenues of 391 $391 million in last year's first quarter. This decline in revenues was driven in large part by the strategic divestiture of the a beta business.
And from fleet downsizing as we look to shed less attractive revenue. Similarly to how we have been displaying results since the davita divestiture process begin on the right hand portion of the slide we are providing our financial performance exclusive of the impact that business had on our comparable results.
This provides a view on the business on a like for like basis, but it's also more indicative of how leadership thinks about our business internally.
Excluding the beta our consolidated revenues were down 4% year over year. This decline in revenues was driven by the strategic reduction of underutilized and less profitable trucks lingering pockets of weakness stemming from the COVID-19 pandemic and the normalization of wind energy project revenues versus last year's comparable quarter.
The delta to the top line compared to last year has incrementally, but consistently pulled closer to where we would've expected to be outside of the outside of the pandemic.
Excluding the Vita the team delivered adjusted net income of $4 1 million or.
Or <unk> <unk> per share in the quarter.
Adjusted EBITDA of $35 $8 million declined by 4% compared to the first quarter of 2020 after excluding the beta.
Due to lower freight volumes and revenues from select women when energy markets, partially offset by growth in volumes and improvement in freight rates in the flatbed segment.
While the adjusted EBITDA is down marginally versus last year.
It is worth pointing out that it's the same operating segment level. Our consolidated adjusted EBITDA result of $44 1 million actually grew 5% versus the results of $42 million in last year's comparable quarter. The delta here with the year over year uptick in our corporate cost center, primarily as a result of the build out of our executive leadership team.
Overall, despite the lower relative revenue base, our profitability continues to trend in the right direction, and we will look to capture incremental improvement as we returned to growth.
With that I'd like to walk you through a detailed view of our results at the operating segment level on slide five we present, our our specialized segment results. However, in an effort to maintain comparability and consistency with our business going forward. We also presented the specialized segment results exclusive of the impact of the divested of beta business, which is displayed on <unk>.
Six.
Revenues of $183 $6 million were down 7% versus the prior year with the decline primarily driven by a normalization of revenues from wind energy projects that were a strong contributor to results from last year's first quarter.
This phenomenon was consistent with our 2021 business outlook.
Additionally, we saw lower freight volumes, which stemmed from the strategic fleet downsizing, we did as a part of the operational and cost improvement initiatives.
This impact to our results as further explained in our segment Reis information on the right hand side of the slide <unk>.
Compared to last year's first quarter. The specialized segment saw a slight decline in freight rate per mile from $2 83 to $2 78 due to the tail off of wind energy project revenues, which was offset by strong rate growth in other verticals. However fleet downsizing efforts in a more optimized usage of our fleet assets.
Roughly 4% increase in revenue per tractor of 57200 up from 54800 per tractor captured last year.
Adjusted EBITDA result of $24 6 million decreased by 6% compared to the $26 $3 million delivered in the first quarter of 2020 with the decline driven by the same factors that drove the top line decline relative to the prior year period as discussed previously.
And that was partially offset by good contract rates in the market and improving demand in construction and building related verticals.
Despite this marginally lower EBITDA figure specialized EBITDA margins incrementally improved to 13, 4%, which was up 10 basis points from 13, 3% from the prior year quarter again, reflecting slightly more profitable operations. Despite the shift in end market mix on.
On slide seven we detail our flatbed segment results for the quarter.
Flatbed revenue in the first quarter was $153 5 million compared to $155 2 million in the prior year quarter here.
Here's another instance, where we see the contributions from our integration and operational improvement plans are delivering value nearly overcoming the impact of lower freight volumes from our strategic curtailing of less attractive revenues.
Flatbed rates were very strong in the quarter as rate per mile growth, 15% year over year as demand across the broader industrial market continues to improve sequentially.
Revenue of 45700 per tractor grew by more than 8% from 42300 as the more efficient and better utilized fleet stepped up to capture those strong rates in the market that.
That healthy demand and solid freight rates were.
Were significant contributors to the segment's adjusted EBITDA performance. Adjusted EBITDA result of $19 8 million grew by 11% compared to the results of $17 9 million in last year's first quarter.
Stronger adjusted EBITDA and improved cost structure helped our flatbed segment EBITDA margins improved by 140 basis points to 12, 9%, reflecting the more profitable operations from our better utilized fleet assets and a good freight environment.
The segment's operating ratio improved 170 basis points to 92, eight with the adjusted operating ratio coming in at $92, two which was 160 basis point improvement versus last year's first quarter.
Turning to slide eight I'll take a moment to speak about our cash flows and balance sheet developments through the first quarter debt, we generated $29 5 million in cash from operating activities.
Cash Capex was $5 2 million and we collected cash proceeds from the sale of equipment of $10 1 million. This resulted in free cash flow generation of $34 $4 million during the quarter.
Capex financed with debt or capital lease capital leases totaled $14 4 million, bringing in net after financing up $20 million.
We've made a significant amount of progress in our transformation efforts driving improved financial performance strong operating and free cash flow generation and debt reduction.
These results led to an improved an important restructuring of our balance sheet through the refinancing of our term loan.
Where we highlight some of the salient point for the transaction on the right portion of this slide.
We deployed $84 million of the excess cash generated from our strong operations and strategic divestitures last year to pay down debt as a part of the refinancing transaction.
The result of the transaction met several key objectives, including a meaningfully lower interest rate extending the maturity and added financial flexibility through the new covenant light structure and other more attractive credit terms.
Additionally, we recently increased the size of our of our revolving credit facility to $150 million further boosting liquidity available to our company.
But it's hard work across the organization that help make the strategic success possible.
We have fortified and derisked, our balance sheet and the greater access to capital on more favorable terms helped strengthen our ability to opportunistically execute on accretive growth growth opportunities. This consistently improving balance sheet health will further serve our goals for shareholder value creation and aid in our commitment to driving sustainable and <unk>.
Profitable growth for our shareholders, so with that I'll hand, the call back over to Jonathan to offer a few final thoughts.
Yes.
Great. Thank you Jason.
I'll conclude our prepared remarks with slide nine where I would like to spend some time discussing some meaningful inflight initiatives and milestone decisions. We push forward in this first quarter substantial progress. This organization has made that isn't necessarily reflective in our numbers.
First we have developed a preliminary future state map outlining the necessary and continued evolution of the ask me that complements our longer term vision all of which we intend to share in more detail during our Investor day, which we are tentatively slated for early fall.
What I can tell you is that answers some of the fundamental questions around the value proposition of our consolidation strategy offering up a consolidated shared service center model don't drive efficiencies in the back in mid offices and provides for additional rationalization overtime over Opco stable. This next phase of interruption consolidation.
However, we'll be carefully and thoughtfully executed with a keen eye on complement cultures and driven by strategic fit as opposed to the vintage 2019, 2020 consolidations, which were generally done in an effort to salvage the brands and customer relationships of underperforming off kits.
As discussed briefly on our last call, we will be undertaking a comprehensive overhaul of our system staff not only aimed at ensuring efficiencies across our enterprise, but equally as important getting accurate insightful real time data into the hands of our decision makers moving down the slide.
Institutionally Institutionalizing, our company will be grounded in the fundamental shift of our mindset from one that focuses on the performance and capabilities of a single Opco.
One that unlocks the power of our entire network.
We are rebuilding the business as a function of the network operations, whereby we are able to better leverage the scale capabilities and footprint of our entire platform to better service our customers.
To help facilitate a more efficient shifts we have among other things established a number of counsel and teams consisting of functional and cross functional leaders from our corporate center and our Opco vs.
Teams are closely working with senior leadership and our newly formed Opco CEO Council and they have been tasked with the identification.
And prioritization of high impact initiatives.
Best in class standards, and then driving the implementation and adoption of those priorities across the enterprise. Examples of just some of the functional areas represented by these teams include safety maintenance procurement and business analytics lastly, with respect to growth as Jason mentioned, a moment ago, we notched a very important win with the refinancing of our term.
On this quarter with the cash we have on hand, our upsized $150 million revolver and this new term loan facility, we have the financial wherewithal to do some very transformational things on the M&A from couple.
Couple that with our ability to tuck in op codes and approach that we successfully proven out during our 2019 2020 integration efforts.
And it creates an exciting equation for strategic growth vis vis this tuck in strategy. Additionally.
Additionally, we are building out longer term sustainable fleet capabilities that will help drive organic growth with a renewed emphasis on third party brokerage and a more coordinated network based initiatives focused on private dedicated source sole source fleet services.
As I've mentioned, we expect to be in a position in the coming months to share redefine multiyear vision for <unk> future with all of you during which we'll provide a greater breadth and depth around our strategy and playbook for organic and strategic growth among other things with that though I'd like to conclude our prepared remarks for this morning.
I'm excited to turn the call over to the operator for your questions Kathy.
At this time and I wanted to ask a question you will need to press star one on your telephone keypad again that is star one we'll pause for just a moment to compile the Q&A roster.
And your first question is from Ryan <unk> of Craig Hallum capital.
Good morning, guys. Thanks for taking my questions.
Alright.
Curious.
I know, it's somewhat apples and oranges.
Between you guys and the other public trucking companies, but.
Industry trends are accelerating.
Most of them again different trends.
Sectors, but most of them beat and raise you guys for either in your guidance a little more cautiousness kind of on the commentary I guess can you really walk through the differences and where you guys are seeing more headwinds than others.
Yes, yes, im happy to hit that real quick right. So.
I think the way I think about it is important to kind of remind everyone about kind of the cadence that we've had here because theres been a lot of moving pieces in the Dasti story over the last 18 to 24 months.
And so.
With the divestiture of the a beta business and with the really disproportionately strong wind energy market that we saw last year.
It's important to kind of refresh everyone on how those things affect the earnings cadence for our business and so if you think about it.
It's really the 2019.
It kind of normalized adjusted EBITDA was about $155 million.
And last year, we had about $178 million adjusted EBITDA, all of which we highlighted $22 million was a net benefit from that wind energy and high security cargo tailwind and so when you look at it that way you had kind of $155 19 $1 56.
I'm using air quotes here adjusted basis for for 2020 and in our guide is kind of 165 to 175 for 2021, we knew we were going to have some insurance headwinds that we kind of highlighted to you guys in that roughly $88 million to $10 million headwind range that was factored into that so when you think about.
All of those different puts and takes the 165 to 175 really represents.
A pretty meaningful.
Somewhat aggressive.
<unk>.
And so I think.
Laying it out like that is important for people to have the context of kind of a stretch debt that we're placing on the organization this year, but.
But we feel really good about it we wouldn't have put that number out there. We didn't think we could achieve it is going to be a stretch or it can be a lot of hard work to get there to kind of overcome some of those unusually beneficial things that we saw last year, but with the COVID-19 recovery that we're seeing the strengthening that we're seeing in a lot of construction related verticals in the munitions area, but we're re.
We're able to kind of overcome that year over year headwind on both the insurance and on the on the wind energy.
Softness and so I just think it's important to kind of lay those breadcrumbs out for everyone to kind of reiterate some of the because there has been a lot of moving pieces in the <unk> story, and so hopefully that helps kind of paint the picture of.
While we didn't necessarily.
Beat but it wasn't a raise.
Important that people understand the context of a wide and we're rolling into the second quarter, which is typically Q2, and Q3 are stronger quarters, and we'll know a lot more here in the next three months about how the year is looking to shape up and hopefully second quarter it will be.
A little bit even more optimistic than we are now.
Yeah, a couple other couple other perspectives.
Tacking on to Jason's comments and I. Appreciate you acknowledging that look it's difficult to really have an apples to apples.
Parison here, because I mean, we've what we've done the same day, we looked at earnings calls commentary from from the analyst community is as earnings have come out for for industry.
And look the asset like guys are having understandably a great year with given where spot rates are your ability to kind of flex that take advantage of that for me.
Milling rate environments.
The asset heavy guys.
Look for.
For a lot of those guys. If you look at the end markets that they service I mean, it's been a tremendous boon for carriers servicing consumer facing verticals with the e-commerce retail pull forward and some of the other COVID-19 tailwind adjacent Jason referenced and so we're.
As we look ahead.
You look at one of the asset like guys that shares a common commented markets industrial facing and markets mentioned that they saw their flatbed business up 5% year over year. If you look at that some of the other data points.
Comparing.
Flatbed segment within some of our peers, we're absolutely holding our ground if not exceeding over performing relative to some of those data points and I think the other thing here that that some of our peers have talked about is the weather impact in Q1 for us I mean, we're live.
<unk> non mode versus versus the bad guys that are better than <unk>.
Robin Hood, so when you think about our drivers out there.
Minus 10 minus 20, minus 30 degree weather weather, either tarps and their belts cables and everything else trailers for frozen over.
It sets us down so it had it had a meaningful impact.
Noteworthy impact from new store and winter storm area. Some of the other regional storms that came up came through in Q1, absolutely hit us around and I think the other point that Jason touched on in his in his monologue and our earnings call was really the right sizing that went on going into 2020 on the on the on the fleet side of things I mean, we took we took.
Nearly 400 trucks I mean, those were those were obviously company trucks debt that had disproportionately high margin margin profile relative to owner operator trucks. So it hit us a lot more than it was the right thing to do at the time and it was one of the reasons, we outperformed last year when everyone else is getting knocked around a bit with COVID-19.
But we did it for efficiencies better utilization pulling down our fleet age and we will look to add 60% or so of those trucks back on this this warner trucks or so back on.
Really in Q2 Q3, tying back to Jason's point, which is which is really peak season for us.
And what that's going to do is it is going for.
Provide a better maintenance profile. It provides our drivers with better safety features better amenities. These newer trucks are better better for the environment. Most of the smart way compliant. So as you look at our Capex spend which is concentrated really in Q2 Q3 as we shift to on season start to have some of these new trucks come back into our fleet, our fleet size and looking at what should.
We continue to be a strong rate environment.
We feel really good about the coming quarters.
Helpful.
Specifically on specialized I get the year over year comps and some of the unusual good guys last year, but we've seen kind of rates sequentially declining each of the last couple.
A couple of quarters here I guess Q2 going forward what the visibility you have do you think those trends continue where can we at least on a sequential basis kind of relative to a more normalized Q1 here.
Sure.
Indicating up similar to kind of a flatbed trends on a lag.
Yes.
Ryan this specialized rates are going to be tricky for the next two or three quarters from a comparable basis, because that was really when the wind energy. So we saw a little bit in Q1, and then in Q2 and especially in Q3 it was.
It was really strong and those rates are as you know the weighted that businesses.
It's not about the rate per mile. It's about the rate for the move the overall payment for the move and they're usually not really long mileage moves and so those rates are unusually high and skew those data points and so I just think it's important to keep that in mind that those.
Q2, and Q3 really really tough comps from a rate perspective.
So we really wont be normalized again using air quotes on on that kind of rate normalized rate trend until we get pass those periods.
But what about specifically kind of sequentially use Q1 for them.
Normal normal I get the year over year ones, but on a sequential basis can we were kind of from here yes.
Yes, I think I think you should see us trend upward.
From a rate perspective in the specialized and flatbed segment from Q1 as we move forward.
Good CEO search I don't believe I caught an update there can you give one and then secondly on the stock buyback I didn't see anything but have you guys started to execute on that.
In the quarter or post quarter here.
Sure sure Ryan CEO search just a couple of comments on that so the search is ongoing we don't have any material updates at this time. The look I would expect to have an announcement on or before our next earnings earnings call certainly.
And I think while we all look forward to the next phase of leadership.
I'd like to be clear from my perspective.
From our senior leadership teams perspective from the boards perspective things are things are moving full steam ahead as mentioned on our last call I was slot into this role because of my experience share in the operating committee in 2019, and 2020 I worked closely with Brian Harvey Executive Chairman at the time to architect the turnaround plan and I have a lot of legacy with the company and I'm always saying that.
Because I want to reinforce that I'm, not simply keeping the seaborne I'm pushing.
The team is pushing and look where all intensely focused on executing our vision and strategic plan, while managing the opportunities ahead, it's the momentum that we're seeing hopefully youre seeing it.
It's the strong teams we have in place a corporate it's the strong teams we have in place at the Opco debt are allowing the board to be much more methodical around the search process.
Yes, and I'll hit the second part of your question there about the <unk>.
Share repurchase program so.
As a reminder, we did put into place a.
There was a share of cooperation agreement entered into at the end of last year between.
Don and Phil and the board and in conjunction with that.
There was.
And agreement to do a 3 million share repurchase.
There's been a lot of moving pieces that have been going on specifically in and around the 10-K, a and for the other things that kind of necessitated us to kind of wait until we got all that done. So that we can then get out of a blackout period and put at 75, one in place, but we look to move move forward on that here now that we've got all that behind us.
And we will begin pursuing.
That share repurchase program that we had committed to.
Some form of fashion.
Great I'll hop back in the queue. Good luck guys.
Thanks, Brian.
Again to ask a question that is star one.
Your next question is from Gregg Gilbert of not.
Northland Securities.
Hey, good morning, guys. Thanks for taking the questions.
I guess first to follow up on kind of the revenue dynamics. There you mentioned the lower freight volumes from fleet downsizing for.
And that obviously being partially offset by the improving freight rates. So I guess just wondering if you could discuss maybe what revenue growth would have looked like if you back out the downsizing of the fleet size.
And I guess, along those lines, what does fleet reinvestment budget look like this year.
Maybe the cadence of that spend for the year.
Yeah. So.
I think.
For our guide on kind of Capex, we haven't really changed at this juncture, we still believe that.
The ranges that we put out at the outset of the year are still good ranges to use and from a cadence perspective as Jonathan I think alluded to earlier youre going to see more of that in the second quarter and third quarter with a little bit less in the fourth quarter.
Just from a from a kind of a cadence and flow on how that works, which kind of aligns with kind of our business trends anyway.
With regard to what.
Yes.
Kind of revenue growth or earnings profile might have looked like absent.
The shedding of the business.
I think if you go you look at kind of the trough count trends and you can kind of see what kind of reductions we had in truck count.
That hopefully will help you kind of depending on what assumptions you are assuming there with regard to revenue and profitability that will help kind of inform you about how strong the performance really was in the quarter with regard to kind of get to an apples to apples basis and I appreciate Greg that the challenge right because there are so.
Many moving pieces in our business over the last 18 to 24 months. It is kind of hard to see and that's why we want to make sure. We take the time to kind of highlight for you guys that the business is actually doing really good and when you look at it.
At apples to apples basis, which is tough to get too we're seeing really strong rate environment, we're seeing really good execution in the field.
We're seeding trucks getting good rate rate increases with customers. There are some cost headwinds that we've got to be mindful of right on the insurance front on the driver for us, but overall the business is actually trending trending really well.
Great Yes, that's helpful.
And I guess, given you maintain the full year guidance I guess I just wanted to ask and maybe this isn't the case, but if any of your end market verticals are performing differently than expected so far this year.
Yes.
I would say we had highlighted the fact that we expected wind energy to be down aerospace is still down.
If I'm being honest I think we would have hoped it would have been doing a little bit better right now than it than it is so that one I guess is a little bit of a disappointment or different than our expectation, but on the flip side to that.
Several of these construction verticals are doing very well and I would say better than we expected when you look at our roofing in lumber and <unk>.
And flat glass and steel like some of these things are doing really really well and the other one that is kind of in a really pleasant surprise to be honest with you as munitions munitions.
Been killing it here.
Unintended.
In the first quarter and hopefully that trend continues.
Great that's good to hear.
And your efforts to continue streamlining the business and then maximizing efficiency.
I recognize it's always an ongoing process, but where are you finding near term opportunities there.
You talked a little about a little bit about it in your prepared remarks, but.
For improved operations optimization, what kind of financial impact might we see this year, maybe more near term.
Yes.
Ill.
I'll give you some high level points don't mean to be circumspect on this but this is something that will provide quite a bit of detail on in the coming months, but our efforts to refine systems and processes.
To hit some of these efficiencies it's something we've been focused on for a while you all have been focused on it for a while.
And we're addressing it we don't think the answer is necessarily centralizing everything at corporate pulling everything up to the mother ship.
For the hybrid hybrid approach that provides the benefits for really does a better job at purchasing the talent and depth, we havent fields that are off because as part of that playbook.
And a lot of this is going to be driven by Bae systems. I mean, I think that's the that's the fulcrum for a lot of the change within the organization right now is overhauling that systems back in providing.
Our system Thats capable of driving some of these efficiencies through mid and back office, providing the ability to leverage.
Some of the some of the insights perspectives and better decision, making for the front office.
That's where a lot of this is going to come.
Okay, great. Thank you.
Thank you Greg.
And that is all the time, we have allocated for Q&A today I will now turn the call back to Jonathan ZIP code for closing remarks.
Yes. Thank you Kathy. Thank you all for your time for today.
We look forward to speaking with you again soon and everyone enjoy the weekend.
Thanks for everyone.
Ladies and gentlemen. This concludes today's conference call you may now disconnect.
EBITDA.
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Good day.
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