Q2 2021 Ag Growth International Inc Earnings Call
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Ladies and gentlemen, and welcome to the AG growth International Inc..2021 second quarter results Conference call. At this time all lines are in a listen only.
Following the presentation, we will conduct a question and answer session.
If at any time during this call you'll be quiet immediate assistance. Please press star zero for the operator.
Note that this call is being recorded on Thursday August 12.2021.
And I would like to turn the conference over to Tim close President and CEO. Please go ahead Sir.
Good morning, Thank you for joining Jim Broderick deny to discuss our second quarter results and the outlook for the balance of 2021.
Make a few remarks on highlights from the quarter, then hand, the call over to Jim for a more detailed recap of our second quarter and then open the call for questions.
Our strong second quarter was anchored by exceptional results in our Canadian and U S. Farmers. In addition to meaningful contribution from Brazil, India, and our food platform.
The second quarter, and our outlook going for our key indicators the resilience of our diversified business model, which has moved into a sustainable growth both from our build out and investment base.
Consolidated backlogs are up 69% year over year, providing solid them at the first half of 'twenty 'twenty, one going to the second half of the year and then into 2022.
Yeah.
After years of careful planning research investment product development and building customer relationships Agi, Brazil is rapidly gaining market share and scaling operations.
Q2 sales were up 180% year over year or up 230% in local currency a record quarter in Brazil.
Our Brazilian business has clearly hit an inflection point, becoming a positive contributor overall agi results.
As well as a significant player in this large growing and strategically important market.
Backlogs in our Brazilian business are up 112%, including multiple strength on the pumps side.
We expect continued growth in Brazil in the second half of 2021 and into 2022.
As covid and supply chain related issues. He's our outlook for continued growth in margins in Brazil are also reinforced.
The broader Latam market also reported very strong Q2 results of 65% year over year.
Our operations in India posted strong results in Q2 with sales up 32% or up 40% in local currency.
Very strong results in what is seasonally the slowest quarter for this business.
India is the second largest producer second largest consumer.
And the largest export good price in the world.
Band for a high quality equipment and solutions remained strong.
Backlogs in India are up 45% and sit at a record high underpinning a robust second half results in this market.
Progress has also continued on setting up a local grade been manufacturing line to further expand our offerings and business in India.
<unk> sales were up 49% in the second quarter as food manufacturers continue to actively and aggressively invest in new equipment.
So the upgrades.
The U S market led the way with sales up 92% as the benefits of strong strategic relationships supported this growth.
In EMEA, our food platform sales were up 56% with increasing share of wallet from existing customers augmented through adding additional new customers.
Our food platform backlog is now up 175% year over year.
U S market is again, leading the way with an increase of 308% a solid contribution across both the food and beverage end markets.
Our international fleet platform backlog.
Now up 56% a significant activity in our European business.
We expect the food pack on to be an area of ongoing strength with pent up demand customers who've had somewhat reduced opportunities to build projects ahead, keeping covid related restrictions.
Our farm segment exited the quarter with sales up 17% year over year benefiting from strong contributions from Canada, The U S and Brazil.
Double digit volume growth was complemented by high single digit price increases, partially offset by a significant FX impact.
Portable products experienced a strong first half performance and demand remains robust across U S and Canada.
Pharm systems also had a strong first half a significant strength of the U S International markets, particularly in Brazil.
Further integration of bundling of our Agi <unk> solutions into our Pharm systems offerings, such as our Agi Smart been initiative.
As adding to demand and supporting this growth.
Looking forward.
We expect continued strong results from the farm segment backlogs remain very healthy U S outlook is favorable and activity in Brazil is accelerating.
We expect the farm segment to finish well ahead of prior year based on its well diversified global business portfolio and strong pricing programs mandated across the first half of the year.
Commercial platform sales were up 7% in the quarter the softness in Canada.
Set by double digit growth in the U S APAC and South America.
This growth was achieved despite some areas experiencing significant delays in steel availability, which led to revenue recognition will be deferred to future quarters for some projects.
Our commercial platform backlog is up 41% European with notable strength in the U S up 57% as well as international up 53%.
EMEA has had strong sales intake and the dip versus a strong comparable in 2020 is timing related where Bert.
Two solid growth heading into the remainder of the year.
As expected our Canadian commercial platform sales were soft in Q2 down 47%.
Great and fertilizer sector is coming off peak prior activity.
Our backlogs are down 22% year over year in this segment. We note that it fits our current backlog sits at its highest dollar amount so far this year.
We still expect a pickup in activity in the second half of 2021 and began seeing increased quoting activity.
Turning to our technology segment, our sales were up 58% of the quarter on an as reported basis.
On a retail equivalent basis sales of $7.8 billion were down 9% year over year.
Regardless this is strong performance across the board the slight decline relative to last year on our retail covid patients was expected given the change in our sales programs.
Technology segment, adjusted EBITDA was negative $1.9 million a quarter given the expansion of the team to facilitate continued growth and the ongoing integration of our mobile.
Removing the negative impact of one 5 million related to our mobile segment was close to breakeven on an EBITDA basis.
We made significant progress in the quarter to help position the technology segment to rapid growth.
During the quarter, we achieved substantial procurement supply chain achievements, we completed additional production automation projects and had strong results in onboarding additional share track dealers.
In the quarter. We also completed the acquisition of <unk> mobile.
Our mobile brings market, leading technology, which has accelerated agi his participation.
Carbon and initiate and sustainability initiatives.
For our mobile is the ability to automatically collect significant imbalance the agronomic and machine data in an easy to use interoperable format.
<unk> made the company a key participant in numerous carbon sustainability programs, where reliable and verifiable data is essentially these programs include participation industry group initiatives as well as direct programs with individual corporations.
The objectives of these programs are diverse arrange from data collection within carbon markets participation in sustainability sourcing projects yield assessment and ghd measurement.
Far mobile cofounder chasing catchy was announced as the new leader of Agi should track in the quarter.
Jason has an ideal background to grow the business to accelerate our technology development. We continue to forecast substantial growth over 2020 subtract business for the full year with a robust second half expected.
A few updates on items relevant to the Brandon incident from last fall.
Work has begun at one of the two customer sites and is expected to be completed by the fall of this year.
The second customer has decided to remediate themselves and with other suppliers.
Based on remediation work completed so far we have recorded an additional $7.5 million previously disclosed 70 million accrual.
This increase was primarily the result of additional engineering steel and labor costs required to ensure satisfactory product solution as well as additional legal costs.
Date, we have spent approximately $25 million of the accrual. We have also recently received two legal claims related to bank loans.
We are in the process of assessing these claims.
We are confident that we have a number of legal and contractual defenses and agi will fully depend our legal position.
And as previously stated we continue to expect that insurance proceeds will partially offset the costs related to the incident.
We are closely monitoring the dry conditions across the U S and Canada.
However, the bulk of the U S. Grain belt has received adequate repo current USDA projections are calling for an increase in the U S corn and soybean production.
The situation is more acute in Canada with severe drought across much of the priorities.
However, the strong early season ordering activity.
<unk> helped offset some of the impact of the drought in Canada.
We'll carefully monitor the situation going forward.
As discussed on our last call steel price and still available availability was a key focus across agi.
In the second quarter, we were able to effectively manage the situation and mitigate the impact to steal positions taken in prior quarters and through price increases Q.
Q2 was a strong quarter in a difficult environment with outstanding work from our global teams as they manage the difficult supply chain environment, producing exceptional financial results across the first half of the year and setting us up for a strong close to the year with a robust backlog.
The high backlogs are a combination of input related price increases as well as strong volume growth.
In addition, much of the growth in Brazil EMEA.
India U S farm in technology, as well as our food platform, our fundamental market share gains.
It is also great to see the benefits of our global growth, which has mitigated the impact regional drought conditions that would've had a much more pronounced impact on agi in prior years.
Highlighting just how much stronger agi is today.
I will now turn the call over to Jim for a review of the quarter further discussion of our 2020 outlook.
Thanks, Tim and Hello, everyone for today's earnings call I'd like to cover three topics first I'll provide a brief overview of our financial results.
I'll discuss our balance sheet and finally I'll provide an update on our outlook for the coming quarters in 2021 overall.
Our second quarter results continued the momentum from a strong first quarter trade sales of $302 million were up 15% from 261 million year over year.
Broad based strength across our farm segment as well as our commercial and food platforms helped offset a few isolated pockets of softness notably the commercial platform in Canada and EMEA.
Adjusted EBITDA of $46.2 million was up 5% from $44.1 million year over year.
Adjusted EBITDA margins of 15, 3% were down 160 basis points from 16, 9% year over year.
As anticipated steel price and input cost inflation had an impact on gross margins, which decreased 230 basis points to 29, 9% in the quarter.
So steel positions taken in prior quarters, and our ability to pass along cost helped to alleviate some of the cost pressure.
Along with SG&A discipline, decreasing 50 basis points to 16.0% of trade sales as compared to Q2.2020.
We were able to minimize the pressure on adjusted EBITDA margins in a tough supply chain and operating environment.
Farm segment adjusted EBITDA margins increased from 23, 5% to 25, 3% as product mix sales volume a disciplined effort on cost containment pricing action as well as scaling off of a relatively flat SG&A base for this segment.
<unk> all combined to drive the strong result for the quarter.
Commercial segment adjusted EBITDA margins decreased from 13, 3% to nine 4% as input cost inflation pressured segment margins in both the commercial and food platforms.
This was also partially offset by scaling off of a relatively flat SG&A base for the segment.
Yeah.
As Tim mentioned in his comments the technology segment posted adjusted EBITDA of negative $1.9 million in the quarter, though by removing the negative $1.5 million impact of fire mobile adjusted EBITDA of negative point 4 million is close to breakeven now.
Overall, our second quarter results demonstrate a highly resilient result, amid challenging operating conditions.
Moving onto our balance sheet.
In the second quarter, we continued to closely manage our senior debt to EBITDA ratio, which now sits at 2.8 times versus 2.4 times at the end of Q1.2021 and versus 3.0 times at the end of Q2.2020.
The sequential increase in the ratio is largely the result of an increase in working capital and investment related activities.
The working capital increase was due to steel price sales mix and a reduction in our warranty provisions as remediation work continued in the quarter.
Investment related spending is primarily related to the acquisition of our mobile and our ongoing capex requirements.
Excluding our $150 million accordion, we have over $129 million in available undrawn credit facilities, and approximately $55 million of cash on hand.
While we closely monitor our liquidity position, we do not have any bank covenant concerns.
A disciplined capital management approach in combination with our strong results and growing EBITDA will naturally reduce our leverage ratios over the coming quarters and years.
And finally, a recap of our outlook.
Supported by our strong backlog up 69% year over year, we anticipate robust trade sales growth throughout 2021 with particular strength in Q4.2021 trade sales.
And we continue to expect full year trade sales and adjusted EBITDA to be strong and above fiscal year 2020 levels.
Thank you very much for your time and with that we will turn it back to the operator to take any questions.
Thank you, Sir ladies and gentlemen, if you do have any questions. At this time. Please press star followed by one on your Touchtone phone you will then hear a three ton prompt acknowledging your request and if you would like to withdraw your question simply press Star followed by two and if you're using a speaker phone, we do ask that.
Please lift the handset before pressing any keys. Please go ahead Empress Star one now if you have any questions.
And your first question will be from Jacob bout CIBC. Please go ahead.
Morning.
Good morning Jacob.
Backlog continues to be strong.
But in the MD&A you mentioned that there has been some pre buy ahead of steel price increases.
Are you able to quantify what that what that pre buy actually looks like.
And then maybe also provide.
How many months of work is there in backlog how should we think about that.
Yes, good morning Jacob.
Greenbrier had a bigger impact.
The growth of that backlog in Q2.
Okay.
Actually it's a global law.
That's.
Quite sustainable over the last.
Last few months.
Given our strong intake really across the board around the world. So.
Yes.
Good impact as we go into three and four.
In terms of.
Timing of backlog that takes us.
Hi.
Pretty significant amount of the <unk>.
As of year end backlog.
You are on the 345 months.
We are in.
Some markets some segments looking into 2022.
Probably a little bit more than we would have seen in prior years.
Okay.
And then the.
The $190 million.
<unk>.
Was that a bit of a surprise and b.
How does that square with your 77 and a half million accrual.
Yes look we did expect to see some of this activity.
Our accrual.
A lot of time on in the detail.
And working with our advisors legal and otherwise.
That represents our expected costs associated with Jim Smith.
Okay.
Yes, let me comment on the pipeline.
Thanks.
Okay fair enough.
Alright, I will leave it there thank you.
Yeah.
Thank you next question will be from David Newman at Deutsche Bank. Please go ahead.
Good morning, guys.
Good morning, followed the impressive results here in the backlog with very impressive so it.
It looks like Youre, gaining momentum just trying to understand the steel dynamic a little bit better because it was the one thing that kind of came out when I read the filings is that seems like commercial.
<unk> was it was a bit of a bit of an area, where it was impacting whereas and farmers seem to be you are getting the pricing. So is there a lagged impact of this has been pushed out because your inventory positions may have buffered you to a certain degree.
And you know why why commercial are more so than than farm and as it relates to supply chain hiccups and things like that.
Yes, so so.
Couple of things here.
You saw our margins in the farm segment gross margins were actually strong stronger than last year. We do expect some margin pressure in <unk>, despite very very strong sales and our ability to manage costs in other areas, but that is the area, where some of our pre buy of steel.
Hi.
We still saw some benefit of the purchasing activity we did earlier.
To help offset some of the costs member in the pharma segment.
Part of that business, we operate from a catalog, where we were able to raise prices and we did so at numerous times in advance of the steel.
As a reaction to the steel cost increases so we are able to benefit from buying some steel earlier.
And.
The timing of when the price case increases went in we were able to offset some of the increased quite nicely.
That and also just higher volume in the <unk> business helps us.
Mark throughput of volume in our business more efficient efficiencies, we gain which actually help our gross margins as well however in the commercial business I think when we talked about this in previous quarters, but we typically when we quote business. We would hold historically, we would have opened for up to 30 days we reacted.
And the environment.
Rising steel costs to cut that timeline significantly now we're at the stage, where when we quota and opportunity there are only valid for seven days.
Still where some projects.
Big projects that take some time to to move from stage to actual production that.
Went through Q2 that impacted us on a margin perspective, where the <unk> is valid.
And when we get positive steel and steel costs were higher than what the core wise and so we've adjusted for that process.
Our bidding for big projects.
In two ways, one we have reduced the window thats closer valid form, but secondly, we're introducing more and more clauses that allow us to revisit the price.
If the cost of the inputs, primarily still vary by more than a certain percentage.
Got it very very helpful and if you look at the backlog, which is very very impressive.
Offset by maybe the lagging impact of some of the steel that you kind of work through your inventory of steel and you're facing I guess more of the more of the curve.
Are you as confident in the guidance that you gave at the end of <unk> being a much higher stronger than last year. As you are today in other words is the backlog and the topline going to lift that despite some margin pressure in terms of dollars such that you can.
Kind of in the same zone.
Yes. So good question couple of couple of.
Couple of points to make on that so when we look at this year, given where we're at in the year and the backlog that we have available.
Very very good about the year, we actually are starting to see a lot of opportunities that they take it through its early next year as well, which is very strong continues to be strong.
We do have.
Impacts from from steel that everyone does the supply chain challenges.
Last quarter, we guided that it will put some pressure on margins in Q2 and Q3, we saw that in Q2 with our EBITDA margin down slightly.
We will see a bit of that in Q3. However, we see a very good rebound in Q4 from a margin perspective, but overall in terms of our business if I look at the range of.
Estimates that are out there we feel very good and.
Feel good actually about the high end of the range.
Even worse and this is important even with the.
The challenges we have with the supply chain.
If you look at our results to where we're working with a third party and our technology business, we will incur significant costs there that we do not normalize out.
We've got FX pressures that we deal with that.
Q2, or more pronounced than we expect for the rest of the year, but still not a headwind.
So even with all of the and the acquisition of <unk> mobile, which initially is a bit of a negative move on our EBITDA, but even with all that we still think we'll be we're confident with the guidance and more so on the high end of the guidance.
Excellent and last one for me I, just overall on the food and commercial backlogs overall, how much of this do you think is a function of not just the reopening trade and normalization, but also maybe a change in consumer maybe I'll say pet behavior.
Or are people buying pets, and how much is supply chain investment and two after this whole incident over the last 18 months of Covid.
That food supply chains are critical and governments need to invest in infrastructure. How much of those is that all playing into kind of these rising backlogs and commercial and food.
Yes, well, it's a good.
Comment.
No that's definitely a factor and we will see.
<unk> has seen well I think just to your point.
There is a bit of a rebound.
Pick up and projects.
Post covid.
I think as I characterize the resumption of prior activity.
And.
And then there's a good security there is a supply chain.
Redundancy aspect of our expansion.
Got to account for.
Similar sort of disruptions going forward I think that's more prominent in war.
So top of mind than maybe it had been.
And then when you look at our fundamental growth around the world.
EMEA.
In Italy.
Hi.
OEM.
EMEA and Brazil, it's food attack and U S Army fundamental market share growth, so where organic share.
A lot of those are also very very high growth markets in of themselves. So.
It's good to see a little bit of everything but certainly the factors you highlighted are our upcoming.
A little bit more more.
Okay.
Thanks, guys.
Thanks, David.
Thank you next question will be from Steve Hansen at Raymond James. Please go ahead.
Yeah.
Yes, good morning, guys.
Just a couple if I may just on the lawsuit quickly I know you can't comment too much but is there are there any milestones around timing, we should expect or just how long do you think.
These situations will take to resolve it in six months two years.
Got it.
Oh, yes.
I expect it to take some time these are complex.
Some clients, obviously, we expected all along.
Yes, it will take years.
Understood.
And then just circling back now on the demand environment, particularly.
Particularly in Brazil to start you described some really great growth down there Kim.
Taking market share.
In a market like that where they don't have the severe drought type issues with Casey how are those customers.
Customers are reacting and steel price environment is the backlog with your order flow continuing down there like are you continuing to see momentum I think you described that I'm just trying to understand the demand side impact of steel relative to some of the crop genetics.
Demand is very strong in Brazil.
Okay.
Steel dynamics has been more extreme than most or many other parts of the rest of the world.
Certainly in some cases you've got.
That's the real deciding factor on.
I can still get to approach it.
So.
Area that our team is extremely focused on we've been aggressive in acquiring it.
<unk>.
Supporting our inventory positions on steel.
Demand is very strong.
Okay, that's good to hear.
How should we think about then the balance of margins I think Jim you described it earlier Q3 <unk>.
Pain pressure with some degree of fourth quarter, we should get.
A rebound with some magnitude is the is the recovery that you expect in Q4 going to get us back to where we were before or as steel prices that seem like it's really been great.
So I understand you're backing off.
Got it.
You mean from a margin perspective, Steve Arthur on my remarks.
No our margin perspective, yeah yeah.
Yeah, Yeah. That's what it was you expect to see some stabilization, but stabilization parity between the two.
Pricing and.
Cost you have some variability as you've got timing issues, but we see that coming together.
Q4, and then and then is still you know as steel eventually.
Adjust to whatever normalized steel cost will be.
Yes.
We will see more more.
Normalization back to expected continued improvement in our gross margins because of all the investments we've made over the years, we're starting to see some nice efficiencies as we scale our diversification approach that we that we've gone through the past several years youre seeing the benefits right now I mean arguably.
You know the number of headwinds.
With Covid.
Oh, yeah effects.
People talk about the drought.
In North America, all of those things aside and we're producing continued strong growing results and those types of environments. Just just really I think is a strong restatement of the benefits of being diversified and being able to capitalize on different parts of the world in different regions of the world.
No that's great and just maybe a housekeeping type items, but on the FX sensitivity, we have seen some relief in the dollar here recently down to of course, the defense, but is there a thinking maybe we should think about from an EBITDA standpoint, or I'm not sure I would think about exactly.
It's still a headwind versus prior year, but yes. It is nice to see some relief for sure at least from a Canadian perspective, Canada dollar perspective, and so.
But it's still down versus the prior year.
Okay very good thank you.
Thank you once again as a reminder, ladies and gentlemen, if you do have any questions. Please press star followed by one on you touched on something.
Your next question will be from Andrew Wong of RBC. Please go ahead.
Hey, good morning.
Just wanted to ask on the Tech segment. It sounds like some of the changes you're implementing there are almost complete can you talk about what the feedback has been from the customer side. Following some of those changes.
How how we should think about the sales growth trajectory over the next six or 12 months.
Yes, good morning.
We do expect.
Really solid a robust second half of the year and technology. So we spent a lot of time.
Onboarding dealers view, new dealers for aircraft with Agi, another OEM equipment dealers.
Dealers and.
That's been a very successful we continue to add more and we continue to get it spent a lot of time in training those dealers to get them up to speed on selling what is a very different product line versus.
I'm sorry, so in Chicago.
Successfully incorporate and bundle the technology risk.
And so we expect that to continue to gain momentum.
Two our growth rates in the technology really going on.
On a weekly basis, but.
Got battlefield.
And produce more scalable.
Our distribution network for Us a channel for us in the dealer side overall, we're likewise spending a lot of time in building out our are other channels, which are going through strategic customers. Both graft grain by our grain traders food processors, who purchased directly are looking for supply chain visibility.
We're spending more time on retail really.
Two to have a lot of momentum traction at retail.
We look at their fleets out putting their fleets with a farmer.
Our mobile App.
To gain visibility into the operation of their fleets.
It's really strong ROI that that has proposed AG retailers.
We're spending time on our direct model as well as record digital model.
You have these four different channels for us.
Coming are coming online and more and more.
More and more activity and volume and so that we expect to carry us through into next year as well.
Continuing to see really strong year over year growth in the technology side.
Okay, Great. That's that's a lot of really good detail there.
I just wanted to ask kind of a follow up on the legal claims and I know you can't really say very much.
One of the things I wanted to ask because you know the original sales for the bins are roughly $20 million.
The provisions are roughly $70 million how are the legal claims as.
Much is.
In excess of $190 million. If you can just if there's anything you can say about that that'd be helpful. Thanks.
Yeah look I guess, we are seeing quite a bit in our in our accrued.
No.
So I just just to circle back to this our accrual.
It is our assessment of our.
Our obligations around cost associated with this.
Okay.
Okay understood.
Did you have any further questions Mr. Wang.
Thank you very much.
Thank you next question will be from Tim Monticello at ATB. Please go ahead.
Thank you.
Taking my questions.
First one just on backlog can you give some details on sort of a quarter over quarter.
Comparison, just because the sort of year over year, I guess, it was getting a little bit muddied by steel price inflation.
Yes, so quarter over quarter, the backlog actually grow group.
It continues to be very strong and strong across all areas of the business.
So a really really strong and then and the growth in the backlog as Tim talked about alluded to in his comments introductory comments.
Definitely have some some benefit off the prices increasing but you also see strong volume.
Growth as well in terms of the commercial side of our projects, including the food the platform, which is just on fire internationally very strong opportunities in items in the backlog as well.
Okay. If you were to look at the backlog on a margin contribution basis would that also be at record levels.
So the backlog in terms of sorry say that again.
Like if you were to strip out the margin within the backlog.
Adjusting for a cost pass throughs and things like that would that also be at record levels.
Yes, so we see R. R.
We look forward on the margin profile.
So we do see some some pressure as some of that backlog flushes through in Q3 on the margin.
But coming back nicely in Q4, and then going forward are fully adjusted.
Okay.
Second question here just on the on.
On the commentary around what you expect for margins.
In terms of steel cost inflation in that sort of rebounding in Q4, what gives you confidence in that readout. When you look at the steel pricing is kind of like on a stairway to heaven doesn't seem like it's ever going to start coming down. So what gives you confidence that you'll see some.
Margin pressure.
Pressure alleviation in the fourth quarter.
Yeah, a couple of hours, primarily just the <unk>.
Backlog in those those are those are orders that we were fulfilling and then we've got visibility as to when they're shipping and so we know what the margins will be for those because we procured steel floor those orders in and most of the cases and so we are and you know you got that coupled with the cost containment initiatives that are going around in our business you see.
SG&A scaling nicely and then and then from a gross margin perspective as I mentioned earlier, you know you've got a lot more volume being called through our facilities, which can handle more volume much more volume and so you get more efficiencies, there, which help offset some of the pressure on the margins at the input cost half.
Okay got it.
And.
The margin in the second quarter.
Seem to outperform what consensus is looking for.
Has your view changed on.
The level of margin degradation that you're expecting to the back half of the year.
Well, yeah, we we were able to mitigate more than we saw in this quarter.
I'd say that guidance walls.
So the remainder of the year we.
We've done a lot of work around mitigating that supply chain pressure so.
As Jim said, we feel pretty good about the remainder of the year.
Based on really strong backlogs to carry us through that period.
Okay.
And then just wondering on the contingency legal issues there, though one of the.
The lawsuits was received after the end of the quarter and the contingency I believe it was you know at the end of the quarter is there a chance that contingency increases based on the lawsuit that was received after the quarter.
I know of it all.
Our assessment was inclusive of all of those facts.
Okay, Great I appreciate it I'll turn it back.
Yeah.
Thank you.
And at this time gentlemen, we have no further questions. Please proceed.
Okay.
Thanks for your time this morning, well end the call there.
Thank you Sir ladies.
Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines.
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Okay.