Apogee Enterprises, Inc.

Q3 2021 Earnings Conference Call


spk_0: ladies and gentlemen thank you for standing by and walk of the up a jews the score twenty twenty one third quarter earnings conference call at this time of letters events or analysts and only mode after the speak of hasn't isn't there will be a question and answer session ask a question during the session you will need of has star one on your telephone if you acquire any their systems to specify zero and him chemical conference is because today just had please go ahead sir
spk_1: they give you a good married and welcome to apogee enterprises the twenty twenty one third quarter earnings call with with me today er jo pushes apogee of chief executive officer and a she group that chief financial officer i'd like to remind everyone that their flight to accompany today's remarks which are available in the industry relation section of apogee his website during this call we will reference certain non gap financial measures definitions of the not get measures and a reconciliation to the nearest gap measures is provided in the earnings release we issued this morning which is also available on our website i'd like to remind everyone that are call will contain forward forward looking statements reflecting management expectations which are based on currently available information actual result may differ materially more information about factors that could affect apogee business and financial results can be found in our as you see file things with that altar and the call over to you joe
spk_2: i thank you jack been a big thank you everyone for joining up this morning
spk_1: i'm very proud of our team and pleased to present our strong results this quarter we deliver earnings growth and very strong as loud despite the car operating environment in the non residential construction market
spk_2: our results demonstrate the underlying strength and resilience of our company and team and the countermeasures we have taken to reduce costs this morning i will read you a few highlights from the quarter and disgusted trends we're seeing in the business and our position for the future
spk_1: or then turn it over the heat for additional details on the result or financial condition and our outlook
spk_2: after that i'll take your questions
spk_3: let me start with i'm from the quarter
spk_2: overall this quarter was nicely similar to the second quarter with earnings per share grow and strong that flows spite we do cell lines colvin and and market conditions are still having a significant impact on our business we continue to see some project delays and i know that the architectural billion that this week reflected a score of forty six so we did in the mid to upper forties for a few months now which is modest decline and month to month the overall eighth of activity and architectural and markets and continue to slow down and kobe has continued impact our workforce and added stress for organization in management team that then we have truly learned how to operate extremely efficiently in a corporate environment and like a many entire apogee team for staying focused and doing a terrific job of managing through the situation while delivering for our customers beat decide to that means we took in response to posted earlier in the year and statewide their business and contributed to strong operating results the last two quarters our thought focus remains the health and safety of our workforce and taking care of our customers or tina turner excellent job of adapting in his corporate environment as i said the protocol we put in place are working maintaining a safe work environment for our people while allowing off to provide the high quality products and services our customers expect from apogee we have also focused on execution and closely managing are caught structure
spk_1: these efforts of showed off and our results with higher operating margins and strong working capital management and delivery metrics such as on time and complete in quality which have never been better
spk_2: a year ago we announced our procurement savings initiative an effort to drive synergies in our framing systems segment we've made good progress on on both initiatives this quarter we added another like to our cost saving zapper watching a company wide initiative to reduce our fixed caught days we have initially targeted ten to twenty nine of feelings from this effort and see significant long term opportunities beyond that and you'll hear more on this way
spk_4: the seek advanced age
spk_2: the performance of architectural services was once again i live in the quarter the segment has double digit growth on both top and bottom line operating margins improved to an impressive eleven point two percent driven by strong project execution and the fruits of art discipline project selection process over the past two years services that had great success in winning new business and building a record that was to sustain us through downturns over the prior five years fiscal fifteen to nineteen harmon our services company averaged two hundred and sixty million dollars in annual awards over that five year period
spk_3: in difficult one last year
spk_1: we sold to time that with a war over five hundred million dollars
spk_2: and i mean by sustaining us for the coming future
spk_5: or to than the segment are always lumpy
spk_2: and slowed this quarter reflecting conditions that are market however i remain confident in the service segment long term trajectory our current that one can sustain the business in the near term we maintain a pipeline of opportunities to win additional projects and our services segment is a leader in the industry well positioned to excel when construction markets time for the better another highlight the quarter was large scale optical would continue to strong rebound from the cold related shutdown earlier this year
spk_1: r l f o stagnant delivered your ear revenue growth in return to it's typically strong operating margin about twenty five percent
spk_2: impressively the lf those segment revenue increased sequentially by fifty percent compared to the second quarter this strong rebound is a testament to our team and the reputation of and demand for are branded products and marketplace architectural framing systems and architectural glass again saw more impact from the current situation the and markets oh segment that project delays and schedule changes which impacted revenue they did a great job anything cost electrocution is quarter which felt off that the reduce volume and importantly both segment made progress on key strategic initiatives the opposition them for huge your grow and improve profitability finally we continue to take action to strengthen our financial position increase liquidity improvised right powder dry long term value year to date cash flow from operation is more than double last year's level
spk_1: we have generated over one hundred million dollars of free cash flow this year to date
spk_2: which is a record for apogee in addition we completed the sale back of one of our property which brought in an additional twenty four million dollars of gas we also extended the maturity of our long term loan and now have no significant near term debt maturities with this financial straight we resume share repurchases during the quarter which he will touch on as well going forward we also love to increase investment in high return capital projects to position the company for accelerated growth as architectural and markets recover the will provide more details on our outlook for the fourth quarter looking longer term i remain confident or apogee is now position for the future yes we will continue to face uncertainty in the coming quarters not ready construction markets are clearly in a law for indicator like employment growth architectural billion debt and construction starts everybody but remain below three pandemic levels i'm encouraged though by recent developments with vaccines and drugs to treat this virus and i'm optimistic that these vaccines will help return to normalcy at some point in the coming year and that are and markets can recover from their previous strong levels let me remind everyone that pre colby are and markets were very healthy there was strong demand for do construction with few signs of overbuilding great tennis occupancy and readily available poignancy we entered this crisis with strong market fundamentals i believe bodes well for a postcode with future of the what lies ahead for our economy and our industry apogee isn't a much stronger position in as a much stronger company day that it was during the last recession we are proving the resilience of our company during the pandemic while laying the foundation for future growth we maintain our strong brand with reading market position we're proving execution across her company removing have grappled abruptly to optimize or caught structure and improve their productivity recounting our operations the drive innovation and see promising growth in all of our segments and we are maintaining a very strong financial position there has always been a hallmark of this company i am very confident that as he has the strength to navigate through the uncertain environment and we are taking the right steps in the company for long term success with that i'll now for it over to she'd to provide more details about a quarter and our outlook and i will before we take questions or return with a few additional comments
spk_6: on the see vacuum you have gone
spk_7: thanks joined good morning everyone that be start with a consolidated reserve which on page five of our earnings presentation
spk_8: total revenue was turned forty million down seven percent from last year's third quarter primary afflicting continued project delayed and market related volume decline in architecture friend systems and architecture glass
spk_7: this was partially offset by year over year growth in a other two segments
spk_5: operating margin what the be point i sent this included a nineteen billion game on the sale and leaseback transaction be completed during the quarter and a one point four million of code related costs
spk_8: excluding these two items adjusted operating margins was ten point one percent a nice improvement or to six point four percent in the last year's third quarter despite the lower volume they improved margin was primarily driven by a car saving efforts improve education and the benefit from a tax credit related to fry investments and architecture of last segment adjusted ebitda improved to forty four point five million compared to thirty three point three seven million in last year's third quarter reflecting the brewed margins which also the impact of know revenue
spk_7: net interest expense was one point five million down from two million love to hear you do both loaded with and lower borrowing costs
spk_8: the facts straight up forty two point five percent was roughly in line with last year's twenty three point two percent and they do so diluted shed found forty six point two million reflecting share repurchases during the quarter or take it all together adjusted earnings grew to ninety cents per share from property seven cents per share in the prior year quarter not burning to segment reserves on page six architecture fame systems revenue of one thirty seven million was done seventy percent from prayer driven by combination of project delay and nor ottawa news despite it's revenue decline framing systems operate brain can improve seven point two million with an operating margin of five point three percent compared to three point eight percent in the last year third quarter gaming system backlog increased slightly two point eight million from for and four minutes last quarter
spk_7: architecture dodge avenue was eighty five million compared eighty nine million in the last year third quarter
spk_8: like payment system that any with impacted by browsing delayed and lower ottawa you architecture does had operating income of ten point eight million which included seven point four million
spk_9: from new market facts straight
spk_8: as a reminder but she has participated in this federal tax food program to support or expansion and capital investments this is an excellent program that incentivize his private investments and local economies private investors provide funding for these products as loan in exchange for tax credits then and then seven year transaction period the loans are forgiven and the procedure recognizes earnings as of late in a previous se filings we have entered into three similar transactions and expect to recognize the income from those transaction in future years we will look forward to for opportunities to invest in center programs to support our local economies architecture services are blinded strong performance with revenue growing eleven percent to thirty seven million as a segment executive products from a substantial backlog savages operating income grew thirty one percent to eight point six million and margins improve to eleven point two percent compared to nine point five percent last year primarily driven by strong project execution services that law degrees to find ninety seven million compared to six sixty five million last year and roughly in line with six and seven million backlog level a year ago eight seven of her earnings presentation shows or backlog trend or the past several years while bachelor degrees is quarter it is desert historically high levels which relies good visibility over the next two years and as though is a segment continues to pursue a pipeline of new project opportunities going out a large scale optical we continued the strong performance love sequentially recovery with revenue increasing by fifty percent compared to the second quarter on it year was your bases revenue grew four percent and then so sales have rebounded faster than we expected as it's retail customers have reopened the strong third quarter revenue reflect a lot of hard work from or ls so deep and the demand for a pilot in the marketplace third quarter revenue also benefited from sales incentive program that we ran during the quarter and favorable timing of customer orders edit time to a more normal level of profitability and this quarter with adjusted operating income off six point eight million in line with last year third quarter adjusted operating margin was twenty six point eight percent now i would like to provide an update on a cost saving initiative which i outline on page eight of our presentation we are on track to achieve the targets the outline last quarter with more than forty million saving in the time fiscal year we've made progress on are forgiven savings initiative and framing systems integration effort was to get will contribute more than twenty one at a cost saving this we're all of which are sustainable we expect these initiatives or provide approximately forty million of on will run rate saving when fully implemented the temporary costs actions be announced in response to go and have contributed more than twenty million dollars saving the a date you the third quarter we began to reverse most of these temporary cost action and the well see little benefit from the savings in the fourth quarter the settings will not be in our run rate for the next fiscal year during the quarter as your mention we lost an additional effort to reduce our fix cosby with an initial target of to twenty million dollars of apple savings by end of f y twenty three doing the third quarter the absorbed roughly six and thousand of restructuring cause related to this initiative and expect additional restrictions cause in the fourth quarter as we will power the evaluate opportunities to accelerate or costs transformation by making additional investment in our back office functions
spk_10: the or i'll go to these initiative is to give rpg a more flexible and efficient cars structure number don't we see several opportunities to continue drive productivity and optimize costs
spk_11: during the sideline
spk_8: or gas line that she remained strong yesterday we have generated hundred and twenty one million dollars of cash flow from operations more than double the fifty four million dollar at this point last year primarily driven by strong working capital management we had less than three million of capital expenditures in the third quarter bringing out yet they told her to seventy million dollars as compared to forty one million dollars at the at this point last year earlier that year with significant uncertainty from going with decided to go back or government spending plan with strong cash flow and issued improvements we achieved in the past two quarters we tend to ramp up capita spending way forward to support high return on investment opportunities
spk_12: and you'll mention
spk_8: would you do other important actions during the quarter to strengthen our financial position the sale and leaseback transaction would generate twenty four million dollars of cash and the long term extension and then a third quarter or daughter that to read hundred and fifty eight million dollars and we outlawed fifty five million dollars of cash shh an advantage he for that that of hundred and thirty million which is less than one time or training twelve month adjusted ebitda it is notable that our primary to and thirty five and and revolving credit facility is completely undrawn which together with our cash balance but the company in a very strong really position with his spread of a financial position we decided to resume share buybacks during the quarter and repurchase six hundred and forty one thousand shares or sixteen million dollars before i rapper i would like to provide few comments on our outlook have you seen in a press release the decided not to provide financial gap guidance a game this quarter given the continue on third entity in our architectural and markets with that then let me provide some detail on the friends we're seeing as a move forward into the fourth quarter with that continued project delayed and thought conditions in architecture and markets which will negative impact revenue and framing systems and architecture glass in both segment some projects have moved out of the fourth quarter into next year also without the benefit of newmarket tax rate in the fourth quarter operating income in the architecture blouse will likely be much lower than the third quarter on the got from the continue to flow the manager cost and project execution but keep in mind that a temporary costs actions we took a piss phones to call it was mostly reversed in the third quarter and will have limited impact in the fourth quarter to wrap up with deliver another strong quota despite the headwinds that continue to impact of business i am particularly pleased with a continued progress in driving sustainable operating improvement and cost savings across the visit in addition our strong cash flow loan debt and significant liquidity give this tremendous flexibility to drive long term shareholder value
spk_13: would that
spk_8: i've done a call back over to job
spk_1: well this will be my last earnings call with apogee
spk_2: i look forward to welcoming apogee neck he always soon as that person is announced well ah thank all of you on the call that shareholders and all my theme or support over these years i'm quite proud of what the apogee team is accomplished over the last decade and i'm carpeted this company has a bright future ahead of it like cabinet is bolstered by the team i will leave behind from the boardroom to the shop floor we have added talent at all levels of the company i quote by thanking every member of the average team that and present for you have done to support me and more importantly the company that
spk_3: joe our by you could open up the call for questions please
spk_0: thank you as a reminder to ask the question you need to pass style one on your telephone switch i question pass it on t t stand by while we compare the current a lost there as as question comes from klinsmann cj as securities he line as an open
spk_14: oh good morning as address i mean good morning
spk_15: looks like i'm on a random backlog was up a little bit sequentially down will be every your of the movie talk about the framing ordered skirt for two three little bit
spk_1: the you're correct it was you know at an average quarter
spk_2: it is us a list of shorter and longer lead time businesses it's where we're seeing the biggest impact from the stock market conditions on the order of i'm out about twenty percent is in improving but it's of down twice a day it it doesn't have a dollar backlog the longer the parts of their upbringing systems are bullies certainly lots of additional project wins in remainder the year it's it's pretty healthy considering the corporate environment in my opinion we are pleased with that way increase sequentially
spk_16: got it thanks
spk_14: in terms of the i'm just trying to get a better deal in terms of
spk_0: geographic strength and weakness if it's as much as you know recognizing that yea be eyes on only one indicator it was down november
spk_15: different pieces within that on the midwest was actually improve purses a very weak ne
spk_14: can you talk about que three results in terms of how they line up with that a be i you know you graphic break down with a consistent there
spk_2: yeah i as to is broken down to ways one is regionally in one is sector segment
spk_1: at first i mean braille of ice and most people know what the a be i actually the calculation it's a survey of architects and basically the question of or your billings increased or decreased and last month so it's a binary answer yes or no
spk_2: if the same number of people answer my bills or higher that pay my bills are lower that index we fifty it does not account for you know can say they're up ten percent and hence eight or down one percent you will still be fifty so it indicative any walking over time i wouldn't stay that friend in the last downturn levin years ago the i was in those the low thirties or sustained period of time so i'm not too nervous i see it coming back it's been hovering in the mid to upper forties and you know hopefully you know i think they and markets were sound when we entered this it will come back i believe most the oath like me believe in work from work not work from all you are right in the region right down the midwest was them the strongest it was slightly over the or the north east just under forty and you know we are certainly dependent on the midwest it's a big part of our a geographic footprint that sector a breakdown was the strongest was multi family residential you know that the acquisition of or the recent acquisitions we done of up though is strong in that segment traditionally we had not been ah the institutional is the weakest segment and most the that his government ah you know a public institution of a private institution all health care will continue to rebound and we have a good presence there but we certainly need office the rebound on and i do believe it will recover and people start to combat price inquiries were over fifty
spk_14: again on that the healthy sign we just need more trigger polling we are definitely seeing faults put em all end up there are we just need ass and pull out that off chris that very very helpful we're almost done i've seen no no we have a crystal ball but the looking at what the bouquet would be for the second half of a fiscal twenty two wouldn't be on the framing side when it's either a quick time framing that would likely be the day the
spk_2: biggest and earliest beneficiary your answer look at the yes yes there's a shorter leash time businesses in our framing systems it's got a very healthy next are small and midsize projects it does that some dependency on the large buildings are less than the other sectors i just met in glass as moved nicely down in the mid markets and of course the launch of our velocity branded given us footprint in the small projects but that smaller shorter lead time your two three
spk_15: weekly time businesses that velocity and in frightening systems will recover first of and then the larger products will follow i think the second half of the year next year it's likely to see ah and market activity improve which will bode well for our fiscal twenty three
spk_17: guy thanks much you have your back in one
spk_0: nice chris
spk_14: thank you i next question concerns that brent killed men with the a davidson and an open
spk_18: a great thanks to my a bread
spk_19: hey joe on me yeah the dalai lama couldn't in how far you from been at a level from operating performance you expect from the new asset and you
spk_20: like to get their you than in there
spk_2: northern ireland yeah we're not quite that repeated yet i expect just business today i a creative cooperating result in fiscal twenty two our revenues an order through again and que three ah
spk_19: the scandinavian it were still operating as slight last but the slightly lower revenues i'd say a healthy indicates it is the businesses had to deal with are more ramp up issues than expected they're getting through that are i'm happy that that the ban for that small private is healthy the customers tension rate is amazingly high because of the amazing quiet i highly automated fact we are very common in a long term or committed to the expansion is part of our of the market in our long term growth and diversification strategy but i expected to be a creative next year
spk_8: yep okay and then en route new content for the details on for queer i get new route color on electoral on a river a recovery year to be think that they're gonna go back to normal came in the fourth quarter canada
spk_21: now that health holiday know down or heard from pent up demand here
spk_14: yeah so episode definitely coming back to normal and indeed that time to the can imagine where people are still locked on and they want to do think the and are going out there to these stores and and buying things for the i wised up and as go there they a look at us to pay me opportunity so definitely coming back to normal see a big
spk_8: fact that by and a queue for the business will be back up and running a normally buying any new code surprises there are some of the read that come and go in certain reader markets being shut down but it that doesn't happen we should be back up and running as a normal business similar to apply twenty and europe by twenty two
spk_14: how can i apologize
spk_19: the new markets tax credit card back from like you moving from additional benefit from new cents on the kind of that going forward yes as a bit of filing the do than we have a benefit coming from new market tax rate at three more coming up in applied like twenty four and have like when you think they are lives one million dollar additional benefit that will come in those years and it is the by project he did out in or it is he planning okay and yeah i just i guess we want to come back and at the framing pregnant and we had the current them backlogged differ so much from and and what you're doing and on the top line and his period and other back like i'm going to have more that kept them
spk_2: larger projects got what he what are you thinking than the difference maker in terms of and factors that you know is causing that different than topline gherkins backlog kind and framing he did increase back on track
spk_1: correct
spk_2: ah listen it's a mix of small projects which really don't in fact that was our store front entrance businesses that gone is raining to wine coolers is very quick time blowhard very very hard to forecast frankly a lot of delays and then rush rush rush on oh was ordered by order delivery within a two to four weeks cycle so some of the bill that turns with thought in a larger price which have much longer lead times do have some current law business in our last thoughts or larger cities and into small degree and out go and we are your those are the businesses
spk_19: that are seeing some lots of slowness in the project in the field but we haven't seen any projects are branded a castle we're just seeing delays of you know that even out on construction sites are open
spk_22: you what you read the news or a lot of people on quarantine from cold itself progress a construction site is going slow that slow down orders it slow down the startup of the next project but there's still pent up demand out there and i think post vaccine will be that turn but
spk_0: the business together
spk_23: a large backlog of the healthy that blog that that they can use to sustain themselves but we still need to see we still need to see some improvement in not in the college situations formal see topline revenue return okay
spk_2: okay thank you know the best gap i sprint thank you and next question comes from deltas along with teton capitol hill i know how open and thank you i have been a couple of questions first of all of the glass revenues were only down five percent whereas the framing revenues were down seven seventeen percent and who would you please it can help us understand why those two segments certain heads and said hey a white dispersion of the the results on an idiot higher altitude out my want to jump in like were seeing growth in our philosophy small projects business that revenue growth is holding off on a higher
spk_8: and tracking in the core brand business at in our solar and we also add up really good strength in a very small piece of that segment but it's are brazilian or south america and operation has seen growth ah thankfully are are resilient
spk_23: business has return to growth and ah it's had great operating results you know when i arrived ten years ago on fire on is losing money or laughing was losing money the brazilian business was double digit operating margins are it is subsequently got into an economic downturn that made the previous crisis and us pale by comparison self that he is returning on much in any strong south those two smaller businesses have helped offset what would it then not probably loud love double digit low teens
spk_24: and tragedy and markets and and it's just also lot it's it's more about a lumpy business as well so we're pleased with the results considering
spk_2: yeah handling code red
spk_23: or i think you may i yeah i'm dave further in to have brazil guess given how weak yet
spk_2: business has been and frankly it's it's it's fallen authors of our radar is is that a business that we should be thinking about
spk_23: no no more nor front and center now
spk_2: we're pleased with the benefits got run by the theme we'd like to grow the business it's a very small and and consequential piece of the whole segment so answers no okay great thanks joke and in one additional question please and did you see your customers behavior improve it all alone in in it it was before the recent surge in their in that case count again arthur i'm not quite with you know how can you found me our customers behavior yes in terms of decision making and where they they were making decisions starting to have a more favorable mindset maybe inquiries going up and then i guess they converse is that question is as the case count rose here in the last the a while did you see them become more conservative with their mindset i haven't stayed in general the answers affirmative yes i think it may or here's what we're seeing in the united states
spk_23: but like our company i'll tell you what the amount of people we quarantine due to contact racing in the third quarter would triple loss in march we have learned how to operate that way ah we haven't called out productivity problems on which so we
spk_2: we've learned that that that's true for the i think a good part of us economy people have learned how to get people are quarantine bring them back we've all learned how to be efficient in this new model and and frankly i think that are on finding complete and our for pass quality yields have
spk_0: i've never been better at this time i would say yes the and markets
spk_25: if we started to feel better in the summer day that turn for the worse with called it had every one oz but i'll repeat del we have not seen any projects cancelled alien i don't think i can recall that i had to cancel was they are the headquarters for one of the large ah cruise lines are all and
spk_26: the crisis a careful in order we had i began to come out of our black that lot and up no surprise that a cruise line or would do that other than that i can't name a one in the hundreds and thousands of mourners we had that one great thank you and happy retirement merry christmas
spk_23: thank you very much and thank you bill
spk_2: think year or next question comes from a sign with a on july falcon i'm hello oh come on corner then i'm just curious ah you know how you're thinking you know the
spk_17: well whether they're that a structural change in the market on the large office vs big a centralized office and and i know that certainly velocity plays and the that on yeah but what what are some of your can a high level thought now that in a were a couple couple corners removed when when everything heck
spk_4: i believe that
spk_2: the job your idol a that trend will happen it's feel pretty early our block i do believe our remote office does do have a strong future but it's not just velocity we're not talking about a storefront operations here we may be talking about buildings that are five eight to ten
spk_17: stories we've always been able to play in that market in in the past decade fire on has become very proficient at servicing that shorter lead time business not a short is the the velocity lead time i believe that is going to be tailwind for us in our industry i do not believe we're seeing
spk_23: demise of lore large
spk_27: buildings as well we are one trend that will continue to drive large buildings is or multifamily housing we don't see that trend turning around for the a we see that maintaining it's it's growth trajectory and with some of the acquisitions we may we play in that market not only in class but in the framing
spk_26: system segments of
spk_2: i think and again i still believe when the economy improves a we will see a return to the office and i would expect a very rapid increase and i think apogee need to be prepared to handle the next five or better than we have last bike and that's what my yeah my replacement will challenge to do got it on welfare and asked this question and i do this and will be a question for whoever i'm know maybe him that going forward but and comes under service business in he obviously some headwinds are more headland and framing glass services been fantastic gun kevin where you brought that pew and execution is that something or potentially you think about arm expand on that and and maybe because obviously you can grow that scantily you know but it would impact margins you know where my you grow that a little bit more on money the margins hurt a little bit but as a weight off glass and framing here just given the uncertainty gone for the little than it's a valid the answers down yes the leader of that stagnant is a phenomenal leader he's got an amazing team we are leveraging are discipline projects selection process and field execution and want to take that
spk_26: him to increase our revenue profile we want to be careful
spk_14: we are in a site a business that is very cyclical and it is a heavy investment on engineers and program managers
spk_26: that take time to train and develop up you gotta be careful you don't over run the growth curve and then you do as i'm very impressed margin they have managed to or thread that needle but in the last couple years of a new leader of that segment i have agreed that increase our
spk_8: but got our vision for how big that business can be not drunk and disorderly were not suggesting we're going to double down but we believe we can increase that business and maintain our margin profile of i think as evidence as i mentioned they booked over five hundred million dollars in orders in fiscal twenty he are winning share executing flawlessly and and that kind of track record can help them not look lumpy during the ups and downs of lumpy or cycles though i would say it's about the answer but we will look at growing that business okay
spk_27: gotta i'm a maybe last on for me just on the cost reductions and i know you can of laid out on the which ones are permanent which ones are temporary but when i look at the e de france and in this corner i mean it was it will is a fantastic number i'm gonna get curious get him and
spk_2: that some of them are the game a one time times in the corridor i mean and did that impact the estimated number and a what has a more reasonable number
spk_0: or that we should we should think about on the effect flying going forward
spk_28: yeah so are the the first is a good to that too big big ticket items in three units in a that economists quarter to look really nice that's not sustainable and we should not factor them for the next two years and one or two years of course when the new my backyard will come in as but it is he planning but beyond that makeover in
spk_29: i'm going to happen to make up being about a guy forty four million dollars a pretty when and on and profits and human good battery the seven ms let's back them out ah if you if you back them out and look at are numbered friends or is any ah
spk_30: a range of about it is i would say two fifty three fifty million dollars according to is what we're looking at right now is there is a normal number we are working really hard to reduce that so i if you mentioned of the ten to twenty twenty million dollar initiative that we're working on right now that you're take that for people to not as to do are kind of
spk_8: forty pam and another trend for quarter or by an end of fiscal twenty three so of more upside their than downside and fifty will and is a kind ran forty five is a boy quitting three your and pay for hundred be looking for canada okay
spk_30: i just sat there for me back to la kill thank you very much i appreciate that arab thank you thank you i next class incomes who we are now it's ability carolina falcon hey good morning everyone
spk_8: morning or they'll hate massoud i think he touched on this but on the glass business you expect revenue pushed out of que forty two product delays so does your does your up margins in the glass business the closer to be bf four percent margin you would have seen this quarter x tax credit yeah the number sounds about right of course the if you look at it by twenty two the velocity video started to come into a break even position and then it'll be a good breath a band of their by going to do so that your to help us any brewing for percent margin that but in the current state a yeah you're right okay and i guess
spk_30: you you you are creating more flexibility yeah yeah across the business both operationally and financially but and i mean can you talk about and you also talk about accelerating kind of reinvestment to the business of can you decide what the projects ah
spk_31: you know without getting too specific i guess maybe had how do you weigh
spk_0: capital projects in terms of flexibility vs rate of return
spk_1: yeah said the network first thing is the them the mention own investment is more about our fixed costs base so we we talked about get i'm getting a puppy or from to advises on what kind of cost base we have and what is the benchmark for projecting and be discovered we have an opportunity of the company to improve pics cosby's that we have love taken that analysis and sorry and we're signing with you'd on the quick hits action serve in cute week you for this year that would benefit in the next two years that the ten to twenty million dollars via mention the investment there needed to make that happened would be more around automation
spk_2: can you know bang up a the consolidation where possible to the consumer businesses better and also to my the cost looking at our infrastructure and the board on cloud servers and so on and how we can do that better those kind of investments a restructuring of of investments are being looked at their arm to and the other question
spk_0: but tapping the of we have a a pretty disciplined profits and capek wherein reevaluate every project on a kind of a hotel rate about fifty percent drawing that that captured project should provide to as so the be not looking at you and met fun ideas coming from each of her segment leaders and out there are a lot

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