Apogee Enterprises, Inc.

Q2 2022 Earnings Conference Call


spk_0: again thank you for standing by welcome to the second quarter two thousand twenty two apogee enterprises inc earnings conference call at the time operators offense or analysts and only mode after the speakers presentation there will be a question and answer session to ask a question during the session the only that plus start with your telephone please be advised to do they cover it may be recorded if he required he further assistance please press star than zero i would die like the hamlet come over to your house today just hips and please
spk_1: thank you more him and welcome apogee enterprises fiscal two thousand forty two second quarter earnings call with me for their types overhauled apogee chief executive officer and the she gupta chief financial officer i'd like to remind everyone that their lives to companies that his remarks these are available on it does to relations section of apogee website during the call we will reference certain non gap financial measures definitions of these measures and reconciliation to the nearest gap measures are provided as early as we issued this morning i'd like to remind everyone that are called him same certain forward looking statements these reflect management's expectations based on currently available information actual results may differ materially more information about factors that could affect apogee them of and finance or involve can be found in our as is the violence and with that altering the call over to type
spk_2: a job that thank you everyone for joining us today this morning i'll discuss their second quarter results and the trends were seeing in our business shared some insight about the rest of the fiscal year and provide an update on or strategy were then the heat will get more detail than the quarter and our outlook after that will take your questions so let's start with the quarter results highlight it on page four of our slide deck i am very proud of our teams efforts this quarter we're managing a lot of moving pieces but our team has executed well and we maintain positive momentum in our business even in a very difficult operating environment adjusted margins in earnings improved sequentially compared to the first quarter this was led by large scale up the goal and architectural services
spk_1: lf though continued it's strong recovery something back from the coven related disruptions that impacted at last year
spk_2: an architectural services delivered double digit growth in both revenue and operating income
spk_1: architectural services also increased it's backlog this quarter an encouraging sign as this is the first backlog growth in that segment in the past year
spk_2: cash flow continues to be very strong we had forty eight million of cash from operations in the quarter improving are already healthy financial position and we return cast to shareholders
spk_1: we did faith several headwinds that impacted our results this quarter
spk_2: as many companies cause inflation is a significant issue input costs are increasing faster than we can mitigate their impact given the speed of raw material price increases and the cycle time with some of our businesses for example the price of aluminum which is apogee largest material costs category as increase sixty five percent in the past year in fact aluminum prices are up nearly twenty percent just censor last earnings call we off of the meaningful cost increases for glass coatings freight and other direct and indirect material used in patients we do work to mitigate some of these two hedging and contracts but the breadth and depth of the increases have outstripped much of that additionally we are experiencing some challenges and i supply chain the market for many materials is very tight with the time pushing out and some suppliers are reluctant to take a new business as we seek additional sources i would like to acknowledge the efforts of our procurement team in helping the company navigate through the situation over the past few years we've added new talent to build a stronger procurement organization a line to our business segment priority do this team did are adding some of the and placed in impact of sourcing alternatives supplier negotiations and driving cost savings and other categories even with these efforts we were not able to fully off that increased costs the materials and free we are achieving meaningful progress in procurement as well as driving cars out in our operations but this is not clearly visible in our results as inflation has outstripped these efforts at a faster rate in addition to our procurement cost efforts we are taking pride factions to mitigate the impact the both labor and material cost inflation as a reminder many of our projects have long wait times so there is a lag from when we keep pricing actions until that impact shows up in our financial results the impact of inflation is hitting us now while the full benefits from pricing will not start to show up until the fourth quarter and into next fiscal year i'd also like to comment on our and markets we thought this was going to be a tough year for volumes especially in framing systems and architectural glass and that is how things are playing out non residential construction remains in a downturn the most recent data from the census bureau shows that non nonresident residential construction spending continues to trend lower total non residential spending is down the eleven percent from the pre pandemic hi there are reasons to be optimistic about the longer term outlook in our markets ford indicators like the a b i and construction starts have been positive for the past several months these board metrics their indicators of the direction of our business twelve to eighteen months out into the future so it's likely a few more quarters before we begin to see these improvements show up in our business results looking ahead to the rest of the year we do not expect the challenges we face this quarter to dissipate we will continue take action to protect their margins in the near term
spk_3: this includes continued focus on execution
spk_2: closely managing our controllable costs
spk_4: right back and as appropriate
spk_2: and working to realize the benefits from my restructuring actions as soon as possible pulling more of the savings into our fourth quarter than originally planned as the year play though we expect that the the actions will off that a large portion of the headwinds we are facing so we remain confident in our guidance for the full year while we work to deliver results this fiscal year we are also possessing the company for the long term our priorities for the year have not changed as shown on page five of our presentation let me highlight a few of these first we will continue to focus on improving operational execution we certainly have more work to do in this area but i am encouraged by signs of improvement a crossed our company for example are execution of the restructuring and business realignment is ahead of schedule and restructuring cause are coming in lower than originally planned we also seeing a solid path for productivity savings in our our town a glass plant that allows us to absorb the states bro operations and still leave meaningful capacity to grow our glass business even as we work to manage cause we continue to move forward with their enterprise transformation efforts these are important investments that will help build a stronger foundation for profitable grow and make us a more efficient acquire in the future the projects we have underway will strengthen core processors and systems and provide new digital and back office capabilities across several areas including finance human resources and supply chain finally we continue to make substantial progress on our strategy work much of this work is now complete setting a clear direction for the enterprise add that discussed previously this was a rigorous process that analyzed all aspects of that his business and the markets we serve we took a systematic outside in approach this included extensive input from key customers in detail competitive benchmarking we analyze our portfolio and mix of products services and capabilities to identify the best avenues for future growth the end we evaluated how we compete to ensure we have the right operating miles to deliver consistent profitable growth from this work we are building a detailed strategic road map to move apogee forward we still have work to do and building out detailed specifics of our plans but i'd like to share a few of the key elements that are guiding a strategy either outlined and page six than their presentation we are positioning to become the economic leader in the markets we serve this means clearly understanding our target markets and where we'd be the most opportunity to drive value for customers you differentiated products and services we are aligning our businesses to have clear go to market strategies managing similar products and services together in a way that as meet the needs of our customers and we will have a relentless focus on operational execution driving productivity improvements to bring more value to customers and to improve our own profitability going forward we will emphasize return on invested capital and the key metric to guide our investment decisions
spk_1: this focus on early the one form how we director capital allocation and how we manage our overall portfolio of products and services
spk_2: to enable future profitable grow we're building centres of excellence for corporate offices and capabilities this will allow us to better leverage scale and will provide a strong back on the support our businesses the enterprise transformation in this is we have underway are important parts of the suffer finally we're adding he telling practices and tools to support our transformation efforts the actions we announced in august or initial steps and executing our strategy we are refocusing architectural glass to emphasize that myth of the market where we see the most opportunity to provide differentiation and drive value the deaths we're taking off to accelerate improvements in the glass segments cost rupture and productivity we are realigning framing systems to bring more clarity in a go to market approach and increased focus on our target markets the changes in framing systems will also improve execution and importantly reduce overall costs to raise our margin levels finally we are moving the thought of our business in the architectural services to create a unified market offering for larger custom the side projects these actions begin our journey to accelerate profitable grow to focus simplification and improved execution the plan to share more details of our strategy and our upcoming investor day invitations for the investor they are expected to go out in the next couple of weeks with that let me turn it over than a sheet to provide more details on the quarter and are outlet
spk_5: thank you die and good morning everyone
spk_6: as dimension
spk_5: we're proud of her team efforts as gordo maintaining the positive momentum in a business despite the significant challenges we face let me start with consolidated desert on paid seven of her earnings presentation total revenue grew by two percent this would lead by double digit growth in both architecture services and alice's segment as expected volumes were lower in architecture glass and framing systems this was due to continued market soft net and some supply chain challenges the according to it when he point eight million dollars of read back restructuring costs these are related to wave actions we announced on august eleven eighteen point five million dollars off the restructuring cause we're including the cost of sales line on our income statement
spk_7: this produced a report he got margin in a quarterback five hundred and sixty five basis points
spk_5: two point three million dollars of the restructuring costs were included in and see any when we're not the restructuring he estimated total cost between thirty and thirty five million dollars
spk_7: as expected most of this was in incurred in a second quarter
spk_5: we can do you expect that restructuring relies be complete by the fourth quarter of pittsburgh twenty three based on her progress to date we now expect daughter restructuring costs would be lower than initially estimated
spk_7: we expect from a pre tax i cause of approximately five million dollars to be incurred over the next two quarters
spk_5: excluding the restructuring cost adjusted operating income was seventeen point seven million dollars
spk_1: it was down from twenty five point five million dollars in the last year second quarter
spk_5: the euro a year decline was primarily driven by input costs inflation which was it twenty million not i had written a quarter and hype labor cause maybe resulting from the reversal of every costs actions we hadn't played last year
spk_7: additionally we had approximately three point five million of operating costs related to and deprived transformation initiative and finally made increased cost of healthcare insurance
spk_5: leave gods increases were partially offset by improved pricing for activity and construct a improvement and benefits from a procurement savings initiatives what are adjusted operating margin of five point four percent was down year we year majid did improve sequentially by fifty basis points compared to four point nine percent in the first quarter this is primarily driven by stronger performance and architecture services or that the score also benefited from reduce net interest expand driven by lord that balances and a lower check out resulting from stock buyback in the first half of the year
spk_7: we reported a net loss of eight cents per share this included the restructuring concept twenty point eight million dollars
spk_5: without this respecting impact adjusted earnings game in at fifty three cents per diluted share
spk_7: the murder margin a desert eap is improved sequentially he breathing by twenty six percent compared to the fourth quarter
spk_5: let's turn to segment are those which are a slight eight starting with architecture rating system revenue of on and fifty million dollars was slightly lower than the prior you this was primarily driven by lower volume and supply chain challenges partially authored by improved right thing
spk_7: framing systems reserved this quarter included two million dollars of restructuring costs
spk_5: excluding the restructuring adjusted operating margin was six point nine percent that was lower than the prior year driven by cause inflation and lower volume partially offset by improved right thing and productivity gave it holding them prior restructuring actions sequentially margins improved from five point three percent to six point nine percent moving to architecture blood segment revenue was down eight percent as expected this was driven by lower volumes the black segments that included seventeen point four million dollars of researching costs
spk_7: this was primarily for at that impairment related to closure of velocity business along with employees southern scoffs
spk_5: excluding the reflection pot adapted operating margins were slightly about break even margins were impacted by high cost of plot lumber and other material along with higher rate and labor costs the high cost are primarily authored by improves help make an increase productivity in our would not i'm minnesota that facility the glad that meant along with rating system is very see the most opportunity for long term margin improvement most of the restructuring ashes announce in august are focused on framing and blocked segment the now like the see profitability improvement from these actors starting in the fourth quarter
spk_7: leap opening a business and differentiate high value add thought it should be a also contributing the long term margin improvements
spk_5: but in doing our focus on lean and continuous improvement to dry productivity gains in architecture so if it revenue growth thirteen percent to eighty three million dollars and the continued to execute projects and backlog operating income group ten percent to seven point two million dollars and operating margins game in at eight point seven percent the seven segment continues to have strong project execution while margins where down slightly compared to the prior year this quarter was a nice improvement compared to the first quarter the remain confident and seven has already secured and and outlook for the folio well also encouraged but improving our friends in architecture services net outflow low increased each of the plot three quarters and as i mentioned backlog gruden order to fire and thirty two million dollars turning your large scale optical and to continue to recover from last year code related shut down
spk_1: revenue twenty four million and daughter grew forty percent compared to last year second quarter the mine has returned to normal and ourselves makes included more premium products
spk_7: as a third author don't win more normal level of profitability
spk_1: operating income was five point five million dollars that operating margin of twenty three point three percent and finally a topic got in previous quarter to seven point one billion dollars
spk_5: this is primarily driven by operating vented related to confirmation projects and he breathe help get caught that i mentioned earlier
spk_1: the copper line is also included one point four million dollars of restructuring costs
spk_7: week that contradict been the remain about last year level throughout the rest of the fiscal year
spk_8: during debate nine a gas giant balance sheet remain strong
spk_7: cash flow from operations in a quarter was forty eight million dollars this bring year to date gas go to fifty five million dollars the that strong reload and cashflow about were typically has been to the first of the fiscal year
spk_5: gosh to a lower than the last year which was unusually strong i do remember last year we benefited from reduced working capital and can break on factions related to call it it would aid capital ten point one million daughter below last year's level we expect capital spending wrap up in a second half of the fiscal year as we see more investment related to transformation initiative based on irritate spending the night back only a copy of approximately thirty five million dollars down from a previous estimate of forty five hundred dollars
spk_7: we continue to done cash your shareholders you today have return over thirty two million dollars from share buyback and evident that it more than double the level and last year for south
spk_5: i balance sheet remain very strong net that is down two hundred and two million dollars the had no significant debt maturities ended june of great four and we have no borrowing in urgent or and thirty five million revolving credit facility this job position provide significant flexibility as we started execute on a new enterprise strategy now turning to an outlook for the rest of fiscal twenty two to twenty two which is on pace ten upper presentation
spk_7: at i mention we are repeating a pull your guide and based on an adjusted if he had bases in a range of white dude two point four
spk_5: as a reminder this guy didn't excludes they expected restructuring costs
spk_7: photo the believe the headwinds you pay this quarter will persist
spk_8: input got inflation and supply chain challenge it will likely remain significant issue especially framing and blocked segment
spk_5: wake that continued top livestock bed and low volume and framing systems and blood
spk_8: particularly in a shark the time parts are forbidden
spk_5: the out of basic continued year over your head when from the reversal of temporary gone factors that were in place last year
spk_8: we're taking near them actions to answer to the edwin
spk_5: during a continued focus and execution globally managing controllable caught at getting pricing to off that inflation and working to achieve benefits from my restructuring we expect these actions that off that much of the headwinds we're facing but get that confidence in our while your outlook
spk_7: or third quarter the will likely be similar to the second quarter
spk_5: we expect earnings will make a larger improvement as a move into the fourth quarter when they expect to live more of the benefit from uprising and restructuring action also as a reminder last year third quarter included seven point four million dollars benefit in architecture blood lead to new market that reddit did benefit will not repeat in this your third quarter so either outlook remain challenging in the near term we're confident that ark theme can it can do to take the cute to substantially out that there had been as it goes out the fiscal year that will put up and strong fourteenth as a move into been twenty twenty three
spk_1: would that i've done it back ordered die or concluding remarks
spk_9: take the heat
spk_2: as i said earlier i am very proud of our teens efforts this quarter there were a lot of moving pieces but our team was able to drive progress and sustained positive momentum in our business we are particularly encouraged by or continued strong cash flow which provide significant financial strength as we move forward we expect are operating environment will remain challenging especially through the third quarter our team is taking the right actions to offset the headwinds and we see a path to improved results in the fourth quarter and as we move into next fiscal year oct importantly we are beginning to execute elements of our strategy to better position the company for the long term that her name an exciting time for apogee we knew this year for challenging and those challenges have increased given the broader economic environment we also realize that making a major shift in strategy and implementing it would take time with this twenty three being the year we would really start to see a larger impact of this work but as we've highlighted today we are making progress on several fronts and we expect that accelerate as we closed out this fiscal year we look forward to sharing more details with you i am our upcoming investor day and with that we are ready take your questions
spk_0: thank you all reminder to ask the question you'll need a pastor one on your telephones so i try a question please pass the pound key our first question comes on the line of credit more like cj as security your line as open please go ahead
spk_10: hey good morning guys thanks for taking a few questions i'm wearing mid mid morning ah maybe to start with and put him inflation sally's talked about twenty mind our headwind sounds like most that is coming from framing of and glass as wondering if you could provide a little bit more detail there err on the split am and when i can understand where it's easier to raise pricing is it is it is easier within the and framing segment think last or maybe movies talk to that with it
spk_5: sure minecraft this in the shade up for broth inflation for the court twenty million dollars he noted we have a lot of actions in place today on of thing that the become and saving as an as right thing as out of that about ten million dollars off the twenty million dollars the net impact inflation
spk_7: for the quarter is ten million dollars and on a year to date bases his number is fourteen million dollars
spk_5: when you think about the split up this i would say ah but fifty fifty would be a bad blood between but laugh and framing segment on on the inflation are there are lots of moving pieces within the quarter but are under actual bases i would say to fifty fifty split and the look at the elite times of where businesses a deck that some time for us to start recovering so the price changes we do as we are committed to certain number of projects to week better quarter three to remain under a negative or trained on inflation but we start to see positive net inflation impacts coming through and quarter for
spk_2: may maybe credited add to that if you think about that split in framing with respect to pricing mean obviously were trying to offset cause ourselves customers never liked to see price increases even though a lot of them have become used to at least the first several months of the here as it was going across i just our industry but of brighter
spk_11: economy
spk_2: framing has some shorter cycle time so they have been taking more pressing so they probably offset a larger chunk of that inflation however it's still than a net negative for them just given the speed of the price increases and glass giving a little bit longer cycle time and how projects are quoted there than a bigger lag and their ability to see that pricing flow through on jobs and sales as a go forward
spk_12: gotcha that very helpful
spk_10: i guess longer term in the expectation is that you can achieve and twenty or thirty million of annual i savings by the end of fiscal twenty three just bought from big picture perspective can you talk about the drivers that you know what would what would be that me of that delta between twenty and thirty will where were those savings and come from that that are less certain at this point
spk_7: sure so the focus on a all of the restructuring program is on unblock and framing segment rate so the if you think about the doctor improvements were doing their than a a do it with that more importantly there is a piece on a cost of goods sold that's gonna improve in both black and framing things
spk_13: ah ok
spk_5: if you think about that the split are areas where we get a restructuring at the rained of people said they shut down from a professor they do we have the have let people go that would be a one piece of or restructuring benefit the second would be that than it he saddam and related to optimization our past and i see any ah those are the to important pieces on optimizing a cost of from restructuring they can think of die
spk_2: yeah i bet it that well and and obviously the simplification that were doing and business realignment that really impacts framing but also moving soda law as we go into next fiscal year old and of to architectural services you know there's some high level savings from a nest in a perspective you know that will benefit from that consolidation and though in the larger framing
spk_10: got it hella last one for me this may be a question for your investor david maybe expectations for for glass operating margin range in a once restructurings complete and nimroz market is a little bit stronger
spk_2: yeah i would say at this point we're not ready to give any long term guidance with respect to margins for apogee overall or or any other business segments i will tell you that through the strategy work we identified significant opportunities to improve our margins for glass and that's really the focus and emphasis for that business right now i'm and and probably well into fiscal twenty three that we want to refocus in parts of the market where we can differentiate ourselves more strongly delivering more value to the customers which in turn shows up as more value for apogee in our shareholders with risk specter margin so so that the focus for glad we we do ceased some significant upside and on margin improvement for them over the next year so
spk_14: i'll leave it there thanks guess
spk_15: thank you thank stress
spk_0: thank you and our next question cause nine actually have a narrow with that out he had company your line of health and please go ahead
spk_16: hey the going to initiate a stigma questions
spk_17: the morning mine
spk_2: so when it it may be target on the string a little bit more on the glass segment on
spk_16: you without speaking about margins that the more broadly if you could speak to the product focus goal forward and gloss maybe some examples of the the in high performance products but i think you called out in your august press release
spk_2: yeah unite let me give you some high level and in this is an area that we will go deeper into an investor day but as we looked at our position and that market we wanted to look at where we have opportunities to leverage some of the unique capabilities we have and coatings as well as certain parts of the markets sir and types of projects that we saw an opportunity where we can differentiate ourselves versus competition especially some of the foreign competition it very is that the business is selling into now and it is part of their portfolio what we're doing is putting a stronger emphasis on that as we go forward we also see an opportunity to bring more value into what we take the market i'm some of that would be organic product innovation that we would invest in ourselves as some of that would be to third party partnerships where we can leverage other technologies that are out in the market and combine it with their glass offerings to in essence raised the value of what we're selling and thereby awful generate higher margins for that business
spk_16: great crusade the color there and he spoke about adequate capacity nato with on it as the quite the additional activity can you maybe give it a sense of what utilization rate are looking like and what you'll be running lot post restructuring and the classic
spk_7: to it be don't really calm and into that level of detail and this capacity utilization all i can say is that there's a lot of brock dirty word this happening in a with donna right now and we'll continue to expand joke about the just based on that productivity or with all the gonna couple of shut down to be a mentioned as part of a restructuring we still believe yeah have adequate capacity for the next several years to take on the market growth and that's coming up
spk_16: okay fair enough and and just last month for me and i'll pass it on his bar on the service decided that he did see some sequential backlog improvement there can you speak of i see backlog for services training for the remainder of the fiscal year
spk_2: when they get we look out for the air was a positive sign that we saw this quarter they're still and even is that we expect to see and that of business just as coding activities moving around with the broader economic challenges so we've seen you know that improvement and orders and the backlog going up as very positive thing we're not ready to call victory that will see that consistently as we move ahead but we've got some very good positive signals expect that business moving forward
spk_18: great they are much help her blog
spk_0: thank you on an exhibition cat on at that time i play callum your line as open please go ahead
spk_19: the morning around
spk_20: the morning money help her father follow up on that last question a little that and in i'm anna you said too early to call little bit on services but i mean he look at the trends in that business obviously his services is the one ah you know that that you're you're doing well now that you're going to start to feel the impact of the downturn later than the other businesses as you get the fiscal twenty three and in clearly more optimistic about glass and framing i mean the you to do you feel i mean what where's your confidence stand in terms of you know that services backline which is still very sizable i'm you know kind of making up for
spk_21: you know some of that softness so maybe maybe are able to keep that business flattened twenty three rather than ah some compression there
spk_2: yeah present a question and you know we're not really ready to give guidance on fiscal twenty three when i will tell you is that you know given that were just midway through this fiscal year it's it's too soon to call any way hollywood see that business performing you know i've commented on previous calls that team while they did see that that downside hitting them later has been actively working to fill that gap so that work continues and i think we have to give them time to continue to see that as we progress forward level little bit more insight you know as we get to the end of the calendar year and and certainly in our fourth quarter you know we'll start apps and better visibility you fiscal twenty three for that business
spk_20: yep know i can appreciate that but it does sound like a you know you are pleased with how services has been executing and suggest would be in a looking at it in that context year
spk_21: you know it sounds like you're you're optimistic that them and on than that and that that they will continue on the path that they've been on
spk_2: yeah we've been very pleased with how that business has been performing and and also how they have been working to you know not only deliver this year from a margin perspective after having a really great margin your last year and then as they built out fiscal twenty three and and that strength is frankly where we saw the opportunity to move soda wallander that business because we with the opportunities to leverage some of that strength with in that business and and raise it's performance as well
spk_22: yep got it
spk_20: only the last and for mean his on on velocity and and the decision that you talked about back in august yeah maybe it just anything you learned in that business you know clearly that's not a part of the market you now want to focus on but you know whether it's operationally or or market facing what you learned in that business the maybe you can take the the rest of the glass segment
spk_2: yeah we looked at that business you know through the strip the strategy work will affect current market as well as how we saw the future market playing out and with respect to that end of the market we saw significant pressure on margins and for that we're we're not seeing the price points that was originally anticipated and therefore not seeing the margin that we expected for that business so we to go forward looking view and didn't see that materially improving over the next few years that that as well what we were doing in that space while it was take different approach from a technology and automation perspective it really wasn't a strong differentiation from the end product itself and and we saw it as being delude of to our margins and are i see goals as we move forward and that led us in other the difficult decision to to exit that business we are working diligently with the team to and effectively offset some of that and best man few the sale of equipment as we shut down those operations and we're seeing some positive indications with respect to that as well
spk_23: okay thank you
spk_24: a deal
spk_0: thank you and i next question khazna line of friend paul and was no davidson yeah mine as often please go ahead
spk_25: thank you the morning
spk_26: morning
spk_16: tired and she went as that the move or the said a wall business and services become effective just remember porting perspective
spk_7: sure so as you see in the august eleventh announcement we are already working on transitioning some of the the parts of the businesses but the real are a business will happen from first of march next fiscal year were looking at deb a lot of moving pieces within the sort of our business common
spk_5: are are savages segment is trying to understand the key opportunity they can drive and and this year will be focus on understanding the business and transitioning it so we're looking to that they're real date or recast them up our numbers and segments coming from bob starting to first of march next year
spk_27: okay perfect and then and services and he had good revenue growth but the margins where a little lower talked about
spk_16: like some of the change in the next and that it is that your expectation for margins in the game for the rest of your for the services business to function and different next for the last year
spk_5: yes i would say those is that is performing really well and there's always the element of project makes that comes along and as business so alert or gotta be concede the margins going down porto a quarter but sequentially they are continuing to ah improve their margins
spk_7: exactly song margins in this could play once the you know the second highest ever ah it'll be hard to repeat that and twenty do but we still see strong opportunity than business as the by backlog a strong and the other team is doing have a good job and their products election and how to select their regime so we continue to seek
spk_5: good positive momentum and margin should be improving overtime
spk_27: okay
spk_5: the the transformation initiative and and similar facility consolidation that gonna come with that are there it i guess could there be significant real estate assets that that we could consider coming out of all this that might often countries of the bouncer year
spk_7: what would we have an aunt and august eleven at one of the key aspects of you're looking at beyond that be do not see any significant opportunities on her ass so for now of course the strategy can do wall and yeah understanding a different part of execution of that strategy and saw the decisions on as it may be made in due course of fame
spk_18: but for now whatever was an os and august eleven and dumps of a glass segment as those are the key assets that we're reducing
spk_27: okay
spk_7: am and then he saw the revised callbacks guidance
spk_5: mean fiscal year to date iran and so well below that are there and projects earmarked it's step up that kept vaccinate second half years is from the magnate week senior today
spk_7: yep
spk_2: yes oh yes if you think about the the enterprise strategy word the be a pencil five deal understood where do we want to invest more and which are the areas where we want to reduce and lessons into that one of the the the key reasons we are looking at dough investing differently what is what we thought was originally in our plan for this year and secondly that the shouted you work that we're doing ah we have invested some of it already malarkey systems and backbone what that's happening that we can do to ramp up in effect in the second half of the year
spk_16: it's will manage that his timing from a strategic of it and she'd said we we actually were adding the team slow walk some of those plan investments until he had a better sense from the strategy work and and that d prioritize some of the things that were in que
spk_28: and and we do expect a step up in the second half the you know the caveat just as we are seeing with raw materials
spk_0: that dependent on supplies that we know some the some of the work that we want to execute will have to rely on the ability to bring that equipment and et cetera so that you know it's something that we're watching as we go to the second half but our plan is to spend a that level now as we move ahead
spk_29: okay great thank you for for that that talking mortimer
spk_30: thank you thank thank
spk_29: thank you and next question cousin line at and props that kansas city capital yeah i know that that please let us more have one arm hi i'm in l a b i and axes been positive for a last six months and also that bodes well ah kneel down the road but with the cost pressures ah that the the industry a scene how the one i'm class and so on
spk_2: do you see any evidence at some these projects that maybe people architects are discussing and so on ah at might be move might they be table for a while the see where these cosco are you seen any any am anything such as that it all were watching that really closely as you might imagine you know it's it's too soon to tell if it's going to have his material impact on the non read the recovery
spk_29: i would say we've seen some projects pause that we're ready to come out for quotes and bed and at same time we saw other projects pull forward ah or push their schedules ahead i'm with respect to that so it it's been mixed signals at this point in as far as what we're seeing obviously what's happening with
spk_7: kobe returned to workplace with the delta variant any other variants the come out that could have an impact as well and in what people are deciding to do with projects so we continue to watch that
spk_5: i would say it is uneven that we haven't seen anything that pointing to you in on acceleration of the recovery or at this point something that pointing to and deceleration of the recovery okay affects at and i may have missed it yeah when you are announced for our the restructuring couple months ago i thank you he said thirty to thirty five million and costs and now it's what twenty five twenty to twenty five something like that ah what's the what's the delta there are what's the difference
spk_2: so yeah you got the numbers right to we had announced the a thirty to thirty five and as initial estimates and we are looking to spend about twenty twenty five million dollars now that a bigger changes the interest that was anticipated from potential buyer for some of the athletes that via we're selling that via see now a good and written therefore we see that we don't need to write down from other that fits and that rubbery bland and equipment okay below country countries reminded his and provide more details and quarter to buy the shame it will have details on some of these transactions on selling these property been and equipment john reality that would say is that the teams have really executed well against us plan
spk_31: you know we we put together a very detailed plan on how would move this ad coming out of the strategy work
spk_15: i'm and the team is executing against that extremely well to the point that in a we're confident we'll see some of those benefits actually flow into our fourth quarter on which is a very good thing and and for us this was the in an area where we look that way you know future going forward if we want to get back into emanate we work
spk_0: coaching some of this as integration work with a profit business units as as mergers your rf and lots of and on lol business combining and that or instruction to the teams and we're building up playbook and how they're managing that so they can start to exercise that that muscle because we do intend to be an active portfolio manager
spk_2: which me the some point in the future in a we will back be back in the market and this is a chance for our teams to start to exercise them a network i thank you very much thank you thank you thank you and i'm shy no further questions at that time and i like turn a conference back over to types of a hot for any fighter remarks
spk_0: a baggie michelle and thank everyone for joining us today and and learning how we are driving progress even in a very challenging environment

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