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spk00: Good morning, ladies and gentlemen, and welcome to Advanced Drainage Systems' second quarter fiscal 2021 results conference call. My name is Laura, and I am your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. I would now like to turn the presentation over to your host for today's call, Mr. Mike Higgins, Vice President of Corporate Strategy and Investor Relations.
spk01: Good morning, everyone. Thank you for joining us today. With me here I have Scott Barber, our President and CEO, and Scott Cottrell, our CFO. I would also like to remind you that we will discuss forward-looking statements. Actual results may differ materially from those forward-looking statements because of various factors, including those discussed in our press release and the risk factors identified in our Form 10-K filed with the SEC. While we may update forward-looking statements in the future, we disclaim any obligation to do so. You should not place undue reliance on these forward-looking statements, all of which speak only as of today. Lastly, the press release we issued earlier this morning is posted on the investor relations section of our website. A copy of the release has also been included in an 8K submitted to the SEC. We will make a replay of this conference call available via webcast on the company website. With all of that said, I'll turn the call over to Scott Barber.
spk02: Thanks, Mike. Good morning, everyone. Thank you for joining us on today's call. We had a strong second quarter of fiscal 2021 with 10% net sales growth as demand and business activity remained favorable. I want to thank the ADS and Infiltrator employees for their execution and diligence in making that happen. I also appreciate our customers for working with us and new and imaginative ways to serve the construction markets. We generated strong performance in key growth states including Florida, the Carolinas, Tennessee, Georgia, and Utah, as well as more broadly across the south and southeast regions of the United States. As a whole, we benefited from our national presence and geographic exposure, as well as our increased residential exposure from Infiltrator and the focused homebuilder programs at ADS. Infiltrator once again exceeded revenue expectations with 63% sales growth in the second quarter. Infiltrator continues to see double-digit growth in tanks and leach field products, with particular strength in Florida, the Carolinas, Georgia, Tennessee, and Alabama. Recall that Infiltrator results are for two months of the prior year quarter, given the timing of the acquisition, which closed July 31, 2019. In the residential end market, legacy ADS sales increased 15% this quarter. We see favorable dynamics in new construction, repair, remodel, and onsite septic. Orders, backlog, and sales remain strong through the period with very limited impact from the slowdown in residential starts earlier this year. As a whole, we are well positioned for growth in the residential market. On the front end of the cycle, the ADS products and go-to-market strategy are positioned for the land development phase, whereas infiltrator products come in play towards the end of the cycle when construction is nearing completion. Additionally, both infiltrator and ADS have a repair and remodel component that is strong and growing, its home improvement activity, and existing home sales continue to rise. About one-third of the infiltrator sales are related to repair and remodel, and at ADS, the repair and remodel exposure is covered through our retail and national accounts. The company's exposure to the residential market has increased to 38% of domestic sales compared to 28% at this time last year. Sales in our non-residential end market were up modestly, led by strong growth in HP pipe and StormTech retention detention chambers, as we continue to benefit from our exposure to horizontal construction. We are tracking very closely to the segments of the non-residential market that continue to do well, such as data centers and warehouses, as well as geographies that are experiencing growth, like the southeast and Atlantic coast. Importantly, we believe ADS is well positioned to continue to grow above market due to our conversion strategy, national coverage, and water management solutions package. And given what we see in the market today, we believe the second half of the year will be similar to the market conditions we experienced in the first six months. Agriculture sales were down just slightly this quarter as we caught up to a tough comparison period. Still, the agriculture sales team has had a great first half of fiscal 2021 with sales up 14% year over year. In addition, the fall selling season is off to a great start as we continue to benefit from the programs we put in place around organizational changes, new product introductions, and improving execution in the agriculture market. International sales increased 3%, driven by double-digit growth in our Canadian business. Canada is doing well across both the construction and agriculture end markets. mexico on the other hand is not performing as well having been more significantly impacted by the covid 19 pandemic overall strong demand is causing some regional and product level constraints lead time and inventory levels are stretched as we get into this part of the season Based on this strong demand and our desire to more fully capitalize on opportunities in our core end markets, we are stepping up our capital investments, which we now expect will total between $80 and $90 million for this fiscal year. The focus of our investments will be to improve safety, increase capacity for future growth, and improve productivity. We will rebuild finished goods inventory in the second half of the year by level loading production at our facilities in our traditionally slow months, preparing both ADS and infiltrator for good customer service and normal lead times. This build will depend on our second half demand, ramping up new capital, and dealing with the COVID-19 related circumstances like employee retention, absenteeism, and local conditions. Frankly, this is consistent with the environment we've been managing since the pandemic hit. We are also making investments in talent, including the recent addition of a senior leader to accelerate new product introductions, marketing, and innovation. As highlighted in a press release this morning, we created a new product management and marketing organization to accelerate the development, launch, and marketing of new products to meet customer needs. I'm pleased to announce Brian King joined our organization in September to lead this effort as the Executive Vice President of Product Management and Marketing. Brian has 25 years of successful product management experience, and we're excited to have him join our team. Moving to our profitability results, we achieved another quarter of record adjusted EBITDA during the period. Adjusted EBITDA margin increased 820 basis points overall, with a 640 basis point increase in the legacy ADS business. This was driven by favorable material costs, leverage from the growth in pipe and alloy products, execution of our operational initiatives, and contributions from the proactive cost mitigation steps we took earlier this year. Infiltrator also achieved record profitability in the quarter due to strong demand, favorable material costs, contributions from our Synergy programs, and continued execution of their proven business model. The Synergy programs are right on track to achieve the run rate targets we've previously communicated. As we look ahead to the second half of the year, we are optimistic as our order book, project tracking, book-to-bill ratio, and backlog all remain positive. We expect the normal seasonal patterns to apply to the second half of our fiscal year as installation activity slows down in geographies with colder temperatures. We also have some profitability headwinds coming up in the third and the fourth quarters, including inflationary costs from materials and labor. We are working to offset these headwinds through pricing actions, operational productivity initiatives, and our synergy programs. In summary, we did a very good job executing this quarter. We're focused on safety, managing through the COVID-19 environment, servicing our customers, and driving these new levels of profitable performance. Though uncertainty still exists regarding the broader market environment, we are well-positioned to capitalize on residential development and horizontal construction while continuing to generate above-market growth through the execution of our material conversion and water management solution strategies. We remain focused on disciplined execution as we look to build off a very strong first half of our fiscal 2021. With that, I'll turn the call over to Scott Cottrell to further discuss our financial results. Thanks, Scott. On slide six, we present our second quarter fiscal 2021 financial performance. Net sales increased 10% with 4% growth in our legacy ADS business plus 63% growth in our infiltrator business. Sales growth in the legacy ADS business was led by 15% sales growth in the residential market, which remains robust. As Scott discussed, demand in our non-residential market remains stable, with pockets of strength in horizontal construction, data centers, and warehouses. Overall, sales were solid throughout the quarter, and this trend has continued through October. Sales grew at Infiltrator across their portfolio, driven especially by strength in their leach field and tank product lines. Infiltrator continues to benefit from the underlying strength in the repair and remodel market, as well as growth in single-family housing. This growth was further accelerated by their material conversion strategy. From a profitability standpoint, adjusted EBITDA increased $56 million, or 47%, compared to the prior year. Adjusted EBITDA for the legacy ADS business increased $33 million, or 35%, with strong performance from our sales, operations, procurement, and distribution teams. ADS is very well positioned to capitalize on the current stability in our end markets due to our market-leading position, national relationships, breadth of products and services, as well as our geographic and end market diversity. These attributes make us the premier partner and leader in the industry and led to the margin expansion and strong financial performance in the quarter. Infiltrators adjusted EBITDA increased $21 million, or 86%, benefiting from strong demand, favorable pricing, lower input costs, productivity improvements, as well as our Synergy programs. Moving to slide seven, our free cash flow increased $112 million to $257 million, as compared to $135 million in the first half of fiscal 2020. These impressive free cash flow results were driven by the strong sales growth and profitability we achieved in the first half of fiscal 2021, as well as execution on our working capital initiatives. Our working capital decreased to right around 20% of sales, down from 22% at this time last year. Further, our trailing 12-month pro forma leverage ratio is now one and a half times, slightly below our target range of two to three times leverage. We ended the quarter in a very favorable liquidity position as well, with $204 million of cash and $339 million available under our revolving credit facility, bringing our total liquidity to $543 million. The favorable changes we have made to our capital structure have also resulted in no significant debt maturities until 2026. While pleased with our conversion of adjusted EBITDA to free cash flow in the first half of this year, we will need to make strategic investments in working capital and CapEx during the second half of this year to position us to take full advantage of expected growth as well as to make the necessary investments to support our productivity initiatives at both the legacy ADS and infiltrator businesses. In addition, we continue to assess bolt-on acquisition opportunities through our disciplined acquisition process. Finally, on slide 8, we introduce our guidance for fiscal 2021. Based on our performance to date, order activity, backlog, and current market trends, we currently expect net sales to be in the range of $1,790,000,000 to $1,840,000,000, representing growth of 7% to 10% over last year. Adjusted EBITDA to be in the range of $495 million to $515 million, representing growth of 37% to 42% over last year. And we expect to convert our adjusted EBITDA to free cash flow at a rate of around 60% for the full year, driven by our strong results as well as the investments we just discussed. With that, I'll open the call for questions. Operator, please open the line.
spk00: Yes, sir. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound or hash key. Please stand by while we compile the Q&A roster. And our first question comes from Mike Halloran of Baird.
spk04: Hey, good morning, guys. So a couple of questions here. First on the demand side, just help parse out how you're thinking about the back half of the year. You know, the commentary around order rates, backlog, funnel, everything seems directionally positive. Guidance is kind of stable year over year. Is that timing mix, you know, just giving yourself a little push in case weather or COVID becomes a bigger headwind? You know, just help me understand kind of those puts and takes a little bit.
spk02: So, Mike, Scott, Barbara, good morning. So, I would say that, you know, we were off to a really good start in October. It looked a lot like September in the prior quarter, and September was particularly strong. a little more conservative in our fourth quarter. It tends to be the most variable quarter around weather, and we feel like we have a bit of a tough comp to last year. We had very favorable construction weather conditions last January, February, March, and both Infiltrator and ADS benefited from that. So we've gotta look at that and put in what we would call the average scenario. for our fourth quarter. Our near term is, as you described, I mean, we continue to move along at a pretty good clip, and we think we've got a good handle on, you know, kind of, let's call it, you know, our 60, 90-day horizon. But as always, there's a lot going on out there in the world, and I think we want to be prudent and just a bit on the conservative side. And, Michael, to Scott's point on that pull ahead in Q4, second half last year, we did talk about that being around $20 million, about $10 million because of COVID uncertainty and people wanting their orders before the end of March, as well as about $10 million due to the warm weather. That's a good point. I forgot about that.
spk04: Yep, very good context there. And then what's the latest thought process internally? I know you typically say you need to get towards Thanksgiving a little later so you can start getting a view on what the next 12 months after looks like. But how are you thinking about the non-res market or non-res pieces of your portfolio today? Obviously, the conversion and your marketing efforts are driving out performance versus end market. But any early thoughts on how you're thinking about how the next 12, 18 months might shape up on that side? And the ability to navigate, you know, what are going to be probably pretty disparate trends amongst the verticals within that non-res space?
spk02: Yeah, I think those will be disparate trends. There perhaps could be disparate trends geographically. I think we're continuing to believe the southeast and Florida, you know, the southern Atlantic coast will be a good non-res environment. We've seen You know, some things rebound in Texas and California here recently. So those have kind of opened back up. We might even see a spring back in the northeast from a non-residential perspective. I think it will kind of come down to, you know, like we talked about before, you know, are new projects initiated, you know, and financed? But we have a pretty good funnel of quotations, and we hear good things around availability, of course, of money, but also of people willing to go forward on projects. So I would say probably we feel better today than we did last time we spoke.
spk04: And then last one for me, just put some takes on the margin side here. How are you thinking about the pricing equation, your ability to capture price in the marketplace versus some of the inflationary pressures that you're seeing on the material side, and how should we think about that cadencing in any lag impacts over the next few quarters?
spk02: So we've been waiting for that question from you. We went out with a price increase in October in its stock, and we're kind of seeing that. We feel like that we're going to fight the inflationary costs, particularly resin, with four tools. You know, it's the pricing, which we've already gone out into the market with, the level loading we're going to do to rebuild our inventories but also load our factories, which should help our off-season conversion costs increase. You know, it'll go on the balance sheet and come out on the P&L, you know, early next year. The productivity programs, which are gaining traction, and then the fixed assets that we're putting in place and automation we're putting in place that should be paying off. Obviously, that one's a little, you know, doesn't have as much impact near term, but, you know, already that wheel is beginning to turn for us in certain areas. Not as fast as I'd like. but certainly beginning to turn. So those are the four weapons I will use against the inflationary environment, which is certainly going to be there. But we're going to fight that fight on inflation every day.
spk04: Makes a lot of sense. Thanks, Scott. Appreciate it.
spk02: All right. Thank you. Thanks, Michael.
spk00: Our next question is from Matthew Boulay of Barclays.
spk06: Morning, everyone. Thanks for taking the questions. I wanted to ask about the commentary you made about, if I misheard you, please correct me, but about needing to make investments in CapEx in the second half and some of the inventory build that you're looking to do will somewhat depend on, I guess, both demand and ramping capacity. I guess, are you actually running up against capacity constraints anywhere at this point? And I guess overall, just any more detail on some of these investments you're looking to make? Thank you.
spk02: Yeah, that's a great question and one we spend a lot of time working on. The answer to your question is yes, we are running up against capacity constraints. You know, to build both businesses or build a stock, We have extreme seasonality, so we've got to kind of build ahead of that and drain down and build back. But even doing that, you know, at both companies, we've run very hard. you know, since basically May. And as we look into next year, we're going to have to make additional fixed asset capacities to give us more seasonal capacity, to give us more overall capacity. And if you think about it in terms of, like, infiltrator, you know, a couple more presses, earlier than we had anticipated, and Roy and his team were right on top of that, and we were able to kind of get that in the pipeline. On the ADS side, it's getting some assets into key areas, the growth areas we have, and that is a combination of new assets and maybe moving some assets and some different production planning and inventory strategies, which we, by the way, have been successfully executing and are now kind of building upon those ideas. So, you know, my goal, Matt, is to give us better peaking, both better absolute capacity and better peaking capacity in call it that June through October timeframe. And that way we can meet, you know, surges in demand, you know, and better availability and service to our customers. And frankly, I think that's one of our strongest growth programs is is getting those things, getting those things in place. Mr. Got it.
spk06: Okay. No, thank you for that detail. It's very helpful. Second question, I wanted to ask about some of the regional dynamics. I think, Scott, you talked about, you know, making a lot of progress and sounded like some areas of the Southeast. Just curious if you could broaden that out a little bit. You know, some of the markets you've, you know, previously talked about is kind of medium-term opportunities, Texas and California, just places where, you know, you've thought about being a little bit less penetrated than other markets. I'm just curious, kind of, what's the state of things today? Where are we on those markets or just any other markets broadly where you feel like the penetration, you know, where you're looking to make sort of the progress? Thank you.
spk02: Yeah, we, you know, our southeast of Florida penetration plans, you know, is our key states in the crescent going. I mean, I think that's going pretty well. Texas, you know, they've had a heck of a year in Texas from just an overall economy. COVID-19, oil prices going down, a couple of hurricanes, lots of uncertainty. So I think there was kind of a natural, you know, just a tough market here for a while, though in the last months, two months, it's began to accelerate and come back into year-over-year growth. I think our penetration is probably maybe up a little bit, flattish up a bit. We're really strong in Houston, which got hit the hardest, and it's coming back very strong right now. In Dallas, in San Antonio, Austin, you know, we're penetrating better every day. We still don't have the full suite of approvals that we want, that we're working towards, but we're making progress. We're making really good progress. And our team down there is doing a really nice job on that, working that, you know, with – the local people that are the influencers to get that approval. California, again, kind of shut down like the Northeast did. Tough to get in front of customers. We were flattish down some, but, again, over the last two weeks, I mean last two months, began to come back. We want a really nice distribution center out there with a big well-known e-commerce company, and we're shipping against that order right now. And there's some more out there on the tee box that we're pursuing. So I think we're in the hunt and in the game, not where we want to be, but we're on the field and playing hard. Got it.
spk06: Very helpful. Thanks again. Thank you.
spk00: Our next question is from John Lovallo of Bank of America.
spk05: Hey, guys. Thank you for taking my questions. The first one, you know, on the price mixing materials bucket, I mean, obviously, that was a big contributor. year to date, around, I think, $43 million on a year-over-year basis in EBITDA. It sounds like the back half gets a little bit more challenging, but is it fair to assume that that bucket is still going to be a good guy in the EBITDA walk in the back half?
spk02: Yeah, John, those walks are, as you know, year over year. So that will still be a good guy. As we walk through the second half, it'll get a little bit more constrained as we go. But that'll be a good guy in the second half. And equally important, as we look at the second half versus the first half, we're holding on to kind of that spread, as we call it, which is what we aim to do as we move forward.
spk05: Okay, that's encouraging. And then the residential exposure at around 38% now, where do you think this could trend over the next year or two? And is there a mix that you believe is optimal for your business?
spk02: Well, that's a good question. I think, here's my answer, John, is I think because the residential for ADS is growing faster than the overall company, it's going to go up some as a percent of sales. And clearly, Infiltrator being 100% residential, you know, in a good growth market, growing faster than the non-residential ADS, I think we're going to mix up that way. Now, what that ultimate destination is, I don't know. We'd have to go back and run through that. I don't have an exact number for you. But it's going to trend north, I think, over the next months and years, which is okay. I think that's fine. I mean, certainly for us, Infiltrator is such a well-run and profitable operation. That's a nice mixed tailwind for us in lots of ways. And then the residential penetration of ADS, pretty good business too. The HP, we've improved our cost position on that. We've improved our pricing on that. So we think that product, we're just as happy if it grows fast as if N12 grows fast right now, if not a little happier. Okay.
spk05: And then maybe one more from my end, if I may. You recently hired a new head of your international segment. Any early reads on kind of how he's looking at the business in terms of opportunities and challenges?
spk02: So obviously the big challenge for Tom right now is Mexico and understanding really the market dynamics down there in the face of a much worse COVID-19 impact on their economy. which is layered on top of a dramatic change in kind of, let's call it government spending or where the government is spending their money. So Tom's, you know, we're working with, you know, an outside firm to kind of help us on a market study there. So really, you know, I would expect... much like we did in agriculture, you know, a year or so ago, to have a completely fresh look at that market, have a very fresh look at, you know, how we go to that market and where the right spots of attack are. He's very good at that kind of thing. And I would say that's been a big priority of his over the last couple of months.
spk05: Okay. Thank you, guys.
spk02: Yeah, thank you.
spk00: Our next question is from Garrett Chemoise of Loop Capital.
spk03: Hi, this is Jeff Stevenson on for Gehrig. Thanks for taking my questions today. My first question is on inventories, and I'm just wondering what the extended lead times from capacity constraints, are they matching distributors sell through right now? I really don't know the answer to that.
spk02: I mean, a lot of our stuff, you know, is delivered right to the job site. it's not really stocked by the distribution as you would classically think. So I don't know that that matchup might have super great visibility on that. What we do send to stock at certain distributor stores appears to be on a fairly normal pace right now. So I wouldn't say they were greatly mismatched.
spk01: Okay, great. That's helpful. This is my kick. It's just to kind of put some more context around what Scott said. Like 80% of what we do goes directly to a job site. So the kind of distributor stocking dynamic doesn't have a huge impact.
spk00: It's a little different for us.
spk01: Yeah, it's different from us versus other building material companies or construction product companies that rely on the distributors to kind of pull through and sell through and deliver to the market.
spk03: Got it, got it. And then given that you rapidly got your leverage targets down after the infiltrator deal, I'm just wondering if you could talk more about your kind of capital allocation priorities moving forward and kind of where you see things next year.
spk02: Hey, Jeff. This is Scott. Yeah, we're extremely excited about that execution and where our leverage is. So we're equally excited about the opportunities that are in front of us organically. So between the infiltrator business, the demand, the productivity, the synergy initiatives, there are just so many things. I call it a target-rich environment that we are accelerating not only that CapEx project, but then as well the organizational structure behind that, the foundational build-out, if you will, to support that, CapEx, as well as the OpEx. So you look at that Brian King announcement for product management, innovation. Again, we're going to make investments there to accelerate growth and productivity initiatives. So extremely excited. So that's the bulk of it. The acquisition side of it, We've talked about our discipline process. We've talked about how we're bringing resources to bear to invest in that vertical, if you will, as well. We're excited about how that funnel is building back out. It'll be a very disciplined process. We'll make sure that we deploy that capital effectively when we're ready to, but we are very active in that space as well as we build it out. So those by far are the two pieces of our capital deployment allocation.
spk00: strategy that we are solely focused on right now got it thanks for taking my questions and all the best thanks jeff once again if you would like to ask a question please press star then one on your telephone keypad our next question is from josh brzezinski of morgan stanley hey close enough good morning guys how you doing good morning how are you
spk06: Well, thanks. So a bit of a layered question here, so feel free to take it in pieces. So always appreciate the color and the profit waterfall. It's very helpful. If I look at kind of the last couple of years here, you're roughly at double your average contribution on price materials mixed. And then the volume piece or the volume leverage of that is maybe a bit lower than where you've been in the last couple of years. Just kind of putting together some of the commentary from the earlier questions, I guess, first, how do we think about that price-cost mix contribution relative to the past couple of years? It sounds like there's some headwinds building, but it's still a good guy. I guess, is that your way of saying we're going to mean revert? And then how do we think about that volume portion of the profit walk, given that there's some capacity investments and some of your comments about that disparate market and geographic growth? So there's a lot there. Feel free to take it in pieces, you know, or we can, you know, circle back on things. I'll kind of leave it to you.
spk02: Okay. So that is a multilayer question, Josh, and there's a lot to unpack.
spk06: Admittedly, I warned you.
spk02: Yeah, you did, you did, you did. Okay, I'm going to give it a shot. I think Katrell will probably jump in here. But appreciate that the size of those bars will move around over time as conditions in the business change. move around over time. So let's take the volume. You know, pre-COVID, you know, our, particularly our non-residential was on a pretty good tear and our conversion strategies were on a tear. The allied products were going much faster. So volume was a bigger contributor at that time for sure. Simultaneously, we've seen, you know, kind of record low resin and input materials that kind of trot down there in the summer. And we were able to hold on to all that. So kind of the size of those bars changed a bit. That doesn't bother me too much. You know, as long as I'm kind of increasing 100 basis points a year, we've obviously had a very good step up here. But from our three-year plan, our investor day, we said that's what we're going to try to track to. And I appreciate that the size of these bars will change. And, oh, by the way, the manufacturing and transportation, we're now offsetting inflation. We're giving a little bit back. A lot of dynamics under there. But we really like the conversion cost trail that we're on. Now, as we look forward, and I anticipate the size of those bars will change a bit. Now, my job, Scott's job, our team's job is to make sure that the size of the bars change, but the overall trajectory is the same. So as we move into these headwinds of resin coming off the floor, we went out with pricing for that. We think we got it covered. You know, it's stuck. But, you know, that evolves over a couple of months. We also work like heck on the recycling and the input costs from a procurement standpoint. We're pretty good at that. But then what we also have to do is, again, the size of the bars change, convert in the off-season very effectively, get this capital in place for both productivity and and additional capacity, which, by the way, we will be leveraging in existing facilities. So there's some method to our madness as we walk through that. And that will be something that will unfold over our next quarters and conversations. But that's how I'm looking at it. That's how Scott and I are managing the team and the operations on that.
spk06: Got it. And that's helpful. Just as a follow-up to that on the volume side, with those capacity investments that you talked about, should we expect that incremental margin just on volume to – get better, get worse. Obviously, there's a lot of things that play there besides capacity investment. Okay, got it.
spk02: You're right. We should be leveraging that. Yeah. A lot of our improvements come through kind of that contribution margin side of the house, so that should play out there as well. No, you're right. You're right. I mean, we're starting up a piece of equipment this week. And, you know, we have big expectations for that piece of equipment as we move into next quarter and the next year. And I can tell you at 5.30 Eastern time, 4.30 that plant manager's time, he was already on the email of us going back and forth, you know, ramping up that piece of equipment and the challenges you face in that and how we're kind of doing it. But this guy is right on top of it. And I'm really proud of how they're tackling that. And we're going to go through more of those over the next year. at both Infiltrator and at ADS as we ramp that stuff up. And that will give us that better surging capacity. It will leverage those facilities very nicely, as you said. And then we get to really walk up that curve of productivity with those new assets.
spk06: That's helpful. I appreciate all the color. Thank you.
spk00: And we have no further questions at this time. Gentlemen, do you have any closing remarks?
spk02: Yeah, I'll make some closing remarks. We really appreciate everyone joining the call and the questions and the quality of questions. Very, very, very good. And we appreciate that opportunity to kind of give more color. We'll continue to focus on the health and safety of our employees. It's really important for us now, particularly as we move into this kind of Thanksgiving, Christmas season, the wintertime, providing essential stormwater management and onsite septic wastewater solutions. For our customers and communities, we think that will continue to be in good shape and an essential activity. As you can see from the questions and discussions, we're going to continue to protect our profitability, our balance sheet, that cash flow. We expect some uncertainty to arise over the next months, but it's what we've been managing through. I think we've been doing a pretty good job of that. It's not easy out there. I was at our factories in Florida early last week. They're busy as heck. It's not easy wearing masks, you know, staying distant and all those kinds of things. So I really appreciate. what our employees, both in the factories, that logistics and transportation, which is so critical for our service, and all of the people that are working in sales and in our staff functions. It's a different way of working, but we are beating our way through it and enjoying it and having a good time right now. I mean, it's fun to be on kind of the role that we're on. So with that, I'll conclude the call, and we appreciate everyone's participation.
spk00: Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.
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