Fathom Digital Manufacturing Corporation - Ordinary Shares (FATH) 31 Mar 232022 Q4 Earnings call transcript

Hello. My name is Bailey, and I will be the operator this morning. I'd like to welcome everyone to the Fathom Digital Manufacturing Earnings Conference Call. This call is being recorded and a replay will be available later today. After the company's presentation, there will be a Q&A session with instructions to follow at that time.

turn Investor over Relations to Fathom’s Michael like of Director to now the to call Cimini, I'd begin. Please go ahead.

Thank Welcome to year good morning, quarter and call. full conference XXXX you, and earnings Fathom’s Bailey, fourth everyone.

information Before our earnings release fathommfg.com, SEC with and where filings we today's will also website important on press begin, along mention are like that about I'd find presentation Fathom’s you available our at company. to links other to

forward-looking we future you become Turning filings the such. that forward-looking risk note statements to uncertainties are contains Exchange encourage within SEC, aware estimates of presentation We taken factors as and X, and that risk to statements only in Securities the to performance Slide be the with the our meaning should business. this our understand the of of contained Act. in read And

expectations Forward-looking disclaims update obligation to company statements of represent the management's today, and any only them. as

to presentation presentation. these the On to measures today's reconcile examine appendix measure. Slide most manage in to We press are which the And and describe way release the X, which encouraged in comparable found includes operate business. those to slide are we both the GAAP financial and our you the non-GAAP reconciliations measures

the a We of for yet months submit Form also Company late note XX completed Fathom filing has process later three notification with the XXXX. XXb-XX to not SEC expect and its reporting ended XX, on today. December

relating potential and in information and subject that income are Our for under are adjustments preliminary based time, specifically this changes unaudited available to at reasonable to are provision Fathom's review the results the taxes. on various estimates still

Mark Fathom's Officer turn Financial would over the I the to floor and Ryan like Chief Martin, our call yours. Ryan, Officer. And Chief is to Executive Frost, now

welcome first everyone quarter and and fourth public year to Fathom its as full end completed conference company. In call. Fathom's XXXX, Thanks a year Michael,

our solidified advancing our to key foundation important deliver ability further strategic growth. During profitable initiatives that we progress, achieved long-term and this time, enhanced

during will profitability core which discuss four Mark results of our year. full operations, extended throughout year some on of our accomplishments we While we highlight slide track our record QX main our the and in

year our execution in an footprint, better facility First, as optimization with utilization. enhancing of our last plan operating Hartland, previously national we at our increasing integration the of legacy consolidating discussed, efficiencies, Wisconsin, Oakland launched our plan date business. enabling to great of our corporate made aimed the in and we is operations the recent scalability progress into which We've

cost future We savings expect maintain greater from generate of our and and nimble in significant on unified margins, Fathom. plan lean our a our we profitability support empowering to best-in-class focus more results, as driving

new Wisconsin, a a our set in a further of capabilities the has second considerable we refresh dedicated namely our XXXX. portion product unmatched additive industry. was SLS, CNC launched of our quick or Excellence of innovation in which half DMLS, created And format we at NPI machines Second, Hartland, of took headquarters Center X-Axis We turn cell unique to of solutions, in support in MJF in two added Hartland. DMG Equipment our and Mori that large steps

Hartland customization. to serving compliment supports class that as other a while national our solution across footprint outsource world our facility enhances NPI stop sites Our a manufacturing in valuable one provide

million. returns on positive Further we XXXX. demand growth, strengthening expect our generate on our beginning XXXX capabilities, to broad totaled CapEx in these investments capital all In in $XX approximately

our in slide a focused commercial highlight had offering. activities, efforts the third on building we technology on continue bureaus members block. need we small going as this which historically our to to also ramp team As Upon worked will recognize our single public, as our key commercial we’ve private revitalize

strong a time, team, of of sales processes. nationwide sales career strategic staff suite fully this program success across our with public company comprehensive focus advantage same transformation our manufacturing enterprise has offerings potential In transitioning opportunities platform-based first taking launched to our We a leverage enhanced to greater team. successfully growth cross-selling ability and by opportunities we facilitate we believe development mindset. our our our Quick to XX help than ever and commercial the At more promote amongst revamped Turn

our made significant this on finally And in capabilities slide, corporate we improvements in XXXX.

approximately example, one led Information by our Chief joined who rebuilt Bourquin, IT new our Dan year For staff, we Officer, ago. Fathom

of boost period, an ERP new which sites. help security all infrastructure brief this a launched used at deploying Dan's template cyber leadership, will we system, programs our all through based single refresh productivity, of During and while cloud sites completing the for our be as and

and also created help increase a accounting for streamline and company-wide system scale. services a of to organization to economies and shared finance We processes

and and This best adopting company public achieved Notably, of the a on building successfully out infrastructure. model-based much our multiple XXXX in developing included contributed our amongst to we and spend at controls, customers technologies. and internal manufacturing $X meet HR year-over-year accounts annualized practices public establishing growth least all spending we in above finance a while more. new progress our to of million of majority reporting utilizing The with requirements, of achieved teams company larger accounting all

mentioned growth and these XXX confidence of in strong their to prototyping iterate indicators innovation manufacturing companies, with we By so for closely low believe We value strategy can X. months customers, mid long-term to they production, continue Slide development to accelerate work the cycles condense potential. and and us give enterprise that our just rapid positive underscore often now focusing days. to Fathom's faster product on Fortune volume to for Turning I

to that and manner supports by agile faster, them built more technical a delivering technologies, supply low flexible manufacturing the bringing market We responsiveness, our system, volume service of adaptive relationships solutions creating customers' more companies mix full with speed, high solving, manufacturing problem meeting assurance on additive support needs effectively a needs. resilient entrenched emphasis products quality to a in chain. and production both an become new traditional in while allows This across hybridized and

we a we achieve intent having manufacturing of desired This approach is original applying the this our based And without market. how Fathom's on the the customers. our design ourselves process to -- in original outcome. centered to solution differentiate is sacrifice best do

focus in have share in with wallet Our add strategic while the last progress is we and the of Fathom's to customers. made blue our year customers, momentum chip now new expanding build foundation solidifying continuing to upon build in our

believe we On future as will XXXX, priorities outline we performance. which navigate our continue on Slide X, near-term enhance macro driving we the strategic to ability to focus our for headwinds,

month we of leadership Bork with Sales. our Vice our of President of part our enhancements, appointment strengthened new as Kurt First, commercial as the earlier team this

with publicly In created solutions. to Development previously sales growth a more at having Fathom Kurt and Company, enterprise as of and experience, this provides an Vice position, years design, than and strategic Business is Engineering XX newly brings based President the Mayville that Sales company in extensive traded He served industry management. of manufacturing Wisconsin veteran expertise prototyping,

at Kurt engineering in During business including his manufacturing its and and extensive for a activities and of X.X-year sales tenure development sales led company, team managed professionals. facilities the the infrastructure U.S. XX

seek strengthen Wisconsin. He commercial be record and at directly leadership, our empowers instrumental sales track key creating Hartland, to accountability we serve Senior to culture members will establishes growth and as and his efforts. as Kurt's our excel me team go-to-market strategic in to driven a our proven our long-term that will in performance headquarters Executive member providing report of will team of

while his four and seamless of endeavors. Fathom's Rich Fathom I've Kurt had the in I transition and his work years, We for will opportunity him Chief to nearly Officer him wish new work departing to center. this Stump, a with enough continued of well thank can't Commercial for alongside be Until ensure support. contributions Rich future will technology all our also year. QX in then, he leading

and in In new connection Tempe, we've with Denver, at Wisconsin, facilities our appointment, recently Colorado. directors Kurt's Hartland, site Arizona, appointed

outsourced while seeking production teams, retain As we resources our highly with This NPI, We've workforce. commercial drive tools our as our our Fathom's product alignment create work and teams. attract talented of prototype right the efforts introduction to creation the frontline fortify will two new new also between and well begun and production with outside as change reposition -- orders. greater to leadership, to

as Technology OEMs. engagement, as recently presence This In well featuring maintaining hub strategically a novel further Bay demonstrates approach advanced will equipment technologies collaborate our we’ve to the way a accelerating critical Silicon located with serve Center, change California. approximately to The Fremont, opened in as facility Valley new in our customers while the customer the Area. we latest cutting-edge XX,XXX-foot catalyst

Our new center, capabilities. technology providing located among technologies growing ideal showcase is currently Evolve additive to at the our an the platform innovative solution

these our greater our last efforts, operations, our cost growth In to company's efficiency steps discipline. with Consistent took and with committed achieve initiatives optimization we terms structure to remain right-sizing of we plan month. expand the to

savings, consolidating generate while implementing second are existing cost the two about over XX%, our and reduced other We year the plan comprehensive initiatives. quarter facilities Texas believe pretax will the additional totaling our times the originally million productivity our Specifically, XXXX. taken steps approximately by completion upon the up $X.X X.X $XX.X we've annualized from in million, past in an we of of workforce

remain we this on on digital lastly focused And Fathom's accelerating slide, thread.

implementing complete to to company-wide ERP multifaceted XXXX. a continue gains project system make expect in We steady this and

we enterprise that of our launching will Fathom's the infrastructure market. pace platform upgrade IT and process and the fast ensure cybersecurity empower we a of pace keep with demands dynamic further we measures, business As are first in our data and

on concentration pillars. these relentless strategic a With

a further of sustainable model provider to Fathom's excellence company We achieve ability our solidify digital with manufacturing more a enhance a are services and will nationwide. as leading role on-demand that operational

over turn now will I Mark. to the call

remarks Thank four morning, year Slide everyone. quarter revenue you, full Ryan, X. begin on results my good our I'll and and for

$XX.X totaled down $XX.X revenue for million, fourth four in below the was and quarter from XXXX. Our expectations which quarter our

quarter ongoing with goods, in the due particularly term our customers near environment, inventory reflect in capital to commercial their the of and activities. production building the the Combined macro for continued industries. results new the reducing semiconductor Our our impact of the ramp softness

in of rebalance the sales new orders, XXXX. As cycles led these near second have extended economic XXXX, of for inventories uncertainty customer continued trends the half term we and began and to into has to a see

approximately within year, $X.X accounts. driven in repeat impact and COVID XXXX. an orders activity and organic revenue of the increased XXXX X% flat revenue was sales approximately reported related On the For full our not reflects that with did in acquisition, million by growth strategic higher in essentially basis related

XX.X% was follows: acquisitions and CNC by X% climbed our to half full Now, our in for product the strategic XXXX. line as or reflecting to proforma CNC following first headwinds. grew completed the macro we approximately XX% drive the $XX.X in XXXX the despite the revenue year fourth in On a growth of revenue, basis, million of total machining XX.X% ability quarter

total orders of primarily of growth in Injection XX.X% Precision sheet $XX.X was molding part due in dropping of or revenue, increased to or metal strategic X.X% certain from revenue, absence accounts. COVID XX.X% $XX.X related million, million XXXX previous some because the year. key to total of the in

In addition, previous reorders the year. part slowed compared to production

orders, one ‘XX quarter We in continue a to towards the and should reduction forward with more on focus improved on reorders combination of go tooling parts which a new new to end tooling basis. has lead

Pricing of manufacturing as remains capture revenue. Additive total share. to additive totaled market manufacturing use some loss X.X% as a companies $XX.X million leader or competition

expect Oakland Ryan mentioned the additive of to of that roller we forward, benefit the our consolidation technologies Going from new facility. and

And of total product line with $X.X million, representing are X.X% finally, revenue. technologies smallest ancillary

at leading increased year platform. of to spending continue which X.X% full on million, scaling the our X our and accounts focus We industry least annualized approximately XXXX, growing for with

a X, adjusted Now X.X%. our four, turning of adjusted In performance adjusted our we of million the $XX.X margin EBITDA year full totaled quarter the margin we for In year. of to period, $X Slide and for representing a EBITDA million, quarter XX.X%. reported EBITDA provide prior fourth

volumes of primarily issue, addressed and caused minute. I'll labor. of effect cost which this was lower We Now, the impact our absorption, performance production cover we which believe reduced by excess follow-on reflects a the in

margin EBITDA primarily year totaled same costs expenses versus XXXX. XXXX, due have the in $X XX.X% recurring the million The XXXX approximately XXXX. $XX.X been the million $XX.X public year, the For public in would for adjusted full in company for million. to versus full was EBITDA about XX% XX.X% margins period totaling adjusted EBITDA without

We profitability Now our XXXX in efforts XXXX optimization indicated and be savings our plan greater part our cost July announced cash as drive expanded plan we initial generation. of limited. would in to and mentioned

benefit will 'XX plan from in expectation that efforts. our we Our 'XX, 'XX is as as the both well

remaining benefit are in and savings, one-third Our of resulting with see to expectation further have total XX% of is our the two-thirds been savings in cost already to our of now SG&A approximately improving savings about $XX.X the realized expenses. million XXXX and margin realized is in gross the profitability. A the with two-thirds point lower cash

contract and In addition, executing hiring. temporary control including service additional restricting limiting cost measures, we external workers, reducing our are discretionary spending

the SG&A due four quarter in million, primarily public decreased year-over-year costs $XX.X impacts. despite to revenue to lower

costs public in stock company to $X.X quarter basis to our $X.X declined again compensation, four a Excluding million on compared quarter three. million in sequential

public for year-over-year large year, decline million, the company EBITDA. For expenses of approximately which recurring our $X the accounted the in full majority adjusted totaled

credit million, On Slide liquidity our $XX cash in undrawn fourth includes with available $XX.X the million X, flow. of revolving commitments ended of show million this we facility. cash cash million $XX.X and our We equivalents quarter and liquidity $XX and under

debt net million cash December operating for XXXX. with XX, As totaled activities for by was debt our in no in approximately $X.X used cash full million before payments. maturities $XXX.X and Cash million non-recurring, of Cash quarter total gross in $X.X non-operational of was we December debt totaled excluding and year. reduced operating four million $X the flow in generated XXXX $XXX.X million

four, further is $XX.X of totaled our ahead year, portion from manufacturing made for and annual million the quarter support full anticipate in included to We a slightly XXXX. commitments will efficiencies which our payments $X.X of CapEx plan, CapEx reduced previous In XXXX. as in million was expected the

the For short expenditures, over while we business eliminate XXXX, of to non-essential long-term. the capital our plan preserving and both integrity

to agreement on our quarter, the existing covenant Now senior extended as credit agreement, to this a with of fourth lenders an subsequent end relief. reached our note we for providing amend slide, final the

and Specifically, the with interest coverage liquidity replaced leverage have available ratios minimum and net suspended EBITDA requirement. XXXX minimum through ratio and been adjusted a

our basis. not down have growing I be one interest quarter on will Suisse. for Credit group exposure manage banking actively Morgan XXXX and step or structure that costs coverage, modifications also Xx up level reinstated a Silicon and maintain a Bank, and Bank, covenants Both enhance preserving gradual capital JP with and does step for focus Valley flexibility, Signature our by These respected our led beginning at as Xx our note Fathom the leverage in business. is financial any net we and to

will and growth At line impact slower increased sized our Turning XX, Slide margins. and operating now recovery of environment, the beginning our second expected with the provide time, the We structure in our activities the the XXXX. leading future for new drive half reality, in an ramping to have same business first quarter macro achieve in challenging banking year-over-year stress year. to fourth we of quarter our we including uncertainty in contribute right to over half system the industry believe with of while marketing economic growth the likely first the sales

to our For commercial over million the our more expanded the We traction drive fully market line fully future on our expansions. optimization realize platform highly on which is leveraging focused in course between both year, enhancements expect EBITDA million the of $XX improvement We in and revenue demand broad we first anticipate to with range begin adjusted a the year-over-year to range and gain and adjusted quarter, improvement as revenue outgrowth $X.X our expected to between of remain and returning benefits $X.X million. and million gradual EBITDA. $XX profitability plan, and revenue in we

turn back the now Ryan? call over Ryan. to I'll

by foundation some completing solidified slide profitable team, XX. to investment strengthening technologies, and increasing million as New full further revamping Hartland, company's the Exchange our capabilities. will Stock a launching I Thank in in NPI company, on you, Fathom sales $XX.X York a creating plan, provide the listed premier the core drive growth Mark. first closing Wisconsin, new year its Upon long-term comments optimization its facility

accelerate We transformation combined that the greater provide of continue implementing leadership, a for front the plan gain commercial will and to stage performance, new on set all take the business, future experience. aggressive customer will believe excellence which greater operational actions digital multi-step senior our with traction to promote of we a

will to to remain footprint Fathom some flexible customers to solutions world's has national product our entrenched across become our companies, technology that we to our innovation. committed business an driven and partner ensure enables strengthening manufacturing our most to steps The scale. to while effectiveness with delivering and taking manufacturing company their our the help increase greater can of accelerate speed new we opportunities, react agnostic are position

foundation manufacturing premier I'm in the proud of on the and effort our and make the further solidify America. to our demand help of company North Fathom resilience team

As what company create our long future open prepared perfectly shareholders our questions. the to This and in concludes the confident value highly our for about linear, remarks call remain our term. we and is matters. over ability now the I of optimistic do and Growth for rarely will

Ricchiuti now [Operator your Instructions] Needham from today Please ahead, first & open. go comes Company. of Jim Our the line question is from line

Well, through thank of want savings say, on ‘XX? clear cost anticipating to I went being this. XX% you you be Mark, the realized you're you. Good morning. about savings. some just Did Hey cost in

million the within the of $XX.X year. actually to XX% Yes, realize we expect

Go that the in the of of announced? were realized from were cost a previous that terms in that had savings it. was realized you And initiatives QX, portion

Yes.

quarter was XX.X four. quarter other -- we It course We all started, the benefit of XXXX. wasn't over actually XX% three, The some had in quarter realized quarter the two, four. of full

QX? in on seen the And mean, about the Ryan, seen I bit you what you what elaborate you've relative if what color that maybe given trends just could in us QX. today? on just, order could wonder can that Okay. give little you you've I So you've you ends talk seen some saw a quarter to

across side an we're of see on NPI morning certainly comeback We're business, growth more similar in strong the CMC still the prototyping about represents what you say, Jim. quarter, the Mark for perspective, business, orders not full but the starting to of sides the XX%. about still from to year. our and only to talked which the a ballpark of seeing Good Yes. would fourth I

of customer great the our As to with industries seeing opportunities. three market deleveraging key cautious building exposure, growth where that, it not all end market losing we capital any some have to are which specifically some and We're and exposure some relates too, customers. still our industry, of production business side of inventories related exposure seeing semiconductor, of goods long-term ordering industry,

continues spent I met our with customers of to strong. on customers, we that. six this a a value cautious out is this fact, key with that some proposition we side where In And They're extremely what just more with different end meeting little earlier for which couple is Texas, of down week be and market that things, the in of guidance days can week. offer their ordering the QX put

feel in -- they is for the continue modeling And to really of they -- But way see the which us. to comeback second and quarter structure the a the good. out year cost from what is second year, and the we've end the hear towards of certainly then half strong customers I built the middle into

of And last you're have color just is you that are -- question, rebalancing noted just on, some customers? one customers with some that's pronounced you of just customer the the with seen you customer, improvement, in respect any from looking had at having that those QX, inventory suggesting areas when of to it which some are conversations these those areas? areas more And hesitancy, have where the going

related optimistic. out of with be. that Act there with huge would key in say term, investment I some that. figure to semiconductor in how going was really think would Chips talking the sure. biggest obviously out we the year. And one that that's definitely executives a towards I AI then to everything for The this all to seeing of amount well in see they customers, both half of up as short second is domestically then, push trying Yes, sorts bit semiconductor the a And feel the there as was incredibly catch senior little of They're our

industry billion north seven of it the years Right they about that they now, $XXX be five to say industry. it's feel look will $X a and over at and next trillion

at we a so really the foundries. And make parts of produce where used goes the to lot into equipment capital the chips that's

going of so have lot capital And our and a we components that products equipment. into are

the into really really, strong companies, about long-term. So year, second talked Jim. quarter starting they to feel half and occurring in uptick of as I've that And second really the this see these

Thank it. Go you.

Please you. go Thank The from line the ahead. of comes Greg question today Craig-Hallum. next Palm from

Your now open. line is

everybody. morning, Good Thanks.

Just bit a kind of little following questions on last of set the there. up

and in of what of maybe now, In where second kind of progress just ramp, half confidence color gives can terms a the more year? bit ramp your a of you that as confidence the level give of you visibility us and little is we throughout that

-- to good talking Greg. just I'd confidence biggest say the to I'd customers. Yes. morning is, say,

us, talking is out a the the XX% components. roughly understanding customers, production on side especially parts to getting our production that reorders they products So of of there business, from our buy business of and

just And on talking with They orders. are them short-term or smaller uncertainty having not pushing understanding based losing amounts that them, to some we’re off that. so

that's -- quarter least needs -- our in and us area that. talking. and that to Greg, related I their over confidence, talked the within them timing really the is gain talked And the of going customers, where out proposition XX last first to the at, think where biggest value that's I've top is understanding at to and out our I've gives

It's really And the timing. just so, to continue we to be Fathom doing. what are committed to very

taking is inventory. right this it and we and where them at have down that the as of down inventories they supply what size that as XX-week they customers just were brought stock, fast most concerns levels year, And -- were the down their that they brought they last so as to they I have in probably not been a chain of eight to they’ve sustainable. got continue may that's us they see based said, on could, now everything really our They where occurring as have lot confidence, really gives safety some to running into of pulled looked

are second levels, you more to to we so we that us. as think And benefit back see a rebound in should half, get which going the normalized inventory

marketplace. that's helpful. to Yes, where little more just how you Okay. this Are and preference margin, competitive are willing maybe to some sacrifice guess strategy, But seed hold more more to win in your What's specific share? competitive. of I terms in thought you mentioned retain price your your Is reacting a And that and to is additive that you some to of there? business? bit order

Yes. It's a great question, Greg.

So it's a multifaceted answer on that.

the we So Wisconsin. the our we areas, previously and to Center one in of one made Additives decisions Oakland talked consolidate about our Hartland,

So, competitive part getting structure more is being cost of the right.

structure investments, in efficiently. some to we so parts be the more the efficient maintain produce and to a additive, offering while allow made additive to change, about I efficient prepared us so And related more equipment talked the which we that side as will to made remarks on more margins have pricing, also to the competitive well that able us drive allow the as on things, cost of

And what really we able really and do of just I optimistic side ship, the the commoditized still think print very is, term continue and the being to which differentiate is long additive in in things. we're more additive than why to

of ability painting, lot And bonding, in post-processing, facility the of processes do value. all really finishing, our add to Hartland, ancillary so, inserting, in the those a

be total really to more and only into validation strategic of that. production being ultimately through engineering able larger on our cycle life the focusing tool customers able using do the not then to a really to the additive development have And and that is

to Evolve, to added committed technologies, in we're so add into And to focus center. that on we've the more that, like technology going continuing the continuing technologies

transformative our technology facility center our manufacturing through that. newer, drive And And there. efficiencies them so to customers cost really then we'll to to using additive, Hartland the processes introduce transitioning where better

But can and for believe can be profitability as well. that, engine the growth a maintain we additive still business

in that compete everybody space of and very commoditized And everything you not to print so, that in really trying ship. have we're where to be to focused

pricing term, the growth our short believe believe and company. hurt have long-term, has for proposition the it value, the with value think, strategy right the but for I is maintaining that we I is long-term differentiated that I discipline

heard growth did growth think, Got it. say clarification, I And just adjusted growth in EBITDA also to revenue I second half? a you I then confirm did And year-over-year miss the return basis, can that? then Or a to that? year-over-year that you on

decline and do And Yes. assumes out with an in the a the in level half. cost that some growth out, EBITDA hopefully to flattening improvement the in ‘XX. half based and We -- we're of a first adjusted we second assumption, on see our in expect savings plan do we taking

year-over-year not And that second basis. half is on That's a sequential… versus

be basis would That up. on a flat year-over-year slightly to be

Okay, best luck. of all right. Thanks,

next ahead, of Instructions] today comes go [Operator question Chung is The JP Please from the line your now Morgan. line from Paul open.

Hey, guys, thanks for taking the question.

goes consistent and times the throughout progression cuts cash year? free charge kind on up. I of just cost see we positive follow and flow then So from $X of can cash million for a away, have ‘XX, benefit kind margins as And X free

in this cash company ‘XX plan so to the free that ‘XX. back to was We rates the assumes to do debt interest of on pretty debt a expect support $X get positive our and up get CapEx. had principle take-outs good a the on fact higher generate that's big and cash a plan, in go Paul. and That's service positive But as We this investments this why aggressive cost we're million well as because Yes. question, of usage this in that our plan based -- our cash service in ability payments. change will cash, our despite operating because free

maybe not can business? And think in the of does industry see dynamic orders the inflow great. customers, kind maybe that with investing dynamic? about or your heavily, kind we And term dynamics lot systems and secondly, of as maybe longer of your purchasing assets Thank Sounds more sweating how not of quite given then customers, benefit a that you. but we

do customers Yes, the add we That think to allow is be We be leverage that to we leverage not to of to investments obviously as question as -- able our our they a genesis able well, the footprint leverage on that great more be to can business. the in outsourcing, think need capital to capital macro make expertise, front our able seen, to make maybe it's Paul. value our of that historically there double lot saw that. in And was we to in back digit as able to growth be they COVID the into environment and investments capital wanted XXXX in customers to spending, that and we've overall when pulled even back the uncertainty past the on timeframe, a related look assets.

that continues for with to services our that us, customers. strategic believe growth us for losing the we to there. and customers, see not we've as is as And manufacturing so, as a to any large look we're we more with offer. continuing we mentioned trend be And to think outsource continued strong We're companies orders I long-term of opportunity an grow, those

customers with year. think second about grew think we of fact, them as inventories, half we their the In that I into this and growth we as we those rebalancing see potential talked for strong

you. Thank Great.

the go Jensen question next comes line ahead, your from is Please open. Street line from of Lake Troy today The Capital. now

seem like mean, with also on can Mark, your kind a margins as for morning, little What cost gross and you the bit. versus much, you can of do Maybe gentlemen. the could for think revenues second meaningfully forward good a was margins touch just you I questions XX% And project is look half? first that didn't little done there redundant half thanks dropped gross a for taking here? moves? fairly it And here. bit my Hey, like

Yes, expected Sure. question. an

hurt that an margins backwards fourth not issue we was by gross fourth that revenue a quarter, had So it went the the pretty tough and fourth yes, a significantly us, quarter fair did XX%. due, down, the The we had really is in Troy, amount in drove in quarter improvement we expected happen.

saw production we Now side quarter. pivot half on that the in the of the second

quarter we put labor and that's that in drove situation the in excess So us had a fourth what it. that

we we for we what run Now, that's so were at, that's revenue knew the to business why had running triggered, we cost also take-outs. the rate and were aggressive on our resize

towards back which levels gross in ‘XX is these XXs. Troy, with margin, we expectation So, take-outs, was of our get the high will cost

back the designed So plan us built we've that's cost to what get to. and

to some cost you if And update QX, basis? SG&A an with in did of million out too. the it $XX.X down absolute mean, take of is it coming out I on

that I'm again? sorry, Troy, say

just we on cuts. I'm model if with a going. down of basis these keep cost some No, it wondering

to Yes. sequential in SG&A be basis XX% XX% down will probably on a 'XX.

you. Got

Okay. Well, thank you.

all I help So good for forward. over luck years just and out Rich the going wanted to shout to the

appreciate I Great thanks, him to pass the No, that Troy. continued certainly on questions. and will success.

luck guys. Good

Thank call. call concludes question-and-answer you your now you. lines. your the you for conference today's Thank also This may for session disconnect participation, today's and