Earnings Call: Q1 2020

May 1, 2020

Today is 05/01/2020. Welcome to the Toromont to announce the first quarter twenty twenty results conference call. Please be advised that this call is being recorded. Your host for today will be Mr. Mike McMillan. Please go ahead, Mr. McMillan. Great. Thank you, Donna. Good morning, everyone. Thank you for joining us today to discuss the results of the Toromont Industries Limited for the first quarter of twenty twenty. Also on the call this morning is Scott Medhurst, President and Chief Executive Officer and Paul Dewar, Executive Vice President. As noted in the press release issued yesterday, we will be referring to a package posted on our website, which we encourage listeners to download and follow along. Before we continue, I would also like to advise listeners that this presentation may contain forward looking statements and information that are subject to certain risks, uncertainties and assumptions. For a complete discussion of the factors, risks, and uncertainties that may lead to actual results or events differing materially from those expected, please refer to Toromont's press release and MD and A from yesterday, which is available on our website. We assume that you've had the opportunity to review our press release and related financial information issued yesterday. And as such, we will focus on key highlights. Scott will begin with a few general remarks and some comments on our outlook, after which I will provide some highlights on the financial results. Then we'll be more than happy to answer questions. Over to you, Scott. Thank you, Mike, and good morning, everyone. Before I begin, I would ask that you move to Slide three on the deck. I am delighted to officially welcome Michael McMillan, Executive Vice President and Chief Financial Officer to the Toromont team. Michael is an accomplished CFO with more than twenty five years of financial experience. He officially joined Toromont on 03/01/2020. It's been an incredible transition given the environment, but true to Toromont's philosophy of ensuring orderly transitions, Paul Druehrer, Executive Vice President, remains on board to assist us in this important changeover. Paul has had a distinguished career providing critical stewardship over the past fifteen years. I thank him for his contribution, support and partnership. I'd also like to take this opportunity to acknowledge an important milestone. This month, our partner, Caterpillar, celebrated its ninety fifth anniversary. This is a formidable accomplishment and the entire Toromont team extends congratulations. We are proud to be Caterpillar's partner and representative in Central And Eastern Canada. Turning now to our financial results. The first quarter of the year is typically softer than others given seasonality and the impact of winter weather conditions in most segments of our businesses. This was exacerbated towards the end of the quarter with reductions in activity, most notably mining construction shutdowns relating to COVID-nineteen. Results were further dampened by higher expense levels compared to revenue growth. The recent outbreak of COVID-nineteen puts us in an unprecedented environment as outlined on Slide four. While Toromont's businesses have to date been declared essential services in all jurisdictions in which we operate, we are not insulated from the broader economic, financial and market impacts. Actions have been taken and are ongoing across our three areas of focus: protecting our employees, serving our customer needs and protecting our business for the future. We appreciate our entire team's effort and commitment supporting our customers during these challenging times. Highlighted on Slide five, consolidated revenues increased 2%, however, was dampened by the onset of COVID-nineteen in the latter part of the quarter. Product support and rental revenues were trending 57% higher through February, but reduced activity in March largely offset this growth. Economic and business conditions are fluid and as such, it is difficult to quantify the impact of COVID-nineteen on equipment revenues. Operating income was 6 percent lower on reduced gross margins as a result of tight pricing and lower rental fleet utilization combined with increased expenses mainly due to increase in the allowance for accounts. Net earnings decreased 5% quarter versus year ago, while EPS decreased $02 to $0.46 per share. Backlogs of $567,000,000 were very healthy at 03/31/2020. We are proud to take part as an essential service. Toromont's businesses serve critical essential services, including but not limited to food production, storage and distribution networks, power generation, including backup power, critical infrastructure, transportation and emergency response. We continue to monitor the situation closely and are implementing responsible measures to manage and protect the long term health of the business, including voluntary compensation reductions by the executive team and the Board of Directors. The diversity our geographical landscape and markets served, extensive product and service offerings and financial strength, together with a disciplined operating culture position us well to weather this situation. Moving to Slide six, the Equipment Group's parts and service business provides stability and benefits from a large diversified installed base. Prior to the outbreak, the long term outlook for infrastructure projects and other construction activity was positive across most territories. The company has a large base of mining customers, which in some cases has seen reduced operating activities as a result of COVID-nineteen implications. These customers and jurisdictions they operate in continue to evaluate appropriate activity levels on a daily and weekly basis. Longer term, mine expansion looks positive, but of course depends on global economic and financial conditions. The company has taken actions to reduce expenses, participating government programs such as work share where available. Human capital, including our technician workforce, is one of our most valuable assets and we will protect that asset to the extent possible. In the quarter, we continued to move forward with our investment in information technology, aligning our dealership under one operating system as well as facilitating and securing remote access to our networks and this created added expense. Actions are being balanced between short term adjustments relative to demand while also being sensitive to the long term requirements ensuring the business is positioned well to meet increased client requirements. Broader product lines, investment in rental equipment and developing product support technologies supporting remote diagnostics and telematics are expected to contribute to the longer term growth once economic, financial and social environments return to a more normalized state. CIMCO's installed base and product support levels are well positioned to support current and future operations and growth trends. The diversity of the market served, expanding product support offerings and services, strong financial position and disciplined operating culture position the company well for continued growth in the long term. Record recent booking activity and backlogs bode well for future results. I will now turn the call over to Mike to take you through highlights of the financial results. Mike? Thanks, Scott. It's a privilege to join the Toromont team and take part in today's discussion. I look forward to meeting those on the call that I haven't yet once it's safe to do so. Let's put a bit more color on the operating results, starting with the Equipment Group on Slide seven. Revenues were up 4% in the quarter. Total new and used equipment sales were up 5%. Sales into construction markets were up 10% with good growth in Ontario and Quebec. Sales into mining markets were down 5%, largely related to reduced activities late in the quarter, as Scott noted. Also, power system sales were down 7%, material handling equipment sales increased 11%, while agricultural markets were lower, down 13%. Rental revenues were largely unchanged year over year as revenue softness in March largely offset revenue growth from the early part of the quarter. Rental revenues from heavy equipment were down 16%, power rentals down 11% and material handling rentals were down 4%, offset by light equipment rentals, which were up 2%, reflecting good activity in Central Canada, partly offset by lower activity in Quebec as well. Rental revenues from equipment on rent with a purchase option or RPO were up 22% on a larger fleet over the period. Product support revenues grew 3% on higher parts and service revenues. Growth was good in construction and power systems. Mining was up 1% as early growth was dampened by mine shutdowns in March. Gross profit margins decreased 100 basis points in the quarter. Equipment margins were lower on the continued tight pricing environment in concert with lower industry activity levels. Rental margins were lower on fleet utilization and the under absorption of rental investments made last year. Product support margins were also lower, however. Sales mix was neutral year over year. Selling and administration expenses in the quarter included a £4,000,000 gain on the sale of a property, while the comparative period last year included a pension curtailment gain of $5,000,000 Other selling and administrative expenses were higher, including allowance for doubtful accounts mainly due to the aging of accounts receivable and the timing of collections. Other compensation costs were higher on annual salary increases and higher headcount. Mark to market adjustments on deferred share units reduced expenses in the first quarter of twenty twenty. Information technology related costs were higher in support of our continued system integration work with the dealership. Operating income was down 5% on lower margins and the higher expense ratio. Bookings increased 15% in the quarter as higher construction, power systems and material handling orders offset the lower mining and agricultural orders. Backlogs of GBP $353,000,000 were 11% lower than this time last year across all sectors except construction. Currently, we expect substantially all of this backlog to be delivered this year. As you are aware, backlogs can significantly can vary significantly from period to period on large project activities, especially in mining and power, and the timing of orders and deliveries and availability of equipment from inventory and suppliers. Let's now turn to CIMCO on Slide eight. Revenues were down 13% in the quarter, mainly due to timing of package sales, slightly offset by product support growth. Package revenues were down 28% with decreases both in Canada and The U. S. Package revenues are recorded based on percentage completion and reflect timing of receipt and start of orders as well as project schedules. Industrial market segments were down both in Canada and The U. S, offset by higher recreational sales in Canada and The U. S. Within Canada, Ontario reported strong activity levels, while in other regions, they were lower. Product support revenues increased 1% versus record levels for the first quarter of last year. U. S. Was up 6%, while revenues in Canada were largely unchanged. Gross profit margins increased three sixty basis points in the quarter versus last year. The increase in margin results from higher package margins, up 170 basis points and higher product support margins, up 40 basis points. Combined with a favorable sales mix of product support revenues to total revenues. Selling and administrative expenses were up 13% in the quarter, principally due to higher allowance for doubtful accounts on timing of collection activity. Operating income was lower versus last year at GBP 165,000, largely reflecting the lower package revenues and an increase in allowance for doubtful accounts, slightly offset by the margin improvement. Bookings were up 61% to GBP 112,000,000. Several large industrial orders were received in Canada, while recreational orders were lower. Overall bookings in The U. S. Were 9% lower, but on a smaller base. Backlogs of GBP $214,000,000 were up GBP 64,000,000 or 43% versus the March. Industrial backlogs were up 86%, offsetting lower recreational backlogs down 5%. We expect approximately 70% of this backlog to be realized as revenue in the year. However, this is subject to construction schedules and potential changes stemming from the COVID-nineteen pandemic. On Slide 19, I'd like to touch on a few key corporate highlights. Non cash working capital was 107,000,000 higher at £571,000,000 versus a year ago on lower accounts payable reflecting the timing of receipt in terms of inventory purchases coupled with the gains on foreign currency derivatives used to hedge currency exposure. As at March 31, we maintained our very strong financial position with a cash balance of $388,000,000 and a strong balance sheet. Subsequent to the quarter, we secured an additional $250,000,000 through a one year syndicated facility to provide additional liquidity in this period of economic uncertainty. And finally, as announced, the Board of Directors yesterday approved the regular quarterly dividend at a rate of $0.31 per share, consistent with last quarter when it was increased by 15%. That concludes our prepared remarks. And at this time, we'll be pleased to take questions. Donna, over to you to set up the first call, Operator, over to you, please. Yes. Thank you. We'll now take questions from the telephone line. If you have a question and using a speakerphone, please hit your handset before making your selection. Thank you for your patience. And the first question is from Yuri Lynk from Canaccord Genuity. Please go ahead. Hey, good morning, guys. Good morning, Yuri. I want to talk a little bit about rental fleet utilization. It continues to drop a little bit. Do you think that the uncertain environment we're in right now, when when things start to normalize a little bit, will lead to perhaps your customers opting more towards rental than than perhaps used or new equipment? Yes, that's a great question. I think we saw it in the quarter. Customers with the COVID impact became more conservative and understandably, everybody is sort of in the same boat here. And when we saw the decrease in the RPO inventory levels, that's a signal that there's a conservative approach. Now that was also due to the conversions that took place, but we did have some returns. So overall, we might be positioned very well as customers' demand signals start to improve because we've certainly invested. When you look at it over a year over year basis on the quarter, you look at our rental service business, increased it over almost $100,000,000 So we think we're positioned well there in the long term. We're committed to that strategy. But obviously, with what took place in the quarter with the impacts, we did see a decline in those rental service utilization numbers and as well as our heavy fleet reflective of the environment, particularly where it came off was in Quebec. But I think you're right, we could be positioned very well here for those customer demand things that might shift to short term needs and be careful with their CapEx. Yes. I guess in the interim, can you I I would assume that net rental CapEx will be down, but any can you provide us with an update on what we should expect there for the year? Yes. So I mean we were we've been aggressive over the last year. As we've said, we're both on the rental full rental services model that we're committed to and that we proved it out in our legacy businesses. We increased it over the last year, but we are going to slow that down now. And that is a conscious decision that took place in the first quarter. Okay. I better turn it over. Thanks. Thank you, Yuri. Thank you. Thank you. The next question is from Jacob Belk from CIBC. Please go ahead. Good morning. Hi, Jacob. So you talked about some of the actions that you have taken to reduce expenses. What is the scale of Well, these cost it's a combination of a lot of factors there. We're really focused on some of these discretionary expense. We've taken those down extremely hard. As we said, it starts with the senior executive and the board. All discretionary is being pushed to a minimum. We're also being very conscious in how we go about this. In the first quarter, things came off quite fast with the government decisions that obviously had to be made. We felt it in mining, we felt it in construction. But we were being very sensitive to our skilled labor, in particular, and all our human capital in general because one thing is we've worked hard to build our infrastructure to provide the demand signals and meet demands of the customers and grow the businesses. So we went into internal work shares through usage of vacation and bank time and training. That certainly created an expense. But and then of course, the productivity and the revenue streams came off. So that was a short term move. That wasn't necessarily an expense cutting move. But now we are moving into governmental work share programs and we are very aggressive on the discretionary. So we are monitoring it relative to the modeling of our revenue projections so we do it on percentages. That is how we are working through it. My next question might be a little bit early, but maybe talk a bit about what you are learning from COVID-nineteen. I know some companies are talking about more of their staff working from home longer term. And how do you think about Toromont looking post pandemic? Yes, it's a great question. We were very granular on just positioning the business, protecting our people, meeting the customer demands and the shifts that took place there. And then I commend Mike on how we worked very hard position our business for the long term, protecting it with the balance sheet. But so we are now just shifting in, okay, how do we want to look when we come out and then what are the changes that are going to take place? I think you're going to see significant changes. We are learning how to interface with internally a little differently. I think there will be some changes in some of our travel behaviours as well as how we are interfacing with our suppliers. And you know what, we are learning how to be effective in those areas as well as I think what we're also seeing is the connectivity with our customer machines. That's been very helpful to really get reads on the hours logged and things of this nature. And so we're going to continue to leverage those investments. And I think that will be very powerful in the long term and how we interface with customers as well. As we've been saying, we've put a lot of work into our development of data interface with customers with smartphones that's coming along. I think that's going to accelerate some areas there. Okay. I'll leave it there. Thank you. Thank you. Thank you. The next question is from Michael Humet from Scotiabank. Please go ahead. Hey. Good morning, gentlemen, and welcome, Mike. Hi, Mike. Just the first question. I mean, the government restrictions have extended largely, you know, through April in Ontario and Quebec. In some respects, I think those restrictions have actually limited more activity. Any way you can guys if you guys can give us a sense for the activity levels and how they've trended so far in early q two, maybe give us a sense of utilization rates in your rental fleet or in your installed fleet just to give us some help work they got. Again, we were we were impacted there. I mean, we had some real hard stops, particularly in mining, and we saw mines going to care and and things of this nature. But it's short term and we have to deal with it. But again, we're trying to be sensitive to what we need to be when we come out of this. We have had some it's all dictated on a lot of the government decisions. Obviously, you're reading it as like we are. Things are going to be phased in here in an orderly manner, I gather. We don't want to get too far ahead of ourselves here in terms of speculation, but we have seen some signals that machines are starting to uptick on the hours logged. And we have had some demand signals come in for some skilled labor, which is good. And some of our rental booking activity has improved recently. But we don't want to get ahead of ourselves here. It's going to be a phase in and we're going to be there positioned for our customers. Maybe just one thing to add to that. I think, again, we referenced the diversification of the business. And so I think you have a couple of things. Geographical and the customer base are pretty broad. But I think also regionally, our customers are making decisions. And as Scott mentioned, we're trying to make sure that we're well positioned there to step in and support them at the right time. And so as they make decisions to go back into phased production and so forth, we're there. And I think that does bode well for us when you think of the essential service nature of the business, but also as our customers make decisions amongst the governmental regulations, we we do benefit from that diversification and and ability to and and reach that we have. So we have a well distributed branch network, which is there to support. Okay. That's a tough call. And thanks, guys. And then just maybe just moving to your service business. I mean, does the implementation of of health precautions and social distancing present any challenges, you know, that could increase the cost of doing business for limited throughput at your current facilities? Or or do you think, you know, after a period of adjustment, could return to somewhat normal operating levels? Well, we've been very granular on our, call it, COVID protocols and procedures, both in the operations as well as externally on the field service and we're working very closely with customers and how we're interfacing and whether we're in their facilities or out in their job sites. So that's our focus. We think I commend our teams. I think they've done an admirable job in moving quickly in those fronts. We're able to operate. We are being sensitive to how we're scheduling shifts, how we're working through some of our procedures. So I would say there's been some added cost. We saw added costs due to this quickly in the quarter. And again, we are trying to position and steer the business through an unprecedented time. So there is costs associated with that. You on the side of safety and proper protocols. So that's how we're doing it. So far we've been able to function with the demand signal we've received, particularly in the central service areas. And our people have done really pleased with how our people are adapting and adjusting and they should be commended. Okay, perfect. Well, thanks for answering the questions, guys. Good luck and stay safe. Thank you. Stay safe. Thank you. Next question is from Devin Dodge from BMO Capital Markets. Please go ahead. All right, thanks. Good morning, guys. Good morning. Good morning, Devin. For, I would say, much of the last couple of years, I think the availability of used equipment has been a bit of a challenge. Just wondering if you expect to see more used equipment coming to market that could provide, say, opportunities for Toromont? And I guess if so, how difficult has it been to go out and source this equipment given some of the travel restrictions we are seeing? Okay. This is an interesting question, Devin. As you saw, we saw a significant uptick in our used sales on the equipment side of the business. You're up overall 21%. And then on the construction side, I think it was over 30%. So there is some shifts going on there. I think part of it might have been also the shift that's taking place with the FX, the weakening dollar. So in actual fact, we think we're positioned well with our inventory levels. We did see a shift where the RPO came off fairly significantly due to conversions, but also due to equipment being returned. But a lot of that equipment was low hour. So the demo that we classify as demo class inventory or low hour, it went up over 68%. We think we're positioned well when the demand signals improve to meet customer needs because that's going to be attractive iron, particularly when you compare it to some of the new pricing with the FX shift. So we think we are positioned well there. In the past and we have always said part of our strategy is to be very optimistic in terms of buying iron, used iron. We held off in the quarter. There was a couple of moves we made that were being opportunistic. But obviously we're being very careful and focused on our balance sheet and our position there for the long term. But we are I mean, we have a pretty good skilled team on how to buy iron. So we've got good resources in there. We're monitoring that. We're going to be careful. But that could become a tactical move here as things progress. But we are pleased with our position on used equipment. Okay, that's helpful. Maybe coming back to, I think, one of Jacob's questions. Just are you seeing or or do you expect to find opportunities coming out of this downturn? I guess I guess what I'm thinking about is are there, like, you know, changes in market share, you know, shifts in product support, technician availability, I guess, anything like this that should be considering as an opportunity for Toromont coming out of this downturn. Yes, and that's what we are trying to be balanced here in our approach. Obviously we have to be attentive to short term, but you don't want to damage the business and the infrastructure. So we are trying to be as careful as possible with our team and our people because it's going to be interesting to see how governments react with infrastructure spends to try and stimulate some economic activity here. So we want to be positioned well for that, both on the product support side. Our rebuild activity in Q1 was I think it was up over 20% at the dealership. So again, you might see a shift where customers are going to move to rebuilds. Our quoting activity there is healthy. So again, we want to be positioned if that really starts to shift into how customers are going to handle their fleets and their CapEx. Maybe one thing to add too that we can you mentioned we mentioned in our statements that we've invested on some of the integration and technology side as well. And I think coming out of this, what this does allow us to do is look at some of those opportunities to advance that integration and come out on quicker out of the gate with an integrated platform and move some of those projects forward. And so taking advantage of those opportunities as well to move our business forward and integrate the acquisition in the eastern part of the business. And that's a good point. In the first quarter, we worked hard at transitioning the first phase of our Toromont Cat business onto one platform. And so there was a cost associated with that, but we feel comfortable and that's gone well. The next question is from Ben Chernobsky from Raymond James. Please go ahead. Good morning. Good morning, Ben. Good morning. I want to circle back, I think it might have been the first question on the rental business and the shift to rental. I can appreciate that some customers might prefer some or might migrate to that channel in a downturn. But overall, generally, I would think that if demand conditions go down, there's pressure on rental rates and utilization. And you guys did report a little bit of pressure on utilization rates in gross margins, but I'm curious what's been happening to rental rates. Has that not become a more competitive environment at present? And what just and what expect could for the quarter or the year without getting into guidance, just qualitatively what's happening in the rental market right now? Again, we look at this over the long term. And if you look at the market data that we continue to process, Long term, we see the rental industry and overall dollar opportunity continue to increase. And we've seen that year over year for several years now. And it's played out well in our legacy business for us. That's why we've been investing fairly aggressively in Quebec and the Maritimes to expand that full rental services model. What we saw in the quarter was, yes, we saw some tightening. But overall, particularly in the legacy, the rental rates were holding up. Even we had growth in Ontario, in the rental services, we had over 6% growth. We were moving really well in January and February, and then everything just came off. And particularly, the thing in Quebec was we were down on our revenue in the first quarter. We've invested heavily in the uptick in the upload of the fleet, so that was a drag on the margin. That was a big shift for us that we didn't see that progress. But we're committed to it. And as we've said, we're only midway through that strategy where you get the full realization of the model with disposition. So that's got to stay committed to it. But you know what, we feel we've invested well there with technology and we can compete effectively. It's going to be interesting in how it plays out on rates. It wasn't there wasn't any real shocks in there in the first quarter from what we saw. And you haven't seen it in April yet either? Well, in April, we're starting to see a little uptick. But the other thing that we saw from the rental services was our winter products, the propane and some of the building supplies, it wasn't maybe as harsh in some areas prior, so that came off a bit for us as well. Okay. And if I could just clarify what's happening in Materials Handling. You said in the disclosure, your sales were up 11%. I think orders were up 17%. But in that area, rentals were down. And just the those trends of the sales and orders being up, was that right through March as well? Or has that side of the business shown any slowdown since the COVID hit? Yes. So we were trending nice. Those numbers are reflective, Ben, of I think the team really worked hard last year. We did a lot of restructuring in there last year with sales management territory coverage, particularly in Ontario. So that's where I applauded the team. They're making good progress. We saw good bookings and the sales revenues were up. And then it did come off in March relative to some of the COVID impact as did the service numbers. And so because we've been very focused on our service excellence strategies and tactics in there. So we did feel it, but we were pleased with the progress on the equipment sales in the material handling business. The next question is from Cherilyn Radbourne from TD Securities. Please go ahead. Thanks very much and good morning. Good morning, Most of my questions have been asked, but maybe I can get you to just comment on how the supply chain has been functioning across the dealership battlefield and Simcoe and whether you're thinking any differently about inventory across one of those businesses? Yes. So far in the I mean, we feel we're positioned well. When you look at those inventory levels, they're only down slightly from last year in the quarter. And I think we commented last year, we were very aggressive in some of those uploads and how we're managing prime product sales and position because we wanted to be aggressive with our integration plan and that played out fairly well. So I think our suppliers have done an admirable job, particularly Caterpillar. Our parts inventories are up slightly. We are in weekly consult with Caterpillar. In the first quarter, their parts supply was solid. Fill rates were good. Certainly they have stated they had some temporary closures in some plants, but we feel we are positioned fairly well and we are staying close to those signals as things progress. But Caterpillar was open on their call that they are being sensitive to the demand signals and they will adjust accordingly. Okay. And then in this environment, obviously customers are going to have a lot of focus on deep cleaning And I'm just curious whether Battlefield has been adjusting its market offering to respond to that need? Yes. So particularly with our Job Site Solutions Group, we have been sort of pivoting in some of the customer demand signals in there with some PPE. And I think our team has done an admirable job in there. Obviously, in some areas, there's tight supply, but we are pivoting in some of those areas, Cherilyn. Okay. And then just lastly, I guess in particular at the cat dealer and at Battlefield, are you seeing customers move more to online channels in a noticeable way? And can that be a competitive advantage in some way? Yes. So it's interesting. We're monitoring that. We're starting to promote that more because we've put investment in there. Q1, didn't really see any real shift, but that's something we are monitoring closely as we move forward. We will see how that plays out. That could be another shift we see due to this COVID impact. Thank you. And the next question is from Maxim Sytchev from National Bank Financial. Please go ahead. Hi. Good morning, gentlemen. Good morning, Max. Good morning, Max. Yes. Most of my questions have been answered, I just wanted to follow-up in relation to Scott's commentary. Did you say that there was a little uptick in April in relation to is it utilization rates or general utilization? I'm just trying to clarify that statement if it's possible. Yes, I don't have the data yet on the rates, but I don't want get too far ahead of ourselves here. What we saw was a bit of an uptick in some of the booked rental business. We don't have the final numbers for April, so we'll see how it played out there. And there was a bit of an uptick in some of the technician demand. Because we have seen some of the mining activity improve as well as construction. We see the hours logged on machines starting to improve slightly. This is going to be I wouldn't want to speculate on anything. It's a very complex environment obviously and we'll see how the phase ins go here. But feel we're positioned, and we're really trying to be careful with our skilled labor. Right. No. Makes makes a lot of sense. And I guess, I mean, we're trying to visualize this, I mean, obviously, there was a tail off at the end of the quarter. And then at least in April, so far, it hasn't gotten worse. I mean, is that sort of a fair assumption? Because I mean, I'm just making reference. Yeah. Let me me give you a little more color to make sure we understand. It came off hard in March. I mean, the industry the industry The industry activities in March, and what I'm talking about is the overall industries for equipment sales, that came off almost 30%. So that's a dramatic shift. So we will see how things play out here. But it came off hard. So it's a very complex environment and we have got a ways to go here. But our focus is positioning this business as best we can with short term moves, but also being very sensitive to this infrastructure. We've had to build so we're positionable when we come out. Yes, that makes a lot of fun. Actually, just maybe one one quick one on CIMCO. A reference to, the competitive environment, is is there, anything changes, any changes there, any emergence of new competitors? Or maybe any color you can you can provide there so we can have a better understanding of what's going on there? No shift in terms of the competitive environment. What we're pleased about at CIMCO was the bookings in the first quarter was I think it was a record. So we were well over $100,000,000 So we're very pleased with that. Obviously, we had there's a difference quarter over quarter on timing of projects and how we progress. That was a bit impactful. And we continue to stay very focused on our disciplines on project execution and how we are building the cost structures of the project. So but we're pleased with that booking level. And now we're we did have an impact with CIM CO. Some of the service areas came off. But still feel signals we're getting right now is those bookings, we don't see a big change as of right now. But on the project completions, but we'll see. We're monitoring closely. And sorry, maybe just to follow-up on this. Is it just the nature or the timing that really resulted in this very strong bookings quarter? Or is it your go to market strategy? I am just trying to better understand what drove that very significant Yes, Tom. Well, we are very focused on our go to market strategy, but I think it's also driven by the customer. Because we it was them making decisions on their capital decisions. So it's mainly but the good thing was we were pleased with our win ratios. There are no further questions registered at this time. I'd like to turn the meeting back over to Mr. McMillan. Great. Thank you, Donna. Before concluding the call, I'd like to remind listeners that our Annual Meeting of Shareholders will be held today at ten a. M. Again, this is a virtual meeting only. The website, details are available in our press release and on our website at toremont.com. I encourage you to look at that. Thanks again for joining us today, and that concludes our call. Take care. Be safe. Thank you. The conference has now ended. Please disconnect your lines at this time, and thank you for your participation.