Ladies and gentlemen, thank you for standing by. Welcome to Enerpac Tool Group's fourth quarter earnings conference call. During the presentation, all participants will be in a listen only mode. Afterward, we will conduct the question and answer session [Operator Instructions]. As a reminder, this conference is being recorded, September 30th, 2020. It is now my pleasure to turn the conference over to Bobbi Belstner, Director of Investor Relations and Strategy. Thank you. Please go ahead.

Thank you operator. Good morning, and thank you for joining us for Enerpac Tool Group’s fourth 2020 earnings conference call. On the call today to present the company's results are Randy Baker, President and Chief Executive Officer; Rick Dillon, Chief Financial Officer; and Jeff Schmaling, Chief Operating Officer. Also with us are Barb Bolens, Chief Strategy Officer; Fab Rasetti, General Counsel; and Bryan Johnson, Chief Accounting Officer. Our earnings release and slide presentation for today's call are available on our Web site at enerpactoolgroup.com in the investor section. We are also recording this call and we'll archive it on our Web site. During today's call, we will reference non-GAAP measures, such as adjusted profit margins and adjusted earnings. You can find a reconciliation of non-GAAP measures to GAAP in the schedules to this morning's release. We also would like to remind you that we will be making statements in today's call and presentation that are not historical facts and are considered forward-looking statements. We are making those statements pursuant to the Safe Harbor provisions of federal securities laws. Please see our SEC filings for the risks and other factors that may cause actual results to differ materially from forecasts, anticipated results or other forward-looking statements. Consistent with how we have conducted prior calls, we ask that you follow our one question one follow-up practice in order to keep today’s call to an hour and also allow us to address questions from as many participants as possible. Thank you in advance for your co-operation. Now, I will turn the call over to Randy.

Thanks, Bobbi and good morning, everybody. We’re going to start today on Slide 3. Consistent with prior calls before we review the fourth quarter earnings, I'd like to spend a few minutes reviewing the impact the global pandemic has had on the company. Enerpac has three priorities; firstly, continuing focus on employees’ health and safety as we navigate the crisis; secondly, how we respond to the dramatic drop in sales while maintaining our focus on future execution of our strategy; and finally, making sure Enerpac Tool Group is an employer where all employees feel accepted and part of a company with a very bright future. These times have been very stressful for everyone worldwide and I want to express my sincere thanks to our entire team for their continued commitment to our company. Currently, Enerpac has about 40% of our employees working remotely, which has declined as we entered the second phase of our return-to-work strategy. All of our plants remain in operation with additional safety measures, including temperature checks, risk assessment and full protective equipment. Our sales and marketing teams have resumed moderate dealer and customer visit coupled with increased safety measures. All these actions have provided a safe work environment and to date, we've had less than 100 COVID-19 cases worldwide with very few serious symptoms. Our response to the drop in sales is focused on controlling our expenses to drive positive decremental margins and cash generation. Our temporary actions in the quarter yielded $9 million in savings and permanent cost measures announced as part of the ECS divestiture provided a total of $33 million of savings to date. Additionally, the footprint rationalization announced earlier this year is proceeding and will be completed during our fiscal 2021. All of our efforts to control costs while protecting our ability…

Thanks, Randy. Similar to last quarter, I'll give some general comments about regional trends, key verticals, distribution and also make a few observations about our operational performance during the quarter. First for our tools and service business and then I'll move on to Cortland. Starting on Slide 7, as Randy mentioned, we did see sequential improvement month over month during the quarter. And for the full quarter, the rate of decline for IT&S product sales improved, we were off 20% year-over-year versus much steeper 36% decline we saw in Q3. From a regional perspective, Europe continues to lead the way as far as recovery. We’ve got some really nice wins from our heavy lift business and did see some solid order improvements at many of our value added distributors. It's clear that as more countries in Europe reopened earlier and our sales teams were able to get out back on the road, we saw the benefits of more face to face engagement. We continue to keep a close watch on the UK, Spain and other areas that may be experiencing spikes in infection rates, but we're really encouraged that the orders and inquiries seem to be trending positively here in September. In the U.S. and Canada, we also saw sequential improvement over Q3 but still lag a bit as many distributors and customers continue to be cautious about reopening. Our sales team began to get on the road back in July and we're hopeful that we can ramp up customer calls at a more normal pace here in our Q1. Again, we're seeing September order rates trending positively thus far. Turning to Asia Pacific. Changes in COVID rates created a bit of a back and forth as different countries eased and then again retightened restrictions during the quarter. A number…

Thanks Jeff and good morning, everyone. So let's recap and go into little more detail on our adjusted fourth quarter results. I'm on Slide 9. Fiscal 2020 fourth quarter product sales increased 9% sequentially but were down 23% from the prior year. Tools products were down 20% and improvement from down 36% reported in the third quarter. Cortland sales were down 39% versus down 21% in the third quarter, and service was essentially down 45% in both quarters. As Randy noted in NPD was greater than 10% of our product sales for the fourth consecutive quarter as we continue to drive innovation during the crisis. We had $2 million positive impact from HTL consistent with the third quarter. The adjusted EBITDA margin for the quarter was 9%. The adjusted tax rate for the quarter was 51%, with the rate exaggerated by lower earnings. The full year adjusted rate for taxes was 25%. Just a quick note here. We've included in the appendix from baseline fiscal '21 modeling assumptions. Those include tax rate, cash, taxes, depreciation, amortization, interest, expense and CapEx, all based on what we know today. So if we move on to Slide 10, the sales waterfall illustrates the components of the sales decline. Jeff just covered what we are seeing by region. So just to give another indicator of some of the sequential improvements on a consolidated basis. Last quarter, we showed here our year-on-year product sales down $40 million and in Q4 we’re showing year-on-year product sales down $27 million. Last quarter, we showed service down $21 million versus the $14 million we're showing here in the fourth quarter. Our service continues to be impacted by maintenance deferrals attributed primarily to the pandemic. As Jeff noted, towards the end of the quarter, we did see some jobs…

Thanks, Rick. Now let's turn over to Slide 14. Perhaps the most difficult question we have to answer today surrounds the timing of the global economic recovery. We continually monitor and analyze economic and institutional financial reports to formulate our view of future growth in the various vertical markets we serve. Consistent with prior quarters, we are continuing to suspend our guidance pending a clear market stability and predictability. The economists view of the market is becoming more consistent pointing towards a second half of fiscal 2021 returning to a growth mode. Our key assumptions include our typical seasonal first half versus second half strength and our focus on maintaining our cost structure to deliver an optimal decremental margin. Our balance between optimum cost and maintaining our ability to execute our strategy remains a top priority for Enerpac. And while we plan for supplemental cost measures in the event the recovery is slower than expected, we will protect the elements of our organic growth. And lastly, we will continue to closely manage our liquidity to maintain the strongest possible balance sheet. And moving on to the last slide on Page 15, our capital allocation priorities have not changed. We will continue to drive all aspects of our strategy to ensure Enerpac remains healthy and is capable of achieving our long-term objectives. In conclusion, I'd like to thank all of our employees for their continued dedication to the company and serving our customers worldwide. Our top priority is keeping everyone safe and healthy, while creating a top performing tool business. Operator, we're completed with our remarks, so please open it up for questions.

Thank you [Operator Instructions]. Our first question comes from Allison Poliniak with Wells Fargo.

You had mentioned -- you’d talked to maybe some potential short-term cost actions that you could take heading into next year, if needed. But with the volume decline so severe, has anything incremental on the structural side come to light that you guys are looking to pursue at this point?

Allison, I'll cover a piece of it and then I'll flip it over to Rick to provide a little more clarity. We have analyzed a lot of things that are going to -- have improved our structural costs and we have taken things that have been structural in nature. Some of it was a follow on to the ECS divestiture and rightsizing the company. And as I mentioned in my comments, I mean, the $33 million of cost offs that we've been able to achieve have significantly improved where we were headed in terms of our overall SAE expense. Secondly, the structural cost associated with the manufacturing footprint is something that we had already started on. As we mentioned, we completed -- largely completed the Cortland consolidation in the third and fourth quarter. And also the consolidations that are going on in the UK operations have commenced and will also yield some significant saving. So Rick, if you want to fill in some gaps there.

No, I think you covered it. As we said last call, we will kind of continue to evaluate, Randy mentioned the footprint optimization. And if there are additional efficiencies, which we said last call we're looking at that and any opportunity we have to drive additional structural cost efficiencies we will do that.

And then just a follow-up on the comments around the service business, I know you guys aren't giving guidance. But I think one of the comment was significant improvement heading into fiscal Q1. Can you give us any parameters around that in terms of that sequential improvement to help us and sort of if we don't I guess overestimate there?

Well, one of the things we want to be cautious on, and I'll let Jeff chime in here. What we're really saying there is we saw some good mobility as we came out of Q4. Now, obviously, there's a lot that has to continue and nobody's predicting that but we like what we saw at the end of -- toward the end of August. We like that jobs are starting to mobilize. We like that there are some emergent jobs that we're picking up work on. We saw that in the improved decline year-over-year. But in terms of what Q1 looks like, are we as we stand here, should that activity continue you might see some sequential improvement. Jeff, I don't know if you want to add.

No, I think you hit that right. Again, throughout Q4, which due to the -- [the heat] [ph] is normally a soft quarter for us we did see inquiry levels pick up. As I commented, major projects are still I guess been delayed but the inquiry level and you know the emergent pop up work that is coming through. Unfortunately, that's a little harder to predict versus a major project but we’re glad to see it nonetheless. So as you said, as long as that keeps up during the quarter, we're expecting to see some improvement.

Our next question comes from Stanley Elliott with Stifel. Please state your question.

Can you talk about the velocity that you're seeing between the Enerpac branded tools and some of the others? Just curious to see if there's been kind of a trade down of mix or where the velocity really is within the marketplace right now?

I don't think there's any large variations between the Enerpac branded product and some of the acquired brands. I think, as we launched the HTL product line through Enerpac and it is fully branded Enerpac. Certainly that there is going to be a acceleration rate as a company that traditionally only saw a very small distribution channel start seeing the benefit of thousands of dealers around the world. As I mentioned in my comments, the bolting product line now has been completed in terms of our three tier strategy. And then the launch of our products that came with the HTL product line fully opens the competitive landscape, which gives us a new area to sell and sell competitive products as well. So I think that's going to be helpful. I think if you think about some of the other peripheral products in terms of our machine and some of the cutting and bending product lines, there have been puts and takes in terms of the volumes associated with them just by their normal dynamics and seasonality. But I think that the Enerpac brand does pull a lot through our traditional heavy lifting, lifting products, pump products, and bolting products have I think seen a very similar range of sales dynamics through the third and fourth quarter.

And then this may be tough, but curious with the 35%, 45% decremental, you're obviously doing better than that. If we're assuming better conditions into ’21, what sort of incremental should we think about? And part of that I guess is with you know the services being down as much as is likely some travel coming back, some of the $9 million in temporary costs come back to, right? So just trying to balance kind of the puts and takes and how we would think about the incremental margins when things recover.

As we look at, you know, some of those assumptions, one of the things, yes, services is down. When you look at our EBITDA margin, as I mentioned, you know when product comes back, it does have a nice impact on EBITDA. So if you look at the impact service product down and the impact on margins, essentially, you know a dollar in product sales is $0.50 in margin. And so if you look at that mix and we talk about sequential improvement, the biggest driver is going to be the return of product sales. Service is always a contributor but the biggest mover will certainly be product. The other aspect of that is as the volume comes back the manufacturing under absorption gets a little better. We start to leverage, Randy mentioned the $33 million that we've taken out, we start to get that leverage, the volume leverage on those costs. And so we feel like we're sitting good in terms of incrementals now when those will kick-in, it depends on the market. But we should definitely be in our stated 35 to 45, once we returned to growth, whereas that product improvement will offset and we'll be able to leverage the cost out. We talked about getting to 25% EBITDA margin. And as we said before, I think the slide is in the appendix. We’ve done all of the actions now to drive that when volume returns and at that level of flow through, we're definitely on the high end of our decrementals.

Our next question comes from Mig Dobre with Robert W. Baird. Please state your question.

As we're looking towards fiscal '21, I'm wondering if you can give us a sense for where you are from a cost savings standpoint overall? I mean, I understand the $9 million worth of temporary savings based on what you know right now or today. How are these savings going to flow through on a year-over-year basis into '21? And is there anything else structural that carries over '21 versus fiscal '20 that we need to keep in mind? Thank you.

Last year, I think we had total restructuring savings, that's incremental savings for fiscal '20 of about $15 million. And that was starting with the actions we implemented in the third and fourth quarter of fiscal 2018. So, you take that roughly $8 million to $9 million, plus the $15 million, plus the $8 million carryover that we expect in fiscal '21, you start to start to see the leverage on that spend. And so that pretty much -- gets you pretty close to the $33 million we've been talking about in terms of realization. Now, in terms of the temporary actions. Our expectation, we've got $6 million those are all carry forward actions and the carry forward actions Q1. Our expectation, as I was mentioning before, is right now other than being diligent, we don't have additional actions. We expect, as we sit here, hopefully, we get to the sequential improvement. If we continue to see that and we continue to see that on products then our need for temporary actions will wane. If we don't continue sequential improvement, then we have to reconsider how we continue to drive the decrementals. So in terms of costs, an incremental $8 million of restructuring savings other than the $6 million we talked about are temporary. You should be looking at kind of leveraging the savings, we’re lapping the savings we've already announced that gets us to full run rate with the $8 million in the first three quarters of the year coming through.

Just to clarify this for myself. So you're saying $8 million is incremental from structural savings in '21 versus '20 and there's also a $6 million benefit from the temporary savings that would probably occur in Q1, correct?

Yes.

And then my second question goes back to the discussion that we had on service. And what I'm actually looking at the total dollars of revenue here, the prior quarter you had $25 million worth of service revenues. This quarter you had just under call it $19 million, so this business slowed sequentially. And I do understand that there is some seasonality here but I'm curious to parse out. How much of this sequential slowdown in the fourth quarter was due to travel restrictions? Because my sense was that those were in place already in the third quarter versus something else happening in the market. And as we look into '21 and we're starting to think about sequential improvement. Can this business get back to $20 plus million of revenue? Is it $30 million? Because your comparisons early on I think are pretty tough in terms of total dollars? So thank you for color on that.

I'll start a little bit and then, Jeff, chime in here. The mobilization, if you go back to our third quarter, that really started to kick in in the back half of the third quarter, and I would say through a lot of the front half of the fourth quarter. So all of the labor constraints were not all third quarter, you certainly saw them in the fourth quarter. There is a cyclical impact here. The third quarter is usually our strongest quarter in service. And so traditionally you'd see not a huge step down but traditionally you'd see a step down in the fourth quarter on a whole. So the sequential normal step down versus as well, including whether the mobilization issues, I think those two items really contribute to the delta you see Q3 to Q4 rather than a meaningful shift in the market for service. Jeff, if you want to add?

I think you captured it. We still have some ongoing work that was coming through and delivering some revenue at the beginning of Q3. You can't underestimate the seasonality. I think it maybe more significant than you realize. Our Q4 is normally a soft quarter and coupled with the lockdowns, I think that pretty much explains the quarter-over-quarter decline there.

But in terms of the opportunity for sequential improvement. Can you maybe help us understand that, the magnitude dollar wise or however you want to frame it?

Yeah, I hesitate to put a dollar around it. But just looking at the amount of inquiries and the amount of emergent work that I talked about that we're already back on multiple sites. Obviously, we look at backlog going into the quarter and I would say that from that perspective we have some optimism as well for the quarter in terms of what's already in backlog.

And then I add, the fourth quarter is the soft quarter. Regionally, we stuck in that MENAC regions, though, first quarter can be a meaningful quarter for that region. And I think what Jeff described earlier is, that's really where we're starting to see what was delayed now mobilized and start to kick in. And it's similar to what we saw in 2019 where we had meaningful large projects going on in that region. Still follows the cyclical pattern because of the holidays and just normal cyclical lows in Q4. But regionally, that region can produce a little bit of growth that on the overall basis is a little bit of an outlier Q4 to Q1. And so I think you're seeing that mix aspect as well.

Our next question comes from Deane Dray with RBC Capital Markets.

I was hoping you give us a sense of where you think inventory levels are in the channel. I mean you commented that some of the larger distributors are doing better versus the smaller ones. But trying to get a sense here of how much restocking may happen just in terms if you start seeing better demand, might we see a restocking coming through, and maybe some color on the potential timing?

As I’ve tried to capture in my comments, we were looking at as many leading indicators as we can. It's not a perfect science. We don't get every distributor telling us exactly what they have on the shelf. But as we look at some of the indicators that we almost always see in the fourth quarter and certainly in August, we did not see a lot of that stocking that we would normally see in the quarter. I also mentioned dropship rates that were up significantly in the month of August, if we look year-over-year, which is a prime indicator of dealers not putting orders through -- not pulling through retail orders from their own stock. So as we talk to some of our major distributors, Randy and I and the rest of the management team had conference calls across the quarter with many distributors. And it was clear that they were kind of on pause until they saw what happened this fall and even the election, as I mentioned, is weighing a little bit heavy on some of our distribution. But early in September, it's quite easy to look at our daily order rates and see when a stock order pops, because they're outside the balance of what a normal distributor would order on a weekly basis. And we did start to see a few of our largest distributors, especially in Canada and in the Western U.S. So that's encouraging. Whether that continues or not I guess is up to the distributors, but we do think there's headroom in the channel for some stocking.

And Deane, if you refer back to the chart that I reviewed in the call, we gave you the first couple of weeks of September, which was some visibility into our first quarter demand rate, and what we've been watching really closely is that daily order demand and the dynamic sequentially. And so we've seen that go from obviously in Q3 that 38% number now we're down to 27% in Q4 and early stages of Q1, which stayed somewhere in the high teens is where it’s running for new product sales, which is where we make the money. On the service side of the revenue it can be more volatile and can get some upside in Q1, but it's something that we all are watching pretty closely. Is it are those markets stable enough and are the job sites stable enough to actually start that demand is normal. But encouragement that we have and we're cautiously optimistic, as we said, is that the sequential movement on orders has continued to improve and is exactly what we were looking for.

And then just maybe some color on your decision not to take the typical September pricing actions, given the backdrop, no one should be surprised. But just what led you to the decision? Was there any competitive response that became part of the decision making?

Yeah, not really a competitive response decision. I guess quite simply we got together and thought that our distribution and our customer base has kind of grappled all year with some pretty challenging dynamics out there, and we decided not to add complexity to the fall with the price increase.

Does that not include the new products? So as you launch new products those typically have better pricing embedded. Is that…

Sure, I mean those launch into the market with a pricing strategy and a plan to them. So, yeah, they're going out at the price that we had planned. We certainly didn't cut prices that's for sure.

Our next question comes from Ann Duignan with JPMorgan. Please state your question.

Just on the back of the last question, I wanted to talk about the seasonality of revenues. You know you said slow market recovery with normal half one, half two seasonality. However, just given the fact that your dealers didn't pull forward demand because of pricing into last year. Is Q1 going to be seasonally different than normal? Usually Q1 is weaker than Q4. But given that we didn't see a pull forward of demand into Q4, does that mean that Q1 all else being equal and everything you talked about on services Q1 should be, from a revenue perspective, above Q4?

Ann, I think you touched on a very good topic, which is as a sequential revenue stream of the company. And so typically our third quarter is the strongest quarter in our typical year. And then this year it turned out to be one of the weaker ones and Q4 was obviously incrementally better. And if you look historically and we look at the pressure waves of a 10 year profile, the company would state that our Q1 should in fact be our second weakest quarter followed by Q2, which is the weakest quarter within the calendar year. That dynamic is probably not going to flow that way until the recovery is complete and dealers have come back to full steam again. And so as we look at the sequential order rates that I mentioned the fact that now we're in the high teens decremental versus prior year, which lead us to believe that our Q1 versus Q4 should be sequentially better but in alignment with where Q4 was. So we don't want to guide anything at this point because there's so much volatility and we've seen order demand week to week change dramatically. And all it takes is a couple of key markets to lockdown and it goes dark on here for a few weeks, which creates a problem. But I do believe that the normal seasonality that we see from year-to-year for the first couple of quarters until we see the back half of our fiscal 2021 is not going to follow on normal sequential revenue.

And then a similar question just for clarification. You expect to deliver comparable decremental margins. Was that comparable to Q4, so we should be looking at somewhere around the 28% decremental margins in fiscal '21? Or was it still comparable to the range -- target range?

It's more of, as we sit here today, it's more of the range is about all we can say, because the delivery is totally dependent upon volume still. And I think Randy was touching on -- the question is, are we going to follow the sequential pattern, or are we going to follow the normal cyclical pattern. Based on what we done, when would we feel like, just like we did in Q3 rather, we should be able to manage to the low end of our decremental. But again, all dependent on hopefully, we don't see any kind of resurgence that's meaningful. But given the cost actions that we've done and the carryover of the $6 million temporary actions, we'd like to be able to say we've managed to the low end of that.

And then one final, just follow-up on all of that there’s and how should we think about working capital and the demands of working capital as volumes recover, particularly in the back half? Should we look at negative working capital just as you start to build inventory and payables rise, should receivables push out? Just talk a little bit about growing sales and what that will do to working capital? Thank you.

So we anticipate that, as I mentioned, we will continue to manage our working capital. We are seeing today, if you look at the charts on Page 13, we ended with levels less than we started with in Q1 of 2019. Now all of 2019, I was saying our inventory was tracking a little bit higher than we felt like we needed to be and that progressed through 2019. And still felt like we ended 2019 granted on a soft fourth quarter but with inventory levels higher than we were expecting. I think the work that we've done brings the working capital down to a much lower level. We still think there's opportunity there. And so while certainly if we can get back to significant growth in the back half, we'll have to see working capital but still working on what that new normal looks like. I don't foresee us look at this chart, getting back to some of the peaks you saw in '19, because I just believe we're looking at it differently. We're focused on supply chain and focused on sales and planning that are now going to be a part of just how we do this going forward. So as I mentioned, we’re setting a new normal and won’t look like ‘19. Too early to call what those levels will look like as we progress here through what could be continued decrementals through the front half of the year here.

So do you have a target new normal working capital as a percent of sales for example?

No, not yet. And I'm not particularly fond of the working capital as a percent of sales but no, we don't have target here.

Our next question comes from Justin Bergner with G. Research. Please state your question.

To start, just a question on the inventories. Were you able to quantify internally or estimate internally how much you think the fourth quarter sales might have been impacted by lack of pre-buy ahead of price increase? And if so, are you willing to discuss or share that with us today?

That's another difficult one to call. So as we sit here today, we don't know if, had we signaled there was going to be a price increase given everything that's going on and given as we talked about what our dealers are doing. Whether they would have purchased more had we implemented the price increase. What we do know is last year, but that was normal activity. And I would say normally for the business, there is a pre-buy, it's tough to say whether or not there would have been a pre-buy and the magnitude of said pre-buy had we had we done the price increase.

So if you recall last year, we had been in the midst of tariff pricing. So there had been multiple levels of price actions throughout the whole year. So our dealers were becoming pretty cautious on pricing. And anytime there was an announced pricing, they were getting ahead of us. So there's no doubt that the record sales that we saw in August of '19 has some impact on that. Now September revenue was also fairly strong last year. So we think that there is always impacts of people being smart shoppers and buying free pricing. That typically does happen. That's always difficult to put an exact ring around how much that is, but it is human nature. If you look at the quarter ends that include price action, you'll see a upswing in revenue.

My second question was a two part question. Given the weak sales environment is Enerpac willing to sort of suggest the sales level, which it thinks it can reach the 20% EBITDA margin goal looking at over the next couple years? And then the second part of the question would be the lack of a price increase this year. Does that change the trajectory towards reaching that 20% goal or is that lack of price increase pretty well supported by the cost environment on the input cost side and the like?

So the beauty of it is, is that we have laid out for cost actions, structural changes to the company have been completed. As Rick stated, we absent the COVID-19 impact, would have exited our Q4 in the ring of getting above the 20% EBITDA margin target. And if you recall and this is going back on it seems like two decades ago but it was our first quarter of last year and how we guided the full year it was if I recall $590 million around $600 million was what I guided for fiscal 2020. Had we been in that zip code of revenue? I have no doubt that our exit point for 2020 would have been right on top of that number. So those dynamics have not changed. Now the thing that we do see and I think it's been an educational process for Enerpac is that we now know the impact of volume in terms of under absorbed and fixed costs, which luckily our businesses have lost several points of margin due to fixed costs but it hasn't been the magnitude a lot of companies have felt. So structurally, our costs were aligned and set for that level of the 590 to 600 range. And so our game plan is always to get back to that range, because once we do the volume impact steps that stage and we're back in business in terms of strategy execution.

And any comment on the second part in terms of the non-pricing action and does that affect that trajectory?

Pricing normally reads through at about 1% or less and it is selective pricing actions. And so that fact that we didn't do take pricing in September would not have a meaningful impact given what we're doing on a cost perspective and our ability to leverage will get once volume returns to Randy's point on $600 million of revenue given what we've done so far, you will definitely be on top of the $20 million debt we were originally speaking of early in 2019. And again, September is -- one of our pricing actions, we do take pricing, it's different by region. And of course we have the opportunity if we get to a point where we need to, to implement pricing before we get to next September. So it is a -- that's one of our pricing actions during the year, it's probably the largest in terms of product but it is only one point.

Thank you. Our next question comes from Jeff Hammond with KeyBanc Capital Markets. Please state your question.

Just want to clarify on, I think Randy you said that down high teens. Is that what the order rates were for September for product?

Yeah, as you can see on the chart, we provided that sequential week to week number. And if you look at that chart as we exited August coming into September, it has tracked that way. And I can tell you as of yesterday, we are tracking to high teams decremental versus prior year. So that is exactly the progression that all of us have been looking for is sequential improvement from when the disaster hit us in March of fiscal 2020. The question is, why we always want to be very cautious on that is that all it takes is European markets to start having to shutdown due to a resurgence or U.S., or whatever the case may be whether it's in Asia or Mideast. If there's an activity that deflects our order rates that could change dramatically. And we saw in the month of March and April that changed within a week. So I'm cautiously optimistic about where it's going. But it's something that -- the trend line that definitely we're looking for and I think all the companies are looking for.

The fact here the caution. It is through September through, as Randy put it yesterday. And while we'd love it to continue, we're not calling it a trend but it just reflects what we've seen so far. It’s a good couple of weeks and hopefully that continues.

And is service declines are running better than that in September, is that?

Yes, they are.

And then just can you give us the cadence, Rick, of the saving the $8 million incremental savings quarter to quarter? and then just on the temp costs, you know what the expectation is into 2Q? And I guess should we assume that the $21 million or so of costs that you had taken out in the second half of this year, you know generally go away in fiscal ’21.

So in terms of the $8 million, it’s probably fair to officially -- it's front half loaded, I'm sorry, I'm just looking at the numbers. It's front loaded because we start to anniversary some of the actions as we get into our back half. So you know, I call it $6 million of that front half, the other two back half. And then in terms of the temporary actions, the $21 million from the back half of fiscal ‘20, as I said, there is no plan right now to carry those forward. You'll see the $6 million and that's all we have right now is that we're looking at Q1 and the actions we've already taken so nothing new just continuing what we said, we’ll generate $6 million savings here in Q1. So no real expectations for Q2 through Q4. We’re probably going to monitor and look at the mix of either sequential improvement and hopefully we can see that. And you know, if we continue to see that and continue to see that in product and some good margin service work, we are hopeful that we won't have to take additional actions but that is still a lever that we can pull.

Thank you. There are no further questions at this time. I'll turn it back to management for closing remarks.

Well, thank you very much for everybody joining today's call. And we hope that everybody stays safe and healthy over the next quarter. And we look forward to seeing you at the end of this quarter. So thank you very much.

Thank you. This concludes today's conference. All parties may disconnect. Have a good day.