Hello and welcome to The Greenbrier Companies Third Quarter of Fiscal Year 2020 Earnings Conference Call. Following today's presentation, we will conduct a question-and-answer session. Each analyst should limit themselves to only two questions. Until that time, all lines will be in a listen-only mode. At the request of The Greenbrier Companies, this conference call is being recorded for instant replay purposes. At this time, I would like to turn the conference over to Mr. Justin Roberts, Vice President and Treasurer. Mr. Roberts, you may begin.

Thank you, Christy. Good morning, everyone, and welcome to our third quarter of fiscal 2020 conference call. On today's call, I'm joined by Greenbrier's Chairman and CEO, Bill Furman; Lorie Tekorius, President and COO; and Adrian Downes, Senior Vice President and CFO. Today, they will provide an update on Greenbrier's fiscal third quarter as well as our near term priorities during the pandemic and continued economic fallout. Following our introductory remarks, we will open up the call for questions. In addition to the press release issued this morning, additional financial information and key metrics can be found in a slide presentation posted today on the IR section of our website. Matters discussed on today's conference call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Throughout our discussion today, we will describe some of the important factors that could cause Greenbrier's actual results in 2020 and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of Greenbrier. And with that, I'll turn it over to Bill.

Thank you, Justin, and good morning, everyone. As we begin this morning, let me express my continued gratitude to our workforce who've been working very hard and succeeding under extremely difficult circumstances. Our thanks extend to employees in every factory, office, and many now working at home as well as to our customers, our valued business partners and our shareholders. Recent times certainly have been extraordinary. Greenbrier and its people are responding to the challenge. And we've adapted very quickly. The rail industry and shipper traffic already had been weakened by trade issues prior to the pandemic and then came the oil shock and the pandemic. More recently, we've all been saddened by the social and racial injustice, and perhaps the time spent by so many in social distancing and isolation have given us the gift of reflection. Since co-founding Greenbrier almost 40 years ago with my partner, Alan James -- late Mr. James, our success has exceeded all of our expectations at the time. It began with an investment of $5,000 each out of my basement and 50-50 handshake deal through partnership based on either of us being able to pledge our entire network in a business transaction. Today, we are among the largest freight railcar transportation equipment service providers in the world From a 300-car fleet out of Huntington, West Virginia, Greenbrier being named after the Greenbrier Resort by its expressed permission has grown to one of the most valuable franchises in the rail service area of the world. It's been a fantastic journey with many adventures and contributions from so many participants along the way. Far too many to name. This is not the first time or the worst time throughout our career that our industry has gone through difficult situations. The playbook is well known, respect…

Thank you, Bill. And good morning, everyone. Our fiscal third quarter was quite strong in the midst of the pandemic and resulting economic downturn. As Bill said, I'm very pleased with Greenbrier's ability to respond quickly and decisively to the world altering events over the last several months. I'll spend a few minutes on the quarter and then provide an update on our COVID response. We delivered 5,900 railcars in the quarter, including the syndication of 1,600 units. As we stated previously, the timing of syndications can be lumpy and a higher number this quarter offsets the lower numbers that you saw in the first and second quarter of our fiscal year. This quarter, we received orders for 800 railcars valued at about $65 million. Orders originating from international sources accounted for over 50% of the activity of the quarter and this mix did impact the average sales price of order activity. Our backlog remained strong at 26,700 units valued at $2.7 billion. Our multiyear manufacturing backlog continues to be the source of stability in difficult times and provides us with the resilience and a bridge to when industry dynamics and economic conditions improve. We don't expect demand to recover overnight and the number of cars in storage represents the highest level of railcars stored on record. So we're nonetheless encouraged by the activities of our commercial team and conversations we have going on with several of our customers. And while orders in the quarter were clearly low by any standards, we have maintained momentum. And there's a reasonable amount of current activity that’s subject to documentation and final confirmation is not reflected in the current backlog. Our North American manufacturing group performed resiliently in a uniquely challenging quarter. In addition to building several thousand high quality railcars efficiently, the…

Thank you, Lorie, and good morning, everyone. As a reminder, quarterly financial information is available in the press release and supplemental slides on our website. As you've heard from Bill and Lorie, we delivered strong results in the third quarter despite a challenging environment. Highlights include: revenue of $763 million; and deliveries of 5,900 units, which includes 500 units delivered in Brazil and 1,600 syndicated units; aggregate gross margin of 14.1%; selling and administrative expense of $49.5 million, it’s almost a 10% reduction sequentially. The effective tax rate in the quarter increased to 41%, driven largely by a foreign currency related discrete tax item at our Mexican subsidiaries. This brought our year-to-date tax rate to 33%. As a background, for U.S. GAAP purposes, we keep the books for these entities in U.S. dollars. For Mexican tax purposes, the books are kept in pesos. Normally these results are similar. However, during third quarter, there was a significant devaluation of the peso, which resulted in a disproportionate amount of peso taxable earnings and peso tax expense, when compared to our U.S. dollar earnings for the quarter. The impact of this item on our third quarter Mexican taxes is treated as a discrete tax item rather than many tax items, which are measured over the course of the year reducing volatility. Based on foreign -- based on current foreign exchange rates, we expect a lower effective tax rate in the fourth quarter. Net earnings attributable to Greenbrier of $27.8 million or $0.83 per share, excluding approximately $7.3 million net of tax, or $0.22 per share of integration related and severance expenses, adjusted net earnings attributable to Greenbrier are $35.1 million or $1.05 per share. Adjusted EBITDA in the quarter was $99.9 million, or 13.1% of revenue. One of the questions we've received regularly…

Thank you. [Operator Instructions]. Our first question will come from Justin Long with Stephens. Sir, your line is open.

Thanks. Good morning, and congrats on the quarter. Maybe to start with deliveries in the fiscal third quarter, Adrian, I think you mentioned about 500 units went to Brazil. But for the remaining deliveries, could you give the split between North America and Europe? And then also going forward, it sounds like you have pretty decent visibility in deliveries the next couple of quarters. So I was wondering if you could give us some kind of rough sense of how delivery should shake out the next couple of quarters based on your backlog?

Sure. Well, Justin, this is Justin, I'll jump in there briefly. So just as a reminder, we are not explicitly providing guidance on the quarters ahead at this point. What I would say is that we had about 700 units delivered in our European operations in our fiscal Q3. And we would expect it to be a similar number in our fiscal Q4 going forward. But, again, we are -- things continue to be a very fluid in the worldwide railcar network.

Okay. That's helpful. And maybe to follow up on North America, do you think that North American deliveries can remain relatively flat sequentially in the fourth quarter as well?

I would expect, fourth quarter deliveries will be down somewhat from the third quarter.

I think some of this has to do with syndication volatility as well, as Lorie and Bill mentioned that our production rates, we continue to take a long, hard look at our rates and our burn rate out of our backlog going forward just to make sure we are managing things well and responsibly.

Yes, I'd like to just add that yesterday we had extensive meetings on this subject and it appears that the remedial work we've done in sizing the facilities, stabilizing the lines, the flexible lines, particularly the ones in Mexico, we're pretty much in balance with flow-out and flow-in. So I think we are -- I'm honestly optimistic, we will be able to maintain momentum on deliveries. But again, it's very hard to tell the future, it depends on the order flow-in. As Lorie mentioned we have been very cautious in booking orders. We have a fairly large number of transactions in processing. About -- I mean it's fairly significant compared to the order of magnitude, it’s 3 times the amount we booked in the quarter, about half in Europe and half in the United States. So I think that things will be less opaque the end of our coming quarter. But I think we're still looking at a reasonably strong quarter given everything that's in the Q4 and everything that's going on.

Great. That's helpful. And maybe as my second question, I wanted to focus on S&A expense. Some nice progress there and some helpful commentary. There were some unusual items in the quarter, some charges. So could you give us a rough sense for where S&A should shake out on a run-rate basis after all the changes you've made?

So I'll take that one. As I think I said or Bill said, we do expect fourth quarter selling and administrative expense to tick down from what we saw in the third quarter. Part of that’s driven by, we did have some severance costs and alike that occurred in the third quarter. This management team is laser-focused on making certain that we manage our costs and manage our spending so that we are right-sizing and having the right folks on our team for when demand comes back. One of the things where it's easy to manage our costs right now is there is not a whole heck of a lot of travel going on or entertainment. But we're looking at every single part of our cost structure and reducing those, that will go into our fiscal '21 planning. As Justin continues to remind us, we are not giving guidance. But it is this team’s focus to maintain the momentum that we've achieved in the third quarter and continue that into fiscal '21.

Thank you. Our next question comes from Matt Elkott with Cowen. Sir, your line is open.

Good morning. Thank you. If we take a look back at the manufacturing gross margins, I think they peaked in the first quarter of 2016 at close to 24%. And then if we go back 10 years ago in beginning of 2011, they were in the mid-single-digits after the Great Recession. Looking out for the next three years of the next up-cycle and current down cycle, given the company looks much different now, can you give us some updates on the range -- the cyclical range of the gross margin?

Sure. So, Matt, it's difficult -- I mean there are so many variables right now in this environment, it's difficult to give specific guidance, but I appreciate that you asked for a range. I would say that we're focused on margins being likely in the low-double-digit area. We might have opportunities for that to be higher. And we'll work very hard to make certain that they're not lower. And I think as you've seen in the past, as the cycle improves, we have tremendous opportunity to move those margins back up into the mid to upper teens.

And Lorie, what about in the current down cycle? Do you have like an internal floor that you like to not go below? Clearly the company is in a much, much better position now than it was even six or seven years ago.

It's a good question, Matt. Again, we have a strong team and we're focused on reducing our costs. I would expect that there's a chance that our margins will get into the single-digits, but I expect them to not drop as low as we've seen in past down cycles.

Okay. So I guess the targeted floor is high-single-digits in the down cycle?

I think that's fair. Yes.

Okay.

I’d just chime in on this. I think we're all facing the same things, but there's quite a lot of pricing discipline that the major builders are introducing into their plans. We do have a flow of business that makes that pretty interesting. And I have to constantly ask you all to remember that there are so many different kinds of freight cars, some tending toward more commodity cars, which have lower margins and others with more proprietary features such as some of the lines that we have added to the ARI facilities. So it depends a lot -- the average depends very much on the mix. And that's something that you guys ought to continue to zeroing on this, as you do such a fine job of doing that.

And Matt, you're right. We're a very different company now. We've got much more diversity of products. So we're always able to service the parts of the markets that can be hot even in the down markets, and we've got a much lower cost footprint that allows us to be very efficient. So, that's one of the reasons why our low should not be low as what you've seen in our distant past.

And Bill, you mentioned pricing discipline, and not only are you guys different now than a few years ago, but the whole industry landscape is different because your competitor with whom you have 75% or more of the market share is really focusing primarily on leasing. So, you couple that with the fact that you just help to consolidate the industry further and then rationalize your capacity, so is that why we're seeing more pricing discipline in this down cycle relative to that down cycle, these steps are starting to see benefits?

You have an excellent point on pricing relating to the sizing of capacity. We've been chronically in a situation in this industry throughout most of the time I've been in it with overcapacity. And arguably with flex manufacturing being the new buzzword -- railroads have buzzwords, we have flex manufacturing in our industry. I expect our colleagues at -- our friends that Trinity to continue to make their facilities more efficient and to size their facilities if we understand their plans. They do have a very good focus on leasing, but they're excellent manufacturers as well. There's a lot of things that go into this. I think the customers recognize the need for a strong supply industry. It's not just the car builders who are at the tip of the iceberg, but it's the smaller component manufacturers. They get hammered by a downturn like this. So I expect the railroads, the shippers to take opportunities to be in the market. And if they're wise, they won't push everybody to breakeven pricing on cash, which can sometimes happen. I think that they will allow and I think that sensible pricing policies will prevail on the sell side to allow a margin that will allow the industry to keep its strength during this downturn. In addition, we're working on legislation that can address this issue very aggressively. We have a lot of cars stored, but it's not as bad as it looks. We had a frictional level of storage even in 2018 of almost 280,000 cars. If you look at the coal cars, the under capacity covered hopper cars that make that up, now the sand cars, almost 50,000 sand cars that go into that number. It doesn't take much to -- improvement in or a decline in velocity -- velocities of -- it is probably 150,000 railcars locked up in the temporarily high-velocity that's below traffic in the industry as provided to everybody. As that snaps back, it snaps -- it can snap back very rapidly. So one of the reasons we're more optimistic is that underlying theme.

Thank you. Our next question comes from Bascome Majors of Susquehanna. Thank you. Your line is open.

Hey, good morning. I was hoping that you could give us at least a directional look into a couple of other items that hadn't been discussed yet where you would seemingly have some visibility into or discretion in managing. And that would be any timing of further syndication activity or even a reduction in some of the finished railcar inventory that's not on lease, that's on the balance sheet, gains on railcar sales. And maybe on top of that, the relationship of the non-controlling interests and how that relates to manufacturing processes? That seems to look more favorable under this temporary arrangement with GIMSA. Thank you.

Yes, Bascome. So, from a syndication perspective, we will continue to syndicate railcars in our fiscal Q4 and into our fiscal 2021. Much of our syndication product is driven by the car types in demand in North America. So if -- so that will be kind of a governor going forward as we progress into 2021.

And I would just add in there that, as we've talked about in the past, we are -- we have great lease origination capabilities and so through the third quarter, and we expect it to continue this quarter and going forward, we will continue to originate leases, build the railcars, which will go into our railcars held for syndication and feed into that model that Justin was referring to.

And then with regards to gains on sale, we would expect that to move down into a more historical number going forward into fiscal 2021. Just as a reminder, this is the final year of our kind of agreement or alliance with Mitsubishi on that front. It was a three-year agreement to kind of work on our lease fleet and refresh it for reimburse purpose, but also to allow them to build it out. So while we continue to have a strong ongoing multiyear agreement with them from a new railcar perspective, we would say that our historical gains on sale is a little more realistic going forward and we'll be more opportunistic based on activity in North America.

And the last piece about non-controlling interest in GIMSA. That looked a bit more favorable versus your overall profits this quarter. Trying to understand how durable that is? Thank you.

Yes. We had indicated in our last press release that we would have a benefit of $0.25 for the back half of the year. So you did see that pace in Q3 and should see continue into Q4. And then we will also have a benefit for the first six months under this arrangement next year and that will be at a lower rate. So we had indicated $0.40 over the 12-month period of the arrangement, $0.25 in the back half of this year. Part of that delivered in Q3 and then about $0.15 for the first half of next year. That's assuming various production levels.

Thank you, Adrian. And last one from me. Bill, congrats on officially marking the path to retirement here. You had made some comments earlier about, I think, quoting Carl Icahn, when things are tough, you want to look for good opportunities. Was this referring to you seeing value in your company shares here or were you actually suggesting that Greenbrier could go on the offensive and perhaps be more acquisitive in this downturn? Thank you.

It was not the latter. It's the -- I think the stock is -- given the franchise that we've grown, the team has grown and the way things are clicking over here. We're really focused on the right levers right now. And I think we can create really strong cash flow. I bought 100,000 shares in the last opportunity. I'm -- I have reached an understanding, if you read the agreement, to fixed stock in lieu of cash. I may still continue investing. I'm pretty bullish on Greenbrier. I've seen this cycle go in earlier times. I know that the industry can flip around. It's baffling to people who are not immersed in the industry, but it is, while a cyclical company, a very, very strong company. We have strong reliable competitors. We don't have the type of overcapacity that existed in earlier eras. I really believe that we can drive cautiously, of course, value opportunities. We are contracting our footprint and consolidating. We're not looking at new acquisitions in any way, shape or form at this point in the crisis. So as soon as we're through our phase one which is liquidity, capital preservation, cost reduction, we can look at meritorious growth. But the first goal is not to run out of cash in a business like this and we are going to have a good level of cash. We're going to exceed our goals way beyond the $1 billion goal. And we're going to be able to deploy capital sensibly, including continuing to consider the returning cash to shareholders through the dividend policy and we may revisit stock buybacks as that opportunity might exist. But right now it'd be too early to get into all that. But it's certainly -- I just think the company is undervalued at its current price.

Thank you. Our next question comes from Steve Barger with KeyBanc Capital Markets. Sir, your line is open.

Hi. Remembering back to the wind down of the shale plays, your earnings were more resilient than some people expected. So do you think this down cycle will be the same? And just generally speaking, given all the cost cuts, what you see in backlog syndication opportunities international, would you expect a big decline in earnings next year versus this year or could that be stable plus or minus?

I think it's a great question. Again, there is a lot of uncertainty and I appreciate you pointing out the resiliency that we saw and how many didn't think that we would be as resilient as we were. I think if you look at expectations from the folks who cover Greenbrier, you can see, it is a very, very wide range. I would expect us to be more in the area where you're seeing groupings of those outlooks. I do expect -- I mean, we are going definitely into a period of time where we'll be delivering fewer railcars, but I don't think we're -- I don't expect us to be in a period where we're reporting losses, but maintaining modest margin and continuing to be focused on keeping our cost level appropriate.

So even if you expect a reported loss in a specific quarter, you wouldn't expect that for the year?

That would be my expectations, yes.

We -- I don't think we would want to be quoted as saying we expect a loss in any quarter. That requires our foretelling the future and there's plenty of pundits out there who can foretell the future one way or the other way and probably none of them are correct. So I think we're going to be a disciplined machine focused on what we've told you we're focused on and we'll let the future unfold as it will. I am optimistic about the future for many of the reasons I've expressed and many more that we don't have the time to get into. If you look at the demographics, you look at FTRs recovery rates, they're going back to 2022 to replacement plus levels of demand. And again in this industry, because of the demographics of velocity and the stored demographics, it can really flip back quickly. So it's just so hard to tell. And that's why we're not going to give guidance. And by the way, we don't give guidance in the third quarter. Anyway, we always wait till the fourth quarter if we're going to give guidance, which I doubt we will, unless things change dramatically in the future like the next few couple of months and everybody's really happy and COVID-19 has gone away and we have a vaccine and there is plenty of things to look forward to. This is nothing compared to what has gone on before, nothing. It's just unfortunate but we can all get through it.

Got it. And to your point on small increase in velocity could unwind cars in the storage pretty quickly. I'm curious if you think the industry needs to see a backlog contraction like we saw in 2009 or is there enough specific car type catalyst that the backlog doesn't need to get down to those kinds of levels?

Again, it's very hard to tell the future. Typically in this type of cycle, you'd see the backlog decline. We all have tactics that we use to counter that. Greenbrier generally does much better because of its commercial go-to-market strategy in a downturn. We have some really great accounts for multi-year orders, particularly, very strong companies that are committed to multi-year relationship. So it's very difficult to say. I would prefer not to -- I'd prefer not to give you any specific guidance. Great question. You guys are always trying to guess -- to give you guidance, but we're slogging through this very much like a prizefight. We're just -- and we're in the ring, and we're doing what the right thing is. And we're going to -- we're going to get out at the other end and I think we're going to win.

So, just one last follow-up to that. So, Bill, you've seen a lot of cycles. Is the primary thing you're looking at to kind of make you feel better about where we are just traffic levels or is there anything else that you would look to as kind of a leading indicator to moving into a more comfortable position?

Well, I think the general economy -- we've taken a real hit to the economy, a 5% GDP decline 2020, probably just consensus roughly maybe a little under consensus. But then if you look at the stats for that and you look at the 4% growth under moderate scenarios, look at -- just look at the facts, look at the projections from reputable economists. Unemployment claims have gotten in March from 6,800 to a projected -- or all the way down to 1.8 billion in May, when we are able to reopen the economy despite the ups and downs of the COVID-19, that's going to produce more income. The government subsidies have been very helpful. More is probably on the way, depending on your political preferences, maybe a lot more, maybe probably certainly more, maybe not as much under one administration or the other, one type of Congress than the other. And so you look at these things and you just see that while we've taken a tremendous hit to the economy and to the health and probably confidence of the consumer, it's all about the math. And it's -- the FTR has us recovering at 50,000, 60,000 cars, '22, '23. Our own projections are a little more optimistic than there is in 2021. So it just depends again on the math. Carloads are recovering, we expect them to recover in 2021. They're down 8%, but that's a lot better than being down 12% in '17 and earlier in 2020. We expect very rapid recovery in the carloads as soon as the economic fundamentals are restored.

Yes, I think just to add on to that, Bill, it's looking at what's going on in the overall economy and then getting the manufacturers back up, the service providers that are going to transport goods on the rails, right, and getting that going again and that will then start compounding that rail traffic recovery, which will then result in increased demand again.

Yes, we have an industry coalition that is promoting and working with Congress on a Railcar Act. It would be an incentive and future stimulus to scrap and take out the inefficient cars in the storage statistics as just tons of frictional cars could be taken out. That would be a very attractive program. We've got wide parties of support for that. Whether that will get through this Congress in that form, hard to say, but we do expect the infrastructure build to come in. That will be a boost and if we could do something to help shippers and railroads address their obsolete cars, the stored cars, it would make the railroads and the shippers more efficient. It would help the economy, it would be green. It would be a socially good thing to do. And we've got a real strong team, interdisciplinary team through our supplier associations to address that. So there's plenty of things that can be done to address these things that are quite rifle shots, specific. And I'm optimistic that we'll see better times in these, sooner than others think. It depends a lot, however, on COVID-19 and what's happening right now is not encouraging with spiking back.

Thank you. Our next question comes from Allison Poliniak of Wells Fargo. Ma'am, your line is open.

Hi, guys, good morning. Some nice efficiencies coming through on the Wheels, Repair & Parts business. Making the assumption that the worst in traffic is now behind us, how should we think about EBIT margin? Is that a decent one to build from or there are some nuances there that we need to be mindful of, going forward?

Yes, Allison, this is Justin. I would say, I think it's a good starting point and I think if traffic continues to improve, we believe that we would see improvements in that going forward. But I would say that, that is a business that has the most explicit exposure to traffic immediately. So, to the extent traffic kind of is volatile or moves up or down, that's what we would expect to see.

And it's that view of referring specifically to the wheel side, but it's also repair side where we want to see cars not going into storage but asset owners being interested in repairing their cars and that's where our management team is working very closely. And the management team of the repair group working very closely with our management services team, where Bill indicated, we manage a quarter of the North American fleet. And so it's looking at how can we capitalize leverage, that relationship we have of our customers who need their cars repaired and doing that in some of our shops if we can do it in an efficient and quality way.

Allison, I appreciate you taking -- bringing it up, I just want to plug in for Lorie here. She has been in charge of that business unit along with Rick Turner for a year now. When she was promoted, she took that very challenging assignment on. We had given her one of the hardest assignments that existed and she and Rick have really turned it around. We've got new team in place, we have rationalized the network. Our repair business is actually making money now, which I didn't think I would see in my career, the way it was going. But the poor thing took a lot of hits and she has righted the ship and I got to congratulate her. I think more good things are going to come out of that in the future.

That's great. And then just one, I guess, clarification on what -- one of the questions Bascome asked in terms of GIMSA. I know you talked about $0.25 in the back half of this fiscal year in terms of the restructured agreement. Is that weighted toward Q3 or is it more balanced between both? Just trying to understand in terms of modeling.

Balanced between both.

In both. Okay, perfect. Thank you.

Thank you. Our final question comes from Ken Hoexter of Bank of America. Sir, your line is open.

Great. Good morning. Can we dig -- Bill, maybe dig into pricing a bit more? Your backlog fell from about $103,000 average per car to $101,000, but if I look at the new orders booked, it drops all the way down to $81,000, down from about $107,000 on average ASP per car. So maybe you can talk a little bit about mix change that's going on, or is it this environment, you really do get a bit more aggressive on pricing to keep the lines working? Thanks.

Yes, this is Lorie. I'll take that. About half of our orders this quarter were generated in Europe, where the price -- the mix of that car type is what brought the average sales price for orders a bit lower than what we've seen recently, but I think it's a testament to our strong backlog and our strong pricing discipline that our overall backlog ASP only moved it a bit.

Right. Also, just basic statistics, we learned in business school, bad sample size, not really characteristic of maybe the next we expect going forward. 800 cars, a mixed 50-50, Europe domestic, probably not characteristic of anything in particular.

So, is it more Europe-U.S. or North America than it is the type of car, or are you saying the type of car in Europe is typically a lower margin or lower -- maybe not margin, but maybe just lower ASP type of build?

The cars that were ordered during the third quarter in Europe, half were of a car type and had a lower average price, just like if you think about years and years ago when there was heavier intermodal demand and in those periods of time, depending on mix, it could bring your average sales price down. So it wasn't being overly aggressive on pricing, it was just the specific car type in Europe that has a lower ASP.

Okay. That's helpful. And then, Adrian, maybe jumping over to the finances, it looks like -- I know in the large moves you've made to get to that $1 billion target, it looks like days sales outstanding dropped from 47 days to 30 days. Have you changed payment plans with customers -- with your major customers? Is that another trigger you're looking at to kind of keep cash on the books?

It's more syndication that would have driven that change. So we did not change terms, in other words. It's just a mix of direct sales versus syndication activity in the quarter versus what you had seen in prior quarters. But we had less syndication activity.

A high percentage of our customers have actually credit ratings. They have followed admirable discipline and they haven't stretched their payables. So, I think that's a significant factor too and we've been spending more time focused on collections and so on.

Yes.

No, it makes sense. I mean given you have larger obviously major customers who are well capitalized. Yes, I just wanted to see if you were putting the screws on that, but it sounds like just a change in where the cash is coming from for the quarter. Alright. That's great, thank you very much.

Thank you very much everyone for your time and attention today. And if you have any follow-up questions, please reach out to myself Justin or Lorie Tekorius. And have a great weekend. Thank you very much, everyone.

Thank you. Stay safe.

Thank you. This does conclude today's conference. You may disconnect at this time and have a good day.