Q1 2021 Badger Meter Inc Earnings Call
Ladies and gentlemen, and welcome to the Badger meter first quarter 'twenty 'twenty, One earnings conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
To ask a question during this time and will need to press Star then one on your telephone keypad.
As a reminder, today's conference is being recorded.
And it's now my pleasure to turn the conference over and over to Karen Bauer, Vice President of Investor Relations corporate strategy and treasurer.
Please go ahead Ms Bauer.
Good morning, and thank you for joining the Badger meter Inc. First quarter 2021 and earnings conference call on the call with me today are Ken by of course, Chairman and President and Chief Executive Officer, and Bob <unk> Chief Financial Officer.
The earnings release and related slide presentation are available on our website.
Quickly I will cover the safe Harbor reminding you that any forward looking statements made during this call are subject to various risks and uncertainties and most important of which are outlined in our press release and SEC filings.
On today's call, we will refer to certain non-GAAP financial metrics, our press release and slides provide a reconciliation of the GAAP to non-GAAP financial metrics used.
Finally during this call we have referred to refer to core results for various financial metrics. For example, core utility water sales core and this case means that designated financial metric, excluding the impact of the recent Afghan and ATI acquisition. We believe this reference point is important for year over year comparability.
With that I'll turn the call over to Ken.
Thanks, Karen and thank you for joining our first quarter earnings call and summary, I'm pleased with our results for the quarter delivering sales and EPS growth margin expansion and robust cash flow.
Most exciting we experienced record order rates for Smartwater solutions across both lines of business is the underlying growth drivers for our digital solutions are embraced by customers.
The well publicized and widespread electronics supply shortages and limited our conversion of these record orders into sales in the quarter temporary and core sales growth, but resulting in a record high order backlog heading into the second quarter, which bodes well for the balance of the year.
Our recent acquisitions delivered strong topline results with net profitability muted as expected and as a result of purchase accounting items overall, our acquisition integration activities are progressing as expected.
And talk about the current environment and our outlook later in the call, but for now let me turn the call over to Bob to go through the details of the quarter.
Thanks, Ken and good morning, everyone and.
And you can see on slide four total sales for the first quarter were $117 $8 million compared to $108 5 million and the same period last year and increase of 9%.
And utility water overall sales increased 12%, reflecting the addition of the Essakane and ATI acquisitions, which contributed approximately $10 million of sales and the quarter.
Scarce capacity of electronics is a pervasive market issue impacting many industries and is not isolated to badger meter.
We did experience growth and overall meter sales and Beacon software as a service revenue and we benefited from strategic value based pricing actions.
As Ken noted we ended the quarter with strong order momentum and a record backlog, which gives us confidence and our sales outlook moving forward.
As expected the flow instrumentation sales rate of change improved sequentially from down 10% last quarter to down 3% year over year with the majority of end markets served experiencing recovering demand trends, we expect to return to overall growth moving forward as a result of improving demand conditions and easier comparisons.
We are pleased with the operating profit improvement delivering a 30 basis point increase and margins to 15, 1% from 14, 8% and the prior year.
Gross margin for the quarter was 41, 9% up a healthy 200 basis points year over year.
The core business delivered higher gross margins due to positive sales mix, namely higher SaaS revenues, along with favorable pricing, which continued to offset the impact of higher brass costs and the quarter Mark.
Margins also benefited from favorable acquisition mix you May you may recall from last quarter, we describe the water quality acquisitions of Essakane and ATI is having higher than line average gross margins combined with higher S. T. A as a percentage of sales and therefore with a net EBITDA range for the combined businesses and the mid teens.
The positive acquisition mixed benefit to gross margin was muted by the amortization of inventory fair value step up in the quarter, but that's mostly behind us moving forward.
Copper prices continued their upward trajectory after our last earnings call in late January when they were averaging approximately $3.60 a pound to now near $4.20 per pound.
And this obviously increases the potential cost headwind for the year that we had estimated at $4 million to $5 million to closer to $7 million to $8 million on a year over year basis. If it were to stay on that $4 20 range.
We have executed well and implementing appropriate pricing mechanisms to offset this inflation as evidenced by our first quarter results and will continue to remain nimble and actively addressing inflation.
Turning to SCA expenses, the first quarter spend of $31.6 million increased $4 3 million from the prior year.
This includes a full quarter of SBA spending for both Essakane and a T I along with the higher level of acquired intangible asset amortization.
Beyond the impact of acquisitions higher personnel costs were more than offset by lower travel and trade show and other ongoing pandemic impacted expenses.
The decrease of which we will anniversary starting next quarter.
The income tax provision and the first quarter of 2021 was 20 2022, 2% slightly lower than the prior year's 25, 6% rate.
In summary, EPS was <unk> 47, and the first quarter of 2021 and increase of 15% from the prior year's EPS of <unk> 41 cents.
Working capital as a percentage of sales was 24, 3% down from 25, 5% of calendar year and despite the addition of ATI largely due to working capital initiatives and the quarter, our free cash flow of $28 8 million was consistent with the prior year.
And early January we deployed $44 million net of cash acquired for ATI and currently have cash on the balance sheet of approximately $51 million along with the untapped revolver, we have significant financial flexibility to execute our growth strategies with that I'll turn the call back over to Ken.
Thanks, Bob turning to slide five we don't provide guidance, but believe it is important to bring awareness to the increase the level of unevenness, we're likely going to see and our topline as this year unfolds.
I want to spend just a minute highlighting comparative sales data to provide a clearer picture of the varied influences on the quarterly sales growth trend lines and discuss the optimism we have for our results for the remainder of the year and beyond.
This chart depicts the quarterly sales growth rate of our core business in 2020 and into the first quarter of 2021 as you can see by the various callout boxes, we had some specific dynamics in 2020 with Covid and now on the first quarter of 2021 that we need to be mindful of as we look at to the rest of the year comparisons.
Namely, we will have an easier comp for our upcoming Q2 versus the 2020 Covid Lockdowns combined with a portion of the record backlog converting to sales given the anticipation for some modest improvement and electronic supply.
As we move into Q3, we will have a difficult comparison based on the post COVID-19 Lockdown and order rate and manufacturing recovery last year.
The bottom line to all of this is that we continue to have strong momentum and robust bid activity order rates and backlog consistent with our long term outlook for mid single digit growth.
From a topline standpoint, the acquisitions are performing in line with their historic growth patterns and our integration teams are working to begin putting the steps and processes in place to realize future growth synergies.
Turning to our outlook the underlying market drivers for Smartwater solutions remain intact and in fact as we've discussed Covid is bylaw spotlighted the benefits of Ams for common utility challenges such as remote work efficiencies and regular and automated consumer engagement tools.
Water quality and security concerns also are driving accelerating interest and our real time digital solutions.
We saw evidence of that during the recent climate events, and Texas and other southern U S States, which experienced a debilitating deep freeze.
We had a number of customers describe their real life benefits of having our cellular Ams solution deployed which remained and service due to the criticality and cellular networks.
These utilities were able to obtain real time mission critical data, which helped identify potential main breaks pipe freezes and burst keeping safe water supply available for their end consumers.
Not surprisingly one of the most common outlook questions, we get from investors relates to the potential impact of the recent infrastructure proposal from the bite and administration.
Specifically the portion of the plan that calls for $56 billion of spending to upgrade and modernize America's drinking water wastewater and storm water systems, and additional 10 billion and part to invest and rural small water systems. As we have repeatedly stated the underlying secular trends driving demand for our digital water solutions are already.
Evident and growing.
Stimulus investments could perhaps accelerate or add to those underlying drivers, but are not necessary for us to realize our long term growth plans and in fact, as we stated over the past couple of quarters. It's the widespread availability of vaccinations that are most relevant to near term demand patterns.
It's too early to tell if a potential pause and spending might occur as utilities weight and digest the implications of the stimulus proposals. Our view is that if a pause would occur it would simply be a matter of timing and not a change to the long term structural growth of our business.
We will as always focus on the elements of our business within our control. Our teams have done an outstanding job managing value based pricing initiatives, which have mitigated the significant increase and brass costs, our sourcing and supply chain teams have their hands full and actively managing the varied ramifications of the wide ranging and universal electronics shortages along with search.
And logistics bottlenecks, including those at West Coast ports.
While these circumstances are not unique to badger meter I am confident that we will be able to adequately support customers. Despite these many challenges.
We will continue to manage working capital and drive cash flow in order to support our investments and both organic and acquisition driven growth our focus remains on enhancing the product and software offerings, serving water related markets and applications globally.
Finally, I want to provide and update on our ESG activities, notably, establishing our first greenhouse gas intensity reduction target.
This represents an important step on our ESG journey as we worked and mitigate the impact we have on the environment and continue to be good stewards of the resources, we use and our operations.
The 15 per cent intensity reduction goal by 2030 was developed through a strategic initiative to capture baseline greenhouse gas data globally and identify opportunities to reduce energy and consumption and other level, one and two emissions. We will set annual smart goals to monitor progress and we'll report externally on our efforts and are Biennials.
Sustainability report.
To close out our prepared remarks, I want to thank our teams around the globe for their consistent and dedicated efforts to serve our customers with that operator. Please open the line for questions.
At this time, ladies and gentlemen, and thank I'd like to ask a question. Please go ahead and press star and the number one on your telephone.
Again on Star one to ask a question.
Your first question comes from the line of Nathan Jones.
Please proceed with your question.
Good morning, everyone.
Good morning Nathan.
I'm going to start on gross margin, obviously very strong.
We talked last quarter when they were about 42% and you guys didn't think that was sustainable.
Most of the input here are the higher margin acquisitions would have already been factored into that.
And net pricing.
Probably better than you anticipated can you just give us if you could comment on on that gross margin level with another quarter under your belt. If you think.
Hey, Nicole.
Did these acquisitions change the day structural gross margin range that you guys had been talking about it 36 to 40 created just any comments you've got a nice.
Yeah, Nathan I'll go first and then I'll turn it over to Bob, but we're obviously very pleased with the performance of our of the business.
This quarter and and frankly in the fourth quarter as well the work that our team has done around value based pricing, which for US is not a project. It's not an initiative. This is this is a change and how we how we do business and how we assess the value we provide for our customers and and what what that value is worth so we feel great about the pricing.
Pricing program that we've started we've talked many times about the structural changes that we have in and more beacon revenue and and a structural mix changes that are favorable.
Bob can talk a little bit more about the acquisitions, but in general from an execution point of view.
I just wanted to get out there that really proud of the work everyone's done here to manage all the inputs to have us and a really good price cost position.
And I don't have all much whole lot to add to that Nathan I think I think let US you know, we're obviously very excited about the last two months two quarters worth of margin performance you know as a cautious company I think we always like to see more wins on the board before we redraw the lines on the field or declare a victory. So I think something to certainly keep an eye on I don't think we're ready to declare.
A movement and that range, but still you know if you're if you add up the last.
Eight to 10 quarters of performance, we've definitely been and that tighter band and yes. The acquisition mix does change that to a certain extent, but I don't think you're going to get us to stretch yet today.
Okay fair enough.
Maybe just to follow up on the supply chain.
And the electronic supply chain has been big news.
And the investment community. So we know it's not something that's restricted that Badger can you talk about how much that impacted the quarter like was there a meaningful amount of revenue that you had to defer out of the quarter because of those restrictions and.
And your ability to produce where you want to add.
And just how you see that going and what your suppliers are telling your comments on that.
Yeah sure you know.
And as you're certainly well aware, we don't provide guidance. So the fact that we even brought it up.
Is the fact that we think it is meaningful and up and nature that are that it should be called out.
And you know on the supply chain challenges that we're seeing again similar to the comments I made on the price cost dynamics, we've got a great team that's been executing extremely well for years, not just the past quarter or two and.
And we expect to see some some moderation and improvement as we get into Q2 and throughout the year certainly recognize that this is a global challenge and that you know there's not a quick fix we're not going to see it snapped back right away and Q2, but we do see we do see some moderation and improvement in the future and and the backlog increase is really something.
And we're really excited about and that's why we're stressing that our outlook.
Is positive it's a matter of digesting through some of these supply chain challenges that I think youre going to hear from everybody else.
Yes, I would expect it.
And then you had a number of different supply chain things right and and those kinds of things is there a number that you think was deferred out of Q1 net if you didn't have those supply chain challenges you would've been average shaping the quarter.
Yeah, we're we're probably not going to frame that that out for you because you know from quarter to quarter backlog can change just I would you know.
<unk> got a guide and a way that this change has been higher than than others. We've had.
Okay Fair enough I'll pass it on thanks very much.
Your next question comes on line.
And welcome.
Martin.
Please proceed with your question.
Yes, thanks, good morning.
Hi, good morning.
I was wondering if we could just stay on margin for a second year because there were just a couple of things specifically called out and the <unk>.
This release, so there was a fair value step on the acquired inventory and then input costs and basically what I'm wondering is as we move into <unk>.
Good quarter here.
Either of those trends significantly in your favor or against you.
Against margins basically.
If we strip those out or thought about where we're going to be in the back half of the year of 2022, how should we think about.
Karen.
Yeah. So let me just take that and pieces and I think you meant maybe the back half of 2021 versus 'twenty 'twenty two are.
Certainly the you mentioned two items. The one is the inventory step up that is largely for all intents and purposes behind us. So the the drag of the you know the step up and inventory that turns out over the first turn of inventory as effective effectively done for both essakane and ATI, so that that headwind goes away moving forward.
Copper and and price cost dynamics, it's a very fluid situation I mean, even just in the first quarter. We saw the input costs go from $3 60 to today $4 in 'twenty and that's after March having been a relatively favorable change that obviously has been and raced here in the month of in the month of April So I think.
And it's it's it's what we've been saying all along in terms of you know the.
<unk> price focus and the opportunity and the market acceptance of being able to pass some of those increases through and today's dynamics and in today's environment. We're going to continue to do that and we're going to do that to a degree that we're able to we believe we'll be able to offset the majority of the cost pressures and I don't see that changing dramatically as we move forward there might be leading and lagging effect.
Quarter to quarter, but I think we've got that well under control and that's evident and our first quarter results.
Got it I appreciate it and I.
I guess the other question I had was on free cash flow. So you guys have.
And you'd like to be conservative, but you've also done a pretty great job and pulling a lot of cash on working capital. So should we expect more of that going forward. How do you think about how.
How much more you can do on that front and I guess.
Sure.
With the acquired revenues and the continued shift towards SaaS revenues, how does the free cash conversion and the business trend going forward relative to what.
Yeah, I'm sure there'll be a couple of people giggling as I say this because I think after the last two years I get to the and we get to the end of the year and I say, we've squeezed all the juice from from the AR from the fruit and that case and and don't expect that level of conversion going forward and I think I said that and the fourth quarter and then here we come with the first quarter at 200 plus per cent conversion I will.
Mind, you if you look at the pacing of the free cash flow conversion in 2020, we started out exactly the same way almost and equivalent equivalent amount of free cash flow and.
In Q1 of last year, and then that abated throughout the year, we still land in 2020 at a relatively healthy conversion and that $1 50 per cent range I continue to just caution yeah. We had a great start to the year, but one quarter does not build for we've got you know some some anticipation here, though of of you know and we've talked about the sequence.
King of the backlog and the rig recovery here in Q2 relative to an easy comp and that creates some opportunities for primary working capital headwind moving forward I would just say we would I would think about it as a you know.
Our standard deviation less than a year ago as conversion and I think we've talked about somewhere in that you know always shooting to be in excess of 100% conversion, but not expecting to be able to repeatedly deliver at that 150% rate.
And just not realistic moving forward I get that that's clouded by a really juicy flow through here or conversion rate and the first quarter, but one quarter does not make for.
Yeah understood and then just the latter part of that question was just do you think that the shift towards increasing software.
Higher technology sales alters relative to historical trend or do you think we should guide.
All right.
I don't think Theres a dramatic change.
And in the cash flow as a result of that.
One might think that there's a bunch of <unk>.
Beacon prepayments and other things that happen with multi years in advance and while that is an element. It's not the you know the broad base of that of that revenue stream a lot of that is month to month. So it doesn't necessarily change and a step change way the cash flow profile.
Got it thanks very much.
Your next question comes from the line of Richard.
Okay.
And with your question.
Yes, good morning.
Good morning, Karen.
Brian just to just a quick question and again I'm going to go back to the same thing here, but Bob could you just possibly maybe better define the impact of Essakane and ATI to the to the gross margin I think the press release suggests that the gross margin contribution was accretive even.
With.
The inventory step up costs and the quarter and could you just give us a sense of what I.
I mean, it's a discrete items. So could you just give us a sense of what the inventory step cost.
Were in the quarter.
So we can build on going forward, here's here's what I would and here's what I would explain about the quarter. So 200 basis points of gross margin expansion I would tell you. The majority of that came out of the base business and wasn't necessarily acquisition related I would tell you the acquisitions themselves.
And in normal times, and and even in the timeframe whereby they're absorbing the higher cost structure from the inventory step up amortization are above line average that's not like it's 20% above line average, but its above above line average.
So I would I would just try to frame it that way short of giving you the defined number.
So going forward without the inventory step it will be somewhat more accretive and then if you think about your price cost commentary and it's quite visible here and the quarter, but I think about where we are and on.
And the raw materials side, I mean electronics shortages, but I would think pricing resin costs.
<unk> costs up so are you able to match price.
With those other.
Raw material inflation dynamics, there around the other components and freight so do we stay positive price cost here.
You know rolling through the second third and fourth quarter here.
Yes. So my earlier comment was was very isolated to a one to one copper and price I was not what I said, our ability to offset was not contemplated about what those other tack on or carry on effects. Obviously as you think about talking with customers and in the market it's easier for someone to understand.
Our copper input costs, that's a published rate and you can look and map out over time, what's harder to understand is are.
Air freight and other logistical challenges and even electronics is much more distributed across.
And the component base, it's not something that's on a commodity that you can point to so I would say you know our ability generically is probably less one to one on those other tack on ancillary effects.
But at the same time, you know we did have a price favorable price cost element and the first quarter. So there's some room to absorb those things, but not a one to one pass through concept like a copper concept that may hopefully that may well and so so so second third and fourth you're going forward there could be a bit of a drag around price cost, including all direct materials.
If you will and freight.
Is that well suffer yet yes, correct. So this is Ken so it's obviously a very dynamic situation you know things are moving very quickly, but the one thing that.
I would just like to point out and what we're doing around around value based pricing is again, when we think about operational excellence, we think about that beyond the shop floor and what we're applying here is a real program and process.
Manage that that price cost value. So while there may be drags here and there and there may be upside here and there I think I think we've really.
<unk> done good work around this and this process and I think we see it and the results and then also which didn't come through in the quarter because of some of the challenges with supply chain is that we're also winning at least our fair share of orders. So you know we're not we're not making.
Rash rash decisions to try to collect a quarter and drop a dollar I feel like our process is hitting on all cylinders.
The other thing I would add is just that what you just described and what Ken just articulated in terms of the dynamic nature of the situation and how it's evolving day by day. That's part of the reason why we're not going to sit here and declare a new gross margin profile and excess of 40%. The other thing to realize I don't want anyone walking away from this conversation and thinking our pricing X.
Houston is a copper surcharge, it's much more sophisticated than that.
So those are just to add on comments that I'd make there.
Okay Fair enough and just just my last question.
When you think back Ken is there is there any history.
When you think about the flow of business on the meter side is there any history of business drifting away from the installed base of another vendor can actually supply the meter and again I know some of these some of these supply chain issues that are constricting supply.
Are not unique to badger, but.
Regardless.
In the flow business, where you're talking about meter upgrades.
If one vendor amongst the big three cannot.
Supply at any given point in time.
You consider that ending up in backlog, but is there is there any history of that business drifting to another vendor that can supply.
Yes, so let.
Let me try to be succinct, but probably have a long winded answer so.
And so as so as we as we think about these supply challenges and just the badger meter portfolio right. You always hear us talk about choice matters. So if we think about this and radios and our meters and communications right. So so as this global electronic shortage situation.
Tightens abates, whatever whatever happens here over the future we have a full product line of meters. So we have both polymer and brass we have both Macau and mechanical and ultrasonic thankfully, we can offer our customers a full solution of meters, which many of our competitors cannot so one where and.
On a much better position on the meter side than most to the D flow acquisition that we did in 2017 gives us much more control over our destiny with with Asics, and perhaps people who have to buy them from from other suppliers. So on the meter side.
Even though were challenged we certainly feel protected if you will better than most in terms of being able to hold on to our share.
Or maybe or maybe even take advantage of some opportunities.
And then if you flip it to the radio side the majority of the the exciting growth. We're seeing on the radio side is of course and the cellular area and.
And that's a case where.
We're rock solid if someone has decided they're going on the cellular side, they can't and won't flip to a fixed network solution on that.
Flip side, they could start installing cellular radios, because theres no upfront infrastructure or anything that takes to go into it.
Yeah. So so from a radio side, we feel really good there too so even though this is challenging and it doesn't feel good at all to have supply challenges from being able to defend ourselves our choice matters platform is going to be really valuable this year.
Gotcha.
Okay. Okay very good thank you.
Sure.
And again, ladies and gentlemen asked the question that is star one on your telephone.
No.
Your next question comes from the line.
Please proceed with your question.
Hi, Thanks for taking my question.
Sure Hi, Robert.
So one of the stick I don't want to beat the dead horse here, but did want to stick with this theme on on the on the electronics now when you think of electronics and Badger, you think of a M. I <unk> and a lot of the sort of next generation solutions, but then again, you mentioned D flow and ultrasonic, which I guess is a big component, there I mean, which which.
Can you can you tell us which kind of product lines are most impacted by that and is it more of the a M. I or is it the ultrasonic or is it really just equal across the board.
You know I think I think as we think about the last several months in the coming 12 months at that can kind of ebb and flow it could be radios for for a certain supplier. It could be electronics I would just say, it's it's not limited to one or the other it could be and boats and both on both areas because it's it's more elect.
<unk> is the broad based category that I would say that's challenged it just happens to sometimes manifest itself and.
Apart that may be going into and electronic meter or it might be a transceiver that goes into a radio.
It's not limited to one side.
And and again.
Broad based I'm not speaking for Badger meter there I feel like I'm, making.
Declaration on electronics and general.
Got it Okay, and then what about you know obviously.
Relatively old fashioned manual read meters still are a day.
And.
Percentage of the market I know that sometimes even surprising to think of this day and age but is there a mix shift risk there that if there is customers who are sort of on the fence between sticking with Matt and more manual read solution with less electronics content than our and upgrade that more of them and start to say you know what this shortage might last a while we're just going to go with.
And with a more basic solution that might carry a lower margin is that any kind of risk.
No not for us because in fact, as we like to point out over and over we still sell 80% of our meters are mechanical so if somebody has a problem with a competitor's static meter would be happy to sell them on mechanical if that's what they wanted or our ultrasonic, which we think will be better than most and positioned to do that and then frankly again with our cellular am I.
Adoption.
There's a supply issue and the second quarter. So what they can put them on and the third quarter. They can put them on the fourth quarter. They don't have to they don't have to chase. This fixed network investments. So we have complete flexibility and that that will certainly I think be in our favor.
Got it Okay, and then one more just maybe the silver lining camp if we link this issue over too.
Another issue kind of pre Covid one of the big.
I guess talking points and issues people talked about was new entry into North America by some of the Scandinavian players and so forth I mean, one would think that.
That might've been interrupted by Covid and the first place some of that new entry and now when you're when you're having these kind of global supply issues maybe.
Folks would concentrate on their home core markets and incentive.
Dialed back ambitions about new market entry can you update us on that that whole kind of new entry situation and North America, where that stands.
Yeah.
Well, you and I, we had several discussions on that a couple of years ago and you know.
As you recall, we felt really good about our ability to protect our.
Our position to begin with and now you layer on Covid and then you layer on the fact that one of the things we felt the most strongly about is.
With our competitors from Europe trying to take over with just a portion of our product line and now that product line is being challenged by electronics.
Yeah.
And I felt good two years ago, when everybody was talking about this I felt better last year and I feel even better today.
Got it okay. That's very clear thank you and thanks for your time.
Yes. Thank you.
Your next question comes from the line.
And I was wondering with water assets.
And with your question.
Hi, Good morning, gentlemen, good morning Hassan.
Good morning, two questions for Bob and then a high level question for Ken Bob on on.
On the accounts payable and inventory and noticed the year over year uptick.
Some of that acquisition. So my question is can.
Can you help us kind of isolate the trends and your core utility and flow of business in terms of payables and inventory. Excluding the recent acquisitions just wanted to understand the reason for the uptick and inventory and payables, excluding the impact of the acquisitions, yes.
Hassan the best place to see that and I won't run the numbers by you because you can find them right on the cash flow that cash flow the cash flow statement effectively neutralizes the impact of the acquisitions and so you can see the true.
And that case working capital improvement on a year over year basis ex the acquisitions and you'll see that that was effectively I think and eight or 9 million dollar contribution in the quarter to free cash flow.
Okay and also in terms of.
Raw materials.
Help us understand your exposure to resin and glass prices if any.
And so we typically don't bifurcate cost of goods sold by independent and commodities are inputs. Obviously, the one we get closest to doing that is on is on on copper. Historically, yeah is there is there a resin and glass and our various products absolutely.
But it hasnt been a significant impact or change we would've been talking about it so really right now it's pretty quiet from that front and it does that isn't to say that there aren't changes and dynamics that happen every day, but it's just not a significant piece for our for us.
Okay.
Those with one high level question for Ken.
Back to the topic on industry dynamics, Ken can you talk about the pricing environment.
Environment, especially in this post COVID-19 world so to speak.
Any of the players.
Being irrational.
Lowering prices to get new business I know you guys are obviously very disciplined and kind of just wondering if anyone, especially the new and brings being irrational and kind of book new business and this environment.
Yeah. So we've we've continued to not see that and if you listen to our competitors that that had to reported earnings last quarter. They they all said all of them said that they would be recovering inflation.
So that was I think a clear indication on their part that they werent intending to.
And do irrational pricing and and from the new entrants. We get asked that question a lot and we just have you might have you might pull and one example out here and there, but certainly nothing that nothing that is.
Concerning.
And there are no further questions and thank you.
And we will call back to the presenters.
Great well. Thank you all for joining our call today for your planning purposes, our second quarter call is tentatively scheduled for July 20 <unk>.
And I'll be around all day to take any follow up questions. You may have have a great day.
And this concludes today's conference call. Thank you for your participation you may now disconnect.
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