Q1 2021 Frontdoor Inc Earnings Call
Ladies and gentlemen, welcome to front doors first quarter 2021 on earnings call.
Today's call is being recorded and broadcast on the Internet.
Beginning today's call is Matt Davis, Vice President of Investor Relations and Treasurer.
You want to reduce the other speakers on the call.
At this time, we'll begin today's call. Please go ahead Mr. Davis.
Thank you operator.
Good afternoon, everyone and thank you for joining front doors first quarter 2021 earnings conference call.
Joining me today are front doors, Chief Executive Officer, Rex Tendons, and front doors, Chief Financial Officer, Brian Turcotte.
The press release and slide presentation that will be used during today's call can be found on the industrial relations section front doors website, which is located at investors stock front door home dotcom.
As stated on slide two of the presentation I'd like to remind you that this call and webcast may contain forward looking statements. These statements are subject to various risks and uncertainties, which could cause actual results to differ materially from those discussed here today.
These risk factors are explained in detail on the company's filings with the SEC.
Please refer to the risk factors section in our filings for a more detailed discussion of our forward looking statements and the risks and uncertainties related to such statements.
All forward looking statements are made as of today may six and except as required by law. The company undertakes no obligation to update any forward looking statements, whether as a result of new information future events or otherwise.
We will also reference certain non-GAAP financial measures throughout today's call. We have included definitions of these terms and reconciliations of these non-GAAP financial measures.
Most comparable GAAP financial measures in our press release and the appendix to the presentation in order to better assist you in understanding our financial performance.
I'll now turn the call over to Rex for opening comments.
Rex.
Okay.
Thanks, Matt and good afternoon, everyone.
We're off to a fast start in 2021, if we continued executing on our strategic plan for the year.
The first quarter, we achieved our highest quarterly revenue growth since the spin off with year over year revenue growing from 8% in Q4 to 12 per cent in Q1 50 per cent increase net revenue growth rate quarter to quarter.
We expect to achieve sustained overall annual double digit revenue growth going forward.
Now turning to slide four where I'll provide a quick update on our 2021 objectives.
Let me start with the drivers of our double digit revenue growth.
I'm very pleased with our first year of direct to consumer or DTC channel growth of 16%, which validates the marketing investments and conversion funnel improvements we made over the last several quarters.
We also successfully completed the nationwide rollout of our new D to C product redesign and April has seen a strong response to our new premium product she'll platinum.
This new product line, coupled with our ability to dynamically price should continue to provide revenue tailwind for us in 2021 and beyond.
As it relates to our first year real estate channel the macroeconomic backdrop remains mixed on one day.
On the National Association of Realtors reported existing home sales increased 15% in the first quarter with median price increasing to a record 17% in March.
On the other hand home inventory remains extremely tight.
Well, we generally benefit from the higher number of real estate transactions are lower inventory crazy, a seller's market, where the seller is less inclined to provide a home service plan that's part of the transaction.
As discussed on our last call. Our team has been refocusing our real estate broker partners efforts to market more to the buyer and the sales transaction, we've been seeing some real progress as a result of this initiative.
Additionally, we experienced on a temporary slowness on the February winter storms in certain key markets, such as Texas, but we still expect those homes to close and to capture those customers.
Home service plan growth is expected to accelerate over the year, while we are monitoring what might happen to consumer behavior as the economy starts to open up more we believe we are well positioned for the future.
Our second objective for 2020 one.
Our automation initiatives on.
North Star remains focused on proactively innovating our processes through automation that will drive improvements in the customer and contractor experience.
These efforts are targeted at reducing cycle time, improving customer retention, reducing cost. It gives us more of a lot of on site essential service issues and the opportunity to intervene before they become a customer problem.
In the first quarter, we completed the appliance purchasing portal launched the new contracted portal and further enhance the use of stream video calls and our core home service plan operations.
While there is much more I want to accomplish on this front I am pleased with the effort. Our team has made on advancing multiple projects at the same time.
But generally remain on track or ahead of schedule.
In fact, we are already receiving positive feedback from our customers and contractors on how we interact with them.
This is a multiyear journey as we are truly redefining our business and the industry.
Our third objective is to expand our customer retention initiatives in the first quarter. We saw some near term pressure on renewals as a result of COVID-19, which was twofold.
Firstly, the industry wide appliance equipment in our parts availability issues resulted in longer cycle times.
Second we have suboptimal customer service levels, and our customer care centers during the peak of the pandemic in 2020. It may impact our renewal rates this year.
We've made great strides in customer attention in 2020, and I expect customer retention to improve over the remainder of 2021.
Continuing to focus on this area.
That's what I'm, saying in the past, we can achieve much greater attention rates through our ongoing digital transformation and our teams on stop until we reach our goals.
Our fourth objective is to execute our growth strategies for both pro connected stream.
Broke conduct is off to a good start this year with a larger component of their growth still come in the back half of the year.
The team has been deepening our contractor capacity.
Producing core trade into new markets and improving our marketing efforts.
We've also begun to cross market pro connect services through our existing home service plan customers and we will wrap those efforts over the next several months.
Our current home service plan customers have enjoyed the convenience sign up for additional maintenance services, such as pre season HVAC maintenance checks.
These types of services are a good tool for reminding customers of the value proposition, we bring outside of their traditional home service contract.
We're still on target for updating the American home shield website to be able to cross market pro connect to our 30 million annual visitors to that site.
The internal rollout of screens augmented reality service is going very well, we're now focused on accelerating contractor and customer adoption rate very strong support from marketing and product management to drive awareness.
Our goal is to continue to ramp the number of service requests and utilized stream to not only enhance the customer experience by reducing the cycle time, but also to improve our contractor interactions and reduce costs.
We also remain excited about the environmental benefits of using stream to reduce the number of contract or truck rolls needed to complete a service request.
In summary, we're off to a great start for the year and our business continues to perform extremely well I'm excited by our revenue growth and plans for the remainder of the year.
We remain extremely positive on the long term fundamentals for all of our businesses as a result of strong execution.
However, we are still early in 2021 and there's a lot more work to do as we continue to execute against an aggressive set of goals.
I will now turn the call over to Bryan Bryan.
Thanks, Rex and good afternoon, everyone, let's now turn to slide five and I'll review, our first quarter 2021 financial results.
Revenue increased 12% versus the prior year period to $329 million driven by approximately seven percentage points of volume growth.
Five points of higher pricing.
I would also point out the volume component includes strong year over year growth.
On the small base from both pro connect inch screen.
If you look at our home service plan channels.
Derived from customer renewals was up 12% versus the prior year period due to improved price realization and growth in the number of renewed home service plans.
First year real estate revenue was up 2% versus the prior year period.
Primarily from improved price realization.
Due to the annual nature of our home service plan agreements first.
First year real estate revenue continues to be impacted by the steep decline in existing U S home sales that occurred in the second quarter of 2020 as.
As well as the strong sellers market Rex mentioned earlier.
As background, our first year real estate units increased over 4% in the first quarter of 2020 versus the same period in 2019.
And had strong momentum until COVID-19 impacted existing home sales in the second quarter.
As we lap that second quarter, our volume is expected to show a strong rebound when compared with the prior year period.
First year direct to consumer revenue was up 16% versus the prior year period. This was primarily due to incremental marketing investments in the second and third quarters of 2020.
And increased year over year investment in the first quarter of 2021.
Resulting in a higher number of home service plans.
Other revenue increased $5 million over the prior year period.
Primarily due to an increase in the growth trajectories for both pro connect inch screen.
Also we remain confident the pro connect well achieved the annual revenue target. We previously provided of approximately $20 million in 2021.
As a result of completing 80000 jobs across the 35 cities. We currently serve.
Gross profit increased 1% in the first quarter versus the prior year period to $148 million and our gross profit margin was 45 per cent, which I'll review on a moment.
Net income was $5 million, while adjusted net income was $9 million net income and adjusted net income declined $8 million and $9 million respectively.
Were in the prior year period due to lower operating results offset in part by a decrease in the provision for income taxes.
Adjusted EBITDA was $36 million in the first quarter of 2021 versus $47 million on the prior year period.
This was just above the top end of our guidance range as appliance service requests were somewhat lower than projected in January and February and we also benefited from realigning the timing of our SG&A spend to better match demand.
Let's move to the table on slide six.
Walk through the adjusted EBITDA Bridge from first quarter 2020, the first quarter 2021.
Starting at the top we had $28 million of favorable revenue conversion in the first quarter versus the prior year period.
Excluding the impact on the change from higher revenue.
Contract claims costs increased $26 million in the first quarter versus the prior year period.
This was primarily driven by a higher number of service request and the appliance plumbing and HVAC trades increased cost pressure in the appliance trade and inflation all upset in part.
Process improvement benefits.
We estimate that COVID-19 related appliance and plumbing service requests negatively impacted first quarter claims costs by approximately $11 million.
The higher costs in the appliance trade, we're mostly result of industry wide parts availability issues that drove additional appliance replacements.
The increased number of service requests in our HVAC trade versus the prior year period, which room by a higher number of heating degree days in the extremely cold temperatures.
Any large winter storms and resulted in an unfavorable impact of claims costs in the quarter of approximately $5 million.
Sales and marketing costs increased $5 million in the first quarter versus the prior year.
We're primarily investments to drive growth in their direct to consumer channel.
Broken Act and Scream.
So our service costs increased $2 million in the first quarter versus the prior year due to a higher number of service requests and the related call volume.
We believe what happened to service cost increase was COVID-19 related and the balance were investments in customer retention initiatives.
And finally general and administrative costs increased $4 million in the first quarter versus the prior year due to increased personnel expense and investments in technology.
Please now turn to slide seven for a review of our cash flow and cash position for first quarter 2021 compared to the prior year period.
Net cash provided from operating activities was $52 million, a $7 million decrease versus the prior year period, primarily due to lower earnings.
Net cash used for investing activities was $7 million and include a recurring capital needs and technology projects.
Net cash used for financing activities was $105 million compared to $3 million in the prior year period and was primarily due to discretionary of term loan debt repayment of $100 million in February.
Free cash flow calculated as net cash provided from operating activities minus property additions was $45 million on the first quarter of 2021.
Fair to $52 million for the prior year period.
The decline was due to lower cash from operating activities.
Cash totaled $538 million, which included restricted net assets $175 million and unrestricted cash of $363 million.
Our available liquidity at the end of first quarter 2021, total $611 million and included $248 million of available capacity under our revolving credit facility.
I should note that we are continuing our efforts to free up restricted cash for example, during the first quarter, we issued $2 million and letters of credit to release, the same amount of restricted cash on.
Although small in scope, it's indicative of our focus on free cash for more productive uses.
As I mentioned last quarter when discussing our capital allocation strategy, we will continue to responsibly invest in both the core home service plan business as well as pro connected screen.
However, even with these investments we would expect our business to generate a sizable amount of excess cash this year.
Beyond organic growth, we remain acquisitive and continue to evaluate potential opportunities within the home services industry and in the technology space.
I'll now conclude my prepared remarks by providing our full year and second quarter 2021 financial outlook.
As you can see on slide eight our full year 2021 outlook remains the same as previously provided despite the better than expected first quarter adjusted EBITDA results.
This is due to the factors previously mentioned, including the lower than projected appliance service requests early in the first quarter.
And SG&A expense timing.
Before I leave the full year outlook.
I would like to provide more color on our projected gross margin of 48% based on the questions. We receive from analysts and investors following our fourth quarter earnings call.
First global supply chain issues have been in the headlines since the pandemic began and more recently as a result of the severe winter storms and we continue to see inflationary pressure on our business as a result.
Appliances water heaters and replacement parts remain in short supply and cost more to acquire and transport than one year ago.
While inventory levels have improved since late 2020.
Availability is still not at pre COVID-19 levels.
Production at most of our key suppliers is at or near capacity.
But demand remains higher than normal.
And the global supply chain issues are impacting delivery speeds.
Pricing and availability for items, such as plastic resin and installation metals processor chips as well as logistics are not expected to improve until later this year.
While the environment is challenging.
We have an experienced and innovative supply chain team is working closely with our suppliers to source equipment and parts and I suspect our position is relatively better than most companies providing home services.
Second we're projecting roughly the same elevated level of appliance service request incident rates, we experienced in the second half of 2020 through mid second quarter 2021, and then dropping to a rate roughly halfway between that elevated rate and historical service request rates for the balance of the year.
Third we have benefited from lower than normal summer temperatures during the past two years and the favorable impact on our HVAC service requests for.
For 2021, we are planning on a higher service request right.
If we have another mild summer.
That could provide upside to gross margin.
And fourth we're projecting a higher mix of first year direct to consumer and programmatic revenue in 2021, which is margin dilutive and the larger benefits from dynamic pricing will not be realized until later in the year.
I would like to make one final comment about our full year 2021 outlook.
We had an unusually low effective tax rate of nine 8% in the first quarter.
Primarily due to excess tax benefits from share based awards.
However, we continue to expect our full year 2021 effective tax rate to be approximately 25 per cent.
Moving to the second quarter outlook, we expect our revenue to range between $460 million and $470 million and adjusted EBITDA to range between $90 million.
$105 million.
We're providing a slightly wider range for adjusted EBITDA This quarter, given the timing uncertainty around both COVID-19 related service request in the summer weather impact on HVAC claims.
The second quarter outlook includes the following assumptions.
<unk> direct to consumer and renewal channel revenue growth along with significant increase in first year real estate revenue as we lap the COVID-19 impact on existing home sales one year ago.
Continued cost inflation pressure as a result on the drivers I previously mentioned as well as the ongoing impact of COVID-19 on the number of appliance service requests.
A $9 million increase in sales and marketing investments to support our growth objectives.
$6 million increase in service investments price.
Really driven by customer growth.
Service levels.
And customer retention initiatives, and additional general and administrative investments to support our growth.
With that on.
Now I'll turn the call back over to Matt.
And the question and answer session Matt.
Thanks, Brian as a reminder, during the question and answer session. We encourage you to ask any questions. You may have but please note that guidance is limited to the outlook we provided.
Operator, let's open the line for questions.
Thank you we will now begin the question and answer session.
Ask the question you May Press Star then one on you touched on so.
We usually have a speaker phone we ask you. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
Today's first question comes from Youssef Squali with tourists Securities. Please go ahead.
Great. Thank you very much I have two questions. Please first Greg I want to go back to the DTC segment, which is really impressive up 16% I wanted to talk a little bit that maybe the market inefficiency that you are seeing there the sustainability of that how do you see that trending throughout the.
The rest of the year and then on the on the retention I think you guys talked about renewals seen some pressure can you just unpack that a little bit for us how do you see that also kind of a.
Reversing throughout the rest of the year. Thank you.
Sure you said.
I think that per.
In terms of direct to consumer.
Yeah. This is really.
The investments we made last year as well as that's this way this year have really started to.
Take take hold.
We're expecting that.
We see kind of sustained double digit growth for the remainder of the year, where we're still very focused on conversion as well as we make.
So tech improvements to our to the funnel so.
You know I think this is a combination of the investments we made last year as well as investments, we're making this year and are very proud of the team to deliver a 16% growth and as you know even even pre pandemic. So.
You know pretty pretty pretty positive there in terms of retention you know we kind of said this may happen in terms of rounding down.
As Brian mentioned in his remarks.
You know the industry wide appliance issues, coupled with early in the pandemic, we had a a pause with our some of our call center providers that are that create longer hold times. So those are all.
You know kind of behind us at least the staffing and training pieces on the call center behind US we've been working a lot on speeding up delivery of appliances on parts.
Bryan's comments earlier.
It really give a lot of kudos to the team in terms of just the level of precision we've got.
Two in terms of.
Expanding on our part suppliers managing kind of real time inventory within the Oems and then from a from a.
Technical perspective, the teams also.
<unk> delivered the appliance portal, making it easier for customers to.
Pick out their replacements and making.
Making them more about customer delight or rather than.
You know, it's always tough when you have to have to replace it and apply it so all those things combined.
I think that.
As we work on those from a retention perspective, I am expecting retention to improve over the balance of this year.
We're also.
Early in early stages of it.
Implementing stream into our business operations. So all.
All those things I think these cross functional efforts will provide a strong tailwind for Oh retention.
That's helpful.
Thanks Rex.
Thank you.
And our next question today comes from Road show with William Blair. Please go ahead.
Good afternoon, and thanks for taking the question first question just on the pricing increases that you know as consumers come up for renewal and I'm, assuming you know the newer mills are at a higher price just curious sort of the receptiveness on the consumers to take the higher pricing and then I think in the prepared remarks, you talked about stream perhaps.
Also playing into that and just a reminder, if you're if you're charging per stream now and sort of how those commercialization efforts are going thank you.
Yeah, Ralph so.
In terms of you know in terms of pricing from a dynamic pricing perspective.
As we discussed in the past you know really where we're looking at our customers on a.
ZIP code plus nine basis, so really a subdivision level and looking at kind of the risk decile across those subdivisions.
We're not seeing any change from our last 15 perspective, we're able to measure it pretty pretty succinctly and you know we were.
To kind of tweak along the way, but with the with the change in pricing certainly I think I intend to make us.
Has a broader value proposition to bear so we haven't seen any changes from an elasticity perspective, and then as it relates to the stream.
No we don't charge customers in terms of us asking them to utilize stream to resolve their problems, but you know the stream. The stream team is growing in terms of.
You know, it's it's SaaS businesses as well so as we talked about in earlier calls a.
Partnerships with.
Lowe's and clear results in others. So.
We expect to grow both.
Externally.
Dream for Matt from a revenue perspective, and then half stream deeper in our operations. So that we can provide it very.
Digital diagnosis, if you will on behalf of our customers.
That's helpful. Thanks Brooks.
Yeah.
And our next question today comes from Mike Hong with Goldman Sachs. Please go ahead.
Hey, Thanks for the question I just have two first it seems like pro connect is pacing well and you should be on your way to hit the full year target of I think it was $20 million could you just give us an update on your pro connect expansion plans for the rest of the year and whether you see an opportunity to exceed your target and then second I was just wondering if.
If you could talk a little bit about the.
The visibility you have into.
Parts supply.
Strength.
I know you mentioned that it may improve later this year.
Is that with because of demand coming off or are your manufacturers really ramping up supply and you expect that to at least some of the pressure. Thank you.
So I'll take the I'll take the broke that piece and then ask Brian to comment on the on the supply chain piece.
In terms of pro connect I do think we're off to a great start we're laser focused on execution.
We're in 35 markets.
We're on track for.
Both expanding those markets to add other trades as well as our job volume goals. So I'm.
I'm not ready to declare that we're gonna be are ahead of plan, but I am I am comfortable in terms of where we are to plan.
So so.
Wells Fargo Security. Please go ahead.
Thanks for taking the questions on on retention I think you've noticed noted in the past the opportunity to maybe utilized dynamic pricing to help with retention in cases, where you may have had an adverse customers reported mint or even cases, where there may have been a lot of utilization uhm. So I'm. Just wondering if you might be able to comment on the opportunity to address the retention issue.
Use with me some support from dynamic pricing and then on the supplies about decided no. You've noted some of the issues around the supply chain. Just wondering if you still have plenty of runway with your preferred provider networks any issues around early inflation or just availability on those networks as as you know the man can take.
To be pretty robust thanks.
Yeah, absolutely yeah in terms of I've done on it pricing as it relates to retention yeah, that'd be great thing about gonna pricing is does that dynamic. So we can focus on you know unit growth or we can focus on you know gross margin expansion and so yeah. I think the teams on a nice job of you know kind of balancing those those.
Two things as it relates to you know kind of pure retention and we do have retention teams in place. So there's someone you know has has an issue with price or is that a service experience. They they can go as well. The team has you know playbooks in terms of how to how to address that.
So I think yeah. Both of those things are are are going well. That's fine you know kind of bullish on the my comments around the kind of strong tailwind as it relates to to retention in the you know on the back half of the year.
As it relates to.
Labor for for our contractors you know, we we continue to to push our algorithms. So that you know we're getting the the most from our our preferred contractors I'm happy to say, we continue to be and and kind of the the low to mid eighties across across the country you know that's.
That's no small feat with some of the starting with some of the appliance issues, but the team done on an incredible job there I've really managing this on on a very macro level and original level as it relates to to you know kind of making sure. We have enough contractors you know we haven't we haven't seen any issues.
Our our preferred contractors you know we're about 40 per cent of their business. So it's a very like symbiotic relationship between between the companies I think they are having some some trouble with when it comes to like office staff and things like that dispatchers. It's it's a very hot labor market right now, but at least it relates to.
You know to the skilled core trades, we're not seeing any indications yet of you know trouble ahead.
Great. Thank you.
You bet.
And our next question is on that it comes from telling him a day with credit Suisse. Please go ahead.
No that is all I needed perhaps.
Mr very well I'm able to hear you on.
Alright, well, we sort of put on I'm Gonna go to our next question, which one from interest you know with auto home or please go ahead.
Hi, Great a couple of questions here I I wanted to hone in on the real estate channel I mean, obviously, it's doing pretty well.
And you know like I guess, a little while ago, we wanted to shore and maybe you wish to on a shifting over more to D. T C. But now real estate seems to be doing pretty well you know how exactly are you guys sort of managing this how are you thinking about.
Your approach and and then also on the on the real Saint side again, you know you you had a bunch of initiatives you are lining up with or was establishing relationships directly with the broker uhm themselves, you know, where where you can maybe followed them as they move around and there might be an issue, particularly now that the the labor markets Hot.
Maybe touch on some of those initiatives on on real estate side, and then I have a follow up thanks.
Yeah, I I anthrax, Yeah is it is it relates to kind of our overall marketing mix I think I think we're on a good position for both direct consumer as well as real estate.
Brian mentioned in his comments you know Q to was it was kind of the the big gift last year as it relates to to the real estate market. So we're expecting you know a very different different view and in 2021, but this is because a record low inventory. This as a solid market. So we've been very focused.
Through a broker brokerage partners to focus on buyers instead of normally we focus on sellers to make sure that you know we're reaching those folks you want to add home service plan to their their house or or even after the fact, they want to add home service plan to their to their house, so that's been going well.
<unk> have a good team has been the next king well on that but so it's been a big shift from from kind of you know focus more on on buyers and sellers frausto expanding into new verticals Uhm. So we saw on the deal, particularly announced last quarter was with Mister Cooper, Yeah, that'd be the third largest mortgage provider, we see you on.
Opportunity there as well from from my vehicles perspective, and then.
To your point about kind of technology. We we do you know we're working very closely to.
To to make sure we have kind of a digital footprint. If you will with with our our best Realtors, who understand our product into the market. Our products. So we have the ability to to kind of followed him wherever they may go.
Okay, <unk> and Brian I can just touch on capital allocation you know how how are you thinking about that and what we should expect on on that front.
Yes. Thanks, you know how you doing I think first and foremost you know we're gonna continue to invest in growth.
And our business eight the hsp business as well as stream and pro connect and you know that's first and foremost drive the top line for the business and we will look at debt repayment as well as an opportunity for us an acquisition.
As I mentioned my prepared remarks were still very inquisitive both in the home services front end technology. So you know those are really the three things. We're looking at today again investing in the business being acquisitive and and repaying debt Opportunistically.
Alright, guys. Thank you very much I'll, let someone else hop on.
And cute pet on a question comes someone comes on with very with Credit Suisse. Please go ahead.
Mr. Rosemary, we're still not able to hear you large sir.
Okay is that is that better.
Yep, that's better now Yep Yep.
So so so sorry about that uhm hey.
Brian I Wonder could you compare and contrast kind of you know some of that.
The equipment shortages, you're seeing this this cycle verses you you know the last one it probably about 24 months ago, because it seems like you're managing through on a lot more effectively this time as opposed to the last one you know would probably what's.
Even more challenging environments to maybe just some put to take you know if you like operationally you're a lot further along is is that the right way to think about it but just if you could maybe compare and contrast, both experienced it a little bit [laughter].
Yeah, well I can I can talk about some of the technology and then would ask Brian He's he's he's you know far far closer to it I think Brian would probably tell you because you know Brian owns that team that's leather, they're doing so well, but I'll I'll I'll I'll I'll take on the.
Yeah I.
I figure that ranch, that's why I asked a question.
Yeah, [laughter] start certainly you know from a technology perspective, it I get the team a lot of props in terms of you know what we're looking for the right. A P is too connected to you. So we have a lot more inventory visibility you know the team has has gotten I think a lot more educated over the last.
A couple of years in terms of our ability to you know to share dynamically do authorizations uhm.
So I think it's a whole confluence of of what I'd say good technical hygiene in terms of of digitally connecting with our our key suppliers as well as expanding our key suppliers and then as it relates to some of the you know the more strategic sourcing and hustle things that had been going on on the last one.
Four hours I'll, I'll turn that over to Brian.
Yeah right. So thank you hit a lot of them you know we had a very strong supply chain team that I inherited and we brought in a great leader about a year ago. They just raised the level of the team and you know, we we don't really close relationships with our with our partners R. O M. As in in parts suppliers and I think that's paying off my.
Times are tough you and I think we can go to them and and we have leverage with them to get parts, maybe a little quicker than we could have previously and again, it's expanding the supplier base is key.
And and then just you know cause <unk> said, you know using technology integrated with our suppliers to order parts and be able to track them more quickly in the system and getting delivered to the contractors. It all comes together and think we're doing a much better job today and we did two years ago.
Wonderful.
Okay.
Such as the pricing I mean, it seems like you know just given some of the shortages send the labor pressure things like that you're probably that able to have more fulsome conversations as it relates to pricing, but just any thoughts on that within the context of you know the dynamical and if he could.
Sorry pricing in terms of how we price our our home service plan contracts are pricing in terms of the supply chain issues.
No no more on the on service plan tracks I apologize.
Alright, yeah. So so yeah. This is where our dynamic pricing just keeps paying dividends for Ah certainly you know being able to quickly pivot as it relates to the prices has been key for us.
You know as as as renewables continue to to lap our last you know price and increase you know you know we we expect that you have to help US you know moving moving forward throughout the course of this year. So you know we made made some pricing adjustments late last year and early this year.
And I expect those too.
You know help I'll I'll set any.
All set some of the gross margin pressure that day, Brian talked about and obviously you know as as the country opens up more you know this will give us an opportunity depending how quickly <unk> you know kind of move away from their home so to speak or neither home. Every every day you know this might give us some opportunity to focus more on unit growth rather than.
Then you know growth gross margin. So that's great thing back dynamic pricing is it's just that dynamic.
Telfer.
Awesome. Thank you so much.
Thank you day, Kevin <unk>, one thing I I I'm remiss, not saying that you know the supply chain team works very well with both our service organizations in our operations teams to make it really work so I apologize for leaving amount on at all we all work together as a team to deliver the experience.
<unk>.
Mhm, Thank you Sir.
Woman. Thank you all again for joining from doors first quarter of 2021 Uninstall. Today's hose now concluded you may disconnect your lines and have a wonderful day.