Q1 2021 SPX Corp Earnings Call
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Thank you for standing by and welcome to the Q1 2021 SPX Corporation earnings Conference call.
At this time all participants.
On <unk>.
After the Speakers' presentation, there'll be a question and answer session cash.
The question during the session and you could buy Star then one of your telephone.
Please be advised of today's call is being recorded.
Require additional assistance and make a start and she was free it's not break and I don't know.
And I have to hand, the call over to Paul Clegg VP of Investor Relations and Communications. Please go ahead.
Yeah.
Okay.
Thank you and good afternoon, everyone. Thanks for joining US with me on the call today are do you lower the president and Chief Executive Officer, and Jamie Harris, Our Chief Financial Officer.
The press release containing our first quarter results was issued today after market close.
And you can find the release and our earnings slide presentation as well as the link to a live webcast of this call and the Investor Relations section of our website at SPX Dot coms.
And I encourage you to review our disclosure and discussion of GAAP results and the press release and the follow along with the slide presentation during our prepared remarks.
A replay of the webcast will be available on our website until may 12.
As a reminder, portions of our presentation and comments are forward looking and such.
Jack to Safe Harbor provisions please.
Please also note the risk factors and our most recent SEC filings, including our disclosures related to the ongoing COVID-19 pandemic.
Our comments today will largely focus on adjusted financial results you can find detailed reconciliations of historical figures adjusted figures to the respect of GAAP measures and the appendix of today's presentation.
Our segment reporting structure includes the results of our South African operations, and and other category, which is excluded from our adjusted results.
Our adjusted earnings per share also exclude non service pension items amortization expense and investment gain certain favorable discrete tax items and acquisition related costs.
Finally, we will be conducting virtual meetings with investors over the coming months, including of the UBS Global Industrials and transportation conference on June eight.
And with that I'll turn the call over to gene.
Thanks, Paul Good afternoon, everyone and thank you for joining us.
On the call today, we will provide you with the brief update on our consolidated and segment results for the first quarter.
And also provide an update to our full year guidance.
Now I'll touch on some of the highlights from the quarter.
We had a solid start to the year our.
Our HVAC and detection and measurement segments performed well and drove strong revenue and earnings growth.
During the quarter, we continued to execute on our value creation framework with another attractive acquisition that bolsters, our AIDS to navigation or <unk> platform, and our detection and measurement segment.
We believe that see light is an excellent strategic addition to our existing <unk> portfolio.
We are updating our 2021 guidance for the acquisition of <unk> life, which and completed in mid April and are on track to achieve double digit earnings growth for the full year.
And Q1, we grew adjusted revenue of approximately 9% with significant contributions from both organic and inorganic drivers.
Our adjusted operating income grew 8%.
And by the performance of our HVAC and detection and measurement segments.
Our cash generation was the strongest for our first quarter since the spin off transaction and 2015.
In summary, I am pleased with the quarter and our current positioning for the future.
The significant capital availability and attractive M&A pipeline and several ongoing organic and continuous improvement initiatives SPX is poised to drive value for years to come.
Okay.
As always I'd like to touch on our value creation framework.
And I'm very proud of our team for the way they manage through the pandemic, while continuing to execute on key initiatives that will better position SPX and the future.
During the first quarter, we continued to make progress on several fronts.
The strengthening our E com platform through the acquisition of C line.
Progressing on our continuous improvement and digital initiatives.
Pending our actions on diversity and inclusion and.
And enhancing our ESG focus and activities.
Yes.
She light is our eighth acquisition and the last three years and the second specific to our <unk> platform.
In total we have deployed approximately $525 million and capital for these eight companies, representing approximately $260 million and annualized revenue.
<unk> is a leader and the design and manufacture of Marine and aviation Etan products and is headquartered in Melbourne, Australia.
And has operations globally, including New Hampshire.
We anticipate that see light will contribute annualized revenue and the range of $30 million to $40 million.
We anticipate margins initially to be a bit lower than segment average until the business is fully integrated over the next 12 to 18 months.
The company is an excellent fit with SPX as existing portfolio of terrestrial and marine obstruction solutions, expanding our geographic coverage as well as our reach into a broader set of adjacent products and technologies.
Our strategy here is similar to the growth story of our location and inspection platform, which has grown from approximately $100 million and annualized revenue to approximately $250 million of annualized revenue and a little over three years.
Prior to our acquisitions and the space. Our <unk> business consists of the flash technology, which was already a market leader and obstruction lighting systems used for cell towers and the other tall vertical structures regulated by the FAA.
These applications require highly engineered specialty equipment to accommodate the extreme environments and real time monitoring capabilities to alert customers to outages that could endanger passing aircrafts.
And 2019, we expanded our <unk> portfolio into the marine AIDS to navigation market with the acquisition of Sabic.
Leader and lighting solutions for lighthouses harbors ports canals and other waterways.
Sort of extreme environments that require high levels of engineering and product reliability.
Today with the addition of <unk>, we have extended our positioning and marine applications and enhanced our portfolio of the airfield the ground lighting solutions, such as military airstrips used for remote deployments.
And just a few years the platform has grown from of 40% to $50 million obstruction lighting business and.
And so the global leader of a highly engineered a ton of solutions.
The $110 million and annualized sales.
And we're very pleased with the acquisition.
And see significant opportunity to drive further value as we continue to develop and offer innovative solutions for our global customers.
I wanted to spend a few minutes discussing our commitment to ESG.
This is an area, we're very passionate about.
SPX has committed to a strong sustainability culture and continuous improvement on environmental social and governance issues.
We view this commitment is the journey and believe that our efforts will create long term value for all stakeholders.
And position SPX for continued success and the long term.
We believe SPX is well positioned to thrive in a world.
From a long term targets on carbon emissions are realized.
We have a strong ESG record and plan to spend more time and focus of communicating it.
Many of our businesses products and initiatives support the sustainable future.
From our cooling towers of which can help reduce energy usage and buildings.
Two our inspection equipment that helps remediate leakage of underground water and wastewater pipes with minimal environmental disruption, we offer a wide array of of highly efficient and innovative products and the maintenance of critical infrastructure.
Every year, we published the sustainability report, which includes data on our energy and water usage and greenhouse gas emissions and employee health and safety.
As well as additional data and information to help our stakeholders evaluate our ESG positioning risks and opportunities.
This year, we intend to include more information and details about our diversity and inclusion initiatives.
And I am pleased with the work our team has accomplished over the past several years.
And I'm, particularly proud of our board, which has provided us with excellent guidance and leadership and brings a wide variety of backgrounds experiences and perspectives.
And now I'll turn the call over to Jeremy to review our financial results.
Thanks Gene.
We are pleased with our results for the quarter as we grew adjusted EPS of <unk> nine.
Nine 7% 68.
In addition to the segment income drivers, which I'll review later three below the line of items that had modest impact on our net results. These include re.
The reduced interest expense due to lower average debt balances and lower interest rates.
Other income and Clinton and the release of certain funding guarantees that previously had been accrued on the balance sheet and higher corporate costs, primarily associated with investments and continuous improvement and other strategic initiatives.
<unk> was strong for the quarter and we believe gives us a good start for the full year of 2021.
A review of our adjusted segment results also shows an overall positive quarter revenues increased eight 9% driven by a 5% organic growth three 2% from the UFC and sensors and software acquisitions and the small favorable currency impact.
The organic revenue increase was due to a strong two strong performances and our HVAC and detection and measurement segments offsetting lower results from engineered solutions.
Segment income grew $5 $1 million of nine 5% with a modest increase in margin of 10 basis points.
Segment revenue income and margin results reflect the blended impact of the strong performances of our HVAC and detection and measurement segments and lower results and engineered solutions.
Let's now review of the details of our segment performances.
And our HVAC segment for the quarter revenues increased 23, 6% driven mostly by 22, 9% organic growth cool and sales rose significantly with increases in Asia Pacific and the Americas and.
Asia Pacific sales were strong while the prior year quarter was negatively impacted by the COVID-19 pandemic.
He didn't products sales also grew significantly due to higher primarily due to higher seasonal demand compared with the historically warm heating season last year, the benefits of ongoing growth initiatives and generally higher pricing.
Adjusted segment income increased by $9 million and rose 360 basis points due to higher volumes product mix and continuous improvement initiatives.
While we continue to monitor nonresidential and market indicators of future demand. We are encouraged by our HVAC segment strong start to the year with heating and particular show and solid order rates.
And the detection and measurement revenues were up 21, 4% year over year.
Six 7% of this increase was driven organically, resulting from strong shipments and our location and inspection and communication technology platforms.
Partially offset by the time and the transportation project shipments of 12.
12, 9% of this year over year increase just from the acquisitions of you'll see robotics and sensors and software.
We also experienced a 180 basis point tailwind from currency related to the UK pound and.
Adjusted segment income increased $4 million, while segment margin decreased modestly due to project mix as well as the addition of ULC, which is expected to have lower margins and the overall D&S segment margin until fully integrated.
Overall, we are seeing significant year over year strength and short term cycle products, such as locators as well as the pick up and communication and technology related projects shipments all of the project shipments are still below 2019 levels.
Yes.
And engineered solutions revenues for the quarter decreased nine 8%, reflecting lower process cooling sales stemming primarily from fewer large projects than prior year.
Segment income decreased $8 million compared with a very strong prior year result, due to lower processed cool and sales and to a lesser extent lower margin on the transformer sales associated with less favorable mix and the lower plant throughput.
Tramp Transformers since had a very robust bookings, thus far and 2021 and remains on track for a solid full year performance.
We would expect process cooling to be similar to 2020 for the remainder of the year.
Turning now to our financial position at the end of the quarter.
Our balance sheet continued to strengthen as our solid operating performance was converted to free cash flow, which was used to pay down debt and make another strategic acquisition shortly after quarter end.
We had adjusted free cash flow of $51 million, which is notably higher than typical first quarters.
Historically SPX has tended to generate most of its cash and the latter portion of the year with the first quarter being the lowest.
This year and addition to the favorable working capital management, we met key milestones on several project businesses that resulted in favorable timing of cash receipts.
The strong cash quarter resulted in an increase and cash on hand to approximately $107 million and debt reduction of $20 million net leverage was one four at quarter end.
Subsequent to quarter and we purchase the light for $82 million pro forma for this acquisition our leverage was one seven which is similar to Q4 of 2020.
We anticipate solid cash generation for the full year and its crude and any capital deployment and leverage ratio declining and below the low end of our target range of one five of $2 five by year end.
Cash associated with South Africa was positive $10 million and the quarter reflect on our cash collection on the performance bond of a form of supplier.
And on Arbitration award and our dispute resolution process with Mitsubishi.
As a reminder, cash associated with South Africa, and excluded from the adjusted free cash flow of figure that I just provided.
We are pleased with our progress on the South African project and related dispute resolutions included and another recent ruling in our favor we continue to focus our resource.
And on resolving the remaining disputes with the Counterparties for the full year, we now anticipate moderate cash usage due primarily to higher legal spending and pursuit of our claims.
Overall, our strong balance sheet positions us well to pursue organic and inorganic growth initiatives.
Moving to our guidance, we have updated our full year 2021 guidance to reflect the <unk> acquisition, which we anticipate will add six cents per share the EPS based on approximately eight and a half months of ownership.
We now estimate of adjusted earnings per share and a range of $3 six to $3 26.
This represents an increase of about 13% at the midpoint compared to 2020 adjusted EPS of $2 80.
Based on the performance of our existing businesses and the first quarter. We have made a few adjustments to the segment revenue and income and other areas of organics that have no net effect on total SPX full year earnings other than the increased U C. Light discussed above you can find more details on todays slides included in the appendix.
With respect to cadence of results for the year, we anticipate that the waiting of earnings between the first and second half will be similar to 2019.
I will now turn the call back to gene for a review of our end markets and his closing comments.
Thanks, Jamie.
Overall, we are encouraged by the positive trends, we're seeing and our end markets and we'll be closely monitoring the progress as we move further into 2021.
Certain markets and geographies of rebounded more quickly than others overall markets are trending positively.
And HVAC. We previously noted early signs of increased activity on the nonresidential portions of our cooling and heating businesses.
Although this impact has.
It's been somewhat even geographically.
Overall, we remain encouraged by order rates and heating and continue to monitor and nonresidential cooling markets for both risks and opportunities.
Demand for our more residential residential focused boiler products appears solid.
And as always remain subject to weather trends and Q4.
And detection and measurement located demand continues to rebound across most regions and the demand for inspection equipment remained steady.
And engineered solutions, we continue to see encouraging behavior from transform our customers' solid backlog and favorable pricing dynamics and.
And as mentioned the process cooling market remains steady.
With respect to our supply chain, we are successfully managing rising input costs with price increases and taking actions to de risk the timely supply of certain inputs.
Currently we are seeing labor availability constraints and some businesses.
Leading to more overtime and adjustments to the shifts, but we do not expect this to have a material impact on full year results.
Before our closing comments and Q&A I'd like to address the topic that we've received the multiple questions on over the past several months, which is how is the SPX position for potential infrastructure spending.
While it is difficult to quantify we believe many of SPX SPX and businesses are well positioned to benefit from infrastructure spending including potential government initiatives across one or multiple areas.
Our location of equipment tends to experience increased demand related to activities that require of digging.
The safety reasons. It is mandated in the U S and other markets.
Scanning take place anywhere of digging may occur near underground utilities.
Clean water is another frequently discussed area net features prominently and legislative proposals.
Our acute business is the north American leader and equipment for inspecting and Remediated and water and wastewater pipes with its end market customers being municipal water and sewer utilities.
Spending on telecom and broadband access such as accelerating <unk> rollouts in the rural areas may create opportunities for a ton of obstruction lighting business.
Any spending on the renewables, which were a prominent feature of current proposals could favorably impact demand for obstruction lighting tied the wind farms as.
As well as increase the need for a step up and step down transformers to move power from remote generation locations to population dense areas.
While we cannot accurately predict where the current debate on infrastructure spending will land or four of legislatively proved dollars would ultimately be allocated.
And are encouraged that there are a number of areas, where SPX is well positioned to help lay the groundwork for future growth.
In summary, I am very pleased with our solid Q1 performance and proud of the way our team has embraced and responded to day to day uncertainty, while continuing to execute on our initiatives for future growth.
I'm excited about our recent acquisition of <unk>, which further extends our <unk> platform and creates additional growth opportunities.
I am also very pleased with the progress on our ESG and diversity and inclusion initiatives.
Which better position SPX for a successful and sustainable future.
We are encouraged by our setup for the remainder of the year.
As well as by signs of improving market conditions.
But the strong balance sheet and highly capable and experienced team.
I am looking forward to the opportunities that lie ahead, as we continue to create and deliver value for our shareholders.
And now I'll turn the call back over to Paul.
Thanks Gene operator, we are ready to go to questions.
As a reminder to ask the question. Please press Star then one if your question has been answered and you'd like to remove yourself from the queue press the pound key.
Our first question comes from Brian <unk> with Oppenheimer.
Your line is open.
Thanks, Good afternoon guys.
Hey, Bryan Bryan.
A really strong start to the year and HVAC.
And certainly above expectations.
You have revised the 2021 sales guide.
I mean, obviously evidenced and some of that momentum I apologize if I missed this on did you break out what you're contemplating for heating and cooling respectively, and the mid to high single digit organic growth.
And.
No we did not actually Brian.
And then a strong heating quarter.
First quarter.
And as you know when we forecast the full year, we typically forecast.
For the fourth quarter to be long from normal operations.
Understood.
Okay any.
Commentary you can offer on your commercial boiler business and trends there and are the largest player and the space.
And I had a very strong first quarter and provided commentary and then revised guidance.
On that.
And that was quite a quite a bit more aggressive and then what was put out a few months ago and just curious if you're seeing similar trends.
Yeah, Brian we're very pleased with the commercial boiler business, we did have a very good quarter.
And we like the trajectory that we're seeing there I would remind you that that is a smaller portion of our boiler business, even though with the acquisition of Patterson Kelley and the.
The addition of a lot of our larger products. This is still of the minority of our boiler business. So.
And that portion is executing very well and we're very pleased with the path of their own.
Very good and just to level set on the revised D and EM guidance.
Has there been any shifts to underlying organic assumptions across your platforms or the follow on contribution from UFC and sensors and software.
The nothing material.
Did add and guidance for the light the acquisition.
But we've.
We moved around that we raise the revenue guidance slightly for Dnm revenue and.
Brit sort of a modest decline on the margin level, but nothing material.
Okay understood and.
And last one if I can see why it seems like a great strategic fits.
Can you offer a little more color on the deal and specifically what Youre expanded geographic presence and more balanced geographic presence will mean for competitive and position and future growth opportunities.
Sure Yeah, Brian, we really like that business with light.
We see this as being as we talked about very similar to building out our platforms like we built out of the location and inspection platform and we feel like we really have a strong scale of business they're similar.
Similarly here.
We started of flash, we added sabic ease of very tough businesses tough environments to make products you have to have the products the outcome of the communication technologies.
Of the modems, yet to have real time monitoring.
And so there's a lot of logic, there what sort of light as we now see light very well, there and very strong competitor.
And being based out of Australia. They have very good coverage in the Asia Pac region.
And they have some very nice products that we don't have so not only does it give us more strength and an area that we were a little bit.
Less present then.
It gives us a much broader product line and what we had so it's the very natural and lots of optical edition.
And also have one of the really important parts of this businesses you are monitoring capabilities.
Communication and monitoring capabilities and they have a products called start to and which is their software and monitoring for how you're monitoring of these devices remotely.
And we think it is a really good solution and.
And we actually think thats, the nice synergy opportunities with with the rest of our portfolio and.
And in addition to that one of the things that we've done is we.
Engineers in the Europe, we have engineers and Australia, we have the engineers and the U S and we the the way we've been working together we've already identified some some very interesting opportunities that we're going after we've also found some areas that we were duplicating some of the same work in which case you can.
Start with the I guess, the one portion of the business day.
Did it surprised the the upside and the quarter so engineered solutions.
You highlighted the.
That's really processed cooling that's driving the 10% decline there, but I was wondering if you could maybe.
Give some additional color on Transformers, I mean, I mean, how where the sales.
And the quarter and and it sounds like you're may be expecting a big second quarter for Transformers, possibly.
And then secondly on that just.
With regard the margin is it is it really just the throughput issue or anything else going on with respect to the productivity that you called out.
The name is Jamie I'll start all.
The transformers.
And the new solutions it was predominantly over and the process cool and as we mentioned the.
Had one particular project.
And some execution challenges on which would get straightened out and then.
Good flow, but not as the big project since we had prior year, but.
The the bigger part of the segment is Transformers as you mentioned and really was we had we did have some <unk> we had to do on the early on that we are we getting through the system and therefore, the throughput wasn't quite as high as red and white for it to be.
And I think we mentioned mix you can have the medium medium voltage probably go through can of a little bit higher March and we have a little bit higher amount of high voltage and extra how 'bout is go through the system this quarter.
And that I would say, we're still please with a transformer business. We're still pleased with the progress we've made of over the last really Bob quarters on continuous improvement initiatives, there and you have a nice level of bookings for the business. So far this year and and we see the rest of the year of shaping up to be you know on.
Track with what we had planned when we and the end of 2021.
Okay that makes sense.
And Jamie you and sounded fairly positive on on H back and and you know I called out the the strong order rates to start the year and.
And obviously a very strong.
Performance and the first quarter from the top line perspective.
You know the guy and instead of it seems to kind of imply Lowe single digit type of growth the rest of the year and I wouldn't say exactly have tough cops there.
Could you just maybe on you.
You know elaborate a little bit on how you're thinking about the outlook for H fact, the rest of this year.
Yeah, Great Great question.
Did we were very pleased with the quarter of both from the the coup inside as well as the heating side.
If you look at cool and we had.
The the the little bit of rehab strong performance and Asia Pacific did very well and the Americas.
We are seeing good growth initiatives and we're seeing good continuous improvement there on the heat and sighed as we mentioned.
Orders of strong we had a hold of winter than prior year. So all of that was good as we look to the balance of the year, Yeah, I'd say cautiously still up very optimistic about the balance of the year, but if you look at the data and the non raise the market.
It's still the same at a macro level you know down mid single digits. We think are and market that we serve it's better than that we think will do.
Think we set of flattish moderately up and that area and so I'd say the the guidance comes with some very good cautious optimism.
And we see a lot of good.
Activity and both heating and cooling we also see.
And again, we see opportunities to continue the drive growth of the top line and and bottom line.
And and and just maybe a little more color of there in terms of the market you nowhere.
And we feel good with where we are in terms of our bookings and I've fought law, but we are you know you look at some of the third party data and we're being just a little bit cautious I'd say the the areas that we see.
A lot of activity on.
More active and all of the the light industrial we see a lot of light industrial activity edgy.
Education government data centers semiconductors. These of some areas of the strength that we really see and hold on the rise the business and then I would say the areas of softness that we see would be an office retail and commercial.
But net net there's more positive there and our mix is pretty similar in terms of Greenfield and replacement. So we feel good about where we are and is Jamie and said, we're being a little cautious of some of the just the third part of the data.
And you know, we actually feel going into 2022 very positive as well because of all indicators are are expecting a very very positive trends there and 2022.
Got it got it.
And our final question on the sea like deal if I could.
And could you just give us a sense on the the I guess the margin profiled there and on for I really obstruction lighting and general relative to the Dnm segment and gene you highlighted you become the global leader and this market.
Just curious.
Kind of how competitive is that market and I'm wondering as you kind of really fortify the sleeping position and how much price and power you might be able to kind.
Kind of exert and the market.
Yeah, I mean, I think and I think it's the good point. So I think if you look.
And.
Etan overall their margins are in line, if not slightly ahead of actually measuring and.
Margin you I might.
It might be of hair below that you know, we kind of more of the high teens as opposed to anything way way below that we fully expect this will get to detection and measurement margins and exceed are on average margins there and we actually have and integration plan and we have a synergies identified all of the normal thing.
Things that you typically have and acquisitions and I think there's always opportunities on the cost is always opportunities on pricing.
And these on.
Sharing of technology and R&D amongst geography, so so yeah, there there could be some opportunities for pricing and we're always looking at the price to our values and.
All of our markets, where and competitive markets.
And these are regulated markers for the most part and you know when you have.
Which we like.
So yeah, I think there could be opportunities for pricing and we.
And we fully intend to take advantage of that and then if you have anything else I knew of thoughts on.
See like the.
We we feel good about actually for a really good about this and the city is.
Tremendous and we're really excited to get started and.
And the only thing I would add to the other things. Good overview, we do have a very good I think thorough integration plan and I do think we have some opportunities to expand margins for a number of reasons mentioned price and the mentioned call synergies the attractiveness of markets. When you put them together I think collectively this is gonna be the.
Great opportunity for us to bump margins and this <unk>.
Great appreciate the caller best of luck with it all guys.
And thank you.
Again to ask the question. Please press started then and one.
Our next question comes from Steve turns on me, what's the that would be your line is open.
Good evening, everyone and thanks for taking my questions.
I wanted to ask you know with her and a lot of commentary to earning season of boat supply chain disruptions on some case of almost horror stories using the talk about it too much of it sounds like and the name of <unk> pretty well I'm gonna do of some of the issues come with the.
Moving on the size of of the global supply chain and the number of components that might go into equipment can you walk through just what you were seeing what's the supply dreams quarter and and what do you think the risks disruption sort of diminished cause we get into the middle of the year.
And as soon as soon let me take of start there and then I'll I'll, let jeez Jimmy offer his thoughts.
Clearly supply chain is.
And the cost impacts of very real I think everyone seeing them and you're looking at.
Still the at the top are you located.
And you can see.
And I would say that where we sit today, we've been able to manage the call.
One of the things I'll remind everyone is that we really do engineered products. We typically do not make of product until we have you know and yeah and with that typically has meant historically is that we have very low purchase price variance positively or negatively.
And our business, where I'd say lower lower beta on that side. So there's certainly has a lot of activity going on and the the name.
Input costs are are unprecedented.
But I think we've been able to manage it the one area that we do see as of challenges on the labor side and.
Pruning is something that we're keeping our eye on and that's in the area that we have seen.
A little bit of a struggle and areas of you have not traditionally had had some struggle there so jim you'd like the will come true yeah.
Good start good overview I think.
It is we get the question often and we here on the other calls Alton.
And it is a real issue out there I think for us and we would take them a lot of proactive steps on the the supply chain sort of and and the availability of side.
We have a structure set up where we have a source and council that works with each of our business individual businesses to both.
Put our purchase and together so we can create scale and the procurement process as well as work too.
Today third and fourth level of supply options.
You know the typical of things that you say a lot of companies doing while we're really we're trying to take a big focus on on working calf of management part of that and not just driving down where from capital of this to have the right amount of safety stock on hand, which is an area, where we're looking at as well.
You know back to pricing the gene mentioned the the.
We're very actually very and a good spot to be able to be on the engineered solution kind of environment for our products and therefore, the amount of time between when we quote a piece of business and when we go procure pricing and again the work is pretty short.
And so we were able to then go out and walk and prices, sometimes too of hedging process of Ford by some of our contracts have pass through.
Abilities and based on the commodity index and and so it gives us a really good protection. If you look at our company is the whole you know gene mentioned the the.
The big materials or commodity that we really watch closely that and you'd probably the other one is circuit boards and.
And I think as we look at those things and it's also concentrated and and three of four of our businesses and those three or four of our business. This happened to be the ones, who would probably be the most engineered and.
In terms of.
Of of specifically designed products and so if we look back over the quarter. You know we were able to cover our cost of inflation and <unk> and our materials, we had I'd say, a slight tailwind on pricing not anything material, but slightly positive and and this environment and this is really good.
What kind of thing.
And so you know that's our goal we've said and previous falls that we do believe we can cover call us and we still believe that to be the case of.
And as you mentioned this is the sort of of two headed.
And as you want as price and the other is availability and so both of the top top focus for us.
Okay could you school color from my Kid and one on on the modeling side S. T and a was there anything there this quarter that would be non repeatable or is this sort of what we should be thinking of all just cause the run rate for the year.
Yeah. That's a great question you know if you look at year over year, both and the quarter as well as of the annual gods, we put out of it is up and.
And it's probably too big drivers of or two primary drivers and I should say on the year over year basis, we had some additional and.
And of comp accruals.
She was of it was the year that was under of sort of of power levels, who curls up a little bit there the thing.
I'd, probably focus on more as we did make some investments.
Called out and are continuous improvement initiatives and and that one has one it was up year over year. It was the very intentional span and the very intentional investment and.
And you know as we entered 21 like a lot of companies, we had there and number of structural headwinds that we had to do with and you know our continuous process continuous improvement process and we've initiated is helping us meet those challenges as well as overcome them and we.
We've got a number of initiatives going on throughout the company that and we will pay benefits and 2021, but also for I think years to come as we build a culture of <unk> and that's and on.
Operations, and engineering and back office and.
And so what you CNS G&A is really you know what I call and investment run into the P&L on something that I think will pay big dividends for us down the road.
So just to try to make sure I feel.
I can characterize your your commentary that's true now you're probably making some more strategic investments of this year sg&a's, a little bit elevated compared the prior to the year and also a set of cop, but that's already ignore your modeling yoga and that's correct. That's correct yes.
Okay, Great. That's helpful. Thank you very much cause and the flu.
Yeah.
And no further questions at this time, please the same with any closing remarks.
Okay, well. Thank you all for joining us on the first quarter call. We look forward the feeding you again and support.
And the talking to many of neutral on the corner.
And have a good day.
Well, ladies and gentlemen that does conclude the program and you may now disconnect.
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[music].
[music].
[music].