Q1 2021 Avient Corp Earnings Call
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Today's conference is scheduled to begin shortly please continue to standby. Thank you for your patience.
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Yeah.
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Good day and thank you for standing by welcome to the Q1 2021 of the Avian Corporation 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.
Ask the question during the session you will need the press star one on your telephone please be advised that today's conference is being recorded.
If you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker of today, Joe The Salvo, Vice President Treasurer and Investor Relations. Please go ahead.
Thank you Joe and good morning of walking through our first quarter 2021 earnings call.
Before beginning we'd like to remind you of that statements made during this webcast may be considered forward looking statements within the meaning of the private Securities Litigation Reform Act of the 1995.
Forward looking statements will give current expectations or forecasts of future events and are not guarantees of future performance for your based on management's expectation and involve a number of business risks and uncertainties.
Any of which could cause actual results to differ materially from those expressed in or implied by the forward looking statement.
Please refer to the Investor presentation for this webcast posted on <unk> web site for a number of factors that could cause actual results to differ.
During the discussion today the company will use of both GAAP and non-GAAP financial measures. Please refer to the presentation posted on the evening of website, where the company describes non-GAAP measures and provides the reconciliation for historical non-GAAP financial measures to their most directly comparable GAAP financial measures.
In addition, unless otherwise stated comparisons to prior year will be pro forma for the Clariant Master batch acquisition as if the business had been together during all periods referenced.
Joining me today is our chairman President and Chief Executive Officer, Bob Patterson.
And senior Vice President and Chief Financial Officer, Jamie Bucks.
Now I will turn the call over to Bob for some opening comments.
Well, Thank you Joe and good morning, everyone. We have record results to share today as well as increased optimism for the rest of the year as demand conditions for stronger than previously expected.
While the world still has a long way to go with respect to combating COVID-19, we are optimistic that as an increasing percentage of the world's population received the vaccination. This too will help drive demand.
We start today and begin by receipt of reviewing our results for Q1.
Where we achieved the highest level of organic sales growth in the last 10 years.
Certainly we're benefiting from.
The pandemic recovery, but our results are also a result of many things and a lot of hard work. Our performance is underpinned by the investments we've made the transform our portfolio to one that is more specialized focused on sustainable solutions and concentrated on high growth end markets.
And our team delivered these results despite the supply.
Hi chain disruptions that have impacted most everyone in the industry.
Our suppliers and our own supply chain leaders for exemplary work to make this possible.
I'm also pleased we were able to expand operating margins by 200 basis points during a period of inflation.
By being on top of pricing capturing synergies ahead of schedule and an improving mix of product sales.
And this is all translated to adjusted operating income growth of 43% and adjusted EPS growth of 68 per cent.
All three of our business segments contributed to our success each delivering record revenue and operating income for the quarter.
Our color business grew operating income, 39% due to robust demand for consumer applications as well as sustainable solutions.
We are also benefiting from early synergy capture related to the Clarient Master batch acquisition.
Specialty engineered materials expanded operating income, 55% driven by continued strength in sales of our composite technologies as well as new business gains in health care and consumer applications.
And last but certainly not least our distributions segment delivered record operating income of 24 million and.
An increase of 26% over the prior year.
This was led by strong demand and new business closes in health care and consumer.
Truly outstanding performance by all of our segments to begin the year.
It's an understatement to say that we have been investing in sustainable solutions and new technologies, such as composites the serve high growth end markets.
Over the years, our portfolio has undergone a tremendous and deliberate transformation with an increased focus on specialty applications.
Not only has this been an important contributor to our recent growth, but the benefits of improved mix are clearly driving higher margins despite raw material inflation.
For investors, who followed us in our early years, you know margin expansion was a hallmark of our success now.
Now as Avion, it is and will be again.
When we announced the acquisition of clarity of Master batch there were some questions regarding our ability to improve the margins to the level of the legacy poly one color business.
I'm pleased to report that in the first nine months of ownership. We have made significant progress in this regard while also seeing an uptick in legacy poly one margins.
For the legacy Clarient business, we have expanded EBITDA margins from 11, 9% to $17 four per cent.
I have to say there is so much energy and excitement that is being generated from the combined organizations even in this primarily virtual environment.
I've seen a number of integration efforts over the years and couldnt be more proud of how we've come together culturally and operationally for each other and our customers.
As our teams continue to work together, we have been able to accelerate our synergy capture and realize the $11 million in the first quarter.
In addition, we expect the full year realization to be $45 million up from our previous estimate of 35.
A few months ago.
During our February webcast, we provided a bridge on the key drivers behind our 2021 growth projections.
Which included sustainable solutions health care composites and growth outside the U S in emerging regions.
We've updated this bridge for Q1 performance.
And you can see how these drivers contributed to our first quarter results.
And these are the same areas that you'll continue to hear us refer to when discussing our ability to grow in excess of the market over the long term.
From an end market perspective, our largest segments, which are tied to long term growth platforms performed exceptionally well during the quarter.
Particular health care and consumer applications led the way with 22% and 24% growth respectively.
You may look at packaging and question its relative performance, but Don the simply reflects a wall packaging did in the early days of the pandemic last year and specifically in Asia, which was impacted most in Q1 and 2020.
The health of our focus the end markets are a big reason, we are delivering record levels of revenue and operating income.
Combined with the optimism from the ongoing vaccine rollout it gives us growing confidence in the economy and our ability to deliver.
So as you read in our news release. This morning, we have increased our outlook for the year, which Jamie will now cover as part of her remarks Jamie.
Thank you Bob we are pleased to provide an update on our second quarter and full year projections for 2021, I think of improved since our last outlook. We provided back in February just as we finished the first quarter with strong results. We are seeing robust demand for our formulations continue into the second quarter.
So for Q2, we expect total company sales of $1 1 billion, which is an increase of approximately 26% over the prior year as.
As we saw in Q1, we expect the health care and consumer end markets to drive a large portion of this growth.
This is truly impressive when you consider that total company health care sales increased by 12% in the second quarter of last year and now we will see double digit growth in the second quarter of this year.
Recall that last year, our health care sales benefited from COVID-19 response applications, such as space map well. This year, we expect health care sales to grow growth to be driven by new business gains in applications, such as the glucose monitoring devices antigen test kits and drug delivery applications. We also see recovering demand for applications used in electric.
The seizures, such as lab Ware and medical equipment.
Consumer sales of benefit from continued underlying demand for specialty technologies used in outdoor high performance applications. This would include things like off road vehicles and sporting equipment.
All in we expect adjusted EPS for the quarter to be approximately 80 cents per share, which is the 90, 90% growth over the prior year.
For the full year, we now expect total company sales increased 14% to $4 $3 billion current demand patterns would suggest the continued recovery into the third quarter of their customers are still trying to keep up with their orders and replenish low levels of inventory.
We expect seasonally lower sales in the fourth quarter consistent with our views we mentioned in our last earnings call. The.
The 14% sales growth combined with $45 million of synergy capture of the Bob previously mentioned it is expected the resulting in adjusted EPS of $2 80 per share, which is 45% growth over the prior year.
The increased sales and earnings will also benefit our free cash flow generation, which we now anticipate to be $275 million up from the $250 million. We previously estimated.
This includes the investments in working capital to support our sales growth as well as restructuring activities to capture synergies associated with the Clarient master batch of integration.
From a leverage perspective, we expect the finished the year at one nine times net debt to adjusted EBITDA. This isn't organic projections, assuming cash remains on the balance sheet.
Our preference, though will be to put that cash to work pursuing strategic M&A with the focus on specialty engineered material opportunities and particularly on composite technologies.
Composites or just one technology in our growing portfolio of sustainable solutions. We have of sustainability strategy. That's brought in we're very proud to be leading we will be continuing to share of sustainability updates and information with our investors throughout the year and I'll now turn the call back over to Bob for more on that and some concluding comments.
Thank you Jamie sustainable solutions are at the forefront of avian it's our future and it's how we will differentiate ourselves, but sustainability of the avian is about more than just our material solutions, we are committed to and investing in each of our for PS people products planet and performance.
These investments are already paying off as you have seen our.
Our commitments of people and building our culture has resulted in employee engagement scores that now have us among the top workplaces in the world for the second consecutive year, we achieved a perfect score on the corporate equality index of the human rights campaign.
We were recently recognized the Newsweek as one of America's most responsible companies.
The improvements not only help us as an employer of choice, but they also are important as the world moves towards becoming more sustainably conscious with.
With the responsibility of corporations, playing a crucial role in the communities where we operate.
Disclosing our activities in environmental social and governance areas has also been of focus for our teams our sustainability report as a comprehensive document that highlights our efforts in these areas. We continue to make improvements in telling our story, which recently was recognized by sustainable that ex who ranked as top for.
<unk> in our industry of this month.
For us sustainability isn't just about taking care of the planet. It's a growth driver as revenue for our sustainable solutions portfolio has grown from $275 million in 2000 $16 million to $560 million last year.
As we look to the future.
You can expect that we will continue to focus on our customers' needs in this regard.
We do the scenarios like improving Recyclability light weighting, providing eco conscious solutions and solutions for sustainable infrastructure.
And our most recent sustainability report we included goals that we are working to achieve by 2030.
And these are goals that will benefit the planet and the people of the world while at the same time, adding value to avions stakeholders.
Before we take some questions. We have included a few other slides related to peer comparisons that I think are helpful to better to think about avian and our value.
As companies report their earnings this year and compare the 2020, there will be many story of the significant growth being delivered.
But think about this as a differentiator I'd like you to recall that for the full year last year, our EBITDA did not decline versus 2019 of group.
And our EBITDA projections for 2021 or 27% higher than 2019.
And that's because of the end markets, we serve and how we serve them.
We are an asset light high touch business and we generate lots of cash are.
Our expertise is in formulation increasingly of sustainable solutions, where we expect double digit sales growth for the foreseeable future.
As our financial performance from projections have improved I expect our valuation will do the same.
We are certainly not out of the woods with respect to COVID-19 as the recent increase in cases in India reminds us.
We keep this top of mind at all times everywhere around the world.
And first and foremost we have to take care of our associates, our customers and each other as health and safety and supply.
The challenges of bound.
That is well known but am I optimistic you bet more so than I've ever been in my 13 years here.
We were embarking on something special when I joined the company in 2008 at the early stages of the poly one's transformation that I know it now as Avion and as a specialty company with an inspired and energized team.
With that I'll open it up for questions.
Thank you as a reminder to ask a question you will need the press star one on your telephone.
Now your question press the pound key.
Standby will be compile the Q&A roster.
Our first question comes from Bob Court with Goldman Sachs. Your line is now open.
Thank you very much.
I wanted to ask you maybe tying into that last.
You know enthusiastic outlook you've got.
The slide deck, hopefully you feel that you guys aren't very capital intensive so.
Why would delever below two turns why not just start buying back your stock before the the market recognizes what you see.
Yeah, I mean look we have.
A number of acquisitions that we are looking at and I do see some from some momentum in that regard.
Obviously, I think last year of things stalled out a bit and just in terms of our ability to move negotiate some moves from discussions forward. So I'm optimistic that.
We can gain some traction and that really would be.
Our preferred use of cash is to put that to work as Jamie mentioned today really in the engineered materials segment and hopefully something in composites.
Okay, and then on Clariant I think at the time of the deal. The margins there were maybe 500 bps lower than what you've got in the legacy poly one color business or the avian compelling.
Color business.
Those that GAAP now the 360 something like that.
Can you fully close it what's the timeframe on doing that if you can or if you can't quite close of whats the hindrance.
Yes, I think we can close it I think the with the continued capture of synergies, particularly.
Particularly as we get to the next phase of that next year that will go a long way towards doing that.
There are some mix differences between the two businesses the.
But structurally have some differences, but I think theyre going to be very close when its all of sudden done first and foremost we have to capture the synergies.
The second.
The combined organizations are doing an outstanding job of managing inflation, right now and getting price improving mix and I think that's gonna go along the way towards doing just that.
Thanks very much.
Thank you.
Thank you. Our next question comes from Mike Sison with Wells Fargo. Your line is now open.
Hey, good morning, really nice start for the year and outlook Bob in terms of revenue for sustainable solutions I guess, the $5 60 in 2020 likely approaching 600 plus from 'twenty one.
Got it.
In terms of growing that business do you need to or can you expand capacity to accelerate that and I know one of your goals.
And one of the slides set of 100 per cent of the products. The packaging will be recyclable or reusable can you could you maybe just walk us through how much capacity you have in that type of area and then what you can do to grow it.
Yeah, I mean look we have.
For the most part of our capacity and if I just focus on the color business as per.
Primarily driven by <unk>.
Personnel, we really do have more than adequate capacity to grow and obviously by bringing the legacy Clarient and legacy poly one organizations together, that's the only improve self I don't look at fixed assets or machines as a hindrance in anyway.
For us it really is about investing in innovation and tackling some of these changes and Thats why youll.
Youll see in our 2030 goals that the preponderance of innovation is going towards sustainable solutions right now I kind of view that is the primary area of focus and investment for us to drive that growth.
Right, Great and then.
In terms of your organic growth outlook for for for 'twenty, one pretty.
Pretty impressive it's sort of a step change the I understand the easy comps in <unk>, what do you think.
Beyond 'twenty, one the sustainable growth rate organic growth rate for avian is.
Now going forward.
Yes, I mean look I think for now it's really good.
<unk> of reference these growth drivers that we've had in our.
The materials over the last six to nine months focused on sustainable solutions composites and healthcare all of that lending itself to six 5% growth rate of.
Obviously, we're seeing better than that.
Now that I think that's still the right way to think about debt and I'm pretty sure of our assumption there and was of a GDP number of sort of 2% to 3% of if you will so better than GDP those being the primary drivers.
Great. Thank you.
Thank you. Our next question comes from Frank Mitsch with Fermium Research. Your line is now open.
Yes, good morning, and thanks for posting the slides concurrently with the release much appreciated.
I wanted to I wanted to follow up on the on the distribution business the.
<unk> posted a record year in the first quarter, but yet you did suffer some logistic issues during the quarter as well I'm curious if you could size that and how much of a tailwind might that be for the second quarter and the distribution business.
Yeah, I can't put an exact number on that but I can say that.
I do think the distribution business could have had a better first quarter had it not been for some of the supply chain challenges.
Those continue right now and so I'm not sure it's necessarily moves immediately just take what we didn't get done in Q1 and added to Q2 because at this point those supply challenges persist and may through the second quarter. So at the moment I wouldn't classify that as a tailwind I think the team would look at.
It is we still got some work to do to catch up.
To match demand right I mean look it's a good thing that we have these orders out there and there is so much demand. It's a very challenging time right now to meet that so I guess, that's the best way I would characterize that Frank.
Got you I was almost going to ask the Jamie since you didn't have an exact number maybe shoot it but I'll pass for now.
And then if I think about your guide for the second quarter.
It's below the first quarter than historically.
Probably one would see a modest increase in the second quarter versus the first quarter are you being conservative here.
Well number one is that I think that with the increased presence that we now have in Europe. As a result of the Clarient Master batch of acquisition that does actually tilt seasonality more towards the first quarter than it has in the past.
Combine that with the sale of <unk> 18 months ago, which always had its strongest quarter in Q2. So I think we need to see this play out of bed and how seasonality.
Really factors into our quarters.
But like as I said, we've got very strong orders and demand out there with some of the supply chain challenges, we have to overcome that to deliver and we will see out of the quarter plays out.
Thank you so much.
Thank you. Our next question comes from Vincent Andrews with Morgan Stanley. Your line is now open.
This is Andrew on for Vincent just if I could expand on that last question about conservatism I guess as you look at the Q and <unk>. Obviously, there is some seasonality in the fourth quarter, but.
But it seems like the back half is based on your guidance meaningfully below kind of where we're at in the first half. So could you just provide a bridge as to how we go from kind of ex <unk> to kind of <unk> levels that you're kind of implying in the guidance.
Yeah look I think there certainly is a seasonality element to that and also probably very consistent to what we said back in February.
And our first call for the year, which is that I think we're being conservative with respect to the second half of the year. So I mean, when you just look at the sales growth projections implied for the second half piece of your the first half I think that would certainly say that's the case. So I think we'll have a better read on all of the second half looks like as this quarter progresses.
<unk>.
Hopefully, we are being conservative and can do better than what.
We've projected so far.
And if I could I guess, just expand on that a little bit.
For Friday on the raw materials I guess, how are you thinking about that as part of that conservatism based on I guess, what we're seeing in terms of inflation.
Do you feel that you'll be able to kind of outside of that with pricing or how you view on kind of the overall dynamic.
Yeah, I mean, I think the team has done a great job of doing that so far to start the year and feel confident about that for the.
The second quarter, and whether or not some of these.
Supply chain disruptions and other things that may be driving some of this inflation persist into the second half of the year remains but our team is really planning for like Hey look we've got to go out of cash.
Cash flow pricing, where we.
We need to same thing with respect to freight and freight surcharges and we've added that to our businesses, where we need to as well. So I feel like we're on it I think we got it covered.
I really couldn't say.
For certain how long that lasts for the balance of the year.
That's very helpful. Thank you.
Thank you. Our next question comes from P. J two of the car with Citi. Your line is now open.
Eric Petrie on for P. J.
I've been watching some of the sustainable solution portfolio offerings that youre doing like rejoin color matrix breakdown could you just talk about how sales growth are in those buckets and peak sales and then kind of give us a sense of what the larger drivers are in your <unk>.
Sustainable solutions sales.
Yeah.
So I mean, you may have seen in our plastic news I think that came out. This week were just highlighting some of the recent technologies that were.
Out there so in those particular areas those are all new technologies and just getting started.
When we look at the areas for sales growth. This year, if I heard of broadly categorize them. They are in the areas of <unk>.
Barrier, which includes food and beverage containment and enabling the use of less materials.
Secondly would be around light weighting for.
For a broad range of applications and perhaps most focused on transportation.
As probably being the two key leaders.
Right now Theres a lot of attention given to sort of what I'd describe as eco conscious materials of our bio based materials.
That's still pretty small I think the growth rate opportunity is there, but that's when I just look at delivering revenue. This year is still a pretty small component of what we expect.
Okay.
Okay helpful. And then secondly, your emerging sales growth was pretty strong with <unk>.
20% plus income margin could you discuss what regions delivered that growth in the market.
Yes, so all of them and look for the most part that's coming out of Asia and by far and away had the highest <unk>.
Sales growth in the in the company you think about that last year. It was about 13% of total company sales. This year, it's about 17%. So Asia is growing quite a bit.
Latin America was up only about 4% to some extent, we actually think that's COVID-19 related and having some supply chain disruptions as well but.
But when I really think about where that growth is coming from it's certainly.
By far and away strongest in Asia.
Thank you.
Thank you. Our next question comes from Colin Rusch with Oppenheimer. Your line is now open.
Thanks, so much.
Because we're looking at your pipeline of acquisition targets can you speak to how.
How much of that is really within your existing segments or how much is kind of move into some of the adjacent areas.
The next to your business.
I mean everything that we're looking at right now I'd say.
But my sort of philosophy on that is you don't want to get too far away from your core confidence with respect to.
Considering acquisitions, so I think everything is very close.
To what we do.
Maybe one or two can be described as an adjacency, but not too many not more of than probably one turn away from what we do today.
But look there's a number of things we're looking at primarily in engineered materials.
Great and then as you think about growth.
The kind of a foundation that stable the support that growth could you talk about.
Additional capacity of that you need to add.
The manufacturing capacity and how you evaluate adding aiming for.
Thanks.
Yes.
Look the.
From a capacity standpoint.
Kind of consistent with the comment I made earlier around the sustainable solutions.
We have plenty of capacity with respect of footprint of machines.
The real dynamic that's challenging for US right now and I think of lot of companies are experiencing this is just getting.
Enough people right and some of this is COVID-19 related some of this is demand related as other industries.
We have grown as well so for us the primary gating factor really is human resource related and getting enough associates into our facilities to meet that demand.
Okay. Thanks, so much growth.
Yeah.
Thank you. Our next question comes from Ben kind of with Baird. Your line is now open.
Hey, good morning, guys.
Hey, Ben Congrats of the results.
So what I heard you say that the SEC.
You're being very conservative numbers don't make sense for me.
You said they don't make line as to you know no just.
The seasonality.
Do you have with your very strong quarter in Q4.
As of last year as well.
But we got to have a big tick down in the second half.
Within the guidance.
Got it.
Yeah.
Yes, I'm not exactly sure of.
All of the words, you replayed radar sorry, INR time hearing you, but yeah, I mean, I don't think we're being conservative in the second half.
I really do hope that as.
More of the World gets vaccinated and we.
We do get control of the COVID-19 that there continues to be really good demand through this there was a I mean, another way of thinking about this there was a good report that I read yesterday on one of our customers in the outdoor industry and just how little inventory. There is right now and how long it's going to take the catch up.
And I think we're being conservative in that regard as well. So that's true of these consumer industries continue to do well.
We could do better in the second half of them, what we have projected right now.
Just two questions. So.
It looked like.
The margins are good there.
Yeah.
Some of what you just alluded to above your outdoor equipment.
But maybe also could you talk about the composites, what youre seeing there.
From from that side and then my last question is just on <unk>.
<unk>.
Because of the Bill.
The.
That's a big deal for people.
It's about the auto industry of electric vehicles the everything.
How much.
<unk>.
The growth that you guys are seeing for for different applications out there might.
It might be a year from now or 18 months or two years, but has that picked up at all thank you very much of it.
Yes, I mean from the.
The composites really has been the key one of the key growth drivers.
In the engineered materials segment, I think what I sort of bifurcate composites versus the rest of our solutions, that's probably half the growth that you see in the quarter.
You recall from the past because of how much investment we have made in composites. The growth. There is driving I think a disproportionate amount of the margin expansion, which is a good thing.
Light weighting of certainly an element of that.
Actually I think the light weighting has even more opportunity when.
One of the transportation industry can really pick up everyone's aware of supply chain challenges impacting it as well and I think when that recovers.
Can do even better from the composites perspective, so look I think theres a good level of demand primarily in consumer applications right now the longer term.
We view this as a double digit grower for us just again based on replacing heavier.
Yes.
Structurally.
Let's say design friendly materials of these composite so we like it a lot of as you know I think it's got really good growth projections.
Great. Thanks.
Thank you. Our next question comes from Laurence Alexander with Jefferies. Your line is now open.
Good morning, two questions of what could you talk a little bit about how your firm handle the labor inflation, rather than commodity inflation for your kind of a good job kind.
So through the feedstock inflation.
And secondly on the sustainability side.
Or should we be thinking about it as a fairly steady KBR over the next few years or are you seeing a difference of the scale of decisions for our customers are contemplating given the shift in the incentives for them in the last couple of years.
Yeah, I mean, so first with respect to how.
How we think about pricing, we take all of the cost of production and freight and the consideration in the setting that and that does include all labor costs I think what I would highlight though is that look we are a great place to work and I think that part of being a great place to work is paying a competitive.
Wage.
To coincide with where people live and the work that they're doing.
And we are moving that forward and up where we need to be competitive in the areas, where we are I mean, they really are.
Labor shortages and challenges in so many places that that isn't increasing cost for the business, but I believe we have that covered from a pricing standpoint.
With respect to your second question.
I think the consumer there's so much consumer excitement and poll for sustainable solutions that brand owners are getting all over this and Thats a good thing for us with respect to working with us to help develop solutions for them that are more sustainable cell.
I think thats factored into our growth rate assumptions, but it could get even.
<unk> as things get adopted more quickly so.
I think with our sort of projections right now around 10% growth. That's a good way to think about that but could be even better as there is greater consumer adoption or OEM brand owner of adoption.
Okay. Thank you.
Certainly.
Thank you. Our next question comes from Mike Harrison with Seaport Global Your line is now open.
Hi, Good morning can you hear me okay.
Yes, Mike.
Great.
They ask about the Clarient the synergy number and the increase that you made there does that mean that youre finding additional projects or should we think about it more of an acceleration of the.
The savings that you were expecting and can you maybe also comment on whether you're seeing some revenue synergies from the Clarient business.
Yeah, I mean, right now I'd say, its just an acceleration of our.
The capture rate if you will maybe starting the year I would have said it would be.
Maybe around eight or nine for the quarter were down a little bit better than that as we had in our bridge schedule.
And look right now I'd say the primary focus of our commercial teams has just taken care of our customers right. We just dropped two really big organizations together, we want our customers to genuinely believe and feel like it's business as usual or if not then better.
That's number one and then I think we can.
To move forward on some of the revenue synergies, particularly to la.
<unk> of last question around sustainable solutions, I think that's the greatest opportunity for synergies between the two organizations is focusing on the sustainable solutions, particularly in the area of packaging.
Alright, and then speaking of packaging I think you've kind of addressed that day.
It's a 5% grower this quarter when other areas are double digits, and obviously, that's because you're up against the more challenging comps.
With the reopening it's going and going on in the vaccine rollout.
Are we going to see that business come up against challenging comps.
And maybe one of the weaker growers and can you maybe also discuss your share position in that market and whether you've gained any share over the past three quarters. Thanks.
I mean, the first way I think about our packaging.
End market exposure is one that is <unk>.
Stable right I mean, obviously necessary important of lot of demand for it and played well north.
During the pandemic last year, that's an important way of thinking about it.
The way that kind of played out last year candidly was a little lumpy.
In terms of looking at some spikes in demand at the end of March and in April of last year, maybe a little bit again in the fall in different regions, but.
So some of that will play out in the comparisons is it already debt in the first quarter.
But I don't think it's going to really be anything we would view as a negative.
Again, certainly look at our presence in that of end market is.
As a positive we've got confidence in our projections here for the second quarter, which are very strong.
And so I don't view that as a headwind of any kind of.
And the share gain.
Look I think at the moment I think again as I would maybe it was just commenting earlier around bringing the legacy Clarient legacy Poly one together and this is kind of how I feel about the pandemic in general I really think customers of just been so focused on surety of supply.
And training that they have quality on time delivery, which is so difficult right now.
I can't really points of something and say theres been some immediate.
Share gain outside of what might just be related to the supply disruptions, where we've been able to step in.
Serve them better, but I think it's a it's been a small number so far this year.
Alright, thanks very much.
Thank you as a reminder to ask a question you will need the press star one on your telephone.
Our next question comes from J D.
The non field research your line is now open.
Thank you.
Can you just explain to us like what the main sort of areas that you serve into hands GAAP and like as we see vaccine rollout.
What are the areas that youre sort of benefiting from is it really wise are you at all linked to some of the packaging material for critical materials for vaccine. So we'll be very tuition of what's going on in your health care portfolio and the second question is really just around the <unk> rollout for you.
Okay books of business.
Is it more of 2000 22023 story for you or is this really.
Going to kick in in the second half of this year. That's my second question and then just thirdly, you know when you look at the Clarion portfolio.
Youre doing a great job on the cost side of things, but when you look at the fundamental growth side of things what are the most exciting areas for you.
In terms of growth opportunities at AVN now thanks, a lot.
Yep.
Sorry about out of my phone just send it off for some reason the ahead of quiet.
So many of your replay of the second question, but I'll take the first one.
And that is current on health care and you know I mean.
Look there are probably 15 different.
Sort of sub markets. If you will inside of health care of when we look at those the biggest being medical devices drug delivery devices.
Packaging around those that can include files and testing and test kits and related packaging.
There is really it's interesting because for US healthcare is so similar to the broader business right, where each application is pretty small.
But some of our healthcare customers or some of our biggest customers and an array of different applications like that what do we think we're seeing of.
Obviously last year, we had really strong demand for.
The face masks, we don't think that replace of the same level of this year, but it's being more than offset by I think more of elective procedures.
Certainly some of the testing that's going on right now.
He is doing that but I think that's where that growth is coming from.
Can you repeat the second question for me again, I'm sorry at the sure no that's fine.
It was just related to <unk> any of our fiber optic cable business.
Have you started seeing growth already this year or is it more of a 2020 to 22 of three story as <unk> rolls out.
Now we are seeing growth in that and actually I think that when I look at growth. This year to some extent look wire and cable industry in general last year was impacted.
By shutdowns related to COVID-19 not.
Not necessarily anything related to demand, but just being able to operate facilities. So I think this year will those facilities being fully operational we're going to have good growth related to <unk> and for our fiber line of business. So look we have a really long way to go with respect to.
Participating in that market and the growth related to it.
As we sit here today, and we see <unk> pop up on our phone.
It's really not all the way there yet because it's really still using <unk> infrastructure and theres. So much investment yet to take place. If you just think about the you know really thousands and perhaps millions of many towers and antennas that are yet to be installed that's going to be a growth driver for us for the next seven to 10 years.
Usually.
Historically, when I look at our participation in that market that's been.
8% to 10% sales growth this year or in the past I think that will continue to be the case.
Outside of that like when I think about these areas where I'm most excited about.
Growth of it really comes back to the bridge schedule that we've been using to articulate how we think about six 5% sales growth, which is really by end market of course health care.
We capture consumer a lot of that's in the composite space.
And from a from a technology standpoint, because <unk>.
Composites and sustainable solutions are really at the top of the list.
Okay. Thanks, a lot.
Thank you I'm not showing any further questions at this time I would now like to turn the call back over to Bob Patterson for closing remarks.
Alright, well, thank you and thanks to everyone, who was able to join us on the call today.
If we don't see you at our conference between now and then we look forward to provide an update.
For our second quarter of results at the conclusion of thereof. Thanks, everyone.
This concludes today's conference call. Thank you for participating you may now disconnect.
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