Q1 2021 Balchem Corp Earnings Call

[music].

Greetings, ladies and gentlemen, and welcome to the Belgium Corp, first quarter 2021 the earnings conference call. At this time, all participants are in a listen only mode.

The question and answer session will follow the formal presentation and.

And it will require operator assistance you May press.

And our hero on your telephone keypad and it's now my pleasure to introduce your host Mr. Martin and angst and thank.

Thank you Sir you may begin.

Good morning, everyone. Thank you for joining our conference call. This morning to discuss the results about the corporation for the quarter ending March 31, 2021 and my name is Martin Bengtsson, Chief Financial Officer, and hosting this call with me is Ted Harris, our chairman and CEO and President.

Following the advice of our counsel auditors and the FCC at this time I would like to read our forward looking statement. This.

And this really does contain or likely will contain forward looking statements, which reflect backend of expectation or belief concerning future events that will involve risks and uncertainties. We can give no assurance that the expectations reflected and forward looking statements will prove correct and various factors could cause results to differ materially from our expectations.

Including the risks and factors identified embark on form 10-K forward looking statements are qualified in their entirety by this cautionary statement.

I'll now turn the call over to Ted Harris, our chairman and CEO and President.

Martin Good morning, and welcome to our conference call.

This morning, we reported strong first quarter results with solid revenue growth earnings growth and free cash flow growth at.

Net revenues of $185 $7 million were up six 4% and our adjusted earnings from operations worse $37.3 million up 7.5% versus the prior year quarter.

Our first quarter net income of $23 $4 million and increase of $18 four per cent resulted in earnings per share of 72 cents on a GAAP basis.

On an adjusted basis, our first quarter non-GAAP net earnings were $28 $4 million or 87 cents per share and increase of seven 1% and.

And we continued to deliver strong cash flows.

Cash from operations was $46 million for the first quarter of 2021 with quarterly free cash flow of $34 $4 million and increase of 97, 7% compared to the prior year quarter.

Overall, a great start to 2020, one and while there are many challenges to manage and the overall macroeconomic environment at the moment. These results highlight the strength and resilience of our business model.

Before passing the call back to Martin to cover the detailed financial results I would like to update you on the impact of COVID-19 on our company as well as of few of our important strategic activities and growth initiatives.

It is incredible to think that it has been more than one year that we have all been living with the COVID-19 pandemic.

And all of the related challenges it has created.

This time last year, we were talking with you about our early response actions of activating our crisis management team halting domestic and international travel implementing new strict safety protocols at our manufacturing sites working from home for our office employees and stress testing our balance sheet to ensure.

And we could withstand extreme scenarios as we headed into the market uncertainties ahead of US just to name a few.

While the pandemic has certainly not behind us yet and our priorities remain the same employee safety first keeping our manufacturing sites operational satisfying customer needs and preserving cash and ensuring strong liquidity and responding to changes and this dynamic market environment as appropriate we are extremely.

The pleased with our response to the pandemic and ultimately the performance of the company and light of the challenges. We have faced we have indeed responded well to the changes in this dynamic market environment and we are today, having to respond to new challenges that are at least partly related to the pandemic as well.

And as the economic recovery regarding significantly higher raw material and freight costs. While we don't believe these cost increases are differentially impacting balcom, we are having to dedicate significant resources to various mitigating activities to effectively manage through this aspect of.

The pandemic and macro economic environment, just as we have through all previous challenges stemming from the pandemic.

Moving on to a few highlights relative to our important strategic activities and growth initiatives within our animal nutrition and health segment. The launch of Aminosugar ex Sam our next generation rumen protected methionine and for the dairy market continues to go well as the product is gaining acceptance with progressive dairy.

The producers who are looking to maximize profitability by growing the milk protein portion of their output.

Additionally, our companion animal team has been working hard to grow our pet share of line of products, including several sensory related products and we are excited to have one of these pets share sensory products included in our recently launched fruit flavor dog treat product by a leading brand we continue to be.

The bullish about the companion animal market and our ability to bring differentiated solutions to solve the new and developing needs of the market and to that and we have a large number of belkin sponsored research trials relating to our pet SHUR line of products that have been submitted for presentation at scientific meetings.

Beatings in 2021.

We're also celebrating today, our one year anniversary of the real Science lecture series, which is now expanded to include all three species segments, ruminants, and swine and poultry and companion animals. These educational and science based webinars have been hugely successful attracting over 8000 live attached.

DS and over 17000 people have watched the recorded sessions. This pivot of our marketing approach during the pandemic has enabled us to effectively reach and interact with and expanded target audience. Despite the pandemic.

And speaking of marketing approaches as we have talked about in the past our human nutrition and health segment has strengthened its marketing capabilities to accelerate awareness around existing science and to better showcase to our customers through marketing campaigns and how they can incorporate and benefit from our products.

This year, we launched three new marketing campaigns and the first was focused on the benefits of our Albion branded chelate and magnesium as the solution for sleep and relaxation. The second showcase the importance of choline and of prenatal vitamin regimen and the third was the new food campaign that.

Based on proprietary market research focused on consumer interest around products, featuring our novel inclusions for baked goods applications.

And the coming months, we'll be highlighting campaigns around immunity cognition, and our enhanced capabilities and protein crisps and beverage.

And we're excited by how these campaigns are already creating opportunities by developing new leads and building loyalty amongst existing customers.

And the quarter. We also continued to progress our efforts to consolidate all of our ERP systems into one Microsoft dynamics 365 the.

This initiative is critical for the continued growth and operational efficiency of the company. We successfully added one more site to the new system and the quarter, leaving just two international sites left on legacy systems. We now have approximately 96% of our revenues on the new system and remain on.

Track to complete implementation of the project this year.

Additionally, and our continuing effort to advance our environmental social and governance or ESG efforts recently, balkin proudly side and the CEO action for diversity and inclusion pledge as of further commitment to advance diversity and inclusion within our workplace the CEO of pledge outlines of specifics.

Set of actions the signatory Ceos will take to cultivate a trusting environment, where all ideas are welcomed and employees feel comfortable and empowered to have discussions about diversity and inclusion.

And just earlier this week, we released our third sustainability report, which captures the company's commitment to managing our ESG performance.

This report demonstrates the company's continuing promise to provide our employees customers shareholders and the communities within which we operate with information on Bell, Canada sustainability initiatives of particular note and this year's report we have for the first time published our 2030.

Goals to reduce both the greenhouse gas emissions and water usage by 25% by that date, we are very proud of the report and the progress we have been making and I would encourage you to go to Bell Cam Dotcom to read the report and while on the <unk> Dot Com website, you will also.

Notice that our website was recently updated consolidating all of our many legacy Balco and web sites into one with a more modern look feel and navigation capability that should service well as we continue to grow and become more global.

I'm now going to turn the call back over to Martin to go through the detailed financial results and the results for each of our individual segments. Martin. Thank you Ted as Ted mentioned, we delivered overall strong financial results and a challenging environment, our first quarter net sales of $185 set.

Millions of dollars were six 4% higher than the prior year comparable quarter, we delivered record sales and our human nutrition, and health and animal nutrition and health segments.

While showing sequential improvement and slight year over year growth and the specialty products segment.

The impact of foreign exchange to our sales was the positive $2 $4 million, primarily due to the stronger euro contributing a positive 1.35% impact to our year over year sales growth.

Our first quarter consolidated gross margin dollars of 50, $758 $7 million were up $3 $4 million or six 1% compared with $55 $3 million for the same period and the prior year. Our consolidated gross margin percent was 31, 6%.

Of sales in the quarter down nine basis points compared to 31, 7% and the first quarter of 2020.

The nine basis points decrease was primarily due to a significant increase and certain raw material and distribution costs, partially offset by favorable mix and manufacturing efficiencies.

Consolidated operating expenses for the first quarter of 2021 were $28 $2 million as compared to $29 $1 million and the prior year.

The decrease was principally due to a decrease and transaction and integration costs travel and bad debt and the amortization, partially offset by certain higher compensation and related costs.

Looking forward, we will continue to focus on controlling our operating expenses and leveraging our existing SG&A infrastructure where possible.

GAAP earnings from operations for the first quarter were $36 million and increase of $4 $3 million or 16, 4% compared to the prior year quarter on it.

And on an adjusted basis as detailed in our earnings release. This morning, non-GAAP earnings from operations of $37 $3 million were up $2.6 million or seven 5% compared to $34 $7 million and the prior year.

Record adjusted EBITDA of $45 $7 million was $3 $4 million or seven 9% of Bob the first quarter of 2020 and.

And interest expense for the first quarter of 2020, one was zero point $7 million and our net debt was $65 million with and overall leverage ratio on a net debt basis of 0.4.

The company's effective tax rates for the first quarter of 'twenty, 'twenty, one and 2020 were 21, 9% and 19, 3% respectively.

The increase and the effective tax rate was primarily due to reduction and certain tax credits and higher enacted tax rates and several states within the United States.

Consolidated net income closed the quarter at $23 $4 million up 18, 4% from the prior year quarter.

This quarterly net income translated into diluted net earnings per share of <unk> 72 cents for the current year and.

And increase of 11 cents or 17, 9% from last year's comparable quarter.

On an adjusted basis, our first quarter adjusted net earnings were $28 $4 million or 87 cents per diluted share up $2 million or seven 6% compared with the prior year quarter.

We generated quarterly free cash flow of $34.4 million up 98% compared to prior year quarter, and we closed out the quarter with $88 $5 million of cash on the balance sheet.

As we look at it from a segment perspective.

For the quarter, our human nutrition, and health segment generated record quarterly sales of $104.5 million and increase of $9 million or nine 4% from the prior year.

The sales increase was driven both by strong.

Sales growth of chelate, and minerals and choline nutrients as well as higher sales within food and beverage markets are.

Our minerals and choline nutrients business saw increased demand when the COVID-19 pandemic started last year and there that have been.

And no signs of any slowdown to date and fact, the last two quarters have shown sequential growth and this part of the portfolio and we're pleased to see the increased awareness around the health benefits of these products.

We were also pleased to see the growth on the food ingredient side of our business, where we are seeing a modest but steady improvement and food service along with the gradual reopening of our economy.

Our human Nutrition and health segment also delivered record quarterly earnings from operations of $19 $7 million and increase of $7.6 million or 62, 3% compared to prior year.

Primarily due to the aforementioned higher sales product mix and manufacturing efficiencies, partially offset by higher raw material costs.

Our animal nutrition, and health segment generated record quarterly sales of $51 $1 million and increase of five 2% or $2 $5 million compared to the prior year.

The increase in sales was primarily the result of higher sales in both of them on a gastric and ruminant animal markets and a favorable impact related to changes and foreign exchange rates, which contributed $1.4 million or two 8% of growth to the segment.

Our ruminant business grew volume six 5% and we continued to successfully drive penetration of our room and protected encapsulated products and the markets and.

In terms of data of economics milk and milk protein prices continue to be volatile and have come down a bit during the first quarter, but are still at relatively healthy levels.

On the mono gastric side overall volumes were relatively flat with good growth and companion animals as well as U S feed grade choline, but offset by lower European demand for choline.

Animal nutrition and health quarterly earnings from operations of $5 $1 million were down $3.0 million or 37, 1% from the prior year quarter, primarily due to increases in raw material costs and distribution costs, along with and unfavorable mix.

We have arrangements in place to recover a significant portion of the raw material increases through price increases to our customers. However, there is the timing delay between the raw material inflation and the selling price adjustments and there is on average of quarter delay.

Our specialty product segment delivered quarterly sales of $28 million up very slightly from the same quarter in 2020.

Primarily due to higher sales of products for the medical device sterilization market and a favorable impact related to changes and foreign currency exchange rates.

Offset by lower sales and the plant nutrition business.

While the volumes related to sales into the device sterilization markets were down on a year over year basis, it improved sequentially versus the fourth quarter of 2020, and it is encouraging to see gradual improvement as elective surgeries are slowly recovering.

The specialty products segment had first quarter earnings from operations of $7 2 million versus $8.0 million from the prior year quarter of decrease of zero point $8 million or 10%. The decrease was primarily due to increases in raw material costs and distribution costs.

I'm now going to turn the call back over to Ted for some closing remarks.

Thanks, Martin we are extremely pleased with <unk> financial results reported earlier this morning, and we certainly carry the positive momentum from 2000 and 'twenty into 2021.

And the first quarter of 2021 we delivered all time record revenues with revenue growth and all three of our business segments, not only versus the prior year's quarter, but also sequentially versus the fourth quarter 2020, reflecting a modest but gradual reopening of economies around the world we achieved record.

First quarter consolidated GAAP net earnings record quarterly non-GAAP adjusted net earnings record adjusted EBITDA and strong cash flows from operations, while facing certain higher raw material and distribution costs and complexities associated with logistical disruptions. These very strong results reported to.

Day continue to show that we are well positioned in attractive markets.

Where we have the leadership and capabilities to be successful not only today, but also into the future.

I'd now like to hand, the call back over to Martin who will open up the call for questions. Martin. Thank you. Ted. This now concludes the formal portion of the conference at this point, we will open up the conference call for questions.

Thank you, ladies and gentlemen, if you'd like to ask the question. Please press star one on your telephone keypad.

Total in the Kate your line of my questions here.

Hi, Chris start too if you'd like to move on.

Hum.

And thanks for taking my call.

And then maybe necessary to the handset before pressing the star of Q1.

One moment, please open the call for questions.

Our first question comes from the line of Bob.

T J F.

Please proceed with your question.

Good morning, and congratulations on an excellent start to the year.

Thanks, Bob.

I wanted to start with one of the things you mentioned in your prepared remarks, you talked about and a strengthening of the marketing to accelerate awareness could you maybe expand upon that a little bit are you using new channels are you spending more dollars as the psyche of shifting dollars.

Just you know what was the impetus behind this and how should we think about you know where you were where you are and where you're going and the marketing campaigns.

Yeah, we're really excited about the changes that we have made and I would say overall, it's really more of a shift in dollars as opposed to a dramatic increase.

And we traditionally relied more on a.

Kind of basic advertising as well as the efforts of our sales organization and while the.

Sales sales organization remains a critical part of building awareness. We've also now added to the team some real.

Marketing expertise and capability and and are paying for that a little bit with reduced <unk>.

Advertising expense and are now able to do.

The campaigns in House for example, some of the campaigns I talked about.

We've recently really done on our own with the.

And we've added not only marketing expertise and leadership with we've added.

Market research capabilities that we never had before and so we're.

Conducting the focus groups and and really kind of digging into the needs of the market and trying to target are those needs with these campaigns. So.

We're not spending a lot more than we used to it's just really a shift and span building our own internal capabilities and and.

Really pleased with the initial progress from all of that.

Got it that's great. Thank you and then I know you highlighted this a little bit I wanted to get a little more specific.

In terms of margins the H N H margins were I think or at least a couple of years, if not all time high on the adjusted basis and on adjusted EBIT basis, and then obviously, our A&H and specialty were more impacted by raw materials.

So the question is one what was the kind of driver of the.

H N H and.

And if anything materially changed from the long term as the timing and mix etcetera, and just how should we start thinking about the recovery from.

On the raw material pressures and A&H and specialty.

Bob This is Martin so.

We take a N H firsts and you did see very strong margins here and the first quarter and it's primarily driven by favorable product mix and the sense that you have a very strong minerals and nutrients, which relatively speaking is higher margin compared to the food ingredients.

So as those minerals and nutrients and growing at you know.

And <unk>.

Very rapid rates, you know 20, 30%.

And that drives that favorable mix, that's helping helping the margin for them.

In addition to that they also had a.

Drawn manufacturing quarter, we have and the previous quarter as you remember Q3, and Q4 mentioned some of the inefficiencies, we saw and the manufacturing operations negatively impacting them and.

And the first quarter you know as we've worked through many of those issues. We saw an uptick and an improved performance, which also helps with the margins for H and H.

When we look at it to the second part of your question around a N H and S. P who are both significantly impacted by both the raw materials and freight and distribution. They are a little bit experiencing what youre seeing around the world at the moment and that you hear him on.

The company's <unk>.

Book about.

So for a number of our key raw materials.

Started to creep up a little bit and the fourth quarter, but it really took off.

Quite significantly and the first quarter in terms of material inflation and on our ability to price that through to our customers, we're usually and Ah I would say of relatively good position to recapture of that through pricing and over time with tito's tend to see the the margins come back to.

To where they should be but it takes us a quarter and sometimes you know into two quarters to recapture that.

Some of our pricing arrangements.

Language around.

The index based adjustments some of these index tie back to commodity index, and that's where we can't do so much around the actual raw material inflation itself.

But we can adjust the pricing, but there is a quarter lag so from the moment the price is plateau, so to speak and stopped increasing.

It is at least the quarter to recapture it and sometime leaks into two two quarters behind.

But so on and upwards trend that.

And that's margin pressure and.

And and a downward trend it helps margins and the same way.

And over time as we look at this historically it tends to even out and the margins sort of come back to two of those averages that we see.

Got it Super Thank you so much.

Thanks, Bob.

Our next question comes from the line of Mark Connelly.

The corporate please proceed with your question.

If we start with the human side of it was hoping you could help us understand where the volume growth is coming from in terms of.

Is it is at the higher volumes on existing customer products or is it new launches it feels like product.

Launches are accelerating so im just curious what your perspective spud.

So mark I'll take that one yeah.

It really is is the <unk>.

Somewhat across the board I would I would have to say if you Peel the onion back and look at all of our product lines all of our sub businesses within what we call human nutrition and health.

Essentially they all grew.

And in the first quarter, obviously, some more than others, but they all grew so there was significant growth of existing products.

With just increased.

Demand for existing products and in the in the marketplace certainly in the.

The the minerals and nutrients, that's being driven by increased awareness around nutrition and the immunity boosting nature of many of our products.

So those are the essentially existing products with increased demand and the in the food side, we are seeing.

The pickup and food service and those are really existing products that are selling.

You know two of greater extent.

But we also are seeing our customers launch new products and for.

For example, and the in the quarter, we've talked about some of the non <unk> products historically, they launched some some product line extensions that debt also include our white of choline.

And so they are launching new products are having success with some of those.

Initial products. The you know the horizon brand of milk for example, that's fortified with the with.

With choline and they've come out with a yogurt pouch for example and of yogurt drink.

Gerber has sold.

The baby puffs.

For for some time there now.

Selling from the baby puffs with slight of choline and I'd call that a product line extension. So there we are seeing some benefits from new products being launched to consumers that are including.

Our products and so I would say overall it's.

It's a it's a mix both of just increased sales of existing products as well as the launches of new consumer products and not so much launches of new fundamental products by by valve Cam we do have.

A few that are.

And making it to the market but.

Not materially impacting things at this point, it's mostly sales of existing products and then our customers launching new products that we're benefiting from.

Alright, alright, well and we've heard a lot of folks expressed concern that the immunity boosting stuff would falloff. So it's nice to hear that it hasn't.

Can you talk a bit about the eo products for agriculture, I know, it's a small piece of the pie, but I'm just curious how much of the of of resource investment and it is for you and where you're going with it.

I think that when we talk about our specialty product segment and and.

Just kind of and maybe gets a little bit where you're headed here on the the specialty product side, when we talk about plant nutrition.

And those really are our key laid minerals for plant nutrition, we're not really selling any I think you mentioned E O products flow.

Alright.

Eric the market.

That's not something we do but within specialty products.

And we haven't really nice.

Profitable plant nutrition business that we view as a growth business that one and one that we can continue to grow at double digit rates.

One thing that debt that has been a struggle with that business at times is weather.

But for the last couple of years weather has cooperated and we've been able to drive double digit growth and we're quite bullish about that business. We have some very differentiated.

The micro nutrient solutions for the marketplace and we have launched some of our <unk>.

<unk> new products, there and those are on.

And our making a difference and we just have.

Enormous opportunity to grow.

Just through market penetration, adding additional crops as well as geographic expansion that is one business we have a good.

A good representation around the globe and Theres a lot of room for us to grow geographically. There. So we are bullish on that and the first quarter.

Of the year actual sales were down slightly.

Partly because Q1 of last year was particularly strong but also because of Q1. This year some orders leaked into Q2 and.

And we feel really good about the full year growth.

For our plant nutrition business and continue to feel as though we can.

Grow that business nicely. Despite the fact that Q1 was not the strongest for that that business.

That's helpful.

Yes, I'm. So excited that I was jumping ahead of my next question on my next question was about.

I'm curious how you think the normalization of hospital activity is going to affect you know are we going to see a bump here of bump up or a bump down.

We believe overall, we're going to see a bump up as opposed to of bumped down but but.

You're sort of digging into and you know very important.

The topic relative to this and very kind of pertinent to whats happening today.

Did see really nice growth sequentially.

In our what we call performance gases business volume was up about 11% sequentially.

Which is a nice.

And.

And.

We've seen some sequential improvement Q4 was up a little bit over Q3. So we are seeing nice sequential improvement, which is very good to see we do think there probably is a little bit of a supply chain inventory building aspect to that.

And that increase in Q1 because of the anticipation of a return to elective surgeries. So.

I think in advance of that return, we see the supply chain, placing orders building a little bit of inventory, which is.

Is all very encouraging and what we're seeing from statistics.

And in the market as well.

Though.

We'll have to see.

This the strong Q1 that were really pleased with that sequential improvement was some of that driven by inventory building and the supply chain or not but if you step back from that we believe that that.

We'll see Q2 of this year being up over Q2 of last year Q3 of this year being up over Q3 of last year and that trend going on throughout the year as elective surgeries.

Come back so I think it's the bump up except for a little as strict that I kind of pointed that detail around the building and the supply chain, but overall, we feel good about the return of that business.

Super helpful. Thank you.

Okay. Thanks, Mark I appreciate it.

Thank you. Our next question comes from the line of niche route.

The Paul with Sidoti. Please proceed with your question.

Yes, hi, good morning, guys. Thanks for taking the questions.

First just coming back on the margin side, obviously, I think on the raw material side it seems like the <unk>.

This increase this should mitigate.

Much of the impact of the year, but I was curious on.

And paste and distribution cost that youre seeing.

What can you do the kind of stepped back and when should we sort of expect that the maybe normalized for you.

I mean the.

Yes, I mean, it's certainly a challenge at the moment with the inflation going on and just to maybe dimensionalize. It a little bit if you just look at sort of price paid.

Year over year and Q1 this year versus Q1 last year for the exact same product that impact as you know four four and a half million almost four and a half million of just increased price paid for for the same thing. So it is very relevant and same thing on the distribution costs I mean, we have seen almost.

Most of you know half a percentage point, so call it 50 basis points impact to our gross margin just from increased distribution costs coming from.

A lot of on the international shipment side shortage of containers also asked we have.

The negotiated rates and and those things, but they're not available. So you have to go to your second third fourth option and then pay a higher price. Your first option just kind of declines of your order.

And to your question and sort of what can we do about that distribution side I think it's a little bit challenging for us to do much to reduce that cost us a little bit supply and demand situation right now the industry has been disrupted demand is high supply of slow.

And while we have negotiated rates and partners and so on.

And there's a limit to what we can do there. So we're really more focused on how do we take these increased costs and turnaround and effectively pass them through to our customers at the end of the day, that's where we're looking for the recovery because we are somewhat limited in how we can can manage the input cost in this case.

Okay, No that's great.

And then on the.

Obviously, the pandemic with the.

The vaccine rollout underway and restrictions being increasingly lifted et cetera.

And would expect specialty product.

And the bounce back of Stat, and it should start growing year over year, but on the human.

Nutrition side I'm, just curious on especially on the food.

Service market, a lot of restaurants et cetera.

The <unk> started to see improved.

Business.

And as any of that showing up for you yet or is it still way too early.

No. It is Mitra, we are we we've talked about.

Approximately $50 million to $60 million of sales or we did at least in 2019 that went into food service that really was.

Significantly impacted and we are absolutely seeing.

And increase in that business, it's still volatile it's still not consistent.

But we are seeing.

That business come back.

And and encouraging way.

We have all along had as part of our human nutrition and health business and really across the outcome is the whole parts of the company that were negatively impacted by.

By COVID-19 and and parts that were positively impacted.

By COVID-19, we've talked about.

Carrig, Dr Pepper, and the business that we have with them and and likelihood of there being a work from home boost to that that are.

And that business that helped us offset some of that.

The decline that we saw in foodservice and and by and large.

Those parts that that have been.

And somewhat benefited by the pandemic we are seeing continue.

And at very strong levels, and and you know.

And there are reasons to think that that will continue I personally feel as though on the on the supplement side of things that the strength and awareness that has been built over the last year.

Will the.

Largely continue and so we're expecting continued strength.

Strength in and that business and and incurred Doctor Pepper just issued their results and I think they are very bullish about the the.

The year as well and I think theres, some staying power for that business.

But there is as we see foodservice come back more over the course of the year. There is some positive offset to any decline that we might happen to see from those.

And there's other areas. So we do feel good about the the H and H business for the rest of the year.

And no that's great and then.

And finally, you've obviously done a great job on the balance sheet steadily paying down debt, yet still building cash and just curious in terms of the acquisition pipeline and.

If you are maybe seeing some opportunity now that might that I think the state.

The pre COVID-19.

Yes.

So we definitely and I think I said these exact same words, there was definitely a short slowdown.

Last year and the early stages of the pandemic and and.

We even as the company struggled a little bit with how could we do a transaction and I think that the market as and as everybody will tell you is very hot and there are lots of assets for sale.

And so we are back active we've been involved in some processes that have.

And have not.

Turned out whether it ultimately didn't make sense for us strategically or we didn't think the value was the was appropriate.

But we're active the pipeline.

And I think is is healthy.

We're interested to see if some of the tax proposed tax legislation has an impact on.

Private companies, which is somewhat of a target for us and their their desire to monetize today versus in the future under a different tax structure. So we're somewhat hopeful.

Debt that May may bring some of some assets to the table, but.

We're busy we're active.

And you know and.

Encouraged about the opportunities out there.

Okay. That's great. Thanks for taking the questions.

Thanks Mitra appreciate of.

Thank you, ladies and gentlemen, and Tom I would like to turn the floor back to the top of Harris for closing comments.

Thanks, Jen once again, just like to thank everybody for joining our call today and more importantly, your continued interest and our company.

We're really pleased with our first quarter 2021 results that we released today and the ongoing progress we're making on our key growth initiatives. As a reminder, please go to our website to look at our new sustainability report, we're really proud of it and I think you will be as well.

We appreciate your time today and look forward to reporting out on our Q2 results in July and the meantime, we will be presenting at several conferences, we're going to be at the Wells Fargo Industrials conference on May six the Stephens food and AG disrupted conference on May 25th and the Jefferies.

Industrials conference in August So we hope to see some of you at one of those events or.

And some other forum so thanks again for joining today I appreciate it.

Thank you ladies and gentlemen.