Q1 2021 Resideo Technologies Inc Earnings Call
Portion of the Cop now, it's my pleasure to introduce Vice President of Investor Relations Mister Jason Willey, Sir I handed to you.
Good afternoon, everyone and thank you for joining us for his idiot first quarter Twenty-twenty wanderings call on today's call will be J guttmacher or is it he is chief Executive officer, and Tony tons of our Chief Financial Officer, a copy of our earnings release and related presentation and materials are available on the Investor Relations page of our web site and Investor Dot <unk> Dot com.
Who would like to remind you that this afternoon's presentation contains forward looking statements statements other than historical facts made during this call may constitute forward looking statements and are not guarantees and future performance are results and involve a number of risks and uncertainties.
<unk> results may differ materially from those and the forward looking statements as a result of a number of factors, including those described from time to time and <unk> is filings with the Securities and Exchange Commission the company and it seems no obligation to update any such forward looking statements.
And we identified the principal risks and uncertainties that affect our performance and our annual report on foreign and 10-K and other SEC filings.
With that I will now turn the call over to J.
Thank you, Jason and and good afternoon, everyone.
Q1 was a strong quarter across the business.
We grew revenue 20% year over year is both products and solutions and a D. I continued to benefit from a strong residential demand environment with a D I seen improved activity and commercial markets.
We were building on these market tailwind with improved execution across the business for manufacturing and supply chain through the engineering innovation and sales organizations.
[noise] with positive demand driving and better than expected revenue, we delivered meaningful profitability expansion.
Both businesses leverage the higher revenue into improved operating margin.
[noise] operating profit grew by 96 million year over year and cash from operating activities expanded by 79 million year over year.
Let's discuss previously we are taking advantage of the strong market conditions and business performance to accelerate investment and high return activities.
Focus areas within products and solutions include key new product initiatives, such as accelerating pro series releases.
Enhancing customer experience staffing and tools.
And a number of activities aimed at optimizing the sales organization and processes.
At a D. I, we continued to invest and our digital platforms and initiatives.
Sales force effectiveness tools and expansion and adjacent categories organically and through M&A.
[noise] products and solutions saw strong demand across the markets and channels during Q1.
This is a continuation of trends that develop last summer as people focused attention on their homes and security.
We also believe we benefited and a number of markets by having the ability to step up and and and and meet our increased customer demand.
The underlying market trends and spending on both repair and renovation and a new home sales remain positive and the first quarter.
[noise] trends, we see continuing throughout 2021.
While repair and renovation work are the largest drivers of products and solutions sales. We are encouraged by early signs of success and our stepped up residential new construction or R. N C efforts.
And an example is our recent engagement agreement excuse me on a recent agreement with maritime home to integrate a range of our products into their homes and provide the platform to support their connected home offering.
This win demonstrates residual is unique opportunity and the R and C market created by our abroad product portfolio.
We believe this product breath will take on increasing competitive importance as builders look to integrate more in front of and behind the wall connected and smart home content into their portfolio.
And the face of meaningful logistics and supply chain headwinds the team did an excellent job delivering for our customers.
While our backlog is elevated relative to where it is it has historically trended we believe that and aggregate we are managing through these challenges better than the overall market.
Presenting us with opportunity and certain categories and geographies.
During the quarter, we completed a comprehensive strategic review and planning process within products and solutions.
The development of eight strategic pillars outlined on slide four of our earning slide slides was a key outcome of the process.
This work form the foundation for the strategy, we outline back and early March at our virtual investor and vet.
These pillars were developed a balance long term decisions with key immediate actions.
As part of this process products and solutions will prioritize a shift from discrete traditional products to cross category solutions.
With an emphasis on enabling the pro through data analytics.
We are focused on thinking about the home holistically.
With clarity on where to play and we're not the play.
The team is now executing to this strategy, taking the concepts and train them into actionable items with clearly defined owners.
At a D. I Q1 performance reinforces our continued leadership position and the security distribution market.
The business is benefiting from increased interest and security products across residential and commercial markets and industry leading execution.
On the commercial side of a D I, which typically makes up over two thirds of their business, we saw on acceleration of activity.
Residential focus categories remains strong in the corner.
In line with our strategy too and Grease increase investment and a D I.
We continued to enhance R e-commerce capabilities and the rollout of our sales force effectiveness tools.
E Commerce continues to grow as a portion of a D I sales.
We also saw positive expansion and our private label business, which remains of relatively smart <unk> small part of a D is mix, but and attractive long term opportunity.
During the quarter 80, I completed the acquisition of Norfolk wire and and electronics, a U S regional distributor of data communication products with 11 physical locations in the mid Atlantic.
And earlier today, we announce another acquisition and the distribution space with shore view and.
A U S distributor of pro a V products.
Shore view serves the entire U S through distribution locations on both coasts and brings a strong brand portfolio that builds on our existing Herman Pro a V business.
Both acquisitions are an example of our strategy to utilize M&A to accelerate expansion and attractive adjacent categories.
I want to welcome both of Norfolk, and shore view employees to the <unk>.
With that I will turn the call over to Tony and discuss our first quarter performance and 2021 outlook and more detail.
Thank you day and good afternoon, everyone.
Both Adi and products and solutions exceeded our expectations and Q1 and delivered substantial year over year improvement across key financial metrics.
Consolidated Q1 revenue was $1.4 billion and increase of 20% compared to Q1 last year.
Gross margin of 25.9% was up 180 basis points from the first quarter of 2020.
Selling general and administrative expenses total $238 million down 5% from Q1 last year, and representing 17% of total revenue compared with 21% of total revenue and the first quarter and last year.
Operating profits and first quarter was $139 or 9.2% of sales compared to $34 million from 2.9% of sales last year.
Products and solutions first quarter revenue $606 million was up 28% do improve demand and strong underlying market conditions across all of our major product categories and channels.
Products and solutions gross profit margin and Q1 was 38% up from 33.9% and queue on 2020.
B and S. Operating profit was $130 million and 21.5% of sales compared with $58 million with 12.2% of sales last year.
This improved operating performance, let's do the fixed costs leverage on higher volume as well as over $10 million and engineering materials productivity improvements.
These benefits were partially upset at $12 million and higher freight and logistics costs and increase investment and approximately $5 million targeted at a new product development and marketing and sales force effectiveness.
80, I first quarter revenue and $830 million was up 15% year over year 80, I had three more selling days. This Q1 compared to 2020 and that's the daily sales average for the first quarter was up by 10%.
And was strong and residential and commercial categories led by intrusion and video surveillance.
Adi's investment and ecommerce and digital selling tools has continued to yield results.
E Commerce sales of 60% year over year, and now accounting for 15% and totally D I sales.
Any and gross profit margin and Q1 was 17.2% versus 17.9% and queue on 2020.
The lower gross margin was a result of lower supply of rebates year over year and.
Unfavorable sales mix and the and media region.
However, we did see 40 basis, playing increase and underlying product claim gross margin.
Adi operating profit and was $59 million for seven 3% of sales up 23% from $48 million or six 8% of sales and Q1 last year.
Adi operating profit benefited from higher revenue and continued focused on cost management, partially offset by increased investment activity and approximately $3.5 million largely around digital and sales force effectiveness initiatives.
Corporate costs, with a quarter or $59 million or 4.2% of sales compared to $72 million or 6.1% of sales and the first quarter of 2020.
This reflects a reduction and spin and transformation related costs of approximately $20 million, partially offset by the build out of our internal innovation transformation and strategy teams as well as higher compensation and bonus expense.
Consolidated cash from operations for the first quarter was $5 million and improvement of $79 million compared with the use of cash of $74 million and the prior period.
The first quarter is typically our lowest cash generation quarter feed a payment of annual bonuses and customer rebates accrued and private quarters.
We ended Q1 with cash and cash equivalents of $508 million and total outstanding debt and $1.2 billion Barnett debt stood at $688 million compared to $1.2 billion at the end of the year and Carrie.
As a result of a robust Q1 results and the expectation of continued strong demand for the remainder of 2021, and we are raising our outlook for the full year and now expect 2021 revenue to be and the range of 5.5 billion to 5.7 billion and increase of $300 million across the range.
And applying year over year growth and between 8% and 12%.
Consolidated gross margin is expected to be and the range of 26% to 29%.
GAAP operating profit is expected to me and a range of $500 million to $550 million and increase of $50 million from prior guidance.
Or 2020 went out and look anticipate the corporate expenses and <unk>.
Accidentally $235 million compared with $290 million and 2020.
Additional outlook details can be found on page 10 of our earning slides.
As a reminder, a day I will have to fewer selling days and 2021 compared to 2020.
And I think three more days and I, just finished first quarter and five fewer days and the fourth quarter.
Revenue of approximately $40 million arising from the acquisitions of Norfolk and shore view included and a revised outlook, but we expect these apple acquisitions to have minimal impact on 2021, and operating profit due to acquisition and integration costs.
Post integration, we expect both acquisitions to contribute operating profit and levels above Adi's current markets.
Concluding remarks before we take questions.
Okay.
Yeah.
Thanks, Tony.
As we look to the remainder of 2021.
We see the strong market trends and the residential and overall security markets continuing.
We also expect increased opportunity for Adi within its core commercial categories as more geographies and markets open up and works work begins or has restarted on projects.
And we remain focused on execution on our transformation efforts targeted at both cost optimization and growth initiatives.
We see this work driving significant long term value creation with progress expected to be increasingly visible and our financial results as we move through 2020, one and into 2020 two.
We went and the market because of the quality and reliability, we deliver which combined with our customer service and breadth of products provides a compelling offering for the professional whether through products and solutions or Adi.
We are putting in place a strategy to further leverage these strengths and enhance our innovation, which we believe will position us to drive sustainable long term outperformance in the markets we serve.
This concludes our prepared remarks, and operator, we are now ready for questions.
Ladies and gentlemen, as a reminder, if you would like to ask a question.
Please press Star then one on your telephone keypad again star one to come into the question queue.
Yeah.
Once again to ask a question press star one.
And our first question is going to come from the line of our net dairy and money with Evercore ISI.
Hey, guys. This is Michael on for Amit.
Just so to start with just wondering if we look at the Q2 guidance are you know you take the midpoint of the revenue and the operating profit and implies.
Our margins are stepping down around 70 basis points sequentially. I was just wondering if there's anything to call out there.
Yeah, Hi, Michael it's Tony.
Yeah, a couple of things and first of all.
We're going to shift and mix a little bit in Q2, two adi over and over P. N S. And we're also going to have we gave you the investment number for the for.
For the full year, we're going to have more investment in the business and the second quarter and we began.
The from a from a mixed standpoint, PNM has a little bit less attractive.
Makeup and they're in there and.
And their sales plans for 2020 for the second quarter, which are which will also have an effect on our margin overall, though and this.
There's no structural change and any of the margin outlooks for any of our any of our core markets.
Okay, and then and more strategic one I'm just curious so.
The M&A strategy with the Adi business.
You know very logical given how fragmented that market is so the only real risk. We see here is kind of around execution. So you know, Jay and and and Tony as well I'm just kind of wondering if maybe you could give us some insight into how you approach acquisitions and maybe some some past experience you've had with the sort of strategy.
Now I'll I'll comment this is Jay and then I'll, let Tony jump in and I mean, the people we've brought into the organization over the last year are very very experienced and in terms of operators are doing integrations and in our in our past lives as well as Rob and the Adi side has a team in place that also have.
On a nice job of developing and and integration playbook and as an example, the Herman.
Herman acquisition that they did right before COVID-19 hit.
They did and really nice job of integrating it and the business through COVID-19.
And and and as a they're on learning experiences from that Theyre going to apply to these additional tuck.
Tuck ins that are that they're executing on now so I'm I'm very confident between what the ATI team and in terms of their own playbook, and then from a P&L standpoint, Phil the transformation team and the other folks we brought in and have done a lot of this and their careers and as you know integration is you don't want on the big keys and success of Great M&A and.
And some companies do it poorly and some do a great job and I and I'm really confident that as we do as we carry out M&A that will do well, we'll actually do an exceptional job on that area.
Tony you haven't had a comment to that.
Yeah, I'd just add that.
To Jay's point, while M&A is relatively new to ATI as a component of their strategy. They're they have a very structured execution oriented process oriented culture, and lends itself really well to to M&A and as Jay said they've prepared for this for a long time, we have beefed up.
Our M&A capabilities, not just at the executive levels, but and.
And also a little further and the organization.
And with some folks who have pretty deep experience and M&A.
And I guess the last the last well two more points. These deals individually are pretty small right. I mean, we've got two deals here that over the next nine months youre going to generate $40 million and revenue. So we definitely you know started cautiously in terms of scale.
And we're going to walk before we run we're going to make sure that we don't overburden bandwidth and too many too many deals and at one time and we will monitor the progress as we as we go forward.
Okay.
Yeah, great. Thanks, Rocco and I just wanted to just double check one number you thought that you said you said $40 million from the two deals you've done so far.
Correct.
Okay, great. Thanks.
Yeah.
And our next question will come from the line of John Lovallo with Bank of America.
Hey, guys. Thank you for taking my questions on.
The first one is the 26% to 29% full year gross margin range and it's fairly wide.
First quarter gross margin I think it was 25 nine second quarter you guys are thinking 25, 5% to 27 five so this would seem to imply the second half gross margins would need to be well and well in excess of 30% to hit the high end of that range. So can you just help us think through some of the potential drivers really of the high and low end of this gross.
And your range.
Sure Yeah, So hey, John its Tony.
I guess the first thing I'd say is we've we've expanded the range of five point as I'm sure you've noticed through 2020 six to 28, we moved it to 26 to 29, because yeah and.
And you're right. That's a that's a broad range at this point and the year that it's somewhat of an unprecedented year we.
And we have concerns around the cost of freight we have concerns around expedited delivery, we actually have some supply chain concerns about making sure that we can get everything we need for some of our some of our product lines and.
And that's part of the reason why the range is relatively wide.
Your calculations are.
You are right in the sense that second half gross margins are going to be higher than the first half gross margins that was that was the case last year as well and to be honest with you I would I would say that Jay and myself and the leadership team.
As we continue to poke and things.
We've come to understand over the last couple of quarters and that that's probably at a structural aspect of the mix of sales and.
And the PFS business. It just that the you have a heating season and you have a cooling season and you know.
This is a gross over simplification, but the products that get sold and one season are you know they.
And they have a somewhat more profitable profile and the ones that gets old and and other parts of the season.
And then there's there's all kinds of puts and takes anyhow.
And in one part of our business, we have a oh, we basically we have a we have a wire business, where we pass through the cost of copper.
And it's basically a pure pass through so those dollars go through as revenue, but they're kind of empty calories, because they don't drive any margin.
And a fair bit of that and the first half of the year and relative to the.
Relative to revenue and the second half of the year that type of activity is likely to be less.
Got it okay, that's all I.
And also I'd also.
There's just one other thing I'd add is you know the transformation team and you've heard us talk about as that team has really picked up momentum and they're doing a lot of things that you know that is our actions that are that are you know very.
Critical for the future of the business and as part of our DNA going forward, but there are also a lot of things that they they action to help offset some of the the things that debt, we're facing that the whole world spacing with logistics and supply chain that Tony talked about so again I think that that just adds to the fact that we want you know we're being careful and.
Terms of exactly what we're communicating to all of you, but it Tony's comments about what we've learned about the business or I would agree with also.
Got it Okay, and then maybe going back to the question and Michael asked and and just looking at the second quarter.
Guide you on the outlook of one four to 145 on.
On the top line is pretty similar to what you printed in the first quarter.
Assuming the midpoint of the gross margin range of 26, 5% I mean that would seem to imply a pretty decent step up quarter over quarter, and SG&A and we call it $15 million to $20 million, just sort of hit that offer on the operating profit range that you're talking about and how much of that $15 million to $20 million is the incremental investment and and what else is potentially driving net.
Sure.
The.
Significant majority of that is debt is the incremental investment. There is there are some smaller stuff and there John there's our merit increases kick in on April one and things like that but the large majority of it is incremental investment from compared with where we were in Q1.
Okay. Thank you guys.
Thank you.
And our next question will come from the line of Ian Zaffino with Oppenheimer.
Hi, great.
And just wanted to ask about that next question again, I think you said 2021 mix is going to be different or is that not what you meant and we're really talking more about a seasonable seasonal mix, because I understand and heating and cooling seasons, but.
Just kind of wanted to clarify if that mixes and actual claim on one thing versus 2020 or is it seasonal and if.
If so what would be driving my simple year over year, sorry broadly, Brian what I was driving Eddie and was was that that it is seasonal we have and more profitable mix, particularly.
Particularly in Q3 and Q4 than we do particularly in Q3, we have a more profitable mix than we do and Q1 and Q2.
On.
It's not the broadly speaking the mix of products within PFS and the mix of sales between PFS, and Adi or not and theres not they're not massive shifts and mix compared to last year, It's really just the seasonal flux debt.
And we're talking about.
EMEA doesn't really have a cooling season. So it tends to be you know they don't as we ramp a cooling season in North America, there tends to be a little less of that and EMEA and then you know.
And like I said, the heating season is a heating season, just tends to be those projects just tend to be a little bit more profitable.
Okay.
Gotcha and.
And on the microprocessor shortage, where does that hit you that would maybe moving and security or are there other areas, where we're going to hit you and color there would be helpful.
You know it it depends in terms of which where the chips are going but it isn't just security. So it's.
You know it is and it isn't the only microchips either I mean, you know from resin and so many other things that are you know they were grinding it out as other companies are doing so I would just say that it's it's a variety of different areas securities and one of the larger ones and I would say.
But not the only area.
Yeah, I mean, we've got because it.
And it also.
Go ahead Tony.
And I'm, just kind of say comfort also in particular.
Comfort and security if I had to pick two categories are the thermal solutions group, a little bit I mean, because I just the supply chain issues. There just as a matter of degree you know, which ones are or are more a bigger problem childs and and others, but in general I'd say security and comfort.
Okay, great. Thank you very much.
And our next question will come from the line of Eric Woodring with Morgan Stanley.
Hey, guys. Thanks for taking my call congrats on the quarter.
I guess I guess I'll throw out two for you guys here I'm just starting them in terms of your performance and the first quarter. Maybe you could just provide a little more commentary on just how PNM stayed across comfort versus security versus residential thermal anything that you'd call out there and then same for Adi on and on the geographic side and.
Anything of note and that you'd call out and then I have a follow up thanks.
On the on Eric Thanks for the thanks for the questions on the P&L side, all three all three of them did and what I'll call. The traditional business lines grew pretty robustly during the quarter security was clearly the strongest.
ADT is a terrific and significant customer that business day, they did really well and we introduced our pro series line, which did well and the market and Q1. So security saw the most robust growth of the three segments, but all three of them. All three of them showed showed meaningful growth.
In terms of Adi and trying to and trying to remember theres not a lot eight EMEA did a little bit better, but there's not anything, particularly dramatic in terms of their their mix or anything that I'd call out one one geography or another.
Okay. That's super helpful and then and then maybe.
Tony O J it either one can take this but you know big picture your leverage has dramatically improved over the last 12 months you no longer have any significant maturities before 2026, you saw some some ratings upgrade so just curious so curious how you're thinking about you know your target capital structure and law.
Average going forward and then how you'd prioritize cash uses them given this given this dynamic banks.
Great Great question.
We'll have more to say about that over the next couple of quarters, and we did and we did a rollout and and Investor day of some of our long term targets, we're thinking more deeply now and working through with a little more clarity exactly where we want to be in terms of return metrics and those kinds of things and that really does that feeds into the kind of the.
Our long term capital structure.
I made the comments early in my tenure at <unk>.
And residual that I would like to see us having an investment grade credit profile.
And our leverage and you know the business performance.
There.
But the track record and the consistency probably isn't.
And you know frankly, we've gotten to a significant component of exposure in the and the Honeywell alright. So anytime we're thinking about our leverage we think about the you know the.
And reimbursement agreement obligation to Honeywell as something that is tantamount to a fixed obligation.
You know and as we grow the business that shrinks as a proportion of the whole, but its something we have to take into account when thinking about the capital structure. So long way of saying we are I would say right now we're in a period, where we probably are carrying less you know less leveraged and we feel like we could carry over the over the long term.
And if there were sensible and reasonable things from a cash deployment standpoint.
And that would take our leverage up a little bit we'd be comfortable doing that as long as it's within the constraints I just described.
I would just jump in with Tony sorry, Tony and interrupt that last thing you just said I want to just reinforce I think that's a great way of framing and it is that and what we're being more cautious, but and the same time, we and I think we've done a really good job of putting ourselves and the right position they will take advantage of opportunities as they come up.
And often.
And in terms of you know in terms of how we deploy that capital the prioritization and inorganic growth.
The the the.
And the deals that you see us doing and and.
And Adi and Adi there.
We fund them with cash flow, that's that's not a problem and not theyre not really of a meaningful scale, but now that we have a foundational perspective on the go forward strategy and PNM.
And earlier, we brought in as our treasurer or a few months ago and somebody who is very and he's also head of Corp, Dev very deep M&A experience.
We're building out that strategy, we're building out and the roadmap to how we want to play and that market and the whole point of doing the debt refinance and the capital raised last year was to put ourselves in a position I think we use the phrase to be strategically proactive and.
And that's that's where we are and that's yeah, and I and I'd add.
I think Tony said that really well on this.
And you know in our presentation deck. There we have a one page slide called P and that strategic overview with the strategic pillars that I mentioned and that and those are the areas that are of course that the peanuts business is focused on and we want to make sure that we have that and.
As we move forward and each of those pillars that we have the flexibility to be able to act as we need to be it organically or M&A, but being smart about it.
One of them.
This is a long answer to your question, but one other thing I wanted to migrate and is.
And the the transformation of our capital.
Capital structure and the deleveraging of the business over the last 12 months has had a profound impact on the strategic and operational decision, making and the business, we've really been able to point people to making the best decisions for the business over the a reasonable time horizon over the time horizon.
Over a multiyear time horizon as opposed to thinking about you know, what's the cash implication or what's the EBITDA implications of something and that was really one of the reasons why and with such a high priority for US early early in the game and as the new leadership team as we wanted to take concerns about important.
Strategic and operational decision, making we wanted to take from the financial concerns surrounding those decisions off the table for people and it feels like we've done.
That was great color. Thank you very much guys.
And once again, if you'd like to ask a question. Please press Star then one on your telephone keypad again star one to queue.
And our next question is going to come from the line of Paul Derrick with William Blair.
Hi, good afternoon, and congrats on a good quarter.
Thanks, Paul Thank.
Thank you Paul So two from two from me first and P. N S.
And the robust nature of the residential market now and the very tight labor market that we're seeing nationally and then its trades is.
Is the value proposition that <unk> is offering to pros strengthening and other words are there things that you guys can do and this kind of market environment to differentiate and to grow closer to some of your contractors and perhaps even recruiting new contractors to your brands and to your products.
I'll jump that first because you've got excited when you asked me that question and I'll, let Tony but yeah, I mentioned and and my my comments.
Paul as you know about our and see the residential new construction and the total portfolio of products that we can offer as part of our growth together and and deepening the relationship further with this great asset a pro pro installers that we have out there. So that that's just one of a one big example that were going on where we've got a lot of focus and effort.
On also.
Phil Theodore Who's President of products and solutions and his team and work and a lot in terms of training out there into the trades and you'll hear more about that as we move forward and that's an important part and on.
One of many things to be able to is young but.
New people come on board and this market and and in those areas with the trades that they learn about us as part of that we're there to help support that so your questions are really good question, but one and one that we're very focused on both short term and long term Tony you got anything to add to that.
Yeah, Hey, Paul it's.
Depression question really because it's an area that we've focused on inside of PFS.
And really Youre right to ask the question on the context of the pandemic and labor shortages, but theres a long longer term challenge for you know for our pros, which is their you know their nuts, and bolts and labor force and their their skilled technicians and their age.
And they're not we're not producing those tax at the rate that is necessary and the future and we've had.
Significant engagement with a number of power customers to to work with them for and areas of scholarships and supporting.
Young folks coming into these trades because meat for a whole bunch of reasons one it's the right thing to do to it supports our.
And our customers today, but yeah.
You make it you make a fan for life, if he helped somebody with their education right.
So theres a tremendous amount of goodness associated with that the other thing I wanted to mention though.
And Jamie will have more color on this too.
When we when we do product design one of the things that we're focused on is making the probe successful and what that really means is when they show up and somebody's house. The product has to be you know they've got to be trained on it it has to be easy to install it has to be robust and and those types of that type of process that type of work really improves.
The labor efficiency of.
The professionals is there as they're going out to the homes. So that you know the root of your question really goes back all the way into our product design cycles.
Yep good feedback.
Okay got it and no. That's very helpful color I appreciate that I'm sure there'll be more to come on the topic.
Second question from me switching to Adi and particular on the ecommerce side, you know the ecommerce growth and the quarter up 60% year over year very robust I believe last year was somewhere in the Twenty's, maybe mid upper Twenty's I guess, what's and what's working there and specifically are there any changes in the marketplace or with your execution.
<unk> that you can point to that and increase your effectiveness and are now commanding more investment dollars from you.
It's definitely command and more investment dollars and Theres no question about it.
And we have improved our ecommerce experience I think meaningfully, but we also have a long way to go and.
We have a product information.
Systems that are coming online here as part of this investment that we've been talking about that are going to improve that web experience and that ecommerce experience even more for our customers.
The other the other part is training and driving our customers to that portal for what I'm going to call. The you know the everyday buys our objective and this is.
One we think it'll it'll increase sales overall and make for a better experience for our for our customers at Adi, but our real objective is also to free up our sales associates to be able to be consultative with with our customers and really take the.
Order, taking you know.
As a clerical but sort of debt.
The process pieces of the job out of their hands move it move.
Moving to the web moving to an e-commerce experience that is valuable and productive for our customers such that our sales associates.
Today, we get tremendous performance out of them.
It can be more consultative with the customers when they are and the branches.
And I think that's it.
Tony hit the nail right on the head with that and I would just add that and as you stated it Paul I mean, we've you know we've had nice growth since last year.
I think gave us some opportunity to get through COVID-19 and it force and helped accelerate that through COVID-19 because of that and there's no doubt about it but now after we saw that and and the market's even coming out of COVID-19 people are saying on how I can do this a lot easier but.
By using the digital experience and so.
As Tony said, where we're investing further it's one of our investment areas to further accelerate that so I know Rob and his team of people that gave yards super excited about because they see the results every month.
Understood I appreciate the thoughtful answers thank you.
Thanks, Paul.
Yeah.
And at this time it appears we have no further questions I will turn the call over to you for any closing comments.
And.
Yeah.
Great everyone's participation today on the call. Please reach out if you have any follow ups and we look forward to speaking with you over the coming weeks and months take care everyone. Thank you.
Once again, we'd like to thank you for participating in today's Presidio Technologies Conference call you may now disconnect.
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Yes.
Yes.
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And.
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