Q1 2021 Donnelley Financial Solutions Inc Earnings Call
[music].
Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time your lines will again be placed on music hold thank you for your patience.
Okay.
Net.
Yeah.
No.
Now on patients.
Okay.
Okay.
Okay.
Moving on.
Okay.
No.
Okay.
Okay.
Net.
And on.
On the growth.
Okay.
On that.
Accounts.
Great.
No.
Okay.
Net income.
Yes.
Net income.
Okay.
Okay.
Okay.
[music].
Okay.
On the calendar.
Sure.
Yes.
Okay.
Okay.
For one.
Okay.
Yes.
Sure.
Yes.
Okay.
Okay.
Okay.
Okay.
Uh huh.
Okay.
Yes.
On the margin.
Sure.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Yeah.
Good morning.
Okay.
Net.
Excellent.
Okay.
Okay.
Okay.
Okay.
[music].
Okay.
Yes.
[music].
Good day.
On the App.
The growth.
Okay.
Okay.
And it's true.
Okay.
[music].
Yes.
Okay.
Every day.
[music].
Thank you.
Good morning, everyone and thank you for joining Donnelley financial solutions first quarter 2021 that results conference call.
This morning, we released our earnings report a cash.
<unk> of which can be found in the investors section on our website at deepened solutions dotcom.
During this call we will refer to forward looking statements that are subject to risks and uncertainties for complete discussion. Please refer to the cautionary statements included in our earnings release and further detail on our most recent annual report on form 10-K.
To really report on form 10-Q, and other filings with the SEC further we will discuss non-GAAP financial information. We believe the presentation of non-GAAP financial information provides you with useful supplementary information concerning the company's ongoing operations and is an appropriate way for you to evaluate the company's per.
<unk>.
We are however provided for informational purposes only.
Please refer to the earnings release and related tables for GAAP financial information and reconciliations of GAAP to non-GAAP financial information.
I'm joined this morning by Dan Leib.
Great Clay, Eric Johnson and Candy toner.
I'll now turn the call over to Dan.
Thank you, Dave and good morning, everyone from.
From all of Us to deepen we hope that you and your families are staying safe and healthy.
Deepen is off to a very strong start in 2021, I am pleased with the continuing momentum in our operating performance as well as within most of our end markets. We noted on our last couple of quarterly calls that we had been seeing a return to a more normalized level of growth in software sales and a <unk>.
Significant increase in transactional activity this momentum accelerated in the first quarter and activity remains high so far in the second quarter.
The growth in higher margin software solutions and Tech enabled services net sales on our proactive pruning of low margin print work along with the significant impact of our ongoing cost control efforts resulted in first quarter non-GAAP adjusted EBITDA of $71.1 million.
An increase of 136% from last year's first quarter.
Similarly, adjusted EBITDA margin in the quarter was 29% more than doubling the first quarter 2020, adjusted EBITDA margin.
Total sales were up just over 11% from last year's first quarter.
Software solutions sales totaled $63 million growing 27, 5% over last year's first quarter, yet again, marking a quarterly record with third consecutive quarter. We have achieved a new high watermark for software solutions sales growth was led by the recurring compliance.
Products, primarily arc suite, and active disclosure, which grew 35, 2% and 16% respectively.
In addition, our virtual data room product venue.
She is an all time high for quarterly sales and grew more than 30% year over year, its highest growth quarter in the last 16.
This growth was largely driven by an increase in M&A deal activity and what we can surmise was robust market share performance.
The strength of the capital markets transactional activity and our strong market share. Once again resulted in strong sales growth nearly doubling our transactional sales from the first quarter of 2020 as a result of the regulatory change in the investment companies business and our proactive exiting from low margin printing contracts print.
Distribution sales declined by $25 million or 27, 3%, which was slightly less of a decline than we expected. Despite this decline first quarter 2021 gross margin for print and distribution was 32, 6% an improvement of 770 <unk>.
Basis points from the first quarter of 2020.
Our proactive planning and cost savings initiatives related to the consolidation of the printing platform are tracking ahead of plan.
In addition, the steps we took during 2020 and continue to take in 2021 to optimize our operations, including streamlining our organizational structure and real estate footprint are reflected in our first quarter performance and contributed to the 136% increase in adjusted EBITDA from the.
First quarter of 2020.
Free cash flow in the quarter was essentially flat for the first quarter of 2020, despite an increased level of incentive based payments based on the strong performance in full year 2020.
At quarter end, our non-GAAP net debt was lower than last year's first quarter by $114 $7 million, resulting in a non-GAAP net leverage of 1.0 times, one three times lower than the first quarter of 2020 the.
The execution of our strategy continues to deliver positive results, our new software offerings contributed in the quarter and our trapping strong interest and adoption.
We have now delivered year over year expansion in EBITDA margins for seven consecutive quarters, demonstrating not only the positive impact of ongoing cost management, but also the continued improvement in our business mix.
Over the seven quarters, our sales have increased by $13 million non-GAAP. Adjusted EBITDA has increased by $84 million and EBITDA margin has expanded by 890 basis points. Moreover, the $13 million increase in sales is the combination of $31 million.
Growth in our software solutions sales and $68 million of growth in our tech enabled services sales, partially offset by an $86 million decrease in credit related sales the.
The trends in our results reinforce the value of our 44 in 2000 for strategy.
Specifically targeting 44% of our sales from software solutions by the year 2024, and more importantly, the resulting financial profile from such a business mix.
Achieving this goal is driven by increases in our software solutions and tech enabled services sales and decreases in print sales.
Yielding margin expansion and continued strong cash generation before.
Before I share a few business highlights as well as an update on our manufacturing platform optimization efforts I would like to turn the call back to Dave to provide more detail on our first quarter financial results and our outlook for the second quarter Dave.
Thank you Dan.
Before I discuss our first quarter financial performance I'd like to provide an update on the multiemployer pension plans obligation related to the second quarter 2020 bankruptcy of LSC communications.
During the first quarter, we successfully negotiated a discounted lump sum payment with one of the funds and subsequent to quarter end, we successfully negotiated a discounted lump sum payment with a second fund.
In aggregate these.
These two funds represented over 57% of the total liability associated with the LSC Multiemployer pension plans at the time of the OSC bankruptcy at.
At the end of the first quarter, our liability was $21 5 million, which included the settlement payments for the two funds the remaining contingent liability and our estimated share of required payments until final allocation between Rd and defend is determined.
As a reminder, deepen and R&D agreed to share required payments equally and then adjustment and repayments will be made as needed in accordance with the final allocation determined in arbitration.
The settlement payments to one of the funds was made in April and our payment for the second on will be made later in the second quarter.
Both negatively impacting second quarter cash flow.
The expense associated with this liability has been recorded in SG&A within the corporate segment and has been excluded from our non-GAAP results.
Relative to our performance in the first quarter, we delivered very strong results, including 11, 1% sales growth and significant year over year increases in non-GAAP, adjusted EBITDA and non-GAAP adjusted earnings per share.
We maintained strong market share and our transactional filing business and posted 27, 5% growth in our software solutions sales all while continuing to focus on operating efficiencies.
These efforts resulted in a non-GAAP adjusted EBITDA margin of 29%.
More than doubling the margin from last year's first quarter further extending the trend in margin improvement we established in the second half of 2019 and demonstrating the strength of our business.
On a consolidated basis net sales for the first quarter of 2021 for $245 3 million.
An increase of $24 $6 million for 11, 1% from the first quarter of 2020.
Software solutions net sales in the first quarter increased by $13 million for 27, 5% compared to the first quarter of 2020, primarily due to accelerated product adoption within our fleet and acceleration of virtual data room activity in venue driven by the improved M&A.
Net as well as solid subscription growth and active disclosure.
That enabled services net sales increased by $36 $6 million for 44, 7%, primarily due to increased capital markets transactional activity.
Britain distribution revenue decreased by $25 million or 27, 3%, primarily due to a regulatory driven reduction in demand for printed materials within investment companies and less commercial printing, where we have proactively exited certain low margin.
First quarter non-GAAP gross margin was 54, 7% for approximately 650 basis points higher than the first quarter of 2020, primarily driven by a favorable business mix featuring growth and higher margin Tech enabled services and software solutions sales.
<unk> combined with lower overall print volume and the impact of ongoing cost control initiatives.
Non-GAAP SG&A expense in the quarter was $63 million.
$9 million higher than the first quarter of 2020.
As a percentage of sales non-GAAP SG&A was 25, 7% an increase of approximately 70 basis points from the first quarter of 2020.
The increase in non-GAAP SG&A is primarily due to sales commission on higher sales changes in the business mix higher incentive compensation expense, partially offset by the impact of ongoing cost control initiatives.
Our first quarter non-GAAP adjusted EBITDA was $71 1 million, an increase of $41 million or 100.
<unk> 36, 2% from the first quarter of 2020.
Our first quarter non-GAAP adjusted EBITDA margin was 29% an increase of 540 basis points from the first quarter of 2020, again, primarily driven by a favorable sales mix operating leverage on sales growth and ongoing cost control initiatives, partially offset by higher <unk>.
Net of compensation and selling expenses.
Turning now to our segment results net sales on our capital markets software solutions segment were $38 $5 million in the first quarter of 2021, an increase of 23, 4% from the first quarter of 2020, primarily due to increased venue virtual data room activity and continued grew.
<unk> and active disclosure subscriptions.
<unk> sales increased 36% from the first quarter of 2020, driven by an improving M&A environment and sales and marketing efforts focused on gaining market share and accelerating growth. While active disclosure also had a solid quarter posting 16% growth non-GAAP adjusted EBITDA.
<unk> for the segment was 26, 8% an increase of over 1000 basis points from the first quarter of 2020.
The increase in non-GAAP adjusted EBITDA margin was primarily due to the operating leverage benefits on the increased sales a favorable sales mix as well as the impact of operating efficiencies, partially offset by higher selling expense as a result of increased sales volumes.
Net sales on our capital markets compliance <unk> Communications management segment.
For $138 $5 million in the first quarter of 2021, an increase of 39, 8% from the first quarter of 2020.
Primarily due to increased capital markets transactional activity continuing the trend that began in the third quarter of 2020.
This growth was largely driven by the ongoing momentum in IPO activity as well as M&A activity.
Quarter was also significantly impacted by stacked ipos, which made up a large share of the total number of priced ipos in the quarter.
Non-GAAP adjusted EBITDA margin for the segment was 43, 6% an increase of over 700 basis points from the first quarter of 2020.
For large increase in non-GAAP adjusted EBITDA margin was primarily due to operating leverage on the increase in sales a favorable sales mix and cost control initiatives, partially offset by higher selling expense as a result of the increased sales volume higher allocation of overhead costs and higher.
Incentive compensation expense.
Net sales on our investment company software solutions segment were $21 $8 million on the first quarter of 2021, an increase of 35, 4% from the first quarter of 2020, primarily due to strong demand for our digital which continues to gain momentum since we've launched it.
In the second quarter of 2020, with new opportunity arising out of the regulatory changes affecting investment companies in.
In addition increased activity from clients, adding new funds for our pro also fueled the growth in this segment.
Non-GAAP adjusted EBITDA margin for the segment was 25, 7% an increase of 520 basis points from the first quarter of 2020.
The large increase in non-GAAP adjusted EBITDA margin was primarily due to operating leverage on the increase in sales and a favorable sales mix, partially offset by higher incentive compensation expense.
Net sales on our investment companies compliance and communications management segment were $46 $5 million in the first quarter of 2021 a day.
Decrease of 37, 4% from the first quarter of 2020 due to the impact of regulatory change and investment companies affecting print related sales and a reduction of commercial printing sales related to contracts, we have proactively exited.
Non-GAAP adjusted EBITDA margin for the segment was 15, 7% an increase of 840 basis points from the first quarter of 2020.
The increase in non-GAAP adjusted EBITDA margin was primarily due to reduction in overall expense within this segment, primarily due to cost savings as a result of consolidation of the print platform and a lower allocation of overhead costs, which are now being absorbed by our three other.
Operating segments as the lower activity level in this segment results in a reduced need for such shared resources.
Our first quarter 2021, non-GAAP unallocated corporate expenses were $12 5 million, an increase of $2 $5 million from the first quarter of last year.
The increase in unallocated corporate costs was primarily due to increased incentive compensation driven by the strong performance, partially offset by the impact of ongoing cost control initiatives.
Free cash flow in the quarter was negative $46 $3 million only $2 $3 million unfavorable for the first quarter of last year. Despite an increased level of incentive based payments in the quarter, including annual bonuses and our 401 K match based on the strong performance in <unk>.
Full year 2020.
We ended the quarter with $252 $7 million of total debt and $214 $2 million of non-GAAP net debt, including $22 million drawn on our revolver.
From a liquidity perspective, we had access to the remaining $278 million of our revolver as well as $38 $5 million of cash on hand.
As of March 31, 2021, our non-GAAP net leverage ratio was one times down one three times from the first quarter last year.
As a reminder, our cash flow is historically seasonal we are a user of cash in the first quarter closer to breakeven in the second quarter and generate more than 100% of our free cash flow in the second half of the year.
As our sales mix continues to evolve to proportionately more subscription based software solutions, we expect the seasonality to be less significant.
We repurchased approximately 127000 shares of common stock during the quarter for $3 $4 million at an average price of $26 92 per share.
We have approximately $46 $7 million remaining on our $50 million stock repurchase authorization.
As it relates to the second quarter free.
<unk> activity in capital markets remained robust throughout the month of April.
We do expect however, spec activity to reset based on the FCC's recent statement regarding the accounting classification of warrants and their potential action on legal protection for growth projections.
Our expectation is that these actions further legitimize the stock market as we currently are supporting our clients and their processes to file revised financial statements and amendments to the stack formations and dis backed transactions.
Regarding our outlook for the second quarter, we are expecting net sales to be in the range of $230 million for $240 million.
Now on approximately $20 million for seven 5% year over year at the midpoint due to the significant reduction in print and distribution for the regulatory changes related to SEC rules 33, and $4 98.
Given the historical seasonality of this print and distribution.
Second quarter will include the largest reduction in print sales compared to the other quarters.
We remain bullish on the near term outlook for our software solutions sales as well as on capital markets transactional activity.
From a profitability perspective, we expect our non-GAAP adjusted EBITDA margin in the mid 20% range similar to last year's second quarter margin.
I'll now pass it back to Dan who will provide an update on our manufacturing platform optimization efforts and cover some first quarter business highlights Dan.
Thanks, Dave I'd like to highlight a few items and then we will open it up for Q&A.
Regarding the regulatory change that will continue to reduce demand for print. This year. We continue to expect a reduction in print related net sales of approximately $130 million to $140 million and a reduction in non-GAAP adjusted EBITDA of approximately $5 million to $10 million related to the regulatory.
Change we are ahead of our plan to deliver the cost savings associated with right sizing our platform.
As it relates to this plan, we recently announced two our affected employees that were shifting to a digital only platform.
And that will be shutting down our offset print platform effective June 30. This year any offset print requirements will be shifting to our vendor network, where we have long standing relationships. This change to our production model allows us to better align our platform with our clients' needs and also to fully variable.
Lies our production costs were offset printing.
In addition, I'm excited about the pace of development of and demand for our software solutions within.
Within investment companies, while the SEC rule <unk> three reduce the demand for print starting in the first quarter as we will rule for 98, a beginning in the second quarter. We responded by launching our digital last year and also introduced our total compliance management solutions to the investment companies industry to serve.
Our clients in new ways going forward, we will be able to leverage these solutions to address potential future rule changes.
As evidenced by the 35% sales growth we posted in the first quarter for our investment companies software solutions segment client adoption of our new solutions is overwhelmingly positive.
Looking ahead, we will continue to assist our clients in their own digital evolution transitioning them from a more traditional service based model to a step model, we expect outsized growth in 2021 from the adoption of our total compliance management solutions, followed by several years of mid teen growth as our solution expands.
Within capital markets, we posted 16% growth in active disclosure sales. In addition, the net wins related to serving our clients' ongoing compliance needs. We also saw increasing demand for active disclosure by pre IPO and IPO clients regarding our new active disclosure platform, we launched our sales efforts.
In March and we will start to see sales on the new platform in the second quarter.
Two months into our sales effort, we are getting positive feedback from both new and existing clients and this feedback as reflected in the pace at which clients are adopting and migrating to our new platform. We.
We expect to transition all of our clients from active disclosure <unk> to our new platform by the end of 2022.
Also on capital markets first quarter sales in our venue virtual data room solutions grew by approximately 30% from last year's first quarter, achieving an all time high for quarterly sales and its highest growth quarter in the last 16. This growth was largely driven by an increase in M&A deal activity in the quarter combined with the strong IPO.
Environment, and our sales and marketing focus to accelerate growth.
Importantly, we are achieving growth across the globe sales in the EMEA region grew 57%. The APAC region grew 37% while U S sales for venue grew 27% from the FERC.
Drilling performance and a strong market.
We're excited about our very strong first quarter results.
Along with the various sales and operational wins that produce them, we are well on our way to achieving the objectives, we committed to as part of our 44 in 'twenty for strategy.
In closing I want to thank the deepen employees around the world who have been working tirelessly to maintain our operations and ensure our clients continue to receive the highest quality service without disruption Stacy.
Stay safe and healthy now with that operator, we're ready for questions.
At this time, if you would like to ask a question. Please press Star then the number one on your telephone keypad.
We'll pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Charlie <unk> with CJS.
Hi, good morning.
Good morning, Cherilyn on Charlie I was wondering if we can get a sense of where we are with.
On the SEC rule changes based on Q1s actual in your guidance for Q2, how much of that 130 to 140 million revenue reduction.
The reduction is kind of baked into the first half of this year.
Yes, Chuck so it's Charlie.
The first quarter, we said it was down.
25, just based on the historical seasonality of when we see most of the print hit.
The second quarter, we'll have kind of a disproportionately larger impact than what we saw in Q1 and it will be the largest impact.
For any.
Any quarter during the full year.
Got it that's helpful. Thank you and then on shifting a little bit too.
Transactional work on.
Honestly stacks have been a big percentage of the Ipos.
Came out in Q1.
We saw per.
Record growth in the Q1 was higher.
Higher than all of last year.
What percent of your transactional revenue in the quarter.
Was related to snacks and then also are you starting to see any pickup at all in.
Stacking work.
At this time.
Sure Charlie So I'll start and then Craig or Dan can jump in.
When we look at the performance in the spec market.
Obviously as you said it was up.
Substantially relative to last year.
But from a share perspective, we did very very well there.
Historically has been an area that we hadn't focused on until more recently and so we did very very well there.
With respect to some of the <unk> back transactions, we're starting to see some of that.
But.
From an overall M&A perspective, we commented on the venue growth being strong at over 30%, obviously tied to.
The M&A activity some of that destock related and then others just more on the traditional M&A space.
And Charlie this is Craig can build on that Dave mentioned, the reset we expect on the other side of.
It'll be less manic debt.
Certainly brisk.
And there are 426 backs that are searching for a business combination right now that we're 92 that were announced in Q1, we did see a drop off in April but it was equivalent honestly for the January February numbers.
So we from a long term perspective, as Dave mentioned believe the SEC attention will actually legitimized and we'll we'll see this move forward as a as a strong product.
Great and then the companies that are stacking and working with you on kind of the.
Transaction part of that.
Also signing up for it.
For kind of recurring long term compliance work as well.
Yes, so we're seeing certainly when they do the initial setup on the shelves stack, we're seeing them also sign up for active disclosure on <unk>.
Compliance solutions and new active disclosure.
We're also seeing during the day spec process. When you then.
Supported by <unk>.
Which is helping with the M&A diligence and then certainly at the acquisition time, we're seeing them continue to report.
Using active disclosure.
As a real opportunity for us.
Great. Thank you very much.
Thanks, Charlie Thanks Charles.
Please press Star then the number one if you would like to ask a question.
Your next question comes from the line of Peter Heckmann with Davidson.
Hey, gentlemen.
Spectacular results.
And good to see that the share your share of.
Filings, both on capital markets and investment continues to be real strong I.
Certainly I think that there's a.
A lot of the investments that youre doing in upgrading the technology are helping you keep share but do you think there is also the opportunity to gain share.
So what areas of the business do you think.
Based on your current technology rollout plans do you think you have the best opportunity to gain came from share.
Sure. Thanks Pete.
When we step back and we look at our relative position in our markets.
We're number one two or three and in each of the markets on which we play and so to your point, we start from a very strong position.
As.
The only full service provider in our markets. It offers us a great opportunity to sell.
Sell across across the house and so yes.
You take each of these individually.
Very high share on the transaction part.
Did see that market change a bit.
And we adapted and have been increasing share.
In fact, when you look at our compliant software side.
Active disclosure has a great opportunity, we rolled out a new product as we mentioned the new active disclosure brand new build of the product and have seen very good interest and very good adoption.
And as we mentioned in our comments on venue, we can surmise that at 30% growth.
That was a share taker. So we continue to see very good opportunity.
In those areas those are all the capital markets transactions compliance areas, when we jump over to the investment company side.
Mid thirties of growth on our software offering.
Which was really supported by the team did a fantastic job of developing solutions for the markets in a changing market.
With what was taking place with regulation with $33 498 day.
And we saw that.
Down on the print side, but obviously saw a great opportunity developed.
Well receive solution and have seen outsized growth there that we think continues through the year. So we feel very good and in all of our core offerings.
That's great that's great and then in terms of.
Just the.
Capital allocation.
<unk> job of deleveraging here over the last couple of years.
So you are now down to one times.
I guess.
Are you thinking about capital allocation.
You're starting to see some seller expectations come down on the M&A market, so that might be some opportunity or for now or are you just going to continue to deploy free cash flow towards debt reduction and opportunistic share repurchases.
Sure Yeah, absolutely so.
We went into our I went into a fair amount of detail on our last call on our perspective on it remains unchanged, which is really key.
Continue to drive performance generate strong cash flow and be disciplined and thoughtful on how we deploy.
Shareholder capital to grow the business profitably.
When we look at the various for five ways of deploying capital.
We have been accelerating investments into the organic.
Growth initiatives.
And that's really to your comment multiples and XL, our expectations remain extremely high.
So as I said, we've put more into organic investment we've been paying down debt, we've done a little bit of share buyback.
And I would expect more of the same but overriding continuing to be very disciplined.
Got it.
Helpful I'll get back in the queue I appreciate it.
Thank you.
Your next question comes from the line of Raj Sharma with B Riley.
Hi, Good morning, guys is spectacular results congratulations hi.
Alrighty Thanks, Josh.
Sure absolutely.
If you could touch upon the cash flows for a second on when you talked about there was some some extraneous items in there because the LSC bankruptcy settlement.
And I know that seasonally the cash flow was supposed to be negative.
First quarter could you isolate the.
On the incentive comp and the LSC.
Impact on cash flows.
Yeah Raj so the LSC.
Multiemployer pension plan payments were.
Pretty small in the in the first quarter, I think around $1 million or so.
On the two settlements.
We talked about.
One of them happened in the first quarter.
The payment was actually made in the second quarter and then on the second settlement.
Debt payment will also be made in the second quarter.
Frankly, the biggest impact on the first quarter cash flow on a year over year basis, and we were roughly flat I think down a couple million dollars Inc.
Free cash.
But the big Delta.
From year over year was really driven by the increased incentive comp payments, including.
Annual bonus payments in 401 K.
I wouldn't break that out as a discrete number but.
Given the performance last year.
Those plans paid at a higher rate than much higher rates on the <unk>.
<unk> had in the past.
Okay.
Alright, and then just on.
Two questions per $130 million decline that you are expecting in print.
Had allowed for.
Donnelley.
Q1 was down 25%.
How much was <unk>.
<unk>.
Would you say primarily on the entire amount will be taken in Q2. So the first half and you wouldn't have taken most of the 130 day decline in credit net.
Sorry, if I said that let me clarify.
What I intended to say was that the second quarter will be the largest decline of any of the four quarters of the year, so it'll be it'll be likely be.
Substantially larger than what we saw in Q1.
And then Q3 and for.
Ballpark should be roughly similar to what we saw on Q1.
Got it and then just lastly, the software solutions for the rest of the year on do you expect similar sort of robust growth in software solutions.
Yes, we talked about Alberta.
Yes, so as we've talked about on.
The software side.
Expecting double digit growth and thats really across the board.
When you look at that on a product by product basis. The momentum we have in active disclosure.
<unk> grew 16% in the quarter, we expect that to be in the mid teen range.
Venue.
30% in the quarter.
And that has been picking up the last couple of quarters. This was.
Our highest growth quarter on again, a lot of that will be tied to the M&A activity and as we said from a from our perspective on venue.
The pipeline is very strong there and then when we think about Rx, we had a very aggressive plan coming into the year.
The first quarter at plus 35% was a little bit ahead of that plan.
We do expect that.
The combination of these offerings within the Rx, We then, especially our digital in total compliance management will continue driving strong growth throughout the year.
Yes.
Add to it is.
Debt if you reflect on last year venues growth started to pick up in the back half.
Commensurate with M&A picking up and so youll, you'll run into Comparables in terms of.
Quarter over quarter year over year growth within each quarter, but notwithstanding that.
We would expect to be a net in that mid teens.
And then just lastly.
Lastly, the guidance for Q2.
Assumes a.
Capital markets transactional activity in line with Q1 or lower.
So our guidance there Raj.
We think Q1 transactional activity will be up.
Not not nearly amount the amount that we saw in Q1 right Q1, we said in our prepared remarks that transactional activity almost doubled from the first quarter of 2020.
In the second quarter.
Our guidance implies somewhere around <unk>.
20% or roughly $15 million increase in transactional so to the extent that.
From a market perspective.
Stronger or weaker than that expectation.
There's some plus or minus in that guidance.
I'm, sorry, $15 million sequential increase.
Sorry $15 million.
Year over year, yes.
Got it okay. Thank you so much would take from my questions. Congratulations again thank.
Thank you Josh.
Thanks.
Your next question comes from the line of Charlie <unk> with CJS.
Hi, just one quick follow up just looking at the balance sheet and the debt.
Remaining on the balance sheet.
Any thoughts there on potential refinancing taking advantage of the robust capital markets that youre seeing on your own business.
Yes, Charlie So we look at this all the time to your point, we have the eight on a quarter.
What's that become callable at 102 on October.
Given the strength in the markets.
Hopefully that continues right we believe.
That it will on that there'll be an opportunity to refi that debt at a significantly lower rate.
Lot of that will just depend on.
What market conditions are if it's on.
Excellent. Thank you very much.
Thank you.
Thanks.
And there are no further questions at this time.
Okay. Thank you all for joining and we'll look forward to speaking.
Again in early August thank you.
This concludes today's conference you may now disconnect.
Yes.
[music].