Q1 2021 Advantage Solutions Inc Earnings Call
Okay.
Good afternoon, and welcome to advantage solutions first quarter 2021 and earnings conference call. Today's call is being recorded and we have allocated one hour for prepared remarks and Q&A.
At this time I would like to turn the conference over to Dan risk share.
Investor Relations and strategy officer for advantage. Thank you.
You may begin.
Okay.
Thank you operator thank.
Thank you for joining us on advantage solutions 2021 first quarter earnings conference call on.
On the call with me today are Tanya del Mar Chief Executive Officer.
Brian and Stevens, Chief financial and Chief operating Officer.
Joe Griffin, President and Chief Commercial Officer, and Dan Morrison, Our senior Vice President of Finance and operations.
During this call management may make forward looking statements within the meaning of the federal securities laws and east.
These statements are based on management's current expectations and involve risks and uncertainties that could differ materially from actual events and those described and the forward looking statements.
Forward looking statements are based on the company's current expectations and are subject to inherent uncertainties risks and assumptions that are difficult to predict.
Actual outcomes and results could differ materially due to a number of factors including.
Including those described more fully and this section titled Risk factors and management discussion and analysis of financial condition and results of operation and elsewhere and the company's filings with the Securities and Exchange Commission.
All forward looking statements are expressly qualified in their entirety by such factors. The company does not undertake any duty to update any forward looking statement, except as required by law.
Please note management's remarks today, we'll highlight certain non-GAAP financial measures our earnings release issued earlier today presents a reconciliation of these non-GAAP financial measures to the most comparable GAAP numbers, which can be found on the investors section of our website at advantage solutions Dot net.
The company has also prepared presentation slides, which are posted on advantage at Investor Relations website.
And what you refer to the slides during today's call. This call is being webcast and a recording of this call will also be available on the website and now I'd like to turn the call over to Todd you don't.
Thanks, Dan and Hello, everyone I'd like to start by thanking our associates, who worked so tirelessly to help keep our client business running safely and smoothly throughout the whole COVID-19 pandemic and so proud of our team's work to help communities in need during these trying times.
And our fingers are crossed that we're in the final innings of this pandemic and poised to continue reopening from here and I did on our last call I'd like to start by just framing our business for you.
And we're the leading provider of outsource sales and marketing and consumer goods companies and retailers and we.
We have a strong platform of competitively advantage services like headquarter sales and retail merchandising in store sampling digital commerce and shopper marketing and.
And for brands and retailers of all sizes. Our goal is to help get the right products on the shelf, whether physical or digital and into the hands of consumers. However, they're shopping.
Creating value on this platform is simple, but it's not easy and we've talked about this before.
Fundamental level, we sit at the Nexus and consumer goods companies and retailers and we're a trusted partner and problem solver for boat.
We help our clients sell Norwalk funding, what we like to say, we do it better cheaper and faster we make our clients more effective and we also make them more efficient.
And we win with winter by providing best in class service every single day and by innovating on a very nimble platform, we operate efficiently providing fuel for reinvestment and growth and we redeploy capital at attractive returns through tuck in acquisitions and organic reinvestment and as we deliver.
Volume to our clients by being better and faster and cheaper on.
Platform compounds over time growing profit that more than two and a half times the pace of the S&P.
So now I'll hop into today's update.
Once I conclude my remarks, I will turn things over to Brian and he'll discuss our financial results and then after that well open the call for questions.
So we've had a good start to 2021 reporting strong results for our third straight quarter.
Net sales segment continued to benefit from elevated at home consumption from new client wins and E Commerce gross and the marketing segment enjoyed the early innings of COVID-19 recovery and sampling and also posted continued strength and our digital agencies and we're really proud to be helping clients navigate.
Hungary, and reopening and times like these with uncertainty and change our when our compounding platform at advantage really shine or navigating and omni channel world that seen 15 years of ecommerce growth and just over a year as we've all seen together and we're working hard too.
And sure that consumers are truly delighted when they fully return to retail.
Our portfolio of essential services, we continue to have winners and losers from the pandemic as we talked about last quarter.
On one hand operations related to in store sampling and foodservice and our international joint venture are rebounding from virus related closures.
On the other hand, our core headquarters sales and merchandising teams are serving still elevated stay at home consumption with recent numerator surveys as many of you have seen a fully vaccinated American suggesting that this higher demand persists.
And we're emerging from COVID-19, a bigger stronger business. We served our clients very well through this pandemic, we've reinforced their trust in us with relentless execution and new service innovation and we really believe that this will pay dividends over time as.
As we said during year end results, we believe at the business will continue to improve throughout the year and will benefit as COVID-19 impacted businesses are restored to help especially in the second half of 2021.
Some highlights from our strong first quarter.
We exceeded our plans and the sales segment the elevated at home demand and new client wins and e-commerce growth as we replicate core bricks and mortar offering online.
Sales segment growth was broad based up low mid single digits, and our headquarter sales and merchandising business and strong double digits in digital Commerce services.
Foodservice and international.
We're still down year over year, but slowly coming back.
Both volume and pricing trends remain healthy across consumer goods surprisingly healthy and backed as our CPG and retail clients sustained elevated at home demand and take pricing to offset commodity and wage inflation, there are emerging a bit stronger out of COVID-19.
Just one word of caution as we continue through the second quarter last April pantry loading presents the toughest comp of the year and the sales segment.
Our marketing segment also came in better than forecast as we brought back in store sampling events and a safe and measured way with our retailer partners and saw impressive digital agency growth.
Here I'd like to remind investors that bringing event teams back and a surprisingly strong Q2 labor market is complex and it's also expensive and recruiting and training and ongoing wage rate and how.
The pricing environment helped offset this though.
As we sit here today, just under halfway through the second quarter.
We continue to see solid consumption patterns in the sales segment as the baseline remains elevated from pre COVID-19 levels with consumers working and consuming more from home and as I noted earlier and the April comp is especially challenging in Q2.
But we are seeing supply chain stabilized quite.
Quite a bit of innovation and product news steadily return price hikes tied to commodities and wage inflation and flow through and promotions remained muted.
While we are still being flexible as we resume in store sampling with retailers in the marketing segment, we continue to receive strong support and our rollout and consumers are very pleased to see the events that they've net.
Brands are eager to invest to drive sales and we've seen event counts continue to grow running at roughly a 176000 in March 2021 person is a low of 23000 last April and 133000 events and February of 2021, So we're almost halfway back.
Back to March 2019 event levels of nearly 400000 events.
And the caveat here is that standing up armies of tens of thousands of trained workers something that we're uniquely good at is complex and costly.
Pace of vaccine rollout has been encouraging virus count trends have been more mixed but we continue to see the pandemic disruption to subside further into the second half as the state of health improve.
Based on the strength of the business and the flexibility of our model. We are very confident and our 2021 EBITDA outlook of $5 15 to $5 $25 million. This represents very healthy mid to high single digit EBITDA growth year over year and it takes us above the pre COVID-19 2019 EBITDA of 500.
Third and $4 million. This guidance range continues to assume that in store sampling build back towards pre COVID-19 levels in the second half of 2021 and guidance also assumes that at home demand reverts meaningfully towards pre COVID-19 levels and assumptions that may prove conservative looking.
Looking out a bit further we will be entering 2022 with mid single digit profit tailwind from and annualized COVID-19 recovery and self help initiatives on top of our normal organic growth and tuck in acquisition algorithm. It's early but consensus estimates show a further acceleration and EBA.
<unk> growth next year to just over 10%.
Now I'll quickly touch on some of the key metrics from our first quarter Q.
Q1 revenue declined 10% year over year, and 10, 8% year over year organically to 791 million nice progress versus our three prior quarters of minus 30, minus 20, and minus 16, and adjusted EBITDA of 111 million.
What's even more impressive it was up four 8% year over year overall against a tough positive 10.9, Q1 2020 comp.
And then 2000 twenty's minus 3% trend.
Favorable mix and disciplined cost management have helped us sustain earnings despite the tough revenue headwinds from the pandemic. This result was ahead of our forecast.
Our net debt to EBITDA came in at three nine times and we continue to expect progress towards three times by the end of 2020 two.
We're very excited about our momentum to start 2021 in terms of the shape of the year, we expect marketing spend to standup demo and sampling teams and a tough April sales segment comp in Q2, and the broader outlook remains back half weighted and.
COVID-19 recovery unfolds.
And we remain very focused on our mission to create value for all of our stakeholders and continue to win on the advantage compounding platform that I mentioned earlier.
To recap there are really three fundamental pillars of our platform first and we always operate with excellence. This means we deliver best in class services to our clients, while driving productivity, reducing cost and increasing our margins over time.
Second we take a portion of the productivity savings that we generate and the ample free cash flow our business model produces and reinvest in our services to widen our moat accelerate innovation and drive growth.
Third, we really nurture and protect our evolutionary culture. This build the business to suit our clients' changing needs and it really helps ensure that we remain a partner of choice for brands and retailers and be very importantly, nimble and opportunistic when fortunate and presents itself.
With compelling proposition to build a better and more valuable advantage.
I am very excited about our future, we're well positioned to win under multiple recovery scenarios, we serve a historically stable and resilient consumer goods and market on market that just weathered a once in a century disruption and is emerging stronger for us this means tailwind over the.
Next couple of years from a recovery from temporary COVID-19, 19, and softness and portions of our business tied to in person and shopping accelerated.
The accelerated omni channel service adoption during COVID-19 that we believe likely six and continues to grow like online grocery pickup and delivery sampling and growth and adoption and our margin accretive digital and E Commerce solution.
With that I'll now turn it over to Brian to cover our first quarter financial results in more detail.
Thank you Tanya and good afternoon, everyone. It's great to be speaking with you Tony.
You touched on the first quarter highlights so I'll share a bit more color at the segment level and speak again to a high confidence for full year guidance as.
And as mentioned earlier, we grew adjusted EBITDA of four 8% year on year. Despite the pandemic driven revenue decline of 10%. This outstanding result is a testament to the nimbleness of our operating platform and the team's discipline and managing the business effectively during the pandemic quickly realigning expenses and scaling <unk>.
This innovation to adapt to changes and short term demand.
Sales segment revenue grew five 2% year on year, $534 3 million up four 7% organically.
Remarkable against the 11, 2% prior year comp sales segment adjusted EBITDA was $84 1 million up 7% year on year with 20 bps of margin expansion marketing segment revenues were down 39% year on year to $256 7 million and then.
And 32% organically. This follows three prior pandemic impacted quarters of minus 59% minus 49% and minus 39%.
Disciplined expense management yielded adjusted EBITDA and mortgage debt was down just one 6% year on year to 27 4 million.
And as demonstrations and sampling return rapidly non economic revenue tied to that will normalize and segment margins a bit.
And we flexible variable cost model here and the margin lift from digital will help offset this.
Turning to overall margins first quarter adjusted EBITDA margins came in at 14, 1% up 200 basis points from last year's first quarter and driven by 20 bps gain and the sales segment and 320 bps higher margins and the marketing segment.
The year over year margin improvement is primarily attributable to the higher margin revenue mix and the current year and.
And some smaller permanent savings from real estate optimization contributing in the quarter, partially offset by anticipated higher personnel related investments that will ramp further in Q2.
As previously disclosed based on April 12, 2021, SEC guidance regarding technical accounting for warrants issued by specs and advantage solutions will be revising its 2020 financial statements to account for this recent directive and the revisions are expected to result in a non cash.
Non operating and financial statement adjustments that have no impact on our current or previous reported revenue cash position operating expenses or total investment investing or financing cash flows.
Additionally, there is no anticipated impact on our non-GAAP operating metrics, including adjusted EBITDA adjusted net income and net debt.
Moving to a summary of our capitalization as Tony indicated our net debt to EBITDA finished the quarter at approximately three nine times free cash flow should ramp solidly.
Profit growth and the back half.
Our de Levered balance sheet will yield meaningful cash interest savings of over $70 million on a pre tax basis and 2021 when compared to 2019.
As noted last quarter, we have no meaningful maturities for the next five years at the end of Q1, our total funded debt outstanding was down approximately $2 1 billion after paying off $100 million of the ABL borrowings that were outstanding following the close of the <unk> transaction.
A summary of our debt capitalization can be found on slide eight and our supplementary slides and Q1 results that are posted to our investor Relations website.
Our latest equity capitalization and todays filing has also captured on slide eight of our supplementary slides.
Turning to fiscal 2021 outlook as Tony noted, we are highly confident and our fiscal 2021, adjusted EBITDA guidance range of $5 $15 million to $525 million.
Some items to keep in mind, one Q1 got us off to a strong start Q.
Q2 is a heavier marketing reinvestment to stand up the business shuttered by COVID-19 and tough April sales segment from.
The large in store sampling business has the widest range of COVID-19 recovery outcomes for the year and we expect most of the recovery to come and the second half.
Firstly, we've driven more than half of our growth from high ROIC tuck in acquisitions that pipeline is quite robust again, and we are proceeding choice fully.
Along that we plan to make room for moderate amount of medium term investment through the P&L. This year building on strong organic growth ideas and projects from our talented leaders. These will pay off in 2022 and beyond.
Summing all this up we have outperformed in Q1, we've got some spending ahead and Q2, we remain confident and the second half weighted COVID-19 recovery our guidance for normalization of at home demand by the end of 2021 might prove conservative and we will continue to delever steadily.
With that I'll turn it back over to Tania.
Thanks, Brian and you've heard we're enthusiastic about 2021 and beyond here at advantage with tuck in acquisitions and stepped up reinvestment through the P&L, we're going to accelerate our journey from a labor intensive franchise to a data intensive one bringing technology enabled services to.
Meet our clients' needs and as we've talked about we evolved to meet our clients' needs and that's exactly what we've historically done and we'll continue to do at advantage and we will continue to deliver both cost efficiency and sales effectiveness real growth.
To serve existing clients and to generate new business wins.
Dan any final thoughts before we kick off Q&A.
Thanks, Tanya I'd, just reiterate that we see a clear path on the short term to close the gap to fair value advantage, it's still a relatively undiscovered COVID-19 recovery story is gaining momentum.
And we see and even more exciting opportunity to unlock future value with this amazing team.
At this early stage and her life.
Public company, we traded a three to three and a half turn discount to the broader market and CPG players and we trade at just over half the multiple of World class services peers. So there's plenty of runway left and two final notes to both owners and prospective investors. We have a great slate of conferences ahead, and May and June where we'd love to catch up and tell you more.
And we expect to see our float and liquidity grow and a disciplined and orderly fashion. This year and next with that I'd like to ask the operator to open the call for questions.
Thank you.
We will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad and confirmation tone will indicate that your line is on the queue.
And I'd like to remove your question from the queue. Please press star two.
For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question is from Jason English with Goldman Sachs. Please proceed.
Hey, good afternoon folks.
Congratulations on a on a great start to the year.
I was particularly surprised to see the robust growth off of the first COVID-19 kind of benchmarking to pre COVID-19 levels, but I'm equally surprised to see your guidance at the mid point, suggesting that for the next three quarters, we're going to see EBITDA levels roughly flat from 19.
It sounds like Youre talking about the labor challenges and is one of those headwinds and the impediments for sustaining the growth bottom line growth. So some questions around that first.
And I've got labor cost just under 2 billion and is that roughly right.
And second how much inflation are you looking at on that front and.
Third is it transitory I like going out sort of bonus was to recruit or are we looking at just the permanent step up and the cost of that labor and if so how do you cover it are you able to pass that through.
Yes, that's a great question. So first of all thank you for your compliments on the quarter and we've all seen and the same jobs reports and understand the short term supply demand mismatch, but tied to low unemployment and.
And I think we also see hospitality racing to fill slots alongside our own hiring and it.
It can make for a challenging environment, but it's one that we're I think uniquely equipped to.
And navigate given the size of our hourly workforce, we monitor and manage what's going on with hourly wages and very closely as we've talked about in the past and just for context.
Our hourly associates earned 30% more than local minimum wage levels on average so that helps us and.
And if from minimum wage increases we work with brands and retailer partners to reflect those higher costs and then provide the benefit of our scale and outsourcing more cheaply I think you're what you're pegging at labor plus or minus in Directionally correct and.
And I think most importantly, we also use technology and tools to help our associates get more productive and we share those benefits with clients and I think underpinning. It all the services that we offer are essential they're not nice to have their need to have services and.
And brands and retailers really depend on them to sell.
Selling more products. So this is a big reason that we've been able to offset wage inflation, while maintaining both the client rois, which is so important and healthy advantage margins over time and of course, we're cognizant of it but this is something that we've dealt with.
And the cycles for many years.
That's helpful. Thank you and turning to a different topic that you touched on on your prepared remarks and inflation.
You or your customers.
CPG industry face with broad based inflation, it's been probably a decade, if not more since we've seen this magnitude and inflation.
The pricing that will follow.
Presumably should benefit yourselves segment can you confirm that and.
And secondly, can you give us a sense of expectation.
It sounded like Youre, saying youre seeing some price already come through.
But one is.
In terms of order of magnitude slope of the build what are you expecting how long does it take to really start seeing a meaningful price in the system.
And and how beneficial do you think it could be.
Yeah. So that's a great question I think you know it's still early you've heard much of what we've seen and now.
But.
Not.
Anywhere near what we expect in terms of actually executing that we all see the data and the surveys that suggest and optimistic hyperstimulus consumer being able to whether price hikes, driven by commodity and wage inflation and we see inflation and building.
As at home volume Normalizes, we do believe price will be and offset that will help our clients comped the comp and aid portions of our sales segment, that's tied to plant revenue, but it's really early our clients seem aligned on the need for it and the willingness to push it through and the conviction seems there.
And you just can't tell you more than that because it's early innings.
No that makes sense I appreciate the candor.
Im going to try not to be too greedy and stop there and pass it on.
Thank you.
Thank you.
Thank you. Our next question is from Toni Kaplan with Morgan Stanley. Please proceed.
Thank you.
Wanted to ask about M&A.
And when would you expect to start and see that ramping up again to sort of more historical levels for you and are there any areas of the portfolio, where you feel like you have a GAAP that you want to fill with with capabilities from and acquire acquired company.
Well I'll give you the I'll give you a 30000 and start answer and then I'll turn it over to Brian and just talk a little bit about to the extent that we can about the pipeline, but as we've talked about M&A is an important part of our value creation strategy, we have a very full pipeline.
And our model is beautiful in that we evolve to where pinpoint.
And the needs for solutions or for brands and retailers and so you can see there are a lot of pain points in the ecosystem today everything from e-commerce to pricing to trade to navigating how to comp last year all of the solutions that we offer cash.
And and will be enhanced as we see opportunities to do tuck in M&A to buy capabilities to solve both some of the problems that we're facing today and more importantly in the future. So I wouldn't call. It a GAAP so much as always trying to stay ahead of the curve to get where we believe.
The pain points are and solutions will be needed and I think a perfect example of that is the way that we've been able to evolve over time from what was first a sales company and now a sales and marketing and technology company solving pain points that are very different today than they.
We're 157 or eight years ago.
Does that answer your question, Tony or do you want a little more detail.
And I think that's great.
I wanted to also ask about digital you mentioned a couple of things that you're.
Youre doing and and that digital has been accelerating and and both marketing and e-commerce within sales.
Basically is there a way to sort of quantify I guess, how much that has had.
It has improved year over year or or any sort of quantification.
In terms of magnitude for both of those are like segment by segment.
Yeah digital has been and exciting area of growth for us and I and very thankful that we had the foresight to invest early so that we could capitalize on the accelerating trends I'll turn it over to Joe to give you a little bit more color about some of the exciting things that are happening and digital.
Sure.
And we did have some good foresight and invest in our solutions and tools before the pandemic hit that would translate our services within our marketing businesses and our sales businesses into digital and E. Commerce Omni channel solutions, and then of course, the pandemic accelerated everything so.
Tremendously and we were really in place at the right time to help our brands and retailers navigate this very quickly evolving space and.
And really what we've done is just that we translated our traditional.
Sales and marketing merchandising solutions into an omni channel landscape landscape. So that we can do provide those services to our brands and let's see whether they are.
And having a traditional brick and mortar conversation with a retailer or an omni channel conversation with a retailer and E tailor or a pure play E tailers and our brands turning to us for that.
And that consistent service across the bulk of those environments and that is.
And you were going to accelerate as brands are recovering from the initial workload produced by the pandemic and now actually thinking about how to be more strategic and this landscape.
That's great. Thanks, so much on and congrats on the quarter.
Thank you Tony.
Thank you. Our next question is from Samir culture with Deutsche Bank. Please proceed.
Hi, Thanks for taking my question great quarter.
I was wondering if you could provide some color about the wins during the quarter.
The second thing you mentioned was and.
And during the second half and going forward, you are going to be investing and some innovations. So I was wondering if you could provide more color on what are the areas you're investing in and how do you expect them to drive growth going forward. Thank you.
Slightly.
And I'm not going to talk about specific innovation investment because from a competitive and standpoint, we'd prefer to have that private but what I can tell you is that the innovation band sales marketing and E Commerce.
Mostly in digital and ecommerce if I had to say where they are weighted towards those are the areas, where our brands and retailers are really looking for solution. So you'll see the majority of our innovation in those areas. We also have significant productivity innovation using our scale at retail against sales.
And and marketing.
And we haven't had a number of wins and we're excited about those but again.
And now those individual wins by brands, but we will tell you that.
On the new business opportunities have been fairly significant I think I mentioned on our last call that you know after nine national new lines and the sales business and in 2019 things got pretty quiet and in the first quarter of this year, we started to see brands and retail.
And we need additional help and more opportunities and more opportunities to win business and.
And do more services for brands and retailers. So the pipeline is full.
And have secured a number of wins.
Got it thank you.
Thank you.
Thank you.
As a reminder, if you would like to ask a question. Please press star one and a confirmation tone will indicate your line is and the Q.
Our next question comes from Jason English with Goldman Sachs. Please proceed.
Jason we'd get you again I am excited.
Jason.
Sorry, and then.
And it gives me some time.
Yes.
Yes, and thank you for let me back in for round two I had a long list of questions I just didn't want to be a call hag earlier, so I'll pass it off.
So a couple of those questions.
Building off the last couple of points on digital.
And clearly a lot of focus on E comm from the industry at large and a lot of the money flow right now seems to be going into this broad bucket called retail media.
Can you talk about your participation participating and that if at all.
Absolutely I'll turn that over to Jill She is at the center of it.
Sure. Thanks, Jason.
Yes, it is a very.
Noteworthy, but currently everybody's talking about it and trying to figure it out I think it's important to note that this isn't a maintenance market place for our retailers and our brands and as with all of these situations because we're at the center, we are seeing both our retailers and our brands and navigate.
They're on.
They're part of this.
On the brand side.
And we either acting as their agency, helping them determine how to spend their media and marketing dollars. We are strategically advising them on how best to spend the dollars and ease and emerging emerging channel to.
Get the best result.
And also where we are there sales agency because we're part of that channel strategy planning, we're having that cash advisory role and that conversation on the retailer side, where they are often and their agency of record and helping them create point.
Cell and execute major marketing platform and on their behalf.
And that's helping advise them on how to package up and their media solutions and a way that will be valuable to brands and that bring us we'll invest and then obviously achieved the retailers objective and being an attractive on media vehicle. So it really is.
And early days in terms of how the media vehicles will develop and how.
And how they will be measured.
How they will evolve how brands and and we're really excited to be and et cetera conversation, helping all of the parties and navigate and we feel that we will continue to provide that service and a more differentiated way we start to develop custom platform for the smaller though.
And this size and the larger retailers and I hope that helps Jason.
Yes that helps a lot there's a lot going on there. Thank you for that and Tom.
And I want to come back to the pricing question, because I realized I missed an opportunity to ask slightly more wholesome question earlier.
So we're hearing and the narrative from CPG companies that theyre going to push through price.
Hearing and the narrative from retailers that they're going to push back and I'm also cognizant that the last time last year and throughout COVID-19 promotional levels were incredibly subdued and your commission rate is off with net sales. So fast forward. We've got this tension on list price is but presumably as volume retracing the promotions should come back and the system.
And actually it begs the question of whether or not despite the cost inflation out there, whether we're really going to see a whole lot of net price appreciation of love to hear your opinion and kind of weighing in on those three vectors attention and the system.
Sorry retailers aren't fighting price.
We haven't seen this play out yet of course, there's always a healthy <unk>.
Dynamic and tension, but price is likely to come and brands seem to have conviction against that.
If you go back to your question because I didn't they converge about labor dynamics that you asked earlier.
The pressure that we face is mostly transitory and recruiting and training and standing up new teams and mostly concentrated in Q2.
And.
We also main maintained our guidance after a strong start because like coke and Nestle and so many others, we're going to still see a wide range of COVID-19 outcomes in second half and it's our style to plan cautiously and execute relentlessly.
But I think you know so many of these things are left to play out and we don't have a crystal ball to know exactly how pricing is going to go and.
We think it could be a tailwind of our business, but certainly we're managing against all of these other things.
Standing up and how expensive it is and you know what nobody does it better than us but.
It's not inexpensive and it takes time and skill and money to be able to stand up programs with thousands of people.
Yes, yes, and no doubt that makes sense great. Thank you for letting me on for round two I will officially offered on thank you.
Thank you Jason.
Thank you ladies.
Ladies and gentlemen, we have reached the end of the question and answer session and this will end today's conference you may disconnect. Your lines at this time. Thank you very much for your participation and have a great day.