Q1 2022 Roper Technologies Inc Earnings Call
Good morning.
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I would now like to turn the call over to Zach Moxie, Vice President Investor Relations. Please go ahead.
Morning, and thank you all for joining us as we discuss the first quarter financial results for Roper technologies. Joining me on the call. This morning are Neil Hunn, President and Chief Executive Officer, Rob Crisci, Executive Vice President and Chief Financial Officer, Jason Conley, Vice President and Chief Accounting Officer, and General Callahan, Vice President of Finance.
Earlier. This morning, we issued a press release announcing our financial results. The press release also includes replay information for today's call. We have prepared slides to accompany today's call which are available through the webcast and are also available on our website now if you. Please turn to page two.
We begin with our Safe Harbor statement during the course of today's call. We will make forward looking statements, which are subject to risks and uncertainties. As described on this page in our press release and in our SEC filings you should listen to today's call in the context of that information and now please turn to page three.
Less otherwise noted we will discuss our results and guidance on an adjusted non-GAAP and continuing operations basis for the first quarter. The difference between our GAAP results and adjusted results consists of the following items.
Amortization of acquisition related intangible assets and purchase accounting adjustments to commission expense reconciliations can be found in our press release and in the appendix of this presentation on our website.
And now if you'll please turn to page four I will hand, the call over to Neal after our prepared remarks, we will take questions from our telephone participants Neil.
Thanks, Zach and good morning, everyone. Thanks for joining us as I'm sure. Many of you have already noticed we are introducing brokers new logo on today's call are new logo better reflects our transformation journey, while peg honor in respect to our legacy.
As a fund back our legacy logo was first introduced at $19 77.
With that let's turn to page four and review today's agenda.
As usual, we start with our quarterly highlights followed by our segment by segment overview.
Then go through our increased outlook for guidance expectations and leave plenty of time to address all your questions next slide please.
As we turn to page five the main takeaways from today's call are first we continue to increase the quality predictability and durability of the underlying business models and revenue streams.
Second we continued to deliver strong organic growth and operating results, enabling us to increase our organic growth outlook and depths guidance for the year.
Third we have substantial M&A capacity, given our rapid deleveraging and completion of our transport divestiture.
As it relates to the first quarter were delighted to report another strong quarter of execution and positive momentum across the portfolio.
Specifically, we grew revenue on an organic basis, 11% in the quarter. This.
This growth was broad based across each of our four segments.
Not only did we grow nicely in the quarter, but the quality of the underlying business also improved as we saw double digit organic increases in our recurring revenue base.
In addition to our strong software growth our product businesses performed quite nicely in the quarter as well experiencing very high levels of demand and record levels of backlog.
Also during the quarter, we completed the divestiture of our project based transport business as Youll note. We now have $3 2 billion of cash on our balance sheet.
When combined with our borrowing capacity, we have over 5 billion of available capital appointment firepower, which when deployed will further help drive cash flow and shareholder value compounding.
So with this definitely a solid start to the year.
Now, let me turn the call, Rob who will walk through our financial summary, Rob. Thanks, Neil Good morning, everyone turning to page six in covering some of the Q1 financial highlights total revenue increased 11% to 1.53 billion.
As Neil mentioned organic revenue also increased 11% with broad based strength across our four reporting segments application software grew 9% organically network software grew 16% our M. A S segment grew 7% and finally, our smallest segment process technologies was up 18%.
EBITDA.
Margin was 37, 8% for the quarter, resulting in EBITDA, increasing 8% to 577 million, notably that 577 million as of Q1 EBITDA on a continuing operations basis is actually higher than the Q1 EBITDA. We reported last April when we.
Still one and of course consolidated transco or any other two divested businesses.
Adjusted depths for the quarter was $3 77, which was well above our guidance range of $3 63 to $3 67 free cash flow was 459 million with solid EBITDA cash conversion of 80% that's above the Q1 conversion levels, we experienced in 2019 and 22.
But below last year's exceptionally strong Q1 conversion of 96% to that and there are two discrete cash items that combined to create an $80 million Q1 headwind versus prior year as discussed on last aprils call last years Q1 included $40 million of accelerated payments to Clinton.
Furthermore, this year's Q1 reflect a $40 million increase in incentive compensation as a result of our strong 2021 performance compared to the pandemic year of 2020.
So stepping back we are of course focused on long term compounding here at Roper and the three blue bars at the bottom of our page you can see our three year compounding from Q1 2019 for revenue EBITDA and free cash flow was 10%, 13% and 17% respectively.
So in summary, an excellent start to the year.
Next slide turning to page seven which is an update on our financial position turning to the balance sheet as Neil mentioned, we had a very large cash balance which is the result of closing the transport divestiture during the quarter and receiving the gross proceeds we have yet to pay the approximately $650 million of taxes related to that.
Two the divestitures, which will be paid during the final three quarters of 2022 as of March 31st as Neil mentioned, our cash balance stood at $3 2 billion, which brings our net debt down to $4 2 billion or approximately one nine times, our TTM EBITDA from continuing ops.
So with our healthy combination of balance sheet cash continued strong free cash flow generation and our investment grade leverage capacity, we are very well positioned to deploy 5 billion or more capital so with that I'll turn it back over to Neil to cover our segments in greater detail.
Thanks, Rob, let's turn to page nine and walk through the Q1 highlights our application software segment.
Revenues here were $632 million up 9% on an organic basis and EBITDA margins were 44, 1%.
Across this segment, we saw recurring revenue, which is a touch north of 75% of the revenue for this segment increased 10% in the quarter.
This recurring revenue growth is enabled by strong customer retention.
Continued migration towards SaaS delivery models cross selling activity and new customer adds.
Across this group of companies the financial strength was quite broad.
As we highlight a few businesses, we'll start with Virtu for.
<unk> had an excellent quarter, which was highlighted by strong <unk> bookings activity and revenue growth in.
In addition, during the quarter vertical released its new commercial submissions product line to remind everyone. <unk> strategy is to help tech enabled workflows for their P&C agent customers.
This new product is a meaningful step in this direction as allows agents to quote multiple carriers and as simple automated workflow great stuff from the very <unk> thousand 14.
Turning to deltak, they posted another great quarter with strength across all end markets served.
<unk> continues to gain momentum driving adoption to their cloud based product offerings. Deltec also continues to be benefited by having favorable secular tailwind.
Classes and data innovations continue to exhibit strong demand and operational strength.
Specifically <unk> continued its market share gains in the U K.
As a reminder, clients. This is one of four strategic vendors to the National Health service.
D. I was awesome in the quarter with continued strength driven by their direct go to market approach and large wins within the VA system.
At or it continues to be a solid performer for roper extending their share gains in the large loss space.
Also in the quarter licensing activity tied to seat expansions was very strong.
They also continue to see a meaningful shift towards our cloud offerings driving substantial increases to the recurring revenue base.
Strata, whose cloud based software helps hospitals plan budget and manage their operations continues to execute their cross selling strategy with TTM net retention north of 110%.
Of note we're in the midst of an orderly leader transition at strata, Dan Michelson, who has led strata for the last 10 years is retiring.
As an element of roper's talent offense strata has been developing its next CEO John Martina for the past several years.
As part of John's development. He started in the CFO function, then led commercial and go to market functions and then became the Companys C O O strata.
Stratas future is secure given the successful succession planning.
Thanks to Dan for all your leadership and accomplishments at strata, John We're Super confident with you at the helm your new role as well earned congrats.
Finally power plant posted a strong double digit growth quarter, driven by recurring revenue adds and higher services utilization.
They also have a substantial new product roadmap slated for this year, which are looking forward to discussing on subsequent calls.
Looking to the outlook for 2022 on the segment, we expect to see mid single digit growth for the balance of the year driven by continued strong <unk> momentum.
With that let's turn to the next slides.
Turning to page 10 as.
As a reminder, the financial performance for this segment as well as the next to MFS and PT are shown on a continuing ops basis.
Revenue in the first quarter for our network segment was $369 million up 16% on organic basis, and EBITDA margins were strong at 51, 2%.
The 16% organic growth is underpinned by 16% growth in our recurring revenue, which is roughly 80% of the segment's revenue base.
As we dig into business specific performance, our U S and Canadian freight matching businesses continue to be super strong during the quarter.
The market conditions continue to be quite as favorable which led to record levels of network adds again, especially on the carrier side of the network.
In addition, the team continues to do a nice job of increasing revenue per user by both adding features and improving value capture.
Over a longer arc of time, our freight matching businesses continued to be well positioned to enable the digitization of the spot freight markets.
Moving to foundry our software business that enables the combination of live action filming and computer generated graphics to being applied into a single frame had record bookings revenue and EBITDA for the first quarter net.
Net retention is north of 110% and <unk> grew double.
Digits foundry success is rooted in our fast paced innovation capability and favorable long term market conditions.
Ice raid our network food supply chain business and pipeline, our life insurance SaaS business, helping to tech enable the quoting and underwriting processes. Each had strong customer additions, which helped drive strong <unk> growth in the quarter.
Finally, RFID has had record orders with growth coming from secure print and identity management applications.
Turning to the outlook for the balance of the year, we expect to see high single digit organic growth for this segment driven by a combination of strong recurring revenue momentum and favorable market tailwind.
Kindly turn to the next slide.
As we turn to page 11 revenues in our <unk> segment were $392 million up 7% on an organic basis EBIT.
EBITDA margins for this segment were 31, 5% for the quarter again. These results are on a continuing ops basis.
Before getting into the business specific details across this segment demand continues to be very strong and product backlogs continue to be at record levels.
Also each of these businesses are navigating the current supply chain complexities, while margins were in line with our expectations. They were negatively impacted versus prior year and are impacted by the availability and pricing of raw material components as well as expediting freight costs.
As our business has increased price actions take hold throughout the year margins should improve as we get into the second half.
As it relates to our business specific commentary, we'll start with Neptune, which had record orders revenue in quarter ending backlog.
Neptune has been able to gain market share by being successful in keeping product lead times at industry, leading terms and releasing new products. Both in terms of cellular connectivity and static meter reading technology.
Verathon, northern digital and each of our medical product franchises remains super solid.
<unk> continued to see strong demand and market share gains and they are single use bronchoscope category and MDI sees the same in both our optical and electro mechanical measurement capabilities.
These businesses are beneficiaries of long term and favorable market tailwind.
As it relates to our industrial businesses demand throughout the quarter was quite strong given the improving end market and capital spending conditions.
As it relates to the outlook for the balance of the year, we expect to see high single digit growth for this segment underpinned by strong demand and backlog levels, but somewhat constrained by the current supply chain environment net net we expect a very strong balance.
Of the year for this group for the balance of the year for this group now, let's turn to our final segment process Tech.
As you turn to page 12 revenue on a process Tech segment were $134 million in Q1 up 18% on an organic basis.
EBITDA margins were 32, 5% in the quarter. These results were also reported on a continuing ops basis.
The story here is we continue to see improving end market conditions across virtually every one of our businesses in this segment and very strong demand.
Cornell continues to perform well for us delivering record orders and backlog in the quarter.
The strength is partially based on market conditions, but also based on Cornell's product innovation as they're seeing very nice demand pickup for their Iot connected pumping solutions.
And the share gains there showing as a result of their niche focused go to market teams.
Also our upstream oil and gas businesses saw strength in the quarter.
Similar to that of our SaaS product businesses. These businesses are also being impacted by supply chain challenges, but continue to navigate well through the issues.
As we turn to the outlook for the balance of 2022, we expect high teens organic growth based on strong levels of backlog and solid market conditions.
Now please turn to page 14, I will talk through our 2022 increased guidance outlook.
Based on our solid start to Q1 strong growth in our software our recurring revenue base and record levels of product demand and backlog, we are increasing our full year 2022 depths guidance to be in the range of $15 50, and $15 75 up from our original guidance of <unk>.
25% and $15 55.
Underpinning this depths guidance as our increased organic revenue growth expectation of 7% to 9% for the year.
We expect a steady tax rate in the 21% to 22% range.
As we look to the second quarter, we're establishing depths guidance to be in the range of $3 80, and 384 again on a continuing ops basis.
Now, we're concluding comments and we'll get to your questions.
As we turn to page 15 in our closing remarks, we want to leave you with the same three points. We started with one as we grow we are increasing the quality of the underlying business and business model. Two we had a strong start to the year and three we have substantial M&A capacity available to us.
As it relates to a strong start we grew revenues organically, 11% and EBITDA, 8% more so we have grown our cash flow is 17% on a three year compounded basis.
We are lifting our full year organic growth in depth guidance based on the factors outlined during this call specifically strong recurring revenue growth record demand for our product businesses and generally favorable market conditions.
Finally, we have reloaded, our balance sheet and continue to have an active and engaged pipeline of M&A opportunities. We have north of 5 billion of available M&A firepower.
So as we turn to your questions, we would like to highlight that our inaugural ESG report was published to our website earlier today. This report outlines our commitment to ESG and our sustainability principles now with that let's open up to your questions.
We will now go to our question and answer portion of the call.
I request that our callers limit their questions to one main question and one follow up.
If you would like to ask a question you may do so by pressing the sarky followed by the digit one on your telephone.
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Again, we request that callers limit their questions to one main question and one follow up.
Our first question comes from Christopher Glynn with Oppenheimer. Please go ahead.
Thanks, Good morning.
Hey, good morning.
Yes, I was curious about the double digit recurring software revenue in aggregate I forget what the comparison was.
Don't think it was particularly low.
So just.
<unk> Goodbye.
So were you surprised by that metric in the quarter and any implications on.
The overall execution and strategic throughput is flowing.
Yes. Thanks for the question as we are.
Look back over to recurring revenue overall growth over the last five quarters I think for the five have been in the double low double digits and so we were not surprised by it but it certainly encouraged by strength also encouraged by the breadth of the Congress.
Some of the strengths it wasn't isolated in one or two business is really quite broad based against.
Everything in and we also just as of Q1. There is a there was a lighter comp from a year ago.
Okay. Thanks.
And so my follow up just curious as you look at the pipeline curious any comments on the mix of platform deals versus bolt on variety if they're both well represented.
Yes, there is certainly both well represented if you go back over I think the last <unk>.
15 years, something like 90% of the capital deployed at Roper has done on platform deals are intent on bolt ons.
On a budget is just the historical referenced the platform versus bolt ons. If we were guessing it might feel a little bit more towards bolt ons over the next 10 years, because we have more things to bolt things into but the preponderance of the capital deployment will be on platform deals in the pipeline is as well weighted across both of those.
Our next question comes from Deane Dray with.
RBC capital markets. Please go ahead.
Thank you good morning, everyone. Good morning, Jamie.
Hey can you just start with process.
Technologies. This is where if we were going to see big pressures on the industrial side supply chain.
You really didn't see that it came through especially on the organic revenue growth, but just can you give us any specifics regarding the.
Supply chain challenges and where.
Is there a big ramp are you seeing it yet in capex that would greater focus on increasing U S shale.
Yeah, Hey, Deane, it's Rob Yes, we're still seeing of course, the impact like everyone else have supply chain. I mean, you can see it in our <unk> segment, probably more so than in process.
But the businesses have done a really really good job of working through it and so that allows us to have.
Great organic growth and then the.
Margins, which were down a little bit on supply chain should incrementally improve.
Moving forward.
So I think overall the businesses are doing a great job of handling what everyone else is also having to deal with and there's no. The only thing I'd add to that we said it a number of times in the prepared remarks, just the level of order activity throughout the quarter and the backlog we entered the quarter with a left the quarter with or just are quite robust to give us quite a bit of confidence for the balance of the year.
<unk>.
That's all good to hear and then on the M&A front you have got the balance sheet fully reloaded.
But there what's the tone of the market right now has with so much macro uncertainty.
Are sellers just holding back now is there any pause in activity and just whats the expectations over the next couple of quarters.
Yeah hard to predict exactly how things will unfold in the near term, but the activity in the market and the activity that we're involved with is very high.
At or above where it's been on the if you looked at our last five year sort of average pace, we're at or above that in terms of the number of deals. We're seeing the number of management meetings. We are doing a number of processes. We are involved in ultimately how many of those transact based on uncertainty on the valuation market is still very much to be determined but encouraged by the level of activity.
Current currently in market.
Yeah.
Our next question comes from Julian Mitchell with Barclays. Please go ahead.
Hi, This is kieran until Connor on for Julien.
So just looking at operating leverage for 2022, I know you guys had previously talked about.
<unk>, 40% is that do you guys still feel good about that number and where do you think we should land for Q2.
Yeah.
That's a pretty good number for the year overall for the company, we're still looking at sort of EBITDA margins relatively flat year over year.
And so again, it's sort of a little bit of improvement throughout the year as some of the supply chain stuff.
It starts to get a little bit better.
Again, the software businesses with this really strong organic growth you get great leverage there and its really about are reinvesting.
In order to make sure there is more growth in the future. So our businesses are reinvesting at a pretty high level, which are which is great to see and that will continue to drive more organic and that's really what moves you from 40 or 45% leverage or 50 or whatever it is it's really about the investments that we continue to make.
Got it thank you.
Our next question comes from Rob Mason with Baird. Please go ahead.
Yes. Good morning, Thanks for taking the question.
Just as you think about your product centric businesses, both MH and process Tech again, you've said that you expect some sequential improvement as we go through the year in revenue.
With supply chain, helping out some but could you tease out how much.
Of the revenue growth sequentially, it's coming from.
Better supply chain versus.
Perhaps price.
Adding a little more you made the reference M. A S. So that was one question then just around supply chain, what specifically gets better I mean around chips.
Electronics or is it other components I'm, just wanted to drill into that a little bit.
Yes, it's Neil let me take a take a crack at both of those price versus volume. If you will and then the nature of our characterized the supply chain challenges and then maybe ask Rob if he has any follow up behind that so on the price versus volume, it's very hard for us to track with precision how much of the revenue rolled up with Roku.
Level and the product businesses is price versus units that said, we would characterize it that we've put a lot with us every one of our companies has taken pricing action or actions.
We're certainly not the back the backstop for global inflation, So we're passing that to our customers.
But it does take time for that price to get it and so for instance in Q1.
MS segment, there was a bit of margin pressure because a lot of their revenue booked was from orders that were in the in this fourth quarter or the second half of last year that was at a lower price point and the orders are booked.
This year. So it takes a little bit of time for that pricing to get into the system, but that's more of a commentary about margins that is about revenue growth. It's just hard to break out as it relates to characterizing the supply chain challenges, it's not a thing and it's not even a thing at a company.
A company might have a chip problem for a quarter or a few months and then it might become a glass problem for computer screens and it might become a caster problem for a cart.
And it really is a little bit of.
A lack them all at the individual company level and nothing sort of Pan Roper that we would characterize it as a single supply chain. The threat. If you will Rob anything you want to add to that yeah. So for MKS, we had 7% organic in Q1, and we're calling for <unk> for the rest of the year. So I mean really gradual improvement we've got very strong order performance, we've got of course record.
Backlog, you've got great book to Bill and so you know again, a little bit of improvement, we're not assuming that the supply chain improves dramatically anytime soon.
I see okay. That's helpful and just as a follow up and again you made the comment that your industrial focused businesses continue to see good strength through the end of the quarter, but.
I know you don't have a lot of international or European exposure, specifically, but strollers is one business that touches that area.
Just specifically to Europe .
Just curious what you saw as you finished out the quarter and into April .
So if <unk> was had a great quarter as they saw stores is tied partially the global.
Industrial GDP and also global auto and so Stuart has really picked up nicely because of the audit the global automotive demand automotive demand all markets are strongest stores ex China for instance in the quarter.
Anything you want to add more broadly on Europe , but.
No I mean, I think overall, we're seeing.
Still seeing pretty good strength across the across the world.
Our next question comes from Andrew <unk> with <unk>.
Vertical research. Please go ahead.
Hey, good morning, guys.
Good morning.
So I can appreciate the color around the supply chain challenges and obviously, that's not unique to you.
But when we think about margins and measurement and analytical and process from Q1 to Q2.
Just given the commentary you've given US do you think that margins would be flattish sequentially Q1 to Q2 and in both of those segments, where do you think we could see some expansion there.
I think sequentially a little bit of expansion in Q1 to Q2.
Not a ton.
Okay that makes sense.
And then on <unk> four.
You kind of cited some strength there do you know how much that business was up in the quarter.
We know precisely how much that business is up in the quarter yeah.
As we said when we bought the business. It's a solid mid single digit organic growth business and it's certainly done that since we've owned it.
And then it was better than that better than missing meaningfully better mid singles in the quarter.
Our next question comes from Joe Giordano with.
Helen Please go ahead.
Hey, guys. Good morning, good morning.
Sorry, I had to jump on late so apologies if this was asked.
Just curious in the.
Just like the overall M&A landscape right now just given what's going on in the market are you seeing more of a willingness.
Maybe private companies to sell now or are they still China like Hey, we will get back to where we were like what's the mindset of a seller now and where you are things more or less actionable than they were like three months ago.
So.
Well, what we see is the mark the activity level the number of processes. The number of companies that were that were meeting with the number of diligent streams is above a trend level in terms of that level of activity. I think it's still your question is still yet to be ultimately determined I think we'll know more over the course of the next quarter.
Or two as we see these processes actually conclude based on if they're willing to accept the price where the market is.
And so a little bit of a partial answer to your question I think we just need a little bit of time for that to unfold.
And you guys, obviously made a lot of portfolio moves within the last year, maybe some very company specific specific opportunities, but as you look at your total portfolio.
Do you see more opportunities still ahead of you to do kind of prune and then.
Kind of finding more appropriate owners. If you don't think you have the right one for some of the businesses.
I'd say if you just take that question and you sort of.
Elevated a touch I mean, our strategy has been.
For 20 years and continues to be how do we increase not just the size of the business, but more importantly, the quality of the business Thats that is the whole punch line of our cash return on investment model is how to improve the quality and so we've been doing that for 20 years on the buy side recurring revenue organic growth less cyclicality more asset light.
Yes.
As you saw in the last really.
Three years, there's been a little bit on the sell side and so the management team and the board looks our charter is to do that is to improve the quality of the business principally through the buy side and here recently on the sell side.
Our next question comes from Steve Tusa with Jpmorgan. Please go ahead.
Good morning, guys, Hey, good morning.
Congrats on the execution this quarter.
Thank you.
Can you guys just give a little more color on how free cash flow it should trend over the course of the year.
Maybe a little bit of.
I know, you're not giving explicit guidance there I might've missed it I was on another call, but maybe just some high level guide on cash.
Yeah sure. So high level total cash flow is going to be driven by organic revenue and organic EBITDA growth first which is looking great for this year.
And then basically timing of capital deployment and how big the deals are and so.
That's why we don't guide free cash flow, because we're always going to be.
Its argument based on what's our what our total deployment, which of course, we're very patient and disciplined.
And as we mentioned on Q1.
The performance on a conversion basis was very good versus history, obviously lower than last year, given the the one timers that we outlined earlier on the call.
Right. So I guess you.
Youre, saying that it depends on what kind of deals you do ultimately where the cash ends up like.
The accretion.
Yeah. So the Roper model right is about double digit long term cash flow compounding and the combination of organic growth and capital deployment. So in 'twenty. We grew our free cash flow of 15% in 'twenty one it was 19%.
If you look at the three year Q1, CAGR at 17% and so we'll continue to do that moving forward, it's a combination of organic and capital deployment.
Our next question comes from Alex Blanton with clear Harbor asset management. Please go ahead.
Thank you moderator.
I ask you. Please don't cut me off until I say, thank you at the end of my second question.
I think that's the best procedure for these Q&A.
The first question is about a compressor.
Controls.
Could you give us an update on how that's going and what the outlook is there and what the backlog is.
Sure So CCC.
Very good quarter coming off a great Q4 order growth was it was nothing short of spectacular in Q1.
And in fact, it was our largest Q1 in a decade for greenfield activity at CCC.
And does this have to do with the oil price.
No I mean think of CCC is much longer cycle than that I mean these are for the most part gigantic infrastructure LNG projects that are planned out in some cases greenfield decade out and so there was just a lot of in this case a lot of Greenfield activity and then further if you want to just break the simplify CCC you basically have a service.
This book of the business and the projects services for callbacks meeting coming in for maintenance with strong services for new commissions, meaning tied to new activity was strong we just talked about how Greenfield project work was very good orders and brownfields been consistent so it's on sort of the two by Geo grid.
All four all four but part of that of boxes are great for CCC in the quarter.
Doing more LNG projects to take gas to Europe would help you is that correct.
As a general matter if there's yes, I mean, if there is LNG compression happening CCC is benefited by that.
Second question is regarding the $5 billion.
Could you just.
Yes.
Reassure us that there are.
Businesses out there to be acquired.
That are large enough.
That was the.
The kind that Roper has traditionally purchased that are large enough to enable your growth to continue at the past rate for how long.
Yeah.
Yeah I appreciate the question I mean, that's always an important investor question and the answer is a resoundingly yes.
We've talked about the size of our broad pipeline, it's very very large there are many opportunities.
We will have no issue continued compounding cash flow for many many more years based on the availability now the challenge is we talk about right is sort of evaluations.
Which remained relatively elevated compared to history and so the idea is to do the best deal for the best price and buy the highest quality business and so we're working hard on that but now where we're in no way concerned about the availability of assets. We are very very busy working on many things and we feel great about our chances to be very successful.
The same kind of quality that that you've been able to acquire in the past.
Yeah very similar if you look at our last deck, yeah, our last decade of acquisitions or a decade, plus it's very similar while asset quality to all of those businesses. The Verde for us the Delta <unk> and all the great things we've done.
Okay. Thank you.
Youre welcome.
This concludes our question and answer session. We will now return back to Zack Moxie for any closing remarks.
Thank you everyone for joining us today, we look forward to speaking with you during our next earnings call.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.