Q1 2022 Superior Group of Companies Inc Earnings Call
Good afternoon, everyone welcome to superior group of companies first quarter 2022 conference call with US today are Michael Benstock, The company's Chief Executive Officer, and Andy Demott, which is what its chief operating officer, and Chief Financial Officer. After the Speakers' remarks, there will be a Q&A session. This call is.
Being recorded and your participation implies that you agree to this if you don't then simply drop off the line now I will turn the call over to Jeff Elliott partner and senior managing director of the three part advisors, who will read the Safe Harbor statement. Please go ahead.
Thanks, Joe.
This conference call may contain forward looking statements about superior group of companies within the meaning of the Securities Act 1933.
Securities Exchange Act 1934 private securities.
Reform Act, a 1995 and all rules and regulations issued thereunder.
Such statements are based upon management's current expectations projections.
Estimates and assumptions words, such as will expect believe anticipate.
Outlook hope and variations of such words.
And similar expressions identify identify such forward looking statements, which include statements on the impact of COVID-19 on the company's business.
Including inventory supply chain manufacturing supply chain.
Factoring capacity of companies.
Contract manufacturing facilities.
This capacity customer demand.
Forward looking statements involve known and unknown risks and uncertainties that may cause future results to differ materially from those suggested by the forward looking statements.
Such risks and uncertainties include but are not limited to default.
The effects of Covid, the COVID-19 crisis on the U S and global markets, our business operations customers suppliers and employees.
General economic conditions in the areas of the United States in which the company's customers are located.
Changes in the markets, where uniforms or weren't where promotional products are sold and where it call center services are used the impact of competition.
The company's ability to successfully integrate operations following consummation of acquisitions.
And the availability of manufacturing materials as well as risks uncertainties disclosed in the company's periodic filings with the Securities Exchange Commission.
<unk> the company's annual report on Form 10-K for the year ended December 31 2021.
The report on Form 10-Q for the quarter ended March 31, 2022 and.
In the 8-K filed recently.
Shareholders potential investors and other readers are urged to consider these factors carefully in evaluating the forward looking statements made herein and are cautioned not to place undue reliance on such forward looking statements.
The company does not undertake to update before looking statements contains your edge to conform to actual results or changes in the companys expectations.
Whether as a result of new information future events or otherwise, except as required by law. Please.
Please note that all growth comparisons that management makes today will relate to the corresponding period in 2021, unless noted with that I'd like to turn the call over to Michael.
Thank you Jeff good afternoon, everyone.
Again for joining us for our Q1 2022 earnings call today, I will share performance highlights and touch on the current macro environment. After that Andy will provide an operational and financial update.
<unk> strategy Officer, Phil Cousineau, Jake Emulsin Fabulous President.
We will participate in the Q&A session following the prepared remarks.
It's fair group of companies is growing in all core businesses and remains focused on executing against our long term strategic roadmap. Our team has shown resilience in the face of a variety of macro headwinds, which continue to challenge businesses around the world I would like to acknowledge some recent company achievements and milestones on may 2nd.
We announced the acquisition of Guardian products, our promotional products distributor focused on the automotive space, which is a natural extension of <unk> December 2021 acquisition of centers Mill Guardian expands our already dominant presence in the automotive market Brexit superb culture and talent to the Banco team, we expect guardians.
And to be immediately accretive to the bottom line.
Following extensive beta testing our state of the art robotic system in the Eudora, Arkansas distribution facility is finally slated to go live in the next couple of weeks. This is a significant achievement I appreciate everyone, who contributed over the past years to bring our new upgraded robotics online significant savings will be realized as a result of our 12.
Dollar investment in this project.
Sales synergies realized through the combination of our branded uniforms and branded merchandise sales force and marketing efforts are driving further accelerated the integration of these businesses, which we will also discuss in more detail later our.
Our organization is growing and has been executing against initiatives to expand and fortify our team for the future. We anticipate sharing some exciting talent announcements in the coming weeks.
Now I am going to review segment highlights. Please note that the first quarter 2022 will conclude the unusual year over year comparisons related to critical PPE sourcing that the company executed during the height of the pandemic.
You'll start to see normalized comparisons in Q2, 2022, I will begin with our uniforms segment.
Our uniform sales during the first quarter increased five 6% compared to first quarter 2021, excluding PPP sales and decreased 11, 8%, including PPE, our strong inventory position ensures customers' needs are met during continued supply chain uncertainty, we are seeing our supply chain.
Get healthier by the day with improving fill rates and improving capability to fully capitalize on replenishment opportunities quickly.
Through strategic adjustments in our buying behavior, we are mitigating risk and improving reliability to customers.
Current favorable inventory stocking positions for both fashion seal healthcare institutional healthcare apparel and wonder when fashion healthcare scripts by CIB puts us on strong footing to service existing and new customers higher fill rates are anticipated going forward, which should also lead to more replenishment orders coming into 2020.
Two we saw some softness in the first quarter as Cid's retailer customers were enjoying the benefit of their consumers having received 2021 stimulus checks that did not reoccur in 2022 that coupled with higher than expected inflation resulted in a more cautious consumer pressuring retailers spa.
Pending <unk>.
Some regions posted strong pockets of growth as a result of sales territory realignment and reorganizations done in 2021, we expect to have a strong second half for fiscal 2022 fueled by growth with new product introductions for wonder wait and also including an upcoming product launch with our licensed partner Carhartt.
Most importantly, as we begin Q2, we are well aligned to ensure confidence in our ability to service our customers at even better than pre pandemic levels levels.
International expansion, particularly to Europe , and Latin America remains a key strategic element and the Companys long term growth strategy.
The European business is off to a strong start led by the director of sales for Europe , who joined the team last September we are conducting additional market research to enhance our understanding of the various countries consumers and opportunities our distribution center in Poland is busy and contributing to reduce delivery times and shipping cost for our middle Eastern and <unk>.
European customers.
Overall, our healthcare team is performing well and demonstrating resilience while facing challenges due to COVID-19 over the past 18 months, we continue to execute against our Omnichannel sales strategy penetrating new international markets trading group sales specialty sales and E Commerce business channel optimization remains key.
And we are working to increase profitability optimize content for an improved brand experience and more deeply evaluate third party partners.
We expect our uniform segment sales to continue to grow driven both by our healthcare apparel offerings and the significant opportunities being uncovered by our combined branded uniforms and branded merchandise sales force.
The integration of our HDI and Banco sales and marketing forces in the third quarter of 2021 continues to yield significant synergies and opportunities.
<unk> recorded multiple meaningful wins that will benefit results later in 2022, our uniforms pipeline is stronger than it has been in many years and we are now accelerating the combination of additional services within these divisions, which will ultimately result in re segmentation the branded uniforms and branded merchandise divisions.
Will be aligned to one segment and healthcare apparel will become its own business segment. Both will still have the benefit of some shared services. We expect this re segmentation to be complete in the second quarter.
Core promotional product sales grew by 38, 3% first quarter 2022, compared to 2021, excluding PPE sales and grew by 11, 1% year over year, including PPE sales Banco recorded another milestone posting the highest quarterly net sales of core promotional products in the.
Companys history during Q1, <unk> differentiated offering serving some of the world's largest companies continues to gain recognition and market penetration.
The office Gurus, our remote staffing solutions segment continues to grow at a rapid clip posting a net sales increase for first quarter 2022, or approximately 40% when compared to Q1 2021.
<unk> excellent reputation for customer service continues to drive strong demand from new and existing clients.
In fact, new agents are rapidly joining our team with a total of 367 billable agents added across El Salvador believes in Jamaica in the first quarter.
Reaching our six month hiring goal early we experienced elevated absenteeism across our locations early in Q1, which has now subsided as omicron bearings adversely impacted communities around the world, including the regions, where we service our customers from currently agents working remotely still account for approximately 70.
Percent of our <unk> workforce.
On another positive note for <unk>, our new center in the Dominican Republic is anticipated to begin operations. Later this year fortifying our ability to meet customer demand for the next 18 months to two years.
Adaptability resilience are key to success, especially in the current operating environment through a strategic planning wholly focused on long term results STC has been able to navigate complex macro challenges while simultaneously growing all core businesses, our direct factory relationships and sourcing raw materials and finished.
<unk> is a key differentiator over our competitors.
We are purposely long in inventory and raw materials further mitigating risk impacting the bottom line, including inflation logistics and freight costs and supply chain challenges now I will turn the call over to Andy to discuss the operational and financial highlights in more detail Andy.
Thank you Michael and good afternoon, everyone, the financial and operational health of the company remains steadfast as we bring to closed a multi year capital investment phase.
We're excited to begin reaping the benefits of our new robotic system at our primary distribution center in Eudora, Arkansas, which is scheduled to go live in the coming weeks, we expect the system to produce distribution labor savings of approximately $200000 per month.
While improving distribution and speed and efficiency we.
We are winding down a period of heavy capital expenditures over the last several years and we expect to return to more normalized capex spending levels of approximately 1% to 2% of revenues in the future.
Now I'll provide some quarterly financial highlights consolidated first quarter net sales were $143 6 million compared to $148 million in Q1 last year. The one 9% increase was driven by strong growth in our promotional products and remote staffing solutions segments. This.
This was offset by a decline in the uniforms and related products segment, which included $11 $6 million less in PPE contribution compared to the first quarter of 2021.
Promotional products also saw a decline in PPE contribution of $10 $5 million.
As mentioned on the last call PPE contribution continues to wind down to pre pandemic levels and as such comparisons will become more normalized going forward no. The total PPE sales in Q1 of 2021 were approximately $26 8 million, while the last three quarters of 2021 combined.
Included only $11 $8 million and PPE sales <unk>.
Excluding the difference in PPE sales for the quarter net sales were up 22% compared to the first quarter of 2021.
Turning to segment results for the first quarter uniforms and related products net sales declined by 11, 8% to $62 2 million compared to 2021 as mentioned PPE contribution was more normalized at point $9 million in the quarter compared to $12 5 million in first quarter 'twenty one including.
The difference in PPE sales for the uniforms and related products segment grew five 6% compared to the first quarter of 2021, driven by increased demand for uniforms apparel are several industries, such as restaurants transportation and hospitality continue to recover from the pandemic.
Gross margins for our uniform segment decreased slightly to 33, 1% as compared to 33, 8% in the prior year first quarter. This decrease is primarily attributed to the continued impact of increased logistics cost within the supply chain associated with the pandemic opt.
Operating margins for this segment decreased to a negative one 2% in the Q1 of 'twenty two versus four 9% in Q1 of 'twenty one.
The 2021 operating margins included the impact of significantly higher PPE sales, which produce higher operating margins as the preponderance of these sales required much less SG&A costs as compared to the core uniform business.
As a reminder, operating results for our uniform segment include all of our corporate overhead cost.
Operating margins were reduced by the impacts of a number of factors in this segment, including airfreight costs of <unk> $4 million fee overruns associated with a year end audit of <unk> $4 million employment placement fees of <unk> 3 million associated with a number of significant positions being added.
And losses on our investment held to offset our liabilities under our unfunded subsequent supplemental retirement plan of <unk> $2 million. These.
These items are in addition to transforming <unk> into the C suite as Chief strategy Officer, and other talent investments that we're making to catch up with our significant growth over the last several years and to help support our next stages of growth. While this has reduced the operating margin in the short term. We expect these investments to pay continuing dividends with steadily improving.
<unk> results both on the top line and on the bottom line in the future.
Sales for our promotional products segment grew 11, 1% to $65 4 million. The increase was primarily due to an increase of $17 1 million and net sales in our core promotional products business, including net sales contribution of $7 $1 million from the acquisition of <unk> Mill in December 2000.
'twenty one.
This was partially offset by a decrease of $10 $5 million in PPE sales.
Excluding the difference in PPE sales for the quarter. The promotional products segment grew 38, 3% compared to Q1 of 'twenty one.
Post closing.
Posting a gross profit of $19 7 million and operating income of $4 million.
This segment is another area, where we are investing in building out our management and support structure to catch up with the significant growth that we've experienced over the last several years and to support future growth.
<unk> posted a record quarter in Q1, 'twenty two with core branded promotional product sales, reaching $61 8 million.
We continue to grow both organically and Inorganically, while also grappling with supply chain challenges and the continuing effects of Covid.
<unk> various led to the cancellation of many in person events and conferences in the first half of the quarter higher interest rates and inflationary concerns led to Paul It is embarking spin.
We recently announced the acquisition of Guardian products, which has trailing 12 months revenue of $23 million and represents a continuation of our acquisition strategy and fits in very nicely with our recent acquisition of centers mill in December of last year Guardian centers mill serve similar end markets and we plan to leverage the in house Deckers.
<unk> and production capabilities et cetera, as meal to better serve guardians ever expanding client base.
And as Michael noted the integration of the branded merchandize sales and marketing forces of Banco in API is bearing fruit and we are accelerating the integration of the branding business businesses and we will ultimately re segmented our operating results are aligned with these pending changes.
We have already recorded some significant wins that will begin to impact sales of branded uniforms in the latter part of this year and the pipeline of larger opportunities has never been stronger.
We are very bullish on the future.
<unk> double digit growth trajectory continues with net sales up 39, 7% to $15 $9 million. Another great result for our team as they continue to drive remarkable growth in this segment.
Gross margins for this segment remained strong at 59, 4%. Despite the impact of increased absenteeism and the omicron variance. This elevated absenteeism reduced revenues and gross margin dollars by approximately $400000 in the first quarter of 'twenty two.
This impact operating margins for the remote staffing segment increased to 24%.
On a consolidated basis, our gross margin for Q1 of 2022 was relatively consistent at 34, 7% compared to 34, 8% in 2021 first quarter with increased logistics cost offset by the impact of product mix shifts.
Operating income was $7 6 million compared to $13 9 million in last year's quarter.
Operating margins were impacted by the significant decline in high operating margin PPE business investments in our management team and the other costs identified in the earlier segment discussions.
Net income for the quarter was $5 2 million or <unk>, 32, or 32 cents per diluted share compared to $10 5 million or <unk> 66 cents per diluted share last year.
Moving to the balance sheet and cash flow highlights as we've discussed over the last several quarters, we have beefed up our inventories in order to compensate for issues with uncertainty and delays within our supply chain in order to be sure that we can take care of our customers' needs. This has negatively impacted our cash flows in the short term and we'll continue to do so for a little longer as we move later.
Into this year, we expect that we will begin to reduce our inventory levels and will return to more normalized cash flow levels. While this investment in inventory has increased our borrowing levels. It has provided a benefit in the form of delaying some of the impact of other higher product cost.
Our debt to EBITDA ratio remains strong at two six times, which is well under our covenant limit.
Cash and cash equivalents at quarter end was $8 3 million.
And as I mentioned earlier, we are winding down the period of heavy capital expenditures and expect to return to more normalized capex spending levels, approximately 1% to 2% of revenues in the future.
We continue to recognize the importance of our dividend to shareholders and paid cash dividends totaling $1 $9 million due in first quarter 'twenty two 'twenty three 9% over the $1 5 million paid in the first quarter of 'twenty one.
The FTC team continues to execute against our long term growth strategies and are successfully growing sales in all core businesses. We look forward to more normalized comparisons as we move past unusual year over year comps beginning in the second quarter 2022 with that I'll now turn the call back to Michael for closing remarks.
Thank you Amy Superior group of companies over 100 years old yet, we keep reinventing ourselves continuously adapting and striving to improve we are quite proud of our entrepreneurial mindset that permeates and defines STC and drives innovation, we are managing the business towards growth and investing in talent to fortify our ranks as we.
Move toward our goal of achieving $1 billion in sales by year end 2025 with that well open the line for questions.
Yeah.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Okay.
Our first question comes from Kevin Steinke with Barrington Research. Please go ahead.
Hey, good afternoon, everyone.
Yeah.
Ill start off by asking about.
Your.
Decision too.
And a great combined are combined.
Promotional products and uniforms, while separating out healthcare.
You've obviously talked quite a bit in the past about the integration of the.
Sales teams, but what other implications does that combination have.
From a management and.
Operational perspective.
Yes, Jake wanted to jump in on that.
Kevin is going to talk to you again, so look we're really excited about this Michael and Andy mentioned in their remarks, but the integration of sales and marketing at <unk> and Banco has really picked up steam this year.
Andy mentioned in his remarks, our pipeline is deep and as long as it's ever been and the re segmentation and that's going to unite the divisions into a single division. It's really the natural progression of the work we've already been doing together. She asked what other areas are waiting and looking at things like design account management.
Technology warehousing those are key points of focus throughout the rest of the year and we expect that will be able to achieve significant economies of scale by combining the two management teams and grow revenue faster than our operating expenses over the next couple of years.
We'll see the benefit of lower distribution cost with Eudora warehouse upgrade that we mentioned.
Really excited about what this means for our future and we're really bullish on on the combination of the two into one division.
Alright, great.
Do you plan on then maybe providing some.
Update.
Growth outlooks by segment once you get that re segmentation done.
And yes, yes, Kevin we will we will be putting together comparative information and whatnot, so that you'll be able to see that.
And if we accomplish it Mitch.
Mid quarter or whenever it is we won't we won't posted out there for our shareholders, but when it's ready youll see its not ready till the next call and you'll see it then.
Certainly understand what we moved in and how it moved.
Right and just also you know in terms of I guess thinking about.
Four year.
Our growth target and how that breaks down by segment.
Third would be any really material change required because of that.
Realignment, but you know.
Just wondering based on that.
Yes, Ken I don't see it changing our.
Overall guidance, but I mean, it obviously.
The split between healthcare uniforms in the branded branded uniforms pizza will be going into Banco could tweet.
The individual numbers a little bit.
And there's another there was another goal, which I know you didn't ask question, but I might as well get it out there there was another goal in that.
We realized the complexity of our story sometimes being.
Having all of these legs of the stool.
It's been described that we were five legs, most oil well paring it down to three by having.
Branded products Division.
Healthcare uniform segment and having the PPO certainly makes our story a simpler story to tell investors who might be interested in hearing.
Right, Okay that makes sense.
And just wanted to ask you about.
The selling and administrative expenses.
We called out that.
CPE sales were higher margin.
Last year lower cost to serve there.
And some of the investments and the management team you've made it also sounded like there may be a few one time.
<unk> items in the quarter, so just trying to get.
A handle on how we should think about.
Selling and administrative expense run rate perhaps.
Going forward given you know there was a sequential increase in the expense space.
Versus the fourth quarter of 2021.
Yes, I think there is.
Obviously, the items that I called out.
Would be pretty well limited first quarter, but the part there is a couple of parts.
If youre looking at the investment and the management team I think those are going to continue at the level you're at plus we're adding we did Mitch we're adding a couple of positions that will be end of the second quarter that will affect us there.
There is some transition phases of that there'll be some overlap.
While some of those for a period of time. So I think that will continue through the balance of this year, we will obviously grow into that with our revenues and such where as a percentage will come down.
Sure.
The other piece of it.
Okay.
I would love to tell you I have a better guest than you do on what the.
The supply chain logistics issues.
With the.
Airfreight and things like that as to whether how quickly those are going to come down and the labor pool out there is going to stabilize a little bit from availability.
I think that those will continue to come down as the year comes along.
But it's just a matter of how quickly I can't really tell you.
Right, Okay, but just following up on that it does seem like from your comments that you've seen some.
Perhaps stabilization or even improvement in.
Supply chain issues and maybe inflation so.
And gross margin was actually a bit better than I expected.
I know, that's also impacted by product mix, but.
Do you still feel like you're at a point, where the price increases you.
Implemented.
And I think it was back at the beginning of December are going to hold and cover.
Is that the cost increases.
That you've seen to this point that you can foresee.
Yes, I think that clearly from a gross margin perspective, I think the pricing is covering maybe you can see that.
Essentially just covering the impact of what's going on in.
That realm.
<unk>.
I mean I don't think it is as you can see what the amount of extra investments, we're making as well as some of the increased cost is not covering all of it in the short term.
That as we get through the year, you'll start seeing the SG&A as a percentage of sales improving us starting to overcome that.
Yeah, Kevin Michael I'd agree with that Youll see youll see some slight improvement as the year progresses.
Some momentum towards being kind of right size, but.
Some of the positions that we're putting on.
There is actually some overlapping positions of.
Somebody who's, leaving and somebody is coming in and Theyre being a transition between us which is.
Going to be some excess costs will also have some additional recruiting fees.
As a result.
Which.
You could say are one time, but.
The level of people that we're recruiting.
It actually is but we.
We might have some ongoing even beyond that we're really focused on.
The human capital, we need to run this business as we start moving towards being a $1 billion business.
If you think about it this way pre pandemic, our sales were less than I believe $300 million.
This year there'll be a lot closer to double that.
And.
We're operating our business.
Almost the same with the same management team that we were.
At $300 million. So we know we've got to improve we know we've got to expand and we know also that we have to bring a higher level of talent.
To hopefully achieve even better results in the guidance we've already given.
Kevin also I would.
I've touched on it in my remarks about the savings that we will generate from the warehouse as we get it up to speed.
Without going into the next few weeks, we'll get to the point, where we're realizing a couple hundred thousand a month.
We did with having the system in operation the first quarter bidding pool, essentially a full quarter of depreciation on the new system already so the operating results were weighed by the additional.
Depreciation expense, but did not yet have the benefits of having that system up and running.
Right. Okay. That's helpful. Yeah.
Yes.
Did notice that.
200000 of labor savings per month that you called out I mean can we think of one.
What other efficiencies or potential savings.
We think about.
Coming out of.
The.
Launch of that.
New eudora.
System I guess.
The savings will come primarily from labor.
But really there's no packaging.
Efficiencies or.
Freight and logistics efficiencies that we will achieve as a result, so it's primarily labor.
Keep in mind kind of turn the clock back I'm sure you remember this that.
It wasn't very long ago that we shut down one of our second largest distribution center in Georgia, and even a second facility in Georgia.
And moved it all into Arkansas remember that we anticipated when we move that that shortly thereafter, we'd have a robotics system in place, but because of all the supply chain delays COVID-19 and everything else that all got pushed back to now finally going live.
We got net warehouse live as we had hoped to win.
Third quarter of last year, we'd already be seeing those savings.
Right Okay.
Yeah, that's some pretty.
Bullish comments on the uniforms segment pipeline and.
The strongest it's been in years.
Just speak to that again in terms of the benefits you're seeing from the combined sales force as well as maybe how that might.
Tie into the competitive environment.
Yes, I'm going to let.
J codes.
Working day and night for many many months talk to you about that Jay jump in.
Yeah, our uniforms pipeline.
It's as strong as it's ever been.
Kevin when we think about.
It was remarked we made probably six quarters ago during the height of Covid and there was no RFP to speak of.
Everyone was kind of just hunkering down not not going out to bid. There was there was really not a lot of opportunities where we are in the exact opposite environment right now.
Yes, there there are everyone that was unhappy with one of their providers over the last two years is now coming out to bid are ready to move to a more qualified.
Provider and we represent a really really nice landing spot throughout the branded products branded merchandize brand new uniforms.
Our feeling is that nobody else in the industry can do what we can do across branded merchandise branded uniforms gifting point of sale point of purchase.
On site.
<unk> capabilities that we now have through the acquisition of southern mill in December .
When we can get our story out in front of people. There is nobody else that can do what we can do and that's what gets us really excited.
I'm going to add to that.
I want to focus in on something Jay said that there are a lot of companies out there that arent just a lot of rfps out there there are a lot of our existing clients that are rebranding.
Finally, they've got through the worst period of their history, and Theyre, starting to revert rebrand with new logos and new advertising new marketing.
A whole different story and as they do that.
They're not just rebranding their uniforms, but they are rebranding all of their promotional products as well and all of their branded merchandize and this is where we step in and we can be the perfect. One stop easy shop for all of them and that's the value proposition that we offer that nobody else does.
Okay, Yeah, that's helpful Ed.
Lastly, I just wanted to ask about.
Yes.
M&A pipeline.
Well what I.
I guess is still the.
Promotional products side of the business I guess, you would say, even though it's going to be integrated with the hps piece, but.
Yes, you made three acquisitions in that particular.
Particular space in the last 15 months here and maybe just talk about the pipeline and the opportunities you're seeing.
Is it mostly on the promotional products side are you also seeing opportunities in.
<unk> two.
I'm going to turn it over to bill for that but.
We've never seen more activity or more.
Transactions.
More all not just uniforms companies uniforms company's branded merchandize companies <unk>.
For sale, but I'll turn it over to Phil to tell you about our activity a little bit.
Yes, I think I think we've we've done well on the acquisition trail over the years by a building out the most robust pipeline out there probably in the industry and then b being extremely choosy and picky with which companies we choose to acquire.
We're going to continue to go and build out that pipeline I would say that it is.
Weighted more heavily towards promotional product branded merchandize firms.
But that being said, we also look at healthcare apparel pipeline on that side and we also look at the Bto call Center World as well and uniforms world. So.
We're active.
But at the same time, we want to continue to be extremely picky.
To make sure that it will require a company that it truly is an amazing fit and which.
And acquisition has incredible synergy.
And one that that really will will cut pay off I would say real quick not just from a cash flow perspective, but also in terms of what else. They can add to our business. So we're going to continue to build the pipeline.
Like Michael said, there's a lot of M&A activity still out there and still happening a lot of people want to sell their businesses.
But we will pick and choose the ones that are right for us at the right time.
I would tell you look Kevin.
As much as we like doing acquisitions, we always have a bunch of the pipeline.
It's got to be as Phil said in Jacobs said regained its got to be the right fit but we also believe that.
Organic growth in security.
Recently important at this time.
So we'll look at acquisitions, if it is not perfect for us and not the right deal for US, we're not going to do it.
Because we think we have enough going with respect to our organic growth.
Two two.
If we stay heads down.
To make make that is equally successful strategy I'm, not saying that we can't do both.
Should.
When it's appropriate.
Alright, Thank you for all the commentary.
This concludes our question and answer session I would like to turn the conference back over to Michael Benstock for any closing remarks.
Okay well.
As always I want to thank everybody for joining us.
We'll look forward to sharing our second quarter 2022 results with you.
And just a few months have a good day and rest of the week.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.