Q1 2023 IDEX Corporation Earnings Call
Actual demand remains steady throughout the quarter, we experienced tailwind from energy mining chemical and lithium ion battery market.
Our water business has performed well quote activity remained strong due to U S infrastructure funding initiatives and we see continued momentum around the adoption of AI and cloud technologies.
Our energy markets continue to be strong driven by favorable oil export and mobile truck demand.
And the chemical market, we are experiencing wins in the energy transition space as well as strong China and middle East demand.
The agricultural demand landscape is mixed farm fundamentals are positive with stable commodity prices and net farm incomes as well as lower fertilizer costs versus last year. However, distribution inventory levels were higher than typical coming into the planting season and a slower start to the season due to weather has delayed the turnover of this inventory.
Tori.
Moving onto the health Science technology segment organic orders contracted 23% driven by the OEM inventory calibration impact as well as timing of a large next gen sequencing order we received in the first quarter of last year.
As Eric noted our life science and analytical instrumentation businesses are being impacted by broad based inventory destocking as our customers recalibrate to a more normalized demand pattern we.
We expect that these markets will continue to see this pressure through the second quarter with some recovery in the back half of the year.
The semiconductor market is experiencing softness, resulting from memory oversupply as well as customers feeling the impact of USF export controls.
We anticipate that macro conditions will improve as we progress through the remainder of the year.
We do continue to leverage share gain to buffer some of the broader market declines.
Our material processing technology business is seeing softness across pharma, biopharma and nutrition markets, driven by tighter capital availability and customer hesitancy due to recession concerns are.
Our funnel does remain strong and we expect some recovery in the second half of the year.
The automotive market remains positive we continue to see a solid global trend towards electrification driving driving opportunities for our growth.
We delivered 3% organic sales growth in the first quarter driven by strong next gen sequencing satellite broadband and fuel cell targeted growth initiatives with some offset from the market factors I mentioned earlier.
Adjusted EBITDA margin contracted by 300 basis points versus the first quarter of 2022. Most of this pressure is in the gross margin line with unfavorable volume leverage and mix more than offsetting favorable price cost.
The recent Mulan acquisition is accretive Thst's overall EBITDA margin.
Finally, turning to our fire and safety diversified product segment organic orders contracted by 4%, mainly driven by timing of project orders in our dispensing business last year.
Organic sales results were strong at 9% growth with double digit growth in both fire and rescue and band it offsetting the decline in dispensing.
Adjusted EBITDA margins expanded by 160 basis points versus last year, largely driven by strong price cost performance volume leverage and productivity more than offsetting higher discretionary spend and employee related costs.
The paint market is mixed with pressure from the North America replenishment cycle coming to an end and softness in southeast Asia, being offset with strong European and Indian demand.
Within our fire business demand for trucks remains strong.
American OEM volumes continued to be constrained by supply chain. However, we are gaining share with north American mid tier in China Oems with our integrated system strategy and have pivoted. Our go to market approach for our Sam product to retrofit and service trucks to bypass the OEM backlog constraints.
A rescue markets are stable and we have experienced favorable demand in Europe and good project activity across most of the globe.
<unk> results continue to be positive industrial demand is steady energy is strong and we continue to drive higher than market performance in automotive through our position on high demand vehicles and share gain.
With that I will give an update on our outlook for the second for the second quarter and full year 2023.
I'm on slide 11.
I'll now provide some additional details regarding our revised 2023 guidance for both the second quarter and the full year.
In Q2, we are projecting GAAP EPS to range from $1 86 to $1 89, and adjusted EPS to range from $2 10 to $2 13.
With organic revenue growth of approximately 3% and adjusted EBITDA margins rating ranging from 27, 3% to 27, 7%.
We anticipate that HST volumes will be negative in the second quarter and the strength we saw in Q1 industrial performance sustained.
Turning to the full year.
As Eric mentioned, we have reduced our full year revenue guidance, reflecting headwinds related to OEM destocking across the HSN segment.
At the midpoint, we expect volume and mix impact reduces EPS by 48.
Offset by 23 cents of cost actions, yielding 25 <unk> of net pressure on our annual guide.
This equates to a full year low single digit organic revenue contraction in HST and low to mid single digit growth in FMT in FSD.
Our view on the industrial market has not changed and we continue to assume a second half decline with a modest recovery in the back half for Hs too.
Bringing it all together, we projected GAAP EPS of $7 30 to $7 60.
And adjusted EPS to range from $8 25 to $8 55.
We expect full year organic revenue growth of zero to 3% and adjusted EBITDA margin to range between 27, 5% and 27, 9%.
The high end of our range implies that we will sustain our record profitability from last year.
Capital expenditures are anticipated to be about $70 million and free cash flow is expected to be 100% of adjusted net income.
With that I'll turn it over to the operator for your questions.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.
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Please while we poll for questions.
And our first question comes from the line of Deane Dray with RBC capital markets. Please proceed with your question.
Good morning, everyone.
Jamie.
Just starting with the HST story here and we're seeing this across the sector, we cover danaher they've been through this.
This whole kind of youre on the other side of the Covid surge in volume.
And Dover's Biopharma pumps same story, there as well so it's not execution, we know that it's not share loss, but what's your degree of confidence in the path of normalizing.
Just what kind of visibility do you have here.
Well, Thanks, Deane I would say a couple of things one as you would expect given the magnitude of some of the swings I mean, the discussions and the intensity and the iteration of them with end customers and at all levels commercial operations is probably at the highest level we've ever had.
And then I would say as you look at the actual order intake.
You can see some things firming up in the back half. So you can see actually kind of the same planning and methods that are pulling it down now are actually repositioning it a little further out in the later in the year sorry.
Youre seeing that for the kind of standard products that we would usually gauge that are kind of right down the middle of the volume fairway. So.
That's it deviates a little bit market for market, but I'd say those two factors are probably the two that were most reliant on as we think about that.
Alright.
And I would just add is our guide on the low end, we have kind of that HST recovery only up about 1% sequentially from the first half to the second half and then on the high side of 7% a reasonable range relative to.
The things that Erik just highlighted alright that makes sense I appreciate that and then <unk>.
Question and Eric maybe you can bridge the comments from last quarter about uncertain period of softness how thats being playing out here as well as the the trends youre seeing across your short.
Short cycle businesses, the implications day rates lead times and so forth.
So are you, saying kind of take it from a little bit.
More depth on the HST and then wrote no no no no just broad.
Leap for IDEXX.
Your comment last quarter or about uncertain period of softness we're all seeing pockets.
Pockets of softness.
But I wanted to see.
With a quarter through now what trends Youre seeing in the short cycle you got any of that is different rare and lead times are so far thanks.
So.
So obviously, the most pronounced recalibration happening exactly in the area that we're talking about here in HST as you look at the industrial side of it and in particular kind of the day rates stuff right down the center of our fairway.
First quarter held up really really well I mean business to business I think we called out Agg is the only one where we saw some similar dynamics, if kind of inventory and things ready to go to plan I will say, though in more recent data here in April some of those can areas that we often reference you can see you can see things pull back a little bit.
And you can see them doing it together.
So it is going to be something we'll watch April for whatever reasons never a real strong predictor for us.
Firms up as we go through May and especially into June , but I will say you can see a little bit of that there in those businesses in terms of just day rates, it's not a it's not a big drop that the uniformity of it is interesting across a couple of weeks here most recently.
And when you kind of hold that up with some other things some of which we do informally and others have done more formally around inventory positions and distributors and things like that and you can see center sort of the.
The same comments hold that up with the same feelings of uncertainty. So it's not it's not a logic break in terms of how this might play out and let's remember.
Comments here last time, I mean, we actually have this positioned in our back half. So we have a bit of a glide path in Italy.
Here very recently seen some of the first signs of it.
That's real helpful. Just to clarify when you talk about the leading indicators can areas thats like band it and Warren Rupp in gas.
Yeah, and a couple of the other FMT pump businesses and even more specifically a couple of product lines, we look at within and where we just know they tend to be order typically one and two and three general replacement. The ones you mentioned a few other places, but yes. They are the ones. We often always look at when we talked to you.
<unk>.
Thanks, Dan.
And the next question comes from the line of Michael Halloran with Baird. Please proceed with your question.
Hey, good morning, everyone.
Hi, Mike.
Can we follow up on <unk> question and talk about the other side of the coin just maybe the capex side of things are you seeing any pullbacks, obviously ignore some of the destock HST stuffs you already commented on but on some of the other longer cycle pieces are you seeing any change in dynamics or or anything noteworthy underneath the hood.
Well.
These are the larger projects or.
Sometimes talk about here I mean, we have we have them in two places and they're a little different so.
I think there are more pronounced.
More aggressive on the HST side in the markets that were referencing here. So you can see some concern in places like MPT, we referenced those in the comments.
But lets tie those to that sort of general macro story that the team did a good job framing for us.
I think on the industrial side I would just kind of come back and say this isn't.
The entirety of the cycle, it's not been a big piece of our story.
I'll remind folks in the beginning of the ramp up post Covid there was a lot of uncertainty there.
That turned into the inability to put those projects. Together then it's inflation came about there was a repricing element that sort of prevented some of them from our side and now maybe we're drifting a bit more into uncertainty.
Sure.
Again isolated.
Got it.
You bet.
Each one of them.
You see more of in chemical and energy.
Yes.
Well not quite positive for us not really because of large projects just that sort of general day to day business is doing real well.
Okay. Thanks for that and apologies in advance for this one I think bill gave some commentary on expectations by.
But by the segments for the remainder of the year. Unfortunately, you guys are breaking up on me could you just repeat that and Keith I misheard or maybe I'm wrong, you guys didn't do that but we did.
And in our updated guide the implied organic revenue for HST is negative low single digits and for FMT and FSD positive low single digits.
Okay. Okay.
That's helpful.
And then I guess just the quick follow up on that then on the FMT piece the orders are good.
I think the end markets. They are probably a little bit healthier broadly why the <unk> worked through the year on that piece specifically is there anything you're seeing that's concerning or is it just how.
How you think things layer out as we as we look forward.
Exactly I mean, it's been our stance as we came into the year and expectation that the industrials were going to start to fall off in the back half of the year, we saw strength in the first quarter, we knew what our backlog positions were and Erik just highlighted some of the caution we're seeing in our daily book and ship order rates that I think just give us more confidence in our call that back.
Half will be softer for those businesses.
A couple of percent on the volume side.
As we progress over the next quarter or two.
Post posted positive here yet.
Thanks I appreciate it guys. Thank you.
Yep Yep.
And the next question comes from the line of Allison Pontiac with Wells Fargo. Please proceed with your question.
Hi, good morning.
Keeping on FMT can you touch on the acquisitions <unk> and <unk> because it seems like they were exceptionally strong just wanted to better understand maybe the drivers there in terms of how we should think about the balance of the year.
Yes.
Holding up really really well.
Casey.
To remind people brought a key piece of automation technology that frankly goes to the same customer set that we have in our banjo business, they're very close by so I mean this is a patient can do.
And so we're working on the commercial side, the technical side and all of the pieces of the IDEXX operating model, So really really happy there.
<unk> business reminder, there was they were kind of long channel partners and there is a piece of software that came with that business, we have long used as well.
So many people kind of associated this with IDEXX for for a number of years, so pretty seamless integration expands our presence in depth and then the water markets as we referenced in the earlier comments and we'll say here are doing well there is good strong support for municipal projects municipal work.
It will play out for quite a while so yeah real favorable with those two KZ their mix of business is much more concentrated towards OEM. So they're not seeing some of the inventory issues that banjo as yet.
Got it and then just on the HST side again, I know you're looking for maybe a second half recovery from those inventory issues, but as we think about sort of that back half and then maybe even into 24 does that sort of drive that somewhat a little trend of what you would expect kind of going forward at least over the next 12 months just any thoughts there.
I don't think so I think I think largely this is a story of coming off of a multi period really aggressive rates both for us and our end customers I mean, I look at I look at our segment in HST was up 30% across two years.
I think that tracks with a lot of the end markets, where we are and so our retraction or a pull back down to more typical rates in the single digits. Even if they are mid single digits, that's pretty dramatic if in fact youre thinking is changing in a relatively short time horizon. So I think the single biggest variable for certainly for us as a component supplier into it is going to be levels of inventory.
Okay.
Okay.
Okay.
Okay.
It really doesn't.
A significant catalyst, which will be kicking it into different areas.
So it's in some ways, it's doing math.
And the latest travel it is different than we've seen before but the preceding period and the run up there was different as well. So I think I think we're all learning to do that together and as I spoke earlier on the call the need for even tighter alignment and iteration as we go through that to protect everybody is very important.
Got it thank you.
Yeah.
And the next question comes from the line of Nathan Jones with Stifel. Please proceed with your question.
Good morning, everyone.
Good morning.
A couple of questions on HSA, just wanted to hit the margins down 300 basis points year over year in the first quarter.
So you said.
<unk> talked about lower absorption.
Revenues were up 3% organically can you, maybe just flesh out a little bit the inputs into that year over year margin decline in HSA.
Yes, I think the.
Biggest driver Nathan is the mix impact some of the volume decreases we've seen our highest margin product portfolio and the business that is somewhat offset that to keep the business positive from an organic perspective.
And then with the overall segment being positive positive there are still some pockets that were negative that caused us to deleverage on some of the fixed cost side.
Yeah.
Okay that makes sense.
And then.
Just maybe a little bit more color on how you expect the year to sequence.
Yes.
In the twenties of orders down.
Just maybe any color you can give us on how we should think about the comps I guess, especially in <unk> is staying relatively short cycle business you take most of the pain here on organic growth in the second quarter, and then you say revenues improved pretty meaningfully sequentially as we got past that.
Now relative to our backlog position, yes, we will be negative in HST in the second quarter, but.
Kind of low single digits.
And then remember the second half of this year is significant.
Significant or the second half of last year was significantly higher.
So we'll have a little bit of comp problems.
We'll keep HST, either flattish or slightly negative for the balance of the year.
Yeah.
And then just one last one on agents.
She is not typically.
Inventory business typically seeing a lot of inventory on customer shelves.
Obviously any inventory Destocking is what we're talking about and you can see can you just talk about how this inventory.
On custom Michelle's, how that works its way through the system.
Yes.
It's a great question Nathan.
In general everything we make here is pretty customized for a very specific end use if not a specific single customer and in the area that we're talking about in the health Science World.
That absolutely happens these respect in components, they don't travel east and west.
When we when we were more generally talking about an IDEXX, so FMT and in that segment FSD as well you've got a channel between us and all of these fragmented end markets, which are at much lower volumes and so no single one of them is going to tend to raise its head up at any one point so that comment generally holds there.
And while its specific customized here. This is a highly concentrated customer set and it's a super direct transaction. So if you chose to do it.
They don't often do it and this is a bit unprecedented if you chose to do it that way you could put mission critical components down that you know youre going to use because they're the most high running parts that you have in the system, even though they are absolutely customized for that customer only.
Great. Thanks for the color.
Yep.
And the next question comes from the line of flat vis tricky with Citigroup. Please proceed with your question.
Good morning, everyone. Thanks for taking my call today.
Hi, Brett.
Yeah.
So just.
Just wanted to ask you in FMT I think Q.
I'm not mistaken kind of upgraded your commentary around strength in the energy and chemical performance you're seeing.
I know you mentioned, it's not really project activity yet. So can you just talk a little bit more about.
Where youre seeing improvements in demand in those end markets and how you're thinking about sort of the sustainability of that strengthening.
Yeah, well I think I think in energy specific remember that we largely do mobile custody transfer there. So there's a little bit of an overhang as the industry gets healthier and price support there out there youre going to get some general tailwind for Capex spend more specifically for us, though we do a lot in mobile applications, a lot of which depends.
Upon chassis availability that's been that.
That was highly constrained for a couple of years, that's freed up as a lot of other supply chains have and some of it is just captive demand at a good and favorable time in the environment, that's something like data micro story like that actually matters for us.
On the chemical side, we've seen strength in China Spa.
Specifically.
With our Richter business I think some of that is probably also related to the fact that country was kind of locked down for a while there are some investments that have to be made we're super well positioned there, we'll see how that plays out.
<unk> term and actually Europe .
In the chemical side, which is an area of concern and was pretty depressed as well for a bunch of reasons. We've talked about that was actually pretty strong for us as well. So it's these little pockets.
That kind of play out in typical IDEXX fashion that go from big to small stories here, but I would say in.
Generally or is there still following others out there that are larger so not not a massive component of project spend are multi period expansion here, but more micro events and things and otherwise markets I think are doing pretty well and I think the other thing is that the energy business they've launched a couple new products that have been very well received in the marketplace.
And then we talk about businesses that add some differentiation relative to their ability to have inventory to supply their customer base I think.
A couple of businesses within our valves, mostly sell into the chemical market have been well positioned relative to their inventory that they've carried.
To take some share from their customers.
Okay. That's really helpful. Thanks, and then just on the M&A front can you give us some more color on the spectrum Tech acquisition I know, it's relatively small but can you just talk about what attracted you to that particular asset potential scalability of the business and more broadly what you're seeing in the M&A pipe.
<unk> environment today.
Yes, sure. So the I mean, the iridium business I mean, as we said in the release it is a leading designer and manufacturer of thin film multi layer optical filters, we do that in a lot of other places within within IDEXX.
In our optical technologies segment and some of it embedded into the life Sciences platform.
Yeah.
<unk>.
It's pretty difficult for highly specialized technology.
Kind of an ideal image.
Unit of measure if you will so think of it as a puzzle piece of technology that goes well with other pieces that we have and honestly the three primary segments here we are.
From a whole bunch of different.
<unk> places and IDEXX not all of them just in optics and technology. So.
Space broadband Super complementary to some other things we've talked about along the way and a great market.
The life Sciences place.
Side of it is probably intuitive I mean, we do other coatings here their technology is a little bit different and so it fits in a way that we were we've been looking for for a while and then Theres a telecom piece thats involved with <unk> rollout and gained filters and things like that so it's the kind of work we know how to do the.
The other piece of this is.
Their coating capacity, then when aligned with other pockets of coating capacity, we have across IDEXX. You can start to think of this as an aggregation and think of how you might move capacity around on what is now becoming quite a bit of math and a very important job to do so it's just really really nice fit we've known a lot of the folks associated with <unk>.
<unk> like this for a number of years so its right in our universe proprietary transactions Super happy to have it here.
Great. Thanks for the color.
Thank you.
And the next question comes from the line of Jeff Sprague with vertical research. Please proceed with your question.
Hey, Thanks, good morning, everyone.
I just wanted to come back to next citing Casey I think you responded to a prior question that there are strong.
And then look amazingly strong right I think at 11 point impact in FMT.
Acquisition impact in the quarter.
Was there something unusual going on or some reclassification or something to drive that.
That big of a result in those businesses.
No I mean.
The only thing of note are as small as a couple of million dollars just as we got next site on our normal accounting procedure. They picked up a couple of weeks of incremental revenue, but yes. It was.
Two 3 million type of deal.
Okay great.
I think I'll leave it there in my other questions were answered thank you.
Okay.
Okay.
And the next question comes from the line of Matt Summerville with D. A Davidson. Please proceed with your question.
Okay.
Matt Matt. Your line is now live you May ask your question.
Good morning, this is Jonathan on for Matt Summerville.
Hello.
I wanted to learn a little bit more about price.
And maybe start out with some historical context for how much prices realized in 2022, and how much incremental realization is expected across your businesses in 2023.
Yes, sure so so.
Price is a big part of our value capture across our portfolio balancing hey, we have differentiated products and making sure we capture that value from our customers. Obviously last year from an inflationary perspective, we were hitting all time high. So we have ramped our price pretty significantly as we went through I think topping off close to 5% last year. This.
Year, we guided about 4% and we're on track for that that's a combination of new price increases that we've launched here throughout the first quarter and then carryover pricing from actions we took throughout last year.
That's great. Thank you and then as a follow up I wanted to get an update on <unk>.
What is the expectation for organic growth in that business for 2023.
How much adjusted EPS contribution.
Contributing to the guide for the year.
Sure I mean, we havent disclosed exactly other than it says it'll be at the high end of HFC growth on a normalized basis before we bought them. They had been a double digit compound or so really successful with their growth trajectory historically and we continue to see that here as they progress.
In the high single digits.
From an EPS perspective, I would refer you to our annual guide we didn't break out the individual pieces, but I.
I think incrementally this year, we said 43 cents for for Moana carryover for next site in KZ net of the divestiture of night.
<unk>.
Great. Thank you very much.
And the next question comes from the line of Brett Linzey with Mizuho. Please proceed with your question.
Hi, good morning, all.
I wanted to come back to HST orders down 23% are you able to parse out how much of that decline was specific to the OEM destock versus maybe some softening in other areas of the portfolio.
Hey, Brett I apologize can you repeat that question.
Yeah sure. So the first one is on HST, so orders down 23% I'm wondering if you're able to parse out how much of that decline was specific to the OEM destock versus softening in other areas of that business.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
On the one time order or the blanket order we received last year. So that was a couple of percent of the 23% of balances a lot of the market factors that Erik highlighted.
Okay got it and just one other one you talked about some of the barometer business is pulling back a little bit how does that shape your thinking around incremental restructuring or further curtailment of some of this discretionary.
Do you lean into the additional actions here to defend the margins just curious what the business planning assumption is.
Yeah.
Yeah.
So far.
We had.
Thanks.
Sure.
For the year the planning for it so remember we did.
Softening in the back half on the industrial side, we're saying here this might be some early indications that it will come to fruition and so in those businesses, we've already made and lined up the discretionary cost reductions in <unk>.
We thought and care around any additions we might make in a way that is completely in line with what we had originally said.
The targeted actions that we spoke about related to the HST destocking phenomenon those are pretty targeted actions within those businesses. So this is where the.
Will the portfolio nature of IDEXX really helps us we can treat these in kind of a differentiated way and occasionally come together on just smart investments around travel and other discretionary things and just do it well as a team.
Alright got it thanks, a lot for the color.
Great.
And the next question comes from the line of Joe Giordano with TD Cowen. Please proceed with your question.
Hello, Joe Your line is live please ask your question.
Hey, sorry, I muted myself can you guys hear me.
Yeah, Okay cool so Nathan that talked about this in his question, but I wanted to follow up there on the inventory thing in HST.
Yes, you guys are not typically like components that are overstocked at Oems. So just was this a change in behavior like where OEM just acted differently because like Unbeknownst to you. When they were just buying in excess of their need for a long time and maybe like maybe that level of granularity is not clear to IDEXX and <unk>.
So that's one and then you guys are generally accompany that learned pretty quickly so well.
What is what do you do differently.
Coming out of this.
Discussions have to change or how do you kind of make sure that something like this doesn't catch you off guard again.
Yeah.
Good question I mean look if you're if you kind of get it right down to the way that inventory replenishment is done obviously your future projections and your assumptions around lead times drive almost all of your requirements.
And so in hindsight now you can view this and think where there must have been irrationality, there, but I don't think that's actually the case I think if you were projecting align a certain way and you've generally been experiencing delivery patterns not just for us, but for others or a certain level, it's going to say you need a lot of stuff.
I think part of what changed here and maybe changed most dramatically as you had kind of a simultaneous well first of all the calendar changed fundings. It sounds that always tends to bring a different headset and I think theres. Some legitimate things out there kind of from a macro perspective that people are wondering about we're further away from COVID-19, we're starting to see some pullback in biopharma spending we have some funding.
Rice's associated with startups and things in Biopharma places. So the minute you interject that back into the equation you potentially go change your assumption on long term demand. It actually has a pretty striking effect on what you should be bringing in now you combine that with the fact that we execute really well so our lead times and our customer sat returning quickly.
Back to normal if you put those two things together.
Given an automated system is going to say, hey, you've probably got too much here. So back to your point on on learnings and things like that first of all we are not typically seen cycles of this magnitude these kind of swings.
But to be fair, maybe in the world to come as we see it seems like there's always another chapter around the corner. So I do take your point and I think higher iteration.
Really coming together and understanding long term projections being maybe potentially more transparent with where we are in terms of lead time performance customer sat making sure that thats exactly understood not just today, but tomorrow as we move through cycles and swings like this I think those would be the kind of things that our teams are talking about at both the commercial and the op.
Operational level.
No. That's fair and then just last for me on the FMT side. I mean, you talked about April weakening and I know that your guidance assumes that industrials get worse in the back half of the year, but.
Is the April weakening here kind of like in line in terms of magnitude with what Youre contemplating at this point Mike nothing as this one did you expect it to start now.
How consistent is what youre seeing with what you previously thought.
Yeah.
I think this is about the pattern that you would expect at some point I would say look this is pretty recent April as I said is often a kind of an interesting month of transition as you move into the spring. So we'll see.
But we're always looking for a slight step down one way or the other and then uniformity.
That's where again the portfolio nature of IDEXX comes into play we're able to kind of see it across a variety of end markets simultaneously all of which have kind of the same sort of short order fulfillment patterns that have long been known to people. So when they tend to move in concert with each other either positively or negatively it's at least worth looking at and taken a signal.
I would say and this is a small drop it is uniform in nature, but that is exactly what we would have probably expected and I think is modeled and ultimately in the backend and <unk>.
We continue to monitor it and talk to you and others about it as we could.
Through and finished the second quarter.
Alright, thanks, guys.
Thank you.
Yes.
There are no further questions at this time and I would like to turn the floor back over to management for any closing comments.
Hey, Thanks, so much I apologize I know we've had some glitches with the technology, maybe you will need to put more filters torque and telecommunications.
First of all I want to thank the IDEXX employees I know theres always some listening in on the call very very strong quarter, you've continued to really perform for the business and for our customers. Thanks to others on the call for your interest and support in the company now.
Bottom line here, we knew 2023 was going to be a year of Recalibration moving one state of the world to another.
Playing out more dynamically than we initially suspected in the HST side, but as you can see we're executing through it we're taking the appropriate responses in the <unk>.
Business.
And I think most importantly, we ultimately believe in the long term success and our growth in those markets and we're talking about coming down from highest to something thats actually pretty typical but actually will absolutely advantaged.
And we think it's going to continue that way and accelerate for years to come.
Through all of this dynamic swings over the last three years I'm really proud of the fact that we've executed well and we certainly stepped up our capital deployment really happy to announce this transaction since the beginning of 'twenty one with iridium.
<unk> doubled our emerging markets footprint and capability set and continue to strengthen our really unique culture as we have done. It. So we're built for the long haul here we're confident.
We're going to perform and deliver value throughout and I look forward to updating everybody along the way as the year and the year to come in the years in the future play out for IDEXX. Thank you.
This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a great day.
Okay.
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Okay.
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