Q4 2024 Balchem Corp Earnings Call
Speaker Change: Greetings and welcome to BALCM's fourth quarter and full year. A question and answer session will follow the formal presentation.
Speaker Change: Specifically designed for inclusion in the multi vitamins and the third is obviously fallen plus which is a patented choline and wrenched bioactive reduced folate ingredient that support cellular health at all stages of life. These product launches will add to our existing offering of minerals nutrients and vitamins and.
Speaker Change: Evel us to bring even more value to our customers, while simultaneously supporting our vision of making the world a healthier place.
Speaker Change: Our animal nutrition and health segment also launched a newly developed product Aminosugar XL, which is a next generation rumen protected precision released lysine designed to consistently reliably and economically meet the lysine amino acid requirements of lactating dairy cattle.
Speaker Change: <unk> XL offers leading performance when considering feed stability lysine content and bioavailability and is a great addition to the animal nutrition and health segments portfolio of high performing encapsulated products focus on optimizing dairy cow productivity and sustainability.
We have also made progress on building consumer awareness for some of our market leading brands via choline balkin with market, leading brand of the essential nutrient choline became a proud partner of the New York Jets, a major professional NFL sports team and K, two vital malcolm's market, leading brand of the specialty vitamin K two.
Speaker Change: <unk> just recently partnered with the Bayern Munich Women's soccer team to further drive awareness and increased focus on women's health. These partnerships. In addition to our increased social media presence is indeed, helping to build awareness and drive market penetration for our brands. We also made significant progress.
Speaker Change: Egress in 'twenty 'twenty four on our 2030 sustainability goals to reduce both greenhouse gas emissions and water usage by 25%.
Speaker Change: We were extremely pleased to report out in our sixth annual sustainability report that we are already tracking ahead of our 2030 goal on greenhouse gas emissions reductions in 'twenty 'twenty four biochem successfully reduced water withdrawals by approximately 15% compared to our 'twenty 'twenty baseline.
Speaker Change: Showing substantial progress toward our water usage reduction objective. We also completed in August of last year. Several important capital projects that collectively were designed to allow us to reach our water usage gold within the next year or so well in advance of the 2030 golf.
Speaker Change: <unk> approach remains unchanged as we continue to focus on our two main objectives, providing innovative solutions for the health and nutritional needs of the world and at the same time operating with excellence as strong stewards of our stakeholders.
Speaker Change: And lastly in December we announced another increase to our annual dividend, taking the dividend from 79 to 87 cents per share a 10% increase year every year. This most.
Speaker Change: Recent increase marked the 16th consecutive year of double digit growth of our dividend, which once again reinforced our commitment to our long standing dividend strategy.
Speaker Change: All in all another strong year, both financially and strategically for Balco.
Speaker Change: Now regarding the fourth quarter of 'twenty 'twenty four this morning, we reported record fourth quarter consolidated revenues of $240 million, which was 4.9% higher than the prior year quarter.
Speaker Change: GAAP earnings from operations for the fourth quarter were higher by 23.8% versus the prior year and.
And we delivered record quarterly adjusted EBITDA of $63 million, an increase of 13.4% with an adjusted EBITDA margin of 26.2% up 200 basis points from the prior year Consol.
Speaker Change: Consolidated net income closed the quarter at $34 million, an increase of 26%. This quarterly net income translated to diluted net earnings per share of $1.03 on a GAAP basis up 21 cents or 25.6% comp.
Speaker Change: Paired to the prior year.
Speaker Change: On an adjusted basis, our record fourth quarter adjusted net earnings were $37 million, an increase of 19.3% from the prior year, which translated to one dollar and 13 cents per diluted share.
Speaker Change: Overall, another very strong quarter for Balco, which as I said earlier capped off another strong year for us.
Speaker Change: I'm now going to turn the call back over to Martin to go through the fourth quarter consolidated financial results for the company and the results for each of our business segments in a little more detail.
Martin: Thank you Ted.
Martin: As Ted mentioned overall, the fourth quarter was another strong quarter for biochem with solid sales growth strong earnings from operations and adjusted EBITDA growth or.
Martin: Our fourth quarter net sales of $240 million were up 4.9% driven by growth in all three segments human nutrition, <unk> health animal nutrition, and health and specialty products.
Martin: Our fourth quarter gross margin dollars up $86 million were up 15.1%.
Martin: Gross margin percentage was 36% of sales up 320 basis points compared to the prior year, primarily due to a favorable portfolio mix.
Martin: Consolidated operating expenses for the fourth quarter were $39 million up six 1% compared to the prior year.
Martin: The increase was primarily due to higher transaction costs higher compensation related expenses and an increase in outside services, partially offset by lower amortization.
Martin: GAAP earnings from operations for the fourth quarter were $47 million, an increase of 23, 8%.
Martin: On an adjusted basis as detailed in our earnings release. This morning, non-GAAP earnings from operations of $52 million or up 16.6% compared to the prior year.
Martin: Adjusted EBITDA was $63 million, an increase of 13.4% compared to the prior year with an adjusted EBITDA margin rate of 26.2%.
Martin: Net interest expense was $3 million, a reduction of $2 million compared to the prior year, driven primarily by lower outstanding borrowings.
Martin: We continue to use our strong cash flows to pay down debt and we reduced our debt by $37 million in the fourth quarter and ended the quarter with net debt of $140 million with an overall leverage ratio on a net debt basis of 0.6 times.
Martin: Our effective tax rates for the fourth quarters of 'twenty, 'twenty, four and 'twenty, 'twenty, three where 24.5% and 19.9% respectively.
Martin: The increase in the effective tax rate from the prior year was primarily due to an increase in certain foreign taxes.
Martin: Consolidated net income closed the quarter at $34 million, an increase of 26%.
Martin: This quarterly net income translated into diluted net earnings per share of $1.03, an increase of 21 cents or 25.6% compared to the prior year on.
Martin: On an adjusted basis, our fourth quarter adjusted net earnings were $37 million translated to $1.13 per diluted share an increase of 18.9% from prior year.
Martin: We continue to translate our earnings into cash and fourth quarter cash flow from operations were $52 million and we closed out the quarter with $50 million of cash on the balance sheet.
As we look at the fourth quarter from a segment perspective, our human nutrition and health segment generated sales of $147 million, an increase of six 8% from the prior year the.
Martin: The increase was driven by higher sales within both the food ingredients and solutions businesses and the nutrients business.
Martin: Our human nutrition and health segment delivered quarterly earnings from operations of $34 million, an increase of 33.9% primarily due to the aforementioned higher sales and a favorable mix.
Martin: Adjusted earnings from operations for this segment were $36 million, an increase of 21.8%.
Martin: We were very pleased with the overall performance of our human nutrition and health segment, delivering another strong quarter of growth.
Martin: We continue to see healthy demand in our nutrients business as well as an improved demand picture in our food ingredients and solutions businesses.
Martin: Our portfolio of nutrients ingredients and formulation capabilities and technologies are well positioned and we will but we believe we will continue to see our human nutrition and health segment performed well as we head into 2020 five.
Martin: Our animal nutrition, and health segment generated quarterly sales of $58 million, an increase of 0.3% compared to the prior year.
Martin: The increase in sales was driven by higher sales in the ruminant species markets, partially offset by lower sales in the mono gastric species markets.
Martin: Animal nutrition health delivered earnings from operations of $6 million, an increase of 7.2% primarily due to a favorable mix with higher ruminant sales, partially offset by higher operating expenses.
Martin: Fourth quarter adjusted earnings from operations for this segment were $6 million an increase of 6.5%.
Martin: We were pleased to see our animal nutrition and health segment returned to growth in the fourth quarter following a period of challenging market conditions.
Martin: We believe that first half of 'twenty 'twenty four was the low point for our animal nutrition business and we've seen encouraging sequential improvement in the second half of 'twenty 'twenty four.
Martin: This improvement is primarily due to the healthier dairy market conditions and continuing strength of our flagship rumen protected choline brand reassure third.
Martin: Further supported by the commercial launch of our amino shore ex out product, which has been well received by our customers.
Martin: We believe the animal nutrition and health business has good momentum exiting 'twenty 'twenty, four and is well positioned to deliver solid growth in 2020 five.
Martin: Our specialty products segment delivered sales of $33 million, an increase of 6% compared to the prior year due to higher sales and the performance gases business.
Martin: Earnings from operations were $10 million, an increase of 15.9% versus the prior year.
Martin: The increase was primarily driven by the aforementioned higher sales and favorable mix, partially offset by higher operating expenses.
Martin: Fourth quarter adjusted earnings from operations for this segment were $11 million an increase of 11.2%.
Martin: We are very pleased with the performance of specialty products in the fourth quarter, both from a sales growth and margin perspective.
Martin: We believe our specialty products is in a great position to deliver year over year growth again in 2025.
Martin: So overall the fourth quarter was another very strong quarter for Balco.
Ted: I'm now going to turn the call back over to Ted for some closing remarks.
Ted: Thanks, Martin we are very pleased with <unk> financial results reported earlier this morning for the fourth quarter and the full year of 'twenty 'twenty four.
Ted: Q4, 'twenty 'twenty four was the 22nd consecutive quarter in which balkin delivered year over year adjusted EBITDA growth as we continue to show an ability to deliver results in a variety of market conditions, given our strong market positions and our value added portfolio of products.
Ted: We continue to watch the ever changing geopolitical and macroeconomic environment closely particularly relative to the impact that significant tariffs could have on complex global supply chains.
Ted: While it is too early to tell what specific impacts will be felt.
Ted: As significant uncertainty still exists we believe we are relatively well positioned to effectively manage through this new global trade environment and remain confident in the long term growth outlook for Pal Chem as a whole I'm excited about 2025 and I believe the company is well positioned to deliver both top and bottom line.
Ted: <unk> growth on a full year basis, while further advancing our important growth initiatives I will now hand, the call back over to Martin who will open up the call for questions Martin. Thank you Ted.
Martin: This now concludes the formal portion of the conference at this point, we will open up the conference call for questions.
Speaker Change: Thank you and if he 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.
Martin: You May press Star two if you would like to remove your question from the queue for.
Martin: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again to ask a question press Star one one moment, please while we poll for questions.
Our first question comes from Bob <unk> with CJS Securities. Please state your question.
Bob: Good morning, Congratulations on continued strong results.
Martin: Thank you Bob Thanks, Bob.
Martin: Yeah. So I wanted to start off with a human nutrition and health, obviously very consistent strong growth. There I was hoping you touched on this a little but maybe you could dive a little deeper into the contribution from nutrients versus food ingredients. The key drivers for each in the.
Martin: The outlook for each of those sub segments.
Speaker Change: Sure, Yes, Bob we really were extremely pleased with our human nutrition and health performance really in 2020 for that continued in AR in Q4.
Speaker Change: And yeah, most of 'twenty 'twenty four really relied on very strong growth in our nutrients business and as we talked about.
Speaker Change: Modest growth.
Speaker Change: Growth and in the food solutions.
Speaker Change: <unk> business.
Speaker Change: And what we really saw as the year progressed and in particularly in in Q4.
Speaker Change: Somewhat slowing growth in the nutrients business still very healthy and growth that we feel really good about but a return to healthy growth and they are the food ingredient solutions business. So you know we delivered little over 5% revenue growth in the nutrients business in Q4.
Speaker Change: And in the food business that actually was a little over 7% growth. So.
Speaker Change: You know that came together to.
Speaker Change: Deliver a little under 7% for the whole business, but we really feel good about both of those businesses.
Speaker Change: And are you know they started to.
Speaker Change: To perform towards the end of the year as we had indicated we saw the normalizing of of demand and in the food business earlier in the year and then a return to a healthy growth.
Speaker Change: Just some standouts within each of those within the nutrients business I would say our.
Speaker Change: K two business, particularly performed very well in AR in Q4 as it really has all year, but really a standout quarter, which I think is exciting and then within the food business are you now are encapsulated.
Speaker Change: Encapsulated products continue to perform.
Speaker Change: Extremely well, we really saw growth across all of our product lines within the food business in Q4, but the encapsulates business.
Speaker Change: <unk> performed particularly well in Q4, so all in all we feel really good about our the human nutrition health performance in Q4, and the full year.
Speaker Change: Okay, Great and then obviously a nice recovery as you sat in A&H and particularly after the tough start are we at a kind of is Q4 run rate like a normalized level until European monarch. Ashford you know gets resolved and returns is there still more growth.
Speaker Change: Growth in ruminant and any update on the European.
Speaker Change: The gastric situation would be great too.
Speaker Change: So maybe I'll take a an early stab and Mark Martin can can chime in.
Speaker Change: You're right, we really were pleased with with the animal nutrition and health recovery I think is the right word obviously, we struggled in the first.
Speaker Change: Few quarters of the year, but with with strung together three consecutive.
Speaker Change: Proving our quarters.
Speaker Change: With you know our being able to achieve a year over year growth modest as it was in Q4.
Speaker Change: It was an important milestone and I think we had indicated on the last call that that would not happen until Q1 of 2025 and it happened as far as we're concerned our a quarter before we thought it would.
Speaker Change: But the sequential improvement you know up 10% was really good to see them and then the modest year over year growth you know I would say no I don't think that this is the new kind of you know a base level.
Speaker Change: Level, we do see one going grows in the ruminant business, while the mono gastric business will stay fairly flattish.
For subsequent quarters here until the European situation.
Speaker Change: Is resolved, but we do see more growth in the AR in the ruminant space in there you know a couple of things going.
Speaker Change: Going on there one is just generally speaking the dairy market is.
Speaker Change: Quite healthy right now.
Speaker Change: And dairy farmers are margins are.
Speaker Change: Vastly improved from a year ago, and and and Oh, you know a couple of years ago. So they are back making a healthy returns and while there are obviously macroeconomic factors at play that could impact that somewhat terrorists being one of course.
Speaker Change: You know even the G. L. P. One drugs in Canada, where I reduced intake of of of cheese and so forth is another factor out there, but everything we see.
Speaker Change: For the foreseeable future is that the dairy market is going to be relatively healthy and so that's good for our business that will be growing that that helps our business, but the other thing we really rely on us.
Speaker Change: In the in the the dairy space or the ruminant space for US is our ability to penetrate the market with our technologies and we feel really good about the momentum that we have.
Speaker Change: And partly that is aided by a healthier market environment put partly that is on our shoulders to be doing the right things in the marketplace, bringing the right.
Speaker Change: Products and technologies, bringing in the right science behind those products and and successfully converting nutritionists. If you will and I think we have good momentum.
Speaker Change: Is there as well and then of course, we did launch a new product in the second half of last year, and that's being very well received them and we think that there's a we've only had that on the market for a little over a quarter and so there's clearly upside with that product. So when you kind of add those three things together, we do see.
Speaker Change: The overall ruminant business growing quite nicely for us next year on top of lets say flattish.
Speaker Change: Mono gastric performance. So we do think that we can continue to see some sequential growth in ruminant and certainly year over year growth in the animal nutrition and health segment next year.
Speaker Change: Okay Super that's that's great and then just just.
Speaker Change: Oh I'll just pass along the Mic now I'll get back in queue. Thank you very much.
Bob: Thanks, Bob Thank you Bob.
Speaker Change: Thank you and our next question comes from Ross Silver Roger with H C. Wainwright. Please state your question.
Speaker Change: Alright, thanks, very much for taking my questions and congrats on a strong finish to 2024 are just a couple quick ones for you Ted.
Speaker Change: Firstly I was wondering if you could comment on specific marketing and promotional strategies you expect to employ over the course of the coming year to really push the Vida choline pro flow product and secondly, you know you had alluded to this a in kind of your closing remarks.
Speaker Change: That you continue to be watchful with respect to the potential impact of tariffs I was just wondering if you could provide us with any kind of regional granularity and in particular.
Martin: Kind of the nature and degree of potential exposure that <unk> may have to tariffs applied specifically in either Mexico or China, and then very quickly for test for Martin I just wanted to ask about the comment that you made regarding foreign tax impact and if you expect.
Martin: E foreign tax impact going forward that might meaningfully change your effective tax rate outlook.
Martin: And then lastly, I don't know whether this is indeed the case I don't think it is but I. Just wanted you to confirm the in the animal health business do you have any exposure to the impact of the bird flu crisis. Thank you.
Martin: Okay, we will try to remember all of those ROM and thanks for your opening comments I'll I'll kick things off and not necessarily go in the order that you said, but let's talk about.
Martin: Tariffs for a second and you know obviously along with everyone.
Martin: And kind of the corporate boardrooms, where Oh, we're closely monitoring.
Martin: The developments of the new administration in and.
Martin: Trying to understand where.
Martin: This all goes as I said in the prepared comments you know overall, we are we really believe we're relatively well positioned relative to any tariffs that that are that could come about and of course, there are positives that can can.
Martin: And can happen relative to tariffs and negatives and as we add all of those are based on our flows you know we feel as though.
Martin: You know it could be sort of a net neutral situation to slightly.
Martin: Favorable for US we do see a lot of competition in our markets from from China, and so additional tariffs there competitively.
Martin: Competitively.
Martin: Could be positive, but you kind of asked for just some specific numbers.
Martin: And you know you all said you have to think about it from Oh, you know what do we source and how much is coming from these various countries and then how much do we sell into them. So just to give you. A couple of you mentioned, China and Mexico are we buy a little less than $15 million of product from China.
Martin: Out of a total in our raw material purchasing of call, let's say $400 million.
Martin: So it's a relatively small amount from Mexico, it's a fraction of of Ah that amount so.
Martin: So we do feel like it's a those are manageable sizes of of our sourcing.
Martin: Regions that that may be recipients of tariffs that we could manage either through pricing or finding alternative sources.
On the sales side.
Martin: And you know and he here really what we're thinking about is retaliatory tariffs that could go on to products that were selling in those regions.
Martin: We sell very little less than $5 million in the into China, So relatively small.
Martin: Quantities.
Martin: Mexico is is around about that same amount so not really significant Canada is a bigger market for us.
Martin: And so there is some you know are a concern that we would have there that's in the order of magnitude of maybe 3% of our overall sales are as a company. So you know not super significant but you know you're starting to get up there. So we're watching the situation.
Martin: In Canada.
And thinking through ways to manage that but do you have any kind of wrap it all together generally speaking what we what we sell in the U S. We make in the U S out of U S products and generally speaking what we sell in Europe, we we make out of products that come from Europe and again, that's why.
Martin: What informs our comment that when you add it all together, we feel like we're in a relatively good position from.
Martin: From a tariff perspective, but nonetheless, something that we.
Martin: Need to watch very closely.
Martin: Going back to your first question about Vida choline pro flow. We're excited about this product as we've said this is a product that's really formulated to be more included in a multi vitamins and you know the history of Vita choline.
Martin: Really comes more from infant Formula and and then prenatal vitamins and so getting.
Martin: Vida choline part of the discussion around broader adult health benefits.
Martin: It is important and and you know that's that's one reason, we decided sponsor an N F. L team was to you know a really be able to tell the story. This is not just a an important nutrient for infants are children. This is an important nutrient for for adults and and.
Martin: You know, we really look back on that investment and feel really good about it.
Martin: And I think the more that we can have light a choline be talked about relative to being an essential nutrient for for everyone and important nutrient for adult cognition and adult liver health and so forth the more it will be included in.
Martin: Multi vitamins, which is the target market for vital choline pro flow. So we're going to be continuing to do.
Martin: More marketing.
Martin: Probably not going to sponsor another NFL team, but.
Martin: But we're going to continue that program actually it was a three year program. So we're going to continue to do that we feel really good about that but youre going to see us increasingly on social media and other forums be promoting the broader health benefits of Vita choline, which.
Speaker Change: We believe should lead to more inclusion in Multivitamins, where it is not included to a great extent today. So hopefully that answers your questions and then Martin So he's got foreign tax question and then the bird flu the bird flu yeah. That's romps. The foreign tax question was a one off.
Martin So: In the fourth quarter. So you should not expect that higher tax rate to continue as we move forward or be a new normal. So that was really a one off impact that had more I call. It four full percentage points impact to the fourth quarter tax rate.
Martin So: As it relates to the bird flu, that's certainly a big topic in the industry, that's being disruptive to the value chain, we're seeing that as it ripples through in various places.
Martin So: And it creates a couple of different dynamics there.
Martin So: Now on the on the poultry side, they are able to replenish birds relatively quickly.
Martin So: So from that perspective, you know as they replenish the birds, we still sell into that but it's still we do see a sort of starts and stops and demands with certain customers as they get impacted by this we start to see also an impact to market pricing right. So the a S.
Martin So: The value chain gets a little disrupted as supply gets a little disrupted the price into retail.
Martin So: It remains elevated.
Martin So: You also see disruptions to egg supply and so on as you may have seen in the grocery stores you walk in and there's not a whole lot of eggs on the on the shelves for you too to buy.
Martin So: But I'd always has an impact to prices.
Martin So: So the flip side of the coin is that.
Martin So: For the producers are they're making pretty good margin right now on the production they have meaning that they are selling at elevated prices. The feed input costs for them is not that high so that our customers are making good money.
Martin So: You know apart from or despite sort of the impact of the bird flu and obviously when our customers are healthy.
Martin So: That also helps in terms of selling product into them. So it's it's sort of netting out a little bit. So it's it's having an impact, but it's not having that major or significant impact where you really see a step change in either direction in terms of our demand.
Martin So: So that's how I would think about it unless something really intensifies or spreads much spreads much more widely than it is today I would expect our demand to to not be too significantly impacted as we sit here today.
Martin So: Really really helpful. Thank you so much.
Martin So: Thanks, Rob.
Speaker Change: Thank you and just a reminder to ask a question press star one to remove your question Press Star two.
Speaker Change: Our next question comes from Daniel Harman with Sidoti <unk> Company. Please state your question.
Martin So: Martin Good morning. Thank you so much for taking my call.
Martin So: And questions just a couple quick ones for me today, obviously margins were fantastic in the fourth quarter and really had been so all year.
Martin So: So I'm just curious to know what your expectations are for margins as we go through 2020 five and wondering more specifically.
Martin So: Is it fair to assume that you may have a little bit of margin pressure in the year as anh continues to grow and maybe within H NH.
Martin So: Getting a stronger growth from food ingredients.
Speaker Change: Versus minerals and nutrients and then finally, just Martin I was just wondering if you could update us on what you all are seeing.
Speaker Change: M&A market in terms of deal flow that may be coming across your desk.
Speaker Change: So Daniel I'll, let Martin take both of those but I would like to just a welcome you to the team I look forward to working with you going forward, but.
Speaker Change: Martin.
Martin So: Thank you Danielle the maybe starting with the margins question S. S. You said they've been very very strong and healthy here in 'twenty 'twenty four and has improved as we've gone through the year.
Which we were really happy to see S. Four for those that have been with us for a few years. Since we went through the inflationary period, where we saw a bit of a margin squeeze due to the inflation, we were sort of foreshadowing that we expect it to be able to bring that back to more normalized margins as we exited that peer.
Martin So: And in came into a more deflationary periods. So we're really excited and happy that we were actually able to to do what we said and restore the margins and bringing them actually to even higher levels than they were sort of pre that period.
Martin So: Going forward as we think about the dynamics, obviously that impact our margins. We have the portfolio mix. We have are our input costs, primarily our raw materials are our pricing et cetera.
Martin So: And it depends a little bit how you see the the world evolving there are.
Martin So: From an input cost perspective in raw materials that sort of a deflationary period that we've seen over the last call. It 12, 18 months I would say have plateaued and it's it's turning into a almost a slightly inflationary period again so that.
Martin So: Sort of tailwind from continued deflation I think is it's passed us and now I think we're more in a flat to slightly inflationary period, and then we'll see how a potential trade tariffs and so on impact that going forward.
Martin So: From a portfolio mix perspective.
We obviously saw benefits to our margin rates of a of a strong H N H and particularly a strong nutrient business.
Martin So: Which is higher margin and then the food ingredients and solutions business.
Martin So: And while the food ingredients and solutions business is coming back and growing nicely again, I still expect the nutrients business to grow faster than the food ingredients business viewed over some period of time here. So I think from an H N H perspective that portfolio mix.
Martin So: Should not be necessarily.
Martin So: Diluted for them going forward, but rather remain similar to where they're at from an A&H perspective animal nutrition and health.
Martin So: The ruminant business is higher margin than our mono gastric business as we've mentioned here earlier, we do expect the ruminant business to grow faster.
Martin So: <unk> faster than I'm Warner gastric business. So there should be some tailwind there from a a N H mix.
Martin So: And our specialty product segment will sort of remain very very solid from a from a margin perspective.
Martin So: So I think where our our portfolio mix will support a continued strong margin.
Martin So: Based on what we see today I think the wildcard of little bit S really the the potential tariffs and supply chain impacts and what that will do to sort of global supply and demand and whether or not we'll get into what we saw a couple of years ago with.
Martin So: In a rapidly increasing input costs that we're going to have to turn around and effectively priced through and last time, we were very successful in pricing that through to our customers.
But as we did that it was dilutive to margins, even though we protected our our margin dollars, but from a rate perspective was dilutive.
Martin So: That's primary maybe where I say the biggest risk to margins going forward, but otherwise I think I would expect our sort of our margin profile too.
Martin So: To be relatively healthy here going forward.
Martin So: M&A, yes.
Martin So: Yes, and on the M&A side.
Martin So: Yeah.
Martin So: We are definitely spending a lot of time on the M&A I would say from a from a deal flow perspective, there is an.
Martin So: Increased flow coming across our desks and.
Martin So: And we are sort of.
Martin So: Have been and continue to actively engage when and where it makes sense for us to evaluate opportunities and we continue to do that and I would not call. It a hot market yet to where it sort of you know a lot of quality assets that that makes sense for us.
Martin So: To pursue.
Martin So: So I would still call it a little bit the the early phase of what people are sort of expecting to be a more conducive M&A market going forward.
Martin So: But we're certainly not there yet.
Martin So: But if you think about it logically there's theirs.
Martin So: This sort of a pent up demand there are a lot of assets that have not come to market for quite some time and obviously, if you're someone who's thinking about selling you want to have some stability in your performance in business before you bring it to market.
Martin So: And I think we're starting to reach that point, where there's been sort of some time now where they've been able to to show more stable results I do expect it to pick up but we're not quite there yet where its a hot market with with a a lot of activity going on but it is improving.
That's really helpful. Thank you so much and Ted I appreciate the warm welcome and congrats on a wonderful quarter and great year.
Speaker Change: Alright, Thanks Daniel.
Speaker Change: Thank you there are no further questions at this time I'll hand, the floor over to Ted Harris. Thank you.
Ted Harris: Great. Thanks, so much once again, thank you all very much for joining our call today, we really appreciate your support and your.
Your time today, and we look forward to reporting out our Q1, 'twenty 25 results and.
The tail end of April in the meantime, we will be participating in the D. N P parabolic exane consumer ingredients and chemicals conference in London on March 11th So we hope to see some of you there and I know some of you have already signed up and so looking forward to that.
Ted Harris: And thank you again for for your time today take care.
Speaker Change: Thank you. This concludes today's conference all parties may disconnect have a good day.