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Heritage-Crystal Clean Inc  (NASDAQ:HCCI)
Q1 2019 Earnings Call
May. 02, 2019, 10:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen and welcome to the Heritage-Crystal Clean, Incorporated First Quarter 2019 Earnings Conference Call. Today's call is being recorded. At this time, all callers' microphones are muted and you will have an opportunity at the end of the presentation to ask questions. Instructions will be provided at that time for you to queue up your questions. (Operator Instructions)

Some of the comments we will make today are forward-looking. Generally the words aim, anticipate, believe, could, estimate expect, intend, may, plan, project, should, will be, will continue, will likely result, would, and similar expressions identify forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements.

These risks and uncertainties include a variety of factors, some of which are beyond our control. These forward-looking statements speak as of today, and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call.

Please refer to our SEC filings, including our Annual Report on Form 10-K, as well as on our earnings release posted on our website, for a more detailed description of the risk factors that may affect our results, copies of these documents may be obtained from the SEC or by visiting the Investor Relations' section on our website.

Also, please note that certain financial measures we may use on this call, such as earnings before interest, taxes, depreciation and amortization or EBITDA and adjusted EBITDA are non-GAAP measures. Please see our website for reconciliations of these non-GAAP financial measures to GAAP. For more information about our Company, please visit our website at www.crystal-clean.com.

With us today from the Company are the President and Chief Executive Officer, Mr. Brian Recatto; and the Chief Financial Officer, Mr. Mark DeVita. At this time, I would like to turn the call over to Brian Recatto. Please go ahead, sir.

Brian Recatto -- President, Chief Executive Officer and Director

Thank you and welcome to everyone joining us this morning. Yesterday, we reported our first quarter 2019 results. Our first quarter revenue of $95.8 million represent an increase of 15.2% compared to the first quarter of 2018. From a profitability standpoint we recorded a basic loss per share during the quarter of $0.11 compared to a basic loss per share of $0.01 in the first quarter of 2018.

I would like to start by discussing our environmental service segment performance. From a revenue standpoint, I'm excited we were able to deliver 15.7% growth in the segment compared to the first quarter of 2018. Our first quarter revenue performance is a record for a 12 week quarter and it represents the fourth straight quarter in which we produced double-digit revenue growth.

This result was achieved by contributions from all of our service, all of our lines of business in this segment. While, we are less aggressive in adding new sales and service resources during 2018 compared to 2017, we still saw an impact of the 2018 additions in the first quarter of this year. Specifically the costs incurred during 2019 associated with the new branches and resources added during 2018 was approximately $1.5 million from which we generated approximately $1.9 million in revenue.

During 2019, we plan to be more aggressive with the addition of new sales and service resources compared to last year. We also plan to add approximately five new branches during 2019. For the full year 2019 we expect new sales and service resources and new branches to collectively add $3.1 million in cost and $2.3 million in revenue.

Through the first quarter of 2019 we incurred approximately $0.2 million in operating cost, while generating approximately $0.2 million in revenue, for the resources added during the year. Our environmental services operating margin in the first quarter of 2019 was 22.1% down from 23.1% in the same quarter a year ago. But was negatively impacted by approximately 250 basis points due to the adoption of a new leasing accounting standard. Mark will discuss the new standard and its impact on our business shortly.

Moving on to our oil business. In the first quarter of fiscal 2019, oil business revenues were up $3.6 million or 14% compared to the first quarter of fiscal 2018. The increase in revenue was driven by an increase in the volume of base oil gallons sold, partially offset by a decrease in the selling price of our base oil. Our base oil netback decreased by $0.36 per gallon during the first quarter compared to last year and $0.34 per gallon compared to the fourth quarter of 2018. During the first quarter, we increased base oil production by almost 16% compared to the same quarter a year ago. However due to a mechanical failure at our rerefinery we incurred unscheduled downtime which limited our opportunity for even greater improvement. On the positive side we completed repairs to address the source of the issue and we'll continue to make metallurgical and equipment upgrades to mitigate the risk of additional mechanical issues at the rerefinery. While we improved our discipline and began charging most of our local customers for our used oil collection service, during the quarter on a weighted average basis we were still in the slight pay for oil position on a net basis for the first quarter as a whole. And that improved and then our average pay for oil during the first quarter compared to the fourth quarter of 2018 was $0.18 per gallon and $0.07 per gallon compared to the first quarter last year.

Looking forward, we have already seen one base oil price increase in mid-March and another in early April. These increases should provide us the opportunity to widen our feedstock cost to base oil spread during the second quarter. Improved spreads and return to consistent operation at the rerefinery should provide us the opportunity to significantly increase profitability during the second quarter compared to the first quarter.

We discussed the expected impacts of IMO 2020 regulation with our investors and analysts in the past and we continue to believe this initiative will improve both the feedstock and finished product portions of our spread. While we anticipate seeing the effects from IMO 2020 prior to the end of 2019, we are not certain as to the exact timing or magnitude of these impacts. For now, we will continue to work hard to operate the rerefinery efficiently and manage our spreads effectively.

From environmental service segment perspective, we continue to see momentum which we believe will support high single-digit organic growth during 2019. And we look to augment our organic growth by closing on additional acquisition opportunities. From a profitability standpoint, we were pleased that after adjusting for the impact of the implementation of the new lease accounting standard, our operating margin during the first quarter was 24.5% compared to 23.1% in the year earlier quarter. Also, we continue to expect our operating margin percentage for 2019 will exceed our 2018 performance.

Mark will now walk us through our first quarter financial results in more detail.

Mark DeVita -- Chief Financial Officer

Thanks, Brian. Beginning with our environmental services segment first quarter revenues were record $66.5 million, if not for the implementation of the new lease accounting standard. We would have generated an additional $2.2 million in revenue. The revenue growth rate would have been 19.5% on a year-over-year basis during the first quarter. We experienced growth in all our products and service line with the strongest growth in our antifreeze, vacuum and containerized waste businesses. In the parts cleaning business, we experienced both price and volume growth while we experience strong volume growth in our containerized waste, vacuum services and antifreeze recycling businesses. The increase in antifreeze business revenue was due to volume gains driven primarily by the antifreeze acquisitions we made in 2018 and the first quarter of 2019. Revenue from these acquisitions was approximately $3 million during the first quarter. Same branch revenues grew approximately 14.5 on a year over year basis during the first quarter.

Excluding the impact of the onetime adjustment for the new leasing standard, same branch sales would have increased approximately 18.4% on a year-over year basis. The implementation of the new lease accounting standard necessitated a change to the way we recognized revenue related to some of our parts cleaning services which contain an embedded lease under the new standard. The revenue associated with the lease component of our partner cleaning service will now appear on our income statement under the caption rental income. For these services during the fourth quarter of fiscal 2018, we recognize hundred percent of the charge assessed to our customers at the time of service, even though the term of some of these services stretched into fiscal 2019.

Beginning in 2019, we are deferring recognition of a portion of the charge assessed to our customers and recognizing the revenue based on the length of the service term. For example, in the second quarter we will recognize as revenue a portion of the charges assessed to our customers during the first quarter and we will defer the recognition of revenue for a portion of the charges invoice to our customers in the second quarter until the third quarter. While we expect the impact of this change to be immaterial in future quarters, the first quarter results reflect a onetime impact from adoption because the standard did not allow us to recognize as revenue in the first quarter. A portion of the charges assessed to customers at the end of last year.

The accounting lessons over. Profit before corporate SGA expense in the Environmental Services segment was fourteen point seven million representing one percentage point decline in operating margin, but an increase of one point four million in the first quarter compared to the year ago quarter. Excluding one time the one time two point two million revenue deferral due to the implementation of the new lease accounting standards, we would have reported operating margin in the Environmental Services segment of approximately twenty four point six percent which would have been an increase of three point six million compared to the first quarter of 2018.

As Brian mentioned, revenue in the oil business segment was up in the first quarter compared to the same quarter last year despite the steep decline in base oil pricing while below our expectations, the rerefinery was able to operate at approximately 85 -- excuse me 87% of our base oil capacity compared to approximately 75% in the first quarter of 2018. During the first quarter of 2019, we produced 9.4 million gallons of base oil compared to 8.1 million gallons during the first quarter of 2018. From a sales standpoint, we sold approximately 10.7 million gallons of base oil during the first quarter of 2019 compared to 8.1 million gallons during the first quarter of 2018.

Profit before corporate SG&A expense in the oil business segment decreased 3.1 million in the first quarter as operating margin fell by almost 10 percentage points compared to the first quarter of fiscal 2018 to negative 15.3%. The decline was mainly driven by the steep decline in base oil pricing and the resulting decrease in the spread between our feedstock costs and selling price for base oil. The result occurred in spite of the improvement in pay for oil as Brian mentioned earlier. Despite the increase in production at the rerefinery during the first quarter compared to last year we are confident we can operate the rerefinery at higher rates in subsequent quarters and this should provide us additional improvement in operating margin in the oil business segment for the remainder of the year.

Our overall corporate SG&A expense as a percentage of revenue remained flat at 14.1% from the year-ago quarter, mainly driven by higher revenue offset by higher professional service fees and retirement costs. The higher professional services fees were mainly due to the implementation of the new lease accounting standard discussed earlier.

If you remove the impact of these fees and the retirement and severance related costs, SG&A expense as a percentage of sales in the first quarter would have been approximately 13.1%. The Company's effective income tax rate for the first quarter of fiscal 2019 was 28.9% compared to 81.1% in the first quarter of fiscal 2018. The rate difference is principally attributable to windfall tax benefits associated with stock compensation having a lesser effect on the tax rate this past quarter compared to the first quarter of fiscal 2018. First quarter EBITDA was $1 million compared to $3.3 million in the year-ago quarter. The decrease in EBITDA was primarily due to higher underlying operating costs and the impact of the onetime lease accounting adjustment discussed earlier partially offset by overall higher revenue.

Adjusted EBITDA for the first quarter was $5.1 million compared to $4.2 million in the first quarter of 2018. From a balance sheet perspective, cash on hand at the end of the quarter stood at $42.7 million compared to $43.6 million one year ago. Total debt remained steady at $29 million year-over-year. During the first quarter, we generated $9.2 million in cash flow from operations compared to a net cash outflow of $0.5 million in the first quarter of 2018.

As mentioned during our fourth quarter earnings call, we closed two acquisitions during the first quarter of 2019. We also closed one additional acquisition in the beginning of the second quarter. We expect this most recent acquisition will initially add less than $1 million of revenue annually. We continue to work on multiple opportunities which we feel will improve our business and help drive value for our shareholders.

In summary, we are very pleased with the first quarter results in our environmental services segment both from a revenue and profitability standpoint. And we expect a significant improvement in the profitability in our oil business segment for the remainder of 2019.

And with that, I will turn the call over to the operator to take your questions.

Questions and Answers:

Operator

Thank you. (Operator Instruction) Our first question comes from Michael Hoffman with Stifel. Your line is now open.

Michael Hoffman -- Stifel -- Analyst

Hey, thanks, guys for taking the questions.

Brian Recatto -- President, Chief Executive Officer and Director

Hey, Michael.

Mark DeVita -- Chief Financial Officer

How are you?

Michael Hoffman -- Stifel -- Analyst

Hey, good, good. I can't complain with that point anyway. I hate to ask you to repeat the accounting lesson there, but not to recall the lesson. Just what am I supposed to assume happens if it's 35 (ph) in rental and 1Q and I got another 12 week period. What's the trend in 2Q? It's -- I think it's going to be better, because, I didn't get to recognize something out of 4Q and 1Q and therefore three. Did I follow that correctly?

Mark DeVita -- Chief Financial Officer

Yeah. Yeah. So well, the rental income will start to see, you did all correctly, will be -- the only difference in Q2 and every quarter going forward is, we will be able to recognize revenue for part of the charges that were made in the previous quarter that we now have to defer based on the fact that, we don't service every customer. Our service intervals are longer than a week, they usually last a couple of months.

So on average, so we'll basically just be recognizing revenue in any subsequent quarter some of which from the previous quarter. So we'll pull those numbers in from the prior quarter and defer some of the stuff that we put on an invoice and charge customers for, but aren't allowed to recognize as revenue anymore.

Michael Hoffman -- Stifel -- Analyst

All right. So, if I'm following this, if you're growing organically, then and 35 (ph) is a starting point and I continue to grow organically 1Q into 2Q then the 35 (ph) will be bigger in 2Q by definition what you just described.

Mark DeVita -- Chief Financial Officer

Yeah. Every quarter and year is going to be big.

Michael Hoffman -- Stifel -- Analyst

Right. Right. Okay. All right. Then -- I just wanted to make sure I understood the pattern here. And is that underlying growth rate would be correlated to the organic growth rate of the service revenue or the product revenue?

Mark DeVita -- Chief Financial Officer

Of the service revenue.

Michael Hoffman -- Stifel -- Analyst

Okay. And then within the quarter, could you just sparse for us the difference between organic growth and deal contribution in ES.

Mark DeVita -- Chief Financial Officer

Yeah, contribution was about 5% in the quarter.

Michael Hoffman -- Stifel -- Analyst

Organic made up the rest. Okay.

Mark DeVita -- Chief Financial Officer

Yeah, 5.3 (ph).

Michael Hoffman -- Stifel -- Analyst

Okay. And so that's the underlying that's approximately 9% (ph) is what's left, that's the consistent with the Brian's comment of -- you can sustain 8%, 9% organic growth in the ES for a while organically.

Mark DeVita -- Chief Financial Officer

Well, if you look at it overall, the leasing standard kind of mix it up a little bit, but we would add 19% and then you subtract the growth from that. So you're actually higher.

Brian Recatto -- President, Chief Executive Officer and Director

But Michael we're still signalling high single-digit organic growth. Obviously we'd like to be the -- that's kind of where we are right now. Our comps get tougher as we enter the year.

Mark DeVita -- Chief Financial Officer

Right. Yeah. Because you're running double-digit growth last year.

Brian Recatto -- President, Chief Executive Officer and Director

Lots of -- lots of money. Yes. We feel really good about it right now.

Michael Hoffman -- Stifel -- Analyst

It's a great level of business which brings you to the one that just seems to have issues sometimes. And then, so what...

Mark DeVita -- Chief Financial Officer

Yeah, that's where this whole keeps up at night no doubt.

Michael Hoffman -- Stifel -- Analyst

Yeah, yeah. So what's happening in the plan that, when there is a period there and you know last few years were -- were was feedstock related issues and you burn through catalyst too fast or there was too much quarter. But this is mechanical, so some broke. What's happening?

Brian Recatto -- President, Chief Executive Officer and Director

(inaudible) that, let's not Michael, let's not lose sight of the fact that we have increased production every year since I've been around. So yes it sounds like, because we had a big construction project in Q4 of last year, it was not a mechanical issue was a construction project. This year was certainly mechanical, we're not going to blame it on whether, it was a brutal winter for us and certainly metal expands and contracts during, severe temperature changes. But that's not the issue. We had a tube failure within a heater. We spent a lot of money on reliability and upgrading the plant. Nothing is going to change in our philosophy. We have third parties that are helping us really make our reliability program more robust. We've got capital that we're going to spend, improve the metallurgy of the plant. We've got some equipment that we're going to change out and these larger turnarounds all in the spirit of trying to make. We've been consistent. We want this plant to be down for 25 to 30 days a year and we're going to do everything in our power to get it there and it's our singular focus right now.

The catalyst issue we've resolved and they would have extended the life of our catalyst as we've talked about on other phone calls, so we feel really good about the plan. We've got to continue to improve the reliability and that's our focus right now. But we did have a tube failure. We replaced the tube. Got it back up and running. We could have spread that process up. The spread wasn't great. We did some other work during that period, right now the platform is well.

Michael Hoffman -- Stifel -- Analyst

Okay. So, to the spread. Thank you for sharing the insight on the PFO to CFO for the average. But how did you exit the 12 weeks and what's the start of the second 12 weeks as far as the trend in that CFO.

Brian Recatto -- President, Chief Executive Officer and Director

We feel -- well CFO, we exited at a charge of very, very slight charge. Obviously we still at a charge today. You know, we worry a little bit about where the WTI is going and we've got indexed accounts and we haven't seen a HSFO do what we expected it to do, driven by the fact that, there's still pretty good demand for high sulfur grew. Given the sanctions in Iran and certainly what's going on in Venezuela, there's pretty good demand for it is still priced higher than WTI. So but we are in charge and we're going to keep driving on that. Obviously we'll have some index pressures we see WTI go up, given that some of our corporate accounts are tied to WTI.

Michael Hoffman -- Stifel -- Analyst

Okay. And how would you frame the spread based on where the charge is now plus what base oil has done sequentially?

Brian Recatto -- President, Chief Executive Officer and Director

What you've heard from our prepared remarks, we -- base oil has seen a nice bump in Q2 and we see $0.25 -- $0.25 to $0.30 in the quarters are our hope.

Michael Hoffman -- Stifel -- Analyst

Is the incremental improvement sequentially.

Brian Recatto -- President, Chief Executive Officer and Director

Yes.

Michael Hoffman -- Stifel -- Analyst

Okay. That's what I was trying to get at. All right. Great. Thank you so much.

Brian Recatto -- President, Chief Executive Officer and Director

You're welcome, Michael.

Mark DeVita -- Chief Financial Officer

Thanks.

Operator

Thank you. And our next question comes from Ryan Michael (ph) with William Blair. Your line is now open.

Brian Recatto -- President, Chief Executive Officer and Director

Hey, Ryan.

Mark DeVita -- Chief Financial Officer

Ryan.

Ryan Michael -- William Blair -- Analyst

Hey, good morning. Good morning. So I wanted to start off with the US business. You talked about some investment. I'm wondering should we be tempering our margins for the rest of the year was it -- was that the message or did I hear that wrong.

Brian Recatto -- President, Chief Executive Officer and Director

No I think our outlook. Is the same as what we talked about last quarter as far as margin goes you know that it's going to be stronger than '18 more like our plan from '17, our new resource has that. But we typically have those weighted toward the second half of the year anyway. And with what we see from a revenue standpoint, we still want to stick with the general guidance we've given on margins.

Yeah. I agree with that. The only thing I could change that is if we get more aggressive on growth targets and adding new resources and opening up branches quicker because obviously it takes some period of time to get those branches of some level of profitability. We've got a lot of money on the balance sheet, so absent acquisitions, we're going to keep pushing, to growth this one.

Ryan Michael -- William Blair -- Analyst

Okay that's helpful. And then sticking with ES, I think you're talking about a 9% or high single digit organic run rate this year which is pretty impressive. I know there's some price in there but what do you estimate the market is growing. And then as a follow on to that is the outgrowth is simple as just hiring good folks and opening branches or is there anything else you're doing.

Mark DeVita -- Chief Financial Officer

From an organic standpoint it is that basic blocking and tackling, adding new branches and adding new positions as you know kind of some of the early stage lines of business, get a little longer in the tooth. We're just adding them to more sites. The overall market in general I think if you have followed general indices on since the general economy GDP and then producer price and what you see especially in Q1 pretty strong print. And we see that for us as a continued tailwind.

I think Brian can give you his opinion, but Brian, I think that's at least the next couple of quarters and we have traditionally been the opposite of the canary in the coal mine for our services in the marketplace as far as the need for them. So I think we continue to enjoy at least close to that support maybe at least a little.

Brian Recatto -- President, Chief Executive Officer and Director

Yeah. I'm not in disagreement and talking to our branches, we're still seeing good market conditions out there. But you know we're certainly not seeing manufacturing growth. I mean obviously the economy is pretty robust, some of our plants, the people that we did business with low on production. GDP, and that's good good for us. So we haven't seen any signs of a slowdown or maybe expect to see some of that in 2020 but not now.

Ryan Michael -- William Blair -- Analyst

Okay. Good. And then just lastly on the oil business just few questions to clarify are you back to full operations at this point. You may have said it, but I might have missed it. And then did you can you quantify how much the mechanical shutdown hurt the EBIT in the quarter?

Mark DeVita -- Chief Financial Officer

I think we're -- yeah, Brian can chime in if he wants but yeah we are running as we would predict. Basically we've had that same headwind for the most part that we had in Q1 last year into one this year. So that was plus 5% type of headwind in the quarter, if you compare to, I guess what a normal quarter might be?

Brian Recatto -- President, Chief Executive Officer and Director

In terms of production we're on plan for Q2 for our production targets and when we lost in Q1 roughly 2 million gallons of production and you could do the math on that.

Ryan Michael -- William Blair -- Analyst

Okay, that's helpful. All right. Thanks I'll pass it on.

Mark DeVita -- Chief Financial Officer

Thanks, Brian.

Operator

Thank you. (Operator Instructions) Our next question comes from Kevin Steinke with Barrington Research. Your line is now open.

Brian Recatto -- President, Chief Executive Officer and Director

Hi, Kevin.

Kevin Steinke -- Barrington Research -- Analyst

Good morning.

Brian Recatto -- President, Chief Executive Officer and Director

Good morning.

Kevin Steinke -- Barrington Research -- Analyst

Just following up on the last question there. You said you lost 2 million gallons of production from the mechanical issue. I think in the past you've been able to maybe separate out the specific impact on oil business margin in terms of percentage point hit. Are you able to do that if we strip that out of the negative 15% segment margin, what it would have been?

Mark DeVita -- Chief Financial Officer

Yeah, we can get more granular on offline. But basically what I told Ryan there, is the impact.

Kevin Steinke -- Barrington Research -- Analyst

Okay. And so you've talked about having a -- wanting to do some other upgrades and tweaks at the rerefinery to...

Brian Recatto -- President, Chief Executive Officer and Director

It's not really process related -- it's really just metallurgy, upgrading the metal, replacing some of the metal. We were very happy with the process at this point.

Kevin Steinke -- Barrington Research -- Analyst

Okay. I guess my question is, does -- do those things you have to do. Your target is 25 to 30 shutdown days a year, I mean but in '19 should we expect shutdown time to be a little higher as you make tweaks or is it not what is real?

Brian Recatto -- President, Chief Executive Officer and Director

No we have not changed our time around schedule. We have a normal May shutdown, we're going to have a longer fall shutdown and then -- just cleaning project at the end of the year. That has changed for us. We'll just do the upgrades as we do our normal shut-ins, absent any other issue.

Kevin Steinke -- Barrington Research -- Analyst

So if you're modeling, it would be kind of a normal Q2 to Q4?

Brian Recatto -- President, Chief Executive Officer and Director

Yeah, exactly.

Kevin Steinke -- Barrington Research -- Analyst

But obviously Q1 was not normal.

Got it. All right. So as you continue to talk about IMO 2020. You know -- you think you'll see the impact coming within 2018. I mean what are you looking for or what would be indicators to you that you're starting to see the benefit of IMO 2020. I mean is it less competitive intensity in the US oil market or you know obviously base oil pricing is going up and I how can you separate the actual impact of IMO 2020 out from -- what's going on in the general market?

Brian Recatto -- President, Chief Executive Officer and Director

Yeah. It will certainly be a little bit of both. I mean the expectations are that there'll be less demand for high sulphur fuel oil as these new standards kick in. As I've talked about earlier. That really hasn't happened because of the demand for high sulphur, crude driven by some of the issues that are going on globally. But we do expect know if you look at the strip that the change as we get to the back end of the year which will should ease the pressure on used motor oil and obviously as people are moving to distillate production, the hope behind IMO 2020 is that they'll move to fuel production in less base oil production which should continue to stabilize.

Right now we've got good base oil pricing. The hope is that we had seasonally slow periods like Q4 on base oil pricing and volume that IMO 2020 will help us stabilize those periods, so that's both sides of the equation from our perspective.

Kevin Steinke -- Barrington Research -- Analyst

Okay. That's helpful. On the environmental services segment, you mentioned you're going to spend more this year, more on par with what you did in '17. But you also mentioned well you really like the opportunity you kind of touched on the potential to get more aggressive, what would cause you to get more aggressive on growing ES. And I mean are there any constraints to growing it more aggressively even than you are now.

Brian Recatto -- President, Chief Executive Officer and Director

The constraints that we've talked about in the past are really people related just making sure we can find the right people we're going to initiate a new training program to help us speed up the development of younger internal candidates to grow our branch network. But you know from my perspective if we don't do some meaningful acquisitions, we will certainly accelerate the organic growth, because we've got quite a bit of money on the balance sheet.

We trust our ability to grow organically and that's what we'll do. Obviously I'd like to augment that with acquisitions that fit in our geographic footprint, you know, certainly our expansion on West, because it helps us speed up route density and improves our cost structure to support the new hub that we're going to be building in the western half of the US. So it just depends on acquisitions. If we don't pull those off we'll probably speed up organic growth or spend more money toward the back end of the year.

Kevin Steinke -- Barrington Research -- Analyst

Okay. Sounds good. Thanks. That's all I had.

Mark DeVita -- Chief Financial Officer

Thanks, Kevin.

Brian Recatto -- President, Chief Executive Officer and Director

Thank you.

Operator

Thank you. That concludes today's question-and-answer session. Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone have a wonderful day.

Duration: 34 minutes

Call participants:

Brian Recatto -- President, Chief Executive Officer and Director

Mark DeVita -- Chief Financial Officer

Michael Hoffman -- Stifel -- Analyst

Ryan Michael -- William Blair -- Analyst

Kevin Steinke -- Barrington Research -- Analyst

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