Q3 2021 Savaria Corp Earnings Call
Please standby.
Good day, everyone. My name is Shannon and I will be your conference operator today at this time I would like to welcome everyone to Saverio corporations Q3, 2021 conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad.
If you would like to withdraw your question. Please press Star and then number two.
Today's call is being recorded this call may contain forward looking statements, which are subject to the disclosure statement contained in <unk>. Most recent press release issued on November 10th 2021 with respect to its Q3 2021 result.
Mr. <unk> you may begin your conference.
Shannon Thank you very much too.
Just sense of addiction.
Hi, everybody my name is instead, what I sat him to CEO.
It's a very instead of seeing a peak challenging Q3 that we.
That's we as IP, but I am very happy and very proud of our results.
Q3 debt.
Sure.
Price increase inflation.
That's information that I've been lucky in the freight yes.
Yes really till okay.
Increase again I don't know.
It's fair or not that good, but we haven't I think CMP the prices.
I'd be don't be happy, but it wasn't a chip so it it was that that's why.
And then just thinking of the price of met.
Increased labor isn't it.
Isn't that easy to advocate whether working for two onto an example, web our best booking ever okay, but it's difficult to to go through and make some big increase.
Sure.
Difficult to add their neighbors.
So.
Plastic get extended and thought it was very strong.
Q3, but you wouldn't you wouldn't see okay.
I am very confident that we'll make the old one.
That we see before that goes with it.
At NAREIT.
I am very confident we add just good people around how 'bout, yet people with that as an example, I am very happy to do that.
The result of the.
And again I think.
People that we have many that didn't.
Right, who is very well.
So crowded Deb so proud.
Yeah the divisions.
If you're lucky we have to do to be better okay, and it was mentioned that in two minutes, we that's where we had some increased price.
We have done.
But not the T. In a last very politely because we have some dealer does make our living for me for 30 years and our customer will arrest.
Okay, and I think they respect us so well work.
Somebody order an elevator to Mrs Smith with respect to price.
The next order okay.
Okay.
The beginning is to really do okay. The increase of prices.
Increase of price at the beginning of 'twenty two so we go with them okay.
Our our lives the dealer, okay, and how would you rank that base. So we work with them and I think it's a win win and they will they are very very happy that we will not increase that you like overnight the price.
We shared that.
You wouldn't see that.
That's what we'll see in 2022 I am not the answer is yes, but that yes. It does yes.
And language Scott we're in the statute that we study studied the people.
Yeah, a little bit the market.
And you can see it really and we span.
So that's our present right now 20% of Saturday at $140 million, that's a lot of thought.
And I am very proud to see that we add the nutrition, Patrick who is our VP they've got them in North America. This guy.
I like the Guy it would be a complement to our our team and he passed the last 20 years with that.
And if you look at the that's the statement on that would be lucky.
Very good EBITDA I E. This is the great a great company in our patient. So we will try to go back to an EBITDA, 15% quickly with Patrick.
Patrick.
So I wasn't there.
At the end of Q do you have some questions.
Very happy to get through to.
To answer to your opinion, if you see what we see in the future we see a tremendous year.
In 'twenty, two but we wanted to finish to when he went in and strengthen that and add.
At our 100 million. So are we going to finance, Okay, I will pass to.
Steve.
Thanks, Marcel and good morning, everyone I'm going to begin with some remarks regarding our Q3 2021 consolidated financial results.
The third quarter Saverio generated revenue of $180 8 million almost double the $90 8 million reported in the third quarter last year, mainly due to the acquisition of Andrew Cure.
This is the second quarter of full consolidation of this acquisition.
Gross profit and gross margin stood at $58 5 million and 32, 4% respectively.
<unk> to $32 6 million and 35, 9% for the same period last year.
The decrease in gross margin can be attributed to additional costs related to the supply chain, including shipping costs and also the reduction of subsidies from the COVID-19 employment retention government of Canada program.
Adjusted EBITDA and adjusted EBITDA margins stood at $26 3 million.
In 2014% 14, 6%, respectively compared to $16 9 million, an 18, 6% in Q3 2020.
The significant increase in adjusted EBITDA was mainly attributable to the acquisition.
Kidney care acquisition, excuse me and cost containment efforts across the company.
These factors were partially offset by additional costs related to the supply chain, including shipping costs and also by a reduction of subsidies from the COVID-19 employment retention government of Canada program.
Turning to segmented results accessibility revenue reached $135 7 million in Q3 2021.
Double from $68 5 million in Q3 2020.
The increase in accessibility revenue was mainly due to the acquisition of Endocare and also organic growth of two 7%.
Prior to the acquisition of Andrew carrier revenue was split almost equally between residential and commercial.
Strong performance on the residential side in Q3, 2021 was partially offset by weakness in commercial.
Accessibility revenue growth was also partially offset by negative foreign exchange impact for the quarter.
Accessibility adjusted EBITDA and adjusted EBITDA margin.
Before head office costs stood at $24 7 million and 18 to 18, 2%, respectively compared to $15 3 million and 22, 3% in Q3 2020.
The significant improvement inaccessibility adjusted EBITDA was mainly due to the acquisition of patient care, while the decrease in adjusted EBITDA margin can be attributed to additional costs related to the supply chain, including shipping costs and also to the reduction in COVID-19 employment retention government of Canada subsidies. These items were partially.
Offset by cost containment efforts.
Patient handling revenue totaled $34 8 million in the third quarter of 2021, an increase of $17 4 million or.
105% compared to Q3 2020.
This increase was mainly related to the Andrew care acquisition and also organic growth of 11%.
Partially offset by negative foreign exchange impact.
Patient handling adjusted EBITDA and adjusted EBITDA margin.
Before head office costs stood at $3 1 million and eight 8%, respectively compared to $2 million and 11, 7% in Q3 2020.
Likewise.
The significant increase in adjusted EBITDA is mainly due to the acquisition of <unk>, while the decrease in adjusted EBITDA margin is partially partially related additional supply chain costs and a reduction in the government of Canada, COVID-19 employment retention subsidy.
These items were also partially offset by cost containment efforts.
Adapted vehicles revenue reached $10 3 million in the third quarter of 2021, an increase of $5 4 million or 110% compared to the same period in 2020.
Adapted vehicles, adjusted EBITDA and adjusted EBITDA margin before head office costs amounted to <unk> six.
$6 million at six 1%, respectively, compared to <unk> 3 million and five 8% in Q3 2020.
The year over year increase in adapted vehicles revenue was once again attributable to the <unk> acquisition, partially offset by organic contraction due to timing issues and a shortage of vehicles stock.
Increases in adjusted EBITDA, and adjusted EBITDA margin for adapted vehicles.
To the <unk> acquisition.
This was partially offset by a reduction in the government and Covid.
COVID-19 employment retention subsidy.
In the third quarter of 2021, net finance costs amounted to $2 5 million compared to $1 5 million for the same period last year the.
The increase was mainly due to higher interest expenses due to additional long term credit facilities related to the handicap acquisition.
Net earnings reached $9 1 million or <unk> 15 per diluted share in the third quarter of 2021 compared to $8 1 million or <unk> 16 per diluted share for the same period last year.
Adjusted net earnings totaled $9 6 million or <unk> 15 per share in the third quarter of 2021 compared to $8 2 million or <unk> 17 per share in Q3 2020.
Turning now to capital resources and liquidity severe.
Saverio generated cash flows from operating activities of $7 7 million in the third quarter of 2021 compared to $16 3 million for the same period in 2020.
The year over year decrease was mainly due to net changes in noncash operating items of $12 5 million.
Including a ramp up in inventories as well as increases in receivables and other current assets.
Our ramp up in inventories was the result of intentional actions taken to minimize any potential supply chain disruptions on the business in Q4.
As at September 32021, severity had a net interest.
Interest bearing debt position of $307 1 million.
And was in compliance with all of its covenants.
On a trailing 12 month adjusted EBITDA basis, so various debt to adjusted EBITDA ratio was three five times compared to three six times in the prior quarter.
The various funds available of 138 billion to support working capital investments and growth opportunities.
Okay.
Looking forward the uncertainty around the future impact of the ongoing global pandemic makes it difficult to predict future performance.
However, considering our financial performance year to date with an adjusted EBITDA of 71 million combined with current backlog levels and our strategic integration planning with handy care. We remain confident we will achieve our previously stated goal of generating adjusted EBITDA.
$100 million in fiscal 2021.
On that note I'll turn the call over to Sebastian for a business and operational highlights Sebastian.
Thank you Steve. So my name is Sebastian will have some day VP operation English that somehow you are talking about the accessibility and dinner for Nick will talk about the patient.
So with the installation and the global supply chain assured labor shortage I'm quite happy with the result of the third.
Carter.
Can you talk about the organic growth three 5%.
For sure it is below expectation, but we expect to rebound in there.
Quarter, because with that.
Or maybe better.
Backlog remained quite strong and we expect a better contribution from the commercial segment continuing client platform critical platform called 2022, which has impacted a lot got it.
I'm on for this year.
As the announced last quarter, we did some price increase on our different products to offset some inflation on raw material and freight we needed one quarter to flush a backlog and we expect a better contribution in the fourth quarter as Marshall said at the beginning we are planning to make some new price increase in 2022.
We have increased our inventory level to add too we do submit the risk of supply chain for the winter.
So we should be in good position to deliver our organic growth.
After that we.
Regarding the integration with <unk>, which I'm sure people have a lot of question I would like to highlight a very good performance from Andy Kerr in the third quarter towards a strong performance. Thank you.
Regarding the integration I think it's progressing well we have a mix.
Reputation to our new leadership team.
And we have the opportunity for the first time to meet in person and Netherlands, and U K a few weeks ago with my brother, Alex and Bill. So we had the chance to meet the peak there David and all the team. It was very nice to see all the different layer of management and I'd have to say.
There's a lot of talent.
<unk> very good processes, good estimation very impressive factories, so congrats Keith and his team.
And what the most important is that everybody attendant care that we are very excited to be part of this summer I think.
We want to be part of the family do you want to share their knowledge and you want to learn from what we do et cetera. So that's a that will be good for for the future.
Regarding that question.
Energy It is continuing to move up between the I haven't.
Mostly on the stair lift they end up getting them into the network and it would be in client platform into the.
Dealership of Andy Kerr.
That should be a start for 2022, that's on a different view on the agenda I would just say mohair. So Q4 looking at that as far up North America. When we just started in January 2020, due the pre COVID-19 a single tube manufacturing of Toronto, we have receiver equipment, our robots Honduras installation people are.
Receiving some training we are expecting to make some bets at desk in December.
To be life generally.
This will be a game changer for North America, and kind of lead time in order to make some custom curve.
Few days with our dealers are quite excited so please come to visit us in Toronto in January.
So overall.
Think we are at the right pace to do a twig synergy run rate by the end of next year as we said when we got the announced transaction of Endocare and with all those channels, we remain on track to achieve or wildly.
In 2021.
Thanks, a lot.
Yes, Thanks, Sebastian I'll spend a minute or two to discuss the integration here with our patient handling segment. It is well underway as was mentioned previously travel restrictions have eased and.
And we've been able to make multiple trips back and forth between our operations in the U S and Canada.
Are these in person meetings have been important in helping us to get to know one another and to better understand our respective products sales channels and organizational structures.
One of the main goals of our strategic integration planning is to bring together the businesses have handy care and Saverio as one cohesive patient handling group.
And this really starts at the top earlier in Q3, we consolidated the leadership of hand care and span and just yesterday as Marcel alluded to earlier, we announced the arrival of an industry veteran with 20, plus years' experience to help lead our sales integration efforts and oversee the commercial strategy for our patient handling activities.
Some areas of particular focus or the development of a clear product roadmap SKU rationalization and the harmonization of our ceiling lift trucks and accessories.
Through these initiatives will be able to optimize purchasing and manufacturing efficiencies and in doing so deliver a better experience for our customers.
Marcellus I made it very clear to us.
And particularly the patient handling segment is an important part of this very group with a combined revenue base now of $140 million.
And we'll be working very hard over the coming months and quarters to ensure that our integration plan is successful and that patient handling will be a meaningful contributor severest overall growth going forward.
So with that I'll turn it back over to Marcel for any final carbons before the Q&A.
Marcella.
Yes. Thank you.
And a good presentation, Steve Sebastian you got that Okay. We are so excited okay too.
Complete this year and go to a 22, so do we have some question Shannon.
Thank you Sir just as a reminder, if you'd like to ask a question. Please press star one at this time also with you find that your question has been answered you may risk move yourself from the queue by pressing star tail.
And we'll take our first question from Derek Lessard of TD Securities.
Hi, Good morning, I guess, Michele della Libera Darrin coupon on our earnings call and thanks, So much for taking my question.
So I'm wondering if you could talk about your confidence behind Wanda narrow EBITDA guidance, given the tough operating backdrop quick.
Oh, I am I am very Covid and as we mentioned before okay. We had many things.
Going.
That's real good for us in Q3, but even with that that at least.
So I would if I know result, okay, and Sharon before okay.
Hey.
Say that again.
I stopped the gate in hours to make our Q4. So we have no problem up shortly okay everything is dead.
And I think that.
Everybody will continue to work hard and we'll deliver because I assume you want to add something on that.
So I think some pretty good come into the team know exactly what they have to do.
Do you have the order in hand, so where are we have confidence.
Okay.
Thanks.
Okay.
Thank you and our next question will come from Nick Agostino from Laurentian Bank Securities.
Yes.
Oh sure.
Just a quick question on the you guys called out labor shortages, certainly that's something that many many companies are experiencing just wondering are you seeing.
With the change in government programs on the subsea side are you seeing any relief on the labor shortage side and.
If not what sort of steps are you guys taking to two.
Two to improve I guess your shortage situation and should we be thinking about higher I.
I guess or a margin impact if you guys are having to pay.
Or throw at higher wages to attract the talent.
Nick Thank you for the question again, so buys you didn't get that.
Is it generally.
It's not just survey as general is why I am so happy that we add curved steadily Duffy, that's coming from and that everything is about robotics.
Very quickly.
Get that stay up 5000, okay manufacture 5000.
For North America, that's major okay, and that number of people don't change because the robot that we can work 24 hours seven days without that gain to be unhappy.
We have two began Apollo gave that when we improve.
Increased.
Sadly.
Some level look at the other level one trip some increase due and we.
We are in shortly after that and I think that will net change overnight.
Would be a challenge in 2022.
But we are very proactive okay.
But when you have the competition like.
Okay.
Somebody can.
So, but yeah. Okay. It's good to see but then it doesn't appear they have good program too. So that's not that's not easy.
But it will continue but.
We have somebody at the.
Laurie.
Sure.
You look at G III to be innovative.
Sebastien can you add some comments you are.
You are in the market.
Thank you.
Good color from what I said, I think Nick Flusher that labor shortage everywhere, where we have some place significant in China, where we have people waiting to come to work for us.
And then we ask this space, where we have more automation that maybe the risk is a bit lower but that's something we're working hard to improve and it takes time no well, we're flexible but not so much we have to plan our growth and that's a bit something what we are doing to make sure that next year, we can deliver us from growth to after we have a lot of good incentive and what time, what would sort of.
As though challenge.
Okay and then just my follow on question you guys say in the press release that freight costs are on the decline is that are you guys now starting to see by making that comment not only is it a miss.
Didn't.
Declining costs, but are you starting to see deliverables.
It's coming through the ports, if you will in D. C easy deliverables of product more more tightly in line with your prior expectations are you starting to see a change there.
In line with the lower freight costs and if so.
Sebastian you made comments that you've increased the inventory through Q4.
That is something that we should anticipate a reversal starting in Q1 as the freight situation improves it will leave it there. Thanks.
At <unk>, we started to create to decline a bit sticky we hope it will continue.
He couldn't be reopened and maybe the demand that people or in a range of people did with will eventually come back to a normal level, where should a port of Vancouver or anything in the U S is the icon just did.
But still that at one point, we had that's why we have increased our inventory our content work on that.
We set a certain place our money better than it was in Q2 and I think in order to lower inventory I think we have to wait there one or two quarter to make sure as things stabilize and the winter storm and everything.
We always have to be cautious with our stock level.
Okay, great. Thank you.
Thank you Nick.
And our next question will come from Zachary <unk> of National Bank financial.
Well go to that.
If you could help me out how are you thinking about the pace of recovery and commercial end markets in Q4 and over 2022.
You cut out.
Yes, I mean, the commercial it has been a drag I mean I think in certain of the comments that have been made here residential is really carrying all of our growth and accessibility.
Happy that handicap exposure to residential is almost 100% so with their stair lift that's been a big boon for us.
But as it relates to commercial it's difficult to know the timing of when it will.
We'll come back our anticipation is that no 2022 should be.
In the first quarter or second quarter.
Entirely sure, but we are expecting those orders to come back it's not a question of in our minds of if but just a question of when and it sounds like I've been repeating myself, because I've talked about sustained foot traffic for quite some time now, but where we are starting to see that I mean some of these these.
Landlords.
The wage subsidies the rent subsidies are coming off there.
They're just starting to to breakeven is starting to make money, they're seeing customers come back. So I think it's going to take a little bit of time for them as well to be comfortable with their own personal balance sheets before they start making some of these investments.
So so we do anticipate it to come back in in the in the next year.
But it's difficult for me to tell you exactly when a life is going to turn on there.
That's helpful. Thanks, That's all I had I'll turn it over.
Thank you and our next question will come from Matt Buckles of Stifel.
Hey, good morning, guys.
Yeah.
I just have a few questions.
I know last time, we spoke there was some mention of doing some tuck in acquisitions I was wondering if you could maybe update us on your deal pipeline in terms of maybe the number of targets or potential revenue and I guess secondly, wondering if multiples have changed at all given what's going on with the global supply chain.
Okay.
Yeah just to tell.
Tell you that for sure. Okay. We are we have a good balance sheet and we have.
Our bankers are.
Well it will grow another $30 million I think OCA accessible came from making some acquisition, but we don't want that.
Looking at the major acquisition, but I am sure in 2020 two you will see some small acquisition.
That would be located at key do you read that we are a little bit weaker right now or at.
Some products that one too and then I will.
Our line.
But really lucky with focus on integration went so many good things that can it can be but for sure we'll make some little acquisition.
Understood. Okay, and then you mentioned that but you know the solid balance sheet. I was wondering if you could maybe provide a little more color in terms of you know where the number top few priorities lie in terms of you know whether it's spending on supporting working capital investments it sounds like M&A maybe.
A little bit later, but if you could just outline you know where your priorities are.
Would be helpful.
Okay. So basically you want to take it.
I can take this one.
Yourself.
Question.
I mean, we are making investments.
Inventory, absolutely working capital to make sure we don't put any of the sales in jeopardy for Q4 and going forward. So we will continue to make investments there where needed.
On the Capex side and investment side.
We're obviously investing a.
A large amount in the facility here in branch into have the curved stairlift production up and running now in Q4 and ended up up for 'twenty 'twenty. Two so there is a significant investment that's what's happening there.
Other than other than that we will continue to make strategic investments in capex is required but.
The any excess funds are going to use to delever.
If something does come up on the acquisition side that the timing is right and the opportunity is right. We will we will pull the trigger on that but our plan is to continue to delever.
Okay and last one for me I was wondering if you could provide any commentary related to or maybe quantify your overall organic growth expectations over these next few quarters.
Yeah.
So Sebastian.
If you go back to the Hickman.
Hickman that we've seen before that we want to be a $1 billion company.
By 2025 and that means we have to be in the 8% to 10% range very often so I think pretty exited different.
Target we are looking for.
Okay, Great I appreciate you, taking my questions and I'll hop back in the queue.
Pleasure.
And our next question will come from Frederic Tremblay aftershocks.
There is also there.
Right.
So first question for me is on the price increases you mentioned the potential for further increases in 2022 I was wondering if it's more on the categories that werent increased in 2021 or is it an increase that's going to be on top of what you're already done or.
For some of your brands here.
Well you know we have some increase in every division in the 'twenty, one and every division of what Avenue increase at the beginning of next year.
So that's a and that.
People understand that at the end of this NDA logistical make their grocery and there has been that the inflation is there.
So it's therefore damage for us and we.
We want to share with that our customer and our dealer.
And they understand that we.
We have to be a strong buy to add to that a strong balance sheet. If we want to keep out where our road to be diverse.
Manufacture around the world about the excess of deep Red Oak.
Okay and I appreciate the comment on the on the patient and make sure. It is.
On the timing of the improvements I was wondering if patient handling is expected to.
We contribute more meaningfully in Q4 than it did in Q3 two to the thing that the 2021 guidance or the improvement in patient had room expect it to be more.
Significant in 2020 between years.
Bob Covid realistic, okay that it would be easier to be better lucky in Q4, but we'll see the real action okay.
And the introduction of past week, Okay. It will be.
We see more change yoki and more EBITDA or sent agents.
Q1 'twenty two.
That's helpful. Thank you for taking the questions.
Okay. Thank you for that.
Nick.
And our next question will come from Michael <unk> of Deutsche Bank.
Hey, good morning, guys.
Yes first question the 2021 EBITDA guidance like that implies a sequential improvement in EBITDA like I understand the typical seasonality here, but I wanted to get a sense for how much of the sequential increase is expected to be driven from higher sales versus.
Maybe I would call margin recapture.
And then just as a follow on on the margins any way you can provide us a sense for how much still needs to get recaptured beyond Q4.
Sebastian you want to go or I go.
But if you can talk about maybe Steve can complete.
Okay.
He doesn't think we have some of that price increase.
Everywhere, but as I mentioned before nicoletti that us in excess of a deal for elevator residential on the new acreage that we the order that they placed with US Okay. We respect it.
Ed.
We respect the timeline of key that they will go to install two Mrs. Smith with the same pricing.
But that is that okay that was an impact.
In Q4, and I know that in Uganda, and I know that span, okay, and other decision, making increase of price, Okay, and we will see that you acquired but we'll see that again, we have another one in Q N at beginning of <unk>. So.
So you will see that that roughly it would be a little bit more of a combined 21 and 'twenty two more than 10%.
So that's my way up.
What I see right now.
And everybody Zumba and advocate and I think it's fair increase that gave that it would be combined 'twenty, one 'twenty two over 10%.
And just can I, just if I could add on that.
If I can just add on that myself.
Obviously, we saw inflationary pressures in Q2 and Q3.
And also China.
On the freight cost.
We have done price increases.
This year already but nothing what we what we put nothing compared to what we put in place in Q3. So the more widespread price increases that we put in place in Q3, we're going to see that come through in the margin in Q4 and going forward and then ask Marcel said, where we're going to continue to look at price increases so to your question specifically about.
Margin margin versus revenue impact in Q4.
We're anticipating both.
That's really clear guys. So most of the catch up versus pricing happens in Q4, but it.
It sounds like there's still some left.
In 'twenty two so yeah no that's helpful.
And then maybe Steve just a question for you if I look at the consolidated P&L, both gross margin SG&A rates declined quite a bit from Q2.
I think there is a plenty of reasons.
Understood on the gross margin side, but I wonder if you could talk about what drove the SG&A lower.
Order over quarter, and whether or not that sustainable.
So we did have a recast of our of our financials.
Our MD&A was was prepared on a with the re casted numbers on a year to date basis for Q3, we had a re class from from SG&A into margins. So if you're looking at prior prior MD&A, you'll see that you'll see that change, whereas if you look at our Q3 MD&A the year to date number.
Or is it more in line obviously, we did have some pressures this quarter in gross margin and in SG&A. A lot of that was was on subsidies. We saw that subsidy decrease we saw that in both gross margin and SG&A.
But there was no no other real impact to SG&A in the quarter.
Okay. So not much of a read I guess.
Helpful. And then maybe the last one what are your what are your conversations with your dealer network suggest for the speed of the potential uptake in.
The stair lift sales.
Manufactured from brand in.
And I guess, the flipside to that you know in terms of the stair lift that do not need to be air Freighted from Europe, you know, what's the confidence level that you can now sell those into the European market with speed.
Boy I can you I wouldn't either okay.
Are very excited that they can propose.
Our current sporadic or CRO Stanley, it's okay, and again installed that.
And two or three days after the order so that.
What will be the best in North America.
And our accompanying our very good okay, but we'll work hard okay to the integrated sporadic.
With the rapid energy dollars appear to be sure that we'll be in production for North America at the beginning.
A further 22, they look at that that would be major paid just under <unk> that right now and Gary you said in North America that buy right. So it would be coming from our factory. So.
It's very ended they are what do you like where that much I can see that we would have something that we can deliver I repeat myself that they can deliver quickly to the customer.
Customer.
The best thing you have to add something on that.
Well I think whats important to Norway.
Been doing it doing it in Netherlands, and keep for years and years. They have perfection their system, it's a well run our system and we are duplicating. The same thing in terms of also the team has done a very good job to train us to possibly would be done at the beginning to make sure we don't make mistakes.
I think.
Did that take years and years to become an expert and will have the chance to do it from the day number one.
Great. Thanks for the color guys I appreciate it.
Thank you.
And once again, if you found that your question has been answered you may remove yourself from the queue by pressing star Q. We do have a follow up question from Derek Lessard of TD Securities.
Hi, Eric.
Hi, Michelle on for Greg I'm, just curious if you have any plans or.
How much of our product in North America, and if so what type of timeframe would you be anticipating.
So betsy.
For sure if you look at them they care about holiday. They are expert in Australia, that's what they do soy right holidays. This trades.
And if all are within North America.
Is that the boat shoe, which is the committee may also move up maybe next sometime next year, we could look to manufactured a double chip system Lindsay carrier in North America for US once we finish with a single tool to make sure. We are successful and after that we can think how about a second product with homeowners trades.
Already I've been involved in the mood is available needs to be shipped.
That's the next opportunity.
So Betsy I would just add okay. That's a major change for us at gape to many picture into onto Oaky.
The products that we have the best EBIT, though.
I'm a percentage.
So that's something that.
Yeah.
That would be a theoretical backup.
Our EBIT in 2022, it's why I'm, so enthusiastic about about the saying, okay. We work hard at it with the with <unk>.
And as mentioned the proved that again delivered the sporadic. So we we have we'll have this knowledge we have right now because it's quite that Vince and draw, though and again Gabe.
That were best EBITDA.
Got it okay. So what will be a video and does he has to get to speak to you about the one.
I will speak to you again in the first quarter next year, what will gave you where we stand with that.
Okay. That's helpful and maybe one last one from me just wondering if you could update us on some of the cross selling synergies.
To monetize with closing the deal with Omnicare.
Steve.
Yeah.
Specifically on the sales side, yes, they're starting to come.
The synergies that we looked at what the health care deal. We we havent been in three separate buckets. We had the indirect costs, we had the direct costs more of the cost of goods section and then the sales.
The indirect pieces is obviously, becoming a little bit faster I think that's.
Easier to execute.
On the sales side is starting to come we're starting to see that come through absolutely. It's that is more heavily weighted towards the end of of the one to two years.
Of our integration plan.
I mean, the good news is is that we are seeing seeing it start to come through we have put some leadership changes and realign the teams to more effectively go after some of those synergies and we're confident we're going to deliver at least what we what we have set out in our initial expectations.
Okay. Thanks, a lot for taking my question.
Thank you.
And it does appear we have no further questions at this time I will turn the conference back over to our speakers for any additional or closing remarks.
Okay. Thank you very much to be there I think he would support my team Mckee and thank you very much.
S&P and named Porton prior to the success of Saturday add because you deliver it to good use.
The barriers. So again, thanks for your very good work at anybody that we speak this morning, and a big thanks to everybody. All My Division. Okay. You are car T and I recognize that.
We are very fortunate okay for us L. Two guys in employee so thank you very much.
Thank you Shannon.
Thank you and that does conclude today's teleconference. Thank you all for your participation you may now disconnect.
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