Q4 2021 LivaNova PLC Earnings Call
[music].
Good day, ladies and gentlemen, and welcome to the Lee the neither plc fourth quarter and full year 2021 earnings conference call.
If you'd like to ask a question at the end of the presentation. Please press star followed by one on your telephone keypad.
As a reminder, this conference call is being recorded.
I would now like to introduce your host for today's conference Mr. Matthew Dodds <unk> Senior Vice President of corporate development. Please go ahead Sir.
Thank you Eddie and welcome to our conference call and webcast discussing leaving though this financial results for the fourth quarter and full year 2021, joining me on today's call are Damien Mcdonald, our Chief Executive Officer, Alex Schwartzberg, Our Chief Financial Officer, and Lindsay Little our senior director of Investor.
Relations.
Before we begin I would like to remind you that the discussions during this call will include forward looking statements.
Factors that can cause actual results to differ materially are discussed in the company's most recent filings and documents furnished to the SEC, including today's press release. It is available on our website, we do not undertake to update any forward looking statement.
Also discussions will include certain non-GAAP financial measures with respect to our performance, including but not limited to sales results, which will all be stated on a constant currency basis.
Reconciliations to the most directly comparable GAAP.
Financial measures can be found in today's press release, which is available on our website. We have also posted a presentation to our website that summarizes the points of today's call. This presentation is complementary to the other call materials and should be used as an enhanced communication tool you can find the presentation and press release.
In the investors section of our website under news <unk> events and presentations at Investor Dot, leaving Nova Dot com with that I will now turn the call over to Damien.
Thank you, Matt and thank you to everyone for joining us.
Today, we reported our fourth quarter and full year 2021 results with full year results meeting or exceeding the high end of our guidance range.
Before discussing the results I wanted to provide you a brief update on the <unk> litigation.
On February 21, the court of appeal in Milan notified us that it is suspended payment of 454 million Euro judgment until a decision has been reached on the appeal to the quarter Cassation.
Which is the Italian Supreme Court. This suspension is subject to providing a first demand. Thanks surety of 270 million euros within 30 calendar days, we believe that we can satisfy the condition of the surety.
Now turning to our fourth quarter results.
I wanted to start off by discussing sales results followed by a review of our strategic portfolio initiatives.
After my comments, Alex will provide you with additional details on our results in 2022 guidance.
Then I'll wrap up with closing remarks, before we move onto Q&A.
We are proud of our fourth quarter results were excluding heartfelt, we experienced both sequential and year over year revenue growth across all regions.
For the full year, we are pleased with achieved all our key financial targets.
I'd like to highlight that effective fourth quarter 2021, we changed our segment reporting from two to three reportable segments.
These reportable segments.
Very much elation, cardiac pulmonary or CP and advanced circulatory support or Ics.
The change reflects the way we internally manage.
Evaluate performance and allocate resources.
This new structure, driving further accountability and execution and provides greater transparency to growth and margin profile.
Additionally, due to the impact of the pandemic on our prior year results. Today's commentary includes certain comparisons to 2019.
We believe this provides helpful context for the underlying trajectory of our business. These comparisons are reflected on slide 20 of the earnings presentation.
Turning to our core growth drivers epilepsy and Ics.
Global epilepsy sales for the fourth quarter increased approximately 10% versus 2020, and 8% sequentially with growth across all three regions. Additionally.
Additionally, epilepsy sales on a full year basis, with 28% above 2020 levels, which was in line with the midpoint guidance and 7% above 2019 levels.
These results reflect our commitment to serving our patients and delivering sales growth, while navigating ongoing COVID-19 related challenges.
U S epilepsy sales increased 11% versus fourth quarter of 2020 and was 7% above 2019 levels.
Total implants grew in the mid to high single digits versus the prior year and were in line with 2019 levels.
Similar to prior quarter trends total implant growth was driven by replacements.
Which continue to benefit from the catch up in procedures deferred due to the pandemic.
Additionally, sales on implants improved sequentially with increases in both new patients and end of service implants.
Our progress in U S. Epilepsy continues to be supported by a go to market initiative, which currently encompasses 12 dedicated CEC teams.
These teams accounted for approximately 19% of U S sales and implants in the quarter.
That continued to deliver sales and implant growth, but trended above the baseline business compared to the fourth quarters of 2020 and 2019.
Epilepsy sales in Europe grew 11% versus prior year led by the UK and Italy.
We achieved growth of nearly 10% and the rest of World region led by a recovery in China, Taiwan and Brazil.
Compared to 2019, Europe sales were unchanged, while rest of world sales grew 23%.
For the full year 2022, we expect global epilepsy sales to grow 5% to 7%.
Our forecast includes growth in new implants in the U S. As patients that can give us return to in person physician visits and hospital capacity improves and.
In addition, we anticipate a continued tailwind in replacement implants related to the backlog created in 2020 that has continued into this year.
We are pleased with the progress of the guide our market initiatives and plan on adding four new dedicated teams in the U S. During 2022.
Okay.
ACS sales were $14 million in the quarter, representing an increase of 4% from the fourth quarter of 2020, and a sequential decline of 10%.
Results were impacted by a reduction in patients treated with Ecmo given hospital staff shortages as well as capacity limitations.
Notably Ics sales for the full year was $55 million and grew over 30% in line with guidance.
We expect Ics to grow at least 20% in 2022.
Turning now to DTD sales for the fourth quarter was $3 million and for the full year were $9 million.
For 2022, we anticipate DTD sales of approximately $10 million to $12 million, primarily from the recover study.
The recover study continues to progress and we're very close to implanting at 250, a few Nepal, a patient and will communicate when this milestone has been achieved.
While we remain focused on enrolling the unipolar and bipolar cohorts. The unipolar cohort continues to enroll at a faster pace, primarily because it is more prevalent patient population.
As a reminder, we can submit the data from the two cohorts separately for transition to the prospective longitudinal study will registry.
We still anticipate a transition to registry to occur for the unipolar cohort in late 2022 or early 2023.
In heart failure, the anthem <unk> pivotal trial continues to advance.
We are pleased to report that we recently achieved two key milestones.
First in late December we enrolled the 400 patient and second in mid January the 300 patients completed the nine month follow up visit.
Given these milestone achievements. The first interim analysis is being conducted by the independent statisticians.
Once all pre specified conditions have been met including safety a trend towards the primary endpoint and success in the three functional endpoints, we may submit the functional data to the FDA, which could occur as early as mid 2022.
If we did not meet all the criteria the independent statisticians will take another look at the data after the 500 patient is enrolled.
Moving to OSA. The Osprey trial continues to advance with approximately half of the <unk> study sites currently screening patients.
While we have experienced delays in scheduling sleep and sleep test and surgeries were excited to announce that our first patient is scheduled for surgery.
We look forward to communicating when this key milestone is achieved.
Importantly, we still assume submission for FDA approval in mid 2024.
For the cardiac pulmonary segment sales were $133 million in the quarter, an increase of 12% versus the fourth quarter of 2020.
Oxygenated sales increased by approximately 20% globally with strong growth in Europe , and the rest of the world regions.
Heart lung machine sales increased in the mid single digits with over 40% growth in the U S offset by declines in Europe and rest of world.
Additionally, cardiopulmonary sales were generally in line with 2019 levels for the quarter, but were below 2019 on a full year basis, given COVID-19 related pressures on procedure volumes and the cadence of the HSM conversion cycle.
We expect cardiac pulmonary sales to grow zero to 2% for the full year of 2022.
Lastly, heartfelt was divested on June one 2021, and heart valve sales for the fourth quarter of 2020 with $24 million.
And with that I'll turn the call over to Alex. Thanks, Damien during my portion of the call I'll share a brief recap of fourth quarter results and provide 2022 guidance.
Before discussing results I wanted to point out that during the quarter, we identified and corrected an error related to foreign currency exchange rates utilized to calculate inventory and cost of sales for the year 2017 through 2020 and the nine months ended September 32021.
This resulted in a decrease to inventory and an increase in cost of sales occur.
Accordingly prior period results have been revised on a GAAP and non-GAAP basis.
The revised financial information for 2020, and 2021 by quarter as supplemental information in today's press release.
Additionally, my comments will reference a revised prior period results.
Sales in the quarter were $270 million, an increase of 12% versus 2020 and.
And an increase of 6% versus 2019.
After excluding part of apps.
Adjusted gross margin as a percent of net sales in the quarter was 70%, which was up 300 basis points for the fourth quarter.
Of 2020.
Adjusted gross margin was favorably impacted by product and geographic mix.
Adjusted R&D expense in the fourth quarter was $41 million.
<unk> to $39 million in the fourth quarter of 2020.
R&D as a percent of net sales was 15, 1% versus 14, 5%.
In the fourth quarter of 2020.
R&D is increasing due to continued progress on our next generation heart lung machine as well as the recover study and the anthem have rep and osprey pivotal trials.
Adjusted SG&A expense for the fourth quarter was $107 million compared to $94 million in the fourth quarter of 2020.
SG&A as a percent of net sales was 39, 8% up from 34, 7% in the fourth quarter of 2020. The increase was primarily driven by higher commercial investments in the U S.
The Acs and epilepsy businesses.
Yes.
Adjusted operating income from continuing operations was $40 million compared.
Compared to $47 million in the fourth quarter of last year.
Adjusted operating income margin from continuing operations was 15% compared to 18% in the fourth quarter of 2020.
Improvements in gross profit were offset by investments in SG&A.
The adjusted effective tax rate in the quarter was 14% compared to a negative 1% in the fourth quarter of 2020.
The higher tax rate is primarily attributable to changes in the valuation allowance in geographic income mix.
Adjusted diluted earnings per share from continuing operations in the quarter was 57.
Compared to <unk> 70 in the fourth quarter of 2020.
Adjusted diluted EPS from continuing operations for the full year was $2 seven.
Which was above midpoint guidance.
Our cash balance at December 31, 2021 was $208 million down.
Down from $253 million at the end of 2022.
Total debt at year end, 2021 was $240 million versus $656 million at year end 2020.
These changes primarily reflect the impact of the equity offering and the term loan retirement completed during the third quarter of 2021.
Adjusted free cash flow for the quarter was $32 million.
And was $84 million for the full year, which exceeded the high end of guidance.
Free cash flow generation was driven by higher earnings and improved cash conversion with free cash flow conversion ratio of 79%.
We invested $26 million in capital property plant and equipment during 2021.
Which was $10 million lower than the prior year.
Yeah.
Now turning to 2022 guidance we.
We forecast 2022 sales growth on a constant currency basis between three and 5% when excluding the heart valve business.
We assume an approximate 1% headwind from exchange rates.
We are projecting adjusted diluted earnings per share from continuing operations in the range of $2 50.
To $2 80.
We assume adjusted diluted weighted average shares outstanding to be $54 million for the full year.
Adjusted free cash flow from operations.
As expected to be in the range of $90 million to $110 million, we forecast capital spending in the range of approximately $35 million to $40 million.
And with that I'll turn the call back over to Dean.
Thanks, Alex.
As discussed throughout today's call 2021 was a year of execution against our guidance and improvement in cash flow generation.
While we entered 2022 with ongoing COVID-19 related market headwinds, we remain committed to delivering sales and earnings growth, achieving a pipeline milestones and improving profitability and cash generation.
We believe the focus on our strategic triangle underpinned by the live in either business system positions us well to realize the full value of our diverse portfolio.
And with that linear we are open to questions.
Yes.
Yes.
Thank you and you have a question at this time. Please press Star then the number one on your Touchtone telephone quest.
Question has been answered or you wish to remove yourself from Macquarie. Please press star followed by Kay.
As we enter the Q&A session. Please limit yourself to one question and one follow up question and then return to the queue. If you have any additional follow up.
Our first question today comes from Adam <unk> of Piper Sandler. Your line is open. Please go ahead.
Hi, Damian Matt.
Matt Alex I Hope you guys are well thanks for taking the questions here and congrats on the progress this year.
Wanted to start with just kind of what youre seeing from a procedure environment standpoint kind of real time.
Just kind of want to flesh out a little bit more.
January I'm, assuming January is a challenging months like we've seen across med tax so would love. Some color. There and then are you seeing have you seen things improved thus far in February so.
Thank you could illuminate that that would be great and then along those lines just how do we think about <unk>.
Orderly cadence and models Q.
Q1 versus the remainder of the year and then I had a follow up thanks.
Yes, Greg Thanks for joining us.
Look thanks for the question.
And then Alex why don't you jump on in.
So I would say like a lot of people the year has been pretty much a map.
For us as well if you look at January it was a little slower in the U S. The epilepsy in the IC <unk> businesses have been impacted more than cardiopulmonary.
In epilepsy, there is still a bottleneck in the new patient referrals.
Surgical scheduling.
Procedures being canceled the delay we have people schedule the midnight, they turn up and Thats what <unk>.
And also the IMU work ups and that's largely related to the staff shortages at the hospitals. So all of that was probably impacting new patients more than the replacements.
I would say, though that coming into February to the next part of your question. We've seen an improvement in that the qualified leads the ops and <unk> as we refer to it have definitely improved through February .
In Ics the staffing shortages have had the most pronounced effect on us.
The ecmo patients.
Much more labor intensive it's one to one versus like with Ventas wonderful.
So we've seen some rigidity, there, but again starting to improve as the staff shortages in pockets look like they're improving do you want to talk about sizing sure.
Adam just.
In terms of our.
Facing the I'd say.
Normalized.
Phasing for Q1.
As always kind of a low watermark for us this year, we're going to skew higher in the second half.
And this is primarily related to our expectation of the next generation heart lung machine launch, which is scheduled for the second half.
And also clearly omicron is still an issue as Jamie just said in Q1, so definitely factor that in.
Okay got it guys. That's helpful color I appreciate that.
Then maybe I'll just ask one more on the guidance front.
I'll, specifically asks about the epilepsy guidance $5 to 7%.
Damian I think you've talked about this a little bit.
<unk>.
In the prepared remarks, but can you just illuminate our flesh out the the NPI versus replacements.
How youre thinking about those two different pieces and then as well as just geographic mix U S. O U S rest of World I think I heard you say you expect <unk> to grow in.
In 2022, but wanted to confirm that so any more color there would be great. Thanks, so much.
Sure Adam it's Matt So for 2022, our expectation is both NPI and replacements grow NPI slightly faster and then we do assume that the international markets grow faster overall, and Thats, mostly NPI driven.
Okay helpful. Thanks again guys.
Okay.
Thank you. Our next question comes from Rick Wise of Stifel. Your line is open. Please go ahead.
Good morning, everybody.
Damian.
Maybe let's start off with the.
It seems like good news about the suspended judgment, but the demand.
Demand for surety.
Just a high level.
Is that.
Our U S.
I hesitate to call. It pleased but are you pleased with is that a positive step forward in your mind.
And as you as you reflect on it what are the next steps in general now in timeline any incremental color there and your comment about.
The surety.
Okay.
Are you going to finance it.
Obviously, you're generating cash internally are you going to.
Finance, it with equity or debt, maybe help us understand that as well.
First of all Hi, Rick how it good to hear.
A few things so let me talk about the case and then you jump in about the financing.
The first thing for US is yeah. We think this is a.
Logical step from the court.
It didn't make sense the demand climate, while we're still discussing the <unk> case.
And so I think it really good decision from the court to suspended until that cases being heard.
And I think you might have heard us talk about the fact that <unk> and the how much case.
Have been joined and we will expect to hear that some time in 2022. So I think it was a really great decision.
It's important for us in terms of financing Rick So all along since we received the initial judgment in November .
We had been sort of planning for the worst case scenario.
So we have been looking at financing and we've lined up a kind of a short term bridge facility two to satisfy the surety.
Okay. Good.
And.
Maybe just a couple of operational.
Questions.
Yes.
Maybe just.
General what are you baking in in terms of the cadence of.
Covid recovery.
Generally obviously, it sounds like second half better but.
Many companies are saying.
Gradual improvement throughout the year or is that the way youre thinking about it.
On.
As it relates to Acs.
What percentage of the disposables of there have been in Covid patients and when Youre talking about 'twenty guide there what's embedded.
Great.
So again in terms of the phasing.
The expectation is we're going to see kind of a.
A slower Q1.
And then improvements in Q2 and the back half of the year again.
The phasing is also impacted by our capital equipment <unk> business, which is it's going to be skewed more towards the second half of the year.
For Ics.
Quarter was impacted by the staffing shortages as I mentioned in.
It makes us a center more cautious about starting a new patient on Ecmo.
Severe covered or non covered.
I think we've talked about before the incentives COVID-19 patients as unit, 40% to 45% in the quarter. It was 43.
We also.
Zinc.
We've talked a bit with the phasing overall, but it'll be a gradual improvement quarter on quarter.
We've also been adding head count.
We added about 20 last year most of them in the second half so they're sort of coming online for effectiveness.
In this first half.
Planning to add another 20 in 2022 again, starting now so that'll become more effective.
In the second half so I think as Covid improves the footprint increases both from last year and this year.
That's how we're thinking about the guide at least 20% and we expect to your last question the percent of Covid will decline in 'twenty, two and we think that'll largely be made up by other respiratory uses COPD rds.
Got you.
Thanks.
Solid fourth quarter performance relative to your excellent guys great to see it.
Thanks, Thanks, Craig.
Yes.
Thank you. Our next question today comes from Mike Matson of Needham <unk> Company. Your line is open.
Yes, Thanks, I wanted to ask about the the anthem trial I think you said you might be able to submit to the FDA mid this year.
So with that if we see that does that imply that it hit the endpoint.
Yes.
Mike why don't you jump in share so for anthem half for us as Damian said, we hit the two milestones that allow the independent statisticians to start reviewing the data which is underway, we think that'll be done in two months or less.
We have to hit all five at the end points. We did talk about this before Damien highlighted its safety trend in mortality or morbidity, which is the ultimate primary endpoint and then the three functional endpoints. So assuming all five here than we do plan on submitting to the FDA, which we think could come around.
Mid year, if we don't hit all five it's an adaptive study so we keep going and we get the independent statisticians get to look at every 100 patients. So again. The next look would be at 500, which we expect to occur kind of in the later part of 2022.
Okay got it.
Alright, and then.
Surprised to see that the operating margin in ECS business was as high as it is north of 20% I think so.
Maybe can you just comment on that.
Stable.
Do you expect it to improve further from there.
Yes, I'm not sure where youre seeing the 20%.
Margin on an Acs we.
We've been investing heavily behind the business and.
We are.
We're going to continue to.
To invest in 2022 as well so we don't expect to see much profitability coming out of that business.
Okay I was looking at slide 15, maybe maybe I'm misreading. It says adjusted segment operating income and margin 21 nine for Acs.
Oh that was last year, sorry, I apologize I thought yes.
Alright, yes, sorry.
Yes last year, obviously, we held back on on investments.
I think on the straight was where we started really putting a lot of our support and resources in 2021. So that's why you see the profile changes in 'twenty one yes.
Okay never mind that yes that makes more sense consistent with what I would expect given what youre doing with that business. Okay.
And then finally I just wanted to add.
Just the overall guidance what have you sort of assumed around.
Inflation headwinds in your guidance and what sort of impact you expect on your.
Margins from that.
Yes, we have.
Incorporated the inflationary impact both from a labor perspective, particularly at the manufacturing levels.
And also.
Continued expectations on higher freight cost as we saw that throughout this year and we're going to continue to see that in 2020, So thats incorporated into our guidance. So it's already assumed in that we absorb those.
Cost and of course, we have our productivity efforts ongoing to help offset that.
Okay got it thanks.
Thanks, Mike.
Our next question is from Amit <unk> of.
Goldman Sachs. Your line is open.
Hey, Thanks, so much this is Phil on for Amit.
A lot of the areas have been touched on I thought just maybe if you follow up items if I could.
Not not hearing as much on the bipolar arm.
The depression trial I was hoping for an update there and try to understand a little bit better about the challenges around.
Kind of expectations for that one and waiting sizing of that portion of the depression opportunity.
Yes, hi.
Thanks for joining us too by the way.
So Amazon overall hit the recover study and beginning the last week of December and the first.
Two months of 'twenty, two we've really seen a slowdown in patients moving from the consent to implant.
Combination of.
Omicron, hitting patience and delaying their surgery or the clinical staff shortages. So.
And it's affected both arms on unit, Paul that we're very close to implanting the 250 patient.
And.
It's been a modest delay in the enrollment there, but it hasnt changed how we're viewing the transition to the registry in late 'twenty two early 'twenty three.
That's for the unipolar bipolar is trending behind we modeled originally 65, 35% in terms of recruitment that's more like 80 515.
And so we're seeing a lot more unipolar and as I said.
On the Investor Day, we're really skewing our efforts to cranking through the Uni polar.
It's a bit like <unk>.
Indication expansion for a drug.
Pushing very hard on one indication the unipolar.
I think more important than hitting both of them. So we have seen a delay in the in the bipolar towards the back end of the year.
That's great. Thanks.
On that one just to be clear the unipolar and bipolar arms can be treated basically completely separately from an assessment and from a submission standpoint right.
That's correct.
On unit pilot program in bipolar side, Okay, great and then on anthem.
Hearing kind of the progress on the enrollment rate roughly it sounds like roughly 100 patients a year. Just wondering you guys had been very gracious about giving unit polar expectations do you have a similar internal expectation for what sort of level of patient event right.
Before youll be able to potentially hit success. As this first initial review sort of what's embedded internally or do you think it will be 500 or later to be able to achieve early success. Thanks, so much savings.
Yes, that's a good question so for this it's a.
It's sort of an embedded PMA. So it was designed to have the functional endpoints hit.
So significant at nine months with 300 patients.
Again, we have to have safety, which we're pretty confident in given all the history of DNS and then there's also a trend in mortality, we don't hit the mortality endpoint that's designed for larger follow up.
But of the five they were all designed to hit at this level as opposed to kind of more of a first look like you saw with some others. So we still have the ability to look at 500 600 patients who are not the first time, but youre right. The design was at this at this first look.
Okay. That's helpful. Thanks, so much.
The next question comes from Zach <unk> with Jefferies. Your line is open.
Hey, everyone. Thanks for taking the question just one on the heart lung machine upgrade cycle that we're expecting to see the tail end of this year, how long do you expect that to last.
And can you talk about some of the margin impacts from that upgrade.
Yeah, Hi, thanks for joining us.
The <unk> I'd like the analog of what happened in.
Slide 17, 18 into 19 with.
The S three to five upgrade cycle and how we ticked up in terms of execution there.
The wife and people.
And model that process. We estimate there are 7005 <unk> out there varying somewhere between a few months old to 15 years old obviously will start at the 15 year old end of the funnel and work our way through and so we think that there's a good tailwind.
Sure.
Two to three years.
In that conversion cycle.
And then in terms of margin.
The gross margin should improve we are anticipating a price premium.
And we're also expecting that by having the operations group starting to ramp volumes we start.
Getting better absorption at the plant level, particularly in Munich, and so that should have a positive gross margin impact as well.
Got it thank you.
Okay.
Our final question today comes from Matt Taylor of UBS. Please go ahead.
Hi, Good morning, Thank you for taking the question.
So first question I was giving US was just about.
Some of the puts and takes on gross and operating margin I was hoping you could flesh that out a little bit with the impact of Covid in supply chain and maybe just talk about how we could consider those impacts not just for this year, but for future years.
You could get some leverage and we could get some some pressure.
Yes, so in Q4.
I think the gross margin was pretty robust and that was driven by the.
Our product and geographic mix.
So and we talked about the operating margin.
To be slightly lower in Q4 relative to Q3 because of the fact that we pushed some some spending out of Q3 into Q4, so thats kind of the color on 2021 and as far as 2022 is concerned. So we expect gross margins to increase about 250.
Basis points.
In 2022.
We expect the increase from the product mix and also obviously the exclusion of the heart valve divestiture.
As well as the efficiencies that are offsetting some of the supply chain costs.
Just kind of working our way down down the P&L, we expect.
R&D as a percent of sales to increase slightly.
As well as SG&A as we continue to increase our sales and marketing.
Investments.
Assuming that we're coming out of out of Covid, So higher travel commercial investments as well as the continued investments in our sales force expansion efforts across Acs and a couple of states.
Okay. Thank you and then.
I guess as a follow up is there any area in the supply chain, where youre seeing critical shortages. It seems like you're managing through this relatively well are there.
Places, where you are at risk for any disruption or should we just view it as some increased costs.
Look I would say like every company we've been looking at these headwinds I think the supply chain team has done a spectacular job I mean, some of the stories through through Q4, both in logistics and distribution or the procurement team to manage that were really solid.
Some of the things we're doing.
We're giving supply has been a long range visibility and forecast we've increased touch points.
With them, so that we're particularly focused on single source or more critical components.
We've increased our visibility on inventory potash.
Potash part of the guidance includes an uptick in inventory.
And we talked about some of the cost pressures.
Split between SG&A and also Cogs.
In certain areas, where we're building inventory I think the key areas like microelectronics.
And our proxy resin of all things.
And we're also but were also watching transport costs, we're doing as much as we can there to balance that out.
The other bit is the inflationary pressures, so lead times and pricing in the.
The balance of that again is working with you.
The suppliers on the long range visibility. So I think we've put in place a lot of really good steps, but again I think like everyone. We've got headwinds there.
Thank you for taking my questions.
Thanks, Matt.
Thank you we have my final questions in the queue. So I'll turn the call back to Damien Mcdonald for closing remarks.
And thank you Lydia and thank you for all of you for joining today on behalf of the entire team. We appreciate your support.
And thanks for 2021, and we're looking forward to 2022 and your interest in live in either.
This concludes today's call. Thank you for joining you may now disconnect your lines.