Q1 2022 Enovis Corp Earnings Call
Good day, and thank you for standing by.
To the first quarter of 2022 earnings conference call.
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Speaker today, Mr. Chris <unk>.
<unk> taken a vice president and CFO , Mr. Hicks the floor is yours.
Okay, Hey, good morning, everyone and thank you for joining us today for our first earnings call since we launched the Novus.
And on the call today of course is also a metro toll our chief Executive Officer.
Our earnings release was issued earlier this morning, it's available on the investors section of our website at <unk> Dot com.
First we are using a slide presentation to walk you through today's call, which can also be found on the website.
Both the audio and slide presentation of this call will be archived on the website later today.
During the call we're going to make some forward looking statements about our beliefs and estimates regarding future events and results.
These statements are subject to risks and uncertainties, including those set forth in the Safe Harbor language in today's earnings release and in our filings with the SEC.
Actual results may differ materially from any forward looking statements that we make today.
These statements speak only as of today, and we do not assume any obligation or intend to update them mixed sept as required by law with respect to any non-GAAP financial measures referenced during the call today. The accompanying reconciliation information relating to those measures can be found in our earnings press release and in the appendix of today's slide presentation.
I would also like to mention that the financial results. We will discuss today on this call are adjusted Standalone results to give transparency to the <unk> results in the first quarter. We have provided a consistent comparison to prior year results.
So with that let me turn it over to Matt who will start us on slide three thanks, Chris and welcome everyone and thanks for joining us for our first earnings call as a med Tech company, we completed the separation of Colfax on April 4th.
Spinning off our terrific industrial business Aesop into a Standalone company and we renamed our company and Novus, a med tech innovator with the vision and capabilities to create better outcomes for patients.
A great symbol of our new beginning with a ceremonial rang the bell at.
The New York stock exchange with many of our senior leaders.
As I visit with our associates around the world. It's incredible how much positive energy has been unlocked through this relaunch of our company.
We're really excited about the robust growth prospects, we have added novus, both organic and inorganic where.
We're confident in achieving our 2024 goals of sustainable high single digit organic revenue growth, 20% adjusted EBITDA margins and over $2 billion in annual sales.
We'll be compounding value for our shareholders from growth margins and acquisitions, all underpinned by our and Novus growth excellence business system known as <unk>.
Our journey to 2024 includes making significant progress in 2022 and on slide four we share some of our key 2022 strategic priorities.
We're a growth company and you've seen our success over the past few years strengthening our operating innovation and commercial engines.
The result has been faster growth in our markets and we expect to continue to outpace the competition this year.
Over the past 18 months, we improved our company by acquiring businesses that are accelerating our growth and the integration of these businesses is on track to deliver the expected results.
And we have the financial capacity to support more strategic growth in 2022 and beyond.
We're using EG act to support topline and Bottomline growth.
Through continuous improvement of our operations, we can better serve the customer while improving margins even during the current inflationary environment.
The foundation of our success is our associates and I want to thank them for their contributions to Q1, we will continue to invest in our talented teams to drive long term sustainable competitive advantage.
A moment ago, I mentioned acquisitions and on slide five we take a closer look at our progress and success.
Our recent acquisitions include matters, which substantially expanded our fast growing recon segment outside the U S and opened up many new opportunities for cross selling our leading products.
We also acquired three businesses to create a new fast growing foot and ankle platform.
And the like your acquisition expanded our PNR offerings in the fast growing treatment modalities and Adjacencies.
These businesses are achieving our strategic objective of increasing in <unk> growth and margins there.
They collectively had over 15% pro forma growth in Q1 with gross margins in the mid sixties.
<unk> significantly higher than our company averages.
Our teams are making great progress on integration, we recently launched our empower <unk> knee and alternate reverse shoulder product into the masses sales channel. We remain on track for the $15 million run rate of cost synergies by the end of 2024.
I was in Switzerland last week for the celebration of the math its 75th anniversary I was extremely encouraged by what I saw great excitement and momentum and the math is team and seamless collaboration with their U S counterparts.
I also got to check in on the globalization of like your buy our PNR team.
We've added sales resources in key countries and have strong revenue momentum and healthy funnels.
And our fast growing foot and ankle platform, we've launched two great new products. This year, the dining out helix in the Arsenal ankle ankle fractured plating system to support continued strong growth.
These examples clearly show, how we use acquisitions to accelerate our strategies and shape our portfolio.
We have a full and active pipeline of acquisition candidates and expect to remain active on this key dimension of our strategic value creation model.
On slide six we share some first quarter highlights, including a strong 21% increase in sales to $375 million.
Reflecting our acquisition successes and organic growth of 7%.
Both of our segments again outgrew their respective markets. We also achieved 25% growth in EBITDA and expanded margins, despite the external environment challenges, including supply chain and inflationary pressure.
Overall, we're off to a strong start in our first year as a new Med Tech company.
Slide seven summarizes our 72% first quarter recon segment growth, including double digit organic growth.
This performance is well above market growth rates and includes 20% growth in U S hips, and knees and 12% in U S extremities.
Our knee growth was significantly above market rates as we continue to make strong progress in the ASC segment.
Overall recon was well above 2019 levels, reflecting sustained outperformance through the pandemic and a strong start to 2022.
We have a terrific surgical portfolio that is gaining momentum scale and strength.
I commented earlier on the Hy pro forma growth and our recent acquisitions, the mathis and foot and ankle business isn't recon are performing very well with double digit growth this quarter.
Sales volumes across our recon business has improved throughout the quarter as COVID-19 related restrictions subsided we.
We expect continued improvement in elective surgery volumes throughout the year in most regions that will likely encounter some volatility as governments respond to flare ups.
Our prevention and recovery business also demonstrated attractive growth as shown on page eight.
Our 6% organic sales growth was better than underlying market growth and in line with our three year plan to create a consistent mid single digit grower.
Part of our success is due to the 2020 like your acquisition a good example of how our acquisitions can complement and strengthen our businesses.
We grew faster than U S PNR markets as some international markets still had COVID-19 pressure.
Our market, leading bracing business grew 7% in the U S, including benefits from motion MD clinic penetration.
And our PNR business has a strong pipeline of new product launches over the remainder of major of 2022, and we expect to convert that into healthy vitality numbers.
We are selectively deploying customer price increases to help battle inflationary pressure and we will continue to dynamically manage this well.
With that I'll now turn it over to Chris who will unpack our financial results a little further Chris well, Thanks, Matt and let me remind today's call participants that the appendix of today's presentation as a reconciliation between the <unk> go forward financials in our 10-Q financial statements that included the now spun off sub business start.
In the second quarter, we will report to continuing operations presentation that will exclude <unk> from all periods presented.
Turning to slide nine sales grew sharply in the first quarter as Matt elaborated earlier, our acquisitions contributed 15 points of growth, we had one point of currency headwind and our organic growth was 7%.
We had an extra selling day in the first quarter of this year versus last year that contributed about one point of that growth.
In the second quarter, the number of selling days will be less than in Q2 of 2021.
Gross margins expanded over the prior year as we realize the benefit from our high margin acquisitions. Our operations teams are keeping customers well supplied in the face of continued supply chain challenges and we are seeing the inflation, we expected for the first half of the year.
Our results reflect the successful initial transition of our corporate cost to a lower level and we are taking steps to further streamline our cost structure.
Our year over year EBITDA margin expansion includes these actions and also the investments to support continued fast growth and market outperformance.
We expect our margins to sequentially strengthen into the second half due to operating leverage and cost actions.
Our first quarter growth and margin expansion and contributed to our 25% increase in EBITDA and 37 cents of earnings.
These results assume the monetization of our 10% stake in each sub.
Resulting in no assumed net debt.
Slide 10 lays this out in more detail.
We finished the quarter with $265 million of net debt and our retained stake that was valued at roughly $269 million at the time of separation netting to a slight positive position, we will be funding the separation costs through the end of the year, which could push us into a small net debt position depending on how the E.
<unk> value develops as a reminder, we will exchange the east sub stake for our outstanding debt within 12 months of the separation.
Regardless of the timing of the exchange, we have ample financial capacity to support our strategic growth program as we drive to sustainable high single digit organic growth in 2024.
Our outlook for this year is unchanged as shown on slide 11.
We are pleased with our first quarter performance and our start in the second quarter topline risks from Covid have been on the lesser end of the range. We identified for the first half of the year.
Flare ups still happening in our markets, but tend to be fewer and with less duration. So organic revenue growth looks to be in good shape and our acquisitions are performing as expected.
But we are encountering increasing currency translation headwinds from a stronger U S dollar that could blunt some of our reported growth this year.
On balance we are reaffirming our existing full year revenue guidance of 10% to 14% total growth.
We believe second quarter revenue will be $395 million to $405 million with the largest performance variables being currency and supply chain.
We started the year with expectations of supply chain pressures moderating in the second half positioning us to take back some ground in 2023, we have not yet seen that moderation. Accordingly, we continue to add inventory buffers and are taking additional steps to control our costs and increased customer prices where possible.
We remain confident in our ability to deliver substantial EBITDA growth this year and are reaffirming our previous full year profit guidance.
We are expecting second quarter, EBITDA margins will be in line or slightly better than prior year Q2 levels.
So wrapping up on slide 12, I think you can sense, our excitement for the new company and Novus several years of business improvements and portfolio shaping have created the foundation for our fast growing Med Tech company with real opportunities for margin expansion.
We are already delivering clear signs of our progress with strong first quarter performance.
We continue to organically outgrow our markets and our acquisition strategy is clearly bearing fruit.
<unk> has a bright future for creating value for our investors.
And with that Chris we're going to go ahead and open up the call for questions.
Thank you Sir.
As a reminder to ask a question you will need to press star one on your telephone.
A question please press the pound key.
Standby as we compile the Q&A roster.
Yeah.
Our first question comes from Jeff Johnson of Baird. Your.
Your line is open.
Thank you. Good morning, guys. Just a couple of questions here for me, if I could and congrats on out of the first quarter out of the box here.
The 12% U S. Extremities number is that a shoulder organic growth number just to confirm that and then maybe just an update on what youre seeing competitive dynamics in the shoulder market here in the U S.
Yeah, Hey, Jeff Good morning, and thanks for joining us on the call. We're excited to have our first our first call here. This morning, when we communicate extremities as you know that is largely driven by our shoulder franchise.
We talked about the pro forma organic growth so in that sense. It also was reflecting the foot and ankle franchise that we have as well.
And.
Matt any condition okay.
Any updates there just on the competitive dynamics within the U S shoulder market and how the solar business itself performed.
Yeah in the shoulder business, we are confident that we have been outgrowing growing the market theyre in shoulder. We're confident we did again in the first quarter looking at our shoulder growth up against what we can see of reported results there.
We also continue to have strong growth in our reverse shoulder as big.
The biggest piece of that by by far but are also making some great inroads into anatomic, particularly with Astellas, there and hey, Jeff just to just to clarify there just as a coincidence or organic growth and our pro forma growth with the foot and ankle franchise or about 12%. So just the math just happened to work out this quarter that way.
Alright, that's helpful. Great and then Chris can you just quantified the extra or the.
Less selling day in <unk> is that 100 basis point headwind then we should build in <unk> or is it is it just the one single selling day, there and then on the full year organic growth are we still looking at that 6% to 8% is the right range to be thinking for full year organic growth I think that's what you've guided to in the past.
Let me start with your second question first which is the 6% to 9% organic growth is what we had outlined for the full year and we don't see any real reason that that changes obviously the bottom end of that is getting derisked as we work our way through the first half of the year with less COVID-19 friction and so we see ourselves organically migrating a little bit up but.
Now we are seeing of course this FX friction that's coming in that currency translation. So we think it's prudent to stay in that that double digit growth that we've got for the full year total growth of 10% to 10% to 14% on the selling days question in the first quarter. We did mentioned that we had about a point of.
A tailwind and as we get into the second quarter, the selling days will be sort of Wanda it'll be sort of a point or maybe a point plus as we reflect on the different holiday schedules and in both Europe and in the U S. So there'll be a little bit of a little bit of a headwind there.
Q2 from from selling days.
Alright that makes sense thanks, guys.
Thanks.
Thank you.
Our next.
Often comes from Matthew Nissan.
Bank.
Your line is open.
Hey, good morning, guys and congrats on a good start.
And a follow up just a follow up to that just how should we think about the <unk> comparisons from last year I think <unk> was a pretty strong recovery around med Tech did you also did you also see that.
Difficult comp for you.
Yeah. Thanks for the question there Matt Yeah. So we saw.
As we've talked about and everybody talked about through Q1, we saw improvement through the quarter here. This year in terms of in.
In terms of rates as we get into Q2, we certainly expect to hold that improvement and even get some benefits as the markets outside the U S move move through to the other side of some of the Covid pressure, but at the same time the comps get tougher because there was some recovery in last year and so we're expecting the growth in Q2 to be kind of at or.
Little above what we had in Q1 when you adjust for those selling days as Chris talked about.
And then as we get to the back half of the year.
We expect to be able to have the potential for some nice acceleration depending on how the how the COVID-19 environment plays out because obviously in the back half of the year, the comps get get quite a bit easier.
Okay excellent.
Gross margin at least versus our model was came in certainly better.
Is this a good starting point.
As we kind of move forward in or.
What are some of the inflation dynamics.
Impact that through the year.
Yes.
Thanks for that question to the gross margins in the first quarter were solid it does reflect the benefit we're getting from the acquisitions of continued work on the operating side of the house and we view this as a.
As we transition to the back half of the year, a clear opportunity for those margins to expand a bit and that's a combination of operating leverage and the work that we're always doing on the productivity side inflation is a bit of a wildcard for us something that we're continuing to manage and monitor and work through an and but we still.
See regardless of that we see a pretty clear path to the second half expansion in gross margins.
Okay.
And then just two questions on matters I guess first.
Are you.
Do you sense that there's a backlog of procedures that needs that need to be unwound.
We're not buying over like the last two years, that's about a little bit of a tailwind for European Orthopedics, and then can you just give us a sense of when launched will be empowered.
Into that channel.
The dynamics of several of those buckets, where why you think that would be successful.
Yes, sure so first as far as the backlog question.
I think that if.
If I say generally not just Europe , but everywhere certainly at this point in time, we've had.
Now three years. If you include the first quarter with limited market growth in the recon product lines and so I think everybody seems to believe that at some point, we're going be able to get some reasonable amount of that back because the patients had the diseases and the continued to advance and so.
We do expect that in the coming years, there is potential to have some.
Some market tailwind is that backlog gets worked off and that would that would apply to Europe .
Well as the U S remains to be seen whether that will come quickly or are more kind of gradually over time, but it's certainly an opportunity for for us in the whole industry to take advantage of working off that backlog over time.
In Europe , we saw if we look at the experience of the last year or two certainly each time. There was there was pressure. There was then some some nice recovery and so for example, there has been some some pretty heavy pressure in Australia, Western Australia was shut down for the last handful of weeks I heard that it's just just opening back up and so.
In that market, there is probably going to be a nice little period of recovery as folks try to catch up from some of what they lost during that.
In that period.
But.
But thats going to vary market by market in terms of how things play out.
But we are very excited about the math is start with the double digit growth that we talked about their pro forma in the first.
In the first quarter, and we see great opportunity there to continue the strong progress in that business. The empower knee Mathis historically has been very strong in hip they've kind of consistently outgrown the market. There were a pioneer in that in that market going back 75 years ago, and so they've historically been able to out.
Though the market pretty nicely and Theyre hip products, they've done quite well and typically outgrown the market in anatomic shoulder.
But.
They have not really had a strong position in reverse shoulder and in particular in knee.
<unk> had products that were pretty pretty pretty long in terms of how long they've been out there and not winning share in the markets and so we do see great opportunity. The team over there is thrilled to have the empower need coming in.
And there's already been some good activities to get Kols educated excited over there.
Collaborating with some of our kols from over here.
We've already had some initial rounds of.
Being out in the marketplace and talking with surgeons and getting them ready to try the product and now we've got the instrument sets in the market and are going through the launch there here in may and so we've had terrific responses.
In key markets over there and we do expect to be able to build some nice momentum over time in the empower knee and flip that position over a need from a below market growth position to an above market growth position as we work through this year and into next year.
Okay. Thank you for taking the questions here.
Yes.
Thank you.
Our next question comes from Vijay Kumar of Evercore ISI.
Line is open.
Yes.
Hey, guys. Thanks for taking my question and congrats on a good start here.
My first one on the guidance.
Hi.
On my first question here.
The guidance.
<unk> revenue growth of 14% was that we've created but I'm, assuming FX get incrementally worse.
So perhaps could you talk about.
Whether the underlying organic growth assumptions actual later and perhaps some upside is masked by incremental FX headwinds, what schumer and FX and lead.
Anything change on.
Pricing contribution for the year versus prior guidance.
Okay.
For the question Vijay and good morning.
Yes, so as we commented on earlier the keeping the total growth in place at 10% to 14% in bodies within at the previous 6% to 9% organic growth.
But as I commented a moment ago, what we're seeing is a COVID-19 derisking in the first half of this year that gives us confidence that we're sort of sliding up the scale from the six moving moving closer to the middle or higher end of that range. There would that possibility on the other hand, we've got a little bit more FX.
Headwind that's come into play and so we put all that together and said hey, it looks like the 10% to 14% guidance the double digit guidance growth guidance for the year. It makes sense to make sense to maintain.
In terms of FX, we started the year with an assumption it would be about a point it looks like that if rates hold the way. They are we may have added another point on top of that but still that doesn't disrupt the overall story that we've got it just.
It means we have to take that a clear I would look at that is as we look at the guidance for the year, but the organic growth fundamental healthy organic growth that we've got as I would argue the we started at six to nine and where it has a strengthening profile now that we've gone through the first quarter and that we're about halfway through the second quarter and Vijay <unk>.
And that price.
We've talked about we had quite a bit of inflationary pressure in our PNR businesses in particular over the last year or two.
And the back half of it last year started to get some price and have gotten more here in the first half and so we continue to work that to monitor that inflation.
To put price through wherever we can in different places around the world in different channels and we've also gotten some help in some cases from reimbursement changes and from being able to make changes in GPO contracts and things.
And so.
I would say the amount of price.
Kind of modestly ticking up as we work our way through the first half of this year.
But not in a way that substantially changes the growth outlook.
But in PNR, certainly, we're working hard to make sure that we started to pull back some ground on price cost in the back half of this year, even as inflation stays high and then we're positioned as we move into next year and beyond to pull back more of that more of that price cost squeeze on the PNR side.
That's helpful and then one on margins here.
We started Q1.
Low teens.
Maybe just talk about the progression here I think.
Adjusted EBITDA targets imply mid teens, perhaps at the upper end of mid teens margins.
Is there a seasonality here in terms of how expenses ramp or Rob.
What was the gross function of gross margins can be.
Talk about some subscribers here on the first half versus second half cadence on margins.
Yes, there is an underlying fundamental element of seasonality to the margins in that they're tied to some degree to the revenue profile that is as we get more revenue we get more operating leverage so it's not uncommon for us to finish the year with very strong fourth quarter and then as first quarter revenues are typically the lowest in.
A year that we would see the lower <unk>.
<unk> profile, you put that together with the improvements that we're making in the business and I think there's a pretty clear path here is in fact the comments we made.
Our prepared remarks suggest that we expect margins to step up from Q1 to Q2, no surprise, there with stronger seasonal revenues and other improvements, we're making and then.
And as we get into the back half of the year, we would expect to see the margins in the second half higher than the first half of the year given that.
Overall higher revenue level between the two periods and the first half in the second half and the improvements at <unk>.
We continue to make in the business on the cost side.
It's a combination we talked about our corporate costs coming down and in addition to that we are doing some other work on an overall opex in the company and then there is the usual work that we do on productivity and the operation side of our business now all of that gets reflected in the improving EBITDA profile.
That we've got some of it shows up in gross margins because of the operating leverage in the and the productivity of the sourcing and operational side and some of it shows up only in the EBITDA margins because of the Opex improvements that we're making.
So yes, we do have a nice path forward to improving margins from Q1 through the through the end of the year.
That's helpful. If I could squeeze one more in I think you embracing this something that you called out in your.
Presentation prepared remarks.
How when you look at the highest and most of the legislation growth number Mike how much of that was.
Normalization of volumes.
What's the share.
<unk>, So maybe talk about what drove that performance.
Yeah sure Vijay so for sure there was a little bit of price in that end.
A little bit of normalization of volumes, but we still feel like it's.
It's an above market share gain profiling and.
I think we've been able to.
Ste.
In a solid place.
Supporting customers through the pandemic and as we've come come out here at the end of last year into this year our delivery levels have improved we've made some strategic inventory investments to make sure that we're protecting our customers there and so we do think that our our ability to serve customers is helping us. We're also kind of well into the double digits in terms of.
Our new product vitality and we've been talking about for a few years now.
Once we get back into a healthy vitality position in that business will be able to leverage our strong brand and channel leadership and drive above market growth and we continue to make nice nice progress on.
Gaining clinics with our motion MD.
Software and workflow technology, and having that be a way that we increase our penetration into the marketplace and so we think all of those have come together to put us back into.
Our solid leadership position in U S pricing that should enable us to drive at or above market growth over over time and in the first quarter, we were in that above market growth range.
Understood. Thanks, guys.
Thanks Vijay.
Thank you.
And we have a question from Josh Jennings of Cowen.
Your line is open.
Hi, good morning, Thanks for taking my questions I wanted to.
Touch on these.
And hips business.
So really strong growth here in Q1, congratulations on the start.
Initial quarter as a public company.
Spin, but just thinking about the ASC channel.
And <unk> is positioned there did you see outsized growth in the ASC versus the hospital channel in the U S.
And then the second follow up question is.
Is just on robotics I believe.
Sure.
And your inputs have had compatibility with surgical <unk> solution, one and just wondering.
If youre seeing any traction there or getting any lift from from that partnership.
Thanks for the question, Josh So first of all yes, the hip knee growth was nice and strong in the quarter.
With me being very strong and at <unk>.
Fueled by that ASC position.
And it's not just one quarter I could go back and compare to 19, which someday. We can all stopped doing I think you'll find it's quite remarkable how much ground. We've covered in that period of time versus the versus the peers. So we really have a powerful position there in hip and knee that is gaining share consistently.
ASC is a key part of that our NIE is a knee that.
Is more stable and it really was a kind of a breakthrough medium power knee when it came out and had better stability.
It takes the patient satisfaction levels up particularly for younger.
<unk> that are looking for a more stable knee and those are the patients that are good fit for the ASC.
We've also in many cases already got positions in the in the ASC in their clinics through our other businesses on the PNR side. Our brands are known that's been an asset to us as well as we as we serve the ASC.
And so we've shared that.
Our business is approaching 20% of it in knee in the ASC, which we believe is well above the percent of the market that is in the ASC and so we do believe in Q1 again.
And that strong position in the AFC AFC helped to fuel our knee share gain in particular.
And on the robotics front, we've talked about our strategy.
In our Investor call.
Or two back we talked about our our strategy there that we do think that.
Surgical workflow and compete computer assisted surgery are very important parts.
Of.
The market is going.
In recon.
And our strategy is really to have the right solutions for each part of the anatomy and four.
Further the settings that are growing the fastest.
So.
Like we've always had a great for years have had a great surgical planning solution, which is really the critical critical solution there.
We have had some collaboration with thinking in the past that has been has been a way.
For for patients to have access to a large robust bought if theyre looking for something like that and that's been a nice collaboration there.
We also shared.
Shared lately at the Academy.
Our augmented reality guidance system that has five 10-K cleared and we will be making bringing that into the marketplace.
And we believe that that.
That augmented reality solution.
He is going to be.
A great breakthrough, particularly for the ASC environment, given the space constraints and the time constraints, there and until we see that as a critical next part of our offering there.
Hip and knee to be able to continue that strong growth in ASC and will continue to evolve our solutions across each part of the anatomy to make sure that we remain in a strong position.
No I appreciate that thank you and one follow up on the masses.
That's going to turn organic I believe in a month or so and wanted to just better understand or just get a reminder of geographic expansion plans.
As you move forward outside of.
Matt This is covered geographies and then also just.
Product registrations.
How the MTR process has been going you guys have launched empower <unk> knee and also the reverse into the mapping sales channel with what's to come as we move through this year and into 2023. So it's just geographic further geographic expansion plans.
This footprint.
And also a new product registration so over the next 12 to 18 months. Thanks, a lot for taking the question yeah sure. Thanks, Jeff So the thing.
I think I'll square foot clear quickly as our P&I business is extremely global a global leader in each of our key businesses are bracing and rehab.
<unk>.
That's something that the strong position that we're continuing to build on Matt. This was really a significant globalization of our shoulder business, we had very limited or sorry, our recon business. We had very limited recon business outside the U S and the acquisition of Mathis did a couple of things for US one it gave us.
A significant amount of outside the U S business. Some key direct channel positions in key attractive markets and it also brought it very complementary product line as I said earlier, they were strong in hip and anatomic shoulder. We bought we've always been very strong in reverse shoulder and in.
And we've been building out a strong hedge position as well.
In the U S.
And so just really a hand in glove fit fit in terms of our joint product lines and a great chance to drive cross selling.
And as I talked about we've already started that cross selling now with empower and the alternate.
Coming in.
<unk> had key parts of those offerings cleared outside the U S and so the math is team.
Actively.
A number of market selling those products and we expect those to create the.
The first wave of synergy between our companies from a from a revenue standpoint.
Obviously, we're actively working on.
<unk>, we've been through a lot of the work on our class.
Class one products or the work on our class one products in PNR and now.
We're working actively on on the recon products and some of our rehab products.
And we've got a great team great Great plan and process, we have been able to do some nice cross learning between matters.
And our teams that.
That we had before we acquired Mathis and I think improve our approaches there and it's <unk>.
<unk> investment that we need to make in those clearances.
And also an investment that not everybody is going to be able to make and we do think theres going to be some advantages to leading players who make those MTR investments and over time, they'll probably be more not less acquisition opportunities that arise based on some of the barriers that are created from that from that MTR.
Great. Thanks again.
Thank you.
And speakers I see no further questions in the queue.
I'll turn the conference back over to Mr. Chris <unk> for closing remarks.
Okay, well listen thank you all for your interest in <unk> and we look forward to updates updating you on our progress throughout this year. So thank you.
This concludes today's conference call. Thank you all for participating you may now disconnect and have a pleasant day.
Okay.
[music].