Q3 2022 Artivion Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the R. T V. In three Q2022 financial conference call. All lines have been placed on a listen only mode and the floor will be opened for your questions and comments. Following the presentation. If you should require assistance throughout the conference. Please press Star zero.
On your telephone keypad to reach a live operator at this time. It is my pleasure to turn the floor over to your host Sam Benzinger from the Gilmartin group, Sir the floor is yours.
Good afternoon, and thank you for joining the call today, joining me today from our JV. Its management team are Pat Mackin, CEO and Ashley Lee CFO before we begin I'd like to make the following statements to comply with the safe Harbor requirements.
The private Securities Litigation Reform Act of 1995 comments made on this call that look forward in time involve risks and uncertainties and are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
These forward looking statements include statements made as to the Companys or managements intentions hopes beliefs expectations or predictions of the future. These forward looking statements are subject to a number of risks uncertainties estimates and assumptions that may cause actual results to differ materially from these forward looking statements additional information concerning certain.
The risks and uncertainties that may impact these forward looking statements.
From time to time in the company's SEC filings and in the press release that was issued earlier today.
Now I'll turn the call over to <unk> CEO Pat Mackin.
Hey, Thanks Sam.
I'm pleased to report that our solid business momentum continues as we've now delivered our fourth consecutive quarter of strong constant currency topline revenue growth.
Constant currency total revenue growth was 11% compared to Q3 in the first nine months of 2021.
Further we remain on track to deliver on each of our commitments we made at our Investor meeting in March.
For the third quarter, we saw top line growth across all their product categories more specifically on a constant currency basis compared to Q3 of 22 versus Q3 of 2021.
On X grew 19% tissue processing grew 13%.
<unk> grew 9% and stent grafts grew 7%.
So for the first nine months of the year on a constant currency basis stent grafts are up 22%.
On X is up 14% tissue processing is up 10% and Baidu is down 4% all compared to the first nine months of last year.
Regarding <unk>, we have secured derogation derogation extensions that will allow us to continue selling in virtually all European market European countries through year end, but which time, we believe we should have the CE mark.
In the third quarter, well derogation extent to your question. We're pending it was unclear if we'd be able to continue to sell by blue into the UK and France in Q4.
As a result, we estimate an additional $1 5 million in orders in Q3 that we believe typically you would have been placed in Q4.
Unfortunately in October we received these derogation extensions by which time the Q3 orders for bio glue to those countries has already been fulfilled.
Therefore, we expect piled whose contribution in Q4 to reflect this increase in the Q3 orders.
If customers had not made these increased five who purchase in Q3, our total revenue growth in the third quarter and the first nine months of the year would have been 10% both on a constant currency basis compared to the prior year.
Our.
So all of these fronts has reinforced our confidence that we can deliver on our three growth initiatives, we outlined in our Investor day in March which you continue to believe will drive double digit constant currency revenue growth through 2024 and beyond.
As a reminder, our three initiatives are as follows.
First we will drive continued growth in on X and our aortic stent grafts.
Second we continue to benefit from our investments in our commercial channels and new regulatory approvals in Asia Pacific and Latin America, and third we will drive growth in 'twenty, three and beyond to PMA approvals in the U S for per clock and the Onyx correct mitral low INR indication.
And commercial footprint expansion, which also remain on track.
I'm pleased to report that we're continuing to execute very well and the strategy is demonstrated by the third quarter constant currency revenue growth of 25% and 22% in Asia Pacific and Latin America, respectively.
We continue to expect these readings to be important growth contributors over the coming years.
Regarding our third initiative, we remain on track to receive regulatory approvals for the low iron or label of the Onyx mitral valve and for per clock by the end of the year.
It's a little INR label is approved we believe we will take significant market share in the us for the audits mitral valve just as we have done and continue to do with the Onyx aortic valve.
If per cloud is approved by December 31, 2022, we received a $25 million payment from Baxter, so that milestone under our divestiture agreement. It will begin to generate revenue for supplying per clot to Baxter for approximately two years thereafter.
In addition to our progress in each of these initiatives, we continue to make progress on Amd's clinical trial.
For Alds, we've 11 patients enrolled in our per severe trial, which is a non randomized clinical trial and up to 25 youth centers 100 patients who have experienced an acute typed a dissection.
The combined primary efficacy and safety and points for the trial or the reduction in all cause mortality mortality new disability stroke.
Cardio infarction, and new onset renal failure, requiring dialysis as well as re expansion of the truth illuminate via Yoda.
We know anticipate completing a for enrollment in the first half of 2023.
Following the one year follow up period, assuming the trials meets its endpoints, we anticipate that we should receive ft approval for the M. P S and early 2025.
In addition, our partner into span is making good progress on the U S. I'd Triomphe trial for its nexis aortic arch <unk> system.
In that trial over approximately 29 patients already enrolled and treated in a total of 40 patients enrolled and approved for treatment.
And it's been estimates trial completion in June of 2023, and a PMA approval in 2025 again, assuming the trials endpoints are met.
To reiterate if this if these PMA trials procedures anticipated, we anticipate FTA approval for aimed yes next us in 2025.
At that time, assuming we exercise our options for understand these products to increase our addressable market opportunity by an estimated $900 million.
Regarding proact in a while we're obviously surprised and disappointed by the termination of the trial as recommended by the data safety monitoring board.
A number one priority has always and will be patient safety.
I'd like to put into perspective with the impact of stopping the proact in a trial means for our <unk>.
First the productivity had been successful we would not have seen any revenue impact associated from the positive trial outcome for another three years.
If the trial had remained on schedule.
Despite the termination of the trial, our current year revenue guidance and the three year revenue outlook, we presented our <unk> has not changed.
Second we believe as many Kols believe that our mechanical you're already valve is the best in the market.
Are you already a balance of taken market share every year since we acquired Onyx and we do not expect that to change.
No doubt a positive trial outcome would have been beneficial in accelerating the pace of our market share gains for the aortic valve, but we fully expect the onyx Dolphins continued to grow with or without a positive trial results due to its superior clinical benefits and indications over competitors.
Third or growth drivers remain unaffected in our pipeline is poised to add more than $1 billion in addressable market by the time Proact today would have been completed.
We therefore still have the opportunity to substantially grow our revenues and earnings.
Finally, there are positive financial implications from shutting down the trial majority of the $10 million, we expected to spend on proact today in each of the year is 23, and 24 will now largely be redirected to offsetting the impact of inflationary pressures enhancing cash flows and EBITDA.
Clinical trial setbacks, Unfortunately, an inherent part of innovation and our product portfolio exemplifies many successes as we can continue to do so.
We will continue to Prioritise and support innovation as we seek to develop products and improves the lives of patients around the world.
With that I will now I'll turn the call over to Ashley.
You said in good afternoon, everyone.
Total revenues from $76.8 million for the third quarter of 6% on a gap basis and 11% on a constant currency basis, both compared to Q3 of 2021.
I spent mentioned we saw strong constant currency growth across all product lines.
On a year over year basis, and the third quarter of 2022 on its revenues increased 17% tissue process and revenues increased 13% and vital blue revenues increased 5%.
Are you worried extent rep revenues decreased 6% due to currency headwinds <unk>.
The constant currency basis compared to the third quarter of 21, Omics revenues increased 19% tissue process and revenues increased 13%.
<unk> revenues increased 9% and able to extend graft revenues increased 7%.
On a reasonable basis third quarter of 2022 revenues and Asia Pacific increased 24% Latin America increased 20% North America increased 12%.
In Europe decreased 8%, all compared to the third quarter of 2001.
On a constant currency basis revenues in Asia increased 25% Latin America increased 22%.
North America increased 13% in Europe increased 5% all compared to the third quarter of 2021.
Gross margins were 63.4% in Q3 compared to 66.2% for the third quarter of 2021.
The decrease was driven primarily by the inflationary impact some materials and labor as well as product mix within our yard extent grip and buy with a new product lines.
Inflation remains persistently high and will weigh on our gross margins. However, with the continued growth and our top line revenues General expense management, along with funds now available due to the cessation of the productivity study, we still anticipate delivering on our adjusted EBITDA commitments, we made in March at our Investor.
Of your day.
G&A expenses in the third quarter were $41 $1 million compared to $39 $1 million in the third quarter of 2001.
Excluding non-recurring acquisition related and business development benefits and charges.
G&A expenses were $39 $90 million for the third quarter of 2002 compared to 37 point.
$3 million in the third quarter of 2001.
R M <unk> expenses for the third quarter included four 7 million dollar charge for estimated costs associated with determination and wind down of the productivity study as recommended by the data safety monitoring board.
The majority of these costs include future administrative and site cost that will be incurred during the fourth quarter of 2022 in the first quarter of 2023 as well as the estimated cost of clinical drugs purchased for patients participating in this study and not expected to be recovered.
These costs are non-recurring and we have excluded them for purposes of calculating adjusted EBITDA and non-GAAP earnings per share.
On the bottom line, we reported GAAP net loss of approximately $13.7 million or 34 cents per fully diluted share in the third quarter of 2002.
non-GAAP net loss was $1.9 million or five per share in the third quarter.
<unk> am non-GAAP net loss includes a $3.7 billion or seven per share loss due to foreign currency revaluations.
Excluding these amounts and the wind down costs associated with the productivity trial non-GAAP income was $853000 for two cents per share.
As of September 30th 2022, we had approximately $38 million in cash $350 million in debt.
And the full $30 million available to us under our revolving credit facility.
Adjusted EBITDA for the third quarter of 22 was $10.4 million compared to nine $3 million for the third quarter of 2021.
Regarding our capital structure and the impact of a rising rate environment.
As we have stated we do not believe that we need to raise additional capital to fund our that our investments and our channels or our pipeline.
Even if LIBOR or sopher increases to approximately 5%, which we place our all in right on our debt at approximately 8.5%. We believe we will still be able to comfortably servers are dead and continue to invest in growth.
With the cessation of the productivity of study, we will have an additional $10 million of funds for each of 23 and 24 previously allocated to the study, which can now be mostly directed redirected to earnings and cash flow.
Our term loan B contains no financial covenants that would place us in default unless we were to have more than $7.5 million drawn on a revolving credit facility at the end of any calendar quarter, which we do not.
As of now we will have we have the full $30 million available under our credit facility and do not currently perceive the need to draw on the facility.
Additionally, our convertible notes do not contain any financial covenants.
Please refer to our press release for additional information about our non-GAAP results, including a reconciliation of these results to our GAAP results.
And now for a 2022 outlook.
Our last call. We stated we had faced a 10 million dollar currency headwind in 2022 versus 2021 cents.
Since that time. The dollar has continued to strengthen resulting in incremental ethics headwinds and for the fourth quarter alone, we faced approximately $4 million in currency headwinds compared to the fourth quarter of last year, putting our prior your constant currency revenue comparator at approximately 75.
Million dollars with that in mind are slightly narrowed full year constant currency growth guidance of between nine and 10% implies full year revenues in the range of $313 million to $316 million.
This contemplates our expectation for fourth quarter revenue to be in the range of between 78, and a half and 81 and a half million dollars, which accounts for the impact of the previously discussed $1.5 million in bio bluestocking orders that we've benefited from in the third quarter.
I will turn the call back over the path towards closing comments. Thanks.
Thanks, Ashley so to summarize our fourth consecutive quarter of strong X execution continues to confirm our gross static strategies working in delivering the results we would envision.
We will continue to further expand our global commercial.
And invest in our clinical programs in the next three years, we expect revenue to grow double digits to approximately $400 million and to generate $75 million to $80 million, an adjusted EBITDA as well as reducing our net leverage to less than three times.
Despite the headwinds, we faced with inflation and its impact on gross margins.
Our success in the third quarter positions positions as well to deliver on these metrics to summarize we saw 19% constant currency growth with onyx, 13% growth in tissue, 9% growth in barbu and 7% constant currency growth with our extent craft program.
We've posted 25 per cent confidence currency growth in Asia Pacific in 2020, 22% in Latin America, while we continue to invest in these regions and.
And lastly, we have we have a very robust pipeline, we expect to receive PMA approval for per clock and the Onyx Proact mitral by the end of the year as well as we have to use clinical trials and rolling the <unk> and the ambience Persevere study.
They are currently enrolling and we expect to expand our total addressable market opportunity by $900 million by early 2025, assuming we execute on the <unk> option.
At this point, we have all the essential pieces in place for sustained growth and continue focus on execution and all the future for our children as Brian .
Notify our position as a leading company and able to prepare I want to thank all our <unk> employees around the world for continuing day in and day out to deliver on our mission with that operator, please open the lines.
Ladies and gentlemen for any questions or comments at this time. Please press star one on your telephone keypad again <unk> for any questions or comments at this time first question comes from brick wise with iPhone right. Please go ahead.
Hi, Pat I actually this is actually at John on for <unk>. Today. So just first one for me kind of on what you saw on third quarter, how things trying to figure out.
It seems like European performance was a little lower than we were expecting.
What kind of complications if any did you face over there and and generally how did you get the quarter in that regard and then on the second account I'm just curious kind of.
As we head into twenty-three you see these macro pressures in any ways easing whether it be staffing supply chain F X. As you look ahead into next year I know I know, it's still early for that but I'm just curious what your opinion is on that.
Yeah, I would say on the European side, I mean, the only real kind.
Softest, we saw in Europe was on the <unk> side.
And that was primarily related to.
Staffing issues in our facility in Germany.
We've seen as you know throughout the year.
Year to date were up 22% on stank cause we had guided 15 to 20. So we're still ahead of where we expect it to be it's really been kind of a growing pains exercise were growing very rapidly in Asia were growing rapidly in Latin America, we have huge demand on these products and.
We're challenged by getting stock on shelves and.
We're hiring.
Rapidly at our manufacturing facility in Germany. So.
That will abate. The good news is that's a very high demand product I mean, we're literally every time the products available to kind of flying out the door.
I think that was the biggest kind of.
Slowdown in in.
From a European perspective.
On the second macro question I mean clearly.
If you look at our gross margin I mean the.
The inflationary impact on labor and materials.
Has had a direct hit on our gross margins in.
That's something that.
Again is that good news bad news I think unfortunately, those are probably here to stay.
Whether or not it gets worse I will see what happens with the fed and how often they raise the rates, but clearly I mean every everything we're reading it certainly looks like we're staring down the barrel of a recession and in a way that is our business is fairly recession proof given that we treat severe aortic disease.
Currently I mean again, a lot of it depends on the actions that.
These governments states I saw that the UK just raise their rates by 75, which should.
Buoy up the pound, but as far as currency projections for next year, maybe I'll, let Ashley comment on that headwind yeah, I mean, we probably read the same.
Information that you guys read and from all indications at least right now we anticipate that the dollar should.
We can somewhat as we go through out next year and again, I mean, who knows what.
Will actually end up seeing but as far as the interest rate environment, which had alluded to everything that we're seeing right now is that rates should hopefully peak sometime.
The first half of this year and then slowly start to moderate so that's kind of.
You that we have taken into account when we communicated our outlook for 2003 in February .
Great. That's helpful. And then just kind of a quick fault and then one more question on the order extensive set graft side could you quantify exactly how much of that I guess.
Followed that you saw this quarter was was due to the supply issues.
Do you have a number or some kind of percentage that would reflect that.
Yeah, it's hard to say I I will tell you that the demand is kind of through the roof.
Yeah.
Given the conversations about the macro headwinds I, I like where I'm sitting.
With what's going on with the economy when I have a product line, that's got a super high demand on it we can solve that that's a solvable problem. It's a lot harder to solve demand problems when they go in the other way so.
We're confident with the hiring that we're doing and some of the streamlining we're doing on that.
Kind of on the operations side I think it's a complex product line and that's part of I think part of the challenge and I've worked in businesses like this and other companies and.
We have folks at work here than work at other companies, it's a pretty challenging supply chain.
And we are growing fast and a lot of places and it just puts pressure on but I don't have a number for.
The number you can look at it when you were growing 22% for the year and.
And we told him we were gonna grow 15 to 20, so I mean, I think the quarter was a little off but.
But.
Just to get more of a growing pain issue than anything else. You know one thing I'll add to that John is that you know a.
Fortunately, we've made the investment and the facilities and we've talked about that over the last several quarters, but the investments and the facilities have been made.
Most of the equipment purchases have been made in his pad alluded to earlier, we've made some changes to our compensation structure.
To address the the labor issues and we've been recently, having some very really good success in in getting people into the facility. So.
We think that these issues are going to abate and and we'll be able to catch up with the demand that we're seeing.
That's a great color guys.
And one more on operating leverage here.
R&D expenses, you kind of face an incremental costs. This corner from from the trial shutdown, but as we look ahead into into the fourth quarter and next year I mean, what should we expect to see their sales growth maybe it could be a bit limited by effects next year, but on the on the R&D and SG&A lines I mean should we expect to start to see more meaningful.
Leverage and more creation of diet.
Yeah, I think we we made some comments in the prepared remarks that kind of guide you in that direction right. So we're spending 10 billion a year on proact today, that's now out.
So if we're spending $40 million in R&D.
It's going to be around $30 million. So you see a direct kind of dropped through with that expense not being there.
The other thing is we we've expected to get leverage in our three year plan. If you. If you look back at what we presented in March in New York.
We had EBITDA of $45 million this year going to $75 million to $80 million and 24, and we believe we can deliver that.
We think we're gonna grow EBITDA significantly faster than revenue next year, even in the face with these headwinds. So we'll give you more communication on that in February .
But we in this market environment, what are the benefits of being a profitable company is we can control what we have in front of us and we realize the importance of EBITDA in cash flow and we will see a significant increase in our EBITDA next year.
I appreciate the collar guys. Thanks.
Okay. Our next question comes from.
Frank <unk> from Lake Street Capital Frank. Please go ahead.
Alright, Thanks for taking my questions on to maybe start on <unk>.
It looked like a really solid performance. There I was hoping you could sure any anecdotal feedback you've heard from any of your accounts and specifically speaking about with Proact 10, a being halted any negative feedback around future demand and then if there's any commentary you can talk to around and ordering patterns if those.
<unk>.
Yeah, I mean, so I realize that the.
Tried to stop late in the third quarter, but we did post 19% revenue growth with the <unk> in the quarter and 21% growth in the U S. Yeah. The anecdotal comments I had been actually.
I've talked to a lot of a lot of services that were in the trial and I've heard words like you guys were bold to do this trial the way you stopped it so quickly with patients at the forefront.
Does nothing but build trust and confidence in your company.
It's the best mechanical valve on the market.
You know I I've had a number of either some big any more texture to say I hadn't used your your valve before the trial, but I started enrolling patients in the trial and using your valve and I like your valve I'm gonna keep using your mouth.
So we are.
And last but not least to be where the only company in the U S market with a low iron or label that reduces bleeding with 60%. So it doesn't change that that paper will be published.
And I think it will show all although this is Ah.
The drug eloquence failed with the Arctic style, the unacknowledged detail I think what you'll see is the <unk> performs extremely well.
We've committed and that data will be coming out probably in the spring.
But it is the best mechanical valve on the market and.
We expect to continue to grow that business going forward.
Got it that's helpful and then maybe just one more.
Comments around inflationary pressures curious if you could just run the Gotland on all your products and talk to pricing power and if you intend to pass through some of those inflationary pressures into the selling price next year.
Yeah I mean.
Sorry.
It's kind of a byproduct by region.
Where we have a it's not rocket scientists, where we have very proprietary patented products. We obviously have a lot more pricing power I'll give you. An example are scintigram pulmonary valve, which is growing very rapidly and our tissue businesses growing 13% right now we've had significant growth with our pulmonary valve.
With the with the kind of Ah Ross procedure growing very rapidly with the market leader.
The Syngraft has no competition and it won't have any competition. So that's an example of where you can raise prices.
And the tissue area vascular business, we have a couple of competitors, there's not a lot of differentiation. So.
If you raise price you run the risk of potentially losing market share.
The other thing is a lot of our I think one of the pieces of good news here a lot of our newer products are neo frozen elephant trunk or inside vehicle abdominal system are AMD S system. Those are all very high gross margin products right those are.
75 to 85 per cent range. So our newest most differentiated products are very high gross margin and that is a mantra for us going forward is that products that you see come out from us are gonna be very high gross margin.
Some of our legacy products like tissue are lower gross margin.
Depending on which part of your talking about him a stinker portfolio. If it's more of a competitive market of your lower gross margin, but our newer cutting edge technologies are very high gross margins, which is reassuring, but we will be <unk>.
Passing along price and where we have differentiation, where we have open contracts out we will be <unk>.
Looking at past price on to offset some of these inflationary pressures.
Perfect. That's helpful. Thanks, I'll stop there X ray.
Our next question comes from Mike Matteson <unk> capital Mike. Please go ahead.
Hi, guys. This is Joseph on from Mike.
So we've heard some commentary from some companies, indicating that cardiac surgeries are are more or less mean prioritize over other surgeries and just wanted to know if this is consistent I guess with what you guys are are seeing currently.
Yeah, We just had a a big training program. This past weekend and I had a chance to talk to a number of heart surgeons in their comments were yeah their staffing issues at the hospitals, but.
A already cardiac cases are getting done I mean, one as you can imagine the the seriousness of the disease.
They they get prioritizing too these are and I've said this a number of times.
The procedures that were in are typically the most profitable in the hospital. So both from me.
The sickness and the disease of the patient and the importance of the procedure to that patient as well as the reimbursement and the importance of that to the hospital.
We don't really see us getting affected by some of the staffing issues that are you know definitely.
Definitely out there that we hear about they're they're finding a way to staff up these procedures.
Okay, great. Thank you.
And then I guess.
Turning toward Asia pack in Latin America is great and strong growth in in the quarter.
I'm, just wondering where you guys are at in progress.
Or you know what <unk> are you in in terms of the sales force expansion somebody and bathroom from that.
Any kind of like timeline when do you think that you can start can leverage these investment.
Yeah, we clearly we've invested a lot and I think part of my earlier comments.
It was kind of laid out in our three year plan. When you look at our EBITDA, we've expected to accelerate EBITDA that plan pretty rapidly.
Going from 23 to 22 to 24.
We're going to start getting leverage in twenty-three from those markets Uhm. So we will still invest but not at the levels. We've been investing money will be getting kind of positive dropped two out of those markets kind of going forward.
Okay, Great. That's very helpful. Thank you very much.
Yep.
Next on the line for a question we have for rash coming here Uhm Oppenheimer and Coke extra large please go ahead.
Actually can you hear me all right.
Hey, Sarah.
I hope everyone is safe and healthy.
You know now that <unk> has been stopped and your talk to your physicians either involved in the trial or or otherwise.
Are you getting an inkling.
Knowing full well that you don't have access to the data that they could be potentially.
Subgroup that y'all could parse through with a benefit.
Of switching to eloquence could be evidence is there anything salvageable incorrect tiny y'all getting any indications of that.
Yeah. So so in my conversations that I've talked to a lot of the investigators in my conversations being the first priority as you can imagine is too.
Crossover the patients on how it goes back to coming in from a patient safety standpoint that'll be done in the next kind of the trial will be actually done in the next 30 days.
They will then kind of wrap up information crunch, the data and we're looking to have it presented probably in the spring maybe a T as in May.
There's obviously a lot of people interested in that data.
Because I've I've heard from physicians that big centers that all their patients did find and there was no issues.
Unfortunately, when you look at the aggregate that that wasn't the case. So clearly we're all interested to see what it was I think the other thing the silver lining here is that the onyx perform extremely well in the Coumadin group.
And that data I think is gonna be reinforcing.
How strong the onyx valves and we're gonna wait till that data comes out, but I think that will be something even though this trial failed I think it'll reinforce that this is the best aortic mechanical valve on the market.
Got it <unk> sorry jumping in between Uhm multiple calls did you talk about next is.
Europe the status how things are going.
Yeah, we mentioned that the only thing we really mentioned about next this was the U S pivotal trial I would say the.
Nexus has been kind of under our expectations, thus far and one of the limitations and you and I have talked about it as we've been.
It's a single branch device at this point, which is you know still.
Still a big advance over doing open surgery, but this quarter, we're actually launching our dual branch device, which I think will make a meaningful impact.
It gets into some technical surgical details, but I think that the the appetite for people too.
Looking for a dual branch to not have to do some of the anatomical bypasses required for a single branch. So I'm very excited to see the the uptake of this dual branch device and I think it will make a meaningful difference on the nexus portfolio in Europe .
Got it and actually if I could just throw this in barrel hop acting too.
The structure, especially in the current environment <unk> thinking just give us a roadmap.
Over the next two years gentlemen, thank you for taking my questions.
Yeah I mean.
We alluded to it a little bit earlier in the the commentary, but but our expectations for interest rates over the next year. We saw that the funds rate, we're going peeking out around five per cent and that's consistent with.
Everything that we're reading and hearing right now and gradually tapering off you know in the second half of 2003 and beyond and taking that into consideration you know we.
Believe that we can comfortably service all of our debt obligations without having to raise any capital or draw on our credit facility going forward. So as as it stands right now we are comfortable with where we are and see no issues with addressing a capital structure.
I know you were jumping between called <unk> actually goes through the script and pretty pretty much a lot of detail around I think there's a misunderstanding sometimes about our that our our convert has no covenants and our term won't be the only covenant is we can have more than $75 million drawn down and and a quarter from our credit facility.
Which we've not ever touched and we have no plans to touch it so.
I think this whole idea that are we can cover our interest interest payments out of operations, even with raising rates. We don't have hardly any financial covenants. So we don't really we're not that concerned and we said in our three year plan.
As we accelerated our EBITDA and drive our top line Grove, even in these inflationary headwinds, we're expecting our EBITDA to get up to $75 million to $80 million and 24, which at that rate. We're gonna have a lesson three times that leverage so like I said, I mean, I get the concerned but I think if you look at the performance.
The business and the fact that we we've got EBITDA and we're gonna accelerated EBITDA next year.
I think this leverage is going to become a non issue in the next 24 months.
Fair enough. Thank you.
There are no further questions at this time I would like to turn to fly back over to Pat back in for any closing remarks.
Well, thanks for joining and again, we were pleased with a quarter. We saw another quarter was 11% top line growth.
Our EBITDA is on track for the year.
And as you said, even with these inflationary headwinds.
We have a lot of levers we can pull off and we'll look forward to the next call will give out our guidance for 2023.
But we are definitely gonna be looking to keep our double digit revenue growth and accelerating our EBITDA.
<unk>.
We are looking forward to closing up a year and and kicking off a strong twenty-three. So thanks for joining and have a good rest of your day.
[noise], ladies and gentlemen, this does conclude today's teleconference. You may now disconnect. Your lines at this time and enjoy the rest of your day.
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