Q3 2023 STERIS plc Earnings Call
Speaker 2: Good day, everyone, and welcome to the Snerus PLC third quarter 2023 conference call.
Speaker 3: All participants will be in a listen only mode. Should you need assistance, please see no conference specialist by pressing the star key followed by zero.
Speaker 4: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To withdraw your questions, you may press star and two.
Speaker 5: Please also note today's event is being recorded.
Speaker 6: At this time, I'd like to turn the floor over to Julie Winner and Vesta Relations. Ma'am, please go ahead.
Speaker 7: Thank you, Jamie. Good morning, everyone. As usual, speaking on our call today, we'll be Mike Tuckett, our Senior Vice President and CFO in Dan Correstio, our President and CEO . I do have a few words of caution before we open for Camman.
Speaker 8: This webcast contains time-sensitive information that is accurate only as of today. Any redistribution, retransmission, or rebroadcast of this call without the expressed written consent of STERAs is strictly prohibited.
Speaker 9: Some of the statements made during this review are or may be considered forward-looking statements.
Speaker 10: Many important factors could cause actual results to differ materially from those in the forward-looking statements, including without limitation those risk factors described in Stairus's securities filings.
Speaker 11: The company does not undertake to update or revise any forward-looking statements as a result of new information or future events or developments.
Speaker 12: Stairs with SEC filings are available through the company and on our website.
Speaker 13: In addition, on today's call, non-GAAP financial measures including adjusted earnings per diluted share, adjusted operating income, constant currency organic revenue growth and free cash flow will be used. For more information, visit www.GAAP.com
Speaker 14: Additional information regarding these measures, including definitions, is available in our release as well as reconciliation between GAAP and non-GAAP financial measures.
Speaker 15: non-GAAP financial measures are presented during this call with the intent of providing greater transparency to supplemental financial information.
Speaker 16: used by management and the board of directors in their financial analysis and operational decision-making. With both questions, I will hand call over to Mike.
Speaker 17: Thank you Julie and good morning everyone. It is once again my pleasure to be with you this morning to review the highlights of our third quarter performance.
Speaker 18: For the quarter, Consecurrency Organic Revenue increased 7%, driven by volume as well as 300 basis points of price.
Speaker 19: As anticipated, the divestiture of the renal care business impacted our revenue comparisons to the prior year by about $47 million, which is detailed in the press release tables.
Speaker 20: This is the last quarter of a year over year impact for the renal care business as we divested it in January of last year.
Speaker 21: The integration of Cantel Medical continues to go well. We achieved approximately $10 million of cost synergies in the third quarter, bringing our year-to-date total to about $45 million. We are well on track to achieve our stated goal of approximately $50 million in fiscal year 2023. For more information, visit www.cantel.com
Speaker 22: As anticipated, gross margin for the corridor decreased 200 basis points compared with the prior year to 43.1%, as pricing, currency, and the favorable impact from the divestiture of RenoCare were more than offset by lower productivity, unfavorable mix, and more.
Speaker 23: higher material labor costs. Sequentially the impact of material labor costs have improved and totaled about 15 million dollars in the quarter compared to the prior year.
Speaker 24: This puts us at about $75 million a year to date with our outlook of 90 million for the year remaining unchanged.
Speaker 25: EBIT margin declined 10 basis points to 23.9% of revenue.
Speaker 26: Compared with the third quarter last year, which reflects the gross margin pressures mentioned earlier, which were partially offset by lower S-GNA expenses.
Speaker 27: The adjusted effective tax rate in the quarter was 23.4%, higher than the prior year, do primarily to geographic mix and favorable discrete items which occurred in last year's
Speaker 28: Net income in the corridor was $202.4 million and earnings were $2.02 per diluted share reflecting the lower anticipated volume.
Speaker 29: Capital expenditures for the first nine months totaled $290.5 million, while depreciation and amortization totaled $410.7 million.
Speaker 30: You to date, our capital expenditure spending has been higher than anticipated, primarily due to timing of our investments within the AST segment.
Speaker 31: We still expect our full year capital expenditures to be approximately $330 million.
Speaker 32: Total debt increased slightly in the third quarter to just over $3 billion, reflecting borrowings to fund a few small acquisitions and share repurchases.
Total debt to Ibadah is slightly over 2.3 times gross leverage.
Free cash flow in the first nine months of the year was $263 million. Free cash flow was limited by higher than planned capital spending, mainly due to timing, and higher levels of inventory.
With continued pressure on working capital, in particular inventory, and now accounts receivables,
We now anticipate the free cash flow for the full year will be about $500 million, or a reduction of about $100 million based on our last guidance.
With that, I will turn the call over to Dan for his remarks. Thanks Mike and good morning everyone. Thank you for taking the time to participate in our third quarter call. I will cover a few highlights from the quarter and then address our revised outlook for the fiscal year.
Starting with healthcare, the segment grew 10% on a constant currency organic basis in the quarter. This was driven by high-teens growth and capital equipment. In particular, improved shipments in our IPT business were driven by operational and supply chain improvements in core washing and steam products.
In addition, we saw double-digit revenue growth in our surgical products.
Our main supply chain issue continues to be with electronic components.
We are working hard to resolve these issues. And as we have discussed, we are working with existing and new suppliers where possible to ensure the availability of parts in order to meet customer demand.
The healthcare services business delivered double-digit, constant currency, organic revenue growth, driven by increased demand and improved pricing.
We also saw sequential improvement in consumables.
Consumables constant currency organic revenue grew low single digits compared with third quarter of last year.
Supporting that growth, US procedure volumes improved in the corridor with recovery outside of the US still lagging.
The underlying dynamics of our healthcare segment remains very favorable.
Hospital capital spending remains stable, as evidenced by our health care backlog, which totaled over $500 million at the end of the quarter.
Orders for the quarter remain at approximately a 60-40 split for replacement and large projects, and we are not seeing any order cancellations at this time.
Although we still have some delays, our capital shipments have improved dramatically from prior quarters.
Approximately 30 million in capital equipment shipments were delayed into the fourth quarter.
Overall, our third quarter healthcare performance showed nice improvement.
Opportunities remain from a supply chain perspective, which we anticipate will take some time to fully work through.
Our expectations for the fourth quarter reflect a conservative outlook on how quickly we can recover from these challenges and difficult comparisons in AST and life sciences.
Our AST segment grew 7 percent on a constant currency organic basis.
Despite a reduction in demand for bioprocessing disposables and delayed shipments from MEVX, our capital equipment business.
On the bioprocessing side, our second quarter this year was a peak level for biopharma within AST.
We are hearing from customers that they are resetting their expectations due to reduction in vaccine production.
Importantly, we are not seeing declines in total revenue at this time, but rather a flattening of growth.
Positively, we anticipate that our core medical device customers will benefit from improvement in procedures, which we expect will help AST continue to perform at historic levels.
Regarding MEVEX, a large e-beam capital equipment order of approximately 10 million was delayed into Q4 as our customer was not ready to receive the unit.
Turning to life sciences, constant currency organic revenue was down about 1% for the quarter with declines in capital equipment and consumables somewhat offset by growth in service.
The same factors impacting the bioprocessing demand in AST are also impacting our life sciences consumables volume.
In addition, we have difficult comparison with strong consumables growth in the third quarter of last year.
That said, we do anticipate that this is a matter of timing, as cell and gene therapies continue to increase in demand, which should help offset the reduction in vaccine production.
We remain confident in the long-term growth drivers within the customer base for both AST and the life science segments.
In addition, life sciences had an unanticipated shipping challenge out of Europe that limited capital equipment growth in the quarter by about 10 million.
Positively, back-long remains at near historic levels at over 100 million.
Dental increased 1% on a constant currency organic revenue basis in the quarter.
Procedure volumes remain at approximately 95% of pre-COVID levels due to the broader economic pressures impacting consumer spending.
Based on market data, Starris is performing better than market in benefiting from pricing and modest sharegames.
As you heard from Mike, gross margins remained under pressure as anticipated.
If, despite the impact of lower gross margins and increased pressure from foreign currency, we held ebit margins about flat in the quarter, as S-GNA was lower than plan, largely driven by lower incentive compensation. With added pressure on interest rates and taxes,
Our adjusted earnings per diluted share for the quarter came in at $2.02.
As a result of our performance to date and our expectations for the fourth quarter, we are revising our full year guidance.
As reported revenue is now anticipated to grow 6% compared with prior expectations of 8% growth.
Based on foreign currency forward rates through March 31, 2023, currency is now anticipated to negatively impact revenue by approximately 110 million this fiscal year. A decline from expectations of approximately 150 million.
Constant currency organic revenue is now anticipated to grow approximately 7%
compared with prior expectations of 10%.
with one quarter left.
This revision in Outlook implies the challenges which limit our performance in the third quarter to continue.
Reflecting on the lower revenue, adjusted earnings per diluted share are now anticipated to be in the range of $8 to $8.10.
Our long-term expectations for the business remain unchanged. We continue to be very strongly confident and believe that Stairus is capable in generating mid to high single-digit constant currency organic revenue growth and double-digit earnings growth into the future.
With that, I will turn the call back over to Juliet to open up for Q&A.
Thank you, Dan and Mike for your comments. Jamie, if you'll give the instructions, we can open up for Q&A. In gentlemen, at this time, we'll begin that question and answer session. To ask a question, please press star and then one. To remove yourself from the question queue, you may press star and two.
If you are using a speaker firm, we do ask that you please pick up the handset prior to pressing the numbers to ensure the best sound quality. Once again that is star and then one to join the cue.
We'll pause momentarily to assemble the roster. Our first question today comes from Dave Turcally from JMP Securities. Please go ahead with your question.
Great, thanks. Hey, I just wanted to confirm something here Dan. So you called out 30 million in delayed capital shipment in healthcare I think and then 10 million from AST and then 10 million I think from Lifesign. So if I look at those and add them up and get to 50.
I mean, that seems to be about, the mix might have been different, but about what you were shy of the street. Are we thinking about that correctly? Yes, you are, Dave. That's correct. Dave, I would also add, in there, the reduction in bioprocessing was another 10 million roughly, and that was split about evenly between AFT and life sciences.
just so that we're all on the same page.
No, I appreciate that and I guess one for Dan too. Thank you. I mean obviously, yeah.
You know, the good news is this is not a big comment or anything you guys But if we look at this the bio you know, I think it even said growth and bio processing customers But you explain that the vaccine was the main driver, but how does that sort of I guess like what is the lead time there? How does it sort of maybe sneak up by and probably not the right word but on use that you know We didn't know this last quarter and now we do
Yeah, so let me give you a little background. So our customers are typically, at least in AST, where we took the biggest hit, are typically the manufacturers of single-use technologies that are sterile technologies that are used in aseptic manufacturing for vaccines and biopharmaceuticals.
What we have seen for the last couple of years is high double-digit growth on a year-over-year basis in that sector within AST. It's been one of our larger growers, and depending on the quarter, it's contributed anywhere from 1.5 to 2.5 percent growth on top of the normal growth that we've seen in AST.
That peaked in Q2, which would be, you know, at the end of the summer, early fall, which would be logical going into high vaccine production sort of season. Our customers had built a lot of inventory and with the slowdown in either vaccine reluctance or just vaccine production in general.
They were stranded with a lot of inventory and consequently our volumes in Q3 went down significantly.
So, we started to see it in the beginning of Q3. At that point, there's nothing we could do but to adjust. And we think this is something that will work its way through as the inventories burn down. And the underlying supporting growth for single-use technologies in bioprocessing remains.
once we worked through the tough comparison of the vaccine spike that was anticipated. Thank you. And our next question comes from Matthew Michon from Debank. Please go ahead with your question.
Hey, good morning Dan, Mike, Julie. I just want to take a step back, Dan. Can you just......
Could you just kind of frame for us what you think the normalized growth profile for stars is over the next several years? I imagine you really don't think it's a 10-11% grower and where you're coming in this year is probably more in mind with a longer term, how you look at the business.
Yeah, I mean, our stated objective is to grow high single digits on the top line and low double digits on the bottom line. We believe with a high degree of confidence that's something we can continue to do, even in the current market conditions over the long haul. And then as you think about going out to next year versus that high single digits, what...
You've heard some of our other MedTech peers mention that they're optimistic about procedural recovery in the second half of the calendar year. We believe things started in Q3 to recover back to pre-COVID levels in healthcare, particularly in the U.S. It's still lagging pretty significantly outside of the U.S.
But, assuming that holds and improves in the second half of the calendar year, since we're largely a procedure-driven company, that would be beneficial to us.
And Matt, I would just also add obviously our backlog remains at least at health care at record levels and within life sciences near record levels. And you have seen that we are getting through some of those supply chain constraints we did ship more sequentially. That's 30 million of...
Capital deferral in healthcare was 60 million last quarter. I mean we are seeing progression there So that that does give us as we look out further more confidence
for next year.
Okay, and I guess this is the last one, just on the order environment. Your backlog did go up sequentially. It typically does on a seasonal basis. But as you're shipping out more from supply chain, improving, how should we think about the order environment and your ability to replenish those? Okay.
It's remained very strong at this point.
which I know is a bit in the face of everything we read about the financial performance of a lot of the hospital systems these days, but they seem to be still willing to significantly invest in the future capacity requirements for procedures. And keep in mind, largely everything that we sell in terms of capital into hospital systems, it's almost like infrastructure.
in order for them to perform at a higher rate of sort of volume, they've got to have more sterilizers, they've got to have more washers, they have to have more OR tables and lights. So, you know, I think our equipment is not, it's not a luxury to utility in many respects.
I'll jump back in the queue. Thanks, guys. Our next question comes from Jacob Johnson from Stevens. Please go ahead with your question.
Hey, thanks. Good morning. A couple on the bioprocessing market. First, Mike, if I heard you correctly, 10 million headwinds in 3Q. Is that the right way to think about 4Q? Then as I listen to what your customers are talking about, they're seeing some near-term headwinds from COVID. The market soak ends.
and inventories that they're kind of looking to the back half of this calendar year where things will normalize again. Is that maybe the right way to think about it for you all, or is there some kind of a lot in terms of what they're seeing versus when the demand comes to you all? I think what you're going to see as it relates to bioprocessing is you're going to see pretty tough comps.
leading up to Q2 of this past year, the year that we're currently in. So I think as we burn those down and get back to what is the normalized growth rate for bio-processing, which is still in the mid to higher double digits, but it's going to take some time to burn through the inventory and to burn through what was a spike in vaccine production demands.
Okay, thanks for that, Dan. And then my follow up, which you may have answered, but I'll check is just on the AST side of things, this slow down due to COVID impacts any kind of capital outpatient plans, especially if I think about X-ray capacity.
Now, I mean, we're obviously looking at our capital spending and adjusting the timing of when we build and had the infrastructure and our capacity. The market and just the inconvenience of supply changing construction has helped us defer a bit because it's been a challenging time to build anything.
But now our plans remain largely unchanged, maybe different prioritizations of what comes online first, but other than that, the projects are still in play and we're very confident
those. Got it. I'll leave it there. Thanks.
Our next question comes from Mike Matson from Needham & Company. Please go with your question. This question comes from Mike Matson from Needham & Company.
Yeah, good morning. Thanks for taking my questions. I want to ask one about the backlog, you know, healthcare. I understand you don't want to give guidance for 24 yet, but you know, just not without specifying a time frame, I guess it just seems like, you know, you kind of expected some above normal growth this year and given the backlog and
and that didn't happen mainly because of the supply chain, I guess, but is there still potential for you to, as you catch up on that backlog to see above normal growth in the healthcare business?
happen mainly because of the supply chain, I guess. But, you know, is there still potential for you to, you know, as you catch up on sort of that backlog to see above normal growth in the healthcare business at some point?
I mean what I would yes at some point and we're not defining that point at this time We expect sequential improvement in our you know capital shipments as we look to the quarter that we're in currently and As we look into next fiscal year We continue to believe things are improving
that would lead one to believe that we will deliver a disproportionate amount of capital in that backlog in the first half of the year. But we have not modeled that out and we have not done our planning yet on that. No I understand and then just as far as pricing I mean good to see that the 300 basis points again without asking for a specific number for 24 but you're just
I'm wondering about the sustainability of kind of that higher level of price increases. Is that, you know, with your contracting and everything that's in place, I mean, is that something that's got some legs to it that could continue for a while? Or is it more of like a one-year bump and then kind of goes back to like normal levels? I think that largely is determined by what happens or continues to happen with inflationary.
just given what's happened with your primary competitor there with all the EO litigation and everything. I wanted to see if you've seen any sort I'm not asking about the litigation specifically, but just you know have you seen any kind of movement away from them or you know any impact on your business because of what's happened with them?
No, I wouldn't say so. I mean the current situation ended.
in the industry as a capacity is pretty tight as, especially as it relates to S-A-L-E, ethylene oxide here in the US. So, you know, we have strong partners across Medtech and we're always striving to take a little more share while wherever we can do that.
Okay, got it. Thank you. Our next question comes from Jason Bednar from Piper Sandler. Please go ahead with your question. Good morning. Thanks for taking our questions. First one I'll follow up on Matt Mashant's question earlier, but maybe take a different stab at this.
I wanted to come back to some questions around guidance. A lot of things that are understandably outside your control, we've seen that here this year, but guidance is in your control. This is the second time in three quarters where we've seen guidance lowered. Since we're sitting just a few months away from fiscal 24 guidance, we've seen guidance lowered and more people involved, but the way to decarbonise it is one that people talk to, and it willZ lean back to the laugh Republican oinking de counterproductive of the back door.
Jason, I'll make one comment and then I'll let Mike add a few comments as well. You know, I think we came into the year and we did our planning and our guidance with an awfully large backlog and we're under the impression because we had navigated COVID incredibly well at that point relative to supply chain.
and we really got tripped up pretty bad in Q1 and it exposed some vulnerabilities in our supply chains across our manufacturing network. What I can tell you is we're a lot more resilient now and we have a much better eye and a much better strategic focus on managing those supply chains and having much more resiliency.
And I believe that I'll carry forward in the next year. Now having said that, just because you roll into the air with a large backlog, I think we need to be a little more cautiously optimistic and a little more metered in our expectations of how quickly that will ship.
I think surgical procedure volume was the other thing that we anticipated was going to be much higher this year and obviously everybody knows how that is playing out. Although from a favorability standpoint we have seen some improvement in Q3 in the U.S. in particular. But again, there is just so many moving pieces here. And to that point I think conservatism at the end of the day is the norm for us.
And we have put out a outlook for the fourth quarter that we believe is conservative in nature based upon the facts that we continue to work with throughout the year.
All right, very helpful. That's good to hear. Okay, then maybe one on free cash flow. I mean, we saw the pretty size of a reduction and we're talking, I think, some round numbers here. You have 500 million versus 600 million. But that is a much bigger drop than what's implied just from the EPS cut.
I think Mike mentioned some comments there around inventory running higher, receivable collections running lower. Maybe could you bucket those two and does that reverse as we started thinking towards free cash flow then for next year to the working capital work lower?
Yeah, I would say that if we go back to the beginning of the year we anticipated about $675 million in free cash flow and obviously we're down to $500 million. And I would bucket though that inventory and receivables two-thirds, one-third. Inventory is remaining elevated obviously as we have not been able to ship at the rates...
We anticipated we are carrying more inventory as we've talked many times the last couple quarters we continue to fill our manufacturing slots. So we're building, building, building, waiting for that golden screw but that golden screw doesn't come, that product remains in inventory until we ship it. So inventory is continued to be elevated. And then on the receivable side.
It's not our inability to collect, it's just the timing of collections. We have about just under a 60-day DSO that we have collections. So originally we anticipated shipping earlier or more product in the third quarter that has shifted to the fourth quarter which pushes collections into the first quarter. So free cash flow isn't lost, it's just more of a timing issue.
Once again, if you would like to ask a question, please press star and then one. To withdraw your question, you may press star and two. Our next question comes from Michael Pollark from Wolf Research. Please go ahead with your question.
Good morning. Thank you. I want to follow up on bio process and AST and try and put together some math, Dan, that you mentioned earlier in the Q&A. So at one point, I want to go contributing 1.5 to 2 points of growth to the segment. I also heard that it's been growing high double digits, which...
I would interpret it 15 to 20%. So if I put those two data points together, bioprocess is a portion of total and AST is 10%. Is that a ballpark? The question is... Yeah, ballpark may be slightly less, but you're in the range.
I would interpret it 15 to 20%. So if I put those two data points together, bio-process is a portion of total and AST is 10%. Is that a ballpark? The question is, yeah, ballpark maybe slightly less, but you're in the range. Okay.
The follow-up also, AST, the MedVAC $10 million splitage. I know this was a recent acquisition. It's been month-be-quarter to quarter. I had $10 million of revenue from this.
in the year ago quarter.
And now you're calling it, while you were annualizing it in the numbers, and now you're calling out a $10 million slippage out of this quarter, which I would interpret as, as Mavic was at or near zero in the quarter. So the question is, what is the revenue headwind from this equipment line in ASC year on year?
Your math is about right. And in total, we're somewhere between $25 and $30 million for the full year for Mavic's. But yeah, you're exactly right Mike. It was near zero. So that full $10 million is flipped from one quarter, third quarter to fourth quarter. And again, it's the timing. It is lumpy, unfortunately.
I know that AST has in the past been much more predictable for us, but MEVX has hurt us twice now with shipping issues. But if you add the MEVX shipping issues, you take the biopharma processing, you're back to somewhere in the low teens growth for AST. So the trajectory hasn't changed dramatically.
our customers to have the infrastructure in place before we can come install. And sometimes there's change in scope and sometimes there's just delays in construction, so it's as much as we try to stay on top of it and help project manage, ultimately it's in the hands of our customers to when we can deliver.
Those two for me, I would hop back in Q and ask a few more, but I guess...
Maybe I'll do that and come back in. But thank you.
You're welcome.
And our next question is a follow-up from Matthew Mishank from Keybank. Please go ahead with your question.
And our next question is a follow up from Matthew Mishank from Keybank. Please go ahead with your question. Do they are met?
I guess we're going to be doing some follow-ups on this call. Just first on the consumables, the low single-digit growth you saw, it's been lagging or flat to low single-digit, maybe even a little bit of declining a couple of quarters ago.
What's your sense of hospital inventory of your consumables? Is it pure volumes or has there been some destocking that's gone along the well? I think it's purely procedural volume driven.
They don't hold a lot of this because it's heavy, it's bulky, it takes up a lot of space, so it's not something that would carry a lot of excess inventory of.
And is it across the board from from from core stars, can't tell, he's surgical or is there is there a little bit of mix, you know, changing in pieces of the business that maybe lagging versus others? You can get into really complex stratification of this, but in the end it's not, it's not really in.
Okay. You guys know we're heavy US. Compared to a lot of other healthcare companies, we're 80% US from what we do. So the trends here have the biggest impact on our performance.
And then back to AST, I mean, does this open some capacity for AST with some slow growth and bioprocessing? I guess, and my sense would be you could fill that fairly quickly because it's like a shortage through the industry.
Yeah, well keep in mind all single-use technologies for bioprocessing only run in radiation. So not ethylene oxide where there's a real significant shortage. And really the phenomena is if we're running with a lot of product backlogged, especially as we come up to the holiday seasons.
In a typical year in AST, we would starve out our plants and we'd shut down a day or two. And either do it the Christmas week or you end up starving out because it takes customers a longer time to start up production because they've shut down factories. Before you see their supply chains start to flow in early January . In the case of the last couple years...
We've been sitting on so much backlog demand in bioprocessing that we ran at a number of our plants straight through the holidays 24-7, 365. Not doing that in this year's case is basically straight drop through because of the high fixed cost model it has to.
Okay. And then Mike, if I'm looking at the balance sheet, right? It looks like the debt, you've generated cash flow through the course of this year, even with the work in capital of those. Why, I guess, why does the debt balance?
and why not get some of that down to lower interest expense? Yeah, so the dead balance went up primarily for two reasons. One, we did some minor acquisitions, some tuck-ins that we paid cash for during the quarter, and then we continued to fulfill our dilution offset for sharing purchases.
And then we also were opportunistic during the quarter on the share repurchase side just due to the overhang that we were facing with the EO situation. So in total we spent about $88 million in the quarter on share repurchases.
on the share repurchase side just to do to the overhang that we were facing with the EEO situation. So in total, we spent about $88 million in the quarter on share repurchases. And then another...
50 to 75 million of cost-force acquisitions.
So those are the two main drivers that changed our profile debt. We still are within the leverage ratio that we are very comfortable in. We're just over 2.3 times. We did pay off during the quarter. Private placement note that was due was about a $91 million. So we actually just borrowed, it was fixed for a floating. So our interest rate ticked up just a tiny bit.
And our next question is also a follow-up from Michael Polart from Wolf Research. Please go ahead with your follow-up.
Hey, thank you just to, in healthcare capital, given the supply chain strains, are you fully competing for new orders or has the supply chain challenges impacted your kind of?
in your ability to bid for new business.
I'm still fully competing and you got to think of it this way. These are generally significant portion of business, long-term projects, and then the other portion is replacement. And that's a largely replacement of equipment that we already have placed in the marketplace. So if we have a longer term in terms of delivery for replacement unit,
We tend to be able to work with the customer and manage that through our service arrangements and service contracts until we can replace that with a new system.
makes sense in the last one, the few small acquisitions in the quarter, anything to flag there in what business segments and any revenue that we do, even if minor or any revenue that we should consider for our bridge work over the next year or so. Thank you.
We called those out in the queue last night, Mike, some health care and AST, really small deals in some cases, buying out a former distributor, for example, where there's really no change in revenue to the company, but we're choosing to go direct in markets opportunistically.
last night, Mike, some healthcare and ASP, really small deals in some cases, buying out a former distributor, for example, where there's really no change in revenue to the company, but we're choosing to go direct and market opportunistically. Okay.
Thank you so much. And ladies and gentlemen, with that, we'll be concluding today's question and answer session. I'd like to turn the floor back over to Julie Winter for any closing remarks.
Thanks everybody for taking the time to join us this morning. If anyone would still like to chat, please let me know and I'll be happy to do my best to accommodate you. Take care.
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