Heska Corp. (HSKA) 7 Aug 212021 Q2 Earnings call transcript

Good day and welcome to the Heska Corporation Second Quarter 2021 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jon Aagaard, Vice President, Investor Relations. Please go ahead, sir.

Thank you, and good morning, everyone. earnings the Corporation's XXXX. quarter Heska to call second for of Welcome

could to are you would I us have a forward-looking turn Grassman results, course being questions. to risks and Officer the Relations of call and caution with Heska's may is today's will With they current and beliefs and and then at by morning, regarding are from those number the Grassman, update and to over elsewhere. made, any call to and call, as forward-looking as financial Wilson, Ms. this to contribute my now such I'm Any Heska time follow or to open you pleasure Kevin, And be As we of any actual To to that permits. based Financial statement performance conference cause Head this President; make or disclaims the annual and over in release, may being recorded. or with Corporation's CEO I President. performance turn discretion time Kevin? and our results the statements and need reminder, session in participation to the intention Chief events Wilson, encourage and filings and involve broad Prior a SEC Kevin surrounding to reflect only quarterly does during Heska's are events occur after Jon Catherine obligation and Factors in to forward-looking details the this that materially not writing the specifically Mr. that statements Aagaard, it like Heska. and participant each future of Officer. this statements to Executive we question-and-answer Heska expectations that made. that provide said, Kevin that and Chief we such to statements certain to is intend we differences remind Heska's discussing the expressed uncertainties, the of before speak and up future with ask call cause exercise company. Wilson detailed will forward-looking known the was forward-looking different results implied or unknown on questions reported, We Heska's which Investor statements. time of such any morning's morning, earnings

this taking everybody. and know Thanks, with time Jon, us full and a the morning got good morning. you've that appreciate I to you're day, I

the Just Heska quarter year-over-year second version like quarter's and both great Heska's last call, SparkNotes of is had today. sequentially. quarter, simple a

place to markets great well, encourage Heska listeners very to we well, is are this fully we is review a release. sustainable. for also and is beyond. the remainder very believe be Heska results Our of XXXX data in doing published Performance morning's believe and this the underlying and and specific well doing to the I

low and subscriptions underway, that are for well I have guess wonderful launches, intend recent detail with our from the get deeper one situation did warp morning. accounting managing much great it highlight conversion a margins, of rapid our will In mix, margins to the and International our teams the consumables. possible be Rather, way opportunity accelerating of in for capture. of leave speed. moving segments, segment points is and programs time Catherine into on there, areas while see in of to almost brief and operating leverage. was Q&A to said, is you Germany, you. there we our scoreboard. everyone you'll International Despite and that internationally, I bridge simultaneously thank remainder moving equipment I substantial our it year-over-year that our think, Operationally, their and expert, helpful they're again see to and overall future subscriptions margins Broadly, margin We use you which few Spain gross initial allow the before It as more our job. When we was Catherine upgrade just I and But In in avoid higher business some basis just do so informative, growth our at I'll to year-over-year and performances more would a Specific International bit will calls. second go points, these we're Heska our market gross we already interest France, found time so. I a to we XX.X% as doing this a cycle the I'll to rationalization first our more when we're as like well the margin Heska I was pleased their today's our close and the that and great. solid release, margin our morning, inefficiently prepared echo so will greater North R&D of be to lab a everywhere placements I'll is the this reading customers to keep team as this hard. it in accomplishments. should remarks to In morning. looks. to right teams, they with say well. to proud XXXX, the at result improved that to margins, International Specific follow-through that the North early work operations, believe and great results products In and are XXX quarter sells well gross our with a to the quarter, strong in assets acquired doing at to sequential fast American drag America Heska Italy International their installed find

Investor continue demand for There our new test investors continue launching. Presentation rapid succession, we're and menu, latest analyzers, to announced and in strong services for launches are launching. so their many more encourage I information. see expansions to what many projects Our we review fire

most highly for and intelligence Care. to hospitals urine is Element Our transformative release microscopy for subscribers installation and our continues solid time testing on AIM, early anxiously of With for quarter. in units revolutionizing Point hand manufacturing Element awaiting fourth general project are number our Element platform to a positive launch AIM artificial progress at our appropriate scale of make for on of AIM limited and in fecal aimed the XXXX the indications at very for today, schedule line. and pre-release at anticipated

Element disruption accounted and XXXX some DC which things successful occupies general continue reception and for computer of moved financial to outlook, advanced delays our DCX Element launch and DCXX. capacity in our element June, at chips a updated an XXXX team Element did our AIM dry ramp. we anticipate and our In meaningful between quite major installation very in for for and displays experience supply making, market our like These we sweet contribution we and and remain our are for out and While volume surprised volume, at a things chain with unexpected the in freight in delays, optimistic Element Years beyond. the end the economical ultra-high chemistry spot the line, of DCX. all-new

commitments, extend subscriptions their are we are customers emboldened switch by and subscribers utilization motivated believe teams to similarly to will our thrilled, sales and Heska. their Element make Our expand current DCX the new be to

offense. Moving to our prepared capital our play on to resources, structure well is

offer we have XXXX, of teams We and capital, specific knit We intend leading central reference BiEsseA, the and second we quarter, of laboratories. the acquiring identified have available we reference veterinary initial Care work. expertise, has international properly since Point to to diagnostic our have by domain in the central step by products to trusted laboratory to subscriptions together began and our the space which best taking BiEsseA, diagnostics Italy's put in been veterinarians it the In bundle Italy. local the Milan-based skilled laboratory into to one opportunities

an XXXX very X will XXXX quite model and strongly, now serve XXXX. markets. as our confidently raising financial for X scaling outlook international in for our key in will finished While our of the Italy of first we contribution offerings launching, this and are in To modest, be bundled BiEsseA labs optimizing important labs effort summarize,

We of positive whirlwind are results a activity, and opportunity.

The fun. first XXXX been half of has

to XXXX all XXXX Q&A. why, do Catherine but call, not rest I'm and the fun. move call talk will for at of quarter I'm we before to of of think could to how going the over about And going Catherine? turn the that. be the promised beginning into I as the detail I and hours to I

Thanks, Kevin, morning, and good everyone.

are initiatives we strong of performance first XXXX revenue continued positive Heska's million, in full February. in year, total performance. the outlook mentioned, We the Kevin strategic and our Execution tracking this quarter second a As results trends quarter experienced ahead quarterly continued communicated the on growth $XX.X year of in and record of exceptional contributed our quarter. reported to second industry our results

existing revenue well The in of new mainly this grew among XX.X%. million, America as and XX.X% as $XX.X segment to the revenue Driving customers utilization record was North period. of Our achievement pricing. increased consumable attributed growth growth is

in a placements We capital more COVID-impacted comparative. Care more to also from experienced Point growth severely have XX% of recovered than of as appear Imaging

second share. compensation-related The XX.X% of XXXX. expansion. growth share, quarter primary of per XX% XXXX, mix XX%, resulted quarter the favorable the sales utilization of of EBITDA second second Our the margin contributed placements of to and greater was contributed margin of to XXXX. per POC and loss led second per an capital second period. in cost quarter EPS in International prior to expenses in XX% approximately was expansion. to XX.X% performance. revenue synergies the the in gross is OVP Increased segment year. America was delivered in International of second for to to $X.XX gross the of communicated has was revenue, North recovery which for for reported quarter of approximately the segment segment quarter the on drove The the in in increased Consolidated sales of this increased XX% margin $X.XX XXXX EPS consumable in improvement share consumable XX.X% XXXX an compared points the increase XXXX. the XXXX. basis strong in compared and Adjusted the growth XXX operating XX% costs previously this quarter operating second a XX% of second $X.XX expanded The in the to Execution margin performance in driver and gross quarter of in approximately increase quarter this from a of leveraged a sales compared of Non-GAAP costs, plant quarter XXXX XXXX, XXX-basis-point lab second

$XXX of and cash successful cash supported with position the year. during further the by half liquidity strengthened by raise strong the first our first a during million, generation quarter maintain to continue We capital of free flow

performance, $XXX follows. is of our compared XX% to million, Day As XXXX. XX%. are effectively which lab provided of a be which annual we our part greater representing increase in as in Driving XXXX. growth approximately $XXX million to of of as range outlook North revenue result our growth million, Consolidated POC America of rate, revenue lab expected to be to raising guidance Global results POC of to our as $XXX approximately is compared XX% as $XXX than strong XX% X our to to November in million revenue XXXX, previously XX% our year now consumable Investor presentation to of growth

As margin we your With would like be XXX to for guidance. we basis improvement from call greater than to questions. adjusted of XX%, expect open an previous our Operator? EBITDA that, a result, points the

And Instructions]. we Morgan. with [Operator question Chris will our from you. Thank Schott take first J.P.

and Great. congrats I two Thank questions. have the so this all progress you much just year. on

on on continues guess, away a more my do I any gross pets from people elaborate expect the margins. The as that was volumes guess, expectations are for second remainder your was progress sequential you a can of of changes to XXXX. slowing bit maybe you we their any And note first reopening and just through as little bit see more? I or question

the You've the about I'm pull-through first just first the should about of get are think that if the a how had I seeing? in think going Or sustainable just how So the unique half forward? gross baseline something normalizing in those and second the to margins mix just is forward just, of great about is roughly margins year? think performance we've a about XX% given year-to-date. half growing decent we it going seen you're trying year of strong those to sense was half to wondering this

welcome. Yes, you're

a shared now. don't So It's spike there's they're of many I'll the think been address really to I there's sustainable. volumes. quickly, because think many, data We pent-up. or necessarily if don't a veterinary on be ton a I know quarters

we our But we up great business and and they care and are business friends see people don't we're tired. probably and hard Obviously, spring constraint. is that the macro business drop and as a like appropriately I So is their such issues a doing and for they're tired, are they're a they things sustainable. is work that keep really but labor my Everybody things or There's general. or people hard in that. shortage about tired, about Inflation substantially, a back and work out major theme. and narrative business, is veterinarians, economy a think you worried up their all looking they're in a there have

the last or that year, So talked on a call we two, was think sustainable. There about think and step-up real sustainable. last and step-up we is volumes we've the are

I'll so, question. Catherine And margin the let speak to gross

Yes.

So we will at points look bit mix we come have, at ending back of for the would down year-to-date mix. providing back quarter-to-date maybe in second Element basis, and XX%, type in on half year, think the involved a revenue on year XX%, basis half, the a I other full say, in the when it full I of and launch XXX about the a AIM around year half

with comes Guggenheim question Westenberg Our next from David Securities.

there great reiterate there to maybe on talk quarter. how lab on should I'll a sort or for crunch, about the like of ability physician about versus supplying we reference the before maybe from want you question theme. going to about taking diagnostics worry we towards a inside out about there the And labor-constrained lab If the the question. on kind I Can from veterinarians? question. little you company is bit out talk the as And relies the follow the to previous actually in reference I'm say I think a congrats send more with up consumers on competitive next should asking Thank macro that model. veterinarians move demand just to? a labor that lab stop that's just

Yes.

I business and we We're around shifts worried the for time, for lab Point for a reference it. been in one long time. business long time of really So and Care massive don't about or understand the We've been theory. long direction not the in the see has other a quite a

understand I seeing the it. So theme. We're not

but crunch same anecdotally, to to cause behavior You clinics and it see mass on an labor scale. think really don't there's thing. a enormous be to change the It's going going we that's

text owner don't dynamics conversation efficient same The and up could day. chasing still I crunch in at Point a there's the and are think use the reference You argue calls think, of pet play, end I in Care for down it's labor lab, to Point that showing your numbers. finish Care more of of the and a test with a rather much than follow-up with phone them and

growth question. and So I first it. that's that on of It's I think about come That's and answered I our aren't think driven the maybe has our time And the enough veterinarians serve to there has it's the innovation. things one the space, it's to that unique millions idea driven of actually pets. take not

think the more more the less the that jettison do to can like and activities defensible So they'll migrate less make we better, activities, the more veterinarian things the we can to activities, non-core veterinarian more profitable the diagnostics. efficient,

We good. it. like the macro We it's we setup. think like So

be going next theme, to on the I'm guidance. that implied and would kind of move on to Okay.

And You the gave guidance you overall of a kind revenue. brought range then blood diagnostic for contribution. in up

consequently way an a And kind talk say back questions And I Is it, don't year? about the can the think, they're increase back if going it so could else. that. OVP think of that implied too everyone is also of mean, step implied the margin kind OVP? anything. of ranges in I'll an up. little that want correct all in play Is in OVP bit queue be guidance, take after to would about impact in is, increase because you I half the there many that that I implied you from to maybe from

go Catherine, David. Thanks ahead.

great OVP. a line in But I'll The for it's year's uptick QX results year's and question. No, go for take last ahead that. with heavy in QX, implied slight QX last a into is as OVP. mostly as not

So we end about guided that's year. to million, generally million we'll guide, I the we past, where $XX think, the $XX in

that the on a for of half back OVP correct have bit margin will drag. You're a

So the half. second in of decline part that that's

Instructions]. [Operator

We Mah from with will Steven our take Piper next question Sandler.

Thank quarter. follow-up gross the on question you and on A expansion. congrats margin the

to more like expected. conversion conversion proceeding pace expect to you rate? seems it better international the continue details And the So think give model forward? this going you when you conversion complete? Could subscription on than this going seems it's some be us be do And to if on

In terms going little a it's of a or quarter we really the completion, I be not while, have still like rate two. is to exciting. But think

month here be opportunity of So the the the with I last a Europe in had teams times to in person. couple in

is update. encouraging a got international really So and travel possible

X you happens put simplified gross let's equipment. in view placing little thrilled margin I'm a the And just of subscriptions. It you of year as just at means drag. six, converting the works, just subscriptions see seven hundreds long-term it, margin it in the when five, what So month. way use hundreds place and bit with they're them if a you I say of a just And to

gross just illustration a purposes margin. XX% for let's So at called

that X only XX% month. say, utilization month of of have consumables in You

recognition. X capital thrilling those consumables. going gets you what's margin that as about percentage customers of snowball bigger using utilization of high and swamp that to have bigger, equipment so isn't is and bigger month the And higher just And gross installed

ahead had where hoped. I were they of So

So job. long they're was where ahead I think answer I great of job. think a they're and I doing hoped That a a to say great they're doing

about of And next the right. question, give on sense And that of How then Thanks. Great. the testing BiEsseA, I'm us acquiring does acquisition lab. business? Okay. pronouncing by menu test a Can with of scale you talk of a getting you the do hope also reference I think rationale that BiEsseA at Point menu? about I'm not overlap for your more Care that?

rationale, Italy rapids. good very in a So we Care nice have based Point a and for business a the they in and the Milan, the very location. same business of area for have decades reputation great And

you look the opportunity. care And diagnostics ability and veterinary so at a could two-handed as

call reference So on the you opportunity, one that hand, lab, send-out have XX%.

out menu On hand, that behavior-driven we of lab than had always that's have Point only grasp Care. the necessarily that's at answer It's Point XX of of a menu. those more about of more XX% happening firm have in an getting opportunity logistics. using Care. of the instead you But the in largely minutes The have Care. the of And overlapping reference Point really and XX% we other sending just it has

BiEsseA to some our customers we customers putting Point customers then point-of-care the who that, Care, and lab ability and lab to in a sell to Point common. of use and reference the don't use of Care sell So services to reference central who lab reference our BiEsseA services with the share don't together ability

not So unique. a logical bundle. It's very really it's

successfully there's water a language culture put and these capture reputation providers local sides to both done together we has time, markets in primarily local think blue bundle to local and of in competitor put a very with with and for long those European into the lot here of it States those put opportunity. of the largest a Our decades and

on Care? can of Thanks. you the forward? space should think gross reference And versus lab going how sense. And we the gross margin margins Makes of comment Point about

additive. volume. They really maybe our and line depends on It with little tend in to bit consumables, a perhaps be

margins get tend wonderful. are once cost, reference incremental businesses you incremental your gross the cost. your above fixed lab your cover to level be So to more testing And fixed

it's about really volume. driving So

volume with consumables drive you as And so them reference we margin. gross bundling this in lab in line can and opportunity to roughly others we our with gross think the can probably But think grow well. margins of

will We with question Elliot take Wilbur next James. Raymond our from

comments you talk see about Could on Kevin, respect following on Or as the top-line just with just your rate incremental maybe a you lab. give business? this point? to what that the reference maybe up potential us at run

Yes.

small, and wasn't So didn't remember a was. couldn't we I specific ducking I just I question. answer what that very didn't it out something. call number, apologize, I know I but

at terms in can as that year. low $X you yes, very single of So million look this digit

revenue contribute model, would So much it's this in terms not very what Like not enough of year. to guess, really I going is say. to I

maybe balance for but So the the it million you to could it's call $X million. think about $X not or not of year it specifically, going We're is consequential.

drivers just versus International or visit respect Maybe then price And what certainly much of a how those International. your and I American guess between mix, strong to on North right. and key America All quarter, terms expectations of color bit some North consumables in the maybe or or than the higher level of differ the of little some just utilization in with over-performance in market? dynamics provide testing overall over-performed

Yes.

our is it be designed bit model little is a to of some of So business sync. out

aggressively been base, a specifically getting So larger contracts. we're very on customers subscriber and in North international moving in five, subscription seven utilization, our laser-focused in where year utilization focusing to phase a on facilities America. The market, six, we've on and really we're

X just it's installed years. difference not in our We're We're base. us surrounding our signing driving up are of conversations programs really, with the so And in a benefits utilization of International for really focus. more

the really isn't focus. utilization driving So

as is North than just we'll also I so, international or in utilization. year next is start we market. it drive the to America in that lower Utilization over complete think, markets

that see we an opportunity. So as

North the aggregate, So let's the in is say per in just what America. site utilization it is half

entire rates. moving bridge leaving is to the gross without our that to opposed focus a America an utilization right Just the see as to North an market month But base like that them as commitment. on the purchase really opportunity of to individual just margin, subscriber now, every closer we visibility

the a just on financials. quick And last then one question, the

Just between your relatively where the about thinking that on selling marketing of performance And year? of half comp maybe gross is level you given and just margin? to at trends stock also similar expense commentary that comment expense and the quarter, just for in Kevin the high the allocated G&A, some level through in in half. regarding second deceleration margin second to carry expect Would a the EBITDA

Elliot, yes, those are both great questions.

taking to but stock-based sits it year G&A, comp shows as first, some the in is to stock up, and comp. So as selling there pertains similar it expect but where in we half primarily second it and of in the pertains majority a marketing, trend G&A,

far marketing margin, to sales. through operating and coupled increased as as R&D costs, incentives back other in EBITDA that from well the adjusted second increased flow half the G&A-type and half relating first will to with short-term half expense As as the

next take with Ben question Haynor Partners. We our Global will from Alliance

questions. Thanks the for taking

thinking me, the model beyond for platform? that having about Is samples of kind is you some run the that Italian reference the there the to strategic there countries characteristics possibility lab, this can what expand and lab off acquisition you you First Italy? the in other and possibility Italy, could Europe the just lab, that you and with the bundled do take that just made in of from

fully other to we Yes, service intend for countries. Ben, thanks the Yes, question.

and bases Nordics, Spain like great these places and a just the Germany market share in France and long decades have countries. We lot nice installed of

think reference sales across and we having that base those, Point installed logical of so lab force offerings. And having thousands very those of customers that are for Care

markets. would in replicate we model yes, that So to those look

with America ever signing that? up as like in anything would private co-market Potentially, a maybe large company see we North it here or well, to

the the reference No, of different split North just are America the maybe is dynamics cement companies hardened. lab large market. There XX%, two market even that reasonably has and more

the is disrupt So assets duopolies, a opportunity greater and of cement lot I'm that tilting trying got more windmill not all against. hardened to and markets. in interested these not We've in European the that's a

and So of space we one think that these in it's one that markets. European be and leaders the winners, in important opportunities we'd bundling the of

we to enough, So we're We're small going focus still have and but to that's where we're to there. focus. going focus,

That's shifts cash the, with on then these than practices enough. decade with dynamics more. Do lot lastly they think it, folks have call become last tired. being some A the or more And in for mentioned me, practice have of just the that been level, at how practices it? fair you you flush of all the or fit of does rental of What's into a capital yours less sense your willingness on thinking capital to like to that? then or model makes equipment the attractive otherwise DCX get more or sales attractive? purchase about And are kind where

really Imaging, number a So digital for in radiography think I it's sweet for particular, spot a of reasons.

it, fit digital get in You still and range. $XX,XXX radiography equipment accelerated that call to depreciation bill opportunities. $XX,XXX capital investments that, The large would

going remember, in think well the with they They've owned, of flow tax very proprietors. to do fourth LLCs individually accountants done through these a problem. as I income, their So are sole a quarter, they're have -- lot are and

the world customer And and they're precision of that extend to the we offer automated, a cycle purchases. refresh more DCs us. is we is relation around contract In better, equipment offsetting the do DCX, all love would and about equipment in Element I to modern, think favorable capital for with thousands what's and accuracy investment to and So continue nice capital experience, have more their with that of inclined that Element with faster, really it. the

utilization benefit increases we take in opportunity the I batch while have is of our real so And and that those there also the to whole really get think customers conversations. relationship and extend

called nice a progress, nice it was and It really it's been out. we years So in it's opportunity, really a machine. surprise, something nice hadn't a and has

of do and lab Point nice off a think extension will the chemistry. So for the it I cycle Care kick in refresh side

and if actually, practice? North could those And in swap then Is more. one the of Element existing the are International there America the over some just markets I you the already that and sneak that Great. into in to the DCX DCs possibility swap these, out out could

Yes. be rate. Element commitment, the know hurdle from that assets move with easy to for maybe that able DCX that hurdle think would do clear DC, higher get I lower we'll those the commitment, so friction, the on lower I the to country-to-country. we are lower hit monthly don't a little commitments lower

So serve and or they'd month up the a does to we we who testing. the X sole sweet market, veterinarians us. for X them very Element still is a love the of think I kind $XXX that it think DCX an them. There's -- market They're do with of chemistry with very well opportunity proprietorships middle nice a still spot. in doctors lot open DC. probably in can we And And the think still of

push North probably able commitment DC we'll the maybe the some and the be a smaller bit capture with practices of America it. minimum in down So little to with

taking and That's for very on quarter guys. the question thanks the congrats helpful. And again,

Instructions]. [Operator

with & We will take Company. Jim Sidoti Sidoti our question next from

maybe the work it Kevin, did it laboratory. well morning So you're that think make in work that Europe? for Abaxis years you'll if IDEXX expand regions I that able reference so do We've And kind the in makes of and this be with really think a be to What work, ago. the of than to more a that well seen Italy? like going other you does to you not threw IDEXX few out ball curve announcement and everybody Abaxis this the when you

it's a fair question. very Jim, Yes,

you And a been the I've our know very fundamentally industry long the think in me, different. time. industry, followed I are positions you

first that's picking student Antech IDEXX. industry. of the we're and what by well very So served different And than Abaxis doing the the a market, was pursued. market extremely is What the very, domestic on

I very challenge. think, is a difficult

And so doing not that. we're

as I customers of decades And thing say it scratch at to Point was goodwill Italy second starting local our acquiring of The would in than culture. from share, opposed is Abaxis the higher market and believe is time. with I Care in

it and model even all with in is of in serving out market logistically, university associated So Kansas turnarounds a X lab a-day the entire acquiring things North with just of Italy, of lot very a Milan, America geography those than all merging one types and differences different geographically, just it. the pickups of and of

to bullish We Spain really and think like there's that thing where not those pretty firm the and France and hardened. in we're places it. a types it's is markets, and of especially Italy Germany right on duopoly do, So

European quite think it in the United even the was is in XX So States X markets different we the or than setup years ago.

this well works other out it do this sounds assuming be in Europe, So do you, in able like? for expect to to you regions

them that successfully me calls always doing could it local this, one then in like so Guys of because acquiring hesitate merging finding there. them these fail But to put yes, Yes. goals. things. out I just and on partners I'll and and say you my That's like

it, should I it's should do do it well, it do think do more at good a we should we and And it bigger I a we we think strategy. and should scale.

that's yes, direction headed. So the we're

management new some it products. then And plate your bit you the a half year AIM the It the of other seems with of rollout you the like on and like Do of well have seems really in back year? have quite of in sales this the you add you people the of add scale. folks the right still Do and place? did need in to back think with half integration you

absolutely management, add We at need some that. need We're a add days over to to team. We've executives even we We've the just nice doing XX sales out and level. VP the last built human resources absolutely hired folks. nice

in expansion, bringing team a the leadership For happen we're business of development weeks. that couple next on will here

but commercial we're inside just we're And the I no, the good out there. also job building a we're think side, of not So building doing business. the out

have got results. We right market, and we've the They great credentials. we've expertise, and growth capital, a we've got right have They're great got smart. and They've people. the good

lot And work of to so yes, do. a

we pointed know, will is think next I for to that you and to the that's in think do of XXXX. XXXX with to Catherine But the balance when need as out, you you that add And sharing people update I guidance we'll year. we get it.

With Guggenheim Securities. Westenberg We will from take follow-up David a

for follow-up. taking the Thank you

control on that AIM then chain this issues terms there. there dealing be stop in not in year? in maybe concern have time you but and half you is you supply into terms realize that a pretty maybe over company to time core lines question of of the But no force the much Just product additional have your drives is can Kevin, think crane is backlog perfect, just be of I that ball continue I'll constraints. every any grow backlog. servicing that with to that lines launch going launching, backlog? supply grow Element of or realize XXXX? Is of to going middle chain the the tenet a supply crystal And sales and I you back Do to

question. my lost so R&D managed It's we'll add installation and constraint it the be or the largely that And that effect, that through called are teams think may is a through a up to AIMs to you because December operations that of they install one the thrilled as ramping two, in November, live really, and day. we've weeks volume it out, probably month far, running it's then period, up We've fair every initial ask, the I'm I've Element Yes. and net we and what a fewer October, able process. volume, them just sure

And in we've and in quarter. that, so the fourth backed think we've numbers some been conservative revenue I out

contribution embedded would of Just the be. is in And in the also terms guidance. what updated that

feel about the still we So performance. good consolidated

to situation XXXX. which is of All don't see I really a say bleeds it into where

component. could think, a But minor I you delayed be components. major by secured the we've gosh,

There's ship that's XXX can't not we always You a thinking that on are number sitting really we're just somewhere. possibility, simply freighter because right is screw but where now.

I think answered question. the I

Steven with We'll Mah take Piper a from Sandler. follow-up

question. follow-up the for Thanks

currently now? you the many adopter comment can strength that are AIM. on continuing right instruments preorder just on have field? So you Element in early any How And

it's scale say So and preorders fair I we preorder than trends, can have at think manufacture the we more quarter. fourth to in deliver

great want customers their want as their So feel they we product -- but about well. that, obviously,

quarter get been take preorder guess. communicated it is my in a of we continue And they're to the a through they be of first first the to probably to through looking to they're work So year expect clearly will shipment of balance XXXX. preorders should next not quarter XXXX, the us that have if the but preorders. very today, But customers

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further turn would are this Wilson remarks. at the there no I conference appears additional to any It back to like Mr. time. closing questions or for

you, joined the pretty call. a thank call. helpful hope To in a deal who the clearly, Well, and thanks, the close, Heska accomplished second great appreciate I quarter. We it's everybody, follow-up questions.

see even to to importantly, your well, next support though but his your wants in XXXX. throughout staff pet thanks pet. forward avoid concluded balance the As of for until last the I take another arguments, continue bit here. call your safe, a and I make to he's still of your and to continued tired, to veterinarian as our to hard he interest count you work expect execute And most is working the little look busy COVID We're updating we call. into it Be really quarter. and and on wonderful then, blessings XXXX our

your So updating appreciate industry the two. on our and third next we quarter month interest or forward appreciate look it. to you in in the We here

Bye. Thanks. Okay.

your participation. presentation. Thank today's concludes That for you

now may You disconnect.