STERIS (STE) 9 Feb 232023 Q3 Earnings call transcript

Good day, everyone, and welcome to the STERIS plc Third Quarter 2023 Conference Call. [Operator Instructions] Please also note, today's event is being recorded.

At this time, I'd like to turn the floor over to Julie Winter, Investor Relations. Ma'am, please go ahead.

Thank you, Jamie, and good morning, everyone.

our President will Carestio, and and on our Mike our speaking CEO. Vice Senior CFO; usual, call be today Tokich, President As and Dan

for of have consent is that of expressed prohibited. of as redistribution, strictly before few this do Any only webcast words STERIS today. or I we time-sensitive is a accurate open written retransmission comments. of information call This contains the caution rebroadcast without

or forward-looking statements. of from or considered Some are statements, website. The filings. company revise statements statements may actual result those cause securities our in future any available this STERIS' made those limitation, factors and risk developments. on forward-looking materially important are forward-looking information review a Many results events the during SEC STERIS' the through including, does update differ or not the could filings undertake to as without described factors or new company be of to in

measures, per be used. today's organic free will call, flow In income, adjusted cash revenue growth, adjusted currency diluted including non-GAAP addition, constant operating share, and on financial earnings

decision-making. Additional as definitions, during and the between Directors financial information of in and Board is their financial management information are the non-GAAP operational reconciliations measures Non-GAAP providing of measures. in financial GAAP transparency this release, as analysis call these to supplemental regarding presented measures, our including with greater well intent available and used by financial

hand the I over will those With Mike. cautions, call to

quarter performance. with Thank of third the this review you, again morning highlights is once my pleasure Julie, good you to be It and morning, everyone. our to

as of X%, For revenue driven the XXX quarter, as increased organic well price. currency by points basis constant volume,

to last tables. the as our year the business is January impacted for of the it release the about we detailed quarter press million, in Renal year. divestiture Renal $XX This year-over-year Care the a impact divested revenue of anticipated, in is which prior last of As the by Care comparisons business

Medical our continues cost Cantel achieved of bringing $XX $XX integration million well. in total We million. year-to-date approximately about to The quarter, go synergies to third of the

We year stated XXXX. our achieve are of in fiscal million well on approximately track $XX to goal

As decreased favorable of year, from XXX labor with pricing, quarter than XX.X%, prior currency, compared and impact were the to mix, anticipated, the productivity, more material Renal lower as the higher for gross basis and offset Care margin the points, costs. unfavorable divestiture by

our million of us This compared Sequentially, labor quarter, year. costs totaled for improved $XX prior $XX to the material have at year and puts about million remaining the $XX in outlook the of year-to-date, with unchanged. about impact million the

declined margin earlier, XX.X% margin of EBIT XX by year, lower which were reflects gross partially mentioned basis the points revenue, last quarter which offset the to SG&A expenses. with compared third pressures

year, than value. prior due quarter. The income XX.X% reflecting the to tax items, favorable quarter mix in $X.XX in was in effective higher was the the quarter and adjusted primarily share, diluted were million per and year's discrete Net third $XXX.X earnings the occurred lower geographic anticipated which rate last

to anticipated, $XXX.X higher AST million. We to totaled for our still segment. expenditure our while our depreciation been capital Year-to-date, nine has the $XXX.X amortization totaled the expect Capital expenditures within primarily million. year million, of capital months investments approximately than first full spending and timing $XXX expenditures due be

fund just times repurchases. X.X over Total EBITDA is third Total reflecting a share over small to $X quarter to leverage. debt debt increased and in slightly to acquisitions billion, few the gross borrowings slightly

on cash With $XXX Free continued and based a limited million. higher-than-planned now in now, for the capital be higher of the mainly on flow Free year inventory. $XXX levels $XXX flow was flow full the guidance. working months year million our spending, accounts and, anticipate first or million, timing, cash last due particular, pressure in was about by nine the will of to cash capital, receivables, inventory we free about reduction of

Dan over will I call his for that, remarks. the turn With to

good our you and call. in Mike, morning, Thanks, everyone. Thank time to for the quarter third taking participate

the from supply revised products. Starting high-teens highlights with quarter. few outlook and constant business and quarter a fiscal This cover segment by improvements particular, improved In on chain in address year. currency basis the our in the washing was operational by our for driven then capital Healthcare, steam XX% in core were grew will growth organic IPT equipment. shipments driven I in a the and

we saw products. our in addition, double-digit surgical In revenue growth

supply chain main to Our continues issue electronic components. with be

have we resolve issues. the and in as existing these of customer new with working availability possible We And suppliers meet where ensure parts discussed, order are to are demand. hard to we working to

delivered business driven currency by The and improved increased growth, revenue demand constant double-digit services Healthcare organic pricing.

outside sequential Supporting organic with quarter, also saw growth, consumables. Consumables improvement compared quarter constant last year. that grew revenue of We still U.S. procedure of the recovery digits, in currency lagging. third volumes improved the low-single with in U.S.

the Healthcare segment very Hospital spending Healthcare remains by quarter. as over at our totaled of dynamics remains the of $XXX underlying The favorable. end which million stable, our evidenced capital backlog,

split Orders projects, time. we large at quarter not and replacement at for remained are the seeing any cancellations this approximately for a XX-XX order and

shipments dramatically from equipment Although quarter. fourth in Approximately quarters. delayed million capital still some the have have delays, prior we shipments our were into $XX capital improved

Opportunities to showed Overall, anticipate our we chain remain Healthcare through. nice improvement. work which third fully supply a perspective, some from performance take will quarter time

difficult can a from outlook and AST how Our recover quickly the reflect Sciences. conservative quarter Life expectations challenges on fourth and these for comparisons in we

reduction bioprocessing capital our in AST segment Mevex, delayed and constant grew currency from shipments business. Our on for equipment despite a X% disposables basis organic demand a

within this peak was bioprocessing AST. our year a quarter level second the for On side, biopharma

from expectations are due hearing that to are their customers resetting in production. they vaccine reduction We

a continue medical anticipate not at will to are this core Positively, flattening AST help revenue our we historic Importantly, from rather procedures, levels. total customers of seeing in declines we growth. which expect perform at will we improvement time, that device but benefit in

million as our QX, into Regarding Mevex, not was customer approximately a ready delayed order was unit. receive large the of E-Beam capital to $XX equipment

somewhat declines Turning impacting capital equipment are constant AST in in bioprocessing currency down and our Sciences, growth about the factors demand quarter, Life also volume. the consumables service. X% revenue Life offset same consumables, with impacting in to by The was Sciences organic for

with growth have In comparison third in difficult strong quarter the year. addition, consumables we of last

confident the Sciences That in base matter growth increase reduction cell segments. said, should we the do anticipate drivers production. help continue that demand, therapies offset within We is of as the to timing which Life for AST and long-term this a gene the and both remain customer in vaccine in

capital of by about quarter Life million. in million. limited Europe had near In the unanticipated Positively, equipment an Sciences growth at challenge addition, shipping remains levels at $XX $XXX backlog over out that historic

Procedure the better data, in pre-COVID Dental increased and from STERIS a constant X% XX% of performing organic gains. spending. volumes economic benefiting revenue Based approximately at due and is remain on consumer currency on impacting to the than levels market basis quarter. pressures pricing share broader market modest

quarter our in was Mike, margins added under As driven adjusted pressure in the you lower impact increased remained With the the about margins gross came from Despite of held and -- as currency, by gross as anticipated. flat taxes, interest at share compensation. incentive for heard SG&A and rates pressure we earnings EBIT on lower largely $X.XX. pressure lower per diluted we foreign margins hit planned, than from quarter,

quarter, are to performance our guidance. year and date our we expectations result the a for of revising As full our fourth

revenue expectations As anticipated impact currency on expectations anticipated $XXX through with negatively grow of reported million by fiscal to now to year, X%, approximately March rates of decline X% million. XXXX, revenue from Based currency is $XXX this now is compared growth. a forward prior foreign XX, approximately

to outlook share which currency in revenue per adjusted the the our Constant to continue. on implies With the the challenges, this earnings compared now are $X.XX range approximately lower limit to performance is organic expectations in $X.XX. in grow XX%. with anticipated quarter now of revenue, of X%, left, revision quarter third one diluted do be anticipated Reflecting prior

long-term expectations the business remain Our for unchanged.

and future. mid-to-high organic constant be is double-digit generating STERIS single and earnings in growth continue growth believe capable We strongly to confident the into digit that currency revenue very

call over will to to I for turn the Q&A. up that, With Julie back open

instructions, Thanks, Dan for your Jamie, we give open Mike, for if the you'll can Q&A. and up comments.

today go from question. with Our ahead your Instructions] Turkaly comes Please question Dave from Securities. first JMP [Operator

Thanks. wanted confirm Dan. here, something I Great. to Hi, just

So, you Healthcare, capital in I in $XX then Sciences. and from I AST out from million delayed shipment $XX million, Life called $XX think, million and think, then

have get what been to -- So, different, I the that and might correctly? about if look -- Street. at and that about them to add that up mean but $XX I shy mix we the Is are thinking be of were you about those million, seems

correct. Yes, sure, That's Dave.

Life and roughly, on page. million would bioprocessing Sciences, I was we're was split that about also in so add Dave, between there. the The evenly AST $XX in and that just same all reduction another

guess, this I does sneak main No, for I that at guys. of -- How customers, the And that, explained of on this the now, what we mean, is but obviously, a But I occurrence with is one growth not you you think -- I this, common Dan it the look if appreciate we said the even in too. bioprocessing good that. news sort probably word, of was up sort does right the not quarter know do? last vaccine how we -- driver. that and is guess, lead maybe But use there? I it time didn't but the

Yes.

a you give me let background. So, little

are typically saw in least took manufacturing growth What the we sterile vaccines we in of on that single-use AST, biopharmaceuticals. AST. at and hit, sector typically, couple are last the high are for customers manufacturers used seen -- years our what that double-digit a have biggest that year-over-year where within for is technologies the So, in aseptic are technologies we

the the fall, anywhere that summer, the growers of going That would on growth end It's logical and sort of in production X.X% which into larger contributed been be high our at from AST. the top seen of peaked early quarter, would it's in X.X% growth be QX, vaccine of season. to on we've depending normal which one

a in down QX built and lot went customers vaccine lot with either general, production And vaccine inventory. stranded consequently, volumes just with of a or had were our significantly. Our they the reluctancy And of inventory. slowdown in

started the beginning see to we of in QX. it So,

that in we It's adjust, And that spike growth as At is was comparison way the we think underlying down. technologies work and the there supporting burn once to work something tough the could its -- anticipated. point, inventories vaccine of through the single-use do we is remains. bioprocessing through for nothing that will this

you. Thank

from Please question. go And Matthew question your ahead our from with next KeyBanc. comes Mishan

of of over just STERIS the Dan. Dan, growth for want for I profile kind good kind XX% don't is think you a a what Hi, morning, years? probably back, step Julie. you're XX% just several just the -- longer grower, normalized this in look how in think next frame us to and term, year or is the I business? you at you where Mike, it's you line could more take you what imagine Can really coming with,

on is current degree our the on even to conditions digits with Yes. and in I digits continue a mean, long that's confidence the topline something can the haul. low-double do bottom line. objective the we And high-single high we stated believe to grow over of market

you high-single going And digits, think worse about I what next looks, then year? as that about versus to year or next as out you better think guess,

to we've Matt, at through this got QX get point.

the encouraging that peers so, procedural calendar other and next preliminary, some they're fiscal not would our heard half medtech you've few in say but is about -- doing for mention -- optimistic any are this year. recovery are that comments of year. guidance the we And of I second A is

in We of back pre-COVID that to be of U.S.; procedure-driven to outside U.S. QX half in us. it's levels we're holds lagging company, second to But would in that largely Healthcare, the the beneficial things the the started assuming particularly significantly calendar improves since year, pretty believe recover and in still a

there. was million capital I of last at are at Healthcare are some that the would Sciences, And And ship Obviously, we -- Matt, $XX of we Life deferral quarter. in within backlog more sequentially. $XX Healthcare you seeing That also just constraints. I record levels remains have supply through mean, seen million getting chain our We near-record and progression did levels. add. least at

give year. look out does us, that for So, as further, more we confidence next

replenish out your I from does your should backlog And mean, just we as you're up I shipping last go to one, think chain typically guess, the just about basis. how sequentially. the It But order the improving, Okay. on a environment did seasonal on more supply ability and order environment. those?

still It's willing But about these capacity which lot is remained everything be this days. to bit performance the the face of future point, systems hospital a to strong at seem they in the you of very the in know I of financial significantly read a invest requirements.

everything capital terms and infrastructure. like sell we hospital largely, in procedures it's of keep For almost into systems, -- mind, that in

them more volume, more have for a have In OR got have rate higher they've washers, got order at of sterilizers, to to they lights. tables to and of sort they've perform more to have

So, our a it's is luxury, not a many think it's I respects. equipment not utility -- in

in back queue. guys. the jump I'll Thanks,

Our with comes from Stephens. Jacob next from Please ahead question Johnson your question. go

on morning. the Hi, bioprocessing couple A thanks. Good market.

is Mike, they're headwind inventories, in way your about, some near-term $XX but to or COVID, First, demand think correctly, year, there normalize to right you looking kind where all? seeing from it things as XQ? to to seeing Is of this and XQ. of kind headwinds what maybe will million that you you in -- way the I listened think lag some for that they're I heard when of they're then to if about comes of talking what of all, versus the right about Is terms And customers are back kind again. the the calendar but half

think it we're up leading comps currently relates past to bioprocessing in. this QX you're to pretty year, you're as year see going see I the to is tough that to what of going

back So, mid-to-higher is digits, through vaccine which it's to burn burn spike I as in get and to inventory bioprocessing, demands. those was still think to we through to the rate growth in is burn normalized what double and take the production down for time some a the going what but

as did about which answered, X-ray I'll have but you that, impact for COVID things, slowdown AST on just any kind And plans, may follow-up, capital of capacity? Dan. the check especially of is, then due I my your the Thanks of to side think Okay. allocation

The capital a what defer construction No. maybe of comes has no, those. and that, a add But still the obviously and spending bit, adjusting the timing capital and build I of mean, projects of than about first. to unchanged, our supply infrastructure -- other inconvenience the largely it's in capacity. time we're helped just looking -- anything. just into when us we're challenging and the build play market prioritizations we and very at this our because plans our confident remain are it's online been different chains But

Got there. it. leave it I'll Thanks.

Company. question. from go next question Our comes & your from ahead Please Matson Mike Needham with

growth this still of as business -- mainly is on see some happen supply given chain, in But seems ask Yes. point? that I without give my yet, for to taking about for for you Healthcare. sort don't Good -- one time you that some guess. understand above-normal of because above-normal morning. I I didn't questions. 'XX growth -- guidance potential it want there Thanks to but catch and the to year I to want not you you kind Healthcare backlog the backlog, of up and in just frame, the expected like backlog just the specifying at a guess,

I point, this we're some defining mean, not at what time. I would and -- that point yes, at

our not improvement shipments not to to into planning quarter believe as we we we look capital But backlog have half of a things deliver the that that. year. in lead that would are continue of look in have yet we our first and as we're and disproportionate that done to the currently. We improving out will expect we believe And that that one fiscal next we capital amount modeled on sequential in in the year,

level your mean, that's price more points. that's one-year got a like, -- place, the back it of I'm about everything some and while, legs kind for something as asking of for that to specific No, then but a of the Is kind that continue in see contracting that with it is could like as 'XX, mean, And levels? I to of for without and I to, pricing then bump that far a goes normal increases. is XXX higher I wondering sustainability basis understand. just Again, number just good or

pressures. sense and largely pricing still done I we through margins something happens always what is extent determined so happen competitive we our order and to makes continues push to remain it that's marketplace, and to that think in need that the To with at we'll have protect or do by consistently that STERIS. to do the in inflationary

final the Okay, got on it. AST And then just business. question, my

Just about happened what's any specifically, but given the seen what's any you happened them? on with not them seen I'm your there see asking all I have primary your just everything, with and wanted litigation competitor -- away business to the you've because from EO or of with kind impact any of movement litigation if

situation wouldn't U.S. the the pretty relates I capacity current to say so. it especially in is No, is here as the industry tight, oxide the I mean, in ethylene

So, we that. little across share more have strong do we and can striving we're of to a wallet wherever take always partners medtech,

Okay, got it. Thank you.

from Our next question. go Please Sandler. ahead comes Jason question with Bednar Piper your from

Thanks Hi, for questions. taking good morning. our

that are time First I'll understandably control, maybe wanted and up seen this. things some seen around But we've I of guidance stab second take come in is a follow lot this your in quarters at guidance this questions that question back we've year. your but is where the on here to lowered. three A outside earlier, different control, Mishan's Matt one, to guidance.

through but next guess, should as on then work puts a particularly the I any I considering equipment just early few guess, And we for side? have fiscal year, help what we sitting just this away for So, learnings say your year from that that set fiscal taken guidance, you how a since we're months can few 'XX inform can I from know others you've be asked, models you outlook 'XX? our takes and

comment, Mike well. a I'll as add then few make let and I'll comments Jason, one Yes,

our backlog. guidance point supply the came up in bad we had at in network. we're our awfully we and in into And that tripped to did our under just chain -- the And QX. an it we COVID -- pretty well supply we relative really with manufacturing across got our when some large vulnerabilities impression, because think and planning navigated chains incredibly got year we exposed I

What more that a next focus much having now believe I have supply much a I better and those more chains strategic much is can resilient better managing and lot and into you forward tell and eye carry we're on resiliency, will a year. we

a roll and with little optimistic cautiously you quickly will that, said metered large of be I to in how the year a that little having think need because more our a just Now, into we more shift. backlog, expectations

Yes.

end I think thing again, that And the going have so seen particular. in that in standpoint, was from the other in obviously, is surgical But favorability procedure anticipated volume improvement year. was how be everybody we much is knows although higher some playing out, U.S. to there QX we many a this just pieces the norm the point, facts of fourth that think moving Dan's for work And in conservative with outlook conservatism is to here. we we is based that us, to the have nature, put year. upon out quarter believe day throughout at and continue I a the the the we for

right. hear. All that's to and Very good helpful,

Okay. But cut. Then free just versus is $XXX from we're saw million. implied some million think, I much that we numbers reduction. what's I the mean, EPS round I flow. maybe cash one than $XXX pretty know sizable drop a on bigger talking, the here,

And that collections capital then does running you around as next some inventory cash lower. bucket year, those comments reverse lower? flow two? Mike, start running higher, for thinking working we towards there work think, could Maybe does I receivable you free mentioned

back million. anticipated year, the $XXX in bucket receivables obviously, and And that we're flow. inventory that I And Inventory I we if remaining to to say down go would $XXX beginning million two-thirds, cash Yes. the though, about one-third. of elevated. is free we would

Obviously, carrying are have quarters. to been couple at as talked we more the as last ship inventory, rates we've times we not the able anticipated, we many of

slots. fill We our continue to manufacturing

screw. building, remains product come, But that it. So screw golden we're we doesn't ship that that building, for golden in building, until inventory waiting

to continued be has inventory So, elevated.

collections. then It's on our inability it's to not the And timing receivables of side, just the collect.

just a DSO about have have under we XX-day that collection. We

earlier shipping the quarter, So, originally, pushes That quarter. or shifted we first product in the fourth third to has the more into quarter. collections which anticipated

issue. So, free just more a of cash It's flow timing isn't lost.

I'll queue. Okay. much. in All Thanks back Makes sense. right. hop so

question Please [Operator comes Instructions] from Our your Research. go Michael Polark Wolfe ahead question. from next with

morning. in some AST Dan, bioprocess I and Thank put and the good follow mentioned trying together Hi, on you. earlier to that to you want math, Q&A. up

of that So, growth at one as would heard it contributing I XX% was interpret high-double to I to digits, XX%. X.X ago, points point, segment. the been long points not growing it's to also which X

I a those as is question data The two together, and put So, ballpark? that AST portion of if -- is a Is bioprocess points XX%. total

you're ballpark. slightly less, but range. Maybe Yes, in the

Okay. now, $XX near calling were is this while the now at million The recent I the a I also of -- follow-up you this of numbers from out quarter. year-ago annualizing you're It's quarter-to-quarter. been and million it $XX acquisition. interpret slippage this $XX you're Mevex in or had a revenue as quarter. I lumpy was in Mevex AST. out million The would slippage, quarter, And in calling zero the which know

in So, the this is, headwind year-on-year? the revenue what line equipment AST is question from

Yes.

million Mike. Mevex. But million Your the somewhere exactly right, $XX for And total, you're full for math is year It right. yes, we're in near zero. and about between $XX was

quarter, $XX much lumpy, fourth now more from to twice It is shipping has predictable been Mevex quarter. And the in full us, us has flipped quarter AST is I hurt that million issues. the unfortunately. past third the again, it's timing. but So, for one that with know

But the you're biopharma in AST. issues, add the the you for processing, somewhere to you back Mevex if low-teens growth take shipping

think, I everybody's it's hasn't So, is timing changed standpoint. that concern, but the trajectory from dramatically, the the

Yes.

systems come to and of build the install. complicated they're anywhere and million, we place to those to can lots or in Mevex have add with we And before from systems. Mike, and control systems million be customers $X conveyance can million that, electronics our large infrastructure on $X to for Just $XX rely

delays in scope just and construction. sometimes, change there's there's in sometimes And

Ultimately, to can in much top as when of project deliver. it stay it's to our of on customer try manage. it's help we hands So, and as the we as

ask hop two have I back come a for guess that do I'll more, I and me. but few in in. back -- queue maybe I would and

So, thank you.

welcome. You're

follow-up is next question Please our Matthew KeyBanc. Mishan And from a your ahead go with from question.

there, You Matt?

that. to we're some this going call. follow-ups on guess, be I about doing sorry Yes,

Just first you there in lagging the that's digit it's of declining it on digit, even of bit a destocking quarters been consumables, low-single low-single a like Kind or kind the consumables? saw, growth of couple has ago. as pure Is flat to or -- on sense been hospital little of inventory volumes, well? your maybe some going of what's your of

heavy, think They don't it's lot hold a of it's volume-driven. lot bulky. this, it's space. takes up of a I procedural It because purely

excess of. a So, something it's of would lot inventory not that carry

it is others? in lagging Surgical, or And the is versus business Key be of board may Cantel, from little the that bit across there pieces STERIS, a core mix change of

particular that's in a But into of stratification it it's not any or one piece the another. this. really one end, get can driving really complex You way

I say mix terms procedure speaking, It's So, products, it's obviously, it's a our But have of all more a exposure in rates. wouldn't demand. we procedurally-driven procedures to endoscopy certain generally where truly procedure-driven, endoscopy issue. with little

-- Okay. And then

XX% other lot companies. know healthcare right, are Matt, what compared We're heavy we you a in of we do. guys to U.S. U.S.,

have impact on So, the the trends our biggest here performance.

-- be because through that my capacity some fill AST the shortage would in growth some for And with AST, the like there's guess could you does sense quickly this slower I fairly back then if to and mean, -- open industry. bioprocessing? I

running single-use of product really, ethylene out lot phenomena And is, real Yes. there's up especially come shortage. backlog, in Well, typical in run the we all in technologies would bioprocessing a for our to oxide, starve in where AST, keep seasons, plants. so the mind, not a year we're significant we if only holiday with as radiation,

So, to up and or down either the it because you see do to production, before longer we'd up a start they've week Christmas in day you their time customers early a chain takes end down supply starving it out, shut shut January. start you because factories or flow two

on case ran of XXX. we've demand at the a years, bioprocessing last of we of backlog In number through much XX/X, the that so the been straight our couple plants holidays, sitting in

because doing case; model straight that this it's AST. not year's drop-through the at of fixed So, basically in cost high

balance of you've capital And generated I'm the course Mike, then, looks this Okay. like up? balance debt if down with debt gone of right, through cash build. pay year, working has the I expense? why even why -- it sheet, -- Why that the lower looking to interest not some flow the at the guess, And

Yes.

reasons. continued fulfill up went balance during tuck-ins debt the the did And acquisitions, we primarily for repurchases. share So, for quarter. minor two offset our paid for we cash One, we some some that dilution then to

EO situation. the we were facing opportunistic And the overhang the then we due to also were during the on with quarter share repurchase just side that

in the acquisitions. to repurchases and on another million $XX million $XX in million $XX of then quarter spent for about total, we So, share cost

did So, $XX X.X a just that still main within off of are debt. during which We profile private we the million. those two note drivers that about was pay We quarter was comfortable the We're times. our are very placement that ratio in. are over changed leverage the due,

fixed So, we just it floating. actually borrowed -- versus was

So, our just interest tiny rate ticked up a bit.

interest X%, sit as is here average rate we just today. Our under

your how for then share left repurchase? much And is authorization on

under the authorization. remains million $XXX current About

very Okay. Thank much. you

You're welcome, Matt.

And Polark Michael your follow-up. also with follow-up our go a next from Wolfe question ahead from Please Research. is

you. thank Hi,

chain the new orders, -- your has supply business? kind the for fully you strains, Just your chain supply new competing given two. bid of Healthcare or In are challenges for impacted capital, ability to

to business portion And significant have of then way. that the it generally replacement, this already think of got replacement you the we in marketplace. our portion a is largely And of These competing. other long-term that's placed fully still and We're -- equipment projects. are is

have unit, system. work service replace customer term through tend we replacement a contracts can we our of be we with until that to that in a arrangements for able to with longer and delivery if So, new service terms the and manage

acquisitions even minor, the small bridge we that the year flag revenue Makes there? sense. that in so? consider and quarter, we revenue over any And segments Thank one. work -- or few the next you. what any In business for our if The anything to last should

We called in markets really those where for no really we're there's a some to change revenue small distributor, direct to and example, out Healthcare in AST buying night, in the Mike, go former but last choosing the to Q some out opportunistically. cases, company, deals

Okay. much. Thank you so

for question-and-answer closing remarks. the we'll and gentlemen, ladies I'd to floor today's turn session. with And like that, back any Julie concluding to Winter be over

the this taking time happy to me I'll know, let morning. would accommodate like join to best be If to Take you. to and do care. my for anyone everybody, please Thanks, us chat, still