Good afternoon, everyone, and welcome to the webcast of ATEC's Second Quarter Financial Results. We would like to remind everyone that participants on the call will make forward-looking statements. These statements are based on current expectations and are subject to uncertainties that could cause actual results to differ materially.

These uncertainties are detailed in documents filed regularly with the SEC. During this call, you may hear the Company refer to reported amounts, which are in accordance with U.S. GAAP as well as non-GAAP or pro forma measures. Reconciliations of non-GAAP measures to U.S.

GAAP can be found in the supplemental financial tables included in the press release, which identify and quantify all excluded items and provide management's view of why this information is useful to investors. Leading today's call will be ATEC's Chairman and CEO, Pat Miles; and CFO, Todd Koning. Now, I will turn the call over to Pat Miles.

Please go ahead..

Thanks, Audra, and welcome to the Q2 2022 financial results call. There will be some forward-looking statements. So if you review that at your leisure, we will be providing a forward view. So I'd say, a very good second quarter finished at a total revenue of $84 million for the quarter, which is a 35% year-over-year growth.

I would say that the procedural investment thesis is working. And so we're scaling top line growth toward positive adjusted EBITDA in 2023, training surgeons on PTP. There's a lot of them. There's big demand. We believe PTP is the next-generation lateral surgery.

We're expanding indications with new product launches, reflecting our information-based competitive advantage in clinical publications, and we'll hit on that, extending EOS' influence while leveraging new hospital access. So we're getting more hospitals and more access.

And so we want to take a minute and just make sure that there's great clarity with regard to the procedural investment thesis.

And so the way that we look at the world is we try to align with surgeons and surgeons don't think in terms of implants or widgets, since implants and widgets are the currency of the business, I think, oftentimes they are industry's priorities.

But when surgeons think in terms of treating patients, they think of procedures, what procedural intervention will work best on a specific patient in respective pathology. What are the unique requirements, what procedure most predictably creates a sustained successful long-term outcome for a patient.

And so many companies talk about procedures, but few have gone beyond really kind of implant and retractor design and development. And what we've done is really design and develop procedures based upon the unique requirements for each approach.

For instance, if you're going to design a system for prone lateral surgery, it's been demonstrated that you need to have a comprehensive automated neurophysiology system like SafeOp. You need to have a patient positioner. You need to have a specifically designed retractor. Additionally, we've invested in imaging technology.

This assists surgeons to better understand unique patient requirements. We believe these efforts create a higher likelihood for predictability. And so when you're investing in predictability, these are the things that we believe to be really most important. And the nemesis of spine surgery is the volume of variables you're trying to control.

So surgeons choose ATEC because we architect comprehensive procedures that obviate clinical variability. So the reason that we think ATEC grows faster, and we think our growth is sustainable over a long period of time is that surgeons very much understand and buy into what we are building.

They know we're best positioned really to deliver that clinical predictability. And what drives predictability is planning, not only planning but execution. And I think there's been a bunch of literature on this. And I want to go over it a little bit. And surgical planning is really a big deal.

And it's much more than when a lot of companies talk about planning, they're talking about planning screw trajectory. And just like spine surgery is a heck of lot more than screw placement, planning is much more than planning screw trajectory. It's part of it, but it's not what drives long-term successful patient outcomes.

Planning includes picking the right patient and knowing you can achieve the goals of surgery, which is decompression, stabilization and alignment. And surgeons want to know what are the unique requirements they need to deal with, with regard to a specific intervention.

If they're going to stabilize the patient, it'd be nice to know what the bone quality is. And EOS will give you that information. And so then you start to think about alignment planning. It's important to have standardization like a standing wave-baring full body image. That should really be a requirement as it relates to the planning process.

And the surgeon needs to see a patient in a standing active position. This is how they can determine if a patient is compensating, if a patient's bending their needs or retroverting their hips. Imagine that it's the whole body that they need to see when they plan a surgery. Something you won't see in a short X-ray or when a patient is lying down.

Other companies are not investing in these type of diagnostics. So they're going to struggle to have a comprehensive plan. Over time, predictive analytics will let us understand a reciprocal change.

And what reciprocal change means is that if a surgeon fuses certain spine segment, they need to understand how they change the mechanics of the entirety of the spine and how it affects other levels, and not just through Gestalt, but the ability to know that before they intervene. Today, surgeons don't know that.

And so we will have objective imaging data to help surgeons make better decisions for patients. And again, we think that that's a big deal. So you combine a very comprehensive surgical planning with a fully thought out procedure, and that begets predictability.

And so we believe that combining specifically designed, comprehensive solutions with the use of computer-assisted tools able to integrate several parameters and learn from the experience can change the way -- can change the traditional way of selecting treatment pathways.

So we think that this is a very big deal, and we think it completely sets us up uniquely. And so changing gears a little bit.

I just want to make sure everybody totally got that because I think that the people interject surgical planning for much less than how we've committed to the depth of doing it in a way that's profoundly unique and better for patients in the long run. So anyway, I'll get off my soap box and get to the organic scorecard for Q2 of 2022.

So I think it's a validation of what we're doing. So year-over-year organic revenue growth at 30%. This is our 13th consecutive quarter of greater than 20% revenue growth, except for the Q2 pandemic quarter in 2020; 17% year-over-year growth in procedure volume; 23% year-over-year growth in surgeon users.

So more surgeons coming our direction, which we love. A 10% year-over-year growth in average revenue per case. That would suggest more products per case, which is a 2.2 blended average, which is growing. And so more complexity, more cases. And so our commitments are not going to change. We're going to continue to create clinical distinction.

We're going to unleash the Company that revolutionizing spine surgery and extend our information-based advantage. We're going to continue to compel adoption from surgeons, expand our procedure utilization and really earn loyalty by furthering clinical predictability. And there's a lot going on that I'll get into with the sales force.

We're going to continue to elevate the sales force and begin to lever these investments made to increase the clinical aptitude in the footprint. And so let's take a look at a few accomplishments from a scorecard on creating clinical distinction. We're likely from a market share perspective around 2.5%. I take that to mean we have 97.5% to go.

We launched four products on course to the 8 to 10 a year. The pipeline for EOS has grown since acquisition by 40%, and the largest contributor to our growth continues to be lateral surgery, which is the way that we intended it. And so we had another record number of surgeon visits in Q2, and it's because of the interest in PTP.

We truly have unmatched sophistication and know-how. You have somebody like Dr.Pimenta and the PTP group of surgeons who really popularized and architected this surgery and surgeons want to come and learn from the most experienced. And so that is without question.

And to that end, we hosted greater than 65 surgeons at a PTP Summit as well as the Duke Emory Interior Column Conference. And that's independent of the greater than 150 who came out to be trained on PTP in the quarter. And so I would tell you this is a very active place and our surgeon education group is exceedingly busy.

The other thing that's been fun is just, I would tell you, a competency of the group is applying our learnings and some of the learnings around PTP will be integrated in terms of what we do with regard to our Lateral Transpsoas Surgery. So applying our learnings is something that we love to do.

We're also seeing more utilization in complex surgery, and it's starting to be fun to be able to see 19 peer-reviewed publications that further validate the clinical thesis for PTP. So one such publication was a study of SSEP monitoring for femoral nerve health during PTP. This is an example of designing a procedure from the ground up.

If there's a documented risk of femoral nerve complication in lateral surgery, our view is that you should develop a technology that detects it, so as to avoid it. So when you start to think about proceduralization, this is a foundational requirement. It's not a retractor and an implant. It's technology that ultimately assist the surgeon.

The study showed that SafeOp automated SSEP enables actionable nerve health monitoring. The historical challenge for gathering SSEPs has been these are very, very small signals and capturing has been difficult.

And so we're able to capture the signals through amplification and then provide real-time actionable information through providing a moving average.

And so the way the SafeOp does this is that, again, it amplifies the small signal, provides the information real time, and it takes -- and the computer takes predefined parameters and classifies the waveform.

So a very predictable automated tool that ultimately makes for safer surgery, which, again, we think is a foundational requirement for doing things in a sophisticated way. So getting to the EOS scorecard, it's -- I still have yet to meet a surgeon who doesn't want EOS.

It's really doing what we intended, which is providing cross-selling opportunities and hospital access. So Q2 revenue was $12 million. Pro forma revenue growth was around 49%.

There's approximately 450 EOS units installed and 40% growth in pipeline since the acquisition closed, as I previously stated, and it's the highest unit order since acquisition closed. So EOS will just continue to expand our information-based competitive advantage.

I was with our marketing and engineering team yesterday, Mike Aaron, and Avi, and they were just showing me some of the images that have come into the portal. And it's -- I can't tell you how exciting it is to start to see and understand the type of thing that comes over the World Wide Web in terms of into the cloud portal.

And just to continue to see the building of our informatics system with regard to live imaging and just the ability to use that information clinically, use it operationally and use it economically is very, very apparent to us and again, I just can't be more excited about what we're doing from an EOS perspective.

Our second commitment is really around compelling surgeon adoption, and it's clearly happening. I think 23% growth in surgeon user base year-over-year. I think I stated at greater than 150 surgeon attendees at training events, 10% year-over-year growth in average revenue per case.

So more complexity, more products and then more product categories per surgery as well. We believe this is reflected by into our clinical thesis meaning the products per surgery and the number of products per surgery is that reflection, and we think this is a great way to really reflect the buy. And it continues to rise.

And I think things like PTP continue to lead the way. I think lastly, but surely not least is what we're doing in the field with regard to our sales force. Some companies are growing by adding distributors. We're growing by both increase increasing revenue in established territories.

Think of it really as same-store sales at a year-over-year rate of 25%. Again, these are objective elements that reflect the buy into what we're doing. So not only are we driving revenue by creating bigger businesses, we're also doing it through adding new distributors as well. 34% of our territories are larger than $5 million.

And I state that because I so vividly recall years ago when we talked about getting to $200 million, and we said, gosh, there's going to be approximately 50 agents doing $4 million. I would tell you that, that's more than happened, and it's going to continue to more than happen.

And so clearly, that's happened, and we continue to compel adoption and it's somewhat undeniable. We also see an increase in average case revenue which is really a reflection of confidence.

And we always talk about creating confidence based upon clinical aptitude, and that seems to be going on based upon seeing some of the demographics associated with increased case revenue. So anyway, we're doing this while we elevate the clinical aptitude in our sales force in a footprint that is still under or unrepresented.

And so from our view, opportunity abounds. And with that, I will turn it over to Todd..

Well, thank you, Pat, and good afternoon, everyone. So I'll begin with revenue. Second quarter revenue was $84 million, reflecting 35% growth over the prior year and a 19% improvement compared to the first quarter of 2022. The $84 million in revenue is comprised of $72 million in organic revenue and $12 million of EOS-related revenue.

Second quarter organic revenue of $72 million increased 30% compared to the prior year, which is probably our most difficult quarterly comp given the very strong performance in Q2 of 2021. Year-over-year volume growth of 17% was driven by the continued expansion of surgeon adoption with surgeon users increasing 23% compared to last year.

Much of that growth is coming from established sales agencies, with at least one year of tenure. That cohort achieved 25% growth in the quarter, demonstrating durable sales growth from our most tenured agents.

Average revenue per case expanded 10% year-over-year as revenue mix continues to shift toward procedures that feature more products per case and procedures with greater complexity. Strength was portfolio-wide, with lateral biologics and ALIF all contributing significantly to the growth this quarter.

EOS deliveries in that quarter were solid, driving $12 million in EOS-related revenue and growing 93% compared to the Q2 of 2021 and on a pro forma basis, growing 49%.

As a reminder, the transaction closed in May of last year and we've continued to make progress with the integration, showing strong revenue, achieved the highest number of orders in any quarter, and are seeing improvements in the time required to install new orders.

Continuing through the remainder of the P&L, second quarter non-GAAP gross margin was 70%.

Down 320 basis points compared to the prior year, just under half of the year-over-year decline or about 150 basis points in gross margin was mix related due to the consolidation of EOS Imaging, which had a lower gross margin profile than our spinal implant business.

Second is an increase in biologics revenue mix as we are seeing biologics attach rate increase significantly. Biologics comes at a meaningfully lower margin profile in overall business, and this contributing about 80 bps of pressure year-over-year.

Finally, increased EOS service costs as we address the backlog of service calls created during the COVID-19 pandemic contributing about 40 basis points of pressure. Our expectation is that the margin headwinds outlined above will persist through the back half of the year.

Operating expense in the second quarter demonstrated leverage while continuing to thoughtfully invest in long-term, sector leading growth. Second quarter non-GAAP R&D was $9 million and approximately 11% of sales, 50 basis points lower than prior year.

The increase on an absolute dollar basis was driven by continued investment to support organic portfolio expansion and the advancement of the EOS platform. Non-GAAP SG&A was $65 million and approximately 78% of sales in the second quarter compared to $50 million and approximately 80% of sales in the prior year period.

This reflects continued investments in the expansion and training of the ATEC sales network, surgeon education and support for the increasing size and sophistication of the Company. We delivered 260 basis points of improvement on a percent of sales basis. This speaks to the leverage we have begun to deliver as our business scales.

Total non-GAAP operating expense amounted to $75 million and approximately 89% of the sales in the second quarter compared to $57 million and 92% of sales in the prior year period, delivering a total of 320 basis points of operating leverage year-over-year.

I'd also like to highlight the fact that we delivered 910 basis points of leverage sequentially. Adjusted EBITDA was a loss of $8 million and approximately 10% of sales in the second quarter compared to a $7 million loss and 11% of sales in the prior year period, an improvement of 80 basis points as a percent of sales.

Sequentially, we saw $3 million or 570 basis points of improvement driven by 910 basis points of operating leverage, partially offset by gross margin.

As sales growth drives leverage across our business, we continue to expect adjusted EBITDA for the full year 2022 to improve approximately 400 basis points as a percent of sales relative to the 12% we saw in 2021. Now to the balance sheet. We ended the second quarter with $107 million in cash.

Operating cash use was $40 million, which consisted with previous quarters and was predominantly related to investments in inventory and instruments to support our expanding distribution footprint and new product launches.

Included in Q2 operating cash was approximately $10 million in onetime legal spend, which if excluded, would bring cash use to approximately $30 million. During the quarter, we settled two lawsuits, including the patent lawsuit originally filed by NuVasive in early 2018.

While the specific terms of each settlement are confidential, they are fully resolved multiple future royalty obligations. We are pleased to have put both disputes behind us.

With asset leverage and a more favorable full year adjusted EBITDA, we expect cash use this year to meaningfully improve relative to last year, consistent with our long-term plan. Debt at carrying value is $336 million, which includes $316 million of a convertible debt.

We also recently signed a term sheet for a [$15 million] revolver with a $25 million accordion feature, which coupled with convertible debt offering place last year will support our baseline investment plans toward cash flow breakeven in 2025. We expect to have the revolver in place by the end of this quarter.

Our outlook for the full year 2022, we now expect full year 2022 will approximate $325 million, representing growth of 34% compared to 2021. We now expect full year 2022 organic revenue to approximate $277 million compared to $269 million previously.

Updated expectations for growth of 31% compared to 2021 contemplate the strength of performance in the first half and the momentum with which we have entered the third quarter. We now expect related revenue of approximately $48 million for the full year 2022 compared to $47 million previously.

Updated guidance for EOS reflects the strong execution-driven Q2 results. So let me frame up updated ATEC organic revenue guidance with our expectations for procedure volume growth and the expansion of average revenue per surgery.

We are raising full year organic revenue guidance due to increased expectations for volume growth, which is driven by expanding surgeon adoption and increasing geographic penetration. We've achieved solid momentum in procedure volumes in the first half of 2022, including 17% in the second quarter.

As a result, we now expect procedure volumes to grow at a high teens rate for the full year compared to the mid-teens percent rate we anticipated previously. Average revenue per surgery grows as our procedural mix shift toward procedures like PTP and LTP, which have higher revenue per procedure than our overall average.

Our procedural solutions are also being utilized in surgeries with greater complexity, which require more products per surgery and in turn generate higher ASPs.

Finally, the level of distinction engineered into ATEC approaches and the cadence of new product launches generally enable us to command a price premium, and we continue to anticipate a high single digit percent of rate of expansion for the full year.

As most of you know, our guidance philosophy is to be thoughtful and prudent about how we set expectations by putting numbers out there that we believe we can achieve and have a reasonable opportunity to exceed.

In closing, we have built a business capable of driving sustained sector leading growth, with scale that revenue growth affords is shifting ATEC toward a new phase of business growth, a phase characterized by consistent operating leverage improvement and ultimately, an inflection to free cash flow generation.

Our procedural investment thesis is earning surgeon confidence and enabling us to methodically execute to plan. We know that through continued solid financial performance, we are earning your confidence too. We have an active IR calendar over the next few months, including the NASS conference, and I hope to be able to connect with you.

With that, I'll turn the call back over to Pat..

Thanks much, Todd. I think if you look at really what we're doing is that we're in the middle of our share earnings strategy. And that means several things. It means PTP is taking share, and that means that we're earning more lateral -- traditional lateral surgeons as well as TLIF and PLIF-type surgeons, guys who were traditionally posterior approach.

As well as we're seeing it applied to more complex cases. And it's perfectly well suited. We're seeing a fair amount done in the ambulatory surgery centers. This confidence is creating a halo effect that impacts the rest of our portfolio. They have a fantastic portfolio that gets applied based upon the -- oftentimes the entry via PTP.

Our sales channel is getting better and so that speaks to further confidence in earning share, and we're dipping our toe into the international business in a narrow but deep way. And I think we've defined that in previous calls and that remains very consistent.

And so we also intend to capture the greater than $2 billion EOS opportunity and hopefully try to lay out a little bit about what we mean by creating predictability through a planning effort today. And so thrilled to death with regard to our ability to uniquely have that information that's going to drive better surgery.

And we think that it will reflect in just the consistency by which we perform.

And so our commitment that we made at the -- our Investor Day out here at ATEC of a 2025 being $555 million, which reflects a 23% CAGR and a $80 million EBITDA, adjusted EBITDA breakeven in 2023 and a perpetuation of a disciplined investment that we'll deliver cash flow breakeven without the additional dilutive capital. And so excited about that.

So our opportunity to address the need for predictability and reproducibility is massive. What is the nemesis of spine is the volume of variables that you have to control. And so we know that spine surgery needs ATEC. So with that, we will take questions..

[Operator Instructions] And we'll go first to Josh Jennings at Cowen..

This is Eric on for Josh. I appreciate all the details you guys shared around volume growth expectations for the remainder of the year. I was just wondering if you could help us understand the recent procedure volume trends that you've observed to date that underpin those assumptions.

What sort of month-to-month or month-over-month improvement have you seen through June, July and now into August?.

Really, when you look at our volume growth, 17% in the quarter, I don't think we're going to get into the nitty-gritty of month-to-month. But I can tell you that we exited the quarter and entered the third quarter with kind of the same level of momentum that we saw in the second quarter.

So we definitely saw an improvement sequentially from Q1 to Q2 in terms of volume growth. The year-over-year volume growth continued to remain strong, and I think we're -- it's really on that basis that we raised our guidance the way we did really on the back of incremental unit volume growth..

We'll go next to Mathew Blackman at Stifel..

This is Colin on for Matt. Just one on EOS.

Appreciating the pressures hospitals are facing given the challenging CapEx backdrop, could you walk us through how these dynamics really affected EOS placements in the quarter and how that factors into the raised EOS guidance as well?.

I'll let Todd take the guidance one, but we're so early in the whole EOS opportunity of worldwide hospital interest and there's so many different ways to acquire this system. I don't candidly see, right now, a huge headwind.

And we're such a small player and the volume of units we need to place to be relevant is such that we're not kind of as appreciative of the macro dynamics. That being said, I think people hold onto cash.

But again, I think what we're doing is our ability to gain access to an institution with regard to ways to rebate against implant provides hospitals access to the technology while perpetuating a relatively [indiscernible]. And so that's kind of how we see it from kind of an operational perspective, but I'll pass it on to Todd for a financial view..

Completely. And Colin, I think what we saw was a [indiscernible] number of orders in the quarters [indiscernible] record. So I guess we didn't really see a headwind from that perspective. And so I think we're very pleased with where we're at in terms of the number of orders in the period.

And as it relates to the guidance, really, what we did was we kind of dropped the beat and held the second half on EOS. Overall guidance was raised $9 million. We beat by about $6 million in the quarter. $5 million of that being in organic and $1 million of that being in EOS. And so we've really raised in the second half, $3 million organic.

And so that's really how you should kind of read through our guidance and the performance in the quarter..

We'll take our next question from Gibran Ahmed at Canaccord..

This is Gibran on for Kyle. Maybe just to dig in a little bit further on EOS. Just curious in terms of what you're seeing between a purchase and an earnout dynamic if you're relatively sort of agnostic to the 2.

And then secondarily, with the broadened hospital access, just how deep is some of that cross-sell and pull through opportunity in these early innings? Maybe just trying to get a sense of, obviously, the opportunity is quite wide, but how deep are you getting at some of these initial accounts and initial [indiscernible]?.

I would tell you that it's early goings. The vast majority of sales we have today are outright purchases. The interesting part is we're getting outright purchases in private surgeon offices and groups right now as well. And so I think what we're seeing is a place like Texas Back entered into a use-based type rebate agreement.

And so the great part is, is the volume for those types of things has been what we intended it to be. And so we're [indiscernible] agnostic, as you say. And also, I think you did a good job of framing the question, which is it's the early innings. But in the quarter, we saw places like Real Cornell, OrthoIndy.

OrthoIndy is like the perfect example of a place that needs it both from a spine and a total joint utility perspective. Also, Hogue here in Southern Cal. And so the places -- that's just a few of them -- are really a who's who.

And again, back years ago when we had a challenge getting access to some of these institutions based upon this being a previously broken company, this is such a great way in if you will. So anyway, probably more than you intended to get from me, but just a little bit of color..

Yes. And I think I'd add to that. Over time, we'll be able to measure after you place these units. We can measure the impact on increased volume from places where we hadn't been. That will kind of happen after we place the unit.

But what's nice to know is that the leading indicator here is that these units we're getting orders for where we don't have access with the order, we're getting the access. And that's the leading indicator in why we have confidence that the value thesis is manifesting itself..

And we'll go next to David Saxon at Needham and Company..

This is Joseph on for David. Just wondering if you guys could give us the cadence into next year for cash burn and potential EBITDA break even next year..

I think as we laid out in our Investor Day in May 2023 is expected to be cash flow breakeven and 2023 -- or excuse me, adjusted EBITDA breakeven. 2023's cash burn will be certainly lower than this year. And so I think I think we're a bit early to put a number on it, but we're certainly going to improve.

But the key here is getting our adjusted EBITDA improving and breaking even next year.

And I think what gives me confidence is our sequential improvement here in the second quarter, where we saw a pretty significant improvement both in dollars but in terms of the percentage leverage that we saw from Q1 to Q2 and our confidence in the ability to see continued improvements throughout the year to achieve really the commitments that we laid out from long term plan standpoint.

And so I view our second quarter performance here as completely consistent with our expectations relative to what we laid out in our long-term plan..

And we'll go next to Amit Hazan at Goldman Sachs..

This is Phil on for Amit. Kind of an overarching question trying to understand -- I realize you're still pretty nascent in a lot of the accounts that you're in, but staffing challenges and issues related to COVID still amounted to materiality for a lot of other companies that are more mature in nature.

And so I'm just wondering what are you seeing in the environment? And basically, the question is, do you feel like you would be growing faster if conditions were slightly different right now and enabling kind of the top end to continue to grow faster?.

It's kind of interesting. I don't think the environment that we participate is any different than anybody else. I don't care how big the Company is. There still tend to be the ebbs and flows. I think the difference is there's a share-taking dynamic going on that is very apparent. And so what we're doing is we're growing through it.

I think that your point is the right one, which is we'd be growing faster if there was more predictability associated with the environment that we're participating in. But everybody has got the same dynamics..

And we'll go next to Phillip Dantoin of Piper Sandler..

This is Phil on for Matt. Just to ask a quick one.

Is there any update on the OUS front following your first PTP in New Zealand in the first quarter?.

Thanks, Phil. As you appreciate, this is a one by one by one by one business. And so we celebrated our PTP in New Zealand. And so not much of an update. We have like a great team in place in Australia [indiscernible] we're not in yet, but the Australia, New Zealand team is really kind of outstanding.

We have a very high class opportunity in those two places. We can't wait to be able to get into Japan here in the coming years, probably '24 is what we're looking at. And then you have maybe the U.K. and maybe Brazil, but like we're going to stay narrow and deep. But really not a heck of a lot to communicate.

We're still just getting going down there and clearly a fair amount of ebbs and flows in that part of the world, but hugely excited about what's going on. We have the right leadership in place here and down there for the opportunity..

And we'll go to Amit Hazan at Goldman Sachs..

It's Phil Thanks for taking the follow-up. I don't believe I heard during the gross margin commentary, a comment on inflationary pressures and input, kind of product costs.

So I was just wondering if that's something that you're seeing, especially peak resin prices up so much, if you're having any difficulty with availability or costs are notably elevated..

Yes. So we're definitely not seeing issues with availability. I mean -- but from a cost standpoint, I mean, there is some cost pressure baked in there.

I think when I look and kind of enumerated the big items, I think those are the major items that we've seen, but we're not immune to the cost pressures that everybody else is seeing out there from an inflation standpoint. And we're working through those.

And I think, again, what's different from us is we are growing through some of those things, and that kind of helps us overall. But they definitely are there, and we're working to navigate them..

And that does conclude today's question-and-answer session and today's webcast. Thank you for your participation. You may now disconnect..