Sharps Compliance Corp.
Q1 2022 Earnings Call Transcript

Published: 27 Oct 2021

[Operator:]

Good morning, ladies and gentlemen. And welcome to the Sharps Compliance First Quarter 2022 Earnings Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Jen Belodeau. Ma'am, the floor is yours.

[Jen Belodeau:]

Thank you. Good morning and welcome to the Sharps Compliance first quarter fiscal 2022 earnings call. On the call today we have David P. Tusa, the Company's President and Chief Executive Officer; and Diana P. Diaz, Executive Vice President and Chief Financial Officer. David will review the company's business performance, operations and outlook, while Diana will review the financials. Immediately following the formal remarks, we will take questions from our call participants. As you're aware, we may make some forward-looking statements during the formal presentation and in the question-and-answer portion of this teleconference. These statements apply to future events, which are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from where we are today. These factors are outlined in our earnings release, as well as in documents filed by the company with the Securities and Exchange Commission. These can be found at our Web site or at sec.gov. So, with that out of the way, let me turn the call over to David to begin the review. Please go ahead, David.

[David Tusa:]

Alright. Thank you, Jen. And good morning, everyone and thank you for participating in the first quarter earnings call. So, let's just jump right into to review the first quarter and then we're going to talk about the business outlook as well. First quarter results were in line with our expectations. Now, they did reflect slower immunization revenue for September, for the September quarter versus the preceding sequential quarters. Just to provide some context, the margin at adjoining quarters for immunization business were about $27.9 million in billings, $24.6 million in revenue. In the September quarter, immunization orders were about $1.8 million and June rated about $3.1 million mailback revenue. And again consistent with the slower immunization that were administered in the country for the September quarter. On the route-based business, we had a bit of a tough comp when you looked at the year-over-year the prior year included increased volumes from the long-term care market which were driven by COVID, labs and also labs performing COVID related testing. Additionally, in our first quarter, our haz waste billings were down, there were delayed pickups resulting from industry-wide limited third party haz waste incinerations. So, those added up to about $500,000 of a negative headwind. And when you take up those three items, the route-based business increased by about 19%. Further supporting that is the increase in our customer location. They increased from the June quarter to the September quarter for 14.2 to 16.0 -- I'm sorry, 14,200 to 16,600 which is a 17% increase in customer locations. We've talked about end use medications for the last couple of quarters and we said that we thought that we would see a return to growth for end use medication in the September quarter and we did. It was up an 11% year-over-year and up 31% sequentially. So, we believe we should continue to see growth in the offering but for our fiscal year 2022 as retail pharmacies and long-term care refocused on the proper and cost-effective disposal of ultimate user unused medication. I'm sure you saw the announcement about our first acquisition, tuck-in acquisition of Affordable Medical Waste in Indiana. We were very pleased to have closed this deal. It enhances our presence not only in the Midwest but it significantly improves the route density in our service area. And while it's small or smaller, it's perfect. It's an overlay to our existing service area and the post synergy EBITDA margins should be much higher than even our consolidated EBITDA margin. So, we continue to work, it's been a lot of resources working on the acquisitions, the pipeline is quite full quite active and we can't make any guarantees but we'll hopeful to be able to close more deals that'll justify our existing route-based infrastructure which again 37 states 80% of the population. So, let's look forward a bit, let's talk about COVID. So, although the landscape, it's been fluid, continues to be fluid but it's starting to become a little bit more clear, my opinion, there's a number of developments. We now have boosters approved, we're about a 100 million adults and the experts say that boosters for the remaining Americans could be approved over the next three to six months. This morning, they were talking about even a fourth shot or the immunocompromised. So, with respect to boosters, let's just from talk about from a point of reference. So, we have a 191 million Americans that are fully vaccinated. And the polling shows that maybe as much as 80% to 90% of the Americans would receive a booster. Well, so far only 7% of those 191 million have received the booster. So, we're hopeful that with more and more adults getting the booster that we can see revenue opportunities. Yesterday, the FDA recommended approval of Pfizer vaccine for children aged 5-to-11. This age group represents about 28 million children and by the way it's a two shot regimen for the 5-to-11 just as it was for the adult vaccine. So, considering all of this, we do believe that we do have opportunity for more COVID-related mailback revenue and if we had to guess that, we would probably see that over the next two to three quarters, maybe the three quarters has all of this rolls out across the country. So, let's sum it up. So, where are we and where are we going. We have begun the process of enhancing our route-based business, the growth in our route-based business with complementary and strategic tuck-in acquisitions as I mentioned the pipeline's active, the pipeline is quite full. And we're looking for the opportunity similar to affordable where we can bring them in and because of our existing infrastructure that we can generate from significant post synergy EBITDA margins and at the same time improve the route density. COVID. So, we don’t think it's over. I mean, March and June were significant quarters with respect to COVID, September slow-down. But we still think we have our ways to go for the fiscal year '22 when you consider boosters, vaccines for children and so on and so forth. So, we'll see but again we do think there's more opportunity there. On the unused medication, it's great that it's that we're seeing return in the growth in the unused medication year-over-year and sequentially but what I get really excited about is the fact that I think fiscal year '22 could be a really good year for unused medication in the long-term care sector. The long-term care sectors you all heard me say many times has been focused on COVID and versus a roll-out of the MedSafe. We're seeing some reengagement and we're hoping our fiscal year '22 can show some significant unused medication revenue growth in the long-term care market. So, that's the big picture. Let me turn it over to Diana. She's going to drive the financials in a bit more detail.

[Diana Diaz:]

Thank you, David. Sharps supported revenue of $13.9 million and an increase of $764,000 or 6%. Customer billings were $12.7 million in the first quarter of fiscal 2022, a decrease of $700,000 or 5%. As David mentioned, sequential revenue on billings for the first quarter are lower than the March and June 2021 quarters due to the anticipated decrease in immunization-related activity. Professional market billings increased 9% to $4.5 million in the first quarter of fiscal 2022 as compared to $4.1 million in the first quarter of 2021. Professional market billings were negatively impacted in the current quarter by first about a $100,000 decrease in billings for route-based services to lab customers as COVID-19-related volume decreased compared to last year. And over a $100,000 lower billings for route-based services to customers or hazardous waste activity that's been delayed until the December 2021 quarter due to nationwide sporadic and temporary moratoriums on accepting hazardous waste streams destined for third party incineration. Retail market billings grew 6% to $3.9 million in the first quarter of fiscal 2022 as compared to $3.6 million in the same prior-year period. Within this retail market, immunization-related orders grew 9% to $1.8 million in the first quarter of fiscal 2022 compared to $1.6 million in the prior year. Pharmaceutical manufacture market billings decreased $700,000 to $500,000 in the first quarter of fiscal 2022 as compared to $1.2 million in the same prior-year period. The timing of inventory bills or patient support programs drove most of the $900,000 decrease in mailback solution billings for the company. Long-term care billings decreased $500,000 to $800,000 in the first quarter of fiscal 2022 compared to $1.3 million in the prior year period. This is primarily related to heightened volumes of COVID-19-related waste management and ancillary supplies in the prior year; about half of which impacted our route-based business with the remainder impacting other ancillary solutions. Billings for unused medications grew an 11% to $2.6 million in the first quarter of the year as compared to $2.4 million in the same prior year period. Sequentially, billings for unused medications which includes the MedSafe grew 31% in the first quarter of fiscal 2022 as compared to $2.0 million in the fourth quarter of fiscal 2021. Related to our MedSafe business, we installed 398 MedSafe during the first quarter consistent with our forecast going into the quarter. This compares to MedSafe installs of a 172 for the June 2021 quarter and 415 for the September 2020 quarter. MedSafe liners processed in the first quarter of 8600 was up 56% over the prior year indicating more traffic in retail pharmacies and increased usage in long-term care. Total, this was up this program inception total lines or 92,470 and MedSafe unit installs were at 6,521 at September 30th, 2021. Gross margin for the first quarter was 25% which is down compared to gross margin of 28% in the first quarter of fiscal 2021. Gross margin was negatively impacted in the current quarter by the effect of revenue recognition where there was a higher proportion of immunization-related mailback's returned for treatment with a lower gross margin upon return compared to immunization-related mailback sold which generate a higher upfront gross margin. On a normalized basis excluding the impact of revenue recognition, gross margin would have been 27%. Think of this as a reversal of source of a very high gross margin that we saw in the March 2021 quarter when the number of immunization mailback shift up really exceeded the mailback's returned for the same quarter. Our SG&A increased by about $400,000 or an 11% to $4.2 million in the first quarter of fiscal 2022 compared to the same prior year quarter. The increase in SG&A is related primarily to continued investment in sales and marketing and to a $200,000 increase in the accrual of management incentive compensation. We reported an operating loss of a $1 million in the first quarter of 2022 compared to an operating loss of $400,000 in the first quarter of 2021. We recorded a net loss of $800,000 or a loss of $0.04 per basic and deluded share this quarter compared to a net loss of $300,000 or a loss of $0.02 per basic and deluded share in the first quarter of last year. We recorded an EBITDA loss of $400,000 in the first quarter of 2022 compared to EBITDA of $59,000 in the first quarter of last year. In August, 2021, we announced that we closed an underwritten secondary offering which generated net proceeds after expenses of about $16.8 million on shares of 2.1 million. Our balance sheet is very strong with $41.2 million of cash as of September 30th, 2021, which is up from $27.8 million at the end of June 2021. The Company had working capital of $44.3 million at September 30th 2021 as compared to $27.9 million of working capital at the end of June, 2021. And as David mentioned, a strong balance sheet provides us with the opportunity to execute on our broader acquisition strategy as we continue to work our active pipeline of opportunities. And with that, I'll turn the call back over to David.

[David Tusa:]

Great. Thanks, Diana. Operator, let's go ahead and open it up for the Q&A session and then we'll just make our couple of closing remarks after these.

[Operator:]

Certainly. Your first question is coming from Gerry Sweeney. Your line is live.

[Gerry Sweeney:]

Good morning, David, Diana. Thanks for taking the call.

[David Tusa:]

Good morning.

[Diana Diaz:]

Hey, good morning.

[Gerry Sweeney:]

David, can you maybe discuss the route-based revenue, I know it's down a little bit and I think there's some moving parts less testing, some probably PPE coming out of at our long-term care facilities but you also saw customer locations up, a very healthy 17%.

[David Tusa:]

Right.

[Gerry Sweeney:]

So, a little bit more detail on that but also on that growth in customers, are those customers essentially the same scope manner of your existing customer. So, they put into a very good future growth?

[David Tusa:]

Right, sure. We had in -- we all remember bringing the experience I'm sure but with the PPE and just increased volumes out of those long-term care. It was quite significant in the prior year quarter. We also do a lot of lab business and the lab business was high because of the testing. So, those collectively were maybe a few $100,000 up that's roughly of the $500,000 in total negative comp. And then the other thing was the -- we do a lot of haz waste. This is I've spoken before about we're taking up the regulated medical waste, we're there. And we pick up haz waste, which is not medical waste and we pick it up, we aggregated and then see they taken to the haz waste incinerator or they can pick it up from us. And we do $500,000 to $600,000 a quarter in that type of business. Its great business and its part of our route-based business. So, nationwide there was a reduction in the capacity in the haz waste. So, what it did is we had to delay pickups and that's which generates revenues when we pick up the haz waste but less capacity from the big three's we that we have here down here in the south. We also had just an overall reduction in the incineration capacity. There were shutdowns of incinerators over the number of things that kind of converged at the same time. Now, we're starting to see that three back up in the December quarter. So, hopefully we'd be able to catchup on those pickups that we didn’t make in the September quarter, make them up in December and hopefully get that part of the business back on track. But those three items were about a $0.5 million across the negative comp. when you take those out, the effect of those out we had about a 19% increase in the route-based and yes about a 17% increase in customer locations. And sure, the customer location that we picked up are very consistent with our existing small and medium quantity customer base.

[Gerry Sweeney:]

Got it. And then, switching gears unused medication. This was an area we spoke about a couple of years ago and obviously took the backbone with COVID, a lot of sort of whitespace on the long-term care side of that. What is the opportunity and to move into long-term care and does that move in to the forefront, are you starting some discussions or restarting some discussions and how do we look at that not just fiscal '22 but maybe even beyond?

[David Tusa:]

So, it definitely it's moving to the forefront, we're having many more discussion with the long-term care customers and which we're very pleased with. So, the focus is now away from COVID back on unused medication. The rules are changing and then any ag rules were originally designed for long-term care. And by the way, in long-term care, it’s a cost saver and long-term care is looking to save money especially with what all that they went through. So, it's a way for the long-term care facility to aggregate the patient unused medications and in a way that is very cost effective versus the ways they were traditionally disposed that the waste generated by those patients. Yes, discussions are very engaged, we're talking with a number of folks and we're excited. Now, from the way I always look at it whether it'd be retail pharmacy or long-term care, which is the two main areas through for the MedSafe. That's probably close to a 100,000 facilities between retail pharmacy and long-term care where the MedSafe could be utilized. And when we dial in we have 6500 of the MedSafe's deploy rates. So, which probably more than half of those are retail, retail pharmacy. So, we see a significant opportunity in the ability to further penetrate that market. And again, we're not typically displacing another provider or the collection receptacle. We're selling them something new, we're selling them something that's very cost effective. It's something that we're the leader in and we see that it's proven in the marketplace. So, we're working on that and we again we hope to see that contribute to some revenue growth with the unused medication in our long-term care market.

[Gerry Sweeney:]

Got you. And there's one quick follow-up on long-term care -- not long-term care, unused medication and then I'll hop on back in queue. Diana, I think you mentioned on the last call a rollout about 400 additional units of MedSafe in we will say the September December quarters, so fiscal one and Q1 and Q2. Is that still on track specifically for December?

[Diana Diaz:]

We expect to see similar installs in revenue levels to compared to the September 2021 activity.

[Gerry Sweeney:]

Got it, thank you. I'll jump back in the queue.

[Operator:]

Thank you. Your next question is coming from Kevin Steinke. Your line is live.

[Kevin Steinke:]

Hey, good morning.

[David Tusa:]

Hey good morning, how are you doing?

[Kevin Steinke:]

Pretty good, thanks. So, obviously you got a deal across the finish line here with Affordable Medical Waste and obviously you characterize it as a tuck-in but can you maybe just get us give us a little more colour on how that deal came together, how long you've been talking to them and maybe anything quantitatively or qualitatively in terms of the size of the acquisition, in terms of revenue and also which you're pleased with, what you're able to reach in terms of a purchased price?

[David Tusa:]

Right. Sure, we're more happy to talk about that. We've been reaching out heavily to the players in the hauling business, the medical waste management business. And we got them at the right time. They were -- they've always said there's a triggering there has to be a trigger even if it's want to get them to sell and the seller was at a point where he talked to make sense to sell the business and to get into a different business. It went pretty quick, we moved quickly into a LOI and I think we closed the deal, was a 35 days after the LOI. So, we moved quickly to get this done. It's like $800,000 to $850,000 in revenue, it's about a 2.5 multiple on the revenue. But what we're really impressed with was the profitability, it's a highly profitable business and it's even much more profitable as a tuck-in. Because we don’t need the drivers or we don’t need much in the way of the cost structure. So, the post-acquisition synergy, synergistic EBITDA margin is even quite much higher than on than what it would be just on the surface. So, we're pleased, we just need to do a lot more of them and again we're spending a lot of time on the road and talking with folks and trying to get more of them and in the stage where we can perform some diligence. But this one was although smaller, it was very much ideal for from a tuck-in standpoint.

[Kevin Steinke:]

Okay, great. That's helpful. As you continue to expand the route-based footprint both organically and through acquisitions. Do you see the need or are you exploring the possibility of adding more internal waste treatment infrastructure?

[David Tusa:]

Sure. Right now, we have our Texas and we have our Pennsylvania facility. We do use some third party facilities around the country. It would be fantastic to be able to acquire a company that also haz treatment, especially treatment in an area where we don’t currently have owned treatment. So, those are high on our radar of ones that would come with the medical waste treatment facility. We think that's the best way to do it. Because to just go out and get a medical waste treatment facility and go through all the approval process and the permitting process and that's years and years versus being able to buy business that already has it where you have it on day one.

[Kevin Steinke:]

Right. Okay yes, that makes sense. Just lastly from me for now anyway, it's just how should we think about just the SG&A expense levels as we move forward here in fiscal 2022 or what are you looking for in terms of SG&A expense growth this year?

[Diana Diaz:]

So, we had an increase this quarter compared to last year. I don’t think all of our investments in SG&A have been fully reflected in the first quarter of last year. We said at the beginning I guess at the end of last quarter that we expected SG&A to increase somewhere in the single digits for fiscal year '22 and I think we're still we still believe that.

[Kevin Steinke:]

Okay, great. Thank you, very much.

[Operator:]

Thank you. Your next question is coming from Michael Hoffman. Your line is live.

[Michael Hoffman:]

Hey David and Diana.

[David Tusa:]

Good morning.

[Michael Hoffman:]

David, can you help us with the dollar amount of potential revenue that you would define as the addressable M&A marketplace?

[David Tusa:]

The addressable M&A. So, if you look at our pipeline, our pipeline of opportunity was probably 35, 40 opportunities and the average revenue on them is probably I don’t know $4 million maybe $5 million, the one we implied was obviously on way on the smaller end. So, 40 of them times $4 million is probably at least that's not all of them, that's ones that we have in our pipeline that we initially think would be a really good step.

[Michael Hoffman:]

Okay. So, simply put somewhere between a $150 million and $200 million is your pipeline?

[David Tusa:]

Right.

[Michael Hoffman:]

And what's your capacity as a team to buy and integrate. What do you think your capacity once you hit up some momentum in restarting this corporate development thing, it's got a timeline to it. So, but once it gets going, what's your capacity to -- and I'm not talking about the balance sheet, I'm talking about the infrastructure of the Company to can you absorb $2 million or $3 million, $4 million deals a year or is it revenue deals or is it bigger, what's what is that?

[David Tusa:]

So, well I look at it from an individual opportunity same point. We've got this integration down. We did it in four, five years ago with the other acquisitions and with this one. We just brushed up the integration plan that we have in place and it's quite these are complicated businesses. So, I mean if we came to it and we have the opportunity to be able to close deals and I don’t see why we shouldn’t be able to close a few a quarter. Straightforward business, a diligence and straightforward and the well-run ones are pretty easy to not only perform diligence but to integrate, especially in our tuck-ins you're just loading up their customer information and then those are going on to your existing routes. So, it's just think of it as just landing larger customer deals and launching a 500 or a 1000 location or more customer opportunity. It's really similar to that. So, not too simplified but it's pretty straightforward, we have it done and we'd love to do three or four quarter.

[Michael Hoffman:]

And do you think you the sellers who at end of the mind where you could actually get to that pace?

[David Tusa:]

Well that's the question. And there has to be a triggering event. And if they see it as an opportunity and if they're really truly interested in selling, I think we have a shot at it. We were in discussion with one here not too long ago and I thought I felt really good about it but sometimes the sellers back off and that maybe it's not the right time or maybe I shouldn’t be looking at this. But we're very active in the marketplace, we talk with folks, it helped that we announced one, so they say we're really truly deploying capital. But it's tough. It's tough to peg but if they are really truly interested in they're reasonable about the valuations and we think we can get deals done.

[Michael Hoffman:]

Okay. And then, on the mailback side we go back pre-COVID, if I averaged sort of where you were settling, it feels like you're kind of on an $8 million a year number with a little bit of growth to it from flow.

[David Tusa:]

Right.

[Michael Hoffman:]

Now that it's gotten through the waves and there's a bit of a start of a recurring and we've got an incremental related to boosters and kids and young adults, is it another rate? How do you, how should we think about that?

[David Tusa:]

No. Yes, well we can you could look at it a couple of different ways, it's a really good question. And just a couple of ways to look at it. So, one way is we had the vast majority of first of all I'm just talking about this fiscal year. You talked about the vast majority of that of the Americans have received a 191 million have received the COVID vaccine, it's the vast majority of those received the boosters and that has gained as much revenue. What we generated? Like $27 million $28 million in billings?

[Diana Diaz:]

Yes.

[David Tusa:]

So, if you do the math, if all of them received the booster, that's another roughly $14 million of revenue. I'm not saying this is going to happen that that would I think would be the potential issue when everyone receive the booster. As far as flu, the as I mentioned last time in the last call, and that we think that some of our larger customers and ordered in advance for flu. So, the March and June quarters I think I've mentioned as much as $5 million. So, I think a significant portion of the flu could already be addressed in their inventory levels. But then you could throw the top in at from a positive standpoint the children's vaccine, there's too many had made up in two shots, that could generate some significant revenue as well. I don’t know the exact number is but I do know that I think that there is going to be more COVID revenue. And I mentioned, I think I mentioned or Diana mentioned, just as a point of reference, that the month of October was very strong for COVID, for immunization-related billings and again it could be flu, it could be COVID. In the month of October, the billings were higher in the entire month of September. So, hopefully we'll start to see they come back with the December quarter. That was in line, that's the way we look at it, that's what we think. Now, after that if we look even further maybe the next year, I think it's pretty certain that on an ongoing basis that there will be at least two shots. So right, so we've always talked about flu is being eight. So, maybe it's too late or maybe it's a little bit higher than that because more people will get whatever the latest COVID shot would be. So, we still think we have COVID revenue for the rest of the fiscal year and we still think that there'd be incremental level of billings for the years afterwards.

[Michael Hoffman:]

Okay. So, just so I'd parse everything you just shared whether let's say now take your fire hose and try and just another drinking fairly enough. I take the eight, subtract five and then add in some assumption for booster's kids and young adults.

[David Tusa:]

Right.

[Michael Hoffman:]

And so I'm not 16 but I'm better than eight?

[David Tusa:]

Somewhere in between. You're right, it's just depends but yes I think that's a reasonable way to look at it.

[Michael Hoffman:]

And October just to clarify what you said. October was better than September but did you mean better than September quarter or better than this month of September?

[David Tusa:]

The September quarter.

[Michael Hoffman:]

Yes okay, that's what I thought you meant. Okay, thank you, thanks.

[David Tusa:]

Alright, thanks Mike.

[Operator:]

Thank you. Your next question is coming from Rob Brown. Your line is live.

[Rob Brown:]

Good morning.

[David Tusa:]

Hey, Rob.

[Rob Brown:]

Just calling in Michael's question. I think you've said that the mailback is sort of running at about a $20 million annualized basis. Is that still the run rate or how is that trending and what's the current pace there?

[David Tusa:]

Are you talking about without COVID or are you talking about just core?

[Rob Brown:]

Yes, kind of the core, without COVID.

[David Tusa:]

So, our -- so well just looking September. So, in the September quarter and in September we had a million eight billings from immunization.

[Diana Diaz:]

Yes.

[David Tusa:]

And we generated mailback revenue when the three months ended, almost $6 million. You take a couple of million out, so that's --.

[Diana Diaz:]

Three and a half.

[David Tusa:]

Three or four, or three and a half four times four. So, maybe just a bit along that but I don’t think that's too far off.

[Rob Brown:]

Okay great, thank you. And then, maybe just not then the inventory situation, how much inventory do you think is sort of still out there or how much impact is there to the December quarter with sort of inventory if already sold that that maybe isn’t being redone here?

[David Tusa:]

Well, just like I mentioned, I think there is maybe as much as about 5 million of inventory that's already out there that I think that they all utilize as part of flu. Just like I think was delayed maculated out made some sense, you may have 5 million of that 8 million traditional COVID, that may be service with leftover mailbacks that were ordered for the COVID season. I think that's probably the best way to look at it.

[Rob Brown:]

Okay great, thank you. I'll turn it over.

[David Tusa:]

Okay, great.

[Operator:]

Thank you. There are no further questions in queue at this time. Your next question's coming from Michael Hoffman. Your line is live.

[Michael Hoffman:]

Yes. Sorry for the quick follow-up. If I took a $0.5 million here then route-based into it in September, what's the is there a like hit in December because how would I think about that?

[Diana Diaz:]

So, we expect to see an increase in the route-based activity in the upcoming December quarter compared to this current September quarter as well as compared to last year's December quarter which was $3.5 million. Despite last year's December quarter had COVID-related revenue, from long-term care and labs of about $300,000. Excluding those headwinds of $300,000, we expect growth in the December quarter to be somewhere between 15% to 20%.

[Michael Hoffman:]

Got it. And the make-up of hazardous waste would be on top of that?

[Diana Diaz:]

It would be within that.

[Michael Hoffman:]

Within.

[David Tusa:]

She included some estimated inclusion there for that for the additional incremental haz waste.

[Michael Hoffman:]

Fair enough. So, EPA is granting 30 day extensions to big hazardous waste there.

[Diana Diaz:]

Yes.

[Michael Hoffman:]

So, that was on the new parts and will all the way through the middle of next spring. Right, they don’t see this incineration pass so as we're leaving before them?

[David Tusa:]

So, we're seeing.

[Diana Diaz:]

But we're seeing it.

[David Tusa:]

We're seeing it open up, we're seeing it pickup.

[Diana Diaz:]

For the types of waste streams, it's opening up.

[David Tusa:]

We're small quantity generators.

[Michael Hoffman:]

Okay.

[David Tusa:]

And small quantity generators, we're not talking about massive volumes but we're already seeing the pickup resume.

[Michael Hoffman:]

Okay, cool. Thank you.

[David Tusa:]

Alright and thanks Michael.

[Operator:]

Yes, thank you. There are no further questions in the queue.

[David Tusa:]

Right. Thank you, everyone. We appreciate your continuous support of the Company. Great Q&A. And we look forward in talking with you on the next call.

[Operator:]

Thank you, ladies and gentlemen. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you, for your participation.