Sharps Compliance Corp.
Q4 2021 Earnings Call Transcript

Published: 18 Aug 2021

[Operator:]

Greetings. Welcome to the Sharps Compliance Corporation Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation . And please note that the conference is being recorded. I will now turn the conference over to your host, Jen Belodeau, IMS of Investor Relations. You may begin.

[Jen Belodeau:]

Thank you. Good morning, and welcome to the Sharps Compliance fourth quarter fiscal 2021 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 their 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. With that out of the way, let me turn it over to David Tusa to being review. Go ahead David.

[David Tusa:]

Thanks, Jen and good morning, everyone. Thank you for participating in our fourth quarter fiscal year 2021 earnings call. I'm going to continuing the same practice as I have previously with really just speaking informally about the business and about the quarter and the outlook. So the business, the quarter and the outlook. We had great success in fiscal year 2021 and I got to tell you, to me it’s most important is the fact that in addition to revenue growth and profitability, we ended the year as a much stronger company. We have much greater infrastructure, additional plant and route based capacity, additional geographic coverage for our route based business and very strong balance sheet with $28 million in cash. So in my opinion, this is just what we need to support a much larger company and continue our leadership positions in the market we're addressing, regulated medical waste and unused medication. Now we also accomplished something I think of equal or maybe even greater importance, the superhuman efforts that we've showed during COVID-19/immunization business during the height of the pandemic to date. Further strengthened our customer relationships. We had no disruption in our business. We served all of our customers and we delivered solution offerings. And I think there's a lot to be said for that and our customers recognize that. And of course we can’t have business discussion without covering COVID. So regarding the COVID business. The March and June quarters, they represent the high to date of our COVID related mailback business. Immunization related orders were about $28 million in customer billings, about $25 million in revenue for both quarters combined and this is a great start to the season. And while it's very impressive and we're very happy to have the business as everyone has seen in the news, the immunizations over the last couple of months is slow. So during the current quarter, there's fewer shots, the September quarter to date, fewer shorts administered. And as a result of mailback activity so far in the current September quarter has slowed. So from a timing perspective and related to immunization orders, I anticipate a slower than expected September 2021 quarter consistent with fewer shots being administered at least now, plus the fact that the rate some of our customers have accumulated inventory, they may have some leftover inventory that can be used to facilitate a portion of the flu season. So looking past the September 2021 quarter and into the remaining 2020 -- fiscal year 2022, which includes the December, March and June quarters, we have the potential, not a guarantee, but the potential for the resumption of larger immunization related customer billings. And they will be driven by the following, an increase in adult and adolescence receiving their initial vaccines. As a matter of fact if I just look at the numbers, we’re at about 61% of the adults that are fully vaccinated in this country, hopefully, we can make that higher. The approval this fall of the children's vaccine, there will be one zero to four and there will be one five to 11. A strong flu season, additional shots for the immunocompromised adults, which the FDA has approved the additional shots like flu. And as many of you seen on the news today that the rollout of the boosters, which just on the news that could begin as early as September 20, and that would be for -- recommended for Americans eight months after they receive their second COVID vaccine shot. So we're watching this development closely. But the third shot looks to be a reality here in next month, which is big news, really big news for us. So moving past the immunization business, as many of you know, we're much more than an immunization mailback business. We're a comprehensive provider of medical, pharmaceutical and hazardous waste services. We have the infrastructure and footprint to officially serve small to medium quantity generators that our markets are primarily healthcare and retail. We focused over the last seven years on positioning the company as this, not a mailback company but as a comprehensive service provider. We had the route-based business in the end use medications. They play a key role in our numbers and our growth, and we think they're going to continue to play a key role in the growth of the business. The route-based business continues to achieve 30% plus growth annually. We remain bullish about the business and the opportunities we're seeing to further penetrate the market. We're in 37 states, 80% of the population with our direct service of our route-based business. Our customer locations are now over 16,000. A year ago, there were about 13,000. Impressive growth. And we believe we have the opportunity to continue to trim. Now one more thing about the route-based business. We remain focused on our goal of supplementing our organic growth with acquisition growth. We're seeing more activity and possibly some viable acquisition opportunities on this front. We're not offering guarantees but the strength of our balance sheet. The expanded route-based infrastructure provides us with great flexibility around this initiative to supplement the organic growth. Unused medication, just a minute or two on that. The MedSafe business was undoubtedly slowed by COVID-19 as retail pharmacies and long-term care were much more focused on COVID versus our unused medication. The line of returns continue to be strong and we have been receiving orders from MedSafe units and we think starting in the September quarter that we’ll start to get back on track with some growth rates similar to what we've seen in the past. And these medications I think will continue to play a big part in the future growth of the company. And as many of you know, the opioid epidemic has actually worsened during the pandemic. Our MedSafe is seeing as a leading solution, so we like where we are there. So one more time. We ended the year extremely well positioned for further growth and we build a much larger company with our increased infrastructure, additional plant and route-based capacity, geographic coverage and again, strong balance sheet with 20 a day and in cash. And just a quick word on the employee base dedicated, everyone's been working quite hard. We have to recognize them for what they've done. We want to thank them for what they've done. And it's been busy and my guess is getting ready to get busier. So with that, I'll turn it over to Diana who'll address the financials in a bit more detail.

[Diana Diaz:]

Thank you, David. Sharps reported revenue of $18.7 million, an increase of $6.1 million or 49%, primarily due to an increase of $4.7 million in our immunization business and increased route-based pickup services of about $800,000. Customer billings were $18.7 million in the fourth quarter of fiscal 2021, an increase of $5.1 million or 38%. The increase in customer billings for the fourth quarter was driven by an increase of $4.2 million in our immunization business and an increase in the route-based business services of $800,000. Retail market billings grew 68% to $9 million in the fourth quarter of fiscal 2021 as compared to $5.4 million in the same prior year period. The increase in retail billings is primarily due to immunization related orders of $7.8 million, which were higher than the prior year at $3.6 million. Professional market billings increased 44% to $4.7 million in the fourth quarter of 2021 fiscal year as compared to $3.3 million in the fourth quarter of last year. Related to our MedSafe business, we installed 172 MedSafe during the fourth quarter, which is pretty consistent with our forecast going into the quarter. Our large retail pharmacy customer accelerated their annual MedSafe installation program into the summer months of 2020, so that they could focus on COVID related response in the December, March and June quarters, and we're still seeing minimal sales activity as current and potential customers deal with COVID. But on a positive note, as David mentioned, our MedSafe liners process for the quarter of 8,200 were up 73% over the prior year and 6% higher than the preceding March 2021 quarter, indicating a lot more traffic in retail pharmacies. As we said previously, we continue to believe there's significant opportunity for further penetration of the MedSafe in the long term care market and safe disposal of unused medications is a key contributor to fighting the opioid crisis. Therefore, we believe the lower unused medication billings and lower MedSafe installs that we sell this quarter is a temporary situation and expect to see a return to pre-COVID levels once the vaccine program has gained meaningful traction. So looking forward in the September and December 2021 quarters, we expect that number of installs to increase by about 300 units in each quarter. Incremental revenue associated with this higher level of installs would be about $400,000 to $500,000 per quarter. Gross margin for the fourth quarter was 33% consistent with the gross margin in the fourth quarter of last year. The fourth quarter of this year gross margin of 33% reflects a year-over-year increase in the fixed portion of cost of goods sold of about $450,000 or 240 basis points as a result of investments in our treatment plants, autoclaves, route-based infrastructure and other expenditures designed to address the increased immunization business emphasis will take for us. Our SG&A expense increased by about 700,000 or 21% for the quarter. This is related primarily to $200,000 increase in management incentive comp, the stock and cash, $100,000 increase in board member compensation and continued investments in sales and marketing. We reported operating income of $2 million and an operating margin of 10.6% in the fourth quarter of 2021 compared to operating income of 700,000 in the fourth quarter of 2020. The company reported a gain on forgiveness of our Paycheck Protection Program or PPP loan of $2.2 million in the fourth quarter of fiscal 2021. We reported net income of $5.1 million or $0.30 per basic and 29% per diluted share this quarter compared to $2.2 million or $0.13 per basic and diluted share in last year's fourth quarter. Without the impact of the PPP loan debt forgiveness, EPS would have been $0.17 per diluted share for the quarter. We generated EBITDA of $4.7 million or 25% of revenue in the fourth quarter of fiscal 2021 compared to EBITDA of $1 million dollars or 8% of revenue in the fourth quarter of last year. Without the impact of the PPP loan debt forgiveness, adjusted EBITDA was $2.5 million or 14% of revenue for the current quarter. Now, we'll take a look at the full fiscal year results. Sharps reported revenue of $76.4 million an increase of $25.3 million or 49% primarily due to an increase of $21.9 million in our immunization business net of deferrals and an increase in route-based business pickup services of $3.3 million. Customer billings were at $81.6 million in fiscal 2021, an increase of $28.6 million or 54%. The increase in customer billings for 2021 was driven by an increase of $25.3 million in our immunization business and an increase in route-based pickup services of $3.3 million. Retail market billings grew 153% to $40.5 million for 2021 as compared to $16 million for the prior year due primarily to an increase in billings for immunization related orders of $21.9 million net of referrals, partially offset by decrease in unused medication billings in the retail market of $700,000. Professional market billings increased 15% to $18 million for the year compared to $15.6 million in the prior year. Long-term care market billings increased 25% to $4.2 million for 2021 compared to $3.3 million in the prior year. And that was related primarily to an increased volume of COVID-19 related waste management and ancillary supplies. Our pharmaceutical manufacture market billings increased 12% to $5.2 million for 2021 as compared to $4.7 million in last year. Gross margin increased to 38% in the full fiscal year 2021 as compared to 31% for the full fiscal year last year, and this would be primarily to the leverage from higher revenue, partially offset by year-over-year increase in the fixed portion of our cost of goods sold of $1.7 million to 225 basis points. That is a result of the investments in our treatment plants, autoclaves, route based infrastructure and other expenditures designed to address our increased immunization business and to facilitate growth. For the year, SG&A expense increased $1.8 million to 12%. The increase is related primarily to $600,000 increase in management incentive costs, including stock and cash, a $400,000 increase in board member compensation and $700,000 due to our continued investment in sales and marketing. We reported operating income of $12.3 million and an operating margin of 16.1% for the year 2021. And as previously mentioned, we recorded a gain on forgiveness of our PPP loan of $2.2 million during the fourth quarter of fiscal 2021. The effective tax rate of 10.2% for the year reflects $1.1 million tax benefit associated with stock compensation and $0.5 million benefit associated with the permanent exclusion of the gain on forgiveness of the PPP loan for taxable income. We reported net income of $12.9 million or $0.76 per diluted share for the year of 2021 compared to net income of $2.3 million or $0.14 per diluted share for the prior year. Without the impact of the PPP loan debt forgiveness EPS would have been $0.63 per diluted share for the year. We generated EBITDA in 2021 of $16.5 million or 22% of revenue compared to EBITDA of $2.4 million or 4.7% for the prior year. Without the impact of the PPP loan debt forgiveness adjusted EBITDA for the full year was $14.3 million or 19% of revenue for the current year. David mentioned our balance sheet remained solid was $27.8 million cash as of June 30, 2021, up from $5.4 million at the end of last year. And our working capital is $27.9 million, up from $11.1 million at the end of last year. And with that, I'll turn the call back over to David.

[David Tusa:]

Thanks Diana. Operator, let’s open up to questions.

[Operator:]

Thank you. At this time, we will be conducting a question-and-answer session . Our first question comes from the line of Gerry Sweeney with ROTH Capital.

[Gerry Sweeney:]

I want to start on the vaccine front. Obviously, a little bit of disappointment vaccines to slowdown. But we've talked a lot about vaccines being given in the retail setting as we look out to the rest of this year. I mean, I know you talked about boosters, adolescence, shots, et cetera. How do you feel about the activity taking place in the retail setting, is this matching your expectations? And is there any thoughts on how this develops on a go forward basis for rest of the year?

[David Tusa:]

I think that we felt good about the shots I mentioned in the retail setting. What we were surprised with nothing, everyone is surprised with it only 61% of adults and 50% of Americans have received the vaccine that was a bit of a surprise. Going forward, let me just tell you how I look at it. And in my world if I stand back and look at for -- fiscal year 2022 for the vaccine side, I'm going to do a little bit of math here. But for the March and June quarter, we had $28 million in billings. We have about 2 million right in the December quarter for long-term care. So call it 30 million so far. So I do think that there will be some increase, not a lot, but some increase in the adults. From what I understand, there's a percentage of the population that are not vaccinated that are waiting for full approval from the FDA, which I understand is going to be around Labor Day. So let's say that we get another, I don't know, 10%, 15%, 20% pick up in the adults that 30 may look like 34. I will say this, our mailback, it's used for immunization is the same mailbock is used for flu, it’s fungible. So the orders are typically they bake in June and September, were really all part of the orders that they place for the last couple of quarters, the March and June quarters. So I'm guessing it looks like about 5 million of the purchases that have been made so far, it looks like will be designated for the initial flu orders that we would have received in June or September. So if we were just looking at COVID, you take the five away from the 34 and they're going to put you at about 2029. The children's vaccine is supposed to be available in the fall zero to 11, who knows. But you know you would think there will be a couple of million dollars of business related to that, which gives you little bit over 30 million in the opportunity for the entire season. And if you believe that the folks that received the vaccine are going to get the booster then since it's one shot instead of two, the 30 is really 45 if everyone gets a booster. So you're looking at roughly maybe 45 and that's if all these things happen. So call it 45, we'll have some remaining flu, some additional flu that probably was not used in that stock that they currently have. So maybe we get a closer to 48 million, 49 million. So what is that 18 million, 19 million -- 18 million to 19 million increment over what we've received so far. And that's if all of those things happen, and that seems to make some sense. I will tell you this. The September quarter, the quarter that we're in, although it may change now because of what happened this morning with the announcement of the booster being available September 20th. September has been slow. We've all received about $0.5 million, about $0.5 million in orders. So hopefully, we'll receive more related to more shots or the booster. And maybe that may increase a bit. But I think it's likely that that roughly, I don’t know, 18 million, 19 million, again, if everything happens, would probably spread between December -- December, March and June, maybe heavier December and March as people are getting their boosters. That's how we see it. And how it rolls out is really going to be dependent upon the number of shots, although, the number of shots will be administered but that's to share on thoughts on how we see it. I hope that makes sense.

[Gerry Sweeney:]

That's incremental over sort of historically mailback has been running 24, 25, 26, higher depending on -- so that's the incremental above that…

[David Tusa:]

Immunizations…

[Gerry Sweeney:]

Yes, got you. Switching gears a little bit route-based. I think you mentioned some pretty strong growth 30% type growth. What's driving that activity? Obviously, it's an underserved market, we've talked about that. You've got some geographic expansion. You made some expansion into the Southwest. What is driving that market? It has been growing 20%, 25% but it feels like it's actually accelerating a little bit?

[David Tusa:]

We've had a tremendous focus on the route-based business. Our sales team is very, very focused on that. And I remind you, one of the reasons why we went into these areas is we weren't selling into those areas before, we weren't selling into the Midwest or on the Southwest. We were subcontracting that. So now we're selling in those areas and it doesn't necessarily have to be part of a much larger opportunity. So we're selling directly in four states in the Southwest and in the Midwest where we really haven't before, and I think that's one of the drivers. Do you agree?

[Diana Diaz:]

I agree that that we're just focused on our direct markets and our sales team is getting out there and adding customers…

[David Tusa:]

They're good at it and we remain bullish and we can hope to keep up those trends.

[Gerry Sweeney:]

And then acquisitions you mentioned specifically more geographic expansion or is this sort of around density play, or what are you seeing or what is -- is there a particular focus?

[David Tusa:]

So I think we're talking about really more route density improvement. We worked really hard in putting in place an infrastructure in 37 states 80% of the population. So what these look like, assuming that we're able to complete these, they almost look like tuck-ins, because we already have the infrastructure in place, and I like those, because that not only improves the route density but improves the profitability as well for the business. So we're talking to four or five different folks, we're in due-diligence on a couple of them. And they will look much, much more like a tuck-in than they would a geographic expansion.

[Gerry Sweeney:]

And then just final question from me, unused meds. Long term care always a huge opportunity that's been out there and obviously COVID pushed that back, because of nursing homes, et cetera, sort of ground zero. Where does that stand opportunity wise in the next, I don't know, 12, 18 months?

[David Tusa:]

I think we're finally starting to see some -- Dennis and the team has finally starting to see some interest in the long term care side as they're coming out of the COVID, out of COVID. And in our sales meetings and some of the prospects we're looking at, it seems like long-term care is popping up more and more. And we're hopeful that ‘22 that we have the opportunity to be able to get more of the MedSafe into long-term care. It has been definitely shut down but hopefully, we'll be able to see some movement on that in the fiscal year '22.

[Operator:]

Our next question comes from the line of Rob Brown with Lake Street Capital Markets.

[Rob Brown:]

Just wanted to kind of continue on the MedSafe discussion here. I think you said about 300 units are kind of planned to go in over the next -- or each of the next two quarters. And is that sort of representative kind of step back to a normalized run rate or is that some catch up from being held back for the last year?

[David Tusa:]

Probably a little bit of both. They were suspended there for a while, at least in retail pharmacy, because of COVID. So I think we're getting back on track with giving the units out and probably a little bit of that as a catch up from what should have probably gone out a year ago.

[Rob Brown:]

And then back to the mailback business. What sort of the baseline there of non-immunization business in that same -- is it about 15 million a year and so you're saying that the team or so million of immunization would be on top of that and sort of I guess kind of mailback business. Is that what you're thinking?

[David Tusa:]

So mailback business ‘19 and ‘20 of about 25 to 28…

[Diana Diaz:]

28 last year and 55 this year and include revenue of 9 million last year and 31 million of immunization this year…

[David Tusa:]

So that 28 million from 20 million included about 9 million for immunization. So roughly 20 million without immunization baseline.

[Diana Diaz:]

And this year was around 25…

[David Tusa:]

25 without immunization, so 25 this year without the immunization on the mailback business.

[Rob Brown:]

So the immunization numbers you were talking about would be sort of additive, whatever they are would be additive to sort of that 20 to 25 baseline?

[David Tusa:]

Right.

[Rob Brown:]

And then maybe just on the September quarter, walking through the order rates. How does that sort of flow through the mailback business, do you expect -- what's sort of the tail on returns and expectations of shipments? I would presume that makes the mailback fairly low in September. But could you help us kind of understand how that flows through in just the September quarter?

[David Tusa:]

You mean revenue -- I mean, just as normally, I mean, if it was $0.5 million in sales, it would be $0.5 million in revenues. There would be a deferral component of 15% to 20% of that. So 80%, 85% of it will be recognized as revenue in the September quarter…

[Diana Diaz:]

Some of the items will be coming back. We have to offset that maybe a little bit more.

[Rob Brown:]

And then in terms of the route-based business, do you feel that sort of fully recovered from COVID and now this is a new baseline of growth, and this sort of 30% plus should be able to continue?

[David Tusa:]

We didn't really see. If you think about our route-based business, while we had a little bit of a business, I think it was April through June of '20, where we saw a bit of a down tick on the route-based, that was offset or more than offset by the substantially increased volumes coming out of long-term care, which is route-based as well. So one really offset the other. So we really didn't see that much of a down tick. Now the long-term care volumes have reduced but the other businesses that we have increased. So we think we're extremely well positioned and very, very fortunate to have that long-term care volume to offset a bit of a slowdown in the - it was like, dermatology and general dental and physicians that may have been slowed down for a short period of time.

[Operator:]

Our next question comes from the line of Amit Dayal with H.C. Wainwright.

[Amit Dayal:]

Most of them have been asked but just on the margin front. Should we think about gross margins as sort of stabilizing at these levels with potential upside coming from any volume increases you may see as people continue to get the COVID vaccines and the flu season sort of comes in…

[David Tusa:]

It's all really driven by revenue, it's operating leverage model and they ran out this year because the volume was as high as because they -- if the revenue is lower, they will be down. If the revenue is higher, they will be up.

[Amit Dayal:]

And then it looks like you've had a decent increase in customer locations to 16,000 from 13,000 year-over-year. Do you have a target to where you might want to be over the next 12, 18 months in terms of customer efficiency?

[David Tusa:]

Well, we talked about this 30% increase in the route-based business, and I think you can directly correlate that with the number of locations. We've been growing at 30%. So you could do the math. And of course if we supplemented that with acquisitions so that percentage could percentage could be higher.

[Amit Dayal:]

And n terms of how the quarterly revenues are now coming through for you. Do you feel because of how COVID has played out there should be some changes in how the cadence in revenues, quarterly revenues, kind of plays out for you or in a few quarters we will go back to maybe sort of a more normalized strength for you?

[David Tusa:]

Well, it all depends on the things that I mentioned earlier about what happens with respect to the immunizations and with boosters and so on and so forth. In that example that I mentioned earlier, there's a potential for maybe another 18 million to 19 million in immunization revenue for fiscal year 2022. I will say this, kind of looking out past '22, another way to look at it is what does this mean going forward in '23 and going forward. And the way I've always looked at it is, I think that the two shot regimen, meaning a flow and a COVID something shot, is probably here to stay. So the way I look at '23 and going forward is probably 15 million to 20 million of revenue, which think of it as like two flu seasons going forward. So maybe an additional as much as 19 million for '22 and then going forward past that maybe 15 million or 20 million for a couple of flu shots a year.

[Operator:]

Our next question comes from the line of Kevin Steinke with Barrington Research.

[Kevin Steinke:]

So when we think about the flu season and you mentioned there, what the numbers typically are, I think, the last couple calendar years flu season billings were 7 million to 8 million. And you mentioned about 5 million sitting in inventory that could be used for the flu season. So should we just kind of think about the seven, eight minus five is how flu season, the remaining flu season orders might play out?

[David Tusa:]

Right, I think so. You're right. I think last year '20 was like 8.2 million. So the way we look at it is we would have typically had about 5 million of orders. About 5 million of all flu related orders in June and September. So I think you subtract the 5 from the 8 and about 3 million remaining. I think that's a good way to look at it, Kevin.

[Kevin Steinke:]

And since you specifically called out the added 5 million impacts on gross margin is as a result of the various investments you've made in infrastructure and treatment. Should we think about that as having an impact on gross margin for the next couple of quarters here, or is that something you start to lap? I mean, kind of what was the timing of those investments and how does it play out on the impact on gross margin over the next couple of quarters?

[David Tusa:]

So starting with the infrastructure investments in mid to late 2020 calendar and the impact on the current quarter, what was that Diana?

[Diana Diaz:]

It was about 400,000…

[David Tusa:]

Yes, about 400,000 for the quarter…

[Diana Diaz:]

And it's about at the same level that we had in this quarter looking out throughout fiscal year throughout fiscal year '22, you'll see increases over that.

[David Tusa:]

So this isn’t related to the addition, expansion of the Texas facility, the addition of the autoclaves, the continue to build out of the route-based business. But once we get through '22 then the incremental fixed costs will be much less on an annual basis, because we would have built out the infrastructure, maybe $0.5 million or so a year going forward '23 and going forward. So I think we're going to have most of it behind us this fiscal year '22. And by the way, it's a good thing that we did it, because the volume that we're processing is obviously increased tremendously because of the increase in route-based business and as well the significant increase in the mailbacks relative to the immunization business.

[Kevin Steinke:]

And you specifically talked about your ability to serve your customers effectively throughout the pandemic and how you believe that strengthened your customer relationships? Is there any way you can capitalize on that going forward in terms of the stronger relationships, just from a competitive standpoint? How do you see that perhaps playing out or benefiting you moving forward?

[David Tusa:]

Our relationship with our customers, all customers, and from the immunizations, I think are very strong. I think they're much, much, much stronger now that we delivered, we've received many compliments. And we're the go to company to support their medical waste management needs, whether it’d be immunization or otherwise. I'm sure we're going to try to parlay that into some cross selling, we're going to try to use that in capturing more business but we're really pleased with that. And again, the customer relationship is strong and I think it's stronger now.

[Kevin Steinke:]

And then just lastly, can you talk about the competitive environment in the route-based business when you're bidding on deals? Is that about the same as it's always been or any changes competitively there?

[David Tusa:]

No, we haven’t really seen any changes we like, we're well positioned. We continue to lead with great customer service and flexibility in contracts, great responsiveness. And that's how we sell. And I think it shows in that 30% increase in route-based business.

[Operator:]

At this time, we have reached the end of the question-and-answer session. I will now turn the call back over to management for closing remarks.

[David Tusa:]

Thank you, operator. Thank you everyone for participating in our call today. We remain very excited and bullish about the business. We look forward to the continued growth, revenue opportunities and expansion for fiscal year '22 and beyond. Thank you. We'll talk next quarter.