Hamilton Thorne Ltd.

Yeah. Thank you very much.

And good morning and welcome to all to the Hamilton Thorne Limited third quarter 2021 earnings conference call. I would like to introduce myself.

I am David Wolf, President and CEO of Hamilton Thorne. On the call with me today is Michael Bruns, our Chief Financial Officer.

Today's call will have the following format. First, I will provide a summary of operational and financial results for the quarter and nine months ended September 30, with a focus on our sales, markets and operational performance.

Michael will follow with more detailed discussion of the financial results for the periods as well as a review of our financial position and liquidity. I will then return for a few minutes to provide an update on our outlook for the balance of the year.

We will then open up the line for questions. As a reminder, we do not provide financial guidance.

So, I’d ask you to limit your questions to either historical periods or general trends in the business. I will begin with our sales results.

I'm pleased to report that our third quarter highlighted the continued strength of our business. Sales $12.7 million reflects a record quarter and were up 30% versus the third quarter of 2020.

Sales of $36.7 million for the nine months increased 33% over the prior year. Looking at our growth, excluding the impact of COVID-19 and our acquisitions, we grew sales organically at a compound annual growth rate of approximately 16% from the third -- for the third quarter of 2021 versus the pre-pandemic third quarter of 2019.

Let me give you some other highlights from our performance. As I mentioned, sales increased 30% over the year to $12.7 million and 33% to $36.7 million for the three and nine month periods.

Sales in constant currency increased 24% for the quarter and 28% for the nine month period. Gross profit increased to $6 million for the quarter and 31% to $18.3 million for the nine-month period.

Net income was $249,000 for the quarter and $1.6 million to nine-month period versus $459,000 and $10,000 in the prior year periods. Adjusted EBITDA increased 22% to $2 million for the quarter and 67% to $6.8 million for the nine-month period.

Organic growth in U.S. dollars was 19% of the quarter, 11% constant currency.

Organic growth was 28% for the nine-month period, 21% constant currency. Cash generated for operations was $549,000 for the quarter and $3.8 million for the nine-month period, leaving us with total cash on hand at September 30 of approximately $18 million.

Sales of consumables and services, which closely correlate to increased activity in our customer sites, augmented by our market share gains were up over 30%. While equipment sales, reflecting more normalized demand augmented by the IVFtech acquisition, which we completed in July, were up 28% for the quarter, despite some deferred shipments, primarily due to supply chain issues.

Looking at field reviews, sales into the human clinical market were up substantially for the quarter, driven by strong demand for all products and services. Sales into the cell biology and research markets also grew substantially for both periods, albeit off a much smaller base.

While sales into the animal breeding markets were down for both periods. Gross profits decreased to 47.5% for the quarter and 49.8% for the nine months versus 50.1% and 50.6% for the comparable periods last year, primarily due to product and channel mix and increased cost of materials and shipping due to certain supply chain issues.

Our operating expenses were generally in line with expectations with increased costs with maintaining investments in R&D and sales and support personnel, as well as variable costs of sales returning to historical levels and acquisition expenses post-transactions. While EBITDA growth was strong versus prior periods, EBITDA as a percentage of sale was below our target, primarily due to the hit to gross profit margins relating to supply chain issues.

During the quarter we closed on the acquisition of IVFtech a leading manufacturer of laminar flow workstations for controlling temperature, air flow and air quality in the assisted reproductive technology and laboratory markets worldwide, as well as a flatbed incubators, a number of accessories and related products. We also acquired IVFtech's affiliate direct sales business.

These acquisitions, along with the acquisition of Tek-Event, which we completed in April at add a number of high quality product lines with significant growth potential to our product portfolio and establish a direct sales presence for the entire health and foreign product range in Australia, now with a IVFtech in the Nordics regions of Denmark, Sweden, Norway, and Finland and Iceland. I'll turn the call over to Michael to provide a more detailed discussion on the numbers.

Good morning, everyone. Thank you, David.

I'm Michael Bruns, the CFO of Hamilton Thorne. I will briefly highlight the third quarter and September year-to-date results.

David has already provided updates on sales and gross profit. So, I will focus on other elements of the income statement, as well as the cash flow and liquidity of the company as of September 30th.

Operating expenses increased 32% for the quarter and 26% for the nine months ended September 30th, which included $133,000 of acquisition related expenses in Q3 and $609,000 versus no direct spending in 2020. Excluding those acquisition costs, comparable expenses increased 29% for the quarter and 21% year-to-date.

Expense increases were also attributable to the inclusion of IVFtech and Tek-Event expenses post-closing acquisitions, as well as increased non-cash share-based compensation. Expense has also increased into volume related increases in variable cost of sales, as well as continued investments in R&D, sales and support resources, continued to return to normalization included increased spending for sales and support team travel to customers and increase trade show activities.

The gain on debt extinguishment of $775,000 was the result of the forgiveness of the U.S. Paycheck Protection Program, or PPP, loan obtained in May of 2020.

The prior year, nine months change in the fair value of derivative was attributable to the debentures fully converted to equity in April of the prior year. Income tax expense increased to $883,000 for the quarter ended September 30th and to $1.4 million for the nine-month period due primarily to substantial increases in non-cash deferred tax expense.

The 2021 deferred tax expense increased to $709,000 for the quarter and $798,000 for the nine-month period to-date. The significant non-cash expense is attributable to changes in the valuation estimates of deferred tax assets and related foreign tax credits, which required reductions in those previously recognized deferred tax assets.

Net income for the quarter was $249,000, a decrease from net income of $459,000 in the prior quarter -- prior year quarter. Net income for the nine months year-to-date increase substantially to $1.6 million from only $10,000 in the prior nine months per year.

Adjusted EBITDA, which we consider an important metric for our financial performance, increased 22% to $2.03 million and 67% to $6.8 million for Q3 and year-to-date over the COVID impact of prior year of $1.7 million and $4.1 million, primarily due to more normalized operations in the first nine months of 2021 versus the substantial revenue and gross profit decreases in the second quarter of the previous year, attributable to the COVID-19 pandemic. These 2021 gains were somewhat offset by the impact of mix and supply chain on gross profit margins and planned increases in operating expenses in the period.

As a reminder, adjusted EBITDA is a non-IFRS measure. Please see the reconciliation of adjusted EBITDA to net income for the quarter and the year-to-date in our MD&A report filed today on both SEDAR and available on our website, as well as our definitions of adjusted EBITDA, organic revenue and constant currency.

Turning now to the company's cash flow and balance sheet. The company generated cash from operations of $549,000 in the third quarter and $3.8 million for the nine months year-to-date, 2021 increase of $1.8 million or 89% over the prior year.

This increased cash flow is attributable to the substantial revenue and gross profit turnaround, as well as the gradual return of the company's inventory levels and other working capital components to more normalized quarterly activity and business operations. Inventory levels are being carefully assessed and increased over several months to address increased product offerings and increasing supply chain issues.

Cash used in investing activities was $8.4 million, increased due to the total cash payments of $6.8 million made in connection with the IVFtech and Tek-Event acquisitions in July and April, respectively. In addition to the normal expenditures for ongoing investments in capitalized intangible development costs by our R&D teams and CapEx for equipment and demo units for production and sales teams.

Cash generated by financing activities was a net of $773,000, including the new term debt of $5.0 million obtained as partial financing for the IVFtech acquisition, which is substantially offset by scheduled term loan and lease obligations and continuing reductions in the company's of credit. The company's resulting cash balance of September 30th decreased to $18.0 million for the nine months year-to-date, a decrease of $3.8 million primarily attributable to acquisition active.

Working capital was steady at $22.6 million. In addition, total availability in our lines of credit has increased to $12.0 million consisting of the acquisition line of credit, as well as an additional $4 million of availability in our revolving line of credit.

This combined $12 million of bank lending availability. This is an important additional resource in our ability to complete acquisitions with a relatively low-cost of capital.

This activity combined with our cash on hand of $18 million, makes us well positioned to support our operations in the coming months, including the continuation of our acquisition program and financing further growth as the business climate continues to improve. Now, let me turn the call back over to David to comment on the HTL outlook.

Thank you, Michael. Our outlook for the balance of the year is positive.

As clinic activity is ahead of pre-pandemic levels in most of our major markets, we are expecting normalized sales growth in the fourth quarter, which should continue for the foreseeable future. While supply chain issues have clearly created new challenges, we believe that they are affecting all market participants in our field as well as many other fields.

And we have demonstrated our ability to navigate product shortages and extended lead times without a material impact on sales. We are planning across the board price increases in early 2022.

That should address at least some of the margin impacts that we have in Q3. We do repeat our caution that the resurgence of COVID-19 cases in certain parts of the world, based on new variants and supply chain issues we have discussed, could impact -- it could have an impact on sales and profitability for a period of time.

It's difficult to predict. On the acquisition front, our pipeline is more active than ever, and we are working on multiple opportunities.

And as Michael mentioned, with our cash and credit lines, we are well-positioned to execute on additional acquisition opportunities. We will now open the line up for questions.

Good morning, David and Michael. First question, you mentioned deferred shipments in the quarter, will you get those all in 4Q and will they be additive to 4Q or do you anticipate you'll have deferrals things ordered in fourth quarter, that'll be pushed into Q1 and is this all just going to be rolling forward?

Yeah. Good question.

So, some of it is hard to know, as you can imagine. Some of it, we understand very clearly.

As I mentioned, we had deferrals for a couple of reasons -- or you mentioned that I should say in our MD&A and an event. We had deferrals for a couple of reasons, one related to supply chain, and the other related to regulatory hold than we had on some of our products.

On the regulatory side, that's been completely resolved. We've shipped those.

We don't see any reason that we would have any of that pushing into subsequent quarters. On the supply chain side, it's always a challenging and a little bit unknowable.

You clearly shipped most, if not all of the things that were deferred from Q3 so far this year, and we're halfway through the third quarter. And we're expecting and hoping that we'll be able to ship everything that we have in our pipeline.

But as I say, there's always opportunity for surprises, either third-party extending lead times, or other issues that just today we don't predict. So, I would say, in summary, it's probably some amount of continued deferral as there is probably every quarter, but I think this quarter was probably a lot for the reasons I discussed.

This is working like it was a larger amount than we would normally see.

Okay. And when you talk about supply chain issues impacting your margins, is that because some products weren't available, or did your suppliers take price increases ahead of you taking your own price increases early in so [Technical Difficulty]?

Yeah. Good question.

Combination of both. In many cases we have products that -- prices have increased.

We typically increase our prices once a year, and we may in fact change that as if prices continue to be as dynamics -- our costs, I should say, continue to be as dynamic as they have been. So, we're expecting to push through price increases in Q1 and in some cases, price increases, as I said, have been -- that they have been pushed on us.

In most cases, those are of components or other, I would say, sort of raw materials that are used in products that we make rather than finished goods, because most of the finished goods we sell at all costs similarly on the annual price increase basis. The other reason costs have increased is, in certain cases there have been unavailability of components.

And again, we'll do the trade-off of time versus money and we would go out and source, either get those same components from alternative suppliers, albeit, at a higher price in some cases, or need to replace those components with what might be a functional equal, or in some cases better component again, potentially with higher prices. Another activity there or another factor that has affected our cost is increased cost of inbound shipping.

As everybody knows, shipping costs have gone up substantially, it’s not a huge factor for us. It is another one of the additive factors.

Okay. Great.

And my last question is, your M&A pipeline, what's the split between consumable services and equipment? Your last few acquisitions of all being equipment is, is a pipeline looking to be headed that direction as well.

So, as we've often said, while we have a robust set of targets, roughly 80 of the 160 plus or minus targets that are all companies that participate in our field, we would consider a to be targets. It's a, I guess, a high enough number that -- there's a level of -- depending on the interest of the target, there's a level of variety in it.

On the other hand, it's not such a high number that we could say, Hey, this quarter we're going to focus just on consumables companies or this quarter, we're going to focus just on services or geographic spread or some of the other things that we look at increasing. That being said, I would say, in general, as we've talked about our capital equipment business is higher than the -- kind of the split of the addressable market and our consumables business is lower.

And as we do believe in reversion to the mean, that indicates that in general, there are going to be more consumables businesses that are in -- there are more consumables businesses than capital equipment businesses and at a given time -- and I think today is one of those, we actually have more consumables businesses in our pipeline.

Okay. Thanks.

That's it for me.

Thank you.

Hi, guys. On the pricing increases you have coming, is this something that should be offsetting your input inflation on kind of a one-to-one basis, so that you're back to a normalized margin range into Q1, or are you also taking this opportunity to leverage your pretty attractive spot in the supply chain to maybe make pricing margin enhancing?

So, I would say -- again, to make it’s higher, that's a little bit of a combination on certain products. We are taking price increases that I think are intended to maintain margins and other cases we're taking price increases that we think will enhance margins.

Got it. And is it fair to say, based on what you've seen historically, that your price increases are permanent, meaning you're going to hold pricing even out of some sources of your input inflation pullback.

Yeah. So, again, we haven't been -- I don't think many people in our fields have been in this situation for almost 20 years in this kind of inflation.

So, I'm not sure that we had a history of that I can kind of refer to them, but we would clearly believe that's the price increases that we would make would be permanent. The flip side of that, of course, is then when you get into the discussion with customers, perhaps it gives you the opportunity to provide what looks like a more substantial discounts and win some business and still maintain solid margins.

Got it. Okay.

Thanks for that color. And then, I'm trying to just kind of figure out how large the price increases are going to be when they start showing up in Q1.

So, if you can give direct commentary, that's great. Otherwise, maybe just speak to how much of your Q3 gross margin percentage pressure was from your input inflation, as opposed to the mix stuff.

Yeah. So, I'll defer to Michael on the second question, and I'll talk a little bit about the first question.

In terms of consumables and services, we are typically looking at low single digit price increases. And in terms of our capital equipment, where we've more of the issues that I've discussed, let's say an availability to certain owners and having to replace those components, or some cases, raw materials, such as sheet metal, which I mentioned in the past swinging, we're looking at mid single digits price increases.

Got it. And last thing on the pricing from me, is this -- should we expect these prices are into effect entering in 2022, are you kind of layering throughout the first quarter?

They're intended to be effective beginning of the year when we issue our new prices. Obviously, there could be situations where we have quotes outstanding, or in case of government buying government tenders, and you have to hold price on those, but generally speaking, there'll be effective in the beginning of the year but just to some limited extent.

I wouldn't say layered in, from announcement perspective, but to some limited extent becoming impactful during the quarter.

Got it. Okay.

That's it for me. Thank you.

Thank you.

All right. Good morning and thanks for taking my call.

Just continuing the questions of the Q4, I know last year there was a bit of a catch-up in orders for equipment sales, just given some of the clinic shutdowns that happened in the early days of the pandemic. And I realized there's a bunch of moving parts for the Q4 this year, but any additional color that you can give on, at least that dynamic, if there is expected to be some stronger seasonality year-over-year, or maybe a bit more tempered just given that was a bit of a unique scenario last year.

Yeah. So, just reminding everybody back of last year, there were, I think, two elements that had some uniqueness to them.

One was, as you mentioned, the people playing a little bit of catch-up after, not quite a year, maybe six to nine months of caution on the capital equipment side. And the other was very specific to -- a couple of our European markets where there was a -- that holiday or that decrease for a period of time, that expired at the end of December.

So, there's clearly some buying forward from Q1 into Q4. The ladder, we -- obviously, we're not going to see that this year, that was a one-time event.

On the former, we're actually seeing pretty strong continued demand on the capital equipment side. Just the way -- as we've talked about the lumpiness of whole laboratory systems, for example, the way that the chips has fallen, and we don't have any large labs in the pipeline for Q4, but we do have -- a fairly large number would feels like larger than normal of good size workstation orders, which can be an extra station, which was kind of a microscope -- micro manipulators and laser.

And it could be a hundred thousand dollars sale and they have -- those, of course, add up as well. So, in summary, I think we're expecting a very much in the normalized Q4.

Okay. That's helpful.

And the ability to meet that -- what sounds like pretty decent demand for Q4. Do you anticipate any challenges there in the supply chain, or would it be more of just -- we could see the supply chain impact more on the costs on the sales?

So, unfortunately, there's a little bit of unknown to that. So, today, again, our -- we have a fair level of confidence that supply chain should not lead to meaningful deferrals.

There should be -- could be some deferrals in Q4, but meaningful deferrals. It may, in fact, impact, and I can actually tell you will impact and continue to impact margins to some extent, because I know we can have some specific situations where we had to go out and source alternative products at a higher cost.

So, that is a continuing effect. And then, as you pointed out, we're also pretty busy.

So, again, not -- I guess I shouldn't knock on wood. We haven't had any significant -- any -- actually any closures due to COVID situations in any of our assembly and manufacturing areas.

But that's also -- it could be a risk as well. We do need people to manufacture the products that we have and if we were to hit with some sort of labor situation, and I guess that could be challenging as well.

But as I said, all of the things -- well, first of all, we still -- WE'RE very positive about Q4. And secondly, I think all of the things that we've talked about 18 months into it, it still feels funny to say this, our transitory nature and that as we get past this into Q1, Q2, and again, if in fact things bodes -- as most people predict on the supply chain side, on the labor side, on the inflation side, do in fact normalize, I think that bodes well for us.

Okay. That's helpful context.

And then, my other question, I noticed in the release, there was a mention of market share gains in the quarter. If you can just speak on, what the market share gains were?

And also is this -- because perhaps some of the smaller competitors are having more challenges dealing with supply chain issues and Hamilton Thorne in turn is able to pick up some competitive wins, if that's the dynamic playing out?

Yeah. So, I think, again, rather than the -- like, I can certainly point to specific customers that we've picked up or we've gained more share.

I think when we talk about supply chain -- sorry -- market share gains, we're talking about on the whole where we continue to grow faster than the overall market. The overall market is growing in -- again, we position -- we believe it's around 7%.

Our two larger public competitors always talk about 5% to 10% and yet our organic growth for that period was 16% and getting 11% in constant currency. So, maybe not hugely fast to the market, it's still fast in the market.

And then, we did do a comparison, which I talked about in our -- my comments, but maybe it's worth discussing -- looked at 2019, how have we grown from a pre-pandemic perspective versus just from that period. And we grew 16% on a compound annual basis, again, with our best to just eliminate the noise from acquisitions.

And certainly looking at this morning, one of our larger public competitors had single digit growth in the same comparison periods. So, I think we're growing pretty substantially and we're taking share across the board.

Okay. Good to hear.

Thank you for taking my questions.

Thank you.

Good morning, guys. I was just calling in for Chelsea.

Can you just touch on a little bit on the integration and in terms of say IVFtech R&D expenses, you called it out in the MD&A. Do you see synergies on that going forward?

Is this the new run rate? How are you we thinking about that?

So, in terms of integration, I'll just give it -- a conversation about how we generally are organized and where we look for, and how we think about integration. So, we generally look at the -- we buy great businesses that are additive to what we do in terms of product line, in the case of IVFtech, both product line and territory.

And that certainly while we're happy to take because of integration savings that can come whether they're redundant facilities and personnel and those sorts of things. In general, we're more focused on investing in those businesses that we buy to continue to grow them.

So to expand their sales teams, in some cases, depending upon management -- actually IVFtech team had a pretty solid management, and adding certain financial, like financial resources if they don't have a controller. So, we typically do an acquisition and probably invest more than we see immediate synergies.

I think, frankly, that's not that unusual for most companies that are growth-oriented rather than still kind of addition by subtraction. And so that's what we've seen.

Specifically, on the R&D front, we've got a couple of new projects, at -- one large port new project at the IVFtech that we've committed to invest in as part of our due diligence process. We certainly learned a lot about it, and that was one of the things that excited us about this.

Like most R&D, it'll take a couple of years to pay off. But we think that's a worthwhile investment.

So, I think that's -- to your point, I kind of a steady state number.

Perfect. That's really helpful color.

Thank you. Just in terms of the supply chain issues that are obviously industry-wide here.

Is that -- do you think that's accelerating consolidation a little bit, is that creating some opportunistic -- acquisition opportunities there? How is that affecting your M&A pipeline?

So, I would say a combination -- if you think about our field, it's one of the things we like about is it's a large addressable market for what we do, which is sell products and services into the IVF -- primarily the IVF labs, $1.2 billion give or take the addressable market. But on the other hand -- and highly fragmented and it's been growing very well.

So, for a number of years, there've been a lot of relatively small players that have been pretty successful. And over the past two or three years, we've certainly seen three major externalities affecting the market.

One is the transition from getting a little technical from MDV, which is medical device practice, MDR, which is medical device regulation in Europe [ph] which substantially increases the regulatory burden on some of these smaller where -- focused manufacturers. The second is COVID itself, which has obviously into significant ups and downs in everybody's performance.

And fortunately, it's a little easier to navigate when you're larger than when you're smaller. And third is supply chain, which has the same thing.

So, we are clearly seeing back to why -- one of the reasons I think our M&A pipeline is as robust as it's ever been is we're seeing that for some of these smaller players, they realize that there is in fact uncertainty in the market and uncertainty in the business and things that could impact them and aligning with a larger player, such as us with a greater financial resources, management resources, regulatory resources, and all of those things, can certainly be beneficial. That being said, we're trying while we -- I guess there's a level of being opportunistic about it.

We're much more interested in partnering with quality companies and bringing in quality products. So, I would hope you won't -- I don't believe they'll see us opportunistically go value, the bargain, hunting and buy either troubled businesses -- let's say, troubled businesses because they're available as they haven't been able to navigate these things as easily.

On the other hand, if we find a great business that maybe is having a slight interruption and a slight problem that we can fully understand and understand how it won't apply to us, then we would go in all guns on that displacing.

Understood. Understood.

Thank you. And then just apologies.

But I did miss it in the earlier answer. You mentioned low single digit price increases on which side?

In the mid single digit on which side?

Yeah. So, low single digits on the consumables and mid single digits on the capital equipment -- consumables and services, I should say.

And mid single digits on capital equipment.

Thank you so much. Okay.

Thanks for taking my questions and cheers.

Hi. Good morning.

Just looking at your G&A expense here for the quarter, it looks like it was a down about 15% sequentially from Q2, any particular reason why the decrease here and I guess what should we expect that for Q4?

Yeah. So, Michael, I know you've been -- you commented a little bit more on the operating expenses in your remarks.

Maybe if you don't mind taking this, would be helpful.

Sure. So, the operating expenses have continued to scale, as we expect back to sort of pre-COVID levels for all the right reasons.

Our sales teams are starting to get out and engage with sales -- with the customers and distributors a little more. Our service teams are getting back into action for both new equipment installs as well as upgrades and other issues going on to serve our customer base.

So, for all those right reasons and trade shows are starting to scale back up. ASRM was actually held live in October in Baltimore.

And that was a substantial return to normalization for the industry. We did not attend to ESRI in the summer, which is the single largest event.

So, those expenses did not occur over ASRM and other expenses are scaling up. So, those are some of the comparison of Q2 to Q3 with more expenses again for all those right reasons, a little bit of a scale.

And also then a little bit of the margin impact we talked in terms of impacting the overall EBITDA. But headed in the right direction and the expense growth that we're seeing, variable cost of sales, additional commissions and other sort of costs.

So, all moving, all necessary elements to keep growing the sales top line.

Okay. Yeah.

No, that makes sense. That's everything for me for now.

Thank you.

Sure.

Yeah. Hi.

It's Stefan Quenneville from Echelon. Just a quick question.

Your MD&A, you mentioned clinical hold on one of your products. Can you give us some color on that and maybe size, what that means for you?

Sure. So, there's -- like everything is a lot of complication to it, but simplistically, as we move from MDV to MDR, which we trained -- we changed an auditor for -- at one of our companies for one of our product lines.

And we got in a gap period between some certifications. So, we did some changes to how we treated the product and essentially, we're now -- so, it's in the rear view mirror that the -- that regulatory hold was completely off.

We shipped everything that would have been shipped in Q3, back into Q4. And we don't see any reason that would be any further deferrals because of -- or problems because of that.

So that's my knowledge. We did have some delays.

We did not lose any business. It was all deferred.

And we're not going to quantify it, but it certainly was meaningful number. We would have mentioned it, but it wasn't as big as the supply chain impact.

Great. Thanks for the color guys.

That's it for me.

Sure. Thank you, Stefan.

Yeah. You mentioned that activity in the industry is back to pre-COVID levels.

Is that at the level of procedures, or the level of build-out of clinics or the level of acquisition of the equipment?

So, in that specific comment, I was referring to procedures. And in general, just to make sure we're clear that's generally the case.

There were certainly some submarkets or specific countries where that's not the case either because they haven't rebounded back quite as quickly, or I think of -- again, not huge markets, but still important to us in Australia over the summer, there was a lockdown in about half the half the country. So that's certainly affected procedures to a meaningful degree.

Again, in a small market. But in our largest markets, which are U.S., Germany, U.K., we're certainly seeing, either back to pre-pandemic levels or in some cases, the concept that we've talked about in the past of pent-up demand, well over pre-pandemic levels.

And then, the constraint on growth at the clinic performance level can be their ability to get the personnel that they need to do the work. And from -- how that impacts our business in terms of consumables, clearly, we've talked about this almost a one-to-one correlation between clinic activity and number of procedures and consumable activities.

So that jumps -- that's helped grow drive our consumables growth. And then on the capital equipment side, that obviously has a little bit of lumpiness because while over the long-term, there's certainly a direct connection in terms of need for additional equipment to have that staff you have -- you have to hire, have a place to work, in the short-term it can vary clinically.

Okay. As far as consumables, you mentioned, your pipeline is probably more biased to consumables because of reversion to the mean.

You've got your pipettes and your cell culture media from the Gynemed acquisition. What are the other big areas of consumables, or is it geographic opportunities you're looking at more than product?

Sure. So, some of it can be geographic because certain products -- even though, they're very well respected and do well in the areas where they're -- where we have good market share.

We're building our market share in other places, but it can be a build versus buy equation. But there are some other areas where we have -- again, we may have products, but they're not quite as mature or our market leadership in some cases.

So, I would think of cryogenic products, particularly vitrification products. We do have our own vitrification media, and -- but we don't have our own vitrification tool, which is a little device, as well as some of the storage containers and things that are used to freeze whether it's eggs, embryos and to a lesser extent sperm.

Another areas could be products that do have some overlap between the clinic and the procedure room. Those would be ovum pick up needles.

And that's the needle that is used to basically pick up the eggs from the ovaries. And then, catheters, embryo transfer catheters where again embryo of this mature is loaded in the IVF lab and then inject -- implanted in the procedure room.

So, those are some areas where we -- three specific areas. And then, of course, there's something else -- some smaller areas as well.

Got it. Your answer brought up another question.

When you mentioned that you have products selling in some countries that maybe don't have traction in other countries and be faster to buy something there. What about cell culture media in the U.S.?

How is Gynemed being taken up in the U.S., are you encouraged by what you're seeing?

So, I'm more encouraged than I was last quarter. We had seen some impact, but -- so, we've certainly got now a reasonable number of customers, primarily focusing on some of the specific media that we sell that is unique to Gynemed.

And as I think I'd mentioned, we have a -- it's kind of a three-step process, which is introduced the product with these unique areas, get your foot in the door that expands the unique products across a much more broad base of customers. And then into those broad base of customers use that foot in the door to try to leverage in other Gynemed products.

So, I would say we're -- after frankly, a lot of time and significant effort, we've -- I wouldn't say we've completely succeeded at phase one, but we're showing where it got strong -- much stronger performance on phase one and clearly have a good number of clinics, not huge, but a good number of clinics who adopted some of these unique products. And again, we're -- so we have a base to which to expand on.

Again, I don't want to overstate it. It has not yet had any material effect or even meaningful effect on our numbers.

But it's a long, long, long -- over the long haul, I think it's going to be well worth it.

Okay. And then just to finish off, in my first set of questions, I asked how much was deferred in Q3 and is moved into Q4.

And I don't think you gave a dollar amount for that. And I'm wondering if you can.

So, I didn't give a dollar amount and we decided not to. But it's -- I would say -- again, you can view -- decide what's material or not, but we didn't view it to be a material amount, but obviously had meaningful impact on our numbers.

Okay. That's it for me.

Thanks.

So, again, I would like to thank everybody for participating in our third quarter conference call. As you are asking great questions and good dialogue, and I'm looking forward to the opportunity to speak with everybody again in -- after we put out our Q4 numbers and the -- meantime I encourage everybody to visit our website, our investor oriented website www.hamiltonthorne.ltd for more information about the company, our products, and our initiatives.

Thank you very much. Good morning to all.