Welcome to the Hamilton Thorne Ltd. Second Quarter 2023 Earnings Conference Call. Before turning the call over to your host today, please be reminded of our standard public company policy on forward-looking information and use of non-IFRS measures. Certain information presented or otherwise discussed on this call may contain forward-looking statements. These statements may involve, but are not limited to, comments relating to strategies, expectations, planned operations, product announcements, scientific advances, or future actions. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Should one or more risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance, or achievements could vary materially from those expressed or implied by these forward-looking statements. These factors should be considered carefully, and prospective investors and other parties should not place undue reliance on these forward-looking statements. The company assumes no obligation to update such forward-looking statements or to update the reasons why actual results could differ from those reflected in the forward-looking statements, unless and until required by securities laws applicable to the company. Additional information identifying risks and uncertainties is contained in filings by the company with the Canadian Securities Regulators, including, without limitation, the company's Management's Discussion and Analysis for the quarter and six months ended 30th June, 2023, which filings are available under the company's profile at www.sedar.com. During this call, the company may reference adjusted EBITDA, constant currency, and organic growth as non-IFRS measures, which are used by management as measures of financial performance. Please see the sections entitled Use of Non-IFRS Measures and Results of Operations in the company's Management's Discussion and Analysis for the periods covered for further information and a reconciliation of adjusted EBITDA to net income. Let me turn the call over to Hamilton Thorne's CEO, David Wolf. Thank you, and good morning, and welcome to everybody to Hamilton Thorne's second quarter 2023 earnings conference call. I would like to introduce Francesco Fragasso, who, our CFO, will also be with me on the call. Our call today will have the following format. First, I'll provide a summary of operational and financial results for the quarter and 6 months ended June 30, with a focus on our sales, markets, and operational performance. Francesco will follow with a more detailed discussion of our financial results for the periods, as well as a review of our financial position and liquidity. I'll then return for a few minutes to provide some information on our outlook for the balance of 2023, and we'll open the line up for questions. I would remind all participants that we do not provide financial guidance, I'd ask you to limit questions to either historical periods or general trends in the business. I'll begin with our sales results. I am pleased to report that our strong start to 2023 continued when we posted sales of $16.4 million and adjusted EBITDA of $2.8 million, versus sales of $14.2 million and adjusted EBITDA of $2.4 million in the prior year for this most recent quarter. This represents 15% sales growth for the quarter, and 17% sales growth for the year to date. Our organic growth, which eliminates the effect of both acquisitions and exchange rates, was up 5% for the quarter. This comes following an exceptionally strong 15% growth, organic growth in Q1. Therefore, we're about 10% for the year, which is essentially on plan. As we have discussed in prior calls, due to stabilizing exchange rates, currency fluctuations and translating financial statements into our presentation currency of U.S. dollars had a minimal impact this quarter, but did have an impact for the year to date, reducing reported revenues by approximately 2%-3%. Fortunately, these headwinds are easing, and I'll discuss this a little bit more in our outlook section. I'm also happy to report that while supply chain issues continue from time to time, as mentioned in our last call, they are far more normalized, leading to fewer delays in production and shipping, and even some cost reductions in some commodity products, which had increased prices significantly in over the past year. Let me summarize the highlights from our performance. As I mentioned, sales increased 15% year-over-year to $16.4 million for the quarter. Sales for the 6 months increased 17% to $33.1 million. Sales increased 14% for the quarter and 19% for the 6-month period on a constant currency basis. Gross profit increased 21% to $8.5 million for the quarter and 22% to $17 million for the 6-month period. Essentially, gross profit growth is outpacing sales growth. Adjusted EBITDA increased 16% to $2.8 million for the quarter, increased 15% to $5.7 million for the 6-month period. As mentioned, organic growth was 5% for the quarter and 10%, on plan 10% for the 6-month period. Cash generated for operations was $1.8 billion for the quarter, leaving us with total cash on hand of June 30 of just over $16 million. Looking a little more deeply into the sales performance, equipment sales growth was in the single digits for the quarter and year-to-date, reflecting some delays, which we mentioned on our last call, on orders until Q3, while consumable software and services grew over 20% in both periods. Sales were up across all the geographic areas that we serve, with our Asia Pacific region showing the strongest growth in the quarter. Sales in China returned to more normal levels following the relaxation of COVID restrictions early in the year. Our Australian business picked up significantly as well. Our strategy to increase sales of higher margin proprietary equipment and software, software services and branded consumables, combined with increased direct sales of products, yielded gross profit margin increases to 52% for the quarter and 51.3% for the 6 months, ending after 6 months that ended in June, versus 49.8 and 49.3 in the prior periods. Approximately a 200 basis point improvement over those prior periods. I'll now turn the call over to Francesco to provide more detailed results on the numbers. Thank you, David. Good morning, everyone. I'm Francesco Fragasso, CFO of Hamilton Thorne. I will briefly highlight the second quarter of 2023 financial results. David has already provided an update on sales and gross profit. I will focus on the other elements of the income statement, as well as the cash flow and liquidity of the company. Operating expenses in 2023 were $8.9 million for the quarter and $16.9 million for the first six months, an increase of 36% for both periods versus the same periods of 2022. Expense increase was mainly due to the additional Microptic expenses for the full period of 2023. Expenses related to M&A, increased costs associated with investment in sales and other personnel to support growth, and increased share-based compensation. The return to a pre-COVID level for the sales and marketing activities is also a factor for expenses increase in 2023, compared to the same period of last year. Overall increases in operating expenses were in line with our expectations. Net interest expense in Q2 2023 increased by $255,000 to $358,000, due to additional term debt incurred to finance Microptic acquisition in November 2022, and higher use of a bank line of credit to fund working capital, partially offset by the repayment of outstanding principal on term loans. In the second quarter, income tax expense decreased to a $271,000 tax credit from a $226,000 tax expense in Q2 2022. This was primarily due to the reductions in income before taxes and to deferred income tax recovery of $456,000 in Q2 2023, compared to a deferred income tax expense of $20,000 in the same period of 2022. The change relates to the temporary differences between income tax value and the carrying value of assets and liabilities. Net loss for the second quarter was $439,000, compared to a net income of $275,000 in the prior year quarter. Net loss for the six-month period was $362,000, versus a net income of $830,000 in the prior year period. This is primarily due to the increase of operating and interest expenses I previously mentioned, partially offset by decrease in income taxes. Adjusted EBITDA, which we consider an important metric of our financial performance, increased by 16% to $2.8 million for the quarter, and increased 15% to $5.7 million for the six-month period. This was mainly due to revenue gross profit growth, offset by planned increase in operating expenses. 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 six months in our MD&A report filed today on both SEDAR and on our website. Turning now to the company's cash flow and balance sheet. The company's cash balance at the end of June 2023 was $16.4 million, compared to $16.7 million at the end of 2022, a decrease of $320,000. The decrease in cash balances was primarily due to investment in working capital to support expected growth, investment in product development, and in expanding our manufacturing capacity, and payment related to M&A activities. The company generated cash from operation of $1.7 million for the first six months of 2023, after having invested in inventories, increased accounts receivable, and reduced accounts payable. In the first six months of 2023, cash used in investing activity was $1.6 million. Of this, approximately $800,000 were related to the normal expenditure in PP&E and for ongoing investments in capitalizing tangible of product development activities, and approximately $800,000 were related to leasehold improvement, equipment, and furniture related in expansion of manufacturing capacity in some of our operating businesses. Cash used in financing activities was $386,000 for the six months of 2023. Those were mainly related to payment of scheduled term loans and lease obligations, net of $1.6 million proceeds from a working capital line of credit. Note payables and term loans outstanding total $14.4 million at the end of June 2023, equal to about 1.3x the last twelve months adjusted EBITDA. At the end of Q2 2023, the company continued to have a strong liquidity position of $26.4 million, including $16.4 million in available cash and $10 million in unused borrowing capacity, including $8 million line of credit for M&A, which was approved in May 2022. This liquidity availability makes us well positioned to support our acquisition program and finance the expected growth. I will now turn the call back over to David to comment on the company outlook. David? Thank you, Francesco. Looking forward into the balance of 2023, we continue to feel our company is in a great position as demand for our products and services remains strong based on the positive trends in our field. For example, the World Health Organization's latest research revealed an increase in the prevalence of infertility from one in eight families less than 10 years ago to one in every six families of reproductive age today. While there are a number of factors driving this, the societal trend of deferring family formation until later in life, when conception obviously becomes biologically more difficult, plays a significant role. In addition, improved affordability, whether due to overall income growth, particularly in developing countries, added governmental benefits or private health insurance, is also a trend that will continue to drive growth. As an example of this trend, adding to benefits they already offer in the U.S. and Canada, just last week, Amazon announced a partnership with benefits provider to offer family-building support to its employees in the other 50 countries, in the over 50 countries in which they operate. We have seen the direct effect of the, in, of this increase in demand in the more recurring revenue parts of our business, including sales of consumables, software, and services. As we expected, first half capital equipment sales growth moderated, as several of our distributors who built up inventory during periods of supply shortages worked through those positions, which dampened our organic growth in Q2. We reiterate that the underlying demand for our products remains strong. Given our current order backlog and pipeline, we expect to continue to have organic sales growth in the 10% range in the second half of the year. As previously mentioned, exchange rate headwinds have stabilized. If this trend continues, we expect foreign exchange fluctuations to actually provide some tailwinds in the second half of the year. Regarding our M&A activities, we continue to have an extensive pipeline and actively are working on multiple acquisition opportunities. As Francesco mentioned, with total liquidity of over $26 million from our significant cash on hand, unused lines of credit for the debt capacity, we are well positioned to continue to execute on our acquisition program. In summary, we feel extremely positive about our market position and our confidence in our team's ability to execute on our long-term strategy of sales, growth, and EBITDA expansion by investing in our own organic growth while building scale, which enhancing our product offerings and expanding our geographic and direct sales footprint through acquisitions. We will now open the line up for questions. Operator, please assemble the queue and let me know when we're ready for our first question. We will now begin the question-and-answer session. To ask a question, you may press Star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the key. To withdraw from the question queue, please Press Star then two. At this time, we will pause momentarily to assemble our roster. The first question is from David Martin of Bloom Burton. Please go ahead. Good morning, David and Francesco. First question, when you acquire businesses in geographies where you haven't had sales previously, you transition to direct sales from distributors over time. I, I'm wondering how far you've proceeded along this path in the new markets you've entered over the past few years. All right. Great. Thank you. Yes, I think you've articulated both our strategy and the fact that it does in fact take some time to accomplish that. We also do value, you know, even though ultimately our long-term plan is to move as much as we can to direct sales, we do value distribution partners in particular markets where, for some reason, whether it's relationship or capability, they might in fact have or segment, they might in fact have additional capabilities. Overall, I would say those plans are on, you know, well on track. Our most mature major acquisition, now, again, it's almost over five years ago that we completed this, which is the acquisition of Dynamed, in Germany. Which has a direct sales team servicing the entire DACH region, Germany, Austria, and Switzerland. I would say, the conversion of our direct, of our direct sales, from our sales from distribution to direct is essentially complete. We don't really work with any, any continued, distributors in that market, in our core markets of IVF. Now, we may in fact work with distributors in the more tangential research and particularly in the animal market, where there's a you know, really strong specialty. In other markets, it's a, you know, it's a work in, work in process. I think we've made great, even though it's not technically an acquisition, we did change our strategy by beginning to offer direct sales in the U.S. in 7, the 2000, late 2010s. I would say there as well, we're very far along in converting direct sales, and this is sort of the difference, in a way, from newly acquired entities or even the, you know, some of the entities we've helped for a while, sales from distribution to direct. There's always, as I mentioned, there are always exceptions, but generally speaking, people will come to us to, to, to buy direct. Going along the timeline, I would say, U.K. is, is well along as well. Our most recent acquisitions, which we completed in 2021 and 2022, which are in AgTech in the Nordic region, and Microptic in the Spain region, in Spain, are still works in process. I would say in Nordics, making good progress, they essentially have a full sales team, trained, well trained, and again, it's just, you know, nothing happens overnight. And Spain, I would guess we're, I would say we're, we're still in kind of relatively in the early days. Maybe a little more granularity than, than, than you wanted, but clearly, the, the, the, the goal is continuing. I don't want to cherry-pick one particular piece of, of data, both because it just happens to be very good, and and it's, and I don't want to find myself every quarter having to report on this, but in Q2 of this year, we actually had, our, our highest record percentage of sales from, direct sales. You know, moving from our normal kind of ish 60% direct versus distribution, to into the, into the mid- to high 60s. Very, very strong on that, maybe just one quarter, and I don't want to, again, paint a strong trend, you know, paint a picture about a trend, but that's one of the things that's helped translate directly into improved margins. Actually, my next question is about the margins. Do you think there's still room to move the gross margin up, going forward, you know, gradually, you know, putting aside quarter-to-quarter differences in product mix? Is there still room to move the gross margin up? Again, over, and I don't want to pin myself to a period, over the longer term, absolutely. The, the, the key drivers in our short-term margins is you picked up completely as product mix. We may just in one quarter have one or another, just be a somewhat higher, somewhat lower margin. Our key drivers for longer-term margin growth are increasing our direct sales percentage of sales that we sell direct versus through distribution, because then we effectively keep the entire margin that we normally would pay to a distributor. I'll come back in a second and talk about how that, that's EBITDA. More and more increasing sales of products that we make ourselves or have made up for us by contract manufacturers versus third-party distribution. Third-party distribution, as you can imagine, we're, we're earning that distributor's margin, which is well below our, our, what has been our historical for the past few years, margin margin of 50%, whereas if we buy the product and own it, we're certainly going to be much closer to, and in many cases, depending on the product category, far in excess of, of 50%. In terms of impact on EBITDA, and that maybe ties back into your first question, in, in the short term, you know, investing in greater direct sales actually has a dampening effect on EBITDA. I think that's pretty obvious. You're, you're hiring a direct sales team. They're not necessarily fully, fully deployed at that point. Over the longer term, as we can continue to increase the effectiveness of that force, that sales force, get more performance out of them, we can accomplish what I described, which is more and more direct sales. While we may still have to add some direct sales personnel over time, we'll get essentially positive leverage from that sales team. Okay, thanks. I'll get back in the queue. Thank you. Again, if you have a question, please Press Star, then one. The next question is from Justin Keywood of Stifel. Please go ahead. Good morning. Thanks for taking my call, and nice to see the double-digit growth in both sales and EBITDA. Just on the equipment sales that got pushed into Q3, are you able to quantify that amount? Yeah, I, I would say it, so quick answer is, is no, we, we, we, we're not going to quantify that amount, but it's really a question of over the course, and, and I discussed this a little more in, in our last call, but I'll, I'll repeat it. Over the course of the first half of the year, it became obvious to us, and maybe we should have picked up on this earlier, that certain of our large- couple of our large stocking distributors, or three of our large stocking distributors, purchased significant amounts of stock in really whether it's late 2021 or through 2022, as we were experiencing supply chain issues, in order to protect themselves against those supply chain problems. As our supply chain issues have diminished, along with others in our category, they began to work through those, those inventories. It's not like we had a big order teed up at the end of Q2, and for whatever reason, fell into Q3. That being said, we clearly are seeing those, I don't want to the floodgates are opening, but we're clearly seeing that, that, that, that backlog and, and inventory being worked through. We received an order, I'd have to actually check whether it was in the end of Q2 or early in Q3, from one of those stocking distributors, essentially, you know, a significant order for that will continue to draw down through the balance of the year, enough to make that product category just back to, back, you know, back, back to the real, really significant sales. We're working on, you know, working on the others with various, you know, various timings associated with them. It's not like a discrete event, it's more of a, a trend. As I, I mentioned, you know, I, I feel, I feel confident that we'll return to, you know, kind of showing, you know, we should have at least double-digit growth on those products in, in the second half of the year. Okay, that's helpful. One of Hamilton's larger peers, Vitrolife, reported a growth that missed estimates for their calendar Q2, and spoke to a pandemic cycle that was returning to more normalized levels. This appears to be contrary to Hamilton's outlook, including the 10% organic growth in the back half of the year. Are you able just to speak to that dynamic, why Hamilton continues to achieve what appears to be higher growth than some of the other peers in the industry? Yeah. First of all, I don't want to spend my call either, either commenting too much on or certainly disparaging, you know, another company in our, in our, in our field, because they're, they're, they're a strong business, and we should never, never, never, just don't think that's the right thing to do. I clearly, you know, Vitrolife has some discrete issues that we don't have. They have a fairly robust, but not, you know, doesn't cover every base in the laboratory, but a fairly robust lines of consumables. I think you noticed in the quarter, their consumables business actually performed pretty well. Their capital equipment business is very narrow, really only two point solutions, versus our capital equipment business, which is very broad. I think it's, you know, just classic portfolio theory. When you have two products, you can have, you know, ups and downs that, that impact those. That's one of the reasons that we've adopted our strategy of being able to provide a broad, broad range of products, because, you know, as I, as I mentioned, we had our ups and downs in the, in the quarter, particularly with one, one category, one, one set of orders that, that, that, you know, didn't come in but, you know, had now have. If that were our only product, we would have, probably, you know, shown a, a fairly, what I would call disappointing quarter. Again, it's balanced by the other broad product criteria that we have. You know, I'm not, not thrilled with single-digit growth, but, you know, in 1 category, when you can understand it and explain it, I think, I think that's fine. Then again, not to get too hung up on, on, on Vitrolife, they clearly did an acquisition of a genetics business, a genomics business, one year ago that they're, they're working through. That business has, has, has declined. Not clear to me whether it's because that business is actually declining for, for them, or, you know, in, you know, for the specialty players, or it's got to do with their, you know, their, their execution. I think those are kind of secular issues in a way relating to the Vitrolife, not so much the, the, the trends in our, in our field. That being said, I think we have consistently outperformed the overall growth in our field for some of the reasons that we've discussed. We, you know, we're, we're continuing to invest and expand in, in direct sales, which is an opportunity to grow. We're getting better synergies from the resale of and cross-selling of our products across our multiple sales territories. And those all all contribute to driving above average growth. That's helpful context. If I could just ask, one follow-up question, maybe in a different way. Is the higher interest rate environment impacting the consumer at all, as far as the demand for IVF services? Are you seeing any early indication of this? The quick answer is, is no, but that would be somewhat delayed, as you can imagine, and also maybe somewhat skewed from a geography perspective, in, in the sense that, well over 50% of our business is based in Europe, where there's very strong, social support, basically governmental support and subsidies for, for IVF. It doesn't mean people don't pay anything out of pocket, but the out-of-pocket payments are, are substantially limited. People aren't, let's say, doing, carrying second mortgages on their house to be able to afford, for IVF or doing, you know, home equity lines of credit. The U.S. that's a different story. Still largely private pay. Though, as I mentioned in the call, that, that trend is moving, both states adding, additional fertility benefits, again, slowly over time, and large employers. Walmart last year added a fertility benefit. Amazon has always had one in the U.S. but now is adding it worldwide, and we're seeing more and more fertility benefit momentum. You know, again, I think the, the fact that somebody else is paying for it or largely contributing to it, that reduces the, the, the sensitivity, I guess, to interest rates. You know, again, there's a fairly big lag in this. Quick answer is we haven't seen it. But I wouldn't, you know. I don't want to be completely, you know, sanguine about it and say, well, that it won't have an impact over time. Understood. Thank you very much. Again, if you have a question, please Press Star then one. Next, we have a question from Devin Schilling of PI Financial. Please go ahead. Hi, David, good morning. Just a question here on you guys' overall strategy. I know over the last few years here, you guys have been really pursuing market share gains over, over focusing on, on free cash flow growth. Has this changed at all now, given where the business is currently at with the, with the current scale of the business? I guess, will the near-term focus continue to be on, on grabbing more share here, or is there now more of an opportunity to start pulling on that free cash flow lever? Let me respond briefly at, at sort of the high level on the strategy and how that has evolved over time. I'll, I'll, I'll move- I'll, I'll let Francesco give a little more color on how we think about free cash flow and, and, and the emphasis that we have on that. Overall, I would say, it is still relatively early innings in this, in this, long-term game that we're, we're playing. I hopefully haven't mixed too many sports metaphors in that. We, you know, we're, are, are still, you know, a meaningful player. We're one of the largest players, certainly top, top 10, if not top four or five, in our, in our field, but, you know, still highly, highly fragmented. There's lots of opportunity for us to continue to, to gain market share, whether it's through our, even though, you know, it's, it's, it can be seen on the one, one hand, it's actually fairly aggressive, by far the most aggressive acquisition approach in our, in our field, and through investing in all the things that, that drive, drive organic growth. I would say we are gonna continue with a, our balanced approach to not necessarily maximizing sales growth and market share gains versus, let's say, what we could do if we dial back investments in those things and, and be able to improve, you know, EBITDA, which ultimately obviously translates to, to free cash flow. We, we, you know, we're gonna take a, a balanced approach. I think there is opportunity, even in that balance, to improve, and it's a lot, you know, somewhat dependent on gross profit margins continuing to, you know, and stabilize at the levels they are at or near the levels they're at, and us being able to manage expenses. I think there's EBITDA, potential EBITDA expansion while we can continue to have that, that emphasis on growth. We're clearly not, you know. I think it's too early for us to sort of dial back on the growth side and say that we should become what I think we can be at some point, particularly when we get greater scale, which is, you know, much more of an EBITDA engine with, with much higher operating leverage. Francesco, if you don't mind, maybe giving some comments on our, our perspective on, you know, free cash flow, how we measure it, and Yeah. you know, how we're thinking about that, that would be very helpful. Yes. Yes. Yes, and we continue to focus on profitability and cash flow as well. Of course, just to pick up from what David just said, we have to invest in supporting future growth, and that creates some timing effect from a cash flow, even EBITDA point of view. How we measure our, let's say, free cash flow conversion, is, is, is trying to eliminate what is not recurring in, in a normal course of business. I, I mentioned, for instance, on the expense side, we detailed in our MD&A what are the non-recurring or one-off items that brings us to the adjusted EBITDA. There is also a capital expenditure component to it. I mentioned before that this year, out of $1.6 million of capitalized expenditure, $800,000 of it was related to, let's say, initial activity, which was a major expansion in our production capacity. Of course, all of that is reported in our financials. How we measure our free cash flow conversion is trying to exclude those one-time expansion costs so that our, let's say, adjusted free cash flow conversion is defined as adjusted EBITDA, less cash taxes, less interest expenses, less lease payments, less normal level of capitalized expenditure, tangible and intangible. If you do that, you will see that for the last 12 months, our conversion rate of adjusted EBITDA to free cash flow was likely about 50%. I don't know if I answered your question fully. Yeah, no, that was, that was very helpful and, and detailed there. Thank you so much. That's everything from me. The next question is a follow-up from Justin Key of Stifel. Please go ahead. Hi, thanks for taking the follow-up. Just on the commentary around M&A, obviously, the balance sheet remains in, in solid shape here. Any indication of the timing when we could see some additional M&A? Has there been any change in target multiples? Yeah, thank you. I, I appreciate the, the question, but as you, as you probably know, we've, we've been pretty tried to be pretty careful in the past, and we will continue in the future, about not, you know, signaling anything on the M&A front until we're ready to actually, you know, disclose a disclose a transaction. So, so on the timing question, I, I think I'm just gonna, again, stick to my script, and of course, I'm just gonna have to punt on, on that one. In terms of multiples, as I, as I somewhat mentioned, we, you know, we are by clearly the most active acquirer of mature, mature, you know, again, still sometimes relatively small, but mature businesses, and we've been pretty influential in the way in, in setting the multiples. We don't view that they've, they've changed materially, certainly over the last couple of years, maybe over the last, you know, eight years since we started this and there was no acquisition activity and it was a little, little bit easier to get lower multiples. Now they're, you know, I think we're seeing for good, solid businesses, you know, with, with the, the kinds of dynamics that we want with sales, sales growth, you know, earning-earnings momentum, some proprietary products, and again, that can, that can vary, you know, sales multiples, EBITDA multiples in the 6-8x range. We could clearly see lower multiples if the, if, you know, there's lack of some of those things that we've talked about, that they may be less desirable to us, or, or higher multiples. You know, again, I've said this in the past, maybe somewhat glibly, but, show me a business with you know, like a software-as-a-service business with 90% gross profit margins, 90% recurring revenue, and 50% EBITDA, and, you know, 30%, 40%, 50% growth, and that will deserve a greater multiple. You know, we try to be attuned to the multiples that we're seeing. We, you know, in the, in the, in our relatively small private company world, where there's not a lot of, like, private equity retrading and not a lot of private equity competition, where we haven't really seen, except in our attitude about things and our free cash flow value, our DCF models, a direct translation of higher interest rates into lower multiples, which I think you will, will definitely see for, for, for larger, you know, larger transactions, and then particularly private equity-led transactions that depend on, you know, high, high leverage multiples to make sense. Lastly, just in terms of recent transactions, there have been a couple of recent transactions in our field. 1 was, it's beyond startup, but a non-profitable business with, you know, nice products, but not necessarily fitting our model. We, you know, EBITDA margin, EBITDA multiples were, are not relevant, but multiples of sales was sort of like 3x multiple of sales. You know, maybe you, you can argue that, but it had some pretty good technology and pretty good technology protections. And then a recent transaction of a product in the, in our field, a little bit more on the pharma side, actually bought by a pharmaceutical company that traded about nine, and a very, very nice financial performance, traded about 9x EBITDA. Again, I think we're seeing, you know, we're seeing reasonable EBITDA multiples continue in our field, or reasonable valuations continue in our field. Okay, good to hear. If I could just slip in one more question, just around the AI strategy. I, I know with Microptic, there was there was a level of AI within that business. Just how that's going as, you know, potentially, deploying that technology in a broader scenario across the business. Thank you. Thank you. We believe, you know, AI is I'm not sure where it is on the, you know, the, the, the Gartner Hype Cycle, where, you know, things get hyped and then you're into the, the, the valley of failed expectations. We've, we've never really been on, you know, high on hyping things and then therefore maybe a little lower, a little lower on the you know, lower expectations, so then you tend to meet them. We view AI in general, and specifically in the Microptic product, as not some standalone, game-changing, gonna change the world kind of product, but a, you know, a valuable, adjunct to the, the, the products that we sell that are gonna make our products work, work better and therefore more competitive and more, more desirable, in, in the laboratory. You know, overall, you know, that, as you know, some cumulative effect, maybe AI, with a kind of like a capital A, capital I, can have a more impactful effect, but it's really, in our view, is how do you make it actually useful by doing something, something better? That being our strategy, which it's worked out very nicely. You know, we continue to see growth in those products. We continue to get strong product acceptance and accolades for the performance of our product, and we believe those will continue. Over time, again, I'm not gonna talk specifics here, we intend to incorporate other elements of AI into other either, you know, parts of our product line or potentially even parts of our operation to get to improve performance or, you know, or, or efficiencies. But, you know, we haven't hyped ourselves as an AI company, and I think, you know, we, we're, we're much more focused on delivering something that, as I said, really, really has value and improves performance than. You know, as being a little more, you know, just to send a number of buzzwords that people are getting excited about. Thank you for the follow-up. The next question is a follow-up from David Martin of Bloomberg. Please go ahead. Yeah, yes, I just want to go back to the large stocking distributors who are working down their inventories. I, I'm wondering, is there any way to quantify how far through the work down of the inventories they are in a combined sense, or if, if not quantify, at least, are they early in the process, midway through the process, or almost done in the process? I would say clearly almost done. I'm glad you gave me that as opposed to approach. I was to quantify it and very difficult and quantify it, something I wouldn't be comfortable with. But in terms of, excuse me, but in, in terms of how you've described it, I would say we're, we're, we're nearly done. One of our, mentioned our major stocking distributors has in fact, placed, placed large orders, and we're expecting from one other. Again, this is not like 100 stocking distributors, really, just, just a handful, and we're, we're working through the others. I would say we're, we're near, nearing the end of that, that curve. I know we're gonna face, you know, COVID style, supply chain issues in the past, but probably a good, good lesson learned for us to keep a better handle on, you know, our inventory levels and our distributors. Okay. Okay, thanks. That's it. This concludes our question and answer session. I would like to turn the conference back over to David Wolf for closing remarks. Okay, well, thank you very much. I'd like to reiterate my thanks to everybody on this call for the good and insightful questions. More, I would say as and more importantly, to, you know, our thanks to our employees for the great work they do and the dedication they've shown to our business, to the customers, to our business partners around the world, to our shareholders, the support they've shown our company, which, you know, has allowed us to be proud participants in our field where we play our part, whether large or small, in helping millions of families, you know, have babies and fulfill their dreams. Thank you very much for participating, and hopefully we'll see you all in October. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.