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spk00: Ladies and gentlemen, thank you for standing by. Welcome to the Intertape Polymer Group's Q3 2021 conference call. During the call, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. In order to maximize the efficiency of this event, the question period will be open to financial professionals only. At that time, those with questions should press star followed by the number one on their telephone keypad. If at any time during the conference you need to reach an operator, please press star followed by zero. Joining me from the company, I have Intertape Polymer Group's Chief Executive Officer, Greg Yule, and Chief Financial Officer, Jeff Crystal. I would like to caution all participants that in response to your questions and in our prepared remarks today, we will be making forward-looking statements which reflect management's beliefs and assumptions regarding future events based on information available today. You are cautioned not to place undue reliance on these forward-looking statements as they are not a guarantee of future performance and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expected. Please see slide two, titled Safe Harbor Statement, for a further discussion. During this call, we may also be referring to certain non-GAAP financial measures as defined under the SEC rules, a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available at our website at www.itape.com. Please also note that all dollar amounts are in U.S. dollars unless otherwise noted. I would like to remind everyone that this conference is being recorded today, November 12, 2021, at 10 a.m. Eastern Time. I will now turn the call over to Greg Yule. Mr. Yule, please go ahead.
spk04: Thank you, and good morning, everyone. Welcome to IPG's 2021 Third Quarter Conference Call. Joining me is Jeff Crystal, our CFO. During the call, we will make reference to our earnings presentation that you can download from the investor relations section of the website. A year ago, it was a challenge to see how we could deliver growth of such strong quarters in the back half of 2020. Demand was still high for e-commerce and we experienced a rebound in our other end markets as the economy opened. Q3 and Q4 of 2020 were two of the best quarters in IPG's history. We knew they'd be tough to top. Revenue was $396 million, up 23% from what was already a great quarter in 2020. Demand remains strong. Our open order position today is as large as it has ever been. We continue to see organic growth and volume mix off the strong comparison periods in the second half of 2020. Volume mix growth was up 4% in the quarter from the record performance we delivered in Q3 2020. The revenue growth would have been approximately $12 to $14 million higher in the quarter if not for the supply chain and labor constraints we are experiencing in the market. Despite the dramatic increases in the cost of raw materials, we continue to cover the spread between selling price and raw materials, as well as a smaller impact from freight costs. Adjusted EBITDA was $63 million, down just slightly from the strong comparison period last year. The ability of the business to deliver in this challenging environment is a function of the changes we have made to the business in the past five years and the experience and expertise of the team to navigate the supply chain and labor issues that manufacturers are experiencing globally. IPG is structurally different today, which has allowed us to compete effectively and demonstrate outsized growth since the onset of the pandemic. One of the positive structural differences is our exposure to e-commerce fulfillment. end market and the strategy we've deployed to grow that aspect of our business. Even with the economy beginning to return to normal post the pandemic, e-commerce remains an end market where we expect to show double-digit growth. Third-party industry forecasts expect e-commerce to reach 38% of total core retail sales by 2026, growing from a 25% share in 2020. The largest player in that market is expected to grow its online sales by 16% per year through 2026. Our e-commerce exposure represents approximately 27% of sales in 2020, and we expect it to be similar in 2021 as a rebound from other end markets catch up from the downturn experienced in 2020. We service a broad array of players in the e-commerce market. Within e-commerce, our sales to the larger player in the market mirror its market share, which means the majority of our e-commerce sales reside with other players in the market. We are not a one trick pony when it comes to e-commerce. Our largest product category, water activated tape, demonstrates strong growth in the quarter and continues to be a workhorse for us. However, our approach of bringing a bundle of products to customers is highly effective. We are seeing major contributions to growth from dispensing machines, service technicians, that service machines onsite at fulfillment centers, as well as protective packaging. In short, we are offering e-commerce players a much broader range of offerings than just water activated tape to earn a larger market share with them. And it's working. Our e-commerce offering grew significantly faster in Q3 than the online sales of the larger player in the market in the double digits off of a record comparison period in 2020. Based on this strength, we believe IPG can grow at GDP plus growth levels, with the plus coming from our exposure to e-commerce, which continues to take share in the core retail market, and as well, higher growth verticals of the economy, like building construction. We are also experiencing headwinds in the broader market. We are not immune to supply chain constraints and the freight and logistics challenges that other manufacturers are experiencing globally. Paying up for raw materials is just one piece of the puzzle of our supply chain and procurement team. Together with our sales team, they have done a great job in covering the spread effectively, which I'll address in a moment. Securing supply of critical raw materials and ensuring significant labour at the plant level have been extremely challenging in this environment. We are working with multiple suppliers to maintain sufficient inventory. We are holding higher raw material inventory to ensure we have supply. We have certain plants that are managing operations with less staff than what allows for optimal production. In short, we are managing through the constraints, although it's not easy. Another key aspect of how our business is different today is our margin profile. Our at-will pricing strategy is working extremely effectively in the face of dramatic raw material price increases we've endured since the fourth quarter of 2020. Our primary objective is to protect the dollar contribution, which we've done. However, as the selling price increases and we protect the spread by covering higher input costs, the math of that equation puts pressure on our margins, which is clear in our results today. Our adjusted EBITDA margin Q3 was 15.9%, which is down from 20% in the same period last year. The major driver of this change was the mathematical impact of similar margin dollars on a higher revenue dollar. as well as certain cost containment and reductions we implemented in the face of the pandemic that temporarily improved the margin in 2020. $54 million of the increase in revenue is a result of price increases. The simple math shows that backing out the large price increases from revenue results in an adjusted EBITDA margin of 18.5%. This calculation demonstrates the margin we would have earned in the raw material environment that existed prior to this inflationary period. In my 30 years in the industry, we've never experienced this movement and speed in raw material pricing. The team has done a great job managing the business through this cycle. How long raw material prices remain at elevated levels is difficult to predict. We have started to see some downward movement in pricing, and some third-party sources like IHS forecast a further easing in 2022. From where we sit, predicting the direction they'll head or when is a difficult call. Our priority is continuing to manage our suppliers to ensure we secure product and continuing to manage our customers' expectation to ensure we protect the spread and deliver products to our customers. What we know is that as pricing eases, we have a track record of managing for consistency in the dollar contribution which will mean margins moving back up. The structural change in the business have fundamentally improved our forward margin profile to well north of the 15% range. In terms of our outlook for the remainder of the year, we announced updates this morning giving higher selling prices driven by the persistence of higher raw material costs. We expect revenue for the full year of 2021 of between $1.5 and $1.54 billion dollars, which represents 25% growth over 2020 at the midpoint of the range. Our adjusted EBITDA for the full year 2021, we expect to generate between 245 and 255 million, which represents growth of more than 18% over fiscal 2020 at the midpoint of the range as we continue to protect the dollar spread. We expect free cash flows between 70 and 80 million in fiscal 2021. This metric is unchanged. We still expect to unwind working capital as pricing and supply constraints ease and capture that free cash flow in future periods. However, the timing of that unwind is difficult to predict at this stage due to the persistence of high raw material pricing and the global supply chain constraints. We continue to execute our capacity expansion plans. We remain committed to investing the entire $100 million allocation originally planned for 2021 Although at this stage of the year, it's clear that some of it will spill over into 2022. As a result, we've lowered our CapEx line item for fiscal 2021 to approximately $85 million from the prior estimate of $100 million. We also remain committed to the original timelines for the projects to be online and producing approximately $100 million in incremental production on a run rate basis by the end of 2022, with more upside beyond that period. These are projects where we have clear line of sight on demand in the market today and offer IRRs of plus 20%. The business is in a great position to perform. We are effectively managing the raw material challenges. We've covered the price and maintained supply in the face of ongoing strong demand. We are allocating capital to key product categories where we are experiencing our highest growth. The capabilities of our team to manage these dynamics is extremely impressive. With that, I'll turn it over to Jeff to review the financials.
spk03: Jeff? Thank you, Greg. On page 9 of the presentation, we present an analysis of our revenue for the third quarter of 2021. Revenue was $395.6 million, an increase of 23% compared to the same period in 2020. Volume mix accounted for 4% of the increase compared to last year. As Greg mentioned, the primary demand driver remains e-commerce and the outsized growth we are experiencing across a wide range of customers in that vertical. As a result, our product categories that support e-commerce performed well in the quarter off a strong comparison period in 2020, those being dispensing machines, water-activated tape, and protective packaging, as well as certain carton sealing tapes like hot melt that serve a range of markets. Price positively impacted revenue by 17% in the quarter, with the remainder coming from acquisitions and foreign exchange. The price impact was due to the multitude of price increases implemented to ensure we maintained our dollar spread, which Greg covered earlier. Turning to page 10, gross margin was 22% in the third quarter, a change of approximately 400 basis points compared to the same period in 2020. The primary pressure on the margin was a 350 basis point impact of maintaining our dollar spread on higher average selling prices. Adjusted EBITDA was 63 million, a decline of 1.5 million from the same period last year. The change was primarily a result of increased SG&A due to the reintroduction of a more normalized cost base required to support the growth of the business versus the cost reduction strategies implemented in 2020 as a result of COVID-19. These costs were partially offset by higher gross profit. However, that gross profit could have been higher without the impact of the missed revenue opportunity in the third quarter from the supply chain constraints Greg mentioned earlier. Cash flows from operating activities were $42.6 million in the third quarter compared to $67.5 million in the same period in 2020. The change is primarily due to working capital changes. Free cash flows were $20.2 million in the quarter compared to $59.2 million in the same period in 2020. Our working capital and free cash flow are bearing the brunt of the global supply chain challenges manufacturers are managing. We are carrying a higher inventory to ensure availability at higher price points, which exacerbates the issue. We believe the incremental working capital tied up due to the global supply chain issues and higher raw material pricing is in a range of approximately $55 to $65 million. As raw materials normalize and once the supply chain constraints ease, we expect working capital to return to historical levels and generate incremental free cash flow in future periods. We finished the first quarter with $463 million in cash and loan availability, and our total leverage ratio at the end of the third quarter was 2.3 times. The investments we have made in CapEx and acquisitions have structurally changed the business. resulting in an improved margin profile and strong cash flow profile. We believe that both of these attributes are sustainable moving forward. Finally, our effective tax rate for the quarter was 17.7%, which reflects a favorable mix of earnings between jurisdictions. As a result of the mix of earnings experience to date, we are adjusting our effective tax rate guidance for the fiscal year down from a range of 25% to 30% to a range of 22% to 25%. Now I'll turn it back over to Greg for his closing thoughts. Greg? Thanks, Jeff.
spk04: As you can see, there are a lot of moving parts that we're managing as we return to a more normal business environment post the pandemic. To focus on the key facts, demand remained high in the third quarter and now into the fourth quarter. Our open order position remains as strong as it's ever been. Raw material pricing remains elevated and our pricing strategy has worked effectively to cover the spread on a dollar contribution basis. We expect this strategy to continue to be effective for us. The global supply chain constraints have required our team to show agility. We have effectively deployed procurement and inventory management strategies to secure key raw materials and keep our customers in product. The e-commerce end market remains an outsized growth driver. Our strategy of bringing a bundle of products to customers in that end market is working with double-digit growth in that aspect of the business. We are investing in new capacity at very attractive returns of over 20% IRR for demand that exists in the market today with our capital CapEx projects. The business is structurally different today than it was five years ago. The improvements we've made to the business and the demand outlook we see in the markets have set us up to deliver GDP plus growth on a consistent long-term basis. As part of that growth profile, we believe our approach to sustainability will be a long-term driver as distributors, end users, and consumers are increasingly aware of the impact their supply chains and choices have on the environment Last month, as part of our core pillar to embrace sustainability, IPG signed the Climate Pledge, which was co-founded by Amazon. In signing the pledge, we joined more than 200 other companies with a similar vision of net zero carbon by 2040. By doing so, we are demonstrating our commitment and action to customers and prospects that we have a role to play in the decarbonization that is critical to address today's climate challenges. We are focused on executing our strategy to deliver for all of our stakeholders, building a global leader in packaging and protective solutions. With that, I'll turn the call back to the operator to open up for the question and answer period. Thank you.
spk00: Thank you. Ladies and gentlemen, we will now conduct the question and answer period. If you would like to register a question, please press star 1 on your telephone keypad. You will hear a two-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the pound key on your telephone keypad. If you are using a speakerphone, please lift your handset before entering your request. One moment, please, for the first question. And your first question comes from the line of Michael Dumit with Scotiabank.
spk06: Hey, good morning, guys. Good morning, Michael. Hey, I'll start with a quick one. Maybe, you know, can you quantify... the missed revenue opportunity in Q3 that you talked about as it relates to the supply chain and whether or not you think you can catch up in Q4?
spk03: Yeah, so we called out $12 to $14 million on revenue, so that's the estimate we had of what was supposed to ship out that didn't. We do expect to get that revenue in Q4, but again, when you think about Q4, these supply chain issues are persisting, so we expect that we could have issues towards the end of the quarter again, getting the shipments out. So I would expect similar issues in Q4.
spk06: So it should be considered maybe more of a gross number than a net number. I guess thinking of it that way.
spk03: What do you mean by a gross number versus net number?
spk06: So you'll get those sales back, but presumably, or there could be other sales that could fall into Q4. Yeah, correct.
spk03: Okay.
spk06: And then on the gross margins, you indicated that the price-cost spread was maintained in the quarter, which is obviously commendable. Can you elaborate a little bit more on the supply chain disruption and labor shortages and how you think that those will kind of persist into the next few quarters in terms of gross margin impact?
spk04: Yeah, so just at a high level, I would say that You know, what we're experiencing right now is pretty similar to what we experienced in Q3. In Q3, it really hit us kind of latter part of August into September. You know, historically, September is a really big month for us, and we were unable to, because of restraints around supply chain and labor issues, you know, hit that historical higher revenue in September. But I would say that as we sit here today, you know, we're continuing to experience similar issues as it relates to a lack of raw materials in some cases to run production lines, and in a couple of specific plants, being short labor, which at the end of the day just cuts your machine hours that you're available to run. And we made reference again, I mean, from a demand perspective, we continue to see really high demand. And as we move forward into kind of 2022, You know, the hope is that we see some labor free up and some of these supply restraints, you know, get minimized. Because the company is, you know, these orders that are in-house right now are priced at the right price. And we just really have to see how we manage through and are capable of handling access to raw materials and labor going forward. So certainly we're very active in that area. I feel confident that we'll be able to work through, but as we sit here right now, we're still experiencing similar things in Q4 that we did in Q3. Got it.
spk06: Okay. And then maybe one last thing. Typically or historically, you've narrowed the EBITDA range for Q4 to $5 million rather than what's implied for Q4 with your full year guidance of $10 million. And also what's been the case is Q4 EBITDA typically been higher and that's not necessarily suggested by the midpoint of your 2021 guide but i mean hearing everything you're saying greg it's just a matter of you know whether or not the supply chains work a little bit better and whether or not you're able to fill those orders is that the right interpretation of it absolutely and you know we've talked about in the past that typically our third quarter fourth quarter is bigger than the first two right and
spk04: And what's happening now is that, you know, on the order side, it's following that historical trend. But on the revenue side, it's not because of some of those gaps that we discussed. So, you know, certainly this is not a normal time. Typically, we would narrow that range. But with what we're dealing with right now, I don't think it's appropriate to narrow that range at this point. Yeah, that's great, Kyle. I appreciate it. Thanks, guys. Thank you.
spk00: And your next question comes from the line of Stephen McLeod with BMO Capital Markets.
spk05: Thank you. Good morning, guys. Morning. Morning. I just wanted to follow up just on the margin questions. Obviously, I guess you talked about maintaining the dollar cost spread at this point, which is sort of a headwind to margins. Obviously, we're sort of sitting here with one and a half months left in Q4. So just curious, are you seeing any abatement in terms of – the resin supply or sorry, resin prices that you're seeing. And then similarly, how would you expect margins to evolve as we head into 2022? Or is that something that it's sort of too soon to tell?
spk04: Yeah, so, you know, right now we're experiencing some, you know, reductions, namely on the resin side, polyethylene, polypropylene, not huge. You know, and the way that works is, you know, that won't flow into our P&L until probably, you know, December or most likely into January, just, you know, the way the inventory turns work. You know, certainly from our perspective and what we read, you know, we expect 2022 to show some falling raw materials, namely in the resin side again, so continued reduction there. We don't foresee it as being very dramatic, like it's not going to be a huge drop right away, which is good from our perspective. And typically what we see on that falling raw materials obviously is, you know, a pickup in margin holding that spread and in some cases being able to increase that spread. But it's very difficult to call that out on a forward-looking perspective for 2022. But if it follows its normal course, I feel really positive that that margin, you know, when we called out the effect on this quarter, you know, in a normalized environment, that margin would have been 18.5%. from the EBITDA perspective and certainly that range in a normalized environment is, is well within our reach, uh, as we see a falling raw material environment.
spk05: Okay. That's, uh, that's great. Um, and then maybe just talking about the end markets, you know, I know you sort of cited broad-based, uh, you know, broad-based demand strength, but I'm just wondering, um, you know, what are you hearing from your, from your, uh, supplier customers around, uh, you know, how order levels are building by end market into next year as sort of things normalize through the pandemic?
spk03: Yeah, I mean, you know, nothing really that different, I guess. I mean, from the e-commerce standpoint, certainly that remains strong, you know, and the reports we read continue to be strong and we continue to expect double-digit growth into that category. You know, the building and construction as well, you know, we continue to see some tailwinds there. and continue to see a good growth. And the other end markets, I mean, you know, for the most part have held up and continue to be strong. So, I mean, like Greg said, demand has been, you know, just not the issue at all. Our order book is very full, probably at all time highs right now. And really the challenge is getting stuff out the door. So we don't see that necessarily changing as we enter into 2022. Obviously, you know, you fast forward. I mean, it's tough to make a call on the macro side, what's going to happen, but Certainly as we sit here today, demand looks like the least of our issues.
spk05: Okay, that's great. Thanks, guys. Appreciate it.
spk03: Thank you.
spk00: And your next question comes from the line of Walter Sprackling with RBC Capital Markets.
spk02: Thank you very much, Operator. Good morning, everyone. Good morning, Walter. Coming back on the lost volume opportunity with high demand but supply chain and labor issues, When you look at and contextualize from what you can see at this point and so far in the fourth quarter, in order of magnitude, essentially, is it in line with what you're missing in the third quarter? Or is there any risk that as we go through the fourth quarter, whether it be resin supply, not price, because you're passing that on nicely, but the ability to get resin or labor that could magnify the impact of what you saw in the third quarter, or is it more in line with what you saw in the third quarter?
spk03: Yeah, I mean, as we sit here today, it's somewhat more in line. But again, like we mentioned on the earlier question, when you think of the ranges of our revenues and EBITDAs, obviously we're buffering ourselves for stuff that's going to happen as we get into the end of December. So there's still uncertainty as to how good or bad that's going to be, you know, which is why we're keeping the ranges where we are. But as we sit here today, it looks very similar.
spk02: Okay. When you put GDP plus in context, that makes sense. I'm looking at the EBITDA consensus for next year. I'm just looking at the share price today. And obviously there's some trepidation being expressed. And I know you're not giving guidance, but if you give GDP plus on the top line, It seems like consensus is right now at kind of mid to high single digit EBITDA growth for next year. It seems achievable. I mean, you know, on a GDP plus top line, is there anything that is happening next year, barring any of the uncertainties around the current environment, but assuming the supply chain issues and labor availability issues? issues wane and and they're no longer as big a factor next year as they are this um is there anything else next year that you would flag that would prevent you from getting you know similar type of EBITDA growth on the back of GDP plus type of uh revenue growth yeah so um
spk04: Obviously, I won't comment on consensus or guidance, but from my perspective, I look forward in this business and I see tremendous growth opportunities for the business. I also see opportunities to increase the dollar spread on the way through, barring any other, as you mentioned, supply chain restraints. I think with our projects coming on, From a capital investment perspective, with the type of IRRs we're expecting, I know that's a run rate at the end of the year, but you'll see some of that in the year. I feel really positive about the business. Again, what we're experiencing right now, as you know, is nothing that anyone else isn't experiencing out there. I think we're managing very well as it relates to things we can control. I think from a growth perspective, I think through your own very, very positive position in many markets that we serve. And back to that capital investment and those IRRs, I think that bodes really well for the future results of the business.
spk02: Yeah, I agree with you, Greg. And I guess I know you had to defer some of that into next year, that work. Is that labor availability related? Is there any risk that we get more meaningful work delays here on those projects because I think you're absolutely right. Those are great low-risk, high-return projects that certainly investors want to see come to fruition. So just an update there would be great.
spk04: Yeah, and the delay is just on the cash flow, right? So the cash out. There's no delay on the ramp-up of the run rate. So I think that's very important. We're really confident in our ability to deliver that run rate. that we articulated, so there's really no delay there. Sometimes on capital expenditures, as you know, it's difficult to get the money out the door, and there have been some slowdowns, but it's not going to affect the timing of our projects on a go-forward basis, so feel really positive about that. Perfect.
spk02: Okay, that's all my questions. Thanks for the time. Thanks, Walter.
spk04: Thank you.
spk00: Your next question comes from the line of Hamir Patel with CIBC Capital Markets.
spk07: Good morning. Good morning. Amazon recently had announced that they'd invested in a company that's trying to reduce the cubic volume of each box by, I think they said, 24% and potentially eliminate about a billion plastic air pillows by the end of next year. I'm curious what your thoughts on maybe some trends you're seeing there with box sizes and the implications for tape demand.
spk04: Yeah, so we saw that investment, and certainly that's a technology that they've deployed in some of their facilities in the past and generally in e-commerce. From our perspective, we've always looked at it this way, is that we have to evolve on a go-forward basis in this business. It's going to continue to evolve from a packaging perspective. At this point, we don't see that as a huge impact to our existing tape business, We do see a lot of shifts, though, from plastic mailers, for example, to paper mailers, and that's a big area of focus for us as it relates to our Kirby mailer. And I think with that investment in that box manufacturer, it's too early to tell what kind of impact it is. But again, it's been deployed in quite a few facilities over the last five or ten years.
spk07: Great. Thanks. That's helpful. That's all I had. I'll turn it over. Thank you.
spk00: And as a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Your next question comes from the line of Roger Spitz with Bank of America.
spk08: Thanks very much. And hopefully you've already answered this multitasking. With 2021 EBITDA and pre-cash flow unchanged, capex lower by $15 million and perhaps cash taxes are lower if book taxes are lower. What is the offsetting 15 million plus headwind?
spk03: Yeah, so that's working capital. So what we've seen, you know, versus what we started out the year, we've certainly seen a lot of headwinds around working capital, some of that on purpose, obviously, related to the supply chain constraints. So we have been ensuring that we're securing supply. And that's been the most important part of the plan to make sure that we can produce and provide our customers with products. So we're certainly carrying heavier inventory related to that. And then you have the price impact, which is affecting our inventory, obviously, at a much higher price. And then you've got our receivables as well at much higher prices. So that's really impacting our working capital. And we continue to see that impact as we move through the year. So that's why... you see that somewhat a little bit worse off than we originally planned in Q4.
spk08: That was my question. Thank you.
spk03: No problem.
spk00: And your next question comes from Zachary Evershed with National Bank Financial.
spk01: Good morning, everyone. Good morning, Zach. Given these supply chain disruptions, you're seeing some sales get pushed to the right. When that happens, how much of a risk is there that you lose that sale altogether? and maybe contrast that in today's environment and in a more normal operating picture?
spk04: I think, I mean, good question. I think in today's environment, I think when we look at our, you know, we look at the industry, I think everyone's pretty much in the same position. I think right now it's a question of getting product for many customers. You know, so I don't think it has, as we sit here today, I don't think what we're experiencing today is any different than what any of our other competitors are experiencing as it relates to supply. And that's the feedback that we're getting from our customers. So certainly we're doing our best to keep our customers in product and to do the best that we can from an on-time perspective. And as we look forward again, once this settles down, I think we'll start kind of eating into that backlog quite nicely.
spk01: Thanks for that. In times like these, I suspect that you're getting orders from people that you've never heard of before as people kind of scramble for supply. What do you think your odds are of being able to hold on to those relationships after this settles out and build market share that way?
spk04: Well, in situations like that, we're trying to make sure that we're taking care of, obviously, our historical customers. And then with new customers, we're trying to make sure that we're doing our best to make sure that's a long-term relationship going forward and not spot. We do not want to allocate... inventory or finished goods to people that are spot buyers so we want to create a relationship with them that's long term and i think i think we're picking our spots appropriately we'll see how that plays out but but certainly we're very cognizant of that both from a pricing perspective and from an availability perspective as it relates to spot buyers that's good color thanks
spk01: Then one last one for me. The supply chain issues you're seeing, are they primarily related to port congestion or is inland freight a big issue as well?
spk04: It's a long list. So certainly those two issues are playing a role. We have had just inability of producers to make product to deliver to us. So certainly from a production supply demand perspective, some of our suppliers have been incapable of meeting our demand requirements. So nothing to do with freight, just their actual production capacity. But certainly freight is playing a role. Certainly when we think of our supply chain from Asia to North America, that was impacted in the quarter, just availability of containers and availability of spots on cargo vessels, and then the whole port congestion issue played a role in backing up some material in the supply chain. But it's pretty diverse as it relates to the areas that have impacted that supply disruption.
spk01: That's helpful. Thanks. I'll turn it over. Thank you.
spk00: And at this time, there are no further questions. I will now turn the call back over to Greg for closing remarks.
spk04: I'd like to thank you for participating in today's call. We look forward to speaking with you again following the release of our fourth quarter results in March. In the meantime, I hope you and your family stay safe and healthy. Thank you.
spk00: Please be advised that a replay of the call will be available as of 1 p.m. Eastern time. You may access this recording by dialing 855- 859-2056 and enter the passcode 6633-796. This concludes today's conference call. You may now disconnect.
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