Q3 2020 Priority Technology Holdings Inc Earnings Call
Ladies and gentlemen, police and advisor conference call will begin momentarily once again, ladies and gentlemen at least from a lot.
[music].
Ladies and gentlemen, thank you for standing by and walking true priority Technology Holdings third quarter 2020 earnings call. At this time all participants are in listen only mode. After the speakers person taste and help your question and answer session.
Question during the session need to press star one on your telephone if you acquire any further assistance. Please press star 100, and electronics Yesterday's conference call Mr. per script and you may begin sir.
Good morning, and thank you for joining US with me today are Tom Currey, Chairman and Chief Executive Officer priority Technology Holdings, and Mike Volkmar, Chief Financial Officer before we provide our prepared remarks, I would like to remind all participants and our comments today will include forward looking statements as defined in the private Securities Litigation Reform Act of 1995.
Regarding future expectations about the company's business management's plans for future operations or similar matters, which are subject to certain risks and uncertainties.
The companys actual results could differ materially due to several important factors many of which are beyond the company's control, including those risks and uncertainties described and the current report on form 10-K filed with Securities and Exchange Commission and March Thirtyth 2020.
Any forward looking statements. We make today are only as of today's date and we undertake no obligation to publicly update or review any forward looking statements. Additionally, we may refer to non-GAAP measures, including EBITDA and adjusted EBITDA during the call.
Please refer to our public filings and disclosures, including those referenced in our press release announcing this call for definitions of our non-GAAP measures and a reconciliation of these measures to net income we.
We have also provided and accompanying presentation with todays call that will help us more clearly articulate our results and go forward strategy.
With that I would now like to turn the call over to our chairman and CEO Tom Priore.
Thank you, Chris and thanks, everyone for joining us for our third quarter earnings call.
I would like to begin this morning's call by providing a brief overview overview of our impressive quarter three results along with the discussion of the sale of our rent payments dot com assets during the quarter.
And I'll turn it over to Mike Who'll go into more detail and our segment level performance art.
Our continued cost control initiatives and the improvement of our balance sheet.
And you saw in our earnings release, we were we reported exceptional third quarter 2020 results, reflecting strong demand and each of our business segments. Despite continued challenges associated with the COVID-19 pandemic.
The momentum, we saw and May and June and carried forward into the third quarter.
As of the strength of our product offerings.
And diversified counter cyclical assets allowed us to quickly adapt to changing cobot environments.
Liver strong top line revenue growth and bottom line results.
Your few quick highlights I'd like to share.
During the quarter revenue and our core consumer segment grew by 20% year over year.
As merchant Bank card processing dollar volume increased 6.3%.
Within this we saw and explosive 800% growth and our specialized ecommerce segment.
Driven by increased online purchase activity.
Gross profit was 34 million during the period.
Nearly 13% from a year ago quarter.
And adjusted EBITDA of nearly 20 million increased 28.1% from the third quarter of 2019.
The EBITDA improvement was driven by a combination of broad based demand for our services continued discipline and driving automation and expense reduction initiatives and the counter cyclical nature of many of our payment assets.
During the quarter, we also announced a definitive agreement to sell our rent payments dot com assets MRI software.
As you know, we founded priority real estate technology, and 2018 and it is comprised of a number of real estate technology assets.
Under the agreement party sold its interest and rent payments.
Tom storage payment dot com and use payment dot com.
Real estate brands.
But we will continue to provide ongoing payment infrastructure as a service and processing to the platform and anymore I rent payments.
We're extremely excited about this transaction for a number of reasons.
In addition to reducing debt by over $100 million and a quarter.
And annual interest expense by $10 million.
The transaction.
Improved our annual net cash flow by approximately $5 million.
Importantly, there is significant opportunity for priority and future as we expand our relationship.
With that MRI both geographically.
And within new real estate pain and segments like.
Like vendor payments within industry leader like MRI, leveraging our payment technology and operations infrastructure.
Further to this point as Patrick Lani, Chief Executive Officer at EMCOR I software Insightfully stated.
With this acquisition and partnership with priority and MRI significantly expands our existing payment solutions and scale and further improves both the resident and property manager experience provided by our platform.
Additionally, we will now expedite the availability of our online payment solutions to include both residential and commercial client offerings in all regions, we serve including Europe Africa and Asia Pacific.
As part of the transaction, we also retain or red hat and landlord station assets, which cater to small and mid size real estate management companies for rental payments and other related services.
Our priority real estate business will continue to offer and number of consumer engagement features such as tenant screening apartment locator tools renters insurance offerings and additional features will be bring to market.
I'd now like to ask Mike Volcker and have a provide further insights into the quarter current trends and each of our business segments and the improvement of our balance sheet liquidity.
Right.
Thank you Tom and good morning to everybody I'll begin by reviewing the very strong revenue and income trends on the on a consolidated basis, the pro forma impact of the rent payment sale and then I'll provide commentary and business segment performance all comparisons will be between third quarter of 2020 and the third call.
And are 2019, and unless I say otherwise.
Our revenue growth momentum has returned and is now stronger than the pre print print and Denigrates total.
Total revenue amounted to $109 million for the third quarter is the 16.1% growth over the prior quarter and it and an 18% growth over this years second quarter.
As previously discussed we began 2020 with very strong revenue growth through mid March then cobot hit in mid March and the total first quarter revenue growth came in at 10.6%.
The second quarter proved to be a temporary speed bump.
And April during the height of the pandemic shelter and place revenue declined 11.7 per cent.
But as restrictions and began to be lifted may return to positive growth of 1.7% and in June revenue improved 10.8% and that brought the total second quarter revenue growth and to just over breakeven at a 0.2% growth right now.
And despite the shelter and placed conditions throughout the second quarter, our diverse distribution channels continued strong new merchant boarding with over 13100 and merchant added.
This followed an exceptionally strong first quarter were 15400 merchants were added.
And then a second quarter.
Core earnings call, we stated that that new merchant boarding boded well for a stable base revenue outlook.
Well the third quarter revenue growth of 16.1% as proven that to be accurate. These merchant adds were strong and a third quarter as well and this momentum has carried into the fourth quarter.
Gross profit was $34 million for the third quarter is the 12.7% improvement over the prior year quarter, and a 13.5 per cent sequential growth over this years second quarter.
Gross profit margin was 31.2 per cent compared with with 31.2 per cent compared with 32.1% and the prior year quarter.
Income from operations of 7 million was a 158.4% improvement over the prior year quarter and represented a 74.7% growth rate over this years second quarter.
We've included in our form 10-Q and earnings release, a pro forma view of the third quarter and year to date 2020 results, excluding the rent payment business on a pro forma basis, excluding rent payment our third quarter 2020 included the following that.
Now these amounts exclude rent payment revenue was 105.1 million up 16.5% over the prior year quarter gross profit was 30.6 million up 14% over the prior year quarter.
Income from operations was 6.7 million up 318% over the prior year quarter, and adjusted EBITDA was 17.1 million up 36% over the prior year quarter.
These amounts and the pro forma disclosures do not include estimated revenue and income to be earned from the ongoing payment infrastructure as a service and processing to amortize new platform.
And now let's break the quarter down within the segments consumer payments revenue was $99.3 million. This.
There's a 20% increase over 82.7 million and the prior year quarter.
Growth was driven by and eight fold increase and high margin E Commerce revenue, which contributed $8.1 million of growth.
And a 6.3% increase and and merchant Bank card volume contributed to the overall segment growth.
Also the strength and new merchant boarding as I mentioned earlier continued through the third quarter with nearly 14000, new merchants added.
Merchant Bank card volume processed was 11.2 billion compared with 10.6 billion and the prior year quarter.
Merchant Bank card transactions of 122.6 million declined 6.9% from a 131.6 million. However, the average ticket of $91.62 grew 14.2% from $80.26.
Current economic factors have impacted the merchant volume mix.
Including shifts and payment transaction activity amongst certain vertical industries.
Spending trends related to the pandemic appear to have resulted in consumer is conducting fewer payment transactions, but at higher average transaction values and card not present transactions have increased.
The card not present transactions and generally off from more favorable pricing to priority then swiped transactions.
[noise] consumer payments income from operations was $11.1 million. This is a 53.8% improvement over 7.2 million and the prior year quarter gross.
Gross profit increased 4.2 million, which was slightly reduced by a point $3 million increase in operating expenses.
Included in third quarter 2020, SGN <unk> expense is a $1 million non cash write down and the carrying value of and intangible assets.
In total our underlying operating costs were down point sevenmillion, driven by the benefits of automation initiatives and focused expense management.
Commercial payments revenue was $5 million during the third quarter, there's a $1.3 million decrease from 6.3 million and the prior year quarter due to covert related impacts within our merchant financing services program.
Revenue 1.5 million and the third quarter of 2020 from processing and our CPX accounts payable automated solutions continued its steady performance, increasing 6.9 per cent compared with 1.4 million and the third quarter of 2019.
This was offset from the aforementioned revenue drop of 1.4 million within our curated managed services program from 4.9 million and the 2019 quarter to 3.5 million and the 2020 corridor.
[noise] commercial payments income from operations was <unk> point 2 million and that compares with a loss from operations and point 4 million and the prior year quarter well.
While gross profit was down 1.1 million.
Other and <unk> and other operating expenses increased decreased point Sevenmillion. So focused expense management has driven net income from operations performance.
You know our.
Our current cost structure within the commercial payments segment is sufficient and supporting the anticipated accelerated revenue growth that we expect in the future.
[noise] integrated partners revenue was 4.7 million a decrease of point 1 million from 4.8 million and the prior year quarter. The rent payment business comprised comprised 3.9 million and 3.7 million and this revenue respectively threats.
Threats Red pad landlord station business priority pay right health services and priority hospitality technology comprises the remaining ongoing operations within this reportable segment.
[noise] integrated partners income from operations was point Threemillion, a decrease of point 7 million from 1 million and the prior year quarter.
The rent payment business contributed income from operations, a point Threemillion and the third quarter of 2020, and 1.1 million and the third quarter of 2019.
Other operating expenses within the rent payments business included 1 million and the third quarter of 2020 and point Fourmillion and the third quarter of 2019 of transition services from your Capstone and that's related to the integration services from that March 2019 asset acquisition.
Corporate expense and the third quarter of 2020 was 4.5 million compared with 5.1 million and the third quarter of 2019.
Included in corporate were nonrecurring expenses, a point Sixmillion and litigation settlement income of point $8 million in the third quarter of 2020, and nonrecurring expenses, a point 9 million and the litigation settlement income of point 1 million and the third quarter of 2019.
Now, let's let's talk about the significantly improved liquidity position.
With proceeds from the rent payment business sales compared with cash generated from operations net debt declined $123.6 million from 494 million at June Thirtyth of this year to 370.4 million at September Thirtyth.
We repaid 107.5 million of senior debt and 3.5 million of our revolving credit during the third quarter.
We ended the quarter with $11 million outstanding on our $25 million revolving credit facility, and we had $21.7 million of unrestricted cash on the balance sheet.
The total net leverage ratio dropped to 6.16 at September Thirtyth down from 7.46 at June Thirtyth.
The leverage calculation is detailed in the Mdna set liquidity section in our form 10-Q.
Although our balance sheet is much improved we expect to continue paying down debt and enhancing our liquidity position in the quarters ahead.
And before turning the call back to Tom I'd like to provide an update on guidance and our.
Our earnings release, we stated that while there continues to be considerable uncertainty regarding the current resurgence of the pandemic. Our October 2020 processing results displayed continuing strong trends and as a result, we're forecasting our fourth quarter 2020 results to be as strong if not exceed the performance.
Delivered in the third quarter of 2020, when you exclude the rent payment business.
Now I'd like to turn the call back over to Tom.
Thanks, Mike.
I'd now like to share more detail around the most recent trends, we've been seeing and the overall business.
Well the global.
Pandemic continues to impact priority and a number of ways. We're pleased to have rebounded from its initial impact earlier in the year and away very few and our industry have been able to do.
As Mike noted processing volume grew by more than 6% and the quarter.
And we saw outstanding performance from our E Commerce business.
Commercial payments remain relatively steady, particularly.
And CPX accounts payable and our automated solutions and integrated payments continued to grow.
Underlying the strength of our product offering and best in class line service, our merchant adoption trends remain consistent with historical levels.
Oh.
4500 to 5000.
New merchants reported per month.
Importantly.
We've continued to see the strong third quarter trends carry into the fourth quarter.
With total bank card processing volume and October exceeding 4.3 billion.
That's an improvement of nearly 5% over 2019, despite one less processing day.
In October 2020.
And just happens to be the highest ever bank card processing month in priority history Gener.
Generating consolidated net revenue.
37.9 million.
Based on our current operating margin this would imply consolidated EBITDA.
$6.7 million.
For the month of October 2020.
And annualized run rate, excluding the income from rent payments dot com sale of 80 million.
And looking forward.
Run rate leverage of 4.6 times.
Our performance throughout the pandemic reflects several several key operational and strategic Differentiators.
First and foremost.
Marty payments technology and operating infrastructure is.
Purpose built to deliver processing scale agility and responsiveness to monetize merchant networks for our partners.
Second.
Our diverse sales channels have continued to add net new merchants.
Which remains one of the lifeblood of our business.
Lastly, the value of our integrated product offerings across these channels and real estate hospitality healthcare VTB payments and automated payables has allowed us to tap into broad and diverse merchant networks, and consumer and corporate payments, ensuring we mitigate risk.
From a downturn in any one area of the economy.
Just as important.
We believe that the conditions influencing behavior and the current environment signal, a significant change and how businesses will need to operate in the future.
And we're well positioned to cater to that new behavior.
Increased use of technology to support contact list ecommerce.
Integrated software with digital collection tools to support.
Healthcare revenue cycle, and real estate payment collections and accounts payable for businesses of all sizes will likely perform well.
Although we're extremely proud of our success over the past six months, especially during a global and damage.
I can assure you will not will not take our foot off the gas.
We'll continue to work hard to leverage our diversified counter cyclical business.
To adapt to the evolving economic environment.
While remaining disciplined with our cost structure, especially as cobot cases rise in the U.S. and states evaluate reinstituting stay at home orders.
We will also look to identify ways to bolster our balance sheet.
By reducing debt and enhancing overall liquidity, giving priority the flexibility necessary to navigate through this uncertain environment, while also investing and our long term future.
Before I wrap up I'd like to quickly. Thank the priority team for their continued hard work and dedication over the past six months.
It hasn't been easy.
Well our success reinforces the exceptional talent, we have throughout the organization and the quality of the platform. We've built over the past several years.
I'd also like to acknowledge and new member of our team day.
Well Hell as our Chief marketing Officer.
He has more than 25 years experience building high performing marketing teams enhancing brand value and driving revenue throughout organization.
And we're excited to welcome him to the team as we enter our next phase of growth.
In conclusion.
We're very pleased with our third quarter results, especially in light of the ongoing impact of Cove and 19 and.
And we are excited about the opportunity to build our partnership with MRI software.
As we move further into the fourth quarter, we expect the momentum of our integrated product and payment infrastructure as a service offering to.
To deliver additional growth and.
And we'll remain focused on leveraging our platform to drive greater value to our shareholders.
Operator, we'd now like to open the line for questions.
Ladies and gentlemen, if you have a question or comment at this time. Please press Star then the one key on your Touchtone telephone.
If your question has been and where do you wish to book yourself from the queue. Please press the pound key.
Our first question comes from Brian Kinstlinger with a large global partners.
Hi, This is chip on for Brian. Thanks for taking my questions with the second wave and depend and across the U.S. have you seen any changes and the volumes of your businesses and October early November.
We we've not mentioned in October.
It actually was our highest crossing month.
Ever.
And.
You know, we could continue to see healthy a similar growth year over year through the early part of November so.
We are yeah, we're we're very optimistic about continued consistency.
Through through the quarter.
Great and then a couple more can you highlight industries, where your business and seeing solid demand and Alternatively were industries are being pressured.
Oh sure we.
You know higher performing segments.
And.
Wholesale trade.
And.
In I'll call. It you know trades businesses.
In particular.
So these are you know these are you know your.
Sure Landscapers farmers H.B.C.
Segment, you know more of that has gone too you know from check to electronic.
The.
We've continued to see a growth in the wholesale side of our business. So this is these are just be to be payments payments being made between.
You know kind of buyer supplier relationship.
And you know the segments that are still down a bit.
On on the card present side or where you'd expect.
Hospitality is still struggling although we have a I would say by industry segment standards, probably a smaller considerably smaller footprint.
And in that segment.
17% of our of our merchant base is is in that segment and if you look at the broader economy is probably.
More more 30% would fall into the restaurant hospitality category, maybe a bit higher than that.
So.
So you know, that's where salons as well it's another sector that is performing it was down kind of year over year.
The.
But those.
Those are the kind of the general trends I would say across all that did stand out.
But you know weve had the benefit.
On.
On that hospitality side of providing products that allow for curbside and and other forms of delivery.
And to to the customer base.
And we we had higher margins on that so despite the drop and volume or margin per merchant in that segment.
Has has seen some improvement which is helpless.
And buoyed up the.
The overall impact in that segment.
And can you talk to other areas. Obviously tangible growth is of course ecommerce, which was noted a number of times.
Which you know standard email.
Yeah, and can you talk about the adoption of Youtube to how that's going as we head into winter and curbside pickup could be even more important.
[music].
Yeah, you know weve seen fantastic adoption of the product you know that that has those those trends have been triple digit growth year over year, we've got some exciting net.
We're partners were working on as well.
And in that area. So we're we're.
You know, we're very constructive on.
And its future.
And we don't see that to your point, it's it's not only are being adopted more broadly by.
The the the traditional and.
So hospitality segment, but we're actually seeing it you know used and you know it.
Kind of non traditional areas.
Liquor stores convenient stores folks that they want to offer a limited online menu for curbside.
We are also and the process of adding a a delivery.
Module.
Into eat tab that we think will.
I will.
Further expand the reach of that product.
Thanks, so much.
Yes. Thank you.
Our next question comes from interest group with Roth capital.
Good morning, and thank you for taking my questions I actually disconnected for a bit so fast repeat question I apologize my first question.
Just on the E commerce business so growth.
Great Great numbers there strong growth question is how many of the customers that you're adding on or new customers versus old customers and and then can you give some commentary on the pipeline there and kind of just how long it takes to own more onboard a new customer once a day expressed interest.
You know that these are and so these are new customers.
The.
If you could think about it this way there their new merchants and.
And they are.
But oh.
Many of them are long time.
Distribution partners.
We're adding.
You know it.
Depending on the month its.
Three.
Hundred to 400.
New merchants in that segment.
There's been months, where its been a bit higher you know months when it's been a little bit lower than 300, but on average assets, that's where it's kind of shaking out over the recent trend.
Do not see that abating channel.
And we're pretty optimistic as we as Weve now brought and Super talented Chief marketing officer to help drive more.
For growth and those channels as we market the capabilities of a priority more fully that we'll see we'll see improved results.
Great. Thank you and so my second question is on the CTX platform, a really nice continued growth. There can you just kind of speak to the dynamics.
And Mark right now.
COVID-19, pandemic stone going and how that's impacting customer leads and and Onboarding.
Oh sure sure you know, it's having a so you you can see that the growth has been steady. So you know that's.
Year over year was just shy of 7% growth.
The growth there you should expect to be a little bit more chunky.
Where we're having a.
Very good deal of success is down into the you know what I'll call the middle markets. So youre hundred million revenue to 500 million.
Market segment.
Adopting.
Automated payable solutions and.
Network software partners.
So these are folks that you know provide.
Accounts payable management or inventory management tools that are looking to add payable solutions or a payment engine true there to their products that.
And.
We're seeing.
Fantastic adoption.
There.
We would expect that to be the growth driver you know moving into the early part of 2021.
On the buy side. So these are treasury.
So these be treasury departments, you know within the banking world.
Dear slower so their their decision time is typically slow.
And it's only slowed down more in the pandemic. So you know we we.
From a month ago, you know just have been pivoting our distribution focus as you might imagine too and so where the fires hot. So you know we expect we expect in the near future you'll see the you know the the continued strong results.
From that.
Distribution focus and you know that will provide us with.
Great deal of latitude as the things kind of come back around and start reassessing, how they want to implement.
Automated payables more more deeply into their platforms.
Great. Thank you I really appreciate the color there congrats on the quarter and that's that's all from me from now.
Thank you.
Again, ladies and gentlemen, if you have a question or a comment at this time. Please press. The Star then one key on your Touchtone telephone.
Our next question comes from James stops and Who's a private investor.
Good morning, gentlemen, first a great job on the quarter, especially given the trying circumstances you're under.
Hey wanted to lead with both the consumer and CPX and <unk> segment.
Thinking from a growth drivers there it looks like there was a healthy uptick and transaction volumes quarter over quarter, but that seems to be partially offset by a reduction and average ticket sizes.
No that's still above historical levels on the consumer side and he since we were both of those counterclaim balancing trends, maybe heading as we move into Q4 and beyond.
Mike I think you actually provided some statistics on this during your segment. So if you want to you want to do so and then I can sure enough on anecdotal Oh.
Well as far as Q4 goes we we kind of see you know a steady state with this mix and you know as we get into 20 or 21 and get you know a vaccine out there and get more normalized economic activity from historical perspective, we probably will.
We'll see you know higher number of Ah transactions, and maybe lower ticket trying to blend back and but in the short term. It Q4 is looking like Q3, and it's it's related to shifts and and behavior from the pandemic now it's hard to say how much of those shifts are going to be permanent right versus you know.
<unk> going back to normal levels, but net net it's had a positive effect on our business.
But we're closely monitoring those trends as we go forward, but again Q4 is looking like Q3.
Right, Okay, and Mike I might submitted its you know that the early results of of October probably a bit better yeah, I'm talking about them that the average ticket size and and but you're right. Absolutely October is better than September for sure.
Right.
On the left column and like I think I understood you had a healthy processing pipeline on these CPX automated People's platform. I think you said it was about 30 plus billion and you're expecting to monetize this quarter is that plan still on target or are you seeing and pushed back there into future quarters due to the resurgence.
Yeah. The large the large F.I. channel, we've seen a bit of a push back and that's what was driving a lot of that yet there is still you know and and Tom's closer to this and I.
But with respect to the big five we have seen a pushback, what we're picking up growth and other avenues.
Yeah, but I would comment on it this way so that the pipeline is still similarly sized book.
But you know as I kind of noted and in the last response.
The.
The the bank.
Pipeline.
It's probably a longer cycle to close.
So we.
Dedicate our resources to well see.
Smaller networks, and when I say smaller.
We're not talking hundreds and millions, we're still talking and the billions.
But better margins.
Okay, because we are and provide so these would be network partners, where we are you know we are not just the payment provider, but we're also issuing solution as well.
Whereas a lot of off and with the banks, while we're providing the payment engine, we're not always the issuer because the bank wants to be the issuer. So so.
The volumes may be larger, but the offset of margin makes them economically.
Similar.
In terms and net revenue does that make sense.
Yes, well that's helpful and thanks again from given the turning towards and strategic partnerships and giving the pre existing relationship with MRI and sort of that and turnkey nature of Onboarding New accounts do you have any update on any progress in terms of incremental penetration into the MRI comes to groupies terms and.
The last two months since the acquisition beyond just the priority existing customer base has there been any new growth and into their customer base.
We'll just have to so the we closed that transaction at the end of September So we're only a month into it.
And.
You know right right now the early stages are devoted to.
You know really ensuring the stability of the platform a transition of all customers et cetera. So we're we're closely and touch with with the group that now constitutes an MRI payments.
Of course, they are there they are former employees of a priority so fantastic relationship there fantastic working relationship and.
So that I would I would expect it will have or I should say you should anticipate.
A more realistic.
Timeframe for driving that penetration through the MRI to beginning in Q1 2021.
Okay and <unk>.
And our recent news and and just to be clear there are always new property managers, joining the platform. So that that's continuing.
From the nice thing about MRF volume, it's an open architecture platform. So the pipeline we had it was across the board and.
Was never disrupted during the transition MRI so.
If that if that makes sense. It does and that's helpful. And then if you can elaborate on the progress for two of the other announce partnerships, specifically occur and and city and possibly elaborate on any progress those relationships and eat into expanding into the international arena and it would be helpful.
Yeah. So look at those those bolt had some integration work to do.
I was there and the two city and their their crop rates for commercial our are much closer to two launch and the the Akorn and NJ freeway.
There's a you know there there's still some integration work that that needs to be done biotechnology partner.
As we as we start to roll that out so the growth that you're seeing.
Is is independent of those.
Integrated partnerships.
And you know pipeline opportunities that you know that that are committed to you know our future platform.
No that's fair and then when momentum you're only additive and I guess just to sum it up.
And that's great if I take the numbers that you put out and annualize them and looking at an 80 million plus EBITDA at today's quarterly run rate that would generate are you still targeting and 80% conversion.
Great from free cash flows and will that capital allocation be focused more on debt pay down or in the past I know you've talked about doing more interest in tuck in acquisitions, and the health care space and.
And any color on that as well.
So Mike I'll, let you comment on the on the free cash flow conversion and and.
And I would say so to answer your question is.
I would expected.
We expect it more as de leveraging and.
If we have a thoughtful.
De leveraging.
Acquisition.
Then yeah, we'll use the cash for that if it if we don't you know we'll use it for debt reduction.
Okay.
Yeah at this point I always use debt repayment I should say that revamp sorry.
All right as far as EBITDA conversion and the free cash flow you know, we obviously got a benefit from lower interest costs nicely.
But the bad news and becoming profitable is we're going to and probably return into being a tax payer. Although we do have some carryforwards remaining to offset that and I think from from from a modeling perspective, I would keep that conversion at the at that range going forward will probably benefit more and no short term but.
Did you we we have a number of kind of point of sales tools.
The you know that the core of which is our MX merchant which is.
Which is omni channel that that's been in place for you know.
Years.
So is there something more specific you were referring to.
And we because we do have some product launches and the.
And in.
[noise] Party technology holdings.
Which was our cumulative offering.
Is that what you're referring to or whether there's something else.
It was related to the each have offering and <unk> and yes that would be cumulative yep yep, okay, you're spot on so we're we're out in beta.
And.
We're we're we're very much looking forward to 2021 with an aggressive launch of that product, but we want to make sure we have that working.
Working.
Seamlessly.
It does it and great so with with eat tab. So you know it's not only on premise. It's also.
The.
Handles curbside and and and it back even mobile on premise.
So a customer can scan and QR code Pops and menu they can order table and and have food delivered.
And then we're adding the delivery module as well right now to try to eat tab.
Components so.
This is going to be.
And we're excited about that for for 2021.
Okay, but again things continuing to get it perfected.
Great Alright, well, great job guys and keep up the good work best wishes and look forward to catching and corridor I will jump back in queue them.
Thank you.
And I'm not showing any further questions at this time and when I turn the call back over to Tom for any closing remarks.
Well certainly would like to thank everyone for their oh for their attendance and and and for the sport of priority.
We we tried to reflect over the past couple of quarters, we know the job at hand.
And we are laser focused on on driving results.
And look forward to continuing to do so through the fourth quarter and.
And having a great story to tell when we when we wrap up the year. So.
Appreciate everyone and you know say say.
And.
And and stay safe out there. Thank you very much.
Ladies and gentlemen sales conclude todays presentation. You may now disconnect have a wonderful day.
[noise] [noise].
[music].