Q1 2022 Rollins Inc Earnings Call
[music].
Greetings and welcome to the Rollins, Inc. First quarter 2022 earnings conference call. At this time, all participants are in a listen only mode.
Question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
Now I'd like to turn the call over to Joe Calabrese. Thank you you may begin.
By now you should have all received a copy of the press release. However, if anyone is missing a copy.
Like to receive one.
Please contact our office at 2128 to 73746.
We will send you release and make sure you're on the company's distribution list there.
There will be a replay of the call, which will begin one hour after the call and one for one week.
The replay can be accessed by dialing 877.
06853, with the pass code 137.
28548. Additionally, the Coles being webcast at Www Dot Rollins Dot com and a replay will be available for 90 days.
Company is also offering investors a supporting slide presentation.
Which can be found on bonds website at www Dot com.
Following the slide presentation on our call. This morning, and encourage you to view it with us.
On the line with me today, and speaking are Gary Rollins, Rollins', Chairman and Chief Executive Officer.
Don Wilson Vice Chairman.
Do you ever get off during your President and Chief operating Officer, and Julian Zimmerman interim Chief Financial Officer, Vice President and Treasurer.
Management will make some opening remarks, and then we'll open the line for your questions Gary would you like to begin.
Yes, Thank you Joe and good morning.
We appreciate all of you joining us for our first quarter 2022 investor call.
Julie will read our forward looking statement and disclaimer and then we'll begin.
Our earnings release discusses our business outlook and contains certain forward looking statements.
These particular forward looking statements and all other statements that have been made on this call. Excluding historical facts are subject to a number of risks and uncertainties and actual results may differ materially from any statement, we make today.
Please refer to today's press release and for our SEC filings, including the risk factors section of our Form 10-K for the year ended December 31st 2021 for more information and the risk factors that could cause actual results could differ.
Thank you Julie I'm pleased to report that Rollins has delivered solid first quarter results and realize strong year over year growth in many key performance areas.
We remain well positioned to deliver on our short term and long term objectives.
And we look forward to sharing our progress in the quarters ahead.
I would now like to give an update on our FCC investigation.
Rollins reached a settlement agreement with the U S Security and Exchange Commission on April 18.
The settlement fully resolved the SEC's investigation into certain adjustments to accruals and reserves and their impact on reported earnings per share in the first quarter of 2016, and the second quarter or a 2017.
Rollins paid $8 million civil penalty, which was fully accrued in the third and fourth quarters of 2021.
Under terms of the settlement Rollins, neither admits or denies the FCC's findings in this matter.
The settlement completes the SEC's investigation, and there will be no restatement of Rollins financials related to this matter.
I wanted to take a moment to highlight the actions that we've taken.
To strengthen Rollins controls and procedures to prevent something like this from happening in the future.
From the beginning we took this matter very seriously and hired outside consultants.
To evaluate and strengthen our financial reporting.
This included improving processes procedures, and supporting documentation that impact financial results.
We also hired a chief accounting officer.
Tracey Horton Foote.
Last October and added to retard, Ian why partners to our audit Committee, Susan Bill and Pat Gunny soon.
Susan currently serves as chair of that committee.
We are also hard and added several experienced accounting personnel to further strengthen our team.
Sure I will share with you details over act a CFO search.
Further improve this area.
It is noteworthy that the FCC recognizes within the order that Rollins quote cooperation in the remedial acts were properly undertaken to prevent and detect the type of misconduct described in the order.
Quote.
Out of respect for the process, we will not answer any questions during <unk>.
Our Q&A on this matter.
I assure you that integrity.
Is that the core of who we are as a company.
And we remain committed to doing the right thing for our employees investors and customers.
And finally, we were pleased to dismantle or is resolved.
With that let me turn the call over to John who will provide some business updates John .
Thank you and good morning.
Everyone.
As Gary mentioned, we are pleased with our first quarter financial results with revenue increasing to 597 million and net income totaling $72 4 million or <unk> 15 per share.
Overall, we experienced solid growth across our family of pest management brands and continue to achieve strong levels of customer growth.
Over the past couple of years, we have been actively strengthening and solidifying our board of directors and board committees, reflecting our commitment to effective corporate governance.
But those of you who are familiar with Rollins. Our board consists of outstanding directors, who have diverse backgrounds and bring in valuable experience strong governance.
And their unique perspectives to our company.
As part of that process. Our directors have also been a key component of driving Rollins long term strategic vision.
We were pleased to announce that Gregory Morrison has been recently appointed to Rollins Audit Committee.
Some of you may recall, the Greg who joined as a director of Rollins and 2021.
18 years, as a vice president and corporate Chief Information Officer for Cox Enterprises.
At Cox he was responsible for the management and operations of all information technology, including Cyber security solutions, which we believe makes it particularly well suited to join the audit Committee.
In addition to his responsibilities as a member of our board Human Capital Management, Inc.
Compensation Committee.
We were also pleased to announce that Don Carson has been appointed to our nominating and governance Committee.
Don also joined our board in 2021.
And as a trusted adviser to catheter precision where he also serves as a director.
Don also acts as a trustee for the cook and buying them fun.
Furthermore, we strengthened our board with the recent selection of seasoned executive Louise Sands.
Luis has also been appointed to our nominating and governance Committee and the compensation Committee.
For almost 20 years Louise wasn't executive Vice President and General Counsel of Turner Broadcasting system.
As general Counsel Louise oversaw illegal work relating to Turner's business activities and its subsidiaries worldwide, including licensing.
And production of content for Turner television.
She was also involved in the sale and distribution of those networks the protection of intellectual property.
It matters as well as litigation and transactional work relating to acquisitions and joint ventures.
Most recently Louise focused on issues related to technology.
Information security use of data and consumer privacy as well as enterprise wide risk management.
We are pleased to have Luis join our board and we believe her broad experience will help to further strengthen Rollins and guide our strategic direction.
At our core we were for most of the service company. Our track record of success is a direct result of the efforts of the dedicated and carrying people that work at Rollins.
Toward this end I would like to highlight that during the quarter Rollins was awarded a 2022 top workplaces award by the Atlanta Journal Constitution.
Rollins ranked 17th in the large business category, marking the sixth consecutive year. We've received this award.
This recognition is based solely on employee satisfaction and engagement feedback gathered through a third party survey.
The survey measure several aspects of workplace culture, including alignment execution and leadership.
More than 2900, Atlanta companies participated in this program and over 68000 of their employees were surveyed about their workplace experience.
Another recent recognition I am I am.
Particularly proud of is that Newsweek ranked ron's number eight in their article on America's most trustworthy companies for 2022, and the consulting and professional services category.
Over 110000 evaluations were collected and reviewed regarding truck customer Trust Investor Trust.
And employee trust to receive this recognition.
We remain committed to providing a workplace where our team members can grow professionally and have a positive impact on the community and many thanks go to our leadership team who deserve all the credit for Rollins achieving these honors.
Now, let me turn the call over to Jerry who will provide more details on our business.
Thank you John and Hello, everyone.
Now I'd like to walk through our 2022 first quarter financial results focusing on items that directly impacted our operations during the quarter.
Julie will address the non-GAAP adjustments a little later.
Looking at our numbers Rowan's first quarter 2022 was highlighted by revenue growth of 10, 3% to $590 7 million compared to $535 6 million in last year's first quarter.
Net income was $72 4 million or 15 cents per diluted share. This is compared to $92 6 million were <unk> 19 per diluted share for the same period in 2021.
This decline in EPS was primarily the result of last year's gain on the sale of properties.
As mentioned, Julie will review GAAP, and non-GAAP results as well as organic revenue growth number shortly.
Operationally all our business lines experienced good growth during the quarter with residential pest control up 10, 2% commercial pest control rising nine 1% and termite increasing 13, 3%.
On the expense side in the first quarter, we felt significant inflationary pressures and fleet and pest control materials and supplies.
Ill give insight on these and an overview of the actions we've been implementing to mitigate these expense pressures.
As you may recall from last quarter, we've been proactively addressing supply chain issues in our termite and ancillary service offerings.
With our procurement teams seeking alternate products and suppliers, while our operation teams have been successfully initiated increases in our rate card pricing where needed to counteract the rise in some of these material costs we.
We believe we have struck the right balance and these efforts are helping to bring material costs back in line for our termite and ancillary business.
In the first quarter, we began experiencing similar inflationary headwinds within our residential and commercial pest control materials and supplies.
Given the successes, we've achieved mitigating mnf's costs and termite were implementing a proactive approach within our pest control business by adjusting our rate cards and diversifying through alternative suppliers and also by seeking shipping and freight efficiencies.
Most important to improve our profit margin. We're also implementing our annual price increase programs earlier this year.
These more aggressive price increases were initiated within all of our brands in late spring as compared to typical timing of the early summer months in prior years.
In short we're proactively managing through this our fuel expenses and important example.
We gave up seven tenths of a point in margin to increases in fleet expense in Q1.
Through extensive routing and scheduling initiatives, we have reduced our overall mileage necessary, which lowers our fuel requirements for first quarter of 2022, our fuel costs would have been approximately $700000 higher if we had not begun these routing and scheduling processes.
This equates to an estimated addition of over $3 2 million miles driven if our miles between stops had not been reduced using our routing and scheduling technologies.
We expect that we will see ongoing benefits of these improvements as we move throughout the remainder of the year.
Furthermore, we continue to increase the number of hybrid and electric vehicles in our fleet as we now have over 800 currently deployed.
Next for a quick update on our acquisition pipeline Fortunately it's full.
We have plenty of potential opportunities that we're actively engaged with.
Our acquisition team has been busy both domestic and internationally.
One of our latest acquisitions highlighted in a recent press release NBC environment.
Headquartered in the U K closed April one.
And now gives us full coverage within the U K, including multiple locations within Scotland.
Before closing I'd like to provide an update on our chief financial Officer search, while we don't have an announcement to make today, we havent engaged an executive search firm to assist with identifying an exceptional candidate to join our leadership team.
We are focused on getting a seasoned talented financial executive as our CFO .
The search is progressing well and we look forward to providing an update this summer.
Julie has been filling and remarkably as our interim CFO .
And you can all rest assure that jewelry will be remaining with Rollins as our group Vice President of finance and Investor Relations.
I know that I sleep better at night, knowing that.
Before I turn it over to Julie I want to emphasize how pleased we are of our first quarter results given the inflationary pressures we faced.
And we remain well positioned for 2022.
I'll now turn the call over to Julie.
Thank you Jerry.
We delivered a strong first quarter highlighted by significant growth across many key financial metrics like last quarter, we are including a slide deck on our website, which presents the numbers. We discussed during todays earnings call presentation to view the debt. Please go to Rollins dot com and click on news and events and presentations.
Now onto the numbers, our first quarter revenues of $590 7 million was an increase of 10, 3% actual exchange rates and 7% organic.
But the constant exchange rate the total revenue growth totaled nine 6% with six 3% organic.
As previously mentioned residential commercial and termite all presented strong growth for the quarter.
Residential grew 10, 2% five 8% organic.
Commercial grew nine 1% seven 9% organic.
Lastly, we have termite, which grew 13, 3% with five eight excuse me with eight 5% organic.
Now onto our income for the first quarter, we are presenting adjusted EBITDA for comparison purposes due to the impact of our gain on sale of several of our clock properties of 31 million in Q1 of last year.
First quarter, EBITDA 2022 was $117 8 million.
Four 2% over 2021, adjusted EBITDA of $113 million.
First quarter 2022, EPS was 15 cents per diluted share were seven 1% improvement over 2021 adjusted EPS.
For the first quarter 2022, gross margin decreased to 50% or 1.2 points below last year.
As mentioned fleet created another quarter of strong headwinds in Q1, 2022, primarily from fuel and the amount of $4 6 million and vehicle repair is a $1 2 million over last year.
Combined these fleet expense increases equated to seven tenths of a point in additional costs.
Service salaries were up four tenths of a point, while pest control materials and supplies were at $2 9 million or 110th of a point.
Fuel increases were driven by a 42% increase in average price paid per gallon in Q1 2022 over 2021.
This along with customer growth of about 55% increase in our <unk>.
Total fuel cost for the quarter.
The service wages increase was a combination of COVID-19 sick time taken and overtime paid to cover work for employees out sick with Covid, we faced some difficult challenges in January as a reported number of employees tested positive for COVID-19 increased 154% over January 2021.
Additional overtime pay required to complete our routes and cover for these COVID-19 cases contributed to a 21% increase over Q1 2021.
We believe this to be a one time event unless another COVID-19 surge of cars.
Sales general and administrative or SG&A on the other hand held flat Q1, 2022 over 2020 , one with both quarters coming in at 33%.
Now for a few notes regarding our cash flow or dividends for Q1, 2022 totaled $49 2 million or an increase of 25% over 2021, while cash used for acquisitions declined 22% to $13 2 million for 2022.
We ended the current period was $258 3 million in cash of which $86 1 million was held by our foreign subsidiaries.
As you probably noted we have also increased our term loan over last year. This will put us in a strong position to act quickly on either potential acquisitions or stock repurchases as opportunities may arise.
Now to free cash flow.
For the first quarter of 2022, our free cash was $79 5 million or decrease of 28, 8% over last year.
The decline was related to six.
$6 million in payroll taxes deferred under the coronavirus aid relief and economic security or cares Act in 2022, and subsequently paid in the third quarter of 2021 and comparing the current first quarter to last year. The deferral was within the Q1 2021 operating activities.
Last time, please please to share that yesterday the board of directors approved a regular cash dividend of 10 cents per share that will be paid on June 10, 2022 to shareholders of record at the close of business May 10 2022.
This represents a 25% increase over the dividend paid in June 2021.
The dividend increase reflects our strong performance in the quarter of 2022 accentuates, our financial strength, the board's confidence in our outlook for continued growth.
Gary I'll turn the call back to you.
Thank you Julie we're happy to take any questions at this time.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment may be necessary to pick up your handset before pressing the star keys.
We ask that you please limit yourself to one question and one follow up question. One moment. Please while we poll for your questions.
Our first questions come from the line of Tim Mulrooney with William Blair. Please proceed with your questions.
Gary Julie Jerry Jon Good morning, good morning.
Good morning.
Thanks for taking my question. So I just had a couple of about pricing and I. Appreciate the color that Jerry gave but the first one is you know if pricing is typically call.
Call it 1% to 2% how much do you expect it to be this year I mean, we've spoken to several regional providers, who were talking about price increases of more than 5%. This year. So we're wondering.
If oregon's thinking along the same lines.
So I'll start with this and then any of the guys can jump in if they want to add to that Tim as you know our price increase you know will typically equate to 1% to 2% of our overall growth and we have said in bringing it forward earlier this year and the fact that we are being more aggressive than we do expect it to increase off of that we're obviously not going to do.
Are you an exact number as you know we never really do that.
But keep in mind, what this means by being more aggressive is there are customers that in the past that we may have considered not doing increase our holding off a little bit longer. We'll do that also there may be some areas that we may.
Push that envelope, a little bit and increase at higher by region by region.
Yeah, Yeah, Yeah. Tim. This is Jerry we were we took a hard look and as we said we've been more aggressive than we probably ever have been in the future and we looked at it is to from a from a standpoint of what will the market bear.
And.
And we've just been considerably more aggressive than we have in prior years with our with our percentage increases.
Okay, well I'll take what I can get thank you E. Maybe for my follow up on pricing.
You know can you talk a little bit about.
Look I think we know how it works on the residential side you send out your price increase in the second quarter every year.
So that makes sense, but on the commercial side I think it could be a little more nuanced. Please correct me if I'm wrong, but I mean my question I guess is.
Are there opportunities for pricing conversations every time, you visit a commercial customer.
Or is it once per year or or is the price fix through the duration of the contract length could you just give us a little more insight on how how that dynamic occurs on on the commercial side.
Tim Yeah. This is John I'll I'll I'll take that.
I guess the easy answer is it depends.
I really you know on that on that customer the contract arrangement and and where you know where we are in terms of service duration most of our commercial customers sort of equate service duration to the price they pay.
And so if you know if we get some pretty robust reporting out of our systems.
To provide our managers and field sales folks with the with the information they need to cause then kind of have that conversation if service durations are.
Our or you know are are exceeding kind of what what are our revenue per hour goal might be.
So it just depends entirely on the customer and where they are relative to all that.
I'd like to add something.
John This is Gary.
Bob.
We have been doing price increases on a consistent program or routine program for.
For the last 20 plus years.
And we have a tremendous database that we were able to compare.
The prices to customers paying related to the current rate card.
Look at the exact the gap if you will between the rate card and the price.
And study.
Quite carefully you know what the results are going to be and so forth. So I think it's it's not a hit or Miss deal.
And we measure rollbacks this would be a situation where the customer objects and we feel like Oh gosh.
Customers certainly profitable obviously, but.
We've learned that.
That really there's.
There's not much difference between the.
The customers that that are being rolled back in other words.
We have branches it roll back very few maybe 10% of their customers. So we really share that data and.
And which really kind of pads.
Integrity.
Input costs there.
There is no need to change the pricing and.
And then we even get something.
Our attitude is you know they.
They may not have maybe not require the full amount of the price increase but we do get some amount.
So this is something that we've been watching carefully.
And.
It's made a big difference to our company.
Tim This is Jerry that we we were just as aggressive within our brands if not in some brands more aggressive on the commercial side than residential even so.
We were.
We definitely touched the commercial the commercial business and a great way as it relates to price increase.
Okay. That's great color. Thank you everybody.
Yeah.
Thank you. Our next question is coming from the line of Ashish Sabra of RBC capital markets. Please proceed with your questions.
Thanks for taking my question.
Just maybe on the gross margins just given all the all the mitigation that you put together in terms of price increases as well as scheduling is it fair for us to assume that the rent of the headwinds with phased into first quarter and those headwinds moderate.
Going forward and again I understand you don't give guidance, but is there a way to think about when does it inflect from being a headwind potentially being a when do we start to start seeing gross margin expansion could that could we start to see that in the back half of the year or do we need to wait for next year to really start gross margin expanding again.
I'll start on that and then let everyone else jump in.
So basically yes on the service salaries, we were talking we do believe that that is something that we've overcome them. Because we do believe that that is related to the COVID-19 experience that we had in the early part of the year, so unless it and as I said another.
Wave is kind of it comes through we believe that we're done with that also as Jerry commented as far as the pest control and Manassas, Yes were taken care of that and going through and adjusting them through our procurement group and then it all sits where our rate cards to make sure that we take care of that that leaves our fuel cost from that standpoint, and so that's where our price increase was.
Definitely be beneficial in helping cover that and then also as our fleet group as you know I think Jerry had commented that is shifting and looking at the type of vehicles that we're using and the ones that are coming into our fleet in the future.
So most of these are at half of these expenses that we're talking about we are we do believe we are well beyond that.
Jerry do you want to jump in on it.
As we also move through the year on this fuel side, we started seeing those the price increases in fuel by mid year.
And some of that will be a little more in our run rate of.
What we're accustomed.
Accustomed to as we move through the year as well so there's that that headwind will be mitigated from a year over year comparison standpoint, as we move through the year and let me add one last thing is the fact as Jerry commented is keep in mind with our price increase coming in were actually brought that forward to where it is going in earlier as well to help mitigate these costs.
If I could add something most of our pest control technicians have an element of productivity.
And our pay plans so when we raise the customer's price.
The technician benefits.
From that as well so it's kind of a win win situation.
And.
Makes you makes you feel good that they're getting a raise too.
That's great color. Thank you very much and maybe <unk>.
Maybe if I can ask a quick follow up on the M&A pipeline and as you mentioned M&A pipeline is pretty solid I was just wondering if you could comment on the valuation and also on the last last call that there was a comment made around restructuring foreign entities to make cash available for them for in all patients more readily so would it be fair for us to assumed.
We could put it he see you'd be good M&A in the international markets as well any comments on that front. Thanks.
I'll address the second part of that which was on the you know we've talked about the foreign subsidiaries or excuse me the cash held by foreign subsidiaries.
As you noted.
I believe it was 86 million held at the end of March.
Our acquisition that occurred on April 1st in the U K N. D. C was a prime example of how when we have that those funds already on the you know within the foreign soil. We can use those for the acquisitions immediately and which we did do so at that time and you know we're always looking for acquisitions, we do not earmark our dollars.
Domestic or international wherever that next right company. The one that has the correct culture that is is the direction you know the acquisition we will make so just understand that we do not say that these dollars have to be for one of the other did you want to address anything else in the pilot.
Would add on the valuation part, we really haven't seen a significant change in valuation in the market I think it's still a pretty.
Very competitive acquisition market.
And there is there's probably more private equity players involved now than there were even two years ago that there's still plenty of competition. There on the valuation side Thats key that's keeping the prices of some of these businesses fairly well propped up.
Thanks, again, a very helpful color and congrats on the strong momentum in the business. Thank you.
Okay.
Thank you. Our next question is come from the line of Mario Kart and watching with Jefferies. Please proceed with your questions.
Hi, guys really appreciate the time.
My first question around kind of what the organic growth looks like in Q2 or in the back half of the year you guys are coming up on tougher comps.
I know that you guys have ramped your sales force as well so maybe you could just help us understand how.
How much pricing is playing into helping.
Alleviate some of that that comp pressure and then also how much of that extra sales force capacity that you guys have will help potentially maintain high single digit growth.
In Q2, and the back half of the year.
So Mario this is John I'll I'll start and then maybe Jerry might have something to add.
I think.
When you look at the what the or business bought by the kind of the service line the.
The residential after two years of really pretty explosive growth will well I think we saw it soften in the in the first quarter and I think that will continue, especially given some of the weather challenges in the first.
Four months or so of the year.
But I think.
Where where the sales force expansion that you mentioned will help us is on the commercial and termite side and and I would expect our organic growth there to remain.
And that high single digit that you mentioned.
And this is Jerry.
<unk>.
John's absolutely right about commercial and termite those ramp up the sales force.
I would add to the color that spring hasnt fully sprung.
That when we look at our call Center data and you just look at the call volume from existing customers that are calling in because you know I I have I need a extra service or I I see something we just see that the volume isn't quite there yet.
That we would have expected.
I think we're probably weeks late.
From a seasonal standpoint as well.
Well, probably have some better color around that as we move through Q2 and see how the weather plays out and what the what that when spring.
What's one spring sprung.
We have a better feel for for that.
That residential pest control side.
Got it I appreciate it and then just for my follow up I haven't asked you guys about this in a while.
It's around technology and kind of connected technology of connected tools.
How penetrated are you within your customer base on that connected technology front I'm, assuming it's probably more weighted towards the commercial customer base and the residential customer base, but any any kind of quantification there would be extremely helpful and maybe where do you think that could go over time.
We're seeing it in other industries, where automation is helping reduce head count or at least allow head count to be used more efficiently.
Wondering if you guys have kind of thought about it internally about potential cost savings or efficiency through using kind of connected products or internet of thing type of tools.
The the work that we've done technology wise, you're right. This is very heavily on the commercial side and I would say at this point in time most of the technology that we're thinking about on the residential side all has to do with customer communication and help us in helping us improve our.
And shifts with customers to improve customer retention.
We've we have not been as focused on automation and back office type stuff, although the routing and scheduling effects.
If if.
Automated scheduling and a lot of what were manual processes can be eliminated overtime with that through the routing and scheduling technologies, but.
Most of our technology on the residential side is focused on that relationship building with the customer communications notifications, Hey, our truck is on the way.
You can.
See the truck on its path come into those types of things that we think will improve customer loyalty.
Understood. Thank you very much.
Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Our next questions come from the line of Michael Hoffman with Stifel. Please proceed with your questions. Thank you very much everybody for taking the questions. So I'd like to come back to price with a little different angle and clarity.
The if I understand the way you're describing the timing of it first quarter 'twenty two does not reflect the benefit of.
Being more aggressive.
And therefore, that's in front of us coming into to Q3 two in <unk>.
Exactly youre thinking correctly, Michael Okay and.
On the commercial growth.
Can you help us understand I'm trying to get a feel for the macro there. So this is as much about your businesses if there's a read through.
Just given all the things were going on a on a geopolitical basis.
I have this sense that there's been a trend of new business formation happening in North America, but really began to ramp in the second half of last year.
And that has not peaked.
You think your commercial organic growth reflects that there is new business formation, meaning you're adding incremental new customers as opposed to upselling existing.
We're probably doing a better job of adding new customers.
And then adding services onto the existing.
Yeah, where we're growing we're growing through new customers.
You would support the idea that there's new business formation going on still that we have not that is not people. So whatever fears about slowing consumer demand and recessions and whenever you haven't seen that come through on somebody starting a business an empty storefront that needs a past service.
I don't know that they're startups from new businesses or just existing business as you know.
Making a change or initiating services for the first time.
Really don't have much insight into that unfortunately for you Michael sorry.
Alright, thank you.
Yeah.
Okay.
Thank you there are no further questions at this time I would now like to turn the call back over to management for any closing comments.
Okay, well. Thank you all for joining US today, we are optimistic about our.
Our opportunities ahead and appreciate your interest in our company.
We look forward to updating you next quarter on our progress. Thank.
Thank you again.
Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time and enjoy the rest of your day.