Q3 2022 SP Plus Corp Earnings Call
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[music].
Yeah.
Good day and thank you for standing by welcome to the Q3 2020 to SP Plus Corporation earnings Conference call.
At this time, all participants are in listen only mode.
After the speaker's presentation, there will be a question and answer session.
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Please be advised that today's conference call is being recorded.
I would now like to hand, the conference over to your Speaker today, Chris Wright, Chief Financial Officer of SP plus.
Go ahead.
Thank you Rebecca and good afternoon, everyone as Rick just said I'm Kristopher Roy Chief Financial Officer of SP, plus welcome to our conference call. Following the release of our third quarter 2022 earnings.
During the call today management will make remarks that may be considered forward looking statements, including statements as to the impact of COVID-19 outlook and expectations for 2022 and statements regarding the company's strategies plans intentions future operations and expected financial performance.
Actual results performance and achievements could differ materially from those expressed or implied due to a variety of risks uncertainties or other factors, including those described in the company's earnings release issued earlier. This afternoon, which is incorporated by reference for purposes of this call and available on the SP plus website.
And the risk factors in the company's annual report on Form 10-K, and quarterly reports on Form 10-Q, and other filings with the SEC.
In addition management will discuss non-GAAP financial information during the call manage.
Management believes the presentation of non-GAAP results provides investors with useful supplemental information concerning the company's ongoing operations and is an appropriate way to evaluate the company's performance.
The non-GAAP results are provided for informational purposes only.
A full reconciliation of non-GAAP financial measures to comparable GAAP financial measures were presented in the tables accompanying the earnings release.
The extent other non-GAAP financial measures.
First on the call reconciliations to comparable GAAP measures will be posted under the regulation G tab in the Investor Relations section of the SP plus website.
Please note this call is being broadcast live over the Internet and is being recorded a replay will be available on the SP plus website. Shortly after the end of the call and will be available for 30 days from today I will now turn the call over to Marc Baumann, Our chairman and Chief Executive Officer Mark.
Thank you, Chris and thank you everyone for joining us this afternoon to discuss our third quarter results.
Im pleased to report that the third quarter of 2022 was another strong quarter across our business with both our commercial and aviation segments, posting double digit year on year growth in adjusted gross profit.
This was driven by strong same store location performance as well as new business.
Adjusted gross profit was essentially back to the comparable quarter of 2019, which was a record for SP plus.
The third quarter also marked the completion of Sp's financial recovery, which reflects strategic actions, we took together with improved business conditions.
In addition, although we're essentially back to pre pandemic financial performance overall demand in some of our verticals continues to lag where it was in 2019, which provides us with additional runway in 2023.
These results underscore two years of hard work by our team to not only improve our financial performance, but also increase our market share and further expand the total addressable market for our products and services.
Consistent with our year to date performance, we're reaffirming our guidance for the full year, which exceeds pre pandemic 2019 at the top end of the range.
Commercial segment gross profit increased 13% year over year as we continue to see strong growth in a number of verticals, particularly commercial municipal and large venues and momentum continues to build as the pace of return to office increases in many of our larger metropolitan markets.
Over the last 12 months, we've added 95, new locations in the commercial segment on a net basis and location retention has remained at 91%.
Aviation adjusted gross profit was up 31% year over year as we continued to benefit from both new wins and expansion of services as well as increasing demand for travel. This has been a strong year for new contract wins in our aviation segment and then in addition to new locations, we've been able to selling additional products and services.
At existing locations, our aviation business is still in recovery mode, and we still see significant additional upside as travel trends continue to improve and demand increases for our services that reduce friction and ease congestion.
Our technology offerings continues to be a key business driver to that and we're very pleased to have completed an acquisition that demonstrates the successful execution of our strategy to further enhance and complement our industry, leading technology capabilities expand our addressable market and accelerate growth.
Last month, we announced the acquisition of <unk> associates, including its global E Commerce platform <unk> industry, leading SaaS platform is currently deployed 70 airports in the U S and Europe and over 400 commercial parking locations in Europe as they continue to expand their footprint operating under the <unk> Parker.
And Metro Parker brands, KFC delivers online booking for parking and other travel services dynamic pricing and e-commerce capabilities, which are all designed to reduce congestion enable frictionless transactions and provide a first class consumer experience. In addition, JMP also provides comprehensive digital marketing case.
<unk> through its award winning digital marketing agency <unk> digital.
While a small acquisition from a financial perspective, bringing together the two businesses gives us the ability to leverage our respective relationships and expertise to bring innovative technology solutions to airports and commercial parking operations, both within and outside of North America. In addition to expanding our addressable market.
We believe the acquisition of <unk> will serve as a growth platform for us providing innovative solutions that clients and consumers demand. We believe this acquisition is a great strategic fit for us as it integrates seamlessly with sphere technology has been a key differentiator for SP plus in the marketplace and an important fact.
During our successful business development efforts. In addition, this acquisition expands our presence outside of North America, and reinforces our leadership position in the digital transformation of our industry, which is developing in sync with the growing trends in smart city technology.
Before I turn the call over to Chris I'd like to acknowledge today's uncertain economic outlook with potential recession on the horizon. Historically, our business model has been recession resistant through past down cycles, and know that management contracts represent 85% of our commercial segment. We believe that resilience is further enhanced.
Additionally, our technology offerings, which we've expanded with the recent acquisition is not just a differentiator, but a profit driver for our clients, which is increasingly important in more challenging economic environments.
And we're continuing to make investments in business development and other resources to better position us to take advantage of our expanded addressable market. Thus, while we are monitoring the economic landscape closely we believe our management contracts provide a strong visibility and cash flow and we're comfortable with our outlook for continued growth in 2023.
Now I'm going to turn the call back over to Chris for a financial review.
Thank you Mark I will discuss our strong financial performance in the third quarter of 2022.
Dale.
Puts us firmly on track to achieve our full year guidance for key profitability metrics, including adjusted EPS and adjusted EBITDA to exceed 2019 levels, which was a record year for the company.
I will focus on adjusted numbers in my remarks.
For 2022, our third quarter adjusted gross profit increased 18% year over year to $58 2 million as we benefited from strategic actions, Marc mentioned as well as strong business activity and new business wins.
Which were enabled and supported by our investments in industry, leading sphere technology capabilities.
Adjusted G&A expenses for the third quarter of 2022 or $26 million, 25% higher than $28 million of.
Adjusted G&A in the year ago period.
This reflects higher performance based compensation and investments in business development technology and other resources to support our current and planned growth.
As one example, we recently created a customer success team to support the effective deployment of our technology solutions across geographic markets as well as industry verticals. While these investments will yield future benefits and are important to drive long term sustainable grow a.
<unk> increased G&A in the short run.
Compared to the third quarter of 2019, Q3, 2022, adjusted G&A was flat as permanent cost reductions taken over the past two years were reinvested into initiatives like the customer success team I, just mentioned as well as higher performance based compensation.
As we've said before we want to reinvest savings realized back into the business in a way that we believe can provide a faster growth trajectory than we had prior to COVID-19.
Third quarter 2022, adjusted earnings per share increased 23% to 80.
Compared to the last year of 65.
And adjusted EBITDA of 31 $5 million was 13% ahead of $28 million reported in the year ago quarter.
Now moving to free cash flow, we generated $56 6 million during the first nine months of 2022 compared to $21 million in the first nine months of 2021.
As a reminder, our 2022 free cash flow benefited from a $20 5 million U S. Federal income tax refund, which offset higher capital expenditures compared to a year ago period at.
At the end of September we had $270 million of capacity under our Upsized $600 million senior credit facility.
On our last earnings call. We noted that the board approved a $60 million share repurchase program in may of this year.
Then we have repurchased 1 million shares at an average price of $33 through yesterday, and currently have $24 $8 million remaining under our authorization.
As Mark mentioned, our year to date performance puts us firmly on track to achieve our full year guidance, which represents significant growth over 2021.
It's also worth noting that the upper end of our guidance ranges represent a return to pre pandemic 2019 levels.
With that I'll turn the call back over to Mark.
Thanks, Chris as you can see from our results our business is performing as planned and continues to improve with a more profitable business model a portfolio of primarily management type contracts that provide additional resilience in a challenging market environment and actions that we believe continue to expand our addressable market, including the <unk>.
Patients in terms of revenue and EBITDA contributions.
Got it well I'll talk about the strategy and then Chris can address some of the numbers that you are asking about Pete but essentially over the past few years and this really started before the pandemic we've been investing in our technology platform is the basis for accelerating our growth and all of that is sold into the marketplace.
Under the sphere umbrella and the main focus of that platform has been on our commercial segment.
Which is a very fragmented.
Segment with a lot of locations and a lot of different operating requirements and while the sphere platform has been deployed at a couple of airports. The main development focus has really been on the needs of commercial clients and commercial lease locations and what we found in the <unk> business is someone who has developed a clear.
Form that is exclusively and primarily focused on aviation and and they've got credibility in the marketplace as they go to market to sell their capabilities because they have that installed base of the 70 airports that we talked about so we saw this is a perfect fit with what we're trying to do with technology and that's the really offer.
Technology to clients, even where there are no boots on the ground and increasingly we're going to expand our addressable market by offering technology solutions, where we're not necessarily managing and operating the facilities. So I think that's really the thinking behind it I think it is they have capabilities that we could have events.
<unk> developed ourselves, but we see market opportunities now when you really wanted to move more quickly than doing internal development would have taken us.
Okay. Thank you very much.
Please stand and then our next question.
Well, let me.
This is Chris I thought I'd just tack on here is as Pete had a couple of other questions that I thought I would address in terms of the acquisition certainly as Mark mentioned in the Korea range call. This is a smaller acquisition I would think about it in terms of less than $15 million or right around there in terms of our purchase price in <unk>.
Of EBITDA it certainly is accretive.
Juan I wouldn't say, it's going to provide significant or meaningful.
The increase as it relates to EBITDA, but what I would say is for all the reasons that Mark mentioned strategically this made a lot of sense for us.
Okay.
By far our next question.
Our next question comes from the line of Tim Mulrooney of William Blair. Your line is now open.
Yes, thanks for.
Thanks for taking my question I'm trying to figure out how to phrase. This I guess I'll just start talking mark.
You talk about 85% of your commercial locations gross profit coming from management contracts.
And that being beneficial is helping to potentially insulate you from a macro downturn, but.
We saw the managed.
Contract.
Gross profit declined pretty materially during the pandemic.
I know that that was a pretty specific situation, but what gives you confidence that we wouldnt see <unk>.
Managed contract gross profit decline again.
In the potentially upcoming recession, if things begin to get really tough again. Thank you.
Sure.
As we've talked in the past.
We are not recession proof, we definitely don't like recessions I don't think anybody does we certainly prefer strong economic backdrop, but our management portfolio concentration in commercial does insulate us from some of the downturns and when we say that we don't expect it to be significant were looking back on.
The financial crisis of 2008, and other recessions that we've been through as a company. The pandemic was unique in many ways and particularly because the bulk of our clients just stopped operating and so that's a little different scenario. When you have a typical recession there may be lower volumes of activity there may be desires.
Clients for greater efficiency, and Thats, where our expanded suite of technology capabilities and provide solutions.
And reduce labor costs, so I think what im.
Imagining is ahead if there is a recession it is going to be more of a typical recession kind in that case, we don't tend to see those sort of downturn downward pressures on management contracts now bear in mind as you know, we simplify and talk about management contracts and we have fixed fee management contracts and we have other management contracts struck.
<unk> and some of those other contracts.
Do depend on levels of volume and activity. So if there is a recession no those things dropped back what we tell our own organization is that in recessionary times in many ways prospective clients need us even more theyre feeling financial pressures. They maybe don't have good solutions provided by their current providers if they've outsourced.
And so I think they can look to us as someone who can come in and in any economic conditions drive improved profitability and lower cost for their operations.
Yeah. Okay. That's helpful or were just doing one question or can I can I do a follow up you can keep going go ahead alright.
Alright. Thanks, So maybe we can just dig into that a little bit more I don't know that you have the data available, but as you think back to the great financial crisis right not dependent on my question is a weird thing.
How did managed contracts and all the portfolio looked very different but you've been doing this whole longtime industry veteran.
How did those managed contracts.
Perform relative to the leased contracts, maybe you can just talk a little bit more.
<unk>.
Whatever you can remember that we can help give a little more color to the story.
Yes, sure and I mean, one of the things that is a little hard to remember that far back and of course.
We also it just so happened around nine.
<unk>, we had a settlement of our legal claims from Hurricane Katrina running through our numbers. So there is quite a bit of noise as I recall in 2009, but essentially in a recession or in any type of a time, where something effects the utilization of a facility if it's a <unk>.
Fixed fee contract that doesn't affect us at all we're going to generate the same gross profit that we were generating before we as I mentioned, we do have some reverse management contracts and if our clients make a decision to reduce the level of service.
And come to us and say.
Look we need to talk about the cost of this operation, but even in those contracts. We are not for the most part dependent on utilization of the facilities for the amount of money that we make so I would be surprised.
Private drop more than 5% or 10% back in 2008, 2008 2009 period.
Bearing in mind that it is a long time ago now leases, obviously are more exposed and I think one of the one of the things that we have tried very hard to do and we certainly did this extensively during the pandemic is that going into the pandemic. We had over 600 leases in our portfolio and we now have about 400, so we've reduced our lease portfolio.
Folio substantially.
Bye Bye basically a third during the pandemic, but as importantly, we renegotiated a lot of the terms on our remaining leases and as we have entered into new leases, we brought provisions and that allow us to get rent relief and other abatements in the event of a downturn so although at least per se is more.
Our goal to lower utilization.
Have some mitigating factors that we can bring to bear that reduce the impact on our honest the other thing around leases in general is it where the decision maker around technology with a management contract, we're going to the client and we're offering up technology solutions.
To them to decide what to go forward with with the leases, we're making those decisions. So in self park leases, where theres no valet option available. We have tried to drive all of our sphere technology capabilities through so that we are not managing labor costs in a downturn environment and then the final thing I'd say Tim.
Is that part of the strategy behind the sphere platform is too.
Get consumers paying transaction fees for processing and so rather than have a lot of fixed cost or fixed cost for clients, we're capturing transaction fees from from consumer transactions and what we're certainly seeing is that people are still returning to the office traffic.
Congestion is a major issue and in the bulk of our facilities, we're continuing to see increases in the amount of transaction volumes that are taking place and we can grab transaction fees off of those things so.
I know there.
No what's around the corner, but certainly as we look into the fourth quarter here, we're not really seeing any evidence of any slowdown in economic activity.
That's all really great color I appreciate it mark.
Pass it along thank you alright. Thank you.
And again as a reminder to ask a question you will need to press star one one on your telephone.
Our next question comes from the line of Marc Riddick of Sidoti. Your line is now open.
Afternoon Marc.
It might be on mute because we don't hear you.
Okay.
Mark make sure you are with.
Your computer and your phone line is open.
Mark can you hear me.
Okay.
Well Mark if you can hear us please dial in again.
Please standby for our next question.
And we are now going to actually add.
Go back to our first caller at Daniel Moore CJS.
T J S Securities. Your line is now open.
Yes, hi, guys. Its Pete just a follow up question.
Any update on your progress converting potential bags customers, including airports et cetera to use it to the user pay model and should we expect adoption or update to pick up some time next year or is it still too early to tell on that.
Well, there's a lot of a lot of interesting discussions going on right now around that.
As you May know from some of our past comments, we introduced the idea of curbside <unk> after the Super Bowl in Tampa.
A couple of years ago, and that led to one airline really rolling that concept out to now close to 40 airports and instead of the traditional airline sponsored Skycap service as a consumer pay model and that has gone very very well.
So have we have another airline that I think is about to come on board with that service and we're having discussions with another few airlines, but at the same time pre pandemic, we had introduced the bags capabilities too.
To the SP plus airport clients and everybody looked at it clearly is a congestion reducing friction reducing solution is proprietary so it's unique it's only it's something that we can provide but before the before we got anybody on board other than a couple of smaller ports.
And the pandemic came along and so all of that went on pause because of the success of curbside costs here as we now have some airports that are actually.
We are explaining to them the consumer pay model might be the way to go and I think certainly within the next three or four months, we should see some airports go onboard with that idea, where instead of them paying the cost it's paid for by the traveler. So I think that's an idea that is ready to take off on a large scale and we certainly will see I think further growth.
And then in 2023.
Very helpful. Thank you.
Youre welcome.
Okay. Our final question.
Being prepared.
Our final question comes from the line of.
Tim Mulrooney of William Blair. Your line is now open.
And we're just keeping keep passing it back and forth here there you go.
Alright.
Yeah.
You mentioned in your prepared remarks.
Market demand in some verticals continues to lag can you dive in a little bit more about what those verticals are again I think I have an idea of what I'm curious, what you'd say and how far below pre pandemic levels you'd estimate those are those still arm.
Trying to gauge what would a full recovery in those verticals would look like for your business.
Yes, no happy to do that.
The obvious one that I think most people would just.
It is really.
Office building vertical and there are some properties around office buildings that primarily are serving those office buildings. So.
It's funny because the certainly seems to be still a reluctance for people to use mass transit in the major cities I know, we followed this in cities like New York and Chicago in particular, and they are a long long way from getting back to pre pandemic levels. So we're getting strong volumes with us.
It's buildings and it's growing all the time.
I was surprised to see the garage full here.
At Aon Center in Chicago, a couple of weeks ago. One day. So I think what we're really saying by the fact that it's not back is that there is opportunity for us too.
Thats vertical to grow faster than the rest of the <unk> versus portfolio, that's really the primary one within commercial.
Aviation, we certainly.
I have seen airports continue to bring back the services that were there pre pandemic and in fact, some airports can't really handle the parking demand and we've opened up temporary parking they've got land in a couple of airports, we brought our sphere.
<unk> solution in place, putting up signs where people can pay with QR codes or text to pay and they've been very very pleased that we could in essence, they give us the green light and we can be up and operating within a week or two so I think I think we have some very fast solutions to reduce congestion at these airports many of which did not even have paid parking.
And a lot of their facilities in the past, but I think other airports have not brought back <unk>.
Operations Theyre not running all the bus routes and if you look at the TSA information and what the airlines are saying.
We're still in terms of seat miles or actual TSA claimants in general it's still running below the pandemic the pre pandemic levels not by a lot. There was a weak recently, where it was above 2019, but theres still whatever 5% to 10% below than their capacity, primarily because <unk>.
Does the demand, but because they don't have the pilots. So I think it's realistic to imagine that as the airlines are able to get their capacity back to pre pandemic levels and the demand is certainly there that the volume of activity that we handle whether it's curbside concerts check ins, whether it's people on buses whether its managing parking.
Our overflow parking lots or the other services that we're providing for for airports are going to go up in volume on the bag side, It's a similar story.
Sure.
There is obviously massive amounts of luggage being handled and there is a new concept out there I think it was American airlines talking about it and its bleser travel leisure with a b and Thats really the concept that because people can work in a hybrid schedule, they're often combining work and pleasure vacations and that means are going.
<unk> and staying there longer. So therefore, they are checking luggage stake there they need help and assistance because they might be bringing family members along with them and so we think this trend toward leisure travel can be a tailwind for our business as well in the aviation space.
Interesting.
One thing you didn't mention is hospitality.
Is that because that is growing really nicely here just.
Just smaller so not really.
Looking about the valet service offering that you have is not big enough to mention or it's actually doing really well.
No, it's a big area for us and I mean, it is doing really well.
I mean, one of the challenges we have when we try to sort of compare that to pre pandemic one of the.
We have a tough comp because in the pre pandemic, we ran the whole NTN portfolio in Las Vegas.
And they decided to initially discontinued paid parking and then eventually bring parking in house during the pandemic and post pandemic period, so hospitality as a vertical for us is not back to pre pandemic, but certainly compared to last year, it's up significantly and it's one of the areas one of the verticals, where we've probably added.
As many or more locations as any I can think of.
And of course, we have we have technology that is geared towards the valet area.
I would say there is still a times some challenges in getting staff, but we've been able to work through that and so we are definitely very bullish about the future for hospitality, we won and number of hotels over the past year.
Yes, Dan This is Chris I mean, when you look at maybe the top three verticals in terms of new business wins, its hotel commercial and office building. So.
I think that does resonate.
The success that we're having around sphere and the technology capabilities that we're able to bring to clients to optimize revenue.
Through digital marketing campaigns or otherwise and so I think those three markets have been really strong for us on a TTM basis certainly.
If you look at over the last 12 months, but even if you look at the most recent quarter. Those are really three strong verticals for us in terms of new business.
Got it very helpful Mark Chris Thanks, a lot.
Thanks, Tim.
Please standby for our next question.
Our next question comes from the line of Marc Riddick of Sidoti.
Mark Your line is now open.
Hi, good evening.
Good evening Hello.
Excellent you can hear me now Thats great.
So.
Thanks for all the details that you've already provided I wanted to touch a little bit about the.
Turning to office trends that Youre seeing and maybe you could talk a little bit about maybe the general pricing dynamic that youre seeing as far as the end customer.
Are you getting are you seeing much in the way of price increases for just general parking and then maybe you could touch a little bit about are we we've talked about sort of that return rate as far as occupancy I guess, but maybe you could talk a little bit about China.
China some of what Youre seeing.
Both with rate as well as maybe is there a time of day difference are the differences now than where we used to be.
Well for sure different because I think.
With some exceptions most companies have adopted a hybrid work schedule and I think there's been plenty written on this and we're sort of seeing this in our own business, clearly Tuesday, Wednesday, and Thursday, or the bigger days Monday Friday tend to be the work from home days and so people, depending on whether youre coming down two days or three days.
It's.
It's probably cheaper for you to pay by the day, rather than monthly parking and so and I think one of the things. We have mentioned before is that if someone comes down and vice parking three days a week, they're not paying that much less than they were with monthly parking so in terms of revenue coming in.
Not as big a drop as you might imagine, but again for us.
We certainly want to see people coming back to the office and filling up these parking facilities, we're bringing our technology options into play for our clients.
In our office environment, and really saying if somebody is looking for hybrid passes rather than the traditional monthly parking pass a multi day pass or some other discounted parking we gave our whole digital marketing team that works with our clients to figure out the optimal pricing incentives and all of those sort of.
Things. So we're doing all the things that we think we need to do to try to optimize the revenue coming into a facility regardless of what the demand pattern is for it now in terms of price increases generally.
It's been a period, where we have been able to put prices up and part of that is allocating more of the facility to daily parking as opposed to monthly parking.
Traditionally you had a lot of people entering the monthly parking contracts and in effect in some big cities. It's really this is their garage. So theyre just leaving the vehicle there and of course, if it's there all the time no one else can parking that spot and so the advantage of reducing the amount of the facilities that are allocated.
Ed and allocating more of its daily parking is that often in a day youre going to get 123 or more people parking on that same spot. So it's a better utilization of the real estate. So that's another way to really get price increases, but it's something we monitor we have built led tools. So that we can scrape the web site to a competitor.
Nearest facilities, we operate and see what their prices are and use that to make pricing decisions.
On a more regular basis and that generally means and the increased direction.
Great and then I was wondering could shift gears a little bit too.
What your what Youre seeing and what youre experiencing as far as labor management.
Certainly it seems as though you've got better tools to work with I guess in these days and then you have in the past is sort of it's just with that but maybe you can sort of talk about what your what your experiences have been in sort of how each of them.
Just those levers and what benefit there is now versus.
Versus maybe prior cycles.
Sure well I think because everybody is experiencing inflation in their personal lives theres definitely.
The expectations that hourly workers have that theyre going to see increases that are may be higher than what they've seen in the past and likewise as we talk especially during the initial recovery phases from the pandemic.
The workforce was actually smaller because not everybody was coming back to work I think theres two things that are happening then and they generally work out okay for US one is that labor force participation is continuing to increase I think people maybe because they are finding their household budgets stretched the decision they made not to reenter the workforce maybe there.
Rethinking that or perhaps they are feeling more comfortable about the pandemic being in the rearview mirror and thats something they have to worry about all the time. So we're seeing definitely an increase in labor force participation, but the other thing and this is why we emphasize regularly.
The amount of our business that is the management contract based we have had to put wages up in some places and sometimes substantially but once again those are costs that we're passing through it predominantly to our clients and so the impact of that wage inflation is really affecting them. The clients of course are also getting the.
<unk> of the price inflation, we put up prices in the parking now when it's a lease we obviously you have to manage those costs very well and one of the ways that we do that is to try to ensure that.
Jos can be automated and provided in an automated fashion, we're doing that as opposed to having to find scarce labor.
Great and then the last question for me.
Forgive me if I missed commentary on this but I didn't notice the share repurchase activity since the.
Resumption.
Share repurchases earlier this year I was wondering if you can sort of bring us up to date assumes maybe how you're feeling about that I mean, obviously you took a pause after the.
They're making then.
We started and there's a decent amount of activity that we've seen.
I guess, it's been about half a year or so maybe maybe a little bit longer than that but I was wondering just wanted to talk a little bit about sort of maybe what you are thinking about that as a longer term use of cash in.
How we should be thinking about that going forward. Thanks.
Yes markets.
What I would say is I think as you look at the business.
I think we're in a pretty enviable spot, we generate significant amounts of cash flow.
And that and we have an upsized credit facility and I think that allows us to really look at the business in terms of investment strategies around investing in the business and the technology.
And continuing to enhance our technology capabilities I think it allows us to look at potential acquisitions.
As we look at either ancillary services that we can provide to clients or in this case that was most recent kmt in some of the technology solutions that we think can help accelerate growth and I think we have the opportunity to be able to deliver and return capital back to shareholders. So I think we're able with our strong free.
Cash flow and our Upsized credit facility.
At all three of those on a continuous basis and so I know we've made sure acquisitions over the last several.
Two quarters or so we continue to make those share repurchases here in Q4.
We will have more to share just in terms of how we're thinking about the capital deployment and potentially return.
Return of capital to shareholders as we get into Q4 and have our Q4 release.
Excellent. Thank you very much.
Thanks Mark.
Okay. At this time I'm showing no further questions I would now like to turn it back to Marc Baumann for closing remarks.
Okay. Thanks, Ruth and I will just wrap up briefly and say thank you for joining US today, we're very excited about the <unk>.
Finish line coming for this year and planning for and talking to you about our growth plans for 2023 before lunch. So anyway have a great day. Thank you.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
The conference will begin shortly.
As Johan during Q&A, you can dial star one one.
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