Q3 2023 Element Fleet Management Corp Earnings Call
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Good morning, ladies and gentlemen, and welcome to element Fleet management third quarter 2023 earnings call.
At this time, all participants are in listen only mode and you're reminded that this call is being recorded.
Following the prepared remarks, the company will invite questions from analysts.
The event you need assistance during the call you may signal, an operator by pressing the star key followed by zero.
Element wishes to caution listeners that todays information contains forward looking statements yes.
The assumptions on which they are based in the material risks and uncertainties that could cause them to differ are outlined in the company's year end and most recent MD&A as well as the most recent yeah, yes, although management believes that the expectations expressed in the statements are reasonable actual results could differ materially.
The company also reminds listeners that todays cough cold and Francis certain non-GAAP and supplemental financial measures.
Management measures performance on a reported and adjusted basis and considers both to be useful in providing readers with a better understanding of how it sets us results.
Reconciliation of these non-GAAP financial measures Ifr's measures can be found in the company's most recent MD&A.
I would now like to turn the conference over to Laura to Torey, It's an ICL, President and Chief Executive officer of element.
Please go ahead.
Thank you operator.
Good morning, everyone and thank you for joining us I am really proud of our elements team for delivering another outstanding quarter, demonstrating the strength of our strategy and the momentum we continue to enjoy in regenerate.
We have delivered record revenue growth at over 15% on a year over year basis.
A rapidly expanding client base with yet another record by welcoming 55, new clients of which 22 were self managed fleets.
And we're increasing our common dividend by 20%.
This is a result of our resilient business model, which speaks to the quality of our clients and the hard work and focus of our team.
In addition to delivering strong financial and operating results, we continue to deliver a superior client experience.
Maintained our strong global net promoter score above 40, with a continued 99% client retention rate.
Outperformed on our targeted easy acceptance rate.
And we had one $9 billion of new vehicle orders from our clients, representing a 29% year over year increase are.
Our confidence in our growth trajectory is further bolstered by the recent prioritization of opportunity to scale, our business and make targeted investments that will drive our future performance.
We announced three strategic initiatives that we have underway.
They are centralizing accountability for our U S and Canadian leasing operation.
Establishing a strategic sourcing presence in Asia, and advancing Digitization and automation, all of which will unlock future growth for us.
The first decentralizing accountability for our U S and Canadian D C function at a new element office in Dublin, Ireland.
Recognized global leasing center of excellence.
This new office will be operational beginning in mid 2024.
A number of long term benefits to both clients and our business support this decision.
So let me elaborate our experience has been that assigning accountability for the performance of each of our service product individuals' senior leaders has driven focus that resulted in accelerated growth.
In each of the last seven quarters services revenue has grown as a result of this approach.
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Our intention is to replicate the proven model of centralized accountability and apply it to our leasing function.
It will be led by Chris getting one of our very seasoned executives who in his past has successfully run elements of Canadian business as a whole and he built our strategic relationship business for Mega fleets, including our model.
Most recently, Chris history, as our Chief Information Officer.
Risks and approximately 70 employees will be based in Dublin.
The centralized accountability for dysfunction will elevate our clients' leasing experience optimized related operations and improved pricing discipline, all to maximize the value of our portfolio.
Now secondly, we will establish a small yet strategic sourcing and relationship management presence in Singapore next year.
This decision will further enhance our global procurement capabilities.
This move is crucial for us to further strengthen our existing ties with Asian, Oems and foster valuable new sourcing relationships.
This will provide us with an opportunity to expand and improve our clients' access to vehicles and provides our business with the economic benefits of strategic sourcing at scale.
And given Asia global leadership position in the development and production of Bbs.
Also aligned with our clients' commitments of sustainability of decarbonization.
Chris Tulloch, the leader of our businesses in Australia, and New Zealand will drive the strategic initiatives.
He is another one of our very talented and seasoned executives within our company.
We expect these two strategic initiatives to contribute to profitable revenue growth and operational efficiencies that Frank will speak to.
Our third strategic initiative is prioritizing and investing in increased Digitization and automation in order to further optimize and scale our business.
For now this comes in the form of having recruited two important new executives to element.
Joining our leadership team.
David It's hard in the role of Chief Digital Officer.
And you as our new Chief Information Officer.
David will accelerate efforts to scale, our business and deliver consistent superior client experiences through digital solution.
Well, you Jen will be responsible for ensuring we build the right technology infrastructure necessary to ensure that element and compete and create great clients and employees seriously.
The time I spent with our team members our clients and our suppliers over the past nine months has made clear the importance of enhanced digitization and automation to build a growth momentum our investors have come to expect from elements.
Our people are motivated and excited about our future that.
That energy has translated into the exciting strategic initiatives, we're implementing to enhance our value proposition and grow our earnings and free cash flow per share.
Moving forward you can expect us to continue working hard to generate strong results by delivering for our clients.
I want to thank our element team members for your commitment to our clients and the exciting work ahead to build a strong and sustainable future for our business and for our shareholders.
With that I'll hand, it over to Frank and look forward to your questions.
Thank you Laura and good morning, everyone. We posted another strong set of results for the third quarter, including several new record highs, we continue to benefit from our commercial capabilities and investments in strengthening those as well as robust client demand and improve the originations driven by improving OEM production.
Our performance underscores the trust and confidence of our clients have an element and the value that we deliver in.
In addition, the strong performance and solid outlook provides us the opportunity to continue returning capital to shareholders. In this regard we are pleased to have announced an increase in our annual common dividend by 20% to <unk> 48 per share annually.
In addition, we anticipate redeeming our remaining outstanding preferred shares as they come due this year and next.
Finally, we have reauthorized, our CIB be able to utilize additional excess capital to repurchase common shares over the next 12 months.
Before I get into our third quarter results, let me elaborate on the strategic initiatives that Laura spoke to.
Echoing her comments, we expect our leasing strategic sourcing and Digitization and automation initiatives to yield significant intermediate to long term benefits.
We anticipate the leasing and strategic sourcing initiatives to contribute profitable revenue growth and operational efficiencies beginning in 2025, which will conservatively scale to between 40 and $60 million of run rate net revenue and 30% to $50 million run rate by full year 2028.
With deep leasing initiatives, representing a significantly larger portion of these benefits.
We will incur approximately $25 million to $30 million in aggregate of nonrecurring setup costs related to these strategic initiatives. The setup costs will be recorded in operating expenses through Q2, 2024 with $3 9 million incurred in accounted for in our G&A This quarter.
We will continue to call out these nonrecurring setup costs in our disclosure materials. So that you can more accurately measure and model our business and the true run rate performance of element without them.
And next quarter when we report our full year 2023 results. We will provide you more detail as to the expected quarterly amounts and cadence of the spend.
These nonrecurring setup costs are related to recruiting relocation office setup.
Severance and professional fees associated with the leasing and sourcing strategic initiatives.
The setup costs have an estimated two and a half year payback period based on conservative estimates of the quantum and timing of run rate benefits, we're creating.
These are exciting times at element and we are investing to benefit our clients our business our people and ultimately our investors.
Lastly, before I move on from this topic I want to be clear that our full year 2023, and 2024 results guidance do not include these nonrecurring setup costs related to both the leasing and sourcing strategic initiatives because of the setup costs are short term and temporal in nature and do not increase elements run rate expense base.
Turning to our 2024 results guidance, we expect continued strength in originations growth.
And demand for elements services and financing and enviable levels of commercial success to drive solid performance again next year.
As you saw in our disclosure materials, we expect full year 2024 to deliver the following financial results.
Net revenue of between $1 36, five and $1 $390 billion adjusted.
Adjusted operating margins of $55 to 55, 5% adjusted operating income of $750 to $770 million adjusted EPS of between $1 41, and $1 46, and free cash flow of $1 75 to $1 80 per share.
Our per share metrics are based on a full year weighted average share count of approximately 370 397 million common shares for 2024, reflecting the conversion of our convertible securities into common shares upon their maturity midyear 2024.
Regarding 2023 guidance before the nonrecurring setup costs associated with the strategic initiatives. We expect to report full year results on our key financial metrics that are near at or above the high end of the various guidance ranges we provided previously.
Before I walk through our third quarter results, let me level set by highlighting the following.
First as previously discussed we benefited from $17 million of nonrecurring net revenue in Q3 of last year.
Excluding that $17 million from year over year comparisons represents what we call organic growth saw be citing growth on that basis.
The growth measures I cited on constant currency because of the strengthening of both the U S dollar and the Mexican peso benefited our Q3 results as reported.
Our third quarter results were very strong.
We grew net revenue at 15, 6% year over year to a record $333 8 million for the quarter adjust.
Adjusted operating income also a record grew 16, 1% on the same year over year basis. Despite increased investment in our commercial capabilities adjusted operating margin was 55, 4% for the quarter.
Adjusted EPS were <unk>, 35, which is a 27% improvement year over year.
And free cash flow per share was <unk> 42, which is the seven 7% improvement year over year.
Looking more closely at our net revenue growth it was driven by services revenue and net financing revenue.
Service revenue growth is the first pillar of our capital light business model and services revenue was up 18, 2% year over year, driven by share of wallet growth, namely increased penetration and utilization in the U S and Canada as well as double digit growth in Mexico and modest growth.
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Net financing revenue grew 11, 7% driven by net earning asset growth with gain on sale growth also contributed.
Now I'll briefly turn to the second pillar of our capital lighter financial strategy, which is syndication.
We syndicated a record $1 billion of lease assets in the third quarter and generated $17 3 million of revenue as well as freeing up excess equity, which we can invest in the business and return to shareholders through dividends and buybacks.
Turning now to adjusted operating expenses year over year increase was largely driven by inflation.
Capacity needs and our commercial capabilities and client facing functions and strategic investment decisions.
As I mentioned earlier Q3, adjusted operating expenses included $3 9 million of nonrecurring setup costs related to the strategic initiatives.
Larger portion of the increases our ongoing investments in commercial capabilities. These are paying off handsomely with resulting net revenue contributions outpacing the adjusted operating expense growth that these investments represent.
This has given us positive operating leverage and a 55, 4% adjusted operating margin for the third quarter before the nonrecurring expenses.
The combination of common share buybacks and dividends so as returned $188 million in cash to our investors in 2023 year to date.
That return of capital, we remained generous going forward given yesterday's announcement of our 20% common dividend increased 48% and 48 per share annually.
This dividend is at the midpoint of our 25% to 35% payout range based on last 12 months free cash flow per share.
Before we take your questions. Let me highlight two housekeeping items in 2024, we anticipate $100 million to $110 million of total capital investments required with approximately $75 million of sustaining capital and the remainder to fund, our digitization and automation and other growth initiatives.
Yes.
This is roughly consistent with our 2023 forecasted spend of $100 million.
With a modestly heavier weighting to growth initiatives.
Second we anticipate our cash tax rate of approximately 10% this year 2023.
Owing to an estimated 12% to 13% for 2024, which remains well below our adjusted effective tax rate of about 25%.
In closing, let me say, it's great to see the hard work of our people continuing to pay off for our clients our business and our investors. Our collective efforts have brought us to this point and we're incredibly optimistic about what lies ahead of.
That concludes our prepared remarks for this morning, So I'll turn this call over to the operator for your questions.
Yeah.
Thank you.
Join and rejoin the question queue, you May press Starkey, followed by one on your telephone keypad, you request will be acknowledged by atone.
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Your question Please press.
Darcie followed by two.
The first question comes from Jeff Geoff Kwan with RBC capital markets. Please go ahead.
Hi, good morning.
My first question is with respect to your customers.
They've obviously gone through a number of years, where vehicle replacements have been relatively modest.
I'm just wondering like if we kind of go down the rate of a recession does that decrease their appetite to replace their vehicles or is it from a.
Total cost of ownership perspective is it still cost effective to replace the aging vehicles right now rather than just to try and hold on to them longer and are there exceptions, where that may not be the case.
Good morning, Jess it's Laura.
So I would say generally speaking given how age to our clients.
Vehicles are that it is still.
Generally still cost effective.
Just to replace them. So we expect that to continue to happen that said in a recession, we would expect to see some of our clients are looking to see how they could pare back on the number of vehicles that they have and that is something that we work closely with our clients with so I'll about how to.
They do the most cost effective.
So takeaway is we're going to continue to replace the vehicle just given how age they are they need to do that.
Which is why we're comfortable with the originations and guidance that we provided but there will be some depending upon whether we go into a recession, but it's like some pullback in terms of overall numbers vehicles.
Okay. Thanks for that.
My second question was just on self manage just wondering if you can give an update.
Progress.
On that front, both just qualitative comments on what that what's happening there, but also if theres anything you can do in terms of say for example, kind of quantifying the revenues not just what you've got so far but the embedded financing revenues because those vehicles.
We're getting wins don't come into revenues right away.
And if we're able to get some sort of context.
What's been done over the past couple of years since you started to focus on that segment more.
Yes, well I can't go into all the specifics and those details, but I will tell you is for the work that started a few years ago, it's really starting to pay off.
As you would've heard not just this quarter and last quarter were really starting to see a pickup in terms of self managed fleets that were bringing on with 22, having been brought on just this quarter and directionally were seeing that our win rates are also up a lot this year.
Relative to last year. So the work that our commercial team is doing led by David Madrigal.
Is really paying off and it's looking good and we do think as we've talked about in the past with the electrification of vehicles.
And the desire of our clients to Decarbonize that we're seeing a lot more interest.
From self managed fleets to look at getting advice from companies such as ours. So.
So we expect to continue to perform well in this.
Okay, great. Thank you.
The next question comes from Paul Holden with CIBC. Please go ahead.
Yeah.
Thank you good morning.
First question is for Frank any kind of guidance you can give us on medium term expectations for the.
Net financial margin, obviously been expanding over time, but a little bit of a pullback. This this past quarter were roughly should that.
Should that stabilize.
Yes, so Paul I would expect there to be.
Some modest.
Margin compression driven by in particular.
Gain on sale.
And so gain on sale will.
Moderate as we've said before coming off these very strong periods and that has contributed to the.
The expansion that being said, we don't expect any material downturn in gain on sale, but even a moderation or flat would have some pressure on that.
Net finance margin. Additionally.
Additionally.
We will see call it roughly $13 million of incremental cost, which is strictly geography for refinancing the preferreds out of the that are now show up below the line with that and those will now come up off the line so that will give us modest margin.
Oppression and then obviously there'll be slightly higher funding spreads as we term out some of the <unk>.
Some of the DFS, Andrew or do more senior notes deals from that perspective.
That will be offset in part by growth in higher jurisdictions interest rate environments, like Mexico and Asia.
Got it.
And then how should we be thinking about.
The.
Financial leverage of the balance sheet.
In consideration of optimization through 2024 I E.
Where should the leverage sort of shake out at the end of the year.
And I'm, assuming obviously you talked to the rating agencies about this and don't expect any change there but.
Has the.
I guess to answer the question I'm trying to ask is like how does the.
The targeted financial leverage.
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Increased to a point, where the credit rating agencies are comfortable with higher leverage yes. So our targets have not changed at all Paul I think where you'll see the change in our as reported numbers and so obviously those have been running below six times, our target is plus or minus six and a half times and as we take out those.
<unk>, we will we will drive closer to our.
Targeted levels, which are materially below.
Any ratings triggers.
So that is not something that we're very concerned that and yes, we talked to the rating agencies consistently and they are very comfortable with our plan and from a leverage perspective, and again significant cushion between before any rating triggers would you actually even become under consideration.
Great Okay.
And then well.
Last question from me in terms of the strategic initiatives you highlighted this morning.
Is there anything embedded in your guidance or the future increase in revenue for the Digitization and automation piece and if it's not can you give us a sense at least qualitatively.
How that might provide a financial benefit overtime sure. So.
Theres two components to that one is a first I would say very clearly, we havent baked a lot in or the benefits of that Digitization and automation at this point.
One of the things that Laura has brought to the company is that focus from her past experience on the benefits of Digitization and automation spoken.
Quite eloquently about that since he's arrived here.
As we move forward and so bringing on a chief digital officer, and David <unk> will help us to.
Push that more further so he is doing that at value of Torrey work on where that we're going to get the biggest bang for the Buck from that perspective, I think there will be two benefits ultimately financially and I believe we will recognize some of those this year are begin to start to realize those one is just.
From the commercial perspective, having a better product and ease of use from a driver perspective in regards to the digitalization of our products.
Second component is on the automation side driving more efficiencies through our organization, which will improve our operating leverage overall, but again I wouldn't expect.
Very large impacts this year, we have looked at the cost of the costs are built in.
For that evaluation.
And we should see some benefits, but I don't think that will be outsized given.
Where we are in that journey.
Got it okay. Thank you for your time.
Sure.
The next question comes from Jamie growing.
Bank financial please go ahead.
Yes. Thanks.
First question just in terms of the order backlog and the excess order backlog that we're in today.
In terms of your guidance, how much of that excess order backlog is assumed to unwind through 2024.
Well it will fully unwind or is it expected to persist.
Yes, those are always something thats, a little bit hard to call, but yes, we expect some unwinding of that order backlog through 2024, and depending on the pace of OEM production.
Would anticipate that.
That will have a big impact on us at all unwind towards do we have some rolling over into 2025, which I don't think would be an unrealistic assumption, where we sit here now the other thing that I would just add is that when you look at our orders we do have.
Clients that are still on allocation from an order perspective.
And so that could continue to either drive higher origination for keeping the backlog a bit higher as we move forward here.
<unk> all a component.
The OEM supply chain in that getting healthier as we move forward. So we are still not.
Near the.
The original it's call it 2019 normalized.
Order to delivery cycle that we've seen back then and until we get back to those levels that will really be when we know that we are.
We are back to normal.
That backlog has unwound.
Okay got it.
In terms of the.
Our capital structure outlook.
The commentary was very very clear.
And.
Discussing the redemption of the preferred shares.
It seems to not be as clear with the convert.
So could you just.
Reeducate us on your plan for that for the converts as it to redeem or is it to convert them to equity or just continue to hold their refinance and what's the plan there yes, so the <unk>.
Converts given where they are in the money they will convert into equity.
So that is where our.
Our assumption in my.
Hey, Mike.
<unk> remarks that we believe $397 million of common shares outstanding for the full year.
<unk> is based on that conversion of those converts into equity.
Okay got it and last last one.
Why why Dublin, why was doubling so much more attractive than say, Canada or somewhere in the US where you are already currently located if you could elaborate on that part of the decision process and then I'll turn it over thanks.
Yeah, Hi, Jamie.
What I would tell you. This we considered quite a few locations, we thought about Toronto, Chicago, Minneapolis, and we considered a host of other countries. Ultimately we landed on Ireland. We felt similar more compelling reasons to set up our U S and Canadian leasing.
<unk> there relative to other locations.
Probably the leading one being that Ireland is recognized as the global center of excellence for leasing.
Almost I think almost 5000 leasing companies that are based out of Ireland.
It is also closer to our Vaal, our global Alliance partner.
And we like that it really gets us access to industry, leading resources So in Ireland.
We see talent. So we think that can help strengthen our product development capabilities.
All of that setting it up separately, we think gives us better visibility and more control around optimizing our revenue and overall performance and we think this approach is really going to drive the most.
Incremental value for our shareholders.
Does that help.
Thank you.
Okay.
The next question comes from Graham Ryding with TD Securities. Please go ahead.
Good morning.
Maybe I can just start with.
The utilization.
Side of your servicing has been.
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Healthy driver of your growth rate there if we do go into a recession or a soft landing.
Backdrop is that one area of your business, where we could see some impact your softness just clients utilizing their fleets or your services.
Less because of lower demand for their services.
Yes, I think the way to think about utilization is directly tied to miles and hours miles driven and hours used for those vehicles.
And so in a recession, if those miles driven or the hours of use entered the time on those vehicles were to decrease they would need less maintenance less hires et cetera, so that would be what was impact that utilization rate.
Okay great.
You highlighted.
Earlier in 2023, some Mega fleet wins are those fully ramped up now and in your numbers that we're seeing today in the run rate.
And then any other Mega fleet wins that you would that you would flag perhaps in the quarter.
Well I'll start we have had a mega fleet win.
Last quarter.
And it does take time, so again as you know when we bring new clients on depending upon what they are.
What they're doing with us whether it's leasing or services. It does take a quite a delay for all of that to show in our numbers.
So you will see that represented in our numbers over time, but I'd say, we're making some really good progress without going into any specific name.
We're making really good progress in that segment.
And go ahead Frank.
Yes, the two things I would say Graham our first remember on the leasing component those Mega fleet. When it takes four years roughly to ramp up. So you are just seeing a small component of that and probably not even a full quarter of it yet as we got onboard those clients et cetera second in regards to the <unk>.
Services component I've said before if all the services take six to nine months to get those vehicles on obviously, you only get about a half a year of those services. There are circumstances with certain clients where parts of their fleet take a bit longer to come on a good example of that is clients that are doing merchant.
<unk> or otherwise and meet you.
Deal with some of their internal complexity before bringing those additional units on so theres also some of that so the answer the answer to your question is there's more to come in regards to those wins that we've discussed over the last three or four quarters.
Okay understood and one last one if I could just not.
I'm not sure if I missed it but did you give any.
On the guidance your expectations for your origination volumes in 2024 versus.
Versus this year.
Any any commentary there.
No we did not but the commentary I can provide you on that as we typically look to gross indications consistent with growth in originations.
And so as we see originations pick up.
Should see syndications picked up because they are a critical component of the funding piece of it and the real strength is that.
We syndicate those lease assets, we keep all of the services revenue associated with those with those assets and Additionally, and have capital to put into the next transaction and therefore self funded.
The growth from that perspective, so just think about our growing originations business, which we believe will continue.
<unk> over the next several years, both as the backlog unwind and as consumer as client demand stays strong and then syndicate syndication is growing in lockstep with them.
Okay. That's it for me thank you.
Once again analysts who have a question May press Starkey followed by one.
Our next question comes from Tom Mackinnon with BMO capital markets. Please go ahead.
Yes, thanks, very much and good morning.
I'm wondering if you could talk about some of the pricing improvements you expect releasing as a result of the accountability initiative in Dublin.
I mean, you currently have these chesapeake funding vehicles.
I assume.
Are they going to stay in place you can enroll them into something else. What is it that you roll them into that and why are those better.
And so just some color with respect to how that's going to improve some pricing that you had noted too.
Hey, good morning, Tom.
Let me start and then I'll hand, it over to Frank So what I alluded to in my remarks on pricing has to do with actual lease pricing in terms of highly run the business and so in centralizing, our U S and Canadian leasing and looking at doing more standardization and automation.
<unk>.
Processes cleanup et cetera, we expect to be in a position, where we're more effectively pricing our clients as it will be in a position to more effectively manage the portfolio.
So that was my comment as it related to pricing and we do expect to do better which will translate into better performance in our numbers, which was part of the numbers that Frank gave when he spoke about the $40 million to $60 million run rate of net revenue.
<unk> in 2020.
To your second question on what we're thinking as it relates to how we fund ourselves overall.
In Europe content, Canada, I'll hand that over to Frank for his Skus recognizing that it's still early days, yes. So in the Grand scheme of things, we see no material impact to our funding no impact to our funding or tour lender base. So those lenders will be a critical part of our new fun.
These structures as we move over there.
We will be putting them together.
N.
In Ireland.
But again with the existing U S lenders and doing that to facilitate growth there our senior line will remain in place with the.
Slightly Ireland added as a borrower there.
And we should be able to we will be able to issue.
Yes term notes and do all of the funding that we do today so.
That should be a relatively easy.
<unk> process more seamless process as we move over to Ireland.
Yeah, and just a follow up as you as you sort of centralized this lease pricing.
None of the I assume you have people who are.
Client facing and then they would say well okay. Here is sort of what we're thinking about the price for the release, but now I'm going to have to run it by Dublin does.
Doesn't that sound like.
Yeah.
A disruption in our process or.
Just help me think through that little scenario you just.
Just suggested.
Absolutely Tom So we are not moving any client facing team members all of our commercial team.
Remains where they are what we're moving is the operational part of leasing.
70 people.
We don't expect it to be.
He will disruptive.
I'd say in the short term limited impact most well had noticed whats happening is its an internal operation that.
That we manage but I would say it's in the longer term we do this right.
As I mentioned earlier, we will have more streamlined processes more standardization.
More pricing discipline automation in terms of how we do things it'll be simplified and all of that will translate into better client leasing experience.
And because it'll be easier for our clients and our sales team when they are dealing with the leasing function and all of that should need better returns for our shareholders.
Does that clarify.
That's good yeah and.
That was the last one here just in terms of the S&P <unk> kind of sector move here I think it went from to industrials from finance can you remind us how that gets initiatives initiated and.
What you're.
Why it was in.
What would the next steps be.
So.
Answer in reverse order.
We don't necessarily have a say in those sector moves and so.
We do not believe there will be any material impact on us for our share price.
We move forward here.
We have some modest volume in some of those indices, which would my understanding is.
[noise] rebalance.
Mid December.
But that was entirely initiated by the PSX and then and not.
Did they have any communication with you before they do that or ask for your input or anything like that or is that just.
Yeah.
Party to any of those discussions.
Tom we didn't have any discussion.
We learned the news at the same time, everyone else learnt the news and so we're digesting it alongside everyone else and so maybe maybe back to you.
Everyone else on the call will be interested in your views post this call.
Okay.
Okay. Thanks, so much.
Thank you.
I would now like to turn the conference back over to a lot of Detroit.
<unk> for any closing remarks. Please go ahead.
Thank you operator.
Thanks to our analysts for your questions and I am thanking you in advance.
<unk>.
For the advice steal share after.
This reclassification that we had.
I wanted to just reiterate my gratitude to the element team for all of your hard work delivering for our clients.
And as a result for our shareholders.
As we shared when we started we're really pleased with our third quarter performance and we're really excited about the strategic initiatives that we've announced.
And as Frank and I shared we're very confident in our outlook for 2024.
So we will finish this year strong and we look forward to sharing our next set of results with you in late February. Thank you again.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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