Q3 2024 FirstService Corp Earnings Call
Okay.
Good day, and thank you for standing by.
Speaker Change: Welcome to the first service Corporation third quarter 2024 earnings Conference call.
Speaker Change: At this time all participants are in a listen only mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session SASSA.
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Speaker Change: Please be advised that today's conference is being recorded.
Speaker Change: Legal counsel requires us to advise the discussion scheduled to take place today may contain forward looking statements that may involve known and unknown risks and uncertainties.
Speaker Change: Actual results may be materially different from any future results performance or achievements contemplated in the forward looking statements.
Speaker Change: Additional information concerning factors that could cause actual results to differ materially from those of the forward looking statements is contained in the company's annual information form as filed with the Canadian Securities administrators and in the company's anywhere.
Speaker Change: And Exchange Commission.
Speaker Change: As a reminder, today's call is being recorded to date October 24th 2024.
Speaker Change: Now I'd like to hand, the conference over to Chief Executive Officer, Mr. Scott Patterson. Please go ahead Sir.
Scott Patterson: Thank you to Wanda.
Scott Patterson: Good morning, everyone.
Scott Patterson: Welcome to our third quarter conference call I'm here with Jeremy cushion.
Scott Patterson: We are pleased to be on the line with you today to report on the strong results we posted this morning.
Scott Patterson: Results that in aggregate exceeded our expectations coming into the quarter.
Scott Patterson: Consolidated revenues were up 25% over the prior year with organic revenue growth at 6%.
Scott Patterson: The growth was driven by our acquisition of Roofing Corp of America in December.
Scott Patterson: And supported by very strong year over year growth for our restoration brands.
Scott Patterson: EBITDA for the quarter was up 43% from 2023.
Scott Patterson: Reflecting a margin of 11, 5% one.
Scott Patterson: 150 basis points better than prior year, all driven by increases at our brands Division.
Scott Patterson: And finally earnings per share were up 30% Jeremy will spend time discussing the profitability metrics in a few minutes.
Scott Patterson: Looking now at a high level results for divisions I'll start with first service residential.
Scott Patterson: Where revenues were up 4% with organic growth at 3%.
Scott Patterson: We've been guiding to mid single digit organic growth. So we finished a bit below expectation.
Scott Patterson: The pension principal driving factor is something we've been discussing for several quarters and relates to budgetary pressures at our communities.
Scott Patterson: From horizon cost, including escalating insurance premiums.
Scott Patterson: The pressure is elevated in Florida due to recent legislation requiring boards to fund cash reserves for maintenance and repairs.
Scott Patterson: This is legislation arising from the Champlain towers collapse in June of 2021.
Scott Patterson: In the past sports could choose to defer maintenance.
Scott Patterson: Our reduced cash reserve requirements.
Scott Patterson: Beginning in 2025 that is no longer possible.
Scott Patterson: And then preparation over the last year boards have been looking closely at all expense items.
Scott Patterson: Putting pressure on management fees and on the levels of sided labor.
Scott Patterson: Looking forward, we see organic growth continuing in the low single digit range for the next few quarters.
Scott Patterson: And then starting to pick back up.
Scott Patterson: The disruption in Florida is temporary it will normalize we're starting to see that and.
Scott Patterson: And we expect to get back to a mid single digit long term average for this business.
Scott Patterson: Moving on to first service brands revenues for the quarter were up 44% driven primarily by the acquisition of roofing Corporate America, but also several tuck under within our restoration.
Scott Patterson: Fire safety and roofing segments.
Scott Patterson: Organic growth was 10% led by very strong gains at our restoration brands.
Scott Patterson: Supported by solid growth at century fire.
Scott Patterson: Our restoration brands, Paul Davis, and first onsite together recorded revenues that were up 25% versus the prior year.
Scott Patterson: With organic growth north of 15% and this is against a reasonably tough comparative quarter in the prior year.
Scott Patterson: Which had $25 million of revenue from hurricane yet.
Scott Patterson: The growth was broad based across our North American branch system.
Scott Patterson: With particularly strong growth in Canada.
Scott Patterson: During July and August we had separate rain storms and flooding that.
Scott Patterson: That impacted Toronto twice and.
Scott Patterson: In Montreal.
Scott Patterson: We had hailstorms in Calgary that drove a spike in claims and.
Scott Patterson: And wildfires in Alberta that cause significant damage from Jasper.
Scott Patterson: Paul Davis and first on strike benefited from all of these events, we own that talk to restoration brands in Canada, and we will always benefit from a regional weather events that impact the major urban centers in Canada.
Scott Patterson: We also benefited during the quarter from a number of large loss claims in both the U S and Canada.
Scott Patterson: It exceeded our experience from the previous year quarter.
Scott Patterson: First on site specializes in commercial large loss and.
Scott Patterson: And generally has several large loss claims in process, but the number and size of claims.
Scott Patterson: Certainly cash fluctuation from quarter to quarter, and we saw that in Q3.
Scott Patterson: During the quarter, we generated less than $10 million of revenue for named storms.
Scott Patterson: Primarily relating to some final hurricane.
Scott Patterson: Reconstruction work, we generated only a small contribution from a hurricane.
Helane hit late September and Hurricane Milton hit October 10.
Scott Patterson: Our restoration brands mobilized around both stores.
Scott Patterson: And have secured a number of claims and mitigation contracts in the Carolinas, North, Georgia and Florida.
Scott Patterson: We're currently generating revenues, primarily from demolition cleanup and water mitigation.
Scott Patterson: Often the mitigation work leads to reconstruction.
Scott Patterson: But it is too early to SaaS or quantify future revenues from these events.
Scott Patterson: Jobs need to be scope and insurance must be approved before reconstruction contra tracks can be awarded.
Scott Patterson: We'll have a much better sense by our year end call and we will provide an update on our backlog and the timing of future revenues.
Scott Patterson: In the meantime, we're benefiting from the extensive mitigation work, which will help drive growth for our restoration segment.
Scott Patterson: That we expect will be 30% or more in Q4, we've estimated $40 million of storm related revenue for Q4.
Scott Patterson: Looking now at our roofing segment.
Scott Patterson: We generated solid results that roofing Corp of America, which were generally in line with our expectation.
Scott Patterson: Looking to Q4, we expect revenues that are down modestly from Q3 due to seasonality.
Scott Patterson: But again in line with our due diligence forecast, which is how the first nine months have played out.
Scott Patterson: Crowther roofing, which we acquired in Q2 of this year has branches in Sarasota, and Fort Myers, and we'll see a modest uptick from hurricane Millner.
Scott Patterson: We're performing some temporary repair work currently.
Scott Patterson: Re roof opportunities or a more significant repairs are more likely to benefit us in the first half of next year, we will provide more detail on any storm related backlog in our year end call. At this point, we expect the storms to be a boost for our Florida branches, but not material to our roofing.
Scott Patterson: And in aggregate.
Scott Patterson: Moving to century fire, we had a solid quarter that was right in line with expectation.
Scott Patterson: Revenues were up low double digits.
Scott Patterson: The growth organic and half from tuck under acquisitions.
Scott Patterson: This is against a very strong Q3 last year, we're pleased with the continued growth.
Scott Patterson: We're seeing from century against tough comparative quarters.
Scott Patterson: We expect a similarly strong quarter sequentially in Q4 for century, which would imply a modest single digit year over year growth against a very strong result last year.
Scott Patterson: And I'll finish with our home improvement brands, where we saw revenues decline by a low single digit percentage, which is where we guided on our Q2 call.
Scott Patterson: During the quarter, we continued to see reduced year over year lead activity, but with some improvement relative to the first six months of the year.
Scott Patterson: In recent weeks, we have experienced further improvement which provides some optimism that we've seen the bottom in home improvement.
Scott Patterson: We expect Q4 to again be down by a low single digit percentage.
Scott Patterson: And modest year over year declines will likely carry into early 2025.
Scott Patterson: We expect top line improvement as we move through 2025, and we'll provide more clarity at our year end call.
Speaker Change: Let me now call on Jeremy to review our results in more detail.
Jeremy Cushion: Thank you Scott good morning, everyone I'll start off by recapping highlights from the very strong financial results for the current third quarter. During the period, we recorded consolidated revenues of $1 4 billion up 25% driving to adjusted EBITDA of 160.
Jeremy Cushion: 843% increase relative to the prior year period.
Jeremy Cushion: Our consolidated EBITDA margin for the quarter was 11, 5% up 150 basis points over last year's 10% level.
Adjusted EPS during Q Q3 was $1 63 up 30% quarter over quarter, even with an almost doubling of interest expenses in the current quarter.
Jeremy Cushion: For the nine months year to date, our consolidated financial performance includes revenues of $3 85 billion.
Jeremy Cushion: Up from $3 billion to $6 billion in the prior year period, an increase of 18%.
Jeremy Cushion: Adjusted EBITDA at $376 million, a 20% increase year over year.
Jeremy Cushion: With our overall EBITDA margin at nine 8% up 20 basis points versus at nine 6% margin for the prior year period.
Jeremy Cushion: And lastly, our adjusted EPS year to date is $3.66 exceeding the $3 56 ripped.
Jeremy Cushion: <unk> reported for the same period last year.
Jeremy Cushion: Notwithstanding significantly higher interest expenses throughout the current year.
Jeremy Cushion: Our adjustments to operating earnings and GAAP EPS in providing adjusted EBITDA and adjusted EPS, respectively are disclosed in this morning's earnings release and are consistent with our approach and prior periods.
Jeremy Cushion: I'll now provide a segmented review of the third quarter performance within our two divisions.
Jeremy Cushion: At first service residential we generated revenues of $560 million and EBITDA of $58 6 million.
Jeremy Cushion: Both representing a 4% increase over the prior year period.
Jeremy Cushion: Our current quarter EBITDA margin yielded 10, 5% matching the level last year.
Jeremy Cushion: Teams are focused on operating with an efficient cost structure and achieving healthy profitable growth and serving our community Association clients.
Speaker Change: Even in the face of some market headwinds, which Scott touched on.
Speaker Change: This has allowed us to maintain in line margins year to date and in similar fashion, we expect to finish the year with annual margins comparable to 2023 levels.
Speaker Change: Turning now to our first service brands Division, we generated revenues of $836 million during the current third quarter up 44% versus the prior year period.
Speaker Change: EBITDA for the division increased by 74% to $105 $8 million.
Speaker Change: With a 12, 6% margin up more than 200 basis points compared to the 10, 5% margin in last year's third quarter.
Speaker Change: Two factors drove the significant margin expansion first as Scott described our restoration operations benefit benefited from higher activity levels and significant revenue growth over the prior year period, and this drop strong topline growth drove operating leverage.
Speaker Change: Second our home improvement brands have continued to show resilience and capture market share to sustain a solid topline and a challenging macroeconomic environment. While at the same time, taking action on the cost side.
Speaker Change: During Q3, we maintained our tactical shifts from the previous second quarter of dialing back promotional and marketing activity in.
Speaker Change: In addition, our company owned operations within home improvement realized operating efficiencies primarily from improved labor productivity.
Speaker Change: Walking next to our cash flow profile, we delivered $110 million in cash flow from operations prior to working capital movements and $77 million in operating cash flow, including changes in working capital.
Speaker Change: Year to date, we have generated almost $200 million in operating cash flow up 17% year over year and tracking almost in line with our EBITDA growth.
Speaker Change: Capital expenditures during the quarter totaled $27 million and spending year to date at just over $80 million.
Speaker Change: We expect to be at or slightly lower than our $115 million of annual all in Capex for 2024, which was our target established at the beginning of the year.
Speaker Change: Acquisition investment during the quarter was negligible, but year to date, we have deployed almost $160 million in capital.
Primarily relating to the Florida base roofing acquisitions in the second quarter.
Speaker Change: Our balance sheet at quarter end included net debt of almost $1 $1 billion, resulting in leverage at two one times.
Speaker Change: Net debt to trailing 12 months EBITDA down from the two three times level for the previous second quarter and back in line with 2023 year end.
Speaker Change: We also have more than $350 million of total cash on hand, and undrawn availability under our credit facility.
Speaker Change: Our conservative balance sheet financial flexibility and ample sources of liquidity put us in a strong position to be assertive and.
Speaker Change: And seizing growth opportunities that fit with our strategy.
Speaker Change: Finally to wrap up our prepared comments.
Speaker Change: Following are some indicators around our outlook to closeout 2024.
Speaker Change: We expect that our revenue growth for the fourth quarter will exceed 20%.
Speaker Change: In terms of Q4 profitability I mentioned earlier that at first service residential we anticipate relatively flat margins.
Speaker Change: While at first service brands, we reconfirm from our last Q2 call the expectation for higher year over year margins.
Speaker Change: For the full 2024 year, we will deliver stronger financial performance than previously anticipated at the end of the second quarter.
Speaker Change: Driven largely by the outperformance during this current third quarter.
Annual consolidated revenue growth should approach 20%.
Speaker Change: And together with an incremental improvement in our consolidated annual EBITDA margin.
Speaker Change: Should drive to EBITDA growth north of 20%.
Speaker Change: Our outlook beyond the next quarter into 2025 will be outlined during our February year end earnings call.
Speaker Change: And that now concludes our prepared comments.
Speaker Change: Operator, please open up the call to questions and thank you.
Speaker Change: Thank you ladies.
Speaker Change: Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question. Please press star one again.
Speaker Change: Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Stephen Sheldon with William Blair. Your line is open.
Stephen Sheldon: Hey, Thanks for taking my questions and nice work on the quarter first I just wanted to ask on the residential side on the HOA budgetary environment, how long can that remain challenged as we think about segment growth there over the coming years.
Stephen Sheldon: And on the flip side are there any old carrier benefits from that that you could see in terms of maybe driving more HOA properties to look to outsource things I think you can help them procure lower insurance rates and that often get on their own I guess, how long you think it is.
Stephen Sheldon: The duration of the impact capacity are there any material benefits.
Stephen Sheldon: Over the last year, Steven we're seeing forwards ask for concessions go out to bid.
Stephen Sheldon: Looking for lower pricing, we're also assuming menu boards, reducing sited staff.
Stephen Sheldon: Janitorial.
Stephen Sheldon: Pool deck, food and beverage and so on.
Stephen Sheldon: Which in turn reduces our revenue on those accounts.
Stephen Sheldon: Reality is boards have been trying to avoid increasing monthly maintenance fees or being responsible for special assessments, but in many of these communities, that's what's necessary and we're seeing that happen as we get closer to 2025. So it is normalizing.
Stephen Sheldon: We're seeing it normalize we're in a little bit of an air pocket.
Stephen Sheldon: That I think will carry through the first couple of quarters in 2025.
Stephen Sheldon: But we fully expect to get back to our long term average and this business of mid single digit.
Stephen Sheldon: In terms of.
Stephen Sheldon: Opportunity I mean this legislation in Florida is driving.
Stephen Sheldon: A number of them.
Stephen Sheldon: Sure.
Stephen Sheldon: Maintenance repair and renovation projects at communities.
Stephen Sheldon: And certainly one of the services that we provide is facilitating loans to boards so that.
Stephen Sheldon: That is increasing and it has been over the last six months.
Stephen Sheldon: We also provide project management services and so we're seeing an increase in that area.
Stephen Sheldon: I mean, we're collaborating very closely with our board to bring value wherever we can.
Stephen Sheldon: So there is incremental opportunity, but it's incremental Steven.
Stephen Sheldon: Got it Thats really helpful.
Stephen Sheldon: Just as a quick follow up would just love to get some updated commentary on what youre seeing in the M&A pipeline are there.
Speaker Change: Are there certain businesses, where you would expect to deploy capital more than others. As we think about the next year or so and I'm curious specifically what does the pipeline look like and roofing as well.
Speaker Change: Yes, I think thats the area that is most active his roofing week and.
Speaker Change: And it's really driven by the <unk>.
Speaker Change: Consolidation, that's taking place in the market and the number of.
Speaker Change: Private equity backed platforms that exist.
Speaker Change: That are out.
Speaker Change: Searching for searching for growth.
Speaker Change: So the pipeline is active.
Speaker Change: The market is more active than it has been certainly than it was a year ago.
Speaker Change: A lot of that's driven again by private equity firms that have been sitting on assets for a number of years that are now putting those assets assets up for sale are prepping to put them up.
Speaker Change: And I'll add that it's a hyper competitive environment.
Speaker Change: Multiples are very high.
Speaker Change: As high as I've seen them.
Speaker Change: So certainly in an environment like this.
Speaker Change: We've been at this a long time.
Speaker Change: We'll be very careful and pick our spots.
Speaker Change: Got it very helpful. Thank you.
Speaker Change: Thank you.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from the line of Stephen Macleod with BMO capital markets. Your line is open.
Stephen Macleod: Good morning, guys.
Stephen Macleod: I just wanted to pick up on the last your last answer Scott regarding regarding M&A and multiples.
Stephen Macleod: Were you, referring specifically to roofing or are you seeing multiples elevated in other parts of your business, where you might be interested in doing acquisitions as well.
Speaker Change: Yes, no they are high across the board.
Speaker Change: A lot of activity.
Speaker Change: But the valuations are very high with with rates coming down.
Speaker Change: I think there is.
Speaker Change: The valuations have picked up in there and there is more product hits.
Speaker Change: Being marketed.
But that's.
Speaker Change: <unk>.
Speaker Change: We fully expect to.
Speaker Change: Be active.
And next year.
Speaker Change: We're just picking our spots.
Speaker Change: Right Okay.
Speaker Change: And it sounds like roofing would continue to be your.
Speaker Change: You are favored.
Speaker Change: Vertical alright, I wouldn't say favor, but it's.
Speaker Change: Happening now it's consolidating.
So we need to be at the table.
Speaker Change: Okay. Thanks Thats helpful.
Speaker Change: I just wanted to turn to the brands brands margin, which was quite strong in the quarter.
Speaker Change: Is there any way to quantify how much of the year over year growth was driven by <unk>.
Speaker Change: Strong operating leverage within the restoration business as compared to just sort of the home improvement our home brands margins improving based on.
Speaker Change: Just on your repositioning around promotional activities and other things like that.
Speaker Change: Yes, Stephen they are both meaningful contributors bed.
Speaker Change: The restoration driven.
Speaker Change: Higher revenue and activity levels, driving operating leverage was more than half of the impact.
Stephen: Okay. Okay. That's great. Thank you and then just with respect to the brand's outlook you gave some good color. So thank you.
Speaker Change: As it relates to specifically Hurricanes Helene and Milton.
Speaker Change: You talked about a little bit of storm related revenue I think not a little bit $40 million in Q4.
Speaker Change: Is that is there room for that number to potentially move higher or do you expect that anything incremental might come.
Speaker Change: Into 2025 as you work through it as initial.
Speaker Change: Mitigation work.
Speaker Change: Right I mean, the mitigation can lead to reconstruction and the reconstruction phase of these projects.
Speaker Change: It can significantly increase revenue potential.
Speaker Change: And stretch the tail.
Speaker Change: Through 2025, but there's a lot of uncertainty at this point the.
Speaker Change: The projects we're working on.
Speaker Change: They need to be scoped insurance needs to be confirmed.
Speaker Change: And and then we need to win the reconstruction piece.
Speaker Change: So it's.
Speaker Change: We will have more clarity.
On our next call.
Speaker Change: Very murky right now I would say, but.
Speaker Change: We're going to get work.
Speaker Change: For 2025.
Speaker Change: Let's be clear, it's just timing.
Speaker Change: An amount.
Speaker Change: Right.
Speaker Change: Okay, that's great.
Okay. That's all I had thanks, Scott and Sharon I appreciate it.
Speaker Change: Thank you.
Speaker Change: As a reminder, ladies and gentlemen that start one wanted to ask a question.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from the line of Daryl Young with Stifel. Your line is open.
Daryl Young: Hey, good morning, guys.
Daryl Young: You gave some great color on the private equity impacts on valuations.
Daryl Young: Roofing and restoration businesses, but I'm just curious are you starting to see any impacts on organic growth from that competition thats coming to market and I know, we've gone through a bit of a land grab exercise and a lot of these verticals. So is that impacting your discussions with your commercial customers or how competitive is it.
Daryl Young: It is competitive I don't think that.
Speaker Change: So I can see if you're muted yourself.
Speaker Change: I'm on.
Speaker Change: Can you hear me.
Speaker Change: Yes, I can hear you.
Speaker Change: Andrew or Scott.
Speaker Change: Scott are you there did you mute yourself.
Speaker Change: Deliberate customer service and driving repeat and referral so.
Speaker Change: We feel good about our organic growth opportunity.
Speaker Change: Thank you.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from the line of Himanshu Gupta with Scotiabank. Your line is open.
Himanshu Gupta: Thank you and good morning.
SSR residential.
Speaker Change: Danny growth.
Speaker Change: It moved from 7% last quarter to 3% this quarter.
Can you quantify like how much was due to the pricing pressure.
Speaker Change: And how much was due to reduced cookbook.
Speaker Change: Can you hear me <unk>.
Speaker Change: I can hear you Jeremy.
Scott Patterson: It's Scott.
Speaker Change: Yes.
Speaker Change: I think I.
Speaker Change: Gapped out a bit on my last answer.
Speaker Change: Sure.
Speaker Change: So Daryl if you want to circle back we can.
Speaker Change: We can cover that again I don't know how much you missed.
Speaker Change: We are about $6 five last quarter.
Down to three.
Speaker Change: And it's just it's just the way the sort of pricing rolled in from contracts that.
Speaker Change: We're where there were concessions or that the net wins versus losses, it's just how it played out.
Speaker Change: In terms of timing.
Speaker Change: There is a.
Speaker Change: Our seasonal amenity services.
Speaker Change: We're flat year over year, which served to temper organic growth but.
Speaker Change: Not not material I would say.
It had a moderate impact.
Speaker Change: Alright, okay.
Speaker Change: And then one more thing.
Speaker Change: I think you were highlighting the change in legislation in Florida.
Speaker Change: The slowdown in organic growth is this mostly like Florida problem or do you see that happening.
Speaker Change: The market as well.
Speaker Change: Don I don't see.
Speaker Change: Yes, we don't see the legislation in other markets. So.
Speaker Change: It certainly.
Speaker Change: <unk> focused on Florida.
Speaker Change: Impact, but the.
Speaker Change: Rising costs in general and in particular insurance that is impacted.
Speaker Change: Our communities in the high rise environment.
Speaker Change: Is causing.
Speaker Change: Similar.
Speaker Change: Not as elevated but some pressure.
Speaker Change: So we're experiencing the pricing pressure elsewhere, but it's focused on Florida, but again, we've been at this a long time.
Speaker Change: And we've seen this before.
Speaker Change: In different ways.
Speaker Change: And our historical organic average at first service residential sort of five to six.
Speaker Change: And we believe that that's reflective of our go forward average organic growth.
Speaker Change: Got it okay. Thank you.
Speaker Change: And then just on the restoration.
Speaker Change: The news I think you mentioned $40 million.
Speaker Change: Expected in Q4.
Speaker Change: EBITDA margin do you get on storm related revenues I would assume it will be a bit higher.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: It's hard to put a finger on it because it really does depend on the nature of the work and the clients that we're doing.
Speaker Change: Work for <unk>.
Speaker Change: But it would be higher than our.
Speaker Change: Quite obviously, it would be higher than our platform margin and if I had to put up.
Speaker Change: A broad circle around it in and around 20% incremental EBITDA margin, but again it does vary depending on the nature of the work and the clients.
Speaker Change: Got it okay. Thank you.
Speaker Change: And then based on your experience of previous Hurricanes.
Speaker Change: Do you see that Q4 is the strongest and then the spillover that in Q1 and Q2.
Speaker Change: What do you see that you know this from Nathan continue for Q1 and Q2 as well.
Speaker Change: At.
Speaker Change: Can't answer that at this point.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: That's fine Okay. Thank you guys I'll turn it back.
Speaker Change: Thank you.
Speaker Change: Please standby for our next question.
Speaker Change: We have a follow up question of Darrow Yang Your line is open.
Hey, sorry about that guys I seem to have got dropped from the call.
Speaker Change: Im.
Speaker Change: On the residential is there any longer term.
Speaker Change: The competitive rationalization that could come from some of these current headwinds and does this.
Speaker Change: Again longer term.
Speaker Change: Youll make for a larger scale operator like yourself to just give you a competitive advantage and edge longer term.
Speaker Change: Don't think so.
Speaker Change: No I don't see that apparel.
We've got a lot of small very small.
Speaker Change: Management companies that are incredibly resilient.
Speaker Change: In this market so I don't see it.
Speaker Change: Okay, and then just one last one.
Speaker Change: Labor productivity on the home improvement side of things is that something that you can continue to see incremental upside from going forward or is that sort of.
Speaker Change: We're running very lean in a tough market.
Speaker Change: Maybe above normal margins youre seeing there.
Speaker Change: No.
Speaker Change: Anable Darrell it's something that the teams have been working on for some time and.
Speaker Change: The current macro environment with the.
Speaker Change: Keeping.
Speaker Change: Taking share, but in a challenging environment.
Speaker Change: I brought a little more urgency it is really around our.
Speaker Change: Staffing levels.
Speaker Change: Reconfiguring our teams, reducing the number of return visits reducing overtime, reducing labor hours, it's sustainable we are not running lean.
Speaker Change: We're just doing doing work better and in a more productive rate than.
Speaker Change: I think we'll continue to see margin benefits in to the first part of next year.
Speaker Change: And then we will hold or maybe incrementally continue but we're definitely not going to fall.
Speaker Change: Paul back from sort of temporary measures that we've taken.
Speaker Change: Running lean.
Speaker Change: Got it okay, great. That's all from me, thanks, and congrats on a good quarter guys.
Speaker Change: Thanks.
Thank you.
Speaker Change: Ladies and gentlemen, I'm showing no further questions in the queue.
Speaker Change: I'd now like to turn the call back over to Scott for closing remarks.
Scott Patterson: Thank you to Rhonda.
Scott Patterson: You everyone for joining.
Scott Patterson: We look forward to providing more clarity around our 2025 outlook on our year end call. Thank you have a great day.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank.
Speaker Change: Thank you for your participation you may now disconnect.
Because I understand that.
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