Q3 2024 WEX Inc Earnings Call
Ladies and gentlemen, thank you for standing by my name is Christa and I will be your conference operator today at this time I would like to welcome everyone to wax incorporated third quarter 2024 earnings Conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
And if you would like to withdraw that question again press star one.
Speaker Change: I will now like to turn the conference over to Steve Adler Senior Vice President Investor Relations you may begin.
Steve Adler: Thank you operator, and good morning, everyone with me today is Melissa Smith, our chairman and CEO and Jack turning to <unk> our CFO.
Steve Adler: Press release, we issued earlier this morning, and a slide deck to walk through our prepared remarks have been posted to the Investor Relations section of our website at <unk> Dot com.
Steve Adler: A copy of the release has also been included in an 8-K, we filed with the SEC earlier this morning.
Steve Adler: As a reminder, we will be discussing non-GAAP metrics, specifically adjusted net income, which we sometimes refer to as a ni adjust.
Steve Adler: Adjusted operating income and related margin as well as adjusted free cash flow during our call. Please.
Steve Adler: Please see exhibit one of the press release for an explanation and reconciliation of these non-GAAP measures.
Steve Adler: The company provides revenue guidance on a GAAP basis and earnings guidance on a non-GAAP basis due to the uncertainty and the indeterminate amount of certain elements that are included in reported GAAP earnings.
Steve Adler: I would also like to remind you that we will discuss forward looking statements under the private Securities Litigation Reform Act of 1995.
Steve Adler: Actual results may differ materially from those forward looking statements as a result of various factors.
Steve Adler: Including those discussed in our press release and the risk factors identified in our annual report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 23, 2024, and subsequent SEC filings.
Steve Adler: While we may update forward looking statements in the future we disclaim any obligations to do so you should not place undue reliance on these forward looking statements all of which speak only as of today with that I'll turn the call over to Melissa.
Melissa Smith: Thank you, Steve and good morning, everyone. We appreciate you joining us today.
Melissa Smith: To start with a quick financial overview of results with Jack <unk> will discuss in more detail and then I will turn to our approach to growing the business and progressing against our ambition.
Melissa Smith: We continued to deliver growth and strong profitability in the third quarter, driven by healthy sales high customer retention and expanding margins. We have also leveraged our strong cash flow generation to deliver on our disciplined capital allocation strategy, including $544 million.
Melissa Smith: Spend on share repurchases through the ended the third quarter.
Melissa Smith: For the third quarter revenue came in at $665 million, a 2% increase compared to the same period last year and adjusted net income per diluted share was $4 35.
Melissa Smith: A 7% increase compared to the prior year quarter.
Melissa Smith: Excluding the impact of fluctuations in fuel prices and foreign exchange rates Q3 revenue and adjusted EPS growth would have been 5% and 14% respectively.
Melissa Smith: While we maintained our momentum in delivering revenue growth strong profitability and thoughtful capital allocation.
Melissa Smith: Our results did fall short of our expectations, primarily driven by two factors that occurred within our mobility segment.
Melissa Smith: The largest impact with macro related.
Melissa Smith: Abstention decline in fuel prices this quarter paired with some broader softness in same store sales.
Melissa Smith: In addition, isolated operational issues were identified while optimizing our pricing structure.
Melissa Smith: And again, an unplanned charge that impacted this quarter.
Melissa Smith: Even with some headwinds this quarter the mobility segment delivered underlying revenue growth of 8% compared to last year, excluding the impact of lower fuel prices and foreign exchange rates.
Melissa Smith: Is higher than the growth rate in Q2.
Melissa Smith: While confident in our growth over the long term, we are reducing our outlook for the remainder of 2024 to reflect our Q3 results and the anticipation of an ongoing impact from lower fuel prices. The softness in same store sales all of which Jack will discuss during his.
Melissa Smith: Remarks.
Melissa Smith: Let me turn now to the four things we focused on to drive growth in the business. The first three are the core pieces that drive top line growth new business sales customer retention and management and growth of our base business.
Melissa Smith: The final piece is cost management and capital allocation, which allows us to turn incremental revenue dollars into higher earnings while also investing in the business.
Melissa Smith: I will start by reviewing the top line growth initiatives for each of our segments, and then turn to cost management and capital allocation.
Melissa Smith: From a new business perspective, I'm pleased that we've continued to generate new signings in the core business in line with our expectations.
Melissa Smith: At the same time, we're investing in and driving a number of new initiatives that we expect will further enhance our growth profile going forward let.
Melissa Smith: Let me hit on some of these.
Melissa Smith: In our mobility segment, we are focused on incremental investments in sales and marketing, especially digital marketing to drive new signings.
Melissa Smith: Through infrastructure investments that include enhanced analytics, we've improved our capabilities to allocate our sales and marketing investments to the highest yielding channels, which we expect will continue to drive results over time and.
Melissa Smith: In addition to these go to market investments. We're also investing to expand the book of offerings for our customers to increase share of wallet that.
Melissa Smith: That includes the acquisition of Pacer, but also new product offerings.
Melissa Smith: To that end I'd like to update you on our new mobile App 10, four by wax.
Melissa Smith: This offering is designed to serve independent over the road truckers, who have historically been an untapped segment of the market for wax because of our scale and expertise, we've long been able to negotiate and pass along significant fuel discounts to our customers.
Melissa Smith: We're independent truckers, who are traditionally unable to lock these discounts because they could not qualify for credit.
Melissa Smith: With 10, four by wax, we're excited to provide independent owner operators and small companies with access to these discounts using their current debit or credit cards through the app.
Melissa Smith: We're proud this will expand <unk> quarter offerings to this new segment.
Melissa Smith: Additionally, we're making strong progress in EV and hybrid solutions as we address the needs of our mobility customers by supporting their transitions to mix fleets.
Melissa Smith: We believe that the transition to electric vehicles will take many years to play out and that we are well positioned to capitalize on it.
Melissa Smith: During the quarter, we commissioned a report completed by Frost <unk> Sullivan, which concluded that 80% of fleet managers interviewed globally intend for <unk> to make up at least a quarter or their fleet by 2030.
Melissa Smith: Evs are inherently more complex to operate today. So we view this as a significant opportunity for Rex as the transition occurs.
Melissa Smith: The public sector showed significant interest in adopting EV solutions, and we have more than two thirds of U S states on our platform today, using our traditional fleet card products.
Melissa Smith: Since we spoke last quarter, we continue to see our solutions resonate in the market and we are on track to hit our 2024 growth goals.
Melissa Smith: I'd also be remiss, if I didn't mention peyser.
Melissa Smith: We acquired late last year to gain access to our near adjacent markets and field service management.
Melissa Smith: Focus on scaling the pacer sales efforts, along with cross selling the product into our existing customer base.
Melissa Smith: It remains on track to contribute 2% to the mobility segment revenue growth rate this year.
Melissa Smith: Turning to our corporate payments segment.
Melissa Smith: <unk> investments have enabled us to offer scalable and efficient solutions that meet the complex demands of global businesses.
Melissa Smith: To that end, we signed several new and expanded relationships with customers during the quarter, including Artful, who offers an accounts payable automation technology platform. Among the other products. We've also renewed our contracts with web chat and web beds in Australia.
Melissa Smith: We empower our customers with leading card product options, helping them unlock growth potential in Q3, we expanded our offerings in the APAC region, we continue to add new product types globally.
Melissa Smith: Building on what we believe is the widest range and variety of virtual cards.
Melissa Smith: We believe this business is built for long term growth supported by industry, leading offerings and strong client relationships that opened new opportunities and enhance our market position.
Melissa Smith: Embedded growth rates and the number of new accounts were consistent with prior quarter and we are pleased with our line of sight into what we expect to be a healthy open enrollment season.
Melissa Smith: Next I'll discuss customer retention per works the customer is the center of everything we do and we have enviable customer retention rates to maintain and enhance the strength, we built a sophisticated approach to tracking and managing customer sentiment through a consistent quarterly NPS.
Melissa Smith: Survey that incorporates customer feedback.
Melissa Smith: The feedback we've received from customers from these surveys reflects the strength of our products and people, including remarks on our smooth on boarding process fraud controls easy to use platforms and strong customer relationship management.
Melissa Smith: The feedback also further informs our future product roadmap and allows us to identify opportunities to improve the customer experience going forward.
Melissa Smith: For example, as a result of customer input.
Melissa Smith: We were able to enhance claims processing and our benefits business.
Melissa Smith: We modernized the solution to reduce processing time, while increasing information clarity and minimizing errors.
Melissa Smith: Now turning to management and growth of our customer base. We look at this through the lens of both pricing and volume growth. Our goal is not only to retain our customer base, but also to focus on growing with our existing customers through both pricing and volume initiatives.
Melissa Smith: This year our results have been a bit next.
Melissa Smith: And our mobility segment, we've seen a very positive impact from pricing initiatives, we rolled out this year.
Melissa Smith: While we were affected in the quarter by macro headwinds for sales as I mentioned earlier, our strategy is working.
Melissa Smith: Painting, these customers and as their mobility needs increase will grow with them.
Melissa Smith: For example, during Q3 the over the road industry continued to experience a lower volume of goods moved compared to last year as reported by the Cass freight index.
Melissa Smith: Even with this backdrop, we saw modest growth in payment processing gallon volumes in our over the road business year over year.
Melissa Smith: We view our positive results as a bright spot relative to the overall over the road market.
Melissa Smith: And our corporate payments segment. This was the first full quarter impacted by the transition of a large online travel agency customer to a new model, which is progressed largely in line with our expectations.
Melissa Smith: This change is creating some short term noise in this segment.
Melissa Smith: Total transaction volumes processed on our platform, including those generating fees rather than interchange revenue increased by 6% year over year.
Melissa Smith: This volume growth highlights the strength of our offerings.
Melissa Smith: And reinforces our expectations for future growth once the transition period passes.
Melissa Smith: As a reminder, we expect to continue seeing the impact of this transition over the next three to four quarters.
Melissa Smith: Finally in our benefits segment. According to the 2020 for Devon year Midyear report works is the fifth largest HSA custodian in the market.
Melissa Smith: And as a technology partner to seven of the lift top 10.
Melissa Smith: We're encouraged by the strong contributions we're seeing from our referral partners, giving us further confidence in the upcoming open enrollment season.
Melissa Smith: <unk> term, we're actively involved in industry wide efforts to educate consumers about the benefits of HSA, including participation in national HSA awareness day on October 15th.
Melissa Smith: Now I'd like to wrap up with cost management and capital allocation.
Melissa Smith: As you know last quarter, we shared that we had realized annual run rate cost savings that exceeded $100 billion target.
Melissa Smith: As at the ended the third quarter, we've now realized approximately $110 million in annual savings on a run rate basis.
Melissa Smith: We've utilized about half of the realized savings to strategically reinvest in initiatives that drive long term growth, while simultaneously delivering enhanced profitability for our business.
Melissa Smith: Disciplined capital allocation that includes investments in our business remains an important driver in achieving our long term targets and is evaluated alongside accretive M&A and share repurchases.
Melissa Smith: We're encouraged by the progress we've made against our artificial intelligence initiatives, which have started to positively impact key areas of our operations enhancing efficiency and security across our platforms.
Melissa Smith: It's not just a tool for operational excellence, but a strategic opportunity that we believe will increasingly become a differentiator for us in the market.
Melissa Smith: We are particularly excited about the application of AI to enhance the end user experience and our benefits segment.
Melissa Smith: We recently began piloting our benefit assistance offering an AI powered resource that we believe will dramatically improve employees understanding selection and use of their benefits.
Melissa Smith: The ability of AI to process vast amounts of data means that benefit assistant will be able to provide easy to access accurate and personalized support to employees navigating the often complex process at <unk>.
Melissa Smith: Using in assessing benefits.
Melissa Smith: AI is positively impacting both productivity and scale and ultimately reduces our cost to serve customers and employees and.
In addition, future product development around AI will enable us to retain and expand with existing customers as well as win new customers.
Melissa Smith: Efforts like our benefit assistant and employee self service AI tools are just two of many examples.
Melissa Smith: Finally to underscore our commitment to driving shareholder value. Our board recently increased its share repurchase program authorization by $1 billion anyway, a broader share count to the lowest level in nearly a decade.
Melissa Smith: Since our share count was last below $40 million in 2016 revenue has grown more than 200% and adjusted net income has increased nearly 450%.
Melissa Smith: Together this reflects our proactive capital management strategy and demonstrates our growth and profitability in a dynamic market.
Melissa Smith: Our focus on share repurchases as reduced outstanding shares by 12% since the first quarter of 2022 further highlighting our commitment to enhancing returns and creating value for our stockholders.
Melissa Smith: In closing before I turn the call over to Jack car I want to reemphasize my confidence in the future trajectory of wax.
Melissa Smith: We revised our guidance for the full year 2024, I believe we have the right initiatives in place throughout the organization to drive strong performance over the long term.
Melissa Smith: Ross the enterprise, we're focused on winning new business, retaining and growing our existing customers and driving productivity and our cost structure underpinned by our solid balance sheet with low leverage we will make the necessary investments in the business to position us for sustained growth.
Melissa Smith: We remain committed to creating value to our shareholders with that I'll turn it over to Jack to walk you through this quarters financial performance in more detail <unk>.
Jack Car: Thanks, Melissa and good morning, everyone.
Jack Car: As Melissa mentioned earlier, our third quarter results fell short of our prior guidance for revenue and adjusted EPS.
Jack Car: I'll walk through the details shortly but this was largely related to noise in the mobility segment from macro trends, including declining PPG and same store sales.
Jack Car: Along with an isolated unplanned charge to finance fee revenue.
Jack Car: On balance it is important to note that we achieved record high Q3 revenue and adjusted EPS continued to show strong growth.
Jack Car: We had solid underlying growth rates in both mobility and benefit segments.
Jack Car: Especially pleased with mobility, which accelerated its growth rate from the prior quarter.
Jack Car: Our cash generation remains quite strong as evidenced by the significant allocation of capital to share buybacks this quarter, while maintaining leverage at the bottom end of our range.
Jack Car: Now, let's start with the details of the quarter results for the third quarter total revenue was $665 $5 million.
Jack Car: 2% increase over Q3, 2023 with more than 80% of revenue for the quarter recurring in nature.
Jack Car: As I mentioned earlier, we had solid growth rates in both mobility and benefits segments. As a reminder, we define recurring revenue as payment processing and account servicing revenue.
Jack Car: Revenue from our factoring business.
Jack Car: Income from custodial HSA cash assets transaction processing fees and other smaller items.
Jack Car: In total adjusted operating income margin for the company was 44%, which is up from 41, 8% last year.
Jack Car: Margins increased in both mobility and benefits compared to the prior year.
Jack Car: From an earnings perspective on a GAAP basis, we had net income of $102 $9 million in Q3 or $2 52 per diluted share.
Jack Car: non-GAAP adjusted net income was 177 5 billion.
Jack Car: Or $4 35 per diluted share, which is an increase of 7% over last year.
Jack Car: The negative impact from lower fuel prices of approximately 33 per share after taxes.
Jack Car: Now, let's move to segment results starting with mobility.
Jack Car: Mobility revenue for the quarter was $357 2 million.
Jack Car: 2% increase from the prior year.
Jack Car: As we expected normalizing for the change in fuel prices and FX rates the revenue growth rate in Q3 accelerated compared to Q2 and has increased each quarter for this year.
Jack Car: Fuel prices have retreated 13% compared to last year with the domestic average fuel price in Q3 of $3 45 versus $3 97 and 2023.
Jack Car: The Q3 average fuel price was falling since lower than our third quarter guidance.
And reduced revenue by approximately $8 million compared to our guidance.
Jack Car: Payment processing transactions increased one 3% year over year.
Jack Car: <unk> customers in the U S increased one 6% compared to last year and over the road payment processing transactions were up 0.4% versus year ago levels.
Jack Car: While these were lighter than anticipated we are pleased to see ongoing growth in our markets.
Jack Car: The OTR market remains soft as evidenced by the cash freight index, but our solid execution has allowed us to continue to grow year over year. Despite these headwinds.
Jack Car: Now, let me take a moment to touch on the volume performance in the mobility segment relative to our expectations.
Jack Car: I will start by saying that there have not been material changes to either new sales or retention rates with our mobility customers.
Jack Car: If anything those metrics have improved year over year.
Jack Car: However, our existing local fleet customer base, but fewer gallons per business day than they did last year, which was not anticipated.
Jack Car: We began to notice a deceleration in August which extend into September.
Jack Car: To date in October we have not seen further deterioration.
Jack Car: So while the softness has continued we are monitoring with an expectation of stabilization.
Jack Car: In the past when we have seen changes like this they have been associated with macro factors.
Jack Car: That would seem to be the case here as well as the volume slowdown was broad across our industry segments and across geographies.
Jack Car: However, the volume softness happen quickly.
Jack Car: There have not been broader indications of an economic slowdown.
Jack Car: We are assuming the expected base volume softness will continue into Q4 at the same rate. We exited Q3 and this assumption has been incorporated into the guidance we will discuss later.
Jack Car: Clearly this is a trend we are watching closely.
Jack Car: Next let's turn to late fees.
Jack Car: The net late fee rate increased one basis point versus the prior year.
Jack Car: Finance fee revenue decreased $7 million.
Jack Car: Four 9% due primarily to the lower fuel prices and the isolated unplanned charge mentioned earlier.
Jack Car: Without these items finance fees would have been up significantly as a result of pricing changes.
Jack Car: The net interchange rate in the mobility segment was 138%, which was up 20 basis points over our 2023 net interchange rate.
Jack Car: The increase primarily reflects higher rates earned for merchant contract renewals at favorable terms.
Jack Car: Lower fuel prices with some smaller items also helping.
Jack Car: Compared to Q2 this rate is up.
Jack Car: At this point largely due to higher pricing and an isolated unplanned item reducing the prior quarter.
Jack Car: The mobility segment adjusted operating income margin for the quarter was 46, 8% up from 45, 6% in Q3 2023.
Jack Car: The increase in margin is due to lower expenses as a result of our cost savings program.
Well as lower credit losses, partially offset by lower fuel prices.
Jack Car: Moving to credit losses decreased $4 million in the mobility segment versus last year and were below the guidance range at six basis points of spend volume compared to seven basis points last year.
Jack Car: We were pleased to see loss rates continued to perform significantly better than we expected in our Q3 guidance.
Jack Car: Lower charge offs during the quarter led to lower expenses and we're one of the primary reasons, we were able to reduce most of the impact of the revenue shortfall to our EPS guidance.
Jack Car: Turning now to corporate payments.
Jack Car: Total segment revenue for the quarter decreased 6% to 100.
Jack Car: $26 9 billion.
Jack Car: Purchase volume issued by works was $23 4 billion.
Jack Car: Which is a decrease of 16% versus last year, largely due to a model change for a large <unk> customer.
Jack Car: The net interchange rate in this thing that was flat sequentially.
Jack Car: Note that the model change that I mentioned is creating some noise in this segment.
Jack Car: It is important to note that the underlying total dollar amount of all transactions processing on our platform for this segment.
Jack Car: <unk>, those where we earn a fee rather than interchange revenue increased 6% compared to the prior year.
Jack Car: Sustained volume growth points to the strength of our offerings and our expectations of future growth. Once we get past these short term transition dynamics.
Jack Car: The corporate payments segment delivered an adjusted operating income margin of 56, 4% down from 61, 3% in Q3 last year.
Jack Car: Finally, let's look at the benefits segment.
We again achieved strong results in the segment with Q3 revenue of $181 5 billion, which is an increase of $15 4 million or 9% over the prior year.
Jack Car: Average SaaS accounts grew 2% in Q3 versus the prior year to $23 billion consistent with Q2.
Jack Car: The core market dynamics of this business.
Jack Car: Our strong <unk>.
Jack Car: Simplified by the underlying SaaS account growth, excluding the declines in Medicare advantage accounts, which was 7% year over year also consistent with Q2.
Jack Car: Purchase volume increased by nine 6% compared to the prior year quarter.
Jack Car: We realized approximately $54 million in revenue from the custodial HSA cash deposits that were invested by Westpac and from funds held to a third party bank compared to $42 million last year.
Jack Car: The average interest rates earned on these balances increased from four 4% last year to 5% this year.
Jack Car: We believe this rate will be relatively stable for the next several years, because 80% of our HSA related investments.
Jack Car: Deployed and Levered fixed rate investments that we believe protect future revenue from interest rate changes.
Jack Car: We expect interest rate impacts and the remaining portfolio, which includes short term deposits of third party bags will be partially offset by the reinvestment of lower yielding fixed rate investments at higher rates as they mature.
Jack Car: To summarize the revenue from our benefits segment is protected from the full impact of changes in interest rates and as we've discussed previously our overall balance sheet hedge cards the company some macroeconomic interest rate.
Jack Car: Purely impacting overall earnings.
Jack Car: Turning now to margin.
Jack Car: The benefits segment adjusted operating income margin was 43, 2% compared to 35, 4% in 2023.
Jack Car: The increase in margin versus last year is driven by the high flow through of custodial income.
Speaker Change: Now I will provide an update on the balance sheet and our liquidity position.
Speaker Change: We remain in a healthy financial position and ended the quarter with $535 million in cash.
We had $606 million.
Speaker Change: Billable borrowing capacity.
Speaker Change: Corporate cash of 123 billion.
Speaker Change: As defined under the company's agreement quarter Ed.
Speaker Change: The total outstanding balance on our revolving line of credit and term loans was $3 2 billion.
Speaker Change: The leverage ratio as defined in the credit agreement stands at two six times, which is at the low end of our long term target of two and a half to three to five times.
Speaker Change: Our ability to invest in the business and return capital to shareholders, while maintaining conservative debt levels puts us in an enviable position.
Speaker Change: Next I would like to turn to cash flow.
Speaker Change: <unk> generates a significant amount of cash each year.
Speaker Change: Using our definition year to date adjusted free cash flow was 393 billion through September.
Speaker Change: You will note that there is an additional line item on our reconciliation to GAAP operating cash flow.
Speaker Change: The underlying assumption in our historical calculation was that the net activity of deposits of Westpac is offset by the combination of changes in accounts payable accounts receivable and investments in.
Speaker Change: In simpler terms the assumption was that the working capital change of works Bank was immaterial.
Speaker Change: As we are seeing more significant changes in the working capital that we have historically.
Speaker Change: Feel this change presents our adjusted free cash flow metric more accurately.
Speaker Change: Our primary discretionary use of cash so far this year has been to repurchase shares.
Speaker Change: We repurchased $544 million of our own shares during the first nine months of 2024.
Speaker Change: <unk> 370 million spent during Q3.
Speaker Change: We expect the final share settlement of our previously announced ASR will occur in the next week and will result in additional reduction in share count.
Speaker Change: We believe in the long term business momentum move west.
Speaker Change: Since we initiated our share repurchases in 2022.
Speaker Change: And including OLED. This year, it's already received under the ASR subject to final settlement. We have acquired approximately six 1 million shares at cost of $1 1 billion.
Which equates to an average cost of approximately $175 per share.
Speaker Change: This has reduced our share count by 12%.
Speaker Change: Looking forward, we remain committed to managing capital allocation between organic investment M&A and returning excess capital to shareholders.
Speaker Change: Finally, let's move to revenue and earnings guidance for the fourth quarter and full year.
We expect many of the trends from the third quarter to continue and we are revising our 2024 guidance primarily to reflect what we see in the world.
Speaker Change: Yes.
Speaker Change: Starting with the fourth quarter, we expect to report revenue in the range of $630 million to $640 million.
Speaker Change: We expect EPS to be between $3 51 to three.
Speaker Change: $3 61 per diluted share.
Speaker Change: For the full year, we expect to report revenue in the range of two six to $2 63 billion.
Speaker Change: We expect EPS to be between $15, and 21 says and $15.31 per diluted share.
Speaker Change: For the full year the midpoint of these updated ranges represent a decrease of $73 million in revenue.
Speaker Change: <unk> <unk> of EPS compared to the midpoint of our previous guidance.
The decrease includes the impact of actual Q3 results as well as a reduction to our Q4 guidance related to macro factors in the mobility segment with a smaller impacts and benefits.
Speaker Change: Let me start with the macro factors and the assumptions we've made around the.
Speaker Change: Fuel prices have moved significantly lower since the end of July compared to our previous guidance at $3 61 for the year.
New average price of $3 48 represents a decrease in revenue of $22 million in.
Speaker Change: 34 cents of EPS.
Speaker Change: Portion of which was recognized in Q3.
Speaker Change: In addition.
Speaker Change: Interest rates have also moved lower.
Speaker Change: We have incorporated the current rate curve into our updated guidance anticipating two more cuts to interest rates. This year, which is reducing anticipated revenue in Q4 by approximately $5 billion.
Speaker Change: I want to stress that the revenue reduction from lower interest rates is not impacting our earnings guidance give you. The overall balance sheet hedged that I have discussed previously.
Speaker Change: Next we are reducing our volume expectations for both mobility and benefits segments.
Speaker Change: This reduction in volume expectations does not reflect any change in.
Speaker Change: Our expectation of longer term opportunity for these businesses.
Speaker Change: But rather the shorter term impacts of recent trends.
Speaker Change: And mobility as I mentioned earlier, we have recently seen fewer transactions from our existing base of customers, which we are assuming will persist through the fourth quarter.
Speaker Change: In addition, we are reducing late fee revenue outlook.
Instances of late fees have underperformed our expectations.
Speaker Change: With these changes we now expect mobility segment growth to be between six and 7% for the year adjusted for changes in fuel prices.
Speaker Change: And the benefit segment, we are seeing a delay of some expected the revenue.
Speaker Change: While new signings are on track for the year did not happen as early in the year as expected, which would have allowed for revenue to be recognized for midyear onboarding.
Speaker Change: As a result, we expect to be closer to the low end of our original 2020 for revenue growth range of 10% to 15% for the year.
Speaker Change: As Melissa mentioned earlier, while we updated our Q4 and full year guidance. We are focused on executing our strategy for the long term and look forward to providing additional updates as we head into 2025.
Speaker Change: With that operator, please open the line for questions.
Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue and if you'd like to withdraw that question again press star one and as a reminder, please limit yourself to one question and a single follow up.
Speaker Change: Your first question comes from the line of David Koning with Baird. Please go ahead.
David Koning: Yes, Hey, guys. Thanks for taking my question.
David Koning: Maybe first of all on the mobility segment the processing rate the interchange rate was high as you mentioned.
David Koning: Is that sustainable sustainably high and then also in this segment how big in dollars was that reversal the finance fee reversal and does that come back basically in Q4.
David Koning: Hey, David This is Jack.
David Koning: No.
Jack Car: The interchange rate, we did have a nice pickup this quarter.
David Koning: Quarter.
David Koning: A couple of factors there one was fuel prices help.
David Koning: And the rate and then the other one was the pricing increases that we've implemented over the last year. So the pricing increases obviously will be sustainable.
David Koning: Yes.
David Koning: Fuel prices will do with fuel prices dip, but if they stay where they have been recently, we should see the the rates stay comparable on the on the.
David Koning: Revenue item that you mentioned, there was about a $10 million impact to the mobility segment.
David Koning: Yes.
Speaker Change: Okay, great and basket.
Speaker Change: With the advent of that going forward and so think of that as a reversal in the past.
Speaker Change: Some of the late fees that we had calculated we had gone through as you might imagine pricing optimization work that we've done for a long period of time creates a lot of complexity and some of the nuance calculations that we had we've gone back and audited the changes that we've made and we found some issues to some of the very new.
Speaker Change: Calculations with a very isolated number of customers.
Speaker Change: And then corrected that and so going forward. It should be at is kind of just under normal rate going forward and we'll continue to use pricing optimization is one of the levers for us.
Speaker Change: Wanted to focus items for us.
Speaker Change: Gotcha.
Speaker Change: And then just as a follow up on the corporate segment I know you've said before the big client, leaving I think you said a 1% revenue headwind next year. If I just look at this quarter you know normally you grow high singles Instead, you declined high single.
Speaker Change: GAAP is about a 3% to total revenue. So is the large client totally out already and then what's kind of that excess gap is that smaller otas and stuff like that.
Okay.
Speaker Change: Yes, there is a number of things that are impacting us this year fuel prices I'm not sure. If as you were talking about that fuel prices have been a pretty big macro.
Speaker Change: Headwind for us this year and we're anticipating it to be in the fourth quarter as well and on top of that we've had this one customer and Thats made their migration, we've said we've seen.
Speaker Change: In the quarter it came through materially as we expected just a titch faster than we expected, but it was pretty much in line.
Speaker Change: And we do expect that we've seen that.
Speaker Change: Really go through the first full quarter.
Speaker Change: Third quarter has more seasonality associated with it choose to travel spend tends to be higher in that quarter. So there'll be some lumpiness of how that comes through in each of the quarters.
Speaker Change: And then the last thing <unk> talked about the same store sales softness.
Speaker Change: That has had an impact.
Speaker Change: This quarter and our expectation is it will in the next quarter as well.
Speaker Change: Gotcha. Thank you.
Speaker Change: Your next question comes from the line of Nick <unk> with UBS. Please go ahead.
Speaker Change: Good morning, and thanks for taking my question.
First just on the benefits segment can you just discuss how the pipeline is looking as we head into open enrollment season.
Speaker Change: And just some of the puts and takes as we head into 2025, I know that Jack charges mentioned that there was.
Speaker Change: Some delays in expected revenue.
Speaker Change: Yeah, just kind of like what level of SaaS accounted needed for this business to kind of accelerate closer to the longer term range in 2025. Thank you.
Speaker Change: Yes, so we feel actually really good about open enrollment season as we've gone through the course of the year bookings have been higher year over year.
Speaker Change: In 2023 at the end of the year, we talked a lot about the fact, we saw some non decisions and that seems to have reversed so far in 2024, so the impact that Jack.
Speaker Change: He was mentioning was the fact that we had some contracts that were actually.
Speaker Change: Right on the finish line and they ended up getting deferred in terms of timing of implementation. So we're not getting some of the benefit in revenue. This year that we had anticipated but in terms of bookings and how we're progressing into next year, we feel really good Devin year has talked about HSA growth be.
Speaker Change: <unk>.
Speaker Change: Around 5% and we certainly expect that were going to.
Speaker Change: Beat that market growth rate.
Speaker Change: Great. Thanks for all the color Nick I, just pointed out that.
Speaker Change: If you look at our SaaS of comp growth.
Speaker Change: You'll see the 2% reported if you remove the one Medicare advantage customer that we've talked about previously.
Speaker Change: Account growth is in the 7% range. So certainly ahead of that Devin their number.
Speaker Change: Your next question comes from the line of Andrew <unk> with Wells Fargo. Please go ahead.
Speaker Change: Hey, guys. Thanks for taking the question I just wanted to.
Speaker Change: Look at the corporate payments business once again.
Speaker Change: I know most of you called out that 6%.
Speaker Change: Growth rate.
Speaker Change: Would exclude the.
Speaker Change: The impact of the large customer transition.
Speaker Change: Thinking about the longer term, we've always kind of thought this business was kind of a mid teens grower.
Speaker Change: With the six out there kind of pointing to that as a sign of the barrels should we be rethinking.
Speaker Change: The term growth rates of that business.
Speaker Change: Yes, when we think about the business, we've talked about it being 10% to 15% grower is longer term.
Speaker Change: The benefits business.
Speaker Change: I'm sorry.
Speaker Change: Travel customer base grew 7% in the quarter.
A little bit more softness outside of travel we talked about two things that are impacting that segment right now and obviously this migration of the large online travel agency has.
Speaker Change: A pretty big impact on the segment and will over the next three or four quarters. We do expect that you would see that migrate back to.
Speaker Change: A normal growth rate within the travel marketplace do we have hundreds of customers in that space and feel really good about our ability to grow with them as well as add new areas of spend.
Speaker Change: Into that customer segmentation.
Speaker Change: And then on the rest of our corporate payments business we.
Speaker Change: We have seen.
Speaker Change: Nyx.
Speaker Change: And within the third quarter and.
Speaker Change: Some pullback on spend and so just kind of generally in the marketplace, it's not a large number but.
Speaker Change: That's impacting us a little bit but in order for us to hit that 10% to 15% growth rate.
Speaker Change: And we're very focused on growing outside of travel as well at a higher rate than the travel business will grow.
Speaker Change: Understood and then if I could follow up on mobility for the last year.
Speaker Change: <unk> been going through this.
Speaker Change: The digestion period.
Speaker Change: When you think about 2025 what inning.
Speaker Change: Brian Youre cutting.
Speaker Change: Sir.
Speaker Change: I'm sorry.
Speaker Change: How are you.
Speaker Change: Got you.
Speaker Change: Okay.
Speaker Change: Can you just repeat the question please.
Speaker Change: Yes.
Speaker Change: When we think about mobility, where do you think we are in kind of this cycle.
Speaker Change: The drawdown in excess capacity and when do we kind of stabilize and as we think about 'twenty 'twenty five.
Speaker Change: Yes within the over the road.
Speaker Change: Marketplace.
Speaker Change: When youre talking about excess capacity.
Speaker Change: We've been in a freight recession for.
Speaker Change: Very long period of time.
Speaker Change: If we're looking at that customer base note talking to that customer base.
Speaker Change: I think there is continues to be hope that that's going to.
Speaker Change: Reverse at some point in time and certainly if you look back in history, that's that things do revert back to the mean.
Speaker Change: But we are not anticipating that that's going to happen within the third quarter and in fact, we saw.
Speaker Change: A little bit more softness even in that customer base year over year and same store sales. So I'd say, if anything we've seen a little bit more weakness.
Speaker Change: It's not as pronounced as what we saw within the local part of the marketplace, but.
Speaker Change: But certainly impacting that segment as well.
Speaker Change: Understood. Thank you Melissa.
Speaker Change: Your next question comes from the line of Dan <unk> with Mizuho. Please go ahead.
Speaker Change: Hey, guys. Thanks for taking my question.
Can we talk a little bit about pricing and mobility in terms of you think about sort of.
Speaker Change: Gallons, they're basically I'd say flattish year over year and 24.
Speaker Change: And organic growth as well.
Speaker Change: <unk> five can can we talk about sort of the impact of pricing.
Speaker Change: What you think about that into the future and then I have a quick follow up thank you.
Speaker Change: Yes, so Dan.
Speaker Change: I think you hit the pricing has had a pretty significant impact.
This year on the order of $40 million to $50 million.
Speaker Change: Obviously.
Speaker Change: Obviously constantly looking at how do we optimize pricing, which we've been doing for the last year.
Speaker Change: Some of what we implemented this year, we expect sort of <unk>.
Speaker Change: Roll forward into next year.
Speaker Change: The 10% to $20 million range Whats you analyze this year's impacts.
Speaker Change: And then we are continuing to look at pricing opportunities, but nothing that we've decided to implement at this point.
Speaker Change: Got it and then quick follow up on the buybacks.
Speaker Change: Given where the stock is like any change to that.
Speaker Change: Buyback cadence.
Speaker Change: So just in buybacks in general we're pleased to bring the share count down the lowest it's been in a decade.
Speaker Change: Outstanding shares are down 12% from Q1 2022, so right now share repurchases are a really attractive use of capital and our recent actions and activity in this space reflect our confidence.
Speaker Change: Around <unk> long term intrinsic value.
Speaker Change: They are aware of the opportunity of buying back stock we've been very aggressive about doing so the board increased the authorization.
Speaker Change: Supported that as well.
Speaker Change: Got it thanks again.
Speaker Change: Your next question comes from the line of Mihir Bhatia with Bank of America. Please go ahead.
Speaker Change: Hi, Good morning, Thanks for taking my questions I wanted to go back to the corporate payments.
Speaker Change: Segment.
Speaker Change: Momentarily. So can you just walk through the impact from the large I guess booking the large customer.
Speaker Change: That segment.
Speaker Change: Yes.
Speaker Change: I guess the real question is.
Speaker Change: Is the impact now in the numbers this quarter like should we expect that account services revenue to be around this level and the decline in payment processing at this level or will the impact growth from here.
Speaker Change: Yes, so mihir.
Speaker Change: At a high level the cost the cost the large OTA customer.
Speaker Change: As sort of continuing to transition volume.
Speaker Change: To the new model so we expect.
Speaker Change: This to grow further in the fourth quarter, and then get to the kind of new levels into next year, we've talked.
In the past that this transition will be about a 1% impact to 2025, so youre going to see that kind of grow as you go into the fourth quarter and then at that level as we get into next year.
Speaker Change: They will offset that is seasonality. So Q3 is just got higher.
Speaker Change: Spend volume within the fourth quarter so.
Speaker Change: So you're saying that the penetration.
Speaker Change: Should we expect to increase to this new model, but historically, there's less spend volume in the fourth quarter.
Speaker Change: And the full year guidance for the segment is unchanged I think it was Jewish but then you had said last time.
Speaker Change: Yes.
Speaker Change: Still in that range, a little softness in corporate payments, but still in that range.
Speaker Change: Got it and then switching to the mobility segment.
Speaker Change: Doug.
Doug: Just a two part question there just on the one is on just the fuel price impact that you have <unk>.
<unk> for the EPS decline is coming from the fuel prices being lower.
Doug: Yes.
Speaker Change: So I guess, Mike also on that it used to be 10 tenths of EPS since 2010 tons of fuel prices and 20 bps of EPS. This seems much larger than that.
Speaker Change: Let me clarify, yes, let me clarify.
Speaker Change: 30, <unk> is the fuel.
Speaker Change: Average fuel price decline.
In the fourth quarter versus from our revised guidance versus where we were previously assuming the EPS impact of that is about 23. So it's in line with the the rule of thumb we've given.
Speaker Change: Okay.
Speaker Change: And then the same store sales softness Youre assumption is just stability in pricing familiar like youre, not assuming any weakness or.
Speaker Change: Acceleration is that the right way to think about that correct. We're taking where we were in September and assuming that for the fourth quarter.
Speaker Change: Okay. Thank you.
Speaker Change: Your next question comes from the line of Sanjay Sac Ranney with K B W. Please go ahead.
Speaker Change: Thanks, Good morning.
Speaker Change: Maybe just go back on the weakness in the spending habits and mobility.
Speaker Change: Historically, that's been a leading indicator on the macro Melissa can you just give us a little bit more detail. How you see that unfolding do you think it's a sign of.
Speaker Change: A broader things to come.
Melissa Smith: So if you look across that.
Melissa Smith: The local business just as a reminder, these are people that are using our products to make delivery calls.
Melissa Smith: And sales calls.
Melissa Smith: Business activity, driven and within our base.
Speaker Change: <unk> seen is that if you look across the portfolio of seven of the eight top industry group declined 3% to 5% year over year. Those declines were broad based and actually I think the only thing that grew with the government.
Melissa Smith: Industry code.
Melissa Smith: This has happened.
Speaker Change: Very recently so it started in August as Jack said and.
Speaker Change: Accelerated a little bit in September and then has leveled off in October.
Speaker Change: What we know when we cut the data based on geography industry type of fleet size that it's very consistent.
Speaker Change: The portfolio.
Speaker Change: We've also reached out and talked to customers.
Speaker Change: Called hundreds of customers just to get a sense of what they are feeling and their most prevalent answer was it just their needs were lower.
Speaker Change: So I think that.
Speaker Change: What we're hearing from our customers is maybe more about uncertainty with elections coming up and.
Speaker Change: Not knowing what's going to happen with interest rates.
Speaker Change: So we're not sure if it's just like a short term pull back and we've assumed the same level of activity would happen in the fourth quarter is just an assumption right now so we're not trying to call it into some macro indicator for the future, but it is what we're seeing right now and that's what we're anticipating happening in the fourth.
Speaker Change: Quarter.
Speaker Change: Okay, Great and then maybe just following up on corporate payments and the Otas stuff. It seems like that large OTA is progressing as planned maybe a little bit quicker, but ultimately that that impact will stay with us until <unk>.
Speaker Change: Next year most of next year is there anything else that we need to be concerned about I know theres been chatter of the other large OTA renewal.
Speaker Change: Any any changes in strategy there I'm just trying to think about what else we need to be prepared for for the Otas segment going forward. Thanks.
Speaker Change: But we're really focused around making sure that we're continuing to work with our existing customer base, but also looking for new areas of spend within those customers.
Speaker Change: <unk> talked about the fact that.
Speaker Change: We had seen weakness in airlines spend.
It's an area of focus we continue to see that as an area of weakness within the portfolio.
Speaker Change: So.
Speaker Change: Think we're looking at areas that can create some opportunity for us.
Speaker Change: Both in terms of acceptance globally, and new types of spend that occur with those customers.
Speaker Change: And then so we feel really good about the product roadmaps that we have within our embedded payments product even outside of travel and what opportunities that's going to create for us in the future.
Speaker Change: And just to clarify like do we is there another large renewal that we need to think about into 2025.
Speaker Change: Let's say we have customers that are renewing all of the time, there's there's not anything that I would call out at this point in time.
Speaker Change: We've talked in the last call about kind of the volume between the first half with second half.
Speaker Change: As some of our Otas.
Speaker Change: Yes.
Speaker Change: <unk> spend but we're not expecting at this point, we're not concerned about any renewals for next year.
Speaker Change: Okay, great. Thank you.
Speaker Change: Your next question comes from the line of Nate <unk> with Deutsche Bank. Please go ahead.
Speaker Change: Hi, Thanks for the question, so sorry to again ask about corporate payments, but I did want to clarify on the large travel clients. So I think previously you had talked about 30% of the volumes being taken in house in <unk>. It sounds like based on <unk> comments that came in at <unk>.
Speaker Change: So any change the prior outlook you had talked about I think sort of 40% of volumes going over in <unk> and kind of maintaining around that level for next year and then the follow up kind of outside of that large client I think last quarter, we had talked about things like weakness in airlines, some larger customers putting volumes across providers and then I know you had lowered your outlook for that.
Speaker Change: Remainder of the year on volumes on the <unk> call. So just any update on those other things outside the large otas impacted results.
Speaker Change: Yes, so larger ta is happening materially as planned it will increase penetration a little bit in.
Speaker Change: In the next quarter, but again seasonality.
Speaker Change: For some of that.
Speaker Change: I would say it's more.
Speaker Change: Again, a little bit faster than what we had projected that leave no.
Speaker Change: And frankly, it's the miner of this conversation.
Speaker Change: The second part of your question around.
Speaker Change: As we progress into next year.
Speaker Change: We are again working with them, but I would say the expectation right. Now is with is what happens in the fourth quarter that that should largely.
Speaker Change: <unk> through next year, and then you're just more about anniversarying anniversary create.
Speaker Change: Creating the anniversary of the.
Speaker Change: Of the transition.
Speaker Change: Got it got it and then Andrew Congrats code that's been volume, Yes. If you go through the rest of the portfolio. We said that two thirds of our revenue comes from these smaller.
Speaker Change: Online travel agencies that we've seen very similar trends to what we had expected. So we continue to see some acceptance issues with low cost carriers in Europe. The <unk>.
Speaker Change: <unk> are talking to those low cost air carriers, and so that could create an opportunity for us in the future, but we have an expectation right now that that's going to continue.
Speaker Change: The volume overall with those customers are a little bit lighter than the volume that we see with the larger customers and in a large part of that is.
Speaker Change: His travel related spend so I'd say generally it's coming in.
Speaker Change: Really pretty much as what we had expected last quarter.
Speaker Change: Got it thanks, Melissa and then I guess just for my follow up credit losses, I guess came in better than expected in the quarter. We also had a really strong <unk> on sort of much lower charge off rate. So I guess two quarters outperformance. Despite some of the softness you talked about in your existing book of business, they're looking at the <unk> Guide does imply a material step.
Speaker Change: Sequentially in credit losses. So just wondering if theres anything specific like I know you've talked about the macro factors, but anything youre seeing across your book of business that is driving that or maybe that's just prudent or conservatism. However, you want to phrase it on your part.
Speaker Change: Yes, I'd say, so we've had really good performance in charge offs. This quarter was kind of one of our lowest charge offs I think as we look to next next quarter there wasn't.
Speaker Change: Specific item it was looking at.
Where our receivable balances are as well as we got the benefit.
Speaker Change: This past quarter of.
Speaker Change: The reserve balances coming down, which we don't expect to repeat next quarter. So factoring that all in is where we ended up on the guidance on credit losses.
Speaker Change: Thanks, Jack I appreciate the details.
Speaker Change: Your next question comes from the line of Ramsey El <unk> with Barclays. Please go ahead.
Hi, Thanks for taking my question.
Speaker Change: In the benefits segment, I think Jack mentioned, a delay of some new revenue because if I later client onboarding.
Does that mean that that revenue will kind of spool up and flow into Q1 is it just sort of pushed back a bit.
Speaker Change: Or should I read it differently.
Speaker Change: No that's right. So if you look at the bookings number that we had anticipated for the year. So we still believe we can hit the same bookings number. It's just the timing of that we had a couple of contracts that were just at the kind of final stages.
Speaker Change: That we had an expected to be implemented.
Speaker Change: And that got deferred in terms of implementation that we don't expect it has an impact in terms of total bookings.
Speaker Change: Okay and then.
Speaker Change: Lastly for me I think there were some extra bill days in the quarter and I'm, just thinking through next quarter and or any impact that those extra bill days might've had.
This quarter is that something that moves the needle a bit or am I overthinking it.
Speaker Change: Yes, we have.
Speaker Change: So I'm, assuming you're talking about the mobility segment. We did have a couple of extra selling days last quarter. A couple of extra fueling days, so about 3% more fueling days this quarter versus last year, whereas next quarter, it's basically flat year over year.
Speaker Change: Very helpful. Thank you so much.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Andrew Jeffrey with William Blair. Please go ahead.
Andrew Jeffrey: Hi, Good morning appreciate you taking the question Jack.
Andrew Jeffrey: Sorry, if im being a little remedial here I'm just trying to understand the.
Andrew Jeffrey: The earnings guidance reduction.
Speaker Change: Roughly a third of it give or take is from fuel.
Andrew Jeffrey: The balance.
Speaker Change: Yes so.
Speaker Change: If you look about this if you look at the fourth quarter was about call it $45 million reduction versus the prior guidance.
Speaker Change: 15% to 20 of that was split between fuel being the majority of it in interest rate.
Speaker Change: And just a reminder, the interest rate well it impacts revenue it doesn't flow through EPS, largely but 15 to 20 years.
Speaker Change: Call it macro fuel and fuel prices and rates. The next one is the call it $10 million to $11 million was mobility softness that we had talked about.
Speaker Change: And what we were seeing on same store sales and late fees and then the last piece of it is.
Speaker Change: As the benefits item that we've talked about and that's in the $5 million to $10 million range.
Speaker Change: Okay, and how does that all drops to the bottom line because it seems like theres various varying impacts I guess, that's what I'm trying to isolate is that yes sure. So if you start at the top where I talked about the 15 to 20 from fuel and rate the rate part doesn't fall to the bottom line. So that's it.
Speaker Change: Connie would fall predominantly from fuel at about 23, as I said earlier on the call.
Speaker Change: And then the remaining $25 million.
Speaker Change: Falls to EPS at about 50.
Speaker Change: Alright, and then the last item is what's happening in credit losses and so.
Speaker Change: You can look at what we've assumed for credit losses.
Speaker Change: In the fourth quarter.
Speaker Change: The last negative on the guide.
Speaker Change: We disconnect tomorrow, but it wasn't.
Speaker Change: Yes.
Speaker Change: And just to elaborate on on the credit loss.
Speaker Change: What's what's causality there is it is it just purely macro or.
Speaker Change: Is it is it transitory or is this a higher level of credit losses.
Speaker Change: I wouldn't say, it's a higher level.
Speaker Change: It's really looking at.
Speaker Change: We've generally been trending pretty positive and credit losses, we got.
Speaker Change: Some nice benefit in the third quarter as I said earlier from.
Speaker Change: The breakdown on the reserve from the good charge offs that we were seeing in the third quarter not expecting we're not going to get that repeat in the reserve balance in the fourth quarter. So as a result charge offs will be higher sorry, the credit loss provisions will be higher than we saw in the third quarter.
Speaker Change: Okay, and if I if I can just follow up I mean this is.
Speaker Change: Stuff that I would've expected you'd be able to see earlier in the year.
Speaker Change: Just a little surprised that it crops up here kind of.
Speaker Change: Right right at the end how do you think about how do you think about that and sort of visibility in your business overall I suppose.
Speaker Change: Ladies who takes them individually feel prices is something we give out a metric it did change.
Most immediately after we gave earnings last time, but I think thats.
Speaker Change: Broadly known number the softness.
Speaker Change: It really came out in August accelerated in September and again, it's leveled off in October. So it is unusual if you look at our volume numbers were normally actually very accurate in terms of estimating what's happening with volume within our mobility business. So this is an unusual movement that we've seen.
Speaker Change: And then in terms of the.
Speaker Change: The push in signing those contracts for literally.
Speaker Change: At the very end stage.
Speaker Change: And so we had anticipated that that would move into onboarding like it normally.
Speaker Change: Wood and it just didn't this time.
Speaker Change: I think about our ability to understand the business.
Speaker Change: In a normal environment I feel like it's actually quite high and if you look back at our history, we've been pretty accurate as us that clearly we've been off a lot this quarter.
Speaker Change: Okay I appreciate it thank you.
Ladies and gentlemen that does conclude our question and answer session and I will now turn the call back over to Steve elder for closing remarks.
Steve Elder: Yes, just very briefly.
Steve Elder: Just thanking everyone for your time this morning, and we'll look forward to speaking again with our year end earnings.
Speaker Change: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.
Speaker Change: Please wait the conference will begin shortly.
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