VERRA MOBILITY Corp Q3 FY2023 Earnings Call

Greetings, and welcome to the Verra Mobility Third Quarter 2023 Earnings Call. This conference is being recorded. It is now my pleasure to introduce your host, Mark Zindler, Vice President of Investor Relations. Thank you. You may begin.

Thank you. Good afternoon, and welcome to Verra Mobility’s Third Quarter 2023 Earnings Call. Today, we’ll be discussing the results announced in our press release issued after the market closed along with our earnings presentation, which is available on the Investor Relations section of our website at ir.verramobility.com. With me on the call are David Roberts, Verra Mobility’s Chief Executive Officer; and Craig Conti, our Chief Financial Officer. David will begin with prepared remarks, followed by Craig, and then we’ll open up the call for Q&A. Management may make forward-looking statements during the call regarding future events, anticipated future trends and the anticipated future performance of the company. We caution you that such statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Actual results may differ materially from those projected in the forward-looking statements due to a variety of factors. These factors are described in our SEC filings. Please refer to our earnings presentation or excuse me, please refer to our earnings press release for Vera Mobility’s complete forward-looking statement disclosure. We do not undertake any obligation to update forward-looking statements. Finally, during today’s call, we’ll refer to certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is included in our earnings release which can be found on our website at ir.verramobility.com and on the SEC’s website at sec.gov. With that, I’ll turn the call over to David.

Thank you, Mark, and thanks, everyone, for joining us. We delivered a strong third quarter, highlighted by 11% year-over-year recurring service revenue growth. Moreover, we delivered adjusted EBITDA growth of 7% over last year and converted 53% of adjusted EBITDA to free cash flow for the quarter. Additionally, we are pleased to report we renewed the tolling contract with Enterprise Mobility for a 3-year term with terms and conditions that are materially consistent with the prior agreement. Enterprise has been a terrific long-time partner, and we look forward to continued shared success in the future. I’m incredibly pleased to point out that we are 100% fully de-stacked with all warrants now exercised and all earn-out shares issued. This comes as we celebrate our 5-year anniversary as a publicly traded company, a significant milestone in our incredible journey to become a leader in smart mobility solutions. Additionally, we executed our previously authorized $100 million share repurchase program, the details of which Craig will further elaborate in his remarks and our Board of Directors has also authorized a new 18-month $100 million share repurchase program. Lastly, we are again increasing our financial guidance due to our strong year-to-date performance and our outlook for the fourth quarter. Moving on to our operations and starting with Commercial Services. We delivered 14% revenue growth, driven in large part by an exceptionally strong summer travel season. Year-to-date, TSA volume is about 101% of 2019 and about 113% of 2022 volume. RAC tolling revenue increased 18% over the prior year quarter due to increases in adopted rental agreements, the increased adoption of all-inclusive pricing plans, a durable trend of longer rentals, and the secular tailwinds related to increased toll roads and cashless toll lanes. We believe the sentiment from the major airlines, hotel chains and rental car companies suggests no signs of slowing domestic travel demand through the remainder of this year. And as we head into 2024, in the near to midterm, we believe sentiment and bookings suggest that domestic travel demand will see steady growth underpinned by an increase in business travel driven by return to office mandates and hybrid work schedules increasing weekend leisure travel. We continue to experience strong growth from the FMC business generating 20% over the same period last year. This was higher than our internal expectations, driven by several factors. The expansion of our sales team and the purposeful intent and focus in this market area. Second, we are enhancing brand awareness outside of our core customer base and building new distribution channels. And lastly, we have capitalized on the near-term opportunity to market the value of our solutions to a customer base that has historically performed these activities internally. On a go-forward basis, we expect FMC business growth to moderate and to grow in line with the overall Commercial Services growth rate. The key factors influencing our conviction in the high single-digit growth rate are low market penetration levels, particularly among small and medium-sized fleets, and the value-added tools we offer that reduce costs and improve the customer experience. Moving on to Government Solutions. Recurring service revenue, which reflects 94% of the total revenue for the quarter, grew 10% over the same period last year. Government Solutions sales growth is benefiting from the prior year completion of the New York City build-out and the city’s decision to transition to 24/7 monitoring as well as program expansion with existing customers and new camera installations with new customers. As we look toward the future, we are anticipating significant growth in our Government Solutions TAM. We continue to experience a favorable legislative environment as states are increasingly turning towards enhanced automated enforcement to increase traffic safety for their citizens. In October, California signed into law legislation for a speed safety pilot program in 6 major cities including Los Angeles, San Jose, Oakland, Glendale, Long Beach and the City and County of San Francisco. We currently estimate the potential annual recurring revenue opportunity associated with this pilot program to be greater than $10 million per year. However, as the program demonstrates its efficacy, we anticipate that additional legislative authority may expand the scope of the speed program in future years. We estimate the total recurring revenue opportunity could be greater than $100 million annually within the next few years, if legislation allows. Additionally, in Pennsylvania, we’re seeing continued positive momentum for the automated enforcement. The legislation is seeking to enable new use cases, including school zone speed and school bus stop arm as well as extend and expand existing use cases for work zone speed and highway speed enforcement. As we previously discussed, Florida passed school zone speed and school bus stop arm legislation in May, and we are actively monitoring how cities seek to operationalize the new legislation and subsequent RFP announcements. We continue to anticipate generating revenue from initial awards and deployments in the back half of 2024, and we’ll provide more color when we provide 2024 guidance on our fourth-quarter earnings call. I’m also pleased to report that we were awarded a contract with the city of Yonkers, New York and the Yonkers Public School system in which nearly 500 school buses will be equipped with our school bus stop arm safety cameras. This is a great example of a purpose-built safety program that will protect our children in the spirit of Vision Zero. We see a continued demand nationwide for our solutions and according to the NHTSA, an estimated 19,500 people died in motor vehicle traffic crashes in the first half of this year, which represents a 3% decrease compared to over 20,000 fatalities in the first half of 2022. At the same time, people are driving more, and preliminary data shows vehicle miles traveled in the first half of 2023 increased by more than 35 billion miles, roughly 2% higher than the same time last year. While it’s promising to see some safety improvements, there’s still much work to do to make our roads safer. We are confident that our technology can play a key role in addressing public safety. Moving on to T2 Systems. Total revenue was effectively flat year-over-year. SaaS and services revenue, the key value driver, was up 4% over the prior year quarter, slightly ahead of expectations. However, one-time hardware sales were down about $1 million compared to last year due to customer-requested installation timing considerations. We anticipate solid sequential revenue growth in the fourth quarter due to continued strength in recurring SaaS and services. In summary, this was an incredible quarter highlighted by a key customer contract renewal, exciting new enabling legislation, executing our capital allocation initiatives, strong financial performance, and increasing our financial guidance. With that, Craig, I’ll turn it over to you to guide us through our financial results and our revised current year outlook.

Thank you, David. Good afternoon, and thank you all for joining us today. I will start by giving an overview of our third-quarter results, then update our 2023 financial guidance, and finish with a discussion on capital allocation. Before going into the third-quarter results, I want to mention that we appointed Deloitte as our independent registered public accounting firm in the third quarter. This transition to a new accounting firm involves significant effort, and I’m happy to report that it is going smoothly. I would like to thank the teams at Verra Mobility and Deloitte for their hard work on this transition. Now, let’s look at our operating results, starting on Slide four, which shows revenue and adjusted EBITDA performance for the consolidated business. Total revenue grew more than 6% year-over-year to $210 million for the quarter, driven by robust recurring service revenue growth. Excluding domestic Government Solutions product sales from last year’s third quarter, total revenue increased 11% year-over-year. Recurring service revenue also grew 11% compared to the same quarter last year, buoyed by a strong summer travel season and last year’s expansion of the New York City school zone speed program. In terms of segments, Commercial Services revenue grew 14% year-over-year, Government Solutions service revenue rose by 10% year-over-year, and T2 Systems SaaS and Services revenue grew 4% compared to the third quarter of last year. Product revenue totaled $9 million for the quarter, with approximately $4 million coming from T2 Systems and $5 million from Government Solutions, primarily from international product sales. From a profit standpoint, consolidated adjusted EBITDA was $97 million, reflecting an increase of about 7% from last year. The core business, defined as excluding one-time domestic Government Solutions product sales, achieved adjusted EBITDA growth of around 11% compared to the third quarter of 2022. Moving to Slide five, we have generated approximately $364 million of adjusted EBITDA on around $792 million of revenue over the trailing 12 months, resulting in a 46% adjusted EBITDA margin. Within that timeframe, we generated about $187 million in free cash flow, translating to a 51% conversion rate from adjusted EBITDA, or $1.19 of free cash flow per share. Now, looking at Commercial Services on Slide six, we reported revenue of $98 million in the third quarter, marking a 14% increase year-over-year. RAC tolling revenue rose by 18% over the same period last year, aided by strong travel and rental volumes. Furthermore, our FMC business demonstrated a growth of 20% year-over-year as our growth initiatives continue to deliver positive results. As David noted, FMC revenue surpassed internal expectations due to our success in managing small and medium-sized business fleets. The adjusted EBITDA in Commercial Services for the third quarter was $65 million, indicating a 16% growth year-over-year. Adjusted EBITDA margins, approximately 67%, reflected normal seasonality and increased by about 1% compared to the third quarter of last year, driven mainly by strong RAC tolling performance. Let’s now proceed to Slide seven for an insight into the Government Solutions business results. Mainly due to the photo enforcement expansion efforts in New York City, service revenue grew by $8 million, or 10% year-over-year, totaling $85 million for the quarter. Product revenue was approximately $5 million, primarily from international programs. Adjusted EBITDA for this segment was $29 million for the quarter, with margins at 32%. The decrease in margins compared to last year is largely attributable to increased investments in platform development and business initiatives. Turning to Slide eight, we have mixed results for Parking Solutions. Revenue was $21.5 million with adjusted EBITDA around $3.6 million, slightly below our internal expectations. Although SaaS and services revenue somewhat exceeded expectations, around $2 million in one-time product sales were deferred to the fourth quarter. We have made several enhancements to our forecasting process, but will need to keep assessing it due to the unpredictable nature of the university purchasing cycle. Moving to Slide nine, we see reported income and leverage. We reported net income of $30 million for the quarter, including a tax provision of about $11 million, leading to an effective tax rate of 28%. Having fully de-stacked this quarter, this will be the last quarter impacted by permanent tax differences related to mark-to-market adjustments for our private placement warrants. Adjusted EPS, excluding amortization, stock-based compensation, and other nonrecurring items, was $0.29 per share for this quarter, which is a $0.02 increase compared to the third quarter of 2022. On the right side of the page, we ended the third quarter with a net debt balance of $942 million, resulting in a net leverage ratio of 2.6 times for the quarter. The main drivers behind this were strong free cash flow, debt repayments, and cash proceeds from warrant exercises, which provided about $56 million during the third quarter. By the end of the third quarter, we had paid down approximately $180 million of floating rate term loan debt year-to-date. Our gross debt balance at the end of the quarter is around $1.1 billion, of which about $700 million is floating-rate debt. With a notional hedge of approximately $675 million, we have secured about 95% of our floating debt total with a fixed-rate swap. This instrument fixes the SOFR component of our floating-rate Term Loan B at a rate of 5.2% for three years, with a monthly option to cancel starting in December if interest rates become favorable. In terms of cash flow, we generated approximately $62 million from operating activities, leading to $52 million in free cash flow for the quarter. Now, let’s turn to Slide 10 to discuss our full-year 2023 guidance. Based on our year-to-date performance and our expectations for the rest of the year, we are raising our revenue guidance from the prior range of $800 million to $810 million to the higher end of that range. We are also increasing our adjusted EBITDA guidance from the previous range of $365 million to $370 million, again to the higher end of that range. Our adjusted EPS guidance has been updated to a range of $1.05 to $1.10 per share, despite an increase in our share count. Finally, there is no change to our prior free cash flow guidance of $145 million to $155 million. Our revenue guidance considers a slight decrease in RAC tolling, which is typical for the fourth quarter and aligns with historical patterns. We expect a slight increase in Government Solutions service revenue in the fourth quarter, with lower year-over-year growth rates due to the completion of the New York City camera installations and the shift to continuous monitoring. Additionally, our Parking Solutions segment is predicted to achieve solid sequential revenue growth due to normal university spending patterns and continuous strength in SaaS and services revenue. Furthermore, if we meet our adjusted EBITDA and free cash flow guidance, we anticipate our net leverage to be around 2.5 times by the end of 2023. This target reflects a nearly full turn reduction in net leverage over the past year, driven by our company’s strong free cash flow generation and the cash received from warrant exercises. Moving on to our capital allocation plans for the remainder of the year, as mentioned by David and myself, we are now fully de-stacked, with the remaining warrants converted to shares on a cashless basis during the third quarter. Additionally, as discussed in our second-quarter call, we paid down an extra $100 million of floating-rate debt in the third quarter, bringing our total debt paydown for the year to around $180 million. Next, I’d like to update you on our share repurchase program, which the Board of Directors authorized last November for up to $100 million over an 18-month period. Through an accelerated share repurchase program, we’ve repurchased about 4.5 million shares by the end of the third quarter. The final settlement of the ASR is expected in the first quarter of 2024, at which point a volume-weighted average price calculation will determine the final number and average price of the shares repurchased and retired. We expect the final amount for the entire $100 million share buyback program to result in approximately 5 million shares repurchased. As David briefly mentioned, our Board of Directors has also approved a new 18-month $100 million share buyback program. We remain committed to delivering shareholder value through a disciplined approach to capital allocation. This new buyback authorization underscores our balanced capital allocation strategy, emphasizing the strong cash flow capabilities of our business. In conclusion, we are in an excellent financial position, and we believe the operational trends in our business are strong and sustainable. This wraps up our prepared remarks. Thank you for your time today. I’d like to invite Irene to open the floor for any questions.

Thank you. The first question we have is from Faiza Alwy of Deutsche Bank. Please go ahead.

Yes, hi thank you so much. So first, actually, I wanted to talk about the California legislation that you referenced. I think I heard you say that it can drive incremental annual revenues of $10 million that can then go up to $100 million over time. So just curious if you can give a bit more color around that. Do you need incremental legislation? Or are there certain outcomes that would drive that increase? And just that $10 million just seems a bit low. So curious in terms of what your assumptions are there.

Yes, this is David. Great question. The way to think about it is similar to other states; California initiated a pilot program with a limited number of cameras. These cameras are distributed across the various cities I mentioned earlier, and they chose to begin with this fixed amount. Regarding milestones, I expect they will seek evidence from the program to evaluate its impact on speed at specific sites, like school zones and other areas in the state. Based on the anticipated benefits, they would then present this information to the legislative body to seek an expansion and a more permanent implementation of the legislation. We have seen other states begin in a similar manner.

Got it. Okay. Understood. You mentioned some thoughts about 2024. We're at a time when we are refining our models for the upcoming year. I'm interested to know what key factors we should consider as we look ahead to 2024.

Yes, Faiza, it’s Craig, thanks. You're correct that we are still in the planning stages, but things are becoming clearer as we move further into the fourth quarter. For the company as a whole, I expect organic revenue to remain in the same range we discussed at Investor Day, indicating organic growth year-over-year within that range. From a margin perspective, my best estimate right now is that we will be flat or experience modest margin growth next year while continuing some investment. This will become evident when I discuss our cash and capital expenditures. Taking into account what David mentioned in his prepared remarks and our ongoing discussions, the growth in total addressable market in the Government Solutions sector domestically is unprecedented. To fulfill our role, we must prioritize capital expenditures. Therefore, we will see an increase in our CapEx, which will be entirely for growth purposes next year. I anticipate an additional $25 million to $30 million in CapEx year-over-year as we aim to seize that growth opportunity. In summary, I expect organic growth to align closely with what we presented at Investor Day. While I hope for a bit of accretive margin growth, I expect it to be flat to slightly accretive, and we will see increased CapEx, primarily directed towards Government Solutions as anticipated.

Got it. Thank so much. I appreciate it.

The next question we have is from Nik Cremo of UBS. Please go ahead.

Hi, David and Craig. Congrats on the strong quarter. First, I just wanted to ask about what’s driving the continued outperformance in the FMC business, such as the new distribution channels you’re building out and the types of new customer bases that you’re gaining traction with?

Yes, absolutely. Traditionally, we have focused on the commercial fleet as a whole, with significant emphasis on rental car services and distribution through fleet management companies. We have increased our sales resources in that traditional channel with fleet management companies. Additionally, we are exploring smaller fleets that may not work with a fleet management company, which is an area we aim to expand. This year, we are investing in that sector and anticipate growth from what could be considered a small fleet perspective going into next year. Overall, it's about strong execution and traction within our core business, along with some expansion as we explore different distribution channels.

Yes. Just to add to that, we were surprised by the growth this quarter. Last quarter, we mentioned that we expected the latter half of the year to resemble the overall consolidated growth rate. If you analyze this business, it amounts to between $12 million and $15 million a quarter. So while a 10% increase is significant, it is not extraordinarily large. We anticipate that growth will align more with the consolidated Commercial Services growth rate in the fourth quarter, but we are very pleased with the performance.

Got it. Thanks for the additional color.

The next question we have is from Daniel Moore of CJS Securities. Please go ahead.

Good afternoon. Dan and Craig, thank you for the information. To start with the Government Solutions segment, as you mentioned, margins have slightly decreased due to increased operating expenses related to enhancing customer-facing programs. David or Craig, it seems like some of these expenses may carry over into fiscal 2024, which is keeping margins somewhat stable. Any further details on what expenses are one-time versus recurring would be appreciated. Thank you.

Yes, that's a great question. Let's focus on 2023 for a moment. You're right that in Q3, the margins decreased significantly due to some platform investments we made during the latter half of this year, which were mostly concentrated in Q3. I expect to see those margins improve in Q4. I still believe we will end up in the 34% to 34.5% range for Government Solutions, as I have mentioned throughout the year. This reflects some differences in the latter part of the year. As we look ahead to next year, you're correct that it ultimately depends on timing. The opening of new Total Addressable Markets (TAMs) will affect how soon we can implement our product. If we are able to do this in the latter half of the year, we will incur some expenses; if it happens in the earlier part of the year, we won't have those extra costs. Therefore, when I mention a stable year-over-year performance with slight growth in 2024, I would anticipate that the same principle will apply to the Government Solutions business, which is where we are investing.

Got it. Makes sense. On the parking side, T2, maybe just talk about the pipeline of RFPs and opportunities as we look into 2024 and more generally, where do most of the opportunities come from? Is it customers that have typically been managed in-house or competing with incumbents and to say how you see the growth in that business in 2024 and beyond? Thanks.

Yes, specifically regarding the SaaS software aspect of our business, we concentrate on products for universities and small municipalities focusing on permits and enforcement. Both sectors show strong potential, and I believe the market will remain robust for these areas. Parking solutions have been established for some time, meaning that customers are often contemplating a shift from their current self-managed systems or existing competitors. The specifics can vary depending on the market, but overall, there's positive news, especially in the university sector where we have a strong reputation. Our existing customer base is very connected, which gives us confidence as we approach next year. We plan to concentrate on the university segment and aim to increase our share of wallet with our new product offerings.

Got it. And last for me, between the ASR and obviously, the new authorization clearly being aggressive around these levels. Is the plan to continue to be aggressive or maybe be a little bit more opportunistic as it relates to the new authorization? Thanks.

Yes. Thanks, Dan. You’ve observed for some time that a significant advantage of Verra Mobility is our capacity to reassess capital allocation nearly every quarter, and definitely every six months. Each time, we evaluate the landscape, our M&A pipeline, the cost of capital, our debt, and how our share price aligns with our intrinsic value calculation before making a decision. Our track record indicates that we have been quite opportunistic in all these areas, and I expect we will maintain that approach.

Thanks again. I’ll jump back and wait for follow-ups.

The next question we have is from Keith Housum of Northcoast Research. Please go ahead.

Congratulations on the quarter. It’s been a notably active year regarding state legislatures adopting favorable legislation for cameras. Are there one or two more states that are currently on your radar where you expect active legislation in the coming months? Or do you believe we're entering a pause period where we simply absorb what has happened?

Well, there’s no such thing as hiatus. We don’t believe in that for sure. What I would say is we have so much incredible opportunity in front of us. We are really focused on maximizing the opportunities that our teams have done such a great job of creating in places like Florida and California and others. We will continue to obviously be on offense in some of the key states and really look to do kind of what we did in Florida, which is we took a state that was only Red Light and then through a lot of hard work added other products to it. So expanding sort of think of it as a legislative share of wallet, if you will. And I would anticipate we’ll continue to do that. But between the opportunities that we have here in the U.S. plus some of the emerging opportunities we see in Canada and in Australia and New Zealand, I think we’ve got so much in front of us that’s where we’re going to focus our efforts.

Got you. And just expanding on that. In terms of the states that perhaps had Red Light and they’re adding speed or vice versa, I guess no 1 read that these days. But how important is that for you guys to be able to leverage your Red Light relationship already? I mean is it almost like a surety that you get that business? Or is it perhaps open that someone else can walk in there?

It often depends on the decision-makers involved, as those handling Red Light may not be the same individuals making decisions regarding school stop-arm programs. Each area can require different considerations, and even speed regulations might vary based on whether it's in a school zone or a work zone, which could involve different decision-makers. While we can highlight the success we've had with other clients, it doesn't necessarily lead to an automatic addition to the contract. More commonly, that isn’t how it happens.

The next question we have is from James Faucette of Morgan Stanley. Please go ahead.

Great. Thanks. I wanted to follow up on a couple of questions on the trial in California. So that could be up to $10 million if you’re able to win those pilots. Like what’s the time to pilot award and then potential time to revenue from your perspective at least?

I would expect that there’s typically a period between the final governor signing a bill and cities figuring out how to implement it. I would foresee that we might start seeing some awards in the middle to late part of next year. However, not all $10 million will be activated at once, as there are several decision-making processes involved. That’s my expectation regarding the timing.

Got it. And then you highlighted some of the school bus and arm related wins. I’m wondering how we should think about like the revenue curves associated with those. I know a lot of times in speed cameras or even red light cameras, you’ll see an initial pickup in revenue. And then as people get used to and conditioned to that enforcement mechanism that it will come down and level off at some point. Is that a similar curve description? And how should we think about that as particularly on some of these new wins?

Yes. The situation with school bus stop arms is different. It generally involves a fixed fee arrangement with the customer for each camera per bus due to the high variability since these items are mobile. We used to have a different approach many years ago, but we no longer follow that. So, consider it more as a fixed monthly fee for each camera.

The next question we have is from Louie DiPalma of William Blair. Please go ahead.

David, Craig and Mark, good afternoon. Craig, did you say that there is an additional $25 million of expected success-based CapEx for 2024?

Yes. Growth CapEx. I expect $25 million to $30 million additionally over and above what we’ll review this year. And again, almost all of that increase and a large part of the base, not just the increase is in the Government Solutions business as we continue to expand into these new markets.

Awesome. Is that success-based capital expenditures tied to specific contract wins that you've secured this year?

We have some insights on that topic. Some of it will develop further over time. Additionally, there is some investment in our platform included in that figure, which creates revenue but isn't linked to a specific customer. So to answer your question, Louie, part of that is already realized, and part is currently in the pipeline.

Great. And one final one for me. In terms of the all-inclusive plans, are there still a large number of the RAC brand that haven’t yet offered all inclusive? And is this an opportunity for you?

I would say we don’t want to get too specific about that, but what I would say is it is not fully penetrated. And so yes, there’s still opportunity to grow that as we look at our portfolio across our RAC customers.

The last question we have is from Dave Koning of Robert W. Baird. Please go ahead.

Yes, hey everyone. Great job as always. For my first question, it seems like Enterprise had an outstanding quarter. It was up about 25% sequentially and around 20% year-over-year. Is that segment starting to see all-inclusive growth, or is there something else driving Enterprise's performance right now?

Yes. So that’s off airport volume. That is purely volume what you’re seeing. That is not a new commercial contract or a new way to contract for the customer did.

Wow. So that’s just a lot of rental line. That’s great.

Yes.

We’ll take it, right? Regarding the share count, due to the complex situation with the warrants and the buyback, what should we anticipate for Q4? Additionally, Q1 is likely to have some residual effects, so what’s the best way to consider those two quarters for diluted share count?

Yes. Okay. I was waiting for that one, Dave. So thank you. So at year-end, I expect that share count to be 160 million shares, okay? That’s year-end 2023.

Weighted average.

That’s a weighted average. That’s the number I’m giving you is going to be the base for adjusted EPS. Is that the number you’re after?

Well, yes, that's very helpful. But also the Q4 average is important since that's what we will use going forward too.

Okay. Why don’t I let you take over, Mark? It’s a better time for you to speak now.

For Q4, weighted average should be about 168 million.

Yes. That’s helpful. And then a little lower going forward because you’re doing some buybacks now that will kind of fall into next year, the average and stuff.

That is correct. Let’s look ahead to 2024. By the end of 2024, we expect the total share count for the full year to be about 168 million shares.

That is very helpful. Thanks so much guys.

You bet.

There are no further questions at this time. And with that, this concludes today’s conference. Thank you for joining us. You may now disconnect your lines.