Verra Mobility Corp
NASDAQ:VRRM
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
19.83
30.84
|
| Price Target |
|
We'll email you a reminder when the closing price reaches USD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Verra Mobility Corp
You don't have any saved screeners yet
Good day, and welcome to the Verra Mobility Third Quarter 2022 Earnings Call. Today's conference is being recorded.
At this time, I would like to turn the conference over to Mark Zindler, Vice President, Investor Relations. Please go ahead, sir.
Thank you. Good afternoon, and welcome to Verra Mobility's Third Quarter 2020 Earnings Call. Today, we'll be discussing the results announced in our press release issued after the market close. 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.
During the call, we'll make statements related to our business that may be considered forward-looking, including statements concerning our expected future business and financial performance, our plans to execute on our growth strategy, the benefits of our strategic acquisitions, our ability to maintain existing and acquire new customers, expectations regarding key operational metrics and other statements regarding our plans and prospects.
Forward-looking statements may often be identified with words such as we expect, we anticipate or upcoming. These statements reflect our view only as of today, November 2, 2022, and should not be considered our views as of any subsequent date. We undertake no obligation to update or revise any forward-looking statements. Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations.
For a discussion of material risks and other important factors that could affect our actual results, please refer to those contained in our annual report on Form 10-K and our Form 10-Qs for the first and second quarters of 2022, which are available on the Investor Relations section of our Web site at ir.verramobility.com and on the SEC's Web site at sec.gov.
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 Web site at ir.verramobility.com and on the SEC's Web site at sec.gov.
With that, I'll turn the call over to David.
Thank you, Mark, and thanks for everyone for joining the call today. Before I discuss our results, I'd like to take a minute to acknowledge our employees, customers and vendors in Florida; the impact of Hurricane Ian were significant, and I hope that you and your loved ones are safe and moving towards a level of normalcy during these challenging times.
For today's call, I'm going to focus primarily on our third quarter results, but first, I'd like to start with a brief discussion to contextualize these results by looking at the trends driving the two broader smart mobility markets in which we operate. We delivered an outstanding quarter, highlighted by strong revenue and adjusted EBITDA growth and solid free cash flow generation. These results are underpinned by two key macro trends across our operating segments: continued travel demand by consumers and businesses; and strong and growing interest in automated enforcement for road safety.
To better understand the significance of these macro trends, I'll take a minute to discuss the two broader markets that we serve, connected fleet solutions and urban mobility. We provided a thorough discussion of these markets at our Investor Day in July, and it's important to understand how our business units support these markets. The connected fleet end markets consist of technology solutions to improve process efficiency and optimize vehicle asset utilization. Our Commercial Services business unit serves customers in the connected fleet market with three primary solutions: tolling management, violation management, and title and registration services.
We expect the $7 billion market to grow to $27 billion by 2030, driven by growing vehicle fleet sizes, increasing complexity of services and new use cases focused on vehicle connectivity. Our Government Solutions and Parking Solutions business units reside in the broader urban mobility market, which is primarily focused on safety, sustainability and increasing efficiency for use of existing infrastructure in cities of all sizes. This is an $18 billion market that industry analysts expect to double over the next 10 years, driven by road safety initiatives and growing city populations necessitating congestion and parking solutions.
With that as a background, I'll move on to our results. We had an outstanding third quarter highlighted by strong revenue and growth and margins and solid free cash flow generation. The factors influencing our performance are largely unchanged from recent quarters. Starting with Commercial Services, the team again delivered strong performance; revenue of approximately $86 million for the quarter represented an 11% increase over the same period last year. And compared to pre-pandemic levels, we also achieved 11% growth over the third quarter of 2019.
The key drivers have been consistent throughout the year. Travel demand remained strong despite rising inflation and fuel prices. As we have discussed previously, TSA throughput has been tracking upward throughout 2022. First quarter 2022 was a little less than 85% of 2019 levels. Second quarter was approximately 90% of 2019 and third quarter came in slightly above 90% of 2019. Revenue is far exceeding 2019 due to the growth in cashless tolling and increased number of toll roads in the U.S. and the longer duration of rentals, which drives more billable days to increase toll margin revenue.
Moving to our Government Solutions business, we generated a total of $90 million, representing growth of 6% over the same period last year. In addition, we all but completed the 265 camera install commitment for New York City. I'd like to thank both our customer and the Verra Mobility operations teams for making this happen. It's a testament to your dedication and steadfast results and rich lives by making mobility safer and easier.
I'm also pleased to report that we were awarded a pilot project for a 12-month automated work zone speed enforcement program in Connecticut. The revenue contribution from the pilot program is not material, but serves as a potential stepping stone for permanent legislation and future long-term, full-scale works on speed programs in Connecticut.
Moreover, we recently executed a contract modification with New York City for the transition to 24/7 camera operations. And we expect these changes in operations to contribute to 2023 revenue growth. Finally, T2 Systems delivered $22 million of revenue for the quarter, in line with our internal expectations and on track to deliver double-digit growth over full-year '21 results.
In summary, Q3 was another strong quarter of growth and free cash flow generation. The secular trends driving our performance are durable, and we continue to experience strong operating momentum in each of our business segments.
Now I'll turn it over to Craig to guide us through our financial results.
Thanks, David. Good afternoon, and thanks to everyone for joining us on the call. I'll start out today by providing an overview of our third quarter 2022 results, followed by some commentary on our current financial guidance, and I'll conclude with a brief discussion on expected free cash flow generation and the resulting net leverage target to close out 2022.
Let's turn to slide four, which outlines revenue and adjusted EBITDA performance for the consolidated business. Total revenue increased approximately 22% year-over-year to about $198 million for the quarter, driven by strong operating performance across the company and the inclusion of T2 Systems in our financial results. On an organic basis, we grew more than 8% year-over-year. Q3 service revenue grew about 27% over the same period last year, of which 15% was organic growth.
This growth was attributable to several factors. First, commercial services grew 11% year-over-year. Second, Government Solutions service revenue increased by about 20% over the prior year. And finally, T2 Systems contributed about $17 million of service revenue. Product revenue was $17 million for the quarter, of which about $5 million was from T2 Systems. Finally, from a profit standpoint, consolidated adjusted EBITDA of $91 million increased by approximately 11% year-over-year.
Moving to Commercial Services on slide five, we delivered revenue of about $86 million, increasing $9 million or 11% year-over-year. This improvement was driven by continued strong demand for travel, particularly in the U.S. as well as the resulting increase in demand for rental cars. As David mentioned, while rental car volume remains below pre-pandemic levels, the percentage of cashless tolls and toll counts are increasing. In addition to the continued strength of the rental car market, our ongoing growth initiatives within the commercial fleet space drove an approximate 15% increase in tolling-related revenue versus prior year levels.
Adjusted EBITDA in Commercial Services was $56 million, representing 10% year-over-year growth. Adjusted EBITDA margins of about 65% continued to benefit from volume leverage, which is consistent with seasonal trends.
Let's turn to slide six, and we'll take a look at the results of the Government Solutions business, driven primarily by our New York City photo enforcement expansion efforts, total revenue increased by $5 million or 6% over the same period last year to $90 million for the third quarter.
Service revenue for the third quarter was $77 million, which grew $13 million or about 20% year-over-year. Product revenue declined $8 million to about $12 million for the quarter, which is in line with expectations as we effectively completed the New York City school zone speed installation programs. Going forward, we expect the Government Solutions quarterly product revenue run rate to be approximately $3 million per quarter and primarily driven by international programs. Adjusted EBITDA was roughly flat with prior year at $30 million for the quarter. Adjusted EBITDA margins of 34% were in line with expectations.
Let's turn to slide seven, and we'll take a look at the results of T2 Systems, which is our Parking Solutions business segment. Revenues of $22 million and adjusted EBITDA of approximately $4 million were in line with our expectations for the quarter. As I mentioned in our previous discussions, we expect T2 to drive sequential revenue and adjusted EBITDA growth through the balance of the year and anticipate double-digit revenue growth versus 2021 levels.
In addition, we expect T2 to generate margins in the low to mid-20% range in the fourth quarter. Overall, total Verra Mobility reported net income of approximately $25 million in the quarter, which compares to net income of $27 million in the same period in the prior year. Adjusted EPS, which excludes amortization, stock-based compensation and other nonrecurring items was $0.27 per share for the current quarter compared to $0.26 per share in the third quarter of 2021.
The tax provision for the quarter was about $8 million, representing an effective tax rate of approximately 25%. As a reminder, our tax rate is impacted by permanent differences related to mark-to-market adjustments for our private placement warrants as well as other nonrecurring items.
Moving on to cash generation for the third quarter, we generated approximately $52 million in cash flow from operating activities, resulting in $39 million of free cash flow for the quarter or a 43% conversion of adjusted EBITDA. Taking a slightly longer view on a trailing 12-month basis, free cash flow per share was $1.05, and the conversion rate is 50% of adjusted EBITDA. We expect a modest sequential increase in free cash flow generation in the fourth quarter, driven by working capital trends. And on a total 2022 basis, we expect free cash flow to be about 50% of adjusted EBITDA.
Turning to slide eight, we ended the third quarter with a net debt balance of about $1.2 billion, resulting in net leverage of 3.5x for the quarter. This is down from 4.3x net leverage at the close of 2021. The gross debt balance at quarter end was slightly over $1.2 billion, of which approximately $890 million is floating rate debt. At the end of June, we locked in LIBOR at about 2.85%, and in the beginning of January of 2023 when we next lock in LIBOR, we'll evaluate locking it in at either a one-month, three months or six-month rate.
Next, I'd like to give you a brief update on the share repurchase program the company's Board of Directors authorized in May 2022, for up to an aggregate amount of $125 million over a 12-month period. As we previously disclosed, we repurchased over 3 million shares in the second quarter through an accelerated share repurchase program for a total purchase price of $50 million. In addition, we've repurchased about 446,000 shares through open market transactions through September 30 for a total purchase price of about $7 million.
The company elected to discontinue open market repurchases during the third quarter of 2022 in favor of an ASR for the remaining availability under the share repurchase program. During the third quarter of 2022, we repurchased 3.3 million shares for $68 million through the second ASR program. The settlement is expected to occur during the fourth quarter of 2022, at which time a volume-weighted average price calculation over the term of the ASR agreement will be used to determine the final number and average price of shares repurchased and retired.
At this time, we expect the final outcome of the full $125 million share buyback program to result in the repurchase of approximately 8 million shares. As I discussed earlier, we ended the quarter with net leverage of 3.5x trailing 12 months adjusted EBITDA. This is flat versus the second quarter due to the decision to execute and fund the second ASR in the third quarter.
Next, let's take a look at our current guidance on page nine. During our second quarter call on August 3, following an increase in guidance at our July 19 Investor Day, we reiterated guidance as follows: total revenue in the range of $720 million to $740 million and adjusted EBITDA in the range of $325 million to $335 million. Based on our year-to-date results and our outlook for the remainder of the year, we're now expecting to deliver results at the higher end of this range for revenue and adjusted EBITDA.
Our revenue guidance incorporates a modest reduction in RAC tolling we typically experience in the fourth quarter, which is consistent with historical trends. We have also factored in an approximate $3 million impact from toll road suspensions across 13 counties in Florida over an approximate 18-day period following Hurricane Ian. In addition, we have also factored in an approximate $2 million headwind related to foreign exchange currency exposure in Government Solutions, primarily related to the depreciation of the Australian dollar.
These revenue impacts are partially offset by sequential service revenue growth in Government Solutions, primarily driven by the New York City school zone speed camera installations and expansion of photo enforcement operations outside of New York City. In addition, our Parking Solutions business is expected to generate sequential revenue growth as the fourth quarter is typically the strongest revenue-generating quarter in that business due to university spending cycles.
Finally, based on achieving the higher end of the adjusted EBITDA guidance range and an expected free cash flow conversion rate of about 50% of adjusted EBITDA for the year, we expect net leverage to be 3.4x or less by year-end 2022. The expected net leverage target reflects a reduction of nearly a full turn net leverage over the past year, including the completion of the $125 million stock repurchase program. We feel this performance highlights strong free cash flow generation capabilities of the company.
This concludes our prepared remarks, thank you for your time and attention today. At this time, I'd like to invite Jenny to open the line for questions; Jenny, over to you.
Thank you. [Operator Instructions] We will go to our first question from Daniel Moore with CJS Securities.
Thank you. Good afternoon. Thanks for taking the questions. I'll start with -- it sounds like in terms of consumer behavior on the commercial services side, contract length in terms continue to be elongated relative to pre-pandemic levels. Are you seeing any normalization back towards historic levels, or is that something that appears to be more sticky at this point?
I think we're still sort of observing generally the same trend. It's certainly not gone back to what we had seen previously in 2019, so far so good in terms of that trend remaining durable through the end of the year.
Got it, really helpful. And David, you gave great color about kind of the macro strategy. Just talk about the -- some of the dialogues that you're having regarding capabilities in terms of congestion pricing, dynamic parking pricing solutions with some of your municipal customers as you integrate T2. Obviously, you can't name names, but just seeing more organic opportunity there, and what's the time frame to kind of monetize that?
Yes. I think just on the part of your question on congestion pricing, AT this point we don't have a solution related to that. We continue to monitor that segment and feel like, yes, they could be, but as you recall, New York was the first to implement -- Well, sorry, the first to adopt congestion pricing. It's yet to be implemented in the United States. And so, far, as I understand it, it won't be until 2024. So, we're kind of just watching that from the sidelines, and we'll jump in when appropriate. That we have been doing is seeing -- we are excited about the T2 momentum as we head towards the back end of the year. We're sort of starting to observe some of the competitive trends of the larger municipality. T2 historically is operating very small urban environments. And so, we're looking at the sort of up level ones. And so, I would anticipate to start to see that happening probably based upon RFP cycles for those probably in the second-half of next year would be the time where we'd start to see some real pull-through.
Okay, got it. And how should we think about the incremental revenue opportunity in '23 of transitioning to a 24-hour monitoring in NYC, is that meaningful to your growth rate?
Yes. I think so, Dan. This is Craig. Thanks for the question. I do think it's meaningful. To size that, we size it at approximately 5% of total New York City revenue. So, if you were to look at total New York City revenue for 2022 or if you were to take 2021 and grow it at our growth rate into 2022, it should be about a 5% add around that on a total year basis.
Great. And then last for me, I appreciate the color on the product revenue in government, T2's product revenue, has that been lumpy historically like yours has? I think you said it was $5 million in the quarter. Just what's the kind of typical pattern, and how should we kind of think about that going forward?
Yes. There's a little bit of lumpiness to it. I think that the overarching trend is a really -- it's a sequential grower, right? So, if you were to look at total product sales for just about any period that we've seen both under our ownership here and before, it tends to be the lowest in the first quarter and to grow sequentially with fourth quarter being the highest number. And really, as I said in the prepared comments, Dan, that really points back to the university buying cycle, which has been our largest channel for those products.
Very good. I'll jump back in queue for any follow-ups. Thank you.
Thank you.
And we'll go next to a question from Faiza Alwy with Deutsche Bank.
Yes, hi, thank you so much. I guess I'll ask a big picture question because I'm guessing you're in the midst of your planning process for 2023. And during Investor Day, you laid out some long-term targets. I was hoping you could give us some early read on how -- where we should ground ourselves. As we look ahead to 2023, is there anything -- should we expect growth sort of in line with those long-term targets? Or is there anything that you think we should keep in mind?
Yes, Faiza, this is Craig. Thanks for the question. I understand exactly where you're going, and I think the first part of your question kind of is the answer. We're really in the middle of that right now. So, we'd like to come back to you on our next call, we'll certainly have a much better view of that. So, unfortunately, we're going to have to bump that one to the next call. We'll be happy to walk through at that time.
Okay, understood, understand. Is there anything you can -- I know you're doing the share repurchase program. Maybe can you share more about your capital allocation philosophy sort of entering 2023? And may be how we should think about interest expense in a rising rate environment and just your approach. Just a little bit more color around how you're thinking about capital allocation.
Yes, sure, sure. So, there's always three legs to the stool, at least from the Verra Mobility standpoint and that's going to be any kind of accretive M&A, right? And I think we can all understand what the market may look like there, but those opportunities tend to be a little bit idiosyncratic, so they come when they come. The other one is share repurchase. So, just to make sure, in my prepared remarks, in case it wasn't clear, the $125 million authorization that we have from the Board of Directors will be effectively complete here in the fourth quarter. So, that should be about 8 million shares coming back kind of year-over-year. And then the third leg of the stool is potential debt pay-down. And when we were at Investor Day, I think it's kind of fair to say the debt pay down was probably a little bit lower on the list. But if you see the news that came out today and where that may be heading, that's something that we'll look at on a quarterly basis. As we close the year here, I don't think we're going to make a big move. I think we're going to let our cash be on the balance sheet. That should be a cash very similar to what you've seen that we've closed with in the second quarter and the third quarter. But we continue to evaluate buybacks on an intrinsic value, discounted intrinsic value on a monthly basis, and we continue -- our floating debt is payable dollar for dollar at our option. So, it's really easy to kind of toggle between those two and what the best use of capital is. So, that will continue to be a dynamic decision for the business going forward.
All right, great. That's really helpful. Just last one for me. On Government Solutions, is there any color you can share in terms of what you're hearing from various municipalities? How would you characterize the environment at this point?
I would say it's very positive. I mean I think overall, we're seeing a recognition of the benefit of having those types of programs that we offer. The pipeline is continuing to get more and more full, and we would anticipate we're heading into next year with really strong momentum across the country.
Great, thank you.
And we'll hear next from Dave Koning of Baird.
Yes, hi, guys, thank you and nice job.
Thank you.
And I guess -- yes, I guess my first question. So, usually, in Commercial Services sequentially in Q3, it's often up like, I don't know, $8 million to $10 million or something like that. And this year, it wasn't up as much. Was there any kind of one-off things that maybe benefited Q2 a lot that then just created a sequential drag on Q3? Or just kind of describe kind of what happened sequentially.
Yes, sure; Craig again on this one. Exactly, I think what you surmise is what happened. What we saw -- maybe I'll do it qualitatively first, then we'll go into the quantitative answer. So, qualitatively, what we saw was the summer driving season came a little earlier than it does typically. So, in previous years, you would see that large spike in the third quarter. We actually saw in the late second quarter. I think that was evidenced as well when you listen to what the RACs put out last quarter in terms of how they manage the fleet size, a lot of those cars came on to the RACs in the second quarter, hence, were rented out. So, you're right. If you look at commercial services in totality, sequentially, the business grew 1% and usually it grows more than that. But I'll say, on a year-to-date basis, our growth is right on what we expected. So, if we back up for a second, to the second quarter. The second quarter usually grows between 5% and 10%. Second quarter of 2022 grew 16%, right?
And that hit two areas of the business. The first area is on RAC tolling. So, there are more cars on the road tolling in the second quarter sequentially, then they were already there in the third quarter, so that's why you can see the growth. And then on the other piece, we don't talk about as much, but it's also the title and registration business, right? As the RACs filled out their fleets in the second quarter, a lot of those titles and registration work came through Verra Mobility. So, that was completed in the second quarter. Now typically, from the second quarter to the third quarter, it's either flat or sequentially down a little bit in that business. This time, it was sequentially down quite a bit, again, because it was all done in the second quarter, so, nothing to do with the third quarter. Summer driving season and re-fleeting came a little bit earlier in the year this year than it has in the past. And on a year-to-date basis, we're right where we expect.
Yes, it looks like year-to-date, I mean, you're still so far ahead of TSA level, so it's impressive. And then I guess my follow-up, just because it's our first year kind of looking at T2, this quarter was up a lot sequentially. Like I know what you said the sequential pattern like I think Q2 was up 5%, give or take, sequentially Q3 up like 15% or something, a big, big number. Is that just truly just sequential patterns that are normal? And maybe why would that happen? And is it actually some cross-selling that's starting to happen just that you're fundamentally making that business better?
I'm sure it's a bit of all three of those, but I think the bigger one is this is fundamentally how the buying cycle works, right? The back-half of the year always -- this business has been around since the early 1990s, still 60% of the business or more depending on the year, it sells into the university segment. The university budgets are such that a lot of the procurement happens in the back half of the year, third quarter right before the students come back and then at the end of the fourth quarter before it flips into the new fiscal year. So, that is normal for the business, and we'll see it grow again going into the fourth quarter.
Got you, great. Thanks, good job.
Thank you.
Thank you.
[Operator Instructions] We will go next to Keith Housum with Northcoast Research.
Hey, good afternoon guys. Thanks for the opportunity here. Dave, a little expansion on the Connecticut pilot, if we could have that, can you talk about perhaps a little bit of a background there? Do the legislators come to you guys in terms of doing the pilot? I think what I heard is that you will decide how it goes, if it will be enacted into legislation, perhaps, just give a little background there. And then outside of that, is there other opportunities that you guys are working on behind the scenes around the country?
Okay. Yes. So, the answer to the last part is yes. Connecticut is -- work is what I would call an emerging trend as people start to look for purpose-built use cases for photo enforcement. Similar to the concept of school zones, it's very difficult to argue that we should not be able to protect people in harm's way when they are out doing work on our highways or specific roads. Places like Pennsylvania have this program and actually one of the nice things about -- and so Connecticut, we -- what I would say is we partnered with local legislators to help create this pilot program. It's not enacted as of yet. So, sort of do a wait-and-see over the next couple of years to see how the program works, and then they can choose if they want to put this into permanent legislation or not. The nice part of this is these are -- this is a nice combination of the legacy Redflex organization that we bought because of the real combination of -- invested both to go on this type of opportunity.
Great, I appreciate it. And then, there's been some interesting news in terms of New York City using Bus Lane Cameras. Can you perhaps provide a little bit color on how Verra Mobility is playing in that program?
Yes. So, we are the back-end processing for that. So, our software, not dissimilar from the other software programs that we use for other forms of photo enforcement that's doing the processing and the violations for that. A different party is providing the cameras for that specific initiative.
Great, I appreciate it. Thank you.
We will go next from Louie DiPalma with William Blair.
David, and Craig, good evening.
Good eve.
Good evening. How are you?
You mentioned the pilot in Connecticut, which sounds promising. At your Analyst Day, you also referenced potentially positive legislation in I think it was California and Florida for speed cameras. Are the things moving forward in those states as well?
Yes. Those cycles obviously have ebbs and flows, and this would be the period of an ebb, I guess, because we're going into a voting cycle next week. So, what I would say is I think we had some good traction in California. But what I would say is those things always not -- this isn't unique to this year. They always get placed on hold related to kind of who's on the -- who's sitting in what chair after the election. So, we'll obviously come back to the legislators upon understanding if any material changes have been made in the legislative body that we're pursuing legislation in.
Great. And for either David or Craig, I think you mentioned that there was an amendment to the New York City Vision Zero contract associated with expanding the hours of operation. Is that amendment -- is it -- should we think of it as material to your government service revenue for 2023?
Yes. Louie, I would say so. I mean so the way I think about it on a total year is about 5% of total New York City revenue. So, if you were to look at total New York City revenue, whether it's in 2021 and you grow that 2022 or look at 2022 in totality, it's about a 5% add around that total for a total year.
Great. And one final one, is there any update on how well the European RAC tolling pilots are going? I know you have, I think, Enterprise in Ireland, Hertz in Spain and Rent A Car in France. Are those going well?
Yes. The one in Ireland has recently been extended. So, the pilots that we're doing there has been extended. I don't know the time frame. I believe, through the end of the year but something around that time frame. And then we're sort of just getting started in Spain, and then we're also continuing to look for other pilots in other parts of Europe as well. So, those are moving at a pace that we are comfortable with, but we're still trying to add more pilots to the mix.
Great, thanks everyone.
Yes, thank you.
And so, that concludes today's question-and-answer session, and that concludes today's call. Thank you for your participation. You may now disconnect.