Perficient, Inc.

Good day and thank you for standing by. Welcome to the proficient third quarter 2023 earnings conference call. At this time all participants are in listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tom Hogan, President and CEO. Please go ahead.

Thank you. Good morning, everybody. This is Tom Hogan, Perficient's President and CEO. With me on the telephone today is Paul Martin, our CFO. I want to thank everybody for your time this morning. As usual, we'll have some prepared comments, after which we'll open the call up for some questions. Paul, would you please read the safe harbor?

Thanks, Tom, and good morning, everyone. Some of the things we will discuss in today's call concerning future company performance will be forwarded looking statements within the meaning of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and we encourage you to refer to the additional information contained in our SEC filings concerning factors that could cause those results to be different than contemplated in today's discussions. At times during this call, we will refer to adjusted EPS and adjusted EBITDA earnings press release, including a reconciliation of certain non-GAAP financial measures to the most directly comparable Financial Measures Prepared in Accordance with Generally Accepted Accounting Principles, or GAAP, is posted on our website at www.proficient.com. We have also posted a slide deck, which includes a reconciliation of certain non-GAAP guidance to the most directly comparable financial measures prepared in accordance with GAAP on our website under Investor Relations. Tom?

Thank you, Paul. Once again, good morning, everyone. Thank you for your time today as we discuss Proficient's third quarter results and our outlook for the fourth quarter. Before we get started, I want to again thank Jeff Davis for his over two decades of commitment and contribution to Perficient. I'm incredibly excited about Perficient's future, and it's because it's built on a foundation of integrity, grit, physical discipline, and ambitious determination. Those are the qualities that Jeff infused into this business, and it's a privilege and honor to now lead Perficient through the next chapters in our unique and compelling global growth plans and aspirations. And to be clear, That is my expectation for this business, growth. Significant, profitable, global growth. Perficient's been on a journey to build out our global footprint in depth. We're just getting started. We will scale in coming years to employ tens of thousands. We will have meaningful presence throughout the world. We will be a top advisor and partner to the world's most innovative enterprises and biggest brands. And Perficient will be a household name. This is what I, our executive leadership team, and all of Perficient will be working towards. We can do it, and we will. My confidence in what Perficient will become stems from what Perficient already is. We're unique in the marketplace, the only firm in our space with true global depth across the United States, Latin America, and India. We have the ability to provide our clients with a robust portfolio of class-leading digital technologies due to our deep and strong partnerships with the leading technology innovators in our industry, who, like ourselves, are on the forefront of digital transformation. We're a Microsoft Solutions Partner. That's Microsoft's highest partner designation. And based on the work we've done, we're a Partner of the Year finalist for Azure Cloud Native Application Development. We're an Adobe Platinum Partner, again, Adobe's highest partner designation. And we were awarded their highest partner honor based on the work we've done as their 2023 Emerging Digital Experience Partner of the Year in the Americas. We're Salesforce Summit partners, Salesforce's highest partner tier. And in the interest of time, we are currently designated in the top partner tier for Sitecore, Informatica, OneStream, Coveo, Google, Optimizely, and HCL Commerce. In addition to our technology expertise, we're also an industry thought leader with significant vertical market perspective. As an example, we were named by Modern Healthcare as the fifth largest healthcare IT consulting firm in the United States. We've also been featured in 28 Forrester and Gartner reports so far in 2023. And finally, and perhaps most importantly for our clients, we're a destination for the world's top engineers and technologies to work and collaborate. We've been named a top workplace in 11 different markets this year alone. And our recent annual colleague feedback program had 90% participation, with 9 out of 10 colleagues stating proficient was a great place to work. Now I'd like to discuss our current business trends. We began to rebound in the third quarter from the macro effect we experienced in the second quarter. I'm confident Q2 represented a bottom in terms of our performance specifically as it relates to profitability. We took steps during the third quarter to better align capacity with our needs, and we substantially improved utilization across every region and geography. And our plan remains to run the business near 40% gross margins. Bill rates remain solid during the quarter, up 1.4%, another demonstration of our customers continuing to value the outcomes we're delivering. Our transformation to a truly global entity remains underway, Nearly 30% of our revenue during the quarter was delivered with delivery teams outside of the United States, the highest mark in our history. As we scale globally and deliver projects with our global depth structure, that mix will continue to shift. To accelerate our global depth expansion, we were excited to recently announce the pending acquisition of Semetics. We fully anticipate regulatory approval of the transaction by the Romanian government in the weeks ahead. Semetics will bring not only 175 amazing developers and engineers to Perficient, but a new set of skills, customer relationships, and a geographic presence we expect to serve as a base for larger expansion in the years ahead. Semetics specializes in designing and developing software that runs various medical devices. They have a long history of working with device manufacturers like Roche, Merck, and others. Given our existing presence in the healthcare space and substantial roster of customers, We believe there's a nice opportunity to leverage Semetic's capabilities in coming years for growth. We're also really excited about the ability to introduce the greater proficient capabilities to the Semetic's legacy customer base. Finally, we're excited about the potential for Romania to serve as a key hub as we build a stronger presence in EMEA in the coming years. We believe Romania can serve as a launch point as we build out a global team in the region on a scale closer to proficient operations in India and Latin America today. We booked 37 deals, greater than a million dollars during the third quarter of 2023. That's flat year over year, down negligibly from the 38 we booked in second quarter of 2023. Our net pipeline, weighted and unweighted, remains quite solid. Q4 and Q1 bookings will be an important indicator for what 2024 growth will look like. As I mentioned on many calls, buying decisions have been drawn out. This environment continues. However, in October, we were able to come to agreement on a new multi-year program with a client, which will add hundreds of new proficient colleagues to the team around the world. More to come on this program as we work to scale the team, but this is one of the large deals we've been alluding to. We have many more programs to win, but we are hopeful this win is an indicator of other decisions to come. As I have mentioned previously, we have line of sight to many large opportunities. We need to close them, like this one we just did in October. We continue to remain well-diversified from a customer, industry, and platform perspective. Healthcare and financial services remain the strongest verticals, but we're also excited about momentum in both manufacturing and automotive. As I mentioned in the last earnings call, we recently surveyed more than 1,000 automotive customers and dealers to better understand the barriers and rationale to purchasing electric vehicles. The results revealed a significant opportunity for legacy automakers and dealers to accelerate the adoption of EVs by enhancing the car buying experience. We have already been collaborating with several large brands on their EV go-to-market initiatives. We are also seeing interest from automakers we have not had the opportunity to engage previously. Perficient continues to demonstrate expertise like these EV insights, and the industry is taking notes. We also just completed a project to focus on helping a utility company implement an in-house supply chain function to reduce costs and the installation time of EV charging sites. I mentioned the launch of our Generative AI Global Innovation Group on Perficient's last quarter's call. This is an active community comprised of over 800 Perficient strategists, designers, and developers from around the world, each of whom brings unique perspectives and expertise to the Generative AI opportunity. This group is experiencing with applying GenAI across all areas of business, including research, design, content development, and digital marketing, not to mention code generation and software testing approaches, and are currently exploring more than 30 potential applications for generative AI. We are also continually working with clients to identify new AI use cases and develop POCs that will help them launch and achieve their goals. Alongside leading AI platforms like Google, Microsoft, Salesforce, and Rider, we've delivered and deployed multiple AI solutions to clients that help them streamline operations, create efficiencies, and improve user experiences. And we have dozens of additional POCs underway. I want to close by mentioning a couple other things I'm excited about. The first is the structure of our executive organization going forward. For many years, Proficient has had a CEO, a COO, and a CFO, and then a next layer of executives responsible for various aspects of the business. My plan for the foreseeable future is to operate without a COO, and I've instead promoted seven executives with significant tenure at Proficient and expertise to various disciplines to senior vice president roles. In addition, senior vice president Susan Adomite has been promoted to principal accounting officer. Going forward, myself, Paul, Susan, and the other senior vice presidents will serve as Perficient's senior executive team, and I'm thrilled to work alongside each of them as we build Perficient into the global brand we expect. And as I mentioned, we firmly intend to ensure that Perficient is far more widely known and understood in coming years, and so we'll be prioritizing additional branding investments going forward in support of those goals. We can consistently compete with and routinely beat firms with much larger budgets and brand exposure. And I tend to focus in this area in the coming years to close the gap and get Perficient more at bats and more wins. And finally, I want to thank Perficient colleagues across the globe for their recent support of Hunger Action Month. We believe strongly at Perficient that we're here to make a difference for our clients, for our colleagues, and for our communities. And during September, we did just that. In conjunction with our giving ERG, colleagues from each of our offices around the world rallied together to help combat food insecurity through donations and volunteerism. Collectively, Perficient packaged and served more than 5,000 meals and donated more than 8,000 pounds of food to those in need. And with that, I'll turn things over to Paul to speak to the financial results. Paul?

Thanks, Tom. Turning to the third quarter results, services revenues excluding reimbursable expenses were $219.5 million in the third quarter, a 2% decrease over the prior year. Services gross margin excluding reimbursable expenses and stock compensation was 37.3% in the third quarter compared to 41.3% in the prior year. SG&A expense was $42.1 million in the third quarter compared to $44.3 million in the prior year. SG&A expense as a percentage of revenues decreased to 18.9% from 19.5% in the prior year. The decrease in SG&A expenses as a percentage of revenues was primarily related to decreases in bonus and band debt expense, partially offset by increases in sales headcount and benefit costs. Adjusted EBITDA for the quarter was 45.8 million, or 20.5% of revenues, compared to 53 million, or 23.3% of revenues in the prior year. Amortization expense was $5 million in the third quarter compared to $6.1 million in the prior year. Net interest income was immaterial in the third quarter compared to $600,000 of net interest expense in the prior year, primarily due to $600,000 of interest income in the current year. Our effective tax rate for the third quarter of 2023 and 2022 was 29.4%. Net income was $22.6 million for the third quarter compared to $23 million in the prior year. Diluted GAAP earnings per share decreased to 63 cents a share compared to 64 cents a share in the prior year. Adjusted earnings per share decreased to 92 cents for the third quarter from $1.11 in the prior year, and you can see our press release for a full reconciliation to GAAP earnings. Now turning to the year-to-date results, services revenues excluding reimbursable expenses were $676.4 million for the nine months ended September 30, 2023, a 2% increase over the prior year. Services gross margin excluding reimbursable expenses in stock comp was 38.2% for the nine months ended September 30, 2023, compared to 40.1% in the prior year period. SG&A expense was $130.2 million for the nine months ended September 30, 2023, compared to $127.4 million in the prior period. SG&A expense as a percentage of revenues increased to 19% from 18.9% in the prior year. Adjusted EBITDA for the nine months ended September 30, 2023 was $144 million or 21% of revenues compared to $151.5 million or 22.5% of revenues in the prior year period. Amortization was $16.4 million for the nine months ended September 30, 2023 compared to $18.1 million in the prior year period. Net interest expense for the nine months ended September 30, 2023 decreased to 0.8 million from 2.3 million in the prior year, primarily due to 1.5 million additional interest income. Our effective tax rate was 26.9% for the nine months ended September 30, 2023, compared to 25.2% in the prior year. The increase in the effective tax rate was primarily due to a decrease in tax benefits related to share-based compensation deductions and research credits partially offset by a decrease in the Section 162M compensation limitation and an increase in the tax benefits for acquisition adjustments compared to the prior year period. Net income for the nine months ended September 30, 2023 was 75.8 million compared to 77.9 million in the comparable prior year period. Diluted gap earnings per share decreased to $2.11 for the nine months ended September 30, 2023 compared to $2.17 for the prior year period. Adjusted earnings per share decreased to $2.96 For the nine months ended September 30, 2023 from $3.14 in the comparable prior year period. Again, you can see the press release for a full reconciliation to the GAAP results. Our ending billable headcount at September 30, 2023 was 5,918, including 5,616 billable consultants and 302 subcontractors. Ending SG&A headcount was 947. Our outstanding debt net of deferred issuance costs of September 30, 2023 was $396.3 million. In addition, we had $80.1 million in cash and cash equivalents at September 30, 2023, and $300 million of unused borrowing capacity on our credit facility. Our balance sheet lease is very well positioned to execute against our strategic plan. Finally, operating cash flows increased to $88.5 million for the nine months ended 30-20-23 from $71.4 million in the comparable prior year period, primarily due to cash inflows related to collection of accounts receivable. I'll now turn the call back over to Tom for the outlook. Tom? Thank you, Paul.

Perficient expects the fourth quarter 2023 revenue to be in the range of $221 million to $226 million. Fourth quarter gap earnings per share is expected to be in the range of $0.64 to $0.69. Fourth quarter adjusted earnings per share is expected to be in the range of 98 cents to 103. Proficient expects its full year 2023 revenue to be in the range of 907 million to 912 million. 2023 GAAP earnings per share to be in the range of $2.74 to $2.79. And 2023 adjusted earnings per share to be in the range of $3.94 to $3.99. And with that, operator, we can open up the call for questions.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Mayank Tandon with Needham. Your line is now open.

Thank you. Good morning, Tom and Paul. I wanted to start, Tom, with just clarifying maybe some more thoughts on demand. What are some of the areas you're seeing strengthen? What are some of the weaker spots? And any early indications from your conversations with clients on budgets for next year? So basically kind of get a read on when you think we might get the inflection point in growth based on your conversations with your current clients.

Sure. From a demand perspective, a lot of conversations, Mike, still on kind of cost takeout and operational efficiency. So that's where we're seeing a lot of organizations look from a data perspective, from a customer perspective, and then quite honestly, internally looking to see what technology they can use to leverage to lower some of their costs of the business. The demand cycle right now, I would say, is reserved. I think a lot of people are excited about 2024, but I think there's a concern about when is it going to kick in. So still a lot of demand out there. A lot of good conversations, but I think a lot of individuals are still thinking about 2024. I think we're still going to have a little slowing in the beginning of 2024. We have a couple of large programs we're chasing right now with, you know, hopefully some nice turning as we get midway through 2024 into 2025. But we want to see some of these big deals coming in before I get over my skis too much there.

Got it. And then any expectation on when you might start hiring organically? I know this quarter you mentioned that you were able to crank up utilization. That's good to see. And then also the pricing tailwinds. But when do you have any visibility on starting to hire organically? So sort of going back to the question about when demand might start to show some signals where you would then need to actually ramp up your headcount in anticipation of that.

Well, I'm a bit optimistic. This program I just alluded to that we closed in October, will we be ramping that up? That's going to be adding a couple hundred folks to Superficient. It will ramp over the fourth and first quarter, but that's organic growth, and that's an organic couple hundred team members that will be joining and more to come.

Just for a housekeeping item, where is utilization today and how much more room can you expand utilization from here on?

Yeah, we want to run the company at 80%. That's been our stated goal. You know, there will be times that it might be in the low 80s, but that's going to be really situational based on a specific project potentially. We are running the organization at that 80% number. There's some holidays and things like that coming up in Q4, so we'll be right around 80% though, and that's where we are and that's where we intend to keep it.

Great. Thank you so much.

Yep. Thank you. Our next question comes from the line of Brian Kintzlinger with Alliance Global Partners. The line is now open.

Great. Thanks so much for taking my questions. A follow-up on demand, which you talked about, beginning to see the signs of turning. Which industries are you seeing that strength in? And then particularly on that large contract win in October, can you discuss which industry that was in?

Sure. The large win was in healthcare. We still see some nice... Healthcare is continuously something we see some growth coming in. Financial services has been nice. It's a bit lumpy, though. The work we're doing in financial services right now has been more regulatory and compliance work, which can be rather lumpy at times. A couple of programs that we're chasing there. But if those consent orders are then fulfilled, there's a bit of a tail that happens there, looking for the next order, looking to get back into more of the digital true transformation work in that industry, although right now it's a bit tepid. Automotive and manufacturing, we have some nice things going on there, some new conversations. As I mentioned, the EB program has started some nice new conversations with new manufacturers we haven't historically worked with before. And those are the areas that continue to be great areas for us within financial services, healthcare, automotive, and manufacturing. Great.

your offshore headcount in the third quarter is a percentage of the total is similar to the second quarter ratio, and your headcount was down 6% sequentially. Can you reconcile that with the gross margin, which was the lowest in several quarters? And then what gets you back to 40%? Is it the moves you've made on the utilization side?

Yes, the utilization is a big factor. And Really what comes into that, Brian, is really the beginning part of Q3. So you see that we've offset the capacity. We've gotten that back in check. And that was around the world. So that's where you're also seeing those ratios in the U.S. as well as in Latin America and India. But where we are looking right now from a go-forward perspective, we want to be at that 40% margin. We'll probably be in the high 30s with the fourth quarter and intention to get back to that 40% margin. Paul, anything to add there?

Yeah, so we were running a little lower on utilization offshore. So as we made the adjustments to sort of 80%, there was more of a headcount impact in the quarter offshore. But as we move forward, as we continue to increase a mix of the work done offshore, that's also going to be a driver of increased gross margins.

Great. Last question I have. It's great to hear that bill rates are up a little bit over 1%. Can you break that down offshore and on-site? Are they both around 1%? Is one area stronger than the other on pricing?

It's a little higher offshore, a larger percent increase. I think a lot of that's the nature of the work that we're doing there, and it's slightly below the 1.4% onshore.

Great. Thanks, guys.

Thank you. Our next question comes from the line of Surrender Thin with Jeffries LLC. Your line is now open.

Good morning. Tom, can you expand on the comment that you made at the beginning of the call about being confident that Q2 is a bottom for profitability? Is that true? as a result of just the scale of the large deal win at that point? And how would that comment hold up if you were to take out the large deal win?

The large deal win, it would still hold up. So that's going to be organic growth to the business, that large win. My comment really comes from their surrender is that, you know, we took the action we need to take in Q3 to adjust the capacity where we are. and seeing that demand where we are right now, I think we have a good line of sight for capacity, and I don't see us going backwards to that element. Obviously, the work is we have to get it closed and keep moving forward, but we definitely made some actions happen in Q3 that got more of an alignment to get utilization back where it needs to be, and that's really where it comes from is seeing what we're seeing for demand, seeing where our current headcount is, seeing capacity adjustments we made around the world. I feel very confident that we've made the decisions we had to make in the third quarter and move forward. That's helpful.

And then on the branding initiatives, obviously that's something, a journey that you guys have been on for a number of years now. Any color on when you talk about expanding those initiatives and then maybe how do you measure them in terms of the return that you're getting?

Sure. So a couple of things on that. We have been on a journey there when it comes to our brand. We're excited to announce in the third quarter we came to terms with the Minnesota Timberwolves to another great market for us to have some more brand awareness. And we always look at market by market and what's going to get the return for us. We have a dedicated team that is constantly looking at the impressions and what we're doing from a perspective there. A lot of it's about branding and making sure people are aware of who we are. and making sure that we are showing ourselves as a presence in the given geographies and or domains we want to play with. Keeping in mind that we are on this track, I don't want to lighten up what we need to do there. And it's also not going to overall increase spend. It's just a matter of prioritizing where we are spending is the intention there. And we have a We have a pretty robust marketing team that really does track, and we have actually leads and wins that have come specifically from those branding efforts, and we do track those.

Got it. And then kind of the final question, it sounds like you spoke about Romania and using that as a jumping-off point. So is the idea... If I understood that correctly, is there an international, bigger international push at this point, or how should we think about the longer-term trajectory there?

Sure. So first, when we work with our customers, they're looking for the best talent independent of where they are around the world. And there have been a number of customers that have been looking for an Eastern European perspective from Perficient, U.S.-based customers that have a presence in Eastern Europe and looking for us to provide services for them. So that's going to be the jumping-off point for it primarily is U.S.-based customers. with the presence in Europe. In addition to that, there is also the ability to provide U.S.-based clients with Eastern European talent as we do with India and Latin America. Over time, over the coming years, we'll look at going after more aggressively into the European market, but right now it's really to service our U.S.-based clients with a European presence.

Got it. Thank you. That's it for me.

Thank you. Our next question comes from the line of Divya Goyal with Scotiabank. Your line is now open.

Good morning, everyone. I just wanted to discuss a little bit. Paul, you mentioned that the SG&A this year obviously came in, this quarter came in at around 18.9%, and obviously you've provided some color on the utilization side of things. But on a go-forward basis, how do you think we can best model this on a quarterly or from an annual standpoint?

Yeah, so the SG&A should run relatively consistent with where it is now. We talk about, in general, 40%-ish gross margins and 20% EBITDA margins. So it's going to run in the high teens. That'll vary somewhat quarter by quarter based on business performance and revenue growth. But we have continued to reduce fixed costs, office costs, and other things over time, and I think we're well positioned to maintain and get some slight SG&A leverage as we move into 24.

That's helpful. On the business front, I had a generic question. So, Tom, if you could provide some color. Broadly speaking, what is the trend that you're seeing on the cloud migration front? Because when we speak to a lot of other corporates and clients out there, We hear a lot more about cloud optimization, but given such a significant part of the business that's historically been cloud migration, where do you see that trending on a go-forward basis across the industries that you're growing?

Well, it depends on how you divide those two terms up. But cloud optimization, cloud migrations, I would say a lot of the work we're doing is on the cloud. So I wouldn't necessarily say that we're doing a lot of on-prem takeouts and cloud migration work. It's really new product development, new product scale in the cloud. There is definitely some modernization work happening, but that's not necessarily a migration effort. It's really an understanding of the infrastructure that a lot of these organizations have, and they have hundreds and thousands of applications that are on-prem and or even in the cloud, and they're looking at rationalizations of those applications to get better cost takeout, as well as better applications for customer experience perspective, as well as just a lot of tech debt out in the environment. So not necessarily a migration to the cloud, but really an understanding of how are they modernizing their platforms and utilizing the cloud to do so.

So you do see some stabilization when it comes to a balance between on-prem and on-cloud network, and the hybrid infrastructure is here to stay, is what I hear from your response there.

I think the hybrid infrastructure is here to stay, but I think every organization is looking to maximize their cloud presence. Yes, that's helpful.

Just one last question here on the automation discussion that you did during your comments there. Could you provide a little bit more color on exactly the kind of work that you're doing for the EV sector and the automation sector specifically? Sure.

There's a lot there. So from a customer perspective, we're doing a lot around e-commerce, the dealer experience, everything from allocations to understanding how to configure. We're doing in-car technology. We're also working on infrastructure of, as I mentioned, the EV networks and the recharging networks for a number of sub-brands. We're also working downstream around some generative AI tools, understanding supply chain management. There is a tremendous amount we're doing in that industry.

That's exciting. Thanks a lot for your comments.

Thank you. As a reminder, to ask a question at this time, please press star 1-1 on your touchstone telephone. Our next question comes from the line of Vincent Colicchio with Barrington Research. Your line is now open.

Yes, Tom. Curious bill rates. Should we expect them to continue at the rate you saw in the quarter, or are you seeing any growing pressure there?

Not necessarily growing pressure. The bill rate, both from the U.S. and from Latin America and India, I think we'll continue to see moderate growth there as we continue to offset costs that happen in the business. I think there is some room to grow ABR, but that's not the overall intention. I want to drive growth. So I'm okay with the ABR staying where it is if we're getting larger deals and larger wins to make sure we're competitive. That being said, we're not losing based on price events. So I think there is some room against the big guys to take on some more ABR. But really, when we look at ABR, it's making sure we're maintaining margin, making sure we're offsetting the increases we have for salaries, et cetera. I think there's a little bit of room there, but I would not expect substantial ABR increases. That's not the intention that we're looking across the board.

And one big picture question. When do you expect coding efficiencies from generative AI to have a meaningful impact on your business?

You know, that's a great question, Ben. We're playing with a lot of different POCs and how we leverage that. I think code generation is a long way off. I think, quite honestly, that is something that will not have a meaningful impact for years. I think there are elements around the software development lifecycle that we will see some efficiencies, specifically testing. I think as far as requirement gathering, maybe creating some assets around content, and I think those efficiencies we're already seeing and will continue to see throughout 2024 and the foreseeable future. But generating code, we have a lot of conversations, specifically with the CISOs and the challenges around code generation, but I think that still weighs off.

Thank you, and congrats again on your new role. Thank you, Vince.

Thank you. Our next question comes from the line of Jesse Wilson with William Blair. Your line is now open. Jesse Wilson, your line is open. Please check your mute button. And I'm currently showing no further questions at this time. I'd like to hand the call back over to Tom Hogan for closing remarks.

All right. Well, thank you, everybody, for your time today. I look forward to getting back together in the first quarter to discuss our fourth quarter and full year and then 2024 expectations. So thank you, everybody. Have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.