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spk00: Good day, and thank you for standing by. Welcome to the Q3 2022 SP Plus Corporation 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 11 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker today, Chris Roy, Chief Financial Officer of SP Plus. Please go ahead.
spk04: Thank you, Rivka, and good afternoon, everyone. As Rivka just said, I'm Chris Roy, Chief Financial Officer of SP Plus. Welcome to our conference call following the release of our third quarter 2022 earnings. During the call today, management will make remarks that may be considered forward looking statements, including statements as to the impact of COVID-19, outlook and expectations for 2022, and statements regarding the company's strategies, plans, intentions, future operations, and expected financial performance. Actual results, performance, and achievements could differ materially from those expressed or implied due to a variety of risks, uncertainties, or other factors including those described in the company's earnings release issued earlier this afternoon, which is incorporated by reference for purposes of this call and available on the SP Plus website and the risk factors in the company's annual report on Form 10-K and quarterly reports on Form 10-Q and other filings with the SEC. In addition, management will discuss non-GAAP financial information during the call. Management believes the presentation of non-GAAP results provides investors with useful supplemental information concerning the company's ongoing operations and is an appropriate way to evaluate the company's performance. The non-GAAP results are provided for informational purposes only. A full reconciliation of non-GAAP financial measures to comparable GAAP financial measures were presented in the tables accompanying the earnings release. To the extent other non-GAAP financial measures are discussed on the call, reconciliations to comparable GAAP measures will be posted under the Regulation G tab in the Investor Relations section of the SP Plus website. Please note this call is being broadcast live over the internet and is being recorded. A replay will be available on the SP Plus website shortly after the end of the call and will be available for 30 days from today. I will now turn the call over to Mark Baumann, our chairman and chief executive officer. Mark.
spk01: Hey, thank you, Chris. And thank you everyone for joining us this afternoon to discuss our third quarter results. I'm pleased to report that the third quarter of 2022 was another strong quarter across our business with both our commercial and aviation segments posting double digit year on year growth and adjusted gross profit. This is driven by strong same store location performance as well as new business. Adjusted gross profit was essentially back to the comparable quarter of 2019, which was a record for SP+. The third quarter also marked the completion of SP's financial recovery, which reflects strategic actions we took together with improved business conditions. In addition, although we're essentially back to pre-pandemic financial performance overall, demand in some of our verticals continues to lag where it was in 2019, which provides us with additional runway in 2023. These results underscore two years of hard work by our team to not only improve our financial performance, but also increase our market share and further expand the total addressable market for our products and services. Consistent with our year-to-date performance, we're reaffirming our guidance for the full year, which exceeds pre-pandemic 2019 at the top end of the range. Our commercial segment gross profit increased 13% year over year as we continue to see strong growth in a number of verticals, particularly commercial, municipal, and large venues, and momentum continues to build as the pace of return to office increases in many of our larger metropolitan markets. Over the last 12 months, we've added 95 new locations in the commercial segment on a net basis, and location retention has remained at 91%. In aviation, adjusted gross profit was up 31% year-over-year as we continued to benefit from both new winds and expansion of services, as well as increasing demand for travel. This has been a strong year for new contract winds in our aviation segment, and in addition to new locations, we've been able to sell in additional products and services at existing locations. Our aviation business is still in recovery mode, and we still see significant additional upside as travel trends continue to improve and demand increases for our services that reduce friction and ease congestion. Our technology offerings continue to be a key business driver. To that end, we're very pleased to have completed an acquisition that demonstrates the successful execution of our strategy to further enhance and complement our industry-leading technology capabilities, expand our addressable market, and accelerate growth. Last month, we announced the acquisition of KMP Associates, including its global e-commerce platform. KMP's industry-leading SaaS platform is currently deployed at 70 airports in the U.S. and Europe and over 400 commercial parking locations in Europe as they continue to expand their footprint. Operating under the AeroParker and MetroParker brands, KMP delivers online booking for parking and other travel services, dynamic pricing, and e-commerce capabilities, which are all designed to reduce congestion, enable frictionless transactions, and provide a first-class consumer experience. In addition, KMP also provides comprehensive digital marketing capabilities through its award-winning digital marketing agency, KMP Digitata. While a small acquisition from a financial perspective, bringing together the two businesses gives us the ability to leverage our respective relationships and expertise to bring innovative technology solutions to airports, and commercial parking operations both within and outside of North America. In addition to expanding our addressable market, we believe the acquisition of KMP will serve as a growth platform for us, providing the innovative solutions that clients and consumers demand. We believe this acquisition is a great strategic fit for us as it integrates seamlessly with Sphere. Technology has been a key differentiator for SP Plus in the marketplace, an important factor in our successful business development efforts. In addition, this acquisition expands our presence outside of North America and reinforces our leadership position in the digital transformation of our industry, which is developing in sync with the growing trends in smart city technology. Before I turn the call over to Chris, I'd like to acknowledge today's uncertain economic outlook with potential recession on the horizon. Historically, our business model has been recession-resistant through past down cycles, and now that management contracts represent 85% of our commercial segment, we believe that resilience is further enhanced. Additionally, our technology offerings, which we've expanded with the recent acquisition, is not just a differentiator but a profit driver for our clients, which is increasingly important in more challenging economic environments. And we're continuing to make investments in business development and other resources to better position us to take advantage of our expanded addressable market. Thus, while we're monitoring the economic landscape closely, we believe our management contracts provide a strong visibility and cash flow, and we're comfortable with our outlook for continued growth in 2023. Now I'm going to turn the call back over to Chris for a financial review.
spk04: Thank you, Mark. I will discuss our strong financial performance in the third quarter of 2022 in more detail, which puts us firmly on track to achieve our full year guidance for key profitability metrics, including adjusted EPS and adjusted EBITDA to exceed 2019 levels, which was a record year for the company. I will focus on adjusted numbers in my remarks. For 2022, our third quarter adjusted gross profit increased 18% year over year to $58.2 million as we benefited from strategic actions Mark mentioned, as well as strong business activity and new business wins, which were enabled and supported by our investments in industry-leading sphere technology capabilities. Adjusted G&A expenses for the third quarter of 2022 were $26 million, 25% higher than $20.8 million of adjusted G&A in the year-ago period. This reflects higher performance-based compensation and investments in business development, technology, and other resources to support our current and planned growth. As one example, we recently created a customer success team to support the effective deployment of our technology solutions across geographic markets as well as industry verticals. While these investments will yield future benefit, and are important to drive long-term sustainable growth, they represent increased G&A in the short run. Compared to the third quarter of 2019, Q3 2022 adjusted G&A was flat, as permanent cost reductions taken over the past two years were reinvested into initiatives like the customer success team I just mentioned, as well as higher performance-based compensation. As we've said before, we want to reinvest savings realized back into the business in a way that we believe can provide a faster growth trajectory than we had prior to COVID-19. Third quarter 2022 adjusted earnings per share increased 23% to 80 cents compared to the last year's 65 cents. An adjusted EBITDA of $31.5 million was 13% ahead of 28 million reported in the year-ago quarter. now moving to free cash flow we generated 56.6 million dollars during the first nine months of 2022 compared to 21 million dollars in the first nine months of 2021. as a reminder our 2022 free cash flow benefited from a 20 and a half million dollar u.s federal income tax refund which offset higher capital expenditures compared to a year ago period at the end of september we had 270 million of capacity under our upside $600 million senior credit facility. On our last earnings call, we noted that the board approved a $60 million share repurchase program in May of this year. Since then, we have repurchased 1 million shares at an average price of $33 through yesterday, and currently have $24.8 million remaining under authorization. As Mark mentioned, our year-to-date performance puts us firmly on track to achieve our full-year guidance, which represents significant growth over 2021. It's also worth noting that the upper end of our guidance ranges represent a return to pre-pandemic 2019 levels. With that, I'll turn the call back over to Mark.
spk01: Thanks, Chris. As you can see from our results, our business is performing as planned and continues to improve with a more profitable business model, a portfolio of primarily management-type contracts that provide additional resilience in a challenging market environment, and actions that we believe continue to expand our addressable market, including the recent acquisition. And while we believe we have recovered from the effects of the pandemic over the past two years, we have additional runway and upside given our success in gaining share amid approved demand. Luca, let's open the line for questions.
spk00: Okay, thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. Okay, our first question comes from the line of Daniel Moore CJS Securities. Your line is now open.
spk03: Yes. Hi. Good afternoon. It's Pete Lucas for DAN. You touched on in your prepared remarks, but can you talk a little bit more about the KMP acquisition and what was the critical driver behind it and what was the key thing that made it easier to buy rather than build? Also, what was the purchase price paid and what are the expectations in terms of revenue and EBITDA contributions?
spk01: Got it. Well, I'll talk about the strategy, and then Chris can address some of the numbers that you're asking about, Pete. But essentially, over the past few years, and this really started before the pandemic, we've been investing in our technology platform as a basis for accelerating our growth. And all of that is sold into the marketplace under the Sphere umbrella. And the main focus of that platform has been on our commercial segment, which is a very fragmented industry. segment with a lot of locations and a lot of different operating requirements. And while the Sphere platform has been deployed at a couple of airports, the main development focus has really been on the needs of commercial clients and commercial lease locations. And what we found in the K&P business is someone who has developed a platform that is exclusively and primarily focused on aviation. And they've got credibility in the marketplace as they go to market to sell their capabilities because they have that installed base of the 70 airports that we talked about. So we saw this as a perfect fit with what we're trying to do with technology, and that's to really offer technology to clients even where there are no boots on the ground. And increasingly, we're going to expand our adjustable market by offering technology solutions where we're not necessarily managing and operating a facility. So I think that's really the thinking behind it. I think they have capabilities that we could have eventually developed ourselves, but we see market opportunities now when we really wanted to move more quickly than doing internal development would have taken us.
spk00: Okay. Thank you very much. Please stand by for our next question.
spk04: Well, let me, Rivka, this is Chris. I thought I'd just tack on here as Pete had a couple other questions that I thought I would address. In terms of the acquisition, certainly as Mark mentioned in the prearranged call, this is a smaller acquisition. You know, I would think about it in terms of less than $15 million or right around there in terms of a purchase price. In terms of EBITDA, it certainly is a creative on day one. I wouldn't say it's going to provide significant or meaningful increased as it relates to EBITDA, but what I would say is for all the reasons that Mark mentioned, strategically this made a lot of sense for us.
spk00: Okay, stand by for our next question. Our next question comes from the line of Tim Mulrooney of William Blair. Your line is now open.
spk04: Yeah, thanks for Thanks for taking my question. I'm trying to figure out how to phrase this. I guess I'll just start talking. Mark, you know, you talk about 85% of your commercial locations, gross profit coming from management contracts. And that being beneficial is helping to potentially insulate you from a macro downturn. But, you know, we saw the managed sales. contracts, you know, gross profit decline pretty materially during the pandemic. I know that that was a pretty specific situation, but what gives you confidence that we wouldn't see managed contract gross profit decline again in the potentially upcoming recession if things begin to get really tough again? Thank you. Sure.
spk01: Well, I think as we've talked in the past, You know, we are not recession-proof. We definitely don't like recessions. I don't think anybody does. We certainly prefer strong economic backdrop. But our management portfolio concentration in commercial does insulate us from some of the downturns. And when we say that we don't expect it to be significant, we're looking back on the financial crisis of 2008 and other recessions that we've been through as a company. The pandemic was unique in many ways, in particular because the bulk of our clients just stopped operating. And so that's a little different scenario. When you have a typical recession, there may be lower volumes of activity. There may be desires by clients for greater efficiency. And that's where our expanded suite of technology capabilities can provide solutions and reduce labor costs. So I think, you know, what I'm imagining is ahead, if there is a recession, it's going to be more of a typical recession kind. And in that case, we don't tend to see those sort of downward pressures on management contracts. Now, bear in mind, you know, as you know, we simplify and talk about management contracts and we have fixed fee management contracts and we have other management contract structures. And some of those other contracts, do depend on levels of volume and activity. So if there is a recession, those things drop back. What we tell our own organization is that in recessionary times, in many ways, prospective clients need us even more. They're feeling financial pressures. They maybe don't have good solutions provided by their current providers if they've outsourced. And so I think they can look to us as someone who can come in and in any economic conditions, drive improved profitability and lower costs for their operations.
spk04: Yeah, okay, that's helpful. Are we just doing one question, or can I do a follow-up?
spk01: You can keep going. Go ahead.
spk04: All right, thanks. So maybe we can just dig into that a little bit more. I don't know that you have the data available, but as you think back to the great financial crisis, right, not the pandemic, which was a weird thing, how did managed contracts I know the portfolio looked very different, but you've been doing this a long time. You're an industry veteran, right? How did those managed contracts perform relative to the leased contracts? Maybe you can just talk a little bit more about whatever you can remember that would help give a little more color to the story.
spk01: Yeah, sure. And I mean, you know, one of the things, it is a little hard to remember that far back. And of course, you know, we also, it just so happened around V089, we had the settlement of our legal claims from Hurricane Katrina running through our numbers. So there was quite a bit of noise, as I recall, in 2009. But, you know, essentially in a recession or in any type of time where something affects the utilization of a facility, if it's a fixed fee contract, that doesn't affect us at all. We're going to generate the same gross profit that we were generating before. As I mentioned, we do have some reverse management contracts. And if clients make a decision to reduce the level of service, they'll often come to us and say, look, we need to talk about the cost of this operation. But even in those contracts, we are not, for the most part, dependent on utilization of the facilities for the amount of money that we make. So I would be surprised if gross profit dropped more than 5% or 10% back in the 2008-2009 period, bearing in mind that it is a long time ago. Now, leases obviously are more exposed. And I think one of the things that we have tried very hard to do, and we certainly did this extensively during the pandemic is that going into the pandemic, we had over 600 leases in our portfolio, and we now have about 400. So we've reduced our lease portfolio substantially by basically a third during the pandemic. But as importantly, we renegotiated a lot of the terms on our remaining leases And as we have entered into new leases, we've brought provisions in that allow us to get rent relief and other abatements in the event of a downturn. So although a lease per se is more vulnerable to lower utilization, we have some mitigating factors that we can bring to bear that reduce the impact on us. The other thing around leases in general is that we are the decision maker around technologies. With a management contract, we're going to the client, and we're offering up technology solutions, but it's up to them to decide what to go forward with. With the leases, we're making those decisions. So in self-park leases, where there's no valet option available, we have tried to drive all of our sphere technology capabilities through so that we are not managing labor costs in a downturn environment. And then the final thing I'd say, Tim, is that part of the strategy behind the Sphere platform is to get consumers paying transaction fees for processing. And so rather than have a lot of fixed costs or fixed costs for clients, we're capturing transaction fees from consumer transactions. And what we're certainly seeing is that People are still returning to the office. Traffic congestion is a major issue. And in the bulk of our facilities, we're continuing to see increases in the amount of transaction volumes that are taking place, and we can grab transaction fees off of those things. So I know you never know what's around the corner, but certainly as we look into the fourth quarter here, we're not really seeing any evidence of any slowdown in economic activity.
spk04: No, that's all a really great color. I appreciate it, Mark. I'll stop there and pass it along. Thank you. All right. Thank you.
spk00: Again, as a reminder, to ask a question, you will need to press star 1-1 on your telephone. Our next question comes from the line of Mark Riddick of Siddhati. Your line is now open.
spk01: Afternoon, Mark. Hey, Mark. You might be on mute because we don't hear you.
spk00: Mark, make sure both your computer and your phone line is open. Okay. Well, Mark, if you can hear us, please dial in again. Please stand by for our next question. Okay, we are now going to actually go back to our first caller. Daniel Moore or Pat at CJS Securities. Your line is now open.
spk03: Yeah. Hi, guys. It's Pete. Just a follow-up question. Any update on your progress converting potential bags customers, including airports, et cetera, to the user pay model? And should we expect adoption or update to pick up sometime next year, or is it still too early to tell on that?
spk01: Well, there's a lot of interesting discussions going on right now around that. As you may know from some of our past comments, we introduced the idea of curbside concierge after the Super Bowl in Tampa a couple years ago. And that led to one airline really rolling that concept out to now close to 40 airports. And instead of the traditional curbside, airline-sponsored Scott Gap service. It's a consumer pay model, and that has gone very, very well. We also have another airline that I think is about to come on board with that service, and we're having discussions with another few airlines. But at the same time, pre-pandemic, we had introduced the BEGS capabilities to the SP Plus Airport clients And everybody loved it. You know, it clearly is a congestion-reducing, friction-reducing solution. It's proprietary, so it's unique. It's only something that we can provide. But before we got anybody on board other than a couple of small airports, the pandemic came along, and so all of that went on pause. Because of the success of Curbside Concierge, we now have some airports that are actually – We've explained to them the consumer pay model might be the way to go. And I think, you know, certainly within the next three or four months, we should see some airports go on board with that idea where instead of them paying the cost, it's paid for by the traveler. So I think that's an idea that is ready to take off on a large scale. And we certainly will see, I think, further growth on that in 2023.
spk03: Very helpful. Thank you.
spk01: You're welcome.
spk00: Okay, our final question is being prepared. Our final question comes from the line of Tim Mulrooney of William Blair. Your line is now open.
spk04: Yeah, we're just keeping, keep passing it back and forth here. There you go. That's all right. All right. You mentioned in your prepared remarks, Mark, that demand in some verticals continues to lag. Can you dive in a little bit more about what those verticals are? I mean, I think I have an idea, but I'm curious what you'd say. And, you know, how far below pre-pandemic levels you'd estimate those still are. We're just trying to gauge what a full recovery in those verticals would look like for your business.
spk01: Yep. No, happy to do that. You know, the obvious one that I think most people would guess is really, you know, the – office building vertical, and there are some properties around office buildings that primarily are serving those office buildings. So, you know, it's funny because there certainly seems to be still a reluctance for people to use mass transit in the major cities. I know we follow this in cities like New York and Chicago in particular, and they are a long, long way from getting back to pre-pandemic levels. So we're getting strong volumes with office buildings, and it's growing all the time. In fact, I was surprised to see the garage full here at Aon Center in Chicago a couple of weeks ago one day. So I think what we're really saying by the fact that it's not back is that there's opportunity for us to, you know, that's vertical to grow faster, you know, than the rest of the portfolio. That's really the primary one within commercial. You know, in aviation... We certainly, you know, have seen airports continue to bring back the services that were there pre-pandemic. And, in fact, some airports can't really handle the parking demand. And we've opened up temporary parking. They've got land and a couple of airports. We've brought our sphere back. solution in place, putting up signs where people can pay with QR codes or text to pay. And they've been very, very pleased that we could, in essence, they give us the green light and we can be up and operating within a week or two. So I think we have some very fast solutions to reduce congestion at these airports, many of which did not even have paid parking in a lot of their facilities in the past. But I think other airports have not brought back valet operations. They're not running all the bus routes. And if you look at the TSA information and what the airlines are saying. We're still, in terms of seat miles or actual TSA employment in general, it's still running below the pre-pandemic levels, not by a lot. There was a week recently where it was above 2019, but they're still, whatever, 5% to 10% below in their capacity, primarily not because of demand, but because they don't have the pilots. So I think it's realistic to imagine that as the airlines are able to get their capacity back to pre-pandemic levels, and the demand is certainly there, that the volume of activity that we handle, whether it's curbside concierge check-ins, whether it's people on buses, whether it's managing parking or overflow parking lots, or the other services that we're providing for airports are going to go up in volume significantly. On the bag side, you know, it's a similar story. You know, there's obviously massive amounts of luggage being handled, and there's a new concept out there. I think it was American Airlines talking about it, and it's leisure travel. That's leisure with a B. And that's really the concept that because people can work in a hybrid schedule, they're often combining work and pleasure vacations. And that means they're going places and staying there longer. So, therefore, they're chucking luggage. They need help and assistance because they might be bringing family members along with them. And so we think this trend toward leisure travel can be a tailwind for our business as well in the aviation space.
spk04: Interesting. I mean, one thing you didn't mention is hospitality issues. is that because that is growing really nicely or just, you know, just smaller? So not really, you know, talking about the valet service offering that you have is not, not big enough to mention or it's, or it's actually doing really well.
spk01: No, it's a big area for us. And I mean, it is doing really well. And I mean, you know, one of the challenges we have when we try to sort of compare that to pre pandemic one of the, the, We have a tough comp because in the pre-pandemic, we ran the whole MTM portfolio in Las Vegas. And they decided to initially discontinue paid parking and then eventually bring parking in-house during the pandemic and post-pandemic period. So hospitality as a vertical for us is not back to pre-pandemic, but certainly compared to last year, it's up significantly. And it's one of the verticals where we've probably added as many or more locations as any I can think of. And of course, we have technology that is geared towards the valet area. I'd say there's still at times some challenges in getting staff, but we've been able to work through that. And so we are definitely very bullish about the future for hospitality. We've won a number of hotels over the past year.
spk04: Yeah. And Dan, this is Chris. I mean, when you look at maybe the top three verticals in terms of new business wins, it's hotel, commercial, and office building. So, you know, I think that does resonate with the success that we're having around Sphere and the technology capabilities that we're able to bring to clients to optimize revenue through digital marketing campaigns or otherwise. And so I think those three markets have been really strong for us on a TTM basis, certainly as you look at over the last 12 months, but even if you look at the most recent quarter, those are really three strong verticals for us in terms of new business. Got it. Very, very helpful. Mark, Chris, thanks a lot.
spk01: Thanks, Tim.
spk00: Okay. Please stand by for our next question. Our next question comes from the line of Mark Riddick of Sudoti. Mark, your line is now open.
spk02: Hey, good evening. Good evening. Hello. Excellent. You can hear me now. That's great. So I wanted to – thanks for all the details that you've already provided. I wanted to touch a little bit about the return to office trends that you're seeing, and maybe you could talk a little bit about maybe the general pricing dynamic that you're seeing as far as the end customer. Are you seeing much in the way of price increases for just general – And then maybe you could touch a little bit about, we've talked about sort of that return rate as far as occupancy, I guess, but maybe if you could talk a little bit about trends and what you're seeing, both with rate as well as maybe, is there a time of day difference? Are there differences now than where we used to be?
spk01: Well, it's for sure different because I think, you know, with some exceptions, most companies have adopted a hybrid work schedule. And I think there's been plenty written on this, and we're sort of seeing this in our own business. Clearly, Tuesday, Wednesday, and Thursday are the bigger days. Monday, Friday tend to be the work-from-home days. And so people, depending on whether you're coming down two days or three days a week, it's probably cheaper for you to pay by the day rather than monthly parking. And I think one of the things we have mentioned before is that if someone comes down and buys parking three days a week, they're not paying that much less than they were with monthly parking. So in terms of revenue coming in, you know, it's not as big a drop as you might imagine. But again, for us, you know, while we certainly want to see people coming back to the office and filling up these parking facilities, you know, we're bringing our technology options into play for our clients in our office environment and really saying if somebody's looking for hybrid passes rather than the traditional monthly parking pass or a multi-day pass, or some other discounted parking. We have our whole digital marketing team that works with our clients to figure out the optimal pricing, incentives, and all of those sort of things. So we're doing all the things that we think we need to do to try to optimize the revenue coming into a facility regardless of what the demand pattern is for it. Now, in terms of price increases generally, it's been a period where we have been able to put prices up And part of that is allocating more of the facility to daily parking as opposed to monthly parking. Traditionally, you had a lot of people entering into monthly parking contracts. And in effect, in some big cities, it's really this is their garage. So they're just leaving the vehicle there. And of course, if it's there all the time, no one else can park in that spot. And so the advantage of reducing the amount of the facilities that are allocated to that and allocating more of it to daily parking is that often in a day you're going to get one, two, three or more people parking on that same spot. So it's a better utilization of the real estate. So that's another way to really get price increases. But it's something we monitor. We have built web tools so that we can scrape the websites of competitors near the facilities we operate and see what their prices are and use that to make pricing decisions on a more regular basis. And that generally means in the increased direction.
spk02: Great. And then I was wondering if you could shift gears a little bit to sort of talk about what you're seeing and what you're experiencing as far as labor management. Certainly, it seems as though you've got better sort of tools to work with, I guess, in these days than you have in the past to sort of assist with that. But maybe you can sort of talk about what your experiences have been and sort of how you kind of adjust those levers and what benefit there is now versus maybe prior cycles.
spk01: Sure. Well, I think because everybody's experiencing inflation in their personal lives, there's definitely the expectations that hourly workers have that they're going to see increases that are maybe higher than what they've seen in the past. And likewise, as we've talked, especially during the initial recovery phases from the pandemic, the workforce was actually smaller because not everybody was coming back to work. I think there's two things that are happening, and they generally work out okay for us. One is that labor force participation is continuing to increase. I think people, maybe because they're finding their household budget is stretched, the decision they made not to reenter their workforce, maybe they're rethinking that, or perhaps they're feeling more comfortable about the pandemic being in the rearview mirror and not something they have to worry about all the time. So we're seeing definitely an increase in labor force participation. But the other thing, and this is why we emphasize regularly the amount of our business that is management contract-based, we have had to put wages up in some places and sometimes substantially. But once again, those are costs that we're passing through predominantly to our clients. And so the impact of that wage inflation is really affecting them. The clients, of course, are also getting the benefit of the price inflation when we put up prices in the parking. Now, when it's a lease, we obviously have to manage those costs very well. And one of the ways that we do that is to try to ensure that, you know, if a job could be automated and provided in an automated fashion, we're doing that as opposed to, you know, having to find scarce labor.
spk02: Great. And then the last question for me, um, and forgive me if I, if I missed commentary on this, but I did notice the ship repurchase activities since the, um, resumption of, uh, share purchases earlier this year. And so I wonder if you could sort of bring us up to date, sort of maybe how you're feeling about that. I mean, obviously it took the pause after the, you know, with the pandemic and then, you know, with, with that restarted and there's, there's a decent amount of activity that we've seen in the, I guess it's been about half a year or so maybe, or maybe a little bit longer than that. But I was wondering if you sort of talk a little bit about sort of maybe what you're thinking about as a longer term use of cash and, and, and how we should be thinking about that going forward. Thanks.
spk04: Yeah, Mark, it's Chris. You know, what I would say is I think we're, as you look at the business, I think we're in a pretty enviable spot. We generate significant amounts of cash flow and we have an upsized credit facility. And I think that allows us to really look at the business in terms of investment strategies around investing in the business and the technology and continuing to enhance our technology capabilities. I think it allows us to look at potential acquisitions as we look at either ancillary services that we can provide to clients, or in this case, that was most recent, KMP and some of the technology solutions that we think can help accelerate growth. And I think we have the opportunity to be able to deliver and return capital back to shareholders. So I think we're able, with our strong free cash flow and our upsized credit facility, So we're looking at all three of those on a continuous basis. And so I know we've made share acquisitions over the last several two quarters or so. We continue to make those share repurchases here in Q4. And we'll have more to share just in terms of how we're thinking about the capital deployment and potentially return of capital to shareholders as we get into Q4 and have our Q4 release.
spk02: Excellent. Thank you very much. Thanks, Mark.
spk00: Okay. At this time, I'm showing no further questions, so I would now like to turn it back to Mark Bellman for closing remarks.
spk01: Okay. Thanks, Rivka. And I'll just wrap up briefly and say thank you for joining us today. We're very excited about the finish line coming for this year and planning for and talking to you about our growth plans for 2023 before long. So anyway, have a great day. Thank you.
spk00: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect
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