Element Fleet Management Corp.

Q3 2023 Earnings Conference Call

11/7/2023

spk02: Good morning, ladies and gentlemen, and welcome to Element Fleet Management's third quarter 2023 earnings call. At this time, all participants are in listen-only mode, and you are reminded that this call is being recorded. Following the prepared remarks, the company will invite questions from analysts. In the event you need assistance during the call, you may signal an operator by pressing the star key followed by zero. Element wishes to caution listeners that today's information contains forward-looking statements. The assumptions on which they are based and the material risks and uncertainties that could cause them to differ are outlined in the company's year-end and most recent MD&A, as well as its most recent AIF. Although management believes that the expectations expressed in the statements are reasonable, actual results could differ materially. The company also reminds listeners that today's call references certain non-GAAP and supplemental financial measures. Management measures performance on a reported and adjusted basis and considers both to be useful in providing readers with a better understanding of how it assesses results. Reconciliation of these non-GAAP financial measures to IFRS measures can be found in the company's most recent MD&A. I would now like to turn the conference over to Laura Dottori-Atanasio, President and Chief Executive Officer of Element. Please go ahead.
spk01: Thank you, Operator. Good morning, everyone, and thank you for joining us. I am really proud of our Element team for delivering another outstanding quarter, demonstrating the strength of our strategy and the momentum we continue to enjoy and regenerate. We have delivered record revenue growth at over 15% on a year-over-year basis, a rapidly expanding client base with yet another record by welcoming 55 new clients, of which 22 were self-managed fleets, and we're increasing our common dividend by 20%. This is a result of our resilient business model, which speaks to the quality of our clients and the hard work and focus of our team. In addition to delivering strong financial and operating results, we continued to deliver a superior client experience. We maintained our strong global net promoter score above 40 with a continued 99% client retention rate. We outperformed on our targeted EV acceptance rate. And we had $1.9 billion of new vehicle orders from our clients, representing a 29% year-over-year increase. Our confidence in our growth trajectory is further bolstered by the recent prioritization of opportunities to scale our business and make targeted investments that will drive our future performance. We announced three strategic initiatives that we have underway. They are centralizing accountability for our U.S. and Canadian leasing operations, establishing a strategic sourcing presence in Asia, and advancing digitization and automation, all of which will unlock future growth for us. The first to centralizing accountability for our U.S. and Canadian leasing function at a new element office in Dublin, Ireland, a recognized global leasing center of excellence. This new office will be operational beginning in mid-2024. A number of long-term benefits to both clients and our business support this decision. So let me elaborate. Our experience has been that assigning accountability for the performance of each of our service products to individual senior leaders has driven focus that resulted in accelerated growth. In each of the last seven quarters, services revenue has grown as a result of this approach. Our intention is to replicate this proven model of centralized accountability and apply it to our leasing function. It will be led by Chris Gittins, one of our very seasoned executives, who in his past has successfully run Element's Canadian business as a whole, and he built our strategic relationship business for Megasleeves, including Armada. Most recently, Chris has served as our Chief Information Officer. Chris and approximately 70 employees will be based in Dublin. The centralized accountability for this function will elevate our clients' leasing experience, optimize related operations, and improve pricing discipline, all to maximize the value of our portfolio. Now, secondly, we will establish a small yet strategic sourcing and relationship management presence in Singapore next year. This decision will further enhance our global procurement capabilities. This move is crucial for us to further strengthen our existing ties with Asian OEMs and foster valuable new sourcing relationships. This will provide us with an opportunity to expand and improve our clients' access to new vehicles, and provides our business with the economic benefits of strategic sourcing at scale. And given Asia's global leadership position in the development and production of EVs, it's also aligned with our clients' commitment to sustainability and decarbonization. Chris Tulloch, the leader of our businesses in Australia and New Zealand, will drive this strategic initiative. He is another one of our very talented and seasoned executives within our company. We expect these two strategic initiatives to contribute profitable revenue growth and operational efficiencies that Frank will speak to. Now our third strategic initiative is prioritizing and investing in increased digitization and automation in order to further optimize and scale our business. For now, this comes in the form of having recruited two important new executives to Element. Joining our leadership team, are David Attard in the role of Chief Digital Officer and Yu Jin as our new Chief Information Officer. David will accelerate efforts to scale our business and deliver consistent, superior client experiences through digital solutions, while Yu Jin will be responsible for ensuring we build the right technology infrastructure necessary to ensure that Element can compete and create great client and employee experiences. The time I've spent with our team members, our clients and our suppliers over the past nine months has made clear the importance of enhanced digitization and automation to build the growth momentum our investors have come to expect from Element. Our people are motivated and excited about our future. That energy is translated into the exciting strategic initiatives we're implementing to enhance our value proposition and grow our earnings and free cash flow per share. Moving forward, you can expect us to continue working hard to generate strong results by delivering for our clients. I want to thank our Element team members for your commitment to our clients and the exciting work ahead to build a strong and sustainable future for our business and for our shareholders. With that, I'll hand it over to Frank and look forward to your questions.
spk04: thank you Laura and good morning everyone we posted another strong set of results for the third quarter including several new record highs we continue to benefit from our commercial capabilities and investments and strengthening those as well as robust client demand and improve originations drive driven by improving OEM production our performance underscores the trust and confidence our clients have an element and the value that we deliver in addition our This strong performance and solid outlook provides us the opportunity to continue returning capital to shareholders. In this regard, we are pleased to have announced an increase in our annual common dividend by 20% to 48 cents per share annually. In addition, we anticipate redeeming our remaining outstanding preferred shares as they come due this year and next. Finally, we have reauthorized our NCIB to be able to utilize additional excess capital to repurchase common shares over the next 12 months. Before I get into our third quarter results, let me elaborate on the strategic initiatives that Laura spoke to. Echoing her comments, we expect our leasing, strategic sourcing, and digitization and automation initiatives to yield significant intermediate to long-term benefits. We anticipate the leasing and strategic sourcing initiatives to contribute profitable revenue growth and operational efficiencies beginning in 2025 which will conservatively scale to between 40 and 60 million of run rate net revenue and 30 to 50 million of run rate AOI by full year 2028, with the leasing initiative representing the significantly larger portion of these benefits. We will incur approximately 25 to 30 million in aggregate of non-recurring setup costs related to these strategic initiatives. These setup costs will be recorded in operating expenses through Q2 2024 with $3.9 million incurred and accounted for in our G&A this quarter. We will continue to call out these non-recurring setup costs in our disclosure materials so that you can more accurately measure and model our business and the true run rate performance of Element without them. And next quarter, when we report our full year 2023 results, we will provide you more detail as to the expected quarterly amounts and cadence of this SPED. These non-recurring setup costs are related to recruiting, relocation, office setup, IT, severance, and professional fees associated with the leasing and sourcing strategic initiatives. The setup costs have an estimated two and a half year payback period based on conservative estimates of the quantum and timing of run rate benefits we're creating. These are exciting times at Element, and we are investing to benefit our clients, our business, our people, and ultimately our investors. Lastly, before I move on from this topic, I want to be clear that our full year 2023 and 2024 results guidance do not include these non-recurring setup costs related to both the leasing and sourcing strategic initiatives because the setup costs are short-term and temporal in nature and do not increase elements run rate expense base. Turning to our 2024 results guidance, we expect continued strength in Originations growth client demand for element services and financing, and enviable levels of commercial success to drive solid performance again next year. As you saw in our disclosure materials, we expect full year 2024 to deliver the following financial results. Net revenue of between $1.365 and $1.390 billion. Adjusted operating margins of 55% to 55.5%. adjusted operating income of $750 to $770 million, adjusted EPS of between $1.41 and $1.46, and free cash flow of $1.75 to $1.80 per share. Our per share metrics are based on a full year weighted average share count of approximately 397 million common shares for 2024, reflecting the conversion of our convertible securities into common shares upon their maturity mid-year 2024. Regarding 2023 guidance, before the non-recurring setup costs associated with the strategic initiatives, we expect to report full-year results on our key financial metrics that are near, at, or above the high end of the various guidance ranges we've provided previously. Before I walk through our third quarter results, let me level set by highlighting the following. First, as previously discussed, we benefited from $17 million of non-recurring net revenue in Q3 of last year. Excluding that $17 million from year-over-year comparisons represents what we call organic growth, so I'll be citing growth on that basis. Second, the growth measures I cite are in constant currency because the strengthening of both the U.S. dollar and the Mexican peso benefited our Q3 results as reported. Our third quarter results were very strong. We grew net revenue at 15.6% year over year to a record $333.8 million for the quarter. Adjusted operating income, also a record, grew 16.1% on the same year over year basis, despite increased investment in our commercial capabilities. Adjusted operating margin was 55.4% for the quarter. Adjusted EPS for 35 cents, which is a 20.7% improvement year over year. and free cash flow per share was 42 cents, which is a 7.7% improvement year over year. Looking more closely at our net revenue growth, it was driven by services revenue and net financing revenue. Service revenue growth is the first pillar of our capital lighter business model, and services revenue was up 18.2% year over year, driven by share of wallet growth, namely increased penetration and utilization in the US and Canada, as well as double digit growth in Mexico and modest growth in ANC services revenue streams. Net financing revenue grew 11.7% driven by net earning asset growth, with gain on sale growth also contributing. Now I'll briefly turn to the second pillar of our capital lighter financial strategy, which is syndication. We syndicated a record $1 billion of lease assets in the third quarter, and generated $17.3 million of revenue, as well as freeing up excess equity, which we can invest in the business and return to shareholders through dividends and buybacks. Turning now to adjusted operating expenses, the year-over-year increase was largely driven by inflation, capacity needs in our commercial capabilities and client-facing functions, and strategic investment decisions. As I mentioned earlier, Q3 adjusted operating expenses included 3.9 million of non-recurring setup costs related to the strategic emissions. A larger portion of the increases are ongoing investments in commercial capabilities. These are paying off handsomely with resulting net revenue contributions outpacing the adjusted operating expense growth that these investments represent. This has given us positive operating leverage and a 55.4% adjusted operating margin for the third quarter before the non-recurring expenses. The combination of common share buybacks and dividends saw us return $188 million in cash to our investors in 2023 year to date. That return of capital will remain generous going forward, given yesterday's announcement of our 20% common dividend increase to 48 cents per share annually. This dividend is at the midpoint of our 25% to 35% payout range based on last 12 months' free cash flow per share. Before we take your questions, let me highlight two housekeeping items. In 2024, we anticipate $100 million to $110 million of total capital investments required, with approximately $75 million of sustaining capital and the remainder to fund our digitization and automation and other growth initiatives. This is roughly consistent with our 2023 forecasted spend of $100 million, with a modestly heavier weighting to growth initiatives. Second, we anticipate a cash tax rate of approximately 10% this year, 2023, growing to an estimated 12% to 13% for 2024, which remains well below our adjusted effective tax rate of about 25%. In closing, let me say it's great to see the hard work of our people continuing to pay off for our clients. our business, and our investors. Our collective efforts have brought us to this point, and we're incredibly optimistic about what lies ahead. That concludes our prepared remarks for this morning, so I'll turn this call over to the operator for your questions.
spk02: Thank you. To join and rejoin the question queue, you may press star key followed by one on your telephone keypad. Your request will be acknowledged by a tone. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press the star key followed by two. The first question comes from Jeff Kwan with RBC Capital Markets. Please go ahead.
spk00: Hi, good morning. My first question is with respect to your customers, they've obviously gone through a number of years where vehicle replacements have been relatively modest. I'm just wondering, like, if we kind of go down the route of a recession, does that decrease their appetite to replace the vehicles? Or is it from a total cost of ownership perspective, is it still cost-effective to replace the aging vehicles right now rather than just try and hold on to them longer? And are there exceptions where that may not be the case?
spk01: Good morning, Jeff. It's Laura. So I would say generally speaking, given how aged our clients' vehicles are, that it is generally still cost effective just to replace them. So we expect that to continue to happen. That said, in a recession, we would expect to see some of our clients looking to see how they could pare back on the number of vehicles that they have. And that is something that we work closely with our clients with. So all about how to make what they do the most cost-effective. So takeaway is they're going to continue to replace the vehicles just given how aged they are. They need to do that, which is why we're comfortable with the originations and guidance that we've provided. But there will be some, depending upon whether we go into a recession, what it's like, some pullback in terms of overall numbers of vehicles and fleets.
spk00: Okay, thanks for that. My second question was just on self-manage. Just wondering if you can give an update, progress on that front, both just qualitative comments on what's happening there, but also if there's anything you can do in terms of, say, for example, kind of quantifying the revenues, not just what you've got so far, but the embedded financing revenues, because those vehicles, if you are getting wins, don't come into revenues right away. if you're able to give some sort of context of what's been done over the past couple of years since you started to focus on that segment more.
spk01: Yeah, well, I can't go into all the specifics and those details. What I will tell you is for the work that started a few years ago, it's really starting to pay off. As you would have heard, not just this quarter and last quarter, we're really starting to see a pickup in terms of self-managed fleets that we're bringing on, with 22 having been brought on just this quarter. And directionally, we're seeing that our wind rates are also up a lot this year relative to last year. So the work that our commercial team is doing, led by David Madrigal, is really paying off and it's looking good. And we do think, as we've talked about in the past, with the electrification of vehicles, and the desire of our clients to decarbonize that we're seeing a lot more interest from self-managed fleets to look at getting advice from companies such as ours. So we expect to continue to perform well in this space.
spk00: Okay, great. Thank you.
spk02: The next question comes from Paul Holden with CIBC. Please go ahead.
spk07: Thank you. Good morning. First question is for Frank. Any kind of guidance you can give us on medium-term expectations for the net financial margin? Obviously, it's been expanding over time, but a little bit of a pullback this past quarter. Where roughly should that stabilize?
spk04: Yeah. So, Paul, I would expect there to be some modest margin compression driven by, in particular... gain on sale. And so gain on sale will moderate, as we've said before, coming off these very strong periods, and that has contributed to the expansion. That being said, we don't expect any material downturn in gain on sale, but even a moderation or flat would have some pressure on that net finance margin. Additionally, we will see call it roughly $13 million of incremental costs, which is strictly geography for refinancing the preferreds that now show up below the line with debt, and those will now come up above the line. So that will give you some modest margin compression. And then obviously there will be some some of the VFN and or do more senior note deals from that perspective. So that will be offset in part by growth in higher jurisdiction interest rate environments like Mexico and A&Z.
spk07: Got it. And then how should we be thinking about the financial leverage of the balance sheet in consideration of the optimization through 2024, i.e. where should the leverage sort of shake out at the end of the year and I'm assuming obviously you've talked to the rating agencies about this and don't expect any change there but you know has the has the I guess the question I'm trying to ask is like has the the target of financial leverage changed increased to a point where the credit rating agencies are comfortable with higher leverage?
spk04: Yeah, so our targets have not changed at all, Paul. I think where you'll see the change is in our as reported numbers. And so, obviously, those have been running below six times. Our target is plus or minus six and a half times. And as we take out those preferreds, we will drive closer to our targeted levels, which are materially below. any ratings triggers. And so that is not something that we're very concerned at. And yes, we talk to the rating agencies consistently, and they are very comfortable with our plan and from a leverage perspective. And again, significant cushion before any rating triggers would actually even come under consideration.
spk07: Great. Okay. And then last question from me in terms of Those strategic initiatives you highlighted this morning, is there anything embedded in your guidance or the future increase in revenue for the digitization and automation piece? And if it's not, can you give us a sense, at least qualitatively, of how that might provide a financial benefit over time?
spk04: Sure. So there's two components to that. One is, first, I would say, Very clearly, we haven't baked a lot in for the benefits of that digitization and automation at this point. One of the things that Laura has brought to the company is that focus from her past experience on the benefits of digitization and automation, and she's spoken quite eloquently about that since she's arrived here as we move forward. And so bringing on a chief digital officer in David Attard will help us to push that more further. So he is doing that evaluatory work on where we're going to get the biggest bang for the buck from that perspective. I think there will be two benefits ultimately financially, and I believe we will recognize some of those this year or begin to start to realize those. One is just from the commercial perspective, having a better product and ease of use from a driver perspective. The second component is on the automation side, driving more efficiencies through our organization, which will improve our operating leverage overall. But again, I wouldn't expect very large impacts this year. We have looked at the costs, so the costs are built in for that evaluation, and we should see some benefits, but I don't think they will be outsized given where we are in that journey.
spk07: Got it. Okay. Thank you for your time.
spk02: The next question comes from Jamie Glowin with National Bank Financial. Please go ahead.
spk05: Yeah, thanks. First question, just in terms of the order backlog and the excess order backlog that we're in today, in terms of your guidance, how much of that excess order backlog is assumed to unwind through 2024? Will it fully unwind or is it expected to persist?
spk04: Yeah, those are always something that's a little bit hard to call, but yes, we expect some unwinding. of that order backlog through 2024, and depending on the pace of OEM production, we would anticipate that that will have a big impact on does it all unwind or do we have some rolling over into 2025, which I don't think would be an unrealistic assumption where we sit here now. The other thing that I would just add is that, you know, when you look at our orders, we do have enough clients that are still on allocation from an order perspective. And so that could continue to either drive higher originations or keep the backlog a bit higher as we move forward here. And that's all a component of the OEM supply chain and that getting healthier as we move forward. So we're still not near the original, let's call it 2019 normalized order to delivery cycle that backlog has unwound.
spk05: Got it. In terms of the capital structure outlook, the commentary was very clear in discussing the redemption of the preferred shares. It seemed to not be as clear with the converts. So could you just re-educate us on your plan for the converts? Is it to redeem or is it to convert them to equity or just continue to hold or refinance them? What's the plan there?
spk04: Yeah, so the converts, given where they are in the money, they will convert into equity. And so that is where our assumption in my prepared remarks that we believe 397 million of common shares outstanding for the full year is based on that conversion of those converts into equity.
spk05: Okay, got it. And last one, you know, why Dublin? Why was Dublin so much more attractive than, say, Canada or somewhere in the U.S. where you're already currently located? If you could elaborate on that part of the decision process, and then I'll turn it over. Thanks.
spk01: Yeah, hi, Jamie. What I tell you is we considered quite a few locations. We thought about Toronto and thought about Minneapolis and we considered a host of other countries. Ultimately, we landed on Ireland as we felt there were more compelling reasons to set up our U.S. and Canadian leasing operations there relative to other locations. Probably the leading one being that Ireland is recognized as a global center of excellence for leasing. There's almost, I think, almost 5,000 leasing companies that are based out of Ireland. It's also closer to our vol, our global alliance partner. And we like that it really gets us access to industry-leading resources. So in Ireland, there is top leasing talent, and so we think that can help strengthen our product development capabilities. So all of that, setting it up separately, we think gives us just better visibility, more control around optimizing our revenue and overall performance. And we think this approach is really going to drive the most incremental value for our shareholders. Does that help?
spk05: Thank you.
spk02: The next question comes from Graham Riding with TD Securities. Please go ahead.
spk06: Good morning. Maybe I could just start with The utilization side of your servicing has been a healthy driver of your growth rate there. If we do go into a recession or a soft landing backdrop, is that one area of your business where we could see some impact or softness, just clients utilizing their fleets or your services less because lower demand for their services?
spk04: Yeah, I think the way to think about utilization is it's directly tied to miles and hours. miles driven and hours used for those vehicles. And so in a recession, if those miles driven or the hours of use, engine time on those vehicles were to decrease, they would need less maintenance, less tires, et cetera. So that would be what would impact that utilization rate.
spk06: Okay, great. You highlighted earlier in 2023 some mega fleet wins. Are those fully ramped up now and in your numbers that we're seeing today in the run rate? And then any other mega fleet wins that you would flag perhaps in the quarter?
spk01: Well, I'll start. We have had mega fleet wins last quarter, and it does take time. So, again, as you know, when we bring new clients on, depending upon what they've – What they're doing with us, whether it's leasing or services, it does take quite a delay for all of that to show in our numbers. And so you will see that represent in our numbers over time. But I'd say we're making some really good progress without going into any specific names. But we're making really good progress in that segment as well. And go ahead, Frank, if you wanted to add.
spk04: Yeah, the two things I would say, Graham, are first, Remember on the leasing component, those mega fleet winds take four years roughly to ramp up. So you're just seeing a small component of that and probably not even a full quarter of it yet as we've got onboarded those clients, et cetera. Second, in regards to the services component, I've said before, if the services take six to nine months to get those vehicles on, obviously you only get about a half a year of those services. There are circumstances with certain clients where parts of their fleet take a bit longer to come on. A good example of that is clients that are doing merger integration or otherwise and need to deal with some of their internal complexity before bringing those additional units on. So there's also some of that. So the answer to your question is there's more to come in regards to those wins that
spk06: Okay, understood. And one last one, if I could. Just not sure if I missed it, but did you give any guidance or expectations for your origination volumes in 2024 versus this year? Any commentary there?
spk04: No, we did not. But the commentary I can provide you on that is we typically look to growth syndications consistent with growth and originations. And so as we see originations because they are a critical component of the funding piece of it. And the real strength is that as we syndicate those lease assets, we keep all of the services revenue associated with those assets and additionally then have capital to put into the next transaction and therefore self-fund the growth from that perspective. So just think about a growing originations business, which we believe will continue. strongly over the next several years, both as the backlog unwinds and as client demand stays strong, and then syndications growing in lockstep with that.
spk06: Okay, that's it for me. Thank you.
spk02: Once again, analysts who have a question may press star key followed by one. The next question comes from Tom McKinnon with BMO Capital Markets.
spk03: please go ahead yeah thanks very much and good morning wonder if you could talk about some of the pricing improvements you expect releasing as a result of the accountability initiative in Dublin I mean you currently have these Chesapeake funding vehicles I assume are they going to stay in place you're going to roll them into something else what is it that you roll them into that and why are those better And so just some color with respect to how that's going to improve some pricing that you noted, too.
spk01: Hey, good morning, Tom. I'm going to start, and then I'll hand it over to Frank. So what I alluded to in my remarks on pricing had to do with actual lease pricing in terms of how we run the business. And so in centralizing U.S. and Canadian leasing and looking at doing more standardization automations, processes, cleanup, et cetera, we expect to be in a position where we're more effectively pricing our clients, as we'll be in a position to more effectively manage the portfolio. So that was my comment as it related to pricing, and we do expect to do better, which will translate into better performance in our numbers, which was part of the numbers that Frank gave when he spoke about the 40 to 60 million run rates of net revenue starting in 2028. To your second question on what we're thinking as it relates to how we fund ourselves overall in Europe compared to Canada, I'll hand that over to Frank for his views, recognizing that it's still early days.
spk04: Yes. So in the grand scheme of things, we see no material impact to our funding, no impact to our funding or to our lender base. So those lenders will as we move over there. We will be putting together a VFN in Ireland, but again, with the existing U.S. lenders and doing that to facilitate growth there. Our senior line will remain in place with likely Ireland added as a borrower there. And we should be able to, we will be able to issue ABS term notes and do all of the funding that we do today. So, that should be a relatively easy process or seamless process as we move over to Ireland.
spk03: Yeah, and just to follow up, as you sort of centralize this lease pricing, I assume you have people who are client-facing, and then they would say, well, okay, here's sort of what we're thinking about the price for the lease, but now I'm going to have to run it by Dublin. Doesn't that sound... like a disruption in a process? Or just help me think through that little scenario I just suggested. Thanks.
spk01: Absolutely, Tom. So we are not moving any client-facing team members. All of our commercial team remains where they are. What we're moving is the operational part of leasing. And so it's 70 people. So we don't expect it to be, if you will, disruptive. And I'd say in the short term, limited impact. Most won't notice it's happening as it's an internal operation that we manage. What I would say is in the longer term, we do this right. As I mentioned earlier, we'll have more streamlined processes, more standardization, more pricing, discipline, automation in terms of how we do things. It'll be simplified. And all of that will translate into better client leasing experience because it'll be easier for our clients and our sales team when they're dealing with the leasing function. And all of that should mean better returns for our shareholders. Does that clarify?
spk03: Okay, that's good, yeah. And just as a last one here, just in terms of the S&P TSX kind of sector move here, I think it went to industrials from finance. Can you remind us how that gets initiated initiated and what your, why it was and what would the next steps be?
spk04: Yeah, so answer in reverse order, you know, we don't necessarily have a say in those type of sector moves and so we do not believe there will be any material impact on us or our share price as we move forward here. We have some modest volume in some of those indices which would My understanding is rebalance mid-December.
spk03: That was entirely initiated by the TSX and then Anat. Did they have any communication with you before they do that or ask for your input or anything like that or is that just not part of any of those discussions?
spk01: Hey, Tom. We didn't have any discussions. We learned the news at the same time everyone else learned the news, and so we're digesting it alongside everyone else. And so maybe back to you and everyone else on the call will be interested in your views post this call.
spk03: Okay. Okay, thanks so much.
spk02: Thank you. I would now like to turn the conference back over to Laura Dottore Atanasio for any closing remarks. Please go ahead.
spk01: Thank you, Operator. And thanks to our analysts for your questions. And I'm thanking you in advance for the advice you'll share after this reclassification that we had. I wanted to just reiterate my gratitude to the Element team for all of your hard work delivering for our clients. And as a result for our shareholders, as we shared when we started, we're really pleased with our third quarter performance and we're really excited about the strategic initiatives that we've announced. And as Frank and I shared, we're very confident in our outlook for 2024. So we will finish this year strong and we look forward to sharing our next set of results with you in late February. Thank you again.
spk02: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
Disclaimer

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