TWFG - Q3 2024

Transcript

Operator (participant)

Good morning. My name is Josh, and I will be your conference operator today. At this time, I would like to welcome everyone to the TWFG third quarter 2024 conference call. All lines have been placed on mute to prevent any background noise after the speaker's remarks. There will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then one one on your telephone keypad. If you would like to withdraw your question, press star one one again. This call is being recorded and will be available for replay on the company's website. Before we begin, let me remind you that today's discussion may contain forward-looking statements, and actual results may differ materially from those discussed. For more information regarding forward-looking statements, please refer to the company's press releases and SEC filings.

Also, on today's call, our speakers will reference certain Non-GAAP financial measures, which we believe will provide useful information for investors. The company has posted reconciliations of the Non-GAAP financial measures discussed during this call in the tables accompanying the company's earnings press release, located in the investors' section of the company's website at www.twfg.com. It is now my pleasure to introduce Mr. Gordy Bunch, Founder, Chairman, and CEO of TWFG. Sir, the floor is yours.

Gordy Bunch (Founder, Chairman, and CEO)

Thank you, operator. Good morning, everyone, and thank you for taking time to join us today to discuss our third quarter 2024 results. Joining me on the call is Janice Zwinggi, our Chief Financial Officer. After my opening remarks, Janice will review our financial results, and then we will take your questions. I would like to start off every call to take time to thank all of our employees, carriers, agents, clients, and vendors that continue to partner with us to achieve our goals. We have a great team working every day to create one of the fastest-growing independent insurance distribution platforms in the country. This quarter highlighted our team's resiliency as we started July with Hurricane Beryl rolling over our home office, knocking out power and internet for several days. Our home office team executed our business continuity plan, bringing our temporary location online the day after landfall.

Knowing we had a tremendously talented team capable of addressing the challenges from Beryl allowed us to continue launching our IPO roadshow the same day. We completed our IPO in July, raising $192.9 million in net proceeds through the issuance of 12,650,000 shares of Class A common stock at a $17 per share price. Hurricanes Francine, Helene, and Milton further tested our resiliency across Louisiana, North Carolina, and Florida locations. TWFG agencies have been through numerous catastrophic events over our 24 years and have contingency plans in place to address the safety of our agents and staff. TWFG offices can work remotely as needed to continue supporting our clients in their time of need. Our Policy Is Caring is not just a tagline. It comes to life and is most visible during these catastrophic events.

I couldn't be prouder of our agents, employees, carriers, and the first responders answering the call to do their duty during our clients' greatest time of need. I want to remind everyone that TWFG does not have balance sheet exposure to the ensuing losses our carriers will cover. New business production, timing of commissions, overtime expenses, contingency amounts, and temporary operational disruptions would be TWFG's impacts from hurricanes, floods, and other catastrophic events. Our third quarter recruiting efforts continue to outpace our historical growth trends, with our Agency-in-a-Box offering launching 86 new TWFG locations in the quarter. The 86 new agencies opened 13 new states for TWFG branches in Alabama, Connecticut, Idaho, Indiana, Missouri, Nevada, New Mexico, Oregon, South Carolina, South Dakota, Tennessee, Washington, and Wyoming, which we believe will provide future growth for our business.

Please note it will take several years for the newly onboarded agencies to contribute to our current period financials. It is too early to tell how these agencies will perform, but it is good to see the growth in new locations and the geographical expansion. As far as the operating environment is concerned, we are beginning to see improvements in carrier appetites for growth as the industry achieves significant improvements in loss ratios. This is expected to lead to higher new business growth and expansion opportunities heading into 2025. TWFG had a strong third quarter highlighted by 14.5% total revenue growth, 7.6% organic revenue growth, 15.3% adjusted net income margin, and a 21.5% adjusted EBITDA margin. At TWFG, we believe we offer a strong value proposition for the tens of thousands of captive agents and independent agents looking for the right partner to help them grow and perpetuate their businesses.

Our value proposition, coupled with a conservative balance sheet, flexibility around deal structuring, and our efficient operating model, position us well going forward. TWFG continues to build a pipeline of potential acquisitions, and we will have several non-binding letters of intent in the marketplace. I will now ask Janice to review our third quarter results in greater detail.

Janice Zwinggi (CFO)

Thank you, Gordy, and good morning to everyone on the call. Starting with the top line, written premium increased $46 million, or 13%, over the prior year period to $400.1 million. Under our primary offerings, insurance services grew $40.5 million, or 13.5%, and TWFG MGA grew $5.5 million, or 10%, over the prior year period. The increase in written premium was driven by an acceleration in new business and normalizing retention levels. Carriers have begun to open up for new business across geographies where they had previously restricted growth, and consumers have more choices in the marketplace today compared to prior periods.

As a result, we saw a shift in our book, with new business premiums increasing 39%, or $25 million, compared to a decrease of 20.1%, or $16.1 million, in the same period in the prior year, and premium retention normalizing to 88% from 97% in the third quarter of 2024. Total revenue increased $6.9 million, or 14.5%, over the prior year period to $54.6 million, which was driven by accelerating new business activity, rate increases, healthy economic growth in our core states, higher investment income, and moderating retention levels. Commission income increased $4.2 million, or 9.7%, over the prior year period to $48.2 million. This increase was due mainly to higher premium rates, new business growth, and continued rollout of our book of business acquisitions in 2023 into the current period.

Fee income increased $0.8 million, or 37.2%, over the prior year period to $2.9 million, due mainly to an increase in policy fee income driven by higher policy count in our TWFG MGA offering. In addition, branch fee income increased $0.3 million, or 42.2%, over the prior year period to $1.2 million due to an increased branch fee rate. Other income increased $1.6 million, or 270%, over the prior year period, due mainly to increased investment income. Organic revenues increased $4.5 million to $47.3 million for an organic growth rate of 7.6%, driven by increases in premium rates and healthy new business growth.

Now, turning to expenses, I want to make a comment that our expense comparisons to prior year periods for mainly commission expense and salary and employee benefits are skewed given the acquisition of nine of our independent branches in January 2024, which in prior years were operated as Agencies-in-a-Box and have now been converted to corporate branches. The commission expense associated with branch conversions decreased while salary and benefits increased compared to prior year periods. Commission expense decreased $1.7 million, or 5.2%, over the prior year period to $30.8 million. This decrease represents one, a $3.9 million decrease related to the branch conversions, of which $2.4 million shifted to salary and benefits. This was offset by a $2.2 million increase related to growth of the business. Total salary and benefits expense increased by $4.9 million, or 146%, over the prior year period to $8.3 million.

This increase was primarily due to one, $2.4 million increase related to branch conversions in Q1 2024, where commission expense shifted to salary and benefits. Secondly, a $1 million increase related to 2023 corporate store acquisitions, and thirdly, a $1 million increase from the issuance of RSUs in conjunction with the IPO. Other administrative expenses increased $2 million, or 71.2%, over the prior year period to $4.8 million due to the continued growth in the business, branch conversions, and the absorption of public company costs. Amortization and depreciation expenses increased $1.9 million, or 161%, over the prior year period to $3 million, due mainly to the amortization of the intangibles associated with our branch conversions and the 2023 corporate store asset acquisition. Net income for the quarter decreased $0.7 million, or 9.4%, over the prior year period to $6.9 million.

Adjusted net income for the quarter decreased $0.3 million, or 3.9%, over the prior year period to $8.3 million. This decrease represents one, the increase in stock-based comp of $1 million, increase of the amortization to $2.9 million due to the aforementioned acquisitions and branch conversions, and thirdly, offset by an increase in tax expense on adjusted net income of $2.5 million. EBITDA and adjusted EBITDA for the quarter was $10.7 million, with 18.5% growth, and $11.7 million, with 29.7% growth, respectively. Our adjusted EBITDA margin was 21.5% in the third quarter compared to 19% in the prior year period. The margin expansion was driven by branch conversions, corporate locations acquired last year, and economies of scale, offset somewhat by public company costs, which we expect to continue to ramp into our run rate expense base over the next several quarters. With that, I'll turn it back to Gordy.

Gordy Bunch (Founder, Chairman, and CEO)

Thank you, Janice. In summary, this was a solid third quarter. Our recruiting and M&A pipeline continue to build, and we anticipate opportunities to deploy some of our $191 million unrestricted cash and $50 million undrawn revolver capacity in the months and quarters ahead. With that, we would like to open the call for questions. We'll now turn it over to the operator.

Operator (participant)

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. We will pause for just a moment to compile the Q&A roster. Our first question comes from Michael Zaremski with BMO. You may proceed.

Charlie Lederer (VP and Equity Research Analyst)

Hey, good morning. Thank you. This is Charlie, on for Mike. Can you update us on the number of agencies Woodlands has by distribution channel and whether the recent pace of growth is sustainable? To clarify, I think you reported 86 new agencies added in the quarter, and I think you said 44 experienced agent hires from captives last quarter. So we're just trying to understand the comparability and the sustainability of that growth. Thanks.

Gordy Bunch (Founder, Chairman, and CEO)

Thanks, Charlie. Yes, we ended calendar year 2023 with a little over 400 locations, and throughout this calendar year, we've added close to 135, 140 new offices. So total office count right now would be north of 500, and we're seeing other changes in the marketplace that is still giving us a good pipeline flow. We did, in the last quarter, talk about a specific carrier taking action on their distribution that gave us outsized recruiting results for the second quarter that has bled into the third quarter. Most of that has already kind of played through. We did expect more exposure from the IPO and get more attention from prospective independent agencies and existing captive agencies looking to adopt our Agency-in-a-Box model as well as partner with our MGA programs. And so in the Agency-in-a-Box category, that's about 520-plus locations. In the MGA, it's over 2,000.

In our pipeline, as far as inquiries coming in, we still have a lot of activity coming in for new potential Agency-in-a-Box recruits. So we do want to caution that, yes, the second quarter and third quarter were above historical averages, but even looking at what's in our pipeline, we see that there will be a continuation of above our average, but probably not at the same extreme that we saw in, say, the third quarter.

Charlie Lederer (VP and Equity Research Analyst)

Got it. Got it. Thank you. That's helpful. On the contingents in the quarter, if we look at it as a percentage of revenue that ticked up, was there anything one-time in that figure, or is this the right run rate ratio to think about going forward? And is there upside should home insurance loss ratios continue to improve in the coming years?

Gordy Bunch (Founder, Chairman, and CEO)

Yeah. So we'll have some adjustments in the fourth quarter when we get closer to seeing the year-end results. I think when you look at the prior periods where you had auto loss ratios for personal lines and homeowners loss ratios elevated in the prior calendar years, that had taken us to a historical low. And as we are starting to see the results of improved loss ratios across both lines of business, we're starting to see the contingencies coming more toward a normalized level. This is still below the peak contingency revenue ratios that we've seen in the past, but so far, everything's looking good for the back half of 2024, which we think will continue on in 2025.

Charlie Lederer (VP and Equity Research Analyst)

Thank you.

Operator (participant)

Thank you. Our next question comes from Paul Newsome with Piper Sandler. You may proceed.

Paul Newsome (Managing Director and Senior Research Analyst)

Good morning. I was hoping you could give us a little bit more color about the change in the customer retention as it relates to the opening of the various states for new business. It sounds like there's a little bit of a push and pull with the new business helping, but the retention offsetting that. And I was wondering if that is behavior you think will continue or if there's some sort of differences in how those two work together?

Gordy Bunch (Founder, Chairman, and CEO)

Yeah. Thanks, Paul. I think there's a couple of things occurring when you look at the premium retention. One, more markets have opened up to accept new business across a larger geography in the third quarter than was present in the first and second quarter. That's providing our agents and our customers alternatives for their insurance that's renewing. It's also giving us more opportunities to write new business in areas that previously were restricted for new business. And so it's not that a customer is being lost or going elsewhere.

It could be that the renewal premium or the expiring premium with, say, Travelers might have been $2,000 a year, but now that there's two or three new markets that have opened up, that Travelers' renewal may come in at $2,500, but we have two or three alternative markets that will offer same and similar coverage for, say, $1,800 or $1,900. So the customers are having some options on where they want to place their renewals. And similarly, customers, even in areas that are still hard, that have less options, they're making coverage decisions where the renewal for their premium may come in at +15%, 20%. They'll work with their agent on how do they mitigate that increase. And so many customers are opting to increase their deductibles or alter their coverages to help lower their rates to make their premiums more affordable.

So that's part of what you're seeing in the premium retention. And then, yes, new business has escalated as our agents are able to secure insurance across a broader portfolio. We indicated last quarter that we saw signs that the market was starting to head towards normalization. I would say that that trend line continues. We expect it to become fully normalized in the private passenger auto side through 2025. There's still some states that are working through rate filings and rate adequacy, but for the most part, all of our major markets are signaling positivity towards 2025 and being more broadly open and looking to reinitiate growth initiatives. So good tailwinds in that manner.

Paul Newsome (Managing Director and Senior Research Analyst)

Great. Appreciate the help. Thank you.

Operator (participant)

Yep. Thank you. Our next question comes from Tommy McJoynt with KBW. You may proceed.

Dean Criscitiello (Equity Research Associate)

Hi. This is Dean Criscitiello for Tommy. You guys called out a change in the fee commission structure of one of the MGA programs being like a headwind to organic growth this quarter. Is there any way to quantify that impact? And then also, would you expect some modest headwinds in the fourth quarter or the first quarter of next year as well?

Gordy Bunch (Founder, Chairman, and CEO)

I understand.

Janice Zwinggi (CFO)

So, referring to the MGA program for Dover Bay, we did see and we projected as well to we had a decline of $1 million for the quarter. So we expect to see that when we compare next year. We won't have this anomaly. But that is, we have a flat fee now, but it was the $1 million with the effect for the quarter of less fee income.

Gordy Bunch (Founder, Chairman, and CEO)

Yeah. And Dean, so to answer your question about will you see that next year, we should not see that next year given that we have a five-year agreement. We have a flat fee with a reset annually. So this was the most acute quarter. We knew that this was going to occur. We included that in our analyst models, and it played through exactly as expected, but should not be a reoccurrence in 2025 given that we would have lived through the first year of that transition of the agreement.

Dean Criscitiello (Equity Research Associate)

Okay. That makes sense. And then my next one, could you guys just remind us of what goes into that other income line? I know it ticked up a bit year-over-year. I think you mentioned it in your prepared remarks, but can you just remind us about that and then how we should think about a run rate going forward?

Janice Zwinggi (CFO)

So that other income, 95% of that is interest investment income, and it's increased because we have more cash, obviously, from the IPO proceeds. So you'll see that in our projections going forward to be increased based on our depending on when M&A falls into place. But yeah, you'll see that rate go up.

Dean Criscitiello (Equity Research Associate)

Thank you.

Operator (participant)

Thank you. Our next question comes from Brian Meredith with UBS. You may proceed.

Brian Meredith (Managing Director)

Yes. Thanks. Gordy, I was hoping you could talk a little bit more about the M&A pipeline. Do you think you might see some land here in the fourth quarter? I know original expectations are probably not till next year. And is being a public company helped at all as far as things you're getting to look at?

Gordy Bunch (Founder, Chairman, and CEO)

So first question, right now, we do have signed LOIs out with two acquisitions that we anticipate closing January 1st for simplicity, so not in the fourth quarter, in line with what we provided in our projections in the analyst model. As far as are we seeing significant activity lift from the awareness of the IPO? Yes. I would qualify that as substantial. Our pipeline is robust, and it spans retail MGA programs. We are seeing things internationally. We're chasing anything outside the country. We are getting a lot of looks coming our way from a number of investment banks, M&A brokers, and honestly, some agencies that are reaching out to us proactively, knowing that we are a buyer in the space and they have familiarity with our organization and are actually seeking us out as potential preferred buyers. So we do have a good pipeline.

We do anticipate meeting what we provided in the analyst model, which, if you recall, had a year-end convention of revenue and EBITDA that we provided to you. And we will be closing those transactions 1/1. So instead of 12/30, we want it to be 1/1, and that just gives us a clean cut for the employees of the acquiring targets and for us to live launch with those folks beginning of the calendar year.

Brian Meredith (Managing Director)

Appreciate that. Makes it easy for us too. Thanks. And then second thing, wholesaler. Could you talk a little bit about kind of flow of business into your wholesaler? What are you seeing as maybe the market's opening up a little bit here, or is it still a lot of business flowing that way?

Gordy Bunch (Founder, Chairman, and CEO)

Our program side is seeing an influx of activity. The market in our core states is still relatively hard on the property side. So we are getting increased volume in our programs, which is doing homeowners insurance across the state of Texas as well as high-value home programs across the country. So as that property segment remains hard or fragmented, we are seeing more engagement in the wholesale side. So our GA showed positive growth in the quarter. A lot of that was driven through our programs business.

Brian Meredith (Managing Director)

Great. Thank you.

Gordy Bunch (Founder, Chairman, and CEO)

Yep.

Operator (participant)

Thank you. Our next question comes from Scott Heleniak with RBC Capital Markets. You may proceed.

Scott Heleniak (Senior Equity Insurance Analyst)

Thanks. Good morning. Just wondering if you could talk about market conditions and capacity opening up. I know you kind of referenced that in auto and talking about some normalization, but I wonder if you could talk about home, particularly in Texas. I know that that continues to be kind of a more difficult, challenging state given what's happened with catastrophe losses. But what are you seeing out there, and do you expect to see normalization in Texas and those places of homeowners in 2025 at some point?

Gordy Bunch (Founder, Chairman, and CEO)

So with auto, I think auto will be a different story than home. Auto seems to have achieved rate adequacy, and most of the national underwriters are projecting confidence in rate. Many are starting to institute new business incentives, which is the signal that we like to see as they're committed to the growth. On the property side, I'm sure you saw the announcement from Progressive on being more selective, that restricted underwriting guideline that they're looking for bundled packages and some of the less appetite for cat-exposed geography. That's going to create a pretty decent void in the marketplace. That marketplace void will get filled by regional markets, new startups, programs. And so our job is to make sure we're aligning our distribution up with the available capacity that exists across a span of carriers, including our own programs.

So in Texas specifically, Scott, our homeowners program has seen tremendous growth starting back in April when Progressive first announced their restricted underwriting guidelines. We do see a couple of the national carriers that are signaling that they have more confidence in their roof age scheduling for coverage reductions and underwriting guidelines and pricing that they're going to be more open for property. So I think it's going to be a combination of a shrinking national market and an expanding regional, super regional, and new programs that come to fruition that prop up the property side.

Scott Heleniak (Senior Equity Insurance Analyst)

Okay. That's definitely helpful, color. The other thing I want to ask you is just, is there any way you can quantify what the new public company expenses were in the quarter and how you see that trending over the next few quarters? I mean, you just went public, so obviously, there's a little more to come, but anything you can point to on either of those?

Gordy Bunch (Founder, Chairman, and CEO)

I know my audit expenses are significantly higher as a PCAOB audit. My legal fees are significantly higher than a private company. Maybe when we have our 1/1, we give you more granular detail. I don't have that number top of mind. We do know, and hopefully, you picked it up in our language, that we do anticipate additional public company expenses coming in through the next several quarters. We have some open positions, more SEC-related experienced roles that we're looking to fill. Those aren't in our current actuals, but they are in our forecast budgets. So even though we're achieving, our EBITDA is higher than we projected in this quarter, we want to make sure that we're consciously conveying that we will have some hires that will bleed into the actual results going forward.

But they are in our projections, and when we provide updated projections, we'll include those.

Scott Heleniak (Senior Equity Insurance Analyst)

Okay. And then just lastly, the retention rate, do you expect that to kind of stay normalized in the high 80s? I know it had been in the 90s, but do you kind of expect that run rate to be kind of the new run rate, or could it go back to the 90s next year?

Gordy Bunch (Founder, Chairman, and CEO)

Yeah. So, Scott, our actual longer-term historical averages have been 88%, and I think when we did the analyst model back in the spring, we showed 88% in the model even though we were currently in the 90s, so we expected this normalization of the market, the customer behavior to self-advocate rate down to get us back to where we're at on this 88% trajectory.

Scott Heleniak (Senior Equity Insurance Analyst)

Great. Thanks.

Operator (participant)

Yep. Thank you. And as a reminder, to ask a question, please press star one one on your telephone. Our next question comes from Pablo Singzon with JPMorgan. You may proceed.

Pablo Singzon (Executive Director)

Hi. Good morning. So most of my questions have been asked, so I'll probably just ask more follow-ups here. So first, just on expenses, given the ramp-up in public expenses, how much higher do you think the quarterly G&A will run from here? Right. I think the quarter was 4.8, but how much higher can it go from there?

Janice Zwinggi (CFO)

You said G&A?

Gordy Bunch (Founder, Chairman, and CEO)

Yeah.

Pablo Singzon (Executive Director)

Yep. G&A. Yep.

Janice Zwinggi (CFO)

Oh, it's $4.8, yeah, for the quarter. So we're up $2 million from prior year. And going back to the question that you had on the professional fees, roughly of that $2 million, we've got $500,000 as in professional fees that have increased. And we are expecting we got the fees from mainly audit and legal is going to be the big guys, and then the salary. So I would say roughly 15%-20% is what we have in our projections for next year increasing.

Gordy Bunch (Founder, Chairman, and CEO)

Yeah. So I don't know if you heard that, Pablo, but half of the increase is legal and audit, and we still have legal estimates to come in, which may spike higher. But then we have open positions, which will be new salaries related to being public. That could be another $500,000-$1 million that's not currently in the actuals. So as we live into those new hires, new roles, we'll keep updating, but we're anticipating at least another $1 million of salary and possibly $1 million to somewhere in that range.

Pablo Singzon (Executive Director)

Got it. And the million is on an annual basis, Gordy, or on a quarterly basis?

Gordy Bunch (Founder, Chairman, and CEO)

No. A million would be on an annual basis.

Pablo Singzon (Executive Director)

Okay. Gotcha.

Gordy Bunch (Founder, Chairman, and CEO)

A million to.

Pablo Singzon (Executive Director)

Gotcha. And then second follow-up. So the topic of retention had come up, I think, once or twice in the call already, but I guess just to follow up on one question about the retention had been from new agents rolling their books into broader markets available in your platform. So as you continue to experience above-average growth over the next several quarters here, is there a risk of the company falling below the normal 88% retention, right, just as you're experiencing this above-normal growth?

Gordy Bunch (Founder, Chairman, and CEO)

The retention is on prior year actual business. Agents that may have joined us that are bringing in customers from prior relationships, those show up in the new business category. We're looking at that 88% retention as being the long-term average. I don't expect that the agents that are bringing in portfolio or rewriting accounts from outside are going to impact that 88%. We think that's a pretty good long-term number.

Pablo Singzon (Executive Director)

Okay, and then last for me, so income tax expense booked on a GAAP basis is lower than the taxes you show for adjusted net income. What's the reason for that GAAP, and is that a real cash benefit to the company? Thank you.

Janice Zwinggi (CFO)

So the tax expense you're seeing is just on the PubCo income. Their pro rata share, which is roughly 24%, 25%. So it's 21%-22% tax rate. So that's why you see them much lower. We don't have on the LLC side, there's no it's a partnership, so you don't have taxes associated with that. It's just on the PubCo, and it's their percentage interest.

Pablo Singzon (Executive Director)

Thank you.

Janice Zwinggi (CFO)

Yeah. Thank you.

Operator (participant)

Thank you. Our next question comes from Michael Zaremski with BMO. You may proceed.

Charlie Lederer (VP and Equity Research Analyst)

Hey, thanks. This is Charlie again. Just one follow-up. Can you update us, please, on the run rate for stock comp from here?

Gordy Bunch (Founder, Chairman, and CEO)

Right now, stock comp for the quarter was really amortization of the RSUs from the IPO grants. There were a little over 7 million at IPO granted that will vest over a two-and-a-half-year period. Those will amortize throughout those quarters. Our comp committee will be approving the stock comp or equity comp plan for 2025 and the awards for 2024 in December. We had, in the analyst model, an annual stock comp of around 4 million as a placeholder. Once we get through the comp committee's recommendations and the board's ultimate selection of 2024 awards and 2025 incentives, we'll normalize whatever that total amount is. Right now, 4 million a year was a good placeholder.

Charlie Lederer (VP and Equity Research Analyst)

Thank you.

Operator (participant)

Thank you. At this time, there are no further questions. I will now turn the call back over to Mr. Bunch.

Gordy Bunch (Founder, Chairman, and CEO)

Thank you, Josh. Thank you all who attended this morning's call. We look forward to continuing to provide information on our company's growth and prospects going forward. I know we have a number of follow-up calls with many of you, and we look forward to getting into more details and answering more of your questions. Again, we had a great third quarter in line with what we provided in our projections and the analyst models, and we look forward to continue to execute against our plans, and looking at the current year-end guidance would be the same as we provided in the analyst model. We are seeing things that are playing out the way we had projected, so appreciate everybody on the call and look forward to reporting full year, our fourth quarter information year coming up in the first quarter of 2025. Thank you.

Operator (participant)

Thank you. And that concludes today's conference. Thank you all for participating. You may now disconnect.