Priority Technology Holdings Inc (PRTH) 2019 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. And welcome to the Priority Technology Holdings Third Quarter 2019 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Chris Kettmann. Please go ahead, sir.

Good morning, and thank you for joining us today. With me today are Tom Priore, Chairman and Chief Executive Officer of Priority Technology Holdings; and Mike Vollkommer, Chief Financial Officer.

Before we provide our prepared remarks, I would like to remind all participants that our comments today will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 regarding future expectations about the company's business, management's plans for future operations or similar matters, which are subject to certain risks and uncertainties. The company's actual results could differ materially due to several important factors, many of which are beyond the company's control. Including those risks and uncertainties described in the current report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2019.

Any forward-looking statements we make today are only as of today's date, and we undertake no obligation to publicly update or review any forward-looking statements. Additionally, we may refer to non-GAAP measures, including EBITDA, adjusted EBITDA and earnout adjusted EBITDA during the call. Please refer to our public filings and disclosures, including those referenced in our press release announcing this call, for definition of our non-GAAP measures and the reconciliation of these measures to net income. We have also provided an accompanying presentation with today's call that will help us more clearly articulate our results and go-forward strategy.

With that, I would now like to turn the call over to our Chairman and CEO, Tom Priore.

Thank you, Chris, and thanks to everyone for joining us.

Our third quarter 2019 results reflected the strong underlying growth we've seen over the past several quarters, particularly when excluding the continued impact from the change in the subscription-billing e-commerce business.

Consolidated revenue of $110 million during the quarter increased 6.1% from the prior year third quarter, driven by solid improvement in the Consumer Payments segment, exceptional growth in the Integrated Partners business and steady performance in Commercial Payments.

As we've discussed since last year, the primary factor creating headwind and prohibiting us from reporting exceptionally strong year-over-year growth is the impact of the subscription e-commerce business and the closure of roughly 1,200 merchants in order to ensure compliance and good standing with Mastercard's program criteria.

While the process to reboard these customers has been relatively slow, I'm pleased to report that the business is steadily coming back. In the third quarter, we generated $1.3 million of revenue from e-commerce subscription customers, and we're confident that number will continue to rise in the quarters ahead.

Adjusted consolidated revenue of $108.7 million, which excludes the impact of the subscription-billing e-commerce merchants, grew by more than 18% over the third quarter of 2018. Gross profit margin for the quarter, an important metric for Priority, increased 110 basis points from 26.3% to 27.4%.

In a few minutes, Mike will provide greater detail on our third quarter 2019 financial results. Before he does, however, I'd like to provide an update on the success we're experiencing in several key areas of the business, including updates on the strategic acquisitions and new partnerships we've completed over the past year.

For those of you who are new to our story, our core merchant acquiring business has historically served as a linchpin of our offering, and we're proud to have grown to the sixth largest nonbank merchant acquirer in the U.S. Building on this key part of our business over the past several years, we've strategically aligned Priority to capitalize on our anticipated convergence of software and payments by creating a purpose-built cloud platform, where applications and payment adjacent products reside. The Integrated Partners segment, which is new to us, in the past year, is the manifestation of that vision, and we're leveraging our platform in many other areas of our business as well.

With that as a backdrop, I'd like to talk about the different segments of our business. And let's start with our core acquiring business. Our Consumer Payments business continues to be driven by our proprietary MX platform technology, which provides resellers and merchant clients a flexible and customizable set of business applications to help better manage critical business work functions and revenue performance.

Despite headwinds caused by the recalibration of the subscription-billing e-commerce business, third quarter merchant bankcard volume processed by the Consumer Payments segment increased 9.6% over the prior year quarter. In addition, merchant bankcard transactions grew by 8.9%, and our average ticket increased 0.6% year-over-year.

Overall, new boarding trends continue to be strong at approximately 5,000 per month. And importantly, portfolio volume attrition, which benefits from 75% of our volume process on integrated or semi-integrated products, remains one of the lowest in the industry.

We are pleased to see the reboarding of e-commerce subscription customers strengthen in the quarter and are confident in our previous expectation that our specialized merchant acquiring segment, including subscription e-commerce, will transition from a year-over-year headwind to a tailwind in the upcoming quarters.

Now adjusted for the subscription e-commerce and the impact of acquisitions from January 2018, which reflects just a purely organic growth rate, our Consumer Payments recurring net revenue grew by 9.7% in the LTM period. We expect to continue driving similar levels of growth as we deepen relationships with resellers and introduce new products to the network such as our recently announced partnership with Company.com in which we successfully implemented the Services & Technology Application Cloud, or STAC, platform. This new offering allows Priority provide a number of bundled and ancillary products and services via Company.com's innovative, personalized business dashboard.

Building on our efforts to grow the business organically, a key part of Priority's acquisition strategy remains focused on identifying accretive purchases within existing and new sales channels, and defensively position payment software opportunities, such as health care and real estate, where the trend toward electronic payments is still in the early stages and volumes will continue to grow rapidly regardless of the macroeconomic environment.

When factoring in recent acquisitions since 2018 and extracting the impact of the subscription e-commerce merchants, Consumer Payments recurring net revenue grew by 12% in the LTM period.

We're presently engaged in several acquisitive opportunities that will complement our existing platform, both in strong markets as well as economic downturns, and we'll provide further updates should they move to completion prior to the end of the year.

Now moving on to the Commercial and Managed Services segment, Commercial Payments revenue of $7 million in the third quarter was consistent with the second quarter of 2018. The Commercial Payments business continues to be underpinned by our CPX automated payables technology as third quarter revenue from our CPX accounts payable automated solutions increased by roughly 83% year-over-year. In addition, Commercial Payments merchant bankcard transaction volume increased 45.7% in the quarter compared to the prior year period. The increase in the adoption of CPX has resulted in recurring net revenue growth of 26.7% in the LTM period. This positive momentum on the CPX side was offset by a nearly $1 million revenue decline from our curated managed services program, due largely to lower incentive revenue in the third quarter. We'll remain focused on optimizing the platform as the industry further realizes the cost and efficiency benefits of electronic payments in the commercial sector.

To highlight the potential opportunity in front of us, our total payment volume, either under contract or currently being negotiated, is roughly $58.1 billion, which is an $11.6 billion increase from the end of quarter 2.

Priority's third segment is our Integrated Partners business. And although we only formed the Integrated Partners just over a year ago, we're extremely pleased with the segment. The segment generated $8.9 million in revenue during the third quarter, led primarily by our Priority Real Estate Technology, or PRET, business line.

Priority PayRight Health Solutions and Priority Hospitality Technology make up the remainder of the Integrated Payments segment. Each posted strong initial results and represent a sizable opportunity to grow, and I'll expand on each of these areas now.

Priority Real Estate Technology maintains a single platform that addresses the needs of a full spectrum of landlord constituents from integrated enterprise property managers and middle market partners to small and local landlords for rent, dues and storage payment processing. The growing preference of consumers to pay their rent electronically align very nicely with our defensively minded integrated payments solution strategy. PRET continues to be fueled by our March 2019 real estate payments operating partnership with YapStone and the integration of our RadPad and Landlord Station assets.

Priority have assumed responsibility for the management and daily operations of the combined real estate business and recurring net revenue has increased approximately 10% since April, which was the date we took over the operation of the combined business. Even more, PRET is poised for a further improvement as the new enterprise partners have joined the platform and portfolio optimization outreach strategies to existing partners have been initiated.

Priority Hospitality Technology was formed to provide technology solutions to the hospitality marketplace. Priority's portfolio of approximately 32,000 hospitality merchants has been historically underserved with proprietary product offerings. And we're strategically solving that problem with integrated point-of-sale and order ahead -- and an order-ahead product suite that can be sold as a full package or individually. And while our -- we're still refining our proprietary point-of-sale offering, our order-ahead technology, e-Tab, experienced 55% growth in recurring net revenue in the LTM period.

On the health care front, Priority PayRight has continued its positive momentum following the recent release of several integrated product offerings. Recurring net revenue for this channel has increased 185% for the LTM period and other key year-over-year KPIs are showing similarly strong results. These include an 82% increase in third-party payments billing volume, a 105% increase in PayRight software revenue, a 145% increase in PayRights payment gateway processing volume and 300-plus percent increases in both total gross revenue and in net revenue.

In conclusion, I remain extremely excited about the future of Priority. The agility of our operating and technology infrastructure supports our strong position as a consolidation platform for payment operating and software companies, adept at delivering an integrated payment experience to our customers and reselling partners at scale.

Furthermore, the diversification high-growth attributes of Commercial Payments and our defensively minded integrated payments creates a foundation for Priority that is well positioned over the long term to perform through changing economic cycles.

We expect to capitalize on further acquisition opportunities as the market turbulence arises, and we look forward to sharing further updates on our progress in the quarters ahead.

I'd now like to ask Mike Vollkommer to provide further information on our third quarter results. Mike?

Thank you, Tom, and good morning. I'll review the consolidated third quarter results and provide comments on segment performance. Where I cite a non-GAAP measure, you can refer to today's press release that provides a reconciliation of these measures with GAAP. We've also provided supplemental slides that are available on the IR portion of our website to assist with reviewing the results.

Consolidated revenue in the third quarter of 2019 was $110 million, an increase of $6.4 million or 6.1% compared with the 2018 third quarter. As expected, revenue growth continued to be constrained by the wind down of subscription-billing e-commerce merchants. In the third quarter of 2019, on a non-GAAP basis, consolidated adjusted revenue increased 18.4%. The supplemental slides on our website illustrate the quarterly wind down of revenue from these merchants.

Fourth quarter 2019 year-over-year revenue growth will also be constrained by the wind down, but to a lesser extent than third quarter. And as we move into the first quarter of 2020, these difficult comparisons will finally be behind us.

Tom has already provided comments on revenue performance within the reportable segments. So I'll move on to other areas.

Consolidated gross profit of $30.2 million increased $2.9 million or 10.7%. Our gross profit metric represents consolidated revenue, less the 2 operating expense line items on the statement of operations entitled costs of merchant card fees and costs of outsourced services.

Consolidated gross profit margin was 27.4% in the third quarter of 2019. That's an expansion of 110 basis points from 26.3% in the 2018 quarter. Gross profit associated with subscription-billing e-commerce merchants was $0.5 million in the third quarter of 2019 and that compares with $4.1 million in the third quarter of 2018. So on a non-GAAP basis, adjusted gross profit was $29.7 million in the third quarter of 2019, an increase of $6.5 million from $23.2 million in the third quarter of 2018.

Consolidated income from operations in the third quarter of 2019 was $2.7 million, a decline of $0.8 million compared with $3.6 million in the third quarter of 2018. Now this decline was driven by a $5.2 million increase in depreciation and amortization, and that's associated with acquisitions and capital investment over the last 12 months. All other operating expenses, which are salary and employee benefits and SG&A, totaled $17.4 million, a decrease of $1.4 million.

Operating expenses in both comparative quarters do include certain costs that we consider nonrecurring in nature. In the third quarter of 2019, nonrecurring expenses of $1.2 million were associated with amortization of purchase price allocated to the temporary free transition services related to integration of the YapStone transaction, certain litigation costs and professional fees.

In the third quarter of 2018, nonrecurring expenses of $3.5 million included legal, accounting, advisory and consulting fees, largely associated with the conversion to a public company.

On a non-GAAP basis, excluding gross profit from subscription-billing e-commerce merchants and nonrecurring expenses from the comparative quarters, consolidated adjusted income from operations totaled $3.4 million in the third quarter of 2019, and that's an increase of $0.4 million from the third quarter of 2018.

Now let's break this down within reportable segments. Consumer Payments income from operations in the third quarter of 2019 was $7.2 million compared with $11.9 million in the third quarter of 2018. Gross profit of $23.2 million decreased $0.3 million. Depreciation and amortization of $8.3 million increased $3.9 million and other operating expenses of $7.7 million increased $0.5 million.

So just to remind you, the higher depreciation and amortization is largely related to the acquisitions of affiliated assets and -- affiliate assets in Direct Connect, which occurred subsequent to the third quarter of last year.

Commercial Payments loss from operations in the third quarter of 2019 was $0.4 million compared with $0.1 million in the third quarter of 2018. Gross profit in this segment of $2.9 million decreased $0.2 million, and that's primarily due to a decline within managed services, largely driven by lower incentive revenue in the third quarter of 2019.

Operating expenses, including depreciation and amortization, totaled $3.3 million, and that's an increase of $0.2 million from the $3.1 million level in the third quarter of the prior year.

Integrated Partners income from operations in the third quarter of 2019 was $1 million, and that compares with a loss from operations of $0.4 million in the third quarter of 2018. Gross profit of $4.1 million increased $3.4 million.

Depreciation and amortization was $1.3 million, and that increased $1.2 million, and other operating expenses of $1.8 million increased $0.8 million. The depreciation and amortization relates to assets acquired in forming these Integrated Partners operations since last year.

Other operating expenses included $0.4 million of purchase price allocation to temporary free transition services from YapStone related to the integration of that business in March 2019.

Integrated Partners adjusted income from operations in the third quarter of 2019, excluding these nonrecurring transition services, was $1.4 million.

Corporate expense in the third quarter of 2019 was $5.1 million compared with $7.9 million in the third quarter of 2018. Nonrecurring operating expenses were $0.8 million in the third quarter of 2019 and $3.5 million in the third quarter of 2018. So excluding these nonrecurring expenses, the corporate expense totaled $4.3 million in the third quarter of 2019, and that compares with $4.4 million in the third quarter of 2018.

Interest expense of $10.5 million in the third quarter of 2019 increased $3.1 million from $7.3 million in the third quarter of 2018. The increase was due to higher outstanding borrowings driven by debt financing of acquisitions subsequent to the third quarter of 2018.

So let me move on tax -- the income tax line. The provision for income taxes of $2.5 million for the 9 months ended September 30, 2019, reflects the impact of Internal Revenue Code section 163(j) limitation on deduction of business interest. Now as discussed in the second quarter call, section 163(j) limits the business interest deduction to 30% of adjusted taxable income, or ATI. For taxable years through 2021, the calculation of ATI closely aligns with EBITDA.

Commencing in the second quarter of this year, we began recording a valuation allowance to offset the benefit of any excess interest carryforward deduction. Therefore, as you recall, the second quarter of 2019 included a discrete valuation allowance expense of $2.6 million related to the associated deferred tax asset benefit recorded in 2018.

Now applying section 163(j), into quarterly effective tax provision calculations can often result in intra-year true-ups as we allocate the forecasted tax expense for the year into the quarters. And that's driven by updates to full year business interest forecast and adjusted taxable income forecast.

As a result, the provision for income taxes in the third quarter of 2019 resulted in a net benefit of $1.7 million. With our current full year forecast, we anticipate the fourth quarter tax benefit to be largely offset by the business interest limitation. So the net of all this is that the full year tax provision expense is expected to approximate $2.6 million, and that is the discrete -- related to the discrete valuation allowance item recorded in the second quarter for the 2018 deduction.

Consolidated adjusted EBITDA of $15.3 million in the third quarter of 2019 increased $2.9 million or 23.6% compared with $12.4 million in the third quarter of 2018. The company's non-GAAP consolidated adjusted EBITDA measure is earnings before interest, taxes, depreciation and amortization, further adjusted by noncash equity-based compensation and expenses that we consider nonrecurring.

Now last quarter, we reiterated our 2019 financial guidance of modest revenue growth despite a forecasted $50 million year-over-year gross revenue decline from subscription-billing e-commerce merchants. And we also targeted earnout adjusted EBITDA of approximately $75 million. This guidance considered second half 2019 revenue growth from our newly established specialized merchant acquiring program, which was expected to generate approximately $8 million of EBITDA in the second half of the year. Due to delays in establishing BIN sponsorships for this program caused by the acquisition of our processing provider, we now expect to realize only minimal revenue growth from this program in the second half of 2019 and to begin achieving our targets in 2020. As a result, we now anticipate 2019 consolidated revenue to only slightly exceed 2018, and we have revised the 2019 earnout adjusted EBITDA expectation to be approximately $70 million.

Now it should be noted that these expectations may be positively impacted by acquisitions executed in the fourth quarter of 2019.

So now I'll turn the call back over to Tom.

Thanks, Mike. Operator, we'll now open the line for questions, please.

(Operator Instructions) Our first question comes from George Mihalos from Cowen.

I guess, first question on our end. If we look at the specialized merchant acquiring that you were talking about coming in over the second half of '19, that's predominantly traditional e-com business, right, that was lost. But I'm just curious, that delay in the BIN sponsorship, is that from one processor or multiple processors that you're affiliated with?

It's from one processor, George. The BINs are actually established, so they're complete. But they will not launch for additional volume until January of 2019 -- 2020, excuse me.

Okay. So you'll see that in the first quarter of next year. And just to be clear, the right way to think about it, if that program is contributing $8 million of EBITDA over the back half of this year, that that will be a $15 million EBITDA benefit as I'm looking out into 2020?

It will be -- it will ramp up to that run rate. So it will take some time to get that volume up and running. So going into second quarter of next year, we'll -- second or third quarter.

Okay, that's helpful. And just...

So basically, George, look at it this way. That was basically a slide what we had in the summer. We thought we'd be up and running now. So what's happened there, it's not -- it's a slide of timing starting to capture that business from '19 into 2020.

So George, if I were to comment, perhaps a conservative way to look at it. It contributed approximately $12 million of EBITDA, $11 million and change. So the goal is to reestablish it at that level. The nice thing about the -- these particular relationships is they actually have -- they open us up beyond just the subscription segments with these BIN sponsors. So we'll be adding some new segments to the specialized merchant acquiring BIN relationships, which should provide diversification and also some additional opportunity on the revenue side that we haven't had before.

That's helpful. Just to kind of close out the point on e-com. It sounds, Tom, like what you're saying is that this was, sort of, the low point. 3Q was kind of a low point, a little over $1 million contribution on the revenue side. That will start to increase sequentially in the fourth quarter, but obviously, it will still be a headwind year-over-year. Is that the right way to be thinking about it?

Yes. I would look at the significant upward trajectory of that to start in 2020. So conservatively speaking, let's look at the fourth quarter to look a bit like the third quarter, which is why I said, we'll still have that bad comp in the fourth quarter. But then that will be finally behind us next year because Q1 of '19 was low. And so the -- we'd suspect that the new business boarding and that specialized program will overcome that bad comp in the first quarter. So we will stop talking about the adjusted results in 2020.

Okay. And just last question for me. The underlying merchant business, that was, I'll call, around about a double-digit, anything you can say there from the perspective of new merchants coming on? Is there a specific vertical that's driving that? That seems to be healthy, and it seems to be in line with the underlying volume growth that you're seeing.

Yes. If anything, it's become more diversified, particularly as we've added verticals that we are a bit more in control of, like the health care segment and the real estate segment, which, as of the last year, are relatively new to Priority. So the core of our distribution channels are pretty steady, and they're reflective of the general economic makeup or business makeup of the U.S. And then they've been enhanced by more vertically focused opportunities on the integrated side. And consistently, we're seeing between 5,000 and 5,200 at a peak point in new merchant boards per month.

Our next question comes from William Gibson with Roth Capital Partners.

Could you give a little more color on the incentive payment decline? What was behind that? And did it impact consumer as well as commercial?

No. It's only impact was on the commercial side and specifically within our Managed Services offering. So these are sales operations that are -- that we manage for large financial institutions, like American Express, and within some of these programs for levels of performance we'll meet incentive targets for bonuses that had been met the prior year and were not met in this quarter.

Okay. So the programs are still out there and could be reached next year?

Yes. They could be reached next year. They also could be reached in the fourth quarter, so.

Okay. And so the -- aside from the subscription loss in Consumer Payments, is that what drove the drop in operating income or was there more than that? And did I miss that on the explanation?

No. That was largely the drop. And when you -- if you look at it, and the reason why EBITDA is -- grew so well is because the big factor -- the other factor is the increase in depreciation and amortization related to acquisitions. And so -- but yes, you're right on. It's -- the GAAP to GAAP is largely driven by the e-com.

(Operator Instructions) Our next question comes from Eric Spector with Fortress Investment.

Just a few of them. First, what was the revenue contribution from acquisitions this quarter? And maybe you could break that down by segment?

Well, if you take a look at the Integrated Partners, the YapStone acquisition was the biggest piece, and that actually is the single biggest piece of revenue, and that was about $7-and-change million on the quarter. Then there was a couple of million dollars from Direct Connect that we acquired in the fourth quarter last year.

Yes. If -- perhaps a good way to look at it just on a percentage basis over the LTM period, so the total recurring net revenue growth was roughly 12% and 9.7% of that was organic and 3% of it was from acquisitions. And we'd be happy to break it out by -- we don't have those numbers handy by the individual acquisitions, but we would be happy to provide those subsequently.

It was largely by segment, Integrated Partners and then Consumer for Direct Connect.

Okay. Yes. I'll follow-up off-line for the specific segment. And so I just wanted to get an update, if you could, on the total number of merchant customers, the penetration of MX merchant across that base and how that penetration has trended?

And then as a follow-up to that, I'm curious if you've seen any additional uptake in your proprietary apps, and if that's driven improvement in attrition levels, and if we could get a better sense, just trying to understand if the attrition levels differ between those merchants on the MX platform and the non-MX merchants?

And then finally, if you've seen any changes in static pool curves over recent periods?

Yes. Sure. So let me try and unpack some of the questions that you have. So first, starting, I'll just say, with -- I'm going to handle kind of in reverse order, if that's all right. Our attrition trends on a static pool basis across our aggregate book is, it varies to about 11%, 12-ish percent. We've seen a little bit of spike because of the subscription e-commerce, and that was, sort of, forced attrition, if you will, but they generally run around 10% to 12%.

Now if you look at our -- if we break that down into the segment of our MX merchant portfolio base or those that are consistently using our MX tools, that attrition drops, usually on an LTM static pool basis, sort of, for any given month, about 8% to 9%. For merchants that are using more than one application within MX merchant consistently, that drops down to closer to 5% to 6%.

Now across our book, that volume -- these are -- this is -- we really recently started tracking this in kind of more recent years as we've really pushed the sales initiatives in these segments. But the -- we've seen that book -- that component of our book in aggregate using integrated or semi-integrated solution go from the high 60s probably 2 years ago to now it's pushing up into the low to mid-70s on a consistent basis. Of course, one of the big drivers of that, and that's one of the reasons why we've established these defined verticals within our Integrated Partners channels, right, those -- 100% of that volume is integrated. And let me just mention again those statistics, right? Because it gives -- it'll -- I think it will kind of put your overarching questions into focus.

Our overall organic growth, and that's just carving out the subscription e-commerce, carving out the impact of acquisitions, was 9.7% on an LTM basis, recurring net revenue. e-Tab year-over-year, right, fully integrated order ahead, that grew by 55%.

Priority PayRight, which is, again, fully integrated health care solutions, grew by over 180%, right? Just in that short period, we've been able to take on the real estate assets in this more holistic approach. Since April, we've seen a 10% increase in recurring net revenue on that business. So those are starting to have more meaningful impact on the aggregate. But I say this with the full appreciation that in total approximately north of $40 billion of payments, right? So these components are growing as a contributor to an overall pretty substantial number.

That make sense. And then my last question is when you're onboarding new merchants, what percentage of them, sort of, fall into the Integrated camp? And are you going back and mining the existing base to try to get them to subscribe to some of these -- to the MX platform? I'm just trying to get a sense of how that -- it's gone from high 60s to low to mid-70s? And how do we expect that to trend in the future? And if we think it's going to drive improving attrition levels over time?

Yes. Great question. I mean, one, we've already -- we've seen the improved attrition levels, albeit, we already had relatively low attrition by industry standards. I think if you talk to most folks in the industry or you grab some of the industry research, you'll see that it's largely in the low to mid-20% attrition rate. So we're already well below that, and we expect to maintain that trend.

The -- we do have direct sales initiatives. And maybe I'll tie a few things together just to offer some strategic insight. One of the reasons why we went out and acquired some of our resellers in July and August of last year, one was Priority Payments Northeast. The other Priority Technology Partners. These were both sales channels that had a skill at selling integrated product and selling into more ISV-oriented channels. So that has enabled us to open up more of a -- an approach to not only sell into our existing merchant base but -- and we do that in partnership with our resellers -- our other independent resellers, where these folks help our resellers sell into their existing book, integrated product solutions and act as a resource for those resellers to sell to new merchants.

So again, the mix to integrating -- to integrated and semi-integrated solutions is increasing just as we see that uptick in overall volume being connected in that. But again, it's on a large existing base. But you've pinpointed a trend at Priority that we've brought in sales resources from existing partners who've done well in these segments to help us as an organization get better at it and jump-start those initiatives.

And I'm not showing any further questions at this time. I would now like to turn the call back over to CEO, Tom Priore, for any further remarks.

All right. Well, thank you very much for your attendance today. And of course, we'll be available if any further questions come up off-line. And we hope everyone has a great day. Thank you. We look forward to closing the year strong here in the fourth quarter.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.