Priority Technology Holdings, Inc. (PRTH) announced a strong start to 2024 with record first quarter results, underpinned by significant growth in its enterprise payments and B2B payables. The company, which processed over $120 billion in annual transaction volume, saw its revenue climb to $205.7 million, marking an 11% year-over-year increase. Adjusted EBITDA reached a new high of $46.3 million, and the company is looking at a robust full-year revenue forecast between $875 million and $890 million with adjusted EBITDA projections of $193 million to $198 million.
Key Takeaways
- Priority Technology reported a strong first quarter with $205.7 million in revenue, an 11% increase from the previous year.
- The company's annual transaction volume exceeded $120 billion, with over $1 million customer accounts on its commerce platform.
- Adjusted gross profit was reported at $76.4 million, with a record adjusted EBITDA of $46.3 million.
- Full-year revenue is expected to be between $875 million to $890 million, with adjusted EBITDA projected at $193 million to $198 million.
- The enterprise segment revenue grew by 50%, driven by favorable trends and new enrollments.
- Priority Technology plans to recapitalize its balance sheet, expecting to save over $5.5 million annually in free cash flow.
Company Outlook
- Anticipated full-year revenue of $875 million to $890 million.
- Projected adjusted EBITDA of $193 million to $198 million for the full year.
- Priority Technology aims to continue its growth trajectory, particularly in the enterprise and B2B segments.
Bearish Highlights
- SMB segment revenue declined by 7% due to diversification of a large reseller partner.
Bullish Highlights
- B2B revenue rose to $21.1 million, partly due to the successful acquisition of Plastiq.
- Enterprise revenue increased to $40.9 million, a 50% increase from the prior year.
- Organic revenue growth over the past 12 months stood at 16.3%, with a 20.3% expansion in gross profit.
Misses
- Despite overall growth, the SMB segment experienced a revenue decline.
Q&A Highlights
- The company discussed significant growth in the enterprise market and interest in acquiring more B2B businesses.
- Priority Technology highlighted its successful turnaround of the AppStone real estate rentpayments.com acquisition.
- The company is considering using savings from recapitalization for M&A activities or to address the cost of capital.
Priority Technology Holdings, with its diversified portfolio and strategic acquisitions like Plastiq, continues to enhance its market position. The company's unified commerce platform remains attractive to customers, contributing to its solid financial performance. With plans to recapitalize the balance sheet and a focus on strategic acquisitions, Priority Technology is poised for continued growth in the competitive payment solutions market.
InvestingPro Insights
Priority Technology Holdings, Inc. (PRTH) has shown notable performance metrics in the recent period, as reflected in the real-time data from InvestingPro. A significant return over the last week of 14.11% and a robust month-on-month return of 13.75% highlight the positive investor sentiment towards the company. This momentum is further substantiated by the 11.63% revenue growth in the last twelve months as of Q1 2024.
An InvestingPro Tip points out that PRTH has achieved a perfect Piotroski Score of 9, indicating a strong financial position, which could reassure investors of the company's solid fundamentals amidst its growth trajectory. However, it's important to note that analysts do not anticipate the company will be profitable this year, and PRTH has not been profitable over the last twelve months. This could suggest that while the company is expanding, it is still navigating its path to consistent profitability.
Investors considering PRTH should also be aware that the stock is currently in overbought territory according to the Relative Strength Index (RSI), which might indicate a need for caution if considering entry points in the near term. Additionally, the company does not pay a dividend to shareholders, which may influence investment decisions for those seeking regular income streams.
For those interested in a deeper dive into Priority Technology Holdings, InvestingPro offers additional insights and tips, with a total of 7 InvestingPro Tips available. These tips provide a more comprehensive understanding of the company's financial health and future prospects. To access these insights and make more informed investment decisions, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at https://www.investing.com/pro/PRTH.
Full transcript - M I Acquisitions Inc Unit (PRTH) Q1 2024:
Operator: Good day, and welcome to the Priority Technology First Quarter 2024 Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Chris Kettmann. Please go ahead.
Chris Kettmann: Good morning and thank you for joining us. With me today are Tom Priore, Chairman and Chief Executive Officer of Priority Technology Holdings and Tim O'Leary, Chief Financial Officer. Before giving our prepared remarks, I would like to remind all participants that our comments today will include forward-looking statements, which involve a number of risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. The Company undertakes no obligation to update or revise the forward looking statements, whether as a result of new information, future events or otherwise. We provide a detailed discussion of the various risk factors in our SEC filings and we encourage you to review these filings. Additionally, we may refer to non-GAAP measures including, but not limited to EBITDA and adjusted EBITDA during the call. Reconciliations of our non-GAAP performance and liquidity measures to the appropriate GAAP measures can be found in our press release and SEC filings available in the Investors section of our website. With that, I would like to turn the call over to our Chairman and CEO, Tom Priore.
Tom Priore: Thank you Chris, and thanks everyone for joining us for our first quarter 2024 earnings call. I'd like to start today by highlighting the positive trends we continue to see at Priority. And then Tim and I will provide an update on important developments within each segment and the broader enterprise. As you saw in this morning's press release, our unwavering focus on delivering the best products and service in the industry, drove record first quarter results that place Priority on a strong financial trajectory for 2020. Maintaining the momentum we established throughout 2023, we delivered solid results in SMB acquiring, B2B payables and enterprise payments in the first quarter. Our unified commerce vision continues to resonate with our customers combining payments and banking functionality in a single platform, accelerated by the strength of our diverse business lines that were positioned to benefit from higher interest rates and to perform in a variety of macroeconomic environments, including the one we're experiencing today. Total customer accounts operating on our commerce platform now exceed $1 million, as we processed over $120 billion in annual transaction volume during the prior 12 months, while administrating $980 million in average daily deposits as of the end of the quarter. Slide 4 highlights our consistent financial performance during the first quarter. Revenue of $205.7 million increased over 11% from the prior year and this led to a 21% increase in adjusted gross profit to $76.4 million and a 23% improvement in adjusted EBITDA to $46.3 million. Adjusted gross profit margin of 37.1% increased 300 basis points from the prior year quarter, highlighting the strong operating leverage our purpose-built platform. As you can see from our Q1 results and the reiteration of our full year guidance, we continue to expect that the robust growth and margin trends in our business channels will deliver full year revenue of $875 million to $890 million, an increase of approximately 16% to 18% over 2023 and generate full year adjusted EBITDA of $193 million to $198 million, a 15% to 18% increase over 2023. Our growing partner base continues to see great value in our product and technology offering and our diverse sales channel performance remains consistent. For those of you who are new to the Company, Slide 5 highlights the market orientation of our proprietary, unified commerce platform that's purpose-built to collect store, lend and send money, combining elegant payment and banking functionality to monetize the commerce networks we serve. Our customers in current market conditions continue to reinforce our belief that systems combining both features of payments and banking to distribute funds in multiparty environments will be critical as businesses put greater demands on software and payments solution providers to accelerate cash flow and optimize working capital. We are committed to meeting our customers' expectations, by refining the experience for our partners to make working with priority, seamless and simple. Our performance illustrates that partners consistently choose the unified commerce applications in acquiring payables and banking that best fit their businesses to accelerate cash flow and optimize their working capital. We are laser focused, on the continued innovation of our SaaS payments and banking suite of services and accelerated commerce engine and are eager to meet the evolving needs of our growing portfolio of customers and enterprise partners. At this point, I'd like to hand it over to Tim, who will provide further insights into our segment-level performance during the quarter, along with current trends in each that factored into our strong guidance for the full year 2024.
Tim O'Leary: Thank you, Tom, and good morning everyone. As I review the results, please refer to the supplemental slides or the MD&A for further details. Our MD&A is included in the Form 10-Q, that was filed with the SEC this morning and provides a discussion of our comparative first quarter results. A link to that filing can also be found in our website. As Tom mentioned, we had strong financial performance across the business in the first quarter, and we continue to generate high growth in our higher-margin operating segments. That growth has resulted in adjusted gross profit from our B2B and Enterprise segments, continuing to expand and now represents almost 59% of total adjusted gross profit. Recall that Q3 of 2023, was the first quarter where that metric crossed over the 50% threshold. In addition, the highly recurring nature of our business model remains strong with over 58% of adjusted gross profit in Q1, coming from monthly fees or revenues that are not dependent on transactions or Bankcard Volume. The last point I'd like to highlight before moving to the segment level financial results, related to our organic growth rates, if you adjust for the impact of plastic which was not part of our financial results in Q1 of 2023, as well as for the impact of the large reseller that I'll discuss shortly. Priority had year-over-year organic growth in Q1 of 16.3% for revenue 20.3% for adjusted gross profit and 29.2% for adjusted EBITDA. I want to repeat those figures for emphasis, over 16% organic revenue growth, over 20% organic adjusted gross profit growth and over 29% organic growth in adjusted EBITDA. When you combine those strong growth rates with our scaled business that produces a high level of recurring gross profit, you can quickly see why we're excited about our business and the franchise value has been built a priority. Moving now to the segment level results and starting with the SMB segment on Slide 7. SMB generated Q1 revenue of $143.8 million which was $11.2 million or 7% lower than the prior year' first quarter but sequentially 3% higher than $139.9 million in Q4 of last year. As discussed on prior calls a large reseller partner started to diversify their processing activity in Q2 of 2023 and that effort was concluded in Q4. If you look at the year-over-year impact of that shift on the Q1 results, there was an over $21 million headwind to revenue. Excluding that impact the SMB business experienced an eight over 8% organic revenue growth on a year-over-year basis. We expect a more modest headwind in Q2 from the large resellers given the timing of their shifts. Bankcard dollar volume in SMB was $14.8 billion for the quarter which is down just under 3% from $15.2 billion in the prior year. However, adjusted for the aforementioned reseller bankcard dollar volume increased almost 8% in the quarter compared to the prior year from a merchant standpoint we averaged approximately 177,000 accounts during the quarter lower than the 45,000 average in Q4 of 23 while new monthly boards averaged 43,000 during the quarter compared to only 3,700 in Q4 of 2023. Adjusting for the impact of a large reseller the average number of accounts during the quarter improved by over 900 compared to Q4 of 2023 and the average number of new monthly boards increased by 500 per month compared to the prior sequential quarter. Adjusted gross profit in SMB for the first quarter was $31.6 million which is $3.9 million lower than last year's first quarter. The 11% decline was partially impacted by lower volumes and revenue from the large reseller. But the comparative result was also negatively impacted by $2.5 million of certain incentive fees that benefited the Q1 period last year. Gross margins of 22% in the quarter are down 90 basis points from last year for those same reasons. However, if you adjust for the impact of the incentive fee in the first quarter of 2023, the gross margins in Q1 of this year improved by 35 basis points. Lastly for SMB, quarterly operating income of $12.4 million represented a $400,000 increase from $12 million in the prior year's first quarter and $1.3 million of sequential improvement from Q4 of 2023 as we continue to manage operating expenses within our business. Moving to B2B, revenue of $21.1 million was an increase of $18.3 million from the prior year. Plastiq, which joined Priority in August 1st, contributed $17.3 million of the increase during the quarter while CPX grew by $1.5 million or 61% on a year-over-year basis. Those increases were partially offset by a $300,000 reduction in the balance of the B2B business. Adjusted gross profit and B2B increased to $6.2 million as a result of the Plastiq acquisition combined with over 74% growth in gross profit for the CPX business unit. For the quarter, gross margins were 29.6% or $470 basis points higher compared to 24.9% in the fourth quarter of 2023. The sequential comparison is a more relevant metric until Q4 of this year given the year-over-year comparison of margins is impacted by the timing of the Plastiq acquisition and Plastiq's GAAP reporting requirements for revenue recognition, which was discussed in our Q3 and Q4 earnings calls. B2B segment incurred an $800,000 operating loss during the quarter, which is the result of increased operating expenses from Plastiq including certain acquisition related compensation expense. However, the operating loss for the quarter did improve by over $900,000 from a $1.7 million loss in Q4 of 2023. Moving to the enterprise segment, Q1 revenue of $40.9 million was an increase of $13.5 million or 50% from $27.3 million in the prior year. Favorable trends from the past several quarters and new monthly enrollments in billed clients combined with an increase in the number of Passport program managers, growth in deposit balances and a stable interest rate environment have all contributed to strong revenue growth. As a result of those factors, adjusted gross profit for the Enterprise segment increased by 50% to $38.6 million, while adjusted gross profit margins remained at 94.5% in the quarter compared to the fourth quarter of 2023, but improved by 50 basis points from the first quarter of last year. Operating income was $25.5 million for the quarter, which is up over 100% from $12.7 million in last year's first quarter. Moving to consolidated operating expenses on slide 10. Salaries and benefits of $22.2 million increased by $3.1 million or 16% compared to Q1 of last year, which was largely due to the addition of Plastiq in Q3 of 2023. However, on a sequential quarterly basis, salaries and benefits increased by less than $500,000 as a result of continued focus on expense discipline, which helped offset the higher bonus and benefit expense that we typically see in the first quarter. We finished the quarter with approximately 970 employees, which is compared to approximately 980 at the end of 2023. SG&A of $11 million, increased by $1.9 million from $9.1 million in Q1 of 2023 but was down by $3.1 million compared to the fourth quarter of last year when SG&A was $14.1 million, including the non-cash restructuring costs related to the discontinued operation of our healthcare payments business. Depreciation and amortization of $15.3 million for the quarter decreased by $2.8 million from the comparable quarter last year. Moving to the next slide, adjusted EBITDA for the quarter was $46.3 million, which is a new quarterly record for Priority and was an increase of 23% from $37.6 million in Q1 of 2023. Interest expense of $20.9 million for the quarter increased $3.2 million from Q1 2023 levels as a result of acquisition-related debt increases during 2023 combined with the impact of the higher interest rate environment. Moving to the capital structure and liquidity overview on page 12, debt levels during the quarter declined to $652.7 million due to amortization of the term loan. Net debt of $618.4 million increased by $3.6 million compared to the balance at the end of Q4 due to lower cash balances following certain seasonally higher cash expenses in Q1. From a liquidity standpoint, we ended the quarter with all $65 million of borrowing capacity available under our revolving credit facility and $34.3 million of unrestricted cash on the balance sheet. For the LTM period ended March 31, adjusted EBITDA of $177 million represents $8.7 million of sequential quarterly growth from $168.3 million at the end of Q4. Preferred stock on our balance sheet totaled $364.2 million at March 31 and is net of $16 million of unaccredited discount and issuance costs. The first quarter preferred dividend included $7.1 million paid in cash and $4.7 billion of a PICC component. Before turning the call back over to Tom, I wanted to further address our capital structure and our plans to recapitalize the balance sheet which is outlined on slide 13. Based on our continued strong performance and the resulting increase in our debt capacity as we've deleveraged, we've undertaken an effort to refinance our existing debt on more favorable terms as well as upsize the debt facility with the excess proceeds being used for a partial redemption of our preferred equity. As you can see on the slide, we plan to close on a new $835 million term loan with pricing that is lower than our current rate, while also extending the maturity for a new seven year term. Proceeds from the new term loan will refinance the existing senior debt, pay fees and expenses and redeem approximately $170 million of the preferred equity. The net impact of the refinancing will be an improvement of over $5.5 million in annualized free cash flow as we lower the cash dividends on the preferred equity and pay a lower interest rate on the debt but pay that lower rate on a new larger quantum of debt. To be very clear, this refinancing effort has not closed yet, but we have commitments from a syndicate of lenders for the new debt facility and are working with counsel to finalize the agreements so that the closing and funding of the financing can occur within the next couple of weeks. Once that closing occurs, we will provide additional information via an 8-K filing. Moving forward we will continue to look for additional opportunities to further reduce our cost of capital and drive value for our shareholders. With that I'll now turn the call back over to Tom for his closing comments.
Tom Priore: Thank you, Tim. Before wrapping up I'd like to take a minute to talk about the differentiated organic growth performance a priority that Tim noted during his comments. To summarize during the past 12 months on a purely organic basis Priority's revenue increased 16.3%, while gross profit expanded 20.3% resulting in 29.2% improvement in adjusted EBITDA. Our consistently market-leading organic growth results reflected today's businesses are adopting a broader expectation for their payments technology providers, to deliver solutions that transcend basic merchant acquiring and help them accelerate cash flow and optimize working capital. Priority was built with intention during the past several years to meet these exacting customer needs and be their trusted partner by establishing our priority accelerated commerce engine delivering tech-enabled services that collect store, lend and send money on a single platform for acquiring payables and banking needs. The value of our product suite is evident not only in our gross numbers and margins, but also in talking to our customers and partners as they expand their engagement with our solutions. As evidence, consider the following opportunities being harvested within our existing customer base and distribution channels in the first quarter alone. Since launching the cross-selling of plastic bill payments in late January with our acquiring partners, run rate revenue contribution from that channel already exceeds $1.2 million annually and has been growing month over month by over 100%. Additionally, Q1 downloads across our POS suite represented 20% of total new boards as we continue to activate new distributors with eight going live this quarter and 27 new resellers executing contracts. The growing penetration of our POS tools will increase our mix of recurring SaaS revenue, improve merchant loyalty and continue to open additional path for banking and payables product adoption that increases margin per merchant. Our banking as a service offering now maintains over $980 million in average daily balances up from an average of 920 in Q4 2023. Importantly, nearly 25% of that comes from improved technology integration with our acquiring payables and enterprise business partners up from 17% in Q4 2023. Lastly in April, we launched our specialty finance offering, Priority Capital, in partnership with Pipe, a leading small business specialty financier. Our initial outreach to just over 50,000 merchants resulted in approximately 36,000 customers receiving offerings for working capital lines of credit totaling $1.9 billion of recurring origination opportunities for Priority and our partners to capture. And we have over 100,000 more customers to whom we can introduce Priority Capital. The cumulative success of these ongoing initiatives represents pure upside to our current projections. I offer these noteworthy activities to reinforce that Priority's technology and operations are built for the future and are proving ready for the current test under fire. We're confident our future results will demonstrate how we've taken unified commerce to the next level by meeting the demands of modern businesses and empowering our customers to thrive in a real-time economy through unmatched speed and transparency to their cash flow. And we're delivering this message as we broaden the unified commerce conversation, and it resonates with current and prospective customers alike. Our vision and ahead of the curve offering has been the key driver of our market outperformance and most importantly, reflects the clear advantages we create through our unique capabilities and style of engagement, which provides long-term runway for enormous upside. I want to thank my colleagues at Priority who continue to execute our unified commerce vision and for never accepting being ordinary. Your unrelenting drive and dedication is evident in everything you do and the market is taking notice. Lastly, we greatly appreciate the ongoing support of our investors and analysts and those in attendance who are new to Priority for taking the time to participate in today's call. Operator, we'd now like to open it up for questions.
Operator: Thank you. [Operator Instructions] And today's first question comes from Tim Switzer with KBW. Please go ahead.
Tim Switzer: Hey, good morning. thanks for taking my questions.
Tom Priore: Yes. Hello. Good morning. Tim.
Tim Switzer: Can you guys talk a little bit about the integration and growth of Plastiq now that it's been in the run rate for a couple of quarters now? How has that trended relative to your expectations? And if there's been any surprises one way or the other on performance and conversations with customers as you continue with it?
Tom Priore: Yes. Sure, Tim. I would say, look, nothing that has been a surprise. The -- we had pretty conservative estimates going in. I would say from a financial standpoint, it's outperforming those expectations and kind of what we -- but we had a very -- we have a conservative outlook in terms of synergizing the business. So I think you may recall when we first announced it, we had it as a drag to EBITDA through the end of 2023. We were able to get at EBITDA positive and net income positive before the end of the year. The trend on it has accelerated. And we would anticipate through the remainder of the year, it will outperform initial expectations. The -- but it's been a quick turnaround. You may recall when we first acquired it, projected EBITDA or I should say its run rate EBITDA was probably negative mid- to high-teens. And that's been reversed very, very quickly. We certainly think it could do something in the high-single digits to low-double digits of adjusted EBITDA contribution and certainly be on that run rate by the back half of the year. And that's been a result of, as I noted in other comments, integrating it into other channels. That's been successful. But we have -- that's blocking and tackling that we just need to continue to do. And then we've seen, and this was our suspicion, we thought it could really be positioned for larger customers, more enterprise-oriented, that could more fully leverage their credit capacity as a cheaper source of working capital. That's proven to be the case, so we're seeing larger enterprise customers that are doing $10 million, $20 million, upwards of $50 million in payments using our FHIR-funded strategies that Plastics Technology enabled as a complement to our broader payables offering. So that's been the source of growth, and we'll expect that to continue to be the case.
Tim Switzer: Great. Yeah. That sounds good. And following up on that, are there any other areas or businesses you'd be interested in acquiring or any other M&A activity you guys are looking into right now?
Tom Priore: Look, that's something we're always on the look for. And B2B is definitely a segment that we think we can have differentiated performance in. We think we've proven it more than once, and let's say the acquisition of the AppStone real estate rentpayments.com, the way we were able to quickly turn that, ended up monetizing that with a sales MRI at a multiple of return. We've now turned around plastic very quickly. The engine's just been built to refactor software and payment technology assets in a unique way. So we do think there's a number of attractive things in B2B that we're tracking. There's some other vertically focused software offerings that we think payments monetization has been underpenetrated that we can be successful at. So definitely looking at a handful of sectors, but I would say more of them fall into those segments than traditional merchant acquiring, although we've got a couple there that we think could provide value to the distribution, but our greater focus is more towards payables and vertical SaaS slash payments opportunities.
Tim O'Leary: Tim, I would just layer on top of that too. Obviously, we're always looking at acquisition opportunities to increase shareholder value, but we're constantly also evaluating just the best use of our capital. And obviously, as you can tell by the presentation today, we've used a portion of our capacity to take out the redeemable preferred equity. So we're going to continue to evaluate the best use of capital and do what we feel is providing the best overall shareholder value, whether it's addressing the capital structure or addressing M&A or investing in the business for faster growth than certain verticals we already have.
Tim Switzer: Gotcha. Yeah, that all makes sense. If I could have one more real quick, please. The depreciation and amortization expense was down quite a bit quarter over quarter. Where should we expect that to trend over the rest of the year?
Tom Priore: I think the runway we're on now is what you should continue to expect. It declined as we had some assets that were fully depreciated, so that's why you saw the reduction from a quarterly basis. But the run rates you have now from this quarter is more of what you should expect for the balance of the year.
Tim Switzer: Perfect. Thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from Jacob Stephan with Lake Street. Please go ahead.
Jacob Stephan: Hey, good morning, guys. Thanks for taking my questions. I guess I just wanted to get some color on kind of the B2B segment. When I run the math, $17.3 million came from plastic in Q1 here. Total revenue in that segment was flat. Maybe you could just help us understand, in Q1 plastic – sorry, in Q4 plastic was roughly flat with that $17.3 million, or am I missing something?
Tim O'Leary: No, that is -- that's accurate, right? I think the revenue was pretty flat. You have, some larger payers that come in at quarter-ended times, and sometimes those volumes vary, which drives revenue, but those payers tend to come in with big volumes but a little bit lower margin. So I think the revenue was flat, but the gross profit in that business improved quarter to quarter. So I think that's what we're certainly measuring and thinking about the net that we keep on the revenue side. I think we're optimistic where the business sits today and the transit time. And as Tom mentioned, we feel like that by the end of the year is going to be at a run rate of EBITDA, that's going to be approaching double-digits millions of EBITDA.
Jacob Stephan: Okay. Got it. Go ahead.
Tom Priore: Like add to -- on that question. The other thing we've seen -- because we just have some a more expansive offering from what plastic had originally been or how they had originally been oriented. We've seen margin expansion within that business, because we've been able to offer other fast pay tools and things that the constituent using plastic found valuable that increase that gross profit take rate, as Tim noted, without necessarily increasing volume, because we're adding revenue on pay-in and pay-out given some of the tools we've been able to add into the mix.
Jacob Stephan: Okay. Got it. And then maybe just kind of remind me on the reseller diversification. I believe we're going to be over or lapping that in Q2 here or at least as kind of the start of it, is Q2 or is it going to be Q3 where we kind of see the first quarter post diversification?
Tim O'Leary: Yes. Q3 will be a clean comparative quarter. Q2, there will be some year-over-year growth through but it will be half of what we had in Q1 of this year. We actually saw the business with a large reseller actually grew in Q1 from where it was in Q4 and Q3. So as we talked about it was truly a diversification effort. It wasn't the decline in the business overall, so I think we're optimistic that that will have a growth for us in the back half of this year. But you will see some headwind in Q2, but it will be less than half of what we had here in Q1.
Jacob Stephan: Got it. Okay. And then maybe just one more on kind of the pending recapitalization here. Certainly nice to see you guys kind of targeting that preferred equity out there. But maybe you could just kind of help me understand, how much does this kind of reduce that preferred dividend by and ultimately kind of what's the objective for kind of the excess free cash flow here, because it to readdress the data that we continue to target the preferred shares?
Tim O'Leary: Yes. So we think on an annualized basis, it's about $11 million of preferred dividend now going forward on the cash component of that. So pretty meaningful reduction from where it is today. And if you think about the free cash flow savings we'll have on a net basis between the lower interest rate on the new debt, right? We, obviously, reducing the interest rate by 100 basis points. Now we are going to have a higher debt quantum or payment, I know. But net-net, we're going to have north of $5.5 million of annual free cash flow savings, which -- that should take us meaningfully north of $50 million of estimated free cash flow for the year. You're probably pushing closer to $60 million as we think about our forecast and what we've expected before this refinancing. So we're optimistic that this is going to help from a free cash flow standpoint. And we'll continue to evaluate the use of that whether it's some of the M&A opportunities Tom talked about or continue to take advantage of our debt capacity and further address the cost of capital by we've got the balance of preferred equity.
Jacob Stephan: Okay. Got it. I appreciate the color, guys. Good luck going forward to you.
Tim O'Leary: Thanks Jacob.
Operator: Thank you. And that includes our question-and-answer session. I'd like to turn the conference back over to Tom Priore for closing remarks.
Tom Priore: All right. I would like to thank everybody for taking the time to allow us to reflect on the on a first quarter 2023. As you can see, it was quite a successful one. I feel like the business setup and to continue to perform at that rate through the remainder of the year. And we'll look forward to the opportunity to update you once again as we progress it through quarter two. Thank you, everyone and I hope everyone has a great remainder of the week.
Operator: Thank you, sir. I wanted to conclude today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.
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