Mark Jones Jr.: We have, just to give you a sense Meyer, we on our recruiting, we are feeling so bullish on the, the classes that are starting this summer. Just to give you kind of one sense of, sort of quality screening, only 5% of people that we interview actually make it through to get an offer. So we’re being highly selective. We’re almost going back to the old day. We’re using a model that is the one that built the business successfully in the first place. I’m not able to do this myself anymore, but it wasn’t that many years ago when Robin and I, Robin or I interviewed every single person that was going to be starting with us. So now, Brian Pattillo that runs corporate, corporate sales. I think you inter Brian, you interview almost everybody that ends up getting an offer. The standards are really, really high. So we’re really bullish on the, the group that’s starting this summer.
Meyer Shields: Okay, fantastic. Thank you very much for the color.
Operator: The next question comes from Pablo Singzon from JPMorgan. Please go ahead.
Pablo Singzon: Hi, thank you for squeezing me in. So the first question I had was just on compensation . It’s been roughly, flat at about $30 million, $31 million for the past three quarters. And obviously it’s an effect of various things you’re doing, but I was wondering would it be able to assume that source stays at that level, I guess until the second half where maybe you ramp up a bit on corporate hiring?
Mark Jones: Yes, I wouldn’t expect to see huge swings in compensation expense. Obviously we need to continue to add people into the service function. They scale really nicely in, into the revenue bar. We will be adding as we’ve talked about, significant amount of corporate sales agents, but the, a lot of the back office scales very, very well. And so we don’t really need to add a ton of headcount. I wouldn’t be expecting to see massive increases in employee common benefits. You will see some, some of the normal onboarding and hiring as we go throughout the year. But nothing crazy.
Pablo Singzon: Okay. And then just as a follow to that, the equity complain, which is 6.6 this quarter, I guess, for the rest of the year it’d be reasonable to assume that states at that level, right? Until sort of the next reload. Is that the correct way to think about that one?
Mark Jones: Yes, so we do our annual option awards in January. And so there’s those were issued in Q1. There may be movement, slight movement up or down during year as if there’s any kind of employment type changes, but that would be a good baseline for the year to think about.
Pablo Singzon: Got it. And then the last one, last question for me is a little broader. So just thinking about your comments on, building up the mega franchises I was wondering is there a certain size of franchise where, the current economic arrangement you have with them, which basically 50-50, becomes less attractive for these bigger partners, right? And if so, is that sort, you’re not anywhere near there yet, right. But at some point is that serves something that might come up as a something to maybe renegotiate or think about on the road or, you think this earth can stick with us economic sharing until franchise group? That’s fine. Sorry, what was that?
Mark Jones: Yes, I can you hear me? Its Mark Jones that, it is a very, very different thing to manage a service organization to manage the finance and accounting when you have an independent agency. It’s very complex. Those are very, very different things than hiring and managing salespeople. And we have had no pressure from anyone. All of our largest agencies, they’re the people that we work the closest with and there’s a lot of intangible there’s a lot of intangible value that they get a lot of, which is we work with them and consult with them on how to build a huge agency because we’ve done it. And so there’s a lot of value there. We feel like the economic arrangement is fair and that’s not something that is front and center ever. We, it’s we agree at the beginning and that’s it. That’s the arrangement.
Pablo Singzon: Understood Mark, thank you so much.
Operator: Next question comes from Paul Newsome from Piper Sandler. Please go ahead.
Paul Newsome: Hello. Good afternoon. Thanks for the call. Couple, may be one or two follow-up questions. There’s been lots of buzz around the investment community that progressive and maybe a few others have yanked back their marketing costs very recently and fairly significantly particularly in the digital area. My guess my question to you guys is, are you seeing that and does something like that have an impact on your business, either positive or negative?
Mark Jones: Yes, Paul, that doesn’t really impact us based, on where we are kind of in the value chain. I mean, if progressive wants to cut back on their marketing spend, that doesn’t change our agent’s ability to write with progressive or to kind of distribute the best product available for the client. So we’re not seeing any impact from that.
Paul Newsome: But presumably there’s some serve secondary impact from all the things they do for independent agents. Others I suppose, but I don’t know if it’s could be that either way.
Brian Pattillo: Paul, this is Brian Pattillo and I can just say that yes, as a corporate agent, I think specifically with the way that we go to market, we’re getting referred from the loan officer or realtor or the client referral, so we really don’t rely on branding of the carrier or advertising the carrier to drive any business. Yes, we’re relying on the referral partner to send business, so it really has no impact on us whether progressive advertises or not.
Paul Newsome: Fair enough. And then completely separately, just wanted to see if there was any updated thoughts on sort of the balance sheet and capital management. You’re obviously producing a little bit more, actually a lot more EBITDA. And does that, is the plan there to use it just for pure investment in the business or are you thinking about changing the debt structure or anything like that respectively.
Mark Jones: Yes, we’ve talked about being comfortable at kind of the four turns level of debt as a ceiling. I wouldn’t expect to see anything in 2023 related to leverage. We’re comfortable in investing in the business with excess cash flow today and paying down debt to the extent that, that makes sense to kind of reduce interest expense given the interest rate environment. Yes.
Mark Jones Jr.: Well, I mean, we’ll look at it, we’ll look at it, once kind of the economy is more stable and there’s less uncertainty in the general economy and also interest rates come down, then we’ll look at our debt situation. But we’re not about to add any additional debt at this point. It’s not that we’re strapped, it’s just that there’s no need to take unnecessary risk.
Paul Newsome: Well, I appreciate the help as always. Thanks for the call. I appreciate it.
Mark Jones Jr.: Thanks Paul.
Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Mark Jones, CEO for any closing remarks.
Mark Jones: I’d just like to thank everybody for their participation on the call and let you know that we’re going to be working very hard for all of our shareholders. Thanks.
Operator: This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
