Scott Heleniak: Got it. Understood. And then just a quick question, Mark, you referenced the margin expansion comment. You said most of that would come from Q4. Do you still expect margins to be up in Q2 and Q3 year over year? I know the majority is Q4, but do you have anything in out on Q2 and Q3?
Mark Jones Jr.: Just the timing of contingents in the second and third quarter compared to the previous year, you could see the total margin percentage down on a year-over-year basis. But if you look at the core margin, you should still get good scale out of it, although remember we’re about to onboard a significant number of corporate agents, and that cost doesn’t just hit as soon as they start, which is largely June, July, August, September. A lot of those on-boarding costs, licensing, things like that happen before they start, so you should see the compensation lines growing in the second and third quarter, and then you get nice scale as they ramp up their production throughout the summer and into Q4.
Scott Heleniak: Last one on retention. I know it’s been talked about a lot, and you’re targeting 89%, and you’re at 85% now. But is that being dragged down by what’s happening in Texas? Is it significantly different by state? So if things lift in one or two states and it brings it up, or is it just pretty similar across the board?
Mark Jones Jr.: Yes. All states have a bit of a retention issue compared to our historic numbers, but Texas is by far our largest state. Home is our largest product, and Texas is really suffering right now just from availability of product. And one indicator of what’s going on is Texas premiums are up, I believe the number is 23% year over year. If you look on a national average, they’re up about 10% or 11%. So it’s up twice as much, and our shopping activity mirrors that. So we look at how many people we have asking for re-shops. They get upset when their price goes up by a certain amount. That’s a trigger point. So 20% I want to shop. And so shopping activity for the number of policies is up twice as much, and a lot of that is coming out of Texas. And so until the home carriers come back into the market, we’re going to fight retention as hard as we can. But it’s going to be a struggle.
Operator: Our next question will come from the line of Pablo Singzon with JPMorgan.
Pablo Singzon: Hi, good evening. I just wanted to follow up on the commission disclosure. When were they cut exactly, just so that we have a better sense of when the impact started and when that should be fully in the run rate? And then I guess related to that, what part of the book is Texas or non-Texas? I know corporate is mostly Texas, franchising is I think of course Texas, but if you could just give us an update on the mix there. Thank you.
Mark Jones Jr.: I think the whole book is about 54%, 55% Texas. So it’s still a big disproportionate amount. Sorry, 45% Texas, so it’s a disproportionate amount Texas. And we really just feel the effects of those commission impacts here in the first quarter.
Pablo Singzon: And then my second question, I was a bit surprised by the positive comments in California, just given all the announced exits or pauses by carriers and homeowners. And I know some of those comments have been made by captive insurers, so maybe not directly relevant to you. But in your view, is what’s happening in California, the dislocation there, net positive or negative?
Mark Jones: Definitely net positive. So our business has gone up significantly in California, and we have the product availability. So our agents have told me that they haven’t seen an environment like this before in a long time.
Pablo Singzon: And then last, sorry if I missed, the buyback program. Will that be financed by operating cash flow or the increased debt capacity? Just want to get a sense of how that will be funded. Thank you.
Mark Jones Jr.: Yes, it’s a combination of the both. And so in our prepared remarks, we mentioned that the term loan is being increased by $25 million, and so that transaction closed today. So a portion of the buyback plan will be funded by that. A portion of it will be funded by operating cash flow. And as needed, we will draw down on the revolver capacity to fund any additional share repurchases.
Operator: Thank you. That concludes today’s question and answer session. I’d like to turn the call back to Mark Jones for closing remarks.
Mark Jones: Thanks, everyone. We appreciate your participation on the call.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
