Aadit Shrestha : All right. Thank you so much. And just as a follow-up I think free cash flow conversion and you pointed out there was sort of a payment — a big payment make a you brought it down to 94% conversion. I think year-to-date you’re tracking around 110% historically it averages around 120%. So do you expect 4Q sort of picks up and you actually get back to that 120% conversion for the year? And how do we think about it long term like beyond 2023 and maybe into 2024 how much more can it improve?
Ken Krause : Yes. It’s a business that’s very capital light. And so when you look at the cash flow profile it’s hard to find a business this investing 7% to 8% and working capital has very little CapEx and enjoys the benefits of that and has been compounding cash flow at 10% to 15%. So our focus is just that how do we continue to compound cash flow in that teen range? How do we continue to convert net income and earnings at above 100% of net income. The third quarter had an impact. We saw payables come down considerably. We paid some payables as we closed out the third quarter. And our focus is to improve that as we go into Q4 and beyond. And so that continues to be our focus. We’re continuing to focus on driving high levels of cash flow performance and compounding in the ranges I previously discussed.
Aadit Shrestha : Thanks a lot.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Stephanie Moore with Jefferies. Please proceed with your question.
Harold Antor : Hello. This is Harold Antor on for Stephanie Moore. So I guess a quick question. How did weather trend in the quarter and how the [indiscernible]. And then also in 2021 MAU increase the hiring of sales professionals. So are those individuals are full productivity? And how do that impact on organic growth in the quarter? Thank you.
Jerry Gahlhoff : So on the — this is Jerry, Harold. On the weather side, we had a pretty good weather quarter. Last year as Ken mentioned we had a hurricane that came through at the end of September it affected south in particular Southwest Florida. So we didn’t have that type of event. So I would generally categorize it as favorable. And then as it relates to hiring of salespeople we’ve been very effective. And when you look at our commercial growth a lot of the investments we’ve made both in commercial and to some degree certainly the residential side and our termite and ancillary is the result of the effectiveness and the efficiencies that we’re getting from a sales productivity standpoint of those sales the sales teams that we’ve added.
And you look at our commercial growth looking back over the third quarter of 2022 we’ve added over 60 more commercial account managers into the Orkin brand alone over the past year that’s really helping us that’s an investment we make in the business. It’s helping us drive that growth. We see a great opportunity in the commercial space. And those are the investments that we’ve been making over the last 12 months.
Harold Antor : Thank you. And then just on M&A. Given where interest rates are in a certain markets, are you seeing more willing sellers how much TV is in the market? And then I guess for your acquisition strategy are you acquiring more traditional companies or more companies similar to Fox Pest Control that are door-to-door like?
Jerry Gahlhoff : We’re seeing everything still in the market. Businesses are still owners are still interested in selling their businesses and the pipeline flow remains good and we’re open to looking at all types of businesses that fit our model that help us continue the growth pattern that we strive to achieve help us that are accretive to our margins that are going to help us grow in a healthy positive way. So that side of it still seems very positive. What would you add to that, Ken?
Ken Krause : Yes. The only thing I would add is pricing which everybody is always focused on what are we paying for acquisitions. Two points I want to raise with respect to that. One is we don’t compete on price. Our focus is to be the acquirer of choice. And we’ve been very successful being the acquirer of choice for a very long period of time. When people are ready to sell their business and they’re focused on brand preservation and their people they sell to our business. And we’ve been very successful being the acquirer of choice for a very long period of time. When we look at the business this year we’ve invested $350 million in acquisitions. I would say that the multiples that we’ve paid for that $350 million investment is probably below the overall long-term average from a multiples perspective. So we feel good about what we’re spending how we’re competing and the success that we’re driving through acquisition.
Operator: Thank you. Our next question comes from the line of John Mazzoni with Wells Fargo. Please proceed with your question.
John Mazzoni: Hey. Good morning. Thanks for squeezing me in. Maybe just to double click quickly on the commercial side. Could you maybe just talk more about the target vertical strategy as well as anything on technology that really is accelerating the kind of organic growth profile? And maybe also just – again, the 60 kind of added reps have been helpful. But just to talk about the kind of sustainability of that growth going forward? Thanks.
Jerry Gahlhoff: So, on the commercial side with targeted verticals, we’ve talked about this over the last few years especially as we are kind of coming out of the tail end of COVID and the investments that we’ve made there. We know that, our research on our customer database shows there are certain much more highly desirable verticals that we like to sell into and service into and things like hospitality or health care, hospitals, logistics, warehouses, distribution centers not that we don’t want everything commercial but we have really targeted our focus on certain verticals. And when we bring on new say commercial account managers at Orkin, we’re really getting them focused and targeted on working that type of material and going after those types of customers from a B2B standpoint.
So it’s really — I’ve also discussed some of our tools like Marketo that help us from a — on a B2B standpoint that have helped us get our outside sales people on the commercial side warmer leads and make them more productive and make them more productive quicker. That’s a relationship sell. It takes some time. So we’ve been very deliberate about that since we started this program, probably midway through COVID seeing this as an opportunity coming once we are on the backside of COVID that would be a great opportunity for us to capitalize on. And we’re again a long-term view and a long-term approach to our business and that’s — you’re seeing the results and the payoff of that now. So — and then on the technology side, certainly our marketing teams in particular when we talk about accelerating organic growth there are technologies.
There’s campaigns that we run where we’re using technology where we’re using some automation. The marketing teams are certainly innovative looking at strategies along those lines. I don’t like to get into specifics, but I can assure you that they are very creative and very helpful to our sales teams in terms of creating that organic demand.
John Mazzoni: Great color. Thank you. And then maybe just to quickly touch on competition. Have you seen any change in the competitive landscape? And perhaps has there been any pullback in either smaller regional players or large national players?
Jerry Gahlhoff: Competitively, it’s — I mean, it’s still a healthy competitive market highly fragmented and lots of players out there. So no — we haven’t seen any significant change from a competitive standpoint. That’s probably noteworthy or remarkable still competitive out there.
John Mazzoni: Thank you. Perfect. Thanks, again. Congratulations on the strong results.
Jerry Gahlhoff: Thank you.
