Rubicon Technologies, Inc. (RBT) on Q1 2023 Results - Earnings Call Transcript
Operator: Good afternoon and welcome to the Rubicon Technologies First Quarter 2023 Earnings Call. My name is Evie and I'll be your operator for today's call. As a reminder, this conference call is being recorded. At this time all participants are in a listen only mode. After the speaker’s remarks, there will be a question-and-answer session. Thank you. It is now my pleasure to introduce Chris Spooner, Executive Vice President of Finance. You may begin.
Chris Spooner: Thank you. Hello, everyone, and welcome to Rubicon's first quarter 2023 earnings call. A few quick reminders before we begin. This call is being webcast can be accessed from the investor section of our website, which can be found@www.rubicon.com. Today, we will present Rubicon's financial results for the first quarter 2023. This will be followed by a question-and-answer session. During the call management will be making forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, and our actual results may differ materially due to known and unknown risks and uncertainties as discussed in greater detail in our earnings release and in our SEC filings. We assume no obligation to update forward-looking statements except as required by law. Additionally, we will refer to non-GAAP financial measures during our call today, including adjusted gross profit and adjusted EBITDA. We provide these non-GAAP results for informational purposes and should not be considered in isolation from the most directly comparable GAAP measures. A discussion of why we believe these non-GAAP measures are useful to investors, certain limitations of using these measures, and reconciliations to the most directly comparable GAAP measure can be found in our earnings release and our filings with the SEC. Joining me on the call today are Phil Rodoni, Rubicon's Chief Executive Officer, and Kevin Schubert, President and Chief Financial Officer. With that, I would now like to turn the call over to Phil.
Phil Rodoni: Thank you, Chris. And thank you to everyone for joining us today. Before I begin, I would like to take a moment to commend the Rubicon team on achieving a fantastic quarter. In Q1, we were able to achieve record high quarterly gross profit and adjusted gross profit, continue to grow top line revenue at strong pace and reduce costs as we move closer to profitability. Every Rubicon team member has played a role in the execution of our bridge to profitability plan. And I want to thank everyone for their continued hard work as we get closer to achieving this milestone on our way to profitability and beyond. We will provide more details of our strategic plan later in the call. But for those who are new to the Rubicon’s story, I will begin by taking a few minutes to describe the Company and the work we do with our customers and partners. Rubicon was founded over a decade ago, and has grown to become a global leader in providing cloud-based waste and recycling solutions to businesses and governments. The company manages waste and recycling services for a network of waste generators, fleets of waste haulers and waste and recycling processes. In addition, Rubicon provides innovative solutions that deliver greater transparency, efficiency and customer engagement within the waste management industry. Prior to Rubicon, customers had to coordinate their waste and recycling needs with multiple vendors, most of which focus on the use of landfills and had little to no reporting capabilities. This inefficient process made it virtually impossible to have a unified corporate diversion program or unified commodity management process. Furthermore, there was no way to track or report landfill diversion or waste related environmental, social and governance metrics, which have become increasingly important for our customers and partners. Rubicon Solutions addressed these industry challenges through a suite of transformative artificial intelligence and computer vision technology products, which deliver better service management, data analytics and reporting. Working with Rubicon our customers can easily procure services, optimize their service schedule, and monitor and report on their ESG performance. Today, Rubicon has achieved significant scale, surpassing 13 million unique service locations and 8000 haulers and recyclers, with the ability to manage over 160 types of waste streams. As our network and platform capabilities continue to grow, our customers benefit from better pricing, a broader service offering, diversion capabilities and improved performance. For businesses that generate waste, we properly aligned incentives by providing an expanded array of solutions to divert more materials landfills. Rubicon’s extraction of commodities from the waste stream can even enable the conversion of customers waste cost lines into revenue generating opportunities. In addition, our fleet customers can use Rubicon’s platform to find new business opportunities, many of which are exclusive to our proprietary platform. Our technology also provides easy to use fleet management and route optimization solutions, and access to a buying consortium where fleets can purchase products and services at discounts, such as fuel parts, tires and insurance. These benefits can help fleet customers save time and money, and for our city and municipal fleet customers have resulted in taxpayer savings. In fact, our solution for municipal fleets known as Rubicon Smart City, it was one of our fastest growing products. Our proprietary technology helps cities run faster, smarter and more efficiently through more effective waste recycling and heavy duty municipal fleet operations. Our software not only helps drivers become more time efficient with their routes, it also captures and sends information back to city employees, which can improve response times for issues like blocked bins, mixed pickups, recycling contamination and illegal dumping. All this can lead to increased citizen satisfaction, lower carbon operations, improve driver safety and morale and substantial cost savings for municipal operators. With this understanding of Rubicon services and platform in mind, I want to take a moment to walk you through how Rubicon makes money. Our platform primarily generates revenue via three sources. First, our revenues are reflective of all the waste and recycling services that transact over our platform. We make a margin based on the difference between the price at which we sell our services to our waste generator customers, and the price at which we're able to procure those services from within our hauler network. As we drive hauler density within markets, and as we leverage our technology to optimize service levels for waste generators, Rubicon’s marketplace margins improve. Secondly, Rubicon monetizes the commodities pulled from the waste and recycling chains for our customers, which otherwise may have ended up in the landfill. Through this process, we are able to earn higher margins by providing unique value to our customers and turning prior costs into revenue. And by adding predictability and quality of supply to processor volumes. It is worth noting that we structure our agreements with waste generators and processors, such that we do not assume exposure to commodity price risk at the adjusted gross profit level. Further, our contracts often feature incentives for achieving certain environmental outcomes to align our interests with our customers. As we drive positive environmental outcomes our margins improve. Finally, whether a customer is a waste generator or fleet, Rubicon charges constituents a monthly software subscription fee for access to our proprietary platform. Turning to the operation side of the business, Rubicon continue to expand the Connect marketplace with the addition of new clients including Vale properties, gold dollar, real estate investments, acuity brands, and others throughout the first quarter of 2023. We've conceived an increasing need to centralize and digitize workflows related to the collection of waste and recycling. Our platform provides a one stop solution for clients to order manage and track sustainability metrics through a single portal. We also continue to see growth in our commodity sales such as OCC, highlighted by the addition of southeast grocers to our portfolio. Southeast grocers joins our other commodities clients who are able to take advantage of special commodities rates that normally would be unattainable as one off sites but are achieved by leveraging our vast network. We also had some notable wins for our Smart City product. In April we announced a new three-year partnership with the City of Miami, Florida, to help enhance its residential waste and recycling services with Rubicon Smart City technology. Rubicon will help the city's department of solid waste transition from largely manual and paper based processes to a fully digital operation as part of Miami's resilience planning efforts. The city will use Rubicon’s technology to balance its waste and recycling routes to streamline collection, track material and tonnage on his bulky trash routes and to reduce missed pickups and unnecessary go backs. We are also happy to announce that our Smart City snow removal technology helped our partner Kansas City Missouri win the American Public Works Association excellent in snow and ice control award for 2023. The award is based on a number of criteria including innovation, resourcefulness and effectiveness in dealing with winter weather events. Rubicon Smart Cities snow removal technology powered the city's 300 snow vehicles through the 2021 and 2022 and 2022 and 2023 snow seasons, which included five major snow events. We were honored to help Kansas City win this award and look forward to our continued success together. And lastly in May, we announced Rubicon entered into a three year Rubicon Smart City partnership with the City of Atlanta. Rubicon Smart City Software will help Atlanta enhance its operations to become a fully digital function with a focus on route optimization, digital route sheets, digital workflows, tracking exceptions in the field, improved routing for the city's bulky waste pickup drivers and street sweeping. We are excited once again to work with Atlanta, the side of the company's former headquarters and where the Rubicon Smart City product was born. We look forward to helping all of our Connect and smart city customers achieve their sustainability and efficiency goals. I will now turn the call over to Kevin to provide a review of the first quarter as well as the financial update and 2023 outlook.
Kevin Schubert: Thanks, Phil. I'll now take a few minutes to review our results from the first quarter of 2023 compared to the first quarter of 2022. Rubicon generated approximately $181 million of revenue in the first quarter. This was an increase of $21 million or 13%, compared to the first quarter of 2022. This growth was driven primarily by strength in our RubiconConnect product, as well as continued growth of our SaaS business. This strong growth was achieved despite negative commodity price impact of approximately $10 million in the first quarter. Adjusted gross profit in the first quarter was approximately $16 million, an increase of $3 million or 23%, compared to the first quarter of 2022, and was our highest quarterly adjusted gross profit ever, beating the second best by 14%. The increase was primarily driven by the RubiconConnect product as we are beginning to experience efficiencies from the margin enhancement actions we've taken over the last few months, and we expect that the efficiencies accelerate as the year progresses. In addition, we also experienced another quarter of growth in our SaaS product. Adjusted EBITDA for the first quarter was negative $14 million. It is worth noting, however, that the adjusted EBITDA figures still includes an additional $2.5 million of non-recurring items, which have not been adjusted for. These items relate to expenses resulted from the business combination and strategic shift. As of the end of the first quarter, the company had $10.5 million of cash on the balance sheet, and approximately $9.1 million undrawn and available under the revolver. We are proud of the steady improvements that have already made a material impact on results, and are confident in executing remaining steps on our bridge to profitability to hit our goals at the end of this year. One of these goals, as we've discussed on prior calls, is to increase liquidity and financial flexibility for the company. As part of this final step in the process, we have secured an incremental equity financing package led by our largest shareholder and now there is no guarantee we will be able to successfully close the refinancing, we are in the final stages of securing the comprehensive refinancing package, which we hope to be able to discuss in the near future. Looking forward to the remaining three quarters of 2023. We expect to be in line with the guidance we gave on our last call and remain confident in our ability to generate positive adjusted EBITDA for the fourth quarter, as well as for the full year 2024. Phil will now give an update on the key strategies we are implementing to achieve these projections.
Phil Rodoni: Thank you, Kevin. We believe Rubicon’s industry leading service experience for waste generators, fleets and processors is strategically well positioned as the definitive platform to enable the elimination of waste in years to come. In support of this success, our efforts have been focused on three primary areas. First, we are thoughtfully and diligently executing on our bridge to profitability plan. Second, we are increasing our financial flexibility through additional equity financing, and our debt recapping efforts as Kevin mentioned. And third, we have been curtailing lower return investments, and capturing payroll and non-payroll cost reductions throughout the organization. These combined efforts have led to our highest ever quarterly adjusted gross profit, increasing revenues and annualized cost reductions to date of over $28 million. While we have made substantial progress, the job is not yet complete, and we continue to focus our efforts on profitability. We expect additional improvements to our margins achieved through increased sales of our higher margin SaaS products such as Rubicon Smart City, and increased prices of select services in line with the broader waste industry. While continuing to drive superior economic outcomes for our waste generator customers through service optimization and revenue generating recycling programs. We have also been successful in obtaining volume based rebates amongst key vendors, and we have selectively hydrated our portfolio to remove underperforming accounts, which have compressed margins and hurt our profitability. As discussed last quarter, Rubicon has made material progress in reducing our SG&A expenses across the company. The actions included traditional efficiency improvements like outsourcing of back office functions, select payroll and non-payroll expense reductions, such as cutting access software and third party services, and centralizing licensing and procurement processes. The actions have also included the strategic use of artificial intelligence based systems in our operations. For example, we will be deploying a large language model ChatGPT like system to automatically process inbound work order requests, thereby reducing the need for employees to perform repetitive data entry tasks and freeing up their time to provide more value added services. Combined, these efforts have resulted in over $28 million in annualized cost savings, which is an additional $16 million of savings identified since our last call. The progress we have accomplished to date has furthered the confidence we have in our ability to achieve positive adjusted EBITDA for the fourth quarter of this year, while expanding our adjusted gross profit margins to within the low double digit range, and we remain confident in our ability to be cash flow positive this year. I'm excited by the prospects and opportunities that lie ahead of us. We have invested in scaling our business and today we work with over 8000 haulers manage over 13 million unique service locations, and are now analyzing over one million images per day for insights related to municipal waste streams and infrastructure. As a result of our breadth of service, we are positioned to begin to take greater advantage of our platform scale. To elaborate we have a strategic advantage in leveraging our existing relationships with partners and customers to increase our share of wallet amongst our current wage generator clients. Additionally, we can enhance our profit margins by offering solutions across the more than 160 different material types that are already handled on our platform, the majority of which feature better margin profile than municipal solid waste services. As previously mentioned, our high margin Smart City Business has doubled in size year-over-year, and we anticipate that growth will continue. We have primarily sold to municipalities that manage their own fleets within the U.S. market. And in the past, we intentionally limited ourselves while we focused on building sales channels, international support capabilities, and developing functionality for commercial fleets including billing and invoicing. However, even with these limitations, we managed to double our SaaS based business last year while maintaining adjusted gross profit margins over 70%. This year, we look forward to expanding our SaaS business beyond municipalities and into commercial fleets, both internationally and domestically. Strategically our marketplace and SaaS products support each other as they expand. For example, our expanded digital marketplace enables us to offer more material solutions, which then attracts more haulers and fleets. This provides us with more opportunities to sell our SaaS based solutions and the more data we collect through these interactions, the more we can offer new and innovative products and services. For instance, in our Smart City product today, we use image data to create artificial intelligence and computer vision models that can detect contamination in the waste stream, illegal dumping overfilled bins and can confirm when service has been provided. This feedback loop has been so successful that our clients have requested that we support other fleet types, such as snow plows and street sweepers to confirm when routes are being swept or plowed. As I said last quarter, and continue to firmly believe the future growth and product opportunities for our company are only limited by our imaginations. By leveraging our resources, building strong partnerships, and continuously pushing the boundaries of what is possible, I am confident that our team's creativity and innovative spirit will continue to drive us forward, leading to new horizons and unexplored possibilities. As we work towards our goals, I'm excited to see what the future holds and the impact we can make on the industry and the world at large. Thank you for continuing this journey with us. And we look forward to updating you on our progress in the coming quarters. With that I will turn the call over to the operator who can open the line for questions.
Operator: We have our first question from Maria Ripps from Canaccord Genuity. Please go ahead.
Maria Ripps : Great congrats on strong numbers here. And thanks for taking my questions. First, it seems like you've been seeing nice momentum with your Smart City offering. Can we just talk about some of the core capabilities that are attracting new clients? And maybe remind us whether there is a sort of a variable component to your pricing framework for that offering?
Phil Rodoni: Sure. And thank you for the question. So you know the kind of the core capabilities from Smart City perspective, think of it as the bait of it is a kind of fleet and telematics kind of management system. But on top of that what you added on specifically for cities is the ability to kind of add in what you would call kind of infrastructure monitoring. So things like you know, are there potholes are the graffiti is there, you know, broken curb cuts or kind of street lamps, the ability to kind of flag for those additional kind of things that are actually happening within the city, that can lead me to wear either automatically through the computer vision technology that we have or be flagged by the drivers as they're going about their routes. So the city's look at it kind of a two-fold benefit. So one is we're going to help them make their operations that much more efficient, we can help them with the routing and the optimization of those routes. And you can actually can bring in some other kind of environmental data about what's actually happening in your city at the same time. So those are kind of the core capabilities of the Smart City system. In terms of the variable kind of costs associated with providing that, it's really more the kind of a direct variable class really about the kind of the cellular kind of services that you will have, or the devices that we actually got to deploy within the field. Those are the two kind of variable costs associated with that.
Maria Ripps: Got it, that's very helpful. And then maybe more broadly, could you talk about what type of customer response you saw to price increases that you implemented on Select Services last quarter? And how are you thinking about your capacity for future price increases from here?
Phil Rodoni: Yes, so first contact on that, I would say so the price increases that we kind of put forth in the last year, we're actually -- I would consider the more kind of catch up to what the industry has already done. So if you look at what a waste management republic services, will have done they kind of publish what their price increases are. So I think we're just more kind of keeping pace with what's in the industry. On top of that, I would say, there are certain kind of customers that we have, when we go with this is what we talked about kind of hydrating the portfolio, there's certain customers that were operating kind of either at a loss or kind of just barely at breakeven. And so those are kind of conversations with those customers that actually make sure that we're providing the right level of services, can we expand into other kind of kind of commodity kind of base services along the way. So I'd say just really kind of expanding the kind of -- expanding the pie a little bit in terms of the service capabilities and offerings we can bring to those customers. So in terms of the future, I would say -- I would think that, from a pricing from a pure pricing free standpoint, that we would certainly cannot keep pace with the industry at large. So that's fairly standard within the industry. And as we've always said, we deepen our relationship with our clients over time. And we as we handle those additional honors, different types of kind of services or materials that are out there, all of those kind of materials typically have a better kind of margin profile than the classic kind of municipal solid waste. So I think the opportunity to kind of grow within the existing base is corridor strategy. And we anticipate kind of being able to kind of certainly hit our numbers based on that.
Maria Ripps: Got it. That's very helpful. Thank you for the color.
Operator: Your next question comes from the line of Stephanie Moore from Jefferies. Please go ahead.
Stephanie Moore: Hi, good morning. Thank you. Maybe just kind of the start, you talk a little bit about what you're seeing on the recycling side of your business, I think it's helpful that on top line, it can be a little bit more volatile just given the underlying commodity pressures. But made up for that on the adjusted gross profit line, but maybe just talk a little bit about the demand you're seeing from just continuing to offer that service when it comes to managing recyclable commodities? Thank you.
Phil Rodoni: Yes, thanks for the question, Stephanie. So you're right, there was some pricing pressure in our revenues, quarter – year-over-year. There's about a 63%, decrease in the average price of recyclable commodities that we saw. And so with that, there was actually a little bit of underlying volume growth in our commodities business even amidst these market trends. As you probably recall, we don't have exposure at the gross profit level to these pressures and commodity pricing. And so we remain insulated at that adjusted gross profit level from these pricing pressures. But I think what's so compelling about the Rubicon business model, is it's an environmental proposition that's built from the ground up with an economic value proposition. And so as we divert these materials from the landfill, we're actually reducing waste costs for our customers. And we're turning these into a revenue line. And so again, even in a down market, there's a value proposition that resonates with our customers. And particularly in a recessionary market people are looking to cut costs and improve their P&L in any way they can. And it makes the recycling proposition all the more compelling.
Kevin Schubert: Yes. And I would just add, Stephanie, that for a lot of our customers, they're looking to go on a zero waste or close to a journey for a number of our large customers, it's important to them and that is important to them above and beyond sort of pure price. They're looking to really continue their recycling and continue their zero waste journey, sort of, regardless of that revenue, that bringing that revenue and sort of offsetting their costs is a great benefit, obviously, but it's not the sole purpose for a lot of our customers. So they're going to continue to do it, regardless of the pricing that we're seeing in the market.
Stephanie Moore: Got it understood. So then maybe it's a follow up and taking that a step further. I think you, you called out targeting, clearly an improvement in your adjusted gross profit margin. So my first is clarification, I think you said, you are eventually targeting a low double digit range. But even just breaking that out, could you maybe kind of walk through, what are the puts and takes to achieve that target over time? What do we need to see from the commodity business? What do we need to see from the SaaS side? And then is there a room for improvement also on that lower margin MSW, our customer base too. So clarification, and then also kind of longer term, how do we get to that target? Thank you.
Phil Rodoni: Yes, so I think, first of all, you are seeing some significant margin improvement in the core MSW product for Rubicon. That's largely what we addressed through the price increases that we discussed during the first quarter and will continue to over the course of the year. But we believe as we continue to drive value in the commodity segments, with the reporting with our ability to generate higher premiums by aggregating these volumes across our customer base, we'll be able to improve the margins even in the commodity markets as well. As you mentioned, the SaaS business continues to grow significantly, that accounts on a net basis. And so it's effectively 100% adjusted gross profit margin. And so as the SaaS business continues to scale, at the rapid pace that it is, that's going to help drive our blended adjusted gross profit margins into those double digits.
Kevin Schubert: Yes, and I would just add, I mean absolutely, that is still where we see it going. And it really is just going to be a combination of the three, obviously, we don't break out the SaaS business yet. But as that becomes a larger piece of our business, obviously, that is obviously a high margin area. And then as we continue to grow in the recycling areas, and to bring on more material types for customers, that's going to drive incremental margin too. So I think you're kind of getting -- I think you've seen, as Chris alluded to, you're kind of seeing, you've seen a nice bit of increase already, from the efficiency measures, there's definitely more to go, we are still kind of going through a portfolio. So we're not done. So there is more to go there. But then you're also going to see, I would say, you're kind of almost equally now between more efficiency measures in the portfolio, as well as continued growth on recycling as well as the growth in the SaaS business as we look towards the end of the year.
Stephanie Moore: Excellent. And then just lastly, for me, can you maybe talk a little bit about the M&A environment? And maybe your appetite for M&A as we look to the second half of this year and into 2024? Thanks.
Phil Rodoni: Yes, thanks for the question. But yes, I think as always, we're kind of really kind of focused on kind of growing our organic business, making sure we're as operationally efficient as possible. M&A, I, as always said, we'll be opportunistic, if a deal comes across our desk, that actually makes sense. And that is within our ability to kind of pull it down, we would certainly kind of approach it. But again, our core focus is really on the -- growing our organic business and making sure that where as efficient as possible.
Kevin Schubert: Yes, and I mean, to your question, those definitely, we definitely are still keeping our pipeline warm, we keep in contact with a lot of potential targets. So we still have that out there and available to us. And frankly, the list of potential targets is growing. And, frankly we feel like, there will be a time it's just a matter of when will be the right time to start pulling down on that, because as Phil mentioned, there is. Still we feel like a ton of opportunity in the core business, right. And we're focused on, on really making sure the core businesses is running as well as possible, and as well, to make sure that we're as strong as possible from a liquidity perspective as well. Once we've achieved that, then you absolutely will be turning to, we'll returning to M&A, and we're keeping close tabs on a lot of different potential targets.
Stephanie Moore: Got it. I know, I understand. Really appreciate the time. Thanks, everybody.
Operator: Your last question comes from the line of Brett Knoblauch from Cantor Fitzgerald. Please go ahead.
Brett Knoblauch: Hi guys, thanks for taking my question. Maybe to start and you guys outlined a kind of more than 8000 followers on the network or on the marketplace and you're still seeing strong growth there. I think that more than 8000 number has remained pretty steady over the last few quarters, can you maybe help quantify what type of growth you're seeing in just the number of haulers and recyclers on the platform?
Phil Rodoni: Yes, it's a great question. And thank you, Brett, for it. So in terms of the 8000, so if you think about this business, this is the network that allows us to kind of service our waste generator customers effectively across the United States. And so, for us, I'm not really all that concerned with kind of growing the overall number that are servicing us across the United States, you know, effectively we curate that number. So if you have good callers in particular territories, kind of double down with them on if you need to make a replacement somewhere else, you'll do that accordingly. So, the core for us is not necessarily kind of increasing that 8000 number any higher, we're already able to kind of serve robustly across every kind of corner, the United States, our customers with that with that network. And it's really about kind of having deeper relationships with them. I think that the next step for us is really about, how can we kind of broaden the engagement within that follower base. And so we start talking about thinking of selling kind of our Rubicon Pro or our SaaS based product within that network, I think that's important. And another thing is, they can maybe they can participate in our Rubicon Select program, which is a buying consortium where those haulers can actually save, save money on fuel parts and tires, et cetera. I think that's another thing that what would be kind of making sure that we kind of make great inroads with that hauler base. But again, in short, it's not the absolute number really isn't important, it's about the covers that you have across the United States. And we have that with a number of we have.
Brett Knoblauch: Perfect. Thanks, really appreciate it. And then I guess, can you maybe just help bridge the gap to, I guess, a pass a double digit adjusted gross profit margins? I guess, if you're looking at where the businesses that today, to getting there, how much of that is coming from, say, higher, maybe revenues coming from SaaS, or virtually the core business margin expansion? And I guess, within that core, gross margin expansion, I guess, what's really driving that as well?
Phil Rodoni: Right. I think, Kevin, just touched on this previously, but I think it's really kind of, I mean, I think we're getting equal contributions from kind of all those measures that we've taken. So the price increases relative to the business on the Connect side, it's certainly the kind of growth and expansion within the high margin, the higher margin kind of smart city kind of business as well, and the kind of the increasing kind of amount that we're actually getting on the economy, commodity services died. So I think, equal contribution across the board, and strategically, again, that you're going to see is kind of playing on those three things as we go on. So those are as our core kind of tenants of actually how we bring in money to the company, and in turn we certainly expect to make good progress on each one of them.
Brett Knoblauch: Were this pricing increases, kind of across the board? Or, your two largest customers? Like, did they see similar price increases relative to the rest of your customer base?
Phil Rodoni: Yes, but we've done I'd say, broadly speaking, I won't speak any one particular client. But broadly speaking, we went through the entire book of business, just make sure that we're -- again, part of it was mentioned is kind of keeping pace with what the broader industry had done. So, certainly it was kind of it was a broad base kind of adjustment, if you will, based on kind of current micro prevailing prices. As you know, we've all been through the inflationary market for the last couple years, and so really was about kind of keeping pace or in getting back to pace with some of that. And then really kind of going back and we talked about kind of hydrating the portfolio as well as looking at where did we have certain customers that we were unable to either, put forth the kind of the appropriate level of price changes, or, we really didn't have a path forward with them, relative to kind of increasing commodities, increasing their diversion rates, which also helps them as well as that are sold out. And some, there are some clients where we just were unable to do that. So when we talked about hydrating our portfolio, that's what those are some of the actions we had to take on that sense.
Kevin Schubert: And I just add we were pretty mindful, as we went through the portfolio. We’re going through it and looking at each client individually, where they add the value, we provide the relationship, right, where it's been, obviously, where they're currently priced the market, all those things and sort of making decisions. So it was really, we really did it with an eye towards being really making sure we're being mindful and thinking about where prices sort of need to be given the environment we're in and what's been going on, but also making sure we're priced appropriately going forward to kind of grow the relationships as well.
Brett Knoblauch: Got it. And the only thing I would ask, one more on the Smart City, to like my wins. And now, I guess, since the quarter ended, I guess, what are you seeing in terms of the pipeline there? You know, I guess just by looking at your website, you now have more than 80 cities deploying your Smart City solution. I guess, are you seeing maybe momentum picked up? Is there like a snowball effect is wanting to deploy that it's encouraging others to deploy as well?
Phil Rodoni: Sounds good. That's a great question. Thank you, Brett. So certainly we have seen momentum kind of increase, over the years, and as upfront, and frankly, kind of quarter to quarter, and you're exactly right. So I think, from a city perspective, one, one particular area, you have only think of almost like, kind of an anchor tenant in the mall. And so once somebody converts kind of the areas around that suddenly become more interested from a city perspective. These are all, as you can imagine these are all kind of tight networks, these are mayors and supervisors and fleet operators at all, it's a small world, they all know each other. And so when they, you know, one has had great success with us that, you know, that kind of gets out and I think we're reaping the benefits of that. Thank you.
Brett Knoblauch: Got it. Appreciate, thanks guys.
Operator: We have no further questions at this time, I will turn the call back over to Mr. Rodoni for final remarks.
Phil Rodoni: Well, again, appreciate everybody's time and for joining us today and thank you for continuing to kind of your interest in our journey so far. And we look forward to keeping you updated and apprised in our growth in the quarters to come. So thank you everyone.
Operator: This now concludes today's call. You may now disconnect.
