Good morning. My name is Marcella, and I will be your conference operator for today. I would like to welcome everyone to the Insperity Third Quarter 2019 Earnings Call. At this time all participants are in listen-only mode. After the speakers' remarks, there will be a question-and-answer session.

[Operator Instructions] At this time, I would like to introduce today's speakers. Joining us, are Paul Sarvadi, Chairman of the Board and Chief Executive Officer; and Douglas Sharp, Senior Vice President of Finance, Chief Financial Officer and Treasurer. At this time, I would like to turn the call over to Douglas Sharp. Mr. Sharp, please go ahead..

Thank you. We appreciate you joining us this morning. Let me begin by outlining our plan for this morning's call. First, Paul is going to discuss our third quarter results and how we are positioned for growth as we head into 2020. I will then discuss further details behind Q3 results and in particular focus on our healthcare costs.

I will also provide our updated full year 2019 guidance and provide high level comments on our gross profit outlook for 2020. We will then end the call with a question-and-answer session. Before we begin, I would like to remind you that Mr.

Sarvadi or myself may make forward looking statements during today's call, which are subject to risks, uncertainties and assumptions. In addition, some of our discussion may include non GAAP financial measures.

For more detailed discussion of the risks and uncertainties that could cause actual results to differ materially from any forward looking statements and reconciliations of non-GAAP financial measures, please see the company's public filings, including the form 8-K filed today, which are available on our website.

Now, at this time, I'd like to turn the call over to Paul..

Thanks Doug. And thank you all for joining us. Our reported results today include a year-to-date increase in revenues up 13%, net income up 18% and EPS up 21% over 2018. These numbers would be considered solid for most companies. However, they're not commensurate with our outstanding performance over the last five years.

These results include third quarter performance below our expectations, driven primarily by a second consecutive quarter with elevated large claims at our medical plan and to a small degree by lower growth than expected in paid worksite employees. Doug and I will explain exactly what happened and what this means to our going forward plan.

The bottom line conclusion from our analysis of the drivers of our recent results, indicate our growth plan remains solid and we expect to maintain our industry leading double digit unit growth into 2020. And we believe we did not have a systemic issue in our medical plan that would compound into next year.

I'll begin with a discussion of our growth drivers and how we arrive at our expectations going forward. I'll also highlight results from our recent client survey and the traction we're gaining on our traditional Employment Solutions bundle, Workforce Acceleration.

Doug will follow with comments about the recent quarter, including specifics regarding our medical plan and provide updated guidance for the year.

We began 2019 with an expectation for growth in paid worksite employees of 15% based upon our starting point in January, and our budget for each of the three growth drivers including new sales, client retention and growth in the client base. We now expect to end the year at 13% growth in paid worksite employees.

Approximately half of this shortfall is due to lower growth and the net change in our client base and the other half due to fewer worksite employees paid from new sales from what we budgeted and forecasted as the year played out. Client retention has been and is expected to be substantially on plan, continuing near historic highs.

In the second and third quarters, we were surprised by the lower than expected net change in existing employees within the client base in the last month of each quarter. As we mentioned last quarter, we had substantially fewer seasonal full time employees added in June, compared to previous years.

Since we had substantially fewer ads in June, we expected substantially fewer departures in September. Although that we were correct conceptually, we were off the magnitude and experienced a shortfall from our forecast in September.

In the bigger picture, our client base remains optimistic about their businesses and our continuing efforts to hire accordingly. The tight labor market has made it more difficult to find employees making net gains in the client base less predictable.

However, in this environment, our HR service has become even more valuable to clients and prospects which is a plus for retention in sales. Our paid worksite employee number from new sales explains the other half of the shortfall. Although we were substantially on plan in this metric through two quarters, the last two months of Q3 fell behind.

The primary cause leading to fewer paid worksite employees from sales in Q3 is we simply had few trained BPAs early this year and did not offset that with mid-market sales. Both of these issues have rebounded and now point towards strong performance in the fall campaign and as we look ahead to 2020.

Historically, our unit growth follows the growth rate in the number of trained business performance advisors with an approximately two quarter lag as new trained sales personnel gain efficiency. Mid-market results either add or subtract from that core growth rate.

We ended the third quarter with a 13% increase and trained BPA is up from 10% in Q1 and our fall campaign sales activity reflects this momentum. Sales for the first month of the campaign were 103% of budget, and the number of business profiles or opportunities to bid our workforce optimization services is up 23% over the last year.

Our success in mid-market sales last year indicated, we could see continuing leverage and sales in 2019, allowing for unit growth at a faster rate than our growth in our BPA team. This year, we have nearly the same number of accounts sold year-to-date in our mid-market segment and a substantially larger pipeline for 2020.

However, the biggest difference from last year in mid-market sales is the lower average size of account sold, and the fact that we did not close a large enterprise account like we did last year. Last year on July 1, we rolled our largest account ever. This added 160 basis points to our unit growth rate last fall.

Since we did not repeat that large sale or increase the number of mid-market sales year-over-year comparisons, beginning in July this year difficult. This is exaggerating the quarterly slowdown in unit growth over this year for mid double digits to low double digits.

As we look ahead to 2020, the number of trained BPAs will drive our unit growth and mid-market sales will supplement that growth. In retrospect, I believe I was too optimistic and expecting mid-market sales to offset a lower growth rate in BPAs at this stage.

With this plan in place, we should see quarterly growth acceleration over 2020 especially as we move past the difficult comparisons related to the large mid-market account.

One other initiative we took when the third quarter ended was a comprehensive survey of our client base and analyzed recent client business and hiring activity and determined their outlook for 2020. We designed this survey to provide further insight in our budgeting and forecasting.

We generally found the health of this Small Business Community strong, and the outlook for 2020 to be better than 2019. Keep in mind small business owners are an optimistic lot, but we also found this to be consistent with the economic indicators we monitor on our client base.

Over time as a percentage of base pay was over 11%, average pay up over 4% and commissions paid to the sales staff of our clients up over 8%.

The survey which will be released tomorrow also found the ability to hire and retain employees and driving revenue to be the number one or two concerns for all segments except our largest clients where controlling operating cost edged out hiring and retaining employees.

I would also like to mention the excellent progress we made in Q3 gaining traction in our traditional employment strategy selling our Workforce Acceleration bundle, which is a critical success factor in our current five year plan. Our goal for this year has been to extend adoption of this strategy across our BPA team throughout the country.

This strategy includes introducing both co-employment and traditional employment bundled HR solutions early in the sales process. We typically sell one out of 10 of our small to medium sized business prospects on our flagship Workforce Optimization co-employment bundle.

Our traditional employment strategy is to ultimately convert some percentage of the nine out of 10 that either don't qualify or not ready for Workforce Optimization to our Workforce Acceleration option. This quarter we gained significant traction coming in at 123% of our budget in reaching 5,000 employees sold a traditional employment solution.

Success in this traditional employment bundled HR solution has a tremendous effect on our business model. These sales represent a value to Insperity of about one third compared to Workforce Optimization clients without the benefit plan risk and contribute to improving gross profit.

These clients also represent an opportunity to up-sell to the full call employment service at a later date, improving overall sales efficiency.

So in summary, we've been on a tremendous run the last five years with a double digit growth rate in paid worksite employees within our target range of 10% to 15%, driven by growth in the number of BPAs plus or minus mid-market account effects.

We expect to continue this growth plan into 2020 and enhance our business model with improving workforce acceleration results. At this time, I'd like to pass the call back to Doug..

Thanks Paul. Now, let me begin by discussing further details of our third quarter results. Average paid worksite employees increased 12% over Q3 of 2018 with a sequential increase of 4% over Q2 of this year. Higher than expected benefit cost resulted in just a 3% increase in gross profit over the third quarter of 2018.

These higher benefit costs of approximately $18 million were slightly offset by favorable results in other areas of gross profit and operating costs, but drove the decline in adjusted EBITDA to $51 million and adjust EPS to $0.75.

Now upon receipt of our third quarter healthcare claims data in October and our subsequent analysis of this data, we determined that these higher benefit costs were primarily driven by elevated large claim activity, which declined from Q2, but did not return to historical levels.

Two consecutive quarters of large healthcare claim payments at these elevated levels is a historical anomaly for us. Additionally, we have historically had a strong track record in predicting our total claim costs on an annual basis. It appears that 2019 will be an exception due to this recent spike in large claims.

In light of this, we have spent an extensive amount of time drilling into the details of claims data with the assistance of our insurance carrier, in order to determine the root cause of the elevated claims, and whether anything systemic has changed in our plans. Based upon our review of the detailed data we have determined the following.

First, it's clear that only a relatively small number of claimants rather than something pervasive over our entire participant face negatively impacted our healthcare costs in Q2 in Q3. An analysis of large claims over the past two years indicated a recent spike in activity related to participant with claims exceeding $250,000 a year.

These jumbo claims from a very small number of participants were the primary driver behind our claim dollars exceeding expectations by approximately $27 million over the past two quarters.

As a second finding our insurance carrier confirm that there is an element of randomness in the recent elevated large claim activity, and there is an expectation that it will revert back to a normal level.

The recent increase in the frequency of claimants with jumbo claims is above the level of our insurance carriers fully insured book of business whereas prior to this activity, we have historically been in line or below their book.

Thirdly, an analysis of claims over $100,000 over the course of the two quarters shows that the claims were largely from different participants, as opposed to ongoing claims from the same group of participants.

The fact that the two consecutive quarters of large claim activity were driven by two largely different groups of participants, further points to the randomness of these two isolated events. Fourthly, a review of the clients associated with these large claims did not indicate a concentration associated with new clients.

And therefore would indicate that this was not driven by adverse client selection. And finally, our comprehensive review of overall plan participant demographics such as age, gender, geographic mix, overall inpatient hospital stays, and plan migration continues to point that to favorable trends of our health plan as a whole.

Accordingly, based upon our detailed review, our best estimate is that the spike in large claim activity during 2019 is a historical anomaly and we expect the large claim activity to normalize.

Now, even though the claims data doesn't appear to point to an ongoing issue with our health plan, we believe it is prudent to take a more conservative approach to estimating benefit costs for the fourth quarter by not assuming a further reduction in large claim levels for the remainder of 2019.

And when taking a look at the full year, you may recall that we began 2019 estimating an expected benefit cost trend of 2% to 3% over 2018. Year-to-date results combined with our revised Q4 forecast yields a cost trend of approximately 3.7% which is still favorable to trend seen in the marketplace.

The elevated large claim activity fully accounts for the incremental trend over the midpoint of our initial budget. As we look forward to 2020 and enter a new plan year. Our detailed claims data does not indicate the level of large claim activity will compound by increasing over the recent elevated rate.

Under this scenario, we would expect 2020 to return to a more normalized benefit cost trend over 2019 costs. And we are pricing our new and renewing business accordingly.

Considerable pricing strength throughout 2019 in other areas of gross profit combined with favorable calls trends in our other direct cost areas, and the traction we are gaining in workforce acceleration contributes to our outlook for gross profit improvement in 2020.

And any reversion of large claim activity back to our lower levels would reduce our 2020 benefit cost trend and further improve our gross profit. Now shifting to our balance sheet and cash flow, we ended the second quarter with $131 million of adjusted cash and $239 million of debt outstanding on our recently expanded $500 million credit line.

We have now repurchased one and a half million shares in 2019, including 1.2 million shares in Q3. When combined with dividend payments totaling $37 million, we have returned just over $190 million to shareholders thus far in 2019 as we continue to invest in the long-term growth of the business.

Now before we open up the call for request for questions, I'd like to provide an update to our full year 2019 forecast. As Paul just mentioned, we are now forecasting 13% growth in average paid worksite employees for the full year 2019.

Our updated 2019 earnings guidance takes into account this revised growth forecast, the recent elevated large claim activity and our conservative approach to estimating Q4 benefit costs. With this in mind, we're now forecasting full year 2019 adjusted EPS in a range of $4.08 to $4.20, and adjusted EBITDA in a range of $247 million to $253 million.

While we are obviously disappointed in the effect of elevated healthcare costs in our 2019 results, we still plan on completing the year with both in industry leading worksite employee growth rate and profitability for worksite employee. We're currently going through our normal budgeting process for 2020.

And we'll provide our detailed guidance on our next earnings call. Based upon our current outlook, including our earlier comments in the areas of worksite employee growth and gross profit, we expect 2020 earnings growth to be improved, and not indicative of the latter half of 2019. Now at this time, I'd like to open up the call for questions..

[Operator Instructions] Your first question comes from the line of Tobey Sommer from SunTrust. Your line is open..

Thanks. This is Jasper Bibb on for Toby today.

With respect to the guide for WSE growth, could you quantify how much of that comes from additional hiring within the existing customer base? And are there any trends you're seeing on that end?.

Yeah, I mean, we've taken a conservative look at the net gain from employees based on kind of what's going on in last couple quarters. But like I said about the survey we conducted, there's still a lot of optimism out there. People have generally met their business plans for the year and are looking at improved sales for next year.

And so we expect the need for employees within our client base to continue and to the degree that you can find the qualified people that will continue to see growth in the client base. But we're kind of being conservative about that going forward..

Okay, perfect. I was wondering if you could elaborate on those changes to your healthcare pricing after seeing those outsized claims in the past two quarters..

Yeah, so on the pricing side, we have an ongoing process where we are pricing every new and renewing customer every month based on the most recent information that we have. So we've been continuing to move pricing up accordingly.

Of course at the year end, we also have our year end transition where you have the highest number of new clients coming in from new sales, and you have the highest churn from the turnover of clients at year end as well, because high percentage are on annual contracts that line up with the year end.

But we feel very good, pricing has been strong throughout the year and has even come in ahead of our expectations as the year went along, so we feel good about how we have things priced going forward, even in spite of this anomaly we've had on these large claims..

Okay, great.

Last question for me, I was curious if you could update us on people analytics and how important that is to how you think about mid-market growth heading into 2020?.

Yes, I've considered putting that in my in my prepared remarks, but we want to get to the point of some of the bigger things that were happening, but we're really excited about the analytics engine that we built into Insperity Premier.

And we're now, I believe, over half of our mid-market clients have had an in depth discussion about the analytics engine and how it – and the data and information, the instant insights that it provides.

And we really believe that this allows us – this tool allows us to really emphasize what I call our software with a service differentiation, the advantage we bring to the table by not only bringing instant infrastructure, but now instant insights. And as soon as you have an insight, you want to know what to do about it.

So the fact that Insperity comes not only with the technology, but with the professionals that are able to help devise a game plan to take that insight and turn it into results for our client that makes what we do for our customers very unique. And I especially think it's going to be very prominent in our mid-market space..

That's helpful. Thanks, guys..

Your next question comes from the line of Jim MacDonald from First Analysis. Your lines open.

Yeah, good morning guys..

Good morning..

You haven't talked about how you'll kinder your guidance for worksite employees for Q4, which also seems way below what we would have expected. I mean, you had pretty strong commission activity in Q3. So what's causing the big drop in worksite employee guidance for this – I mean, it's basically doubling the miss from this quarter..

Well, Jim, you can – as you know, the sales that you make this time of year generally come in January. And we took out all kind of – most of the net gain from existing. You don't have a lot of clients turning or you're – from the retention side, we expect it to be the same, but we just wanted to be really conservative about it.

And at this point, frankly, that fourth quarter doesn't really matter. We're all focused on the January starting point for the year. And so what we're really focused on is our fall campaign activity. And we've got our – nice increase in trained rep count back up where it belongs 13%.

We've got our key indicator for sales activity, which is the number of opportunities to bid, running really strong over the EBIT, over the growth rate at 123% for the beginning of the campaign.

So we think we're off to a really good start, we know we're off to a really good start and as we maintain that then we'll get into next year and see a more normalized pattern for growth. So we're in that period where you have this year-over-year growth on top of this significant increase in the – with the large customer we had last year.

And with that comparable, along with having a lower trained BPA count early in the year, that's just the way it's come out at this point where we're focused on turning that around..

Can you give us the current end of quarter trained BPA level?.

Yeah, let's see it here. It is light of five, just under 550 – 548..

548, at the end of quarter?.

Right..

Okay. And over to healthcare, so I hear your survey results and things.

But what if employees were thinking – I don't know if you use surveyed employees or the employers, but if employees are worried about their jobs for some reason, would this kind of – would this kind of healthcare activity be more normal if everyone was sort of worried about their jobs or thinking about leaving their jobs or worried about being fired..

Not really, Jim. I mean, I wouldn't see any connection between – first of all, if they were worried about their employment, which the labor market is so strong, I don't see that right now. But if they were, I don't see how that would drive a large claim. That which was the core issue here, these jumbo claims above 250,000.

We just had a significant increase in the incident rate. And it's sitting down with our insurance carrier going through. You can't believe how much data we went through looking at it every six ways from Sunday. And the answer is the same every time and it's these random large claims. In our history, we've had large claims in the quarter.

All of our investors usually know that that happens once in a while. Usually, we haven't even seen happen more than once in a year, like that. And that's why it kind of evened out over the course of the year. This is two quarters in a row. It's more the luck of the draw, and it's very disappointing, but it's what happened.

And there's nothing systemic in the plan. And I really don't see it being driven by employee related activity..

Yeah, Jim its Doug, we also look at the nature of the large claim activity.

And the two big drivers to it were heart conditions, heart attacks, issues like that, in cancer treatments, which clearly doesn't point to your earlier question there into some lesser extent, accidents, even within the participant base, so it gives you a little bit of flavor there as to as to the drivers in – gives you – hopefully helps you out there also on your question..

Yeah, none of those are what you'd call chronic in terms of the treatment period is a specific thing. And then you go down the road..

Your next question comes from the line of Jeff Martin from Roth Capital. Your line is open..

Thanks. Good morning, guys..

Good morning, Jeff..

Wanted to get a sense on how you feel that the higher benefits cost could affect your yearend transition in terms of retention..

Really no connection there because our pricing strategy really didn't – this didn't call for any change in pricing. Remember, the total cost trend of 3.7% that we even have in this year is really favorable against the market at large as it is.

Our normal pricing strategy would actually have us pricing in a higher number than that in our normal pricing. However, that number gets offset by people making plan design changes, or choosing a lower cost plan or making other changes.

Where it's not – we can't really determine today what percentage increase would we have in benefits pricing in January? But we know we've built in a higher number than the 3.7, it will come out something lower than that. But it'll be within the range and we don't have the cost price mismatch.

We don't have to go back and hurry up and increase prices on customers. That's not what's going on from this situation..

Okay. And then is this the first time that you've really seen claims come in above, you're fully insured book of business. I know you've mentioned historically it's in line or below.

But is this really the first time we've seen that trend?.

I would say without having the benefit of going back and looking every quarter historically, but certainly and – we don't know of a time. I mean, our whole book of business constantly runs better than the United's book. They tell us that on an ongoing basis.

The comments in our script related to these large claims, which for this period, for the first time ran above their level and it's historically been below. We don't have any reason why we're sitting here today to think they're not going to turn back to at least the normalized levels.

And, frankly, I don't have any reason to think we're – based on how we run the plan. We did a complete deep dive on the demographics to see if there's anything driving this, any source of new business, any age, gender differences, any selection that could possibly be driving this and this is not there.

In fact, the demographic review that's 50 something page analysis, actually shows our book of business measured out in terms of the health of the book and how changes actually was a little positive. So that's not again confirmed nothing they're driving these two quarters we had..

Okay, that's all for me, thank you guys..

Thank you..

[Operator Instructions] Your next question comes from the line of Mark Marcon from Baird. Your line is open..

Good morning, guys..

Good morning, Mark..

When did you – you bought back a lot of stock this quarter, when did you buy it back?.

Let's see here, Mark. Yeah, it was throughout the quarter..

I mean, we followed our normal pattern, which is to buy in the open market, when we can and then put in a 10b5-1 plan when we go into the quiet period..

Yeah, but it was really yeah, throughout the entire quarter..

When did you discover that the healthcare costs were running at an elevated level?.

Well, as I mentioned in my prepared remarks, as with every quarter we get the claims from data from United Healthcare in the month following the end of the quarter.

And so it was in October, first we get the initial claims data from them and then we further – it takes time to further analyze that data particularly in a quarter like this where you can get going into a deeper analysis of that, but that's very typical. That's typical with every quarter over the course of our history.

So you don't know your healthcare claims data on an occurred basis until after the quarter is over with..

Is there the possibility of getting more frequent updates?.

It's actually not a matter of frequent updates. We meet with United every month.

And even through the September meeting there wasn't an indication because you don't have the quarterly report which has the fully – full claims as on an incurred basis, put back to where they initiated and things were looking reasonable like through the two months at one until the claim reports for the quarter.

They came in after that we were faced with some numbers with that were quite disappointing..

Yeah.

The point is, I'm assuming you wouldn't have bought a 1.2 million shares of [indiscernible] this was going to transpire?.

That's exactly correct..

Yeah, it's a safe assumption..

So I guess the question is, is there a way to get an earlier warning system? Any sort of ruling system or anything like that?.

So what we've done because of this large claim activity, we did work with our carrier to provide various looks at various cuts of these sizes and looking at some projection of ongoing cost at this point, we have some things that we'll probably work with them on to try to get better inside, but now that it's kind of new information, it's not something we're going to be able to say right away, this will help us project that.

So we're going to continue to work with them and try to get more information earlier. But it'll take a little time to see if there's really anything in there that can do that.

The problem is on these jumbo type claims, the carrier gets some when they finally get filed and sometimes it's making run through a process, they're monitoring conditions, and know things are happening. And we know – you always have some number.

When are you going to have an increase like this, this is really outside the norm to have this high of an incident rate of those jumbo claims in such a short period of time and that's the bottom line..

Your next question comes from the line of J Jim MacDonald from First Analysis. Your line is open..

Yeah, I just wanted to follow up on what you're seeing in the market in terms of rate increases. We've been hearing of some for healthcare. We've been hearing some pretty high numbers out there actually this year..

Yeah, as far as within the marketplace at large, I think from our carrier’s perspective, I think you're looking at high single digits basically. So like I say we're not unhappy with where we are in the bigger picture on how our plan is trending even with the large claim activity this recent period..

Great, thanks. That's what I wanted to ask..

Your next question comes from the line of Mark Marcon from Baird. Your line is open..

Just a couple of quick follow ups, one, your existing clients, when do they – when did they receive the notification for what their rates are going to be for next year?.

Well, as you know or you may be aware of Mark, we're renewing clients every month of the year. There's a trend to that because we sell clients and they have an annual contract, we're selling every month, so people are renewing every month.

Now, at the year end, we have about 40 to 40 – a little over 40% of our book of business renews in this January to February time period. And those – we're well into renewing those accounts already, and are actually a little ahead on that.

But the pricing on those accounts goes out in October, typically, the bulk of it, and so we're already out there, renewing those accounts..

And are you renewing at roughly a 3.7% price increase for healthcare or how are you – how do you price that?.

Yeah, this is what I was saying a little bit earlier. Let me try to be a little more clear with that. We actually are building on price increases that would be greater than that 3.7% and that's on an individual account basis.

We're looking at their specific experience in the total PEO relationship, not just the healthcare side, but within the allocation that we build in for the benefits. There would be an allocation increase above the 3.7.

But what happens then is customers also have options to change the plan they selected, or change the contributions they're making, so forth between the client and the employee. So there's other decisions that are made.

And once we get on any renewal period, whether it's a month or the year end, once we enroll or re-enroll and pay everybody or renew them and pay them under the new system, their total increase in benefit allocation can be less than that number that we built in because they may have made a change in their plan.

So we would anticipate our best guess would be around a 3% increase in – that came from pricing, but then of course you have to realize that would have been driven by going to lower cost plans that would offset the trend that we're talking about that occurred this year the 3.7.

So all in, like I say our pricing compared to our all in cost is still well intact not an issue there that has driven a big change in pricing strategy.

Does that help any?.

It does.

I was just wondering, how does that compare like if a client's been with you for say three years, the price increase that they're looking at this year for like-for-like insurance plan, how does that compare to like the price increase that they would have seen last year?.

Yeah, that that's a good question that it wouldn't be – it would be a little bit higher, maybe 1% higher than then they would have seen a year ago because we would have been – as this year has gone on, we've been moderately raising pricing to reflect what's been happening in the underlying plan.

Not so much related to the large clients, but just to the normal trend that you look at. Now, for example, pharmacy trend has been a little elevated over the course of the year. So those kind of things get factored in.

But the good – the thing to remember is that the longer a client is with us, the more they've had multiple years of lower than market increases and benefit plans and the better this deal gets for our clients. That's the reality of it..

What's the typical client trend that you would expect during this core time period?.

I'm sorry, typical what trend?.

Client trend that you would typically end up seeing in the year..

Client trend?.

Yes..

Okay. Yeah. So our annual attrition in clients is typically last five years now been around 15%, 14% to –.

16..

14% to 16%, so let's call it 15. In the way that has played out over the last five years, it's more like a 6% to 8% that go away in January because you have such a high percentage of customers renewing and then you have less than – you probably have a 2% to 3% for February, and then you have a 0.5% to 0.7% every month thereafter.

So that's kind of your trend. That's I mean, that's the pattern of how you get about a 15%..

Okay, and then the BPA productivity typically around this time of the year..

Well, this is when it really bumps up, this is when you've really worked hard to have as many BPAs trained as possible and running at a good efficiency level and get them as many qualified leads as possible.

So we usually – our fall campaign, we typically have nearly doubled up, about a maybe 1.7% or 1.8% over what you had in the first and second quarter, for example. So this is making, hay look, wow the sun is shining..

Okay, great. Look forward to talking offline as well. Thank you..

Absolutely, thank you for your questions..

There are no further questions at this time. I'd now like to turn the call back over to your presenters..

Well once again, thank you all for joining today. We appreciate your interest and we look forward to having better news for us next quarter and we're going to finish off this year strong with a good fall campaign and look forward to a strong 2020. Thank you for joining us..

This concludes today's conference. You may now disconnect. Have a great day..