ASGN Inc (ASGN) 2010 Q1 法說會逐字稿

Good afternoon. My name is Stephanie and I will be your conference operator today. At this time I would like to welcome everyone to the On Assignment first-quarter 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator instructions.) Thank you.

I would now like to turn the conference over to Jim Brill. Please go ahead, sir.

Thank you, Stephanie. Before we begin, I'd like to remind everyone, as we do each quarter, that our presentation contains predictions, estimates, and other forward-looking statements representing our current judgment of what the future holds. These include words such as forecast, estimate, project, expect, believe, and similar expressions.

We believe these remarks to be reasonable but they are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. We describe some of these risks and uncertainties in today's press release and in our filings with the Securities and Exchange Commission. We do not assume the obligation to update statements made in this conference call. And now I'd like to introduce Peter Dameris, our CEO and President, who will provide an overview of our first-quarter results. Peter?

Thank you, Jim. Good afternoon. I would like to welcome everyone to the On Assignment 2010 first-quarter earnings conference call. With Jim and me today is Emmett McGrath, President of our Life Science and Allied Healthcare groups.

During our call today I will give a review of the markets we serve and our operational highlights, followed by a discussion of the performance of our operating segments by myself and Emmett. I will then turn the call over to Jim for a more detailed review and discussion of our first-quarter financial performance and our financial guidance for the second quarter of 2010. We will then open the call up for questions.

All markets we served, except healthcare, improved measurably during and exiting the first quarter. Despite normal first-quarter seasonality and adverse weather in the Northeast, our IT and Life Science divisions grew sequentially. In addition, March consolidated revenues of $35.6 million was the highest monthly consolidated revenue generation for our company since April 2009. Our absolute divisional sequential revenue performance in the first quarter was 0.7% for our IT group, 0.4% for Life Sciences, negative 13% for the Healthcare group, and negative 5.9% for our Physician group. During the quarter our revenues were adversely affected by severe weather in the Northeast by approximately $300,000.

Exiting the quarter, revenue growth in our nonhealthcare related groups, i.e., IT, Engineering, and Life Sciences, which made up 61% of our total first-quarter revenues, was good and is improving. The Healthcare staffing market is still very challenging, but we are starting to see modest signs of improvement in demand that we hope will permit sequential growth in the third and fourth quarters of 2010. Although Healthcare staffing is currently a drag on our revenue growth, we firmly believe this end market will provide some of the greatest growth opportunities in 2011 and beyond.

Consolidated gross margins remained solid with only normal first-quarter negative impact occurring from employment tax rate resets, including the increase in unemployment tax.

As we commented on during our fourth-quarter comments call, we believe contract labor should perform well in what appears to be a slower than normal economic and labor market recovery. This belief is based on the assumption that so many of the decisions that corporate America was forced to make in 2009 cannot be sustained long term. In addition, we believe during this economic expansion period the secular growth of contract labor will outpace cyclical growth, that secular growth will be fueled by greater government employment mandates, and how well contingent labor permitted corporate America during the recession to realign its labor costs with demand for its goods and services.

From our perspective, the cyclical recovery in the staffing industry is taking a traditional course. Light industrial commercial staffing recovered first, and now demand for contract labor is broadening into professional staffing end markets.

During the quarter we were somewhat surprised how strong and quickly demand for IT personnel returned and how weak demand for physicians was. On April 19th, we announced the acquisition of The Cambridge Group, Ltd. The Cambridge Group is a 35-year-old staffing firm that specializes in the recruitment and placement of professionals in the information technology, life sciences, clinical research, and physician recruitment end markets. Cambridge had approximately $11 million in revenues and 37% gross margins in 2009. Our pursuit of The Cambridge Group extended over a two-and-a-half year period. Mike Salvagno, the founder, will become Vice President of our Clinical Research group and report to Emmett McGrath.

Although this acquisition is relatively small, we believe it is important in that it increases our skill in several of our key areas of -- for future growth. In addition, beyond normal accretion we hope to eliminate certain back office costs and thereby increase the profitability of this group. Emmett and Jim Brill will share more details regarding the acquisition later on in this call.

As we advised you during our fourth-quarter conference call, since early January of 2010 we have been engaged with an outside strategic consulting firm to create a plan to achieve our stated $1 billion revenue goal. We completed the initial phase of a strategic planning effort over the last three months.

Looking back at 2009, our focus, like many companies, was purely tactical in response to the external macroeconomic environment. This was the right operating strategy for those times. But it's now time to chart a more strategic course for the future. The Waterstone Group of Chicago was our partner on this initiative. Together we set out on a process that was highly collaborative, with dozens of participants across all business segments, from our managers and senior leadership team to a cross-section of external customers. Our primary goal is to reach $1 billion in revenue over the next three to five years.

Work continues on our secondary goal, which is to validate our cost structure associated with our supporting infrastructure. In order to reach the revenue target of $1 billion, we started with a hard look at our existing business units and how we stack up against the competition and our place in the overall professional staffing market. Our analysis and conclusions illustrated that On Assignment is a uniquely positioned, diversified professional staffing firm and that our IT, Engineering, Life Sciences, and Healthcare segments operate within large addressable markets, showing positive long-term industry fundamentals.

From an organic growth perspective, without further diversification, we believe we can close nearly 65% to 75% of the revenue gap needed to reach $1 billion in gross sales. Of course, this assumes a moderate economic recovery and only minimal internal investments to expand market share, geographical presence and client penetration. The balance of our revenue goal would come from acquisitions, where we see an ample portfolio of smaller scale targets in the $15 million to $50 million range, and some larger, opportunistic targets that would also accelerate growth.

Regarding profitability, we also believe that we can generate double-digit adjusted EBITDA margins from our existing business. Strategic planning is an enduring effort and will become part of our discipline. The professional staffing market is still highly fragmented, and in many segments we see a bright future to grow along our existing service lines without further diversification. Plus, there is plenty of opportunity to speed up growth with three to five complementary acquisitions per year.

Now to the first quarter. Revenues in the first quarter declined 3.6% over the first quarter of 2009. Net income was negative $300,000 or a negative $0.01 per share. Revenue generated outside the United States was $6.5 million, or 6.8% of consolidated revenues in the first quarter, versus $5.6 million, or 4.8%, of first quarter 2009. Consolidated gross margin in the first quarter was 32%, up from 31.7% in the first quarter of '09. Adjusted EBITDA was $4.4 million, or 4.5% of revenue for the quarter, down from $8.1 million, or 6.9% of revenue in the first quarter of '09.

Exiting the quarter, demand for our services continues to strengthen in most divisions, with the exception of Nurse Travel and Physician Staffing. Our consolidated revenues in March were $35.6 million. Our weekly assignment revenue, which excludes conversion, billable expense, and direct placement revenues averaged $7.2 million for the last three weeks. This period includes, however, the Easter holiday, which reduced the average weekly revenues by approximately $200,000. And it compares to an average of $7.3 million in weekly assignment revenues for the three-week period prior to our earnings release last quarter.

Before turning the call over to Emmett, I would like to give you a brief review of operations. As we look at the Nurse Travel group, we experienced stabilization in demand for temporary nurses reflected in the quarterly number of open orders and the number of booked weeks nurses are contracted for. While the economy appears to be showing some signs of improvement, we believe the nurse staffing industry continues to face economic challenges and the pressures of the macroeconomic environment.

Our quarterly revenue of $9 million was down sequentially 5.6% and down 57.7% year over year. Q1 showed the smallest sequential decline in revenue in the past six quarters. Gross profit of $2 million represented a 14.1% decline sequentially, and a 59.8% decline year over year. Gross margin was 22.4%, representing a 221 basis point sequential decrease and a 115 basis point decline year over year.

2010 continues to be a challenging year for the Nurse Travel industry. We continue to experience some compression in bill rates and hours worked per nurse, while the use of vendor management systems is growing. As such, we are more aggressively aligning services between our Physician and Nurse Travel group. This will build a partnership between the two groups and increase our geographical presence. Also, it will allow us to expand our market share with existing accounts and sell into new markets. We believe that by working more closely together, we can offer innovative, dynamic services to our mutual clients. We look forward to building on this capability as the healthcare industry responds to the intense pressures of increased need for care, increased demand for access, and the growing shortage of trained professionals. For the remainder of 2010 and forward, we believe the Nurse Travel group is well positioned to experience improved financial results.

Now let's turn to IT. First-quarter revenues for the IT and Engineering segment were $35.8 million, about a 1% sequential increase over the fourth quarter of 2009 and a 6.2% decrease over the first quarter of 2009. The year-over-year decrease is a reflection of the somewhat stronger first quarter of 2009 that we experienced compared to our IT staffing competitors. The sequential improvement reflects monthly increases in our average weekly sales that started in September of 2009 and were the result of a significant increase in the number of billable consultants on assignment, somewhat offset by continued decreases in our average bill rates.

During 2009 our IT and software and hardware engineering disciplines experienced the largest percentage revenue decreases year over year, and they were negatively impacted by the lack of available capital and by our clients' reluctance to start new ERP and product development projects during the recession. We are now starting to see that change as clients are beginning to improve budgets for capital projects and new programs.

Contrary to our experience in these two disciplines, our first-quarter revenues for the mechanical and electrical engineering and telecom disciplines grew year over year by 1.9% and 3.5%, respectively. Now, for more details. During the first quarter of 2010 we averaged 641 billable consultants on assignment, equal to the fourth quarter of 2009. The average bill rate in the first quarter of 2010 was $107 per hour compared to $119 in the first quarter of 2009 and $109 in the fourth quarter of 2009. Our gross margin in the first quarter of 2010 remained strong at 35.1%, but down slightly from 36.8% for the same period last year.

Starting in the second half of 2009, we intentionally relaxed our historically high gross mark-ups to drive revenue. Nonetheless, the bill rates and gross margins of our IT group remained the highest in the staffing industry. During the first quarter we were also successful in continuing our strategy of diversifying our business across clients and industries, billing over 620 different client companies, with no single client accounting for more than 2.1% of our revenue. Demand for IT and engineering consultants continued to increase from medical equipment, semiconductor, and chemical manufacturing companies and from service organizations in the telecommunications, education and healthcare industries. Our business is down somewhat from utilities and companies in the machinery, appliance and transportation and manufacturing industries.

From an organizational standpoint, our internal sales consultants drive our business and are a significant investment necessary for current and future growth. While the average number of sales consultants increased during the first two quarters of '08 to a high of 447, since that time we have decreased the number of sales consultants and averaged 289 over this past quarter. We monitor our operational activity daily and will continue to align the size of our sales staff with the current and future economic conditions. As a result of our strong performance in the fourth quarter of 2009 and the first quarter of 2010, which has continued into April, we are now adding staffing consultants to select Oxford International and Oxford & Associate offices.

One of the investment areas we mentioned last quarter is in the healthcare IT market. We are making steady progress and will continue to add staffing consultants to focus on this opportunity. The aging US population, the need to make our healthcare system more efficient, and the US government's investment in healthcare information technology presents a compelling opportunity for our IT business.

As I mentioned earlier, we have seen an increase in consultants on assignment and a resultant increase in weekly sales since September, reflecting the slow and steady economic recovery similar to the previous recession. We experienced the normal seasonal drop-off at the end of December and early January in terms of consultants on assignment, but have experienced steady progress since then. And anecdotal reports from our clients are that most intend to increase their temporary hiring throughout the year. Based on our results through April, we are pleased to report that we will experience sequential revenue growth in Q2 over Q1, as well as growth over Q2 '09 in this segment.

Now let's turn to our Physician Staffing segment. As most of you will remember, we produced good revenue growth through the first half of last year and then saw declines in Q3 and Q4. These declines have leveled off, but we have not seen an uptick yet. We attribute this to continuing tough times within the health care industry, and I will explain.

First, here are the details of this just Q1 performance. Revenue was $18.9 million, a 13% decrease from the same quarter last year and a 6% decrease from Q4 '09. Gross profit was $6 million, an 8% decline year over year and a 13% drop sequentially. Following the same trends VISTA's average locums tenens hourly bill rate was $181, a 4% decline year over year, and flat against Q4 2009. Demand for physician services as measured by days sold was also down 30% year over year, but down just 2% sequentially.

We excelled at increasing our gross margins last year, finishing the year at 34.3%. However, decreased overall demand, a shift towards primary care specialties, and a decrease in overtime and call hours worked by locum tenens physicians have caused our margins to drop to 31.7% in the first quarter. We think this will normalize as the year progresses, and margins will remain strong.

We attribute these trends to a slow recovery of the hospital segment of the healthcare industry. The American Medical News recently reported that hospitals have had to continue to cut costs through mass layoffs at the same pace set in 2009 because of increased demand for charity care combined with increased demand for commercial services such as elective procedures. The jobless recovery continues to drive hospital volumes down, as people defer elective medical procedures because of changes in employment status or health insurance coverage.

The staffing industry analysts have also reported that hospital companies are experiencing very low staff turnover rates for the quarter, which reduces the need for interim help. In their Q4 2009 earnings call, Tenet Health reported dramatic reductions in employee turnover and the use of contract labor. And HCA reported a 22% decline in turnover for 2009. Despite all of this, we have started to hear positive news from clients. And although the anecdotal evidence has not translated into increased demand for physician services yet, we are guardedly optimistic. Physicians continue to have a very low unemployment rate, less than 1% in 2009. And the US is facing a shortage of 150,000 physicians in the next 15 years. These factors make physicians an attractive, although increasingly competitive, segment. We expect growth across all specialties as hospitals see an increased demand for commercial services over the course of the year. In the long term we expect healthcare reform to drive an increased demand for primary care physicians.

We are also expecting a positive boost from the closer alignment with the Nurse Travel division. There is a natural fit between these two divisions and we believe that by working more closely together we can offer innovative, dynamic services to our mutual clients. We have tapped Katie Hoffman Abby, a senior leader from VISTA, to lead our Nurse Travel division. To strengthen the partnership between the two groups, she will continue to oversee our international physicians placement and physicians search and consulting practice for VISTA.

I will now turn the call over to Emmett, the President of Life Sciences, Allied Healthcare groups. Emmett?

Thank you, Peter. Revenue for the Life Sciences segment grew on an absolute dollar basis over the fourth quarter to $23 million, which represents a small sequential increase and a 9.2% decrease year over year. The sequential increase, although slight, further illustrates the improved operating environment.

On a divisional basis, US operations generated $19.4 million in revenues, representing a 1.3% sequential increase and a 10.1% decrease year over year. Foreign revenues were $3.6 million, decreasing 3.9% sequentially and decreasing 3.6% year over year. Foreign sequential revenues were impacted by declining exchange rates in the quarter and Jim will provide more information regarding the exchange rate impact in his prepared remarks.

Direct hire revenues for the Life Sciences segment increased on a sequential and year over year basis. Gross margin for the Life Science segment was 31.6%, representing 115 basis point decrease over the prior quarter and a 29 basis point decrease year over year.

On a divisional basis, US gross margin was 30.8%, a decrease of 159 basis points over the prior quarter and a 32 basis point decrease year over year. We attribute the decline in gross margins predominantly to increased SUI rates and unfavorable Workers' Compensation adjustments. In response to increased SUI rates, we have implemented pricing strategies for both current and new client engagements. Foreign gross margin was 36.1%, representing 130 basis point sequential increase and a 40 basis point decrease from the prior year.

Moving on to the second quarter of 2010, demand for both contract and permanent placement services remains steady and the business climate in most of our markets continues to stabilize and improve. However, market conditions are still far from historical post-recession levels. With that being said, early in the quarter we are encouraged with the steady flow of job orders, number of weekly assignments, and permanent placement activity. Our focus continues to be on maintaining the improved business climate through consistent emphasis on employee productivity, new business development, gaining greater depth with existing clients, capturing a greater number of higher-level skill disciplines, executing effective market campaigns and maintaining our hard-earned gross margins.

In support of our effort to capture higher level skill disciplines and to enhance our gross margins, as Peter mentioned, on April 19th we acquired The Cambridge Group, a privately-held provider of contract and permanent staffing services located in Westport, Connecticut. The addition of The Cambridge Group will strengthen our higher-level clinical research service offering, add greater value to our many lab support clients, enhance gross margins, and ultimately enable us to capture greater market share in the CRO, biotech, medical device, and pharmaceutical arenas.

Now I'd like to turn to Allied Healthcare. Revenues for the Allied Healthcare division were $9.6 million, which represents a 19% decrease on a sequential basis and a 6.3% decrease year over year. We attribute this steep sequential decrease predominantly to the absence of seasonal revenue solely associated with the unprecedented demand for standard flu and H1N1 vaccinations in the fourth quarter of 2009. As previously reported, we expected demand for such services to not carry over into the New Year. However, we expect the seasonal demand to commence in the second half of 2010, albeit not at the level seen in the prior year.

Furthermore, growth was constrained by the following specific factors -- one, poor weather conditions; two, a continued reduction in demand for elective procedures; three, a greater number of patients choosing more cost-effective forms of treatment, such as self-medication over more costly medical procedures; four, hospitals' reduced usage of contract professionals in response to declining cash balances and patient admissions; and, five, reduced demand for less critical Allied skill modalities.

Allied Healthcare gross margin for the quarter was 30.8%, which represents 115 basis point sequential decrease and 139 basis point decrease year over year. We attribute this sequential decline in gross margin to increased SUI rates and less permanent placement fees associated with our HIM business line.

Turning to the second quarter of 2010, the markets in which we operate continue to be challenging, but signs of improvement do exist. Demand for our Core clinical lab, medical financial, local nursing, Allied Travel, rehab therapist and contract HIM professionals continues to improve. Our focus continues to be on new business development, gaining greater presence in higher level skill disciplines, permanent placement, preservation of gross margins, and employee productivity.

I'll now turn the call over to Jim Brill. Jim?

Thanks, Emmett. As Peter mentioned, consolidated revenues for the quarter were $96.3 million, down 17.5% from the first quarter of 2009.

There were approximately 63 billing days in this quarter, 61 in the fourth quarter, and approximately 63 in the first quarter of 2009. However, for Nurse Travel there were 90 billing days this quarter, 92 last quarter, and 89 in the first quarter of 2009.

Foreign currency had about a $500,000 positive impact on revenue relative to the last year's first quarter, and a $400,000 negative impact on revenue relative to last quarter.

Now let me address some of the variances and their related explanations to the extent Peter or Emmett has not. In the Travel Nursing group the bill rate relative to the fourth quarter was down about 1%, as were the bill/pay spread and the bill/pay margin. The bill/pay rate was down 6% from the first quarter of 2009, and the bill/pay spread contracted. However, the bill/pay margin expanded.

The bill rate, bill/pay spread and margin in Life Sciences were down slightly from the fourth quarter. The bill rate and the bill/pay spread were down about 2% from the first quarter of 2009, although the bill/pay margin was down slightly.

In Allied Healthcare, the bill rate relative to the fourth quarter was down 4%, the bill/pay spread was also down, but the bill/pay margin was up. Relative to the first quarter of 2009, Allied Healthcare's bill rate was up 5% and the bill/pay spread and the bill/pay margin expanded.

Peter addressed the physician rates.

Conversion and direct hire revenues totaled $2.2 million in the quarter, or 2.2% of revenue as compared to $2.1 million or 2.1% of revenue in the fourth quarter and $2 million or 1.7% of revenue in the first quarter of 2009.

Total SG&A expense for the first quarter was $29.8 million, or 31% of total revenues, which is up from $29.6 million, or 29.6% last quarter and $33.1 million, or 28.4% in the first quarter of 2009. The reduction from the first quarter of 2009 is in part related to lower employee costs due to the reduced number of employees, and a $900,000 reduction in the amortization of intangibles related to the acquisitions to $600,000. The increase from last quarter was due in part to $300,000 in expenses related to our strategic planning process, a similar amount related to seasonal auditing expenses, net of a reduction in the amortization of intangibles. Also included in SG&A in the quarter was $1.4 million in depreciation and $1.3 million in equity-based compensation.

Our operating income was $1.0 million, or 1% of revenues for the quarter, compared with $3.6 million, or 3.6% of revenues last quarter and $3.9 million, or 3.3% of revenues, in the first quarter last year. Our tax rate benefit for the quarter was 43.7% and we had a net loss of $300,000 or $0.01 per diluted share.

We believe it's meaningful to compare EBITDA and adjusted EBITDA when comparing the current quarter's results with prior quarters. As outlined in today's press release, EBITDA for the quarter was $3 million, excluding equity-based compensation expense of approximately $1.3 million, adjusted EBITDA was $4.4 million, or 4.5% of revenue. Adjusted EBITDA was $7.8 million, or 7.8% of revenue last quarter, and $8.1 million, or 6.9% of revenue in the first quarter of 2009.

We ended the quarter with cash and cash equivalents of $30.3 million, up from $26 million last quarter. And we generated $6.4 million in cash flow from operations. CapEx was approximately $1.3 million, up from about $900,000 last quarter and down from $1.6 million in the first quarter of 2009. Net accounts receivable was $50.4 million at the end of the first quarter and days sales outstanding was 48 days, up from 46 days last quarter and even with the first quarter of last year.

Now, turning to productivity, which we define as quarterly gross profit generated per staffing consultant, for the first quarter we averaged 587 staffing consultants. And gross profit per staffing consultant was $53,000, down from $55,000 in the first quarter of 2009 and $58,000 in the fourth quarter.

The Life Sciences segment generated $80,000 in gross profit per staffing consultant, up from $78,000 last quarter. The Healthcare segment generated $44,000 in gross profit per staffing consultant for the quarter, down from $54,000 last quarter. The Physician Staffing segment generated $68,000 in gross profit per staffing consultant for the quarter, compared to $75,000 last quarter. And the IT and Engineering segment generated $44,000 in gross profit per staffing consultant for the quarter compared to $47,000 last quarter.

Looking at the second-quarter revenue expectations this year, it continues to be very difficult to estimate what will happen to revenues because of the worldwide economy. So given that backdrop, based on labor markets not getting worse than they are today and normal seasonal trends, we currently estimate consolidated revenues of $103 million to $107 million for the quarter ending June 30, 2010. This estimate includes $2.1 million in revenue related to Cambridge, our recent acquisition, double-digit, quarter-to-quarter growth rates in our IT and Engineering and Life Sciences businesses and slight contractions of our healthcare-related businesses.

We're estimating consolidated gross margins of approximately 33.4 to 33.6%, SG&A of $31.8 million to $32.4 million, which includes approximately $0.8 million at Cambridge. Equity-based compensation expenses of approximately $1.8 million, and approximately $0.5 million in the amortization of intangible assets and depreciation of approximately $1.6 million.

We estimate net income of $0.5 million to $1 million, earnings per share of $0.01 to $0.03, and an effective tax rate of about 47%. Adjusted EBITDA is estimated to range from $6.5 million to $7.5 million.

Now I'll turn the call back to Peter for some closing comments before we open up the lines for questions. Peter?

Thank you, Jim. We believe that we are well positioned to take advantage of what we believe will be a historic secular and cyclical growth for the staffing industry over the next three to five years. While the entire On Assignment team is very proud of our performance in this difficult economic environment, we are now focused on regaining our peak levels of profitability.

We'd like to once again thank our many loyal, dedicated and talented employees whose efforts have allowed us to progress to where we are today.

I would like to now open the call up to participants for questions. Operator?

(Operator instructions.) Jeff Silber; BMO Capital.

Just have a couple of quick follow-ups. You guys are very thorough on your calls. Not to nitpick, but in looking at your guidance last quarter compared to where you came in on the quarter, gross margins were about 50 basis points shy of where you had expected. I know you went through segment by segment in terms of the variances, but I'm just curious. Compared to your expectations that you gave us in February, what happened to actual gross margins?

Yes. I would tell you that we were, as I said in my prepared remarks, somewhat surprised at the margin in the Physician Staffing, Jeff, because of the mix. There was a little bit less perm placement in the HIM group. And the rest of it pretty much came in as we expected. And Oxford was down a little bit, but it wasn't much off of what we expecting. And SUI impact was in the range of what we were expecting. But I would lay it predominantly on the drop in HIM perm placement fees in the quarter and also the mix shift to more primary care at the Physician Staffing group, where we had a significant drop from the historical high gross margin we had in the fourth quarter.

In terms of the SUI impact, some of the other companies in this sector have said on average they have been able to pass through about 60 to 70% of the SUI impact to your clients. I'm just wondering how you rate on that and if you think that percentage will increase going forward?

Yes. You know, as Emmett had said in his prepared remarks, we have no SUI impact on the Physicians side, but in the rest of the businesses, I think we're having good progress. We're having to have, as you can imagine, a lot -- many more conversations than others because of the nature of our business. But we're being met with good success. But it doesn't happen overnight. But I think we're going to be in that 50 to 70% range like the rest of the industry.

Okay, great. That's helpful. In terms of guidance, what are we looking at in terms of the share count for the quarter?

Based on the profit levels, it's probably going to be in the 37.2 million range, something like that.

Okay, great. And which segment is Cambridge going to be booked in?

No, it's going to split out, Jeff, into segments. It's predominantly in the Life Sciences segment, but there's also a little bit in IT and a very small amount in Physician perm placement.

We'll try to identify it, but it's truly going to be difficult, Jeff, just because of how it had three exact fits in three of our divisions.

Okay. I appreciate that. And I'll jump back in the queue. Thanks.

(Operator instructions.) At this time there are no questions in queue.

Okay. Well, we appreciate your attention and look forward to reporting our second-quarter results. Thank you for your attention today.

Thank you. This concludes today's conference. You may now disconnect.