CRA International Inc (CRAI) 2002 Q4 法說會逐字稿

Good day, everyone, and welcome to the Charles River Associates Fourth Quarter 2002 conference call. Today's call is being recorded and will be replayed today beginning at 1:00 p.m. eastern time and will be available through Tuesday, January 21st at midnight Eastern.

The rebroadcast dial-in number is 719-457-0820, and you will be asked for a confirmation code. That is 145308. Again, the dial-in number is 719-457-0820 with a confirmation code of 145308. You may also listen to a Webcast on CRA's Web site located at www.CRAI.com. In addition, today's news release is posted on the site for those of you who did not receive it by e-mail or fax.

With us today is the President and Chief Executive Officer, Mr. James Burrows, and Executive Vice-President and Chief Financial Officer, Mr. Phil Cooper. At this time for opening remarks, I would like to turn the call over to Mr. James Burrows. Please go ahead, sir.

Thank you, Debbie (ph). Good morning, everyone, and thank you for joining us. Before I begin my comments, I would like to turn the call over to Phil to read our Safe-Harbor statement.

Hello. Good morning. Statements in this conference call concerning the future business, operating results and financial condition of the company are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements are based upon management's current expectations as of today, January 15th, 2003, and are subject to a number of factors and uncertainties.

Information contained in these forward-looking statements is inherently uncertain, and actual performance and results may differ materially due to many important factors. Such factors that could cause actual results to differ materially from any forward-looking statements made by the company include, among others, dependence upon key personnel, attracting and retaining qualified consultants, dependence upon outside experts, intense competition, and professional liability. Further information on potential factors that could affect the company's financial results is included with recent filings with the SEC. Jim?

Thanks, Phil. As you may know, Phil was recently named CRA's CFO after serving in an interim capacity for several months. Phil has been with CRA since mid-2000, focusing on corporate development. He and I have worked closely together for some time now, and I, along with the Board of Directors, am confident that he will have continued success with his new responsibilities.

In addition, we announced yesterday the appointment of Ron Maheu to our Board of Directors, where he will serve as our Audit Committee Chairman. Ron replaces Robert Prichard who regrettably resigned from our Board to accept the position of President and CEO of Torstar Corporation, a large Canadian media conglomerate.

Ron Maheu has several decades of experience working with a variety of organizations, including PricewaterhouseCoopers on corporate finance matters. His expertise makes him an ideal candidate to lead CRA's audit committee and appointing this highly regarded outside director underscores CRA's commitment to corporate governance and to the independence of CRA's Board.

We also announced that Karen Frost has joined the company as Vice-President of Finance after serving as a consultant of CRA for a major part of the past year. Karen brings a wealth of domestic and international experience from leading financial service firms in the area of financial planning analysis, capital raising and business development. We are pleased to welcome her to our corporate finance team.

So let's turn now to our fourth quarter results. Despite challenging business conditions affecting many of our end markets, demand for CRA's high level consulting services remain robust in Q4, and in many cases continue to grow. This domain (ph) translated to strong performance from many of our practice areas and office locations.

Our Q4 revenue of $36.4 million increased nearly 25 percent from revenue of $29.2 million in the fourth quarter of Fiscal 2001. I should point out that year-over-year comparisons are complicated this quarter by the timing of CRA's fiscal year-end. Our fiscal year ends on the last Saturday of November each year. As a result, we essentially have a fiscal leap year in 2002, gaining a 53rd week. Plus our fourth quarter contained 13 weeks instead of the normal 12 weeks.

Earnings per share of 25 cents in Q4 were in line with our expectations for the quarter. Within our larger practice areas, competition and general commercial litigation increased significantly over Q4 of last year, largely offsetting declines earlier in the year. Adjusted for the different links of the quarter, revenues from those practices also increased over Q3 revenues in line with the expectations we discussed at the last earnings call. We are very encouraged that this line of business ended the year on a strong note with good momentum for next year.

Finance practice revenues increased dramatically year-over-year and on a sequential basis. CRA has been capacity constrained in this area, and we expect this practice to grow as we add more staff. The growth in financial litigation has been fueled by a sharp increase in securities and other finance-related litigation projects. We foresee - or we expect the demand in this market for our services to continue growing for the foreseeable future. Adjusted for the longer quarter, revenues of the energy and environment consulting practice were about the same as Q4 of last year. Revenues for the year were up significantly over Fiscal 2001, due in part to the PA could consulting acquisition in mid-2001.

We are pleased that we've been able to maintain revenues in this practice at a high level in the face of a very challenging business environment. When transaction activity in this sector recovers from its current depressed level, our revenue rate should increase sharply.

The chemicals and petroleum practice continue to operate at levels above those we anticipated at the time of the acquisition of the ADL Chemicals & Energy practice. As in the case of the electric power market, business conditions in the chemicals industry are challenging. We have been encouraged by the strong flow of new leads and projects in this practice, and we are looking forward to continued growth during the next fiscal year. The new Aerospace and Defense practice continues to grow with revenues during the quarter more than twice revenues in Q4 of last year; revenues for the year have nearly doubled the revenues of last year.

The Transportation and Metals practice has also experienced strong growth for the quarter. It is particularly notable that revenues of all the business consulting practice areas were up from the year earlier levels with most of the practice areas experiencing sharp growth at a time when the consulting industry in general is experiencing flat or negative growth.

In the Chemicals and Petroleum practice, since our late Q2 acquisition of the North American and UK operations of ADL's Chemical & Energy practice, we have been working diligently and successfully to integrate the ADL staff into CRA's core Chemicals and Petroleum practice. The integration proceeded smoothly and ahead of schedule and is fully completed. Our success in developing new work in this sector indicates that we already have been able to establish the CRA brand with the clientele served by our former ADL staff.

Turning to our international operations, revenues of each of our five foreign offices increased substantially, both for the quarter and for the year. The Mexico revenue growth was entirely a result of the ADL acquisition. The ADL acquisition also benefited the London office, whose revenues approximately quadrupled in Q4 and more than doubled for the year. Revenues of the Toronto, Melbourne and Wellington offices, which were not significantly impacted by the ADL acquisition, were also up sharply. We also opened a new office in Brussels to take advantage of the growing UC market for competition in regulatory consulting. We also expect to use this office as a springboard for business consulting work in Europe.

Our new custom (ph) subsidiary generated revenues of $582,000, which was in line with our forecast for the quarter. This is similar to our Q3 performance, but was substantially below Q4 2001, when NeuCo revenue reached it's highest level ever at just more than $2.1 million. As we have said recently - as we have said previously, NeuCo continues to have a sizable backlog of opportunities - in fact, the strongest in the company's history - but the selling process is lengthened due to the plant operator's reluctance to spend for infrastructure improvements.

For the quarter, NeuCo produced an after tax loss of $346,000. We continued to have confidence in NeuCo's potential to return to the profit and growth experience of Fiscal Year '01, and customer testimonials and the sizable backlog validate our confidence.

Overall, our Q4 results capped a very successful year for CRA. Despite the uncertain economic picture following the events of September 2001, which made for a disappointing Q1, we were able to achieve full-year revenue growth of 19 percent and earnings growth of 12 percent. The earnings growth would have been higher but for the losses in NeuCo. These results are a testament to our success in executing our strategy to grow the business organically, and to supplement that growth with strategic acquisitions that complement our existing capabilities and offer expansion into new geographic markets.

The success of our Aerospace and Defense practice is an excellent example of how we are growing the business organically. As we did with the electric utilities practice in 2001, in Aerospace and Defense, we saw an opportunity to enter with high demand and move quickly to capitalize, hire two of the industry's most highly regarded consultants and leveraging our name to achieve rapid penetration in the market. As a result, we enjoyed considerable success in the Aerospace and Defense practice in 2002. Our success in identifying areas of opportunity, constructing practices around those opportunities and moving aggressively to gain market share is representative of our efforts to continually grow and diversify CRA's revenue base, to reduce the impact of cyclicality in some of our end markets.

On the acquisition front, CRA's Q2 acquisition of the North American and UK operations of ADL's Chemical & Energy practice was the highlight of our fiscal year. With that acquisition, we added a number of seasoned and well-respected consultants to our staff, strengthened our international presence, gained a solid revenue stream and achieved critical mass in a practice whose end market is experiencing considerable change, always a good indicator of increased demand for our high level consulting services.

During the past year, CRA continued to work primarily on high stakes assignments for high profile clients. Although confidentiality agreements constrain our ability to discuss most of our assignments, I can report that CRA provided the economic analysis for Bristol-Myers Squibb in a major antitrust case that was recently settled for, according to the newspaper accounts, $650 million.

CRA is also continuing the work for the US Department of Justice in connection with this lawsuit against the tobacco companies regarding youth smoking. One of our major antitrust activities during the year was our work in connection with litigation over alleged price fixing with a number of items. In the energy and environment practice, CRA experts testified in connection with MBTE litigation in California, and we are now establishing our authority on this issue, which is likely to be the focus of continued litigation and controversy.

CRA has also been the leading source of quantitative analysis of addressing the impacts of environmental legislation affecting the electric power industry. In the trade area, we worked for the Canadian soft-wood (ph) lumber industry and for the US Steel industry in an ongoing trade disputes affecting those industries. CRA's options practice continues to be active. For example, we are working for the New Jersey board of public utilities in connection with electric power supply options in that state.

In the finance practice, CRA has been engaged by defendants in the substantial share of large securities-related cases brought against audit firms and investment banking firms. In the Chemicals and Petroleum, Pharmaceutical, Metal and Aerospace industries, CRA's roster of major multinational corporations for whom we provide strategy consulting services continues to grow.

Across the entire company, the lead stream grew significantly over the course of Fiscal 2002 into the Fiscal 2003 year, giving us confidence that the pipeline of opportunities will continue to support top line growth. With that, I'll now turn the call over to Phil Cooper, who will discuss our financials in greater detail. Phil?

Thanks, Jim. As a reminder, CRA's fiscal year operates on 13 four-week cycles, producing quarters unequal in length. Normally, our first, second and fourth quarters are 12 weeks, while Q3 is a 16-week quarter. However, as Jim mentioned, we gained an extra week this year due to the timing of the fiscal year-end. As a result, the fourth quarter was 13 weeks long instead of the usual 12. Please keep this in mind when making comparisons to prior year financial results.

Starting at the top of the income statement, the $36.4 million in revenues we posted for Q4 represents year-over-year growth of nearly 25 percent. This growth reflects strong performance from many of our practice areas and international offices, as well from the extra week of billings. As Jim mentioned, NeuCo accounted for $582,000 of Q4 revenue and generated an after tax loss of $346,000, compared with net income of $646,000 in Q4, 2001.

Gross margin for the fourth quarter was 36.6 percent, compared with 40.1percent in Q4 of 2001, largely due to the decline in utilization and the impact of NeuCo. Excluding NeuCo, the gross margin in Q4 was 36.4 percent compared to 37.2 percent in Q4 of 2001. Going somewhat further, excluding NeuCo and reimbursables, which are such items as travel, outside consultants and other passthroughs, gross margins actually rose by 40-basis points from 41.5 percent to 41.9 percent.

Utilization of 69 percent for the fourth quarter was down from 76 percent reported a year ago, and from the 71 percent we reported for the third quarter of Fiscal 2002. We were anticipating flat utilization due to the ramp of integration of ADL staff within our core chemicals and petroleum practice. Going forward, we don't intend to record separately the ADL staff as they are now fully integrated into the company. But for this quarter, excluding ADL staff, utilization of CRA's legacy staff was somewhat closer to the mid-70s.

For the first quarter, due to the timing of the two holiday weeks, we are expecting utilization to remain in the range of the last two quarters and to trend upward gradually throughout the course of the year. CRA has stressed for some time that lowering SG&A was a major focus for management, and we have continued to execute on that initiative. For the fourth quarter, SG&A as a percentage of revenue was 26.9 percent, a 110-basis point improvement from the sequential third quarter of 2002. Excluding NeuCo, SG&A was 25.5 percent in the fourth quarter of 2002 versus 26.2 percent in the third quarter. SG&A is now at the lower end of our target range of mid to high-20s as a percentage of revenue, and we expect it to remain in the mid-20s going forward.

Fourth quarter operating income of 3.5 million declined from year-ago levels, primarily due to the lower utilization and operating loss at NeuCo. This yielded an operating margin of 9.7 percent in Q4, compared with 13.2 percent in Q4 of 2001 and 11.1 percent reported a quarter ago. Excluding NeuCo, the operating margin improved to 11 percent in Q4 versus 10.6 percent in Q4 2001. Net income was 2.3 million in Q4, or 25 cents per share, versus 1.9 million, or 21 cents per share, in the fourth quarter of Fiscal 2001 and exceeded our expectations. These EPS numbers are based on approximately 9.2 million fully diluted shares in the fourth quarter of Fiscal 2002, compared with approximately 9.3 million fully diluted shares a year ago.

The net income margin was 6.3 percent in Q4 versus 6.6 percent in Q4 2001, reflecting the loss at our NeuCo sub. Excluding NeuCo, the net margin improved to 6.8 percent in Q4 2002 from 5.9 percent in Q4 2001. Professional head count at the end of Q4 was 353, up from 347 at the end of the third quarter. Our current junior to senior breakdown in staff is 102 junior consultants and 251 senior consultants. Total consultant adds during the quarter was a net increase of six. This increase reflects very selective hiring at the junior and senior levels, as well as a normal junior staff leaving in the summer and starting at the start of graduate school classes. We do not expect much head count growth in 2003, but we will continue to be opportunistic in selectively hiring senior consultants that will have an immediate impact on revenue and utilization.

Looking at the balance sheet, billed and unbilled receivables increased sequentially to $41.9 million at the end of Q4 from 38.1 million at the end of Q3. Days sales outstanding were 103 days in Q4, essentially flat from the 101 days we reported in Q3. This breaks down into 41 days of unbilled and 62 days of billed in Q4, as compared with 38 days of unbilled and 63 days of billed in the sequential third quarter.

CRA's financial position continues to be strong. Cash and equivalents and investments stood at $24.3 million at the end of the fourth quarter versus 21.6 million at the end of Q3. Cash flow from operations was positive again at $13.4 million for the year.

Turning now to the results for Fiscal 2002, revenue for the year increased 19 percent to $130.7 million from $109.8 million last year and exceeded our expectation for the full year revenue growth of 10 to 15 percent. Gross profit for Fiscal 2002 was $50 million, or 38.3 percent, compared with $44.2 million, or 40.3 percent, in Fiscal 2001. Excluding NeuCo, the gross margin was 37.9 in Fiscal 2002 compared with 38.7 in Fiscal 2001.

Operating income for Fiscal 2002 was 13.4 million, or 10.3 percent, versus 12.7 million, or 11.5 percent, in Fiscal 2001. Net income for Fiscal 2002 was 8.4 million, or 91 cents per diluted share, compared with 7.4 million, or 81 cents per diluted share, in Fiscal 2001. For the year, earnings growth of 13 percent was in line with our expectation of 10 to 15 percent growth. Per share calculations are based on approximately 9.3 million fully diluted weighted average shares outstanding in 2002 and approximately 9.2 million in 2001.

That concludes the financial review, and I'll turn the call back over to Jim. Jim?

Thank you, Phil. A brief look forward before we go to your questions. As we begin Fiscal 2003, we see robust demand for our brand of economic and business consulting services. As one of the premiere names in the industry, we continue to believe that CRA will be called upon to weigh in on a majority of the high stakes cases and matters affecting global business.

Specifically, we expect our Chemicals and Petroleum practice with a fully integrated ADL staff to have continued success in 2003. We also anticipate strong performance from our Aerospace and Defense practice as recent world events indicate that the defense industry will continue to be economically robust. The energy and environment practice has established a strong baseline of business, but significant growth will be dependent on recovery in transactions. We expect that demand for our types of services and litigation will continue to grow, offsetting any continued weakness from merger related business. When mergers recover, we expect our revenues to increase significantly.

Based on backlog and new business leads, we anticipate substantial growth in many of our smaller practice areas, including Pharmaceuticals, Metals and Minerals and Transportation. With regard to NeuCo, the backlog and pipeline of opportunities remain strong. NeuCo's revenues for Q1 should be at least as high as Q4, and there's a good chance that revenue will be up significant, depending on when contracts are signed. With the existing pipeline and prospective new business, NeuCo is expecting operations to be profitable for the year. However, we should caution that at this stage of NeuCo's development as an early stage software business, revenues likely will continue to be volatile and hard to predict.

Overall, based on the current business climate, we expect both revenue and earnings growth in 2003 in the range of 15 to 20 percent. Looking at the operational side of the equation, our focus in 2003 will be on improving margins and utilization and capitalizing on opportunities for growth in our strongest practice areas. In terms of the utilization, with the ADL business fully integrated, we now believe a more realistic target utilization for 2003 is in the low to mid-70s. However, as Phil mentioned, we expect Q1 utilization to remain in the range of our Q3 and Q4 experience.

We begin Fiscal 2003 with numerous opportunities for growth. Our business continues to generate strong cash flow and maintain a clean, healthy balance sheet. We intend to capitalize on opportunities within our markets, enhance CRA's reputation as a leading provider of sophisticated economic and consulting services. With that, I will ask the Operator to open the call for questions. Operator?

Thank you, gentlemen. Today's question-and-answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star key, followed by the digit one on your touch-tone phone. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We will proceed in the order that you signal, and we'll take as many questions as time permits. Again, star , one to ask your question.

We'll go first today to Matt Litfin, William Blair & Company.

... ask about bill rate - trends in bill rates. When was the last increase, and what was the percent increase in your bill rates?

We increased rates during the fourth quarter. They were implemented across the board, I believe, at the beginning of this quarter, and it was - the average was in the five percent range.

OK. Just a follow-up there, have you seen any pushback from clients on that?

No.

OK. Next question has to do with your hiring plans. How much of the 15 to 20 percent revenue growth guidance for 2003 is driven by new heads?

Our current hiring plans for - are not to hire for much growth in head count. That's not to say we don't - that head count growth isn't reasonably likely, because as the year goes along, as events unfold, we'll probably add people, but we're currently not aggressively recruiting for head count growth. We want to focus on utilization growth over the year.

OK. Turning to NeuCo, obviously revenue declined throughout 2002. What are the trends in your spending on that subsidiary, and at what point do you start pulling back on that spending, even if the pipeline remains robust but revenue doesn't - is not recognized?

Well, NeuCo's spending has - has declined. I believe their cost of operations are in the range of $300,000 a period, or slightly above that right now. We currently, based on existing work and promised work from customers, are very optimistic that revenues will be well above that number. But obviously, we'll keep a close eye on that.

One final housekeeping question: what was cap ex in the quarter or for the year, either one?

Hold on. We're trying to look up that number. Actually, can we get back - can we get back later in the call for that?

No problem. Thank you very much.

We don't want to hold people up while we're looking it up.

We'll take our next question from Sandy ...

Notardinado.

Thank you so much - Adams Harkness Hill.

Thank you. Thanks, Phil. Can we talk about organic growth in the quarter, if that's possible, what it was and what acquisitions, if you do make them in 2003, what they could add to organic growth?

I'm not sure we have a breakdown on how much the growth from last year was organic. Obviously a component of it was the ADL effect. But ...

There was no actual acquisition, of course, in the fourth quarter. We did add, as I reported, a number of people to the research staff directly. But in a sense, if we look at the kind of acquisitions we've been doing as both (ph) on (ph), the growth really was from people who are already on board prior to the beginning of the third quarter of 2002.

Did you see quarter-over-quarter growth in ADL this quarter?

Absolutely.

OK. Do you care to share what percentage growth you saw sequentially?

Again, this is really determined by running rates because in one case, we have 16 weeks and the other case, now 13 weeks. So, I don't have the exact numbers in front of me, but I believe that we are looking at a run rate that's now - that's certainly is in excess of the - of what the ADL folks were running at when we acquired them ...

Hello? Hello?

... gradually throughout the year.

You know what, Phil, you cut off on me. You started to talk about the run rate and, for some reason, I got disconnected. Do you mind repeating what you said? I'm sorry.

OK. The acquisition was literally at the end of the second quarter. Given what their run rate of ADL staff was at that time, we know that that run rate has been trending up through the third and continued to trend upward in the fourth quarter. We also know that the backlog that we have there is a larger backlog than we've had in the past, and the pipeline is - for new prospects, is healthier than at any time that we've seen it over the seven periods - seven accounting periods that they've been part of our company.

So, I don't have the exact quarter-over-quarter, again, because of the difference in number of weeks, but the run rate is up relative to, let's say, a run rate that we were quoting or anticipating when we did the acquisition early last year. We were thinking of $20 million as our annualized revenue from that, and we exceeded that - probably that run rate by about - I believe that we - in the seven periods, we had $14 million roughly of net revenue from ADL, which means they're running at the rate of about two million per period right now.

OK.

Sandy, just to elaborate on your question of the year-over-year growth and how much is organic, the year-over-year growth in revenue, not including NeuCo, was 8.9 million. And although we don't have an exact estimate of the ADL effect, it would have been on the order of half or slightly more than half of that. So, the other portion of it would have been organic.

OK. That's helpful. And if I could just follow up on Matt's question on NeuCo, you seem very optimistic for 2003 -excuse me - indicating that they - excuse me - that the company could be - or that segment of your business could be profitable, or the subsidiary could be profitable. Is there - what happens in 2003 if it's not? When do you start looking at other options on what to do with this - your majority interest in the company?

We don't have, you know, any specific criteria. Obviously we'd watch it closely, and we wouldn't want NeuCo to just be a drag on our earnings indefinitely if that turned out to be the case, so we would start exploring our options, I think, as the year wore on if it didn't look like there was going to be a pickup.

However, I've actually sat down with the NeuCo people fairly recently and they have a - what appears to be a fairly substantial backlog of pretty highly probable leads, we've been out (ph) selling contracts for cases where we've been told they're getting the work and it's just a question of getting the paperwork. So, at the moment, we don't think there's a need to start looking at those kinds of contingencies.

OK. Just shifting gears a little bit here, if we can talk about what's happening on the international front, how sustainable is the growth you saw in Q4, particularly the strongest offices, UK and London - I'm sorry, London and Mexico?

Well, I think we're pretty optimistic in both cases that there will be continued growth. We've been getting very strong in our new business coming in to the London office, and there are some significant prospects in Mexico. So, obviously everything is contingent on clients actually giving us more work, but it looks - the outlook looks quite positive. And I would say I would have a similar comment about the other international offices. They all seem to be well-established, developing roots and gradually growing.

Are there any large engagements either here or overseas that are coming to a close at the end of this quarter? Or phases of engagements that you're going to - there's going to be a little bit of a disruption in the flow?

Actually, I think the net, I would say that we're actually expecting to add to the backlog.

The - we're not dependent on any one or small number of projects, and many, many of our projects basically turnover over a quarter, too. But the normal business as usual case would be projects ending, projects starting, but there's nothing we see that would be disruptive or that would be accounting for a large part of our revenue now that wouldn't either be ongoing or be replaced.

Sandy, further to answer your question, the business that has been extremely strong in London and Mexico City is on the business consulting side primarily, and the window or visibility on those projects tends to be longer than in litigation.

OK. I have two more questions. I'm sorry to be hogging up so much time here, but you gave some very - I don't know - positive, if you want to use that term, last quarter in terms of what's happening on the M&A front in terms of maybe some pickup there, some early signs of a pickup. Are you starting to see that reflected in the pipeline?

Well we did get M&A where (ph) coming in during the fourth quarter, and we have some projects ongoing right now, and there are some things in the pipeline. But I'm not sure I would see - I would forecast a sharp pickup. I think we're seeing early signs of some stirring of activity, but it's nothing like what it used to be.

OK. And then my last question, how much revenue in the quarter came from outside experts, and what are you modeling from these outside experts for 2003?

I'm hesitating because I don't have that number off the top of my head.

Can we get back to you ...

Absolutely. Not a problem.

And at this time, let me - just so that we don't have too many numbers we're getting back to people on, the answer to Matt's Litfin question about capital expenditures is 3.9 million for the year, 1.8 million for the quarter.

OK. Thank you both.

Thank you, Sandy.

Again, ladies and gentlemen, it is star, one to ask your question. Turn off your mute function to allow your signal to reach us. Again, star one.

Gentlemen, we have no other questions standing by at this time. Mr. Burrows, I'll turn it back to you for additional or closing remarks.

OK. Actually, while I'm speaking, I'm trying to get someone to get me the data on the outside experts. So, if we want to hold on for 30 seconds, I may have an answer for that.

OK, I - based on our preliminary - on some rough numbers, the percentage of our business in Q4 from outside experts appears to have dropped about 15 percent from what it was in 2001. That's actually more or less what our expectations are given that the - a lot of our growth has been in areas of business that would not be dependent on outside consultants.

And, for example, the addition of the ADL staff.

Right. So, I think when we report that number at the end of the year, it'll be down. But thank you, everyone, for waiting for that. We look forward to speaking with you next quarter, and this concludes today's call.

Thank you, ladies and gentlemen, for your participation in today's call. This does conclude our conference today, and you may disconnect at this time.