DLH Holdings Corp (DLHC) 2021 Q1 法說會逐字稿

Good day, and welcome to the Fiscal 2021 First Quarter Earnings Conference Call. (Operator Instructions)

Please note, this event is being recorded. I would now like to turn the conference over to Chris Witty, Investor Relations Adviser. Please go ahead.

Thank you, and good morning, everyone. On the call with me today is Zach Parker, President and Chief Executive Officer; and Kathryn JohnBull, Chief Financial Officer. The company's earnings release and PowerPoint presentation are available on our website under the Investor page. I would now like to provide a brief safe harbor statement, which is also shown on Slide 2 of the presentation.

This call may include forward-looking statements that relate to the company's outlook for fiscal 2021 and beyond. These forward-looking statements are subject to various risks and uncertainties that could cause actual results and events to differ materially from these statements.

Please refer to the risk factors contained in the company's annual report on Form 10-K and in our other filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements.

On today's call, we will be referencing both GAAP and non-GAAP financial measures. A reconciliation of our non-GAAP results to our reported GAAP results is included in our earnings release and in the investor presentation on DLH's website. President and CEO, Zach Parker, will speak next; followed by CFO, Kathryn JohnBull, after which we'll open it up for questions.

With that, I'd now like to turn the call over to Zach. Please go ahead, Zach.

Thank you, Chris, and good morning, everyone, and welcome to our first quarter conference call. Let me begin with the recognition of the excellent and courageous work done by our DLH employees worldwide and executing the mission of our customers. Many of our employees attend -- largely attended workplace on a daily basis, braving the challenges imposed by the pandemic and we're truly indebted to the service of our folks. As well as the close control and safety provisions provided by our customers where -- for those working at our customer sites.

And then by our leadership team and our COVID-19 task force for those of our employees that work in our existing facilities. We began fiscal '21 with solid results. And I do -- as I indicated last time, remain very optimistic about the year ahead.

Starting with Slide 3. I'll first provide a high-level overview of our financial performance and some color around the -- on the outlook for the balance of fiscal 2021. As I indicated, the year started off strong, and I'm pleased to say with revenue of $57.9 million and operating margins of 6.3%. The company's top line benefited from almost $7 million in contribution from IBA as Kathryn will review in a moment.

While overall profitability increased even as some of the pandemic-related headwinds continued. Due to ongoing travel restrictions, as noted in the past, certain programs saw less activity and, of course, the subsequent billings. But we believe that such challenges should lessen in quarters to come.

We posted net income of $1.8 million or $0.13 per share, and our backlog was $665 million at the end of the quarter, providing strong revenue visibility. Most importantly, we're seeing a very active proposal bid environment. And as I'll describe more in a moment, we're pleased with the wide array of opportunities that have been open to us this fiscal year.

Overall, I think the company performed well in Q1 and that we're on a path that's towards sustained solid performance throughout the fiscal year. A quick brief note also that as we ended the quarter, we have satisfied the majority of our transition and integration requirements associated with the IBA acquisition that started on day 1 of the quarter, and it's going really quite well.

Now turning to Slide 4. I'd like to update our investors on DLH's business outlook following the recent political changes in Washington. As we said last quarter, the outcome of the election was not expected to materially impact the overall stability of our end markets or demand for the services we provide.

We continue to maintain strong alliances with a customer set that is supported very strongly on both sides of the aisle as well as the White House. However, at this juncture, we anticipate that the new administration's spending priorities may result

in even greater opportunities for us to grow long term due to the ongoing focus on improving technology, associated with health care solutions. These include the Department of Defense and the Defense Health Agency, the Veterans Administration and several agencies within the Health and Human Services agencies. What's different is that our company can now provide an even broader and deeper range of services than ever before.

As we continue to integrate our acquisitions, develop unique value propositions, leveraging tools and technologies to differentiate us as we look to grow our opportunities organically. We continue to drive key technology enhancements and modernizations and to support the fight against COVID-19. We've been using this depth of our credentials and expertise to continue to address a large number of opportunities associated with the pandemic and bringing together core service offerings in a way that transumes anything that we've been able to do in the past.

Furthermore, the federal government, including the key agencies that we serve, continue to increase their focus on digital transformation, artificial intelligence, and the move to a secure cloud environment. The pace of bidding activity has clearly picked up. We think, in part, due to the fact that we actually had a budget signed at we end of the calendar year as opposed to continuing to operate on CR or continuing resolutions. We also believe that this solidly positions us to have access to pursue more contracts over the course of the next 12 to 18 months, including the majority of which will be new business opportunities.

In addition, the COVID-19 pandemic continues to offer opportunities for us to pursue largely in our public health and life sciences arena, but we also find opportunities within DoD and veteran arena as well. These opportunities should help us continue our track record of growing the top line and most importantly, supporting the nation's fight against this virus.

Some of our recent awards in this arena are already positively impacting the outlook for fiscal '21, and we anticipate pursuing additional contracts dealing with both the vaccine rollout, therapeutics, telehealth applications and, of course, clinical trials for the safety and efficacy of investigational therapeutics.

All in all, I remain upbeat about the coming year and the performance of DLH during these challenging and uncertain times. With that, I'd like to turn the call over to our Chief Financial Officer, Kathryn JohnBull. Kathryn?

Thank you, Zach, and good morning, everyone. We're pleased to start the year with continued positive results. Turning to Slide 6. We posted revenue for the 3 months ended December 31, 2020, of $57.9 million versus $52.2 million in the prior year's first quarter. The revenue variance reflects the impact of roughly $7 million in sales tied to the acquisition of IBA, as Zach mentioned, offset in part by a reduction in organic revenue due principally to restrictions on pass-through travel within the current COVID environment.

These expenses were not incurred and, therefore, not billed to the government. Revenue delivery from labor was stable year-to-year, albeit with a somewhat different distribution among programs. We anticipate revenue to grow organically during fiscal 2021 as a whole, due to expansion on current programs, expected new business wins and general task order timing.

Turning to Slide 7. Income from operations was $3.6 million for the fiscal 2021 first quarter versus $3.1 million last year. Operating margins improved to 6.3% from 6% in fiscal 2020, reflecting improved operating leverage. We reported net income of approximately $1.8 million or $0.13 per diluted share versus $1.6 million or $0.12 a share last year.

DLH recorded a provision of $0.7 million and $0.6 million for tax expense during the fiscal 2021 first quarter and fiscal 2020 first quarter, respectively. Interest expense in the current year quarter increased to $1.1 million versus $0.9 million for the 3 months ended December 31, 2019, due to higher outstanding debt levels resulting from the acquisition of IBA.

Turning to Slide 8. EBITDA for the first quarter of fiscal 2021 was $5.7 million versus $5 million in the prior year period. As a percent of sales, EBITDA rose to 9.8% this quarter versus 9.5% last year. A reconciliation of GAAP net income to EBITDA is provided in our earnings statement and at the back of this presentation.

Slide 9 gives an updated snapshot of our debt position at the end of the first quarter. As of December 31, we had $77.4 million of debt outstanding under our credit facility versus $70 million at the start of this fiscal year. This position largely stems from our use of $8.5 million of operating cash during the quarter versus $2.9 million last year, reflecting a significant growth in receivables. This was due to 2 key drivers: first, the impact of the continuing resolution on the fiscal 2021 federal budget, which was not signed until December 27; and second, a transition in key contract payment offices, causing a delay in collections.

These 2 big drivers have since been resolved, and we anticipate returning strong cash flow in the second quarter, leading to a resumption of our deleveraging efforts. As noted on the slide, we continue to see debt levels of between $50 million and $52 million at the end of fiscal 2021 and a substantially lower leverage ratio in tandem.

This concludes my discussion of the financial statements. With that, I would now like to turn the call over to our operator to open for questions.

(Operator Instructions)

The first question comes from Joe Gomes with NOBLE Capital.

I wanted to start out with you talked about the top line and how there's the lack of the travel pass-through, but also in some of the compliance programs. I wonder if you might give us a little more color on how much on the compliance programs was in the quarter that was not received? And on those programs, once we hopefully get back to normal sooner than later, would you make that revenue up? Or is that revenue gone due to COVID and not doing those compliance programs at those times?

Right. So great question, Joe. And you're absolutely right. We continue, as we discussed briefly at the -- the quarter of last year. The impact of the COVID-induced restrictions for travel, a large portion -- the overwhelming majority, I'd say, north of 90% of our compliance-related reductions are associated with the compliance and surveillance that we do that actually requires on-site visits.

I can tell you that in terms of the go forward, we're working closely with our customers to leverage new methodologies to still get the job done that is less dependent upon having large numbers of people in specific facilities. Many of our compliance programs have to do with children and programs such as Head Start and our support for the Department of Homeland Security. And then best, our -- these are (inaudible) that had, in many cases, been closed and being very, very restrictive with regard to access.

We have been working and postulating some alternative means to execute the mission in a reduced travel mode. And are working closely with our customers to start to implement those.

So we think we're going to start to get some of that revenue less, of course, the specific travel-related component. And we should start to see some of those gains, we think, by second quarter. Having said that, on the last part of your question, we were probably not -- its current indications are that we'll probably not accelerate the -- those that have slipped over the course of the last 2 quarters and to try to get those done during this fiscal year.

So all indications are that for that particular work, I did not expect it to be reflected by 30 September this year.

Okay. And then you talked about the large number of opportunities associated with the pandemic, especially in the public health arena. I was wondering if you might give us even a little bit more color because you combine that with you're seeing a expanded pace of proposal activity. What type of contracts are? If there's any way you can give some type of detail or color on the amount of bidding and how's it -- what's the timing of some of those? Any additional detail or color on that would be appreciated.

Yes. There's a couple of forms of that. First and foremost, as you may recall, when we really began to step up our support largely in the Dr. Fauci side of NIAID. Our nation took it as approach to really apply all hands on deck, right? That was manifested not only by us and other contractors, but also the active participants of the Center for Disease Control and NIH, both of our principal customer sets that we are supporting the pandemic response.

And so we've been working with them to make sure that we can appropriately align our workforce for the added bandwidth. In many cases, the customer is using nontraditional means because of the urgency of getting the range of clinical trials and evaluations done in a relatively short time. So in many cases, we've been drafting white papers that would allow our customer to not have to go through the normal competitive channels.

And to expand some of the work on some of our existing contracts. We're starting to see quite a bit of bid activity that will -- that is associated with expanding work on some of our existing contracts, both IDIQ and some standalone scope increases to some of our contracts awarded in the last couple of quarters. So that's exciting for us. It, one, reflects an acknowledgment of the quality and the caliber of the work that we have been doing as we continue to look at various types of vaccines and therapeutics.

And they're asking us to expand our footprint and increasing our market share in that arena. So some of the jury is still out. We've had a number of proposals that have been submitted in the course of the last several weeks. It's not a few months. But there's a sense of urgency from the federal government to get these in place and in motion. So we are really leaning in on those. The majority of those are in our public health and life science arena, quite a bit of it from the -- is being executed from an epidemiology and clinical trials network standpoint from Jeanine Christian's operation, which we call PHSR, public health and scientific research, the cornerstone of the S3 acquisition.

However, we're also seeing some expansion in the veterans needs in that arena. And so we're working very hard to expand our bandwidth to be able to support a greater demand for veterans to support their response to COVID-19. A part of that also is attributed to the fact that they're trying to restrict physical presence by veterans and a number of the VISNs and the medical centers, VA medical centers and hospitals. And so some of that work is flowing into the mail order component, and we're going to see some of that increase on our VA CMOP contracts as well.

So it's a pretty broad range. The ones that are -- we think are -- those are 2 of the areas that we think are probably the most material for an upside for us over the course of this fiscal.

And just one more for me, and I'll get back in queue. It's kind of a 2-part question. Obviously, we -- you mentioned the increase in the accounts receivables part of that from the continuing resolution, part of it from the transitioning key contract payment offices. So questions. One, can you give us a little more information on this transition and the key contract payment offices, what does that all actually mean?

And two, we're now a month into the second quarter, are your collections keeping up with what your internal forecast are in order to get back to being able to pay down debt and get a more normalized cash flow situation?

Yes, let me grab that one. Go ahead.

Yes. Let me kick it off real quick and then Kathryn will certainly add the color. I just want to give the context. As you heard Kathryn mentioned earlier, the 2 key dates. One is that we closed our IBA acquisition on 30 September, which happens to be the last day of the fiscal year -- of the prior fiscal year. And of course, most of that activity from a government standpoint starts up the first week of a brand-new fiscal year, which happens to be our Q1, consistent with the government Q1.

And so a substantial portion of that transition is impacted not only by the start-up of new customer set and new paying offices for us, but it's associated with that transition. And as Kathryn also indicated, there's always a bit of a reluctance associated with funding when you're on a CR moving towards with a pending approved budget. And as you may recall, during the Q1, there were 3 changes to the date of implementing the -- what was finally approved at the end of December.

And that caused a fair amount of paralysis with some of our customers and their paying office, and we don't expect those to continue on a regular basis. Kathryn, over to you to add additional color there.

Yes. No, that's absolutely right. Historically, for us, our first quarter is always our softest quarter in terms of collection. It's just that this year sort of outdid itself in terms of the volume of cash consumed because of the factors Zach mentioned.

So it's typical for the government, our counterparts there to have a lot of use or lose time that once they get through their big government year-end work at September 30, there's a lot of time out and training time and all that.

So that causes Q1 to be softer in general, and then we had a couple of exacerbating factors this quarter. However, to your second question in terms of whether we're on a pace, we most definitely are. And as we indicated, we expect to return to normal pace of collections and really drain that backlog from Q1 and then deliver normal cash flow in Q2. So we're setting up for a strong Q2 in terms of cash delivery.

The next question comes from Ken Herbert with Canaccord.

Kathryn, I just wanted to first follow up on that last comment. It sounds like you're still expecting roughly sort of $25 million in deleveraging this fiscal year. How should we think about the pace of that through the second through the fourth quarter?

Yes. It will likely follow our historical. So we'll have a strong Q2 because we'll be burning -- we'll be clearing that backlog from Q1. But historically, for us, our normal pattern is it builds through the year and Q4 ends up being kind of our strong -- typically, our strongest quarter because, obviously, our government partners, it's the inverse of the Q1 effect, where they have a lot of out-of-office time, either on burning their use or lose leave and/or doing their annual training.

The flip side of that in the fourth quarter for us is that as they're heading into their own fiscal year-end which aligns with ours, they're clearing the decks and kind of resolving their issues.

So to the extent there's anything pending, it kind of tends to gush through Q4. But we expect strong Q2, kind of an average Q3 and a strong Q4. But all to the goal or the expectation, as you indicated, that we expect our debt level at the end of the year to be between $50 million and $52 million.

Yes. Yes. Perfect. And as we just think -- maybe get to a finer point on the first quarter traveling compliance issues, was that about in the quarter about a $2 million headwind? Or is it possible to sort of quantify how we should think about that from a top line standpoint?

Yes. That's a pretty good sizing of it. As we talked about in our Q4 call, we expected that to slide out of Q4 and Q1 and into Q2 and 3 as Zach indicated. And we are pleased with the progress we've been able to make in converting some of those compliance events to a virtual environment. And in the case of our current first quarter, hopefully, we were able to offset that significantly with revenue delivery from the Defense and VA market on the CMOP programs, as Zach mentioned, due to the higher volume there.

So actual revenue delivering from labor was pretty well in line year-to-year, notwithstanding the headwinds on the compliance programs.

Okay. That's helpful. And then just finally, on that point, you had -- I think you reported about 60% of your sales in the quarter were from Defense and VA markets. And I know this includes maybe the majority, if not all, of IBA. But as you look at this market, it clearly looks like you're seeing some growth in the Defense and VA besides just IBA, especially in the quarter. Can you parse that out a little bit? And maybe which particular contracts or is that run rate then with these sort of that organic growth in that business? If that's sustainable in the second, third or fourth quarter, how should we think about that for the fiscal year?

Yes. so there's a good...

Go ahead.

Sorry, go ahead.

Yes, Joe (sic) [Ken] , I think there's a couple of things in play here. First of all, you're right in that north of 95% of the IBA business is in the Defense side of the equation. That was strategically exactly where we were looking to start to balance the portfolio, as you may recall, and to get ourselves into a stronger 3-legged stool of our market focus areas. So yes, you're spot on there.

We are also seeing growth in some of those key programs, Helene and -- Helene Fisher who heads our MSS, Mission Services and Solutions operating unit is where the IBA acquisition landed in the company. And we did retain the leadership in the -- from that acquisition. And Mary Dowdall and her team have been doing an excellent job of positioning us to have growth in the -- some of the key programs. We are doing some COVID-related work for the Defense Health Agency customers there as well. And it's difficult to try to forecast how much of that is surge versus sustained at this time, but we do expect to see some Q3 and Q4 plus ups in our labor-intensive work there as well.

I think, Kathryn, will properly categorize what we're seeing in the VA. But that was an intentional part for us to start to round out that portion of our market focus areas. Kathryn?

And you can see in the Q in our disclosure around our major contracts and major customers that the contribution from that -- those core VA programs grew from 46% of revenue last year to 48% this year, notwithstanding that overall revenue grew pretty significantly.

So you can see that the -- just the volume of top line delivery from that set of programs has grown pretty substantially, and that's again, pointing back to this factor, Zach mentioned earlier about redirection of workload from the MTF, the Military Treatment Facilities over to the CMOP.

Now time will tell whether that business model, whether that part of the incremental volume sustains. To us, it seems imminently reasonable that it would because it's a very cost-effective way of delivering that service.

But obviously, veteran health delivery in some respects has an element of it in terms of the visual and the person attending being in the Military Treatment Facilities. So we're expecting -- our best bet on that is to continue the excellent program delivery and obviously, the customer sees the value-add and getting it done cost effectively. So I think that kind of gives you a sense of where some of the growth in that market segment is coming from.

No, that's very helpful. It sounds like you've got some nice runway in that business.

Yes.

And just finally, Kathryn, as you do or Zach, as you do start to catch up or see at least maybe some ideally loosening of travel restrictions and maybe more compliance opportunities through technology or in person as we go through your fiscal year. I imagine those businesses are or those revenues are probably margin dilutive to other parts of the business. As you do start to see that ramp, is it -- is that the case and that would perhaps negatively impact margins in the remainder of the fiscal year? And to what extent could that be a factor for the margins?

Sure. Yes, the -- first of all, part of what we're doing to get us through this, through the rest of this year, is again, virtualizing a substantial amount of some of those compliance programs so that we can continue to deliver some value to the grantees and to the program office with no real crystal ball as to when the normalcy from before will come back. So it's difficult to tell.

Now it does have and the fact that a lot of our compliance programs are leveraging a lot of the technology tools that we developed with the new completely modernized system. And that nets out into some cost savings and cost reductions for -- and cost efficiencies as it relates to how we execute and deliver those services.

So I think the combination of those is going -- is still have some pressure on our overall margin basis throughout the rest of the year. As we start to stabilize the virtual approach throughout the rest of this year, we're also looking at -- much like we described some of our initiatives with white papers for the clinical trials arena.

We're also looking at some additional analytics, potential expansion on the analytics throughout this fiscal year that may also help us to offset some of that margin erosion on the compliance side. As Kathryn indicated, though, I think we're not expecting to recover. Obviously, the travel and the nonlabor component of what has been lost in our first quarter this fiscal as well as the final quarter of the last fiscal.

The next question comes from Burt Osterweis with Osterweis Business Consulting.

Great to hear your voices. I was pleased to see your Form 4s in December. And I was tickled pink and giddy as a school girl to learn that I could now start trading options on my favorite security, it just happened recently.

Nobody mentioned that. That's a big deal. And I'm interested in learning more about the CMOP exploration extension and also that exclusion, which would have prevented us from a recompete.

Yes. No, great points, and we thank you again for your continued support and engagement in the business. You've been with us for quite a while, and hopefully, we're answering the mail for you as well. With regard to CMOP, of course, it is one of our longer and strong -- longer heritage businesses and of course the VA and that work happens to be as strong as it gets when it comes to protection under -- during various threats for funding, and we expect that to continue.

As it relates to our prognosis for the extensions, as you may remember, we have 2 primary channels for delivering those services. One is heavily on the pharmaceutical side and the other is on what we call medical logistics.

The program -- both programs, and when they came out with their solicitations a couple of years ago now, they were slated to be small business set asides as a preferred option for the pharmacy one, it was exclusively small business set aside.

As they went through their evaluation process, through evaluating all of the bids, including those -- the bids in which we had the partnership, the government made the decision that it was not in their best interest to continue the path that they had been on.

So they did cancel that one. That has resulted in us getting sole source extensions. We continue to operate on those extensions. They've been ranging from 6 months to 3-month options, and we'll continue in that mode until such time that the VA reestablishes and gets an approved new acquisition approach. And as of today, we have no knowledge that, that has been solidified as yet, their acquisition plan. So that usually bodes well from additional sole source extensions. We feel quite optimistic that, that will go at least through the end of the fiscal year. And if a solicitation comes out, then that normal path allows industry partners to get another couple or few months in the bid process, we will certainly notify you all when that -- if and when that occurs as it is a material contract to us.

And then that starts the whole evaluation, for us, cycle on part of the government again, which on the average range is really quite a wide range, it generally ranges from about 6 months evaluation process to a couple of years. So we'll keep you posted on that, but we feel like we'll be on extensions on that one for a while. For the other one, the medical logistics one, as you all saw, we did some upsize that the government had taken that one to a down-select process.

And that one was a tiered approach, which had the first option being the government evaluating those bids that were submitted by service-disabled veteran owned small businesses. And if they did not reach a decision that is in the best interest of the government for both price and technical execution requirements combined that they would then look to a larger set of small businesses. They did go through that process, ruled would that out as the selectee. And as of now, as we stand today, the proposal that we submitted, along with any other large businesses are those that are still in the acquisition cycle. There's been no formal notifications with regard to their path on that one. And accordingly, we are continuing to operate and receive sole source extensions, bridges for that work as well. We can't give any real crystal ball information on that as well.

But each of those opportunities has at least a quarter's worth of phase-in activity. And so we fully expect the way to bet is that we'll be operating with extensions and bridges through the end of this fiscal year. If we are successful and the government does decide to award on the basis of the proposal that we submitted previously, that could start before the end of this fiscal year. So we'll keep you posted on that one as well.

You mentioned that it was material. How material is it? Is it 40% or 50% of revenue?

Yes, we're doing north of $100 million for that customer. And so it's been a very significant material contract, even with our expansions with organic growth and the 2 acquisitions that we've had over the last year plus.

The next question comes from Jeff Bronchick with Cove Street Capital.

So just a quick question. So let's assume this COVID thing goes away in 2021. And when you look at '22 maybe looking back, would you say that over the 2-year period that there's x amount of revenues that you benefited from as you've helped your customers deal with just motivating and getting prep through the COVID issues? Or would -- and that would expect to drop off? Or would you say, no, it's the opposite, we've actually lost more revenue because we couldn't execute on either current or potential plans?

Right. Thank you, Jeff. And for those of you enjoying 80-degree weather right now, I'm not sure that you get any extra bonus points right now.

It's 3 and I have a sweater and hat and Bernie gloves on.

Listen to you.

Bernie gloves, wow.

Yes and the means to boot. No, that's a great question, Jeff. I can tell you that the way we are viewing it right now and we've largely drawn upon the history of some of our other pandemics and emerging infectious diseases. What we're hoping we will see is that over the course of the years, whether it's 2 years or 3 years, the nature of the trials and the studies and evaluations and/or the health comms -- communications will evolve, but we really wouldn't expect to see much of a drop off, right?

There's certainly some surge associated with getting the networks in place and dealing with a very large population of subjects that are actually folks experiencing the infection, the disease itself. But often, there will continue to be sustaining studies around its effects, sometimes environmental effects, in many cases, looking for a variety of different types of therapeutics.

And much like many of both other chronic as well as infectious diseases. There's a tail associated with evaluating it and really making sure we can understand its implications for decades, not only on our society. Not only on our society, but in many cases, working with the global community. So we'd like to see it as something that we think we're standing up that will be sustainable. It may change. And of course, the margin basis of that may change as well. But we don't see it as having a substantial drop off as we enter FY '22 to specifically address your comments.

At this time, there are no other callers in the queue, so I would like to turn the conference back over to Mr. Parker for any closing remarks.

All right. Well, I just want to say again, thank you all. We think we've -- we're continuing to build this platform consistent with the strategies that you heard us lay out several years ago. We're really excited about the continued transition, collaboration amongst our team to be able to help drive this 1 plus 1 plus 1 into a 5, 6 and 7 equation. We are truly, truly committed to continuing to execute the strategy where the -- where we focus and build our pipeline on complex and mission-critical kind of work.

We think that helps us as administrations change and budgets shift as well as dealing with some of the potential long-term headwinds associated with budget debt issues at the federal government and so forth. So stay tuned. We're going to continue to give you additional color.

We are having next month, our annual meeting of the shareholders. And it is our custom, we will give a deeper dive into our new business pipeline, our targeted agencies as we start to see that we can open our aperture further and how well we'll continue to do on the win rate. So stay tuned. We look forward to seeing you all soon. And thank you very much for your participation today. Have a blessed day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.