DXP Enterprises Inc (DXPE) 2014 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the DXP Enterprises first-quarter conference call.

(Operator Instructions)

I will now turn the conference over to Mac McConnell, Senior VP of Finance and CFO. Please go ahead.

Thank you. This is Mac McConnell, CFO of DXP. Good morning and thank you for joining us. Welcome to DXP's first-quarter conference call. David Little, our CEO, will also speak to you and answer your questions.

Before I -- we begin, I want to remind you that today's discussion will include forward-looking statements. We want to caution you that such statements are predictions and actual events or results can differ materially. A detailed discussion of the many factors that we believe may have a material effect on our business on an on-going basis is contained in our SEC filing but DXP assumes no obligation to update that information.

I will begin with a summary of DXP's first-quarter 2014 results. David Little will share his thoughts regarding the quarter. Then we will be happy to answer questions.

Sales for the first quarter increased 20.1% to $348.5 million from the first quarter of 2013. After excluding first-quarter 2014 sales from acquired -- businesses acquired during 2013 and 2014 of $53.4 million, sales for the first quarter increased to 1.7% on a same-store sales basis. This sales increase is primarily the result of one additional business day in the current period.

Sales for the supply chain services segment decreased 2.8% to $37.4 million compared to $38.5 million for the 2013 first quarter. This decrease in sales is primarily related to declines in sales to customers serving the automotive and truck manufacturing industries. Sales of innovative pumping solution products increased 92.4% to $79.9 million compared to $41.5 million for the 2013 first quarter.

After excluding 2014 sales from acquired businesses of $32.6 million, innovative pumping solutions segment sales for the first quarter of 2014 increased 14% on a same-store sales basis. This sales increase primarily resulted from an increase in capital spending by our oil and gas and mining-related customers.

Sales by our service center segment increased 10.1% to $231.2 million compared to $210.1 million of sales for the first quarter of 2013. After excluding 2014 service center segment sales of $20.9 million from acquired businesses, service center segment sales for the first quarter of 2014 increased 0.1% from the first quarter of 2013 on a same-store sales basis.

When compared to the fourth quarter of 2013, sales for the first quarter of 2014 increased 11.1%. After excluding 2014 sales from an acquired business of $30.4 million, sales increased $4.3 million, or 1.4%. This sales increase is primarily the result of one additional business day in the 2014 first quarter compared to the 2013 fourth quarter.

First-quarter 2014 sales by our service center segment increased 3.1% compared to the fourth quarter of 2013. After excluding 2014 service center segment sales from an acquired business of $5.6 million, service center segment sales increased 0.6% on a same-store sales basis. First-quarter 2014 sales for supply chain services increased 4.2% compared to the fourth quarter of 2013.

First-quarter 2014 sales of innovative pumping solutions products increased 49% compared to the fourth quarter of 2013. After excluding 2014 innovative pumping solutions sales from an acquired business of $24.8 million, innovative pumping solutions segment sales increased 2.8%.

Gross profit for the first quarter of 2014 increased 14.1%, from the first quarter of 2013 compared to the 20.1% increase in sales. Gross profit as a percentage of sales decreased to 29.2% in the first quarter of 2014 compared to 30.7% for the first quarter of 2013. This decrease is primarily the result of businesses acquired in 2013 and 2014, having a lower gross profit percentage than the remainder of DXP, and partially the result of changes and customer and product mix in the service center segment.

Gross profit as a percentage of sales for the first quarter of 2014 decreased to 29.2% from 30.7% for the fourth quarter of 2013. This decrease was primarily the result of the lower gross profit margin for B27 and partially the result of changes in customer and product mix.

SG&A for the first quarter of 2014 increased $13.1 million, or 19.8%, from the first quarter of 2013. After excluding first-quarter expenses from businesses acquired of $13.2 million, SG&A decreased by 0.1%. As a percentage of sales, SG&A decreased to 20.8% from 22.9% for the first quarter of 2014 as a result of the decline in SG&A for the remainder of DXP after excluding businesses acquired in 2013 and 2014.

SG&A for the first quarter of 2014 increased $13 million, or 19.5%, from the fourth quarter of 2013. As a percentage of sales, SG&A increased to 22.8% from 21.2% for the fourth quarter of 2013.

After excluding first quarter expenses from businesses acquired of $6 million, SG&A increased by approximately $7 million. $2.8 million of this increase was related to the reversal of Natpro's earn-out in the fourth quarter of 2013, which decreased SG&A for that quarter.

In addition, there were $2 million of increased payroll taxes in the first quarter of 2014, compared to the fourth quarter of 2013, due to the fact that many payroll taxes have limited amounts of income on which payroll taxes are paid. Therefore, the amount of tax paid generally decreases during the calendar year.

The remainder of the increase in the first quarter, compared to the fourth quarter, is primarily the result of a $2.4 million increase in SG&A for Natpro. This increase is primarily the result of cost for Natpro being classified as SG&A instead of cost of sales to conform with the rest of DXP.

Interest expense for the first quarter of 2014 increased 109% from the first quarter of 2013 and 151% from the fourth quarter of 2013. This increase was primarily due to the higher average outstanding balance of debt during the period. The increased debt was incurred to acquire B27.

This increase in debt also increased the interest rate on our debt. Total long-term debt increased approximately $275.9 million during the first quarter of 2014.

During the first quarter of 2014, the amount available to be borrowed under our credit facility decreased approximately $40.7 million to approximately $113.4 million of availability. This decrease was primarily the result of our -- of the increase in our debt.

Our bank leverage ratio was 2.99 to 1 at March 31, 2014. At March 31, our borrowings under the credit facility were at a rate of approximately 2.16%. Capital expenditures were approximately $1.7 million for the quarter.

Cash on the balance sheet at March 31, 2014, was $12.1 million. Accounts receivable and inventory balances were $250.3 million and $110.7 million, respectively, at March 31, 2014.

Now I would like to turn the call over to David Little.

Thanks, Mac. We have reviewed our first-quarter results and, while experiencing 20% sales growth year over year, we are surprised by elements of DXP and not satisfied with our overall performance. We are encouraged by the resilience and strength of our core DXP business and believe we have some work ahead of us for recent acquisitions. Specifically, Natpro and B27 are not performing as expected.

Natpro lost $0.06 per share and B27 lost $0.06 per share. The results of Natpro have been negatively affected by slow economic environment in Canada, weather, exchange rates and 2 IPF type jobs where some of the engineering was outsourced to an [Indian] engineering firm and they miscalculated the piping.

We continue to integrate Natpro's Calgary fabrication management with our innovative pumping solutions management team in Houston. We feel confident that the necessary people, processes and checks and balances are being addressed to make Calgary the quality and competitive fab shop that DXP will be proud of. Our time frame is over the next 6 months with improvements happening every day.

Natpro's Eastern Canada operations has been slow with some signs of improvements in the municipal states. As of 3/31/2014, the rig count in Alberta is down 4% and down 1% overall in Canada.

B27 is a huge disappointment. We knew that B27 would add some lumpiness to DXP but nothing like the first quarter results.

We want to look at why we bought B27, why Q1 was so miserable and what the future looks like and why. By the way, if I knew what I know now, I would still want to buy this company, but I would not be able to justify the $290 million for it.

B27 expands our ability to service our customers' needs for high energy pump repair capabilities. It has credible API pump products with the shortest lead times in the industry. It enhances complex engineer-to-order systems for oil and gas and power generation industries.

B27 provides a plant form for future growth in the international market. Our combined businesses dominate the remanufactured pump market, with both inventory and capabilities.

New products and markets for IPS's IPS segment for power generation and air quality. The US Supreme Court just gave the EPA the power to kill coal.

B27 has capabilities in products such as Cadillac reduction units, fuel gas conditioning, NOx reduction units, they clean up coal plants and reduce emissions at natural gas power plants. B27 has new products planned for coal, such as mercury removal for coal and natural gas and sulfur removal for coal.

Q1 was less than expected at B17 due to delays in shipments by the pump OEMs, in part a glut of API orders that overloaded the front-end processing capacity. API's front-end will catch up with no impact on delivery dates and we have increased our staff to handle this increased workload. The transaction created some distractions and we experienced some higher medical costs as a result of the transition, but these are non-reoccurring items.

IFS also moved into a new facility in Q1, which contributed to costs and distractions. But they are settled in now. Know we had we had a run out of old medical plan in addition to the cost of the new medical plan, resulted in an overcharge to B27 group of $250,000, and so impacted a minimum. And we also had two major claims.

We think the power and air quality market may be positioned to strengthen with the final decision by the Supreme Court regarding cross state air pollution rules. We think we will -- this will further empower the EPA to clean up the coal power plants. We sell equipment for this.

We build -- or build replacement plants using cleaner natural gas fuel, which we also sell equipment for. So either way, as long as a time line is established and the EPA will be building a market for us.

The midstream market is strong and we see expansion of our opportunities here as we continue to gain traction in the Middle East, specifically Dubai. We continue to add products to our line of API products while maintaining the best lead times in the industry. We have booked about $7.8 million from Dubai in less than a year.

The primary concern at B27 is the up stream offshore market. This market is softening due to increasing pressure of international oil companies to make final investment decisions in light of increasing costs, time delays and soft projects based on future oil prices.

For example, partly due to local content requirements, projects are costing more and taking longer to complete and there has been probably a 5-fold increase in project costs over the past decade. In fact, IFS had a project cancel this quarter due to the massive cost over dues on the entire project.

Another example of this is that Petrobas, who controls about 30% of the floater inventory, announced in February they will be reducing their 5 year CapEx budget by 7%. This kind of news causes other companies to rethink their economics and all this results in a delay. We have had a lot of proposals out there but final decision making are not happening as timely as they have in the past.

Also, the failure of Nigeria to pass a comprehensive petroleum industry bill, along with the political unrest in that country, makes us believe that this will be a challenging region for the next 3 or so years. Accordingly, we are moving our attention from there to other areas where the potential does exist. We're establishing a presence in Ecuador and are establishing representation in Angola.

At the end of the day, B27 still provides all the strategic advantages that we acquired it for but the first step was not as strong as we had hoped. But the team is intact and they have been through times like this before and we are confident we will get where we want to be with this company.

When we look at other parts of DXP, we are performing as expected. Organic growth of 1.7% quarter over quarter. This is consistent with low growth -- with slow growth domestically and weather factors in the first quarter of 2014. Organic profits were negatively impacted by gross margin pressures and our investment in people resources to grow in a slow growth environment.

IPS and their project business continues to be the bright spot of our segment business with 14% organic sales growth and 29.2% organic operating income growth. We expect our organic growth to be slightly higher than the general economy because of oil and gas, manufacturing, super centers, minus negative growth in Canada caused by their economy and the drilling rig count decline.

Our profits as a percent of sales should increase organically as we reduce the number of investments that are not going to make it in a slow growth economy. Which means we plan to focus on profits and asset management with an opportunistic slant on sales growth instead of a bully approach to grow at all costs.

Should the economy show signs of heating up, we will be more glad about it with a play book of growth strategies. If not, then we will be more conservative.

Our base business continues to perform and we expect all three segments -- SCS, IPS, Service Centers -- to have a slow growth year. On the acquisition front, we are pleased to add Machinery Tooling & Supply, a leading distributor of cutting tools, abrasive coolants, machine shop and industrial safety supplies.

MT&S is headquartered in Schaumburg, Illinois. It's focused on customers in the oil and gas, general machining, automotive, power generation and industrial markets. DXP welcomes approximately 52 experts to our DXP family. As to future acquisitions, our focus will to be improve our financial performance at Natpro and B27.

We are now open for questions.

(Operator Instructions)

Matt Duncan with Stephens Incorporated.

So, David, obviously the first thing I want to dig into a little bit here is B27. At this point, knowing what you now know, what is a reasonable assumption for how much revenue that business can generate for you guys this year? And have you guys revisited your accretion assumption from that acquisition based on that new revenue viewpoint?

Well we're not going to give forecasted sales or profits, but it is not going to be accretive this year. And it is probably going to look at being accretive, hopefully, sometime before the second half of 2015.

So you don't think it will be accretive earnings at all? You think you'll -- it will end up being a diluted acquisition this year now?

I hope it is not dilutive. But it's not going to be accretive.

Okay. So around break-even is probably the right way to think about it. Do you feel like, in any way, you were misled in that process? Or is it really just that their business changed as you were buying them?

Yes and yes.

Okay. So if there is the potential you were misled, you made the commented that you would still buy it but you probably wouldn't pay what you paid for it. Have you looked at what you do think it is actually worth and is there any chance you can claw back any of that purchase price?

Well that was a Board member question. And I think after I thought about it for a while, I think we overpaid $100 million for it.

And what about the ability to get to -- if you were indeed misled, is there any ability to get any of that back?

I think at this point we would have to prove fraud.

Okay. So maybe hard to do at the end of the day.

Right.

Okay. So how much of their business is international? Because it sounds like that's really where the lion share of the weakness is coming from there.

1/3%.

About 1/3%?

Yes.

Okay. So moving on to Canada, other than that pro acquisition, you guys obviously made some safety services acquisition up here back in 2012. How are those performing? And then on Natpro, are -- do you feel like they have sort of bought in to the DXP way of doing things on IPS so that you won't see them outsourcing any more engineering?

Yes, Natpro is fully on board. We feel really good about the fact that we're overcoming any kind of cultural issues. They are engaged. We're making the appropriate people changes.

And we're having very positive meetings. We're double checking their engineering here in Houston. There's talks about consolidating engineering. There is a lot of positives about Natpro.

Again, we like that company because they do have fabrication capabilities and they also have a national presence across Canada. And so it is just -- it is so ironic that we're having trouble with some pump companies when we were founded as a pump company. And it is, frankly, the core of what we should do best. And so we are pretty optimistic about our abilities to make Natpro a real quality company.

Okay. So let's talk a little bit about the organic business then. Your organic growth rate was, I think, 1.7% in the quarter. Obviously I'm sure weather had some negative impact on your ability to grow. I don't know if there is any way to quantify that.

But as you look at 2014, what kind of organic growth do you think you guys can generate this year? I know your target is always 10%. You started out, obviously, below that. Again, weather probably had to have played a role. But what do you think a reasonable growth rate is for the year for legacy DXP?

I always feel like I'm going to outperform the market. So with that said, maybe I should just talk about the market. We don't -- we're not really seeing -- certainly, we had weather related issues just like everybody else, but -- and in Canada it is a little soft. But we're not seeing the general economy booming in any form or fashion, including our oil and gas segment. So we're -- I think there is a reason why we look at interest rates and they're staying low and GDP is being projected at 2% or something. I mean, so we're just not -- we're not seeing any inflation. We're not seeing any big organic growth out there in terms of our customer base.

The exception is I would like to maybe look at a hint of the fact that for maybe the first time in a couple of three years, our supply chain service business, which is really a function of -- we get 100% of a customer's spend. So as we gauge that spend as going up or down, maybe that is telling us something. And our supply chain service business is finally starting to grow.

It had a -- from the fourth quarter to the first quarter, it had growth, nice growth, and it has continued on into April. So maybe there is some signs there. But I'm not overly optimistic that our economy is heating up. I'm just not. And so (inaudible - multiple speakers) whether it is right or wrong. But then -- and so then I think we are always going to do 1% or 2% better than the economy. So you tell me what the growth number is going to be.

So it sounds like maybe on the service center side, you're looking at -- call it 3% to 6% somewhere depending on the economy. But IPS is obviously -- it's off to a good start at 14% organic growth. So maybe that piece continues to do well.

Right.

Okay. And a couple quick numbers questions and I will hop back in the queue. Mac, was there anything one-time in nature that you can kind of call out if you aggregate any kind of one time stuff in SG&A? Was there anything in there that isn't going to recur in the second quarter going forward?

Not in a first-quarter compared to first-quarter calculation.

Okay. And then on the tax rate, last year it was 36.5%, give or take, and it was 38.6% in the first quarter. Why that jump? And what tax rate should we be modeling for the year?

I think the first quarter 2014 tax rate is our best estimate of the tax rate for the year, pending some acquisition that might change it. One of the reasons the tax rate is lower last year is the $2.8 million Natpro earn-out is treated as a permanent difference for tax purposes and book purposes. And so it lowered the tax rate.

Okay. I will hop back in the queue. Thanks, guys.

Joe Mondillo with Sidoti & Company.

I have a few questions on B27. Just trying to get a sort of an idea of what we're looking at in terms of improvement throughout the year, I guess. Has there been any sort of improvement at the backlog at that business? And are you -- can you see or do you have any visibility of improving demand for, say, the back half of the year?

We will break down the business in three areas. One is sort of the manufacturing piece, the distribution piece and then the integrated flow solutions piece. The backlog is increasing nicely in midstream, which is viewing their manufacturing piece to increase backlog.

Their distribution piece is kind of flat, at best. And so the backlog there is not growing. And then IFS, the backlog is declining significantly.

Okay. So it has declined throughout the first quarter. So putting all of those pieces together -- backlog improving at the pump business, flattish at distribution, declining significantly at integrated flow -- are we sort of looking at maybe a flattish business going into the second half of the year? Is that fair to say?

I think we're --

From what you saw in the first quarter?

We're going to see some improvement in volume and profitability from the first quarter. We're not going to see significant improvement. We're going to see some improvement.

Okay. And at Integrated Flow Solution, can you just give us some more color, an idea, what is going on there, per se, and what the biggest drivers to that business are?

Well the -- so probably their -- I guess we saw with their average order size being over $1 million, and so they do these projects that normally you see a lot of orders awarded, starting in December and January, because of things people want to get accomplished before the end of the year.

So to go through December, January, February, March, April with some substandard orders, is just not good. And now the reason -- so we have an order sales problem and, frankly, that's all -- that's the only problem we have. It is still a great business. We may all be laughing about this in 2015, but it is not very funny right now.

So it sounds like -- is it fair to say that a large part of the weakness is on the international side of the business? It seems like a lot of the growth that that business saw in 2013 came from international. You put out a slide presentation in December regarding B27 and the international made up 8% in 2012 in that slide presentation. But you're saying it is about 30% in 2013.

So is that just maybe not going to come back possibly? And domestically, things continue to stay strong. So maybe that business is really $120 million, $140 million sales type of a business. Just help us understand the last couple of years from what your vantage point is with that business.

First of all, the API-610 manufacturing piece of the business, they have opened up a sales office in Dubai. And so mid market, the pipeline market, they have grown that business and they have grown it internationally as well as domestically. So the international piece for that piece of the segment has grown.

IFS has always had a bigger layer of international business. They have domestic business too. So I think when we re-look at a shift of what really happened in 2013, is where we're coming up with the 30% of the business being international.

We like the international market. We have wanted to play -- our own IPS group would like to play in the international market to a greater extent than we have. As we get into it, we are running resistance to these countries that are trying to employ their own people. So they're getting stronger and stronger around content being inside of their country. And so we're having to address that, but we are addressing that. It is not impossible to address that.

The problem in addressing it is that it is causing everybody's costs to go up. And so now we've got a higher cost for these projects because they're insisting upon local content and that is causing some of the economics of these oil and gas plays to not be as favorable. So people are sort of rethinking some of that. And that is the reason for the fact that we're not losing any orders but we're not getting any orders either.

So this will sort itself out over time. These countries need the production and need the oil and gas income. So we will get there.

But let's just say it was a pretty big surprise that we would go this long of a period of time without getting X amount of orders during this time period. And then of course, we have a fixed cost in [Tyler] and other parts of the world to produce these things. So then as we -- we don't have the throughput, our profits get hammered pretty bad.

Right. Okay. And a couple of other just quick questions on B27. That integrated flow solutions business, what kinds of lead times is that business? Or what kind of visibility do you see with that?

Again, like our IPS, we have long-term visibility. But if we get an order today, we start doing the engineering on the project and we have progress billings and we have things that allow us to apply a percentage of completion so we can start capturing income. Give me a $40 million order today and I'm going to be a happy camper and probably singing a different song.

Okay. And then just lastly with B27. Mac, can you give me the sales from B27 that hit in service centers and also in IPS? Just to break that out.

IPS sale -- their total sales were $30.425 million and the service centers was $5.621 million and IPS $24.804 million.

Okay. Great. And, David, I was wanting -- last question and then I will hop back out. The traditional legacy IPS business, can you update us on the offshore market? I know that has been sort of a lingering opportunity but it's been being pushed out. Any update -- positive update, maybe, hopefully, regarding that?

Yes. Actually, it is kind of -- that is really a good question. Our Golden facility up in the Bakken and Niobrara is actually kind of flattening out a bit. Their growth is going to be pretty modest this year.

But the growth in Gulf is starting to pick up. And so we feel really good about our overall IPS business. And it is a great point that it does look like some things in the Gulf are getting turned loose and we feel good about it.

All right. Great. Thanks a lot, guys.

(Operator Instructions)

Holden Lewis with BB&T.

Perhaps shifting to lesser issues, the MRO business -- I guess I have a couple of questions on that. But perhaps first starting -- how come the margin was down as much as it was on a year-over-year and sequential basis? It just seems like that was much lower than it should have been.

Yes, that was -- that's a good question. And the answer to that is a couple fold. One is our safety services business is down. Actually, it is our only division that is down. Everybody else is up and doing rather nicely.

Unfortunately, the safety services business has the highest gross margins of anything we do. And so it been -- it's a little soft in Canada and it is also soft in the United States because we have a pretty significant customer that decided that they didn't need safety people on the work-over rigs and that gave us little bit of a bump in the quarter. That said, the drilling count in the United States is on the rise. And so we feel pretty good about our ability to replace that business. And so demand of our people is pretty high and so we see that being just really a temporary bump.

Canada is a little different. We see the drilling count there being down and a little softer. The business is still okay. But our results are not quite as strong as they were last year.

That is one. Did you say there were a couple of facets to that?

Just Canada versus the United States. They are two different scenario. But both of them are leading to the fact that the safety services business is down. And so, therefore, our margins -- because that is such a high gross margin business -- our margins are down.

Got it. Okay. And then I guess I've -- if you sort of strip out the IPS business and just look at your industrial businesses, the MRO and the integrated supply businesses, when I look over the last few quarters and I adjust for the number of days and all that, I mean it is a pretty sluggish performance. And I know the economy has obviously been sluggish, but with all of the investments that you have been putting into this business -- training, service centers, super centers and all of that stuff -- I guess I am sort of curious, when you look back, do you feel that you are getting the return on the investments out of the -- those two segments that you would have anticipated? Because it feels like if those investments were paying off, that you should be exceeding the market growth. And I guess it is not obvious to me that that has been the case over the past five quarters.

Well, frankly, I couldn't agree more with you. Your statement is accurate. We're not getting the return on the investments that we have been making.

I think we feel that they're good long-term investments and that we will get a return on them some day. But I think if you were to look at Q4, and then now Q1, that the results are saying that we are growing sales 1% or 2% and that the bottom line is negative. And so that is not a top-line/bottom-line growth scenario that you expect and what I expect. And so I'm not happy about that.

So what goes wrong with those investments that basically means you're making them and they're kind of performing in line with the market as a whole? How have we not gotten premium growth from those investments? Have we identified kind of what to fix there?

It is always a people investment. We're hiring a salesman to get him to come. We're guaranteeing him $100,000. And of course, he is not bringing $100,000 worth of business with him. And so he has to grow his way out of that guarantee. And it doesn't happen as fast as we would like or the employee would like.

I mean he is making an investment in us, also. So I'm not picking on him but -- and so we have a lot of super centers that are in process but we also, all across our Company, we have -- we are hiring salesmen and people like that to cross-sell products. So we're -- even though we might not be calling this a super center in process, we are still hiring other people to grow and cross-sell and do the things that we do to grow our business and capture more of the MRO pocketbook of each customer. And in a slow growth environment, we found this to be the case, too, in 2009. And we just -- we can't overcome the fact that everybody else is working really hard to maintain the business that they've got. And so it is just hard on us.

Okay. And then I guess the last thing on this matter is I guess you sort of indicated that you're probably going to set aside the growth objective in favor of ramping productivity, fixing the acquisitions, those sorts of things. But I believe that your sales force has a pretty meaningful incentive for growth.

So how do you tap the brakes on growth in the near term and keep your sales force engaged and happy at a time when you need them to firm things up, become more productive, when they're largely incented on the growth that you're opting to sort of stall for the time being? How do you envision keeping the sales force engaged in that scenario?

Right. Holden, you always ask good questions. That's an excellent question and we're not trying to reduce head count. So lets -- maybe we ought to be perfectly clear about that. So we're not trying to reduce our ability to have people go out and try, individually, to develop relationships and grow the customer and try to capture more of his pocketbook.

So we're not disincentivizing him to do that but I'm also not going to go out and hire 20 new salesmen tomorrow either. And so that is really the investment. It is kind of a go-forward investment that we're going to slow down than the present one.

We expect, however many people we have -- 4,000 people -- to go out and be customer-driven and to try to capture more market share every day. And we're still going to do that. We're just not -- we're just going to slow down the fact that -- I don't know how many people we've hired this year but I bet you it is already in the 100s. So it is what we will do going forward.

Okay. Great. Thanks, guys.

And there are no further questions. Ladies and gentlemen, this does conclude the conference call for today. Thank you for participating. Please disconnect your lines.