Ebix Inc (EBIX) 2009 Q1 法說會逐字稿

Good morning. My name is Amy, and I will be your conference operator today. At this time, I would like to welcome everyone to the 2009 First Quarter Investors Conference Call. (Operator Instructions)

Thank you, Mr. Raina, you may begin your conference.

Thank you. Good morning, gentlemen. Thank you for attending Ebix's 2009 Q1 Investor Conference Call. I have also here with me Ebix CFO Robert Kerris.

Our Q1 2009 results were announced a few hours back. Let me summarize those results for you.

Q1 2009 results were yet again record results, the best ever in Ebix history in terms of diluted EPS, net income and revenues. Each of the last many quarters has been a record result, with each quarter beating all the preceding quarters in our 33-year history as a company.

As a management team, we have believed in being consistent rather than just producing spectacular quarters. You could compare these results to Q1 of 2008 or Q4 of 2008 or for that matter compare it to Q1 of 2007, and all comparisons will show that the present quarter scores over all these quarters on all four key criteria --- growth in revenues, net income, diluted EPS and net margins. Let us delve a bit deeper into it.

A comparison of the Q1 2009 numbers to the Q1 2008 numbers reveals that all four -- namely, revenue, income, net margins and diluted EPS grew in this quarter as compared to Q1 of 2008.

Revenue in the First Quarter of '09 was 24% higher than the First Quarter of 2008. Net income after taxes in the First Quarter of 2009 was $8.3 million as compared to $5.7 million in the First Quarter of 2008, a 47% increase.

The Company's operating expenses for the quarter grew by 17% to $12.31 million as compared to $10.5 million for the First Quarter of 2008.

Results for the First Quarter of 2009 were based on 12.36 million weighted averaged diluted shares outstanding, as compared to 12.46 million in the First Quarter of 2008. Basic earnings per share in the First Quarter of '09 rose 51% to $0.84 as compared to $0.55 in the First Quarter of 2008.

I am especially pleased that our net margins grew to 40% in the First Quarter of 2009 as compared to 34% in the first quarter of 2008. During the First Quarter of 2009, we generated $7.8 million of net cash flows from operations, which represents 116%, or a $4.2 million improvement over the First Quarter of 2008.

EBITDA for the current quarter was $9.5 million, implying 46% of our revenues, a significant improvement over the $7 million EBITDA from First Quarter of '08 that was 42% of our revenues at that time.

The current economic environment has made things harder for any company, and we are no exception to that. The insurance industry worldwide has been hit severely by the present economic crisis, and new capital expense decisions are either being delayed or just being put into cold storage. To add to that, the US dollar has strengthened by approximately 30% in the First Quarter of '09 as compared to the First Quarter of '08, having an obvious adverse impact on our revenues and net income numbers. Considering all that, this has been a satisfying quarter to the extent that it helps underline the fundamental strength of the Company today.

Our repetitive revenue streams and infrastructure-based transaction services, helped ensure that Ebix continues to grow its revenues, net income, and net margins steadily.

A comparison of the First Quarter 2009 numbers to the Fourth Quarter 2008 numbers, reveals that all four -- namely, revenue, income, net margin, and diluted EPS, grew in this quarter as compared to the Fourth Quarter of 2008. Our revenues grew almost 3%, as compared to the Fourth Quarter of 2008. Our net income after taxes grew 5%. Our diluted EPS grew 5%, and our net margins grew almost 7%.

The strengthening of the US dollar has been rather dramatic since last year. A comparison between Q1 2008 and Q1 2009 reveals that the Australian dollar has devalued by 27%, New Zealand dollar has devalued by 31%, and Singapore dollar by 7%. Even compared to Fourth Quarter of 2008, the First Quarter of 2009 had to deal with the effect of comparative devaluation of these currencies, with the Australian dollar having devalued by 1%, New Zealand dollar having devalued by 6%, Singapore dollar having devalued by 2%.

This is since changing, since March 31. The dollar has gone the right way, which means the foreign currency devaluation has started to improve. For those of you who like to look at currency-neutral results, I have some numbers for you.

Currency-adjusted revenues in the First Quarter of 2009, grew to $22.4 million, a 34% increase over the First Quarter of 2008. Currency adjusted net income after taxes in the First Quarter of '09 grew to $8.91 million, a 56% increase over the First Quarter of 2008.

Basically, what it means is, that if you were to keep currency rates constant between the first quarter of 2008 and the first quarter of 2009, Ebix revenue would have been $1.73 million higher, and net income would have been $580,000 higher. "Currency adjusted" is a non-GAAP financial measure that we use solely for comparing numbers from two different periods, without the impact of foreign exchange.

Over the last six months, lots of new institutions and investors have discovered the Ebix story. For their benefit, I felt it would be useful for me to emphasize the consistency of the Ebix story by looking back and comparing the Q1 2009 results to Q1 2007, also, to emphasize the strides the Company has continued to make in a consistent manner.

Our revenues for the First Quarter of 2009 grew by 129% as compared to the First Quarter of 2007. Our net income after taxes grew by 325% as compared to the First Quarter of 2007. Our net margins grew from 21% to almost 40% -- 22% to 40%. Our diluted EPS grew 13% between these two quarters, showing that our Q1 2009 numbers were better than the Q1 2007 numbers on all four criteria -- revenue, income, net margin, and diluted EPS.

Ebix business is broken into four channels -- carrier channel, exchanges, broker channel, and the BPO channel. To look at the performance of this -- to look at the performance of these channels, I have a few numbers for you.

Exchanges this quarter were 58% of our revenues, BPO 17%, carrier systems 14%, and broker systems 11%. Exchanges, carrier systems and BPO, all three grew this quarter in comparison to the First Quarter of 2008, or as compared to the Fourth Quarter of 2008. The broker channel in local currency terms grew this quarter in comparison to First Quarter 2008 or the Fourth Quarter of 2008. The broker channel, however, in US dollar terms, the First Quarter of 2009 had slightly lower numbers. In fact, the broker system channel had 18% lower numbers as compared to the First Quarter of 2008, and the prime reason for that is -- and that's kind of a misleading picture. The broker channel was mostly impacted by the currency fluctuations. In local currency terms, as I said, the numbers were better. However, our broker channel primarily comprises a broker systems business coming out from international.

Also, newer decisions are harder to get by these days. Since our broker business and mainly international currency fluctuations impacted the most, we're not overly concerned with this as the broker channel is one of our most recurring revenue bases with a strong business pipeline at any time. Add to that our recent strides in the broker channel, especially in New Zealand, Europe and Asia, have given us reason to believe that this channel will continue to be a strong pillar for Ebix.

When you look at the other channels, our carrier channel grew 12% as compared to 2008 Q1. Our exchange channel grew 27%. Our BPO channel grew 99%, mainly because of acquisition, I'll confirm that. When you compare this performance to the Fourth Quarter of 2008, our carrier channel grew around 33%. Exchanges grew 1%. Our BPO channel grew around 11% and the broker channel was down 22%, but again that impacted mainly because of currency fluctuations and also some of it has also to do with that newer deals are harder to come by in the broker channels.

Our pipeline continues to be good, with many well-awaited deals having been agreed to in the last 90 days, in the area of exchanges and BPO. The economic environment continues to create pressure on insurance companies reducing their spending, but Ebix has continued to use its cross selling to open up new opportunities and keep revenues growing.

We continue to work on improving our balance sheet, and are committed towards significantly reducing the debt on the balance sheet. As of 31st of March '09, the total convertible debt balance stood at $26.5 million with $11.5 million maturing in December 2009, and $15 million maturing in July 2010. Both the converts are in the money, and the common stock after conversion is already fully counted in our diluted EPS count for the calculation of quarterly and annual EPS results, as if it has already been converted.

On 17th of April, as a subsequent event, Whitebox Advisors converted $5.7 million of principal on their first promissory note. The remaining outstanding balance on this original $20 million note is now $5.9 million, expiring in December 2009. Since the other $15 million convert is also in the money, we expect them to exercise their conversion rights resulting in making our balance sheet looking a lot better.

As of 31st of March, 2009, our cash balances stood at $11.8 million. This is after paying a combined total of approximately $12.5 million for the acquisition of ConfirmNet earn outs to Acclamation and IDS, etc. using our internal cash flows since December 2008.

The only bank debt we have presently is a line worth $25 million at LIBOR plus 1.3, which translates to 1.8% at this time. We are looking at various options to either renew that line, renegotiate a new line with another bank, with zero unused fees, or to reduce that debt considerably using our strong cash flows.

In January 2009, we had announced that Ebix has received 100% tax free status in 2014 for its development operations in India under the Special Economic Zone Act of the Government of India. This new building, our third in India, will be fully functional in a few days from now resulting in giving Ebix another world-class facility to support our continued growth.

So, how do we at Ebix, or I personally, perceive these results? From my perspective, these results are just another step forward. As the CEO of this company, I see my role as creating sustained, long term shareholder value. Towards that extent, this quarter is another small step forward. My belief is that long term shareholder value can only be sustained if our business has a few key elements. One, we need to fulfill a business need in a manner that makes us almost the engine that powers fulfillment of that need. In other words, our goal is to be an infrastructure player worldwide rather than being a services or software product company.

I could draw a simile with the airline industry to emphasize my point. When you take a flight to any destination, you can choose what airline to fly by. But, you do not necessarily choose what airport to fly by, as most of the time that's considered a given. Nine years back, Ebix embarked on the journey to be an airport, rather than be an airline. And today, we remain focused on continuing to establish such airports around the world.

A second key element in our viewpoint is that our revenue stream needs to be as recurring as possible. Ideally, upwards of 90%. This goal is rather linked to the first goal. If we are an airport, or in simple parlance, an infrastructure player, then recurring revenue will flow by itself. Again, we have work to do before we can get to that mark of 90%.

Thirdly, our margins need to be consistently higher than 37%. Towards that extent, we need to watch our costs rather carefully and balance that cost pressure with the right amount of investment in the future so that we are continuously investing in the future without taking huge risks.

Fourthly we need to keep investing in innovation. We need to take our competition seriously and need to keep making consistent efforts to be a few years ahead of our competition in terms of technology, depth of functionality, as also in terms of how we provide these services. This goal is more of a journey rather than a destination.

Lastly, the insurance markets worldwide are fragmented, disjointed, and need increased standardization in terms of service offerings. That is a rather difficult goal to standardize, but in my viewpoint a huge opportunity. The fact remains that there is no one dominant player in the insurance services market worldwide, or for that matter in the United States. That is an opportunity that Ebix needs to go after by positioning itself as a player that can offer a wide range of services to the insurance market under one roof, while converting services, regions, and channels in insurance.

When I look at these five goals and evaluate Ebix today, it's a rather humbling feeling as I realize that we have a long way to go and that we're just getting started. The good news from my perspective is that we realize how far we need to go, and that we have made a rather good start.

So what is next? We're looking to expand our exchange offerings, make a few acquisitions in the exchange area, in specific geographies, get into claims inquiry, billing inquiry, increase our presence in the life and health markets, expand ourselves further into emerging economies like China and India. All of these are good opportunities, and we intend to pursue them. While doing all this, we are continually strengthening our resource base around the world, in addition to designing newer cutting-edge products and services that can keep us a few years ahead of our competition.

As always, the audio transcript of this and any of our previous calls can be heard and downloaded from the investor home page on the EBIX site, www.ebix.com, after 2:00 p.m. Eastern Standard Time. Also, I would encourage you to visit the comprehensive investor home page on the Ebix site with a view to providing you a one-stop place to analyze Ebix.

Before I hand it back to the moderator to open the call for questions, I'm going to request each one of you, if you have more than two questions, ideally one, if you have more than two questions I'm going to request you to hold onto that question and give others an opportunity and get back in the queue, and we'll come back to you. With that, I'm going to hand it over back to the moderator to open the call for questions. Thank you.

(Operator instructions) Our first question comes from [Simon Borak], a private investor. Your line is open.

I have a question about your tax holiday. First of all, is that only applicable to the income generated from the new facility?

Yes, that's absolutely true. It will -- it is only applicable to our income generated from the new facility. We are going to be moving most of our revenue-intensive operations into this facility in India.

Okay, great. And as far as those things that do stay in the other facility, I saw in your 10-K that the other tax holiday expires in 2010, at least to some degree. Is that at the beginning or the end of 2010?

Well, the other tax holiday is basically a -- it's starting in the March of 2010. However, it is -- at the present moment, the Government of India has made some announcement, they're in an election period right now in India. But before they went into elections, they basically made some announcement that we're extending it for another two years. It's not yet a bill, but most likely to happen, the extension of two years. In any case, we have almost insulated ourselves, whether they extend it or they don't extend it. (inaudible) the new facility that we have in place.

Okay, thank you.

Thank you.

Our next question comes from the line of Joseph Garner with Emerald Advisers. Your line is open.

Good morning.

Hi, Joe.

A couple -- well, I'll keep it to two questions. The first question is, you've done very well in growing the business through what has been a very difficult time in the financial services and insurance industry. I'm wondering if you can perhaps talk about what you're seeing in the market currently and any signs that the industry, that you might be seeing that the industry may be getting healthier.

Well, frankly, no. I'm not seeing any encouraging signs as of now, meaning there is -- the good news is, companies are starting to take the right decisions in terms of trying to strengthen themselves. But, I don't think we're at a point in the insurance industry where we're starting to see a major change from where they were.

Okay. Second question would be related to the operating expenses of the Company. You've done a very good job of expanding profit margins over the last several quarters, and with the growth that you've been experiencing, I'm wondering how you would expect the expenses to trend from this point? Will you be able to maintain the expenses at these relatively low levels, or do you see anything coming around the corner at all that might increase the cost structure of the Company?

Well, I think that's a rather big question, to be honest, because we hate to issue any guidance. But I will, I will say this. That as we stand today, if you look at the history of Ebix, we remain extremely focused on keeping our costs under check. Today, Ebix has a centrally controlled expense system which means anything that happens in any part of the world at some point will go through a centralized system, and it will have to be approved by a number of folks at the corporate level.

Now, all this when you do stuff like that, and put controls in place, you can't compromise nimbleness. So, what we have done is we have created systems across the world so that while the controls are in place we're not losing in terms of our efficiency. Having said that, you see expense control is the journey. When you can't -- you can never be sure that you have everything under control. You have to be absolutely on the watch, each and every day virtually, to make sure you are doing it right.

So having said that, I believe Ebix has room to improve itself still. Meaning, our margins look good. At the same time, I think there is room on one side to make sure that you know, there's a bit of fat existing in certain areas. And I think we can improve on it. We're not perfect in that area.

Now, on the other side, Ebix has to keep innovating. Has to embrace innovation, all the time. We are dominating in certain business areas, and we dominate in certain technologies. Now, having said that, some people would say, "Why do you really need to change that technology if you're already the dominant player?" And really, to me, you can't really take anything for granted. You always have to keep -- your only way to remain ahead of your competition and remain a few years ahead, not just in how you're -- whether you have cutting edge technology. It is an expanse of your functionality, it is how you implement your services, and so on. And all of that, requires innovation. And you have to make sure that you're not -- you suddenly don't get a surprise. And having said that, that means you have to continue spending more on R&D all the time. So, I think we will try to balance both. In terms of I don't know, to answer your question, I don't know of anything specific that should really suddenly increase the costs, our costs.

I'm not at liberty to issue any guidance on expenses in the future, but I will tell you if you're asking me do I see anything at this point in terms of anything that should throw our expenses out of the park, no, I don't see that.

Thank you very much, and great job.

Thank you.

(Operator Instructions) We have another question from the line of Simon Borak, your Private Investor. Your line is open.

Hi, Mr. Raina. As far as the income that's going to be generated from the new facility in India, will that be subject to the minimum alternative tax?

No.

Okay.

It has no MAT on it. It's a 100% tax-free unit.

Great. And as far as the acquisition pipeline, do you see any difference in valuations from what it was a year or two ago, have they become easier?

Oh, absolutely. Absolutely. Meaning, meaning, this is a good time, as I've always said, this is a good time to be opportunistic, and make the right acquisitions. Because you could pay a bit lesser, and you know, so there is - people's expectations are a bit lower at this point. There's definitely a change.

And are people out there willing to make a sale?

Oh, absolutely. In fact, more than ever, there are companies today who are at a point where they feel that maybe this is the time to get out, and some of them are basically struggling with the -- at times they have a good business. And they're struggling to either grow it, or at times they're struggling with simple cost control. And different challenges. Some have technology challenges and so on, but - so we have to walk into any of those situations with open eyes to see they're -- you know, the transfer given, we should focus -- we tend to focus on their weaknesses and see, we have a medicine for those sicknesses. And if we do, then we clearly use their weakness as an opportunity to negotiate a good price.

Okay, thank you.

Thank you.

Our next question comes from the line of [Ian Baithrow] from [Wausoc Advisors]. Your line is open.

Hey, good morning, this is actually Brian. I wonder if you could just talk about your revenue opportunities over the next say, three to five years, and if you could break that down and you know -- if you did make another acquisition, what's your organic growth potential? And then, additionally, maybe separately talk about those acquisition opportunities, and what's a realistic target that management might have, or with that same time frame? That's my first question.

Well I think, first of all, is the revenue opportunity. If we're discussing opportunity, I mean, we -- the market size is almost $59 billion meaning in terms of just the amount that you are spending on paper-based processes of insurance alone. So, clearly to me that is opportunity. Now, what can Ebix do in that? And I don't -- I hate to answer that because I don't want to be issuing any guidance on revenues.

Having said that, I think we have consistently grown our revenue. Meaning, if you go to our website you'll see a particular presentation there, which walks you through some of the organic growth rate last year. And once you take out all that commission, you'll see it's a 22, 23, I think it's 27% actually. The organic growth rate. So, it's -- we have done decently well with cross-selling. In a time like this when new capital decisions are harder to come by, we have continued cross selling and using -- launching new products and opening up new areas, and so on, and so that has kept our revenue growing.

And clearly, we will make a few acquisitions, and coming back to the second question on acquisitions, we clearly will make a few acquisitions. You could see us make possibly, you will -- you could see us go after two kinds of companies. One are relatively smaller acquisitions, a kind of acquisition we have made in the past, which tend to be, have to - have always been accretive. We have never made an acquisition that was not accretive on day one. And then there is, there are larger opportunities. You could possibly see us going after some larger acquisitions, but the only case in which we'll go after a larger acquisition is only if we see a slam-dunk situation.

If we see our -- this has the next big life changing step for us, then only we'll go after that. And clearly, even when we do that, we are very simplistic in that approach. We expect accretiveness on day one, rather than as a long term objective. So, our staff always become harder when we are looking at acquisitions, because we're almost trying to make an acquisition with accretiveness in the first quarter. And that's been our history, and we feel that's the benchmark we're getting evaluated by, and we want to stick to that.

Could you also talk about what percent of your growth has come from the customers outsourcing the business to you, something they did previously in-house, versus business that maybe you've taken from another competitor?

Well, most of it would be, you see, if you're talking about outsourcing, the -- BPO is the only channel in which we handle the outsourcing business. And I think during my initial talk, I talked about the BPO channel in terms of the percentage of the BPO channel. If I am looking at my numbers here correctly, I think we did on our BPO channel, we did around $3.4 million, $3.361 million this quarter. And that is basically business outsourced.

Again, this is in the one specific, mainly one specific line that we are focusing on, and that is we're focusing on insurance certificate, in terms of tracking insurance certificates, creation of insurance certificates, and in that market we are by far the largest player, we're the most dominant player. We work with 75 of the Fortune 500 companies. It's virtually a Who's Who of the corporate world, who basically outsources the handling of these certificates of insurance to us. So, that's basically the $3.361 million line that I talked through. And BPO accounted for almost 17% of our revenue this quarter.

Thank you.

Thank you.

Our next question comes from the line of Mark Rye with Singular Research. Your line is open.

Hi, good afternoon, gentlemen. I wonder if you could comment on your specific new business development initiatives. For example, you mentioned in your investor presentation that you are launching a new property and casualty exchange in New Zealand, and also an employee benefits service in the UK.

Yes. Well, meaning, those are two areas we defined but there are a few more areas that we are actually continuously going after. The P&C exchange in New Zealand, you should start seeing revenue this year. We expect this to be the exchange, and clearly our prime reason for confidence is rather simple. We have teamed up with the four top carriers, four top P&C carriers in New Zealand, to launch this exchange. Those four carriers account for 90% of P&C premiums in that market.

So, we believe we should see this being the exchange in that market. Now, beyond that, it actually should help us sell a lot more broker systems. Because, these services tend to get very connected. If you exchange as I've always said, insurance transactions are like a telephone transaction. And we provide broker systems, and we have one end of the telephone already, and we have the broker system and we have the exchange. Once you have the exchange, you -- it also kind of helps you to sell on both sides. Which is, you go to the carriers, insurance carriers, and say, "Now I can take a transaction end to end, especially if you use my own back-end system, P&C system, this could -- life could become very easy for you. Because, most of the brokers in New Zealand already use our system, almost 67%." And that's one angle you take, and you have a better chance of selling a carrier system then, to the back-end carrier. Because they are able to be seamless with the brokers.

Now on the other side, you go to the brokers and say the same thing. You say to them, "Well, I have this exchange, and if you were on my broker system, life would be a lot easier because you don't have to log into the exchange, you work directly from your broker system and the data will seamlessly, in the background, go in and go into the carrier's back end." So, it really helps you sell three things, when you're trying to launch exchanges. It helps you sell broker systems, it helps you sell carrier systems, and of course it is helping you get revenues from exchanges. So, we see that as a good development.

Under employee benefit exchange, we launched it in the UK and our -- the UK is basically kind of, we're making it into some kind of a headquarters right now for our European kind of employee benefit operations. Now, in the last few months we have tried to take it to Asia also, and we've had -- we were starting to make inroads into that market. So clearly, our goal remains to take the employee benefits side of our business to different parts of the world.

But again, you will also see us launch, possibly bringing exchanges into Singapore, possibly get into India, possibly going into more difficult places like London. Keep in mind, we're not even a P&C exchange player in the US right now. That's a large market. And that's an opportunity. And so, you could see us do a few more things.

Are there other competitors currently doing that in the US? In the P&C market?

Yes, there's a very large player in that market who is a leader in that market.

I see. How about in the business process outsourcing area, any specific business initiatives to comment on there?

BPO area we have continued to do well, and the last 90 days have been reasonably good. We have -- we continue to sign deals. We have really a reason to be pleased with our performance on the BPO channel side. We're continuing to get newer business in the US. We're also, our goal remains to expand on the BPO area from -- into other service areas, you know, whether it is claims inquiry, billing inquiry, launching -- there are so many other lines of business on insurance that you could go to in the BPO side. Our focus has always been, we like to be the end-to-end service player. What I mean by that is, we don't just provide the manpower for handling the -- the traditional BPO means you provide the manpower and you handle provide the service, on an [ex-functionality].

What we try to do, we try to provide the -- clearly the manpower with the knowledge of insurance but we -- in addition to that we tried to also be the software services player. What I mean by that is typically our BPO is always functioning on our software application platform. And, why is that good? That is very good because we kind of insulate ourselves from our competition. Our competition when they come in, since they don't have the software service and they're talking price and they're talking people, whereas we go in and we say, we understand insurance, and we show that through our -- and we say, "We can really make this happen," and you don't have to worry about two players getting involved, we'll just make that service happen.

What happens is we get an edge, and not only do we get an edge, price becomes a slightly -- I would never say the price is unimportant, but I would say we are able to get better prices than most people because we become an end-to-end services player. So, there's reason for us to believe that we can expand the BPO channel. In the BPO channel there is one more area that I think I should have said, and somebody asked the question about expense control. We have continued to move some of the BPO business to -- some of the back-end BPO business, to India.

We're keeping all the customer handling in the US, but if there is any data entry functionality, we're moving that to India and that should help us reduce some of our costs.

I see. One final question. With regard to your India tax strategy, do you find that you're generating significant cash in India, and are there any restrictions in moving that cash, say for use of an acquisition in another country?

No, we haven't had any because there is -- you see, we have -- we are employing the best in the business. We have -- we take advice from E&Y, you know. I would -- I would suffice that that at this time, that we have the best in the business, Ernst and Young, working on providing us tax advice. And as such, we have never had problems. And if you do it the right way, if you have the right tax structure, if you have the right way to figure out, to repatriate money, you're able to do it. Meaning, as of now, at least. In the current scenario as you know, everything is out in the open, and we'll have to wait and watch, and we'll have to keep re-inventing our strategies as the environment changes in the US.

Okay. Thank you gentlemen, good luck next quarter.

Thank you, Mark.

Our next question comes from the line of [Vincent Caposi] from Kovac Securities. Your line is open.

Yes, hi, very nice quarter.

Thank you.

I just want to ask you, have you -- seeing that -- well here, can you break down how much business you do in Australia, New Zealand, please, just the top four or five countries, how much business? You did that last quarter, and I don't have it in front of me right now.

Vincent, we'll have to do a separate call to talk through that, because I don't have the number in front of me and I would rather do it separately.

Okay. And have you ever thought about hedging the dollar against the Australian and the New Zealand currencies?

Yes, we have looked at it. And hedging as you know has its positives and negatives. And as of now, let me suffice it to say that when we looked at it, we analyzed it in pretty much detail. We feel at this minute we would rather not hedge. We would rather live with where we are because there are quite a few advantages of not hedging, also. And yes.

All right. And can you tell me what - what your NOLs are?

Our NOL at the beginning -- at the end of 2008, was around $42.9 million. We use around $3.9 million in this quarter.

That's all, huh? That's pretty good. The last thing is, the way I figure your company out here, is that if you issued some -- a certain amount of shares, and paid off this $24 million that's due by the end of the year, and get some kind of -- some kind of decent acquisition, that you would get a higher valuation.

I'm not sure I understand the question. Can you repeat that?

I feel that if you were to issue some shares, shortly, and perhaps couple that maybe like a million or 2 million, say 2 million shares, or something. And couple that with paying down your -- or paying off your $24 million set that's coming due by the end of the year, and also maybe some kind of accretive acquisition, I think you would get a higher valuation.

Well, you could be right, or you could be wrong. And we -- we are starting to look at it, meaning I couldn't tell you what exactly we would do because we haven't decided. We're going to look at it, and we will be as opportunistic as we can be. Let's suffice it to say that. We're going to keep our eyes open. We understand what it means. Clearly, at the end of the day, we are very focused on long term shareholder value, and short term shareholder value. I -- we are not just going to do a transaction which hurts our shareholder's interests. So, if we feel in a scenario that you portend, that there is a possible -- let's take a possible scenario that there is an acquisition happening. A larger size acquisition and we sell some stock (inaudible) and along with that, raised slightly more cash, but again, we could do that. But we will only do it if we feel that -- the transaction overall will be accretive for our shareholders.

Right. Right. Well that's, that's --?

So it goes down to, it gets down to the nuts and bolts, you know. We'll have to adhere to that.

That's admirable, you know. I mean, if -- it's got -- like a certain amount of dilution, maybe the stock might go down a point or something. It's not going to be a bad thing, if over the next couple months you're going to buy an accretive acquisition, the stock's going to go up again, you know? So.

Well Vincent, we're not adverse to anything. As we said, we're not adverse to anything.

Right.

But we're going to be, I -- I couldn't tell you either way what we're going to do right now. We're going to do the right thing, let's suffice it to say that.

I -- I -- I think you -- I believe you will. Thank you very much.

Thank you, thank you, Vincent.

At this time, we have no further questions in queue.

Since we have no other questions in the queue, we -- I basically would thank each one of you for attending the investor conference call, and look forward to speaking to you again soon. Thank you again, with that we will close the call for today, thank you.

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