Hackett Group Inc (HCKT) 2013 Q4 法說會逐字稿

Welcome to The Hackett Group's fourth-quarter earnings call. Your lines have been placed on listen-only mode until the question-and-answer session. Please be advised that the conference is being recorded.

Hosting tonight's call are Mr. Ted Fernandez, Chairman and CEO; and Mr. Rob Ramirez, Chief Financial Officer. Mr. Ramirez, you may begin.

Thank you, operator. Good afternoon, everyone, and thank you for joining us to discuss The Hackett Group's fourth-quarter results. Speaking on the call today and here to answer your questions are Ted Fernandez, Chairman and Chief Executive Officer of The Hackett Group; and myself, Robert Ramirez, Chief Financial Officer.

Our press renouncement was released over the wires at 4:25 PM Eastern time. For a copy of the release, please visit our website at www.TheHackettGroup.com. We will also place any additional financial or statistical data discussed on this call that is not contained in the release on the investor relations page of our website.

Before we begin, I would like to remind you that in the following comments and in the Q&A session we will be making statements about expected future results which may be forward-looking statements for the purposes of the federal securities laws. These statements will lead to our current expectations, estimates, and projections and are not guarantees of future performance. They involve risks, uncertainties, and assumptions that are difficult to predict and which may not be accurate. Actual results may vary.

These forward-looking statements should be considered only in conjunction with the detailed information, particularly the risk factors that are contained in our SEC filings.

At this point, I would like to turn it over to Ted.

Thank you, Rob. And welcome, everyone, to our fourth-quarter earnings call. As we customarily do, I will provide an overview of the quarter and then turn it back over to Rob so that he can go through a detailed review of our operating results, cash flow, and also review guidance. Rob will turn it back over to me, and I will review some of our market or strategic related comments, and then we will open it up to Q&A.

So let me go ahead and start with the quarterly highlights. We're actually disappointed to report revenues of $53 million and pro forma earnings per share of $0.08 in the fourth quarter of fiscal 2013. The reason I say that is that after solid performance through the first three quarters of the year, very weak performance from our European and Australian operations more than offset solid US performance, which drove our fourth-quarter results.

The year-over-year difference in our European results on an earnings per share basis was $0.07 unfavorable in the fourth quarter. And although we have made several key leadership and sales related changes in both Europe and Australia, I wanted to make sure everyone knew that we will continue to make the necessary changes in our European operations in order to recapture our momentum and contribution from that region.

In the US, very different story. Our results were as expected. Hackett US continued to grow at a 10% rate consistent with last quarter. We actually saw growth across all of our groups. And this was somewhat offset by solid performance from our SAP group, what we classify under ERP Solutions, which actually had a solid quarter but did so with slower growth.

Internationally, which is really Europe and Australia, we were down more than expected, with the weakness in Europe coming primarily from the UK due to longer sales cycles and deferred project conversions.

On the balance sheet side, we actually generated terrific cash flow during the quarter, which we used to continue to use for our stock repurchases. We paid the annual dividend, which falls in the fourth quarter; and we continue to pay down debt, some of which we actually took down as part of the Dutch, which we also completed in the fourth quarter.

As a result of our buyback activity during the quarter, the Board announced an additional $5 million expansion to our buyback program. So we can continue to be active and opportunistic in the market as available.

On the investment front, we continue to develop to attract talent and expand our brand and intellectual property. Probably the best example of both innovation and IP development for us recently has been the development of our new Hackett Performance Exchange. But we continue to also invest very heavily not only in the way we execute engagements for clients but in the expansion and execution of our Executive Advisory [offense], which are also very important to us.

I will comment about these opportunities in more detail in my strategic overview section of our call. I will also comment further on market conditions and specific go-to-market initiatives, but let me first ask Rob to provide details on our operating results, cash flow, and also comment on outlook. Rob?

Thank you, Ted. As I typically do, I'll cover the following topics during our call. An overview of our fourth-quarter results, along with an overview of related key operating statistics, an overview of our cash flow activities during the quarter, and I will then conclude with a discussion on our financial outlook for the first quarter of 2014.

For purposes of this call, any references to Hackett Group will specifically exclude ERP Solutions. Correspondingly, I will comment separately regarding the financial results of The Hackett Group, ERP Solutions, and the total Company. Please note that all references to gross revenues in my discussion represent net revenues plus reimbursable expenses.

As mentioned in previous quarters, we exited our Oracle ERP implementation practice during the first quarter of 2013, and, as such, historical information discussed in this call has been recast for comparability purposes.

Additionally, references to pro forma results specifically exclude non-cash stock compensation expense, intangible asset amortization expense, results of discontinued operations, and one-time acquisition related charges, and assumes a normalized tax rate of 40%.

Before I move to our fourth-quarter results, I'd like to make a few comments regarding our annual results for 2013. Annual revenues totaled $224 million, essentially flat from 2012. Pro forma earnings per diluted share were $0.41 in 2013, compared to $0.40 in the previous year, an increase of 3%.

For both 2013 and 2012, pro forma EBITDA was approximately $25 million. As we discussed last quarter, our Hackett International operations, mostly Europe, were expected to be down significantly for the fourth quarter, which offset US growth. International revenues in the fourth quarter were down 31% on a year-over-year basis. This negatively impacted pro forma earnings per share by approximately $0.07 in the fourth quarter of 2013, which was approximately one penny more than our guidance forecast.

During 2013, we were pleased we were able to utilize our strong balance sheet and cash flow to return capital to our shareholders. First, we completed a stock tender offer that resulted in the repurchase of approximately 1 million shares of the Company's stock at a price of $7.00 per share for a total of approximately $7 million excluding fees and expenses.

In addition during the fourth quarter, the Company paid its annual dividend of $0.10 per share for a total of $3.1 million.

Now moving on to more specifics on the fourth quarter. As I mentioned in our third-quarter call in discussing the fourth-quarter guidance, the fourth quarter was negatively impacted by the typical seasonal increase in holidays and vacation utilized in both the US and Europe, which unfavorably impacted available days by approximately 5% on a sequential basis. Having said that, for the fourth quarter of 2013, total Company gross revenues were $52.6 million, a 4% decline on a year-over-year basis.

As we discussed during our previous call, this overall revenue decline was primarily due to the decline in international revenues mostly related to Europe. Total Company international gross revenues accounted for 18% of total Company revenues in the fourth quarter, as compared to 24% in the fourth quarter of 2012.

Gross revenues for the Hackett Group, which excludes ERP Solutions, were approximately $44.2 million in the fourth quarter of 2013, or down approximately 2% on a year-over-year basis, with Hackett US revenues up 10% but offset by the 31% decline in Hackett international revenues.

Hackett annualized -- Hackett Group annualized gross revenue per professional was $332,000 in the fourth quarter of 2013, as compared to $342,000 in the fourth quarter of 2012 and $358,000 in the previous quarter. Gross revenues from our ERP Solutions group, which consists of our SAP implementation practice, totaled $8.5 million, down 15% on a year-over-year basis and 8% sequentially as expected. It is worth noting, as Ted mentioned, that this comparison comes off very strong 2012 results.

ERP Solutions hourly gross realize billing rate per hour was $127 in the fourth quarter of 2013, as compared to $135 in the fourth quarter of 2012. This includes the impact of our offshore resources, which approximates 45% of our ERP implementation resources.

ERP Solutions consultant utilization was 71% for the fourth quarter of 2013, as compared to 68% in the fourth quarter from the previous year.

Total Company pro forma cost of sales, excluding reimbursable expenses and stock compensation expense, totaled $30.3 million, or 64.3% of net revenues, as compared to $30.7 million, or 62.2% of net revenues in the previous year.

Total Company consultant headcount was 702 at the end of the fourth-quarter of 2013, as compared to 718 in the previous quarter and 724 at the end of the fourth quarter of 2012. This year-over-year decrease was primarily attributable to headcount adjustments commensurate with market finance and our ERP Solutions group.

Total Company pro forma gross margin was 35.7% of net revenues in the fourth quarter of 2013, as compared to 37.8% in the fourth quarter of the previous year. Hackett Group pro forma gross margins on net revenue was 35% in the fourth quarter, as compared to 37% in the fourth quarter of the previous year. Again, primarily due to the decline in Hackett international revenues.

ERP Solutions pro forma gross margins on net revenue were 38% in the fourth quarter of 2013, as compared to 41% in the previous year, primarily due to decreased SAP license revenues. Pro forma SG&A was $12.7 million, or 26.9% of net revenues in the fourth quarter, as compared to $12.9 million, or 26.2% of net revenues in the previous year. This 70 basis point increase is primarily due to decreased revenues on a year-over-year basis.

Interest expense on borrowings under our credit facility was $111,000 [in the] quarter, which compares to $160,000 net interest expense in the prior fiscal year. This decrease is a result of debt repayments throughout 2013 which decreased our average debt balance in 2013 when compared to 2012.

Total Company pro forma net income for the fourth quarter of 2013 totaled $2.4 million, or $0.08 per diluted share and was at the midpoint of our fourth-quarter's guidance. This performance compares to pro forma net income of $3.4 million, or $0.11 per share diluted in the fourth quarter of 2012. Total Company pro forma net income for the fourth quarter of 2013 excluded non-cash stock compensation expense of $1.4 million; intangible asset amortization expense of $151,000; one-time acquisition related charges of $188,000; and assumes a normalized tax rate of 40%, or $1.6 million.

Pro forma EBITDA on net revenue in the fourth quarter of 2013 was $4.6 million, or 9.8% of net revenues, as compared to $6.2 million, or 12.6% of net revenues in the fourth quarter of 2012. GAAP diluted earnings per share were $0.04 for the fourth quarter of 2013, as compared to $0.21 from the same period in 2012. GAAP net income for the fourth quarter of 2012 included a tax benefit of $4 million, or $0.13 per diluted share, due to the release of deferred tax valuation allowances as we previously discussed. Excluding the $0.13 impact in the fourth quarter of 2012, the comparable number would be $0.08.

GAAP diluted earnings per share for the full year of 2013 was $0.27, as compared to diluted -- fully diluted earnings per share of $0.50 in the previous fiscal year. Again, GAAP net income for the full year of 2012 included a tax benefit of $6.7 million, or $0.20 per diluted share, due to the same release of deferred tax valuation allowances that we've discussed. Excluding the $0.20 impact on 2012 results, the comparable number would be $0.30.

At the end of the fourth quarter of 2013, the Company had approximately $17 million and $20 million of income tax loss carry forward remaining in the US and in foreign tax jurisdictions, respectively. As a result, for tax purposes we will continue to have the ability to offset most of our US and international tax liabilities.

Now turning to cash. The Company's cash balances were $18.6 million at the end of the fourth quarter of 2013, as compared to $15.4 million at the end of the previous quarter. This cash increase in Q4 was primarily attributable to net cash generated from operations and net borrowings on our credit facility offset by repurchases of common stock and dividends that were announced and paid.

Net cash generated by operating activities in the fourth quarter was $15.2 million, which was primarily driven by operating earnings adjusted for non-cash items, decreases in accounts receivable, increases in accrued expenses primarily relating to the timing of US payroll related items, and increases in deferred revenue and an increase in accounts payable due to the timing of vendor payments.

During the fourth quarter of 2013, the Company borrowed a net $4 million from its credit facilities to fund our most recent tender offer and most of our subsequent share repurchases made during the quarter. At the end of the fourth quarter, the Company had $19 million of borrowings outstanding under its credit facility.

During the fourth quarter, we purchased approximately 1 million shares of the Company's stock for a stock tender offer at a cost of approximately $7 million. Subsequent to the tender offer, the Company repurchased another 894,000 shares for $5.4 million at an average cost of $6.00 per share.

Our DSO, or day sales outstanding, at the end of both the fourth quarter of 2013 and 2012 was 59 days.

I'll now turn to our guidance for the first quarter. Before I do that, I'd like to remind everyone of the seasonality of our business relative to costs as we move from Q4 to Q1.

Specifically, consistent with first-quarter guidance provided in previous years, our first-quarter guidance for 2014 will reflect the sequential increase in US payroll related taxes and the sequential buildup of our vacation accruals.

We expect total Company gross revenues for the first quarter of 2013 to be in the range of $51 million to $53 million, with a reimbursable expense estimate of 12% on net revenues. This compares to a prior-year gross revenue amount of $54 million with a reimbursable expense ratio of 11.2% on net revenues.

We expect US gross revenues for the first quarter to be up on a year-over-year basis by approximately 5% to 7%, with Hackett US estimated to be up strongly and ERP Solutions to be down. International revenues, mostly derived from Europe, are expected to be down on a year-over-year basis by approximately 30%.

Relative to pro forma diluted earnings per share, we expect that our first quarter will be negatively impacted by approximately $0.06 on a year-over-year basis due to the continued weakness of our European operations. As such, we expect our pro forma diluted earnings per share in the first quarter of 2014 to be in the range of $0.06 to $0.07 per diluted share.

Our pro forma guidance excludes amortization expense, non-cash stock compensation expense, other one-time acquisition related charges, and includes a normalized tax rate of 40%. As a result of our revenue guidance, we expect pro forma gross margin on net revenues to be approximately 34% to 36% in the first quarter.

We expect pro forma SG&A and interest expense for the first quarter to be approximately $13 million. We expect first-quarter pro forma EBITDA on net revenues to be in the range of 7% to 9%. We expect our cash balances, excluding the impact of debt repayments and any share buyback activity, to be down on a sequential basis due to payment of 2013 performance related bonuses.

At this point, I would like to turn it back over to Ted to review our market outlooks and strategic priorities for the coming months.

Thank you, Rob. As we look forward, we expect continued year-over-year growth from our US business across nearly all of our groups. In fact, as we get a little bit further into the year, our SAP group will also start copying a little bit better than they have here in the latter part of 2013.

We also expect demand internationally to remain adequate but characterized by the uneven and prolonged decision-making decisions behavior that we've seen as compared to the US.

As I mentioned last quarter, we believe that some of our international volatility may be a result of our limited solution offering when compared to the US. A key part of our solid US activity is due to the very strong enterprise performance management and business intelligence capability that we have in the US, which represents over 40% of total US Hackett revenues.

I also mentioned last quarter that we had a new European leader coming on board, and that individual has in fact joined us in early January. And probably one of the most important things about this individual, in addition to the fact that this is someone that we hadn't known for a while but had been unable to attract, is that he actually specializes in the EPM and BI area, which is an area that, as I mentioned last quarter, we want to build out throughout Europe.

Our plan is to do that throughout 2014. And our effort will be to try to mirror the US capabilities in Europe, and that will require us to build out our EPM and BI strength globally. We think that will improve the ability to grow in Europe. We also think that it will further strengthen our global delivery capabilities for large EPM and BI jobs that originate in US, which are important to our large multinational engagements.

Beyond our immediate focus in Europe, our strategy is to continue to build our brand, building dedicated skill around unmatched intellectual capital in order to serve clients strategically and, whenever possible, continuously. We believe that clients that leverage our intellectual capital are more likely to allow us to serve them more broadly. So IP-based services enhance our opportunity to serve clients remotely continuously and, we also believe, more profitably.

Our goal is to use our unique intellectual capital to establish a strategic relationship with our clients to further use that entry point then to introduce our business transformation and technology consulting capabilities. This strategy would allow us to increase our client base, profitability, and increase revenue per client.

I always like to allude to the fact that the leverage IP that we've continued to nurture inside of our Executive Advisory program has been a great example of where utilizing IP to drive continuous relationships has resulted in expanding client revenue and revenue per client for those clients that use that Executive Advisory offering.

Specific to the Executive Advisory client base, we've always said that our long-term goal is to be able to describe an increasing percentage of our total annual revenues to clients who are continuously engaged with us through our Executive Advisory programs and eventually also through our Hackett Performance Exchange.

At the end of the year, our Executive Advisory programs totaled 852 across 265 clients. And consistent with prior quarters, over 40% of our Hackett in Q4 sales were also advisory clients, which continues to show the strong relationship leverage to IP and IP-based offerings.

On Hackett's Performance Exchange front, we have completed our planned enhancements to both our Oracle and SAP offerings. Doesn't mean we are done. We'll continue to enhance these offerings as we continue to get clients to come and utilize our platform and we continue to figure out how to enhance the offer. But we have started to build out our dedicated sales group, which I mentioned last quarter, and we'll continue to add to this team throughout the year.

As I repeatedly mentioned, this is an ambitious new offering but, if successful, could help us enhance our business model by creating a powerful and possibly continuous relationship with our client. And although we continue to learn how best to sell and leverage our IP -- HPE offerings, we now believe that this new platform will not only be utilized as an edge offering but it will become a critical component of all of our benchmarking offerings over the next several years.

Lastly, even though we believe that we have the client base offering and market coverage to grow our business, we continue to look for acquisitions and alliances that can add scope, scale, or capability to accelerate our growth. I would also add that our efficient access to debt further encourages this focus.

In summary, we reported solid quarterly results, but it's clear that we must be more successful in Europe. We did not like having such strong US success offset by the 30% decrease in European revenues. But we know that we must be successful in Europe in order to continue to grow our total revenues and profits. So that will continue to have a significant part of our attention, at least in the near future.

As I mentioned in my opening comments, though, we will continue to make the necessary changes and investments in the region to ensure our success. So I assure you that we will not stand still and will try to recapture that European contribution to our total revenue growth and profitability as quickly as possible.

Having said that, we also continue to believe that our unique ability to combine proprietary intellectual capital with terrific talent to help our clients optimize their performance, especially in this complex demand environment, allows us to remain top of mind with leading global companies and bodes well for our prospects. I always like to see how many inquiries we get to our Executive Advisory programs because I know these are touch points with these Global 2000 companies. And I'm always -- I'm pleased to see that we continue to average over 1000 inquiries across our membership base throughout the quarter, which just tells me that clients really value the feedback, and we're continuously engaged with them in that process.

Lastly, let me close by thanking our associates for their tireless efforts and always urge them to stay highly focused on our clients, our people, and the exciting opportunities available to our organization.

Those conclude my comments. Let me then turn it back over to the narrator to see if we can open it up for Q&A.

(Operator Instructions) Morris Ajzenman, Griffin Securities.

International -- Europe and Australia, I guess we kind of got a heads up on this the previous quarter as you exited the third quarter. Back then, you also talked about some deferral projects. And then during your commentary now, you've talked about lack of product offerings, let's call it, relative to the US. How much is actually clients just deferring? Or is that a small part of it? Are they continuing to push out, or are they just not going forward with projects? How can you -- put more color if you can on the nuances of what these difficulties are, I guess, particularly in the UK?

Well, I would say the comments -- comments now would be consistent, Morris. We continue to work with a significant number of clients in Europe on significant initiatives. But we've seen, especially as we got -- as they started looking at -- it really started tail end of Q3, if you recall, impacted a little bit of Q3, and then we felt the full weight of it into Q4.

And then we're seeing improved activity in some areas in the first quarter, but we also think that they were -- they didn't come -- we just didn't come out of the box the way we would have hoped they could have so that we could get a quick rebound. But we're probably -- we have some optimism that we'll see some of our activity pick up as we head into Q2. But given the volatility -- you know the way I am; I'll tell you about it once I actually see it.

But that is our hope -- clients simply knowing that they have to do some things but deferring second-guessing, and I'm seeing we saw a little bit of that happening in Q1 with things starting out a little bit later than we hoped in Europe and probably more specifically in the UK. Probably more solid activity relative to Germany, but we also think Germany could be a much bigger business for us as well.

But as I said in my opening comments, not only did we make the people changes in order to expand the capability, we do know that we need to work the clients -- and those clients and execute with those clients probably as well as ever. And we'll continue to make changes in each of those -- we really run the region in two region -- in two, if you want to call it, regional groups. We'll continue to make changes until our execution improves.

Because I think the market opportunity is more volatile than the US. But it's -- as you recall, we had Europe give us a quarter blip -- if you said if we look back at 2011 -- maybe even 2010 -- 2010, 2011, and 2012, we had some quarter that disappointed us but, we saw the bounce-back come back a little quicker. I would say the timing of this hitting in the fourth quarter and us waiting to see projects initiate in Q1 not the way we hoped may mean that we need to be a little bit more aggressive in both the transition, the introduction of our EPM and BI offerings in Europe, which we will be, and continue to add talent and make further changes that we have to.

And just as a follow-up on that. You say you're working with significant number of clients in Europe, and then you highlight the UK being weak. Is this across-the-board, the weakness, or is it one or two customers particularly that really hindered the comparisons?

No, the indecision is more prevalent in the UK than in Germany. That's probably the best way to characterize it. Look, I look at it one of two ways. We know clients are challenged by the volatile and complex environment. We see how these multinationals are using us with increasing -- in a nice, meaningful way. Let's not just kind of push aside the 10% growth in the US -- Hackett core US the last two quarters. And, in fact, we think we'll do better than 10% in Q1.

We just think that these are large companies that are based in Europe and that the need for our services shouldn't differ that much. So we still believe that the opportunity in Europe is significant. And until we turn around, I'll just chalk it up for poor execution on our part and also expanding the service offerings that more closely mirror US.

Ted, my question was specific to UK. Is this one or two customers, or is this a plethora of customers that (multiple speakers) --

It was broader. It is broader. Clients' willingness to move forward through phases. The velocity of those decisions I would say has been more difficult in the UK for us than it has been in Germany.

Okay. And one last question, and I'll get back in queue here. When you talk about Hackett Performance Exchange, entering the first quarter of 2014, are we on schedule or are we behind schedule? Where were you looking at this a year ago? Where are we right now, and where are we on actually paid subscriptions?

Well, we're not going to provide those paid subscriptions because we're building that base right now. Once we have enough, I'll start commenting.

But no, I consider 2014 -- I mean, we realized 2013 -- it took all of 2013 to complete the planned changes we wanted to make to HPE. So as I mentioned last quarter, we started then going back and saying, okay, let's bring on some sales support that are going to be dedicated to the offering. And we think 2014 for us, now that the product is working as intended, is really to make 2014 for us a proof point. And that would be to have a nice number of clients across both platforms, SAP and Oracle platforms, by the end of 2014.

But we're not -- other than our own internal targets, we're not providing any guidance or commenting on specific numbers until we see them materialize.

Thank you.

George Sutton, Craig-Hallum Capital.

Good afternoon, guys. It's Jason on for George Sutton. So you talked about the European EPM updates and you put some new leadership in place there. And just wondering if you can maybe walk through what further changes you need to make and what kind of a time frame you should expect for those changes and when we should kind of see a turnaround in that business.

I would break it up into two pieces. In fairness to the new leader who actually will be leading the charge to build our EPM and BI capabilities in Europe, that's -- I want to remind everyone he came on board January 10. We're excited to have him. We think he's going to be a terrific leader, and the fact that he has this capability is going to be very helpful to us given our capabilities in the US.

So I would say for us to start building on that capability and getting some EPM activity on board will take at least a couple of quarters, and that's specific to EPM.

What was the second part of your question, Jason, or was there a second part?

Well, I think you nailed both parts there.

Okay, I just wasn't sure.

No, that's fine. And then -- so another question for me. You did talk last quarter about one deal in Europe and one deal in Australia that got pushed from Q4 into Q1. And just wondering if those opportunities have been locked up since that time and if you've seen any other deals that have had further push-outs.

We clearly saw a number of clients not make decisions in the normal time frame that we expect. The Australian one, actually we do expect it to start shortly; so we'll expect to see some of that benefit toward the tail end of this quarter and going into next. But it did take an extra, put it, at least half quarter to start than we would have hoped.

On the large UK opportunity, we're still working with the client, but we still haven't gotten him off the dime so that it could have a material impact on our results. If we had, you would not see the 30% year-on-year decline that we're projecting in Europe for Q1.

Are we still working with that client? Yes. Reviewing several projects, yes. But meaningfully start any of those initiatives in a meaningful way, the answer is no.

Okay. Thanks for the color on that. And then just the last one for me. The US business seems to be moving along pretty well. Just wondering if you can talk about any specific points of the business that are really driving that growth.

It's really across the board. It's across the board, and if you think about the fact that we're saying that the SAP performance, which has been solid financially but coming on slower growth after some really rapid growth in 2012 -- I mean, we saw growth across almost every one of the practices last quarter, and we expect the same this quarter.

And so when you look at that, right, you look at our overall scale and that opportunity, we are saying, look, we obviously must have the right mix. We clearly are only strengthening our leadership position in being able to measure. And as we tell the clients, strategically size the prize for improvement. We think HP is only helping tell that message with more credence, especially as it relates to anyone who says that they are competing with us in that, if you want to call it, entry space -- that entry-level space we're benchmarking.

But the other piece that we have talked about quite a bit over the last couple of years, our EPM and BI groups continue to see quite a bit of activity and that continues to grow. So it's just a shame that that's all really not what we're talking about, given how weak Europe was last quarter and will be this quarter.

Sure. Well, hopefully we start talking more about the US and less about Europe soon.

Believe me, we're all over it.

Okay. Thanks, Ted.

At this time, I show no further questions. I would now like to turn the call back to Mr. Fernandez.

Let me thank everyone for participating in our fourth-quarter earnings call. We look forward to updating you again once we report in the first quarter. Thanks again for participating.

Thank you for your participation in today's conference call. You may now disconnect.