Hackett Group Inc (HCKT) 2014 Q2 法說會逐字稿

Welcome to The Hackett Group Second Quarter Earnings Conference Call. (Operator Instructions) 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 second quarter results. Speaking on the call today and here to answer your questions are Ted Fernandez, Chairman and CEO of The Hackett Group, and myself, Robert Ramirez, CFO.

A press announcement was released over the wires at 4:05 p.m. 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 question-and-answer 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 relate to our current expectations, estimates, and projections and are not a guarantee 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, contained in our SEC filings.

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

Thank you, Rob. As I ordinarily do, I'll open up the call with some overview or highlight comments on the quarter. Then I will turn it back over to Rob and ask him to comment on detailed operating results, cash flow, and also cover our third quarter guidance. Rob will then turn it back over to me, allow me to make some market and strategic related comments. Then we will open it up for Q&A.

So first, my highlight comments. Let me first welcome everyone to Hackett Group's second quarter earnings call. This afternoon we reported revenues of $61 million and pro forma earnings per share of $0.16 in our second quarter of fiscal year 2014, both which exceeded the high end of our guidance. As a result of our actions taken in Europe and the strong U.S. momentum, we exceeded last year's Q2 results in spite of having only neutralized the European contribution impact during this quarter.

In the U.S., Hackett grew at an 8% rate in the U.S., 5% if you exclude the recent acquisition of our EPM AMS capability, with strong performance from our EPM and benchmarking groups. This quarter we also saw strong performance from our ERP group, which benefited from strong license sales activity.

Internationally, Europe was down slightly more than we expected, but more importantly, we're starting to see improving demand and shorter sales cycles, which will benefit our second half of the year operating results.

On the balance sheet side, we continue to be active with our stock repurchase program throughout the quarter. Subsequent to quarter end, the Board also approved an additional $5 million to our stock repurchase program. On the investment front, we're already seeing the complementary capability that we brought onboard with our recent EPM AMS acquisition, which we closed in the first quarter. Since the acquisition, we have closed six AMS transactions and we continue to build a strong pipeline of opportunities. Rob will provide more color on exactly where those overall numbers and growth rates stand.

Additionally, we continue to develop and attract talent, expand our brand and intellectual property, through the development of our new Hackett Performance Exchange and our benchmarking and executive advisory offerings. 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 first, let me ask Rob to provide details on our operating results, cash flow, and also cover outlook. Rob?

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

For purposes of this call, any references to The 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 growth revenues in my discussion represent net revenues plus reimbursable expenses. Additionally, references to pro forma results specifically exclude non-cash stock compensation expense, intangible asset amortization expense, non-recurring acquisition and restructuring charges, and assumes a normalized tax rate.

Turning to our second quarter results, for the second quarter of 2014, total Company gross revenues were $61.1 million, a 4% increase on a year-over-year basis and above our second quarter's guidance. Gross revenues for The Hackett Group, which excludes ERP Solutions, were $49.2 million in the second quarter of 2014, an increase of 3% on a year-over-year basis. Hackett U.S. revenues were up 8% and 5%, excluding the Technolab acquisition made in the first quarter.

The increase in Hackett U.S. revenues were offset by a 13% decline in Hackett international revenues. Excluding the European impact of Technolab, total Hackett international revenues were down 22%.

Hackett Group annualized gross revenue per professional was $359,000 in the second quarter, as compared to $358,000 in the second quarter of 2013, and $336,000 in the previous quarter. Gross revenue from our ERP Solutions group, which now consists of our SAP implementation group totaled $11.9 million, a year-over-year increase of 5%. ERP Solutions hourly gross billing rate per hour was $125 in the second quarter, as compared to $130 in the second quarter of 2013.

This rate includes the impact of our offshore resources, which approximate 45% of our ERP implementation resources. ERP Solutions consultant utilization was 75% for the second quarter, as compared to 83% in the second quarter of 2013. Our recent acquisition of Technolab has continued to increase the portion of our revenues that relates to application managed services for both the Company's SAP and Oracle EPM clients. These services are provided to clients on annual contracts. Our current annual contract value is approaching $12 million, up organically on a pro forma basis by approximately 10%. We expect that growth rate to double in the third quarter.

Over the second quarter of 2013, total Company pro forma cost of sales excluding reimbursable expenses and stock compensation expense totaled $33.6 million, or 61% of net revenues, as compared to $32.5 million, or 62% of net revenues in the previous year. Total Company consultant headcount was 774 at the end of the second quarter, as compared to 770 in the previous quarter and 735 at the end of the second quarter of 2013.

This year-over-year increase is primarily attributable to the Technolab acquisition completed in the first quarter.

Total Company pro forma gross margin was 39% of net revenues in the second quarter, as compared to 38% in the second quarter of 2013. Hackett Group pro forma gross margins on net revenues was 36% in the second quarter, as compared to 38% in the second quarter of 2013, primarily due to the decline in European margins, which were 33% in the second quarter of 2014.

ERP Solutions pro forma gross margins on net revenues was 52% in the second quarter, as compared to 37% in the second quarter of the previous year, primarily due to strong SAP software sales in Q2.

Pro forma SG&A was $14 million, or 26% of net revenues in the second quarter, as compared to $13 million, or 25% of net revenues in the second quarter of 2013. This increase in SG&A is primarily attributable to higher selling relating costs resulting from increased revenues, as well as incremental costs absorbed with the Technolab acquisition.

For the second quarter of 2014, interest expense on borrowings under our current facility was $166,000, as compared to $125,000 of interest expense in the second quarter of the previous year, as a result of higher average debt balances during the current year.

Total Company pro forma net income for the second quarter of 2014 totaled $4.7 million, or $0.16 per diluted share, and was $0.02 above the high end of our second quarter's guidance. This performance compares to pro forma net income of $4.1 million, or $0.13 per diluted share, in the second quarter of 2013.

Our Q2 results benefited by $0.01 from a lower normalized tax rate when you consider the costs we are expending to effect our revised tax strategy. We guided our second quarter utilizing a 38% normalized rate. As I discussed last quarter, improved Hackett European results, including the Technolab acquisition, along with decreasing income taxes abroad, particularly in the United Kingdom, continue to have a beneficial impact on our consolidated rate. As European operating results return to historical levels, we expect our consolidated tax rate to continue to decrease.

It is also worth noting that our current normalized rate estimate does not consider the impact of our tax amortization of goodwill, which decreases our cash tax payment rate by an additional 5%. This deduction currently runs through the year 2028.

Total Company pro forma net income for the second quarter of 2014 excludes non-cash stock compensation expense of $1.5 million, intangible asset amortization expense of $590,000, and assumes a normalized tax rate of 32%, or $2.2 million. GAAP net income for the second quarter of 2014 was $3.5 million, which includes non-cash stock compensation expense of $1.5 million, amortization expense of $590,000, and income tax expense of $1.4 million.

Pro forma EBITDA on net revenue in the second quarter was $7.7 million, or 14% of net revenues, as compared to $7.3 million, or 14% of net revenues in the second quarter of 2013.

GAAP diluted earnings per share were $0.12 for the second quarter, as compared to diluted earnings per share of $0.09 in the second quarter of 2013. At the end of the second quarter, the Company had approximately $19 million of income tax loss carry forward remaining in the U.S. for both state and federal purposes, and approximately $23 million in foreign tax jurisdictions respectively.

As a result, for tax purposes we will continue to have the ability to offset most of our U.S. and international tax liabilities in the near future.

Now turning to our cash balances, the Company's cash balances were $10.8 million at the end of the second quarter, as compared to $12.7 million at the end of the previous quarter. Our net cash provided by operating activities in the second quarter was $611,000, which was primarily driven by net income adjusted for non-cash items, but offset by increases in accounts receivable of $7 million, primarily due to quarter end SAP software sales and overall revenue increases throughout Q2.

Our DSO, or days' sales outstanding, at the end of the second quarter of 2014, was 65 days, as compared to 61 days at the end of the previous quarter. We fully expect DSO to come back down during the third quarter as a result of expected collections activity.

During the quarter, we purchased 491,000 shares of the Company's stock at a cost of approximately $3 million, or $6.03 per share. From a cash prospective, this cost was partially offset by $1 million in borrowings under our credit facility.

At the end of the second quarter, the Company had repurchased $1.2 million shares for a total cost of $7.3 million on a year-to-date basis, at an average cost of $6.04 per share. At the end of the second quarter, the Company had approximately $2.3 million remaining in its stock repurchase program authorization.

Subsequent to the end of the second quarter, the Company repurchased another 208,000 shares for $1.3 million, at an average cost of $6.12 per share. In addition, the Company's Board of Directors approved an additional $5 million increase to our share buyback authorization. As a result, our remaining stock repurchase authorization is currently at $6 million.

Now I will turn to guidance for the third quarter of 2014. Consistent with seasonal third quarter trends, we expect the impact of the additional U.S. holiday and the typical increase in vacation utilized in both the U.S. and Europe to unfavorably impact available days by approximately 5% on a sequential basis as we head into the third quarter. We expect total Company gross revenues for the third quarter to be in the range of $58 million to $60 million, with a reimbursable expense estimate of 11% on net revenues. This compares to a prior year gross revenue amount of $58 million.

On a sequential basis, we expect Hackett North America revenues to be down slightly and Hackett International revenues, primarily derived from Europe, to be up strongly. We expect ERP Solutions to be down by approximately 20%, given the strong performance achieved in the second quarter, but still up slightly on a year-over-year basis. As a result, we expect our pro forma diluted earnings per share in the third quarter of 2014 to be in the range of $0.14 to $0.16. Our pro forma guidance excludes amortization expense, non-cash stock compensation expense, restructuring charges, acquisition related costs, and includes a normalized tax rate of 32%, a decrease from the 38% normalized rate used in the previous quarter's guidance, as I just discussed previously.

Sequentially, we expect pro forma gross margins in the third quarter to benefit from the seasonal reductions in U.S. payroll related taxes resulting from reaching FICA limits and the utilization of vacation accruals, but offset by decreasing available days due to summer vacation activity. As a result, we expect pro forma gross margin on net revenue to be approximately 38% to 39%, up approximately 200 to 300 basis points over the previous year, primarily driven by improving international results.

We expect pro forma SG&A and interest expense for the third quarter to be approximately $14 million, or flat sequentially.

We expect third quarter pro forma EBITDA on net revenues to be in the range of 13% to 15%. We expect our cash balances, excluding the impact of debt repayments and share buyback activity, to be up on a sequential basis.

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

Thank you, Rob. As we look forward, we expect continued growth from our U.S. Hackett business across nearly all of our groups through the balance of the year. We also expect activity to improve internationally, even if it comes with more volatile decision-making when compared to the U.S. We continue to believe that some of the international volatility may be a result of our limited solution offering when compared to the U.S. A key part of our solid U.S. activity is due to our very strong enterprise performance management and business intelligence capability, which now represents over 40% of our total U.S. Hackett revenues.

Our plan is to expand into this area in Europe during 2014, as I've covered in our previous call. We believe by more closely marrying our U.S. activities in Europe and building on our EPM and BI strength globally we can improve our ability to grow in Europe and also further strengthen our global delivery capabilities, which are important to large multinational engagements.

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

Our goal is to use our unique intellectual capital to establish a strategic relationship with our clients and to further use that entry point 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. The best examples of this strategy continues to be the revenue leverage we're experiencing from our executive advisory client base, and also the strategic entry points provided by our benchmarking capability.

Specific to benchmarking, we are seeing increased demand for our services, which we believe will enable greater downstream opportunities for all of our consulting services. Specific to executive advisory and its client base, our long term goal is to be able to ascribe an increasing percentage of our total annual revenues to clients who are continuously engaged with us through one of our executive advisory programs. Eventually, we would hope to have the same kind of relationship with those who would use our Hackett Performance Exchange on a continuous basis.

At the end of the quarter, our Executive Advisory Members totaled 900. The first time we reached that mark across 280 clients. In the quarter, we also had our highest relationship leverage ratio for the group with over 50% of our Hackett Q2 sales coming from clients that use our advisory services.

On the Hackett Performance Exchange front, we continue to build our pipeline. We believe these efforts will allow us to build a client base during the year and help validate the value of our offering. As I've repeatedly mentioned, this is an ambitious offering, but if successful, it could enhance our business model by creating a powerful and continuous relationship with our clients. And although we continue to learn how best to sell and leverage these--this capability, we clearly believe that this new platform will become a critical component of all of our benchmarking offering over the next several years.

Lastly, even though we believe that we have the client base, offerings, 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. We would also add that--we would also like to add that given our efficient access to debt we're encouraged to pursue this focus.

In summary, we reported strong quarterly results, especially given our weakness in Europe. However, we are optimistic that the changes of investments we've made in Europe will lead to improving results in the second half of the year. More importantly, we continue to believe that our unique ability to combine proprietary intellectual capital with terrific talent to help our clients optimize their performance in this complex demand environment allows us to remain top of mind with leading global company and bodes well for our prospects.

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

Those are my comments. Let me then ask the Operator to move on to the Q&A session of the call.

(Operator Instructions) George Sutton.

Thank you. Ted, Europe had been costing you several cents a quarter previously. I'm curious, is it still in that range? And how much impact do you think some of the changes you've made there--how much can that help in the next few quarters?

We actually neutralized it and made that impact in the quarters I'd say--I'm going to say marginally positive. What we would like to--obviously, we would like to see that improve in Q3 and further improve into Q4. But as Rob mentioned, we expect growth in Europe. This is excluding the Technolab acquisition, to be I'll call it meaningful, nice, especially given the results we've had over the last year. So we would expect it to be favorable. How much, I don't know. A couple of cents.

Okay. If we look at Technolab, which as just been a great acquisition, could--do you see other potential concepts out there that you could either acquire and-or simply replicate organically what you're seeing at Technolab?

Well, the answer is the good thing about Technolab, it's allowing us to talk more broadly about also the same AMS capability that exists within SAP. We've always said that we've made significant improvements, enhancement, in our SAP AMS capability. But I really think the Technolab acquisition has just great, great potential, George, when you consider the strength of our EPM and BI capability, especially in the Oracle EPM area. So our belief--when we mentioned that we'd signed six new clients and we're literally just learning how to integrate, sell, this capability into our business, look, we hope that it's a significant contributor to our growth in the future and profitability as well.

Are there things like that that are similar? The answer is they're harder to find than you'd think. But we clearly believe that there is capability that we can acquire that we've leveraged strongly in the U.S. that we clearly have not taken advantage in Europe. And this is not only the EPM capability we're trying to build in Europe, but internationally there is just capabilities on the transformation side that we think give us great opportunities as well. So we do like the--we do like this recent acquisition and the prospects for it. And, yes, there is prospects for us for similar opportunities globally as we look around.

Finally, for me, you and I have talked over a period of time about branding. And I know you've looked into some initiatives on branding and potentially enhancing the Hackett brand or changing some of the imagery. Can you give us any update on sort of where you're thinking from that perspective?

Well, it's interesting because--and you are one of the big proponents that believe so strongly in the brand, that believe that there is a way for us to further leverage it and promote the brand. Look, there's--it is. It's amazing how well our capability and our brand is known globally, especially given our size. Having said that, as I've also shared with you, especially for those of us who have been through some cycles, we know that you can spend quite a bit of money promoting something and it must be meaningful and sustainable. And we're not--we're just not courageous enough, George, yet to put significant sustainable dollars into a branding promotion yet. That doesn't mean we don't think about it all the time, but it's not something we're currently considering.

Okay, that's fair. Thanks very much.

Morris Ajzenman.

Just to follow up on the question on [Europe], I think you stated that your--with I guess the cost you took out, even though you had declining revenue of approximately 13% and 22% organically, I think what you stated--and please correct me if I'm wrong--that either the couple of pennies per share--and I presume that's the action you took earlier in the year. Is that correct? And then, there's a follow on to that.

Say that again.

That the actions you took earlier this part of the year aided EPS by approximately $0.02 a share in this quarter despite the revenue--.

--No, not at all. It was--the contribution in the quarter fully loaded was marginal. So I call it neutral to earnings. And, no, if you recall the charge we took was $3.6 million and that was in Q1.

But what I'm trying to understand is was there any benefit from that restructuring, the charge you took, in this quarter from an expense basis.

Oh, yes. There was a reduction in cost. Yes. There was a reduction in cost. Absolutely.

And what I'm asking--can you quantify that or not for the--?

--I don't know. I'm going to say $0.02 to $0.03.

Okay, that's what I'm getting at. So then the question is going forward into the third quarter and fourth quarter, I presume that takes more time to really ramp up. Will we see a greater contribution by a lower cost overhead let's say for Europe, and will that be further extenuated by top line growth now?

The answer is yes. That--those cost benefits should be sustainable. And, yes, that allows then the revenue growth on top of that then to lead to truly incremental contributions.

And would you care at this point or is it too early to--some sort of guesstimate of what top line revenue can be sequentially year-over-year in Europe?

Well, I think Rob said it strong. So look, we're hoping that it's something that can approach 10%.

Okay, fair enough.

All right?

Fair enough. Let me just switch gears.

That was meaningful. That's a meaningful transition for us. That's why I--in my comments, Morris, I'd really like to say that it should help us through the balance of the year. Right? Second half of the year I think is what I said. So I was trying to talk like you're saying, that this is--that if we can--if we can have some revenue growth on top of the cost reductions that we've made, in fact--and Rob was just reminding me it's a couple of pennies, $0.02 instead of $0.02 to $0.03, that, yes, we should see Europe start to contribute.

Having said that, as--for those of you who have covered us long enough, you know that Europe is nowhere near its contribution level. It will be nowhere near its historical contribution level in this upcoming quarter.

Right.

Okay.

Switching gears, Technolab. It closed towards the end of the first quarter. Was there any accretion into the second quarter from that acquisition on an EPS basis?

No. The Q1 contribution--the contribution in Q1 was not better than Q2. It doesn't mean we're not building a pipeline. But remember, that AMS revenue is something that you sell into a client, have selling costs, and then comes in continuously over a multi-year period. So just keep that in mind.

And Ted, I mean, I know when you make the acquisition you like it to be accretive.

Well, it is accretive. You just asked me if it was more accretive, and the answer is no. It was not more accretive in Q2 than it was in Q1.

Okay. So the question is do you expect that to gain traction over the next couple of quarters as far as being more accretive?

No. Having said that, if you listen to Rob's comments as he commented on application management services revenue, he did say that he expects the growth rate in AMS, which was approximately 10%, to double into Q3. So we should see improving benefits as we (inaudible) new clients. How is that?

You got it. Okay, thank you.

Bill Sutherland.

Thanks very much. Rob, I guess, for you. The gross margin guidance for the--Q3, does that have--do you expect further software sales in the quarter?

It does, but lower. Lower than Q2.

It does have--it has a more--the software sales, especially if you track our SAP growth, Bill, can spread out or it can accumulate. So I mean, it has a certain amount of volatility. So I would say that this next quarter is expected to be a more normalized level. And I would say that the previous two to three quarters have actually been lower than historical levels. And that was probably consistent with the revenue growth you saw in that group over the last few quarters.

Okay. Another margin question. As AMS becomes more significant, does it--should we think about that helping the blended gross margin?

Yes, we do. Even though we would like to see our total Hackett--let me speak specific--the Hackett margins we still think have significant room for improvement as we build out the capability. Yes, we do expect our AMS margins, especially given the way we blend that in and provide that service, to be at least equivalent to current or higher than current margins.

Oh. So it's not materially different than your consolidated margins?

Not materially different today. No, not materially different. Correct.

Okay. Are you to the point of expanding your capabilities in Europe with more EPM, obviously? Yes, I'm just asking how are you trying to get that done? Are you hiring? Are you bringing in folks from North America?

Well, remember that we brought in a European leader whose dedicated experience was in this enterprise performance management area. So start that--our European leader's primary capabilities is in this EPM space. Secondly, we moved a--one of our senior guys from the U.S. into Europe to help build out the technology side. They're both hiring around that capability. We're currently going to market in that capability and hopefully soon we'll be [able to announce] our first significant EPM engagement in Europe. Not yet, but hopefully soon.

Well, the six deals--well, maybe I'm getting mixed up. The AMS deals were all North America? The six?

All the AMS--yes, when we mention AMS deals, these are--well, they could be a European client, but we think of it more as not the traditional EPM, which is the data and the implementation of the software around EPM. We did have--Technolab did have European clients in--as part of the client base that we acquired. And, no, we have not added--all of the six deals that we sold at AMS were all U.S. or North American based transactions.

Okay. Rob, a couple other questions related to--I don't know if I got in your guidance comments accurately. The quarter-over-quarter expectation for international revenue growth, what was that?

About 10%. Fully blended, about 10%.

And then, this income tax--the pro forma income tax effective rate stays at 32% going forward?

We used 32% for this guidance number. That's correct.

And should we think about that as more of the baseline--?

--No, we expect it to continue to decrease further, Bill.

Oh, okay.

Directly impacted by how quickly we return to historical profitability in Europe.

In Europe, right.

So as European profitability comes back, right, who would have thought I would ever say we would benefit from the significantly lower European rates than the ones we currently enjoy in the U.S.

You're not thinking about inversion, are you? And then--.

--Oh, no. No, what we're doing--what we're doing is perfectly fine with us.

I know. And then, finally, I can't--I have to ask the HPE question. Another quarter under your belt. Just give us whatever color you can in terms of how that's developing for you guys.

Continuing to build the pipeline. Have added a few clients. Have a target for year-end that we keep to ourselves on what we'd like to see us achieve by the end of the year. And also, at the same time, knowing that since it--you could see it either as an integrated benchmarking and monitoring tool, but you could also see it as a very powerful business intelligence and cloud tool. We're continuing to reengage with software vendors to see if we could open up those channels, because we think that they could be helpful to us as well.

In other words, you're talking about--.

--We are currently selling the product directly through a very small dedicated group. Right? That's how--.

--Right--.

--(Inaudible) and working with clients.

And when you say selling the product, are you selling it as an integrated benchmarking tool?

Well, we sell it as either both a benchmark or measurement and monitoring. Right? You can use it singly as an event, benchmarked the way we would describe it, or you could use it continuously. Right? Our goal is--our belief is that if you see it in a single event that you'll like the--how rich the data is and you'll want to see that data on a monthly or quarterly basis, and then you'll become a continuous user of our product.

Just so I'm clear, Ted, you've added a few paying clients.

Yes, we do have a few paying clients. That is correct. And we've got a pretty nice pipeline. But we--obviously, we want to do more. So we're looking for multiple channel strategies as we continue to build this capability and build our client base.

More is better. Thanks, guys.

You got it.

Thanks.

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

I'd like to thank everyone for participating in our second quarter call and look forward to updating everyone again next quarter when we report our third quarter. Thank you, again.

Thank you for participating in today's conference call.