Heidrick & Struggles International Inc (HSII) 2004 Q4 法說會逐字稿

Good day everyone and welcome to this Heidrick & Struggles fourth-quarter 2004 financial results conference call. As a reminder, this call is being recorded. For opening remarks and introductions, I would like to turn the call over to Mr. Eric Sodorff. Please go ahead, sir.

Good morning everyone and welcome to our 2004 fourth quarter and full year investor conference call and webcast. On today's call are Tom Friel, Chairman and CEO of Heidrick & Struggles; Eileen Kamerick, Chief Financial Officer and Todd Welu, Controller. Tom will review our fourth-quarter results and the outlook for the 2005 first quarter and 2005 year. Then, Eileen and Todd will provide additional financial details.

As a reminder, there are supporting slides available on our website, www.heidrick.com, to accompany today's comments. As always, we advise you that this call may not be reproduced or retransmitted without our consent. Second, certain matters in this call are forward-looking statements. Please refer to the Safe Harbor language contained in our press release dated today, February 25, 2005, which was widely disseminated by the various wire services and other media. The language is also on slide 2 of the web presentation. And now I will turn the call over to Tom.

Thank you Eric, and good morning, everyone. Before I talk about financial results, I would like to take just a moment to comment on how proud I am of the performance of our search teams and colleagues around the world. 2004 was the best year ever for us at the top of the market, particularly on high-profile CEO searches and major client relationships. Our success in these areas is absolutely critical to our reputation as a firm and we delivered on this in 2004. So far, this success is continuing in 2005 and we look forward to it continuing throughout the year.

Now let me turn to the financial results. We're pleased not only with our client performance, but we're very pleased with our financial performance this quarter and especially with our revenue which grew sequentially in nearly all practice areas and showed atypical seasonal strength. Our earnings exceeded the guidance we provided last quarter due mainly to the stronger than expected revenue, along with a lower tax rate which offset some significant expenses in the quarter. Our net revenue of 98.7 million grew 20 percent, compared to the 2003 December quarter and our 6.7 million in operating income provided a 6.8 percent operating margin.

We did have a number of unusual expenses and items that benefit income this quarter that Eileen and Todd will explain in detail in a few moments. Assignments in the Financial Services, Consumer, Education, Not-for-profit and Technology practices were all up from the prior year. Our confirmed searches in the fourth quarter decreased 2 percent compared to the December 2003 quarter and were down the 6 percent sequentially. For the year overall, our confirmed searches reached 3975, which was up 6 percent from 2003 full year.

Our consultant headcount grew by 2 compared to the end of last quarter and now totals 297. We expect consultant headcounts to rise gradually in 2005 as we carefully expand our business while we maintain our margins. Our targeted hiring plan is in three areas. Number one, experienced search professionals, most from our competitors; number two, industry or functional specialists with no search experience or limited search experience (technical difficulty) where we have a particular need; and number three, the recruiting and promoting of our own associates and principles the larger market facing roles. We did all of that in 2004 and we will continue to do it in 2005. We try to keep the roughly in balance at about a third each.

We do have a group of targeted specialties that we're (technical difficulty) recruiting to fill in various industry, functional and geographic sectors. Our consultant productivity increased as executive search revenue per consultant rose 31 percent from the 2003 fourth quarter to an annualized rate of 1.3 million in the 2004 fourth quarter. While this is close to a historic high and some regions have more capacity than others, we think the accompany overall still has room to improve on this productivity measure.

As we look to 2005, we have numerous business building efforts and cost control initiatives in place to help us improve both top and bottom line results again in 2005. An essential component our continued margin expansion in 2005 is a focus on raising our profitability in Europe. Our Europe region moves from a loss to a profit position during 2004. It is very good progress and we're very appreciative of the hard work of a lot of people that got that done, but we have more to do and we have assembled a focus team of executives charged with raising that profitability further in 2005 and beyond 2005.

I'm leading this effort personally but have delegated day-to-day project management responsibility to Jeff Scherb (ph), our Global Chief Technology and Operations Officer, who is relocating to Europe. To date, we have identified areas where we can further improve profits in Europe and have just began to prioritize our 2005 activities and policy changes needed to achieve our (technical difficulty). We have not yet finalized our action plans, but we do expect to record a restructuring charge of $9 million to $15 million in the 2005 second quarter, which will improve profits in Europe and meet our companywide profitability objectives. We're just beginning this effort, but we will keep you informed of the progress we make on it over the next couple quarters.

Looking forward, for the 2005 first quarter, our net revenue is anticipated to be in the range of $93 million to $98 million. As those net revenue levels, the Company expects that diluted earnings per share for the first quarter 2005 would range from 25 cents to 30 cents a share. For the 2005 full year, our net revenue is expected to grow from 7 to 12 percent. At those net revenue levels for the year, we expect an operating margin of about 10 percent. These estimates exclude any charges we may incur to align our cost structure for improved profitability, particularly in Europe.

Looking forward, we recognize as always that revenue, particularly our revenue, is difficult to predict. But we (technical difficulty) aligning 2005 spending with revenue so that we can continue to meet our growing profitability goals.

Now I will turn the call over to Eileen Kamerick, our Chief Financial Officer, who will give you more detail about our fourth quarter results. Eileen?

As Tom said earlier, we are encouraged by sequential revenue growth this quarter. The topline strength and a few other positives helped offset higher than expected expenses in the fourth quarter, resulting in an operating margin of 6.8 percent. I will provide additional color on revenue and results for each region and Todd Welu, our Controller, will cover the income statement items line by line and additional cash flow detail. Let me start with an explanation of our plans in Europe.

We've created a long list of potential areas for improvement and are prioritizing these at the moment. Each potential area for improvement has its own wide range of possible costs and savings. So I emphasize that our restructuring range of 9 to 15 million is an estimate at this time. We expect to be in a position to provide more detail on charges and cost saving ranges on our next call when plans have been finalized.

Importantly, the European savings are necessary for us to meet our 10 percent operating margin goal and we want to be very clear that these savings should not be classified as incremental to the 10 percent operating margin goal, at least not for 2005.

Now, moving to net revenue in the fourth quarter, we noted a benefit from foreign currency change fluctuation of approximately 3.2 million. Excluding the impact of currency and the conversion of our Finland operation to an affiliate basis, revenue increased approximately 16 percent versus the fourth quarter of last year. Year-to-date, our year-over-year net revenue growth was 18 percent. Excluding the positive impact of exchange rate fluctuations, net revenue increased by approximately 14 percent. Worldwide, all regions posted topline growth, but the growth rates versus prior year fourth quarter varied widely from 13 percent in Europe to 49 percent in Asia-Pacific.

We will begin with a look (technical difficulty) for North America on slide 11. North America's net revenue was 52.2 million in the quarter, a 22 percent increase from last year. The year-over-year increase was largely due to widespread strength across nearly all practice areas. Similar to last quarter, the Financial Services, Consumer and Technology practices led the increases in the quarter. The Industrial practice posted the only decline.

Operating income in North America was 14.3 million in the quarter versus 8 million in 2003. The operating margin in the fourth quarter of 2004 was 27.3 percent versus 18.6 percent a year ago. The consultant's headcount in North America at the end of the fourth quarter was 140, a 4 percent decline from last year.

Latin America's results are on slide 12. Net revenue in the quarter increased 14 percent to 3.4 million and operating income grew to 606,000 -- 100,000 -- excuse me -- to up 285,000 from a year ago. The consultant headcount in Latin America at quarter end was 20, up 2 from one year ago. Beginning next year, we will not report this small segment separately. In 2005, we will have three geographic segments -- Americas; Europe, Middle East and Africa, or EMEA and Asia-Pacific. Since much of the Latin American business is managed and closely coordinated with our Miami office, we believe that will be much more efficient and just as effective to manage this business which constitutes about 3 percent of net revenue as part of one group called the Americas.

Okay, let's turn now to our European results on slide 13. Europe's fourth quarter net revenue increased 13 percent to 34.8 million. On a local currency basis, net revenue increased 6 percent from the fourth quarter of last year. Europe's operating income was 1.1 million in the quarter, improving from last year's operating loss of 276,000. Europe's consultant headcount was 100 at quarter end, a 12 percent decline from December 31, 2003.

Now let's move onto slide 14 and look at the results of our Asia-Pacific region. Asia's net revenue was 8.3 million in the quarter, a 49 percent increase over last year's fourth quarter. Operating income in the quarter was 1.3 million versus 345,000 last year, primarily due to the significant improvement in revenue. The consultant headcount in Asia-Pacific was 37 at December 31, an increase of 12 percent over the fourth quarter 2003. In the fourth quarter, total corporate expenses increased by 5.1 million to 10 million in the 2004 fourth quarter from 4.8 million in the 2003 fourth quarter. The increase is due mainly to G&A expenses, including the worldwide consultant meeting, which was held in the third quarter last year and we highlighted to you in our call last October. Todd will describe the overall change in G&A and corporate expenses compared to prior year in greater detail.

Excluding any unforeseen costs, the Company expects that 2005 first-quarter corporate expenses to range from about 6 to 7 million, occurring at a more even pace of annual expenses than in the 2004 fourth quarter. Our guidance for the 2005 first quarter assumes that the economy will continue to grow. under that scenario, we anticipate net revenue of 93 million to 98 million with earnings-per-share of 25 cents to 30 cents. For the 2005 year, net revenue is anticipated in the range of 400 million to 420 million. At those net revenue levels, the Company expects that the operating margin will be about 10 percent.

Please note as Tom said that revenue in our business is very difficult to predict, even one quarter in advance. These estimates an excluding any charges we make incur to align our cost structure for improved profitability, particularly in Europe.

I will now turn the call over to Todd, who will give you more detail about fourth quarter results by income statement line item and our cash flow expectations.

Thanks, Eileen. If you turn to slide 7, salaries and benefits expense in the fourth quarter of 2004 was 63.1 million, up 14 percent over the fourth quarter of last year, growing noticeably slower than revenue, which was up 20 percent. The expense increased compared to the 2003 fourth quarter was primarily the result of additional bonus accruals that increased with higher revenue and 1.3 million of pension expenses recorded to meet the latest actuarial estimates. We book an estimated pension (technical difficulty) by the year-end, we true this up to agree with the actual actuarial update. Salaries and benefits expense as a percent of revenue was lower than last year at 64 percent in the quarter versus 67.5 percent for the fourth quarter of 2003. Sequentially, the percentage dropped 1.9 percentage points from 65.9 percent in the 2004 third quarter.

Total bonus accruals in the fourth quarter of 2004 were 18 million versus 13 million in the fourth quarter of 2003. G&A costs for the fourth quarter of 2004 were 29.7 million, up 28 percent compared to the fourth quarter of the prior year. As a percentage of net revenue, G&A was 30.1 percent compared to 28.3 in the fourth quarter last year. The 2004 fourth quarter includes 1.3 million of unforeseen legal settlement costs and 750,000 for professional fees related to Sarbanes-Oxley compliance. Spending on discretionary items, such as marketing, business development, IT initiatives and our annual worldwide consultant meeting were in total up 3.8 million, versus the prior year fourth quarter. All of these expenses in the fourth quarter were offset by a reduction to the bad debt allowance of 1.4 million in the fourth quarter.

Net nonoperating income of $96,000 in the fourth quarter of 2004 was up versus a loss of 186,000 last year due to the higher interest income, partially offset by higher foreign currency expense. (technical difficulty) is the foreign currency, which was $1.1 million expense in this quarter after three quarters of minimal effect on the income statement.

During the fourth quarter of 2004, we enhanced our estimation techniques related to reimbursable expenses which added 1.5 million to operating income. This estimation technique update provided a onetime benefit in the current quarter and is not expected to have any significant impact on operating income going forward.

Operating income was 6.7 million in the fourth quarter and net income was 9.0 million, or 44 cents per diluted share. Net income and earnings-per-share in the fourth quarter benefited from a $2.2 million tax credit due to the lowering of the 2004 estimated annual tax rate to 5.5 percent from 8 percent estimated at the end of last quarter. The lower rate resulted in a 13 cent per diluted share of benefit versus the fourth quarter guidance we provided in October. The rate dropped because we were able to use more tax assets due to higher than anticipated 2004 taxable income and a higher mix of U.S. taxable income.

Now let's talk about our income tax provision and why our 2004 annual tax rates are so low. The Google gain in the 2004 third quarter had a dramatic effect on our overall income tax situation. We were able to fully utilize our U.S. net operating losses, capital losses and other benefits to significantly reduce the taxable gain. Based on requirements of FAS 109, we have restored 10.5 million of the tax asset values in 2004 and 3.5 million in the current quarter. The offset to the restored tax asset values is income tax expense reduction.

For 2005, we expect that income tax expense will continue to benefit from reductions in the valuation allowance for some time. Our 2005 tax rate estimate is 15 to 20 percent. This 2005 tax rate (technical difficulty) taxable income and the regional mix is similar to 2004 (technical difficulty) without Google and that we will be able to continue to utilize deferred tax assets. Our effective tax rate estimates will continue to be affected by the amount of tax assets we are able to record in accordance with FAS 109, the profitability of our foreign taxpaying entity and the mix of taxable income within those jurisdictions.

Because our revenue and expenses fluctuate quite a bit quarter to quarter and we evaluate our performance on an annual basis, we (technical difficulty) want to take a moment to highlight our results on a full year basis. For the full year 2004, consolidated net revenue grew 18 percent to 375 million. As a percentage of net revenue, salary and compensation expense was 66.9 percent, 3.4 percent of percentage points lower than in 2003. General and administrative expenses were 25.7 percent of net revenue and dropped 1.7 percent as a percentage of net revenue compared to 2003. Operating income was 28.7 million, compared to an operating loss of 22.3 million last year. The operating margin for the 2004 full year was 7.6 percent. For the 2004 year, net income was 82.3 million and diluted earnings-per-share were (technical difficulty). Excluding the 2004 third quarter Google stock gain of 56.8 million and the related income tax expense of 688,000, a comparison which management believes more appropriately reflects its core operations, net income for the 2004 year would have been 26.2 million, or $1.31 per diluted share.

On December 31, cash balance of 223 million was $104 million higher than one year ago due to the monetization of Google warrants in the 2004 third quarter and the rest from operations. The cash balance on December 31, 2004 includes about $37 million that relates to 2004 accrued bonus compensation that will be paid in March 2005 and 17 million of deferred table.

Looking at our cash flow items for the quarter, depreciation was $3.3 million and amortization of intangible assets was $219,000. Depreciation and amortization for the year was 13 million in 2004. Capital expenditures were 2.1 million in the quarter compared to 1.6 million in the fourth quarter of 2003. We expect capital expenditures to be in the $6 million to $7 million range in 2005. With that, I will hand it back to Tom.

Thanks very much, Todd. I am sorry that there are so many complicated things moving in and out here, but even given that, we are very pleased with the performance and in summary, I'd say that our fourth quarter performance provides us very much with continued optimism when 2005 will be a year of revenue growth and improved year-over-year profitability.

We continue to see opportunities to improve our productivity and leverage our cost base going forward, even though our consultant productivity is already very strong. We will continue to carefully monitor our consultant productivity and our discretionary spending as we add staff over the next few quarters. We look forward to updating you on our progress next quarter and thank you for your participation in the call this morning. And with that, we will open up the call for your questions.

(Operator Instructions) Kelly Flynn, UBS Financial.

This is Andrew Fones for Kelly. I had a couple of questions. First of all, I wanted to ask you about the restructuring charge in Q2. Do you have any estimates yet as to what that could add to your operating margin?

Andrew, this is Eileen Kamerick. No, it's really a very preliminary estimate at this time. And when we come back to you in our next conference call, we should be able to give you further sense of what we think that is going to do. But it's baked into the 10 percent that we're estimating for the full year that's our goal. We need to do this in order to reach that target. So it should not be incremental this year. You should consider it as part of the 10 percent we've given you. After 2005, there may be some incremental uptick in the operating margin, but we'll give you a better sense of that on the next call.

I think in the past, you've said that you had the goal of getting to about a 12 to 15 percent operating margin in Europe, and I think in Q3 and Q4, you were at about a 3 or 4 percent operating margin. I was wondering if you expect this restructuring to go along way towards achieving that goal, or whether there are sort of things outside the restructuring that will drive you to that target?

Well, we certainly think the restructuring will be extremely helpful in driving us towards a higher operating margin in Europe. At the same time that we're doing this, we have market initiatives to continue to work at every high level in Europe. So we think those two initiatives will really make a difference in terms of driving profitability and revenue growth in Europe.

Okay. And then if I could, on the fee for search, I noticed that that spikes up in Q4. I was just wondering whether you could talk a little bit about your kind of strategy in terms of searches and when you are particularly targeting high-end searches, or whether that just happened randomly a little bit?

First off, high-end searches certainly don't happen randomly. They happen with very focused efforts by our top consultants competing for some of the most important searches in the world. Our strategy overall drives on several key points. One is, and we've talked about this before, is our continuing effort to work at the top. That's what Heidrick & Struggles is all about as a company and we succeeded dramatically in 2004.

Second is to continue to build much a bigger and deeper major client relationships. We greatly increased this year the average size of our top relationships and the number of major global clients with sizable relationships that we are serving in all four regions of the world. And the third is our continuation, still fairly new, but the continuation of our leadership services businesses (technical difficulty) services, particularly big global clients.

So all three of these things work together, combined with normal improvements and increases in our consultant productivity around the world. And I believe we had increases in productivity in all of the regions of the world this year. It was overall a very good year for productivity. So all three of those things together are important, but the work at the top does tend to set the tone, it sets the brand and we continue to see that as a very important part of our strategy.

And to add to that, I think the other thing is we are seeing increases in cash compensation in the mix in the fourth quarter with a higher amount of U.S.-based searches where cash compensation us typically higher than in the rest of the world.

Okay. I think I saw an article this morning in the Journal saying CEO compensation was up 40 percent this year for the top firms. So would you expect the fee for search for Q4 to be a good base to build off in '05, or could we see that come down a little bit?

it depends on the mix, to some extent, of where we get revenue from, which region, and a number of other things -- the supply demand in the labor market. We are seeing a move towards more cash compensation, less of an emphasis on equity. So longer-term, we think all of that drives the sort of cash comp (technical difficulty) up and that we are beneficiary to that. On a quarter for quarter basis, that is difficult to estimate, Andrew, but on a longer-term basis, we think all of that tends towards higher fees for search.

I think clearly in that require, there's two factors that help us. As we continue to try to push toward the top of our clients worldwide, we move into higher compensated positions. And as the cash compensation for those positions continue to go up on a global basis, many of our fees are based on a percentage of that compensation and that helps to drive our overall revenues up and our fees per search and fees per consultant up. Even assuming modest increases or even flat in productivity, those things will drive up our fees.

Okay, thanks guys.

David Koning, Robert W. Baird.

Good morning Tom, Eileen and Todd, and nice results in the quarter. I wanted to pursue the North American margin a little bit. I remember I think five quarters ago, you did a 28 percent margin and sort of talked about that being an unsustainable level, but you have done really it looks like, and you have gotten to about a little over 27 percent margin this quarter. And I'm wondering what your thoughts are now about the sustainability of that type of level?

I think those margins are sustainable in North America, largely driven by productivity. And I think that is sustainable because if you talk to people (technical difficulty), there's still capacity within the system now. So we really don't have to add much or any incremental cost to continue to drive productivity gains. So whether or not we will reach that every quarter remains to be seen, but we think it is sustainable over time. On the other hand, as people get to the top tiers; i.e., they are producing at very high levels, they do have a greater percentage in terms of bonus. So there's some offset to that. All of that having been said, we do think that the margin increases in North America are largely driven by the story that we're explaining to you on productivity and we still think that there's room in that productivity model to move up beyond 1.3 million in terms of revenue per consultant.

Okay, thank you. And then I guess secondly, just wondering what the recent trends have been in North America and Europe, specifically over the last couple of months now.

Trends in terms of revenue?

Yes, revenue trends, and searches too, I guess.

Well, I think we're continuing to see a strong market. And obviously, that is reflected in the guidance that we've given you for first quarter. So we haven't seen a significant change either up or down, but continues to be strong demand in both of those regions.

Okay, thank you.

Matt Litfin, William Blair & Co.

Hi. Good morning, and let me add my congratulations as well.

Welcome to the group, Matt. I'm glad you're with us.

Thank you. Did anybody mention the cash from (technical difficulty) in Q4?

Well, on a full year basis, our cash that we generated for the full year was just around 30 million.

Okay, I should be able to back into that. You know, I guess given $8 a share of excess cash or so, what would be the argument for not implementing a dividend or at least stepping up the share repurchase beyond what is authorized substantially?

This is something that we do discuss at each of our management reviews and our Board meeting. We do have a share repurchase in process and we will continually look at the uses of our cash. Clearly, the first and most obvious use of the cash is to invest in the business and -- both in terms of building staff and looking at new business opportunities. But if we have more than that, and we may have more than that at this point, we will find a way to return it to the shareholders.

Thanks, Tom, very helpful. One more, if I might. Specifically on the question Andrew was asking about European margins, one of the main couple of points of the plan there, I know it is sort of preliminary when you look at this charge, but does the charge expected in Q2 represent any kind of a retreat or retrenchment in Europe generally?

No (technical difficulty). What it does reflect is that we still believe that we have the opportunity for more operational efficiency in Europe. Europe is a mosaic of different countries with different needs. It is more challenging than a big homogenist (ph) region like the Americas -- one language, one currency, one set of accounting systems. Europe is moving somewhat in that direction, but it is still not there yet and the individual markets are smaller, which means that certain overhead items as a percent of revenues are more significant.

We have a fairly wide range of margin performance in the various European countries and we like to see that gap narrowed and we also believe we have some structural and some management leverage that we can see there. I think as Eileen has said earlier, we are really not prepared in this call to discuss the details of a plan that we're just beginning to put in place with our European management. But by the time we come together next time, we will have more details on that.

Okay. And then finally, any view into the tax rate in '06? The '05 was a little lower than I was looking for late into the '06 tax rate still in the low 40s, or does it look to be maybe something lower than that now that you have taken a look at '05?

Matt, that's very hard to predict because it has to do with at what point (technical difficulty) that we put on this year will in fact reverse. And that is a question of what our tax planning looks like, how quickly we uncover those assets, those facts and circumstances around it. It is very difficult for us to give you a tax rate for 2006 given the number of variables in that equation. We are comfortable with what we've given you as a range from 15 to 20 percent. We've been conservative and use 20 percent for 2005 guidance and that we've given you.

At some point, a more normalized tax rate will come back for Heidrick & Struggles, and it will be around 40 percent. Exactly when that will be is difficult for us to predict at this point.

Okay, but even though it's 20 percent blended for the year, you would expect that at no time during '05 would you be paying a tax rate of that magnitude?

You mean of back to 40 percent?

Correct.

No. That is full year (technical difficulty) that we're giving you. That may vary by quarter, but all-in, we expect that to be the effective tax rate on (technical difficulty) basis for 2005. Again for 2006, we just don't have enough information or insight to be able to give you an estimate at this time.

Great (technical difficulty) on the quarter.

Michel Morin, Merrill Lynch.

Good morning. I was wondering if you could like a bit about stock option expensing, and more specifically, what the amount was for the full year 2004, and if you have given some thought as to how you are going to go forward in 2005? And also on that, whether there is any stock option expensing included in your 10 percent operating margin target? Thank you.

Yes. We have not been expensing options. Obviously, we will begin (technical difficulty) starting in the third quarter. We have not finalized the methodology that we would use in expensing options. Using a very rough estimate with Black-Scholes, which is one of the methods that has proved in (technical difficulty), our 2005 impact is approximately 2.3 million based on current options outstanding. We have yet to have actual option awards yet this year, so we will have to adjust that once we understand the full extent of the equity awards that are given this year. The (technical difficulty) at the moment, it would be about 1.1 million in the third quarter and 1.1 million in the fourth quarter. Rounding up, it would be about 2.3 million for the full year. And again, we have not yet made a decision as to what methodology we will use or whether or not we will be expensing prospectively or retrospectively, but we will have more details on that in fact in the next conference call. And yes, we have taken that into account in terms of the 10 percent margin target that we've given you.

Great. Okay, thank you.

Michael Carney (ph) , Stephens Investment. One moment please, Michael Carney? I do apologize for the interruption. We are experiencing a problem right now. One moment.

It sounds like we have a problem on the conference call line on the technical end. So hopefully they will be able to get that resolved in just a minute. Is there anybody on the line that has a question they want to ask, or is that not possible? Not possible. Okay, well I guess we just wait until they get the line restored then.

This is Tom Friel again. We've been waiting here for a few moments in the hopes that our conference call provider would be able to restore service. They tell us that they may not be possible. So they also tell us that you can hear me, but we cannot hear you. So I believe that the only option unfortunately that we have at this point is to end the call because they don't have the ability to put your questions through to us here where we're standing by.

I'm sorry about that, so all I can offer is that our financial team is standing by here in the office. And if you have any questions, I know several of you were still in the queue. If you have questions that you have not been able to ask, call us on the numbers provided on the press release and Eileen Kamerick and Eileen Kamerick are available to take your calls and we will make sure that they get answered.

I certainly did not expect to end the call this way, but in the hope that you can hear me, I would thank you for participating. To reiterate, we're very pleased with our performance. As always, we have a lot of work to do and we're working hard at doing it. We will report to you in the next call our progress. Call us with your additional questions and we thank you very much for your participation this morning.

And with that, I think since nobody else can talk here, I will end the call. Thank you all for your participation. Goodbye.