高德納諮詢公司 (IT) 2008 Q1 法說會逐字稿

Good morning, ladies and gentlemen.

Welcome to Gartner Incorporated earnings conference call for the first quarter 2008.

A replay of this call will be available through June 8th, 2008.

The replay can be accessed by dialing 888-286-8010 for domestic calls and 617-801-6888 for international calls and by entering the passcode 84659984.

This call is being simultaneously webcast and will be archived on the Gartner's website at www.gartner.com for approximately 90 days.

I will now turn the conference over to Mr.

Hank Diamond, Group Vice President of Investor Relations and Corporate Finances for opening remarks and introductions.

Please go ahead, sir.

Good morning everyone and thank you all for joining us.

On the call with me today are our CEO Gene Hall and our CFO Chris Lafond.

Before we discuss our results for the quarter, I would like to remind everyone of four things.

First, the rebroadcast, reproduction, and retransmission of this conference call or webcast without the express written consent of Gartner are strictly prohibited.

Second, if you did not receive a copy of our press release, it is available on our website at www.gartner.com or on the FirstCall system.

Third, the company will be making statements about its future results and other forward-looking statements during this call.

Statements about future results made during the call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements are based on current expectations and the current economic environment.

Forward-looking statements and projections are inherently subject to significant economic, competitive and other uncertainties and contingencies which are beyond the control of management.

The company cautions that these statements are not guarantees of future performance.

Actual results may differ materially from those expressed or implied in the forward-looking statements.

Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements and projections are specified in the company's filings with the SEC, including in its annual report on Form 10-K for fiscal year 2007.

Finally, during the call the company will be using certain non-GAAP financial measures as defined under SEC rules.

Where required, we have provided a reconciliation of those measures to the most direct comparable GAAP measures in the tables and the press release.

Before I turn the call over to our CEO, let me briefly review the major points from today's press release.

First, GAAP EPS from continuing operations for the first quarter was $0.14 a share, an increase of 56% versus the first quarter last year.

Research contract value, which is a key leading indicator for our business, increased 17% year-over-year to a record $778 million and total revenue grew 10% to $290 million.

Net income increased 163% year-over-year to $22 million, and normalized EBITDA increased 26% to $40 million.

Please take note that GAAP EPS from continuing operations and normalized EBITDA exclude the results of the company's former Vision Events business which was sold in February 2008, is now reported as a discontinued operation, and the $7.3 million gain on sale resulting from the divestiture, which is included in net income.

Turning to cash flow, the company generated $14 million of operating cash flow during the first quarter versus a cash use of $200,000 during first quarter 2007.

It deployed $7.5 million for capital expenditures and repurchased 3.6 million shares of its stock for $66 million.

As of March 31st, the company had total debt of $421 million and cash on the balance sheet of $96 million.

Finally, we reiterated our most recent outlook for full year 2008.

Chris will give you more details, but to highlight, we continue to project revenue growth in the range of 9% to 12%, EPS from continuing operations growth in the range of 33% to 48%, and operating cash flow of between $155 million and $170 million.

Now, I would like to turn the call over to Gartner's Chief Executive Officer, Gene Hall.

Thanks, Hank.

Good morning everyone, and thanks for joining us.

Our results for the first quarter demonstrate that we're off to a strong start for 2008.

We generated high teens research contract value growth for the fifth straight quarter and double-digit total revenue growth, all of which is in line with our expectations despite the uncertain economic environment.

At the same time we delivered better than expected EPS growth as a result of our decision to tightly manage expenses and to postpone some investments to later in the year.

We also continued the opportunistic use of our capital to repurchase our stock at a significant discount from where it's trading today.

We were able to produce the results during an uncertain period for many companies and there are several reasons for this.

First, we offer services that provide high value to our clients at a relatively low cost and these services are critical to the operation of their IT programs regardless of the economic environment.

Second, we have a vast untapped market opportunity for our research.

And third, we have the right strategy, products and people to capture that opportunity.

Now, our strategy is the same win that we've been executing since 2005.

The cornerstones are to produce extraordinary research content, deliver innovative and highly differentiated product offerings, enhance our sales capability, and provide world class service.

Our results this quarter demonstrate its continuing success.

Our role based product offerings were a major contributor to our strong growth in Research contract value during the first quarter.

Gartner for IT Leaders and Gartner for Business Leaders -- the two products together accounted for $236 million of contract value at March 31st, which is up over 120% from last year.

We're also seeing very strong early acceptance of Gartner for IT Executives, which is our new role based product for CIOs and that was introduced in the second half of 2Q '07.

Our role based products collectively now account for more than 30% of our contract value, up from zero only two years ago.

This helped both attract new clients and sell additional subscriptions and upgrades to our existing clients, resulting in our wallet retention remaining over 100% for the past five consecutive quarters.

We will continue to introduce new role based products and enhancements to our existing products and expect them to represent a substantial driver of our growth going forward.

So the research business continues to perform towards the higher end of our expectations.

We continue to see strong demand for our products both in terms of renewals and new business, stability and pricing, and good salesforce productivity.

As you would expect, some clients are being more thoughtful in spending, but to date we see no meaningful indications that the economic environment has impacted the growth outlook of our research business.

We continue to remain vigilant and are prepared to take appropriate actions should the environment change.

Turning to consulting, during the first quarter we continued to make progress in improving the profitability of this segment.

We've been successful in increasing both the size and length of our engagements, which has the effect of both increasing utilization and improving the predictability of our revenue.

We also continue to hire more senior level consultants who have business development responsibilities in addition to consulting delivery.

We ended the quarter with a strong backlog, up 10% year-over-year, which positions us very well to meet our guidance for consulting revenue growth for the full year.

Finally, our events business performed in line with our expectations during the first quarter.

Although our reported results were impacted by the calendar of events, both revenue and attendees grew on a normalized basis as Chris will discuss in more detail.

As we would expect in this environment, we are seeing some vendors be more thoughtful in terms of the number of events at which they exhibit, and attendees registering closer in to the date of events.

Overall, the business is performing in line with our guidance.

Before I turn the call over to Chris, I would like to thank Alister Christopher for the contribution he's made to Gartner.

Alister, who recently tendered his resignation for personal reasons, has been a valued member of the Gartner community for more than 12 years and he's led our events business since 2004.

The travel demands of his global job kept him away from his home in the UK for extended periods and led to his decision.

We wish him the very best in the future.

I also want to congratulate Alwyn Dawkins on his promotion as the successor to Alwyn (sic).

Alwyn has most recently been a successful sales leader within research and has a strong background in the events business.

Alister and Alwyn will work together to ensure a smooth leadership transition.

So to summarize, looking ahead, we remain very excited about our products and market opportunity, but cautious on the economic environment.

The demand for our research remains strong and both consulting and events are both performing in line with expectations.

Overall, we remain confident that we will meet both our 2008 and long-term revenue and earnings growth targets.

So with that, I'll turn it over to Chris for additional business unit insights and financial details.

Thanks, Gene, and good morning everyone.

At Investor Day in March, we once again reiterated our focus on executing the strategy we first shared with you in 2005.

Our continued successful execution of this strategy delivered the results we report today.

We have begun 2008 with continued strong year-over-year growth in both research revenue and contract value.

We experienced throughout 2007 and continued in this quarter this growth that's very broad-based across all client industries, sizes, and geographies.

These results highlight the demand for our products and services, given the critical need organizations have to effectively manage their IT programs and investments in all economic environments.

And importantly, that our products play a critical role in helping our clients achieve success.

Revenue performance by segment in the first quarter was exactly in line with the quarterly phasing guidance we shared at Investor Day.

EBITDA and EPS were both better than our original expectations due to the postponement of some investments until later this year and the extremely tight expense controls we implemented as a result of the current economic uncertainty.

Let me start today by reviewing our first quarter results and then briefly reiterating our outlook for 2008 which is unchanged from the projections we provided at our Investor Day in March.

We're off to a solid start in 2008.

Our research segment continues to perform at the levels we expect for the long-term financial objectives shared at Investor Day.

The strong contract value growth we produced in 2007 converted to 19% year-over-year revenue growth in Q1.

The operating leverage inherent in our research business together with tight cost controls drove a 3 percentage point increase in growth contribution margin over last year.

Looking ahead, we are well-positioned to continue the positive momentum in our research business.

During the first quarter, contract value, our key leading indicator for research growth, grew 17% year-over-year as reported or 13% FX neutral to a record level of $778 million as of March 31st.

This was our fifth consecutive quarter of high teens contract value growth, clearly demonstrating the success of our strategy to accelerate the growth of our research business.

We continue to see solid growth in new business with approximately two thirds of the year-over-year increase in contract value coming from new client enterprises that we were not working with 12 months ago.

Also, almost 75% of our contract value growth in the first quarter continued to be driven by volume, further evidence of the strong demand and vast market for our products.

From product perspective, Gartner for IT Leaders had $170 million of contract value at March 31st, up from $96 million last year.

And Gartner for Business Leaders represented $67 million of contract value, up from only $10 million last year.

Collectively, contract value for these two products is up 122% year-over-year, and we expect continued strong growth.

Our executive programs offerings also continued to deliver consistent year-over-year growth, with contract value up 17% to $197 million at March 31.

Gartner for IT Executives, our new suite of role based products for CIOs launched in the third quarter of 2007, is already starting to be a meaningful contributor to the growth of our executive programs.

In addition to the success we're having at a attracting new business with new clients, we're also driving growth by further penetrating our existing clients with additional research subscriptions and upgrading them to our role based products.

The success of these efforts is reflected in our retention rates.

Wallet retention has remained above 100% for the past five consecutive quarters, and client retention is a solid 82%.

We expect continued strength in these metrics over the long term as we continue to gain acceptance of our role based products, improve our client service and take other steps to ensure that our clients are getting maximum value from their research subscriptions.

Let me now turn to our consulting segment.

For the first quarter of 2008, consulting revenue increased 2%.

This was consistent with our expectations and was delivered despite a 9% reduction in billable headcount versus last year as a result of our decision to exit consulting operations in the APAC region during the second quarter of 2007.

Importantly, gross contribution margin increased 3 percentage points year-over-year to 40% as we continued to improve our consultants' productivity and focus on larger, more profitable engagements.

All of our consulting productivity metrics improved in the first quarter.

Utilization was 72%, up 5 points year-over-year and above our target of 70%.

Our average engagement size increased 30% to 321,000.

Our average billing rate was up, which helped drive a 13% year-over-year increase in our annual revenue per billable headcount, up to $464,000 per year.

Importantly, we ended the quarter with a strong backlog, up 10% year-over-year.

This highlights the continued demand for our unique consulting assets and positions us well to achieve our growth objectives for 2008.

Aside from the positive impact on our margins, the improvement in these key metrics enhances the stability and visibility of our consulting revenue stream.

All of these results in our consulting segment demonstrate that our strategy to improve productivity and invest for future profitable growth is working as planned.

Turning now to our event segment, as expected and previously communicated, the year-over-year comparison is impacted by the timing and mix of events.

Although we held the same number of events in both the first quarters of 2007 and 2008, four large established events that were held in the first quarter of 2007 were moved to the second quarter of 2008.

During this quarter, we launched three new first year events and moved one smaller event that was held in the second quarter of '07 into the first quarter.

As expected, these calendar shifts had the effect of moving about $8 million of revenue from the first quarter of 2008 into the second quarter of 2008.

So if we look at the results of this business normalized for the timing change, revenue was up 14%, and attendees grew 9% year-over-year.

This reflects the growth in the eight events that were held in both the first quarter of 2007 and 2008, plus the revenue added from the three new events that were launched this year.

Moving down the income statement, SG&A increased by $16 million or 14% year-over-year, including approximately $4 million adverse impact from foreign exchange.

The increase reflects the continued investment in our sales organization, which grew headcount by 120 or 17% from March 31st '07 to March 31st, 2008.

And we continued to tightly manage G&A expense, which declined slightly as a percent of revenue in the first quarter versus last year.

Turning to cash, operating cash flow for the first quarter was $14.2 million, versus a use of cash of $200,000 in the same quarter last year.

This was our highest first quarter operating cash flow since 2005.

The first quarter is by far our weakest quarter seasonally for cash generation due primarily to bonus and commission payments.

We continue to project full year 2008 operating cash flow of between $155 million to $170 million.

We deployed our cash in the quarter primarily to repurchase 3.6 million shares at a total cost of $66 million or an average price of $18.55 per share.

As a result of our share repurchases over the past 12 months, our fully diluted shares outstanding in the first quarter 2008 were down 6% from the first quarter of 2007.

We believe that repurchasing our stock remains a compelling use of our capital and have continued to repurchase shares during the second quarter.

In April alone we repurchased an additional 1.7 million shares at a total cost of $37 million.

In terms of our balance sheet, we ended the first quarter with $325 million of net debt and I'm particularly pleased to report that in April we successfully closed on a new $150 million term loan with very attractive terms, the proceeds from which were used to pay down the balance on our revolving credit facility.

Turning now to our outlook, we remain comfortable with the 2008 and long-term projections we gave at our Investor Day in March.

The details are in the press release, but to summarize, for the full year 2008 we expect total revenue to grow 9 to 12% to between $1.278 billion to $1.303 billion.

Normalized EBITDA will grow between 10 and 15% to between $208 million and $219 million and EPS from continuing operations to grow 33 to 48% to between $0.88 and $0.98 per share.

Our first quarter 2008 revenue growth was in line with our full year projections and seasonality.

Although our first quarter earnings were higher than the quarterly phasing guidance we previously provided, this was primarily due to our decision to postpone certain investments and expenses to later in the year, given the current uncertain economic environment.

These investments will be made as the year progresses, particularly during the third and fourth quarters.

In addition, as we previously discussed, our investment and sales expansion could be easily increased or slowed as we gain more visibility during this year.

If demand remains at the current levels, we may decide to increase our sales force by more than 10% in 2008 to further capture our untapped market opportunity.

However, still too early in the year to make this call for certain, given the continued economic uncertainty.

As a result of all of this we are not changing our guidance for the full year.

So in closing, the first quarter we continued to deliver on our commitment to generate double-digit revenue and earnings growth.

Looking ahead, we're very optimistic about our business fundamentals and market opportunities, but cautious on the economic environment.

We are prudently managing our business to ensure that we continue to deliver double digit revenue growth, double digit earnings growth, and increasing returns for our shareholders in any economic environment.

With that, we will open the call for your questions.

Operator?

(OPERATOR INSTRUCTIONS) Your first question comes from Peter Appert from Goldman Sachs.

Please proceed, sir.

Thank you.

Chris, could you give us any more details on the cost shift issue and specifically what kind of expenses are you able to defer and order of magnitude, what the number would look like?

Hi, Peter.

It's Chris.

Yes, it's actually a number of things.

Given the current economic environment, we've been very tightly managing expenses across the whole organization, so we have been tightly managing all hiring.

We've been tightly managing all discretionary spending.

We've been tightly managing obviously investments in our sales force, other investments in the product areas.

So we have been very tightly managing across the entire organization and so I would expect as we continue to see the same kinds of performance and demand we've seen in the first quarter that we will ultimately allow some of those expenses to happen later on in the year.

As we said, we've been very cautiously managing that to ensure that we see where the economy is going.

In terms of the overall impact, as we said, essentially the difference in our performance in terms of what we said at Investor Day versus what we delivered is really all driven by that and a little bit of foreign exchange benefit in the quarter as well.

Okay.

So it's not related to some specific projects or initiatives that you've deferred?

Yes, I mean, it's generally pretty broad based, Peter.

We were kind of across the board managing.

Certainly some of our bigger investments as you know were in our sales force.

In the quarter we added about 30 people.

I think it ended up being actually 30 that we added I think in the quarter.

So that's a bit of a slowdown from where we were and where we expect to be over the longer term.

But consistent with what you had said, actually.

I think the 30 salespeople --

Pretty close.

On that front, Chris or Gene, in the context of the dicier macro environment, are you seeing any change in terms of the trajectory of the ramp on newer salespeople?

Is it taking longer for salespeople to get traction in the market?

Hey, Peter, it's Gene.

No, we're not.

We track that very closely.

Each quarter we look at the performance of salespeople by tenure, by geography, by the role they have.

In other words, are they inside salespeople, are they field salespeople.

And if you look across that, our newer people are gaining productivity at very close to the rate that we've seen over the last couple years.

And how about, Gene, in terms of renewal rates, revenue growth rates within end user sectors, is there a significant differentiation in terms of what you're seeing from different types of customers?

No, actually, if you look at it, across all of our geographic regions grew double-digit in research and if you look by industry, as you know, we're highly diversified.

We kind of reflect the entire economy.

And all industries showed double-digit contract growth year-over-year.

So if you look at what we're seeing, basically it's -- we're not seeing any particular industries that are weaker or stronger than others.

They're all I would classify as quite strong.

And then -- this is a slight nitpicky item, but the wallet renewal rate, and again, this is I guess could be rounding error, but it has trended down fractionally over the last couple of quarters from 104 to 103 to 100.

Should we read anything into that?

Peter, it's Gene.

I wouldn't read anything into it.

I think we had an extraordinary -- if you look at Q1 last year, as you recall, it was quite extraordinary and we took a very high change.

We actually said at the time, we thought that was a one -- that was not going to be sustainable at that rate and so I think what you're seeing now is more what we would expect it to be.

Somewhere around 100% probably a good run rate?

Yes, that's kind of where we would expect it to be that's right.

And then just the last thing, I guess this is sort of in terms of your philosophy of running the business, the -- what I hear you saying is quite upbeat in terms of the sales force productivity, the customer response rates, the metrics, obviously all look great.

So why not be a little more aggressive in terms of sales force hiring, et cetera?

Peter, great question.

As Chris said and as we said actually on Investor Day, given the uncertain economic environment, we wanted to be cautious about how we invested and make sure that in fact the investments were going to pay off.

To your point, as we've seen what's happening so far, we'd be inclined to make these investments including the sales force to accelerate that over what we had would have done if the economy were impacting us more.

I think we will accelerate those investments.

That's what Chris was talking about in terms of we'll be making more investments during the rest of the year.

That would include an acceleration of what we've been doing in the sales force.

Great.

Thanks, guys.

Your next question comes from Laura Lederman from William Blair & Company.

Please proceed.

Thank you for taking my questions.

Starting back with the economy, hate to ask additional questions on that, but it's certainly on the mind of all the investors.

Can you talk about are you seeing any weakness in the vendors, because obviously you have less vendor business than a [Forrester], but outside of the events which you mentioned where maybe they're not going to the events as much, what about in terms of their subscriptions?

Also on a related note, what are you seeing in IT budgets?

Are you seeing them going down?

Flat?

And along the same lines, what do you make of vendors like Oracle and SAT seeing bad results once again and you're not, is because the ASP is so much less and you help people in good and bad environments?

And then I have a few follow-ups, thanks.

Laura, it's Gene.

First in terms of the technology vendors that are our clients.

As I mentioned a moment ago, we're seeing double-digit CV growth year-over-year in those just as we are in the other segments.

Some companies are doing better, some companies are doing worse.

As a whole in the technology sector, we're seeing strong demand.

If you look at IT budgets, we're expecting IT budgets on the whole to grow in the kind of 3% range this year.

And that's what we're seeing.

So we haven't seen -- if you look at like certain financial institutions that are in trouble, they're cutting their budgets.

But if you look at other places that are growing, there's still a lot of companies growing out there that are increasing their budgets.

Overall we're expecting and we're seeing net growth in IT spending today.

We surveyed our contacts very recently on this.

This was a survey of more than 1,000 CIOs around the world.

And then with regard to Oracle and SAP in particular, again, I think it's -- if you look at the tech industry overall it's going to grow.

If you look at the reported results, some companies did quite well.

Others didn't do so well.

I think it gets down to the specific company situation as opposed to kind of the whole industry's got some problem.

I think it's individual companies, just like in any economic environment, some companies are doing well, some are doing not so well.

It's not sort of a harbinger of things to come, the biggest ones get hit first?

We're not seeing that.

Again, we're not seeing that and if we look at what people's intended purchasing -- end users' intended purchasing patterns, we don't see that there's a big -- this is a precursor to a pullback across the board or anything like that.

Final question.

If you look at pricing, you mentioned on the call that it was stable.

What about the ability to increase pricing the cost of living you typically do?

I understand that separately that when customers move to new role based product they end up paying more.

What about price increases in terms of the existing products?

We've seen no pushback on our pricing at all.

And it gets down to -- our products are so inexpensive for the guys that buy them.

The differences are -- again, our base research product, in fact, the IT leaders, which is kind of our flagship research product, is about $15,000.

So if you have a price increase of $1,000 on the $15,000, for a guy that's got a $10 million or $50 million budget, it's not meaningful to them and they're going to decide on the product based on the value they get out of the service, not based on whether it's $1,000 price increase versus a $500 price increase.

So we're not seeing any issues at all in terms of pricing and we would expect -- we plan to make a price increase in the fall of this year.

And we haven't decided the amount of that, but we -- that's when we typically do the increase and we intend to do that as usual.

So that would be more likely a cost of living type of adjustment of 3% or whatever it is?

That's what we've done traditionally is that.

As you recall, our strategy basically is -- our pricing strategy, price of our new products, we don't discounts our new products to any clients.

So those products sell -- one [instrument] sells for $15,000, that's to all the clients.

There's no volume discount or something like that.

For these legacy agreements which we have which people have, we tend to increase those at sort of a cost of living along with the new products, cost of living and then upgrade people from the older less expensive products to these newer high functioning products, which gives us an effective price with the client getting a new, better product for that additional pricing.

Can you also talk a little bit about acquisitions?

Obviously, historically the META acquisition was beautiful and stabilized the market.

Is there really much out there to add going forward or that would be a relatively small strategy because there's not much out there to buy?

We are -- we have a business development function.

We see acquisitions as a very important part of our strategy and we are always looking for opportunities where we can contribute to our business through acquisitions.

And by the fact that we -- we clearly wouldn't have a business development function if we didn't think there were opportunities out there.

Thank you so much.

Good quarter.

(OPERATOR INSTRUCTIONS).

Your next question comes from Bill Sutherland of Boenning & Scattergood.

Please proceed, sir.

Thanks.

Good morning and thank you for taking the questions.

Just a couple.

Just curious, the U.S.

amongst the world regions was at either end of the contract value growth range in the quarter?

The U.S.

was one of our stronger growth regions in the quarter.

Okay.

And I'm just looking at my model, and certainly with the research revenue a little over the top of your growth range for the year, I'm just wondering if -- Chris didn't refer to operating leverage as having any part in the -- or margin mix having any part in the EPS upside and just doesn't -- I can't seem to make sense of that.

If you could add some color, I'd appreciate it.

Thanks.

I actually did make a comment during my portion, I believe, that the 3 point improvement in the research margin was due to two things.

Number one is the inherent leverage in the research business and our tight cost controls.

So we saw a 3 point improvement.

In fact, if you looked at the face of our income statement, the year-over-year flowthrough on revenues from that segment into contribution margin was above 80%.

We've said traditionally or longer term that we think that's more in the 70% range as we make the appropriate investments in product development and analysts, et cetera, but we've been very tightly managing expenses given the economic uncertainty.

So what you're really seeing is absolutely seeing that leverage flowthrough, which is a part of the drivers for our continued improvement and partly what we expected when we started the year.

So the flowthrough of last year's strong contract value growth into Q1 was a big driver of that and partly why we and how we thought about setting our expectations for 2008 when we set them originally.

Right.

So if you weren't sorting down the expense spend quite so much, maybe your flowthrough would have been closer to 70%.

That would still have, given the strong growth in research, that would still have led to a little extra on the bottom line, wouldn't it?

Just a couple of things.

As I said, we've been managing expenses across the whole organization, so we've been very tightly managing not just the research business, but every part of our business, and as a result, you're seeing all of that play into why you're seeing the strong results in the quarter that were so much above where we originally had guided from an earnings perspective.

Okay.

I guess, again, I'm just trying to understand the strength in the quarter relative to the maintaining of guidance and understanding that you are going to be bulking up potentially expenses in the back half.

I guess we're kind of looking at a change in the quarterly phasing of EPS is what I should be taking away.

Absolutely, as we said, we've held back some expenses.

We're going to shift it more towards the back half of the year.

The reason we're not saying it's going to dramatically impact Q2 is we're still being very cautious as we said at the beginning.

So Q1, if you step back and think about it, as we originally expected it to be about 10% of our earnings for the year.

It's a relatively low events quarter.

We've certainly not reached a point of feeling like the whole year has completely played itself out.

So we want to be very careful and cautious In the first half of the year, we're being very thoughtful.

As Gene said, as we see the continued demand and strength in our business, we'll make that decision to make some investments, particularly in sales in the back half of the year, as well as some of the things that we've held back on.

Okay.

And tax rate I guess looks like it's going to run a little above the range that you had been using in the guidance chart?

Not for the year.

We still expect for the full year to be in the range that we provided from a guidance perspective in the quarter.

We had a couple of discrete one-time items that we had to book in the quarter, given the accounting rules around that.

But at the end of the year, we're still projecting to be at the range that we've talked about when we gave original guidance.

Okay.

Great, Chris.

Thanks a lot.

No problem.

Sir, there are no further questions at this time.

Okay.

Gene, I want to thank you for joining us today and we look forward to talking with you at our next quarterly call.

Thanks.

Ladies and gentlemen, this concludes your conference.

Thank you for your participation.

You may now disconnect.