Performant Healthcare Inc (PHLT) 2015 Q3 法說會逐字稿

Greetings and welcome to the Performant Financial Third Quarter 2015 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being record.

I would now like to turn the conference over to your host Mr. Richard Zubek, Director of Investor Relations. Thank you sir, you may begin.

Thank you operator. Good afternoon everyone. By now you should have received a copy of the earnings release for the Company's third quarter 2015 results. If you have not a copy is available on our website www.performantcorp.com. Today's speakers are Lisa Im, Chief Executive Officer and Hakan Orvell, Chief Financial Officer.

Before we begin, I would like to remind you that some of the comments made on today's call including our financial guidance are forward-looking statements. These statements are subject to risks and uncertainties including those described in the Company's filings with the SEC. Actual results may differ materially from those described during the call.

In addition, all forward-looking statements are made as of today and the Company does not undertake to update any forward-looking statements based on new circumstances or revised expectations. Also, non-GAAP financial measures discussed during this call are reconciled to the most directly comparable GAAP measures in the table attached to our press release.

I would now like to turn the call over to Lisa Im. Lisa?

Thanks Rich. Good afternoon everyone and thank you for joining us for our earnings call. For Q3, we reported overall revenues and adjusted EBITDA of $38.5 million and $6.5 million, in line with our projection. On a year-over-year basis, revenue was down slightly by $1.1 million or 3% and adjusted EBITDA was up slightly by $800,000, or about 14%.

We continue to experience delays with the Department of Education contract renewal process. Based on our best information, we believe that they would announce the new contract award by September 30, which is the end of the Federal fiscal year. To date, they have made no announcement about the awards. However, we still believe that our excellent compliance results, recovery of student loans and size of managed portfolio position us well for a re-compete award.

While the timing of the contract renewals are outside of our control, we have been aggressively managing all that is within our control. During this transitional softness in our business, we have been focused on establishing resiliency in our financial platform by comprehensively restructuring our expenses in both variable and fixed costs. If we annualize these cost reductions that we had implemented in the first nine months of the year, they represent about $15 million annualized.

Our total healthcare revenues in the third quarter were $5.1 million, which is even with the prior year period. Our commercial healthcare revenues of $1.6 million fell short of our expectations and we expect fourth quarter commercial revenues to approximate third quarter revenue. While we are firmly committed to growing our commercial healthcare business and believe that we are positioned to build a diversified commercial healthcare revenue stream, these results are unacceptable to us.

There are two key factors driving lower commercial healthcare results in 2015. First, one key opportunity representing over $1 million of revenue has been delayed in implementation and as a result, will push revenue into 2016. Secondly, in some contracts it has taken longer than anticipated from implementation to contract ramp-up to revenue realization. Keep in mind that all of our meaningful commercial healthcare contracts are new contracts and are undergoing a level of ramp-up.

As a result, we are undertaking a number of initiatives to drive increased results in commercial healthcare going forward. First, this past quarter, we re-organized to create faster implementation team; decreased the time required to increased audit volume; achieved greater standardization of products that can be utilized across clients and streamlined overall operational efficiency. To strengthen this reorganization effort we have added experienced commercial healthcare employees to drive contract expansion in our current clients.

While only time and results will tell, we intend for these changes to drive critical improvements in acceleration of execution. While still a small overall revenue source for Performant, we have doubled our commercial healthcare revenues in 2015 and believe we are pursuing the right opportunities through our sales pipeline to build a well diversified and strategic business over the long term.

With that, I'd like to turn the call over to Hakan to walk you through the financials. Hakan?

Thank you, Lisa and good afternoon everyone. Today, we are reporting results for the third quarter with revenues of $38.5 million, net loss of $314,000 or $0.01 per share, and adjusted EBITDA of $6.5 million. Beginning with our student lending business, revenues totaled $28.5 million, an increase of $0.5 million compared to the third quarter of last year.

During the quarter, the Department of Education accounted for $6 million of revenues while Guaranty Agencies generated $22.5 million. These amounts represent a decline of $7 million and an increase of $7.4 million respectively when compared to the third quarter of 2014. These results reflect the increase in borrowers that are participating in income based rehabilitation programs with our Guaranty Agency clients, partially offset by the Department of Education contract transition and fixed fees.

During the third quarter, student loan placements were $0.5 billion, down from $1.7 billion in the third quarter of 2014. The decrease is a direct result of receiving DoE placements only through April 21 when our DoE contract expired. We do not anticipate receiving new placements from the Department of Education until the re-award of a new contract and this gap in placement will impact our results through 2016 due to the lag in converting placements into revenues.

For reference purposes, we had received $0.5 billion of Department of Ed placements during the third quarter of 2014. In addition, placements from Guaranty Agencies were lower than normal in the quarter primarily due to fluctuations in placement volumes that we occasionally see from Guaranty Agencies. Looking ahead to the fourth quarter, we expect to see Guaranty Agency placement volumes return to a more normalized levels.

Our healthcare revenues were $5.1 million compared to $5.2 million in the third quarter of last year. Revenues from our work with the Centers of Medicare and Medicaid was $3.5 million, down from $4 million in the prior year period. Due to the current limited audit scope. Our commercial healthcare business generated $1.6 million in the quarter, an increase over the $1.2 million from the prior year period. Lastly, revenues from our other markets generated revenues of $4.9 million in the third quarter compared to $6.4 million in the prior year period.

Moving to our expenses, salaries and benefit expense in the third quarter was $21.7 million, a decrease of 2% compared to $22.2 million in the prior year period. Other operating expenses for the quarter was $14.1 million, a decrease of 10% compared to the third quarter of 2014, primarily due to reduction in volume-related costs and other completed cost reduction initiatives. We are focused on improving our productivity, executing on our business development initiatives and thoughtfully engaging in expense restructuring.

As we have discussed previously, a significant portion of our expenses are highly variable in nature and as such there are other adjustments that could be made as necessary to help us achieve our financial objectives. We're balancing this with a focus on building long-term revenue.

For the third quarter of 2015, our reported net loss was $314,000 or $0.01 per share compared to a net loss of $479,000 or $0.01 per diluted share in the prior year period. Adjusted net income in the quarter was $0.8 million or $0.02 per diluted share compared to $0.7 million or $0.01 per diluted share in the prior year. Fully diluted weighted average outstanding shares were 50.1 million shares in the third quarter of 2015. Our adjusted EBITDA in the third quarter was $6.5 million, compared to $5.7 million in the same period, last year. Adjusted EBITDA margin was 16.9%.

Our effective income tax rate change to 18.1% for the nine months ended September 30, 2015 from 42.2% for the nine months ended September 30, 2014. The decrease in the effective tax rate is primarily due to the loss from operations incurred for the nine months ended September 30, 2015 compared to the income from these operations for the nine months ended September 30, 2014 and the resulting impact of the state income taxes on the effective tax rate.

Even though we have a loss for the nine months ended September 30, 2015, in certain states we continue to pay taxes due to the profitability of our Performant Recovery subsidiary, which files a separate turn in those days. Cash flows from operating activities in the third quarter were $19 million.

Turning to the balance sheet, as of September 30, 2015 we had cash and cash equivalents of $78.3 million. Our total outstanding debt as of September 30, 2015 was $96.5 million, reflecting our continued focus of paying down our long-term debt.

Now I will turn the call back to Lisa for some concluding remarks.

Thanks Hakan. Considerable work has gone into restructuring our expenses and reorganizing our commercial healthcare operation. Our reported results in the third quarter reflect some of these hard work and we are cautiously optimistic that additional benefits will continue to escalate. I say this repeatedly but firmly believe that the results year-to-date do not fully reflect the hard work and considerable effort from our employees.

As we manage through a transitional period. We will continue to thoughtfully, but aggressively manage all within our control to grow in the long-term. As a result of this work, for 2015 we are still estimating revenue to be at the upper end of the $150 million to $160 million range. But we are increasing our adjusted EBITDA guidance range to between $24 million and $26 million.

Lastly, although we will provide our full 2016 guidance, as we normally do on our fourth quarter conference call, I wanted to provide some brief color on our current view of 2016. At this time, we expect 2016 revenue and adjusted EBITDA to be adversely impacted versus this year by the ongoing delays associated with the contract awards from the Department of Education and CMS.

Well, it's too soon to get into specifics, if we were to assume that both projects were awarded in the near-term. We would still be faced with standard delays related to revenue recognition under both contracts. We will continue to recognize revenue due to the run off of the old Department of Education contract based on the rehab funnel from this year. Although it will be at a lower level that in 2015. Similarly on the CMS contract, we will continue to audit through the contract extension that was just executed.

With that I'd like to open up the call for questions.

Thank you. (Operator Instructions) Denny Galindo, Morgan Stanley.

Hi, thanks for taking my questions. I had a quick one on the timing of the educational revenue. You said you're just thinking that it may not be awarded at the end of the year and then there would be delays in revenue recognition, but we've [envisioning] from those in the industry that with a small business award even though that already had an ATO in place, still had to get a new ATO. So, I was curious if your thinking on that has changed, whether there will be the revenue recognition delay, but also a delay associated with getting a new ATO with a new contracts?

Thanks for the question. I think with respect to getting a new ATO, those are processes that are fairly routine for us particularly since we've had numerous ATOs year after year. So I don't think, we're anticipating much of a delay. And I think it will depend too on -- if there were non-incumbents that were selected on the new contract and if they were not ATO compliant.

However, I would say that probably -- and again, I haven't talked to anyone at Department of Education, but I would speculate that their patience with small businesses is probably at a greater level than with unrestricted businesses as those businesses are expected to have an ATO and that was actually made clear in the procurement

So you are thinking that it should be relatively quick then between contract award and actually getting new placement?

We believe so.

Okay, and then switching to a different topic. On the tax piece of your business, it's relatively small although it may be one of the things that does go in next year when everything else has slowed down. Two things, I noticed in the recent budgetary talks in Washington, there is talk of kind of expanding the scope of tax collections and I wondered if you could give some details there and then secondly, I heard that the existing [tax-slashing] contract you have might also be coming up for rebid in the near future. And maybe if you could just comment on that a little bit?

There is legislation and it's been in the press with respect to the IRS and the legislation from what we've read is to have the IRS actually contract with vendor partners. So of course, with any legislation, we don't know what the outcome of that will be. It is being supported in a bipartisan fashion. We hope that it will pass and it will provide an opportunity for the growth for experienced [tax votes] and we certainly provided those services to state agencies in the past.

With respect to re-procurement, there is a re-procurements going on in one of our existing clients and we submitted an RFP. We think we're in a very strong position given our experience with that client and our, I would say very, very strong results over the years that we've serve that client. So we think, at this point, we have a very strong probability of re-winning that, but we'll see, I think. I'm not sure what the timeframe is for the award notice.

When will that contract expire?

I don't have that right at my fingertips. I will tell you that our contracts are such that they continue during the procurement. So for example, if there were any kind of a protest, we would not stop working.

Okay, that's helpful. And then getting into just the GA placements, they were down a little bit this quarter, but there is always some ups and downs there and it's kind of hard to get a decent run rate. Maybe you could give some more color on where you think those placements will end-up, either a 30-year or a one with more normal quarterly placement rate is for that GA business?

Sure. So as we've stated, we occasionally experience fluctuations in placements from our clients due to delay and sometimes (inaudible). There could be a system challenges or other factors, but we expect to see a more normalized placement in Q4 and the placements from Guaranty Agencies historically has been running in the vicinity of $800 million to about $1 billion. So that's where we would expect to be in Q4.

And is that still increasing next year or with the kind of decline in the stock of our GA business start to cause a decline there?

We, at this time do not expect there to be a decline and one of the things that we've mentioned in the past, as the Guaranty Agency industry starts to consolidate, clearly the smaller and the mid-sized Guaranty Agencies would fold into the larger ones. We are strategic partners with several of the very largest and strong diversified Guaranty Agencies. But at this time, we do not expect our Guaranty Agency volume to be in a decline as we go through next year.

Okay. And then lastly just on expenses. Any idea about what -- you're expecting it to come down pretty steadily as you prepare for this kind of rough starting ahead for the next year. Any idea on how much more you can cut or are you still thinking the kind of ratio of variable revenue to their -- or expense will stay similar or any kind of guidance you can help us with that? How does expenses will trend over the next year will be helpful?

Sure. So as we have stated in the past, we have a significant percentage of variable cost in our business to the vicinity of about 70% to 75%. So that gives us good opportunities to make adjustments as it'd be appropriate to meet our financial objectives. And we see that, again continuing to 2016 as well. So we've been very thoughtful as we manage our cost structure, because, again, we're focused on building revenue and focused on our long-term revenue growth as well.

Okay, that's it from me. Thanks for taking my question.

Brian Hogan, William Blair.

Good afternoon. First question is actually on the CMS RFP that was released on Sunday, November 1. It's RFP and sort of -- open to everybody, but I assume it's still pretty closed to those who are capable. But I guess, what are the changes that you see from this to the previous ones and anything important you want to point out? And then your expectations o on the timing of that?

I think as we looked forward to a new contract -- and obviously it's different from an RFQ; but we believe that an RFP allow CMS to have a little bit more flexibility in terms of what they want to build in. We do believe that in the newer contracts, they are going to step through a bit of a different process. We think they are very focused on program integrity, but there will be a differentiation in terms of how they approach the broad provider market.

So I don't know in terms of how long the process will take. We did just sign an extension to work through, I believe it's the end of July of next year and so we believe it's CMS' intent to continue to have the old contract continue to run regardless of -- if there are protest to the RFP. So we're confident that we'll continue to have work with CMS.

All right. And then the commercial with the delays in implementation and I mean its $1 million in revenue that you expect to flow into next year now, is that what I heard correctly? And then, what's the ramp up in the commercial business, obviously you have a lot of initiatives there?

Yes, we do expect that revenue to flow into next year and that delay was a result of a -- actually a very large client and just the data transfer and coordination piece took a very long time, much longer than what we anticipated. As I mentioned in the call though, we have restructured our organization so that we can be more effective in responding to opportunities at the client level and so we do expect, as we roll into next year that we're going to have a fair amount of growth versus this year.

We're not giving guidance today on 2016, but absolutely, we expect to have better results as we roll into 2016. And we think the restructuring and the reorganization of our internal efforts will have an impact on that and as I mentioned, time will tell; like time and results will tell, but we are already seeing some positive impacts.

And for the CMS' revenue, I mean, $3.5 million in the quarter, up from $3 million in the second. Is the $3.5 million a good run rate number as you're -- obviously it's a very limited scope, but what should we expect there?

Well, as you've seen, Brian, over the last quarters and as we've stated earlier in the year is that we project to be at around $3 million every quarter and that's where we've been historically. We're not ready, at this point, to take the number up much beyond that.

Just a small item. The tax rate going forward, is it, I mean, obviously with the -- what should we think about tax rate?

As far as an effective annual tax rate where we are right now, we are looking at about 21.8%, that's where we are to-date. So I think, as you look out towards the end of the year, that's an appropriate level.

Alright, and then obviously 2016 looks like a challenging year and you have a healthy amount of cash on your balance sheet, but you also have a healthy amount of debt. What kind of conversations are you having with your banks regarding your debt covenants?

Sure. Now we are in regular dialog with our vendors just as any company is and they are very much focused on the same issues and questions that we are and that our investors are. So we've had the same vendors for many years and they're very knowledgeable about our business and they have always been very supportive of our business and supporting us overall as it relates to our credit facility.

Are you going to need to have exemption or -- but exceptions again for a period of time given the delays in contract awards?

As we look at it right now, owing largely to these significant variable costs in that business and as you look at our financial projections. We show that we are going to be in compliance with the bank covenants through 2016 and the real issue, from our perspective is not the covenant compliance but resolving the contract uncertainties that have been hanging over our business now for some time. If those are resolved, as we hope and as we also expect, we believe that any covenant issues will take care in and of itself

Right. The GA business, $900 million was kind of the middle of your range you gave, Hakan, for volume. How fast do you see that consolidating and obviously your expect growth, but how much growth do you expect next year?

If I could speak to that, I think at this point we're not privy to all the information with respect to consolidation of Guaranty Agencies. We can tell you though that our strategic partners have been the consolidators and so I don't think we'll know until we get a lot closer to when those activities happen. They do occur in a very confidential way at the Department of Education and with the Guaranty Agencies. So we won't be privy to that for a while and certainly as soon as our clients have the ability to let us know they will give us the heads up.

Okay. And then one last one and just a bigger -- broader picture, I believe you can now call [cell phones], how does that impact your business, obviously I think it'd be a positive, but just kind of what are your thoughts there?

We're very excited about that. We think that will actually be -- it is finally sort of brining the [TTPA] into the modern age. And so with respect to how it will impact our business, it will certainly be helpful in allowing us to work better with borrowers, to help resolve their obligations for any of our federal agencies. So we think it will definitely be a productivity enhancer.

All right. Thanks for your time.

Michael Tarkan, Compass Point.

Hi, thanks for taking my questions. This is actually Andrew Eskelsen on for Mike. So on the healthcare side; I recently saw that starting in January, the ADR limits will be reduced to 0.5% from 2% currently. How should we think about the impact after this change goes into effect. I mean, given that you're still around that $3 million quarter run rate in the business. I'm imagining that as long as the contract starts up again, it's still additive. I'm really just trying to get a sense for how you are thinking about that longer-term?

Well CMS hasn't made anything public yet. I think what you're reading is probably in the Wall Street Journal. There was an article that's out in the press. We are in very regular contact with CMS on all aspect of the audit scope, including the document request levels and the scope of we can audit. And we might have mentioned earlier, we are certainly still working through the current limits. And at this point, I don't think we can tell you, first of all, what the final definitive program will be and again, we're going to meet with CMS and we've been in pretty good dialog with them.

So as I mentioned earlier, I think what CMS is balancing is an attempt to be very provider sensitive as well as how to change the program in a way that will enhance program integrity and it could be that we end up with a different level of audit capacity for different types of providers. But that's still all being worked through. So, at this point, nothing has been made official yet, but you should know that we are in a very regular dialog with CMS on this topic.

Okay. And then sort of not related, but could you give me the trailing 12 month EBITDA for your covenant?

The covenant is at $20 million minimum [in that] covenant.

Okay and then, just one more from me. On the Ed collection contract, I know that you said that you expect it by the end of the year, but do you guys expect the Pioneer lawsuit against the Department of Education could still delay that contract further? Are you hearing anything on that front?

Well we know the lawsuit, but we do not believe that that lawsuit will impede Department of Education from making their contract awards.

Alight, thank you very much. That's it from me.

Toby Wann, Obsidian Research.

Just kind of follow up on the earlier line of enquiry about the supposed reduced additional document request, I guess my question along those lines would be, supposing that, and as an assumption, I'll go ahead and readily admit that, but assuming that the additional document request limit is at that 0.5% on a go-forward basis, what's the impact? And then number two, assuming that that would be a go-forward type of threshold under the new program, would that change your thinking about willingness to participate in the program going forward?

So just as a historical reminder, when we started out this particular contract, the ADR limits were at 0.5% and then CMS fairly quickly move those up to 1% and then up to 2%. So as we think about the intent, we think CMS is more educated in terms of how they want to approach. But we're also cautiously optimistic that their balance is program integrity as a priority, in addition to having a way to start up the contract that is more thoughtful in terms of the provider landscape. So all I can do is look at our discussions, what I think their objective is? What the historical behavior has been? And if that is the starting point, then I think there is certainly opportunity for us to continue to work with them to move that up as the contract matures?

Thank you.

Oscar Turner, SunTrust.

Good afternoon. Thanks for taking my question. My first question is just on the cost structure. You guys have done a great job of taking costs out of the business given now it's a pretty tough environment. I was just wondering how will these cost cuts affect your ability to ramp in the case that you do win one or two awards either later this year or next year?

Again, I mean, as we look at our cost structure, we'll remain very focused on keeping the balance of not -- again jeopardizing our ability to ramp up on the new contract and also not driving as much revenue as we can under the current scope of work that we're doing on, in the [Xarelto] business. So as you look at on the new contract awards on the Department of Education side, certainly we would need to ramp up fast on the production side to -- depending on how many contracts and so forth is awarded, clearly they just base these on the increase in volume, there will be an increased scope of cost that we will incur and those (inaudible).

Okay, thanks. And then just a follow-up on commercial, so over the course of this year, since you began implementing these commercial projects, I was just wondering if your view of the long-term commercial health care opportunity has changed?

Well, actually not at all. We are still very encouraged by what we see and I think part of our challenge was one, bringing in the right, I would say additive talent to the commercial team and then really redefining and reorganizing our structure. We had some inefficiencies and just organizational challenges that we believe we have addressed in a meaningful way and we are, as I mentioned, it's still early but encouraged by what we're seeing. So it does not in any way change our long-term view.

And then just a follow up to that, should we expect any increases in expenses in 4Q or next year due to your adding resources for commercial or is that largely done?

What expenses we add will be, I would say, very prudently added and alongside of revenue growth. So we don't have our projection for 2016. But as our revenue grows, we'll certainly need to bolster the organization to continue to fuel that growth.

(Operator Instructions) [Michael Cohen], Private investor.

I was wondering if you could provide just a little more clarity on your expectations for the DoE contract at the end of the year. Can you just talk about sort of the assumptions underpinning your belief that it will come at that time. I mean what conversations you've had or what process gives you some confidence that it will be awarded in that time frame?

Well, let's be clear. We are not a 100% confident, because this is based on good information from very reliable source. We originally believe that the awards will be made in April. So we're going on what we believe are reliable sources but we're not a 100% sure.

Right. And do you have a sense as to what the remaining hurdles are for them to make that decision? Are they imminently making that decision? Do you have a sense as to what changed over the course of the six months to delay things?

Well, I'm speculating, because I haven't talked to the Procurement Officer or anyone inside about what has caused the delay. But certainly, there has been a lot of activity around the vendors to a wound down in February including the lawsuit that I think Navient has out and it's currently in the courts. And so, with regard to federal agencies, they tend to be very cautious to make sure that they have dotted their eyes and crossed their teeth.

So I can only speculate that they're ensuring that whatever awards are made and when they make them, that they are very, very prepared to address any kind of protester issues or challenges that come up as a result. So from our work with federal agencies over 30 years, I can tell you they are very cautious to ensure that they have the right background and the appropriate decision making that's in place. So this particular one, I think is sensitive as a result of all that flurry of activity.

Okay, great. And then as you look out to the time horizon in which that might get implemented, you are talking about obviously that it has a delay through 2016. But what is your view of the time horizon of ramp from whenever the start is? In other words, if it were today, is it three months, is it six months, like what is the conversion cycle from placement to revenue as you think this next contract will be?

Typically Michael, it's generally a nine-month rev reg cycles. As you look at the rehabilitation process, which requires the borrower to make a nine monthly prepayments and we've recognized that bulk of our fees associated with that ninth payment is done. So we'll be looking at about nine months.

Okay, great. And then, I guess between now and then or between now and whenever each or any of these contracts, either on the Medicare side or on the DoE side, is there anything that you guys can do to leverage the platform for other short-term things, I mean, are there other things of it you can do to generate revenue, while we wait?

Well, one of those in healthcare is clearly our expansion in commercial healthcare revenue.

Right, I saw it.

Yes, on the student lending side, we actually are working on default prevention, which is an expanding business for us on fairly guaranteed student loans. So yes, we're definitely looking at ways that we can expand and utilize our platform in order to grow and continue to diversify our revenue longer-term.

Okay, that's helpful. And then just to readdress, I guess the issues on the -- associated with the private healthcare revenues. Can you -- obviously it sounds like, clearly there were some execution issues, can you just kind of -- aside from I guess, that I would sounds like it was some combination of the wrong personnel as well as not managing the process of porting data over, is that a good summary of it. Can you just kind of walk us through I mean, it would seem that this should be a fairly high priority given that this would be something that could be growing and that it is not beholden to the government. I'm just curious as to how that happened?

Sure. Well, let me give an example, our account management and sales reported into another executive and operations reported somewhere else and so, one of those areas that was -- that quite frankly just could be fixed fairly quickly was to align that organization under one executive. I don't know that if it's wrong personnel, but we certainly needed a bolster of an executive level at the -- when I say executive, not a C level, but someone who is at a VP level coming in from commercial healthcare to really just help us expand those contract faster.

And with respect to data and data portals and IT, we definitely needed to re-prioritize and make a decision as an organization about which priorities we were going to pursue. So we have, I would say, a complex business in that we have many types of clients whom we serve and initiatives that we are executing for those clients. And so it wasn't quite a simple as picking one thing and fixing it. So we feel like we've really done a lot of work around that and as I mentioned, we're actually seeing some -- it's early, but we're seeing some positive momentum already. So we're cautiously optimistic.

Great, thank you.

Thank you. At this time, I would like to turn the call back over to management for closing remarks.

Thank you. We really appreciate your time today and as we mentioned, I believe that the hard work that has been done by our organization has driven these stronger result and we're anticipating that as we move forward that some of the work that we've done in the past quarter will continue to escalate in terms the benefits. So again, thank you very much for spending your time with us.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time and have a great day.