Resources Connection Inc (RGP) 2017 Q2 法說會逐字稿

Good day, ladies and gentlemen, and thank you for your patience. You've joined the Resources Global Professionals FY17 second quarter earnings conference call.

(Operator Instructions)

As a reminder, this conference may be recorded. I would now like to turn the call over to your host, Interim General Counsel, Ms. Alice Washington. Ma'am, you may begin.

Thank you, operator. Good afternoon, everyone, and thank you for participating today. Joining me on this call today are Kate Duchene, our Chief Executive Officer, and Herb Mueller, our Chief Financial Officer.

During this call, we will be providing you with comments on our results for the second quarter of FY17. By now, you should have a copy of today's press release. If you need a copy and are unable to access the copy on our website, please call Patricia Marquez at 714-430-6314, and she will assist you.

Before introducing Kate, I would like to read an important announcement about certain statements we may make during this call. Specifically, we may make forward-looking statements, in other words, statements regarding future events or future financial performance of the Company. We wish to caution you that such statements are just predictions and actual events or results may differ materially. We refer you to our Form 10-K report for the year ended May 28, 2016 for a discussion of some of the risks, uncertainties and other factors, such as seasonal and economic conditions, that may cause our business, results of operations and financial condition to differ materially from results of operations and financial conditions expressed or implied by forward-looking statements made during this call. I'll now turn the call over to Kate Duchene.

Thank you, Alice. Happy New Year, everyone, and thank you for joining us today. Welcome to Resources' second quarter conference call for FY17. I'd like to start this call with some overall commentary about events during the quarter and then I'll turn the call over to Herb Mueller, our Chief Financial Officer, to review our business performance in detail.

Let me start by sharing how honored I am to have received the permanent appointment as President and CEO of Resources about two weeks ago. I appreciate the Board's confidence in me and am humbled to lead an organization of this caliber. I have worked hard for and believed in this Company for over 17 years. I have worked on many aspects of the business over that time period and have had the great privilege to work with colleagues all over the world.

When I joined the Company, we were a little over $100 million in annual revenue, focused on interim, high level staffing needs of our client base, almost exclusively in the United States. We had 26 offices and approximately 1,400 employees. Today, we are approaching $600 million in annual revenues, serving clients in 20 countries with over 3,400 employees.

I believe in our people and our business model now more than ever. We fill a unique niche in the consulting space as a premier project execution firm. Given the pace of regulatory change, M&A activity, digital transformation and globalization impacting our client base, our business model remains on trend. Our clients need access to exceptional talent that is agile, experienced, and focused. They also want a services partner that can deliver solutions in a value oriented way.

The market opportunity ahead for Resources continues to be robust. To deliver on such opportunity, however, we will have to engage in certain change. When I assumed the interim CEO role, we started working on a growth agenda for the Company. We are focused on activities that will enable us to build long-term value for all constituents of our business. In November, we executed the Dutch tender, improving our capital structure. We were able to purchase 6.5 million shares, or 18% of our outstanding stock, while still maintaining flexibility for growth, as well as future repurchases and the ability to maintain our dividend program. We were very pleased with the results of this action.

At this time, let me now outline the growth priorities that we will initiate over the next quarter. First, we have been and will continue to realign the executive team at RGP. The functions we need for the future are not the same as those we needed in the past. Our clients have asked us to deliver more than just great people. We are asked to deliver points of view, tool kits, methodologies and technology accelerators. We are focused on getting the right functions defined so we create the right roles with the right leaders to drive the right results for the business. We are doing this work with the needs of the client top of mind.

Second, we are committed to improving our sales process across the enterprise and in an aligned and clear way. We were founded with an organizational structure that drove sales efforts in a market focused and decentralized fashion while serving our global client targets. As our business has evolved, and we do now serve more and more global clientele, we are building a hybrid sales structure with both enterprise focus and market focus. We need clarity in our sales process and transparency across client teams in order to execute efficiently for our clients.

As part of this initiative, we are implementing Salesforce.com as our common sales tool globally. The implementation of this tool is one part of the effort. The project includes building more aligned process and transparency in order to better serve our clients, whether those clients are the Global 500 or middle market businesses. This will be the first time we have a global tool to drive the sales effort across the enterprise.

Third, we are committed to building increased accountability throughout the organization. One of the functions identified in the reformed executive team will be focused on enterprise operational excellence. This role will drive the execution of our strategic plan across markets so we measure and hold ourselves accountable across the enterprise. We are excited about the opportunity for alignment across the organization regarding performance excellence.

At this juncture, as we enter our 20th anniversary as a firm, we must focus on leveraging our strengths and building on them. We need to do so in a way that keeps our core business stable, but builds for the future and allows our business to innovate, like our clients. To be clear, while we participate in this emerging change environment, we are fully committed to growth in a cost efficient manner.

I will now turn the call over to Herb for a detailed review of the financial results of the second quarter. We will then open the call to questions that you may have.

Thank you, Kate. Total revenue for the second quarter of FY17 was $147.6 million, a 2.2% decrease from the comparable quarter a year ago; sequentially, however, revenue was up 2.9%. On a constant currency basis, revenue decreased 1.8% quarter-over-quarter and increased 3.3% sequentially. Our second quarter gross margin was 38.3%, representing a 70 basis point decrease from the prior year.

SG&A expenses of $46.1 million compared to $43.2 million in the second fiscal quarter a year ago. However, SG&A in the current quarter included $1.5 million of severance cost related to the departure of a senior executive. For the quarter, our pretax income was $9.6 million, based on an effective tax rate of approximately 41%. Our GAAP net income was $5.7 million, or $0.16 per share. On a pro forma basis, excluding the severance mentioned above, net income would have been $0.19 per share.

In Q2, adjusted EBITDA was $12.3 million, or 8.3% of revenue, compared to $17.1 million, or 11.3% of revenue in the year-ago quarter. As we reported in October, weekly revenue during the five weeks of the second quarter totaled $55.8 million. During the five-week period, weekly revenues averaged $11.2 million. During the final eight weeks of the quarter, average weekly revenues were $11.5 million per week, including Thanksgiving week. Without the Thanksgiving week, the average was $12 million.

Now let's discuss some of the highlights of our revenues geographically. For the second quarter, revenues in the US were $117.6 million, a decrease of 4% quarter-over-quarter and an increase of 1.7% sequentially. For the second quarter, total revenues internationally were $29.9 million versus $28.3 million in the second quarter a year ago, an increase of 5.5% quarter-over-quarter, or 7.6% on a constant currency basis, and an increase of 7.8% sequentially, 9.9% constant currency. International revenue accounted for approximately 20% of the total revenues for the quarter, compared to 19% in the first quarter.

Europe's second quarter increased 4% quarter-over-quarter and increased 13% sequentially, while the Asia-Pacific region saw second quarter revenues increase 9.2% quarter-over-quarter and 2.3% sequentially. On a constant currency basis, total international revenue increased 7.6% quarter-over-quarter and increased 9.9% sequentially. On a quarter-over-quarter basis, the US dollar was stronger against most currencies in Europe, but weaker against Asian Pacific currencies and countries where we do business. As a result, on a constant currency basis, Europe revenue would have increased quarter-over-quarter by 8.9% and Asia-Pacific's revenue would have been up 5.5%.

Let me now discuss early revenue trends for the third quarter of FY17. Weekly revenues for the first five weeks of the third quarter are $51.9 million versus $50.1 million last year. However, our sixth week that we're now in will be impacted by the January 2 holiday. Allowing for that, we're tracking approximately 2% below last year. We continue to face a challenging business environment, particularly in the financial services area in the energy sector. Low interest rates and restrictions on proprietary trading, among other things, continue to pressure financial services.

However, there are definite signs of improvement. The decline in financial services has leveled off for us and the recent interest rate increase by the Fed is a positive sign for our financial institution clients. We actually saw a sequential increase in Q2 in the energy sector. The potential of deregulation is also encouraging. While we are tracking about 2% below last year's third fiscal quarter, we believe we have an upside potential to close that gap in the second half of the quarter. We've seen significant increase in both the number of proposals and in the projects won in revenue recognition, as well as lease accounting. Some of these projects are well underway.

Now let me discuss gross margins. Gross margin for the second quarter was 38.3%, versus 39% in the year-ago quarter and 38% in the first quarter of FY17. The quarter-over-quarter decrease of 70 basis points results from reduced bill pay spreads. The sequential increase of 30 basis points results from reduced employer payroll taxes at the end of the calendar year.

Excluding reimbursable expenses, our second quarter gross margin was 38.9%, which compares to 39.7% in the second quarter a year ago. The average bill rate spread for the quarter was approximately $118, compared to $119 in the first quarter and $120 in the year-ago quarter. The average pay rate for the second quarter was approximately $59, compared to $60 in the first quarter and $60 one year ago. Please remember these hourly rates are derived based upon prevailing exchange rates during each given period.

We expect gross margin in the third quarter of FY7 to decline approximately 180 basis points from the second quarter's gross margin, primarily due to increasing employer payroll taxes and the impact of holidays. For the second quarter, gross margin in the US was 39.1% and our international gross margin was 35%.

Now on to headcount. For the second quarter, the average consultant FTE count was 2,530. This compares to 2,459 in the previous quarter and 2,554 in the year-ago quarter. Quarter-end consultant headcount was 2,649 versus 2,645 a year ago. The total headcount of the Company was 3,431 at quarter end.

Now on to other components of our second quarter financial results. SG&A expenses were $46.1 million, or 31.2% of revenue. This compares to SG&A of $43.2 million, or 28.6% of revenue in the second quarter of FY16. The second fiscal quarter included $1.5 million of costs related to the departure of a senior executive. The increase relates to the additional investments we made in business development professionals and management consultants in potential growth markets. We anticipate SG&A expenses in the third quarter of FY17 to come in a little under $45 million. We've made these investments in dedicated business development professionals and subject matter experts as we focus on building our technical accounting, our M&A transaction services, and our data solution teams.

Stock compensation expense was $1.9 million, or 1.3% of total revenue. The increase from prior quarters was due to the acceleration of vesting of options related to the departure of a senior executive. We would anticipate quarterly stock compensation expense in the upcoming quarters to approximate $1.5 million.

At the end of the second quarter, our office count was 67, 44 domestic and 23 international. Related to other components of our financial statements, depreciation was $800,000 for the quarter, similar to the first quarter. We expect depreciation expense to approximate this amount for the next couple of quarters. Our adjusted EBITDA, or cash flow margin, which we define as EBITDA before stock compensation, was 8.3% in the second quarter, down from 11.3% a year ago and from 8.5% in the first quarter of FY17.

Our pretax income was $9.6 million in the second quarter. During the quarter, we reported a provision for our income taxes of $3.9 million, representing an effective tax rate of 40.8%. Our GAAP tax rate for each of the upcoming quarters is difficult to predict and could be volatile as the rate will be dependant on several factors, including the operating results of our US and foreign locations, each of which are taxed or benefit at different statutory rates and the offset of tax benefit of foreign losses in certain locations by valuation allowances.

On a cash basis, our tax rate was about 42% and we expect that rate to continue over the next couple of quarters. For the third quarter of FY17, we anticipate a tax rate approximating 47%. Our effective tax rate is impacted by our current inability to offset income in tax jurisdictions in which were profitable with losses and several tax jurisdictions which were not profitable.

Finally, our GAAP net income was $5.7 million, or $0.16 per share, during the second quarter. The severance cost mentioned above had a $0.03 per share impact on EPS.

Now, looking at the balance sheet. Cash and investments at the end of the second quarter were $63.6 million, a $39.3 million decrease from the end of the first quarter of FY17. The decrease stems primarily from using $46.2 million of cash on hand to partially fund the Dutch tender offer of $104.2 million which settled in November. The remainder was provided by use of our credit facility for $58 million. In addition, cash generated by operations was $15.2 million in the quarter. Additional share repurchases and dividends here in the quarter totaled approximately $4.9 million, offset in part by stock purchases by employees of $600,000.

Capital expenditures were $1.2 million during the quarter, net of landlord reimbursement. We expect to be in that range in quarter three.

During the second quarter, we repurchased just under 6.6 million shares of our common stock at an aggregate cost of $106.3 million, or $16.15 per share. Just over 6.5 million shares were purchased through the modified Dutch tender offer, the balance on the open market.

Our stock buyback program has approximately $132 million remaining. We'll continue to return cash to shareholders through our dividend and share repurchase programs while balancing debt repayment, the capital requirements of growing our business and fiscal prudence.

Our shares outstanding at the end of the second quarter were approximately 29.6 million. Receivables at quarter end were approximately $97 million, compared to $96.2 million at the end of the first quarter. Days of revenue outstanding were approximately 60 days, compared to 59 at the end of the first quarter of FY17. Now I'd like to turn the call back over to Kate for some closing thoughts.

Thank you, Herb. As we embark on the new calendar year, we are all focused on driving growth and working hard to accelerate the productivity of the business development and subject matter expertise investments we have made. As I mentioned previously, we are evolving the business to respond to the solution demands of our clients. We believe that such investments will provide positive return for us in the long term.

For example, during the quarter we learned that we were appointed to be the internal audit partner for a global consumer products company for a three-year term. This three-year engagement is a multi-million dollar deal for Resources and was procured by packaging our talent and solutions together to deliver an end-to-end service for the client. In winning this work, we competed against three of the Big Four firms. Our value proposition and our customized global client service and delivery approach provided a compelling solution to the client. We are currently proposing similar packaged solutions in the internal audit space to several other global firms.

Let me now share some additional statistics which we believe reflect the continuing health and strength of our core business. Client continuity remains outstanding. During our second quarter, we served all of our top 50 clients from FY16 and 48 of the 50 from 2015. In FY17, we have 261 clients for whom we provide services exceeding $500,000 in fees on a run rate basis, up from 243 in the first half of FY16. In addition, our top 50 clients represented 38.1% of total revenues, while 50% of our revenues came from 92 clients.

Our loyal client following is reflective of our client service approach and the talent and quality of the work performed by our consultants. Our largest client for the quarter was approximately 2.3% of revenues. Through the second quarter, 92% of our top 50 clients have used more than one practice area and 74% of those top 50 clients have used three or more practice areas. This practice area penetration reflects the diversity of relationships we have within our clients' organizations. As discussed earlier, we believe that enterprise-wide aligned sales process and global sales tool will help us improve such results and such penetration going forward.

In closing, we viewed the second quarter with optimism. We saw improved results in Europe and Asia-Pacific. We were also encouraged to see that the negative year-over-year revenue gap in North America is narrowing. Based upon reports from the field, we are beginning to see the financial services and energy sectors improve. We are also pleased by the revenue trends related to our key initiatives, technical accounting, M&A transaction services and data solutions.

All of the key initiatives which are part of our strategic plan saw double-digit growth sequentially and compared to prior year. We will continue to monitor and measure such trends in order to make the appropriate investments to deliver for our clients and drive accountability. That concludes our prepared remarks and we'd be happy to answer your questions at this time.

Thank you, ma'am.

(Operator Instructions)

Our first question comes from the line of Andrew Steinerman of JPMorgan. Your line is open.

Hi, Kate. Congratulations on your new position. I wanted to go over the first new growth agenda bullet, when you're talking about more of a solutions approach and providing a point of view in technology. My question is, are you still going to be billing on an hourly basis or is this a business model change and are you taking on any assumption of solutions risk?

Well, thanks for the good wishes, Andrew. I know we've known each other for a long time. So the answer is, no, we're not taking on a material different risk profile with the solutions practice. We are building up our subject matter expertise and our managing consultant bench a little bit in order to provide the quality control and the oversight we need on these projects, but I don't see a significant shift in how we engage legally with our clients or the risk profile that we're taking on as an organization.

No, I like that. And then just a little more comment about the technology piece. You said you wanted to add in a technology piece. And I know at times, Resources has had some technology, let's call it, backbone to its solutions.

Right. So I don't see us building a lot internally, but we do need to invest in the right kind of channel partner relationships and to partner with those emerging technology firms that may not have a services component but would be perfect partners for us. And we have not invested time and attention to date in that strategy, and I think that's one that could play out very positively for our organization.

Perfect. And then just finishing off, you said something right after technology, like accelerators or something like that. Just tell us what you meant by that last piece of your first bullet.

Yes. So you know I led the legal services practice. And in a number of those proposals, what we see clients asking for in RFPs are a category of technology accelerators. So what kind of tools would we recommend as part of our services offering to really provide a more complete solution, that's what I mean by it. Not that we would grow these internally, but that we have enough market knowledge and intelligence to help a client craft a full solution.

Great. No, that makes a lot of sense. Thank you so much.

You're welcome.

Thank you. Our next question comes from Kevin McVeigh of Deutsche Bank. Your question, please.

Great. Thanks. Let me add my congratulations, as well, to you and obviously Herb, as well, settling in. Are there going to be any incremental costs associated with this strategy? And as you think about it longer term, how should we think about it from a revenue perspective as it scales, in terms of how big can it become?

Well, Kevin, again, thank you for the good wishes. I think Herb and I are settling in to our positions, both being new to these roles. So this is a balanced approach. We know we need to make some investments. We know that some of our infrastructure is not up to par. And I think Salesforce is our first big step to have a global platform, where we can really serve our clients most effectively and efficiently by having access to information in real-time across the globe to serve them. So that's our first start.

But we do have some other investments that we will make, but make in a balanced fashion. We know our SG&A is higher this quarter. It's something we're keeping our eye on very carefully. But if you work towards short-term results and then long-term value creation strategies, that's our balance. And Herb and I and the rest of the executive team will be working together very carefully to make sure that we're striking the right balance for the business and keeping all of our constituents in mind.

Right. And some of them may have a stair step impact. For example, as we're investing right now in our management consulting program, the subject matter experts, to build up the expertise in some of these areas that we need in order to be able to drive growth. So you'll have the shorter term SG&A impact that we'll see over the next couple of quarters, but the belief is that that will lead to greater revenue and be able to help us there, as well.

Got it.

Let me just add. Kevin, if we're doing this right, let's take the Salesforce tool, for example. My firm belief is that should pay for itself quickly, as we have better access to information, we know what our global client initiatives are, and we can work effectively in all parts of the globe on helping our clients with those initiatives. Right now our process, we've been very committed to that client service, but it's been very inefficient, with phone calls or e-mails that don't allow us to move with the speed and the action that we need in our business today.

That was going to be my next question, Kate. Not to get too in depth, but I've always thought of the model as an [MD]-type person running an office that's got to call into the CFO Controller that they're selling the services into. Does that process change in terms of you've got a dedicated sales force that's more proactive, or is it still the same and those folks just have additional responsibility based on new software that's going to allow them to be more responsive?

Yes. Kevin, I think it's both, really. I think that's a good question. I think what we're going to do is really just raise our game here. We're going to still have that one-on-one outreach in markets, but we're also going to have an enterprise-wide focus that may utilize sales automation tools in a way that we haven't used before and also have an enterprise-wide sales team that's driving opportunity at different levels in the organization and in different ways. So I think the short answer is both.

Right. And I'll add to that. Where we have piloted Salesforce, we've seen significant growth in those markets, and that's been primarily adding the capability for them to do a better job of tracking their outreach and being able to do it just in that classic model approach in the single markets. What the global implementation will do for us now, as Kate mentioned, is really enhance the communication. So for our Fortune 500 customers, that we'll have a lot better understanding of what's happening with those customers in the different markets.

Got it. And then Herb, I just want to make sure, I know we typically give an implied revenue range. Sounds like you gave it through the first five weeks, somewhere around $52 million or so. Is there any way to quarterize that, just so we get a sense of what that would imply for the quarter?

I think the way to look at it, as I mentioned, I think right now we're tracking about 2% behind a year ago, and I think there's a little bit of upside to that.

Got it. Okay. So a range of down 2% to flat, is that a fair way to think about it?

I would think so.

Okay. Thank you.

You're welcome.

Thank you.

(Operator Instructions)

Our next question comes from Mark Marcon of Baird. Your line is open.

Good afternoon and let me add my congratulations, Kate. We've known each other for a long time and nice to see the new position.

Thank you.

With regards to the revenue trends that you're currently seeing, frequently you end up -- you mentioned that things were picking up, and frequently you've given us the weekly color. Can you do that for us for the first five weeks of this quarter?

I'm going to turn that to Herb.

Right. What we had for the first week, $12.010 million, second week, $12.071 million, third week, $11.934 million, fourth week, $10.090 million, fifth week, $5,829. And so again, you get into the Christmas holidays.

Sure. But it sounds like you are seeing some real improvement, just from a current perspective, in terms of both on the energy side, as well as flattening out with regards to the financial services clients and then you have this new project that's coming on with the consumer packaged goods company. So is it possible that you could end up doing even better than flat versus a year ago?

It is possible. The momentum is definitely in the right direction. As I mentioned, energy is sequentially up. There's the possibility of a nice upside on financial services as we get into the new year. As I mentioned, the technical accounting areas, the rev rec and the lease accounting has increased significantly and we're kicking off. And it's hard to say how much of that will completely impact Q3, because we've got, with some of the projects that we've closed, we're getting started now but at a little lower level, as these companies are getting through their audit and then picking up going into our Q4. But there's definitely a lot more bullish signs than bearish.

Great. And you mentioned, during the last quarter, that you were starting to see these projects pick up with regards to rev rec and a little bit on the lease accounting side. Can you give us a little bit more color? Because there's been some recent articles that have come out that suggest some companies are still behind, and I'm trying to balance that opportunity relative to what sounds like a period of new initiatives, which can lead to changes in terms of personnel and some stops and starts before things really take off.

Right. And we saw, as we mentioned in last quarter's call, that we were starting to see the momentum. The SEC has become much more vocal lately on asking companies to start disclosing, not only in their Q, but on their earnings call, how are they coming on rev rec. The institutional shareholder services have been telling companies, hey, you need to get going on this. So it's getting definitely a lot more attention. We ran some metrics comparing this quarter to last quarter, and the number of proposals that we generated was up 250% over a year ago and the projects that we closed were up three times from a year ago.

So definitely seeing some significant attention and growth there. It's definitely on everybody's radar. You've got a combination of things. You've got some companies that they've been aware of it and they've been trying to do it internally and then are realizing that they need outside help; and then, to be frank, you've got some where in the executive offices, they were downplaying the impact and their auditors have finally awakened them to the fact that, hey, there's a lot of work, even if you don't think that this is going to impact you, you still have to really look at your sales contracts and what's going on and evaluate and do that assessment.

So right now, some of these projects that we're looking at are ranging anywhere from $15,000 to $2 million. So they're significant and they're real. I'm not going to quantify it much more than that at this time. But there's definitely some upside that we haven't really baked into the, when you look at our forecast mathematically.

Okay. Great. And then in terms of the proposals being up 250% and three times the closes, could you give us some level of magnitude in terms of -- is that up 250% from 100 proposals a year ago, 200 proposals a year ago?

No, it's less than that. I'm not going to get into those exact numbers, but it's enough to be meaningful. And it certainly has our attention.

Great. And then can you talk a little bit more about some of the initiatives, just in terms of the stair-step function? When would you fully implement Salesforce and how should we think about that from a CapEx perspective?

Great question. That's going -- over the course of 2017, we're going to have different phases of it. The initial part is to get our sales teams up to speed and being able to utilize that to track prospects and work through that. And we'll be working on that fairly aggressively. I think in the course of the calendar year, you could see neighborhood of a little over $1 million of capital expenditure related to that. You can see some SG&A impact of perhaps just under $1 million a year for that. However, there's also a little bit of offset as we're working through that. But it's certainly going to have an impact. But again, we looked at this long and hard. We've been piloting it for several years and have seen the results in our pilots and very excited about what we can do with it going forward.

Great. And then with regards to the adding some thought leaders and business development folks, how should we think about that in terms of when that would stair-step through? Are you talking about adding one additional person per office? How should we think about that, just in terms of the scope of the investment?

Right. The bulk of it has been made and you're seeing that. And that's what -- the increase in SG&A that we're going through right now has happened and it's put us in a position, for example, where we could close the project that, the multi-million dollar three-year project that Kate talked about earlier, as well as being able to support some of these rev rec projects and the data solutions group and, again, a higher level of service. So that investment is there and it's poised us for a significant amount of growth that it would support.

Let me just add a little more color there, Mark, for you. This is a process. It doesn't happen overnight. I give great credit to [Tonya Sibula] and the work she's done with the talent acquisition group to really up our game in terms of the kind of talent that we're bringing into our organization and the new roles that we are bringing into the organization. That's a great start.

But once they really then stand up our tool kits, and I'll speak to really our M&A transaction services tool kit, we have a lot of capabilities, templates, tools, methodologies, that we can bring to a client engagement in that regard. But a piece of it then is educating our incumbent management team on those capabilities. And again, that doesn't happen overnight. We have to get materials ready for that internal marketing effort. So it does take some time.

I think Herb is right. We've made a lot of the hiring to date. Now it's our job and our focus is making those hiring decisions and those investments productive for our business. And we are all focused on that.

I think the Company is really energized by some change. I can tell you, having done a couple of town hall calls with the employee group, we are ready. We're ready to go. We are ready to try some new activities. We're excited about the future and we're being led by what our clients are asking us for. And I think that's really critical, returning to the core of what our clients want.

That's great. Super. I'll follow up a little bit more offline. Thanks.

Okay. Great.

Thank you. At this time, I'd like to turn the call over to Chief Executive Officer Kate Duchene for any closing remarks. Ma'am?

Yes. Thank you, operator. Well, thank you, everyone, for your continued support and interest in Resources. We look forward to our next update for the third quarter of 2017. Thanks again.

Thank you, ma'am, and thank you, ladies and gentlemen, for your participation. That does conclude your program. You may disconnect your lines at this time. Have a wonderful day.