Resources Connection Inc (RGP) 2021 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Resources Connection, Inc. conference call. (Operator Instructions) As a reminder, this conference call is being recorded.

At this time, I would like to remind everyone that management will be commenting on results for the third quarter ended February 27, 2021. They will also refer to certain non-GAAP financial measures. An explanation and reconciliation of these measures to the most comparable GAAP financial measures is included in the press release issued today. Today's press release can be viewed in the Investor Relations section of RGP's website and was also filed today with the SEC.

Also during this call, management may make forward-looking statements regarding plans, initiatives and strategies and the anticipated financial performance of the company. Such statements are predictions, and actual events or results may differ materially. Please see RGP's report on Form 10-K for the year ended May 30, 2020, for a discussion of risks, uncertainties and other factors that may cause the company's business, results of operations and financial condition to differ materially from what is expressed or implied by forward-looking statements made during this call.

I'll now turn the call over to RGP's CEO, Kate Duchene.

Thank you, operator.

Good afternoon, everyone, and thank you for joining us. With me today are Tim Brackney, our Chief Operating Officer; and Jennifer Ryu, our Chief Financial Officer. I'll start with an overview of the third quarter, which I'm pleased to report showed continued improvement. I will then discuss opportunities that are building as we execute on our defined strategy. Next, I'll provide an update on our digital initiative, HUGO, and close my remarks with insights on the macro environment that we believe bode well for fiscal '22 and beyond. Then I'll turn the call over to Tim and Jenn for further color and detail.

From a revenue perspective, we delivered $156.6 million in Q3, representing a sequential improvement of 3.4% same-day constant currency despite the seasonal holiday impact. This performance continues to narrow the year-over-year decline caused by the global pandemic. Fourth quarter trends continue to show improvement.

Another highlight from our financials this quarter is the 200 basis point improvement in adjusted EBITDA margin from prior year performance driven by sequential revenue improvement and cost improvement of 12% year-over-year, excluding contingent consideration and restructuring costs. We remain focused on improving our margin performance as we continue to drive top line growth, extract operational efficiencies and lower costs, including real estate expenses.

I want to now make a few remarks about our strategies and how they align with opportunities that have been building throughout this fiscal year. Results achieved during this quarter reinforce more so than in any other prior quarter our strategy to build more capability in the digital and technology and health care practice areas. Both practice areas are delivering growth despite COVID impact. Specifically, Veracity's revenue was up 20% year-over-year, and we believe the pipeline of opportunity is near pre-COVID levels. Health care opportunities across the client set of payer provider, medical device and pharma are all increasing as projects that were delayed due to COVID reemerge or new needs created by COVID arise.

For example, we're currently engaged in multiple significant projects in the areas of revenue integrity, continuum of care, vaccine distribution and clinical trials development. We also recently entered into a multiyear contract with a preeminent group purchasing organization in the health care space and have seen our pipeline continuing to expand. Additionally, technology and digital revenue continues to rise as a percentage of our overall mix.

Now for a quick update on our digital transformation initiative, specifically HUGO. For anyone who's new to our story, HUGO is our digital engagement platform to offer clients and talent the opportunity to connect digitally for project work in the accounting and finance space with speed, transparency and choice. What is special and different about our platform is the foundation of employment versus an independent contractor model. We have purpose-built this platform for the professional knowledge worker who wants the safety net and community of employment with the agility and choice of a gig-oriented career. We believe HUGO will be one of the first platforms to revolutionize how accounting and finance professionals join the fluid workforce of the new gig economy.

We're in the final stages of product development, testing and marketing readiness for the initial rollout of HUGO. We will launch HUGO first in the New York Tri-State area, although specific timing remains fluid. We're keeping a close eye on market conditions for launch to ensure the pandemic recovery is stable enough to support on-premise work if required.

Many clients are in various stages of office reopening plans, so we will carefully evaluate their readiness when determining the final time line for launch. We're excited that this digital engagement model creates a new pathway to serve clients and consultants with user experience at its heart. We believe this approach will only grow in the coming years as digital natives become our core buying set.

Let me now share a few insights on trends materializing on the anticipated backside of COVID, which we believe should serve as longer-term drivers for our business. We know the economic environment is strengthening. GDP growth is expected to exceed 6% in the U.S. this calendar year, according to the Fitch Ratings Global Economic Outlook March 2021 report. And in the other regions in which we operate, they project growth in the range of 5% to 8%. Last week, The Conference Board reported that consumer confidence is the highest it's been in the year, and last week's jobs report beat expectations. Staffing industry analysts also projects U.S. staffing revenue to grow 12% in 2021.

Specifically for RGP's clients, COVID has hastened the shift to fluid talent strategies as a dynamic force for improving corporate performance. In other words, in a world filled with technology change, demographic shifts and the economic uncertainty, having the right talent in the right place at the right time has become an imperative to compete and thrive in today's business environment. Add the dimension of evolving labor preferences toward remote work, additional flexibility and increased choice and the human capital marketplace has drastically changed. These factors explain why a growing number of large enterprises will now define staffing needs with agility in mind.

A recent study published by Harvard Business School and BCG Henderson after serving 700 business executives and companies with more than $100 million in revenue highlighted the importance of adopting a strategic approach to an on-demand workforce. Here are a few of the salient research findings from that study. 60% of the executive surveyed expect that they will increasingly prefer to rent, borrow or share talent with other companies. Almost 90% of business leaders report agile talent platforms will be somewhat or very important to their organization's future competitive advantage. And nearly 50% of the executives expect their use of new digital platforms to increase significantly in the future.

We believe that this research, like many other studies recently published, confirms that the full-time equivalent paradigm is yesterday's framework. Agile or fluid talent strategies are taking hold today, play right to RGP's strengths and capabilities and will accelerate as we move forward in the now of work.

I'll now turn the call over to Tim for his operational update.

Thank you, Kate, and good afternoon, everyone.

During the quarter, we saw progress in our revenue and operating metrics as clients embrace the start of a return to normalcy. Top-of-the-funnel activity is approaching pre-pandemic levels as new and existing buyers have become more eager to discuss current and future initiatives. Opportunities identified through our enhanced outreach led to an appreciable increase in pipeline and closed engagements. As the overall macro environment continues to improve, our revenue has also gained strength.

As Kate touched on, sequential quarterly revenue trended up 3.4% on a same-day constant currency basis despite seasonality buoyed by the positive dynamic of clients resuming engagements that have been paused, starting projects that were delayed and generally committing to a larger spend on initiatives, including initiatives that have been driven by the changes to the workforce paradigm as a result of the pandemic.

COVID has and still does present challenges for our business. At the outset, demand creation was challenged. However, as client initiatives have continued to ramp, it has impacted timing in terms of engagement starts, creating a lag between closed won engagements and revenue generation. We are seeing improvements in this dynamic as well, but timing continues to be fluid on an engagement by engagement basis.

Overall momentum, coupled with our ability to deliver borderlessly, has given us capacity to pursue a more robust set of strategic initiatives. While there have been increased calls for on-prem resourcing, we also continue to deliver with blended teams and still, in many cases, fully remotely. We believe that a blended approach will be the standard operating model going forward as we serve clients that are comprised of increasingly distributed teams and have become more conditioned to flexible ways of engagement, focusing on outcomes versus ZIP codes.

We have seen numerous examples of this, including helping a large consumer goods company headquartered in the U.K. drive trade promotion efficiencies and benefits through better process and tooling, using advanced analytics, machine learning and AI. Our delivery team for that project has worked both on-site and remotely and is based in various localities across Europe and North America.

Another example is the fast ramp assistance we delivered to a client for stack readiness. This was a quick turn and featured a multicity team delivering in a blended fashion to help prepare our client to go public and then comply with ongoing public company requirements around financial systems, Sarbanes-Oxley and equity administration. As we have stated before, we believe this new way of working is here to stay and that it allows us to operate with increased efficiency while offering clients and consultants more choice and agility.

As we push into more of a post-pandemic environment, we believe that utilizing a mixture of traditional and remote delivery models will be critical in a commercial environment rife with pent-up demand. Specifically, our ability to capitalize on speed to market and to spin up solutions that produce the desired outcomes was one of our core competencies before the pandemic and has been further enhanced by lessons learned during the last year. We believe that this foundation provides the backbone for growth and profitability as we fully embrace life in a borderless world.

Now let me turn to our third quarter operations. During the quarter, we began to see a strengthening pipeline and increased average daily revenue rates. This strengthening increase throughout the quarter, partially offset by some of the adverse weather effects that impacted parts of North America and renewed COVID outbreaks in parts of APAC and Europe. Nonetheless, average daily revenue rates ended the quarter at the highest they have been in nearly a year. Enterprise revenue grew sequentially despite typical seasonality, and pipeline and booked revenue also nearly reached pre-pandemic levels. Average daily revenue rates in Europe ended the quarter nearly matching pre-COVID levels despite some latent outbreaks, while North America also continues to make good progress.

In fact, the majority of North American markets continued sequential progress, while several markets, including Tri-State, Detroit, Cleveland, Toronto and Mexico, had Q3 revenue results that exceeded the prior year quarter. APAC was slightly down sequentially due to renewed waves of COVID and some holiday impact, although Japan continued their strong run, improving both sequentially and over the prior year quarter.

Finally, there was continued strong performance from strategic client programs, health care, Veracity and Countsy, which either equaled or exceeded prior year quarter results and are building strong pipeline.

We are laser-focused on strategic growth and expansion, and we are also concentrating heavily on operating leverage. Executing in a more borderless fashion, continued migration to a more agile footprint and consistent focus on expense management has yielded improvement in operational leverage and a reduction in SG&A. We believe as we return to a more open economy, our discipline around driving operational efficiencies, combined with our increased sophistication and adapting to the new modalities we use to meet, deliver and commune, will allow for a more efficient and effective operating model in the future. We will continue to invest in the areas where we see upside opportunity and allow us to elevate and widen our relationships within our client base, including in HUGO, digital and technology, health care, client programs and office of the CFO.

Before handing over to Jenn, I want to provide some additional insight on early fourth quarter trends. The early weeks of Q4 have shown a continuation of positive trends in both revenue and growing pipeline. While we are optimistic, given operational indicators and broad economic trends, we recognize that there is still some fluidity in the macro environment.

I will now turn the call over to Jenn for a more detailed review of our third quarter results.

Thank you, Tim, and good afternoon, everyone.

Starting with an overview of our third quarter results. Revenue continued to improve sequentially despite the typical holiday impact. Gross margin was in line with our expectation given this typical seasonality. SG&A continues to benefit from our restructuring initiatives as well as our increasingly virtual operating model. We delivered a solid 6% adjusted EBITDA margin, a 200 basis point expansion from the same period last year. Our balance sheet remains strong with an increase in available liquidity during the quarter, and we continue to generate positive cash flow from operations.

Now let me provide more color on our operating results, starting with revenue. We generated $156.6 million of revenue, a 2.2% increase sequentially and a 6.8% decrease from the comparable quarter a year ago, narrowing the year-over-year revenue gap. After adjusting for business day and currency impact, revenue increased 3.4% sequentially and decreased 10.4% year-over-year.

North America led the sequential improvement with a 5.8% increase on a same-day constant currency basis, largely driven by a 12% growth in digital transformation services and a 3% improvement in both health care and financial services. Europe and Asia Pac revenue sequentially declined by 7.1% and 5.6%, respectively. Europe was primarily impacted by the reinstitution of lockdowns in Germany and, to a lesser extent, the expected shrinkage from unwinding our businesses in certain European markets in connection with the restructuring initiatives. Asia Pac's revenue recovery was hindered by heavier adjacent impact from various holidays in the third quarter.

Our third quarter gross margin was 36.4%, down 10 basis points from the prior year quarter. The change in gross margin was largely due to a slight decline in the bill/pay spread. Comparing to Q2 of fiscal '21, gross margin declined by 160 basis points, primarily due to an increase in payroll taxes at the start of the calendar year as FICA earnings reset. The average hourly bill rate for the quarter was approximately $125, up from $123 in the prior year quarter and $124 in Q2 of fiscal '21. The average pay rate for the quarter was $64 up from $63 in both the prior year quarter and the prior quarter sequentially.

SG&A expenses for the quarter were $49.5 million after excluding $2.7 million of contingent consideration expense and $0.7 million of restructuring charges, a meaningful improvement of $6.7 million compared to the prior year quarter. Reflecting the benefits from our restructuring efforts, management compensation costs were reduced by $3 million and occupancy costs were reduced by $0.9 million compared to Q3 of fiscal '20. General business expense also continued to improve, down $1.6 million compared to Q3 of fiscal '20 due to reduced travel and reduced discretionary spend.

Turning to other components of our financial statements. Income tax provision was $1.1 million, representing an effective tax rate of 60.5% compared to an income tax benefit of $4 million in the prior year quarter. The increase in effective tax rate for the current quarter was driven by our inability to realize any tax benefits on losses in certain foreign entities due to required valuation allowances. Prior year quarter's tax benefit included a discrete tax benefit of $6.6 million relating to certain deductions we took upon the solution of entities in the Nordics.

Adjusted diluted EPS for Q3 of fiscal '21, which excludes the net of tax impact of restructuring charges, thought compensation and contingent consideration was $0.14 per share compared to $0.25 per share in the prior year quarter, which included the favorable impact of $0.18 per share from the discrete tax benefit just mentioned earlier.

Our balance sheet remains strong. We ended the quarter with cash and cash equivalents of $84 million compared to $96 million at the end of fiscal '20. We generated approximately $35 million of positive cash flow from operations in the first 9 months of the fiscal year and paid down $35 million of outstanding debt under our credit facility. We maintained our $0.14 per share quarterly dividend in the third quarter. We remain prudent in managing our liquidity, considering the lingering impact of the pandemic and the near-term cash requirements to fund our digital transformation efforts.

I'll close with our fourth quarter outlook and an update on client statistics. Given the pace of recovery from the pandemic and the increasing stability in the macro environment and in our business, we're pleased to provide guidance for Q4. We expect continued revenue growth in the fourth quarter in a range of $164 million to $167 million. Gross margin is expected to rebound from the third quarter given fewer holidays and is expected to be in the range of 37.5% to 38%. From an SG&A perspective, we expect to achieve sub-30% in the quarter during which the top line is still recovering from the pandemic, estimated to be in the range of $48 million to $50 million. Finally, RGP's client continuity was outstanding this quarter, and we believe our retention statistics demonstrate the value-add we bring to clients every day.

During Q3, we served 49 of our top 50 clients from fiscal 2020 and 45 of the top 50 from 2019. This stickiness has remained consistent year-over-year despite the global pandemic. In addition, for Q3, our top 50 clients represented 42.5% of total revenue, while 50% of our revenues came from our top 80 clients.

Reflecting our efforts to continue to diversify our solution mix. 94% of our top 50 clients procured multiple services or functional expertise from RGP during the third quarter, an improvement from the start of the second half of the year.

Now we're happy to take questions.

(Operator Instructions) Our first question comes from Josh Vogel with Sidoti.

Jenn, appreciate the guidance that you gave for Q4. I know it's still early, but I was wondering if you could frame how we should start thinking about the gross margin profile of the business once we get into midyear, specifically fiscal '22, thinking about mix, search revenue increasing but also perhaps an increase in client reimbursements. Could the gross margin get back to an above 39% on a full year -- full fiscal year basis?

Yes. Josh, yes. I mean as we think about gross margins, I think of it in really 3 components. One is obviously the bill and pay ratio. And the second one is exactly what you said, which is the mix of our revenues, search conversion revenue, which is 100% gross margin, versus the client reimbursement revenue. And the third one is really what I consider to be the fixed cost -- consultant fixed benefit costs and as revenue increases in fiscal '22, and that leverage is really going to increase. So from a bill/pay standpoint, we do expect that we have some kind of room to increase our bill rate, particularly in the areas of digital as well as health care solutions. And so yes, I mean, we expect bill/pay to get better.

And remember, too, this year, because of COVID, we did have to make some concessions on pricing where it's appropriate to our clients in order to balance our top line and our gross margin. So we do expect to get some of that back as we head into mid-fiscal '22.

Great. And when we look to the future, we think about the changes in digital and health care and looking to operate in, I guess, this blended delivery model, do you think that's going to have any impact on the bill rate side of the business?

Josh, it's Tim. Go ahead. Go ahead.

Let me break that down a little bit better. When I think about the blended delivery model of whether it's on-premise versus virtual or remote, is there any notable changes or deviations in the bill rates that we should expect to see longer term?

Yes. I don't -- like I think -- let me answer this in this way. I mean we will still price relative to the work that we're doing, sort of irrespective of where the delivery assets lie. So to the extent that we have -- that we can match a better resource for -- as part of the delivery team that's off-site, that allows us a better delivery outcome. But the pricing -- the pay and pricing will be sort of split, right?

So if you -- it gives us an opportunity for actually margin uplift, depending on kind of where the delivery asset sits relative to the outcome of the project and the pricing associated with it. So I don't -- I think it will have more impact on margin than it will on billing in short, if I were to answer your -- to kind of get back to your original question, but it does provide real opportunities for us when you think about profitable growth.

Sure. No, that's helpful. And shifting gears a little bit. You had a comment around clients committing to larger spend on certain initiatives. Can you just quantify what this larger spend is, how it looks versus pre-pandemic levels?

Yes. I mean it's hard to give you -- I'll give you a couple of ways to look at it. I mean our average deal size right now is larger than it's been in well over a year. So That's one way to look at it.

The other way to look at it is just the outcome -- the types of projects that we're being asked to come in, in for, there are large initiatives where we're -- they're asking for dozens of people. That's quite different than towards the beginning of the pandemic and certainly when we were in the middle of it, where it was very much more smaller projects, and the commitments, both in terms of timing and number of people and certainly bill rates, were lower.

All right. Great. And two more quick ones, if I may, and I'll hop back in the queue. It sounds like Veracity is doing very well. I'm just curious how -- given the contingent consideration payout, how are they performing relative to your minimum or max that you had put on that business?

I'm sorry, Josh, I lost the very end of your question.

I'm sorry. So I'm curious, Veracity's performance -- how are they performing relative to the minimum or max targets that you set for it.

Yes. Josh, I'll take that one. They're performing -- they're actually performing very well. And as you can see, we have contingent consideration of $2.7 million during the quarter. And right now, they are exceeding the minimum threshold to make their earn-outs. So we do expect it to exceed the minimum threshold when we get through their earn-out period, which is July.

Great. Great. And lastly, can you just talk a little bit about the recent investment in APAC, the collaboration with ServiceNow? What it immediately brings to the table for you? And is this something we could see you do in potentially other regions?

Yes. I think the answer -- Josh, it's Kate. I think the answer is yes. I mean Veracity, when we purchased them, we knew was a largely domestic business. But the need for collaboration, streamlining workflow and automation is a global problem or issue. So our start in expansion is in Asia Pac, specifically in Singapore, where we've hired a leader out of the Big 4 to lead our digital practice there. And he brought with him a small team. And we hope to do the same thing in Europe when the time is right.

For Europe, we needed to get through project strength first, though, and stabilize that business and then we'll focus, I think, in fiscal '22 on how do we add to the global platform for Veracity.

That's great. And I'm so sorry, I just want to sneak in one more quick one. Based on your guidance, is there any other additional structuring tied to Europe that's baked into those numbers?

No. We're substantially complete with our restructuring in Europe. And there are a couple of real estate locations that we're still working on, but we're there.

It's great to see the improvements in the business, and looking forward to seeing the earnings.

Our next question comes from Andre Childress with Baird.

This is Andre Childress calling in for Mark Marcon. So my first question is on the HUGO implementation. I know you provided some detail that the New York Tri-State area is going to be the first market that you're implementing it to. But what does the time line look like beyond that from the initial rollout to that dedicated market to the complete rollout to the all markets? Just walking through kind of what that road map looks like would be very helpful.

Sure. Andre, Nice to meet you. It's Kate. So we will start in the start of the fiscal year, fiscal '22, with our rollout in the Tri-State area. That will be a soft launch. And I imagine we'll continue to iterate the product a bit.

Our plan for fiscal '22 is to be able to roll out fully in 3 major markets. We next intend to move to the Texas region and then move to the West Coast in Northern California. And from there, we believe that the adoption will be more rapid across the country. So we'll cover those 3 markets in fiscal '22 and then move to accelerate in fiscal '23 across the domestic market.

Okay. That is very helpful. And so within fiscal quarter 3 results and kind of looking forward, how much of a contribution did you guys see from assisting with kind of the stack business and kind of how much of that activity has been going on?

Yes. Andre, it's Tim. To quantify that, I think the little -- it's difficult for me to give you sort of a percentage of business. What I will tell you from -- what I will tell you is that prior to this quarter, we were doing transaction support and IPO readiness are more sort of in the traditional arena. And it feels like in this quarter -- I think much like a lot of others, the genie is out of the bottle on stacks. And so our pipeline is very full. We expect that -- barring something happening from a macro perspective that we'll have more of these types of projects that we're working on into Q4 and probably into Q1 as well.

Great. And so looking forward, particularly like what you saw in March and going forward, can you dive into some details that you saw with the trend in North America? And so like, for example, how that has performed since they really opened up at the Tri-State region in California? Any detail there would be very helpful.

Okay. I think -- Andre, I think you broke up a little bit, so let me just -- I'll take you on sort of a quick tour of North America. I mean, let's start in Tri-State, which I could hear you ask about. Tri-State got hit hard early with COVID, and they've come out really swinging in the second half of the year. Their Q3 was very strong. I mean they had year-over-year growth sequentially -- excuse me, year-over-year growth and sequential, I should say.

I think the -- Texas had been having a very strong year, but they were hit by some of the inclement weather and other things that happened in this quarter. So the Midwest and Southeast are probably our slowest recoverers, but we've got some real signs of life there now when I look at sort of leading indicators. Midwest, even with sort of manufacturing coming back. Detroit had a very good quarter.

And then on the West Coast, West Coast has been strong. The -- I think when I look at their pipeline and I look at the trend line level and sort of top of the funnel and I think about the progression relative to deal size and velocity, we're expecting them to continue to have a strong fourth quarter and into Q1 in the summer.

Okay. Great. And so just on that, just with some economies reopening, has that driven stronger pipeline activity, at least people reengaging in certain conversations and thinking about bringing certain projects back?

I mean definitely. I mean it's sort of like a double-edged sword. So I mean -- but the answer to that is yes. I'll get to the double-edged sword in a second. But just the idea of having some certainty around what has been very uncertain times, a lot of our clients, particularly the large ones, are moving more quickly. Relative to projects that were either shelved or paused or they sequence differently, what we see is that they're stacking their projects and trying to move them -- move quickly on them. So the answer to that is yes.

Relative to -- it's not really relative, I would say, to an economy opening faster than the other. It's more about certainty and uncertain times. The double-edged sword piece, I would just say, is that I think there's a lot of people who feel -- I mean we see a little bit of an exaggerated holiday and vacation effect because of people who have been cooped up for a month at a time who now also have that sense of optimism and want to utilize the opportunity to spend time with people that they haven't been able to spend time with before.

So I feel bad calling it a double-edged sword because that's a very positive thing for all of us, but it's a mild blunting effect to the upside of the economy opening up again.

Our next question comes from Andrew Steinerman with JPMorgan.

Two questions, one on days, one on SG&A. So Jenn, just a quick one on days. Going over the quarter, the third quarter just reported, were days different year-over-year? And then again, for the fourth quarter, which we're in now, are days different year-over-year?

And then my question about SG&A. Obviously, thank you for guiding the fourth quarter with SG&A and overall. My question is, as we move past the fourth quarter, is this a period of higher SG&A? I'm thinking about discretionary costs coming back and then, of course, the launch of HUGO.

Yes. Andrew, so with respect to that's, Q2 -- I'll just talk about North America because that's what drives majority of our business. So in Q2 -- I'm sorry, in Q3, we had 62 days -- I'm sorry, 61 days. Versus Q4, we're expecting to have 65 days -- business days.

And I asked year-over-year?

And SG&A, yes. And with respect to SG&A, I mean, I think beginning in FY '22, some of the SG&A favorability this year was really attributable to about -- expected to be $6 million to be attributable to the reduced travel cost. And I expect that going forward in FY '22 as the economy and the world opens up, we would give back some of that savings. I would expect we would give back maybe in the range of 50% of that savings that you're seeing in this fiscal year.

And then with respect to HUGO, too -- and as we launch HUGO in fiscal '22, we will add additional SG&A in the next year just because roughly about 75% of the cost today is -- has been capitalized.

Right. And did you give days year-over-year? I think you just gave it for the current quarter. I meant year-over-year.

I'm sorry, Q3 of '20 is 59 days.

And Q4 of '20?

Q4 of '20 is 69.

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Kate Duchene for any further remarks.

Thank you, everyone, for your interest in RGP, and we look forward to talking to you again at the end of our fiscal year. Thanks very much.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.