羅致恆富 (RHI) 2013 Q2 法說會逐字稿

Hello, and welcome to the Robert Half International second quarter 2013 conference call. Our hosts for today's call are Mr. Max Messmer, Chairman and CEO of Robert Half International, and Mr. Keith Waddell, Vice Chairman, President and Chief Financial Officer.

Mr. Messmer, you may begin.

Thank you, and good afternoon, everyone.

We begin today's call with our customary reminder that comments made on this call contain predictions, estimates and other forward-looking statements. They represent our current judgment of what the future holds, and include words such as forecast, estimate, project, expect, believe, guidance, and similar expressions. While we believe the remarks to be reasonable, we do remind you that they are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Some of these risks and uncertainties are described in today's press release, and in our SEC filings, including our 10-Ks, 10-Qs, and today's 8-K. We assume no obligation to update statements made on today's call.

Now let's discuss the second quarter. Global revenues for the quarter were $1.06 billion, a 3% increase year-over-year, income per share was $0.46, up 42% from a year ago. In the second quarter of last year, net income was reduced by $8.1 million, or $0.06 per share, as a result of non-recurring costs associated with a litigation settlement and the resolution of certain tax matters during the quarter. After adjusting prior year results for these items, net income was up 18% and income per share was up 20% on a year-over-year basis.

Cash flow from operations during this year's second quarter was $102 million, and capital expenditures were $11 million. We paid a $0.16 cash dividend to shareholders on June 14, at a cost of $22 million. We also repurchased 1.2 million RHI shares during the second quarter at a cost of $39 million. Approximately 9.4 million shares remain available for repurchase, under our board-approved stock repurchase plan.

Robert Half saw continued demand for our professional services during the quarter, and we were pleased with the Company's overall performance. Our revenue growth was concentrated in the United States, which has been the case for the past several quarters. Within our staffing lines of business, our Robert Half Technology division reported the most sizeable revenue gains. Protiviti also had a strong quarter, with revenues reaching the highest levels since the fourth quarter of 2007. Despite ongoing softness in international markets, this is the 13th consecutive in which net income and earnings per share have grown 15% or more on a year-over-year basis.

Now I'll turn the call over to Keith for a closer look at our second-quarter financial results.

Thank you, Max.

As noted, overall revenues in the second quarter were $1.06 billion, up 3% from last year on a reported, as well as same day constant currency basis. On a same day constant currency basis, global staffing revenues increased 1% year-over-year, with the US growing 4%, and international staffing revenues declining by 7%. US staffing revenues were $703 million in the second quarter, while international staffing revenues were $229 million. We have 348 staffing locations worldwide, including 103 locations in 19 countries outside the United States.

We calculated 63.5 billing days in the second quarter, compared to 63.1 building days in last year's second quarter, the effect of which was a less than 1% increase in reported year-over-year staffing growth rates. The current quarter has 64 billing days.

Currency exchange rates had no meaningful effect on reported second quarter 2013 staffing revenues. A supplemental schedule accompanying our earnings release today shows year-over-year revenue growth rates for each of our staffing lines of business on a reported, as well as a same-day, constant currency basis. The schedule further divides the data between US and non-US operations. This is a non-GAAP financial measure that provides additional information on certain revenue trends in our staffing operations.

You can find the schedule in today's press release and in the Investor Center of our website. Second-quarter global revenues for Protiviti were $131 million, including $103 million in the United States, and $28 million outside the US. Global revenues for Protiviti grew 19% year over year, with US revenues up 23%, and non-US revenues up 4%. Protiviti and its independently-owned member firms serve client through a network of 75 locations in 24 countries.

Now turning to gross margin. Second-quarter gross margin in our temporary and consulting staffing operations was 36.1% of applicable revenues. This was a 30-basis point increase over the second quarter of 2012. The improvement reflects continued strength in the US, pay bill spreads, as well as lower US payroll taxes and other fringe benefit costs.

Permanent placement revenues were 9.7% of overall staffing revenues for the quarter, the same as reported one year ago. Together with the higher temporary and consulting gross margins just discussed, overall staffing gross margin expanded by 20 basis points versus a year ago. Protiviti second quarter gross margin was $37 million, or 28.6% of revenues, compared to $29 million or 26.4% of revenues a year ago. This is an increase of $8 million or 28%, owing largely to higher staff utilization rates.

Turning to selling general and administrative costs. In the second quarter, our staffing SG&A costs were 32.5% of staffing revenues, down 190 basis points from the 34.4% reported a year ago. Last year's SG&A costs included the non-recurring charge of 2.1% of revenues related to a litigation settlement. Absent that change, SG&A would have increased by 20 basis points compared to last year. Second-quarter SG&A costs for Protiviti were 21.9% of revenues. This is a 270-basis point improvement from the 24.6% level reported last year.

Turning to operating income, second-quarter operating income from our staffing divisions was $92 million, or 9.9% of staffing revenues. The temporary and consulting divisions reported $77 million in operating income, or 9.1% of applicable revenues. Second-quarter operating income for our permanent placement division was $15 million, or 17.1% of applicable revenues.

Protiviti's operating profit was $9 million in the second quarter, or 6.7% of revenues, compared to $2 million in the second quarter one year ago, or 1.8% of revenues. This was Protiviti's best second-quarter operating profit in six years. Accounts receivable were $557 million at the end of the second quarter, with implied days sales outstanding, or DSO, of 47.7 days, compared to 47.1 days at the end of the second quarter of 2012.

Now let's turn to third-quarter guidance. We saw the following trends in the second quarter, and so far in July. In the US, year-over-year growth rates for our temporary and consulting divisions slowed in April, but accelerated modestly in May and again in June. Also in the US, year-over-year growth rates for our permanent placement divisions slowed in April, and also accelerated modestly in May and again in June.

Outside the US, year-over-year staffing growth rates remained consistently negative throughout the quarter. For the first two weeks of July, revenues for our temporary and consulting operations were up 1% on a same-day constant currency basis, compared to the same period last year, with US temporary and consulting revenues up 4% and non-US temporary and consulting revenues down 10%. For the first three weeks of July, global permanent placement revenues were up 9% on a same-day constant currency basis, compared to the same period last year, with US perm revenues up 23%, and non-US perm revenues down 13%.

We would remind you, however, it's difficult to evaluate trends over such short periods of time. Taking this information into account, we offer the following third-quarter guidance. Revenues, $1.05 billion to $1.1 billion. Income per share $0.44 to $0.49. We limit our guidance to one quarter. All estimates we provide on this call are subject to the risks mentioned in today's press release.

Now I'll turn the call back to Max.

Thank you, Keith.

We were pleased with the quarter overall, notwithstanding softness in many of our non-US markets, particularly in Europe. We saw the strongest growth rates in our Technology staffing and Protiviti operations. As Keith mentioned, Protiviti had its best quarter in six years, with growth in all consulting solutions, especially in areas such as regulatory risk and compliance, information technology application controls, and security. Protiviti also saw continued growth in internal audit and financial advisory services.

We've talked before on this call about some of the reasons we believe Robert Half is well-positioned. Economic growth has been uneven in many markets, but we do see a broader picture. Skills shortages persist in many of our professional disciplines, including technology and accounting. Robert Half is a resource for companies with hard-to-fill jobs. Businesses are using more temporaries as part of their human resources mix. We believe this trend could lead to further increases in the number of temporaries as a percentage of the total workforce. The temp penetration rate in the United States is near an all-time high.

We're focused on small and mid-sized companies, a segment that is leading private sector job growth in the United States. Global regulatory mandates are creating demand for compliance professionals and other staff. We can help businesses locate these professionals quickly. We offer companies, particularly small and mid-sized ones, an attractive option for finding and hiring great people.

Not every employer has the resources or the desire to spends the time it takes to ensure they are making a good match. We make it convenient for them to find specialized talent when and for as long as they need it. We argue that our fees are not expensive compared to the cost of hiring the wrong person. At this time, we will be happy to answer questions.

We would ask that you please limit yourself, as usual, to one question and a single follow-up if needed. If time permits, we will try to return to you later in the call if you do have additional questions. Thank you.

(Operator Instructions)

Mark Marcon, Robert W. Baird.

I was particularly impressed by Protiviti, and a very nice margin improvement there. Can you tell us what your expectations are for Protiviti that are embedded in your third-quarter guidance? And how we should think about Protiviti longer-term, particularly on the margin front?

If you look at the last few years, you'll see that Protiviti gets some lift in margins in the third quarter versus the second quarter. Sometimes upwards of 200 or 300 basis points. That said, it is starting from a higher level this year, so we would be a little more conservative than that. But longer term, as we have spoken many times, we have always believed Protiviti can be a double-digit operating margin business. It showed nice progress toward that end, and we're even more confident that we can get Protiviti overall to double-digit margins. During this past quarter, we had significant improvement in US margins, with higher utilization, and I'll also say that our non-US operations showed improvement as well relative to the second quarter.

I'll just add that, as I said on prior calls, we're very happy with the management group running Protiviti day in and day out. Joe Tarantino and the team do an outstanding job, and we do have a lot of confidence in them going forward.

Great. And would you expect to see the normal -- if we take a look at the last two years in terms of the type of sequential growth that you typically end up having there in the third quarter, and longer term, is it your sense that you're gaining share? When we take a look at your performance relative to some of the other players that overlap with you, it seems like you're going faster.

As to normal sequential trends, again, we're optimistic about the third quarter. But as I said, we're starting at a higher base sequentially than typical. As to the gaining share comment, I would certainly say that the market is growing, particularly for financial services, risk and regulatory consulting demand, so I believe we're more than participating in that uptick in demand. Now, whether we're net gaining share, particularly relative to the Big Four, which is who we compete with most often, it's frankly hard to measure.

Great.

Andrew Steinerman, JPMorgan.

Keith, could you just go over the low end of guidance on the [revenue] side, which is a touch lower than what you achieved in the second quarter? And what would have to happen for us to end up at that low end? Or is there just conservatism of a uncertain economy baked into that?

The short answer is it's the latter. Typically, Andrew, what we do is, we look at our growth rates for the quarter just ended, we look at our start for the current quarter for the first few weeks of July, and based on that, look at the midpoint of our range. And if you look at those data points, I would say the midpoint of our guidance is that we're a little more conservative relative to where we were out of the gate in the US. We're a little less conservative relative to where we are out of the gate non-US. But that overall, our midpoint shows some acceleration in year-over-year growth rates versus the year-ago. We then look at low end and high end as plus or minus relative to that, but frankly, where we start is, what should the midpoint be? Not only from a trend perspective, but from pretty extensive discussions with our field people that run these areas.

Okay. Good. And what would be the implied constant currency same-day growth in the range of revenues that you gave for third quarter?

Implied same-day constant currency overall global revenues at midpoint would be 1.5% at the high point, it would be 4%, and at the low point, it would be negative 1%.

Right. So at the midpoint, you're saying, we're leaning forward from the growth rates that we saw in the second quarter?

Yes.

Perfect.

Right. Informed by the little nicer start, informed by the trends during the quarter, where we saw modest acceleration in both of the last two months of the quarter, all of which point to some modest acceleration.

Perfect.

Sara Gubins, Bank of America Merrill Lynch.

When I look at the growth trends on a same-day constant currency basis outside the US, the declines got a little bit better in the second quarter in both temp and perm. Could you give us some more color on a market-by-market basis that's showing at least some improvement in the declines in growth rate?

Sure. So clearly, the strongest market was Germany, where it still continued to have positive growth year-over-year. Then if you look at Canada, Belgium, UK and France, the negatives were less negative than they were a quarter ago. So when you put the package together, you get the trend line you described. I'd say that versus 90 days ago, our field leadership team outside the US is modestly more positive, but not dramatically so, and our guidance reflects that.

Great. And then separately, looking at the growth in permanent placement costs in the second quarter, it looks like they were up almost 6% year-over-year. They had been up a little less than 2% in the first quarter. Can you talk about what's driving the increase, and should we expect that rate to continue, or is there any reason that costs would ramp further?

The costs are up, because of A, if you look at the growth rates in the US, particularly, that justifies some additions to head count. Further outside the US, we're optimistic about Germany tech, and we've done some hiring there in advance of actual growth. That, in combination with some negative leverage in those markets, where you got negative growth rates, the combination of which gives you cost rising modestly quicker than revenues. But that said, we still had perm operating margins that were 16%, 17% for the quarter, which isn't bad. And in fact, we are seeing 20% a year ago, which was the highest margins we had a year ago.

Okay.

Jeff Silber, BMO Capital Markets.

I wanted to focus a little bit on temp gross margins. Historically, you tend to see a little bit more of a pickup in temp gross margins between Q1 and Q2 than you did this quarter. Was there anything specifically going on, and is this something we need to know about going forward?

I'd say in the past, we were trying to recover significantly more unemployment cost, which was done on a phased basis, some of which was in Q1, some of which was in Q2. The headwind from unemployment costs this year hasn't been what it is. And therefore, that didn't repeat, so generally speaking, we're pleased with the progress we've made with gross margins. They were still up nicely year-over-year, but as you look to the third and to the fourth quarter, our guidance for the third quarter, as an example, is that sequentially and year-over-year for that matter, they are pretty flat. We didn't see any lift for workers actuarial accrual adjustments that we've seen in some quarters past, and that happens in the second quarter. So maybe not so much one year ago, but in years past in the second quarter, we've gotten some lift from the actuarial reassessment of our workers comp accruals.

Okay, that's helpful. And shifting gears a bit, I know in the past you've talked about the potential benefit to your business from Obamacare, and now with the delay in the employer mandate, have you seen any adverse impact on your business, accordingly?

As we've talked about on many calls, while we've had many discussions with our clients to this point, there hadn't been a lot of actual demand. I would further say this about the delay, and the delay of the employer mandate is currently until January 1, 2015. Understand that the determination of whether an employer has 50 or more full-time and equivalent in employees is based on the previous calendar year. And therefore, assuming a January 1, 2015 effective date, the prior year look-back period would begin January 1, 2014, which is less than six months away. And so while further regulations could change this, and other ACA provisions as well, we're still advising our clients to assume that the counting of their FTEs begins on January 1, 2014, because that's currently the law. And again, that's less than six months away. So I think there's a lot of visibility out there that this has been delayed until 2015. I'll tell you, our discussions with our clients would indicate there's much less visibility to the counting that happens on a one year look-back basis, and therefore, our clients are on the clock, so to speak, beginning January 1, 2014.

Okay. Great. Appreciate the color, Keith.

Tim McHugh, William Blair & Company.

Yes. First wanted to ask about the technology segment, the growth rate on a constant currency basis picked up a little bit. I know that comp was easier, but qualitatively, how would you describe the market and what you're seeing? Is demand better, or are some investments you made in the business starting to mature? Just a little more color on what you're seeing.

I'd say that the demand remains strong, as we've talked about before. We've invested particularly in the tech development, the application developers, the web developers, the higher end of the tech market relative to the tech support, where we typically focused. I believe that those investments we have made paid off to a larger degree this past quarter than they have in quarters past. We were very pleased with our tech performance, and we continue be very optimistic about our tech performance as we move forward.

By the way, it sounds like you wouldn't say that environment is any different from what you've seen.

It's not significantly different. It's clearly more Canada-challenged than the other markets, but that's a matter of, "he who is the best recruiter wins," and frankly we like our chances when that's what the battle is.

Okay. And then going back to the earlier comment about Q3, you expect the gross margin to be relatively flat year-over-year. And I know Europe is a bit of a headwind to the gross margin right now. But are you reaching a point from a pricing and bill rate spread perspective in the cycle where it's just going to be harder to get that improvement? Or do you feel good about continuing to drive that forward, exclusive of whatever happens with conversion fees, which are outside your control a bit?

Right, and we would observe that, given the relative minor macro lift we've gotten thus far, we've done really well getting our gross margins north of 36%. And a corollary, we believe that when we do get some macro lift, we can participate in that nicely, including with higher gross margins. But in the absence of much of a macro lift, it seems that, given where we are, to assume that they are anything more than flattish, would probably be too aggressive. But I want to make clear that we believe that if and when the macro economy, particularly in the US, does pick up more solidly, that there is gross margin expansion opportunities at that time. It's just, we've gotten them where we've gotten them in the absence of that, and we're probably about where we can get to in the absence of that.

Okay. Fair enough.

Paul Ginocchio, Deutsche Bank.

Keith, just wondering what your exposure to mortgage processing is? And can you talk us through those trends? Would they look like the macro mortgage data we are looking at?

Without getting particularly granular on exact percentages, I will say this. If you are looking at Accountemps, and if you look at Management Resources, and if you look at their year-over-year growth rates, they are clearly impacted by the decline in the mortgage. The foreclosure look-back has the impact of two or three year-over-year growth rate points, or 200 or 300 basis points, however you want to look at it. So if you look at their year-over-year growth rates that we showed in constant currency, you add two to three, and it's a little different for Accountemps and MR, but it's in that order of magnitude. Our remaining exposure to mortgage is a modest single-digit amount. And as we've said on prior calls, if we're talking exposure generally relative to our total revenues, it's pretty small. But if you're looking at growth rates and growth dollars, then the impact of the lesser amounts for mortgage and foreclosure look-back, it's more significant. And as I said, it had the impact of two to three growth rate points year-over-year.

And in your Q3 guidance, have you assumed that's going to be a bigger headwind?

We haven't assumed much change there. The big drop-off was early in the year, when there was the big settlement that occurred, I think it was in January. And since then, it's been relatively stable, but that drop-off doesn't anniversary until the end of the year.

Kevin McVeigh, Macquarie Research.

Keith, it looks like sequentially, Protiviti was up $14 million, that's almost 2x the rate of the last couple years. Was there anything specific in there that drove that? And as you think about that, the pull-forward effect, if you will, around Management Resources and Accountemps, again, anything specific? Or as we think about that going forward, is that the trend rate we should think about?

There are no discrete revenue items that, by definition, fall away. Again, we saw more demand in the financial services risk and compliance area, and the technology application controls and technology security. It's a continuation of the nice trends we have seen for a few quarters now. As to the pull-forward effect to our other divisions, clearly Protiviti uses staff from our staffing operations on some of those engagements. And further, it helps our other staffing divisions focus on which skill sets are particularly in demand, that they can offer not only to Protiviti as a client, but to third party clients as well.

Got it. Okay.

(Operator Instructions)

Tobey Sommer, SunTrust Robinson Humphrey.

I was wondering if you could describe tech demand, and whether you're experiencing better demand on the high end of your skill sets and bill rates, or on the lower end?

We have invested disproportionately on the higher end, and we're seeing more success for that reason. I think we're seeing very solid demand at the higher end and in the tech support positions. But because we have more internal capacity relative to a year ago at the higher end, our growth rates are higher there.

And then relative to the ACA and its cost impact on your business, do you have any refined thoughts on what it would mean for Robert Half's expense growth?

Clearly, the delay means we'll delay by a year offering bronze level coverage to our temporaries. It will give us another year to measure what percentage would qualify for whatever our requirement is ultimately ended up at. It will give us another year to see how many of our temporaries go to the public exchanges, and to what extent they qualify for subsidies. So I think we'll have another year's worth of data, but frankly, the data we have looked at in the last six to nine months is really consistent with the data we had looked at a year ago, so we don't expect any huge surprises there. Our strategy was that we would simultaneously offer to our temporaries bronze level coverage, and also a much lower cost plan, and they could choose between the two. Our current thinking is to go forward with the lower cost plans, but not to go forward, at least in '14, with the bronze level plan, so we'll also see what kind of sign-up rate we get for that lower cost plan. But based on everything we know today, including the effect of the delay, we don't expect the cost to be certainly any more than what we first projected them to be, which we thought would be manageable.

Randy Reece, Avondale Partners.

If you were to extract some of the small segments, like Robert Half Legal and The Creative Group, and look at the remainder, would that change comparisons at all? Is there anything meaningfully different there?

I'd say The Creative Group is doing particularly well in the digital media area. But because of the relative size of Accountemps in The Creative Group, it's hard for The Creative Group to move the needle in the combined Accountemps number. So it's doing very well in its own right, but it's small relative to total Accountemps, so what you get when we report Accountemps, for all intents and purposes, is Accountemps.

I would expect Robert Half Legal to not be so hot lately. Is that the trend you've seen?

Robert Half Legal is holding its own, but it's certainly not in the digital media space, which is doing much better, which is why I mentioned it first.

My inclination when it comes to the mortgage review work is to think that revenue continues into part of the first quarter, but really trailed off toward the end. Did you have any significant revenue in the second quarter?

We continue to have some mortgage revenue, including in the second quarter. And as I said earlier, it's a small single-digit percentage of our overall revenues. And we've had some mortgage revenue for years. And we would expect to have that for years to come.

I was talking about, particularly, the look-backs.

The look-back was a very discrete, very special thing, and that pretty abruptly came to an end. I believe it was the early part of January.

Okay.

And from that moment on, we've had virtually no foreclosure look-back work. But normal mortgage refinance and mortgage origination processing demand continues at a low single-digit rate of our revenues.

Yes. That doesn't really bother me. I was just trying to understand the effect on your comps, just in that particular surprise settlement, that caught a number of the vendors by surprise. If you just pull that out, is Accountemps in the US following what you would typically see when GDP grinds down like this?

As we said earlier, the foreclosure look-back decline impacts Accountemps and Management Resources growth rates between two and three growth rate points, so you can add those back to get what it's doing absent the fall-off of that work. And again, given the context of very little macro, very little cyclical lift at this point in the cycle, Accountemps isn't doing unexpectedly.

Was that impact similar in the first quarter, the year-over-year?

I think, because we had a little bit of it, the impact was a little less.

I didn't know how much you had in the same quarter of the previous year. It seemed like with other vendors it ramped pretty significantly through the year last year.

Right, but concentrated more in the second half, and on.

Yes. Okay. I think you pulled that out. I can get a good picture.

Mark Marcon, Robert W. Baird.

Two questions. Just a follow on from Randy's question. Assuming that we just keep muddling along in the US, how are you thinking about Accountemps' longer-term growth rates? If we add back in the 200 to 300 BIPs for the mortgage look-back, do you think that's the trend that we'll see in this kind of environment?

If we talk longer-term, we still believe that Accountemps is under-penetrated relative to the middle market opportunity it has, starting in the United States, where we do business with fewer than 10% of all prospects, and that's all divisions combined. That's not just Accountemps. And therefore, we continue to be optimistic about Accountemps and our other divisions' prospect, because middle market companies are less penetrated as it relates to temporary help than our larger companies. And we believe bridging that gap, narrowing that gap, presents a large opportunity for us.

Agreed. You've obviously been saying that for quite a long time, and you've been proving it right for quite a long time. Just wondering, would you have to do anything differently than you've been doing? Has anything in the environment changed at all, just as it relates to demand for F&A within the mid-market?

There are no trends, no structural changes, no competitive landscape, there are none of those things that would cause us concern. In the accounting and finance world, change is always good, be it tax changes, accounting regulation changes, internal control requirement changes, and usually in accounting and finance, there is always something that is changing.

And then shifting over to IT, where you're seeing an acceleration, he who has the best recruiters wins, and you guys are quite good at that. Do you -- how are you thinking about investing in that area over the next few years, in terms of it's been outsized, which looks like it's proven successful. Should we continue to expect continued outsized investment in that area?

Right. For continued outsized financial results, we'll continue to make outsized investments.

Which really makes sense.

Because there's nothing like organic growth. Our return on equity is in the high 20%s, which is some of the highest returns you get anywhere, particularly in staffing, and you get that with internal growth.

100% agree.

And Mark, it's an extent we take a few margin points off the table, by investing higher in one division than the other, it's because it's growing faster, you still get high 20%s return on equity, which we're very proud of.

100% agree, and good to hear.

Jeff Silber, BMO Capital Markets.

Just wanted to stick a couple of number questions. What should we be modeling for capital spending and tax rate for the rest of the year?

So CapEx -- it appears that some of our projects are going to lap over into next year, so we're first guiding to $60 million, plus or minus $5 million. We would probably guide now to $50 million, plus or minus $5 million. On the tax rate, the tax rate has come down. We've done some structuring things overseas that helps us better utilize some of their prior losses. We would expect the tax rate for the balance of the year to be 36.5% to 37.5%, maybe a touch lower than what we've had the first half of the year, but somewhere in that ballpark.

And I know you're not giving any guidance beyond that, but should that be the normal rate, or I guess the rate we use for next year?

It's hard to define normal in tax. Enterprise zone credits come and go, losses and how you utilize losses changes. It's hard to define normal, but somewhere in the 37%, 38% range is mostly normal.

Okay. Fair enough.

That was our last question. Keith and I would like to thank everyone again for joining us on today's call.

This concludes today's teleconference. If you missed any part of the call, it will be archived in audio format in the investor central of Robert Half International's website at www.rhi.com. You can also dial a conference call replay. Dialing details and the conference ID are contained in the Company's press release issued earlier today.