Startek Inc (SRT) 2006 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the third quarter 2006 StarTek earnings conference call. My name is Nicole and I will be your coordinator for today. At this time all participants are in a listen-only mode. We will be facilitating a question and answer session toward the end of this conference. [OPERATOR INSTRUCTIONS] I would now like to turn the presentation over to your host for today's call, Ms. Jennifer Martin, Director of SEC Reporting and Compliance. Please proceed.

Thank you. Good morning everybody. It's great to have you with us today. I am joined on the call today StarTek's President and Chief Executive Officer, Steve Butler; and Rodd Granger, StarTek's Chief Financial Officer. Steve will begin our prepared remarks today with some brief comments about the state of our business. Rodd will follow with a review of our financial results for the third quarter. At the conclusion of our prepared remarks, we will conduct a question-and-answer session. This call will conclude no later than 9:30 a.m. eastern time.

For those of you who have not yet received a copy of our press release from this morning, please go to www.startek.com where you can download a copy from the Investor Relations section of our website. Please note that the discussion today may contain certain statements which are forward-looking in nature pursuant to the Safe Harbor provisions of the Federal Securities laws. These statements are subject to various risks and uncertainties and actual results may vary materially from these projections. StarTek advises all those listening to this call to review our 2005 form 10-K posted on our website for a summary of these risks and uncertainties. StarTek does not undertake the responsibility to update these projections.

I'll now turn the call over to Steve Butler, StarTek's President and CEO. Go ahead.

Thank you, Jennifer. Good morning. Welcome and thank you for joining us today. During the third quarter we continued to see strong growth in our revenue year-over-year and perhaps even more notable, we had sequential improvement in our gross margin from Q2 to Q3 of this year. This quarter we added two new clients to our portfolio and made our first announced sale of a service offering we launched in May called Intelligent Enterprise. We are close to the completion of our ramp process now for the three new call centers we opened earlier this year. We reopened our Laramie facility in response to new client demand. Our financial results were impacted by the launching of these new clients. However, our earnings per share almost doubled quarter-over-quarter as we were able to use existing capacity to accommodate this new client growth.

Before I get started on the results for the third quarter, let me address one of the issues that I am sure is weighing on your minds this morning -- the status of our negotiations with Cingular, our largest client. As most of you know, we have not announced a contract renewal or contract extension. Likewise, some of you are probably concerned the impact of the FCC's delay in approving the merger between AT&T and Bell South and how it may affect us and our contract negotiations. The good news is that we have received indications from AT&T and Cingular that we will continue to be a provider of choice for them and so we remain optimistic about our prospects for a positive outcome. We have, however, had some delays in completing the contract renewal process, many of which are matters of circumstance beyond our control.

Cingular's approach to renewing its contracts with us and our competitors has been to work on one contract at a time, renewing its larger contracts first and then working its way through the smaller contracts. As you know, Cingular shares its business outsourcing, and particularly it customer care with West, Convergys, and StarTek. As such, our contract renewal discussions were delayed for much of the summer as Cingular worked to renew its outsourcing contracts with these two other outsourcing vendors.

However, we have made significant progress. We are currently negotiating some specifics with respect to a couple of lines of business. These specifics are expected to be resolved in the very near future. We were recently informed of a new resolution enacted by AT&T that requires that contracts that are as monetarily significant as ours, must be approved through the AT&T board of directors. While we fully expect to have a completed contract ready for the next AT&T board meeting, we haven't been given details as to when that meeting will occur, nor do we know for certain that the Board will be approving contracts at that meeting. AT&T is currently indicating to us that this meeting is expected to be late in the fourth quarter. If you will recall, the contract doesn't expire until the end of December. We have begun conversations with Cingular about a contract extension in the unlikely event that our contract is not signed by the end of the year due to these necessary approval processes.

As I mentioned before, we had two new client wins during the third quarter. In August we signed a three-year deal with a regional communications company. This contract positioned us as the exclusive customer care provider for this Company's prepaid wireless program. We began taking calls in October and are serving this client using pre-existing facilities. In September we announced that Comcast has chosen us to support its IT-enabled phone service, Comcast to digital voice. We will be providing activities through our Intelligent Enterprise service offering. This win is particularly important as it marks the first new client win for Intelligent Enterprise service offering since we launched the offering in May of this year. We also began servicing Comcast out of a pre-existing facility in October. Our Intelligent Enterprise services, which are supporting Comcast included complex order management, port center management, exception management, local service, and provisioning management.

As I indicated, we are servicing both of these new clients through facilities already in the StarTek system. This provides us with the added benefit of reducing our ramp cost as we are not building out an entirely new facility. The fact that both clients are in the communications industry is a further testament to our continued success and expertise in this industry. We look forward to building a mutually successful business relationship with these new valued clients.

Onto some financial results. As you noticed in our release this morning, our gross margins improved from 14% in Q2 to 16% in Q3. There was still some ramp-related activity during the quarter that continued to impact negatively our margins as well as costs associated with hiring, training, and retention of employees at these new sites along with the fixed carrying costs to operate these new facilities. As we continue to graduate agents into production, our fixed cost as a percentage of revenue will decline, therefore allowing our margins to further recover. Our new clients continued to materially contribute to our overall revenue growth during the third quarter as we realized $13.3 million in revenue from these new clients compared to 9.6 million in the second quarter representing a sequential increase of 39%. Our policy is not to provide capacity utilization numbers for competitive reasons, but we are currently nearing the end of our ramp phase and look forward to continued stabilization of those new centers during the fourth quarter.

Attrition is still an issue in many of our locations and though we are seeing these attrition rates beginning to decline, our ability to staff to client demand continues to be a challenge in many of our locations. Of course, at our new sites, much of the attrition has been ramp-related as we take on an enormous number of agents all at once. Some of the attrition across the Company can be attributed to seasonality in the labor pool. As we've mentioned before, we have experienced increased competition in some of the markets in which we operate. This often manifests itself as wage pressure and includes increased competition for quality employees. In some of our markets, the towns we are located in have experienced significant job growth, which leads us to an increase in similar-paying jobs in the market, for instance retail and other service-related jobs. As a result we experience greater pressure in attracting appropriate personnel talent into our call centers and retaining them on a long-term basis. We have taken proactive steps to try and retain our people, including wage increases in some markets. We also continue to implement other human resource initiatives including career-pathing, increased coaching and training, and other employee incentives.

I will now turn the call over to Rodd Granger, our Chief Financial Officer who will give a more in-depth look at our financial results for the third quarter.

Thank you Steve. Good morning everyone. Before I begin my review of our financial results, I'd like to remind you that all comparative information relates to comparable periods in 2005 and 2006, unless I note otherwise.

Revenue for the third quarter of 2006 of $61.8 million represents a 15% or $8 million increase compared to the third quarter of 2005. Also during the third quarter, we achieved $12.2 million in incremental revenue from clients new to StarTek since the first half of 2005. Sequentially, revenue from new clients was up $3.7 million from Q2 of this year. Partially offsetting new client revenue growth was a decline in review from our two largest clients, Cingular and T-Mobile. As we discussed in the first and second quarter calls, the decline in Cingular revenue was due to a decreased production volume as agents went through training related to the transition from blue to orange service. As a remainder, these agents do generate revenue during training, but at a lower rate than would be generated in production. Another contributing cause to this lower production volume is that Cingular has reduced the hours of operation at some sites moving in general from 24 hours a day seven days per week to 12-hour days six days per week.

We also experienced some staffing issues in meeting client demand at both T-Mobile and Cingular sites, which led to lower numbers of agents in production. As Steve discussed earlier, some of this attrition is either seasonal in nature or has to do with increased competition from labor in some of the markets in which we operate. We are pleased to announce that for the third consecutive quarter our revenue concentration [has moderated - background noise] due in large part to the addition of revenue from new clients. Revenue concentration during the third quarter of 2006 was as follows. Cingular was 41.2%; T-Mobile 20.3%; AT&T 9.2%; and all others combined at 29.3%. This compares to the third quarter of 2005 where Cingular was 51.7%; T-Mobile 25.9%; AT&T 10.9%; and all others combined 11.5%. We anticipate that this trend towards further client revenue diversification will persist as we continue to sell new clients in addition to broadening our current client relationships.

Our gross profit for Q3 2006 was $8.2 million, which is down $2.8 from Q3 of '05. Gross margin was 16% in Q3 '06 compared to 23% in Q2 '05. This percentage decline was attributable to a few factors. First, the continued ramp of the new clients and sites during the quarter. While we are working through our ramp process, we are still hiring and training agents. As a result we had higher support costs in relation to revenue when compared to our more established sites. We incurred approximately $1.2 million in ramp-related costs at our three new facilities during the quarter. A strengthening Canadian dollar versus the US dollar in Q3 2006 compared to Q3 2005 had a negative impact on our gross margins of approximately $1 million. As previously mentioned, we also had decreased production volume and more agents in training related to Cingular. We continued to experience higher attrition in 2006 than we did in 2005. However, most of this increase in attrition is at our new sites, which can be expected during a time of heavy ramp. This attrition caused us to incur more hiring, recruiting, and training expense in 2006. We have begun initiatives to help mitigate the attrition issues. We believe we will continue to make positive progress as we move forward into 2007.

Q3 '06 SG&A expenses were up $300,000 from Q3 of '05. However, as a percent of revenue, SG&A expenses were down, representing 12% of revenue in 2006 versus 13% in 2005. We believe that despite the incremental cost to support our new centers, the more streamlined infrastructure set in place last year has yielded positive results. Our FAS 123R expense was nominal during the third quarter.

Operating profit during the third quarter was $2.2 million, down approximately $3.1 million from the comparable period last year. This decline is a reflection of a period of heavy ramping at our new sites during the year along with the pressures on gross profit previously discussed. Net interest and other income for the third quarter of 2006 was $700,000 lower than in the same period of 2005. In 2005 we experienced a gain of $800,000 on the sale of a facility in Greeley, Colorado. Excluding this gain in 2005, net interest and other income was relatively consistent year-over-year.

Income tax expense was $1.7 million lower in the third quarter of 2006. Our year-to-date 2006 effective tax rate is 31.8%, which is lower than the 40.5% effective tax rate during the same nine months of 2005. Due to changes in tax valuation allowances, the current period's effective rate is comparatively low while the prior year's rate is comparatively high. Outside of these anomalies, our effective tax rate is approximately 38%.

Income from continuing operations for the quarter was down $2 million from the prior year. Third quarter 2006 net income was $1.6 million lower than the same period of 2005. In Q3 2005, net income did include a loss of 470,000 from our supply chain management platform, which was sold in September of 2005.

Our fully diluted earnings per share from continuing operations for the third quarter was $0.11 in 2006, down from $0.25 in 2005. Shares outstanding for the third quarter of 2006 were 14,696,000. This is both basic and diluted as we had no dilution for the quarter.

Turning to the balance sheet, our cash, cash equivalents, and investments ended the quarter at $27.3 million, down from $45.6 million at yearend 2005. As you can see from our cash flow statement, the primary driver of this decline was due to capital expenditures incurred largely during the first half of the year. The majority of these expenditures were related to the build-out of our three new centers. Our working capital was $58.7 million, down $72 million at yearend, which was driven almost entirely by a decline in our cash and investments as a result of investing in these new sites.

Day sales outstanding was 70 days at September 30, up from 66 days at June 30. This increase is due to a higher AR balance resulting from revenue growth and a delayed payment from a client. This payment was subsequently collected in early Q4.

I'd now like to hand the call back to Steve for a discussion of our dividend and his closing remarks.

Thank you Rodd. As most of you know, we announced a dividend today of $0.25 per share, which will be payable on November 27 to the Company's stockholders of record as of November 15. As with all other quarters, the Board along with the senior management group reviewed our cash position in conjunction with what we see as being the best return for our stockholders in determining the dividend for the quarter. The Board and management has always maintained that we would utilize our cash in such a manner that it would provide the greatest returns to our stockholders while giving the Company the flexibility it needs to compete and implement its strategic initiatives. During the first three quarters of this year we have made significant capital investments in expanding our operations, launching new clients, and improving our technology. We continually evaluate the cash requirements necessary to fund our growth opportunities, implement our strategic initiatives, and maintain a strong balance sheet for financial flexibility. As I have stated before, we will assess the dividend every quarter and will adjust it as needed in determining our best use of cash as well as the best return for our stockholders.

In summary, things continue to progress forward here at StarTek. I am very pleased with the continued revenue growth brought about by our new clients and the future growth prospects of our recent wins we had this quarter with Comcast and a regional communications client. Although we continue to pursue new clients in the financial services and health care sectors, we are encouraged by our ability to continually grow the communications sector, which has become a core service competency for StarTek. As the communications sector continues to expand and evolve, as we've seen with the recent product offerings from cable and satellite companies, StarTek is well positioned to be a major player in bringing mutual success to these bell-weather companies in the services industry sector. It is my belief that the ramping process for our new centers, which were opened earlier this year, is nearing the end. Additional ramp costs associated with our two new clients should have minimal impact during the fourth quarter. I remain optimistic about our negotiations with AT&T Cingular and am confident that we will be able to renew our contracts as they work through their own internal processes. It is with great anticipation that I look forward to the future growth that this Company is poised to attain. It remains our promise to you that we will continue to make the strategic decisions necessary to benefit you the stockholders, our clients, and employees as we remain focused on revenue, earnings growth, and greater client diversification.

We will now open the call for question and answer session. Please stand by while the Operator provides some instructions.

(OPERATOR INSTRUCTIONS) Tobey Sommer with SunTrust Robinson Humphrey.

Thanks. It seems like you had some really good sequential revenue growth from new clients. Could you give us some insight as to how much more ramping there is among those clients before you get to what your contracts have contemplated with them and you get to a more of a normalized growth rate. Are you still a little bit away from that?

I think I would tell you that for the fourth quarter we have probably attained the ramp that is going to be there for the rest of the quarter. I don't see a lot more growth with them during the rest of this year. If we continue to ramp with them, adding more agents and stuff, that will come more into next year than this year. We are probably, as of the end of this month, or October, very close to the agent numbers that we will be at for the remainder of the year.

So on a sequential basis, unlikely to see the same kind of surge that I guess you saw from 2Q to 3Q?

No, I wouldn't say that because this will be the first full quarter with these new clients. We didn't have hardly any of their revenue in the third quarter. So we will see some sequential revenue increases from Q3 to Q4.

Curious about the, I guess, labor issues particularly related to the markets in which you service your largest clients. You seemed to described good job growth among competitive jobs. Can you describe what you are doing to counter that.

I think a lot of the issue, to be quite honest, has come in the Canadian area because the oil industry is going gangbusters up there. So trying to match any kind of wage demand there is almost improbable. But I will tell you that what we have done is -- in some areas we have done some wage increase. A lot of it requires people to be bussed a number of hours to locations. There isn't a lot of that going on, but there is some of it. Certainly the seasonality impacted us with people going back to school the first part of September and things like that. We've also put into place a lot greater emphasis on training and coaching of our supervisors to help retain the agents and to start career-pathing them in a more distinct way than has been out there in the past. We started this program back at the end of the first quarter, first part of the second quarter. But when you are trying to get through 19 sites it obviously takes some time to implement those programs. We are starting to see impacts to that in the form of some attrition reductions across some of our sites. But the bigger challenge is trying to get people in through the front door, through training, and then out on the floor. We think we can retain them once we get them out on the floor. But with increased competition from -- even though they are local retail suppliers. I'll give you an example. In parts of Canada, MacDonald's and Tim Hortons have actually shut down because they can't find people to staff their restaurants. It has become an issue. We continue to fight through it. We are making good progress against it. But it did impact us in the third quarter a bit.

Can I ask you to describe -- you mentioned you are still optimistic with the Cingular contract. Any concern that the labor issue in terms of serving those large clients will impact the negotiations at all?

No, none at all. What they tend to do at Cingular is, you tend to give them the number of agents you are going to have staff to serve them. They will deliver you volume according to what you are giving them from an agent perspective. No, that has not had any impact and I don't foresee it having any impact. Where it has impact is on our P&L because we're probably not generating as much revenue as we could from them if we could continue to increase the staffing. We fully believe that we will start to get that back in place as the year moves on and into next year. In fact, if anything, I think there is really a great possibility of growth with those guys. We'll just have to wait and see as the contract works through its processes. No, I don't think any kind of impact from that.

I think I missed part of your commentary as you were discussing the dividend. I hate to ask you to repeat yourself, but could you update us as to your current thoughts given the net income generation at the firm and the dividend payout. Thank you.

Sure. What I've indicated to you before -- I've indicated this on every single call I believe that we've been on. We did announce a dividend of $0.25 again for the quarter. In every quarter we get with the Board as a senior management group and go through where we think earnings are in relationship to where our cash position is in relationship to where our growth opportunities and capital investments are that are required in the very near future and from that, make determinations as to what we think is the best use of cash at that point in time. This quarter we decided to go ahead and do the dividend at $0.25. But as we continue to move forward into the rest of this year and next year, if the growth continues in such a way that it requires more cash, more forms of different types of financing, then that may change. As of this point in time, that is the current thinking.

I'll ask one last question and then thank you very much. Can you comment on what the pricing environment is on new and existing clients. We've heard from other industry players describing good margin in pricing scenarios out there. What are you seeing?

I think there is a shift in focus with all of our clients, or at least the majority of them, from focusing so much on price. They are focusing more on quality of service delivery and how you are actually doing as far as service level to their end users. Quite honestly, from their standpoint trying to make more of an efficient use of our agents along with us to make sure that we don't have big swings in having appropriate staff at the appropriate time. From a pricing perspective, we're not seeing, I guess, a lot of great pressure on that end as much as we are on more pressure for us to deliver higher levels of service, more consistency with staffing. Then we get the pressure on the other end, of course, from the competitive wage issues.

Thank you.

Arnold Ursaner with CJS Securities.

Good morning. First question I have is your T-Mobile contract expired -- if my notes are right -- in August '07. Was this contract renewed? Because I noticed your revenues with them are down quite sharply.

I think it expires in August of '07, right?

Got a ways to go. Sorry.

Got a ways to go, yes. I think the T-Mobile issue is -- the volume is down because some of the staffing challenges that are out there.

The second question I have relates to the way your are negotiating with Cingular. I think if I heard you right, they approached both West and Convergys and tried to negotiate with them first, if you will. In your business with them, you indicated you've gone from 24/7 down to 12/6. Would it be a reasonable assumption to assume they have given West and Convergys incremental business at your expense, even at this point?

No. They are not doing 24/7 with anyone as far as we know. They've reduced to 12/6 across-the-board.

So is their overall demand down reasonably sharply?

Not that we know. I think what they are doing is looking for more capacity among their suppliers and probably expanding a little bit on their in-house side. Their subscriber growth, if you read -- I think their latest release -- is up.

Final question from me. You've frequently spoken about acquisitions as an incremental driver of growth. With both your stock relatively low and your cash being reduced as you've built out facilities, what is your thought process currently on acquisitions and how much flexibility do you have? Can you remind us of your bank borrowing lines.

I think the only debt that we have out there is less than $10 million right now in the form of an equipment financing that we did a few years back. We have certainly some significant debt capacity from that standpoint. As far as the acquisition side of the equation, we are still looking at stuff. We have been very active, I guess, in making sure that the -- that our own operations are in order first and foremost before we go and layer on somebody else's. In expanding like we have this year, the acquisition process has probably slowed a bit as far as looking into possible activity there. But we are still looking into activity. We are still looking offshore for some possibilities there as some of our clients and some of the clients that our sales team are running to are looking for various aspects and components to do some offshore stuff for them. We are still actively engaged in that. I would tell you that will become more of a prominent piece of the framework probably next year as we move into '07 and get through the growth processes we've done this year.

One more question if I may. Your gross margin is 15.8. Last year you had been 23.2. That includes about 0.5 million of startup or ramp-up related expenses. This year you are indicating 1.2 million. There still seem to be some other factors that are at work in gross margin. I am assuming those are labor. Are there any other more identifiable? You mentioned the Canadian dollar. Any other specific items that are impacting gross margin?

Going back to what we talked about during the scripted part of the call, I think a lot of it is just getting the agents in the door to produce the revenue to overcome the fixed costs. When you have a fixed cost infrastructure, you get to a certain point, as you get higher volume of revenue, all of that contributes to the gross margin and it starts to ratchet up fairly quickly.

Thank you.

Tom Carpenter with Hilliard Lyons.

Good morning everyone. I'll build on one of the last questions that the prior caller just asked. Offshore you have announced some partnerships with Global Vantedge who has some facilities in India and in Costa Rica. And also you are in co-markets some of your offerings to your existing clients. Do you see that relationship contributing to revenue over the next year? Is it going to be with some of your existing clients? Or do you think you can get some of their clients to use some of your new offerings?

It's a good question. I can't predict that today. We signed the partnership a couple of months ago, I guess now. It is still somewhat early. I think there are opportunities. Global Vantedge is licensed in all 50 states. The do accounts receivable management and things like that as well. They currently have contact centers and technology infrastructure in Costa Rica and India. That gives us opportunity to do things there. We have not secured any clients or business to do anything over there at this point in time. It's just too hard to predict.

Do you still have -- before -- maybe about a year and a half ago, you had talked about one of your existing clients. I am going to guess maybe it was AT&T. You had considered doing some stuff in India maybe jointly with them. Is that still something you are pursuing? Or is that on the back burner?

No. It's not anything we're pursuing. The demand to go to India has really, really declined. There doesn't seem to be as much emphasis there.

I want to circle back real quick today to the AT&T issues. Before you were at 24/7 and you've gone to 12/6. Was that -- that was their decision with some of their outsourcers to [multiple speakers]?

Those are with all of their outsourcers as far as we know.

What percent of the folks that you have that are Cingular in your system are orange trained? I know you said you have been doing some training from blue to orange the last couple of quarters. What percent have completed the training and are now orange qualified?

I am guessing around 75 to 80% at this point. We'd love to get everybody onto orange. Part of it is the challenge that Cingular has in getting people off their blue phones still. Of course, if you have listened to them, they've implemented a lot of things to try to encourage those folks to convert. But there are still some hanger-ons out there. We'll supply some of the blue level customer service.

Right. From my conversations with some of the customer service folks at Cingular, they say that -- I was curious what some of your experience with this is -- when a client goes from blue to orange, they experience a 30% drop on average for those clients in call volume. Is that something you've seen? Could that be part of the reason for the drop-off? Or is it more of a conspicuous effort on Cingular's part to reexamine some of their operations.

I don't know. It seems counter-intuitive given their subscriber growth is so great. So I don't know. We've not seen that kind of an indication, I suppose. I don't think Cingular really has either with subscribers up over five million or something like that.

In some of your prepared remarks in the first part of the call, I guess you've indicated that they are still trying to work out renewals with West, who is going private and also Convergys. Is your sense -- you said something that they anticipate continuing to work with you beyond this year on existing customer care. Or is it going to be maybe that they switch it to some other lines of business.

. No, no. Their indication to us is to continue as we are today and to maintain the relationship just as we are now. We're in care. We do business care. We do consumer care. We do some receivables management for them. As far as we know at this point all indications are all of those lines will remain.

But as far as you know, they have not renewed West or Convergys yet.

I don't know. I know that they have been in discussions with both of those people. I don't know if they have finalized. Of course, West I am not sure would even announce anything at this point. I haven't seen anything come through on the Convergys end. But that is not to say that they aren't done or are nearing completion. They have, because of the merger that they are in the middle of, AT&T has been more active in the whole discussion and put more onuses on the approval processes, I think, which is probably what has slowed every one of us down.

But if for some reason, the renewal process drags into early next year, you will continuing answering the calls and everything like that. Pricing will stay as is until there is a formal agreement?

Yes. I think what they are willing to do and they have indicated to us is, given the nature of what they represent for us, is to look at doing a contract extension and getting that out there so everybody knows that business is status quo with us. If there comes a day where it looks like we're not going to meet the December 31 deadline, they've been very forthright in saying that we're willing to do an extension until we get through our own internal issues.

Okay, great. Good luck with that renewal. I anticipate hearing more about that by the end of the year.

Absolutely.

Thanks Steve.

(OPERATOR INSTRUCTIONS) [Allen Tanbaum], a private investor.

Good morning. How would you characterize the prospect of finalizing the contract that would diversify the Company into a new industry group, say the financial service industry or the health care industry? Would it be a long shot in the next 12 months, or imminent, or somewhere in between?

A good question. We have been pursuing different sectors and industries throughout the year. It has taken longer to formalize because we've not been active in a lot of these sectors. They have more, what I would call capital requirements from a security nature and things like that. We are still very active in them. I wish I could give you a great timeframe. There is nothing that I can tell you today that is imminent. My policy has always been to -- I can tell you that the pipeline for the financial services and health care sector is good for us. But it is meaningless until we sign something. Once we've signed something, I will always announce it as soon as I possibly can and disclose as much information, even the name if possible, in that announcement. That's about all the direction I can give you right now.

Okay. Thank you.

(OPERATOR INSTRUCTIONS) Martin [Betch] with Morgan Stanley.

Good morning. Have you heard anymore or have you heard any more about [Emmitt's] blocks of stock? Could you also comment on his relationship still with the Company.

I don't know anything further on his blocks of stock. That is not something that obviously that he and I discuss. His relationship with the Company is -- we have a part of the business called Domain.com, which is a bunch of websites that people click on and we actually get paid a little bit for. Emmit actually manages that part of our business for us today. That is the extent of his relationship with us. From a direct involvement, that is it.

Thank you.

There are no further questions at this time. I would like to turn the call back over to your host for today's call, Mr. Steve Butler.

Thank you Operator. Thank you everyone for your time this morning and listening to us. I encourage you, if you have any other questions that you didn't think of on the call, to certainly give Jennifer a call and follow-up with her. Thank you for your continued support and faith and confidence in the Company as we continue to move forward. Talk to you next time.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good-day.