Startek Inc (SRT) 2007 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first quarter 2007 StarTek earnings conference call. My name is Carol, and I will be your coordinator for today. At this time all participants are in listen-only mode. We will conduct a question and answer session towards the end of this conference. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to Ms. Jennifer Martin. Please proceed, ma'am.

Good morning and thanks. I am joined on the call today by StarTek's President and Chief Executive Officer, Larry Jones. We're also joined by Pat Hayes, our Chief Operating Officer and Sylvia Church, our Controller. Larry will be delivering our prepared remarks today with some brief comments about our release this morning. 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. As always for those of you who have not yet received a copy of copy of the press release from today, please go to www.StarTek.com, where you can download a copy from the Investor Relations section of our Website.

And of course, 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 those projections. StarTek advises all those listening to the call to review our form 10-K for the year 2006 posted on our website for a summary of these risks and uncertainties. StarTek does not undertake the responsibility to update these projections.

Further, our discussion today includes in non-GAAP measures. In accordance with Regulation G, we have reconciled these amounts back to the closest GAAP basis measurement and have included these reconciliations on our website. We encourage those listening to the call to refer to the corporate governance section of our website to see the reconciliations. I will now turn the call over to Larry Jones, StarTek's President and CEO.

Thank you, Jennifer, and good morning to everyone. Good Friday. First let me start with general comments, then I will review the first quarter numbers and then discuss some of the operating highlights for the quarter.

Last quarter, I announced a new plan to return the Company to profitability and growth. That plan included several components: restoring margins, accelerated revenue growth, strengthening the executive team and exploring acquisition opportunities. In more detail, the plan included a focus on increasing customer margins, on increasing site productivity, reducing attrition, signing add-on and new sales to existing customers, it also included hiring new executives and building a platform for accelerated growth. Finally, building and acquiring new high margin services to broaden our offerings to the communication sector.

While some of these initiatives are visible in the first quarter results, most of these programs initiated in the first quarter will not yield visible financial returns until later in the year. Later in the call I will discuss the specifics of those programs and our expected outcomes. Now let me turn to the financial results for the first quarter of 2007.

First quarter revenues of $57.6 million increased 1% when compared to the same period in 2006, driven by the opening of two new sites at the end of the first quarter of '06, the addition of two new clients, including Comcast in late 2006, and revenue growth from existing clients. These increases were offset by declines in revenue resulting from the closure of Petersburg in January, localized staffing pressures and fewer operating hours at our Cingular sites. Revenues decreased $1.5 million or 2.5% from the prior period, driven by the temporary closure of our call center site in Petersburg, Virginia, negatively impacting revenues by $1.9 million quarter over quarter.

As previously announced, one of our existing clients significantly reduced their call volumes, resulting in a temporary closure that far facility in late January. We're pleased to announce that we will be reopening this site in June with higher margin business from a different existing client. Offsetting these decreases were revenue increases from most of all of our other clients, including a 4% increase from AT&T on a post merger basis.

Gross profit for the quarter increased $0.5 million from the fourth quarter driven by price increases, productivity gains, reduced volumes in our less profitable clients, and reductions in fixed costs. Gross margins increased from 14.3 in the prior quarter to 15.5%. Taking into account the $1.2 million incentives and other one-time costs we booked and announced in the fourth quarter, margins actually increased more than 3 points quarter over quarter on a $1.5 million less revenue base.

SG&A for the quarter increased sequentially $1.6 million due to several factors. First, $779,000 of the increase was due to one-time severance charges related to executive terminations in the quarter. Increased recurring bonus and option expense and increased IT depreciation counted for another $800,000 in the SG&A increase. The higher gross profit, offset by increases in SG&A resulted in an operating income decline of $1.2 million and a net loss in the quarter of $189,000. With 14.7 million diluted shares outstanding the resulting loss per share for the quarter was $0.01. I should add that in the fourth quarter, we had two one-time charges, net operating incentives received of $1.162 million and an investment gain of $400,000. Likewise, in Q1, we had one-time severance expense of $779,000.

Normalizing for these three factors, income actually improved quarter over quarter. Normalized operating income for the quarter would have been $297,000 in the fourth quarter of '06 and a loss of $463,000 in the first quarter of '07, a net increase in operating income of $760,000. Likewise, EPS would have been a loss of $0.01 in Q4 versus a gain of $0.02 in Q1, an increase in EPS of $0.03. This assumes a normalized tax rate of 35%, and I refer to you our website for full reconciliation of these amounts as well as those I mentioned previous to the nearest GAAP measure. Cash and equivalents investments for March 31st were $35.4 million, down $3.9 million, primarily due to timing of accounts receivable and accounts payable.

Now let me turn back to the business. Our turn around plan, and why we believe that the business is making progress in increasing profitability on revenue growth. Margin improvement. The number one goal of our plan was to return the Company to historical profitability levels. Our focus has been on improved productivity, lowering attrition, improving customer pricing terms, and increased revenues to leverage our fixed costs. During the quarter we made good progress on these goals.

First, as I mentioned, our gross margins increased over 3 points versus the prior quarter on an adjusted basis. This was a direct result of improved client pricing and improved site efficiencies. We continue to work with other less profitable clients on new pricing terms. Also, we have a number of programs in place to increase productivity which should have a positive impact on future gross margins. Secondly, we've been battling an attrition issue for several quarters now. In the first quarter, we lowered our attrition rate for agents in production but still have work to do with respect to attrition rates relative to training and in recruiting of new agents.

We have several initiatives in place, which should result in continuing improvements in these areas over the course of the year. Finally, in the longer-term, margin improvement will be further enhanced by leveraging our fixed site expenses. Our site optimization effort is focused on increasing FTE in every site, choosing sites with better labor markets, and exploring alternatives to reduce fixed site expense in lieu of more variable costs.

Growth. Our second goal was to accelerate the revenue growth of the company. This entails growing FTE in our existing programs, winning new programs from existing clients, and winning new name customer contracts. Our sales efforts have been focused on securing new revenue from new and existing clients. We continue to strengthen our partnerships with existing clients, and we're often ranked among the high nest quality scores when benchmarking against our competitors. We have been able to leverage these relationships and win new programs and lines of business. As proof this strategy is working, during the quarter we secured three new programs from existing clients, including a new program that will result in the reopening of the Petersburg facility in June.

This is especially true in AT&T, who just completed the merger with Cingular during the first quarter. As mentioned earlier, revenues from the combined entity grew 4% last quarter. In the first quarter , AT&T represented 53% of our total revenues, down from 57% a year ago. During the quarter, we also secured a contract ex extension for the wireless consumer line business that extended the existing contract terms through May 31st. We're working diligently and expect to resign a multi-year agreement with them by the end of the month on similar terms to the existing contract. Equally important is our sales team's focus on securing new business. We have a lot of activity, a good pipeline, and I remain confident in our ability to sign several new contracts in '07.

The executive team. Shortly after my arrival in January I determined that we needed to strengthen the executive team with more experienced and growth oriented executives to say handle the expected growth. During the quarter we added significant new talent to our executive team as we readied the Company for future growth. As we mentioned in our last call, we hired it hired two new Senior VP's of HR and Business Development as well as a General Counsel.

Recently we also added Doug Pontious to the team as our new CIO, a great win for us given his extensive background in the call center industry. This new team will provide us with the horsepower to address the operational and growth issues at hand and in the future. We're still actively recruiting a CFO. We've seen a number of very talented individuals and hope to announce a new CFO during the quarter.

Acquisitions. Last quarter we announced that we would explore acquisition opportunities that could provide us with increased revenue and scale, more profitable value-added services, and international and off near shore capabilities. While our new SVP of business development is in place, I would not expect any activity in the first half of '07 and there after, we would look only at small and easy to integrate opportunities.

Turning to guidance, as for guidance I caution you again like I did last quarter, that until I have more experience with the Company we will provide only limited guidance. As such, we expect to see continued quarter over quarter revenue and margin improvement throughout 2007. In closing, while we're disappointed with the lack of revenue and EPS growth in the first quarter, we're pleased with this significant increases in gross margins and modest increase in EPS on an adjusted basis. We continue to execute on our profitability improvement and growth initiatives that we believe will be fruitful throughout the next several quarters. The executive team remains committed q-and-a

Your first question comes from the line of Tobey Sommer with SunTrust Robinson and Humphrey. Please proceed.

Thank you. One question about the AT&T contract that you expect to be signed by year end or excuse me by month end. What particular confidence do you have, what gives you confidence in the fact that over the next couple weeks you're really going to close out that deal?

What gives me confidence? I think as we talked before that we've had confidence in that contract since we first renewed it in January, and we've been working very diligent with the management team. We have a great relationship with them, and because I know what the state of the contract is, I got high confidence it will be done by the end of the quarter. That's about all I can tell you.

Question about the volumes that you've seen sell from AT&T in the quarter up sequentially, after a little bit of a dip in the fourth quarter, is there an opportunity to see a ramp in business as a result of the contract?

I don't think the contract itself drives a ramp. Remember, we have kind of a steady state large contract that sits in place in a bunch of statements that work that sit underneath that that drive all the program that is we do. One, we have a good relationship with them. Now realize that AT&T and Cingular together have a whole series of program that is layout underneath there, and we're constantly adding and subtracting from each of those programs, but in general the answer is yes. We see opportunities to grow on multiple fronts within AT&T as the year progresses.

Shifting gears to your second largest customer, can you describe maybe provide some additional color as to what impacted business in the quarter and what your expectation would be over the next couple of months? Do you expect that to rebound or is this kind of a fall off that will persist?

No. I think it was a -- I won't say an anomaly in the quarter, but clearly there is give and take going on in that account in various programs, and we see some new programs coming on line that we think will help restore that growth.

Okay. Then the Petersburg facility, the opportunity to reopen it in June, I was wondering if you could provide some information about any costs associated with reopening that and perhaps what kind of work you may be doing?

First of all, in January when we closed and really it was a soft close, and there were no expenses associated with closing that site, and we kept the bare bones management team in place, so ramping that up is totally about securing the business, training -- enabling the training engine and then training the head count, so the expectations I would set is that Q2 is a training quarter to ramp up to real revenues in the third quarter and that is from an existing account, a new line of business, and you may see a little bit of negative effect because of the training revenues versus the fact but the reality is it will be fairly neutral in the second quarter and then see the positive impact of revenue in the third quarter.

And then could you remind me about the capacity in that particular center, how many seats?

400 seats is the current capacity.

Okay. And then just a housekeeping question and I will get back in the queue. What are your expectations for cash flow generation over the balance of the year? A little draw on cash in the first quarter. Would you expect that to continue or would you expect that to kind of generally reverse itself and then could you refresh your expectations also on CapEx for the year?

Yeah. I think the two are absolutely related. If you look, we had a modest amount of CapEx in this quarter, and we will probably continue to do that as we ramp the revenues later in the year we will probably have CapEx associated with new facilities, but if you look at the cash neutral for this quarter, given that all the cash was in AR and AP, so clearly the Company has cash generation capability as we restore margins, restore the earnings, so I would expect all positive as we go on through the year getting stronger and stronger every quarter.

Thank you. I will get back in the queue.

Your next question comes from the line of Arnie Ursaner with CJS Securities. Please proceed, sir.

Hi, good morning, it's Arnie Ursaner. First question is tax rate guidance for the year, please.

We don't have tax rate guidance. We put into the adjustments a 35% statutory rate. It is very early in the year to give that guidance, so do we have a number in the first quarter that it comes out to be? I don't know. About 35.7 is the first quarter.

Share count just to remind us, you were granted a fair number of options, and yet your share count showed no change versus Q4. Did they not hit the diluted share count yet?

There was very minimal dilutive effect because they were in the money. The restricted shares did hit the option expense, but the -- my options had very minimal effect on the options.

Your share count was 14.7 in Q4, and it was 14 -- less than 14.7 this quarter, and yet you were granted 300,000 options. There had to be an offset somewhere.

We had the shares that came back from the previous CEO and other terminations.

I am sorry? Someone was whispering back there?

The shares were not in the money, and therefore they did not hit the diluted.

Okay. Going to the gross margin, in Q4 you had had a $1.2 million municipal incentive. Ex that you would have a 12.2 gross margin in Q4 and did show a very nice improvement obviously sequentially in this quarter. Were there any one-time items in this quarter and were there any one-time items in the gross margin this quarter?

No. There was the one-time SG&A that we highlighted, and the reason we did the reconciliation was to kind of show you that -- I refer you to the website to get the details, but there were no other one-times in effect. In effect, that's what gives us good confidence that the gross margins are returning, clearly not to the level that we're expecting but on their way.

Final question is in response to the previous question you mentioned you thought you would see some CapEx growth in the back half of the year, and I am trying to get a feel. My recollection is you built some pretty sizable facilities, had more than ample capacity. Is there specific activity you're seeing in your backlog or in discussions that would lead to you need additional capital expenditures or are these internal expenditures for your existing facilities?

We have a pretty low steady state CapEx requirement. Until -- until we add new facilities, not build out facilities but add new facilities. Only if we secure new contracts that require new facilities would we be adding CapEx, so until we secure those contracts and can talk about incremental revenue, I would assume that the CapEx will be pretty steady state.

Okay. Thank you.

Your next question comes from the line of Josh Vogel with Sidoti and Company. Please proceed.

Good morning.

Good morning, Josh.

I was reading somewhere that you guys are raising the wages in one of I -- I believe it was in one of your Oklahoma centers. I think wages were going up about 18%. I was wondering if this is just specific to that call center or is this an initiative that's going to be pretty much across most of your centers?

What we do is a periodic analysis on our 19 sites, and as we see market changes, and typically it is every two to four years that we actually make a change in a site, so from time to time, you'll see one or two or three of the 19 wages moving, so we don't do an across the board where we get a big uptick. We actually stagger it, and it is totally based on market conditions where we see a gap and where we need to raise it we do, and either we absorb it or we talk to our client and work through the gap.

Okay. And you commented that attrition was down in Q1. Can you just quantify it for us?

We don't provide that kind of guidance, but I will tell you it was not trivial. Again, it was focused totally on the production. We still have battling some of the attrition issues in the recruiting the right people, training them, getting them on the floor, and we've got programs programs in place to address that.

I can't recall if you guys commented on this in the past, but do you have a utilization number in the quarter?

Nope. We do, but we don't guide that.

Maybe if you can give a snapshot of how many seats you ended the quarter with and how many you expect to have by year end?

We're not going to guide you that way either as well. We don't provide FTE guidance.

Okay. Thank you.

Your next question comes from the line of Donna Jaegers with Janco Partners.

I missed some of your commentary on the AT&T contract and obviously you're confident it is going to be signed by month end. Can you talk a little how the Company is positioned going forward with AT&T because there is a lot of speculation that AT&T will bring jobs back from overseas to do more here in the states that potentially could benefit you. Any comments there?

There is a lot of moving parts in AT&T which is now probably five or six lines of business that we deal with, so there is moving give and take in all of that. I would say from a macro trend we see AT&T moving pieces from offshore on share. We also see them moving stuff on shore to offshore, and I wouldn't say that's a mega trend. Where we see benefits and future growth from AT&T is the fact we're doing a great job for them. They have more business to be out so far so far outsourced and we're at the table trying to get more and more programs whether it be the Cingular business side, consumer side or the AT&T units we serve. We're pretty bullish on that.

Can you refresh us on the lines of business you do for AT&T? I know you do some of the debt collection on the business side. What are the other lines of business you have?

They're very specific detailed lines of business but basically think the business, customer care, business, servicing of the accounts, and doing that across multiple product lines ranging from long lines to high speed and others, so quite a diverse set of lines of business which is why a lot of our investors are focused on the 53%, that it is a huge part of our business but in reality when you break that down it is a portfolio of lines of business that ebb and flow as we go forward.

Okay. Thanks.

Your next question comes from the line of Melissa Moran with Thomas Weisel Partners. Please proceed.

Hi. Good morning.

Good morning.

Just quickly housekeeping question, did you get the percent of revenue from T-Mobile in the quarter? We'll dig it out here for you. Okay. While you're looking that up,I was wondering if you can comment a little bit more on the pricing improvements you're seeing? Are these generally contracts that were below market and that are just getting up to market rates or is there something else going on there?

I think it is a discipline more than a market condition. In some of our clients we think there is pricing opportunity. We think in some of our clients there is pricing terms, you know, that the structure of the contracts, so it really is not anything general. It is just that as I came in the door we said we're going to systematically go through our contracts and our relationships, and look for opportunities price increases or price changes, pricing terms changes, so I wouldn't say it is anything systemic, and it is clearly not -- we're not writing a letter to all our customers and demanding a price increase. It is not that at all. It is systematically over a select number of our clients, working through the pricing issues.

Okay. On the Cingular contract I know it is portfolio lines as you said, and it sounds like you also commented that you said the terms of the contract you expect to be similar. Is that also the case for the pricing on that contract?

Yes. By the way, your T-Mobile number is 19.5% for the first quarter, and in year ago it was 22.4%.

Okay. And then just lastly, are you seeing anything in the marketplace in terms of sales cycle or client interest, client demand, are you seeing any trends that are notable, and could you comment just a bit on your pipeline?

Trends in the marketplace. I think clearly in a number of our clients have won -- in the last six to twelve months they focused on quality of Customer Service. We've seen a recent trend on sales which is cross-selling product as we serve customers, so we've been able to work with our clients but not only provide a high level of quality of Customer Service but focused on cross-selling the product. That's an opportunity for them and an opportunity for us. I think from a volume point of view and a demand point of view it is different company to company, competitor to competitor and the wireless space it is very competitive, so we see ebbs and flows across our different customer base but no mega trend, I would say, and in the cable and other areas, we see clearly rapid growth, and we see significant triple play/quad play cross-selling net that is required there. Pricing in the industry, nothing I would say is a mega trend either.

Okay. Great. Thanks. That's very helpful. Thank you.

(OPERATOR INSTRUCTIONS) Your next question comes from the line of Tom Carpenter with Hilliard Lyons.

On the new business in the quarter the three lines were all from existing clients, correct?

Correct.

Later this year you said you expect to get new business from some new clients?

Yes. We have a very active pipeline and a very active sales effort which gives me confidence that we'll see some activity later in the year.

Can you give us an idea or maybe rank for us some of the industries that you're going after by likelihood or probability of getting new business this year?

First of all, we focus on the communications sector, so telco. Two, we see some opportunity in wireless but more opportunity in the other types of telco industries, cable, long lines, and particularly as the industry consolidates, we're also seeing other subscriber-based media, whether it be internet media or new types of cellular media. We see clients growing pretty rapidly in that space, so we've got a pipeline that's pretty rich across the telco space, and I can't say one is more probable than the other, but probably non-wireless is more probable than wireless given that industry is pretty give and take, one guy takes from the other and it is moving ahead, so some of our clients in that space have grown pretty rapidly and others are giving up share.

Can you refresh our memory on the types of business you do for Comcast?

I will give you a little just because we're not free to disclose a lot of this, but sync business side -- What was that? Did you sigh sync? There is two ways to look at it. First of all, we don't do call work. We do manual order entry. Okay. It is on the noncall side of the business, and second of all, it is one of their specific emerging lines of business, not the core --

Right.

Table side of -- cable side of the business.

Are there opportunities to expand that over time to work with them on the call side because obviously they're growing rapidly on some of their newer services that they launched over the last three or five years?

Yes. We're in one of their services. There is opportunities to grow with them in other lines of service, and moving from both back office to front office, and we're all over that.

Okay. Can you give us an idea, at least point us in the direction of on the magnitude as far as client praise pricing, a change in the quarter, maybe a percent of clients that pricing did change and then maybe an order of magnitude?

It is a small handful and a small handful to go, so it is not across the board, and I can't give you an order of magnitude. They vary too much, and sometimes it is a line of business, not the whole contract.

Right. Would a 5% number be fair or was it higher on average than that?

I will let you pick the number. You can look at the swing in the la quarter, and you can kind of get a sense that some of that was due to price increases.

The reason why it is a little harder is a few of your facilities might have been in the red, so that's a little harder to handicap, and then you have some currency changes of course.

I share your pain. I am trying to figure it out.

Okay. Fantastic. Are you sticking with your margin assumption for this year that you mentioned on the last call?

Yes, we are. And can you give us that range again? I want to make sure it is -- I don't have it in front of me. I would screw it up, so I will let you refer back there.

You mentioned 20 to 22%, and I want to see if you're sticking with that for '07 as maybe a last quarter rate or if that's more of an '08 number?

At this point I am not going to give you quarter to quarter guidance. I think I gave you a more annual that we were going to restore to historical levels I think is what we said last quarter.

Do you see that happening by the end of the year? Is that more of an '08 issue?

At this point I will stick with what I said last quarter, and as we get closer to the end of the year I will be able to give you more guidance.

Right. As you guys renew or the expectation is to renew the AT&T contract, and obviously there is a lot of moving parts there. Do you see yourself working with AT&T more on other lines of business and the customer care/consumer care for wireless decreasing as a percent of your revenue?

I think there is opportunities on all the segments we're dealing with there, so I don't think -- I think we got a strong relationship with the Cingular management team as well as the existing AT&T management team, and as those ports move around we get a stronger and stronger position.

In the first quarter was the 4% Q over Q revenue increase due to the business side of AT&T or the consumer side?

Actually both increased. I don't know what the breakout is, but both lines increased. Okay. Good. Thank you.

Your next question is a follow-up question from the line of Tobey Sommer with SunTrust Robinson Humphrey.

I wanted to visit one of the prior questions about the improvement in gross margin in the quarter, and I was curious. Did you say that after your hiring in the beginning of January you are able to revisit contracts, and sufficiently so as to improve the gross margin just a couple of weeks after your arrival or was there already some momentum in the gross margins when you arrived at the CEO's spot?

There was some momentum in place as I arrived. We accelerated some of that, and we initiated some new ones, so, yeah, I am not taking the credit for that being a new initiative. It has been an ongoing initiative for the Company on an ongoing basis really.

You would say that in the quarter post your arrival you were able to further that momentum, and that's part of what would give you confidence for the general upward trend in gross margins as we move forward?

That's one of the factors for the upside, but, yes, that is a fact.

And a question about gross margins kind of dovetailing on the most recent question on where they ultimately can go, is it possible for you to get backed up to those historical margins without an improvement in terms in the AT&T contract?

Oh, yeah. I think the AT&T is not the focus of our energy here. The focus of our energy as I said is a handful of other customer contracts. It is on internal productivity. It is on attrition. It is on leveraging our fixed costs in each site, so it is a multi-faceted effort to raise those margins to historical levels, yes, and we're confident we can get there.

You mentioned attrition. That's something I want to touch on. Can you maybe let us know in a did he sending order of priority what the most impactful initiatives you have, either already put place since your arrive el or plan on put in place and drive down the attrition rate and improve the margins there?

I can't break out before and after, but there are programs that were in place before and there are more enhanced programs with the arrival of Sue Morris, but kind of if I were to give you the top three or four, first is the focus on the recruiting engine, I will call it, which is selecting the right people being the selectivity of the right people, and getting them into the training programs. Second is focusing on the attrition in the training programs so you don't lose people, and obviously if you put the wrong people in the front end of the pipe you lose them because of the wrong people through the pipe, so that's kind of an engine. That is probably one of the key initiatives. The third initiative which is to further enhance the production attrition is focusing on site management issues, making sure we got the best site managers in each site, two, supervisor development, making sure we have the best supervisors, and those two factors really drive whether people like the work environment and feel respected, productive, and want to stay with the Company. Those are kind of the top three I would say.

Okay. Thanks. From a modeling perspective with G&A, you have made a couple of hires and just wondering sequentially would you expect an uptick in that kind of corporate G&A expense as a result in Q2, and secondly to what extent do you plan additional meaningful hires and will there be search fees associated with those?

The last question is no. We have a CFO yet to be hired. The fees have already been booked for that in the first quarter, so if I look at future SG&A, one, we -- you have the one-time severance which you have to back out of the run rate, and then, two, we have the full quarter effect of the executives comp and the executive options that were issued in the first quarter, and as we had a CFO in the second quarter you will see that go forward as well, so continued uptick, not significant uptick but uptick from the Q1 minus the severance level.

Can you refresh my memory as to the level of the search fees for the CFO and maybe could you comment on the progress and when you expect to bring someone on board?

I don't feel comfortable disclosing the search fees for a whole bunch of reasons, and they're already booked in the Q1 results. Two, the status as I said is that we've seen quite a few candidates, and we are -- need to work through that, and confident that we will do something in this quarter.

Okay. Thanks.

(OPERATOR INSTRUCTIONS). There are no additional questions at this time. I would now like to turn the call back over to management for closing remarks.

I thank everybody for their time on a Friday morning. Again, look to our website for more information, and we'll talk to you next quarter. Thank you.

Thank you for joining today's conference. You may now disconnect. Good day.