Startek Inc (SRT) 2009 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Quarter Three 2009 StarTek earnings conference call. My name is Denise and I will be your coordinator for today.

At this time, all participants are in a listen-only mode. We will be conducting a question-and-answer session towards the end of this conference. (Operator Instructions)

I would now like to turn the presentation over to your host for today's call, Julie Pierce, Director of SEC Reporting. Please proceed.

Thanks, Denise. Good morning, everyone, and thanks for calling in. I am Julie Pierce, StarTek's Director of SEC Reporting and Investor Relations. It is my pleasure to welcome everyone to StarTek's third-quarter 2009 earnings call.

I'm joined on the call today by StarTek's President and Chief Executive Officer, Larry Jones, and Chief Financial Officer David Durham. Larry and David will deliver prepared remarks today with some brief comments about this morning's release. At the conclusion of their prepared remarks, they will conduct a question-and-answer session.

For those of you who have not yet received a copy of today's earnings press release, please go to www.StarTek.com, or you can download a copy from the Investor section of our website.

In addition, for the first time, we are using a PowerPoint presentation to better communicate our message to you and to provide better after-call documentation. The presentation is available on our website next to the webcast link.

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 of those listening to this call to review our 2008 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.

Further, our discussion today includes some non-GAAP measures. In accordance with Regulation G, we have reconciled these amounts back to the closest GAAP basis measurements. These reconciliations can be found in a table at the end of this morning's release, in the appendix of the earnings call PowerPoint presentation, and on the Investor page of our website under Regulation G.

I will now turn the call over to Larry Jones, StarTek's President and CEO.

Thank you, Julie. Welcome, everyone. As Julie mentioned, we have a presentation on our website for this call. If you've not yet downloaded it, I encourage you to do so and follow along.

Starting on Page 4, we had a very good third quarter from a financial perspective. While our revenue fell short of our expectations, for reasons Dave and I will cover in detail, our trend of improving profitability continued from the momentum that we created in the first and second quarter.

Revenue was up 5.1% over the third quarter of 2008 and down 1.1% from the prior quarter. Gross margins were up 18.6%, up 70 basis points from the second quarter. Operating income from the quarter improved to $2.4 million and earnings per share was $0.12, up from $0.09 in the second quarter. EBITDA was $6.4 million, or 8.8% of total revenue.

Turning to client highlights on Page 5, AT&T, our largest client, represented 63% of our total revenues for the quarter and accounted for most of the sequential decline in revenue. While seat demand from the wireless division remains strong, the layoffs in the second quarter and the subsequent hiring freeze in several of our AT&T locations in the third quarter resulted in a 3.5% sequential AT&T revenue decline.

As you may recall from our discussion on the earnings call in the second quarter, in May of this year, we discovered some hiring practices that were out of compliance with our contract that ultimately resulted in agent layoffs across a number of sites. This issue also led ultimately to agent layoffs across a number of sites. This also led to sequential hiring freezes that, in certain locations, extended into the third quarter.

As of today, these hiring freezes have been lifted in all locations, and we're well on our way to back-filling all of these lost agents. We expect to be back to pre-layoff FTE levels in those sites by the end of Q1, 2008 and will bear the cost of training for those new agents in the fourth quarter.

Having said all that, this issue only affected a small portion of our overall AT&T business. Our relationship with AT&T remains strong and we continue to be awarded new business across the multiple lines of business that we serve.

T-Mobile, our second-largest client, represented 22% of our revenues in the third quarter. Again, while our relationship with T-Mobile remains strong and we have secured new seats in the last quarter, our overall volume contracted this quarter. The net result was a sequential revenue decline of 1.2% from the second quarter.

The good news is that revenue from all of our other clients grew 10%, primarily from new business that was signed in the first half of the year. As in previous quarters, we continue to secure new add-on contracts with a number of our existing clients for new seats for both the US and the Philippines. Recently, we were awarded a new project that will bring 300 additional seats to the Philippines in early 2010, and we are negotiating several other sizable add-on contracts from our base for offshore delivery. Most of these should be additive and not migratory from the US.

Turning to the operational highlights on Page 6, our US operation continues to perform well after the optimization efforts of last year. Revenue and utilization were down slightly from the second quarter, mainly due to the earlier mentioned items. However, gross margins continue to improve to 19.5%, near our 20% target for the US.

Our Canadian operation has been shrinking as a percentage of revenues from 32% a year ago to 26% in this quarter. As we have discussed before, this is an attempt to rebalance our geographic footprint to a target of 20/60/20 -- 20% in Canada, 60% in US, and 20% in our offshore operations.

Gross margins in Canada were strong, 18%, partially due to favorable FX hedges that were in place for the quarter.

The Philippines operation in Makati continues to scale nicely to 200 FTE at the end of the quarter with average utilization in the quarter of 41%. Philippines gross margins expanded to 7% for the quarter.

Finally, our new Costa Rica operation is in the planning stages for an opening in the first quarter of 2010. The center located in San Jose will house 440 seats. We expect one of our existing clients to occupy 150 of those seats, and we have a number of other prospects who we are in discussion with for the remaining capacity.

Looking now at Page 7, you will see that we have a number of strategic initiatives underway to improve our infrastructure, standardize our processes, and strengthen our organization. In sales, John Damian, who joined the team last quarter, has restructured the sales operation to improve our close rate, pipeline, and lead generation efforts.

During the quarter, we added a new sales exec focused on the healthcare industry, and a new legion manager.

Recently, we also went live with our new ERP system, which will improve our financial reporting and employee tracking, pay and management capabilities. Our process improvement effort continues and is progressing nicely during the quarter, where we hired a new director to lead that effort.

The new shared services operation opened in an adjacent floor in our existing Makati facility and has grown to over 80 people. The staff there are handling multiple operational, IT and corporate functions and is expected to grow to over 150 in 2010.

We have also focused on upgrading our middle management talent and developing our existing leadership team. During the quarter, we have replaced or added a number of new site directors, site management and corporate positions and continued training and leadership programs initiated earlier this year.

Now, on Page 7, we've highlighted some of our disappointments for the quarter. First, it was disappointing not to close any new logo sales after such a successful first half. Several deals were postponed, and others were awarded to incumbents.

Despite the lack of closed deals, we are optimistic that we will show some success in the fourth quarter and, with the efforts that John has taken, start converting more of the deals in our pipeline in 2010.

Finally, we've made some slow progress in an expecting ramping of one of our new clients signed in the second quarter. It is an inbound sales program that we initially had difficulty staffing with appropriate skilled agents to consistently meet the targeted close rates. We have since adjusted our recruiting efforts and believe that we have the ramp back on track. It will slow the new revenue recognition for that program that we had expected to see in the fourth quarter.

With that, now I'd like to turn the call over to Dave, who will walk you through the third-quarter numbers.

Thanks, Larry, and thanks to everyone for calling in.

As Larry mentioned, the revenue was a bit of a disappointment. Our financial results for the third quarter were solid and our outlook continues to be very positive. Topline growth was respectable year-over-year but down sequentially due to temporarily lower FTE.

Despite lower FTE and utilization, we achieved a modest sequential gross margin improvement, in part due to lower training costs, and we experienced significant margin expansion year-over-year. Profitability continued to improve, with third-quarter EPS reaching the highest level in 13 quarters.

So moving on to the details outlined on Page 10 of the presentation, comparing our third-quarter results to last quarter, revenue was down 1.1% to $72.5 million, compared to $73.3 million in Q2. The agent layoffs and hiring freeze that Larry mentioned, plus slightly lower T-Mobile call volumes, accounted for the overall decline and was offset by higher revenue across the remainder of our embedded base, led by a $1.2 million revenue increase from our Makati facility highlighted on our financial scorecard that is included for your reference in the presentation on Slide 13.

Gross profit dollars and gross margin expanded sequentially to $13.5 million and 18.6%, respectively. The margin increase was fueled by increases in all three segments, most notably the improvement in offshore, which flipped from negative gross profit last quarter to 7.1% in the third quarter -- or in the current quarter -- due to growth in average quarterly FTE to approximately 450, and utilization of 41%. We expect continued margin improvement in this segment, which exited the quarter with over 500 FTE.

Gross margin in the Canadian segment is expected to be flat next quarter, while we expect the US segment gross margin to drop in anticipation of higher-than-normal training costs related to the accelerated FTE ramp that will return our FTE count in that segment back to second-quarter 2009 levels. Our gross margin expansion led to an increase in operating income which totaled $2.4 million, compared to $2.2 million last quarter, and net income, aided by a lower-than-expected tax rate increase, to $1.8 million.

Earnings per share came in at $0.12, compared to $0.09 a quarter ago.

A more significant comparative analysis and a better indicator of the progress made on our long-term site optimization strategy is the comparison to the third quarter of 2008 that is illustrated on Slide 11. There, a bridge analysis for revenue, gross profit dollars and gross margin highlights the positive impact of foreign exchange, site openings and closures, our offshore initiative as well as other operational improvements.

The swing in FX contributed $1.6 million in gross profit and 240 basis points of margin. Our US to Canadian dollar FX rate, net of hedge positions, was $1.17 compared to $1.03 in the third quarter of 2008. We expect a similar net FX rate in the fourth quarter.

Our site closures in 2008 in early 2009, combined with the three new US sites opened in the last year, had a neutral impact on revenue but incrementally added $2.4 million to gross profit and 360 basis points of gross margin.

Our Philippine offshore investment and migration effort yielded incremental revenue of $1.5 million but cost us $300,000 in gross profit and 70 basis points of gross margin. Based on future utilization forecasts, we expect our offshore initiative to produce incremental gross profit dollars and gross margin on a go-forward basis.

In all, revenue grew by $3.6 million, gross profit grew by $5.3 million, and margins expanded by 670 basis points to 18.6%. We are obviously pleased with this progress and believe that we have established the foundation for a solid delivery platform that will sustain revenue growth and allow us to achieve our long-term margin targets.

The year-to-date analysis on Slide 12 captures a similar trend driven by the same underlying factors. Revenue for the nine months ended September 30, 2009 totaled $216.5 million, an increase of 8.8% compared to the same period in 2008. More important, gross profit increased by over 40% to $37.3 million, and gross margins expanded 410 basis points to 17.2%.

SG&A expense grew by $1.2 million but as a percentage of revenue decreased to 14.6%, contributing 70 basis points to operating income before impairment and restructuring charges.

Net income for the nine-month period grew to $3.8 million or $0.26 a share, compared to a loss of $6.8 million and $0.46 per share for the same period in 2008.

Moving onto balance sheet and cash flow highlights on Slide 14, the balance sheet remained strong at the end of September with cash and investments totaling $21 million and no debt. Working capital totaled $58 million, and our current ratio was 3.2-to-1. Cash flow was also strong, as Larry mentioned, with EBITDA of $6.4 million, or 8.8% of revenue, the highest level in 11 quarters.

CapEx for the quarter totaled $5.5 million, which included over $3 million in IT expenditures related to a client technology implementation. Depreciation expense totaled $4 million for the quarter.

Once again, we feel that the quarter, while not great, was very solid, and our outlook heading into next year looks very bright.

With that, I will turn the call back over to Larry.

Thanks, Dave. I'd now like to talk a little bit about the future and where we are headed.

On Page 16, I'd like to draw your attention to trends that we are seeing in the marketplace. First, many of our clients are experiencing revenue challenges. In the telco space, line disconnects continue, although many are able to offset this with new products such as high-speed Internet and media.

Second-tier wireless clients are experiencing lower unit sales and increased churn, but all wireless clients, however, are seeing an increase in ARPU and a rapid adoption of new data products.

In the cable industry, subscriber rates are relatively flat, but revenues are up through the selling of new services like high-speed Internet and voice-in-the-home.

Net-net, the impact on seat demand is mixed depending on the industry, the client, their relative market position, and which line of business we serve for them.

However, there are three factors that are very positive drivers for our business -- the increased use of outsourcing; the acceleration of offshore and nearshore migration; and the elimination of nonperforming vendors. These three factors are driving the growth of add-on contracts in our US and offshore markets. Because of our strong performance with existing clients, we are seeing net adds in these clients at the expense of other vendors.

Another trend we are experiencing is the increased demand for sales programs. Driven by the need for new revenue streams, clients are asking for our agents to cross-sell new products. We are also seeing an increase in demand for direct sales programs in both the consumer and business segments.

Finally, while our clients are running fast to save costs and increase revenue, they are risk-averse, given the uncertainty of our economic environment. This results in longer sales cycles and clients reluctant to add new vendors, preferring instead to expand with existing ones. This trend has helped us and our existing clients but also makes new logo sales more challenging.

As we look to the fourth quarter, on Page 17, our priorities are first to ramp the FTE to meet seasonal demand and backfill the seats lost in the third quarter. We expect modest sequential growth coming from the ramping of new clients and programs, offset by modest declines in several of our telco programs.

At the same time, the Philippines will continue to ramp, and we expect increased utilization and margins.

Third, as mentioned earlier, we expect to close some new logos from our current pipeline and, finally, continue our efforts to launch the Costa Rica operation in the first quarter of next year.

Page 18 lists our priorities for 2010. While we are still in the planning process, we wanted to share some of our early objectives and plans for the upcoming year.

First, we expect to achieve revenue growth rates of 8% to 10%, given the demand from our existing clients and new sales. We will do this while continuing to expand gross margins and operating margins.

We've talked previously about our At Home program that is currently in the planning stages for the first-quarter launch. The buildout of the organization and the technology to support this effort is progressing well, and we expect to be able to ramp this program to significant volumes throughout 2010. Given the increased demand in the Philippine seats, we expect to fill the existing 1100 seat site by the end of the second quarter and are already in the planning stages for a new site in the Philippines to open the second half of 2010.

As you heard earlier, we have started to add experienced healthcare personnel to enter the healthcare marketplace. We believe that this market is poised for significant growth and plays well to our strength of delivering high quality services. Throughout 2010, we will add staff and marketing resources to seriously enter this marketplace.

Finally, throughout 2010, we will continue our organizational effectiveness programs initiated this year and continue to pursue appropriate and accretive M&A opportunities.

To wrap up, on Page 19, we are still very bullish on the business. Industry demand remains strong though variable depending upon the industry, clients and specific programs. We expect to continue to deliver revenue growth and improve margins, partially through the rebalancing of our onshore, nearshore and offshore mix.

Finally, while we are focused on profitability, we will continue to invest capital and SG&A dollars in programs that will ensure long-term growth, a stable and expanding delivery platform, and an organization that can scale with the business into the future.

With that, Dave and I would now like to open up for Q&A.

(Operator Instructions). Arnie Ursaner, CJS Securities.

Good morning. My first question relates to the lack of training expenses in Q3 and how that might affect margin in Q4. So remind us, if you can, roughly what the math is. You had roughly 300-person decline in FTEs. I'm assuming you'll have to incur the training expense to ramp those back up. How should we think about the math on that ramp?

Hi Arnie. This is Dave.

I think the best way to think about it, as I mentioned in my comments, we do expect margins to drop in the US segment. I think thinking about 100 basis point drop in Q3 on US revenue of roughly $50 million is probably the way to think about the impact on Q4.

Okay, so you had a 100 basis point benefit in Q3 because you didn't incur the expenses?

It probably wasn't that big because, in a normal environment, we wouldn't have been spending as much as we will spend in Q4. We are kind of playing catch up, so it probably was 50 to 70 basis points help to the current quarter and will probably be about a 100 basis point drag on Q4.

Okay, thank you. On Costa Rica, one of the advantages of having your scorecard is we can measure your performance quite differently by the geographies that you are in. We know that you expect the Philippines to be dramatically better than the other two markets you are currently in. How should we think about Costa Rica relative to either the US market, Canada or the Philippines?

Yes, the Costa Rica site, which we expect will go live in the first quarter of 2010, obviously will not have any impact on Q4. Target margins for Costa Rica will be around 30%. We believe it will take us at least probably 12 months to get to that level. So as a percentage of the overall total, it will add about 440 seats.

As Larry mentioned in his remarks, we expect our Makati facility to be full in early 2010 and reach target margins there of 30%. So you can kind of play with the math to figure out what the offshore margin would look like, but I would think about the Costa Rica ramp as a relatively linear ramp of the 440 seats throughout 2010 to achieve the 30% gross margin target.

Going back to the Philippines, to ramp from 500 so that you're at now to 1100 implies a fairly substantial jump in a relatively short period. Are these -- is this work you already have in hand that you are just executing, or do you have to win contracts to get that?

It is about half and half. We are pretty confident in what we are in the middle of negotiating in.

Okay. My final question is a little more strategic. In the slideshow you had in the middle of the summer, you had talked about two and three-year goals that led to quite dramatic improvement in revenue growth and margin. Part of it would've been acquisitions but the key would also be execution and shifting to various markets.

How is your view? Is it the same as you had in the summer about kind of your two or three-year view, or if it is changing, how is it changing?

I don't think it's changing much. I think, you know, we've talked to you about 8% to 10% revenue growth from an organic point of view. You've seen a lot of the margin improvements in the US and Canada that we talked about. There will be continued shift as we change the offshore/onshore mix, but no, I think, in general, the strategy is the same.

Thank you very much.

David Koning. Please proceed.

Good morning. I guess my first question -- last year -- when we look at the three revenue sources between AT&T, T-Mobile and then the Other, in Q4 last year, AT&T ramped a lot while the other two were kind of flat to down a little. I'm wondering if you can just refresh us on exactly what happened in that quarter, and then, this year, kind of how you see those three sources playing out, if we should get some normal seasonality or maybe just kind of walk through each one.

Due to weather in Denver, Larry and I are not sitting at the same table, so Larry, do you want to take that one?

Sure. I think I am trying to think back to the fourth quarter. We had new sites opening up for both AT&T, T-Mobile. Primarily in the fourth quarter of last year, we had T-Mobile ramp -- AT&T ramping very strongly in the sites that we have built throughout the year. So I think you had a AT&T push there.

I think, as we talked on the call today, you will see an increase in AT&T because we will be back-filling those seats. I think you'll see a pretty flat to maybe slightly up T-Mobile as we continue to ramp for seasonality there.

Then the rest of the base, again I think, in the next quarter, you should see ramping stronger than the other two, given the new business that is being brought online.

The only thing I would add on the other piece is there is some wireline-based lines of business that have been contracting and we would expect that macro trend to continue. But new business that was won early in 2009 will continue to ramp and we do expect that piece of the mix to increase, as Larry mentioned.

That would be great. Okay, great.

Then secondly I know you've talked before about this Dave, the Canadian hedges that roll off into next year. It sounds like you expect margins to go up next year on a total company basis with offshore helping, but Canada will be a little bit of a head wind, assuming that the rates stay here.

Maybe you can talk a little bit about what type of headwind you expect from that, and then how that is offset with offshore next year.

Sure. Yes, we have modeled our Canadian business for 2010 using an exchange rate of $1.06 which, thanks to a recent rally, is a little bit below the current spot rate. We have hedged a decent chunk of the first quarter at $1.07, but at a $1.06 exchange rate, we are looking for Canadian margins to come in at about 14%, 15% for 2010. We would expect the US to, again, be very close to the 20% that is our long-term target, and then the offshore piece will ramp pretty much as I had described earlier in the call based on Arnie's question.

Okay, great. Then just finally, on the tax rate that was lower this quarter, is part of that based on something that is now sustainable, given the offshore continues to ramp, or should we expect longer-term (multiple speakers)?

Yes, I would absolutely characterize it as a one-off. We had some work opportunity credits that are a dollar-for-dollar benefit that helped bring our marginal rate down overall. We don't expect that to continue. I would, for modeling purposes, use the roughly 38% tax rate that we've guided to in the past.

All right, great, thank you.

Howard Smith.

c Good morning. A couple of questions -- first, just a clarification on the topline guidance for Q4. You say sequential revenue growth on Slide 17 but I also heard you say some programs are declining. So would you [net] expect to be up?

Yes, this is Dave. We are looking for a margin, just a relatively modest revenue increase in Q4 as we ramp and back-fill the lost FTE that we talked about. We do expect a slight gross margin drop due to the --

Training --

-- unusually high training costs, but we do expect revenue to start sequentially increasing again.

Speaking of AT&T and the FTEs, it seems that the impact maybe has extended longer or maybe was a little more impactful to Q2 revenue than initially expected when it was first discovered and started to be corrected. Am I interpreting the situation correctly, or --?

Yes, I think it was more about the hiring freezes that were on the tail of the layoff. We thought we could start hiring faster,. Depending on the site, it was delayed from 30 to 60 days, and given an attrition rates, that was the surprise to us.

Okay, so that was kind of an extra thing imposed by AT&T for whatever reason?

Correct.

Okay.

Yes, and I think, as Larry mentioned, we just, at the time of our last earnings call, really were not fully aware of the length of that freeze. So what you have going on are terminations associated with the individuals that were part of the violation. But on top of that, you've got all of the normal attrition that occurs with no way to back-fill for that attrition. So that was the difference.

I see. Now I understand a little better. Thank you very much.

Tom Carpenter.

Good morning, Dave and Larry. As we look into 2010 and the Philippines, you guys, I don't know if you're talking about hitting 30% after you get full hiring and those folks are season. I'm talking about the existing facility.

Do you see that being above 20% next year, maybe getting to 30% by the end of the year? Because that would be pretty aggressive to go from where you are now to 30% on the gross margin.

Yes, Tom, this is Dave. I don't know that is all that aggressive, given where we exited this quarter with, as we discussed, over 500 FTE. We had an average of 450 for the third quarter, so we are expecting a pretty nice sequential bump in Q4 and then feel like we've got some pretty good momentum going into 2010.

Okay. One of the things that you guys have talked about on past calls, especially on new business, is the importance of reference wins. You try to break into some industries and I think you guys have had some success, especially maybe on consumer tech. If you bring in a healthcare salesperson or two, can you guys win new business in that vertical without reference wins?

We think we can, otherwise we wouldn't be doing it. I think the way you do that is you take on generic programs that look a lot like the programs we're doing today, which is more like customer care. In the healthcare/insurance side of the business, it's -- there are a lot of programs that are basic consumer care where you and I call in for benefit information and so forth.

So I think the way we springboard into this is to start with pretty generic-type programs that look and smell much like what we do today and then lever that up further.

Would those be offshore or onshore?

No, it's a mix. As we've analyzed the marketplace, there is a migration happening in healthcare, very much like in the wireless space, for the more primary care component. Just like in wireless, the low-end kind of work is going offshore first, but at this point, we will take anything we can get.

Okay, one final question and I will get back in the queue. When you look at the two to three-year plan that you guys had put out a couple of months ago, to get to the upper end of you all's revenue range, I think you do need for At Home to be at least a modest success.

Can you drill down a little deeper into your intentions for that over the next six months or a year, and why you guys think you can succeed in that market?

Yes, I think there's two success components of At Home. One is building the operating and technical platform that you can scale the business. In that, I am very confident that what we've built and what we're testing now in small pilots is very scalable and is a true virtual workforce; it is not satellites off of existing centers. So between the management team we've put in place and we've continued to hire, we have a site director, we have some supervisors, so we are building that out. And the technology is coming along quite nicely that supports that virtual environment.

The wild card is the client adoption. In the marketplace that we are talking to and in our competitive marketplace, we see higher and higher rates of adoption. Again, it depends on the type of program; it depends on the security requirements and all kinds of things. But our early indication is that yes, we can close some of those deals and we can ramp very nicely, but the wild card will be in sales.

Our existing customers, which there are certain types of programs that are peak and valley that are very applicable to At Home -- there are certain types of backup requirements that play nice At Home for our existing customers.

If you did launch that service -- or I guess you're going to launch that service -- you would have people possibly throughout the US; you just wouldn't have them like in a 30-minute radius of an existing (multiple speakers)?

No, we are taking the virtual approach, which means I think, in eight different states, we will not hire anybody within 100 miles of our centers.

Okay. Just maybe give me two or three minute thing rundown on how you intend to hire for that program.

How do we hire for that program?

Yes.

It's all virtual. Again, the technology we've built allows us to screen on board, do background checks, drug testing, etc., all virtually without bringing people into a center. The sourcing of that is through the typical online monsters, etc. Our competitors are doing that quite successfully. In fact, the indications are that you get more volume than you would ever dream of, and the trick is how to do the screening process to whittle it down to the people who actually are productive at home, have good work environments at home and have high skill sets.

Well that's interesting. best of luck in that endeavor. Thank you.

(Operator Instructions). At this time, we have no further questions in the queue. I will turn the call back over to Larry Jones for closing remarks.

Well thank you, everyone, for your deep questions.

In closing, we are very pleased with the third-quarter results and we really look forward to continued growth, expansion in our platform and profit -- improved profitability.

Have a great day, and we will see you next quarter.

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