TSS Inc (TSSI) 2008 Q1 法說會逐字稿

Good day, everyone and welcome to the Fortress International Group's First Quarter 2008 Earnings Call. Today's call is being recorded. For opening remarks and introductions, I'd like to turn the call over to Mr. John McNamara. Please go ahead, sir.

Thank you and good morning, everyone. Welcome again to Fortress International Group Conference Call to discuss 2008 first quarter financial results. As with previous quarters, we will be displaying slides with today's conference call.

If you would like to view the accompanying slide presentation, you may access it through the investor relation's section of the Fortress International Group website at www.thefigi.com and fill out the registration page, it should only take you a moment or two.

Joining us this morning from the management of Fortress are Harvey Weiss, Chairman of the Board, Tom Rosato, Chief Executive Officer and Tim Dec, Chief Financial Officer.

Before we begin, as usual, we would remind you all to take note of the cautionary language regarding forward looking statements contained in the press release. That same language applies to statements made on today's conference call.

This call will contain time sensitive information as well as forward looking statements, which are only accurate as of today, May 14th, 2008 and Fortress International Group expressly disclaims any obligation to update, amend, supplement or otherwise review any information or forward looking statement contained in this conference call or replay to reflect events or circumstances that may arrive after the data indicated, except as otherwise required by applicable law.

For a full list of the risks and uncertainties which may affect future performance, please refer to the company's periodic filings with the SEC. We'll begin a call with the brief overview of the quarter and then we will open up the line for questions and now I'll turn the call over to Tom Rosato. Go ahead, Tom.

Thanks a lot, John. Good morning, everyone, and welcome. Thank you all for joining us to discuss our 2008 first quarter results. As John mentioned, with us today via telephone -- teleconference is Harvey Weiss our Chairman, and Tim Dec is here with me, our Chief Financial Officer.

The first quarter presented Fortress with some unique challenges as we, and everyone else, had to navigate the fall out from the credit crunch which resulted in some hesitation on the part of corporations to aggressively proceed with certain spending plans.

On a longer term basis, however, we see no slow down to the growth and upgrading of data centers as well as the other related services that we provide.

Our first quarter included some temporary delays which I will discuss later in detail. The scheduled project launches which impacted the first quarter results. However, these projects are all still active, some have been initiated in the second quarter and all remain a part of our backlog.

The competitive environment still favors companies like Fortress because of our go to market strategy, which offers strategic consulting design, construction and facility management services to customers that have mission critical facilities.

We continue to generate a tremendous number of new proposals which we will also discuss later in the call. We continue to expand our existing client base to include more and more commercial named customers.

If you go to slide two, there's a list there of some of the newer customers and new technology consulting engagements that were won in the first quarter and you can recognize some of the well known names. We continue to add and we continue to grow our new customer base list.

We continue to actively search for appropriate acquisition targets also that will specifically enhance our facility maintenance capabilities and our technology capabilities and we will be sure to keep you updated on that as best as we can.

In summary, there's a strong demand in the marketplace for our services. Our reputation in the industry is continuing to grow and we anticipate that 2008 will bear out these statements. What I'd like to do now, before I turn it over in detail to Tim Dec, is talk a little bit about the business side of the first quarter and what occurred.

Revenues for the first quarter continue to show quarter to quarter improvement. While we showed modest revenue growth on a sequential basis, it was not as high as we had originally anticipated.

This was mainly due to generator shipment delays we encountered this quarter on a significant project that was in backlog as well as delays to begin pre-construction activity on our significant wins that we had in late December. However, these will all just be pushed into future quarters.

Our adjusted EBITDA loss for the quarter was $935,000. The increased loss was driven, primarily, by a decline in the construction management revenue segment for the first quarter, which I discussed earlier, as well as a slight increase in SG&A.

With regard to this SG&A increase, we analyzed areas in the first quarter where we had a duplication of sales efforts and support personnel as a result of the acquisitions that were made in the last quarter of 2007 and the first quarter of 2008.

And we have made reductions in this current quarter to the amount of $1.4 million in annual fixed costs, which should improve our operating efficiencies going forward.

Let me talk a little bit about new orders. As you know, we previously discussed that January new orders were $51 million. We saw some modest new order bookings through February and March of $3 million, bringing new book business to a total of $54 million for the quarter.

However, one thing to be note is that the pace has picked up substantially again in April. As of the end of April, we booked an additional $13 million in new business orders, added on top of the $54 million for the month.

Plus we have additional significant verbal commitments that we hope to be announcing soon, prior to the end of the third quarter for projects that we've had in process -- before the end of the second quarter, I'm sorry.

Some of this new business is from clients that we had done previous consulting or engineering work with in prior quarters where the customers delayed the next phase in the project, which primarily had to do with the uncertain economy.

Data center expansions typically are not capable however, of being delayed over extensive time frames and are necessary elements that the customer can't delay once they get beyond certain paying points. The pent up demand is now requiring customers to move forward on some of these projects with their plans, despite the economic conditions.

Larger customer awards year to date, included work from Switch and Data, particularly in their new facility in Chicago. We closed, recently, a project with University of Chicago. This is a $2.8 million project. One of the benefits of this is that it came out as a result of the acquisition of our SMLB group in Chicago that was made on January 1st of 2008.

Our existing customer Criticon, which is now DBT Criticon, signed a new lease and we have additional project value coming with regard to tenant expansion of that facility. We also signed a nice project with Howard Hughes Medical Center and we just began doing additional work for IBC in Boston.

We continue to issue new proposals at a very aggressive pace. So far this year our new proposal activity had totaled $218 million through March 31st of this year. If you look at slide three, it kind of gives you an idea of the growth in proposal activity quarter over quarter and how that relates to subsequent bookings.

The conversion value of contracts that we are pursuing that are related to in-house consulting projects was more than $202 million at the end of the quarter and our success rate at converting these projects is very high. As you recall, our conversion pipeline represents open proposals related to projects that we have in-house where we are doing consulting work or engineering and design work for existing customers.

Our facility management division added new project revenue during the quarter and a diverse client base which includes Time Warner Cable, SCIC Corporation, DARPA, GEICO, Comcast and XM Satellite Radio.

I mentioned last quarter and I will reiterate it today, that we have experienced no cancellations of any projects to date. Our relationships with the major IT firms continues to expand from a proposal standpoint and we are receiving new consulting engagements.

We have created two distinct teams to keep up with the request for services and proposals from these service partners since the demand from their customers seemed to require a collaborative offering of both hardware and software services and facility related support systems. Typically -- particularly concentrating on energy efficiencies and providing total cost of ownership of the data center, over the lifecycle of that particular facility.

We were recently awarded two consulting engagements in the Middle East as a result of our efforts to expand our service offering there. In the demand for our knowledge in the mission critical marketplace overseas continues to attract significant new interest and opportunity.

I'd like to talk a little but about our backlog. If you go to slide four it gives you an idea of the size of our backlog at the end of the first quarter and the components of our backlog.

Our backlog at the end of the first quarter was $207.5 million. As you can see, our backlog has been at a high level for some time now and the questions, I'm sure on everybody's mind is when and at what rate will it convert to revenue.

We've indicated that a large part of this backlog consists of a few construction management projects and we recently have been in contact directly with the clients and have discussed in more detail their plans to implement these projects.

We now have a much clearer idea about when this backlog will be converted into revenue and are in sic with what their business plans are. Industry fundamentals remain strong and available space for data centers is still in short supply.

The fact, we believe that with the combination of the booked new business, growing backlog, the pipeline of potential projects, we are now in a position and are comfortable to finally offer guidance into the balance of the year, which Tim Dec will address. Now, I would like to turn the call over to Tim Dec, our CFO, who will walk you through a more detailed examination of our financials.

Thanks, Tom. We reported $19.4 million versus $18.2 million in the fourth quarter of last year. Revenue from the first quarter last year on a pro forma basis was $10.1 million. That represents an increase of approximately 93% this quarter over the same quarter of last year.

If you take a look at slide five, it's just a depiction of what you guys already know of, but it is, again, revenue was up for the fifth straight quarter. We've stabilized the first three quarters, as you can see, in 2007.

We're a little bit lighter, closer to the $10 million range and now we -- the company has moved closer to the $20 million in the last two quarters and we expect to continue to see forward trend in those -- in the revenue numbers.

Our revenue breakdown for the quarter was $1.1 million in technology consulting. $14.4 million in construction management, and $3.9 million in facilities management. Our gross margin for the first quarter was 17.6%, essentially flat quarter over quarter -- flat over the fourth quarter in 2007.

Our SG&A for the first quarter, excluding non-cash comp was $4.8 million, up from $4.5 in the fourth quarter. The increase in SG&A during the quarter was attributable to professional fees associated with the year end out of work, completion of phase one of our [SOCs] compliance work and the inclusion of a full quarter of overhead associated with the recent acquisitions of Rubicon and SMLB.

If you remember, last quarter, Rubicon was purchased at the end of November so there was only one months of SG&A cost in the fourth quarter of last year. Our SG&A as a percentage of revenue was 23%.

Our reported net loss for the first quarter was $2.3 million. Our adjusted EBITDA, our primary focal point, which excludes amortization, non-cash comp and depreciation, was a loss of $935,000.

As we have discussed in the past, the ramp up of our sales and marketing efforts, as well as our required public company costs are a large bulk of our SG&A expenses. Our goal, as stated on our last conference call, is to have our SG&A percentage at approximately 12% of revenue by the end of this year.

We certainly understand the importance of controlling our SG&A costs as we continue to build this company, as evidenced by the fact that we just made the changes that Tom discussed for $1.4 million in -- during this quarter.

Backlog. Our backlog at the end of the quarter was $207.5 million, as Tom touched on. For the breakdown by division is technology consulting at $4.9 million, construction management at $187.6 million and facility management at $15 million. New proposals remain strong and we expect to continue to add to our backlog as the year progresses.

At March 31st, our cash balance was $8.4 million. Net cash used during the quarter was $4.8 million, primarily due to the purchase of SMLB for $2 million, the repayment on the Rubicon seller's notes of $1.5 million and the adjusted EBITDA allowance of $900,000 --935.

As mentioned on our last call, we are providing guidance today due to the complexity of the larger construction projects and the delay of converting those into revenue, we will not be providing quarterly guidance at this point.

We feel that with our existing backlogs, anticipated growth to that backlog and current expectations for converting backlog to revenue. That we are now in position to provide that guidance. We believe we will generate revenues of between 120 and 125 this year with an adjusted EBITDA of $3 million.

If you refer to slide six now, affect two tables really, one that shows revenue and one that shows adjusted EBITDA. Our reported revenue for 2007 was $50.4 million, as compared to our 2008 revenue guidance of $120 million to 125 million.

More importantly, our reported adjusted EBITDA for 2007 was a loss of $4.3 million, as compared to our 2008 adjusted EBITDA guidance of $3 million. A positive net change in adjusted EBITDA of $7.3 million year over year.

On our last call, I suggested that the company was well positioned with a strong balance sheet, high quality receivables and minimal debt. We still believe those facts are in place today. Our primary focus for 2008 is moving this company to positive adjusted EBITDA.

Our backlog has grown from $20.6 million at the end of 2006 to an excess of $200 million at the end of the first quarter of 2008. We all realize the critical element success for 2008 will be converting our backlog into reportable revenue and ultimately achieving profitability, that along with our continued focus on prudent and accretive M&A transactions will help draw shareholder value in 2008. I'll turn the call back to John for other questions.

Melissa, we can start the Q&A now, please.

(OPERATOR INSTRUCTIONS). We'll take our first question from Josh Jabs with Roth Capital.

Hey, guys. Good morning.

Hi, Josh.

Hi, Josh.

Tim, can you just walk through your guidance for 2008. Obviously there's some larger contract revenue in there. So maybe you can break out what you're expecting from sort of the conversion business versus what's already contracted in your backlog.

We will be filing our Q today, either this afternoon or tomorrow. And in terms of what we have in the Q, we talk about recognizing 30% of our revenue versus what we had publicly disclosed in the past as being about 50% of that revenue.

And essentially, what that is is what Tom had touched on earlier on the call. It's back in December and January, we had -- we had initial meetings with customers and the major jobs that we thought were going to roll out and that was really kind of our thoughts back in late December and January.

As we've moved further along into 2008, we've opened up continuous dialogues with these particular vendors to understand their particular desires for 2008, thus we've really kind of -- as Tom touched on, we haven't lost any of the backlog, its really more just pushing certain particular projects out. Thus we've gone down from the 50% backlog that we expect to recognize in 2008 to 30%.

So, in looking at the delays there, can you give us a little bit more color. I know there's been some credit issues in the past, that doesn't look to be as much of a concern this spring.

Does it have to do with actually -- I guess I'm looking at, was there any one specific thing within your backlog that has caused a shift in when the work is going to get done?

Yes, one of our customers that we've gotten some major wins from had a progress of two of their project dependant on successful financing on March -- during the first quarter of '08.

That successful financing occurred on March 31st. So, we thought we were going to be in some pre-construction activity on these projects during the first quarter. That got pushed out as a result of that because we -- the financing had not come though. But now it's been successful for them. So, we've got a -- I guess a more realistic schedule as to what the timings going to be to begin some of those projects.

Another large developer customer of ours, same situation, waiting to get financing in line as a result of that, it delayed some of our pre-construction and preliminary construction work.

Now, that has been resolved and we are actively working in -- pushing forward on those projects in the second quarter. So we should see this bunch up of -- some of this approved revenue coming in for the balance of the year.

But it certainly did push some of these revenues into the next fiscal year, into 2009, which is obviously going to effect where we thought we going to be at for 2008.

All right. Looking at the -- your relationship from -- with IBM, it looks like some of the bigger players, Google and Microsoft, HP with [Bridge Telecom] over the last couple of days have all made fairly big announcements regarding data center build outs. Are you guys getting any contribution from the IBM relationship? And what's kind of the status there?

We are and we have quite a bit of proposal activity going on with them right now. I refer to -- there's two significant IT vendors that we're working hand in hand with.

Most of the activities with them, however, are related to offerings they had to their customer base. But we've got so much activity going on in both of these with -- with both of these relationships that we have set up separate teams just to deal with the proposal activity and the consulting wins that we're getting right now. So we're getting a significant amount of consulting wins.

I have a hard time sometimes mentioning and I don't like to mention the names of some of the specific customers because they're all very touchy when they -- when we say anything specific about what their plans are because a lot of it is very sensitive to their internal strategic planning.

But I will tell you that of the major vendors, I think one of the only ones we're not engaged with is Google and probably all the other names out there -- probably Google and Intel are the only two that we're not doing some sort of either consulting work or activity with. All the other ones we are involved with in one way, shape, form or the other.

Okay, and this last question here. Earlier in this quarter you'd mentioned that you were getting a number that was getting close to $300 million in proposal activity. How has that trended over the last couple months?

Good, actually, I've got some statistics here on proposal activity. For the four months ended April 30th, we issued $286 million worth of proposals so far this current -- this current fiscal year. That's through April.

I looked at what our trailing 12 month proposal activity was from April back to April 1st, and it was $566 million worth of proposals were issued in the trailing 12 months. The prior 12 months period it was only approximately $123 million. So that gives you an idea of the increased capacity that we have and our ability to be able to respond to customers.

Our prior 12 month bookings have been approximately -- and I don't have the exact numbers, but around $250 million in booked business for the last 12 months. Prior 12 months, prior to that was only about $43 million.

So, between the proposal activity, which is really -- it just amazes me but the activity is very strong, the market is very robust and we are penetrating new customers and new opportunities and we are also getting involved with a lot of customers who have multiple sites and multiple facilities all over the country. So it really as a -- I can say nothing other than the market looks really favorable for us and the suite of services that we offer is definitely in demand.

All right. Thank you.

We'll take our next question from Matthew Weiss with Maxim Group.

Hey, guys. How are you?

Hi, Matt.

Good.

To build on one of the prior questions, sort of wanted to drill down into your methodology for arriving at guidance. Is the strategy there to sort of be ultraconservative? It sounds like you are with what you've done taking down expectations for pushing backlog through, but maybe you can just talk a little bit about that.

And then, at the -- your issued revenue guidance how much of that is implied organic growth? $120 million to $125 million would apply about 130% to 140% growth. How much of that is, do you think, organic.

In terms of our guidance, I think your question was we're being ultraconservative. This is -- I've been with the company now for three calls here, this is the first time I've come out and provided any guidance. I feel very comfortable in the numbers that we've provided to you at this point in time. I don't think its ultraconservative but I do think those are the numbers that we will be able to achieve this year.

Okay, then from an organic standpoint. How much are you factoring in from a -- from the acquisitions of Rubicon and SMLB and then maybe you could tell me the contribution in the first quarter from those two?

Yes, the organic growth, I think about $100 million is organic and figure the 25 is from the acquisitions.

Okay.

And, actually in the first quarter, the contribution was $5.7 million in total revenue from the -- from our acquisitions and they were probably ahead of plan with regard to EBITDA.

Where our disappointment came in the first quarter with the organic company and just the lower construction management revenues on the -- what we anticipated to be earned, but again, that's been pushed into this second quarter.

Okay.

I think to Tom's point. It's important to note that each of the acquisitions that we've made are positive EBITDA producers for the organization. Exclusive of really kind of a management fee allocation.

We kind of absorb more of the overhead and more kind of at the parent company level. But each of the acquisitions that have been made so far to date have been positive contributors to EBITDA and we expect that to continue.

Okay. Good enough. How much was pushed out this past quarter, of construction management revenue, how much had you had in your forecast to be recognized.

We're not going to provide that particular answer, but what I can say is what I touched on earlier that last call we said -- in our press release we said 50% of our backlog we recognized, now we're saying 30%.

Okay. Fair enough. And then you had mentioned that you eliminated about $1.4 million in fixed costs, can you tell us a little bit about where that came from and then, is that supportive of your targeted SG&A range of 12%.

Yes, it is supportive of our targeted SG&A range. It was a combination of the acquisitions, we ended up with some duplicate sales personnel in some of our outlying areas that we evaluated who the most efficient were and we -- we made some decisions there. We also made some decisions regarding some of our support personnel in our proposal in our estimating and pre-construction [departments].

Okay. And then, lastly, from a liquidity standpoint, can you give us an idea of your CapEx requirements for '08 and maybe if you have, what type of expectations you have for cash flow operations. I guess I would sort of mirror what you're looking for in a adjusted EBITDA, but some color there.

Yes, I think you've kind of touched on that point, the $8.4 million in the bank and we're looking at a -- and we're looking a positive EBITDA for the year of $3 million. We should be up -- up over the ten number by the end of the year and looking into 2009 as a positive year as well.

In terms of our CapEx, you'll see on our Q today or tomorrow for the first quarter is was less than $100,000, and not a really -- as you touched on, we're really not a CapEx intensive business.

I mean we're really adding computers, kind of office needs for people to get out and sell. So that's -- I tend to look at our adjusted EBITDA as almost our free cash flow, depending our fluctuations and kind of balance sheet items. And really we control the receivables and payables. So it's a really good measure.

Okay. And then gross margin is nearer term still a 17 to 18.5 targeted.

Yes.

Okay. All right. Thank you gentlemen.

Thank you.

Thank you.

We'll go next to Bill Sutherland with Boenning and Scattergood.

Thank you. Good morning, Tom.

Hi, Bill. How are you doing?

Good, good. Hey, curious is -- I realize you don't want to get into quarters, I understand that completely but what kind of EBITDA run rate would be baked in as you exit '08 into this full year number of $3 million?

I didn't get that question, could you maybe say it differently?

Well, obviously you've got to catch up here after losing -- with the negative EBITDA in the first quarter and I'm just kind of curious what kind of number as you get to the back end of the year you're looking for in terms of adjusted EBITDA. Is there -- clearly some catch up I would think.

Yes, I really don't think at this point in time we're going to be able to answer that particular question. I think by saying that we'll do three for the year and where we are, that we will generate $4 million of EBITA over the next two quarters.

Okay. What's -- what's D&A for the year look like?

SG&A?

D&A, depreciation amortization.

Depreciation is very minor within the company, you get about $100,000 at the end of this quarter, $106,000. And I think you'll probably maintain right about that level, probably about $400,000 for the year, maybe a little bit higher.

In terms of the intangibles? The intangibles now are about $750,000 for the year. There's another component within the cost of revenue about $100,000. So it's probably about 850 and that has all of our acquisitions to date baked in so none of those are run off. Did I say for year? I'm sorry, that's for quarter. So you can just annualize that times four. So about $3.6 million.

Okay. The gross margins by group, were you pretty satisfied with the where they are, or -- I guess they're under pressure in CM, given the short fall in the revenue.

I think that the margins that we have kind of planed out and modeling are kind of general trends that we've discussed publicly before. I think that if there's any downward pressure, its more so on the FM side of the business.

Because you had talked there about something that could be in the 20 range.

Yes, it was like the high 20's, 30% somewhere around there. And we've experienced some little bit lower gross margins that that. But a lot of that still, I think, has to do with getting a certain amount of volume and level of revenue base to cover -- to cover some of the fixed costs that we had in that particular division.

If you looked -- I mean, just a quick trending. If you look back at the company as it's grown in the last three or four quarters. I mean we reported about 13% gross margin at the end of June, 15% at the end of September and then between the 18%, 19% range in the last couple of quarters. So we have maintained the range that we discussed publicly. Even though really the revenue concentration is trending a little bit more to the CM side.

Right.

But we have -- we have maintained the range that we've discussed prior.

Okay. Think here. Oh, your business, Tom, historically has just been U.S. and pre -- and a heavier mix of government to private sector.

Yes.

Where is that mix currently?

We're probably more about 80% commercial and 20% government. And we actually -- I don't know if we compared that over the last quarter or not, but we do keep track of those statistics and the government -- the government side is definitely reduced significantly and our main -- our main strategic push has been to embed ourselves more in the private sector.

And you got -- sounds like you got all you can handle just in the U.S. as opposed to looking outside the U.S. at all. Is that correct?

Well, no. I don't think we're at capacity at all right now. The thing you have to realize is on these larger construction management projects, we're really acting as a CM and it doesn't require us to self perform all the major trades.

So we can leverage those projects with four or five -- four or five people. We do see a huge demand overseas, the Middle East, there is a lot of activity going on in the data center market.

Some of our competitors are over there and some of the IT service partners that we have are taking us into those areas also with their American customer base.

So we think that we need to take advantage of that. I don't think it's beyond our ability and mainly our goal overseas is to work more in the consulting arena and the engineering arena and provide consulting services as opposed to actually getting involved in the construction projects there.

Yes, that makes a lot of sense. I have an idea there that I'll get into with you offline.

Okay.

That's good. Thanks a lot.

Thank you.

Thank you.

We'll take our next question from Philip Anderson with Pinnacle Fund.

Good morning.

Hi, Philip.

Hi, Phil.

Tom and Tim you both mentioned in your prepared remarks that one of the reasons, kind of the overarching reason for the backlog conversion to revenue this year, having gone down from your expected 50% to 30%, is that your customers, due to the credit crunch, were unable to get the capital they required for their own projects along a time line that they had previously expressed to you.

So, what I'm curious about is to what extent would your competitors be suffering as a consequence of their own customers having experience similar push out in projects and being a public company, perhaps the only public company in this space with perhaps enhanced access to capital, because you're public, publicly automated financials, you have a currency in your stock.

What opportunity does this -- has the credit crunch given you to consolidate and become the predominant play, or make an effort at becoming a predominant player?

I guess it's difficult to figure out the -- how its affecting our competitors because we don't have access to their information. Could you repeat that last -- the last section of your question?

It's basically -- it's a small industry, everybody talks, a lot of its localized in the mid Atlantic states. I guess I'm wondering, just as your company has suffered a push out in significant contracts which you had expected to begin earlier.

Right.

Because your customers were unable to secure the capital which they needed to commence these projects.

Right.

I am making a theory that your competitors would have suffered a similar realty.

I would assume that, yes.

Why should they be any different in other words?

They shouldn't.

And being a public company with a publicly traded equity that can serve as a currency with which you can pay for an acquisition, I'm wondering how the acquisition landscape may have changed over the last four to six months and how those changes may advantage you as you seek to become a predominant player in this industry.

Well, that's a good point. From the acquisition standpoint it should benefit us because there should be some fear out there that if they're not -- if we're trying to acquire someone and they're not comfortable with what the landscape looks like out there, it could -- it could help us.

Both from, like you said, from the standpoint of having access to capital. So I think that would be, that would be good. I mean where you can see the effect of this, in a lot of cases is what's occurring with regard to, I think, a lot of the developers in our space, or the REITs in our space, the activity that they're starting to see in the second and third quarter now where a lot of companies that traditionally built their own data centers, with their own capital are moving more into the developer space.

But I have to agree with your comments. I think it should help us considerably with regard to acquisitions.

Okay. Well I hope it does. Tim, do you have anything that you could add any more color to? Maybe what you're seeing out there?

Well, I think Tom's point about the general industry nature is right on as well s your comments. I think from my world of the financial situation that we as an organization need to get this company to EBITDA profitability.

We need to convert this backlog in such a way that we drive value in this particular company, drive our share value up such that when we look at acquisitions it will be a little bit cheaper for us in the long run. So, I think that's our objective here in the short term.

Okay. Thanks everybody.

Thank you.

And it appears we have no further questions at this time. I'd like to turn the call back to our speakers for any additional or closing remarks.

Thank you, all, for joining us today and --

We look forward to talking to you in three weeks.

In a couple weeks -- months.

And once again, that does conclude today's call, we do appreciate your participation. You may disconnect at this time.