TTEC Holdings Inc (TTEC) 2004 Q3 法說會逐字稿

Welcome to the TeleTech third quarter 2004 earnings conference call. I would like to remind all parties that you will be in a listen only mode until the question and answer session. This call is being recorded at the request of TeleTech. I would like to turn the call over to Karen Breen. Thank you ma'am. You may begin.

Good morning and thank you for joining us today. My name is Karen Breen, Vice President of Investor Relations and Treasurer. Tele Tech is taping this conference call to discuss it's results for the third quarter 2004 ended September 30, 2004. Yesterday we issued a press release announcing that our quarterly report on form 10Q had been filed with the SEC. This call will reflect items discussed within that press release and form 10Q and TeleTech management will make reference to it several times this morning. Speaking on today's call are Ken Tuchman, Chairman and Chief Executive Officer and Dennis Lacey our Chief Financial Officer Ken will begin today's call with a top level overview of the company's performance during the third quarter. Dennis then will review certain aspects of our financial results, following which Ken will make closing comments. After our prepared part, Ken and Dennis will open the call to your questions. Before we begin I would like to remind you of our disclosure regarding forward-looking statements. Matters discussed on today's conference call may include certain forward-looking statements related to future plans and developments, financial goals and operating performance, and are based on management's current beliefs and assumptions. They are subject to risks and uncertainties. Factors that called cause TeleTech's actual results to different materially from those described include but are not limited to, reliance on a few major clients, the risk associated with lower profitably from or the loss of one or more significant client relationship, the company's ability to close new business, execution risks associated with performance based metrics and certain client agreements, the risks associated with achieved profitability in the comment, execution risks associated with achieving improved profitability in the data base market ing and consulting segment , execution risks associated with achieving our targeted cost reduction plan and the possibility of additional impairments and restructuring charges. With that, I will now turn the call over to Ken Tuchman, Chairman and CEO.

Thank you, Karen. Good morning, everyone. I'm pleased our efforts to improve profitability are paying off. Enabling us to report earnings of .14 per share in the third quarter. These results included a one time charge of 2.8 million that we previously announced to terminate an interest rate swap agreement. The third quarter results also benefited from a 5.4 million tax gain associated with the various tax planning strategies that Dennis will discuss later in the call. Operating income increased 2.8 million to nearly 12 million over the prior year quarter. Additionally, our operating margin improved to 4.7% from 3.7% in the year-ago quarter. Our improving financial performance enables us to virtually eliminate all our debt and reduce our revolving credit facility borrowing by 58 million in the third quarter. Since the beginning of the year, we have reduced the total debt by 114 million, or nearly 90%. As a result, our balance sheet has never been stronger, with 58 million in cash, 15 million of debt and access to 100 million revolving credit facility. This puts Tele Tech in a solid position to finance it's future growth initiative Our improved profitability and solid balance sheet is a result of a series of initiatives we undertook over the last 18 months to strengthen the company operationally and financially. I discuss these initiatives in detail during the last conference call, so I won't repeat them today. Now that these initiatives are firmly in place in North America, we're taking steps to implement them world wide. It will provide a strong foundation for renewed profitable growth during 2005 and beyond. As we begin the fourth quarter and complete the planning process for the next year, our primary objective remains profitable revenue growth, along with revenue diversification. We will keep also keep a sharp focus on operating efficiencies and identifying additional profit improvement initiatives across the globe. Our revenue growth and diversification efforts are illustrated by some recent new business wins, and several important client renewals which I will briefly review now. The first new business win was in the government vertical, where the General Service Administration, also known as the GSA, selected TeleTech to provide customer management services to GSA, as well as other large government agencies under it's oversight. These agencies include the IRS, Department of Education, and Health and Human Services among others. We believe the GSA selected TeleTech for several reasons, including our strong financial position and solid balance sheet. As clients want to be certain they are working with a financially sound partner. Our proven reputation in delivering front and back office solutions, our highly reliable centralized integrated technology platform,that enables clients to benefit from our voice over IP capabilities, and our ability to manage multiple communication channels in languages. Another important new business win with a long term partnership with a fortune 50 company to support their on going business transformation efforts around the world. This agreement initially valued at approximately 150 million other other over five years will enable this client to achieve their broader goals to accelerate growth in both their traditional and emerging business while lowering costs and further strengthening global brand loyalty. The sales cycle for this win was approximately nine months and the client selected TeleTech after an exhaustive review of our unique solution. Our global facilities and our integrated and standardized delivery capabilities, our centralized global technology platform will enable -- excuse me, will enable this client to provide consistent quality customer experience around the world. We expect the program to ramp over the next 12 to 18 months and the work will be done in our existing facilities and will absorb some of our available capacity. Along with winning new business It's equally important that we focus on renewing and expanding existing client relationships. To that end we recently renewed an agreement with one of our top five clients for another five years. One initiative we are undertaking to deepen and broaden our existing client relationships is through the launch of new products that are less labor intensive, yet tightly coupled with our traditional service offering . On the last conference call I touched on one of these products which will enable us to offer the client the full rage of TeleTech services. These include using our global network, our work force management, our quality assurance tools, along with our diagnostic capabilities. Clients can use these products in our facilities or internally in their organization. This capability further extends our client relationships beyond the traditional outsource model, enabling them to benefit from reduce capital and deployment risks by utilizing our services. Besides organic growth, as I just described, thanks to our strong balance sheet, we are we are augmenting our business developing team, and we plan to explore select accretive acquisitons that can deepen our vertical expertise , or broaden our VPO and technological capabilities. Let me now take a moment to review some of the operational aspects of our business. Through the first nine months of this year, our North American operations continue to benefit from improving gross margins. Arising from standardization of our global delivery platform. We've made a significant investment in in developing this capability and it has taken us the last several years to fully implement. Moving forward, standardization of our global delivery platform and operational methodology will continue to be one of our key initiatives. A standardized delivery platform with consistent profits, simplifies global deployment needs, dramatically increases flexibility and significantly reduces capital requirements, which clients consider a strong differentiator. We have completed this undertaking in North America and are beginning to implement this initiative world wide. In addition to investing in our global network infrastructure to support our client . We have spent the last two years enhancing our internal systems by developing proprietary technology to deliver real time reporting on our operational and financial results globally. We have rolled these capabilities out in North America and expect to complete world wide deployment in 2005. One facet of our enhanced internal systems is the recent implementation of a global data warehouse that provides comprehensive dashboards and operational reporting as well as analytical and financial tools, with significant drill down and what if capabilities. This application is being used in every level of the organization. from the executive level to our operational management today. Moving to cost reduction achievement, I am proud to say we competed second phase of our $20 million cost reduction plan and expect to fully realize the benefit of this during 2005. When combined with the $40,000,00 first phase of cost reduction plan we have successfully taken $60 million of cost out of global operations on an annualized future run rate basis. Let me briefly review our international operations, along with Newgen before turning the call to Dennis. As you know, we've been challenged in certain international regions. While we have significantly reduced the losses in this segment, we will not be satisfied until it returns to profitability on a consistent basis. Last year our operating loss in our international segment averaged $10 million per quarter. We reduced that loss to 3 million in the third quarter of 2004. And are committed to returning segment to profitability during 2005 Asia Pacific continues to operate profitably and we recently signed an agreement with a major bank in Australia to provide sales and support for their new internet banking roll-out. The ramp has been extremely successful and the client is expanding their work with us. Latin America returned a profitably in the third quarter and we expect this trend to continue going forward as we increasingly leverage our presence in Mexico and Argentina to serve offshore clients. We plan to add Brazil to our off shore destinations for our clients in 2005. Moving to the U.K., which has been a challenge for us, we recently hired Marcus Flynn to run our European business (inaudible ). Marcus was most recently a senior executive with Semans, responsible for their European mega-deal sales force in their out sources division. As we have discussed in previous calls, we have significant access capacity in the U.K. and our new agreement with the fortune 50 company will increase the utilization in this region when fully ramped. Lastly, moving to NEWGEN , we recently signed an exciting new business including opportunities with a large OEM and a supplier in the automotive industry. That will contribute to revenue in 2005. These new agreements have required us to add enhanced features and functionality to our delivery platform, as a result we incurred higher cost in the third and expect some of these costs to carry over. into the fourth quarter. NEWGENs unique business model has enabled us to expand our market opportunities and I am confident they will become a significant growth contracted contributor in 2005. All in all we are quite pleased with our new business wins and our client renewals and our operational improvements and our third quarter results. With that, I will turn the call over to Dennis.

Thank you, Ken, and good morning to everyone. We continue to see the results of our company's initiatives to improve operations bear fruit. The impact of previously discussed programs to improve client by client profitability, to strengthen our pricing discipline and reduce cost is paying off. As Ken explained, our focus now is on revenue growth and revenue diversification, while at the same time continuing our efforts to realize future savings from standardizing our global delivery platform , and implementing our ongoing cost reduction initiatives. Let me review our third quarter results and the factors affecting comparabilities of those results to the prior year quarter. As outlined in yesterday's press release, We reported revenue of 256 million, up 11 million, or nearly 5% from the 245 million reported from a year-ago quarter. This increase is primarily from new clients. Approximately 4 million of the increase relates to favorable foreign currency fluctuations. As forecasted during our last call,the third quarter revenue was approximately 8 million on a sequential basis from the 265 million we reported for the second quarter. This is primarily due to the seasonal slow down on Spanish operations. related to the extended summer holidays in that region. Approximately 3 million decrease is related to performance based pricing, as we discussed on the last conference call. Also, as Ken mentioned, we reported EPS of 14 cents per share. which includes certain material items impacting the quarters results. It's detailed in our press release and form 10Q The first of these items was a one time charge of 2.8 million related to our decision to terminate an interest rate swap agreement that was originally scheduled to expire in December 2006. The interest rate swap agreement related to outstanding borrowings 38 million under our revolving credit facility .By electing to terminate the swap agreement now We expect to benefit from future net pre-tax interest savings of approximately 4.8 million during the period from October 2004 to December 2006. During previous conference calls, we explained we are pursuing various tax planning strategies, these tax planning strategies led to another material item reported this quarter. A $5.4 million tax credit. Under generally accepted accounting principles, we are required to recognize the financial statement impact of any contingent tax benefit as soon as the outcome can be estimated and is considered probable realization. The 5.4 million was determined to be probable based on information reserved and events occuring during the quarter , such as the company's filing certain amended tax returns We are pursuing additional tax filing strategies which may result in additional tax benefits in the future and we will record those benefits when they become probable of realization. our effective tax for the quarter excluding the 5.4 million gain I just discussed , was 45%. This is within the range we forecasted during the last call and we believe the annualized effective rate for 2004 excluding tax gains will range between 45 and 55% As described in our tax foot-note . On page ten, of the 10Q this tax rate is somewhat artificially high, as we are not receiving any benefits from losses in our startup locations. Another material item this quarter was the reversal of nearly 2 million in liabilities, associated with self insurance reserve , related to Workers' Compensation and employee health care. We estimate these liabilities each quarter based on historical claims experienced , and in consultation with third party administrators,and independent advisors Beginning this year, we elected to change health care providers and modify our North American coverage benefits. Based upon the third party administrator assessment of those plan changes and reduced number of claims received thus far for workers compensation , we reduced our estimated reserves by approximately $2 million during the third quarter. As we have discussed in previous calls, each quarter's results can be impacted by provisions for performance based pricing agreements. We have considerable organizational focus on performance based pricing to ensure maximum results for our customers and our shareholders. During the conference call last quarter, we indicated the 2 million in increased performance based pricing we earned in the second quarter, would not be repeated in the third quarter and this turned out to be true. As such, the swing in performance based revenue is approximately 3 million from the second quarter to the third quarter of this year. It was a primary reason for the sequential decline in operating margin, which we also forecasted would occur on our last conference call. Going forward, we believe the impact of performance based pricing will vary from quarter to quarter, although with less volatility that occurred during the last two quarters. I have remarked a few times during there call about how this call turned out compared to the forecast during the last conference call. The third quarter benefited from the material tax gain and the 2 million reduction in health and workers compensation reserves Because of that, we do not expect to report the same level of earnings during the fourth quarter. However, we do expect to report a profit during the fourth quarter. We explain that and other circumstances effecting the expected fourth quarter revenue and earnings on approximately page 17 of our form 10Q. We believe we are taking positive steps to grow our top line during 2005 and accordingly, our recent new client wins will contribute to revenue during the first half of 2005. I would now like to direct your attention to the financial comparison chart that appears within the MD&A section of the 10Q which will be approximately page 23 of your printed document. You will see that it contains the same transparent explanation of our results compared to the prior year that we have been including in our SEC filings. We believe this chart is helpful because it quantifies the impact of the various moving parts if you will, of our business and how our strategy and tactic have positively impacted our financial results. The line item in that chart labeled net increased to income from operations shows a positive impact to income from operations of approximately $45 million, for the nine months ended September 30th versus the same period a year-ago. The nature of the items that are driving that change are discussed and the management discussional section of our form 10Q But they are the same items Ken has talked about. Client profitability focus cost savings controls et-cetra However, let me comment on some of these a little bit further. Our cost reductions have affected 3 lines in the income statement. Cost of services, SG&A, and future depreciation as our Capex cost per site are declining. As detailed more fully on page 21 of the 10Q, When comparing third quarter 2004 to the year-ago period, cost of services and percent of revenue declined to 73%. from 74.3 Depreciation declined from 6.2 to 5.6%. These improvements are a result our cost reduction programs. On the other hand, SG&A as a percentage of revenue increased to 16.8% from 15. 3% the year-ago quarter and represents the net result of many plus and minus items. Just to mention a few, on the plus side, grant expense at international costs were down. This was offset by higher employee incentive bonuses being earned arising from our return to profitability and increased investments in our sales and solutions teams needed to achieve our revenue growth and diversification strategy. As a result of executing our plans our operating margin for the quarter was 4.7% versus 3.7% for the year-ago quarter. Although there are many moving parts, we believe this is improvement attributable to improve profitability on existing client programs, such as transitioning client programs that are not generating acceptable margins, to strengthening our pricing discipline, to modifying our incentive programs to drive desired results and to pursue and realize ongoing cost and programs. Now I'd like to make the comment on the strength of our balance sheet. Cash and cash equivalents were 58 million the end of September. This was after reduction in debt of 58 million during the quarter. Debt outstanding at the end of the quarter was approximately 15 million, which includes a grant advance of 7 million, which we expect to earn overtime. We ended the quarter in a net positive cash position of $43 million. Going forward, we anticipate operating with a minimal debt level, except for potentially leveraging the company to pursue select strategic acquisitions. BSO's were 58 days, slightly higher than the 57days for the previous quarter, at an increase of five days versus the year-ago quarter we have consistently stated that the target range for us is 55 days The 58 days for this quarter falls within that range. We are particularly pleased our free cash flow, which we define a was cash flow from operations less capital expenditures was 37 million for the quarter, compared to 28 million for the year-ago quarter. This level of free cash flow enabled us to de leverage our balance sheet. Capital expenditures were 5.8 million for the quarter and 26 million year-to-date. We believe Capex for all of 2004 will be approximately 30 million, down from our earlier range of 40 to 50 million on previous conference calls. I'm extremely confident that we have a solid strategic plan which will enable us continue to operate profitably. I will turn the conversation back to Ken.

Thank you. Dennis Looking back at the first three quarters we are extremely pleased with our profitability , which has enabled us to de leverage balance sheet and has provided to us to increase financial flexibility to finance future growth initiatives. We're excited about our recent business wins and client renewals which will benefit our revenue during the first half of 2005. Now that vertical realignment is complete and sales leadership is in place, top line revenue growth continues to be our primary focus. As we discussed on our last conference call, we have successfully Expanded capabilities to complement our core offerings, several will be formally announced in the near future. In addition to globalization of platform, our operations are providing increased cost savings and have allowed us to reduce capital spending. As we approach the end of 2004, we are in the process of completing our 2005 strategic planning process, and I'm confident the heightened level of discipline we exercised this year will be continued into 2005. As a company, we are committed to delivering long-term profitable growth and are excited about our future. To close, I thank our dedicated employees who have embraced our internal vision and focused on making it happen. We are confident we have the leading branded a the right strategy in place to execute in today's market. Thank you.

with that, we'd like to open it up to questions.

At this time if you would like to ask a question, please press star 1. You will be prompted to record your name. Again, to ask a question, please press star 1. Our first question comes from Jeff Nevins. Please state your company name.

Good morning. First analysis. Just about two housekeeping questions and one kind of strategic question. On the health care accrual, it sounds like it was a 2 million -- just so I read this right -- it was a $2 million kind of reversal in the quarter that we would not expect to see in the fourth quarter, is that correct, Dennis?

That is correct.

Then related to the performance payments, I know it was roughly around 1.7 in the June quarter and you're saying it changed, or reduced $3 million sequentially, right?

Correct.

Okay. Then on, the Verizon payments it looks like according to your chart most of the payments or virtually all of the payments have been made that were estimated for 2004 thus far?

That's correct. No more payments.

Good. My strategic question for Ken is when you talk about your reporting dash boards, as it relates to the consolidated reportings initiatives you're putting in place, what's your thoughts on, you know, having the data sent -- I guess my question is data integrity and the different customer information that you would be putting together which in some cases may be competitors how did you get over that hurdle with clients or I guess just the industry?

I apologize. I'm not sure -- I want to make sure I answer your question accurately. I'm not sure I understand the question.

As you go after offering clients a consolidated reporting offering, so to speak, and I know there's different pieces of it, that may require you to take information from some of your competitors and other areas, and I'm just curious how clients feel about having the data shifted around amongst different players and what makes that work for you.

Yeah, I think I understand the question. We have a whole series of tools, several of which will be self-service type tools that our clients will use and will have access to on a real time basis. Included in those tools they'll have obviously drill-down capabilities. In many cases I think what I'm hearing you say, there might be competitors that are taking advantage of some of the technology, and consequently, our one view technology would then be consolidating the results of all the various different competitors, as well as maybe even our clients' own internal centers. We're finding their actually very positive about this. The fact is the industry right now is really suffering from fragmentation of internal centers versus external, as well as internal versus multiple outsource vendors. For the opportunity for them to look at the information in a cogent fashion and have imperical real time data for the first time of understanding how their customers are being serviced, is something we believe is very important to them and we're hearing is important to them.

Okay. Thank you.

Thank you.

Next question comes from Rob Brown. Please state your company name.

Rob brown with (inaudible) On your gross margin you had a nice bump this quarter. Is that level sustainable going forward?

Absolutely.

You're saying around 27% gross margin is sustainable going forward in '05?

Absolutely.

ok Great.

We actually hope they improve.and that is our intention

ok great On your new contract that you talked about in the past you've targeted double digit margins can you comment on if that new contract hit that new target

Unfortunately because of the sensitive nature of our contracts, I can't. because of the competitiveness I cant What I will just simply tell you is that we're very focused on making sure that all of our deals going forward deliver value to our shareholders. I realize that's not giving you what you want to hear. But I can assure you that we believe we priced it fairly and that everybody on both sides is receiving a fair value.

Okay.

Thank you.

Thank you.

As a reminder, if you would like to ask a question, please press star 1. If you would like to withdraw your question, you may press star two. Next question comes from Brandon Dobell and state your company name.

Hi Brandon Dobell from First Boston. Ken, a couple of questions on your contracting environment, both from a new deal and renew perspective. Maybe get your, some color on the nature of the RFPs, looking for a lot of different geographies,lot of different technologies, straight head call center operations, also want to get a sense of if the deals are now looking more unbundled than previously. from having the opportunity to price in a more pioneer level then you had a in previous deals especially in renewals

Okay. Well, first of all one of the things that you need to know that our global sales force is is focused on creating opportunity versus responding to RFPs. That being said, being said you know in the market place on a global basis, it would be impossible for us to avoid all RFPs.

Right.

What I want to stress is the majority of our energy, more than 70% of our energy today and going forward in the future is creating demand and creating opportunity, not responding to RFPs. On the note of what are people actually looking for, whether it be MERP, or wether it be something we've created the opportunity, no question about it, that the global 1,000 or global 500, and I stress the term global versus the fortune 500, are looking to do business with a company that has global capabilities. No question about it. Every major deal we're looking at right now is requiring us to to operate and have capabilities not just from off shore, but from an in country standpoint across the globe. So although becoming international has been a very painful process and one that has taken quite some time to really perfect and to get, you know, near to where we want it to perform from a profitability standpoint, there is no question that it is paying off now and we believe that in 2005 we're going to see significant benefits from operating in all the different global theaters that we operate in. More and more corporations are saying they want to do business with fewer vendors and they want to do business with very strong financial vendors. We see the market place going through natural consolidation. Many clients won't even consider a high percentage of the quote, competitors, end quote, that operate in multiple companies because they don't feel financially they're strong enough. To summarize, clients are, A, looking to have typically no more than a couple of vendors in some case a sole source, B, they want to be able to operate in multiple locations not just offshoring, but also in country all over the world, C, they want someone that understands their customers, understands their corporation' paying points and have solutions that dress the paying points and address the ability to assist them in acquiring and growing and retaining customers. Then in addition to that, they want to work with a company that regardless of the kind interaction or transaction, meaning front office or back office, they can receive capabilities from that said company. We think that's all in our sweet spot. Sorry for being long winded.

Certainly does. I guess one follow along would be earlier comments about being pretty good balance sheet position right now and coming some acquisitions, do you think there's more opportunity international, if you think there's a lot of multiple country opportunities or in country opportunities, but seems the environment seems pretty fragmented, is there an opportunity to pick up some business, but also bolster your offerings by making acquisitions in countries outside the U.S.?

I think it'scertainly something that's on our radar screen and we're focusing on. What I want to just stress is there's so many companies that claim to be in the same space that we're in that are really not doing all that well. Fortunately for us, we're going to stay disciplined and any acquisition we do is going to be active, immediately. And need to be strategic. So therefore, that limits a lot of the playing field based on the shape of some of the competitors. Quite frankly, we feel our sales are going to be significantly stronger '05, we're now starting to get automatically into the number one, number two round as the finalist round because of the strength and reputation of the company an the balance sheet, vis-a-vis the rest of the playing field.

Thanks. I'll turn it over.

Next question comes from Jeff Nevins. Please state your company name.

Good morning. That was quick. On the taxes, am I reading this right, Dennis, if you're saying there's going to be the 4555% tax rate for the full year, that would imply the hit in the fourth quarter is going to be significant reaching a double digit number in reaching tax gains in the fourth quarter.

That statement was made excluding the tax gains from the whole year. You get a different result if you do that. No, it should not be moving up like that. it should be more like in that same range that 40%roughly

Good clarification. and then thinking about I know you have a lot of moving parts on the taxes but I mean is there any sort of guidance you can provide what you would think a number to be for taxes going forward?

You mean tax refund, like what we booked this quarter or tax rate?

the tax rates.

That range that we gave you is certainly a good working range for right now.

45 to 55?

40, 45, 55, something like that would make sense. Look at our tax footnote in the 10Q,we try to get more information on why that result appears that way because of the current situation where we have startup operations in certainly international locals, markets have opened up. that we are operating at a loss We don't get a tax benefit. if fact at some of these locations Even though we have a loss we have to pay a minimum tax. so It artificially kicks up the tax rate. so As we win new business, what will happen is our effective tax rate will go down overtime, if that makes sense.

Yeah. On the Capex, I mean, it looks like you're running at levels that are below 3% of your revenue. Is that sustainable over the next 12 months? Yeah, I think so. Yeah. That range, give or take, I think that's doable. Couple of things we're doing. We're doing a lot of things we talked about in prior calls to reduce the Capex. We also talked about programs we have underway to staff business in our existing centers more favorably . We've been exiting some programs that did not hit hit our desired margins. By replacing that with other business all that affects our need for Capex and then I guess on the international, the improvement there was pretty dramatic. Was that a function of cost, taking cost out or function of being able to fill up some of the empty seats?

I think it's a combination of both. It's a combination of A, businesses growing pretty much in all regions and we're seeing a lot of active in the pipeline and all across the globe right now, so it's that as well as it is really staying very, very disciplined on our cost structure and on our client profitability structure, and I think the combination of those two are netting some positive results. You know, as we stated before, we fully expect to continue to keep delivering on those results and to be able to continue to drive the gross margin, gross margin up over the quarters to come.

Just two more questions, if I may. The former NEWGEN business , you had cost of ramping up a new business. That something in terms of profitability to get back to where you were at the first half the year after these new programs start ramping up in '05?

No. We expect it to be better.

Better than the first half, okay.

We're very excited about the amount of business that we've just signed and we're very much looking forward to announcing in the near future some of the capabilities -- some of the new business that we've signed. But all of this new business is going on to the new platform at NEWGEN, which has just now come online and significant amount of functionality that's being added as well this quarter and next quarter for all the new business that's coming online.

Ken, last question is are you seeing any change in the velocity of the pipeline? There's a deal that you guys participated in out west that was in the San Francisco chronicle, have a lot of bidders, only 45 days ago, which is very quick. Are you seeing any -- is that across the board or what are you seeing as far as the velocity of the pipeline ?

I think now the elections are over I think there is quite frankly much more of less sheepishness and nervousness of companies going forward with their intent that they've had for the last 12 months to outsource. So to answer your question, we're hopeful, and I want to use the word hopeful, because it's difficult for me to predict how, you know, how people are going to respond. But based on what we've heard over the last six months on several pieces of business, that they were definitely going ahead, but they wanted to hold off until after November 2nd. We're hoping the velocity is going to pick up. That being said, we're also feeling pretty good about the overall pipeline and the quality of deals that are in our pipeline that we feel that they definitely are good fit for us, they're a good fit for our margin targets and so we're excited about the opportunity to announce some more wins, you know, towards the beginning of the first quarter. Since we're going to be going into Christmas, et cetera, there's no point announcing anything during that time frame.

Thanks a lot.

Thank you.

Thank you. And this concludes today's conference call. Thank you for joining us. You may now disconnect.