Hello, and welcome to the DHI Group Inc., Third Quarter 2018 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity as questions. [Operator Instructions] Please note this conference call is being recorded. I would now like to turn the conference over to Rachel Ceccarelli. Ms. Ceccarelli, please go ahead.

All right, thank you, Keith, and good morning, everyone. And welcome to our Third Quarter Earnings Conference Call. Joining me today are Art Zeile, President and Chief Executive Officer; and Luc Grégoire, Chief Financial Officer. Today's call includes certain forward-looking statements, particularly statements regarding future financial and operating results of the Company. These are based on management's current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may differ possibly materially from those expressed or implied in these forward-looking statements due to changes in economics, business, competitive, technological and/or regulatory factors. For a discussion of the principal risks and factors that could affect the Company's future results, please see the description of risk factors in our current annual report on Form 10-K for the year ended December, 2017, and in our quarterly report on Form 10-Q in the section entitled Risk Factors, Forward-looking Statements and Management's Discussion and Analysis of Financial Conditions and Result of Operations. The Company is under no obligation to update any forward-looking statements, except where required by the federal security laws. During today's call, we will be referring to certain financial measures, including adjusted EBITDA and adjusted EBITDA margin that are not prepared in accordance with U.S. GAAP. Information about and reconciliations of these non-GAAP measures to the most directly comparable GAAP measure are available in our earnings release, which is posted on our website at www.dhigroupinc.com. Now with that, let me turn the call over to Art.

Thanks, Rachel. And good morning to everyone who has joined our call. We appreciate your interest in DHI. I am pleased to be here today to talk about the progress that we've made in moving our business forward this past quarter. We finalized the last of our non-core divestitures, completing our transition to a company with three complementary tech-focused brands. The fundamentals of the business are showing solid improvement. Reinforced by clear, strategic priorities that are already delivering results. With the addition of a Chief Product Officer, and a Chief Marketing Officer this quarter, we now have a strong execution-oriented management team in place. Our strategy of delivering high-quality specialized offerings for technology professionals and the employers who recruit them addresses a substantial unmet need in the marketplace. ClearanceJobs also known as CJ is an excellent example of this, and the template for how we believe DHI will look in the future in each of its brands. CJ connects employers with actionable candidates through functionality and communication tools that I believe are the most innovative and sophisticated in the market today. The employers and candidates who use CJ view it as an invaluable and irreplaceable resource. And CJ's revenues have been consistently growing at 20% plus year-over-year as a result. CJ is effectively our test bed for innovation. The introduction of TalentSearch with IntelliSearch in Dice this past quarter was the first step in enabling Dice to deliver an equally strong value proposition. The key features that make the CJ experience unique and compelling are now embedded in our Dice and eFinancialCareers or eFC product roadmaps. In addition to the progress we're making on the product side, our fundamentals are also improving as a result of the changes we have made to our sales strategy and the work we are…

Thanks, Luc. I'd like to close by once again thanking all our employees across the world for their hard work and dedication over the last quarter. Without your focus and commitment, we would not have been able to make such great progress. With that, we're happy to take your questions.

Thank you. At this time, we will begin the question-and-answer session. [Operator Instructions] And the first question comes from Kara Anderson with B. Riley FBR.

Hi, Kara.

Hi, good morning. Luc Grégoire: Good morning, Kara.

Just wondering if you guys can elaborate a little bit on attracting new clients to Dice, how do the addition this quarter compare to say the first half of the year?

I'd say that there was a significant increase in the actual clients that we are able to bring on board. And when I think about the trends that are behind the business, specifically with regard to sales, you know at the beginning of this year we brought onboard a new sales leader, and he's making a distinct impact. We've also stood up an enterprise field sales organization and that continues to grow. We've actually changed out mid-level sales leaders. And we have done a lot of account rebalancing, and what I mean by that is that we essentially have moved accounts between sales reps so that the more significant and more impactful accountants are in the hands of our best sales reps. So there's been a lot that's happened since the beginning of this year. And we're starting to see the effects of all that.

Great, and then on the initial reception of the TalentSearch, the launch at Dice, is it leading to new business? Or is it kind of too early to make that call or make that determination?

I think that it is starting to lead to new business itself, although, it's early days. Our very first customer migration took place at the end of August. So think of TalentSearch as being super foundational for us. I mean it's a new technology platform, we're moving all of our customers, 6,200 of them, from their old version of TalentSearch to this new version, what we call TalentSearch 4.0 internally. And so they're moving in waves. And the salespeople that are essentially addressing new prospects are putting that front and center are saying this is a much better type of search, it's non-bullion search. You can put in your entire job posting to get a relevant result. And because of the nature of the sales cycle, I think, we're going to start seeing the real effect of TalentSearch towards the end of this year or first quarter of next year, once all customers are moved. And the sales team really has a rhythm around how to pitch it.

Okay. And then, I think I heard you guys say a couple of times that you're expecting positive year-over-year growth in 2019, can you elaborate on that a bit, maybe what specifically drives that?

Well, so I can elaborate on it mechanically and I'll let Luc also follow up with this. But I mean, obviously, we have three engines for growth inside of DHI. The first is ClearanceJobs, the second is eFC, the third is Dice. So if you mechanically look at those three engines, CJ is a $22 million run rate business, eFC is approximately $34 million run rate business, and Dice is $95 million. CJ is actually growing right now at about 22%. So it's a growth engine for us. eFC is roughly about 2%, and really the question mark is Dice. Dice has sequentially decreased its rate of decline. So if you talk about first quarter of this year, it was negative 11% year-over-year revenue growth. Then in second quarter, negative 8% year-over-year revenue growth. Third quarter, negative 6%, so you can see the trend line and the real key is that we believe that Dice is turning around. And it's because of those things that I just spoke to earlier associated with sales. There's been a lot of work behind the scenes to make sure that we have an effective sales organization, and that we have the products that are necessary for them to sell. And specifically, to the direct hire universe of customers. I'll let Luc also follow-up. Luc Grégoire: No, I think that's right, Art. Remember we're basically most of our businesses is annual subscription if you like. And that revenue slope is relatively predictable once you get in that pattern. So you can kind of extrapolate where that's going.

Got it, and then can you discuss the decision to, I guess, spin-off the last part of the Rigzone business after sort of retaining that piece earlier this year?

So we still have a ownership interest in Rigzone, Kara. And the decision was really made as a matter of eliminating distraction. Coming on board as a CEO, six months ago, I've recognized that the tech-first strategy really did make sense. And Rigzone, obviously, although, it could probably have tech in certain parts of the oil and gas industry, it really doesn't fundamentally line up with tech-first. And so I wanted to make sure it was very clear to our engineering team, our marketing team, our sales team that our priority and full focus had to be on tech. And so with that in mind, I approached the folks that are essentially the management team of Rigzone and suggested that a spin-off would make sense for us. And that it was an opportunity for them. And again, we still have an ownership interest there. But it was a matter of really making sure that our team fundamentally realizes that focus was a really super important goal for us.

Got it. And then Luc, can you just talk a little bit about the impact of the model as a result of spinning that off of the majority, I guess? Luc Grégoire: Sure. Well, you have in our filing this morning the supplemental schedule that will show you the revenue that we were tracking on this. They were – both businesses that the Dice Europe that we closed and Rigzone were at best breakeven with a slight loss. So it actually improves marginally on the bottom line and the dollars are in the supplemental schedule. Around $5 million a year is the impact on the consolidated results on the top line.

Thank you. That’s it for me. Luc Grégoire: Thanks Kara.

Thank you. And the next question is from Jafar Azmayesh with 1776 Holdings.

Good morning, guys. Can you provide an update on your discussions with TCS, where that's headed?

So Jafar, we cannot comment at this time. But I want to reassure you that our Board is committed to acting in the best interest of the company and its shareholders, and we will of course, provide you with an update when further information is available. But that's all we can really say at this time.

Can you give us your best guess, generally speaking, of why a company would trade at half of what an offer on the table has been presented for?

Again, we can't comment on any kind of discussions or even hypothesize about how people are reacting to that in the investor’s center.

Okay. And my other question relates to the share repurchases, which for several quarters now you mentioned as opportunistically – opportunistic. So my question is if you're trading at a fraction of what a third-party things you were and that's not opportunistic enough, what is opportunistic?

I think opportunistic, Jafar, as you know – it can be different things. It can be the volatility. It can be the price point. We don't comment on that, but I mean, we do look for opportunities to buy and recognize value for the shareholders.

I guess what I'm saying is I understand that and here we are at $1.70 a share, there is an offer at $2.50, and you have not seen opportunity at $4, at $3, at $2, at $1.70, so is your signal to us that you think the shares were substantially below what they're trading at?

Yes, we're not commenting on our signals or what we think the shares are trading at. We bought back 347,000 shares in the quarter. And you have the value at which we did that and we'll report that as we're required and as the discussions progress.

As you know, the share comp line is about $5 million, so buying back $700,000 of shares doesn't even get close to offsetting that. Is that the pace we should expect when you say opportunistic? Or is there something meaningful that can happen at some point?

I would say that we can't comment on that and it's a specific program that we put in place. So we can't really tell you about the mechanics of that program.

Okay. So basically your message is more of the same stuff that hasn't worked and we hope it will start working?

I don't think we are messaging what we plan to do here. And again, we're not at liberty to discuss these details.

Is it fair to now say with the changes you've made to your billing terms that you're going to be needing to get into your revolver? And that we should expect some level of that, maybe higher than where it is today, as normal level for the business?

Well, I think what – I would say that the levels of arrears billings that we're seeing have kind of – are kind of held now for a couple of quarters. So I'd say it's a working capital adjustment. So we should be able to revert. The fourth quarter is seasonally high invested in the working capital, because of the peak to the business near the end of the year, and we should collect that in the next quarter. So we're like down about maybe 12, 13 points on announced [bill] upfront for the year. So I consider that a transition and we should be picking up the cash flow again in the upcoming quarters.

Got it. And Art, I just want to put my $0.02, since you're new to the game. We've been talking to the Company for 18 months now and the message has been consistent, which is you have a solid business, it's been challenged, but it's strong and Dice is showing that it's gaining traction or at least it's putting a bottom in. The mistake that's ongoing at DHX, and we can't figure out what it is, and you're hearing it from us, and you're hearing it from TCS, you're hearing it from others is the financial side of it. You're trading at substantial discounts than what any logical person thinks you were and yet management refuses, I should say the board really is who it sits with, refuses to do anything to help shareholders or at least help the market get a sense for what these shares are worth. And it's a travesty and I hope TCS gets through to you guys. And I wish you all the best for stabilizing the business even further.

I appreciate it, and we are obviously focused on what we consider to be our primary mission, which is growing this business and making sure that we have financial discipline as we do so. So thanks very much for your comments. End of Q&A

Thank you. And as that was the last question, this does conclude the question-and-answer session. I would now like to return the floor over to Rachel Ceccarelli for any closing remarks.

All right. Thank you for your interest in DHI Group. To speak with management today, please e-mail ir@dhigroupinc.com to be placed in the queue. Have a good day.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.