Welcome to the Franklin Covey Fourth Quarter and Fiscal Year Earnings Conference Call. My name is Vivian and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Mr. Derek Hatch, you may begin.

Thank you, Vivian. On behalf of the Company, I'd like to welcome everyone this afternoon to our conference call. Before we begin, I'd like to remind everybody that this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon management’s current expectations and are subject to various risks and uncertainties, including but not limited to the ability of the Company to stabilize and grow revenues, the ability of the Company to hire productive sales professionals, general economic conditions, competition in the Company’s targeted marketplace, market acceptance of new products or services and marketing strategies, changes in the Company’s market share, changes in the size of the overall market for the Company’s products, changes in the training and spending policies of the Company's clients and other factors identified and discussed in the Company’s most recent annual report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission. Many of these conditions are beyond our control or influence, any one of which may cause future results to differ materially from the Company’s current expectations. And there can be no assurance the Company’s actual future performance will meet management’s expectations. These forward-looking statements are based up on management’s current expectations and we undertake no obligation to update or revise these forward-looking statements to reflect events or circumstances after the date of today’s presentation except as required by law. With that out of the way, I’d like to turn the time over to our Mr. Bob Whitman, our Chairman and CEO.

Thanks Derek, thanks everyone for joining today. I’m happy to have the chance to talk to you. From today's discussion, I'd really like to have you leave with the clear understanding and feeling of confidence about three points or three things. First, that I'm deeply sorry that we missed our guidance in the fourth quarter and thus for the year, and that I take full responsibility for it. Come back and talk about that. Second, so just notwithstanding we've achieved significant and consistent growth over the years and that the key growth engine that have driven this growth are strong and proven. Those units whose growth slowed in fiscal 2015 are education practice in our US direct offices or growing again. And we believe our poised for very strong growth in fiscal 2016 and beyond. And third, we plan to use our substantial cash flow and liquidity to compound impact of our expected operating growth on shareholder value creation. We go back to the first point. I want to acknowledge and address the fact that we missed our annual guidance. This is something that has not happened in many, many years and I apologize and take full responsibility for it. I apologize to each of you, our analysts and each of you our investors. It's something I and our senior management team; all of us take very seriously and personally. And we’re determined not to miss our guidance again. I’d like to briefly just five some context what was behind the miss from your information, not to mitigate it, but will provide some additional details about the education practice in a few minutes. In our education practice, our results for the balance of the company did meet our expectations for the fourth quarter. However, in the education practice in the…

Thanks, Bob, and hello everybody. Just a couple of things in support of what you’re saying there. As you mentioned, in Q2 and Q3 and Q4 last year, we started to see the pipeline increasing in the direct offices and that has continued into Q1 at an even accelerated pace. And what’s exciting about that is not only the growth pipeline up, but the number of unique opportunities that were surfacing and driving the pipeline that’s also increased and the average size of each individual opportunity going in is also larger. On the thing I would say just in – as we pre-organized into divisions, there has also been some changes we made within the direct office division. One of those that’s I think applicable here is that we reallocated some of our internal resources to give our enterprise client partners, particularly, the resources they need to go and close larger deals within what we traditionally referred to as our HR or training suites of offerings and so that’s helping drive larger opportunities and we expect to drive larger deals as well. So thanks a lot.

We’ve just continued to focus on building pipeline, that’s really what it takes as we want to hinder, started quarter with about three times the amount of pipeline there that we need to do in our commitments. We are confident over the next couple of quarters, our direct offices, growth will get back closer to our historical growth rates. So it will probably take us a couple of quarters because of the conversion time for these pipelines. But strategically measured, just to make sure every week we’re adding the right amount of pipeline. Finally, just a brief note on growth engine number four, it’s a new one, our Strategic Markets division. This part year, we put our government sales performance and customer loyalty practice into a new unit, we are calling it Strategic Markets under the leadership of Shawn Moon. Each of these units have as in common the decision makers high up in the organization, the size of the transaction is typically large and the sales process complex. Shawn has been the company’s top sales leader for such transactions for many years and has previously led the government sales performance and education sales forces individually prior to taking on the role of EVP of our Direct Sales six years ago. We are very excited about the growth potential of this new organizational unit. As you can see in slide 18, from 2010-2015, combined revenue for these units grew from $25.7 million to $35.1 million. This increase however included the acquisition in the sales performance practice of the Ninety-Five 5 company. Absent this acquisition, revenue would have been more or less flat. This is a big opportunity for us and we believe that each of these units has the potential for significant growth. So we have organized, so that rather…

[Operator Instructions] Our first question comes from Jeff Martin from ROTH Capital Partners. Please go ahead.

Thanks, good afternoon, Bob.

Hi, Jeff.

Bob, could you touch on the marketing events at the start of fiscal ’15, you had plans for roughly a 50% increase in the number of events versus fiscal ’14? Can you give us a review of the effectiveness of those events and what your plans are for fiscal ’16?

Yes, thanks [indiscernible] We did just what you suggested, in the second quarter of last year, we amped up the number of marketing events really substantially. And the result of it was we did in fact increase our pipeline a lot. What we also recognized was that we didn’t need – when you analyzed every city in which we held one and the nature of which events generate the most revenue by the third quarter, we said we still see my view, we ought to be increasing our marketing events, but with two refinements. One, which practices in which cities with which client partners and concentrated a smaller number of events with a lot more client partners feeding into it, so we had the effect of having looking at more events. But it didn’t – the actual number was less, because you had bigger events in bigger cities. That was wise. Second, we focused more of the execution and speed of trust related, which tend to generate larger opportunities when they generate them. And so I think now based on last year it had the effect that we wanted in terms of getting stuff up, we probably spent an extra $0.5 million or so more in marketing than in the second quarter than in retrospect we would and we won’t this year. The total number of events, Paul, for this year – last year was -- total number of events we held was 540 and the new number is --

About 308, 320

And so some of these events, Jeff, where we could run 100 events for $500,000, these culture events, we run 12 for $500,000, so they are much bigger decision-maker events, but in terms of number of attendees and level of attendees, we think for the same investment we made last year were less, we can generate more pipeline and more business, but it really did have the – I mean those events that we held last second and third quarter and the adjustments to those in the third and fourth and now first have had the effect. About a third of our total pipeline is driven by events. The other two-thirds is just driven by the fact that I am going out and making face to face calls by the sales person and our people. We’ve also provided additional resources to those folks as Paul said with realigning some of our regional client partners to work directly on the biggest opportunities rather than helping out lot in the smaller stuff.

Okay, could you give us an update on the international license partners? I would have thought that with 7 Habits being translated and going out roughly a year after the domestic launch that you would have seen more of an uptick in license?

I will let Sean address, but I think the short answer is we actually have had is just I think FX impact has been a pretty big headwind, but Sean do you want to speak to it?

Yeah, so the international partners I feel had really good year last year actually. FX disguises that, because it was the worst year we’ve had since I can remember. But if you look at the last five or six years, if you adjust out FX, we are growing at 11% per year. This last year, if you adjust for FX, we grew at 9.5%, so it’s a little lower than where we have been, but still pretty darn good year. And we did have a couple of hits in the Middle East, for example, that oil prices dropping so much really hurt our Middle East operations and our operations in Egypt, but all things considered, I thought it was a pretty strong year adjusted for FX and then looking forward, the story we've been talking about for quite some time I still think is there, nothing has changed. These partners are for pretty young, they're pretty small, they are relatively underpenetrated in their markets. We’re primarily selling one solution which is leadership. We still have a lot of growth in the other practices. We've got some big economies that we haven't really got off the ground yet. Just this last year we signed up France with the new partner there, so this economy will be helping us a lot in the future years. So all things considered I felt like it was little lower than where we’ve been. The 7 Habits localization has been helping. And we just have fallen off a little bit in some other areas, some other things that didn’t come through as much as we thought and a couple of countries hurt us. But all things considered, we feel pretty strong and the story is still a really good one. I think we can continue to grow at the same rates we have been for very long time to come.

Okay. And then, Bob, on the client partner side, where did you start the year, you ended at 191, what was the numbers at?

At this time last year, I believe we had 176 – 169. So 169 and you may recall, Jeff, last quarter we said that we – last year we did our sales academy right in the middle of kick-off and we think it actually slowed down getting out of the blocks quickly on the New Year, because we had general managers and others who were trying to focus on both getting the existing client partners growing and so we decided to move that sales academy back. And so we have gone from 169 to 203 by the time we had sales academy even though the sales academy is a couple of months later, so it’s not exactly year-over-year. It’s kind of sales academy over sales academy which is the driving factor we will have grown by that number.

And how has the performance of client partners hired over the past two to three years track versus your model that you’ve shown several times?

Yeah, for us the good news is that actually not just last year or even in the prior year, but for a period of like six years every year the ramp rate in the aggregate and of course there are people who don’t do as well, but not very many, but in aggregate we are couple of million dollars ahead this last year again of where you would have expected the ramp in client partners to be. So for us the issue really wasn’t how much can you hire and ramp them, the sales management position which we announced a couple of years ago has turned to be a huge thing. We now call these people managing directors who recognize their power not only in directing sales people but also in managing 10 to 12 sales people. Some of these managing directors or sales managers not as much as 10 million of revenue under their responsibility. So these are the key next level of leaders who have elevated the titled, we are treating as management. So they are doing great. The issue for us is the same thing that slowed, so it wasn’t the new client, but it was the slowing -- the slowdown happened with our more seasoned client partners who were sort of working on bigger deals because they all have a big pipeline also in facilitators. They, during the launches of 7 Habits and 5 Choices reoriented a lot of their activity in most of our events oriented, as we noted to, sales that although quicker were smaller and they are the ones whose pipelines are most currently we are focused most on and that’s where these culture events, execution events and other things, this is the domain of these client partners, their networking on things that are big and one thing interesting thing that Paul you referred to bit, the average size, not only is the overall size of the pipeline growing substantially, one of the interesting thing is that’s a big statement substantially, but and we are growing our pipeline that’s $7 million to $8 million a week in the US direct offices alone. That compares with 4 to 4.5 to maybe as high as 5 last year. That’s an important number. What maybe to us even more important is the average size of the opportunity that’s going into Salesforce.com and if you track the Salesforce.com and that, Paul, has gone up by 40% or so, even higher.

It’s actually gone up. The average opportunity going into the pipeline in the first couple of, well, even going back into August last year is about 70% larger than it was which reflects I think that we are on the backend now of these product launches. So as Bob alluded, what we are asking our enterprise clients partners to go back and relaunch these products to their facilitators which is the smaller price point sale and now that that’s behind us and they are focused on more of the types of deals that we would like to focus on going forward, the average size deal going into the pipeline is about 70% larger than it was.

I am not sure honestly going back we do anything differently, because these big client partners started out as small client partners. So half of their revenue comes from these facilitator sales where they build up these foundations. And so really we feel like getting those product launches done and done well establish as a foundation for these client partners for years to come. The thing I would do differently, Jeff, is that we because we renovated a bunch of our historical products right on top of each other, because they hadn’t been redone for years over a period of two years, we relaunched the 5 Choices, our productivity project management and 7 Habits. And I think the combination of those things really did hurt our pipeline where if we launched those – so I can promise you as we go forward when those get renovated three or four or five years from now, we will make sure we have spacing on these things to go a bit. In the end, these client partners have benefitted from the launch even though it hurt them in the short term.

Okay. And on government side, just to be clear, you are not including any contribution from government contract renewal in the guidance.

That’s true.

That doesn’t necessarily imply you don’t expect to renew, is that correct?

Yeah, it doesn’t. I will say this, I think I would say I think right now unlike in some prior years where there has been a process going on that was likely to lead to a rebid, right now that process is not going on. And it doesn’t mean it won’t sometime during the year with management changes and those things in that agency, we are both not including in the guidance and also thinking that’s pretty smart not to include in the guidance, because I think right now we are working on a bunch of things, but we’re just not sure that it is going to translate. I don’t know if Shawn Moon if you want to add –

No, that’s correct. Although there is lots of activity to do everything we can there, but I will say this Jeff that we are pleased aside from that there is nice double digit growth in the team, aside from that particular contract.

Exactly. They had growth aside from the contract grew at 14% last year that team and so -- but yeah, we are not including it, we think it’s wise not to, but we are working on it.

Okay. And what is the contact specifically? It was – you said it was over 2 million, it was 5.7 million of revenue?

Yeah, for the year we did 5.7 million, for the year it generated a little over 3 million of EBITDA contribution of which 2 million of it came in the first quarter, the way the contract works is they bought an intellectual property license upfront which was very high margin and then that gave them the right to buy materials and things rather at much lower margins. And so the 2 million generated, I mean the 2.2 million intellectual property contract generated about 2 million of EBITDA contribution whereas the 3.5 million of other services generated about 1 million. And so for the year if it didn’t renew and we didn’t do anything with that agency otherwise, we would lose 3 million where we expect in the first quarter we will move that. But what’s happening is there is actually a couple of sales people focused directly on that agency who are now buying materials at much higher price and so we are going to earn I mean independent of the renewal we are going to earn back some portion of that in the course of the year and there is a big effort to do so.

Okay, great. And then one last question if I might. On the last page of your fourth quarter presentation slides, you mentioned that share based comp, impaired assets and other 4.5 million in fiscal ’15 expected to be 7.2 and 16, what’s the delta there and is that factored in and out of EBITDA guidance.

There are two primary changes. One is our share based comp has gone up just because of the nature of share based company and the other one is that as you know with acquisition, earnouts these days you have to value the earnout given current information. And if an area that’s attached to an earnout is expected to grow at a rate a little more than you expected to grow before and it trips an earnout payment that’s in all or nothing payment then you have to adjust for that. And so that’s a couple of million of the delta is a valuation of potential earnout valuations in the future and these items are not included in our adjusted EBITDA.

Yeah, Jeff this isn’t of course the one earnout we have is the Ninety-five 5 acquisition. Starting out of the blocks it wasn’t doing as well as we had maybe thought we would come out of the blocks a little faster when we actually impaired –

Valued it

Valued it down somewhat. Now that we are back and especially now under Shawn Moon’s [indiscernible] obviously growing it 14%, 15% a quarter, this is now looking like that we are going to need to –

That’s what the delta.

The good news is they are going to get their earnout payment probably and we will get the EBITDA from that.

Got it. Okay, thanks very much.

Thanks, Jeff.

Thank you. And our next question comes from Marco Rodriguez from Stonegate Capital. Please go ahead.

Good evening, guys, thank you for taking my questions.

Thank you.

I was wondering if we could back up here on your guidance. I had a little bit of hard time writing down some of the information you had and following, you had given out some quarterly guidance and kind of flow I think you said in Q1 of your fiscal ’16 the adjusted EBITDA is going to be able 4 million, did I hear that correctly?

Yeah, last year it was 5.9 million. That included about 2 million from this government contracts that which you were just been speaking that intellectual property portion of 2 million of EBITDA contribution and we are guessing also that foreign exchange since the main changes in foreign exchange hit after our fiscal first quarter, it will have some hit there as well. And so that would take it down 2.5 million or something. We are expecting that we will grow and grow some of that back. We are just saying while we are not per se giving official guidance, I am just trying to nudge and say that from what we see right now, we won’t fully replace that government contract, [indiscernible] how well we grow, because even if everything else grew EBITDA by 20% or 25% that would just get us into the 4 and so while we are expecting good growth elsewhere it just won’t make up for that 2 million and may not make up for the FX. So that’s what we were trying to say.

Got it. And so, but you are expecting to make up elsewhere that 2 million to 2.5 million shortfall in Q1 in Q2 and Q3, did I hear that correctly?

Yeah.

And then you mentioned something about making some changes operationally that was going to change the seasonality, so Q4 wasn’t as much of a hockey stick. Can you talk a little bit what that is exactly?

Yeah, there is three things. I think you’ve got exactly – first of all, you said is just what we meant to meant to say, so thanks for waiting through the interpretation. There are three things operationally that we think will change the flow of EBITDA throughout the course of the year. The first is one that we have talked about in the past, but it’s the more consistent holding of events throughout the whole year, so their pipelines are bigger will mean that we don’t have to depend on the hockey stick at the end to have most of our sales coming in the third and fourth quarters. And so that’s just a function operationally of having decided after last year not having done that in the first quarter and having to double down on events in the second, but we’ve held the standard events all year long, all through the summer and this year’s kick off we were holding events starting in September where last year we didn’t even start till mid-October. That’s the first which is just more pipeline. The second is the marketing engine the things about we just asked, have been such that in total, we put all of our marketing dollars throughout the company behind the things that we know are really good, we are going to be spending as much on some of these events, but we are not spending as much elsewhere. There is probably close to $1 million of marketing spend which is being spent by our practices and doing things that really has been funneled into – after the analysis and everything it has been funneled into things, we will pick up neither. Third is that we are not selling at least the start of new intellectual property sales et cetera that we will – we think we will be of a positive effect on our gross margin operationally for it, we consolidated our Northeast region offices and so in a time -- in quarter three we have a little less revenue, you don't have quite the same impact on EBITDA. So those are the factors that on the same revenue would drive more EBITDA, but also we think with the increased pipeline and a fixed cost structure, will just flow -- there will be more flow-through of incremental revenue to EBITDA. There will be more revenue. Therefore, more flow-through, less increased expense and we think we’re also lasting -- Marco, I should mention is that over the years, we've been building up this infrastructure to hiring salespeople. We’re really there now. I mean, this year, in the whole of the US direct offices, which in some years hired as many as 60 to 70 people in sales and sales support roles, is really like four positions this year other than new salespeople. So I think with those things, we just think a higher flow-through to incremental revenue and higher revenue in the second and third quarters.

Got it, understood. And then shifting here to the education practices, I appreciate some of the color surrounding the issues that cause some revenues to perhaps be a little bit lower than you were expecting, but maybe is that the sort of trend that we should probably be expecting going forward, maybe a little bit higher of licensing effect for that practice?

So, Marco, can you explain your question again a little bit to make sure I understand.

Yeah. It seems like one of the main reasons you guys were discussing why education practice didn’t meet its expectation was because a fair amount of revenue got deferred because it wasn’t more of a teacher based form and so I'm just trying to figure out whether or not that was just some sort of a quarterly anomaly or that’s something that we should be expecting a trend where more of that type of revenue goes into deferred versus more of a recognition upfront?

Sure. Yeah. I think this last year was more of an anomaly because this was a new product. It was basically trying to keep the school strong. And we started earlier in the school. We hope to retain them for life. So, we created this coaching and web services package that's deferred over a year and last year was our catch-up year. It was going to all the schools for the first time and saying, hey, we've got this great new resource. So, a lot of our selling time and effort went towards that, more so than we anticipated, especially last couple of months. And so, as a percent of sales, I think it was last year was the biggest anomaly and we got the majority of our schools on the service now. So I don't think it will be as impactful as it was this year and the coming years. But -- so all things considered, we still feel great about the opportunity we have ahead of us and these large deals, many of which we had six large opportunities that didn’t close, four of the six are still alive and hopefully, we’ll close these. So we just overestimated what was going to come in for the fourth quarter.

Sean, just maybe refining also, it's not the total amount of subscription revenue wouldn’t be similar to next year, but as a percentage -- year-over-year change.

Year-over-year change. Last year would be an anomaly, the percentage of change. It will continue to be an important part of our business going forward and as was said, the fourth quarter, we still contracted and sold 18.5 million versus 17 million the year before and the year before was 32% growth from the previous year. So we were up against the really big year and even on that big increase, we were able to contract and sell more. So we feel that the basic engine is strong and alive.

Sean, you might address also some of the things you’re doing inside your own business model, since almost all of the -- half of the revenue and essentially all the EBITDA contributions occurred historically in the fourth quarter. Some of the things you are doing to move some of that revenue up during the year, besides the deferred revenue portion. Some of the innovation you’ve done to try to, because it’s one more operating thing Marco to your earlier question.

Yes. No one likes hockey sticks right. So in education, we’re aware of it and we're trying to do what we can to help smooth it out. There are a few things we are doing for one is our higher education group is not hockey stick like, and so as that continues to grow, it's kind of a new area for us. If that continues to grow, that will help us out, that will be more smooth. We’re also so much of the delivery of the education solution, the leader in me happens in the summer time when we have professional development days available from schools and it's hard to find two or three days where teachers can take time off and so, so much development happens in the summer. So what we are doing now is we’ve created modular training opportunities, so that these trainings, instead of taking place over two to three days, they can happen in small half day increments throughout the school year. It gives the school a lot more flexibility and helps us in the fourth quarter. We’re also creating some new solutions that are different in the -- we can deliver throughout the year, such as the Principal's Academy, symposiums and just other odds and ends. So altogether we think over time, the hockey stick will decrease, it’s still going to be an issue, I think, because so much happens in the summer, but I think over time, it's only going to get better than it is now in the coming years. But it will take a few years to really smooth it out more.

Got you. Yes, very helpful. And that kind of dovetails into my next question, you had mentioned the large contracts that didn't close, I think you said that there were six that were outstanding that didn't close I suppose, and four that are still alive, can you quantify how much we're talking about here in terms of revenue standpoint.

Well, just roughly, I mean we missed our fourth quarter by about 4 million. I think some of the shift, so it's probably couple of million worth of large opportunities that we're talking about here. And it is primarily, you are dealing with state governments, you’re dealing with large districts and it’s just a lot of bureaucracy, you get a lot of signatures and I guess we underestimated how many signatures we needed.

Got you. And have any of those additional four that are still alive or are they any closer to closing? Have any closed or?

We have one of them that we are hoping will close in the next couple of weeks, and another one we are hoping will close in the second quarter, early in the second quarter and that's about where we are right now.

And we are not forecasting those either in our guidance.

Yeah. I think going forward, I think it's going to be, we want to forecast less of these large deals and focus more on just the core and if the large deals come, then great, if not, they are not in the forecast.

Got you. And then last quick question, just kind of a clarification, on the CPs, where did you end the year with the headcount on the CPs?

We will be at 203, exactly here in, 191, which we must have ended the year. The problem is for us, we are thinking of sales academy year and so but I think at year-end we were, 180, so we’ve added that number 11 in the last month and a half and we will add the rest here in the next month.

Okay. And so is the goal for your Q1 fiscal ’16, the November quarter, is that still to get to 210 or is it 203 now?

I think 203 looks like what we are going to do, with some of the organizational changes we've made, consolidation of regions and one of our regions, which will have new sales managers in place, really exciting new sales managers who are big engines that we put in there. We are going to let them. Instead of adding a bunch of new client partners on top of them, they've got a bunch of -- they’ve got a group of existing client partners who are in the ramp in one of the regions we decided not to add the extra six or seven that we would have added and just it was better to let these new sales managers, managing director get their feet on the ground and get to know the existing folks and hold off on. Of course, we can add them any time. Once we feel -- they don't have to be there for the one big sales academy, but so later in the year, if we feel by mid-year that the sales managers have the traction, we've talked about at that point we’ll probably think about adding a few more.

Got it. Thanks a lot guys. I appreciate it.

Thanks, Marco very much.

Thank you. And our next question comes from Kevin Liu from B. Riley & Company. Please go ahead.

Good afternoon. Just with respect to the strategic accounts piece of the business, you talked about some of the growth opportunities there, given the size and complexity of those deals, how are you factoring those into your guidance and then anything you can share in terms of year-over-year pipeline growth heading into ‘16?

Yeah, let me have Sean answer that in just a second, but let me just say, there are kind of two types of business. We already have, these are already existing units, our government units, our sales performance units, our customer loyalty, already have an engine in place and that doesn't affect that, but Sean, why don't you talk about global accounts and what you're thinking.

Yeah. Hi, Kevin. So, there is not an expectation in the first quarter on the global 50 team, that's the account where -- that’s the team that we’re focusing on these large account relationships, although we’re excited about the start that we've had. This really is an opportunity for us of great leverage with the organization. We’ll bring a specific focus on a very small, but very talented group of people on a very hand selected set of opportunities and it really does open the door for a lot of exciting things, I mean, just for example. We've historically -- take a look at just -- speaking now about strategic markets, take a look at the government team, the government has historically been focused on the federal government and now this team is going to be focused on all governments, Bob said earlier, which historically we’ve opportunistically gone after, but now we’re very strategically going after and it's just one data point. We do about $2.99 for every federal government employee and we currently do about $0.24 for every state and local employee. So if you apply the same metric over the next few years on achieving what we've done at the federal level with the state and local level, you can see that’s a $24 million, $25 million opportunity for us just right there, could potentially open 30, 34 new sales territories. It’s that kind of focus and that kind of leverage that this team represents across government, sales performance now that we have unfettered access as Bob mentioned and of course the global 50 team, which brings tremendous talent at a tremendous level of focus.

Got it. And within the past two quarters, certainly there’s been more talk on your part just about creating more value for shareholders and you’ve expanded the share repurchase plan as well as, it appears that the pace of repurchases. As you make your way into ‘16 and given some of the return metrics that you showed on the slides, do you anticipate being able to accelerate the pace of repurchases or do you have plans in place to do so? And then are you also considering more aggressive repurchases outside of just open market purchases, for instance, a tender off or other means to be able to buy back a bigger block at once?

We do see a significant opportunity. We understand there are many different avenues we could go down or different directions we could go to acquire shares. So without talking about our announcing any decision related to any of those, specifically which we haven't made, we understand there are different things we can do. We are going to look at all of those and we’re going to aggressively look at buying shares.

During the opening period, we were able to buy, Kevin, approximately $1 million a week on average during the open windows in the last six months and so that's not a bad thing, but also the number of open weeks during the course of the year also constraints that and so some of the other things, our cash flow was actually better than we thought and so whether we've -- possibilities of reloading, increasing our authorization again, considering there are alternatives, we feel like we should be very aggressive and we are going to look at every alternative for doing that.

Got it. I appreciate the color.

Thank you. And our last question comes from Tim McHugh from William Blair. Please go ahead.

Hi. This is actually Sam calling in for Tim. Just a quick question, have you thought about how many new client partners you're expecting for next year?

Yes. Our goal really is to have 30 net new a year, and with the exception of the decision in this one regions, that's really -- in fact, I think to hold it to 30 will be challenging a little bit because, Shawn Moon in his area added three new already and he's got this idea of the whole government teams, but I think net 30 a year continues to be our objective and we can choose this to delay some occasionally, but that is our goal, and we've got the infrastructure we think to support it.

Sounds good. And then I guess if I strip out the first quarter of next year, it looks like there's a pretty significant increase in the last nine months of the year for EBITDA growth, I guess is part of that driven by maybe fewer client partner adds or –

Not really. The eight fewer -- it’s a good question. The eight fewer client partners that we might add or eight or ten, whatever it is, during the course of the year, that would have cost us about, call it, $900,000 of compensation for a whole year, so they would have only been here for two-thirds. So it would have been 700,000 and they would have contributed something against that. So it might have cost us $300,000 to $400,000 of EBITDA negative for the year. So that's not a factor really. It’s these other things that I probably didn’t do a great job of explaining earlier that a combination of higher revenue growth, good flow through, less addition of sales support people, because we've gotten that put in place. Those are the kinds of things that are really driving it.

Okay. Thanks. I really appreciate that. That helps.

Yeah. I mean for us, just an example, in our direct offices, if we had $1 million of revenue in a quarter, the flow through on that at the marginal level is more than $0.50 of the incremental dollar, you’ve got 70% gross margins. You're all in commissions and benefits associated with it and marketing costs are the 20 or so range. And so there is really huge flow-through if we can just get the revenue going. So that's why for us, it’s mostly driven by revenue, but the fact that it’s revenue without a lot of addition of staffing means that there really ought to be very good flow-through on any revenue we do have.

Thank you.

Thank you. And I'm not showing any further questions at this time. I’ll now turn the call back over to Bob for closing remarks.

All right. Thanks very much. We sort of got a little over. Thank you so much for all your great questions. We appreciate your support. Again, we feel great about where we’re headed right now, feel great about the team and apologize that we’ve missed your expectations and pledge that you will be able to trust us going forward as you have in the past. Thanks very much.

And thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.