GEE Group, Inc. (JOB) Q1 2023 Earnings Report, Transcript and Summary

Hello, and welcome to the GEE Group Fiscal 2023 First Quarter ended December 31, 2022 Earnings and Update Webcast Conference Call. I'm Derek Dewan, the Chairman and CEO of GEE Group. I will be hosting today's call and joining me as a co-presenter is Kim Thorpe, our Senior Vice President and Chief Financial Officer. Thank you for joining us today. It's our pleasure to share with you GEE Group's results for the 2023 fiscal first quarter ended December 31, 2022, and provide you with our outlook for the remainder of the 2023 fiscal year in the foreseeable future. Some comments Kim and I will make today may be considered forward-looking, including predictions, estimates, expectations and other statements about our future performance. These represent our current judgments of what the future holds and are subject to risks and uncertainties that actual results may differ materially from our forward-looking statements. These risks and uncertainties are described below under the caption forward-looking statements safe harbor and in Tuesday's earnings press release and our most recent Form 10-Q, 10-K and other SEC filings under the captions cautionary statement regarding forward-looking statements and forward-looking statements. We assume no obligation to update statements made on today's call. During this presentation, we also will talk about some non-GAAP financial measures. Reconciliations and explanations of the non-GAAP measures we will address today are included in the earnings press release. Our presentation of financial amounts and related items, including growth rates, margins and trend metrics around it are based upon rounded amounts. For purposes of this call and all amounts, percentages and related items presented are approximations accordingly. For your convenience, our prepared remarks for today's call are available in the Investor Center of our website, www.geegroup.com. We once again achieved very good results in fiscal 2023 first quarter, beginning with consolidated revenues of $41.1 million. Our consolidated gross profit and gross margin were $14.4 million and 35%, respectively, for the first fiscal quarter ended December 31, 2022. Our consolidated non-GAAP adjusted EBITDA for the 2023 first quarter was $2 million. We achieved consolidated net income of $700,000 or $0.01 per diluted share for our fiscal 2023 first quarter. As Kim will explain further, the prior year first quarter results were above average due to peak demand for direct hire and a significant amount of current COVID-19-related project work. The current fiscal first quarter still compares favorably taking into account the unique opportunities present in last year's first quarter and particularly in terms of growth in our professional IT contract businesses. Before I turn it over to Kim, I want to say thank you to our wonderful dedicated employees and associates. They work extremely hard every day to ensure that our clients get the very best service. This was a key factor in the stellar performance of GEE Group in fiscal 2022 and so far in fiscal 2023 and will continue to be the most important underpinning of our company's future success. At this time, I'll turn over the call to our CFO, Kim Thorpe, who will further elaborate on our fiscal 2023 first quarter results. Kim?

Thank you, Derek, and good morning. Once again, revenue for the fiscal 2023 first quarter was $41.1 million, which is $1.7 million or 4% lower compared with the fiscal 2022 first quarter revenue, up $42.8 million. As Derek alluded to, revenue for the prior fiscal 2022 first quarter included above average performance in our direct hire revenue as well as professional contract revenue of $2.3 million generated from the discrete projects for clients serving as COVID-19 responders. The COVID-19-related projects successfully concluded during December 2021 and January 2022, and are non-recurring in nature. Excluding the effects of them alone, our remaining total revenue increased $600,000 or approximately 2% quarter-over-quarter. Professional and industrial contract staffing services revenues for fiscal 2023's first quarter were $35.4 million, which again is $1.3 million or 3% lower as compared to fiscal 2022's first quarter contract staffing services revenue. Professional contract staffing services revenue, which represents 90% of all contract services revenue and 77% of total revenue increased $1.5 million or 5% quarter-over-quarter, excluding the effects of the non-recurring COVID-19-related projects revenue. Professional IT contract services revenue grew 15% quarter-over-quarter. IT contract services represent 60% of all professional contract revenue and 49% of total revenue and is our highest priority growth specialty. Direct hire revenue for fiscal 2023 first quarter was $5.7 million, down $500,000 or 8% compared with the fiscal 2022 first quarter direct hire revenue of $6.2 million. Considering its inherent sensitivity to macroeconomic conditions, we are pleased with this level of direct hire production and remain cautiously optimistic about the overall direct hire revenue potential for fiscal 2023. Direct hire revenue for Q1 2023 annualized still exceeds fiscal 2019, 2020 and 2021 results. The increases in our quarter-over-quarter professional contract staffing services revenue and total revenues absent fiscal 2022's non-recurring COVID-19 projects and in our professional IT contract staffing services sector, in particular, are the result of increasing demand and our strategic and tactical initiatives to meet this demand in the new post COVID-19 U.S. economy and workforce. Two recent indicators the outstanding December jobs report and in contrast, recent significant layoffs of IT professionals by larger employers also are positive indicators for the remainder of fiscal 2023. Recent lower unemployment trends suggest increasing demand for our services, while recent IT corporate downsizing actions, meaning more IT candidates available to fill demand. Industrial Staffing Services revenues were $3.6 million and represented 9% of total revenue for fiscal 2023's first quarter ended December 31, 2022. We continue to experience growth challenges in our industrial markets associated with economic and lingering post-COVID-19 conditions. Recent inflation also has led to significant increases in hourly wages in our industrial business, while at the same time, certain state and local COVID-19 and unemployment relief programs remained active in Ohio. We are finding that the combination of higher wages and benefits tends to cause many of the company's temporary labors to seek to moderate or reduce their hours in order to balance income streams and preserve their welfare and other governmental benefits and subsidies. This in turn has the effect of increasing competition among the staffing firms in Ohio to fill temporary labor orders. We are actively introducing new sales and recruiting programs and price increases to restore growth and enhanced profitability in our industrial business. Gross profit for fiscal 2023's first quarter was $14.4 million, down $1.2 million or 8% compared with fiscal 2022's first quarter gross profit of $15.6 million. Our overall gross margins were 35% and 36.4% for fiscal 2023 and 2022's first quarters, respectively. The decrease in gross profit and gross margin is mainly attributable to the lower direct hire business, which has 100% gross margin and increases in contractor pay associated with the recent rise in inflation resulting in some spread compression in our professional services businesses. The company has recently stepped up counter inflationary increases in bill rates and spreads in order to increase gross margin. Despite slightly lower quarter-over-quarter gross margin trend, it remains relatively high as compared with those of our competitors. Selling, general and administrative expenses, SG&A for fiscal 2023's first quarter ended December 31, 2022, increased $400,000 or 4% compared with fiscal 2022's first quarter. SG&A expenses were 31% of revenues for fiscal 2023 first quarter compared with 29% for the first quarter of fiscal 2022. Inflationary increases in costs, including some strategic investments in sales and recruiting and management resources to take advantage of future growth opportunities accounted for the significant portion of the quarter-over-quarter increase. We expect these strategic investments to begin contributing to topline growth this fiscal year. In addition, we expect the implementation of the bill rate increases and spread I spoke of and other targeted cost reductions to help improve our expense ratio and operating margin. We achieved net income for fiscal 2023 fiscal first quarter of $700,000 or $0.01 per diluted share as compared with net income of $16.7 million or 14% per diluted share for fiscal 2022's first quarter. Adjusted net income, which is a non-GAAP financial measure, for the fiscal 2023 first quarter was $1.1 million or $0.01 per diluted share, down $1.6 million or 59% as compared with $2.7 million or $0.02 per diluted share for fiscal 2022's first quarter. The fiscal 2022 first quarter net income included gains on the forgiveness of forward PPP loans of $16.8 million and a non-cash goodwill impairment charge of $2.15 million. Adjusted EBITDA, which is a non-GAAP financial measure for fiscal 2023 first quarter ended December 31, 2022, was $2 million, down $1.9 million or 49% compared with $3.9 million for fiscal 2022's first quarter. The overall declines in our net income, non-GAAP adjusted net income and non-GAAP adjusted EBITDA quarter-over-quarter are mainly due to the increases in compensation and certain other operating expenses since fiscal 2022's first quarter. As I indicated a moment ago, we expect strategic investments in personnel and price increases to begin contributing to topline growth and in combination with targeted cost reductions begin to have positive effects on our margins and profitability during the remainder of fiscal 2023. Our current working capital ratio at December 31, 2022, was 3.6:1, up 90 basis points from 2.7:1 at September 30, 2022. We reported a small negative cash flow from operating activities of $300,000 for the 2023 fiscal first quarter ended December 31, 2022, due to extraordinary payments. Operating cash flow for the 2023 fiscal first quarter was reduced by payment of the second and final installment of deferred FICA taxes of $1.8 million that were deferred under the CARES Act and the $1.1 million in aggregate annual cash bonuses we commented on last quarter. Excluding the effects of these non-recurring deferred FICA payments and the aggregate cash bonus payments, non-GAAP adjusted free cash flow would have been $2.5 million. Our liquidity position is strong. We have no outstanding debt. Our net book value per share was $0.89 at December 31, 2022, and our net tangible book value was $0.26 per share. To conclude, we remain positive and optimistic in our outlook for the remainder of fiscal 2023 with appropriate considerations regarding lingering macroeconomic uncertainties as they are. Before I turn it back over to Derek, please note that reconciliations of GEE Group's non-GAAP financial measures discussed today with their GAAP counterparts can be found in supplemental schedules included in our earnings press release. I'll now turn it back over to Derek.

Thank you, Kim. The fiscal 2023 first quarter marked our sixth consecutive quarter of strong operating performance, having consistently achieved solid margins and free cash flow. For the last six quarters, we continue to build a positive track record as well as strong momentum for the future. At December 31, 2022, the company had over $18.5 million in cash and another $13 million available under its bank ABL credit facility. GEE Group's prospects today for future profitable growth continue to expand and improve and despite macroeconomic challenges or unforeseen events, we believe we can continue to produce solid results in this fiscal year and beyond. Before we pause to take your questions, I want to again say a special thank you to all of our wonderful people for their professionalism, hard work and dedication. Without them, we could not have accomplished all the good things we have shared with you today. Now Kim and I would be happy to answer your questions. Please ask just one question and rejoin the queue with a follow-up as needed. If there is time, we will come back to you for additional questions. We will now enter the question-and-answer session.

One of the first questions that we have, and it's repeated a few times is regarding the potential for the company to initiate a stock buyback. We've had discussions in the past regarding the buyback. We brought it to the attention of our Board of Directors. We've had in-depth analysis and very lengthy discussions regarding a stock buyback, the consensus of the Board and senior management at this time is that a strategic tuck-in acquisition would help our growth prospects much better by adding additional revenue and EBITDA to our company and actually have a better impact on our stock price performance and market capitalization going forward. And we have targeted various tuck-in acquisitions. I should note also with regard to acquisitions, doing a very large acquisition that would have more potential risk would not likely be in the cards at this point because we've been successful with the smaller tuck-in acquisitions, easier to integrate and also easier to manage with less risk going forward in a fairly uncertain economy, and I'll talk a little bit more about macroeconomic trends as well. We have a few questions regarding what we're seeing and what we think we're going to face going forward. Another question came up is how many offices do you have? Do you look at consolidating offices and reducing costs? We have reduced bricks-and-mortar costs. We have renegotiated leases. In many cases, we've gone virtual in some of our markets. And with remote and hybrid working, the need for office space is somewhat reduced. So as leases expire, we will absolutely reduce the amount of space and lower cost for rent and so forth. It was a good question. Can management talk a little bit more about the discrete projects you had last year with COVID? Those were special projects that created huge volumes of contract workers for us, and we're very, very good on pricing, too. The demand was very, very strong, and we had pricing power on those contracts. Those contracts pretty much expired in the first quarter of last year and a little bit in the second quarter. So they're hard to make up that kind of volume on the contract side for that business. Noteworthy though, is our IT contract business, which has very good spreads and higher bill rates and so forth in margin, are on the rise, and that should be expected, particularly going from an economy that was more focused on permanent hires to an economy now with uncertainty moving towards more contract tires. I've been through this before several times, and it's happening similarly to what we've seen in the past. Other questions, bonus payments, are you accruing bonus payments? Kim?

Yes. I think on the call for last quarter, there was some consternation about that. So let me be clear. The company and the Board with the assistance of an independent compensation consultant created a performance-based incentive program for the senior managers of the company, including Derek and I. This program is based – both the cash and the equity compensation is strictly based on performance and hitting financial targets for both revenue and profit, which the Board sets and negotiates annually. So yes, we did accrue some during the first quarter, commensurate with the very strict formulas and performance measures that are in that plan.

And let me add that bonuses for the C-suite level executives will not be paid if performance targets aren't met, and they tend to be set, for example, this year, they're set fairly high relative to where we've been in the past. So it's possible that there won't be any performance bonuses if the targets for EBITDA and other metrics aren't hit. So I think what happened in the quarter that September 30 quarter, we accrued them all because the plan was newly implemented and it was a catch-up. So I think, Kim, another question is, are you accruing bonuses quarterly as you earn versus bunching them up in a quarter? And the answer is yes to that. So that's good questions, and those are the answers to that. Another question, what are you doing about SG&A, selling, general and administrative costs? Kim, can we address that as well?

Yes. Yes. First of all, number one, we do actively manage expenses on a routine basis. However, given the recent inflation we've had, we've doubled down on renegotiating contracts, including principally with lessors of our operating locations on one hand, where we renew leases and in some cases, we won't be going forward. And then primarily with what we call our job board, our candidate tracking system providers. The LinkedIn of the world, the job divas, and the like, Bullhorn, all the tools we use, we’ve negotiated hard with them. And last but not least, we're making certain that we are reviewing the productivity of our folks and that they're producing a reasonable what we call a PDA or per desk average. And when people fall behind, we counsel them to try to help them pick back up and get where they need to be. But if it's not in cards, we'll manage our workforce accordingly. So the goal always – and keep in mind, people drive our business and our growth. There are two fundamental things that do that. One is you hire the best sales and recruiters that you can. And then the second thing is you make sure that they're achieving the productivity they need, both by managing and motivating them with incentive compensation appropriately and then also by giving them tools they need. So we are very actively managing all those things. Now for example, if I want to get more granular, when we look at commission plans and bonus plans and milestones, targets that we set, we're graduating those upward to, again, to incentivize people to make their own payout by producing more business. And if they don't produce, then we achieve a cost saving if they only produce what they did in the prior year. And then in our corporate support staff, we continue to trim away, we're very lean in the back office. As I promised my staff, I’ve never used that word. I’ve done it. But we're very lean in our corporate staff, and we integrate and use technology wherever we can. Our goal – I realize that our SG&A percent ticked up to 31% and actually came down from the fourth quarter, but our goal is to be below 30%. And so that's where we're targeting our cost reductions to get our SG&A down below 30%.

Thank you, Kim. Here's a really great question that I'm happy to address. Unemployment is at an all-time low, hiring is happening and the pool of applicants is growing. This should be very favorable for GEE Group. Why are we not seeing the results of this? So it's a complex employment environment, and you have to stratify the population of workers. You also have something called the workforce participation rate and other things that influence hiring. So the unemployment rate itself as a standalone metric is not always indicative of each segment of employment or vertical. For example, let's look at information technology. So you had an information technology in light of a tight or very low unemployment rate, you've had layoffs at Google, Facebook, Amazon, Dell and more – Salesforce and more are coming. Now we have an IT vertical. So how has our IT vertical reacted to that shift in labor? What it's done for us. The pool of candidates have increased and that has made recruiting better for us in terms of being able to get candidates because that's always been an issue in the past year or two to fill job orders. How are open job orders? Open job orders are steady. The fill rate takes a bit longer for the hiring manager at companies to make the decision, but we are seeing good momentum at this point in our contract IT staffing segment. These layoffs have presented us with a pool of recruiting talent that was very hard to get in the past because people were going to the Googles and the Facebooks and Amazons and taking permanent jobs at high salaries, and they have been laid off, the first group to be laid off would be recruiters, particularly since those entities are not hiring full-time. And I think there's a huge distinction now between contract labor and what we call direct hire or permanent placements. Last calendar year or fiscal year was a banner year for permanent hires. And I call it the post-COVID bounce because people laid off a lot of talent and scrambled to assemble workers and workers could call the shots in terms of wages and schedules and so forth, even remote versus hybrid versus permanent office work. What we're seeing today is somewhat of a shift toward the employer and also the use of flexible talent because of potential uncertainty in the macroeconomic environment. We're seeing noise somewhat in the economy and by definition, we've had two successive quarters of negative GDP, like it or not, that was indicative of some type of downturn or recession. The labor statistics haven't borne that out if you take them singularly, but if you take it segmented, then you'll see pockets of higher unemployment and pockets of even possibly a little bit lower than the average rate that's been published, hospitality, for example, it's hard to get hospitality workers. We're not big in that segment. It tends to be a low-spread segment with high workman's comp risks. So you may see some hiring in that area and that is influencing somewhat the unemployment stats or the hiring stats, but again, we're focused on the higher end. We've taken a bit of a beating on the labor force in our Ohio segment, which is industrial. And that's because of subsidies, as Kim had said, by the government that continue, and it keeps people from working at certain hours a week, meaning they're limiting their hours to possibly 25 to 30 instead of 40-plus because they don't want to disqualify themselves from these welfare and other government subsidies/benefits. That will probably run itself out at some point. We are cutting costs in that division in order to respond appropriately to get to the profitability level that we want. We also are cutting costs across the board to respond to the decrease in direct hire business, which is expected versus last year because of economic challenges and because of the COVID bounce. For example, permanent placements last year in the aggregate last fiscal year were approximately $27.5 million in that range, and they're anticipated to be in the $19 million to $20 million range this year, which is historically a high number in comparison to all years, except for the last fiscal year, which was somewhat of an aberration. And that's been found in almost all of our competition, similar results. So again, while labor statistics by itself is not always indicative of what's happening to different companies in our sector. For example, if you took TrueBlue, that's an entirely labor, low end-driven business, and they've taken it a lot harder than some of the professional staffing firms, including us in terms of performance. Now another question. The SG&A, we addressed that, and we're taking aggressive action there to reduce our SG&A percent below 30%. And we've historically had it as low as 27.5% and that's very, very possible as revenue increases as well. A question is, can you do buybacks and acquisitions? The answer to that is yes. We have enough resources to do both, and that's under the assumption that the acquisitions are not of a large size, but that are tuck-in level that can add profitability, improve our verticals, for example, in IT. We're very IT-focused. And add to revenue and profitability, and we are generating good cash flow. So we're able to do both. And at some time, that possibility will come back to the table. But initially, we believe an acquisition would be the most likely scenario before a buyback at this point. And that's been the consensus of our Board and also senior management. One of the questions was, you're able to get more IT workers because of the recent layoffs of IT companies? The answer is yes. We talked to you about bonuses, let's see. Many of the questions are very similar. Obviously, the interest in acquisitions and buybacks is a key question that repeats itself. And rest assured, we take that very, very seriously, and we'll take action as I just discussed. Can you discuss the current acquisition pipeline? It's good, and prices will moderate some in this environment. We will not buy a company, by the way, that had excessive permanent placement or direct hire business last year and is trying to sell off of that number. In that situation, we will go back historically and look at what the trend line is and adjust the purchase price accordingly.

Derek, some on the SG&A, I'm seeing a number of questions about the bonuses. I just want to reassure everybody that last year – or last – the September 30 quarter, the fourth quarter of our prior fiscal year had an outsized SG&A ratio because of a catch-up for a newly implemented program. So I just want to assure everybody that we are – we now have a process in place to monitor that quarterly across the year. So you shouldn't expect to see another bump like that or another outsized accrual like that at the end of this year or any future year, now that the program is in place and operating as intended.

Thank you, Kim, for that. Somebody said, do you care about the long-term stock price? And the answer to that is I care about the stock price in the morning, in the afternoon, when I'm dreaming at night, when I wake up in the next morning and so forth. What do I care about? I care about shareholders getting the return that they deserve, including me and others that have invested in our company and the long-term value is what we're focused on when we build talent to generate revenue and profitability in the future. Fortunately, I do have a little experience in this area. And I think that if you are a shareholder, you will get your just rewards. And whether they say that most shareholders say, I'm a long-term shareholder with a short-term focus. So I understand the frustration in the short-term, and we share that same frustration at times, but we're very confident in the long-term performance of delivering on the equity value. And I say that with all sincerity. I'm not doing this for my salary and neither is Kim or any of our other leaders. We're looking to long-term shareholder value and building a company that lasts and continues to succeed. And the way you do that is you focus on the operating aspects of the company on what I call blocking and tackling as a football analogy. And we can't throw the bomb, as I say, every day. We take advantage of it when it's there. But right now, the key for us is to streamline our cost structure, execute appropriately, get our spreads and operating margin up and then the rest should take care of itself. Another question came back saying, okay, if your stock price drops, will you reconsider a buyback in conjunction with an acquisition? And the answer to that is yes. We will bring it back to the table at the appropriate time. And our cash flow accordingly if it continues the way it is, which is very good, then we'll will be very keen on something of that nature, that plan. Let's see, most of the questions were answered so far. Have you had somebody offer to buy your company? Let's just say that we get those from time to time. And to the extent that there's one that's phenomenal, of course, we have fiduciary obligations to bring it further. But if this depressed stock price, it's not [indiscernible] consider that unless someone made an offer that you couldn't refuse. But at this point, we're focused on execution and building value and delivering that value to our shareholders. And if at some point, that becomes appropriate to consider, the shareholders will make that decision with a Board recommendation on top of it. And I ran a company for 17 years, and then we sold it at a really good level at the appropriate time. You always want to sell out on strength, not on the weakness, if that's your exit. I don't want an exit personally at this point. I want to deliver the value to shareholders and let the shareholders decide the appropriate time what's best for them, which will be best for all of us, quite frankly. So at this point, let's see if we have…

There's one other thing. There is a couple of questions in here on the small new item in there for interest income? And why is this so…

Oh, yes. Yes. I wanted to answer that. That's one of the consistent questions we get. But go ahead.

Yes. So the rates for suitable cash investments for us, meaning something that's relatively low risk, but can earn a decent rate, and we're not locked in with penalties and all that has really just optimized in the last quarter. So we do have a sizable amount, most of the $18.8 million – I'm sorry, $18.5 million in cash or a large chunk of it invested. So you can expect investment income to grow and be more sizable than the $38,000 that's in the P&L today.

Thank you, Kim. One other question that I want to address is someone asked the question. When will you increase your prices and influence your spread or your gross profit dollar per hour? We are doing that as we speak. And when will that take effect and when will we see it in the financial results? I would say in the next two quarters, the latter part of the quarter we're in and then the next quarter after that. So we are conscientiously increasing the spread, and it's not contingent on CPI or inflation statistics or anything else. Again, the supply and demand for labor in particular segments and even within an IT vertical for specific skills gives you pricing power. So we will take advantage of that and influence our spreads and ultimately, the gross margin percent. Permanent placements are not going to be at the same level as we've said before, as the prior fiscal year. But we're on track to exceed the years before that, which are more normalized years. So we feel pretty good about where we're going. And again, this is a transition year economically, it appears, recovering from COVID, from high inflation and so forth. The good thing is, we don't have 6% unemployment in the aggregate, which would have an influence on virtually everyone in our space. So we think the macroeconomic challenges or changes can be dealt with appropriately, and we're going to continue to execute. Kim, do you see any other questions that we haven't addressed?

No, not really. I mean, I think we've addressed – I don't mean to be – I think we've addressed almost everything at this point.

Here's one, somebody said, what are the multiples on acquisitions? Each one is structured a bit differently, but probably somewhere between 6x and 8x EBITDA. But when you do earnouts and things like that, you can bring down your multiple. And then the next question would be, if you're trading at 4x EBITDA, how can you do an acquisition at 8x? Well, we're not going to give away equity cheap. That's for sure. And we believe that the acquisitions will add to the bottom line and topline, and it will be reflected in the market value of the stock at some point. So we're not giving away our stock cheaply is the short answer to that question.

And Derek, let me add that the company is in a position now where we can reliably generate free cash flow, which means that gives us the luxury of patience in terms of picking and choosing good accretive targets, which in the long run, grows the company. I mean I understand people wanting to see us put our capital to work right away and aggressively buy stock back because it is cheap right now. But on the other hand, keeping our cash and growing it gives us more dry powder to go pull these acquisitions in without using stock and therefore, growing the value of our stock through accretive acquisitions and importantly, growing the enterprise value and the scale of the company, which only adds to the intangible value of the company.

Great. I think that – let's see if there's – one other question was are bonus payments based on the overall company's EBITDA? The answer is that metric absolutely plays a huge part in bonus payments and...

As well as topline growth.

And topline growth, the combination, yes. When can you get to $1 billion in revenue? That's a question. So the answer to that is, as we start to make strategic acquisitions and grow internally, that target becomes very real. And we're not going to just go for a large acquisition for the sake of revenue growth. So we have to make sure that our internal growth is where it needs to be and then take less risk and augment it with tuck-in acquisitions that can integrate easily and contribute very quickly to the profitability. And we will deploy capital appropriately and also reconsider capital allocation in the aggregate for acquisitions and potential buybacks at the appropriate time. That's not off the table. It's more of what's more appropriate and when, and I already articulated what the consensus was at this time. So that pretty much concludes our call for today and we can say very much so that we are optimistic about our future as a company. We also are very thankful for our employees and their dedication and hard work. And we also want to say thank you to those of you that are shareholders or are considering an investment in our company. We work hard for you every day, and we care very much about stock price performance and delivering shareholder value. Thank you. That concludes our call.