Resources Connection, Inc. (RGP) Q1 2013 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and thank you for standing by, and welcome to the Resources Global Professionals First Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference may be recorded. It's now my pleasure to turn the floor over to Kate Duchene. Ma'am, please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for participating with us today. Joining me on this call are Don Murray, our Chairman and Chief Executive Officer; Tony Cherbak, President and Chief Operating Officer; and Nate Franke, our Chief Financial Officer. During this call, we will be providing you with comments on our results for the first quarter of fiscal year 2013. By now, you should have a copy of today's press release. If you need a copy and are unable to access a copy via our website, please call Patricia Marquez at (714) 430-6314, and she'll be happy to fax a copy to you. Before introducing Tony, I would like to read an important announcement about certain statements that we may make during this call, specifically, we may make forward-looking statements. In other words, statements regarding future events or future financial performance of the company. We wish to caution you that such statements are just predictions, and actual events or results may differ materially. We refer you to our Form 10-K report for the year ended May 26, 2012, for a discussion of some of the risks, uncertainties and other factors, such as seasonal and economic conditions that may cause our business, results of operations and financial conditions to differ materially from results of operations and financial conditions expressed or implied by forward-looking statements made during this call. I'll now turn the call over to Tony Cherbak, President and Chief Operating Officer.

Thanks, Kate. Good afternoon, and welcome to the Resources Global First Quarter Conference Call. I'm going to begin by giving you a brief overview of our first quarter operating results. Total revenue for the first quarter of fiscal 2013 was $136.9 million, slightly less than a 1% decrease from the comparable quarter a year ago and a decrease of 5.9% from our fourth quarter revenue of $145.5 million. First quarter gross margin was 39%, representing an increase of 120 basis points from the comparable quarter a year ago and a sequential decline of 120 basis points from last quarter. The sequential decrease stems from -- primarily from the impact of 2 national holidays in the U.S. during the quarter. During the first quarter, our SG&A costs were $42.1 million, a $500,000 decrease from the comparable quarter a year ago and similar to last quarter. In Q1, we generated adjusted EBITDA and cash flow from operations of $13.1 million and $3.7 million, respectively. For the quarter, our pretax income was $9.8 million. Our GAAP net income was $4.8 million or $0.12 a share. Our GAAP net income reflects an effective tax rate of 50.5% while our cash tax rate remained at approximately 42%, an impact of $0.02 per share. Nate will provide more detail on each of these items later in the call. During the first quarter, we returned $11 million to our shareholders in the form of a stock buyback of approximately 765,000 shares in our regular quarterly dividend. In addition, our Board approved a 20% increase in our quarterly dividend effective last month to $0.06 per share from $0.05 per share. As we reported in July, non-holiday weekly revenues for the first 6 weeks of the first quarter averaged $11.1 million. During the final 7 weeks of the quarter, weekly revenues ranged from $10.3 million to $11 million, averaging $10.6 million per week as summer vacations increased in Europe and the U.S. in July. We experienced this similar pattern of vacation usage by our consultants as in prior years. Despite continuing reports of a slowing global economy, our business remained stable, and we continue to improve our quarter-over-quarter operating metrics. Our U.S. revenue increased 4.5% quarter-over-quarter while our European and Asia-Pacific revenues decreased 7.7% and 6.5%, respectively on a constant currency basis. While European-based clients remain cautious, we are pleased to see increasing business volumes following the summer holiday season. Average weekly European revenues during the first 4 weeks of our second quarter are trending slightly above the average weekly revenues during June, the month preceding the summer holiday season. Consequently, we continue to believe that our European business remains stable despite economic turmoil in the region. With that, I will turn over the call to Nate for a detailed review of our financial results.

Thank you, Tony. As mentioned, the revenues for the quarter were $136.9 million versus $138 million in the first quarter of fiscal 2012, a quarter-over-quarter decrease of 8/10 of the percent and a sequential decrease of 5.9%. As anticipated, our first quarter revenues were impacted by summer vacations, both in the U.S. and Europe. On a constant currency basis, revenue increased 1.2% quarter-over-quarter and decreased sequentially by 5.3%. For the first quarter, revenues in the U.S. were $104.8 million, up 4.5% quarter-over-quarter and down sequentially by 3.6%. For the first quarter, total revenues internationally were $32.1 million versus $37.8 million in the first quarter a year ago, a decrease of 15.1% quarter-over-quarter and a decrease of 13% sequentially. The sequential revenue decreases in the U.S. and internationally stem from the impact of summer vacations. International revenue accounted for approximately 23% of total revenues for the quarter compared to 25% last quarter. Europe's first quarter revenues decreased 18.5% quarter-over-quarter and 18.1% sequentially, while the Asia Pacific region saw first quarter revenues decrease 6.5% quarter-over-quarter and 2.9% sequentially. On a constant currency basis, total international revenue decreased 7.9% quarter-over-quarter and 10.6% sequentially. On a quarter-over-quarter and sequential basis, the U.S. dollar was stronger against most currencies in Europe. As a result, on a constant currency basis, Europe's revenue decline quarter-over-quarter would have been 7.7% and Asia Pacific's decrease would have been 6.5%. On a sequential basis, Europe's revenue decrease would have been 14.2% and Asia Pacific's decrease would have been 4.9%. Let me now discuss early revenue trends for the second quarter of fiscal 2013. Weekly revenues for the first 4 weeks of the second quarter were $10.7 million, $9.8 million during Labor Day week, $11.4 million and $11.4 million. As we closed out the summer vacation season, it is encouraging to see our weekly revenue trends returning to pre-summer levels. In thinking about the second quarter, it is important to remember that in addition to Labor Day, we will lose about 2 days of revenue in the U.S. due to the Thanksgiving holiday in November. I'll now discuss gross margins. Gross margin for the first quarter was 39% versus 37.8% in the year ago quarter and 40.2% in the fourth quarter of fiscal 2012, a sequential decline of 120 basis points, results from 2 paid holidays in the U.S. occurring during the first quarter. The quarter-over-quarter increase of 120 basis points stems primarily from improved bill/pay spreads and a reduction in 0 margin reimbursable expenses. Excluding reimbursable expenses, our gross margin -- our first quarter gross margin was 39.7%, which compares to 38.8% in the first quarter a year ago. The average billing rate for the quarter was approximately $126 compared to $129 in the fourth quarter and the year ago quarter. The average pay rate for the first quarter was approximately $63 versus $64 in the fourth quarter and $65 one year ago. Please remember, these hourly rates are derived based upon the prevailing exchange rates during each given period. The decrease in both bill and pay rates this quarter is substantially reflective of the strengthening U.S. dollars in the first quarter -- of the strengthening U.S. dollar in the first quarter. We expect gross margin in the second quarter of fiscal 2013 to approximate the first quarter's gross margin. For the first quarter, gross margin in the U.S. was 40.3% and our international gross margin was 34.6%. Now to headcount. For the first quarter, the average consultant FTE count was 2,270. This compares to 2,284 in the previous quarter and 2,232 in the year ago quarter. Quarter end consultant headcount was 2,284 versus 2,317 a year ago. The total headcount of the company was 2,959 at quarter end. Selling, general and administrative expenses for the first quarter were $42.1 million or 30.8% of revenue versus $42 million in the fourth quarter of fiscal 2012. SG&A was approximately $42.6 million or 30.9% of revenue in the first quarter of fiscal 2012. SG&A expenses were lower than anticipated, primarily due to foreign exchange rates and slight reductions in other expense categories. We anticipate SG&A expenses in the second quarter of fiscal 2013 will approximate that of the first quarter. Stock compensation expense was $1.8 million or 1.3% of total revenue, similar to amounts recorded in the fourth quarter last year and the first quarter of fiscal 2012. We would anticipate quarterly stock compensation expense in the upcoming quarters to increase slightly from the amount recorded in the first quarter. At the end of the first quarter, our office count remained at 77. 50, domestic, 27, international. Related to the other components of our financial statements, depreciation and amortization was $1.6 million for the quarter compared to $1.8 million last quarter. We would expect depreciation and amortization expense for the upcoming quarters to be similar to that of the first quarter. Our adjusted EBITDA or cash flow margin, which we defined as EBITDA before stock compensation and contingent consideration adjustments, was 9.6% in the first quarter, an increase from 8.3% a year ago and down due to seasonal factors from 12.6% in the fourth quarter of fiscal 2012. Our pretax income was $9.8 million for the quarter. During the first quarter, we provided income tax provision of $4.9 million, representing an effective tax rate of 50.5%. Our effective tax rate is impacted by our current inability to offset income and tax jurisdictions in which we are profitable, with losses in several tax jurisdictions in which we are not profitable. Our GAAP tax rate for each of the upcoming quarters is difficult to predict and could be volatile as the rate will be dependent on several factors, including the operating results of our U.S. and foreign locations, each of which are taxed or benefited at different statutory rates and the offset of the tax benefit of foreign losses and certain locations by valuation allowances. On a cash basis, our tax rate was about 42%, and we expect that rate to continue over the next couple of quarters. In summary, our GAAP per share income was $0.12 during the first quarter. On a non-GAAP basis, but consistent with many analyst models which utilize a cash tax rate of 42%, our per share income would have been $0.14 for the first quarter. Onto our balance sheet. Cash and investments at the end of the first quarter were $122.9 million, a $5.2 million decrease from the end of fiscal 2012. This decrease stems primarily from share repurchases and dividends totaling approximately $11 million during the quarter, partially offset by cash generated from operations of $3.7 million. Capital expenditures were $590,000 during the quarter. During the first quarter, we repurchased approximately 765,000 shares of our common stock at an aggregate cost of $8.9 million or $11.67 per share. Our current Board authorization for our stock buyback program has approximately $97.8 million remaining. We will continue to return cash to shareholders through our dividend and share repurchases, while maintaining a balance between the capital requirements of growing our business and fiscal prudence. Our shares outstanding at the end of the first quarter were approximately $41.5 million. Receivables at quarter end were approximately $86.2 million compared to $84.2 million at the end of the fourth quarter. Days of revenue outstanding were approximately 55 days, the same as in the fourth quarter of fiscal 2012. Now I'd like to turn the call over to Don for some closing thoughts.

Thanks, Nate. While we're pleased with the continued progress we made in the first quarter to improve our operating metrics, our collective efforts resulted in an increase in our adjusted EBITDA margin of 9.6% from 8.3% a year ago. We remain focused on growing our global business across all service lines through further leveraging our operating results. Let me update you on a couple of specific areas of opportunity for us. Our efforts to expand the depth of our services we can provide to our health care clients are bearing fruit. In the past few weeks, we have 1 new engagement encompassing electronic, medical and record system implementation, post implementation systems support and regulatory compliance. Given the magnitude of change occurring in this space, we believe the health care industry offers long-term growth opportunities for all our service lines. We continue to see new projects with our financial services clients related to Dodd-Frank legislation. And after a long delay in late August, the SEC issued regulations related to the conflict minerals section of the Dodd-Frank Act. While Dodd-Frank was widely viewed as an instrument of financial reform, it also sets forth significant changes to the reporting of supply chains of SEC filers. The SEC estimates that about 6,000 or about half of the SEC registrants will be impacted, so companies are required to assess their supply chains to disclose whether conflict materials are used in their products, because conflict materials are used in many common consumer products such as jewelry and electronics, as well as the pervasive use in the alloys, solder, metal wires, electrodes, packaging and promotional material, compliance with this rule is expected to be a very significant undertaking over the next 12 to 18 months for many companies. Our supply chain finance and accounting and legal service lines are positioned to assist existing and new clients comply with these new rules. Now, let me share some additional statistics which we believe reflect the continuing health and strength of our core business. The client continuity remains outstanding. During the first quarter, we served all of our top 50 clients from fiscal 2012 and fiscal 2011. In fiscal 2013, we had 216 clients for whom we provided services exceeding $500,000 in fees on a run-rate basis, down slightly from 229 in 2012. As we progress further into fiscal 2013, I believe we will report an increase in these clients from 2012 levels. Our top 50 clients represented 43.2% of total revenues, while 50% of our revenues came from 71 clients. Our loyal client following is reflective of our client service approach and the quality of the work performed by our consultants. Our largest client for the quarter was approximately 4.3% [ph] of revenues. Through the first quarter, 90% of our top 50 clients used more than 1 service line, 64% of those top 50 clients have used 3 or more service lines. So this service on penetration reflects the diversity of relationships we have within our clients' organizations. So this concludes our prepared remarks. We would be happy to answer your questions at this time.

[Operator Instructions] Our first question in the phone queue comes from Sara Gubins from Bank of America Merrill Lynch.

Could you talk about more on conflict minerals, the provision, I'm glad that you mentioned it. Are you starting to see clients begin to spend in preparation for it now?

Sara, what I would tell you is, some companies -- and what I would label them as probably the largest -- some of the largest consumer product companies, electronic companies have already started. And I would tell you we're at the infancy of, probably, the other companies. I think a lot of folks didn't believe that this was passed or didn't even know it was in the Dodd-Frank, so we're busy educating our clients and putting outreach programs in place to get people educated. So I think we're at the very infancy of it for most companies. But we have started some projects though in that area already.

Great, and then directionally, if you could just talk about relative strength of various types of work and specifically, I'm wondering if you're seeing companies ramp their IT-related projects more than other types of projects.

We are seeing a lot of work in IT, Sara, generally around regulatory compliance or the -- getting -- working on a SAP implementation or say a Hyperion implementation. People are trying to get more out of the data that they have available to their companies and this usually -- it usually works with trying to put in a Hyperion system or Cognos system. So, there is a lot of work in IT. Similarly, we're seeing work in supply chain as well as in finance and accounting, working with companies to help them with the SEC filings, M&A integration and so on.

Our next questioner in queue comes from Molly McGarrett with JPMorgan.

I was just wondering if you could talk about your European business and what you're seeing by region over there.

I would say Europe remains soft with all the financial uncertainty over there. We focused on, in Europe, trying to increase new revenue sources, but at the same time, we're really improving our operating metrics there to become profitable with this downsized environment there. So, the 2 things we have going against us in Europe is the U.S. currency strength compared to the euro in the last 3 months and the European economy. The positive trend is the European companies don't want to really hire, so we are still getting new project flow as they're trying to get work done without making new hires in the area.

And yes, one of the -- our strongest practice over there right now is really Germany, and that's pretty consistent with how they're performing on a world market. For the balance of the countries, there's so many austerity -- so many austerity programs in place right now. It's kind of tough. But we believe that our business over there is pretty stable.

Okay. And then, on -- can you just talk about the M&A environment? Any areas that you're looking to be acquisitive?

We're looking to be acquisitive for consulting services that help us go upstream more or consulting services that strengthen parts of our practice, like health care consulting services. So, we're looking at different types of things. It could be litigation support business. So we haven't narrowed it down or we're just looking at whatever we see would help us, but we're not willing to pay a crazy money for it.

Our next questioner on the phone queue comes from Kevin McVeigh from Macquarie.

Great. Just kind of quarterly trends were pretty helpful, if I assume kind of $10 million to $12 million in incremental revenue sequentially, is kind of a 6% to 8% incremental EPS impact a good way to frame that in terms of Q1 into Q2 from an EPS perspective?

Well, I think, Kevin, that if you -- so the 4 weeks of revenue that we gave aggregated to right around $43 million, so there's obviously 9 weeks remaining. And we don't really give forward guidance. But using those run rates, keeping in mind that one of the weeks was obviously Labor Day, you can go through and do the math, again, with the caveat that we will lose 2 days in the last week of the quarter. Yes, I think our comments, we also gave comments on what the key expense categories around where we thought gross margin and SG&A would be.

Sure. And then, is it fair to say you'll expect much incremental acceleration, kind of, of the $11.4 million level or based on the projects you have out there, or as you said, kind of should we just use that as a baseline and adjust it for the 2 fewer days?

Look, [ph] I think we're optimistic. As you point out, the early trends coming out of the summer were very nice to see. Obviously, we're in a somewhat volatile environment with the election coming up and the issues here as well as Europe. But I think we're pleased with where we are today and we're working forward in lots of different places, as Don mentioned in his comments. But we've really never given growth expectations.

Sure. And then, Tony, could you just remind us, in terms of Europe, out of 100%, how much comes from Germany versus -- or if you don't want to get that granular kind of Northern Europe versus Southern Europe, just to gauge it, the kind of revenue footprint over there at this point?

Yes. What -- I think what we've always said is that Europe is about 2/3 of the international revenues which make up 23% this quarter of total revenues, and Asia Pacific is the other half. We've never really gotten more granular than that.

Our next questioner in queue is Gary Bisbee with Barclays Capital.

I guess, [ph] the first question, Don, on the commentary on M&A, you said specifically hiring and consulting and then you mentioned a couple of consulting-type practices. Does this mean more of a -- less of a temp model, more of a focus on full-time staff? And if so, I guess, how do you think about dealing with the demand ebbs and flows that the business has seen over time if you're having more of a fixed cost?

We would probably look to continue our current business model for the majority of our business. If we acquire a consulting firm of, let's say, as we did with the restructuring business practice, we would have 1 or 2 primary practitioners, and then as they need staff to help them, we then provide them our consultants, which are on our current model. So, we wouldn't -- we don't envision changing our financial metrics by any significant way with that positions.

Yes. We're not looking to go to a utilization model more to leverage up potential businesses with our own consultants.

Okay. All right. That makes sense. And then, any change in willing -- you talked a lot about the overseas demand and the U.S. looks like it's chugging along about like last quarter, but any change in willingness to start projects either around all the political and economic uncertainty here or the fiscal cliff issue? Or are you seeing the U.S. demand remain fairly stable like it's been the last few quarters?

Gary, I would tell you, I think we believe the U.S. is fairly stable. We're seeing a fairly good amount of deal flow. But as we talked about in the last couple of quarters, clients tend to be managing very tightly the budgets. So, as you're starting new engagements, other ones are ending. And as we've commented in the past, in better economic times, our clients would extend projects and add other phases to them. And in this environment, everybody's focused on the projects budget. So the flow still seems to be fairly good.

And then at the end of the press release, I think if I'm reading this right, it says cash flow from investing generated $12 million, did you sell a building or an asset or something, or is that a typo?

I think that's just the movement from short-term investments into cash.

Oh, okay. Got you. And then, I'm sorry, Nate, I missed your comment on what SG&A would trend like sequentially into Q2. Could you repeat that please?

I think we said it would be similar to the Q1 level.

Our next questioner in queue is Kelly Flynn with Credit Suisse.

Guys, I have a bunch of small questions. First one on the Asia constant currency, you said it a couple of times, but I just want to make sure that if the constant currency in the reported for Asia were the same at negative 6.5%?

Yes. There's a little bit of an offset between the yen and the other currencies that negated each other.

Okay, great. And then, on the comments about Thanksgiving, I just want to make sure, I mean given the timing, that's obviously a sequential comment. I just want to make sure there's -- is there anything year-over-year that should cause a discrepancy in growth rates?

No, just obviously, the currency that we had mentioned, but other than that, there's no fundamental changes quarter-over-quarter.

Okay. All right, great. And then, for the first 4 weeks -- forgive me if you already gave this, but the first 4 weeks of the quarter that we're in, can you give Europe versus U.S. which I think you gave last quarter?

Yes. We don't -- I don't think we've broken those out, and I actually don't have those right in front of me.

Okay. That's fair. And then, I guess similar question to Gary's last one, did you guys say gross margin was flat Q2 versus Q1?

Yes, that's what we would anticipate. 2 holidays in Q2 with Labor Day and Thanksgiving. So, very comparable sequentially.

Our next questioner in queue comes from the line of Timothy McHugh with William Blair.

This is Stephen Sheldon in for Tim. Could you maybe talk a little more about bill/pay spread. We've heard it's a challenging market to find talent right now, so how is that impacting the business in terms of the bill/pay spread?

I would tell you that we generally have done pretty well finding talent aside from the currency fluctuation, the bill and pay have been relatively stable. What you do find in certain situations is clients have very precise needs and so they might be very -- have a very high level of precision and skill sets they want so it can take a little bit longer to find the people. There are some areas in health care that can take a long time because finding people with some of the newer technologies is hard. But I think what you can see from the bill and pay spreads and the stability of the margins over the last couple of quarters, we seem to be managing through that.

Okay. And then one more if I could. For the purpose of conflict minerals audits, I believe the SEC ruled that existing financial auditors wouldn't be precluded from going after that work. So, are you guys already seeing competition from the Big Four and how do you think they will compete for that business?

Well, clearly, I think the most immediate opportunity over the next year is going to be helping companies go through the compliance effort and digging back through that supply chain. So I would tell you that, that is currently our primary focus. But your statement is correct, non-CPA firms will be allowed to do those audits, and so we would anticipate us doing those audits to the extent that the client did not use us for -- that we chipped [ph] for that work if they didn't use us to help them with their compliance. You still have to maintain a degree of independence from the conflict minerals process. But clearly, I think there will be a number of firms out there competing for that work in the Big Four, and the other national firms that have the audit brand will obviously chase that work as well as other firms.

Our next questioner from the phone queue comes from the line of Paul Condra with BMO.

Great. I just wanted to follow-up on the capital expenses for the year, because I think prior you had said you expected $3.8 million in 2013, and it's looking a little -- I'm just wondering how that's going to look for the rest of the year. Are you still sticking to that?

Yes. I think for the year, that's our -- the same estimate that we made last quarter and it sticks. I would tell you that the majority of that is going to be on the back half of the year, so I would probably expect in Q2 $700,000 or $800,000 with the remainder in the back half just the way the different leases are turning. Now, a big chunk of that will ultimately be reimbursed by landlords, but GAAP says for us to treat it all as CapEx.

Okay, that's great. And on the first 4 weeks of the revenues, did you say how that compared year-over-year?

Year-over-year, it, I think, was up about 1% all in.

[Operator Instructions] Our next questioner in queue comes from the line of Mark Marcon with Robert W. Baird.

I wanted to get a little bit more detail with regards to the international. Could you give us the breakout for the Netherlands like you normally do?

Yes. Mark, we kind of -- we have so much of the work now in Europe and actually, I would tell you the most recent wins is a lot of cross-border activity, and Europe is starting to operate much more as one Europe. So, we're probably not going to segregate out the individual countries. What I would tell you is we have a whole host of projects now that are much more cross-border oriented with some large companies doing financial transformation and that type of stuff. So, we're getting Europe much more focused on operating as a unit despite being governed by individual countries.

Okay. And so from that perspective, I mean, would you -- you mentioned that in Europe things were rebounding back to preholiday levels. It sounds like what you're basically saying is things are fairly stable over there despite everything that we read.

Yes. I think, Mark, that's a very good synopsis. We hear other folks say that it's a little bit different climate, but based on what we're seeing and the fact that we bounced back fairly quickly from the preholiday says to us that it's reasonably stable. Obviously, it can be very volatile over there just with the economic environment, but as Don mentioned, there seems to be quite an aversion from the large companies to hire over there.

Understood. And then, with regards to Asia Pac, on a constant currency basis, that got a little bit worse. Was that primarily the trends that you were seeing in China that you talked about ...

China, Mark, is down a little bit just because we're having some difficulty with the various different practices over there. Hong Kong is primarily a financial institutions practice, and we've had a little bit of struggle with the financial institution companies in Shanghai. We're also getting hit kind of from a rate perspective. But in, I will tell you that the China losses have been kind of negated by the profits in Japan, or the revenue growth in Japan has offset the revenue declines in China.

Yes. We're not losing money in China. We don't have China losses. So, it's more of the nongrowth in revenue in China which we had experienced last year.

And can you discuss a little bit what you're seeing in terms of the mid market initiative that you discussed last time? And also, how you've kept the SG&A pretty flattish here now for 8 straight quarters, how should we think about that progressing above and beyond the second quarter, which again, looks like it's going to be steady-state?

We constantly control SG&A and we're being very careful on making investments, the middle market initiative, we really only launched it in one area and that's been successful and they're selling work and the work then is being done by our consultants. We anticipate having 3 more or 4 more regions with middle-market initiatives launched in this next quarter. So, we would expect to see and evaluate the results of how they're doing after next quarter. So SG&A, it's -- we're keeping a tight rein on it unless we see opportunities for really robust growth like we do in health care solutions.

Our next questioner in queue comes from the line of Kelly Flynn with Credit Suisse.

Just following up on a question, a few questions ago, someone asked what the year-over-year growth was in the first 4 weeks of the quarter, I think you said it was up 1%. But I've typed in the trends you gave out last quarter, and I'm showing it down 2% year-over-year.

Yes. I think, when I was looking at it, it was on a currency -- adjusted currency. I think you're right that on a GAAP basis, it's down 1% to 2%. I apologize, Kelly.

[Operator Instructions]

Sorry, I had one more question, and sorry if I missed this earlier, how much revenue came from the Sitrick business?

About $4.3 million.

And presenters, at this time, I'm showing no additional lines in the queue. I'd like to turn the program back over to Mr. Don Murray for any additional or closing remarks.

Yes. I would like to thank all of you for your continued support and interest in Resources, and we look forward to our next update in December for the second quarter of 2013.

Thank you, sir. Again, ladies and gentlemen, this does conclude today's conference. Thank you for your participation and have a wonderful day. Attendees, you may disconnect at this time.