Resources Connection, Inc. (RGP) Q2 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and thank you for your patience. You have joined the Resources Global Professionals Fiscal 2017 Second Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference maybe recorded. I would now like to turn the call over to your host, Interim General Counsel, Ms. Alice Washington. Ma’am, you may begin.

Thank you, operator. Good afternoon, everyone and thank you for participating today. Joining me on this call today are Kate Duchene, our Chief Executive Officer and Herb Mueller, our Chief Financial Officer. During this call, we will be providing you with comments on our results for the second quarter of fiscal year 2017. By now you should have a copy of today’s press release. If you need a copy and are unable to access the copy on our website, please call Patricia Marquez at 714-430-6314 and she will assist you. Before introducing Kate, I would like to read an important announcement about certain statements 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 28, 2016 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 will now turn the call over to Kate Duchene.

Thank you, Alice. Happy New Year everyone and thank you for joining us today. Welcome to Resources’ second quarter conference call for fiscal year 2017. I would like to start this call with some overall commentary about events during the quarter and then I will turn the call over to Herb Mueller, our Chief Financial Officer to review our business performance in detail. Let me start by sharing how honored I am to have received the permanent appointment as President and CEO of Resources about two weeks ago. I appreciate the Board’s confidence in me, and I am humbled to lead an organization of this caliber. I have worked hard for it and believed in this company for over 17 years. I have worked on many aspects of the business over that time period and have had the great privilege to work with colleagues all over the world. When I joined the company, we were a little over $100 million in annual revenue focused on interim high level staffing needs of our client base, almost exclusively in the United States. We had 26 offices and approximately 1,400 employees. Today, we are approaching $600 million in annual revenues serving clients in 20 countries with over 3,400 employees. I believe in our people and our business model now more than ever. We fill a unique niche in the consulting space as a premier project execution firm. Given the pace of regulatory change, M&A activity, digital transformation, and globalization impacting our client base, our business model remains on trend. Our clients need access to exceptional talent that is agile, experienced, and focused. They also want a services partner that can deliver solutions in a value-oriented way. The market opportunity ahead for Resources continues to be robust. To deliver on such opportunity, however, we will have to engage in certain change. When I assumed the interim CEO role, we started working on a growth agenda for the company. We are focused on activities that will enable us to build long-term value for all constituents of our business. In November, we executed the Dutch tender improving our capital structure. We were able to purchase 6.5 million shares or 18% of our outstanding stock while still maintaining flexibility for growth as well as future repurchases and the ability to maintain our dividend program. We were very pleased with the results of this action. At this time, let me now outline the growth priorities that we will initiate over the next quarter. First, we have been and will continue to realign the executive team at RGP. The functions we need for the future are not the same as those we needed in the past. Our clients have asked us to deliver more than just great people. We are asked to deliver points of view, toolkits, methodologies, and technology accelerators. We are focused on getting the right functions defined, so we create the right roles with the right leaders to drive the right results for the business. We are doing this work with the needs of the client top of mind. Second, we are committed to increasing our sales process across the enterprise in an aligned and clear way. We were founded with an organizational structure that drove sales efforts in a market focused and decentralized fashion while serving our global client targets. As our business has evolved and we do now serve more and more global clientele, we are building a hybrid sales structure with both enterprise focus and market focus. We need clarity in our sales process and transparency across client teams in order to execute efficiently for our clients. As part of this initiative, we are implementing salesforce.com as our common sales tool globally. The implementation of this tool is one part of the effort. The project includes building more aligned process and transparency in order to better serve our clients, whether those clients have the global 500 or middle-market businesses. This will be the first time we have a global tool to drive the sales effort across the enterprise. Third, we are committed to building increased accountability throughout the organization. One of the functions identified in the reformed executive team will be focused on enterprise operational excellence. This role will drive the execution of our strategic plan across markets, so we measure and hold ourselves accountable across the enterprise. We are excited about the opportunities for alignment across the organization regarding performance excellence. At this juncture as we enter our 20th anniversary of the firm, we must focus on leveraging our strengths and building on them. We need to do so in a way that keeps our core business stable, but builds for the future and allows our business to innovate like our clients. To be clear, while we participate in this emerging change environment, we are fully committed to growth in a cost efficient manner. I will now turn the call over to Herb for a detailed review of the financial results of the second quarter. We will then open the call to questions that you may have.

Thank you, Kate. Total revenue for the second quarter of fiscal 2017 was $147.6 million, a 2.2% decrease from the comparable quarter a year ago. Sequentially, however, revenue was up 2.9%. On a constant currency basis, revenue decreased 1.8% quarter-over-quarter and increased 3.3% sequentially. Our second quarter gross margin was 38.3%, representing a 70 basis point decrease from the prior year. SG&A expenses of $46.1 million compared to $43.2 million in the second fiscal quarter a year ago. However, SG&A in the current quarter included $1.5 million of severance costs related to the departure of a senior executive. For the quarter, our pre-tax income was $9.6 million based on an effective tax rate of approximately 41%. Our GAAP net income was $5.7 million or $0.16 per share. On a pro forma basis excluding the severance mentioned above, net income would have been $0.19 per share. In quarter two, adjusted EBITDA was $12.3 million or 8.3% of revenue compared to $17.1 million or 11.3% of revenue in the year ago quarter. As we reported in October, weekly revenue during the five weeks of the second quarter totaled $55.8 million during the 5-week period where weekly revenues averaged $11.2 million. During the final eight weeks of the quarter, average weekly revenues were $11.5 million per week including Thanksgiving week. Without the Thanksgiving week, the average was $12 million. Now, let’s discuss some of the highlights of our revenues geographically. For the second quarter, revenues in the U.S. were $117.6 million, a decrease of 4% quarter-over-quarter and an increase of 1.7% sequentially. For the second quarter, total revenues internationally were $29.9 million versus $28.3 million in the second quarter a year ago, an increase of 5.5% quarter-over-quarter or 7.6% on a constant currency basis and an increase of 7.8% sequentially, 9.9% on constant currency. International revenue accounted for approximately 20% of the total revenues for the quarter compared to 19% in the first quarter. Europe’s second quarter has increased 4% quarter-over-quarter and increased 13% sequentially, while the Asia-Pacific region saw second quarter revenues increased 9.2% quarter-over-quarter and 2.3% sequentially. On a constant currency basis, total international revenue increased 7.6% quarter-over-quarter and increased 9.9% sequentially. On a quarter-over-quarter basis, the U.S. dollar was stronger against most currencies in Europe, but weaker against Asia and Pacific currencies in countries where we do business. As a result on a constant currency basis, Europe’s revenue would have increased quarter-over-quarter by 8.9% and Asia-Pacific’s revenue would have been up 5.5%. Let me now discuss early revenue trends of the third quarter of fiscal 2017. Weekly revenues for the first five weeks of the third quarter are $51.9 million versus $50.1 million last year. However, our sixth week that we are now in will be impacted by the January 2 holiday. Along for that we are tracking approximately 2% below last year. We continue to face a challenging business environment, particularly in the financial services area in the energy sector. Low interest rates and restrictions on proprietary trading among other things continue to pressure financial services. However, there are definite signs of improvement. The decline in financial services has leveled off for us and the recent interest rate increase by the Fed is a positive sign for our financial institution clients. We actually saw a sequential increase in Q2 in the energy sector. The potential of deregulation is also encouraging. While we are tracking about 2% below last year’s third fiscal quarter, we believe we have an upside potential to close that gap in the second half of the quarter. We are seeing significant increase in both the number of proposals and in the projects won in revenue recognition as well as lease accounting. Some of these projects are well underway. Now, let me discuss gross margins. Gross margin for the second quarter was 38.3% versus 39% in the year ago quarter and 38% in the first quarter of fiscal 2017. The quarter-over-quarter decrease of 70 basis points results from reduced bill/pay spreads. This sequential increase of 30 basis points results from reduced employer payroll taxes at the end of the calendar year. Excluding reimbursable expenses, our second quarter gross margin was 38.9% which compares to 39.7% in the second quarter a year ago. The average bill rate spread for the quarter was approximately $118 compared to $119 in the first quarter and $120 in the year ago quarter. The average pay rate for the second quarter was approximately $59 compared to $60 in the first quarter and $60 one year ago. Please remember, these hourly rates are derived based upon prevailing exchange rates during each given period. We expect gross margin in the third quarter of fiscal 2017 to decline approximately 180 basis points for the second quarter’s gross margin primarily due to increasing employer payroll taxes and the impact of holidays. For the second quarter, gross margin in the U.S. was 39.1% and our international gross margin was 35%. Now, on to headcount, for the second quarter, the average consultant FTE count was 2,530. This compares to 2,459 in the previous quarter and 2,554 in the year ago quarter. Quarter end consultant headcount was 2,649 versus 2,645 a year ago. The total headcount of the company was 3,431 at quarter end. Now, on to other components of our second quarter financial results. SG&A expenses were $46.1 million or 31.2% of revenue. This compares to SG&A of $43.2 million or 28.6% of revenue in the second quarter of fiscal 2016. The second fiscal quarter included $1.5 million of costs related to the departure of a senior executive. The increase relates to the additional investments we made in business development professionals and management consultants in potential growth markets. We anticipate SG&A expenses in the third quarter of fiscal 2017 to come in a little under $45 million. We have made these investments in dedicated business development professionals and subject matter experts as we focus on building our technical accounting, our M&A transaction services and our data solution teams. Stock compensation expense was $1.9 million or 1.3% of total revenue. The increase from prior quarters was due to the acceleration of vesting of options related to the departure of a senior executive. We would anticipate quarterly stock compensation expense in the upcoming quarters to approximate $1.5 million. At the end of the second quarter, our office count was 67, 44 domestic and 23 international. Related to other components of our financial statements, depreciation was $800,000 for the quarter similar to the first quarter. We would expect depreciation expense to approximate this amount from the next couple of quarters. Our adjusted EBITDA or cash flow margin, which we define as EBITDA before stock compensation was 8.3% in the second quarter, down from 11.3% a year ago from 8.5% in the first quarter of fiscal 2017. Our pre-tax income was $9.6 million in the second quarter. During the quarter, we reported provision of our income taxes of $3.9 million representing an effective tax rate of 40.8%. Our GAAP tax rate for each of the upcoming quarters is difficult to predict and could be volatile at the rate – as the rate will be dependent on several factors including the operating results of our U.S. and foreign locations, each of which are tax or benefited at different statutory rates and the offset of tax benefit of foreign losses in 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. For the third quarter of fiscal 2017, we anticipated tax rate approximating 47%. Our effective tax rate is impacted by a current inability to offset income and tax jurisdictions, in which we are profitable with losses and several tax jurisdictions which we are not profitable. Finally, our GAAP net income was $5.7 million or $0.16 per share during the second quarter. The severance cost mentioned above had a $0.03 per share impact on EPS. Now, looking at the balance sheet, cash and investments at the end of the second quarter were $63.6 million, a $39.3 million decrease from the end of the first quarter of fiscal 2017. The decrease stems primarily from using $46.2 million of cash on hand to partially fund the Dutch tender offer of $104.2 million, which settled in November. The remainder was provided by use of our credit facility for $58 million. In addition, cash generated by operations was $15.2 million in the quarter. Additional share repurchases and dividends during the quarter totaled approximately $4.9 million offset in part by stock purchases by employees of $600,000. Capital expenditures were $1.2 million during the quarter, net of landlord reimbursements. We expect to be in that range in quarter three. During the second quarter, we repurchased just under 6.6 million shares of our common stock at an aggregate cost of $106.3 million or $16.15 per share, just over 6.5 million shares were purchased through the modified Dutch tender offer, the balance on the open market. Our stock buyback program has approximately $132 million remaining. We will continue to return cash to shareholders through our dividend and share repurchase programs while balancing debt repayment, capital requirements of growing our business and fiscal prudence. Our shares outstanding at the end of the second quarter were approximately $29.6 million. Receivables at quarter end were approximately $97 million compared to $96.2 million at the end of the first quarter. Days of revenue outstanding were approximately 60 days compared to 59 days at the end of the first quarter of fiscal 2017. Now, I would like to turn the call back over to Kate for some closing thoughts.

Thank you, Herb. As we embark on the new calendar year, we are all focused on driving growth and working hard to accelerate the productivity of the business development and subject matter expertise investments we have made. As I mentioned previously, we are evolving the business to respond to the solution demands of our clients. We believe that second assessments will provide positive return for us in the long-term. For example, during the quarter we learned that we were appointed to be the internal audit partner for a global consumer products company for a 3-year term. This 3-year engagement is a multimillion dollar deal for resources and was procured by packaging our talent and solutions together to deliver an end-to-end service for the clients. In winning this work, we competed against three of the big four firms. Our value proposition and our customized global client service and delivery approach provided a compelling solution to the clients. We are constantly proposing similar package solutions in the internal audit space to several other global firms. Let me now share some additional statistics which we believe reflect the continuing health and strength of our core business. Client continuity remains outstanding. During our second quarter, we served all of our top 50 clients from fiscal 2016 and 48 of the 50 from 2015. In fiscal 2017, we have 261 clients for whom we provide services exceeding $500,000 in fees on a run-rate basis, up from 243 in the first half of fiscal 2016. In addition, our top 50 clients represented 38.1% of total revenues, while 50% of our revenues came from 92 clients. Our loyal client following is reflective of our client service approach and the talent and quality of the work performed by our consultants. Our largest client for the quarter was approximately 2.3% of revenues. Through the second quarter, 92% of our top 50 clients have used more than one practice area and 74% of those top 50 clients have used three or more practice areas. This practice area penetration reflects the diversity of relationships we have within our clients’ organizations. As discussed earlier, we believe that enterprise-wide aligned sales process and global sales tool will help us improve such results and such penetration going forward. In closing, we viewed the second quarter with optimism. We saw improved results in Europe and Asia-Pacific. We were also encouraged to see that the negative year-over-year revenue graph gap in North America is narrowing. Based upon reports from the field, we are beginning to see the financial services and energy sectors improve. We are also pleased by the revenue trends related to our key initiatives: technical accounting, M&A transaction services and data solutions. All of the key initiatives, which are part of our strategic plan saw double-digit growth sequentially and compared to prior year. We will continue to monitor and measure such trends in order to make the appropriate investments to deliver for our clients and drive accountability. That concludes our prepared remarks and we will be happy to answer your questions at this time.

Thank you, ma’am. [Operator Instructions] Our first question comes from the line of Andrew Steinerman of JPMorgan. Your line is open.

Hi, Kate. Congratulations on your new position. I wanted to go over the first new growth agenda bullet when you were talking about more of a solutions approach and providing a point of view in technology. My question is are you still going to be billing on an hourly basis or is this a business model change and are you taking on any assumption of kind of solutions risk?

Great. Well, thanks for the good wishes, Andrew. I know we have known each other for a long time. So, the answer is; no, we are not taking on a material and different risk profile with a solutions practice. We are building up our subject matter expertise in our management consultant bench a little bit in order to provide the quality control and the oversight we need on these projects, but I don’t see a significant shift in how we engage legally with our clients or the risk profile that we are taking on as an organization.

Yes, no, I like that. And then just a little more comment about the technology piece, you said you wanted to add in a technology piece. And I know at times, Resources has had some technology, let’s call it, backbone to its solutions?

Right. So, I don’t see us building a lot internally, but we do need to invest in the right kind of channel partner relationship and to partner with those emerging technology firms that may not have a services component, but would be perfect partner for us, and we have not invested time and attention to-date in that strategy, and I think that’s one that could play out very positively for our organization.

Perfect. And then just to finish it off, you said something right after technology like accelerators something like that, just tell us what you meant by that last piece of your first bullet?

Yes. So, I led the legal services practice, and in a number of those proposals, what we see clients asking for in RFPs are a category of technology accelerators. So, what kind of tools would we recommend as part of our services offering to really provide a more complete solution, that’s what I mean by it, not that we would grow these internally, but that we have enough market knowledge and intelligence to help a client craft a full solution.

Great. That makes a lot of sense. Thank you so much.

You are welcome.

Thank you. Our next question comes from Kevin McVeigh of Deutsche Bank. Your question please.

Great, thanks. Let me add my congratulations as well to you and obviously Herb, as well, settling in. Hey, are there going to be any incremental costs associated with this strategy? And as you think about it longer term, how should we think about it from a revenue perspective as it scales in terms of how big can it become?

Well, Kevin, again thank you for the good wishes. I think Herb and I are settling in to our positions, both being new to these roles. So, this is a balanced approach. We know we need to make some investments. We know that some of our infrastructure is not up to par, and I think salesforce is our first big step to have a global platform where we can really serve our clients most effectively and efficiently by having access to information in real-time across the globe to serve them. So, that’s our first start, but we do have some other investments that we will make, but make in a balanced fashion. We know our SG&A is higher this quarter. It’s something we are keeping our eye on very carefully. But as you work towards short-term results and then long-term value creation strategies, that’s our balance. And Herb and I and the rest of the executive team will be working together very carefully to make sure that we are striking the right balance for the business and keeping all of our constituents in mind.

Right. And some of them may have a stair step impact, for example, as we are investing right now in our management consultant program, the subject matter experts to build up the expertise in some of these areas that we need in order to be able to drive growth. So, you will have the shorter term SG&A impact that we will see over the next couple of quarters, but the belief is – is that will lead to greater revenue and be able to help us there as well.

Got it.

Yes. Let me just add, Kevin, if we are doing this right, let’s take the salesforce tool for example. My firm belief is that should pay for itself quickly as we have better access to information. We know what our global client initiatives are and we can work effectively in all parts of the globe on helping our clients with those initiatives. Right now, our process, we have been very committed to that client service, but it’s been very inefficient with phone calls or e-mails that don’t allow us to move with the speed and the action that we need in our business today.

That was going to be my next question, Kate, just not to get too in depth, but I have always thought the model as kind of an MD-type person running an office that’s got to call into the CFO Controller that they are selling the services into. Does that process change in terms of you have got a dedicated sales force that’s more proactive or is it still the same and those folks just have additional responsibility based on new software that’s going to allow them to be more responsive?

Yes. Kevin, I think it’s both really. I think that’s a good question. I think what we are going to do is really just raise our game here. We are going to still have that one-on-one outreach in markets, but we are also going to have an enterprise-wide focus that may utilize sales automation tools in a way that we haven’t used before and also have an enterprise-wide sales team that’s driving opportunity at different levels in the organization and in different ways. So, I think the short answer is both.

Right. And I will add to that, where we have piloted salesforce, we have seen significant growth in those markets and that’s been primarily adding the capability for them to do better job of tracking their outreach and being able to do it just in that classic model approach in the single markets. What the global implementation will do for us now as Kate mentioned has really enhance the communication so far of Fortune 500 customers that will have lot better understanding of what’s happening with those customers in the different markets.

Got it. And then Herb, I just want to make sure, because I know you would typically give an implied revenue range. It sounds like you gave it through the first five weeks, somewhere around $52 million or so. Is there anyway to kind of quarterize that, just so we get a sense of what that would imply for the quarter?

I think the way to look at it as I mentioned, I think right now we are tracking about 2% behind a year ago. And I think there is a little bit of upside to that.

Got it. Okay, so a range of kind of down 2% to flat, is that a fair way to think about it?

I would think so.

Okay, thank you.

You are welcome.

Thank you. [Operator Instructions] Our next question comes from Mark Marcon of Baird. Your line is open.

Good afternoon and let me add my congratulations, Kate. We have known each other for a long time and nice to see the new position.

Thank you.

With regards to just the revenue trends that you are currently seeing, frequently you end up – you mentioned that things were picking up and frequently you have given us kind of like the weekly color, can you do that for us for the first five weeks of this quarter?

I am going to turn that to Herb.

Right. What we had for first week 12,010,000, second week, 12,071,000, third week 11,934,000, fourth week, 10,090,000, fifth week, 5,829, and so again you get into the Christmas holidays.

Sure. And so, but it sounds like you are seeing some real improvement just from a current perspective in terms of both on the energy side as well as flattening out with regards to the financial services clients and then you have this new project that’s coming on with the consumer packaged goods company. So, is it possible that you could end up doing even better than flat versus a year ago?

It is possible. The momentum is definitely in the right direction. As I mentioned, energy is sequentially up. There is a possibility of a nice upside on financial services as we get into the New Year. As I mentioned, the technical accounting areas, the rev/rec and the lease accounting has increased significantly and we are kicking off and it’s hard to say how much of that will completely impact Q3, because we have got with some of the projects that we closed were getting started now, but at a little lower level as these companies are getting through their audit and then picking up going into our Q4, but there is definitely a lot more bullish signs than bearish.

Great. And you mentioned during the last quarter that you were starting to see these projects pickup with regards to rev/rec and a little bit on the lease accounting side. Can you just give us a little bit more color, because I mean there has been some recent articles that have come out that suggest some companies are still behind and I am trying to balance that opportunity relative to what sounds like a period of new initiatives which can lead to changes in terms of personnel and some stops and starts before things really take off?

Right. And we saw as we mentioned in the last quarter’s call that we are starting to see the momentum. The SEC has become much more vocal lately on asking companies to start disclosing not only in their Q, but on the earnings call, how are they coming on rev/rec. The institutional shareholder services have been telling companies hey, you need to get going on this. So, it’s getting definitely a lot more attention. We ran some metrics comparing this quarter to last quarter and number of proposals that we generated was up 250% over a year ago and the projects that we closed were up 3 times from a year ago. So we are definitely seeing some significant attention and growth there. I mean, it’s definitely on everybody’s radar. You have got a combination of things. You have got some companies that they have been aware of it and they have been trying to do it internally and then realizing that they need outside help and then the clients you have got, some were in the executive offices, they were downplaying the impact and their auditors are finally awaking them to the fact that, hey, there is a lot of work even if you don’t think that this is going to impact you, we still have to really look at your sales contracts and what’s going on and evaluate and do that assessment. So, right now, some of these projects that we are looking at are ranging anywhere from $15,000 to $2 million. So, they are significant and they are really – I am not going to quantify it much more than that at this time, but there is definitely some upside that we haven’t really baked into the – when you look at our forecast mathematically.

Okay, great. And then in terms of the proposals being up 250% and three times the closes, could you just give us some level of magnitude in terms of what that – I mean, is that up 250% from 100 proposals a year ago, 200 proposals a year ago?

No, it’s less than that. I am not going to get into those exact numbers, but it’s enough to be meaningful and it certainly has our attention.

Great. And then can you talk a little bit more about some of the initiatives just in terms of the stair step function when would you fully implement salesforce and how should we think about that from a CapEx perspective?

Yes, great question. That’s going over the course of 2017. We are going to have different phases of it. The initial part is to get out our sales teams up to speed and being able to utilize that to track prospects and work through that and we will be working on that fairly aggressively. I think in the course of the calendar year you could see neighborhood of little over $1 million of capital expenditure related to that. You can see some SG&A impact of perhaps just under $1 million a year for that. However, there is also little bit of offset as we are working through that, but certainly, we are going to have an impact, but again we look at this long and hard. We have been piloting it for several years and have seen the results in our pilots and very excited about what we can do going forward.

Great. And then with regards to the adding some thought leaders and business development folks, how should we think about that in terms of when that would stair step through, are you talking about adding one additional person per office how should we just think about that just in terms of the scope of the investment?

Right. The bulk of it has been made and you are seeing that and that’s what the increase in SG&A that we are going through right now has happened and it’s put us in a position, for example, where we could close the project that the multimillion dollar 3-year project that Kate talked about earlier as well as being able to support some of these rev/rec projects and the data solutions group and again a higher level of service, so that investment is there and it’s poised us for a significant amount of growth that it would support.

Yes, let me just add a little more color there, Mark, for you. This is a process. It doesn’t happen overnight. I give great credit to Tonya to view on the worksheets done with the talent acquisition group to really up our game in terms of the kind of talent that we are bringing in to our organization and the new roles that we are bringing in to the organization, that’s a great start, but once they really then standup our toolkits and I will speak to really our M&A transaction services toolkits. We have a lot of capability templates, tools, methodologies that we can bring to a client engagement in that regard, but a piece of it then is agitating our incumbent management team on those capabilities. And again that doesn’t happen overnight. We have to get materials ready for that internal marketing effort, so it does take some time. I think Herb is right he has made a lot of the hiring to-date. Now, it’s our job and our focus is making those hiring decisions and those investments productive for our business. And we are all focused on that. I think the company is really energized by some change. I can tell you are having done a couple of town hall calls with the employee group. We are ready. We are ready to go. We are ready to try some new activities. We are excited about the future and we are being led by what our clients are asking us for. And I think that’s really critical returning to the core of what our clients want.

That’s great. Super. I will follow-up a little bit more offline. Thanks.

Okay, great.

Thank you. At this time, I would like to turn the call over to Chief Executive Officer, Kate Duchene for any closing remarks. Ma’am?

Yes, thank you operator. We will thank you everyone for your continued support and interest in Resources. We look forward to our next update for the third quarter of 2017. Thanks again.

Thank you, ma’am and thank you, ladies and gentlemen for your participation. That does conclude your program. You may disconnect your lines at this time. Have a wonderful day.