Resources Connection, Inc. (RGP) Q3 2019 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. And welcome to the Resources Global Professionals' Q3 Fiscal Year 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions for how to participate will follow at that time [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Alice Washington, General Counsel of Resources Connection. Ma'am, you may begin.

Thank you, Operator. Good afternoon, everyone, and thank you for participating on this call. Joining me here today are Kate Duchene, our Chief Executive Officer; Herb Mueller, our Chief Financial Officer; and Tim Brackney, our Chief Operating Officer. During this call, we will be commenting on our results for the third quarter of fiscal year 2019. By now you should have a copy of today's press release. If you need a copy and are unable to access it on our Web site, please call Shannon McPhee at 714-430-6363. I would like to remind you that we may make forward-looking statements during this call. Such statements regarding future events or future financial performance of the company are just predictions and actual events or results may differ materially. Please see our report on Form 10-K for the year ended May 26, 2018 for a discussion of the risks, uncertainties and other factors such as seasonal and economic conditions. Such factors may cause our business, results of operations and financial conditions, to differ materially from results of operations and financial conditions expressed or implied by the forward-looking statements made during this call. I'll now turn the call over to our CEO, Kate Duchene.

Thank you, Alice. Good afternoon, and welcome to RGP’s third quarter conference call. Here is a quick roadmap for my remarks; I will start with a brief overview of our operating results for the third quarter; second, I will share some color around trends we are seeing in the third quarter, as well as marketplace dynamics; third, I will discuss our progress on bill rate improvement and expanding our mix of business to higher value and more profitable offerings; and fourth, I will share additional detail regarding the appointment of Tim Brackney as our President and Chief Operating Officer, which we announced today. I'm delighted that Tim could join us on this call as we welcome him to this important role for the company. First, operating results. Our total revenues for the third quarter of fiscal '19 were $179.5 million, which represents an increase of 4.1% over the third quarter a year ago. We are pleased with growth in North America and Asia Pacific and our business in Germany. North America grew 6.4%, Asia Pacific grew 4% or 7.5% on constant currency; and taskforce continued to deliver exceptional growth at 48%. For the first time in 12 quarters, Europe faced a decline in revenue. Herb will share additional detail later in the call, but let me say now that Europe’s challenges are a result of three primary factors; first, the expected completion of some large projects; second, a loss of focus on our pipeline development, while we were delivering on those projects; and third, the unstable micro-environment we believe is causing clients to postpone or delay critical decision-making regarding project initiation. This is especially true in the UK with the Brexit uncertainty. With respect to things we can control, we have increased our sense of urgency and focused on business development, pipeline development, and sales management. We are also evolving certain positions to bring more business development capability to the team broadly. Finally, as I just mentioned, taskforce continues to perform beyond expectations, and we are actively discussing further opportunity to grow that business in Europe. Now, I want to talk for a minute about cost structure. We are pleased by our progress in bringing SG&A down as a percentage of revenue. Year-over-year, SG&A improved by 110 basis points. Our SG&A expense was 31% of revenue versus 32.1% in the prior year third quarter. And this improvement happened at a time when we have increased our marketing spend to support the launch of a new Web site and brand refresh. We've been working hard on our brand enhancement, and we'll be prepared to reveal more detail regarding this work during our call to discuss year-end results. In addition, we've made important investments in headcount to accelerate our capabilities in digital engagement, transformation, and automation. These are growth areas in our client base, and we must invest in order to win further work. We balanced such investments against the goal of moving SG&A below 30% of revenue. Turning to bottom-line results, we've again made progress. We achieved $13.9 million of adjusted EBITDA or 7.8% of revenue compared to $8.7 million or 5% of revenue in the year ago quarter. Our pre-tax Q3 income more than doubled to $9.6 million from $4.6 million in the prior year quarter. We intend to deliver more profit to the bottom-line through a combination of improved leverage from growth, careful talent management and compensation planning, expense management, improved pricing, and expanding our mix of business to higher-value services. This is the third consecutive quarter we have delivered progress on this important metric. As I’ve stated before, our long-term financial objectives are to deliver 10% annual revenue growth, which may include strategic growth; SG&A below 29% as a percentage of revenue; and adjusted EBITDA performance between 11% and 13%. Herb will share further detail regarding our financial results during his discussion in a moment. My perspective on our improving results through three quarters of the fiscal year is that our strategies in evolving the business and our hard work in transforming our sales culture, which includes focus and accountability are paying off. At the same time, we have more work to do in curating a healthy and vibrant pipeline, never taking our eye off the ball there and staying committed to sales management and continuing to develop further management consulting competencies so we grow our solutions practices. Next, I want to talk for a minute on trends we're seeing in the current quarter. Our weekly revenue in Q4 is trending relatively flat to prior year. In North America, our velocity has slowed as we moved through Q3, and have entered Q4. I do not believe that there are fundamental obstacles in the business. With such strong growth for the first half of the year, we were focused on serving our clients and failed to balance enough attention on pipeline development. We have also experienced slower client decision making in the U.S., following the holidays in the face of negative economic news. The financial markets as we know brought considerable pessimism and worry in December and January. We faced the government shutdown in the U.S. that left people feeling uncertain, and we had one significant client in North America furlough all employees post holidays for two weeks. In that landscape, we just did not see new significant projects launch as quickly in January and February. I have said before that I do not believe our revenue trajectory will be linear. Given the nature of our agile human capital business model, we will face some ebb and flow of project demands in our client base. I can assure you that we have renewed our focus on pipeline development and are starting to see some pick-up in client decision-making. Two of the leading activity indicators we track are legal contract flow, which is increasing and number of outstanding proposals, which is rising. I also remain optimistic about the potential of our business as I follow marketplace trends and research on changing workforce strategies. As evidenced by recent studies published by Ronstadt, the Staffing Industry Analysts and Intuit, a dominant labor trend over the next five years will be the rise of the blended workforce. This means that employers larger and medium sized prefer plans to pursue non-employee talent to team with full time employees to get project work done. In fact, in Ronstadt's report, 61% of employers surveyed reported the intent to convert one-third of full-time positions to what they call an agile labor category. The rationale for such workforce strategies are twofold, companies gain flexibility in procuring the exact skills needed for special projects and companies can more rapidly respond to changes in the skill sets needed without the delay and challenge of traditional employment management. RGP is perfectly positioned to meet this labor trend around the globe as we excel at projects scoping, talent acquisition and management, as well as subject matter assessment. We provide both first resourcing and project delivery. Our talent enjoys a full suite of benefits and professional development opportunities, which allow them to focus on the clients and the project success. We particularly welcome this growing trend given that we've been successful selling agility to baby-boomers who are traditionally more conservative in approach. Now, we have both a client buyer and a talent base who actively seeks agility and flexibility. These are important macro trends for our business model, which we believe will drive increasing opportunity in the future. We have a unique business platform to be the blended workforce provider of choice. I will now update you on our priority enterprise objectives that I laid out during our Q1 call to improve pricing and grow our higher value solutions business. We are making progress on both. Through three-quarters, bill rates have improved by 2.2% in North America and 4.1% in Europe. For new engagements in North America, bill rates had improved approximately $9 per hour since the beginning of the fiscal year, in part due to progress made growing our solutions business year-over-year. Our solutions practices are up double digits through three quarters of the year, led by technical accounting projects and transaction services projects. Now, before handing off to Herb, I want to again welcome to this call as our new President and Chief Operating Officer. Tim has been with RGP for 16 years joining us first as the Managing Director of our Portland, Oregon office after watching Tim's career at CWC. Tim relocated to the bay area in 2011 and oversaw Northern California business during a period of significant growth. Tim earned his MBA from Stanford Graduate School of Business, so he's very familiar with Silicon Valley, and he has done a terrific job in building our business in this vibrant economy. For the past few years, Tim has been a part of our executive team driving our revenue efforts in North America and executing our sales transformation strategies. Tim has performed well in leading the North America business back to faster growth, and I'm excited about his ability to have that same positive impact across all regions. I believe the time is right to name a COO to align our revenue plans, growth strategies and processes globally. This focus is important as we drive opportunity with global client to walk a trusted provider who can deliver agile talent seamlessly wherever they operate. I will now turn the call over to Herb for a more detailed review of our third quarter results.

Thank you, Kate, and good afternoon, everyone. I will start by giving detail on our fiscal third quarter financial results, and we'll then discuss the trends we're seeing in the fourth quarter. Starting with an overview of the third quarter results, total revenue for the third quarter of fiscal '19 was $179.5 million, a 4.1% increase from the comparable quarter a year-ago. Sequentially, revenue was down 4.9%, a normal trend since this quarter includes the Christmas, New Year's and Chinese New Year's holiday. The fiscal third of the quarter was very strong with some slowing after the holiday break. On a constant currency basis, revenue increased 5.3% year-over-year and decreased 4.8% sequentially. Our third quarter gross margin was 37.8 %, up 150 basis points from the prior year third quarter, primarily the result that impacted internal pricing initiatives, slightly lower payroll taxes and business expenses. SG&A expenses were $55.6 million or 31% of revenue, compared to $55.3 million or 32.1% of revenue in the fiscal third quarter a year-ago. Our net income improved to $5.8 million or $0.18 per diluted share compared to $4.6 million or $0.14 per diluted share in the prior year quarter. GAAP tax rates were 1% in last year's quarter compared to 39.7% this year. Last year, we had a favorable impact from the Tax Cuts and Jobs Act. In Q3, adjusted EBITDA was $13.9 million or 7.8% of revenue compared to $8.7 million or 5% of revenue in the year-ago quarter. Now, let me discuss some of the highlights of our revenues geographically. Our U.S. performance remained solid in the quarter with revenue increasing 6% year-over-year. The East and Central South regions have been especially strong, led by strong double-digit growth in Atlanta, Philadelphia, Cleveland and Dallas. Chicago also continues to perform well. Sequentially, revenue in the U.S. decreased 4.4%, primarily as a result of consultants being on holiday during Christmas and New Year's compared to the second quarter, which includes only the Thanksgiving holiday. For the third quarter, total revenues internationally were $37.1 million versus $38.1 million in the third quarter a year-ago, a decrease of 2.6% year-over-year. On a constant currency basis, revenues internationally increased by 2.7%. Sequentially, revenues decreased 7% to 6.6% constant currency. Europe's third quarter revenue decreased 9.7% year-over-year and sequentially, 3.5% constant year-over-year and 8.7% sequentially. Europe's growth slowed this quarter from the growth trend of the last three years, especially in the UK where economic conditions are mixed. We had several major projects wrap up, as well as multiple client delayed project starts, and some clients have been hesitant to commit on new projects. Asia-Pac continued their strong performance led by double digit growth in both China and Japan. Turning to early revenue trends for fourth quarter of fiscal 2019, weekly revenues in Q4 are trending relatively flat compared to last year. If the current trend continues, revenue will be in the range of $180 million to $186 million, compared to $183.8 million last year. As Kate mentioned earlier, we are positive about our forward prospects, however, there's some uncertainty in the market short-term. North Americas continue to grow in most markets, though at a slower rate than the last several quarters. New starts slowed after the first year after our clients delayed start dates on projects. As mentioned earlier, Europe revenues slowed while Asia-Pac continues to grow. North America is strong in most markets, especially Atlanta, Chicago, Dallas, Denver, Mexico City, Charlotte is also performing well with financial services being the catalyst. That financial services is up globally as well. Northern California slowed after the holidays after several years of strong growth and Southern California continues to lag. Europe despite issues in the UK and the Netherlands had excellent results in Germany led by taskforce. Taskforce continues to provide profitable growth. Asia-Pac's growth has been driven by China, Japan and we see that continuing in the foreseeable future. Now turning to gross margins. Gross Margin for the third quarter was 37.8%, increasing 150 basis points from the prior year period equivalent period and decreasing 110 basis points sequentially. The year-over-year change is related primarily to improved bill pay ratio, driven by aggressive internal initiatives to improve pricing, as well as lower business expenses. The sequential decrease was a typical decline from the reset of payroll taxes beginning in the new calendar year. For the third quarter, our gross margin in U.S. was 38.6%, compared to 36.9% of the third quarter last year. And our international gross margin was 34.8%, compared to 34% a year ago. For the fourth quarter, we expect our gross margin to be in the 38.8% and 39.3% range, compared to 38.3% a year ago. As Kate mentioned, we've been making significant strides in improving bill rates and gross margin in new deals sold. As expected, we're seeing the impact now. The average hourly bill rate for the quarter was approximately $124 in the second and third quarter of fiscal 2019 and $123 in third quarter of fiscal 2018. Bill rates are improving, however, the overall average is staying constant as a results mix. Europe, which has the highest bill rates, has decline in revenue, whereas Asia-Pac, which has the lowest bill rates, had increased revenue. The average pay rate for the third and second quarter was approximately $62 and $63 last year. As a reminder, these hourly rates are derived based on the daily exchange rates during each given period. Now, looking at other components of our third quarter financial results. SG&A expenses were $55.6 million or 31% of revenue. This compares to SG&A of $55.3 million or 32.1% of revenue in the third quarter of fiscal 2018 and $55 million or 29.1% of revenue in the second quarter of fiscal 2019. The year-over-year percentage decrease from last year's third quarter relates to improved leverage from revenue growth with lower severance and acquisition costs in the quarter, particularly offset by benefits, commission, bonus expenses tied to support revenue growth. SG&A was up $600,000 sequentially, resulting from the additional payroll and benefit costs from new headcounts to support the growth critical markets and an increase in operating expenses, including rent and bad debt expense, offset by lower commission bonus and service expense. Stock compensation expense was $1.9 million or 1.1% of total revenue. In the fourth quarter, we reserved SG&A to be in range of $55.6 million to $56.4 million. Sequentially, severance will be lower, however, we'll have slightly higher marketing spends and we'll also have a charge of $525,000 for loan forgiveness. This loan is related to Tim Brackney's relocation in the Northern California in 2011. At the end of the third quarter, our office count was 73, 47 domestic and 26 international. We completed the renovation of our San Francisco office and closed the former accretive San Francisco office during the quarter. We're now fully combined with the RGP team in San Francisco. Turning to other components of our financial statements. Depreciation was just under $1.2 million and amortization was just under $1 million. As a result of the improvements noted above, our adjusted EBITDA or cash flow margin, which we defined as EBITDA before stock compensation and contingent consideration adjustments was 7.8% in the third quarter, up from 5% a year ago. Our pretax income was $9.6 million in third quarter, up from $4.6 million in the year ago quarter. During third quarter, we recorded a provision for income taxes of $3.8 million, representing an effective tax rate of 40%. Our GAAP tax rate for each of the upcoming quarters is difficult to predict, it 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 in certain locations by valuation allowances. On a cash basis, our tax rate was about 32% and we expect the annual rate to be in the 31% to 33% range. Finally, our GAAP net income was $5.8 million or $0.18 per share during the third quarter. Now, let me turn to the balance sheet. Cash and investments at the end of the third quarter were $48 million, a $7.2 million increase from the second quarter of fiscal 2019. Receivables at quarter end were approximately $138.5 million compared to $146.5 million at the end of the second quarter. Days of revenue outstanding were approximately 66 days compared to 64 days in the second quarter of fiscal 2019. Dividends for the quarter were approximately $4.1 million. Capital expenditures were $5.9 million during the first nine months of fiscal 2019, $2.5 million during the quarter as we have multiple office relocations occurring this year. We are transitioning to an open office footprint and the change in concept requires an investment in new office furniture. We expect CapEx to be in the $3 million to $4 million range in Q4. Three of our largest offices are moving this year, including two in the New York Tri-State area, as well as our San Francisco office that I mentioned earlier. We are migrating to an open office layout to enhance the collaboration for teams, as well as to reduce the overall footprint. In the third quarter, we repurchased $9.2 million in stock. We are continually evaluating uses of cash to reduce debt and/or facilitate our growth, both organically and strategically. In addition, within days after our quarter end, we paid down our revolver by $10 million. Our stock buyback program has $97.7 million remain. We will continue to return cash to shareholders through our quarterly dividend, while amounts in debt repayment, the capital requirements of growing our business organically and strategically and fiscal prudence. Our shares outstanding at the end of the third quarter were approximately $32 million. A quick update on our acquisitions Countsy. The accounting of the service for venture backed startups we acquired as part of the accretive acquisition continues to perform well. Revenue was up just under 20% for the quarter compared to last year, and is up 14% year-to-date. Countsy was just named the BPO partner of the year by NetSuite. The award acknowledges their strong client count growth and their ongoing collaboration with NetSuite. Countsy achieved this award because of their dedication of providing fast growth startups integrated and scale of solutions. Before, I turn the call back over to Kate, I would like to take a minute to thank, John Bower, our Chief Accounting Officer for his outstanding 21 years of service to the company. I've really enjoyed working with John the last few years. He was critical to me in assisting in my transition by role. John has decided to retire and enjoy some free time. John, thanks for everything. Now, I would like to turn the call back over to Kate for some closing comments.

Thank you, Herb. Let me also add my things to John, it's a privilege to work side-by-side with you John for the last, almost 19 years. We are really going to miss you. While we look forward to delivering our year-end report on the business in July, but before turning to Q&A, I want to remind our investors about our client continuity statistics for Q3 and year-to-date. We are proud of these statistics and we are proud for a reason, it means our clients are continuing to come back to us as their trusted provider to deliver projects in the blended workforce environment. Our client continuity remained strong. During our third quarter, we searched 49 of our top 50 clients from fiscal 2018 and 45 from 2017. Through Q3, we have 286 clients for whom we provide services at a run rate exceeding 500,000 in fees, and that number is up from 257 in fiscal 2018. In addition, our top 50 clients for the quarter represented 35.2% of total revenues, while 50% of revenues came from 111 clients. Our largest client for the quarter was approximately 2.4% of revenue. At the end of the third quarter, 90% of our top 50 clients have used more than one type of service or functional expertise, and this penetration reflects the diversity of relationships we continue to build within our client's organizations and reinforces the opportunity for growth. So that concludes our prepared remarks, and we are happy to answer any questions. Thank you.

[Operator Instructions] Our first question comes from Andrew Steinerman with JPMorgan. Your line is now open.

I have two questions. The first one might be a simple one. What is the hopeful goal of creating a new COO/President role? Obviously, Kate you had the title President by breaking out President and COO. What does the management team collectively hope to accomplish? And then also I know there was a quick call out to part of Accretive and the growth there. But if you can model we are in the anniversary this just reported third quarter, how did Accretive overall perform in the first year with RGP?

So Andrew, I'll take the first question and then I'll have Herb give us some more color on Accretive overall. So, I think the time is right now to name a COO, and my overall hope is that Tim and I worked very closely together to drive the same growth strategies and the planning process across all of our regions. This year, we have continued to build deeper and bigger client relationships with some of the largest companies in the world, and I think these are -- our largest company is a household named, For Everyone, in the technology space. And I think if we can really cement ourselves as a provider of choice for those global companies, which are actively migrating their workforce strategies that will be a good thing for our business and our investors overall. So, I need a proven leader who can help me in aligning our growth strategies, our investment planning, and our core processes to improve delivery to our clients and improve our consultant experience everywhere we operate. So that's the primary reason for it. Tim has been essentially operating in this role in North America, which is 80% of our business now. So, this is a natural extension for him. He is a very talented guy and we don't want to lose him in the business too.

And then, Andrew, on your second question on Accretive, overall it's exceeded expectations. When we went in, we modeled that we would lose approximately 10% of their revenue through transition. We actually ended up only losing about half of that. So overall from a revenue perspective, it's been very positive. On the downside, we lost a couple of people that were good performers that we would prefer to stay with us, but they decided it was time to take -- look at things outside of the company, but we worked hard to integrate their team within our offices, and it's been an exciting transition and it's helped us a lot, especially in the GRC area where they're very strong. And then of course Countsy, I highlighted as well.

Let me just add something too, Andrew. Post acquisition, our entire goal was to stabilize revenue and to stabilize their good people in our business. I think the opportunity ahead for us in the next 12 to 18 months is to really optimize some of the offerings and bring them together with some of the offerings we have in our solutions business and accelerate growth, so if you think about the GRC space, for example, which is the governance, risk, and compliance, we probably have more capability in starting to build out automation tools that could leverage and grow that business. And so, that's what I mean by optimizing our capabilities together, and I think that's what’s still ahead for us.

Thank you. And our next question comes from Mark Marcon with Baird. Your line is now open.

Just to start, can you talk a little bit about what you're seeing in the Tri-State region? And also, can you describe a little bit with greater depth what you meant in terms of Southern California in terms of what you're seeing there?

I'm going to pass Mark the question to Tim since he's been leading our North America business.

In Tri-State, what we're seeing is we worked out to stabilize our operations, and what we're starting to see is some turn there, a little resurgence in our ability to kind of go-to-market the way that we'd like to. In Southern California, we continue to struggle a little bitwith the transition of that marketplace there from being one that's entertainment dominated and then have lost some large clients to other lower cost markets, so what we've done is try and transition our go-to-market approach to one that can be -- go after more middle market and emerging market practices there. So, we're at the middle of that transition right now.

And Tim, how long do you think before we get back to growth, I mean like meaningful growth in the Tri-State?

Never soon enough, but I feel pretty good about the team that we put in place and who have been together for the last 18 months or so and have worked real hard to transition, sort of move the aircraft carrier. And so, I feel very good about our prospects over the next year or so.

We focused for a long time on Tri-State, because a lot of our financial services business was coming out of Tri-State. But keep in mind that it doesn't live in Tri-State anymore. So we have significant clients that have moved a lot to Charlotte, and are also moving to the Salt Lake City area. As they look for lower costs markets in which to operate some of their shared service and other compliance functions. So, I look at now more how is our East regions performing because many of our client buyers from Tri-State have moved, say into, Charlotte. So, I look at it now more regionally and follow what we're doing in terms of rebuilding our financial services business.

And then can you talk a little bit about some of the initiatives that you've had in place in North America that Tim was already in-charge in North America. So the expansion and the responsibility there is really global. So can you talk a little bit about what would be some of the commonalities or initiatives that you would bring on a global basis?

Mark, one of the biggest things that we will be doing and as we've already started to explore really relate to sales discipline and pipeline management, getting working off of common process and making sure that we can fit that together as part of a global coalition. We transitioned really from being, I think, very tribal in nature and operating very geographically and now we want to be more client-centric to be able to meet our clients where they work. So in order to do that, we need to have more commonalities behind process and approach.

Yes, I'd also say I think one of the things that Tim has led is strong sales force adoption and sales process adoption. And that is not so that we can beat on our sales teams or our client service team. It's really to get them to use the technology that we've provided to make them more efficient and hopefully better engagement in their job. I mean it does also help with sales management. But we need to be using that as actively everywhere we operate and that also gives us visibility across the globe to serve some of our largest clients. We've had great growth in our pharma business. And I'm very bullish about our opportunities in big pharma in China, for example, and it's absolutely critical in delivering there that that we're able to share our client development and client insights with one another.

And then can you give us a little bit more color with regards to what you were seeing on the ground in terms of the post holiday slowdown, both as it relates to what you saw in North America. And then in addition to that, if you could just -- it sounds like Germany was strong at least with the task, and so when we go through and look at. Was it just the UK that really slowed down because of a Brexit? Or was it more dispersed across Europe?

Let me talk about Europe for a minute and then I'll past it either to Tim or Herb, and they can share more color in North America. In the UK, everyone will tell you and I'm sure you've had other clients, Mark, that are talking about the chaos and are getting whipsawed, so it just naturally seizes the marketplace for a while and clients really did get slower in decision making. I would say right now, we're starting to feel some momentum. We're starting to bid on some big projects that we hope to hear soon. So it does sound like clients are starting to pick-up again. In the Netherlands, I'm disappointed in our performance in the Netherlands part of that as a result of some legislative change that has happened with respect to agile business models that we're working through. But that is a function too of migrating our business to higher value work, less commodity oriented work, which I think is important for us in the longer term but has created some short-term challenges. And our leader in Europe right now is very active sitting in the Netherlands market with the team to really drive better performance out of that group. And we started to see some uptick in Sweden, for example, that in some very interesting way just closed some very interesting RPA business there for a large regional client that we think will grow. So, it is some of the natural ebb and flow of our business. But we are doing all we can to control the things we can control and that is our effort and our drive and our commitment. And you can be assured that the three of us at this table are focused on it every day.

And Mark, you asked from a macro perspective. We saw a lot of uncertainty coming out of the holidays, I mean there're lot of things going on, government shutdown, potential trade war and things like that. And what it did is it basically forced our clients to reprioritize. So we saw a lot of delay in strategic decision making, some shrinking of scopes of projects at least in the initial phases. And then to think about as opposed to going big bang thinking about sequencing things appropriately based on strategic priorities. I would say that in the last few weeks, we've seen some fog but there's still some uncertainty out there.

Thank you [Operator Instructions]. And I'm showing no further questions in the queue at this time. I’d like to turn the call back to Kate Duchene, CEO for any closing remarks.

Thank you, Operator. And again, thank you for attending this call and your interest in RGP. We'll look forward to talking with you again at the end of our Q4 and report on full year for fiscal '19. Thanks again, everyone.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude your program, and you may all disconnect. Everyone, have a great day.