Q3 2019 Earnings Call
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Good question answer session to ask a question and doing especially if you want me to press star on your telephone. Please be advised that todays conference is being recorded if you require further assistance. Please press star zero, Oh, and I'll like to hand, the conference over to your speaker today Kurt.
Meyer.
Hello. Thank you. Please go ahead Sir.
Thank you sit areas and good afternoon to all of those on the call. Let US note at the outset that certain statements in this conference call maybe considered forward looking statements under the Safe Harbor provisions of the private Securities Litigation Reform Act.
These statements include statements relating to management's views with respect to future events and financial performance that are based on management's current expectations and beliefs and are subject to risks uncertainties and other factors, which could cause actual results to differ materially from historical experience for from future result.
Old expressed <unk> implied by foot by such forward looking statements for additional information on these factors. Please refer to PR gx, well Incs filings with the Securities Exchange Commission, including but not limited to its reports on forms 10-K and 10-Q.
PR Gtx undertakes no duty to update or revise any feud forward looking statements, whether as a result of new information future events or otherwise.
This presentation also contains references to certain non-GAAP financial measures such as EBIT EBITDA and adjusted EBITDA metrics that we use internally to measure our operating performance.
A reconciliation between these non-GAAP measures and that income or loss. The most directly comparable GAAP measure is available under the Investor Relations portion of our web site at PR Gx dotcom.
Now I'll turn the call over to Ron.
Thanks Kurt.
And welcome everyone. So we've been very busy this quarter as we move to reduce our overhead cost structure further improve operating margins and move towards adjacent services profitability to achieve meaningful improvement in EBITDA and free cash flow in future quarters as discussed in our Q2.
Earnings call.
As promised we made substantial reductions in our overhead and operating expenses, taking over $10 million of cost out of the business on an annual run rate basis, which will become more apparent during the fourth quarter and throughout next year.
We also reduced our losses and adjacent services to near breakeven during Q3 and expect to be profitable on a smaller revenue base starting in Q4.
We also made real progress towards completing our data conversion for our new pits any data infrastructure, formerly referred to as Dx three and developing our next generation audit platform, which we call panoptix.
We believe these platforms will have positive implications for continued cost reduction improved client experience and accelerated Arctic capability starting in 2020.
Now with respect to our financial performance for the quarter, while we met analysts expectations for revenue our results were below our internal expectations.
Lower revenue and an elevated level of bad debt expense, which we do not expect to recur resulted in adjusted EBITDA dropping below our expectations.
As noted previously we are taking necessary actions to get SGN and SGN, a inline with our revenues, but it will take a few quarters to see the full effect.
Revenues for our Europe , and Asia Pacific Recovery audit business segment declined year over year, primarily due to headwinds of foreign foreign currency exchange relative to the dollar stabilization and several UK retail clients. Following strong first year performance on new audit scope.
And changes in merchandising and our internal accounting processes as several UK clients.
Global commercial recovery audit and contract compliance businesses showed continued strong revenue growth for the quarter led by excellent results in the North America commercial audit business.
This is important for us as we see our commercial recovery audit business as a meaningful growth engine for the future.
Our Americas retail recovery audit business was down slightly compared to the same quarter in 2018.
Merely due to reduce claims production in Canada and continued challenges getting valid claims converted on a timely basis at two large you asked retailers. We believe we have sold for one of these client situations with the recent scope expansion.
I would note that we also had very strong contribution from several North America retailers.
As we noted on the Q2 calls we decided to rationalize adjacent services to reduce our EBITDA losses in Q3 entered and turn to positive EBITDA in Q4 and beyond.
During Q3, we made the decision to further reduce the scope of our pursuits in this segment, which impacted Q3 revenue in Q4 revenue projections.
The good news is that we came very close to EBITDA breakeven for Q3 significantly ahead of our committed timeline.
While our overall financial <expletive> performance did not meet our overall expectations. We're pleased with our progress and positioning the business for strong EBITDA improvement in 2020 and beyond through reduced overhead and operating expenses as well as continued success in the marketplace as the end.
Three leader in their global recovery audit business.
With these opening comments complete I will turn it over to Kirk to provide more detailed financial information on the quarter.
Thank you Ron in addition to providing a review of the quarter I'll be discussing our increased focus on profitability. The topic that I introduced on that last quarterly call. Some of the actions. We are undertaking to achieve increased profitability and a discussion of our guidance for the fourth quarter of 2019, and our preliminary view of 2020.
Moving onto the quarterly results.
Consolidated revenue from continuing operations for the third quarter of 2019 was 42.3 million a decrease of 2.4% to the third quarter of 2018 on an as reported basis and a decrease of a half percent on a constant dollar basis adjusted for changes.
Foreign currency exchange rates, there is general strengthen the dollar across almost all of our currencies this quarter, especially with increased Brexit anxiety during the quarter that created about a 500000 dollar currency exchange rate headwind during the quarter.
As for some color on quarterly revenue performance in the service lines in regions recovery audit Americas increased 4.1% year over year on an as reported basis and up 4.6% on a constant dollar basis.
The commercial business within this segment was relatively strong with a few large client engagements beginning to generate revenue during the quarter.
While the retail part of the business decreased modestly primarily driven by some weakness in Canada.
As in the past there've been some isolated cases of delays in revenue realization due to changes within the internal financial processes of a handful of our clients that have lengthened out the time between claim generation and revenue realization.
Recovery Audit Europe Asia Pacific declined, 11.4% on an as reported basis and 6.2% on a constant dollar basis.
Retail recovery audit within this segment was relatively weak in the UK and Europe , largely due to a difficult year over year comp with strong performance in 2018.
While the commercial business in Asia Pacific was also experiencing some challenges.
Of particular strong move into us dollars during the quarter accounted for the 520 basis point difference between reported and constant dollar results.
As for adjacent services revenue was down $800000 year over year results from the third quarter of 18 included two particularly large advisory projects that were nonrecurring in nature, which largely accounts for the reduction year over year.
As recently discussed we're rationalizing this part of the business and expect to general reduction in revenue that will be outpaced by expense savings such that we manage this business profitably on a smaller scale until we can find the right mix of capabilities that enables us to scale. This line of business profitably.
Moving on to gross margin.
Gross profit in gross margin from continuing operations for the quarter was solid with gross margin continuing a multiyear trend of expansion for flat increased performance gross profit for the third quarter was 16.8 million and gross margin for the third quarter was 39.6% essential.
Changed compared to the third quarter of 2018.
With the execution of recent cost reduction initiatives, we would anticipate further improvement in our gross margin performance as well as additional expansion opportunities as we leverage our future platforms to improve productivity.
Moving on to adjusted EBITDA.
It was for the third quarter of 2019 $5.6 million compared to 6.4 million in the third quarter of 2018, and the adjusted EBITDA margin was 13.2% of revenue.
The reduction in adjusted EBITDA year over year was primarily attributable to three things one a 1 million dollar reduction in revenue to elevated bad debt expense levels and three generally higher people related costs is hiring ramped up during 2018 through mid.
2019.
Provide a little more detail on these three areas on the less of those three points. We believe we're hitting an inflection point on elevated staffing levels as we've made targeted cost reductions to rightsize certain areas of our business. So I don't expect to call. This out in the future other than in a positive way.
With respect to the second point on bad debt expense. This is mostly related to only a few clients and for a variety of reasons.
About $400000 was from confusion within our clients on who found the claims prgf ex identified which ultimately gets accounted for as an adjustment against revenue as opposed to bad debt expense.
This is an honest mistake that arises from time to time I would note that this would account for part of the difference between our reported revenue results and any initial expectations.
About 100000 was from client bankruptcies, which would be a typical reason for bad debt the inability of a client to pay.
And about $500000 was due to disagreements between PR gx and clients on whether a fee is owed to PR gx.
These are yet to be sorted out and some we would be expected to collect than some we would now.
Some of these bad debt impacts during the quarter are also related to elevated bad debt expense from the first and second quarter of the year.
We had expected some of these to be resolved during the second or third quarter to be a net benefit to adjusted EBITDA, but because some of these have yet to be resolved. The continued to be a drag on an adjusted EBITDA, but are now completely reserved against.
While I can't ever really say for certain that a bad debt issue is completely resolved. It would appear that this is largely behind us as these issues related predominantly to invoices from 2018, and we aren't seeing a similar elevation from invoices in 2019.
One last point on adjusted EBITDA as for adjacent services, we almost broke even on an adjusted EBITDA basis for the quarter. We took action during the quarter to reduce expenses and recognize revenue on some advisory work from a sourcing project, which helped skinny up the adjusted EBITDA loss during the quarter.
We are committed to getting in keeping this part of the business at breakeven or better until we can find the right set of services that we can scale up profitably.
As for net loss.
Net loss from continuing operations for the third quarter of 2019 was 1.5 million and was largely driven by the same factors impacting revenue and adjusted EBITDA performance as all other expenses in income below adjusted EBITDA were consistent with levels from prior quarters.
Moving onto the balance sheet in cash flow statement, we ended the quarter with $11.1 million in cash and cash equivalents 36 million in debt and 38.1 million of net accounts receivable.
Turning to capital expenditures, there were 4 million for the third quarter of 2019 as for the full year of 2019, we would expect cash capex to be around 13 to 14 million.
To provide a rough breakout the capex spend.
Ill note that there are four general buckets first.
Audit development spend which helps with the productivity of our auditor activity is expected to be about 5 million, which is consistent with prior years levels.
Second, replacing some very old equipment, and use which is making up for underspent in prior years is expected to be more than $1 million.
Third investment next generation data platform Auditor platform in order to tools should be about 5 million and fourth development of some tools in adjacent services will be about 2 million.
Lastly, I'll note that we exited 2018 with 1.9 million of Capex and accounts payable such that adjusting for this carryover, we would anticipate our capex spending patterns to be relatively flat year over year, because the cash capex for 2019 includes the carryover.
In accounts payable from 2018.
I'd like to provide an update on our cost reduction initiatives in short we've made great progress as the team came together to figure out how best to execute on this initiative.
As we had stated on the last earnings call, we expect to reduce expenses by about $10 million on a net annualized basis.
As of now we have met this goal and look forward to the impact becoming more apparent in our future results.
Now I'd like to turn the guidance for the rest of the year.
As we have only one quarter left we're providing guidance for the fourth quarter.
We are setting guidance for the fourth quarter of arrange for revenue of 46 to 49 million and arrange for adjusted EBITDA of 11.5 to 13.3 million.
I think it is worth noting that the performance within the fourth quarter guidance range of 11.5 to 13.3 million for adjusted EBITDA would be the best quarterly result for the company in over five years.
Turning to 2020, we are providing a guidance range for adjusted EBITDA of 28 to 30 million.
Our confidence in achieving this level of adjusted EBITDA stems from the net 10 million annualized savings we have been working on over the last two quarters.
This guidance range would imply an adjusted EBITDA margin improvement of about 400 basis points over 2019, and a level of around 17% for 2020, which would be the highest level in over a decade at PR gx.
And we won't be stopping there as we enhanced our systems tools and processes. We expect further efficiencies to be gained and additional potential expansion of our adjusted EBITDA margins overtime.
While we're not planning on providing revenue guidance at this time I will note. The adjusted EBITDA guidance range is based on a relatively flat assumption for 2020 revenue.
No matter the case, we will be working as hard as possible to grow our business profitably to enhance devaluation of the business.
And with that I'll turn it back over to Ron.
Thanks, Kurt So as you can tell from Curt's comments, we're making good progress against our commitment to reduce overhead expenses improved operating margins and eliminate unprofitable service offerings in the near term.
At the same time, we're delivering on our very important technology initiatives, which will enable the longer term strategy of highly automated and integrated recovery and compliance audit services.
That said in spite of a very detailed process of re estimating revenues at the into Q2.
Our most experienced recovery audit professionals, we fell short of our internal revenue expectations for Q3.
Now as we have discussed previously the nature of the contingency based revenue model such as in the recovery audit business makes forecasting revenues extremely complex and challenging.
To address this challenge longer term, we are pursuing a strategy of claim acceleration and integration.
Moving the audit process closer and closer to the actual transaction and ultimately to claims prevention identifying the discrepancy before invoice payment or promotional billing.
We have made considerable progress and acceleration over the last few years modifying our legacy audit tools processes and infrastructure to reduce the time between transaction and audit binding. However, even with these improvements to large majority of our revenue is still contingency based and subject.
Two potential delays in variability in realized value of claims ultimately we want to move to a subscription or at least a hybrid model that moves from being paid solely on the discrepancies we find to a service model, where we are paid to prevent errors.
Get to this model requires a sophisticated in high performance data ingestion engine and technology powered audit platform that can identify discrepancies much earlier.
This data ingestion engine is our opinion the platform, which is live today with over 90% of our client data converted.
The technology Pat powered audit platform is called Pinakothek.
And we'll be ready for initial client conversion starting in early 2020.
Full conversion of our clients to the Panoptix platform as well as the more advanced automation of the audit processes will take place over the next couple of years, but we are on our way.
We believe that these technologies will revolutionize the recovery audit industry, and pure and position PR Gx well for the next generation of source to pay compliance.
In the meantime, we must continue to operate and execute in our existing environment to meet or exceed our revenue forecasts each quarter.
We have multiple initiatives and activities underway to support our continuous improvement.
First we are continuing to accelerate and automate audits in their legacy platforms to move revenues forward and improve margins.
This has been an active program at PR gx over the past few years, which has yielded excellent results.
Secondly, we must continue to train and develop our audit teams to constantly aligned with their clients on audit scope and any requested changes in the work that we perform communication and documentation are very important.
Finally, our we are investing in sales and marketing to expand our base of clients and increase the volume of claims going through our audit process funnel.
We rely on adding new clients in expanding scope than existing clients to give us a larger base who claims to work with.
We are having a very strong year in sales, thus far adding 54 net new clients year to date and 69 existing clients, where we added new scope.
We have the healthy pipeline of new clients and existing clients expansion opportunities and expect to finished the year in a very strong position.
Well I have prudent financial performance in 2000, 2019 move will fall short of our original expectations for the year, we expect to Didnt deliver profitable year with strong momentum for EBITDA and free cash flow improvement in 2020 and beyond.
As Curt mentioned in his comments, we expect Q4 to deliver the highest EBITDA performance in years.
I want to remind you that we have a very solid business here at PR gx with real opportunity for future value creation and expansion.
The company has made considerable progress over the last several years and we are well positioned to realize meaningful and sustainable performance improvements going forward.
Remember, we are the largest and only truly global recovery audit and compliance from in the world with almost 50 years of experience in this field, we are the industry leader.
We have an amazing list of clients many of which we have served for decades, and we continue to win new clients and gain market share versus our competitors.
Bottom line, our client base is solid and growing.
Our core recovery audit business is highly profitable and we have considerable opportunity continue to continue to improve operating margins to our appears to any data infrastructure and next generation Panoptix audit platform.
As described earlier, we are well down the path of our digital transformation building on our Epiphany Panoptix technology platforms to drive our business into a more strategic and integrated position with our clients.
In the near to medium term, we have taken significant cost out of the business over the last two quarters, which will translate into higher EBITDA and free cash flow flow in 2020 and beyond.
And finally in the face of the slowing economy I would point out that our business performs consistently well during periods of growth as well as periods of recession.
Source to pay compliance is constant and largely impervious to economic trends.
We appreciate your continued confidence in us and now with my comments complete I will turn it back to sit areas for questions.
Thank you as a reminder, second question you would need to press star one your telephone.
Question, Chris the pound key please standby, we compile the culinary roster.
And your first question comes from Alex Paris from Barrington Research.
Good afternoon, everyone. This is Chris how soon for Alex Paris.
Had several questions here, but let me start specifically with some of the comments that you made on the quarter.
Within the Americas Division of retail recovery, you mentioned the two large retailers one you reached resolution with.
The other is still pending can you provide some additional color here is when you expect the resolution from this other retailer.
Imminent and what's the financial impact if there isn't a resolution in the near term.
So is this is not to imply that we are.
Completely frozen in terms of revenue the revenue is slowed down or delayed because of internal approval processes with this client they've gone through a recent.
Change in their accounts payable processing and.
And we have a different and a new approval process that we have to go through that is a bogging is down and slowing down approval of a significant number of claims. So it's not that it's not going to happen. It's a matter of just continued delays in this process now we're having regular does.
Cautions and work and we're trying to elevate the the issue. So we can get it resolved and we have every expectation that we will break through and get this settled but has had an impact on Q2 and in Q3.
Now the other situation that you use that I mentioned in the call has has had a similar kind of the.
Okay.
No problem, where.
The delays in approvals and getting claims approved.
Has been an issue and weve expanded the scope of that relationship and we think that starting.
Really in Q4 and definitely in 2020, we'll see a much smoother transition and approval process for our claims.
That makes sense so.
Revenues are still coming in it's just a matter of timing and just some deferral towards the resolution.
Right that's right, but these are claims we thought would be coming through on a more timely basis and it impacts our our revenues.
Okay.
And then.
About profitability, the 20 to 30 million you're expecting in 2020.
As far as.
The rationalization of the business lines within adjacent services contract compliance can you talk about the profit improvement.
That you're expecting in 2020.
From these two parts of the business and.
In regard to contract compliance what has the reception been so far.
In regard to your time and materials element that you introduced into the fee structure.
Sure, Yes as for the composition of the 10 million of net.
Annualized savings.
A few million would be from adjacent services. So keep in mind, we've committed to take that to an EBITDA breakeven basis worst case scenario. So that's going to be three roughly 4 million a year that we've taken out cost wise.
With respect to contract compliance I don't know that we necessarily really pulled much out of that that's that's a good business for us we look to be growing it.
The balance of its really going to be coming from some corporate positions and some in the our traditional recovery audit part of the business.
Now let me.
Respond to your question about the time and materials, the receptivity of our contract compliance clients with time and materials.
We would break that up into three buckets first of all for all new contract compliance arrangements or contract compliance clients, we begin with putting on the table either a.
At a time and materials option or a hybrid time and materials and contingency and that's that seems to be going five we're continuing to win new business and clients.
From a.
Coming out of the box here seem to be receptive to it.
For our existing clients, we come up for renewals and where we're putting.
The idea of the.
Over time and materials or hybrid in front of them and making that all those are options in the agreements and again that seems to be going well.
Now the clients that.
Where we're not coming into a renewal situation. We've had a number of them, where we've gone out and had the conversation of where we want to go.
And I'd say there were early days, but we've had.
People understand it and there is sensitive to it and we've had.
Some with one particular client quite a bit of success and moving to that kind of a model.
But.
Our intention is to overtime move all of our client contracts to that kind of a have a model.
Grow from there.
That makes sense and then my last question.
As you continue to extract profitability from the business.
Whether it's now we're in 2020 or beyond 2020.
Can you go through it just your priorities utilization of free cash flow as it increases over time.
And what sort of.
Investments are you considering into whether it be product extensions to enhance the client experience.
Or other investments internally.
Sure I'll take a stab at part of it I think Ron is going to want to follow along with more of the product specific.
Element of your question, but.
And I hope all answer this the right way.
We've been ramping up with the cost take out during the back half of the year here, we would expect it to be fully ramped such that we would be meeting our guidance range of 20 to 30 million.
As I also noted we'll be looking to further refine our systems our tools our processes.
Some of the Capex that we've been spending over the last few years is to really improve that going forward and.
We will continue to get those efficiencies and invest in those tools wherever we think we'll get the right return on investment.
Having said that that would result in increasing EBITDA flat to decreasing capex overtime.
And is there other areas to probably where we'll we'll be able to realize lower expenses than than we've had.
Such that our free cash flow is weve dimension to it should be in the neighborhood of two times the level that it's been more.
More recently, so we expect to have a lot of expansion there.
With.
With respect to the product part I'll turn it over to run here.
Sure and we've got.
Several.
Very clear objectives that that we're committed to first as Kurt was just talking about is driving the business into higher EBITDA higher free cash flow from operations and we've talked about that quite a bit secondly is too.
To implement and convert the technologies that we've been developing over the last couple of years and that specifically is the epiphany platform and the Panoptix audit platforms. So our job we've got almost all the data we'll have all the pip any data loaded.
By the end of this year, which is very significant and audits will start to be produced now we'll have some additional enhancements to that platform, but a lot of the heavy lifting is behind us now, especially around the the conversion and initial conversion of data.
With regards to the audit platforms.
You know those these platforms are supporting all parts of our audit business and and we're going to begin the rollout of these.
Of these platforms to our clients in the early part of 2020, specifically January so we will invest next year and getting the audit platforms rolled out to clients and getting all the audits up and running and we have some more development work to expand certain functionality.
The that or be needed as well as to continue to develop automation that the audit professionals can use to accelerate these audits. So we are going to continue to invest primarily in our audit business next year, we and.
And drive from there and we'll revisit what our priorities are in 2021 and beyond.
Thank you for all the color I appreciate it that's all have for now.
You're welcome Chris Thank you.
Your next question comes from Zach Cummins with B. Riley FBR.
Great. Thanks, Good afternoon, So I guess just shifting over to the retail recovery audit business in the United Kingdom can you talk a little bit more around some of the impacts that you experience there I know you're facing a tough year over year comp, but it sounds like there were few other additional impacts that really impact.
Good.
Growth in the quarter.
Well I know the.
The one area. This was the largest single factor was of course, the currency fluctuations against the dollar so that.
That explains that part and then we the second would be stabilization. We brought on as you may remember we were successful in winning.
Expanded scope and new new clients at the end of 2017 in the UK, which was great. We onboarded those clients in early 2018 and.
We had a lot of startup and we did very well coming out of a blocks on those clients and now those have stabilized and we're starting to see more of a normal.
Trend in terms of revenue generation from some of those new clients secondly.
We have some retail clients in the UK that have changed some of their merchandising practices that impacted the number of claims that that we generate the number of discrepancies they've effectively simplified their merchandising process and this is something that we see retailers go through from time to time and.
They change their merchandising procedures.
Over time with on a pretty consistent basis, and we had a couple of large clients where that has been the case and then we have others that.
They've improved some of their internal processes and claims have come down so those sort of.
The major reasons, we havent lost any clients or meda.
Any big changes that that we see as concerning our long term basis.
Understood and then in your press release, you mentioned that just going forward, you're going to have a more conservative claims conversion for the core recovery audit business.
In comparison to what was assumed going into 2019. So can you share some of your thought process behind what's really driving your more conservative assumptions and.
How you're thinking about building upon that going forward.
Yes. This is Curt I'll try to take a stab at answering that first.
I think it's.
Digging in perhaps a little bit deeper client by client to understand the different dynamics.
This is a very complex business the contingency based model.
Very atypical.
I don't see many companies with that kind of a model.
You have complexities with the timing of when the revenue gets realized the volume of it.
And there are so many different facets to it that ultimately determine what the final number is that when you're at the beginning of a year or beginning of a period you might have a decent sense of what you think you'll be able to realize but there are so many moving parts that.
It's not always easy to to get tremendously good bead for where you're going to come out on a quarter or for the year. So I think that theres, probably a little bit more of an appreciation for that.
Yes, I mean coming in from outside this is the first time that I'd come across this kind of a model that.
It's something where perhaps of.
I've brought a more of a sensitivity that we'd need to kind of scale back and account for some of the risk in the timing and the amounts and that you will see that in our guidance going forward.
Does that make sense.
That's helpful. Thanks, and just one final question it sounds like you're hoping to move away from just a purely contingency based model going forward to maybe more of a hybrid subscription and contingency based model.
Have you had any initial conversations with customers about this type of model or is this more so conversation to be revisited. Once you have all of your updated data platforms and new core recovery audit platform launched and ready to go next year.
No we are.
We speak to our clients about this kind of a model and gauge their reaction to it and I think every time, we have a discussion with the client about the idea of preventative type of model versus a recovery model. There's there's very good receptivity to it and then the question of how you bill for that.
Because obviously your if you are preventing versus recovering.
It's hard to be contingent on on prevention.
And so that's something we're going to have to work through but there are some.
Some models that we see in other industries that we think makes sense that we'll be working towards but the whole point that was making earlier in my comments about moving to that kind of a capability you have to be able to process the data.
In a very rapid almost real time fashion and be able to identify claims and present those claims or those discrepancies either before a payment occurs over for a promotional building occurs so you've got to have.
A very high performance data infrastructure, which we feel like now that we've brought in online and very excited about what is going to mean to us and you've got to have the audit platforms that can support.
Consistent improved automated audit processes and that's what the pen optic platform does for us. So we've been working on this for the last few years to get it to this point and we think it's now we're ready to start to take it to market and it won't it won't all come online in January .
We are the early part of next year it will take place over time, but it's a much healthier and a much more.
Consistent predictable model than what we've had in the past.
Understood. Thanks Thats helpful. And then just one final question just building on Christians earlier question around this.
With free cash flow expected to increase over the coming quarters. How would you rank. Your uses of cash in terms of looking at potential acquisitions investing in some of your organic processes or potentially repurchasing some of your stock down here at these levels.
Well I know as we've said the past.
We are first going to invest in ourselves and make sure that we're covering our transition into our digital platform. So we will continue to do that.
As we've talked in the past.
We will be opened to.
Accretive acquisitions will be up opportunistic about that that's not something that we see in the in the near term, but we surely keep our eyes open and then as we have in the recent past we buy stock when.
We think were.
It's advantageous for us to do so so we'll look at that and then we'll look at paying down debt. So there are plenty of things we can do with the capital, but first and foremost is we've got to complete this digital transformation and pivot into a new delivery model that is really going to make the differences.
For PR Gx long term.
Understood well, thanks for taking my question and.
Good luck in the upcoming quarter.
Thank you that thanks Zack.
As a reminder, if you want to ask a question. Please press star one on your telephone.
And while we compile the Q on a roster led to tournament tow Ron Stewart CEO for any final remarks.
Okay. So dareus doesn't look like we've gotten the other questions, but I appreciate your assistance today and all of you on the call. Thank you very much for joining and.
Please let us know if you have further questions or want to discuss anything we appreciate your participation and look forward to speaking with you in.
2020, when we talk about our Q4 performance. Thanks, so much.
Ladies and gentlemen.
Concludes todays conference call. Thank you for participating you may now disconnect.
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