Q2 2020 Earnings Call
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Lays in Yemen, thanks for sending back and I'd like to welcome you all to today's called the second fiscal quarter to that I <unk> <unk> Orange conference call and.
<unk> participant fines are listen only mode and after the speakers presentation there'll be a question and answer session, how analogy to tar call over to your Speaker day Mister <unk> Smith. Please go ahead Sir.
Thank you right before we begin I would like to point out of that you in this cool we will discuss certain financial information that is not prepared in accordance with gap. The company's management uses this financial information in its internal analysis in order to exclude the effect of acquisitions in other significant items that may have a disproportionately fact in a particular period.
Accordingly management believes that isolating the effects of such events enables management and investors to consistently analyze the critical components and results of operations of the company's business.
I have a meaningful comparison to pry periods for more information regarding our use of non got financial measures, including reconciliations of these measures. We refer you to today's endings release, which will be also finished with the F.T.C.L. form six k.
Also this call includes information that constitutes forward looking statements.
We believe they expectations reflected in such forward looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material such statements involve risks and uncertainties that may cause future results to differ from those anticipated. These risks include but are not limited to the effects of.
General economic conditions, the duration of severity of the Coby 19 pandemic I'm the same price on the global economy and such other if that's disgusting I Rantings released today and at greater length in the company's filings with the Securities and Exchange Commission, including an hour annual report on form 20. After the fiscal year ended September 32019 filed on December 16, too.
I was in 19, and our form six k. finish for the first quarter of fiscal 20 on February 18th 2020, I'm docks may elect to update these forward looking statements at some point in the future. However, the company's specifically disclaims any obligation to do so.
Spending on the call with me today are <unk> chef, President and Chief Executive Officer, If I'm Ducks management, Lemonade and Tomorrow Rapoport again joint Chief financial an operating officer without any type of the Shuki.
Thank you mess.
What else does on everyone plentiful joining us on the cold today and I Sincerely Hall, if you and your loved ones I'll save on well. It is difficult time intervals I talk about second fiscal quarter performance, especially considering the nobody has an economic crisis.
Buy a new going 19.
We didn't even though they're called high revenue just slightly involved in <unk>.
Save a possibility we so it's pretty cash flow generation and we ask you to resist <unk> and enough to support the ongoing business needs and long term investment.
I was I was sponsored the public 19 funding we <unk>.
As we adopted a global operations, one show business continuity and the hassle when being because no one who holes are possible now and those types of seventies.
From all vantage point himself. He says yeah, how's up some onto the files to know industry <unk> address the biggest impact in the morning crisis, we acted decisively.
But I'm sure that only measures an employee probably legislation, it's hard to religion, and politics, Europe and the L.E. <unk>.
Unfold you so many mobinil Congress in Barcelona.
<unk> almost <unk> 25000 employees really quick to security work from home and most of what the writing the mission critical systems like watching people customer permission Bonnie seamlessly it costs 85 conference.
I don't know if essentially employees required to be on Friday, So it's cost almost inevitable sites we <unk>.
The safety.
So suppose it position as a normal development, but once you're delivering in Minnesota separation <unk> well, let's D.V.D. intact does not reveal we successfully complete and <unk> 20 goal I think the mosque and I Hope 56, an airplane using human physiology.
Plus part to sit in Venice collaboration deployment orders to meet the quite important schools.
The same time, we supposed to be discontinuity <unk> billing and collection.
So suppose individual innovation.
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Just take a moment warmly. Thank all employees folder <unk> Oh, Miss Miss inability to quickly adopted a new circumstances I would also like to say just I'm <unk> <unk> of the dependability, we've <unk> I've costume now to get voice they have to ensure essential services for every one <unk>.
I was talking about coping 19, a spectral also glad for them to call, but <unk> <unk> <unk> across I think what Alex D.V.D.'s on the original places.
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<unk> deployments of Angeles based on intelligence systems, <unk> say and continues progress you just successful deployment of the new digital customer service go in Columbus capabilities. As you are so low in our customers <unk> two has monetizing building can simplify operation at once.
Additionally, we have the likes to report it people <unk>, it's a major new logo, which are selected <unk> lounge, new services. The cost is customer base, including five you wireless wireless internet providers.
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Generation offering and provides us we didn't <unk> <unk> venue for position I'm looking brain isn't he'll make even talk with bono.
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I'm, just media's cloud bit spots when we provide the content organization.
I've seen compliance and delivery service it was supposed to be <unk>, operator, Meanwhile, and those media markets, one plus <unk>.
No way to one boat <unk> nails, such as innovative new input, we'd be making <unk> flashy magenta in Los Emily blame customers.
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The economic environment.
Although only continuously many of them both opportunities in North America, but we <unk> tries to weekend Defusco second hop given the prevailing level of economic outs up okay.
Moving to Europe.
Activity level, what has the adjusting for for unconsciously, Henry and normal business fluctuation I can't recall that we sent budget like wonderful in Germany on Spain Hyping up is planned it will beat using the most capabilities well also has been going to bring a communication media customer individual business.
In 19 environment.
Since we have expended o. Minnesota's as d. with E.D.. Okay. So we've limited sick humor in more detail engagement is going to <unk> electrical enabling east coast emails to complete sense like in from the safety of the <unk>. Additionally, it's people to stay home during the coming 19 looked down and use it.
Over the T.V. services mould, we have seen that'd be increasing village and we just all in veal, Jim movies, or D.V.D. and supported by the Big City.
Find out of high like to <unk> to provide seamless access on multiple devices using a unified digital identity solution, which would be the leave it alone the clouds <unk> opinions group of operators.
The only for the rest of the walls, we didn't even like impressive <unk> movement, the normal business fluctuations.
Used to look D.V.D.'s included success was go like Marketwatch on the cloud that they can do Mexico. It's sweater. Several other multiple believers for instance, we deployed out entire customers spend suite on NWS clouds, <unk> spousal produced approximation wheel supporting for leaving content as consumer.
And consumer company Southeast Asia, Despite the consumer limitation, both by the Kobe 19 pandemic, we've successfully collaborate use the custom and other sports team, which involve habits of people said Oh God. Please too too bizarre thing to go like this was a cheat on time in budget was nearly all out.
Louise walking securing effectively from the mountainous on their home.
The phone I Yang India, we let them all day event or ask ought to be great Love section of they'll subscriber base in local time. Despite all tend to just as a global pandemic why why <unk> <unk> <unk> <unk>.
Tells us new wings <unk> being selected are leaving cloud nine you've got to look one and they get a one solution to transforming enterprise operation <unk> minutes services agreement.
Generally we continue to expand and helps me to address on the war <unk>. We just blew me media content and duration of course multiple copies of my puzzle puzzle.
It also makes a three or agreement with entail you your wife stays on Oprah Rachel for the provision of constant services.
<unk> movies, but there's more than 1 million households have started.
Oh, and pleases outperformers, the coastal region in the second quarter and essential supposedly provide to the world's largest communication to meet up companies Oh way avail. The continuum coping 19 pandemic and you start with global economic D.V.D. <unk> scale and there is very good clarity as to when the economy can.
<unk> and most of you know when he does.
<unk> outlook for the fiscal year real providing are called expectations based on formation, we have to date, but remind you. This we are in time of great uncertainty regarding the spread of civility over the <unk>.
Needs adverse effect on the global economy remains.
<unk> mine, let me, let me think let me take a moment to talk about our current market position or <unk> in financial expectation for the full discover you felt we believe angeles the dogs solution ready to support our costs a lot of investment in <unk> five G. network deployments in the motivation.
Immigration to the clouds in launching media ended thing offering it. The same time replace will tell you know like center like session R. and B. investment in order to bring the innovation our customer we need to succeed in the post Kobe nine Kobe 19 environments second when there is being no project cancellation.
Due to the Kobe 19 pandemic there was some slippage introduced by playing doing mouse yourself customer prioritize their own business continuity plans I miscast totally poured that some of these these are what is closing Q3, what I did a lot for but I think so the distance bosses. Nevertheless, the slower than expected base of Python conversion.
Needs to busting, our revenue growth outlook for the system for fiscal year 2020. So we've moved quickly to align our cost structure to the reality of the card business environment, and we expect it to maintain or breaking miles you need to fiscus second half, it's similar to a level to the to the last couple of portals falls.
We remain committed to a <unk> a location of the topic, though well in fact to meet all normalized free cash flow targets for the full fiscal year innovative enough liquidity support ongoing business needs insults them organic growth investment at least to me because <unk> did you vehicle for long term boss.
Possibly using <unk>.
Hip hop, we expect to generate positive revenue in any gloss. It. They meet 0.4 of the 440 or guidance, even though the cover 19 <unk> negatively <unk> physical second huh.
Visibility for 12 months backlog lend support so outlook and we believe we have the right to me so bought up offerings and they breed tell him to ensure we managed to describe this token than before any to position to generalize future Bulls with that let me tell the codes with the mouse for remarks.
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Second quarter of as many of the billions five oh, what slightly above them. They meet points of our expectation of billion in 35 million and 75, excluding from negative foreign currency impact on approximately 8 million relative to violence right.
On reported basis that many performance included a negative impacts on foreign currency fluctuations of approximately 6 million relative to the first fiscal quarter of 25.
Do you do a strong wind momentum entering the quarter.
And the discipline execution, we have delivered to our customers. We are pleased to have met all.
I live in expectations, while adjusting of global information.
Two copies 19 outbreak.
When you have a year basis, a second quarter. When you go by 2.8% reported and 3.7% these constants currency.
Oh second quarter nine gap operating margin was 17.2% above the meat point of a long time target range of 16, and a half the seventh year and a half and consistent with our guidance.
Below the operating line nine gap net interest in other expense was $2.3 million and kitchen.
Foreign currency fluctuations in the quarter at higher than normal and our hedging program was effective investigating for most of the impact on the bottom line.
For forward looking purposes, we continue to expect Nongaap net interest another expense in the range of a few million dollars quarterly using foreign currency penetration.
The remind you that are falling currency hedging program is designed to protect couple stability and free cash flow generation.
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Please this approach has proven effective oh, the volatiles currency markets up the second quarter.
You just gotta P.P.S.
Or a dollar an eight cents and cute too involved in meets point of our guidance range of a dollar and sweet tends to a dollar and nine cents.
I think dissipated online got the effective tax rate of 18.3% and the second quarter wasn't both behind the <unk> target range of 13% to 17%.
He lives in Gabby P.S. was 94 cents for the second quarter and both our guidance range of 82 290 cents.
Free cash flow, what $67 million and kids too.
What's comprised of cash for corporations, approximately 100 and.
$3 million less 46 million in next capital expenditures in honor.
And includes an annual cash bonus payments in January for the prior fiscal year 2019, consistent with our guidance expectations of blackboard.
Nobody's speak out a couple of $76 million in the second quarter, which is on track with all we journalists the station philosophy experiments on the actual cash flow in the first half of the fiscal year.
Please refer to the reconciliation table provide any another cue to anyone really for an explanation of the difference between normalize end report is free cash flow in the quarter and for past period.
The itself 82 days the clean like full days deal with me and then by six days as compared to the plastic supporter.
Really mind, you the D., a soulmate fluctuates from Florida supporter.
Just a question gap between as bills receivables into felons menu narrowed by 18 million as compared to the first hit the quota 2020, deflecting and decrease in total and beat receivables 30 minutes and an increase in total deferred revenue both short enough time for five minutes.
That is to use all the gap increased by $36 million.
<unk> just to the timing of contract specific line items relating to this transformation project smells and living like for our customers.
Moving forward, you should expect and build the syllables in total deferred revenue to fluctuates from quarter to quarter in line with no one business activities.
Moving on I'll 12 months Battle was asleep point $46 million at the end of the secretaries for for doing relatively flat compared to the file quarterlies constant currently basis.
Well, one back down 60 minutes sequentially.
2.1% compared to yours.
That we believe all 12 months. That's all continues to serve as a good living indicates all about forward looking revenue.
I'm pleased to report just revenue from managed services arrangements.
Generate I typically high level of recurring revenue streams has a reckless quartering cute tools, comprising 68% are still sort of avenue.
That's just like timing you will make the going adoption of our managed transformation model and the casinos expansion of activity within existing managed services customers.
Our cash balance at the end of second quarter was approximately $763 million.
Given to us doesn't magnetism duration of the covers on C.N. economic crisis, we took the precautions to increase our cash that on my drawing down $350 million and cute too.
Including $300 million as the last 500 million revolving credit.
And the father $50 million in shorten back home.
For the.
Third quarter today, we have taken an additional hundred million dollars in <unk>.
Install those shows or bowling's to $450 million.
We remain comfortable with our balance sheet and believe we have Apple net cash iniquity to support the ongoing business needs.
Both investments in catchy stands for shareholders include our quarterly dividend <unk>.
Additionally, we're committed to maintaining our investments made Friday painting.
During the second spectral corner, you, we purchased $120 million of ordinary share <unk>.
More than half, which was executed doing texting show microphone acidity of March.
I was March 31st we have more than $800 million them otherwise capacity for Sherry purchases, we'd know stated expiration date, which will execute that accompanies the question going forward.
Now turns to the outlook, they're taking and why doesn't know one age with respect all revenue guidance for the circuits a quarter of 2020 and the Fools to spend 2020, which we believe is appropriate given the preventing level of macroeconomic and business uncertainty.
The magnitude and you relation of the comic 19 pandemic.
Point of our revenue by 63, and the full seats and your lanes reflect what we consider to be the most likely outcome based on information. The information we have as of today, but we cannot predict all possible scenarios and reminders of our outlook may be impacted materially as our customers continuous value destitute business.
<unk> and future pace of investments.
Well that's that we expect revenue for the 32 quarters 2020 to be within a range of 992 billion point those four.
Embed. This we are cute to me revenue guidance anticipate the sequential negatively impacts on foreign currency fluctuations of approximately $8 million.
As compared to she's got a second quarter.
They got into the food.
20 expected to leave a total revenue growth in the range of roughly half a percentage 0.23, 0.5% point you will be here on cost them courtesy basis.
For those wages are <unk>, one month basis points lower.
Just our previous expectation of two and a half the five and a half a year.
Oh, no reported bases, we not expect slowly revenue growth in the range of negative happened person, two plus 2.5% as compared with the range Oh, plus 2.5 to 5.5 previously.
Didn't you onto the dissipates negative impacts on foreign currency fluctuations of approximately 1%.
As compared to an industrial amount expected previously.
But it just depends a lot of gap operating margin will remain at or above the midpoint. Upon changed I don't talk between 16 and a half the 17 and they have to stand in the fiscal second half and similar to the levels of the last couple of quarters.
Why are we are faced with revenue headwinds, resulting from the copies 19th and then maybe we are focused on protecting our possibility.
I don't think between I'll show them customer commitments operational excellence and now until you will be.
The same time, we I'm investing in our business to ensuring emotional this crisis, even stronger customer relationship high levels of into engagement and it's a few your offerings of his relevance is the needs of the Marcus.
We expect a lot and got to take these tax rates remain within the same talk between angel, 13% to 17% for the schools can give 2020.
We expect a therapy gets a cold diluted not happy appears to be in the range of $1.20 dollar an eight cents.
With respect to two or three we expect on nine got the fact is tax rate to build the highlight of I don't talk to change of tells him to 17%.
I'll just go quarter, another yappy P.S. guy that incorporates unexpected average due to check out the roughly 134 million shares.
Let's go do the impact of incremental future share buyback activity in doing this those people quarterlies the level of activity when depends on market conditions.
For the first gets to you know.
Aspect of the livers alluded nine got D.P.S. schools, all the zero to 4% you'll video.
As compared to apply expectation or 3% to 7%.
Additionally, a four year the P.S. outlook incorporates are expected to be patches activity over there.
We continue to expect normalize free cash for for the year 2020 of approximately $500 million.
We continue to expect reported free cash flow for the fiscal year 2020 to be approximately 400 million, which include those dissipated as capital expenditure after 90 million in relation to development My phone U. campus in Israel and otherwise.
They got any hard copy the location plans you remain committed to the quarterly dividend of an important part of it doesn't return expect supervise or shareholders.
And together without shall we purchase activity <unk> I'm, a joystick and follow much be cash flow if it was 2020.
Then we will continue to assess the deployment of capital carefully in the system second half having regard to the status of Cobiz 19 pandemic down a little terminate.
Fashion markets and preventing industry conditions.
So close on financial comments, we expected to live in modest still tied rules as one of the total shows are retired approximately 4% for the full fiscal year 2020, which includes the 2% meets point of our expected non got 30 per share.
Oh Super size, even the Neil.
That's why the toughest economic times.
We that we can tell exactly the over there and we happy to take your questions.
Yes of course at this time, if there are any questions on the like you could press star and the number one frame questions again star one and we do you already have some questions on the line. So we'll start with our first question from the line of.
<unk> sure far from the city.
I'll take it I should say hi to my good to hear your wife is irrelevant.
Yeah.
I guess I wanted to start by asking how your clients adapting do the this new enlightenment. It seems as though new signings are coming back. So maybe this is the process is working but can you talk about.
<unk>, Okay existing deals can you talk about the your current conversations are.
<unk> transformation is now more important than ever before.
Any other point to consider you know, they're pushing out payment.
<unk>, Yeah telecom, what his media things like that.
Hi, Eh, so I think a and from from sounds perspective, we see two type of activities.
There was activity. This we engage prior to the coping 19 to this on many mentioned it all the beach, some slow down and during the Marsh timeframe and we expect and wants to see recovery you treat we see some signing of some of these deal at the beginning from <unk> three we hope you'll be able to continue with this movement.
From offering perspective.
We see again to type of Fame.
Oh for like a day. The we continued day all the offering it ends up is coming to know find <unk>. If you mention do you get those ones formation et cetera.
But we also commie, we use a a new ideas any innovation to suppose wouldn't believe is a reflection of the Kobe 19, painful and say Oh. This we were trying to find solutions will affect the ability to stole cool. So how we can <unk> elevate data sets care.
And the equivalent of the activities. If obviously closing the call centre, we're moving to call centre to walk from home.
This is another thing that we are comic words, you know innovative solution to support our customer.
Has to move <unk>, thousands and thousands of food customer service representative to work from home.
A how to <unk> work and how to.
You might then into opening times like these.
We are coming flooding division solution to A.M., two so both of our customers.
I for you to I cannot tell you that we've seen a pressure regarding good collection actually be a good they really do some collection walk down I cannot tell you that this will be always the case, but so far.
The the value of the services the importance of.
Of the services the mission critical services <unk>.
That this or mention we've done in exceptional.
A good job.
These quote the that also in that bridge. So so far we did not see expression.
That's 115 might be glad to know the media side, where we're very pleased with the continued a wins momentum all over the world and you've seen some of the examples we share and during the prepared remarks as many you logos a lot of a service providers around the world launching guilty P. services with things that they meant for the content management approach.
Saying that supervised as well as a things like seem less identity management and all morning of new new consumer market. One has been very successful platform, both with T. mobile that's launched over the new partners as well as I think we call.
So we're very pleased with it won't let them over there.
Right. Thank you and then the second question really is about costs flexibility I do think about the current current environment.
Yeah. That's both take question about the ability to cut costs of control costs. <unk> you know given lick you have you know fairly large number of transformation, though.
Deals going on and so on support he talk about you of course credibility.
Oh sure. So what we're saying is that obviously, we we need to plans for multiple scenarios given that Justin.
I have to do is to build a you know costs contingency initiative tries to factoring in different things that can happen. Both in terms of manpower friend down as you know we have quite a robot delivery model w., the global one and as a matter of regular business, we need all the time.
To be able to reallocate resources between activities that are accelerating it doesn't customers versus either that or naturally ramping down. So it's the muscle in the company in a way that is very active and even more so of course in times like that there's going to need to be very cautious own talents acquisition. These days.
Why we on high like many employees and by the way you already own boarding hundreds of employees in different places in the world will very selective in well with decisively cool.
At the same time, we continue to battle.
Activities that we do with all kinds of finishing things that are less harmful. So the employees are the productivity and the commitments, we can do for customers and by doing that so far we managed to do is go jump in protecting the margin plus we have things you know contingency plans, so addressing father pressure one week.
So that's why we came out to the message we believe that in the second half of the year, while we're experiencing some pressure on the top line. We can protect the Mark 11, we've seen in the last couple of borders.
And we can have more questions on the line and just start questionnaires I remind your place to limit yourself to one question plus one for question. Our next question controller Jackson enter from J.P. Morgan.
Thanks.
My question.
Collect changes being strong in court or not runs counter to Jack think what.
You know what we would have expected and you can't just curious about about the collecting activity in the quarter. One also have you have you had any customers maybe that you you hit invoicing milestones on their projects and Dave for either get for olds or.
For leniency in payment terms.
So I I think actually it's a good point because naturally collecting money is never an easy thing.
He wants to cash in their bank account them differently in time like that but at the same time, we've we've been very focused on making sure that a we even voice portals and lifestyles that we've heat and N.B. collect the money that is.
Well deserved after we meet those milestones and and it's an ongoing discussion with customers. So yes naturally down difficulties, let's come with the the situation by the way some of them even.
Logistical difficulties like.
How do people access the bank accounts in countries in which they paid by checks. The you know it's hard to believe that the sometimes exist in the case, but it is so.
So oh the way from these kinds of what is more logistical challenges that we have to overcome to customers dialogue around 10, we move the payments.
So it's an ongoing discussion we have these customers.
I think that a wheel managing that in the end affecting way our customers understand how well we are executing the commission yeah.
And the other way around we expect to be paid on time.
Okay, and then actually that's a nice segue into my fourth which was.
It is there any more paper maybe that you could provide on <unk>. When you were talking about.
Logistical hang ups are getting paid what about the logistical hang ups that that go with some of your transformation or or project oriented.
Milestones are there are there things that are there milestones and dots cannot typically it. During this time period that would preclude you from being able to recognize threatening from a certain project.
It will be my team.
The answer is the signal I'm, saying that we prove you Ain't good.
February March do everything that we are able to deliver all milestones or this is what they said in the screen, but we are we're very proud and how effectively removed toward completely agree with drugs, let really the best in class methodology is a collaboration tools.
We are walking be really wonderful in Germany on continuation, which I think one of the biggest confirmation the walls everything in a really short away from probably.
Three to four countries is the same you know on Spanish seminar, though so I think that yeah, we were able to adopt very very fast food will deploy all these production might have so.
<unk> shall we move the auto for the override though in two weekends to the to the whole system to the crowd everything was supported the remotely from of a wall falls in India and these wherever you like it stays in the Philippines et cetera. So I can tell you is a great confidence that we're doping.
Whereas with this environment and I don't see any reason to do we continue.
Deployed.
Thing between mouse and joined together, we deployed 15 my supposed to productions.
Sorry, Mark Martin I put a sewing so so that data.
Don't see any reasons, we will continue to leave them I think I think just.
That it requires obviously a lot of a joint effort with our customers that are <unk> eh open dialogue about how to make it happen, which obviously the case in terms of the.
Interest of both parties.
Yeah, and just an incredible commitment of our workforce all employees have been wonderful in in coping with the they are they're all move in a very fast paced to this working from home old and very small quantity of employees that are essential to be on <unk>.
Yeah like basis, and it's about things like that has been a also very flexible in in the Greens to do the task and obviously, we made all of that one making sure, though very safe and uncontrolled eh clean environment.
And we do have more questions on the line or next question comes on line of Q. carrying him from a P.C.
Hey, guys. Thanks for taking my question regarding the a new campus in Israel.
Has the Kobe 19 locked out impacted the progress of work there.
And I'm looking forward you expect any impact on on the work on the new campus.
Yeah, I I can start in Somalia.
We'll complete.
I I can tell you that there is the old arrangements with everything that comes Fools is that we will also flexibility we made sure that the we if it's a bit to the older <unk> a wheel evaluating the what we call. The the next generation of a wheel of walking it's going to be considered to be bought.
Between walking from the office they'll sell some things that the only way to doing this in the high productivity is from the office.
Definitely we see them almost produce walk from home.
So this is I think are we ever flexibility. Additionally, in the car pools, we moved from pretty much when we used to own indefinitely and when you own to compose you're much more flexibility to balance the workforce walk into the conference as much as you know we use the days when you sign as long term loosing deal with.
The landlord is usually typically don't have so much possibility. So so I believe A.A., we build a right the right flexibility is to adjust to the needs to remain the Mike.
Containing on time I'm actually the construction sector in Israel, it's been excluded as an essential sector. So work continues while the <unk> limitations on other activities in country that construction continues as planned.
Okay, and so the the cash flow you've laid out we emphasize there is no expectation and that's gonna that's going to change.
Yeah, Yeah, the saying after 90, because obviously, we want to take a cautious view on on the number we're giving you and if we can delay some of these payments and it'd be good I think you agree with me so.
I think that overall in terms of expectation it was definitely not be more than the 90 that we expect for the yeah, maybe some of it when shift the basis for next year.
And at this time, if there are any more questions on how funny superstar Amber 110 from keep it again that star and and number one.
We do have a question that came in from the line of Charlie are click from there.
Hey, Thank you taking the question was is truly early gone for willpower one of your fucking ask the question on the balance sheet and doctors always had a really strong balance sheets. So I'm wondering you know what Mrs and and maybe the the reason and timing around the 350 million you guys rate. This quarter and then also wanted to clarify.
But I've heard correctly that you read another 100 million and in Q3.
And so you're right we have a strong bell shaped and we'll definitely laying down and then giving you full transparency about how we are planning to use the money you know what <unk>, what we said that the majority of the fictional would generate no less because we we tend to show this though.
Can understand on top of that will funding the independent of the council fluffy just touch and again that was plants. So the main reason we draw. The learning was just to be cautious you know given this kind of circumstances and the color make pressure coming with the Cobiz 19th and then make we know liquidity is scarce after.
We prefer to stick with it you must be in all bank accounts rather than they.
<unk>.
Yeah. So that's the main reason, we're not trying to single here any any kind of a mega move this was not plan before.
Just to be able to save side.
Great Yeah that makes sense, and then I might Miss snow there.
So if it if the other parts of the question, Yes, we did join additional hundred are doing.
The beginning excuse me.
The three states you still in in total we have a already boring as of now with 450.
Great Yeah. Thanks.
And then just my last question on H.T.M., sorry for Mrs. But did you guys, calling anything out in the beginning of the call on 18 teach specifically if there's any changes to their you know discretionary spending patterns or trends or any conversations you're having with them either positive or negative you know given the environment.
The the comment that I have I hear there's regarding 18 see that do we have a happy with that could be <unk> of the lounge minutes service agreement as we started with them.
In the last <unk>, so it execution of just going for this stuff that.
Already and he's doing well.
Additionally, we are talking with them and on different ideas and innovation that can be relevant for coping 19 situation animal.
And at this time or we do have more and more question in the queue or this is a follow up from the line of Jackson and or from J.P. Morgan.
Hey, guys sorry, just.
One quick follow up on gross margin I know Tomorrow. You said you expect operating margins be roughly in line with the first out which would be be expecting with gross margin.
Yeah.
Yeah.
Jackson, usually where we are not guiding all to be honest managing oh activities to the goes margin level because they do wants to keep it six ability between there for a million dollars <unk> at least building, sometimes we would like to accelerate telling me for example, not one of the and ideas that we have looking on different opportunities in the market.
It's too to see where we can it's likely to accelerate objectivity. So the shift between.
Margin or the gospel merging level in operating margin. It's something that's we may see nothing material, but that's why we're very focused on managing in guiding also on the operating margin level.
Okay.
Oh, Thank you very much.
And at this time there no further questions on the line out now turn it back over to our speaker Matt.
Thanks, Ryan and thanks very much every one for joining I call. This evening and for your interest in M. dogs would you like 40 hearing from even the coming days. If you do have any additional questions just give us a call it the investor Relations group.
That they fit and wealthy Scotland healthy and have a great evening. Thanks.
And this has concluded on email and <unk>.
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