Q1 2020 Earnings Call
[music].
Good day and welcome to the CBS first quarter 2012 results conference call all participants will be unable to make.
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After todays presentation, there will be an opportunity to ask questions to ask a question. You. My question Star then one on your telephone keypad to withdraw your question. Please press Star then too.
Please note this event is being recorded.
I would now like to teleconference, I want to Lori Novickis director of corporate relations. Please go ahead.
Good morning, everyone and thank you for joining us [laughter] first quarter 2820 results conference call.
In connection with this call today's press release has been posted on the Investor Relations page of our website Www Dot CBS dot com.
This call is being webcast.
A link to the live webcast as well if the replay can also be found on our website.
Before we begin or presentation, we would like to remind you that during the call management may discuss certain non-GAAP financial measures.
Conciliation of these measures can be found his opinion until tables of today's press release.
Finally, remember that management May also make forward looking statements.
Such statements are based on current information and managements expectations as of this date and do not guarantee future performance.
<unk> looking statements involve certain risks uncertainties and assumptions that can be difficult to predict.
Actual results can it sometimes do differ materially.
More detailed description affect risks and uncertainties can be found in the company's filings with the Securities Exchange Commission.
Joining us for today's call, a Jerry Grisko, President and CEO, and where growth Chief Financial Officer.
I'll now turn call over to Jerry for his opening remarks Jerry.
Thank you Lori good morning, everyone.
Given all that's happened with the Cobot 19 pandemic since our last earnings release.
We'd like to begin today's call with reminder of the key attributes of our business.
Which should provide helpful context around how we perform in the first quarter, how we continue to navigating the current environment and what we expect to see for our business in the months to call.
Hi, this is a leading provider of accounting insurance and other professional business services to a wide range of clients, including small middle market businesses.
We're not highly concentrated in any particular geography or industry, which helps to insulate us when economic conditions. There are other events occur that have a disproportionately impact on certain regions or industries.
Approximately 65% of our total revenues are generated by our financial services group.
Among the businesses within that group, our tax and accounting business, our private equity advisory business and our government healthcare consulting business.
In a typical year, we see strong contribution from this group in the first quarter since our accounting and tax work related to normal finally payment deadlines is compressed.
In addition to the revenue generated by our more recurring services.
Approximately 27% of the revenue generated within this group comes from more project oriented services that are less recurring.
Such as tax consulting and certain other advisory services.
Our government healthcare consulting business typically entries into longer term contracts. So we view that business is more recurring.
Turning to our benefits and insurance group, we generate approximately 31% of our total revenue from this group.
Among the businesses within this group our employee benefits business, our payroll business, our property and casualty business and our retirement plan services business.
The majority of revenue generated with this within this group is typically spread more evenly throughout the year.
A smaller portion of revenue is project oriented through our more transactional businesses like our executive search business.
By their nature of these project oriented businesses can be harder to predict in terms of timing uncertainty throughout the year.
Many of the services that we provide within both the financial services group and the benefits in insurance group are considered essential services that are clients need regardless of economic conditions.
For example.
Just services include the completion of tax returns payroll processing property and casualty insurance employee health insurance and a host of others.
Revenue from these essential services typically represent approximately 70% of our total revenues in both years, which creates a more reliable and predictable revenue stream.
As a professional services company approximately 60% of our expenses are in the form of wages.
Within each practice group a significant portion of the wages for our highest wage earners our variable.
This structure is designed to reward our team members for high individual performance and for growth and more favorable years and to mitigate the impact on earnings and less favorable economic times.
One of our key market Differentiators is that we provide a much broader range of products services and solutions than many of our competitors who are most often model line.
Our breadth of services is particularly valuable to our clients when the issues or opportunities, they're facing are complex and touch multiple aspects of their business.
The stimulus packages enacted to help business in response to the pandemic is a perfect example, this kind of situation.
Where business is the broad based solutions that address multiple areas of their organizations.
Given our unique ability to coordinate multiple services, we've been hard at work, helping our clients and prospects I understand how to avail themselves of the opportunities presented by these various programs.
With that by way of background.
We kicked off 2020 with a great deal of momentum coming off a very strong 2019.
We were pleased with the performance of the business through mid March.
We're also pleased with the results that we experienced in a number of the businesses, where we've made substantial investments over the years, including the investments that we've made in producers in our employee benefits business and investments in our new service platform for our larger more complex payroll clients.
For the first quarter of 2020, we reported total revenue growth of 2.8%.
Same unit revenue growth of 0.9% and earnings per diluted share of 66 cents versus 67 cents reported for the same period a year ago.
We believe that those results would have been even stronger, but we began to see the impact of cobot 19, and the resulting government stay at home orders in the second half of March.
Our results in the second half of March were impacted by a number of factors, including inefficiencies experienced as many of our team members migrated from office space work environment to working from home.
In addition, normally our tax and accounting team is working at full capacity throughout March to meet government deadlines for compliance work.
In late March in early April the IRS extended both tax filing and payment deadlines.
Once those deadlines were extended our clients slow the delivery to us of the information that we need from them to complete our work.
The result is that we filed significantly fewer tax returns in the first quarter than expected.
This is work that we will still complete.
But it will be shifted into the second and third quarters, rather than being completed in the first quarter as expected.
It's important to note that our advisory services business was off to a strong start in the first quarter. However, because of the nature of the work is off the tied to a transaction or more discretionary investment by our clients. The demand for these services started to decrease in mid March.
We expect to see a more significant impact on this business line for the remainder of the year as our clients foot planned investments on hold to preserve cash and potentially reassess.
Limitations on travel May also have an impact on our advisory engagements as this work often requires onsite component with our clients.
At the same time, our clients are adapting to these limitations just like we are and we've made steady progress and using virtual solutions in place of onsite work.
Our government healthcare consulting business was also off to a strong start to the year with several projects that were delayed in 2019 getting back on track in early 2020.
Fortunately, we've not experienced any material contracts of this business being put on hold.
We do expect some delays and the timing of revenue.
Those delays will impact the pacing of revenue 2020 and May shift some work from this year into next.
Now turning to our benefits and insurance business, which experienced a good first quarter with strong sales improved client retention.
Those results were impacted by lower revenue in our retirement plan services business tied to the financial markets and the cancellation of policies in our property and casualty insurance business.
These cancellations were specifically related to the hospitality and recreation industries.
Given the record unemployment numbers. We also expect that we will begin to see some negative impact on our payroll business as companies reduce the number of workers on their payroll either temporarily or permanently.
We were pleased to have closed three acquisitions within our benefits in insurance group during the first quarter.
These three transactions includes Petra dynamics, a retirement plan services advisory firm located in the San Francisco Bay area.
Alliance Insurance services, Washington, DC based property casualty agency in Sunshine systems of payroll implementation provider located in Newburyport, Massachusetts.
Now I would like to turn to our response to covert 19, which began in late February.
With our core values as our guide our top priority was and continues to be the safety and well being of our team members and our clients.
At the outset, we took proactive steps to safeguard our team members in our clients, including limiting access to our offices suspending business travel and shifting our teams to working remotely to minimize disruption to clients and to maintain continuity in our operations.
I'm, particularly proud of how our team quickly leverage technology and new tools to make this a smoother process for both ourselves and our clients.
We are also proud of the fact that with over 100 offices nationwide. We remain open in operational throughout the outset of the pandemic.
We are fortunate to have committed the situation in a very strong financial position heavy come off a solid performance in 2019 and with the strong balance sheet low levels of debt ready access to capital in a supportive lending group.
Thats strength has allowed us to be measured but proactive in our response, while at the same time wrapping up our efforts to support our clients and navigating this challenging and evolving business climate.
We continued to be proactive in taking steps to protect our business as the situation unfolds.
In late March we do down on our credit facility.
While we had and continue to have sufficient cash flow and access to capital to support the ongoing needs of the business. We elected to drawdown the facility additive abundance of for caution to ensure that the funds would be available to support the ongoing needs of the business if and when needed.
In addition, we also took a number of cost containment measures, including the following.
Hiring freeze for all but business critical positions.
We limited all but the most mission critical discretionary spending.
We pause strategic initiatives and our national marketing campaign.
We deferred some compensation actions and we took advantage of the cures act provision that enables us to defer our employer payroll taxes.
These measures and put us on from financial footing to date, but given the uncertainty around how long are current environment is likely to less the pace of recovery in the impact on our clients. We continue to closely monitor our key operating metrics and have identified additional measures if warranted based on future changes to our revenue outlook for the remainder of this year.
And into 2021.
Despite some of the challenges caused by the current environment. We continue to see a substantial number of opportunities based on our unique ability to help our clients and prospects navigate these unchartered waters.
Since the onset of the pandemic, we remain focused in how we can support our clients through the most challenging business climate many of us have ever experienced.
As I mentioned, a portion of our clients are small middle market businesses.
In many were hit hard by the impact of the stay at home and related efforts to flatten the curve.
We immediately began to shift resources and engage our subject matter experts to help our clients respond plan and take advantage of the opportunities as a federally packages began to be released.
A great example, this work is the Cobot 19 resource Center, we established on our website that brings together thought leadership, new content and tools from across the business to assist our clients on a wide variety of challenges concerns and questions.
We have developed 18 webinars based on our new content today.
All of which are available on demand through our resource center.
These webinars bring our clients and prospects the both updated information and guidance available and typically attract more than 1000 attendees.
Following each webinars, we have a team of people who reach out to participants to follow up on any questions or needs. They may have.
As a result of this and other outreach efforts, we are working with our clients and prospects on a significant number of new engagements and proposals.
We recognize that this is the time when our clients need us in both in our continued outreach and support has been well received.
While the characteristics of the business provide us with comfort that much of the revenue that we received from the essential services that we provide will be realized this year. There remains a great deal of uncertainty around the duration and severity the pandemic on the economy as a whole and on the demand for some of the services that we provide.
Given that uncertainty we are withdrawing our 2020 guidance, which was provided in February Twentyth 2020.
So with that I will turn it over to where grow our chief financial officer for a few comments on our financials and then we'll be back to talk more about our plans for returning to normal and our approach to mergers and acquisitions in our current environment where.
Thank you Gerry and good morning, everyone.
As I normally do I wanted to take a few minutes to run through the highlights. So the numbers we released this morning.
More importantly, I want to shed some light on the uncertainty in the business environment and the actions we are taking.
Total revenue for the first quarter was $277.5 million, an increase of 2.8% over first quarter a year ago with same unit revenue up 0.9%.
Impacted by some of the events related to the co that 19 health crisis in the first quarter. The margin on income from continued operations before tax was 18.1% compared with 19.0% for the first quarter a year ago.
With an effective tax rate of 26.7% net income was $36.8 million this year or 66 cents per share compared with 67 cents a share in the first quarter a year ago.
Adjusted EBITDA was $57 million or 20.6% of revenue in the first quarter.
Total revenue within our financial services growth increased by 2% the same unit revenue up by 1.2% in the first quarter.
With a migration to working from home that occurred in mid March there were inefficiencies during what is normally a very highly productive and busy tax time that time for tax compliance work.
Our workforce is equipped for and as a custom to working remotely.
However at the same time many of our clients were also adjusting to working remotely focused on their own immediate issues in response to the onset of the pandemic and the overall sharing of information that was that commonly occurs during this time did experience some delays.
As a result, our productivity suffered and this impacted first quarter revenue.
Turning to the benefits and insurance business total revenue grew by 4.4% in the first quarter was same unit revenue declining by 0.6%.
We're very pleased to see the continuing improvements in the new business generated as a result of our investment in new producers and the way we have seen stronger client retention as well.
There was a decline in revenue in our retirement advisory business related to the general decline in market asset valuations at the end of the first quarter.
Also the level of nonrecurring actuarial project work in the first quarter. This year did not match the level of a year ago.
With a loss of productivity in the second half of March combined with the other items. We have commented on we estimate the first quarter revenue was impacted within a range of approximately $4 million to $5 million.
The majority of which is related to tax compliance work that will get recaptured later this year.
In addition, while the cares act and the economic release measures enacted are helpful. The extended stay at home orders and the associated economic disruption have created financial distress throughout the economy.
As Jerry commented, we have a large in diverse set of clients with no particular concentration, but you should be aware that we increased our bad debt reserve by $2 million in the first quarter to recognize the increased payment risk and receivables.
Bad debt expense for the first quarter. This year was 82 basis points as total revenue compared with 39 basis points in the first quarter a year ago.
We made three acquisitions in the first quarter that will have an annualized revenue contribution of approximately $6.1 million acquisition related spending in the first quarter was approximately $12.4 million.
For the balance of 2020 earn out payments for acquisitions previously closed are estimated at approximately $10.6 million and for 2021, approximately $11 million for 2020 to approximately $7.7 million and for 2023 700000.
In dollars and for 2024 approximately $200000.
During the first quarter, we repurchased approximately 1.2 million shares of our common stock at a cost of approximately $29.5 million as coated 19 related issues became disruptive to the business environment in mid March we suspended further share repurchases with a share repurchase act.
Tivity to date, we expect our full year fully diluted share count at approximately 55.5 million shares.
Let me turn to how we are dealing with the current environment.
And normal conditions Cboes generates strong cash flow from operations as we enter the second quarter, we are managing our liquidity very carefully.
We want to navigate through this period and emerge with financial capacity and the wherewithal to take advantage of acquisition and other investment opportunities that lie ahead.
Preserve cash we are taking advantage of the carriers act provision that enables companies to defer the payment of employer payroll taxes.
In addition, we're watching customer collections on receivables very carefully as clients take actions to preserve their own liquidity.
Day sales outstanding on receivables was 94 days at the end of the first quarter. This year compared with 97 days a year ago.
I want to remind you that day sales outstanding typically increase in the first half the year as we billed receivables and they normally liquidate into cash later in the year.
Our strong balance sheet has given us great flexibility to deploy capital for strategic investments.
In late March as we observed the dysfunction in the capital markets that was occurring at that time, we made a decision to draw down $210 million on our credit facility.
Our liquidity is strong and this decision was made strictly as a precautionary measure to preserve our financial flexibility flexibility in the event further disruptions were encountered.
At the end of March our cash position was $216.9 million.
That does the cash position our debt outstanding was $166.1 million, which results in a net debt leverage as measured against our 12 trailing 12 month EBITDA of 1.4 times.
As Jerry outlined we have taken a number of actions to manage expenditures and cash flows.
In fact with the actions taken to date, our cash position has improved by approximately $18 million from 216.9 million at the end of March to 234.5 million at the end of April.
This is during a time, what our normal seasonal pattern is to use cash.
This is very positive confirmation that our initial efforts are on track.
But it remains very unclear what the ultimate impact maybe like many others. We are actively modeling different scenarios and we have prepared contingency plans.
As a result at a high degree of uncertainty as Jerry mentioned, we have withdrawn our guidance for the year.
When business conditions are ready, we want to be well positioned to deploy capital for strategic investments and acquisitions, including the potential for further share repurchases.
Depending upon how the economy rebounds longer term, we're navigating through this period of uncertainty in order to emerge and strong condition and be ready to achieve the same revenue growth operating leverage and cash flow attributes that we have recorded over many years, let's see this.
So with these comments I will conclude and I'll turn it back over to Jerry.
Thank you where as you would expect we have a comprehensive plan in place to bring our team members back into our offices and client sites in a measured and responsible manner.
With offices around the country, we are closely tracking the state and local plans in each region and what is required to safely reopened our offices for team members clients and visitors.
As stay at home and related efforts begin to expire arrays.
We will be bringing our team back and three phases.
In order to do this we have numerous safety measures in place, including plans to maintain social discussing within our workplace continued use of virtual meeting tools and enhance protocols to protect our team members Hell.
As part of this process.
We also plan to resume client related travel and work at client sites in the near future.
While I'm confident that the actions we are taking now will ensure that we have a safe and healthy workplace. We've also learned a great deal over the past two months our team did a remarkable job and shifting to remote work arrangements and embracing new technology.
This experience as illustrated what is possible with more people working remotely and how we can best support them in the future.
Overall, we will be taking these lessons learned to help accelerate our thinking on everything from future real estate needs to recruiting for talent.
I believe that what we've learned through the crisis will continue to shape, our strategy through the recovery and beyond.
Finally with regard to M&A. In addition to the three transactions that we closed in the first quarter. Our M&A efforts were active right up until the onset of the pandemic.
We began 2020 with a robust pipeline of potential acquisitions, including a number of larger deals and we're making steady progress when the effects of the pandemic hit mid March.
At that point like most other firms we made the decision to put a whole then closing any further transactions in the short term.
We've made that decision not only to conserve cash, but equally because we always strive to provide the teams at join us with the best possible Onboarding experience and we believe that that would be nearly impossible to create in the current environment.
Waiting to close pending transactions will allow us to be much more thoughtful about the integration experience for the sellers ended at both the time resources attention necessary to ensure the successful transition.
We're also continuing to actively engaged in conversations with perspective acquisition candidates.
And believe that new opportunities will emerge in the coming months as professional services firms better appreciate the advantages of being part of a large well capitalized and diverse organization like Steve is.
That is better able to weather the storm and provide resources and solutions to clients that smaller organizations may not have the breadth or depth to provide.
With that I will now turn it back over for today.
Thank you we will now begin the Q in a session.
To ask a question you May press Star then one on the telephone keypad.
Periods in the Speakerphone, please pick up your handset before pressing the key.
To withdraw your question. Please press Star then too.
At this time, we will pause momentarily to assemble our roster.
First question will come from Andrew Nicolas with William Blair. Please go ahead.
Hi, Good morning hope each of you safe and healthy.
Just recognizing the current environment unique in a variety ways, but still line to use the last recession as a reference point can you maybe talk through how the business mix today compares to low eight or nine and maybe how you think those those differences or the major differences are likely to reflect them.
Sales in your financial.
Performance this time around.
So Andrew it's Jerry good morning. Thanks for the question, we've looked a lot at that environment and the positives are that if you look back at our performance during that period of time, we actually performed quite well certainly relative to many other businesses in the environment and I think it's the key attributes of the business that allowed us.
To do that I'm first the fact that we provide in large part essential services to our clients in our clients need those services I'm kind of rig regardless of the business climate.
I am second.
It's times of challenge in complexity that our clients most turned to us and we saw that then and we see that now.
As as we've developed our cobot resource center in really work hand in glove and side by side with our clients to help them navigate in this very complex environment. So that only not not only creates opportunities for us to generate revenue as a result of those consulting engagements, but it also helps with its retention and it certainly helps to build.
Goodwill. So we came out of AD environment again relatively strong compared to others. We're confident that the attributes that that we that led to that are are equally applicable today on top of that since that time 12 years, we've made substantial investments in our processes in our system.
In our infrastructure and I believe that were much stronger organization today than than we were even back then and so all of those things should help us to emerge from this environment strong as well.
Great. Thank you.
Do you expect any competitive dislocation to come out of the current environment and if so where would you expect that to be concentrated within your various businesses and then any color on how you'd expect cbas to capitalize would would be helpful.
Yes, it's interesting.
Here's what we're hearing in its early right. It's early in its in time will tell right, but we're hearing that certainly many of the smaller competitors that we face off against.
Our significantly capital constrained in this environment. They did not have strong balance sheet. They did not have access to capital. They had embedded on retirement obligations that were unfunded theres a number of factors that I think are placing significant stream.
On many of the competitors and I'm, referring specifically in the accounting industry right now.
And and we've seen that many of them have of.
Add substantial reductions in.
Staffing.
They met some of them have had really kind of close their doors through this period of time to try to conserve cash.
All of that should allow us to to increase market share. We were proud of the fact that not only did we.
Close our doors, but we very proactively engage with our clients throughout this period of time, we've engaged with a substantial number prospects throughout this period of time and we would expect that as a result of our approach.
Our resources our size our scale.
That we should gain market share in December.
Great. Thank you and then if you had in mind ill squeeze one more in before getting back into queue. Just on the expense base. I think you mentioned, 60% of that expense bases in the form of wages.
Could you provide a little bit more color on on what within that compensation line is variable in the extent to which you expect to be able to flex that up and down depending on kind of top line environment.
Thank you.
Yeah, I don't have the exact percentage, Andrew but let me just tell you a little bit by category, what we're talking about and I mentioned that a high percentage of the of our highest wage earners have a significant variable component. So on the benefits insurance side many of our high wage earners, Our commission driven they get paid a higher commission based.
New revenue that comes in the door and then they get paid a lower level of commission on retained business.
But that commission structure is variable and in years, where there's high levels of production. Obviously they are more as they should.
In years works, a little bit more challenged our compensation in those areas is less.
Turning to our financial services group, we have approximately 300.
Of our top wage earners are managing directors.
Fall in that category. There is approximately 30% of the compensation for that group. That's that's somewhat variable part of it is tied to the performance of the individual office in debt off is making plan.
And then part of it is tied to their individual goals.
But again much of that is variable based on revenue production hours billed client realization on all the key metrics within that group. So again, while I don't have exact percentage as to what that calculates do it is a substantial percentage for both categories of high wage earners within or within our organization.
Great. Thanks, a lot.
Our next question comes from Chris Moore with CJS Securities. Please go ahead.
Hi, Good afternoon, guys. This is a brendan on for Chris.
I wanted to ask with.
And I know skinny.
Yes tough to answer thank high precision, but.
With what you can see now what is your view on on on 2020 revenue and then.
And even more importantly.
Is that a when we're thinking about 2021 do you view that.
2020, as a new base for looking at growth levels beyond 2020.
Our do you think that there's reason to believe there could be some kind of catch up for some of the revenue that shows up.
And 21.
What's your base as we sit today, what's your view on that.
Yes, let me let me just say that we withdrew guidance, we're not yet in a position to be able to give guidance for the remainder of 2020 as a result of all the factors that everybody else is is struggling with as well that be the duration of the.
Of the existing environment the impact of the environment on season, our clients in when eventually we do start to come out of this the piece of that recovery. So for all of those reasons.
We don't yet have enough visibility into 2020 in order to be able to give guidance on the number with that said.
Here's the comforting facts right like I said.
On the call.
To the extent that we had some of the revenue that we otherwise would've expected to occur in the first quarter certainly as it relates to the extension of tax or the preparation of tax returns. We expect that DAP revenue will be realized in 2020.
There are other.
Components of our revenue stream and I'm thinking, particularly our government healthcare consulting business, where well that those are long term contracts that work needs to be done we believe that that business will remain strong throughout the year.
What happened was the federal government gave relief to the states.
In NIM, providing some of the critical information that we need in order to do our work.
That work again will get done the question is the some of that pushed into 2021.
Time will tell but again, we're confident that the work is not going away. The work, we will get done and we believe a good deal of it will get done in 2020, we just don't have visibility into.
The full scope of network and when it will be realized.
Okay, and then kind of.
Somewhere line of thought but looking at your margins a target pretax margin improvement.
Yeah, quite a 50 basis points a year.
Obviously, if I 20 is going be tough for that and and fall shy probably fall shy that level, but.
Again as their reason to think that that's whatever level you fall to thats the base and to improve time 50 basis points beyond that or will there is there also potential for some kind of margin catch up.
Beyond 2020.
Yes, Brendan this is where growth has that's another difficult one to answer.
Jerry said it well some of this revenue will get caught up and we will be spread later in this year some of it.
May get pushed into next year.
One thing to keep in mind as you look at the margin in the first quarter. We commented that we increased our bad debt allowance by $2 million, that's about an 80 basis points impact on first quarter margins.
We thought that was approved move in light of the economic stress throughout the economy at this point in time.
And.
Don't know, how it's all going to turn out yet, but that did have a big impact on first quarter margins that we will not hopefully be a recurring items. So thats a recoverable item once that charges done and enough and behind us. The other things are really difficult to answer on it depends on red.
Revenue growth our cost structure, we do have levers we're pulling.
To to mitigate the impact on margin, but we can't completely mitigate all impact and as we restore it it just depends on how quickly the costs and that the revenue can come back.
It would be our intent over a longer period of time and I'm not talking specifically in 21 versus 20.
To continue to feel the business has the capability with operating leverage built into it to improve margins by 20 to 50 basis points a year over time. The same attributes we feel that we've demonstrated and have a good track record of in the past we feel those same attributes are still there in the business.
Once we get through this.
Okay, great. Thank you for that color.
Once again, if you would like to ask a question. Please press Star then one.
Next question comes from Marc Riddick with Sidoti and company. Please go ahead.
Hi, good morning, everyone.
Hey, good morning, Mark Hi, Mark.
Hopefully everybody is safe and well and certainly wish you all the best State I wanted to touch a little bit on.
The commentary in the the press releases why did you get spent some time discussing some of the some of the comments around increased demand, particularly around some of the government initiatives kind of maybe if you can sort of talk about kind of how that has materialized and and if there's been a precedent that you've seen before that that would drive some.
Thing like that and then I guess included in that somewhat is is that it could you talk a little bit about.
Where that demand is coming from.
From existing customers, new customers made what that mix might look like.
Yes, thanks Mark.
Again, I think I've said it before.
I said it on the script here.
In an in it in a situation environment, where there's complexity and challenges in the environment, our clients turned to us for health and helping them to navigate through this we've seen that in this situation someone rep reference 2008 to nine we saw it back then as well we saw that when you. When you asked if we see that before we saw.
With some of the healthcare issues a ways back we've seen it with tax reform, so anytime that there's changes or complexity in the environment.
Our clients in the market in general is far more receptive to the types of things that we have the tools that we have the services we have in the way that we can help them.
I think what's unique about this one and what really shine the light on our on our real unique market differentiator is the types of solutions that are available to our clients to help them navigate in this environment are not model line and so if you look at the types of relief efforts that have been put in place through the stimulus packages I'd.
I think when we went through it there were 12 different disciplines that were touched upon anywhere from applying for our for the loans that were available to.
Understanding the tax impact to payroll implications to insurance implications I will share with you that there is no organization that has the breadth of services and the geographic reach in the scope did see this adds in order to help our clients and others in the market. So as a result of that and when you say how many clients if we help with helped thousands.
Clients.
With the PPP loads in similar financial packages, we've had I think over 12 or 13000.
Participants so far in our Webinars series, we've reached out to those participants one on one.
My follow up on their participation ask if theyve had questions we've had.
Considerable number of opportunities that have come out of those situations.
We are starting just now.
To see some pretty significant revenue opportunities coming from that outreach. So while it's not in the numbers. Obviously that you saw we're highly encouraged by the feedback that we're getting from the resources that we've made available and.
And encouraged by the revenue opportunities that we're seeing coming out of it and again, while apples to apples.
No direct comparison that I can think of.
In the past I can also not big of anything that is more better suited for the types of.
Services, we have the breadth and the attributes that we have in order to bring value to our clients in this environment.
One other question you said, how many were clients how many were prospects I think it was typically around two thirds one third.
Participants on the Webinars were about two thirds being clients about a third of them.
Be other prospects of people from the outside so considerable number of opportunities for us to expand market share.
Okay. That's great. Thank you for the for the detailed not just this question, but provided previously as well I did want to touch also on.
It's just sort of the.
The tax filing cadence.
Because.
Since last year and itself was not a normal year due to the the the delayed IRS guidelines and I think at some point during the year you'd made mentioned.
Tell me if I Miss remembering this but I guess the filing extensions were up 10% year over year last year or something along those lines. I was wondering if you had like a similar.
The.
View or number or kind of maybe what you're seeing to compare to last year.
Yes, Mark Thats a great question. So let me give you a little bit of color around that.
In the in the.
Busy season typical January one through April 15th.
We typically file X number of tax returns.
About a third of those get filed their passthrough type entities get Pat filed by March 15th. We obviously this is not had not really hit us at that point and so all of those returns were filed.
About two thirds of default of the returns that we typically get filed.
During between January one in April 15th about two third to them really get filed on or around.
March 15, Im sorry April 15th of those very few of them were filed this year.
So last year, we had a number of extensions as you alluded that kind of came out of tax reform and complexities around that but we still received we still we're able to get a great deal great number of those returns filed by April 15th this year very few of them were filed and it makes sense because what happened was not only was the.
Worthy deadlines extended but the payment deadlines were extended as well so.
If it had just been that the returns were extended nonetheless, what has to happen is the work is done on the returns and then people pay estimated.
Estimated taxes when they deferred not only the requirement that you filed the return but also the payment.
Basically our clients put their pens down and they said, we'll get to you, but this would not our highest priority right now they are working through liquidity and other issues trying to take advantage of some of the stimulus program. So that work will get done this year, but it will be pushed out into the second third quarter. So we saw substantial amount of have pushed off that will be realized in the second.
Accordingly.
Okay, Great. That's that's very very helpful. Thank you very much.
Youre welcome.
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Ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over.
For closing comments.
Hi, Thank you very much with all the uncertainty around the duration and impact of cobot 19 in the pace of recovery.
I want to remind you that see this came into the situation in a very strong financial position.
And we have a number of key attributes that should allow us to continue to remain strong in the current business climate.
These include the fact that many of our services are essential to our clients are highly valued and represent a very low cost to them on a relative basis.
We have a high percentage of our revenue that recurring.
We have a high retention rate among our clients.
We have a variable cost structure with built in leverage.
We're not capital intensive we generate significant amounts of free cash flow and we have low net debt outstanding.
In addition, our clients turned to us in times of uncertainty in complexity.
And there are few professional service organizations is well positioned to see biz to provide the solutions to the challenges that many businesses now face.
We believe that our size.
Our geographic reach in our breadth of services will allow us the opportunity to gain market share in this environment and to resume and accelerate growth in the business climate resumes.
I'd like to thank our analysts investors for joining us on todays call and for your continued support.
And finally I'd like to close by thanking our team members, who maybe listening to today's call for your inspirational can do attitude throughout this environment.
For your dedication to our clients and for your support that you've shown to each other and to our communities.
Thank you would stay healthy.
And thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
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