Q1 2020 Earnings Call
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Conference call at this time, all participants are in listen only mode. What are we will conduct a question and answer session to participate whose press one zero and if you need assistance during the call. Please press Star then zero as a reminder, this conference call is being recorded.
This time I'd like to introduce you to your host for todays conference Senior Vice President Investor Relations Schumacher Ji. Please go ahead.
Good morning be hope you Aneel families I see.
Thank you for joining us on our first quarter two hasn't been trained Jianying school. Despite the difficulty posed by this crisis.
The caused me to de Jong drone odd chairman and Chief Executive Officer, and Phil Angelastro I, Chief Financial Officer, We hope everyone has had a chance to review our findings shouldn't.
We have posted two www dot Omnicom group Dot Com. This mornings press release, along with the presentation covering the information would be then review <unk>.
This call is going to be Simon cost and then be archived on all that right before we start I've been asked you remind everyone to read the forward looking statements and other information would be have included at the end about investor presentation, and you point out.
No. The statements made today may constitute forward looking statement on these statements are all crescent expectation and that actual events or is that we'll defer TV I.
I'd like to remind you the during the course of the goal and he will discuss some non-GAAP nice, yes, im talking about gone the comps.
You can find reconciliation of those measures to the notice comparable GAAP measures in the presentation, making.
Yeah going to begin this morning's call with an overview of our business from Johnson.
Then Phil Angelastro review, all financial exercise for the quarter and then even open up the nine feel question.
Over to you John.
Good morning.
I hope everyone on the call staying safe and healthy.
I'm pleased to speak to this morning about <unk> first quarter results and update you on how we are actively responding to the effects with covidien team.
First and foremost.
I would like to recognize the healthcare workers first responders and essential personnel around the world.
We're working 24 seven to help those in me.
Their workers heroic in homily, especially as the human toll continues to grow.
As the impact of covert night team continues to evolve around the world. We're focused on three key areas.
The safety or well being of our people.
Continuing to effectively serve our clients and preserving the strength of our business.
And while we don't know today, how this all fully play out we will be as clear as we can you know remarks in responding to your questions.
Starting with the safety and well being of our people in mid March we moved to a global work at home policy and implemented our business continuity plans.
With few exceptions across all markets are people from creators to account management review your operations production, I T and accounting and back office services.
And many others continue to work for bone. This is no small feat speaks to how well prepared we were as an organization. The transition has been all that I could invest for.
Given the vast change in the way we are working in in our personal lives. The support we are providing is leading to deeper engagements and the tighter bond between our clients in their agency teams.
As a result, omnicam as a whole is operating very well.
This shift would not be impossible without are exceptional people and I want to thank them for their extraordinary efforts.
I also want to call out and think those of you in our businesses that are performing essential services and continue to work outside of your homes.
Before getting into the first quarter I'd like to explain the actions we've taken to date to improve the strength of our company.
Many agency leaders in their staff as well as Omnicom and our network senior leadership are taking voluntary pay cuts we've stopped new hires frozen salary increases and eliminated or reduced the number of freelancers. We use we've taken advantage of government wage subsidy programs.
Wherever available inappropriate in countries, such as the U.K., France, and Germany, among others to reduce the number of permanent staff reductions we had to take.
We've eliminated discretionary cost and capital expenditures, including participation All award shows.
We are further enhanced already strong working capital in cash management practices in mid March we suspended our share repurchase program.
In February March we completed several financing to enhance our liquidity and balance you.
Creasing, our cash and available credit facilities by approximately $1 billion and extending our debt maturities.
As of March 31st we had over 2.6 billion in cash in excess of that bounce through the end of last week.
We also have 2.9 billion in available revolving credit facilities and our nearest long term debt is not due until may 2022.
We expanded coverage in our U.S. health benefits for those affected by covert 19 and extended our medical benefits to employees that were furloughed or laid off to July 31st Regrettably. Despite these efforts are companies had to take a number of job actions, including reduce work weeks furloughs.
Layoffs for many of our colleagues our leaders worked tirelessly to limit the number of people impacted and we've helped them find opportunities in areas are our business.
Continuing to grow.
We're also sharing resources across companies in the group wherever possible.
Give interactions to date I can tell you with confidence that the underlying fundamentals of our business remain in place.
Do our core strategies, and we have the resources and financial strength to where the this crisis.
Let me now discuss our first quarter results I, well then come back to more specifically address how we are servicing our clients and responding to protect our business in the current environment.
While we only felt a partial impact from conveyed 19 in the first quarter.
Certainly negatively affected our financial performance relative to the expectations. We had when we last spoke in February.
Certain businesses were impacted much more than others in the first quarter and March was more affected than January and February.
You would expect the more highly impacted disciplines for us in the first quarter or events and feel marketing, which are dependent on social interactions and group gatherings.
And as I mentioned, our last call our events business was all but shut down in China earlier in the year.
Staying home waters in restrictions on travel in large gatherings took effect in March.
Events business as well several of our field marketing businesses in the affected geography is where in large part shut down.
The postponement of the Olympics as well as every other major sporting event has compounded the challenges.
Even though some of our events businesses have done an excellent job of executing virtual events overall it has not been enough to make up for the lost revenue.
As a result.
The first quarter organic growth was three tenths of 1%.
Operating profit declined by 2% to $420 million and our operating margin was 12.3% 10 basis point decline as compared to the first quarter of 2019.
Net income for the quarter was 258 million and E.P.S. was 1.7% year over year to $1.19 per share.
Are free cash flow for the quarter was $362 million and we were you turned over $140 million in dividends to shareholders.
As I've already discussed our liquidity balance sheet and credit ratings remain very strong and we have no plans to change our dividend policy.
<unk> cover our first quarter performance in more detail during his remarks.
Let me know turned to how our agencies and people have quickly adapted and embrace innovative ways to continue to deliver great work for our clients in the current environment.
We've seen first hand that are people can be just as productive at home as they are in the office they have been nimble and using technology to make the most of what they have on hand.
For example, one of our agencies produce more than 20 video spots in less than two weeks.
With its staff working from home the agency's solely using inhouse production capabilities, including design animation photography, as well as tools like face time, and Microsoft teams to develop concepts direct shoots and collaborate in a virtual added bay another one of our.
Agencies, you drones to maintain social distancing, while shooting a commercial.
These are just a couple of the <unk> of examples of the great work, we are seeing from our agencies.
While these circumstances have been unusual they've highlighted the creativity that runs deep in our D.N.A.R. teams are overcoming obstacles and continuing to deliver to clients.
Our agency, who not only working with existing clients in helping them reposition their brand campaigns in the context of covert 19. They have also continued away new business.
In mid March P.H.D., one <unk> global media planning and buying account in all of its key markets around the world.
The audio selected P.H.D.
Due to stand out media account strategic thinking and expertise in deploying Ami our group wide data and then a Linux platform.
Other recent wins include Lint USA select a P.H.D. as as media agency a bracket.
<unk> Sydney was awarded Unilever's Blue Ribbon ice cream brand.
Any G.B.B.D.O., one bear digestive health brands Merril accent Philips to add to their current responsibilities in the United States.
T.V.W.A., China, while on Lockdown picked up right games legal religions World Championship.
D.D.B. with T.B.W.A., Australia, one cold supermarkets.
And good be so scene, which was recently rank number two on at ages eight list for the second year in a row, one the roster spot for an Arab bread.
Are agencies are also finding unique ways to leverage that creativity to help stop the spread of Corona virus and serve their local communities.
For example, a number of our agencies recently responded to the U.N. and World Health organizations global call out to craters to design work.
Phase essential information about Kobe 19.
Integer one of our shopper marketing agencies responded by creating a social distancing retail tool kit that helps retailers keep shoppers to carts apart.
T.B.W. I also participated by developing the official logo that will go on all of the idea is chosen by the U.N. selection panel.
There have also been numerous examples of our agencies, creating covert 19 information campaigns, P. essays and communication tool kits, including P.B.D.O. in the Philippines launched a campaign advertising the lack of personal protective equipment for the people on the front lawns.
T.V.B., Singapore worked closely with its local government to create an official watch SAP channel I could provide daily updates on Kobe 19 to subscribers.
And then the U.S.O.M.D. helped drive donations to the American Red Cross.
In another initiative to help our communities carrying Vanbergen Dean of Omnicam University is part of the task force to reopen Connecticut.
It's a public private partnership to support Governor Ned Lamont to open up Connecticut's economy in a responsible way based on health science.
Omnicam team developed an integrated communication plan, which has been embraced by the task force.
Throughout this crisis, our culture creativity and the spirit of giving back have remained constant for a organization.
Even as our people in agencies continued to deliver great work covered 19 is having a profound impact on the economy on our clients businesses and then turn on ours, our businesses are being impacted in different ways and across different geography is due to government restrictions that had been putting.
In most parts of the world.
As I've already discussed several of our events and feel marketing businesses have been virtually shut down due stayed home order and restrictions on events and travel even as some of their events have been shifted digital platforms.
Are agencies that have a larger share of clients in sectors that have been most vulnerable for example, travel and entertainment oil and gas automotive and nonessential retail have clients that have acted quickly to cut costs, including postponing or reducing marketing spend in the second quarter.
On the other hand, certain clients actors and our agencies that serve them such as farmer healthcare Tech and telecom have generally perform better to date in our healthcare discipline Omnicom Health group, which is one of the largest specialize communications group in the World has also continued to perform very well to date.
And finally, we have seen some bright spots reemerging in China and other parts of Asia.
I know all of you are interested in our view of the second quarter and the rest of 2020, while we hope for a swift recovery from the pandemic. We are adjusting our operations quickly to the current environment continuing to deliver outstanding service to our clients and positioning ourselves for when the market rebounds, we will.
Might be providing any specific guidance, but.
But let me give you some context of our approach.
Agencies are developing their financial plans for Q. too and the full year based on four key factors first and foremost is the health of our people like everyone else where dependent on when health authorities in government make decisions to end lockdowns and begin to reopen their economies safely as.
Possible.
Next is the expectation for economic conditions and consumer demand in each of our markets after locked down so gradually lifted.
Third is the type of service each agency offers.
And when demand ramps up or services can restart such as in events and feel marketing.
Lastly, it's identifying additional contingency plans now for wind conditions change.
Certainly tell you that we have and will continue to quickly reduce our costs, which are in large part variable unexpected gone or significant savings from the actions I've discussed earlier.
These costs savings will impart offset the decline in revenue, we expect in the second quarter and for the remainder of the year.
We also expect that in the second quarter, we will continue to evaluate our portfolio latency is to identify businesses that are noncore underperforming for potential realignment disposition.
And we'll review opportunities to reduce our real estate portfolio, giving the changes in our operations and the way we are working.
Looking forward as more governments begin to plan for the into the lock down and the re opening of their economies, we're starting to turn our focus to gradually and safely returning to our offices, where you're from the committee to start planning for the opening of our offices market by market. Once we have the green light to do so.
The first priority preparing this plan is the safety of our people.
The challenges we are facing as the covered 19 crisis continues to unfold are without precedent.
Although we don't know with certainty how things will look going forward. We do know that we will continue to focus on our people clients and the strength of our business.
We have managed through crises before and survive to survive in the future R. people in our company I've shown tremendous grit and resilience.
Which is a testament to our culture and that feel stronger than ever I will now turn the call over to fill for a closer look at our results. So.
Thanks, John and good morning.
I also want to take a moment to recognize our people.
The people at our agencies that are serving our clients as well as the people in our support functions around the world.
For their tireless efforts over the past several weeks.
Swift transition to mobilize and implement our work from home policy was done quickly and successfully.
<unk>, but not impossible without are exceptional people. When we are proud of how well they have adapted to this new working environment.
John said, we're focused on aligning our business model to the realities of the new economic environment impacting us and our clients around the globe.
We are continuing our process of revealing our operations to realign our costs structures to meet changes inclined demand as we managed through the crisis.
We've also taken proactive steps to strengthen our liquidity in financial position, both before and after the end of the first quarter.
These actions included in early February we amended and extended are 2.5 billion dollar revolving credit facility. The facility was extended until February 2025.
Mid March we suspended our share of purchase program.
In February we issued 600 million of 10 year 2.4, or five per cent senior notes.
And in March we were deemed early the remaining 600 million a 4.4 or five per cent senior notes that would do in August of 2020.
In early April we issued an additional 600 million of 10 year, 4.2% senior notes.
And in early April we also completed a 400 million dollar 364 day revolving credit facility.
Which is in addition to our existing 2.5 billion dollar revolving credit facility.
We view these actions as putting in place additional acquity insurance during these uncertain times.
And we should also note that we have no longterm debt maturing until may have 2022.
Turning to our actual results slide for the first quarter.
We had organic growth three tenths of 1% for the phone quarter.
Our performance at the end of February was positive on a global basis.
March our results turned negative as economic impact of the covert 19 pandemic began to affect the global economy.
F.X. again produced the hadn't wind.
Using our revenue by 1.4% and the quarter.
Or approximately 1% more negative than we estimated on our February earnings call.
And then that impacts from dispositions made during last 12 months exceeded revenue from acquisitions in the quarter by seven tenths of 1%.
As a result are reported revenue in the first quarter.
Decreased 1.8%, it's a $3.4 million when compared to key one of 2019.
I will discuss and further detail the components and the changes in revenue in a few minutes.
For the quarter, even was $420 million and our operating profit decrease by $8.7 million, while our operating margin decrease by 10 basis points to 12.3%.
Interest expense for the quarter was 45.8 million.
Flat versus Q1 last year, and up 7.2 million compared to queue for of 2019.
As I said previously in February we issued $600 million of U.S. denominated 10 year senior notes at 2.4, or 5%, which will mature in April of 2030.
The proceeds that this issuance we used to retire the remaining $600 million of our 4.4 or five per cent 2020, senior notes that would do to mature and the third quarter of this year.
The impact of the early redemption, resulting in a charge to interest expanse of approximately $7.7 million in the first quarter of 2020.
However, when combined with the reduction in our interest expense, resulting from refinancing actions, we completed and 2019.
Including the issuance of our Eurobonds in July of 2019 defined both the majority of our $500 million 6.25 per cent 2019, senior notes and the early redemption at $400 million of our 4.4 or 5% 2020 senior notes or told.
Will interest expense decreased $4.5 million when compared to Q1 of 2019.
This reduction was largely offset by decrease and interesting come a $4.3 million versus Q1 of 2019.
Which resulted from interest rates on our cash deposits that were lower than the prior rates.
When compared to the fourth quarter of 2019 interest expense increase $6.5 million driven by the charts interest expense from the early redemption in March 2020 notes, while interest income was down a little less than $1 million.
Prospectively.
When we include the additional borrowing up $600 million of the 4.2% senior notes that we completed in early April.
Long term debt portfolio going forward will be comprised of 4.6 billion in dollar denominated debt.
And 1 billion in euro denominated debt.
For the remainder of the year, we expect that are refinancing activity in 2019 and 2020 or.
Well more than offset the increase in interest expense from the issuance of the 4.2% notes and April 2020.
We believe adding this additional liquidity, while maintaining our interests expense levels was approved and step to take at this time.
However.
We do expect reductions in interesting coming 2020.
Which one compared to the pry year will offset they expected reductions in interest expense for the remainder of 2020.
Are effective tax rate for the first quarter was 26%.
Down a bit from the key 120 19 tax rate.
26.8% and a little below the range, we projected for this year.
26.5% to 27.2%.
This time, we're still forecasting that are effective tax rate will be in that range for the rest of the year.
Earnings from our affiliates included a noncash after tax charge approximately $4 million related to the plan disposal of an equity method investment in the middle East.
Allocation of earnings to the minority shareholders that are less than fully Allen subsidiaries decreased by about $3 million to 13.6 known.
As a result net income for the first quarter was 258.1 million down, 1.9% or 5.1 million when compared to Q1 of 2019.
Now turning to eat P.S.
Or deluded share account for the quarter decrease three per cent versus Q1 of last year 217.5 million shares.
As a result or diluted D.P.S. for the first quarter was $1.19.
Which is an increase of two cents or 1.7%.
Compared to our key wanting P.S. from last year.
Returning to the details of our revenue performance in the first quarter.
On a year over year basis. The U.S. dollars continued strength once again created a headwind in our report in revenue.
The impact of changes and currency rates decrease reported revenue.
1.4% or $50 million and revenue for the quarter.
Strengthening was widespread the dollar strengthened against practically every one of our major foreign currencies in the quarter only the Japanese yen strengthens against the dollar.
The largest F.X. movements in the quarter or from the Euro the U.K. pound, the Australian and New Zealand dollars and the Brazilian route.
As for projection of the effects impact for the remainder of the year.
Any assumption on how foreign currency rates will move under normal economic conditions, let alone. Our current environment is always a speculative exercise.
But looking forward currencies stay where they currently are for the balance of 2020.
Effects could negatively impact are reported revenues by approximately 2.5% during the second quarter.
But then moderate somewhat in the second half of the year, resulting in a negative impact of around 2% for the full year.
The impact of our recent acquisitions native dispositions decreased revenue by $24 million in the quarter or seven tenths of 1%.
Which is right in line with the estimate we had when we entered the year.
Since we've had relatively few acquisitions or dispositions recently at this time, we estimate the net impact on the transactions completed as of March 31st we'll be negligible on our revenue over the remaining three quarters of 2020.
However that estimate does not include the impact of any future acquisitions or dispositions, we may make going forward as we continue to evaluate our portfolio businesses.
And finally organic growth for the first quarter was three tenths of a percent.
So the full quarter geographically, our domestic U.K. and Asia Pacific regions had positive performances.
While the rest of Europe, and Latin America were negative.
Within our service disciplines for the quarter, our healthcare agencies led the way and P.R. was also positive.
While advertising and media.
Serum consumer experience and C.R.M. execution in support.
Slightly negative due to the downturn that began in March.
Turning to our mix of business by discipline.
For the first quarter, the split was 56% for advertising and 44% for marketing services.
As for the organic growth by discipline or advertising discipline was down marginally at 110th of a percent.
Organically, we saw declines that our global advertising agency networks.
But organic revenue from our media agencies was up to that for the quarter.
Serum consumer experience was down 1.3% organically.
We continue to see strong grows from our precision marketing agencies and they also had positive results in March.
Well, our events and shop or marketing businesses lagged.
C.R.M. execution and support was down nine tenths of a percent, which was an improvement over what we had seen from the discipline recently.
P.R. was up two tenths of a percent and lastly, health care was up almost double digits at 9.6%.
And as has been the case over the past several quarters.
The growth continues to be well distributed across the geographic regions. They operate in.
And they also had positive results in March.
Now turning to the details of our regional mix of business you can see during the quarter to split was 56% in the U.S.
3% for the rest of North America.
10 per cent in the U.K., 17% for the rest of Europe.
11% for Asia Pacific.
2% for Latin America, and the remainder for the Middle Eastern Africa, our smallest region.
In revealing the details of our performance by region.
Organic revenue growth in the first quarter in the U.S. was 1.7%.
Led by R.C.R.M. consumer experience healthcare N.P.R. disciplines.
With our advertising in serum execution and support groups lagging.
Outside the U.S.R. other north American agencies were up six tenths of a percent.
With growth at R.C.R.M. consumer experience and serum execution and support offerings more than off setting a decrease at our advertising medium businesses.
R.U.K. agencies will once again positive up 3.7%.
Driven by the continued solid performance over advertising in health care agencies.
The rest of Europe was down 2.3% organically in the quarter.
In the Euro zone, while they were a few markets with positive performances, such as Ireland, Portugal, and Spain, most were negative as business activity slowed as the covert 19 outbreak spread throughout the continent.
Germany was down just over 1% and then that'll ends was down mid single digits.
While our businesses in France, which were already dealing with client losses that a few local C.R.M. execution in support businesses before the impact of covert 19 hit was down double digits organically.
Organic growth outside the Arizona's positive for the quarter by six tenths of a percent with most markets positive except for Russia.
Growth in Asia Pacific for the quarter was 2% are great China agencies were down about two and a half per cent in a quarter.
Elsewhere in the region, we saw mix performance by market.
Solid performance from our agencies in Australia, India, Indonesia, and New Zealand, or partially offset by reductions in Japan, Singapore and Thailand.
Latin America was down 5% organically in the quarter.
Brazil once again have a negative performance as they'd Columbia offset in growth in Chile, while Mexico was down slightly in the quarter.
And lastly, the.
The middle Eastern Africa was negative for the quarter, primarily resulting from the cancellation of events activity in the region.
Turning to the presentation of our mix of revenue by our clients industry sectors and comparing the first quarter revenue for 2020 to 2019.
You can see there was a small shift in our makes a business.
This quarter, we have also added some additional industry categories toward disclosure on the slide.
Provide more details regarding certain industry categories that were previously included another.
None of the additional categories represent greater than 2% of the total.
Moving onto our cash flow performance.
You can see that in the first quarter, we generated 362 million or free cash flow, excluding changes and working capital.
Up about $20 million versus the first quarter of last year.
As for our primary uses of cash.
Dividends paid to our common shareholders will $142 million.
Up slightly versus Q1 last year.
The impact of a five cent per share increase in our quarterly dividend payment effective in April of last year.
Partially offset by the reduction and are outstanding common shares due to repurchase activity over the past year.
Dan's page, where non controlling interest shareholders total $10 million.
Capital expenditures were 26 million down slightly year over year and as we stated earlier, we are limiting our capital projects in the near term to only those deemed essential to our ongoing operations.
Acquisitions, including aren't out payments total just under $10 million.
Electing that reduced recent activity.
And stock repurchases net of the proceeds received from stock issuances onto our employees share plans total just under $200 million.
And again, we suspend that our share purchase program.
All in we outspent are free cash flow by about $25 million and the first quarter.
Turning to our capital structure slide as of March 31st keep in mind. This reflects only the transactions we completed as of the end of the quarter.
And it does not include the 600 million of additional scene, you know borrowing which closed during the first week of April.
So as up at the end of March our total debt was $5.1 billion, which is down almost 400 million from this time last year.
As you May remember the key 120 19 debt balance included 520 million euros of short term non interest bearing senior notes and a private placement to an investor outside the United States.
Repaid those notes in the third quarter of last year.
Partially offsetting the repayment isn't that impact of our dollar denominated issuances and repayments over the year.
Along with the issuance of our euro denominated that last summer.
Versus December 31, 2019 gross that at the end of the quarter was down about $40 million, primarily due to the F.X. impact of translating or your denominated that to the U.S. dollars value as of March 31st.
Our net that position at the end of the quarter was 2.41 billion.
Up about 1.6 billion compared to your end December 31 2019.
The increase in net debt was the result of the use of working capital of about 1.3 billion.
Which is typical of our working capital requirements during the first quarter.
As well as timing differences in the latter part of the first quarter.
In addition.
That that increased as a result of the impact of exchange rates on our cash and that balances during the quarter by about 180 million.
And by 25 million related to the use of cash in excess of our free cash flow.
Compared to March 31, 2019, or net that is up $368 million.
The increase was primarily driven by the change in operating capital during the past 12 months of approximately $485 million.
And the negative impact of F.X. on our cash balances, which totaled around $185 million.
Personally offsetting those increases over the past 12 months was our access free cash flow approximately $345 million.
As for our debt ratios they remain salad.
Are told that they even <unk> 2.2 times and our net debt to even dial ratio was 1.0 times.
An orange was coverage is 10.6 times.
And finally moving to our historical returns for the last 12 months or turn on invested capital ratio is 25.1%, while our return on equity was 54.9 per cent.
And that includes are prepared remarks. Please note that we've included several other supplemental slides and the presentation materials for your review.
But at this point, we're going to ask the operate it open the call for questions. Thank you.
Thank you, ladies and gentlemen, if you'd like to ask a question. Please press. One then zero on your telephone keypad you may withdraw your question at any time by repeating the one zero command, if you're using a speaker phone. Please pick up the handset before pressing the numbers. Once again, if you ever question. Please press one zero at this time and one moment. Please for your first question.
Oh.
Your first question comes from the line of Alexia Quadrani from J.P. Morgan. Please go ahead.
I. Thank you. So much. Thank you guys found that tolerant and help you guys are talking while I wanted just like a gig in Q. <unk>. You made about did you guys that declined to sign marks curious if you could hear how much March organic grabbing both with down.
And sort of how organic replica that's trendy in April.
[noise] sure I'll take that.
We we had approximately a 3% organic growth through the end of February.
So March was was essentially.
Yeah <unk>.
Similar them out in in a negative fashion so.
A little bit lesson that in a month March.
And and in terms of April I think that was your second question.
We we don't have numbers for the for the month of April we don't collect.
Weekly revenue numbers by agency and roll them up at the Omnicam level, but.
The expectation is the year over year.
Revenues will be down in the month April.
And then if I can follow up yeah, perhaps John or <unk>. You know you guys. Both had great perspective, having been in on the calm created a last financial crisis I guess, how is it different <unk> nine I do think that <unk>, you know, perhaps a lot worse, but may be shorter led and I'm, telling you didn't.
Great job, you guys get back and they're not in terms of protecting profitability.
Yeah, so like I say good morning.
This <unk> this.
Situation is is quite different than past situations, because 2008 2009.
Started off as a financial sector.
<unk>.
This this this time around it's affecting the companies are the areas. Most specifically that were referred to on on remarks because of the total shut down.
The good news is.
If they do it intelligently.
Countries around the world is starting to bring people back in one as severe another which.
I think would be very positive if anything is a couple of months, but.
They're very positive.
Reactions that we've taken so far.
Simply because this is different than anything we've faced in the past have been I guess appropriate well they've been edited inappropriate level to reflect what we think's going to happen to our revenues.
And the second quarter and then.
We're always everyday reevaluating, what we think it's gonna happen me on the second quarter.
So.
Actions that we've put in place so far.
Those that we took in 2000.
Nine 2010.
But we feel they're appropriate and related to the revenue that we expect.
Downfall well the.
So revenue that we expect a second core.
Yeah, I you know I think based on the data we we have.
From our agencies today.
And and the the forecast processes, yes, Sir an iterative process. We spent a lot of time with our senior managers that our networks and practice areas over the last month regular time with them.
And and you know we're in the process of Reforecasting the numbers for you to one and the the rest of the year.
Ah yet again over the next few weeks, but I I think we expect the initial impact.
<unk> to me a little deeper.
Then it was back in no way you know nine.
Initially.
And.
Yeah, we we we like everybody else or don't have enough information yet too.
Yeah really know what to expect in terms of when.
Businesses will come back, but we're certainly focused on.
Making the decisions that we need to make now.
And preparing.
The businesses for.
When the economy's open up and and the opportunities that are going to be there for us to take advantage of.
The only say I might add let's see is it's not all doom and gloom.
If you look at our health care sector.
It's probably.
If you look at the health care sector within the public relations <unk>, that's very very solid so there are areas our business. Despite all the difficulty that's out there that are in fact scrolling.
And I would assume that you you get some incremental benefit to that point, John some of your client Twain wanting to read assets there creative work make it more appropriate that's environment is that continuing or that really likely in my mind to that.
No I mean.
<unk> almost every one of our clients you can see it and some of the our major clients in their advertising.
Pepsi H. interior, some others that they're still actively engaged in trying to address themselves.
Their employees into the public with messages of support of this and our guys ladies.
<unk> basically from home at this point.
That's the most fascinating and then.
Enlightening thing that I've seen through this whole process.
Just how well.
And how quickly we transition from work in the office with all the facilities in office would would offer to working at home.
And our people have been just.
Just amazing.
It's really been incredible and thankfully so.
Thank you very much sure.
Your next question comes from the line of Craig Huber from Huber Research Partners. Please go ahead.
Yes, hi, Thank you a few questions it sounds like usual safe.
Phil can you give us a sense at the individual advertising agency level what percent a cost what you say a variable that you can really attack.
Hold back costs, there first question.
You know I'd I'd, I think as well I think as an overall matter <unk>. We're certainly you know we're going to consider an address.
Any at all cost components in the business.
What we do a significant portion of of variable costs.
You know if you look at the.
You know salary and service costs line.
A significant portion.
Of those cost, which you know about 70 little under 75% of the cost structure of the business.
Certainly we're going to we're going to look at any and all of those costs <unk>.
You know I I don't I don't think there's a way to say you know all of the 75% or actionable and and this this.
Situation is not a dire as that.
A significant portion of of our costs are valuable isn't set of calm in those numbers.
Some of the service costs component.
Of that of that costs line, certainly is tied directly to revenue and you know we're looking at well looking at all those things, but but we also.
Are keeping in mind, we do have a business that continues to provide.
Ah services to our clients and innovative creative ideas to our clients.
So there's a significant component that cost that that will continue in support revenue streams going forward.
But but I you know I think if you look at that variable costs a lot. They the Sally service line.
A significant component of that is in fact valuable.
Oh My second question fill when you sort of it's hard to know this of course, but.
You guys, obviously do an awful lot a long term work feet or clients is there anything that you're thinking at the third quarter. The euro for your percent decline in the organic revenue to be down.
Worse than what you maybe thinking with the second quarter could be I know, it's hard to know for sure, but how do you sort of think about that <unk>. Thank you could be the worst of the second quarter.
Yeah, I'll give you my opinion on John John can add to it I think.
We we just don't know with any certainty, but all the discussions we've had with our businesses to date.
Would would lead us they concluded that yeah, the second quarter will bear the brunt.
The decline in marketing spend by a client says they they pulled back because of the shutdowns global shutdowns.
N.
I think as as the economy slowly comes back both in the U.S. it overseas.
You know clients will want to grow again, and I want to invest again and yeah. We don't expect second half.
In terms of her Saturday declined to be a significant on the second quarter right now.
Yeah, there's not much I can add to that.
<unk>.
In a preliminary forecast that we.
Looked at and they are preliminary we have to go back and.
And dig deeper into the second quarter was the most traumatic.
And there was an assumption.
That many sectors wouldn't release gradual these reopened at some point during the third quarter that seems to be playing out based upon what we're hearing.
From the governments around the world So the second quarter at this point.
Is going to be.
Thing.
Worse from a cost point of view, though we've taken a different view.
You've taken the reality of what we've seen second quarter is going to be.
Plus we projected that a little bit more severely into third quarter.
Then our revenue expectations are just too just to assure ourselves that'd be actions that we're taking.
Are.
Right size and we'd rather be in a position later in the year where where.
<unk> instituting people.
As behind the revenue coming in as opposed to.
Chasing a revenue decline for the full year.
In my last question, if I could can maybe help quantify force how you sort of thinking about your employee head count the terms of.
<unk> furloughed or unfortunately laid off in this environment is it like a 15% number keeps her sense ballpark. Please.
I'm not sure I want to give you a number at the moment you said so fluid.
You do recognize that just systems, where you are in the world are in fact different.
If you take places like France, and Germany, which were big markets for us their governments look to support.
The population by keeping the employee attached.
To the to the <unk> company, which will make it very easy for us to recover when those raucous in fact recover.
In the U.S.
Start a political statement for better or worse.
U.S. requires you to make people redundant in order to get the benefits associated with what the government is offering.
We view the actions that we've taken then we continue to analyze this.
As permanent.
For companies that we do not think we'll come back to spending.
During this calendar year.
And furloughed, even though they're true the same they've put our unemployment.
And those people of the first.
Those people will be the first priority in terms of us frame them back as soon as client Ram is restored.
I don't know if that helps you are filled with yeah. So so so it <unk> you certainly maybe familiar with us already but what what johns referring to is there's a number of.
Of countries in Europe, especially but but also what other parts of of the World, Canada, and and and certain Asian countries.
Where.
Employees remain on our payroll.
And the government subsidizes that employees pay rather than have the employee terminated because our clients have have.
Indicated that they're gonna they're going to.
Reduce their spending near term, so, whereas we might tip and the typical quarter a client reduces their spending if we had to take action at an agency.
And actually reduce our head count we would do that in this environment.
In some countries that isn't permitted during a short period of time.
So those employees will stay on the payroll and won't get reimbursed.
You know a significant portion of their salaries 70 or 80% in some cases, so those furloughs, our our what's occurring in a number of the European countries, which you know hopefully clients then comes back and those employees will be.
You know they won't need to be reinstated they'll continue on what the company in the same fashion as as from before.
If the business doesn't come back we're going to have to reevaluate our decision in the U.S. because the U.S. doesn't have a similar.
Approach in terms of furloughs.
Formal furloughs, we've we've taken him a little bit of a different approach.
We have indicated to those people that that where we we believe.
You know, we're hopeful that that we're going to bring them back, but yeah that that we do in fact want to bring them back as soon as clients. Then comes back on what we have had to take the action of of severing them from the from the payroll so that they could.
Take advantage of the the government programs.
To help them in the near term.
The other thing I want to Ed, which.
Kind of blows me away and I'm very pleased with this is a number of people.
And the United States, but across the world, who have taken a voluntary <unk> salary reduction.
That's I mean.
You have to be in my position, but it's wonderful when you see what people are doing.
And what people are willing to offer up.
To.
Help.
Reduce the number of.
<unk>.
And reflect the fact that this unlike any other crisis in the past is a shared experience.
That's very good. Thank you very much sure. Thank you.
Your next question comes from the line of Michael Natanson from Moffettnathanson. Please go ahead.
Thanks, I just have to feel I'll be quick so John.
I Wonder what you guys. Both said about for a long people you know I'm calm has been known for having you know the best talent do you worry about maybe creating a bunch of free agents for some of you are more challenge companies you know competitors in Europe, you know, maybe sweeping and take some of the town. So how do you have you guard against losing.
You know all the people who are on furloughed, you know down the road maybe competitors and then fill you mentioned the working capital I'll close you know, it's it was bigger than we've seen before I realized that we're a bit so they go pandemic, but any color and what happened maybe in March you run from senior comments and it kind of the sustainability of the working capital outflow is this your clothes off.
<unk>.
Oh, let me take the first question.
You know people are free to do as day.
<unk> and they've always been that way.
I'm not.
Well I'm not any more concern.
Then I would be probably should crisis.
About.
Our staff choosing to work for Omnicam as opposed to one of our competitors.
And we've been very careful and thoughtful I think.
And unlike in past crisis is communicating with our employee base and living though.
What are our priorities and what our concerns and what to expect our actions to be.
And I find that when you do communicate with your employees that way.
It creates a dialogue at a trust level.
That is terribly important to get us through this crisis. So.
I will be shocked.
If.
Is any depletion talented Dominic I quite expect to be able to do just the opposite of what you're suggesting and probably hire.
People that we think are terribly talented in some of our competitors.
After this or as a settles down.
Yeah I you know the only thing I would add is is.
You know that this isn't a situation where.
There there have been or will be indiscriminate productions.
And.
The overall.
You know talent that we have at our agency. So so there are client situations.
Where.
Reduce their spanned.
And you know we need to take actions that that agency.
The answer isn't simply.
<unk> whoever's servicing that client.
Is unfortunately, you got to be part of.
The furloughs or terminations that need to be made.
So that he overall agency can thrive in the future there there's an evaluation that's being made of for our bass people.
And you know do we have any under former is that you know we'll be.
First on that list of of either terminations or furloughs. It if that action has to be taken. So we we are certainly a working through this and doing everything we can't keep.
Those who we think are best.
Yeah.
One thing I want to point out.
Is.
You wouldn't see the level of leadership.
You know, we entered 2020 or D.V.D. it with a difficult situation revisited lost several large clients thankfully to other parts around me calm.
And we were a bit shocked him put off when when the clock decided.
That she was going to move on in the middle of a crisis, but we were able to recover.
With no interruption at all because Chuck Brymer, we've previously been the C.E.O. and the chairman of the company was.
With us and ready to step back in and is done in magnificent job irrespective of whatever the behavior.
Of his predecessor lists so I feel.
That we can replace every every single one of us and it's it's truly a team effort.
So to to the second question, Michael as as far as working capital.
A number of.
A number of factors impacted us.
That March 31st I've handled a quarter so.
<unk>.
<unk> one one thing to start as John at sat in in his prepared remarks.
Our cash balances as of.
Yesterday are are still an access of.
The balance in cash that we had at 331 22.7 billion in cash we had it.
331, 2020, the cash we have on a hand today is is an access of that number.
And is is right around that number.
If if he back out the 600 million an additional financing we raised which closed on April 1st.
It's our our performance in in terms of working capital management and and cash.
In the month of April has been very good.
And essentially what happened in the last week in March.
We're a few things clients a number of clients, who have India based eight processing centers.
If you remember India was in disarray in disarray the last.
Basically week of March.
And and number of their.
You know outsourced service providers, we're kind of caught in the middle of trying to transition their operations to work from home.
Which in India is very challenging and a number of those service providers, we're not well prepared for that transition.
As a result.
[noise].
Yeah, the the the <unk>.
Cash payments from those clients that we expect in the last week March came in in April as opposed to.
As of the day March 31st.
And you know I think I think the other the other things that contributed where similar certainly a lot of our clients.
We're in transition or or we're working from home and the matter of a delay of you know two or three days at the end of a quarter you know doesn't make a difference overall toward working capital management.
It does make a difference in terms of the cash balance that's on on the balance sheet at March 31st and yeah. The working capital disclosures in our statement a castle. So you know it and I say I think there's probably a bit of you know certain clients.
Yeah, holding onto their cash a little bit longer at the end of the quarter.
As they were sorting through.
Coven 19 was really get a mean and what kind of an impact it was going to have in their business.
So I think I think those are the primary factors that drove.
The the $600 million of declining in in working capital performance in in the quarter.
As of March 31st and.
I think otherwise the performance in April has been excellent and and we've certainly.
Stepped up our.
Yeah interaction with our agencies on a daily and weekly level in terms of cash forecasting and we're very pleased with our performance. These first three plus weeks.
Of April so we don't we don't have any concerns.
Just from this snapshot as of March 31st.
Hey, Thanks, guys I appreciate the Austin Thank you.
Your next question comes from the line of Julian Roche from Berkeley's. Please go ahead.
Yeah. It's good morning. Thank you for picking my question, what other Coppola and I've been one by one if that's okay. With you you gave no indications of cued speech, writing I understand it's really difficult thing to watch ending every day.
I guess investors expectation, all I believe <unk> or getting decline up 25, P., 30% way do T.V.Q.T.I. does that sound like the outcome potentially was potentially you'd better.
Wow.
[laughter] well this got a very short answer compared to the answers are giving your previous question.
Certainly we're looking at.
A a cue to downfall, which.
Could be you know Dup certainly will be double digits.
We're not prepared to discuss I'm not prepared to discuss anything that happens beyond that in the year it'll depend on.
How quickly businesses reopened.
<unk> car dealerships too.
And franchises too.
All sorts of activity, we couldn't take it pretty good estimate that some of our events businesses will be affected for a longer period of time.
But oddly enough.
We've got to get into a situation where people are gonna start to get extremely creative because I think sports in one form or another are going to come back maybe that attendance it stadiums.
Or people viewing it but.
Oh.
Oh that people are not which are clearly the most effective to this whole thing.
Are coming up with incredible ways that I as an individual could have never even imagine that we'd be able to do so we're taking this.
The first the first thing that we did.
In this crisis is we went out and we increased without sacrificing our credit rating are liquidity.
To make sure make certain that versus every single one of our competitors. We have far more resources. There may do because some of them because of that acquisitions that they made in the past or received bad.
So that from my experience in prior crisis is is the key the fundamental to making sure that your company prospers and recovers from the situation.
Then what we've done is we've got out very thoughtfully and taking.
Advantage of every single government program that's out there.
And then finally as a result.
We've had to adjust our payrolls.
Anticipation of what our clients we've seen her was going to spend and when they're going to come back.
I don't think it's gonna be Rosie, but we do fully expect to bring many of those people back as we get later and later in two year. So.
I'm not prepared to give you.
Numbers yet.
But I can assure you the actions that we've taken have been thoughtful.
With a view a very strong view.
That whenever recovery stars will be well resourced to recover quickly fill us add anything so.
You know I think I think it it's hard julianne for us to to give a.
Yeah, and insightful in any meaningful.
Number if he will as to what we expect in Q3.
Not necessarily my my question by just for Q. too.
She was cute too.
So so.
Q too I think just to add the Johns comments.
They give you a sense for you know some size certainly the events businesses and the feel marketing businesses we have.
<unk>.
<unk> War, and we'll be most affected most quickly and and those businesses or.
You know the events business is probably you.
You know roughly four per cent of our revenue.
And the feel marketing business is less than three in the first quarter as an example.
And yeah, some of the businesses within events and feels marketing.
We we found interestingly in the last a few weeks and month is some of those clients, while they certainly have reduce their spend.
Pretty quickly.
They didn't want to keep our talented people.
Around and are willing to.
To work out some solutions with us to keep them.
On the payroll and keep them working on virtual programs and things like that for their brands. So so it isn't all doom and gloom, even within those discipline, but I you know I think I think Johns assessment of directional guidance of double digits for the second call.
<unk>.
Is probably.
You know that as as much as are willing to say at the moment given the uncertainty still.
Okay cool thanks for that the second question I have three.
You said that <unk> <unk> down three in in in knowledge, but I get the second up a maltese quite different because that's when the look down started in in many countries could can we have organic trends in the last two weeks of March and and I guess some countries I'll be friends you know.
Although you give us a available number well well by countries, but but some call other than the last two weeks of knowledge. Please Julie and I wish we were that good let me let me tell you what I think because I haven't wasted a single moment or by time.
Analyzing what happened in the last two weeks of launch, but we knew I mean, some or events businesses for instance.
Are very been very profitable.
Expect them to be again, especially in China and other other markets around the world. They work cancel their name I think we even met mentioned that.
You're in call, which we talked about in early February.
We saw the impact of those cancellations.
And certainly in March they said it was scheduled to March <unk>.
So.
I'm pretty.
Oh, it actually in pretty delighted.
That we came out of the first quarter with three tenths of a percent organic growth.
I mean because.
Yeah.
We were doing just fine so but in terms of doing an analysis of.
What happened in the last two weeks of March.
Tell you with everything else that's going on that has not been.
One of my areas of focus I don't know fill us add nothing.
Yeah, I mean, <unk> just to be clear, we we we actually don't have access to that data, we don't close our books weekly.
It yeah, it's a different.
In a professional services businesses different type of business. Then you know a retail example, or or business like that where they do have.
You know I'll process in place where yeah. They are tracking sales daily or weekly the numbers just don't come together.
That way, but I think certainly the discussions we had and have had with our businesses as John referred to yeah. There was a much greater sense near the end of March on the impact this was going to have.
And and we've been dealing with a real time ever since.
Okay very good not not question, you've given no indication of course, but w. could be as I liked it 700 billion pounds of cost savings that'd be these 500 million euros southern can you give us an indication of cost saving all if you can't do that may be operational gearing.
H. two points of organic <unk> backing it up in coffee mugging by X.P.C.'s boring stuff I mean, some numerical colors on costs you'd be welcome.
You know never spoken about this.
Publicly anyway in 2000 in 13, when we were going into the proposed merger of Omnicam and public <unk>.
Magic number for synergies was always 500 million.
Just humorist associated again in 2020.
Cost cuts, we've taken any annual impact of them have been appropriate to the level of revenue expectation that we have.
We'll be in a much much better position later in the quarter to tell you what those actions were and what they weren't.
We're not setting of the object or a goal.
That we are willing to announced in public has to the amount of savings that we're about to that we're going to achieve by.
Decimating parts of our staff, what we're doing is thoughtfully looking at it client by client office by office and taking the appropriate actions to make certain that we saw profitability as quickly as possible. So I cannot join my colleagues in giving you a number to cheer.
We're about or to put down so we can measure ourselves about did we get to it or not.
Yeah, I think I think the only thing I would add to Johns comments is that.
Yeah the approach.
That we're taking is one that's got to be you know agency by agency region, Yeah market by market region by region.
Business by business and and the approach is going to have to be different.
Based on all those factors and it really is about.
The processes about trying to re align our costs structure at the lowest level the agency level with the revenues.
At that level and when you add up all the numbers, they're going to add up to.
A big number if our revenues come down by big number relative to our past history.
What I'm, referring to in terms of big So you know that number is going to change.
From what it was a week ago and what it'll be a week from now because it's an iterative process and.
Yeah, we're going to try and do the right thing the right thing for our people in the right thing to long term sustainability of.
Of our business.
And and we'll have a number certainly.
When we talk to the next.
The only thing to my Dad is a letter offended by the question at all.
I think it's still foolishness or my competitors.
Thrown out a number two.
When they don't even know what.
There's going to be required to write size their business unless they were.
Holding onto adjustments that they couldn't unjustified to in the past and throw them out.
And using covered 19 as an excuse so.
Some of its experience probably but it's all nonsense at this point, we'll let you know.
And as soon as we do when we do thanks.
I really can't thank you very much you're welcome.
Your next question comes from the line of Benjamin Swinburn from Morgan Stanley. Please go ahead.
Things come morning, I have two questions for John.
You know first we've we've sort of seeing this kinda gradual increase in sort of trade barriers in protectionists silliest rhetoric around the world and.
It does seem like cold in 19, maybe increasing some of those trends in as a as a company who deals with multinationals and.
And you know global trade as important to the overall business I'm just wondering when you look at this crisis, John If you think about that having a long term impact on the business.
Or maybe you think you know were overreacting and it's it's again, mostly political rhetoric, but you guys are sort of uniquely positioned in a in sort of media to think about these things and.
And what they might means that it would love to get your thought on that question. Then secondly, you guys have been a disposing assets over the last couple of years.
I'm wondering under this sort of umbrella of structural long term changes as a result of coping 19 to the agency business. If you think this may prove to be an accelerants in either further asset sales or maybe maybe actually even consolidation just given you know some of the weaker competitors of years out there who have done.
Finding revenues heading into this situation so to to kind of bigger questions I'd love to get your thoughts on [noise].
Sure.
In terms of.
Globalization.
And.
The impacts or is it is going to have <unk> I think a profound impact on like companies do.
Moving forward, our consumer facing cost of.
Clients are going to want to continue to expand into those markets for just a population of potential growth that.
Where I've heard the most.
Concerned I guess or.
<unk>.
Evaluation.
Is.
Companies that where they're supply chain.
Hmm has been.
Been been putting in place principally because for the basis of where the lowest cost provider was and people seeing that.
In this type of environment.
That.
That free.
Type of access to.
Every single market in the world without consideration too I mean.
Pandemic or other type of pandemic interruption is something that they're going to have to rethink his we'd come out coming out of this.
But.
You know our cars in shot or spending because China is basically back open again people are actually going to car dealerships in China, where they're not allowed to go to car dealerships that are close in the United States. So there's going to be very very thoughtful and long considerations about.
Not so much once you get past where the consumer is.
Some of the ways that companies have operated.
Up until now and we'll have to re evaluate.
Your second question was Oh.
This positions or a consolidation in the industry is is this a catalyst for either of those in your mind.
Certainly not a catalyst I mean.
We may not this for close to three years.
Yeah Yeah.
<unk>.
I'm not going anywhere but I.
Did have a secret book I was gonna leave their my successor as to what I thought should happen [laughter] [noise].
But I can assure you I'm not going anywhere it during this.
So.
We're going to be looking at markets were gonna be looking at I don't think we're going to be exiting markets, but we're going to look to see.
Halloween should.
Present ourselves in those markets and how we should servers are.
International clients in those markets and what the local market potential is for the brands that we have represented there so yes <unk> interface anyway.
We're going to use this event to properly size our business.
To take whatever adjustments, we need to take.
<unk> that is absolutely stronger coming out of this than it was going into this and we were in pretty good shape going into it.
<unk>.
Sure.
I think given the market's gonna open shortly I think we have time for one more question operator, Okay that question comes from the line of Tim Nolan from Mcquary. Please go ahead.
Oh, Thanks, very much let me if I can't just kind of type two things together here. So sounds like the queue to revenue impact is probably going to be worse than we've ever seen at least in our memories, but you're taken as aggressive cost action as probably you'd certainly did versus 2009 when I look.
Back on my numbers and you were down 120 basis points peak to trough 79 full year like you or you know on track to do perhaps even better than that now I guess. The question is are there permanent changes that might come out of this on the cost side. John you mentioned real estate, you've talked a lot about.
They used to technology, we'll see what happens with staffing levels that sat around people come back after furloughs, but are there permanent margin positive impacts that could come out of this thanks.
Well the good news is the same <unk>. Unfortunately that was here in 2000 or nine and took all those actions is still here now.
So we are taking I think what the appropriate actions are yes I.
I think every aspect of.
Our business is going to change what in addition to all the actions at all the immediate day to day things that we've.
I've been.
Been engaged with during the last five weeks, especially during the same period of time I established three separate committees one to look at the media business one to look at the advertising business. Another to look at the public relations business.
To go away forget that day to day was happening and two in a blue sky type away with a clean sheet of paper.
Tell me how those services should be performed in the future.
Without any.
Any consideration of costen adjustments.
But just to give me a very clear sight.
As to the things we should be looking towards as we emerged from this.
And I'm expecting some dramatic.
Answers and goals and objectives that we can look to to accomplish so yes, I do think that the business is going to change I think once we get through all the restructuring costs and everything else that people are going to have to take it will be positive and your are correct I mean.
Fixed costs for instance, like real estate, we absolutely proven.
That people can work from home, we believe that.
The corporate level going into this and had resistance from maybe some of our operating people who are so quick to except that kind of point of view, but they've all learned and they've been fascinated amazed at the resilience of their staff in the way they've been able to do that so that's the only one s.
We've also cotton.
Without having to go through the <unk> rhetoric or though.
The procedure of having.
Production houses in post production houses.
Those capabilities, which delay.
The moment from women idea is created in a brief is crazy to the execution of that.
It's pretty fascinating to see how.
The people who have traditionally thought most terrorists have changed the way that they say.
And when.
The difference between getting a brief him having him executed.
Super idea to put out.
<unk>.
<unk> has is really collapsing very positive way. So I think the organization that will emerge from this will be incredibly strong.
And it will be.
And it will ever adjusted.
To the environment that we're going to work in the going forward. So.
Despite all those actions that we have for taking all this other stuff.
Incredibly optimistic about the business as we move and you know out of this period in into the future.
Excellent.
Okay. Thank you all for joining us on the call. We appreciate it.
Take care.
Ladies gentleman that does conclude your conference for today. Thank you for your participation for using A.T. and T. teleconference. You may now disconnect.
[laughter].
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