Q2 2020 Asure Software Inc Earnings Call

This call as far as soon as CEO Pat Capella.

Kelly Brennan.

Nice precedent go for each or Cheryl trbula. After the speaker's remarks, there will be a question answer session.

I would like to turn the call over the shirt for introductory remarks. Please go ahead.

Thank you operator, good afternoon, everyone and thank you for joining or sort of second quarter 2020 earnings call.

After market close through at least Arcadia as a result, the earnings materials are available on the Fccs website in our Investor Relations website at Investor Dot assure software Dot com, where you'll also find the investor presentation. This teleconference is also being broadcast over the internet and will be archived been available on our IR website during <unk>.

Whole today, we will reference non-GAAP financial measures, which we believe it could be useful to investors and exclude the impact of certain items I just got to timing of these are yeah. This along with a reconciliation of non-GAAP measures to their most comparable GAAP measures can be validate our earnings release today's call will also contain forward looking statements that research.

Future events and as such involve certain risks we encourage you to review our filings with the FCC for additional information on factors that could cause actual results to differ materially from our current expectations.

Really I would like to remind everyone that this call will be recorded at it will be made available for replay the a week available in the Investor Relations section of our website with that I would now like to turn the call Overcharge CEO Packable Pat.

Thank you Sheryl and thank you all for being on the call today, we'd like to welcome everyone to our second quarter 2020 earnings call I. Appreciate your interest whether you're an employee client investor analyst or interested third party I'll start today's call with an update on some key metrics and our response to coal but now.

18, before reviewing our business highlights for the second quarter and recent changes to our board and senior leadership team next calendar will review our financial results and then we'll take questions. Despite the obvious that certainly kobin 19 as created for small businesses. We're encouraged by our strong human.

Capital management business bookings in the second quarter assure continues to make progress on our strategic initiatives, including our product innovation and go to market investments, while accelerating expense reductions after the workspace business sale.

In April we provided an update on our business says were responding to the impacts of Cobot 19, we also talked about the headwinds in our key metrics since that time and especially beginning in late may our key metrics began to improve and continued improving throughout the quarter as busy.

This is started reopening and employees began returning to work we experienced a steady increase in paid employees as well as an increase in sales leads and sales productivity in the quarter.

We usually do not provide detailed metrics on a monthly basis, but we think it's important to our investors to understand how they've been trending as the economy recovers or April call. We mentioned that we had.

Little over a thousand lumbar 10000 direct customers delayed because of coal bed and 160 had returned now a little over 600 of return so year over year. The number of clients process is down just 4%.

Same store sales on the other hand is down about 14% year over year translating these metrics in the recurring revenue on a monthly basis April and May we're roughly in line with each other but June and July increase substantially no July had its flow.

Right ticked down from June.

Some of the state's reinstated closures still we're pleased that new sales units exceeded losses in both June and July.

Starts in July also exceeded losses.

We view this as an encouraging an important milestone on our path to double digit growth looking forward as cobot customers continue to return and small businesses continue rehiring combined with our strong new bookings and starts we expect.

The tailwinds on recurring revenue to keep improving that said, we think it's prudent to monitor these trends for a few more months before revisiting a return to providing guidance.

We have been a valuable business partner to our small business customers during the pandemic, providing them with information to navigate complicated changes in legislation.

Solutions were invaluable to clients and adapting to new environment of a remote workforce as they begin to reopen and get back the business. Our cobot 19 resource Center and Webinars in particular have benefited more than 10000 small business intend. These since launch our web and I.

Webinars led by Mike Benoit are at an all time high we could not deliver this axle adds to our customers without the dedication of our employees, who continue to excel in this ever changing environment I want to thank them for rising to the challenge and delivering Ics.

Optional service to our small business clients. Furthermore, we have an ongoing commitment to our employees to ensure their safety more than 90% of the workforce continues to work remotely and that has been going very well, while small businesses have experienced unprecedented economic.

Headwinds due to cobot 19 bit damning will never stop providing our clients with service technology and support they need to survive the crisis and thrive when it's over as such we continue to make progress on our strategic initiatives, including product innovation and go to market investor.

Meds, while also controlling expenses. These go to market investments resulted in strong new business bookings in the second quarter.

Still.

As expected the heightened unemployment rate and a 150 basis point cuts in rates Mark in March adversely impacted assures second quarter financial performance. Nevertheless, as an essential small business assure remains committed to helping our 50000 indirect.

And 10000 direct small business customers grow in this challenging environment, we remain optimistic about our long term strategy and expect to be well position once the macro environment and our clients operations normalize turning to the second quarter financial highlights revenue was.

14.1, non-GAAP EPS was three cents, both exceeded wall Street expectations, new bookings in the second quarter grew 21% year over year demonstrating success in our initiatives, our human capital management quota carrying reps now stand at 55.

Up significantly from the 33, we began the year with in addition to salespeople. We also hired human capital management developers and client service people to meet the changing requirements for small businesses.

Shifting to the board of directors and senior leadership changes that we announced today, we launched our human capital management only strategy in December with the sale. The workspace business. We completed the transition services in June we believe these leadership and board changes optimally positioned the sure.

Deliver on our goal of doubling revenue over five years, while tripling non-GAAP EBITDA.

Assures chairman David Sandberg was it has elected to step down yet plans to remain an independent investor We're thankful for David's dedicated and loyal service for the past 11 years. In addition.

Two CEO I am truly honored to assume the important role as chairman of assure you want to thank my fellow directors for the trustee a place than me and our leadership team. Furthermore, the board of directors have elected current board member Dan Gil as the lead independent director, we look forward to work into.

Together with Dan and his expanded role as he has been a valuable leader and a source of knowledge for sure for several years now ill Goldstein has been promoted to president and Chief revenue Officer Els made some outstanding contributions to insurance growth and success, while he takes on additional.

Management responsibilities over.

Overseeing some certain operations I will be able to concentrate on some strategic focus with a focus on growth in creating greater shareholder value JD powers has been appointed as Chief Financial officer, succeeding Kellen Brannan, who will consult through the ended the year jazz more.

And in 30 years of leadership experience and accounting and finance that publicly traded technology companies and resides in Austin, Texas, where the majority of assures finance team works I'd like to welcome Jake and also very much wanted say kellen, who brought global finance experience too.

Our team when our company included the workspace business.

Was more than instrumental in our efforts to enhance assures financial systems with the implementation of net suite in the execution and the transition of the workspace business, we will absolutely midscale and wish her well on our future endeavors.

I also have added to really exceptional board members gracefully brings over dozen years of human resources and diversity experience to ensures board and been Alan brings a wealth of experience as CEO and president of multiple industry, leading companies and we'd like to welcome.

Great and ban and look forward to their expertise and immense contributions with that before we go any further I'd like talent to talk about the detailed financial results tell us.

Thank you Pat and good afternoon, everyone for comparison purposes, we have provided restated 2019 revenue numbers that exclude non strategic customer contract and noncore HCM businesses, we exited in December of 2019.

As usual all non revenue financial figures I will discuss today, our non-GAAP unless I state them as a GAAP measure.

And you will find a reconciliation from GAAP to non-GAAP results and restated revenue numbers in today's press release.

During the quarter bookings increased 21%, we increased our sales representatives to 55 at the end of July up 67% from 33, we began the year, where they will be impactful in the second half of this year and into 2021 and further we experienced year over year declines in.

Revenue gross profit and adjusted EBITDA, primarily driven by lower check volumes due to fewer customers processing payroll as well as fewer employees paid as a result of coated related shutdown still we remain confident about our financial and competitive position and look forward to a gradual return to more normal.

Operating conditions revenue for the second quarter decreased 18.5% to 14.1 billion from an adjusted 17.3 million in Q2 of last year recurring revenue represented 97% of total revenue in Q2, compared with an adjusted 98% in Q2.

2019.

Next I'll discuss our profitability metrics Q2, non-GAAP gross profit was 9.1 million equating to a non-GAAP gross margin of 64.7%. This compares to 11.1 million or gross margin of 64.1% in Q2 of 29 team.

We continue to be laser focused on gross margin and we're taking actions to drive improvement interest on client funds exceeded 140000 in the second quarter down from 350000 in the second quarter of 2019, we still expect 2020 level of interest on client funds to be between $850000.

Okay and $925000 for the year.

Q2, non-GAAP EBITDA was 1.4 million down from 3.6 million in the second quarter of 2019 in the second quarter of 2020, our non-GAAP effective tax rate guidance still remains a zero percent as we build this more accurately measures our expectations for actual performance net operating loss carry.

Before forwards currently stand at 34 million.

Shifting gears to our balance sheet cash and cash equivalents was 29.3 million at quarter end.

At June Thirtyth 2020, we had 33.6 million in gross debt, which are the amounts payable for our term loan and for the seller notes. This is up 8 billion from 25.6 million at the end of Q1 2020.

Total deferred revenue on the balance sheet as of June Thirtyth 2020, including both short term and long term combined was 4 million up from 1.5 million in the first quarter of 2020 Dsos. In Q2 was 35 days up from 24 days a year ago quarter overall head count remained at for 11 and.

Change from Q1.

During the second quarter cash generated from operations was a negative 700000, now I'll turn the call back over the past.

Thanks, Kelly, our large market opportunity and re occurring business combined with the value proposition of our solution is strong and we continue to experience success in our sales efforts before turning to Q and eight today I'd like Jay to say a few words Jay. Thanks, Pat is a great privilege for me to accept this year.

Overall, I look forward to working closely with recipe for sure excellent management team the board and our dedicated employees to drive growth profitability and value creation for shareholders.

With that we'll open it to questions operator.

Ladies and gentlemen, if you have a question at this time. Please press Star then the number one on your telephone keypad. If your question that's been answered or you wish to remove yourself on the Kim Please press the pound key.

Our first question is from Ryan Macdonald Your line is open.

Yes. Good afternoon, everyone. I guess first off can best of luck in the future and welcome Jay Thanks for taking my questions.

You talked about that we're seeing some nice trends here.

In June and July, albeit July may be slightly lower than June can you talk about the mix there or what maybe.

Well that fall off slightly in July was it more as things closed off again that you saw maybe fewer payrolls or was it just some new bookings slowing down one more commentary dosing yeah. No I appreciate it Ryan yes, what I'm signaling here you know from a sales perspective, we're getting increasing momentum in sales and starts.

And and fewer losses, so thats, a really positive development, what I would say.

Starting right around Memorial day through the ended June we saw clients ticked up a bit on the same store sales are the people that they pay what I would say in July and went down about 1% or percent behalf I think anecdotally some of the PPP money.

The the metrics that we can really drive around bringing companies on our system and keeping customers on our system, we're really encouraging and then I would say from a.

Process.

We had a little over a thousand pause a little over 600 now have gone back and what I've seen is the companies are staying open it's really.

Maybe a person or to lever up as.

Pp money goes away or there's some uncertainty around hours et cetera, that's that's how I'm interpreting it based on the feedback.

Axon Thats really helpful. And then I guess sort of follow up I think in about mid July you announced acquisition, a small acquisition I'm, assuming if a reseller can you talk about as you're looking into the back half of the or how you're thinking about the mix of organic versus inorganic if that's changed at all since first quarter. Thanks.

Yeah, I think were covered in our big focus with our employees than our clients et cetera is we will continue to look for strategic acquisitions, and we define them as as companies, we know really well and in our kind of network I don't think you'll see us go outside the HCM space or or.

Go too far afield then.

We'll look at the reseller network, what I would say is we're really focused on getting organic growth, bringing more customers. There may lose on Mark we're having a great line a success in doing that and then as coal that and the tailwind start to come back where people start hiring again et cetera that only add.

This certain me of.

The organic growth so that'll be a positive development and then as far as I don't think will be to two active on the acquisition front, but we will be opportunistic, especially in this environment.

Excellent I'll jump back in the queue. Thanks again.

Thank you Ron.

In Q. The next question from Gary Quinn from Cowen Your line is open Sir.

Great. Thanks for taking my questions nice job on the quarter and killing it was great to work view. Good luck in your new invest endeavors and welcome Jeff.

Pat Pat when you look at that 21% growth and new bookings year on year that certainly seems quite.

Thank goodness environment I mean, what would you say were key contributors and improving growth and I'm curious if that the cobot 19 response center that.

But that's been kind of a new vehicle for new customer generation.

Yes.

Our go to market team, Mike Franois in marketing Lucas.

Well, the Chief revenue Officer, I think they've not just an outstanding job of really helping small businesses, where they need at the most and you know in that call at March 15th to Memorial day. It was all about natural much payroll or tie him or eight.

We are we've had a businesses survive and you know IC.

When we're getting a thousand people to a webinars that draws a lot of interest and we're helping them and we're not really thinking about a sale. We're thinking about this helping our small businesses get money I think that was a very.

Good move and then what I would say is we have hired some people and hired some really both.

We're now at 55.

Most people up from 33, and then finally the marketplace doesn't states.

And.

No.

There been some acquisitions in the market space and we've been able to get out it.

Poised as a result to those and then we add some clients that maybe had problems with their current provider we could.

No not only help them at a higher level stay in business get PPP funds et cetera, but then also they are rewarded us with their business and so it's a combination of focus good people and.

Just it was our time and and what I feel good about is I think we're set up for success for a long time here.

Thanks for the color and.

I guess I guess, you're not you're not reinstating guidance I was hoping to get a little better color on what you're thinking about the rest of the quarter and.

We have seen turn areas in the country kind of reverse a bit over the last four weeks and I think theres. Some open there about what ppps going to do from here. So just curious how do you think dollar retention should trend or what you're thinking about through through the rest of the quarter.

Yes, no I appreciate I wonder when I drill and Thats why we went into some of what we've seen in June and July we saw good increase.

Let me sales perspective, I think we're we're going to keep driving sales and I think we're going to have some success.

I think from a client loss perspective, I think clients.

No. If you do a good job servicing them, you're going to keep them because.

They are focused on bigger things with the Pandemics. So I think our retention will be strong where the issue is and you mentioned.

Mike I think is the same store sales or the hiring.

If you will see as some companies will be reluctant to invest the new hires because they don't want to us bring somebody on it and plaza. So what they'll do as the work from a little bit more from an overtime perspective, if they need get business and there'll be a look to fund higher now okay I got to be a lot.

Smarter as an individual if I can predict the economy and the second half of the year, whether it's going to be a V. A W cetera, what we've kind of model there.

Slight to steady improvement and that kind of what we're banking on from here and then that same stores sales improvement will be a nice tailwind to us and if we don't get it you know it's kind of what we modeled.

Now if it's a.

Another closure or what have you we haven't model that what I would say at our daily call Downs from a pause perspective, we're really encouraged that over little over a thousand companies have pause a little over 600 to have.

Started with.

We're not seeing many completely shut off payroll so thats encouraging and then of that another 200 or so have given us a restart date now it remains to be seen what start date kits.

Lift back a little bit based on it will further pandemic decision, but thats kind as much color as I can give you are right now.

Great I will get back Nicole thanks.

Thanks there.

Again as a reminder, if you would like to ask a question. Please press fine then the number one on your telephone keypad.

The next question is from Eric Martinuzzi from Lake Street. Your line is open.

And it seems that we have lost margins line that's questions from Richard Baldry from Roth Capital. Your line is open.

Thanks.

For a second so not sure. If you covered this but can you talk a bit about the pattern to Q bookings, how heavily backend loaded that might have been.

And 1% seems pretty good im sort of curious.

Yes April may were almost dead stops and so June had to be pretty strong are.

How are you able to book throughout the quarter.

Yes bookings accelerated through the quarter and I would think really since that memorial day timeframe to to July 1st was good and we're seeing continued momentum.

Hi.

And then on the hiring side can you talk about.

Where are these people come from it seems to me that a lot of people are rather than to make any moves right now so with these.

Alright will they be in house develop salespeople or the veterans, you're actually equal to or away from another entity.

There were couple.

Acquisitions in the marketplace and one of them out just met them because we have some board members.

From a copy pay but the benefit mall.

Decided to exit the payroll business and sold TDP and sold really dose for customer acquisitions. They didnt take the people. So you know we did benefit in some cases.

From sales salespeople that you know were pretty experience, but.

Chose to make a change and that was.

I think a rewarding experience for us.

And there were some other industry veterans that saw the opportunity where you know instead of getting.

120 at the but city they could get the whole city or you know they could get a bigger territory and get some momentum and then that coupled with I'm also there's been some industry, where there's been some.

Changes in the sales process, where you have people that maybe are competing with the broker a record and the benefit folks.

Instead of partnering with benefit folks per payroll sales they found themselves in competition, they really like the model, where they can partner with benefit people for additional payroll sales. So the people were picking up our experience productive.

In many cases, a known quantity and they can hit the ground running right away. So we're excited about that opportunity.

Maybe the last thing.

Extent, you can think about it.

While acquisitions, maybe sort of slower impact short term for obvious reasons.

You talked about what you're seeing in turns me. The earliest stage that pipeline of people are there more willing to talk to you because of fears around trying to stay independent or any change to the expectation in terms of valuations mix of consideration.

For us to think about when he starts to pick backup. Thanks.

Yes, Thanks, Rich and you know what I would say between February 15th and April Thirtyth I think a lot of people were talking I'm not sure. They wanted to execute they just wanted to understand or options because.

So the pandemic hit him right in the face and they didn't know what this means I think people are getting their sea legs and kind of understanding a little bit what the new normal could look like now that being said there is still.

Kind of a lot of ambiguity and when there is lot of ambiguity people kind of search for options and then ultimately do they commit or not I think valuations where people are not.

Capitalized or or facing some kind of burning platform valuations are going to be lower which you know I think ultimately will be good for us.

From our perspective, though we want to make sure we acquired the right people at the right time and with the right degree of certainty going forward and so from my perspective, I think certainly will be active but we're really going to make sure timings right in the valuations are right and.

We'll do that as we go we have our own business to worry about we're focused on improving at each day and we're really encouraged with some of the companies you know that we're bringing on and the losses are less than the company's we're bringing on so we'll continue to execute that strategy and be opportunistic.

The acquisitions and we do think there's going to be value there and opportunities there.

Later in the second half and to be more importantly, I think the beginning in 2021.

To continue to drive results.

Thanks.

Thank you again that is far one to ask any questions.

Your next question is from Vincent Colicchio.

Barrington Research your line is open.

Yes, and Pat I'm curious where are you in the cycle in terms of negotiating better financial terms to certain clients or is that mostly past us.

You know Vance that's a good question I really think early on.

In February or March to call. It May I think people were you know just really trying to figure it out.

I think now that things there are certain I think people are going to be value conscious, but by the same token you know they want us supportive partner.

And their first inkling I think is is really.

Do they have good financial terms do they have a good business model have they worked out or do they have the right partners.

Pricing concessions or some of that especially in the payroll area, where we can provide a lot of value.

We're just that see in that much frankly, it's more about hey can you help them through what they're going through and can you help to help them get to certainty and an uncertain world and if we focus on that I'm confident value will continue.

And.

And the competitive landscape is there any particularly aggressive behavior from competitors.

No I think everybody's trying to provide value to their clients I think they're trying to understand the business model I think some of them our focus Dan I think inward to make sure. They understand the post kobin world a little bit I do think people want to play offense to and then there is some.

Folks that maybe have to really look at their business models, so there'll be opportunities that exist, but I.

I think what we're seeing as people are probably a little more focused on helping our clients, which is a great thing for the clients and then helping.

To get market share and look at offsets I think with our strategic plan heading into the year that we were going to grow organically and we hire salespeople have provided clarity for our folks they know what they want to do they know they got to get.

Organic growth they know they need to bring on new customers and keep customers. We're focused on one business Cal did a great job of transitioning workspace off so our organization going just focus on growth and I think thats honestly Ben.

Good recipe for the beginnings of our success here.

Nice job in the quarter. Thank you.

Thank you.

Again, as a reminder, that as far as Brian in order to ask a question.

Your next question is from Jeff from Craig Hallum. Your line is open.

Great. Thank you Pat a lot of personnel changes here just talking about the timing obviously board.

Alan you a lot of moving seats. Your what why now why is the right time why did these all happened at this point.

Yes, as we announced early in December and January we're becoming a human capital management company.

So we talked about board members, leaving I think we signaled that we've talked about how do we reshaped the company.

Into a human capital management company and then.

You know, we're not a global multi product we're a company now thats HCM for small business. So I think a lot of at June at TS a added.

You know I think the cold it hit and also to me, it's all timing at a plan coming together and you know now's the time and from a board member perspective, you know David's done an outstanding job and been here 12 years, but he had signaled dnos ready to go and ready to leave you can.

See better people, Rick recruited whether it's been Alan or gracefully or even prior Harold through NPR and rental rates they have.

Decades of human capital management experience and they've been operators are specialists than what they've done. So I think all that kind of makes sense and then from a management team you know a else that a really nice job of growing the company has been with with US here for four years and it was his time to shine and.

And be there and then kellen add to make.

The decision right to you know she's got a you know house in San Francisco, and then choose a very accomplished CFO.

With the global platform and and then Jay here and lives in Austin and it just felt like to timing was right count I don't know if you have anything now that's a that's exactly right.

Okay.

That's helpful. What.

Two others, then Pat does the.

Sure you, adding a lot of sales capacity just the pipeline at this point assuming cove it doesn't get better get worse, we sort of trend at whatever levels. We're at now does the pipeline in the year over year compare suggests the ability to sustain 20% plus bookings rose.

Yes, I think from our perspective, you know, we're not going to give guidance because we said were Walt but what I would say is the leading indicators are pretty positive whether its marketing sales and then.

The additional salespeople, we will continue to be opportunistic and hiring and we want to get to bigger numbers here from a sales perspective, and then we want to get organic growth. We had a mission that we'd get to organic growth double digit in the first quarter of 2021, it remains to be seen with coal that at all.

That when that will shake out, but the mission hasn't changed and we're going to continue to drive that.

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Thank you and last and on the expense front.

Anything about Q2.

Cost wise that makes is not a good baseline to build off of sequentially.

No not really it's Ed if you if you kind of look at our gross margin our Cogs that are there.

As revenue came down because of lower check counts and number of employees being process.

We still needed to keep all of our customer facing.

Correct.

Customer service price folks and so therefore.

Would that dip in revenue, but still keeping those costs in place and ADW adds runs his ADW as Doug but.

I would feel very comfortable building off of what you see in Q2. There was no. There was nothing unusual from an expense perspective, yes, and the only thing I'd add to that perhaps is you know we have been making sure that we're making investments in our salespeople on our developers and some of the market.

Acquisitions that we talked about are getting us from talent a little bit early so you know I think where we originally were at a goal of 55 to 60 sales reps by the ended the year.

We're fortunate to be at 55 now so we're starting to bring some of those costs and a little bit early where we need them. But then we're also trying to drive efficiency and we have some pretty good efficiency programs in place for the second half. So I was thinking about anything that could really like modeling the thing that could have the.

The biggest change in Q3 and Q4 remember we started the year with 33 to be houses.

We ended Q1 with about 45 to be S.'s Q2 at June Thirtyth was 47, and we're now at 55. So you will see an uplift.

And if you're modeling all Q2 kind of all the total comp and benefits you will see a sequential increase as we continue to higher.

Primarily around the the qbs is but also in our development organization.

Great. Thanks for taking my questions and best wishes, they're killing.

Thank you thanks, Jeff.

Again, if you would like to ask a question. Please press star one on your telephone keypad.

Your next question is from Eric Martinuzzi from Lake Street. Your line is helpful.

Thanks, not sure what happened on my first go around I wanted to come at the outlook from a little bit different perspective, given the good bookings in Q2 is safe to assume that were sequentially up on revenue in Q3.

Yes, I think.

Appreciate Eric Good question I think from our perspective, we're now ready to institute guidance, but but what I would say is we have.

In that area, but when you look at same store sales. We also outlined data in July took a <unk> percent the percent they have a downtick.

So we really want to model in on C. August and September and then we'll resume guidance I do think we you know we we have some favorable trends in that we're starting more of them are losing.

The same store model, though or metrics were not ready to declare victory yet.

Okay, and then you Didnt make an acquisition that I think you announced at around one set of inquiries into line.

Yes.

My first.

Hi Tech Newsmen, I think what's the contribution anticipated there either from a if you could give us an LTM revenue or maybe.

Remainder of the your expectation.

You know where we're in the mid of absorbing right now the the PJM business.

This was an asset transaction, which means that there is going to be a repapering.

They are primarily indirect and just does the tax processing piece of it.

Not not necessarily the payroll so there's a lot of things going on with that customer base with new power of attorneys with.

Getting the new paperwork in working with them and so right now we'd rather just wait and see how should we work through this process through there to USA, which is between three and six months pattern. If you want to add to that are not yeah, I think I think.

We will be ready to limit on that as we comment on guidance going forward.

Okay.

Alright, and then lastly, I know you guys have been targeting ever since you had the the workspace sale.

It was the old assure was.

I think I can safely describe it as much more levered than maybe the board and management comfortable with you've been targeting kind of a three to one.

Three times coverage ratio here.

The debt that you have right now.

Is that still safe assumption unfair to look at it from the bankers perspective that you're going to be safe safely under that.

Sure.

No I think when we look at the banking you know we.

We're not looking to be highly levered.

You know, we're looking to grow the business than the and I might much tighter way with human capital management being the sole focus.

So you know I think it's safe to assume.

You know that we're not going to have you know a five to one or six to one debt level. What the actual number is whether it's three to one or two and half the one or whatever you know I think we'll provide as we get to some normalcy coming out of coal that but.

I don't think you'll see us highly levered at all.

Okay. Thanks for taking my questions.

Thank you again that second Mike if you would like to ask any questions. Please press star one on your funnel.

All right and I'm showing no further questions at this time element to turn the conference back to see scaffold for closing for any closing remarks.

Yes, I just want to just personally I want to sloot Kellen done an outstanding job in three years and very appreciative of her efforts and is moved the business forward as the Chief Financial Officer I also want to thank David Sandberg. He served 12 years here and really Theres no company without them.

He's done an outstanding job and I appreciate his efforts and then I want to welcome.

All the people playing different roles, Dan Gail as done a nice job.

Since joining the board and to be the lead independent director I'm thankful I want to welcome Jay powers I want to salute Alkyls team has done a nice job and I want to welcome Grace and bad and I think they're going to contribute very much into a assure from an investor perspective, you know I think told that is.

But some uncertain times I don't think we can predict whether it's a v. ws foolish or what you know the issue of the day is all we can count on as we do a great job day to day, we really understand our business, we get to the level of detail than we have some success.

I'm confident that were really getting.

To a point here, we can bring more clients on them, we lose each month over if we keep doing that good things are going to happen and then as same store sales are people started hiring will be a nice wind down our back. So there's no question is heavy lifting the do but the second quarter and early pay.

Right and a third you know I think signals that trough and.

With some luck here, we're going to two really really well and we appreciate your patience and getting to this point and we look forward to talking to you soon thank you.

Ladies and gentlemen, you just conclude todays conference call. Thank you for your participation and have a wonderful day.

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Okay.

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