Q3 2020 Kelly Services Inc Earnings Call
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Good morning, and welcome to Kelly Services third quarter earnings Conference call all parties will be in listen only until the question and answer portion that was the presentation. Today's call is being recorded at the request of Kelly services.
If anyone has any objections you may disconnect at this time I would now like turn the meeting over to your host Mr., Peter Quigley President and CEO. Please go ahead.
Thank you John Hello, everyone and welcome to Kelly services third quarter Conference call.
With me today is Olivier T. Rowe, our Chief Financial Officer, who will walk you through our Safe Harbor language, yes. Thank you Sarah and good morning, everyone. Let me remind you that any comments made during this call, including as a QM. They may include forward looking statements about our expectations for future before.
Patients before Olivier provides perspectives on queue for.
And finally, I'll conclude by highlighting Kelly's plans to connect even more people with work that enriches their lives.
Now, let's turn to Q3, while COVID-19 continued to impact Kelly's business in the third quarter <unk>.
All of our staffing operations in Brazil during Q3.
Ill now turn it over to Olivier to further explain each of our operating segments and to review their Q3 results. Thank you Peter.
On slide seven of the deck, we issued today, we have another view of the five segments that out of the outcome of the new operating model and their respective pre pandemic 2019 financial information.
In the future, we expect education will provide a broad range of talent to customers in these markets, including services directed towards special needs students Zebra rating education reflects the delivery of services to both large Metropolitan School District.
As well as smaller districts across 41 states.
Professional and then just real with more than $2 billion of revenue in the U S and Canada combines our branch base and software it delivered staffing solutions in the office put fish in or light under Triola and call Center specialties together with our outcome based product that deliver talent.
In those same skeeter sets can reconnect our view of your 12.
Center product eating cause he segment similar to science engineering and technology, bringing these delivery mother's together as a single business unit eliminates artificial organisational values and they're losers to continue to increase our efficiency.
And now I will move to a discussion of our Q3 results for the company as a whole.
Since the second quarter.
Like in Q2, our education business continues to be particularly impacted as you as school districts return to school in the fall using a variety of delivery models, including virtual and hybrid, which which has an impact on the demand for our services.
As we moved through the quarter. Our Q3 revenue results were also impacted by tenant supply constraints in the us.
Why's enhanced unemployment benefits were reduced during the quarter covered nineteena related child care needs and perhaps Nols saft safety concerns are still impacting the pool of available tenant in some skill sets, especially in education and professional and industrial.
And finally, our LCD segment has continued to be the most resilient with a 7% decline in revenue for the quarter.
While certain customer industries, such as NLG, while negatively impacted the demand from life sciences customers remain strong.
He is related to a protracted contract dispute with a customer we stop sales in in 2014.
There are no similar disputes with ongoing customers.
Excluding the 9.5 million charge expenses for the quarter were down 12.7% year over year.
The decline in expenses reflect the temporary expense mitigation actions, we took starting in April including the compensation adjustments. We have mentioned in the past and to a lesser extent the benefit of 19 government subsidies related to our full time employees in the us.
Which we recognized in the quarter. We have also seen the continuing benefits from the cost reduction actions. We took in Q1 2020 prior to the pending.
It's increased significantly you over a year as a modest reclining G. P was more than upset by stone cost management.
Cause he's the only things before tax also include the unrealized gains and losses on our equity investment in person holdings.
For the quarter, we recognize 16.8 million pretax gain on our soil common stock compared to a 39.3 million pretax loss in the Pio year. This non-cash gains and loses Ah recognize below earnings from operations as a separate line item.
[noise] income tax benefit for the South Dakota was 1.2 million compared with our 2019 income tax benefit of 12.8 million hour.
[noise] hour effective tax rate for the water quite a was a 9% benefit as tax expense on current failures earnings was more than offset by the benefit of the work opportunity tax credits.
And finally reported earnings per share for the third quarter of 2021, 42 cents per share compared to a loss of 27 cents per share in 2019.
In order to better understand the underlining Trentino things, let me provide some additional information Twenty-twenty earnings per share was favorably impacted by the gain on personal come in stock partially upset by the non-cash charge related to the customer dispute.
In 2019, EPS was negatively impacted by you'll also until some stock adjusting for these items cool Sweet Twenty-twenty EPS was 29 cents compared to 40 43 cents bookshelf EQ Sweet 2019, a decline of 73%.
Now moving to the balance sheet cash total 248 million compared to 23 million a year ago that was nearly zero down from 2 million at you run 2019, we ended the quarter with no borrowings in our use credit facilities, our cash balances reflect.
The impact of reductions in working capital primary accounts receivable as revenues decline beginning in late March and the benefit of the deferral of payroll taxes in the U S. On the provision of the care of the act.
As we negative navigate spell your the economic uncertainty will continue to manage our cash in that closely to ensure that we have the working capital available to catch that is on the economic recovery and to take advantage of future market growth opportunities.
Accounts receivable was 1.1 billion and decreased 12 person year over year Global you saw was 61 days an increase of three days of a human 2019, and two days from the same period last here.
While we have experienced an increase in da so it does not reflect the deterioration of the quality of our receivables.
The increase reflects two trends, we feel suing cute too.
Result of dependent first customers are continuing efforts to manage their own cashflows and are taking advantage of their full payment terms with us.
Taken there's been a shift in our customer mix as large account demand as we covered faster and as a result in a greater proportion of business with the large customers with generally enjoy longer payment payment terms.
We continue to monitor customer payment patterns, very close and he and are confident that our collection teams of the resources necessary to respond to current conditions.
In our cash flow for the corner, which generated 34 million a free cashflow compelled to use a $4 million if we cashed flu in the same period in 2019.
As I mentioned, we have continued to benefit from the ability to defeat certain payroll tax payments as part of COVID-19 related economic stimulus and that is a primary reason for our inquiries in free cash flow photo quarter compared to a year ago.
Given that we have been operating at a reduced level of demand for the best two quarters and demand and reason revenue of gradually improved from their queue to lose we would expect to begin to use some of our existing cash balances to meet working capital needs is volumes continue to improve.
Over the next several quotas and now back to you Peter Thanks Olivier.
Our strategic decision to shift our portfolio towards higher values specialties was made prior to the pandemic and we are already seeing benefits higher margin specialties have been some of the most resilient parts of our business in the COVID-19 environment, Kelly Science Virtual call Center and O C. G.
Solutions have all performed well in this challenging climate.
And while our education specialty has been dramatically impacted by COVID-19, we continue to believe it offers considerable growth potential in a post pandemic environment, we believe that demand for educators and instructors is going to increase and our acquisition of New School district.
Customers during the pandemic plus a strong pipeline of new prospects support this assertion.
What is less clear in a post pandemic environment is a stabbing demand will see from small and medium sized businesses, we serve within Kelly professional and industrial without the resources of larger companies, which are showing good signs of recovery small and medium enterprises have been disproportionately impacted by COVID-19 and are not yet showing the.
Same signs of recovery.
Overall, we delivered acceptable Q3 results in a tough business environment, we're encouraged by our sequential improvements and strong pipelines in all of our operating segments and will continue to closely track the recoveries trajectory as we enter the next phase of the pandemic.
Well now share his thoughts on what lies ahead. Thank you Peter consistent with the first two quarters, we are not providing guidance based on where we are in the cycle.
Economic conditions continue to be highly uncertain. However, we're comfortable that after reviewing fourthquarter economic data and completing our annual planning cycle will be in a position to return to providing an outlook each quarter, beginning with our year end twenty-twenty earnings called in meat fur.
Marie.
Since the early stages of the crises, we have continued to reevaluate avaya tier of demand scenarios based on the depth of the downtown and that was a speed and stability of the economic recovery, including the possibility that they would be repeated cycles of reopening of the economy and then the subsequent.
Resilience infection rates, we continue to review the resulting impact of these scenarios on the earnings cash flows and debt covenants metrics. We continue to stress. This hour cash flows in debt covenants and at this point, we remain confident that we have adequate financial resources and the liquidity too.
Were those of crises.
We are also planning so is that we are prepared to take actions that advance our cottage.
For example in a quota we completed a sale of our staffing operations from Brazil and are evaluating opportunities to advance our inorganic strategy in this special teas way, we choose to focus to accelerate that won't gross.
So while we are in providing guidance I will share some perspective on the false quota current trends may not be predictive of future results, but they're helpful to understand the current level of demand and customer buying behavior.
As mentioned in my remarks on the third quarter results revenue declines well not even across the segments and Niesr has been the pace obsessed subsequent improvements in revenue trends.
Education in particular will be challenging in queue for as less than 25% of the districts. We service are back to fully in Boston infection.
While we are supporting our K 12 customers with remote and hybrid infection demand for our services will be higher when all schools are able to return twin Bilson selection.
Assuming the current global response to COVID-19, and related economic impact doesn't change significantly we expect a recovery period to reach pre crisis revenue levels will be longer than our view when we parted in queue to to.
To give a sense of the speed of recovery, we have seen for the month of June our heel of of your consent currency revenue decline was 22.5% and that will Q3 calls on current heal over a year revenue decline was 18.2% revenue trends were consistent so each month.
Doing too sweet.
Other factors specific to queue for we are starting to see some of the traditional seasonal lifting demand for our selves she's in the distribution and logistics signals, which is oncology.
And we anticipate that frozen you an education with also will also exhibit the normal seasonal trend caused by the K 12 school calendar.
And as a reminder, 2022 is a 50 said week fiscal year for us so queue for who will have 14 weeks of revenue, but the additional week is a holiday week. So we will gain about two working days in queue for.
We continue to expect woven trends to reflect year over year declines until we anniversary the economic impact of the crises in March 2021.
We expect our queue Q4 G P right to be slightly low wasn't cool sweet we expect to have the seasonal increase of education revenue went lower margins uncertain employee related costs that are always subject to a degree of variability that we would expect could even more pronounced doing the pandemic.
We have continued to work closely with our customers and I've not yet seen any material sign of margin pressure you to the current environment.
And as discussed we have taken some definitive steps what is really weasley speak to SG&A expense levels in response to the crisis and will continue with tweak cost controls. However, we are handing the dumper re compensation reductions and acted at the beginning of the crises in the months of November and ended.
<unk> also lose in October.
Based on the anticipated speed of the recovery. We have continued to assessor will service delivery infrastructure and goes base in.
In mid October we made the difficult decision to start reducing our internet staffing levels in line with expected volumes will continue to monitor conditions and take actions consistent with all scenario planning back.
Back to you know Peter Thank you Olivier even though are aggressive plans for growth have coincided with a global pandemic I'm encouraged that we are making significant progress and reinventing ourselves progress that will serve us our customers and talent when the crisis and we have an aggressive path to pursue.
Who are specialization strategy and we have organized the Kelly of the future to grow and thrive.
We're making strides in our digital transformation journey building, a technology foundation to sustained growth, we're affirming our commitment to talent on assignment last quarter, introducing or five point talent promise and we continue to monitor the market for acquisition targets to bolster our inorganic growth aspirations.
This progress would not be possible without the talent and dedication of the Kelly team and.
And the passion, we share for our purpose of connecting people to work in ways that enrich their lives.
And we are now looking to extend this purpose from our vantage point operating squarely in the middle of the talent supply and demand equation, we continue to see that long standing systemic barriers in the U S make it hard or even impossible for some people to secure enriching work.
As a talent company, that's always considering what's next for a talent. We believe we can and should do more to champion those who aren't given a fair opportunity to secure meaningful work, our new platform announced last month equity at work sets of course to up and systemic barriers to employment and make.
The U S labor market more equitable inaccessible for more people.
Kelly is uniquely capable of being a catalyst for positive change and we believe that change will not only help Kelly place more people in great careers at great organizations, but also help their families communities and the overall economy thrive.
In closing I'd like to thank our internal teams or talent on assignment our customers are board of directors and shareholders for their support.
These are challenging times, but together, we are rising to the occasion and will emerge stronger than before.
John you can now open the called the questions.
And ladies and gentlemen, if you wish to ask a question. Please press. One then zero on your telephone keypad. You mean withdraw your question at any time by repeating the ones you know command.
If you're using a speaker phone please pick up the handset before pressing the numbers. Once again, if you have a question you May press. One then zero at this time.
One moment for our first question and we'll go to Josh Vogel with Cydonia. Please go ahead.
Thanks, Good morning, guys hope you're doing well.
Morning, Josh Good morning, Josh.
Peter earlier on in your your commentary, we're talking about seeing some supply issues in lower weeks drops I'm assuming that.
Stimulus and unemployment level.
People are getting paid and unemployment now I'm, assuming that's in professional and industrial but I'm curious if you could just talk to.
Order flow within that in relative to three months ago.
Are you seeing stronger orders coming in but you just don't have the supply and do you expect that supply too who wants you know the stimuli now that the stimulus is over.
Yeah, Thanks, Josh and hope you're doing well too.
Yeah, we were very encouraged by the order demand that we're seeing in professional and industrial but also in in other parts of our business I think it's not only the stimulus dollars, but it's also a small and medium sized enterprises that are reluctant to.
Really match the market wage rates, particularly when you have big box companies that are paying $15 an hour if if a small and medium sized business isn't willing to match that it's a challenge to find talent, particularly in a.
Environment, where people have transportation needs childcare needs may be reluctant to go into a workplace because of concerns about the pandemic. So it's a it's a combination ah, particularly at the lower end of the wage scale, we don't see the same dynamic.
In our professional skill.
Skill sets just move it to add on that specific to the can I Ah segment, we have seen wage inflation basically on the segment moving up we were at about four.
Laughs here Q1 of the issue is easier for person increase we are now more at 627% meaning.
Meaning that in some cases, we are successful at convincing some customers probably mainly lodge customers to really get more competitive in them of wages, which of course I mean, knowing the numbers that were shamed with you is reza positive for us also.
Thank you for the insight Sir.
Olivier you you may have talked a little bit to this but I was writing down notes. So I missed it I you know looking at your science Engineering and Tech I'm not sure. If you guys are going to call that set or or whatnot, but down.
Down 14%.
It's mostly U S and Canada I'm seeing some of your peers that are provide services to that and market. They were down more in the mid single digits. I was just wondering if you could talk to you know the difference maybe in your business.
And just talk to some pockets of strength there versus weakness things so on the corner.
Yeah, I mean, the we we see very positive signs of improvement in silence clearly we have seen some pick up all the time from Q1 Ah.
I would say.
Q towards pretty resilient, but we have seen those things moving up pretty quickly engineering is much more challenging and one of the reason he's oil and gas where we still see some downside we start to see I T picking up.
Telecommunication, which is basically inaction N G T O or 2019 acquisitions, he's a little bit of down not because of the market, but more because of some a customer dynamics I mean, namely wrong T-mobile Island.
And the males are on that.
But I would say we start to see very good sign in terms of science and to some extent you know I T. All technology and Josh I would just point out that our exposure or the.
The volume of business, we have an I T is is smaller by comparison to a number of companies in the professional and technical space. Hence are inorganic strategy as I mentioned earlier. In addition to education also looking to bolster our portfolio.
If the if the right opportunity came along for an acquisition.
Alright sure that make.
That makes sense.
The the the customer just in Mexico is that an isolated event are you having any other negotiations with clients, whether there or elsewhere globally no as I say, it's it's really a one time event Ah. It's a non-cash item. It was a dispute that is Ah ah older than five years.
It is basically one of our customer in Mexico to make it clear we don't have any more relationship with his customer.
So I would call it a very isolated case that is pretty old.
But we have not seen no we have not any other simulate exposure sofa. We have we have a great track record with our customers as you know or you know our our accounts receivable are one of our strongest assets and over many many years with this.
As a one off situation that.
Resulted from Ah.
Just ah.
And you're waiting sedums circumstances, and and the Mexican Court system, Yeah. When when you look at our balance sheet and we mention you know in the band sheet and also in some disclosures the level of bad that we have historically Ah. This.
He is really a very unusual type of event not because we don't have.
Have bad debt, but small the magnitude so unique magnesia doves event.
Sure sure just one more and then I'll I'll hop back into the queue, but just trying to get a handle on cash.
Cash flow.
Especially thinking out into 2021 and when are we look at the balance sheet. The line item for a crude payroll related taxes that that's all for payroll taxes, and we should expect cat for that to be paid at the end of 21 and the other half of the end of 22.
Yeah I mean.
When the when you see the band sheets Yoga and a series of specific like 19 in the long term liabilities now it's about 70 76.
That is basically mainly the detour all of the U S. Payroll tax. It was you know a positive boost to our queue to free cash flow for about 38 million and again in Q3 falls the same type of Mount we expect of cool.
Similar amount of benefits into for so the total is going to be probably around 110 million and 50 person of each be paid basically at the end of next year and the singing that if at the end of 2022.
[noise] very well thanks, guys, taking my questions I look forward to talking soon yeah. Thank God Josh.
And then she'll go to Kevin Stinky with Barrington Research. Please go ahead.
Hey, good morning.
Kevin but moaning.
So you referenced a strong new business pipelines I believe maybe you could you just talk about what's contributing to the district in the pipeline as you see it.
Yeah I think.
Particularly among our large accounts, Kevin we're seeing you know very strong demand.
And then that that's both in our professional industrial and also in our set businesses Science engineering and technology and I think it's just a reflection that that those businesses are figuring out how to operate in a in a pandemic environment and there's some some pent up demand for the products and.
Ah services that they are that they offer our life Sciences practice for example has been resilient throughout the pandemic, but we're seeing nice increases in order demand there distribution logistics.
But particularly it's particularly apparent in among our large accounts I would add automotive where we she.
You know a lot of improvement, which is very helpful for us as well.
Okay, great and so those those opportunities are actually moving forward in the pipeline in this environment, it's not a situation where you know maybe things are in the pipeline, but there there are a little slow to convert or you know just trying to get a sense as to how quickly.
Those opportunities are moving towards you know actual revenue generation.
Yeah, I I think I'd actually say among the large customers are accelerating uhm I think among small and medium size as I said, it's still remains a little bit slower.
Are outsourcing consulting new wins have been very very encouraging as well as the pipeline the decision making cycles in that space tend to be a little bit longer than pre pandemic, but again, we're we're seeing deals.
Being closed a number of significant ones that last quarter in the pipeline look strong as well in the OCG space.
Okay great.
So Ah Olivia you you watch some of the factor through some of the factors behind the the year over year gross margin improvement I I don't think you you know actually broke out kind of the basis point contribution you know like product mix an employee cost.
Would you will be able to provide that.
As you have in the past.
Yeah, I mean, when when when you look at two three saw imagines about 18.4 persons 240 base point higher than 2019.
And he's very helpful. Because basically it is moving our G. P. A dollar or a decline at minus 16 person instead of minus 18 in revenue I would say when you to get the 40 based upon the the.
The project Meeks, which is which is something we have scenes circulating overtime out of the 40 Baseborn Teazel round 20, which is something we have seen the best I mean, we have been always you know showing improvement you'll have a year of about 2025 baseball and.
[noise] season customer Meeks R I.
I would say if he's he's much Molina international where we have more exposure into she business.
Customer Meeks, yet is likely negative I would say these factors are more or less upset with unbelievable related cost and I'm probably related cause I mean payroll tax in the U S. This one I would say, it's it's a quarter over quarter.
Mild fluctuations, we have and I would say the the main factors you need to sing about is our sock trial improvement of I will put it makes about 2020 something.
And basis points.
And the other 20 I would say he's.
The result of the Sampley related cause positive.
Oh said, partially offset by a little bit of pressure on the fees they shouldn't even answer national and the customer Meeks that way I'm mentioning whether it's on Margene, but also of course, some DSO. So I think what you need to think about is that we are still on track to continue to improve our value profile G. P.
Margene by about 2025 basis point due to these products Meeks as we have down for the last five years in fact, as a reminder, I want G. P. Mounting in 2014 or 16 point Sweet and we have seen even during these challenging environment in 2020 hour margin.
Being you know even if you exclude you know one time cables act an employee benefit of fluctuation I mean, continuing to show progress and again. The main long term structural driver is a project mix I was referring to.
Okay. That's helpful. Thank you.
So I just wanted to get a sense as to.
You know, how how you think SG&A might trend the fourth quarter, you mentioned ending temporary cost or.
Duction to Ah Ah compensation, and and I'm also bringing back employees from furlough you also referenced doing some adjustments to internal staffing.
You know, so I guess kind of against it SG&A adjusted for the customer just viewed in three Q would you expect SG&A to kind of to pick up sequentially or what would you think I would yeah I think the way I see teeth is really we actually.
Ah now you on what we call a recovery ratio right I mean, how much of the European G. P do now.
Basically offsets by basically SG&A management right. So.
Do you want it was about 63%.
Two 280%.
Two 374% so does that mean that basically if you look at Q3, we have managed to have said 74 person of the dropping GT through as Jenny management right.
And he it's it's a very good way to basically partake too our bottom line and and when I do get queue for we see this recovery ratio, probably 20 <unk> Ah around.
I would say 50%.
Meaning that we expect basically.
To cover.
Screw kussman atrament about 50% of a potential pressure on our cheap he did outgrowth in queue for.
Okay. That's great that's very helpful.
So.
With your transition to the new segment structure I know, it's kinda early days, but any initial returns or early wins from from their structure that you're seeing just within the organization or within the pipeline.
Yeah, very pleased Kevin already I think the the focus and the combination of the what I referred to as the earlier as the subscale businesses that were in in different segments. We've seen some some early customer wins I think the.
The discipline and focus around the specialty that that combination of those resources.
Has produced a I'll call it a re-energized.
Organization and I I think we're.
Frankly ahead of head of where I thought we'd be after just one quarter.
Fossils, which we see and that that's one of the very positive outcome of the new selection amongst those things is combining outcome based business, we staffing I think he's creating a new a dynamic and if I look at four he sells P&I and I'm, referring to Q3 numbers or not.
Extremely positive environment hour I would come base business and P&I Ah in Q3, the revenue ease up by 16% one six and.
And we have seen some acceleration first of all each of the reason you're in business. We have said that several times, but when I was looking at the numbers. We have seen some acceleration to sweep of these dynamic and I believe that part of it is really combining outcome base to visit we stashing phone calls can piano.
I that is creating icing brother integration topline schnelle G. As in approaching Jeeze that I think we start to see a phone call Squeezes example.
Okay that it's helpful color.
I think you mentioned in your prepared comments stabbed.
Established you establish growth targets for each segment.
I I don't know.
In the future.
Be open to discussing those are you know what what your plan would be for maybe a longer term once we get past. This crisis, you know, perhaps talking about those targets.
Yeah Kevin.
Going back to pre Covid I think.
In my remarks in February I, we talk about the aspiration to provide more transparency into growth targets for the company that the pandemic has disrupted our that that aspiration, but you know we we would like.
To continue to.
Be transparent with with our internal targets, because we think that helps inform.
How we're doing and how we're tracking but it's a work in progress.
Okay, Yeah fair enough makes sense I alternative over for now thanks for taking the questions Yep. Thanks, Kevin appreciate it thank you Kevin.
Next will go to a joke comes with the noble capital. Please go ahead.
Good morning.
Morning, Joe.
So.
Quick if you could you provide a little more color in terms of.
<unk> process behind in size and you mentioned you saw.
And that's third quarter, you Brazilian staffing operations.
Yeah, So I'll, let Olivia give you the numbers Joe but you know we we made the investment in Brazil, you know more than.
10 years ago with aspirations to have that be sort of a beachhead for a Latin America expansion.
In the intervening decade, we've obviously changed course and the while we continue to provide are outsourcing consulting solutions in Brazil to our global customers. The staffing operation just didn't line up with where we were headed and so we decided to exit the business.
Yeah, just just to give you an idea of sizing and so on and and you are going to she's at in our our owning swirlies and and also of course, our 10-Q I mean, when you get the sizes collection and you're going to see the the caching bag. The cash proceed net was about one point.
2 million and you are going to see that on our cash flow statement.
So small right and that the the PNA impact I mean, he's he's close to zero, meaning overall it was a tall election was at book value to give you an idea of the size of the business Ah. The revenue of last year was about 34 million Ah so pretty smaller.
They're all and the yesterday 2020, and you you're gonna see that on again on the.
10-Q, when and those Saudi earnings release.
Yesterday 2020 about 17 million so a rise a small business I think is clearly another step on our focus tight T. G. You might remember that all the time, we have basically a davis did else scale Eagle and that's another step on.
Our focus strategy.
But pretty pretty small impact over all right.
Thank you for that.
Switching gears onto the education business and and understanding some of the challenges there.
You did mention you were you had acquired some new clients in the quarters wondering if you can give a little more color detail there.
Also.
Given the uncertainty in that business.
Have you seen any increase in difficulty and and retaining talent here just that.
Teachers.
Saying, Hey, I've I've Gotta do something and if it's not if it's not if the schools aren't gonna go back to Ah.
Normalized model anytime soon I just have to find something different is that is that becoming more and more of a challenge for you in that business.
Yeah. So Joe Thanks for the question I'm sort of reverse order or maybe in the order you asked them then the new customer acquisition is very promising given the environment, but even in compared to pre pandemic environment.
Or a new customer wins are up substantially and I think it. It reflects the fact the comment I made earlier that when we get to the other side of the pandemic the demand for instructors and teachers.
Is going to be is going to increase in part of that is the the number of teachers that are leaving the profession and you know retirees, which was already the case pre pandemic, but probably will be accelerated as a result of the pandemic.
And with.
With respect to the the pandemic environment, particularly among I would say.
People in upper you know the upper demographic in terms of age. Many teachers are reluctant to go back into a classroom. So that has impacted our ability to some extent with with our historic fill rates.
In a little bit lower due to the fact that that.
Substitute teacher population tends to be older. Then then you know other disciplines because there's a lot of them are retirees or had had some role in education. We have I think done a nice job in a short amount of time pivoting to recruiting a different demo.
A graphic in what we call our momentum seekers, which are individuals who may see teaching as a a new career opportunity coming out of the pandemic and so we've.
<unk> stood up a number of different programs to try to recruit.
From that demographic indoor supply bass, but I think the the combination of the.
Teacher shortages, coupled with what we're seeing from school districts wanting our help to prepare for the post pandemic environment, where we're encourage it even though the the top line is taken quite a hit it during the crisis.
Yeah.
Okay. Thank you for that call 911 last one for me obviously you.
You seem to have lines about new lockdowns in your.
Hi to get a little bit more detail here on how you guys have it's been impacting.
Your business you know how big of a monkey wrenches at throwing.
<unk> at you at this point.
Whereas you know jar or exposure to Europe is cigna.
Significantly lower than some of our some of our competitors and but we are seeing.
You know not necessarily an immediate impact of the lockdowns, but cuss.
Customers are clearly dealing with it and it is there are some early indications that companies will deal with it differently than they did in March, but they're still going to have to grapple with transportation issues child care issues and the like.
So it's I think too early to tell but you know the the particularly in countries like France, and the UK where there.
You know basically reinstituted.
Almost total total.
Lockdowns, there's likely to be sort of.
An impact, although it's hard to hard to quantify.
Okay. Thank you for taking the questions really appreciate it yeah. Thanks, Joe good to hear from you. Thank you Joe.
Ladies and gentlemen, just a quick reminder, if you do have a question. Please press one then zero.
And allow me a few moments she quickly no further questions coming in.
Okay. John I appreciate your help thank you everyone. Thank you John day, well for anyone yeah.
Say well yep.
Thank you and ladies and gentlemen that does conclude your conference for today and thank you for your participation you may now disconnect.