Q4 2021 Resources Connection Inc Earnings Call

Good afternoon, ladies and gentlemen, and welcome to the resources Connection Inc. Conference call at the time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will.

All of them at that time the fan.

The 1 should require assistance during the conference call. Please press the Star key followed by the Bureau of button on your Touchtone telephone and you will be connected to an operator, who will assist you as a reminder of this conference call is being recorded at this time I would like to remind everyone that management will be commenting on results for the fourth quarter ended may 29.

2021 day will also refer to non-GAAP financial measures an explanation and reconciliation of these measures to the most comparable GAAP financial measures are included in the press release issued today today's press release can be viewed in the Investor Relations section of our G. P's Web site and was also filed today.

With the SEC.

Also during this call management may make forward looking statements regarding plans initiatives and strategies and the anticipated financial performance of the company such statements are predictions and actual events or results may differ materially.

Please see the risk factors section in our G. P. <unk> report on form 10-K for the year ended May 32020 for a discussion of risks uncertainties and other factors that may cause the company's business results of operations and financial condition to differ materially from what is expressed or implied by forward looking statements made during.

This call such discussion will also be included in the risk factors section in our G. P's report on form 10-K for the year ended May 29, 2021, which will be filed on or around July 23rd 2021, I'll now turn the call over to our G. P CEO kick the shame.

Thank you operator, and welcome to our quarter for fiscal 'twenty, 1 earnings call. Thanks for joining us today I'll cover 3 topics. During my remarks, starting with a quick review of fourth quarter performance well then the outline of our enterprise objectives for fiscal 'twenty 2 to position the <unk>.

Company against the market opportunity and improve shareholder value and lastly, I'll comment on positive macro trends that we're watching as the economic recovery unfolds as.

As we discussed last quarter, we expected Q4 to strengthen any debt Q4 revenue came in at $172.3 million, reflecting a sequential improvement of 10%.

This improvement returned our G P. The year over year growth and exceeded the high end of revenue guidance.

In analyzing our results. Please keep the following important timing comparison of mine R. G piece of fiscal year is June to me, we will not see the full impact of Covid related recovery in our results until we report performance in Q1 of the current fiscal year in other words.

Third we did not experience the negative impact of Covid until well into Q4 last year and that quarter also had an extra week of revenue, which covered some of the impact that our G. P's double digit revenue bounce back well really be seen when we report on results.

For the current quarter.

1 further highlight from the financial results before I move on we're especially pleased with the improved adjusted EBITDA performance at $20.7 million or of 12% margin in the quarter, that's up 600 basis points sequentially and 160 basis points year over year.

We've worked hard to improve the profitability of the business and we'll continue to do so we exceeded gross margin guidance and SG&A performance was better than guided.

Today, given what we're currently tracking in pipeline and committed revenue. We believe Q1 fiscal 'twenty 2 will be another strong quarter, especially given the easier comparisons.

While COVID-19 numbers seem to be creeping back up in parts of the world. We are better positioned today to execute remotely and virtually than we were 18 months ago clients Trust us and know we have the quality tools and process to deliver in the disrupted environment.

Now I'll outline of our enterprise objectives for fiscal 'twenty..2 these are the main priority items for the management team to accomplish and they align everyone in our organization for the year, they're 5 enterprise objectives, and I'll briefly comment on each.

First we have launched a project to elevate the technology infrastructure of our G. P. Globally. This means we're upgrading our core ERP system on our core talent acquisition and management system. This technology initiative will accelerate our efficiency goals and data led decision making capabilities were.

Eager to accelerate optimized process flow and automation.

And the second enterprise of Jack David will be focused on further commercializing our digital strategies. The 2 areas of activity are driving more digital transformation revenue through our G. P channels boats per veracity and digital agency and the launch of Hugo.

Our G P as digital engagement platform in.

In fiscal 'twenty, 1 we grew the veracity of digital consulting business by 36% Q4, 'twenty 1 over Q4 'twenty despite dealing with the global pandemic today, we have improved process and structure to drive that opportunity forward, even more in fiscal 'twenty 2.

Hugo represents an accretive source of revenue given its both of new digital engagement channel as well as the service category, we haven't capitalized on yet.

As a reminder, Hugo empowers clients and gig workers to engage digitally for project work with the focus on early to mid career level finance and accounting professionals.

Our fleet, combining digital with our G. P's employment model and tradition of exceptional service Hugo will continue to put humans first we're completing soft lunch development and will introduce the platform in New York City in the fall the.

The exact timing will be communicated during Q2 to ensure that the New York marketplace is healthy and has opened sufficiently for successful introduction.

Third we'll grow top line revenue leveraging these key strategies among others for starters, we're broadening the strategic client program moving 22 additional accounts into the program for fiscal 'twenty 2 with a dedicated client service personnel. We're also adding capability to the health care practice.

In the areas of revenue integrity clinical trial support and supply chain optimization. In addition, we're adding personnel to our fast growing county business County, as of finance and HR as a service offering for startup and divested entities that choose strategically to outsource these functions.

Yes.

Finance is the service is a growing opportunity and we have of bespoke approach built on the net suite Oracle platform proprietary IP and exceptional fractional CFO talent.

As of fourth enterprise objective will continue to improve our adjusted EBITDA performance to deliver even more shareholder value through disciplined management of head count business expense of real estate cost in fiscal 'twenty, 1 we reduced our cost structure by $26 million or 12%.

And we will continue to eliminate expense in an increasingly digital and virtual world.

We're also focused on improving both utilization and pricing of salaried consultants in our E. P. S group and other high value segments like veracity for example, veracity increase bill rates by 6% year over year.

The competition for talent is heating up and we will continue to adjust our pricing to keep pace and reflect value delivered.

Fifth we will strengthen the our G P brand.

Our brand is built on the power of human and the World is moving in this direction. This year will focus even more on our human first brand to improve consultant experience.

This means creating more digital connection providing opportunities for upskilling, and professional community and delivering care and well being to our consultants.

We can deliver what talent wants today, which is radical flexibility work with the purpose and the connection to an employer, who cares about them personally and professionally where our business model built for the new realities of work.

The encouraging signs in the macro client environment also indicate that the time is now for our G. P. This month for example, Chief Executive magazine issued its July polling.

CEO confidence and current business conditions has rebounded to a 3 year high.

Ceos of our forecasting increases in transformation projects and Capex for the year of head and anticipate talent needs growing double digits simply put big deals are back and at the same time companies are engaged and workforce strategies built for flexibility speed and resiliency.

Ceridian of human capital software firm reported just yesterday in its future of work study that 62% of the 2000 senior global executives pulled during the spring believe the Gabe workers will substantially replace fulltime employees within the next.

5 years.

Agile talent needs of rising whether it's categorized the staffing or project based work and business leaders plan to leverage gig workers to increase the size of their teams.

All of these factors are converging to make work more modular and time box. Our G. P is built to deliver on modular work, whether it's on site remote or outsourced we partner with clients every day to fill skills gaps and we do so with speed and flexibility we find the right.

Skills and deploy those skills for the right period.

To close my remarks, I am pleased to invite you to learn more about the macro trends.

<unk>, our business and progress against the fiscal 'twenty 2 objectives during our upcoming Investor day to be held at NASDAQ on October 13th in New York City, We've not hosted alive Investor day in many many years and we're excited to share more during that event.

It is an inflection point for our G. P. The world has turned in our direction.

I'll now turn the call over to the Tam for an update on operational trends initiatives and opportunities.

Thank you Kate and good afternoon, everyone.

During the quarter, we saw good progress on our revenue on operating metrics as the economy recovers.

The combination of client and prospect nurturing coupled with the release of pent up demand resulted in increased momentum and revenue and pipeline growth.

Lead generation and opportunity identification have reached pre pandemic levels as new and existing buyers with the launch initiatives quickly on the competitive labor market.

Enhanced outreach throughout the year is paying dividends as closed engagements in the core business in Asia Pacific Europe, and North America, which fiscal 2019 levels and pipeline continues to be strong.

And some of the strengthening of the economic environment combined with the operational effectiveness has led to improved results.

As Keith touched on our fourth quarter results exceeded the high end of our revenue guidance. We continue the see the positive dynamic of clients resuming of engagements that have been part of initiating projects that were delayed and generally looking at the project portfolio through a broader and longer term loans as commercial confidence rises the.

This has led to increased demand for both professional staffing and project consulting, which we believe will continue as a permanent workforce shifts around the use of variable workforce solutions for project co deliberate.

This change predated the pandemic, but was clearly accelerated in the last 18 months as clients of talent increasingly embraced flexibility initially out of necessity, but now by design while.

There are lingering effects of the pandemic and we're not yet completely out of the woods. They do not dominate how we operate.

We continue to deliver successfully using a blend of on prem and off at resources.

Trend the place to our strength and we will continue with increased product lines of the companies have learned the care more about resourcing based on fit for purpose versus proximity.

This sets the table for better matching of supply demand, which leads to elevated operational efficiency for our GP.

While there have been sort of increased calls for on Prem Resourcing. Most companies are you utilizing a hybrid workforce himself and are comfortable engaging with us on the same manner.

As an example, this quarter we began in earnest the complex financial transformation of compliance project with the financial services client that will require a large and distributed cadre of project consulting support for a number of months geography is important for some aspects of the project, but in other cases, mostly virtual delivery will suffice.

Another illustration of the engagement of our health care practice, 1 to stand up of project management office for an R&D transformation initiative from a pop life Sciences company.

Moving program and change management and supporting organizational redesign of.

The multiyear project consists of nearly a dozen work streams spanning multiple functional areas. Our delivery team for this project is delivering both onsite and remotely working with our client in the way that is most effective for successfully delivering the project outcome.

These engagements punctuate. The fact, the project delivery of more to be more flexible in unconstrained and an environment that requires it.

These are demand trends that will continue and play to our core strength of rapid deployment pristine delivery and strong project and change management.

Reported economic trends noted significant constriction on the labor market and while we continually monitor for potential operational impacts we haven't noted in the material effects to day.

With a broad geographic network, we were able to utilize the borderlands talent deployment to our advantage and is a differentiator we work seamlessly as 1 of our GP and then working this way of consultants have been deployed more quickly on engagements with longer durations in fact, given the tight labor market and the increase the demand for code of delivering on strategic initiatives. We have also seen clients.

In the end of the concept of captive labor pool to ensure they have the ability to complete key projects, while accepting and in many cases asking for distributed support.

We have had several discussions with key clients in this arena and this is the burgeoning trend on opportunity.

We're giving them more flexible fashion of maintaining control over key career decisions is the hallmark of employment of choice in the new economy. This agility combined with membership in our professional community is the RGB core tenet, which allows us to produce on average consultant tenure of nearly 3 years, we believe that on the near term as more professionals assess.

The career objectives and offer more flexible work the powerful combination of aimless clients career control flexible delivery and professional community will make us an employer of choice.

While we feel the trends of broadly favorable to our model. We will continue to focus on operational discipline, and prioritization and resource allocation and pricing governance.

Now, let me turn to our fourth quarter operations.

During the quarter, we saw continued growth on the pipeline and average daily revenue grew by approximately 6% from the first weeks of the quarter to the last in fact average daily revenue rates ended the quarter of the highest they have been since early FY 'twenty and pipeline of book revenue have reached pre pandemic levels.

The majority of markets demonstrated sequential progress, while several markets, including Tri State, Los Angeles, Chicago, U K, Cleveland, Portland, Japan, Hawaii, and Mexico demonstrated growth both sequentially and over prior year quarter, finally, veracity and count the both grew sequentially and over prior year quarter.

The tenaciously ending the year as they began it was strong growth.

While we remain focused on revenue expansion, we target profitable growth from operational leverage.

This year and in the quarter, we continued to make strides the controlling fixed costs and improving the efficiency, we will rent balance with respect to expense going forward, knowing the importance of in person interaction, but he lessons learned during the last 18 months.

To that end, we will continue to sell deliver and operate in the mobile world is fashion look for opportunities to reduce real estate footprint and utilize technology to extend and strengthen our community.

Before handing over to Jim on what to provide some additional insight on early first quarter trends. The early weeks of Q1 has shown the strong continuation of positive trends in both revenue and growing pipeline.

We will be watching for vacation trends of the summer coming out of the pandemic of debate Theres no unusual patterns of note.

I will now turn the call over to Jim for a more detailed review of our fourth quarter results.

Thank you Tim and good afternoon, everyone. During our fourth quarter demand of the business propelled revenue acceleration, resulting in meaningful growth both from the sequential quarter and the fourth quarter of year ago gross margin rebounded from the third quarter as we continue to focus on the bill pay spread.

Our restructuring efforts coupled with the virtual operating model continue to yield favorable SG&A results.

Executing on all 3 fronts enabled us to deliver a notable 12% adjusted EBITDA margin of 160 basis point expansion from the same period last year.

Now, let me provide more color on our operating results starting with revenue.

The quarterly revenue of $172.3 million, we well exceeded the high end of our revenue guidance of 167 million.

After adjusting per business day, and currency impact on Q4 revenue represents of 4.7% improvement sequentially and 1.2% growth year over year.

As Keith stated given the timing of our fiscal period and of laden impact of Covid in the fourth quarter of the previous fiscal year, we did not yet see the full impact of the top line recovery from Covid.

Revenue growth in the fourth quarter was driven by the combination of pent up client demand as well as new demand in areas such as digital transformation as clients accelerate their digital agenda.

In addition, macro trends accelerated by the pandemic, including increased use of contingent cap talents and the shift towards a more agile workforce model also drove healthy momentum in professional staffing revenue.

Professional staffing revenue has achieved an increasing sequential growth rate of 4.4% 5.5% and 14, 4% over the last 3 quarters and we expect the trend to continue.

In North America revenue improved sequentially by 3.8% on the same day constant currency basis, and 8% year over year.

Growth in the fourth quarter was across the majority of our solution core market and industry vertical most notably veracity grew 15% sequentially and 36% year over year on the same day basis, furthering our progress in growing our mix of technology and digital solution.

As employee experience and digital technologies continue to increase in importance, we see strong opportunity for digital to drive collaboration automation and self service.

We also experienced strong growth in the financial services industry, and our strategic client accounts with 10% and 3% sequential revenue improvement respectively.

In Europe, our strategy to adopt an integrated global go to market approach to focus on serving our tier 1 multinational clients in the region has proven to be successful on.

On the same day constant currency basis, Europe revenue improved by 11, 1% sequentially and 4% year over year, both U K and our task force business contributed significantly.

More importantly, not only did we expand our top line the restructuring initiatives took significant fixed costs out of the business and positioned us for profitable growth in the future.

Asia Pacific experienced the sporadic COVID-19 outbreaks in certain geographic pockets throughout the quarter. However revenue was back to pre COVID-19 level by the end of the fourth quarter.

And on the same day constant currency basis, Asia, Pac's revenue improved 4.5% sequentially and 1% from a year ago.

Our fourth quarter gross margin was 39, 6% compared to 44% of year ago.

The Bill ratio is up 85 basis points year over year due to some lingering impact of pricing concessions provided earlier in the fiscal year.

Compared to the third quarter, we improved our payable ratio of about 58 basis points, primarily as a result of better pricing governance.

To alleviate any pressure of the tightening labor market may impose on our gross margin, we're taking a disciplined approach to price of engagements to market appropriately. We also see opportunities in achieving higher bill rate across certain solutions that such as digital transformation services.

As an example average bill rate in Q4 for veracity with $1.53 up from 150 in Q3 and $1.44, a year ago.

Run rate SG&A expenses for the quarter were $47.8 million after excluding noncash stock compensation contingent consideration expense and restructuring charges, representing 27, 8% of revenue a meaningful improvement of $5.9 million or 230 basis points compared to the same period of.

A year ago.

Turning to other components of our financial statements.

We had an income tax benefit of $7.8 million for the fourth quarter, representing an effective tax benefit rate of 56% compared to $2.9 million of income tax expense or an effective tax rate of 42% in the prior year quarter.

As part of our cash planning strategy, we made changes to the capitalization of certain fixed assets, which resulted in an NOL carry back permitted under the cares act contributing to the income tax benefit for the quarter and for the full fiscal year.

Adjusted diluted EPS for Q4, which excludes the net of tax impact of restructuring charges stock compensation and contingent consideration rose significantly to 80 cents per share compared to 33 per share in Q4 fiscal 'twenty.

The current corner of adjusted EPS includes a favorable impact of 39 cents per share related to the NOL carry back.

Our balance sheet remains strong and we continue to generate positive cash flow from operations paying down $45 million of outstanding debt under our credit facility in the course of the fiscal year.

As we head into fiscal 'twenty, 2 assuming the macro environment remains stable, we're regularly evaluating our long term capital allocation strategy, taking a balanced approach between investing in the business and returning value to our shareholders.

I'll close with our first quarter outlook and an update on clients statistics.

We're optimistic about the sustained improvements in sales and pipeline metrics, including win percentage close engagement and average deal size as well as the continued recovery of the average bill rates. We expect revenue in Q1 to be in the range of $1.73 to 177 million, an estimated 20% increase compared to Q1 of fiscal.

The 21.

Margin is expected to be in the range of 38 to 38, 5%, reflecting seasonal impact of summer vacation.

We expect run rate SG&A to be in the range of $50 million to $53 million.

Finally, our GPS client continuity was outstanding this quarter and we believe our retention statistics demonstrate the value add we bring to clients every day.

During Q4, we served 49 of our top 50 clients from fiscal 'twenty and 45 of the top 50 from 2019.

The strong retention has remained consistent year over year, despite the global pandemic.

With that now we are happy to take questions.

Thank you.

Under the ask a question you will need to press star 1 on your telephone to withdraw your question press the pound key please standby, while we compile the Q&A roster.

The first question comes from Josh Vogel with Sidoti You May proceed with your question.

Thank you good afternoon, everyone hope you're all well.

And certainly the <unk>.

Nice to see the the business recovering of etc of fast clip here a couple of questions.

Looking at the the bill pay spread improvement year over year, maybe this is for you Jen.

I know you brushed on it in your prepared remarks, but can you just give us some more broad strokes on what do you think the pricing environment will look like in fiscal 'twenty..2 I know you said that there's higher bill rates on on the digital transformation work and I may have asked this before but is there any difference in how of consultant.

Is paid.

Whether they are fully remote or on a hybrid position.

Hey, Josh Yeah, I know I answer that question first I mean, there is no difference between between of remote consultant and if not I can bolton in the way they're paid from.

From the Bill pay spread standpoint, I mean, the bill pay spread is still down compared to compared to the year over year. If you compare keep want to keep bought but we did see sequential improvement from Q3.

So the bill rate environment.

Such that we you know we are seeing some opportunities in the digital transformation services area area as well as our health care health care industry vertical and pay rate, we talked about in our <unk>.

Third remark.

We are expecting some maybe some construction in the on the supply side of things, but so far we haven't really noticed any pervasive.

Pay rate increase in the business and so going forward in fiscal 'twenty..2 is really we're monitoring that very closely and while we want to pay competitive rates to our consultant. So they can attract and retain the right talent.

Really on the built in the on the Bill rate side that we are that we need to get ahead of the trend. So that we don't get squeezed in terms of in terms of our margin.

Alright, great. Thank you for those insights.

You mentioned about a nice traction.

<unk> rebounded in the staffing side of the business I was curious if you could breakdown.

It's between project consulting versus professional staffing is that still kind of like a 60.40 split and then whats implied guide.

In that 20%.

Growth guidance in Q1 between the 2.

Yeah sure.

Yeah, our historical project consulting versus professional staffing it is roughly about a 60.30 split and the remaining 10% is is our managed services business and on counting we talked about that and.

Executive search and so this year the mix between the 2 has shifted a little bit because professional staffing revenue did continue to grow throughout the year. So we're seeing that that makes the shifting by about 2%. The professional staffing is is up to about 33% now and.

And consulting is down slightly.

On going into going into the next year of 22 I mean.

While we want the we think this trend is going to continue with professional staffing revenue continue to increase the we're also working really hard on growing our project consulting side too. So I think the whole pie is going to grow in line revenue and just depends on which side of the business outpaces. The other so I do expect the mix to stay relatively consistent because we do expect.

Both of the both side of the business to growth.

Alright, Great and then maybe 1 for Tim.

Is it possible to quantify how much the pipeline grew over the past 6 months and what percent of that that you think will get converted to revenue over the next 12 months.

Hey, Josh.

You don't want to.

I would just tell you that we had.

Pretty significant growth in pipeline from the beginning of the fiscal <unk>.

To where we are now flips that were pretty close to where we were in the pandemic loving it.

In terms of conversion of our conversion rate has stayed very consistent.

And actually increased a little bit in the latter half of this year as the.

Demand from the back online so.

I guess, the easiest way to think about the commodities that are from.

From Q2 from the <unk> from the from the latter part of Q2 to where we ended up.

Q4 pipeline was up.

Over 20% and conversion rates stayed about the same.

Alright Thats helpful. Thank you and.

Just 1 more of and I'll jump back in the queue.

Obviously, it's very buzzy these days anything related to digital transformation and clearly you're seeing traction there.

I'm curious you know what exactly of the nature of the engagements you're winning are buying 4 or another way to put it what are the what our clients primary digital agenda today and then no 1 being that this is the category are there any specific apps in the portfolio regards of your capabilities and digital transformation.

Typically in the where youre seeing outside and in the marketplace. Thank you.

Yeah, Josh it's Kate Thank you and hope you're well too so.

So when you are digital transformation business is largely.

With our veracity subsidiary and when you think about the kind of work they are doing and the kind that we're starting to pull from our GP client base, it's to accelerate the ability to collaborate and automate.

On process and workflows.

Specially.

The growing and this is also tied to a GAAP is the work we're doing with service now with the service now software platform and also with Humana.

Those are 2 technology providers that we see growing opportunity with and if wrath of the had a GAAP that they would say we need more service now certified and personnel in order to keep growing so we're looking for them I think everybody you talk.

2 we will say the technical talent is the hardest defined right now and so we're also looking at them offshore strategies are in.

In order to help that team build more quickly and that's also the power of our footprint and network at our GP that we can go to places like Mexico City, or India and look for the kind of qualified talented resources that they need.

Alright, great well I appreciate all the insights and thank you.

For taking my questions look forward of chatting soon.

Thanks, Josh.

Thank you. Our next question comes from Andrew Spinola with Jpmorgan you May proceed with your question.

Hi, I Kid once you fully recover from Pandemics and get back to the the revenue base. What do you think the medium term organic revenue growth profile will be.

And what do you think the margin associated with that organic revenue growth profile will be.

Yeah, I mean, we're looking am Andrew at the.

The growth kind of range between 8 and 14% as you look over the next 2 to 4 years and that's what we're focused on I think the gross margin, we're still very focused on 40%, but the mix is going to come differently than it has in the past.

As we strengthen pricing for our Aps services, which are more of our management consulting.

Services and Hugo we're expecting because it's in the adjacent market, that's a little lower level earlier career that will be competing in an arena with the lower margin profile.

So you'll see our mix shift a bit.

Right and I'm sure you realized it to grow 18 to 40 per cent that would be much faster than the big 4 accounting firms will likely be growing and so it's just been a while in my observation since since the time of resources very regularly.

<unk> was able to outpace the big 4 firms. My question to you is dosage strength of big 4 firms will start to notice.

Yeah.

Able to grow at that growth rate or is it really not really as competitively close with the big 4 firms as you were asking about.

Well, Andrew I think we're not apples to apples and that's a really important comment that I. Just made so if you. If you believe like I do that talent wants something different in their careers moving forward it won't be to align with the professional partnerships in the future it will be to align with.

Employers and consulting firms like ours, which are offering career paths that are more flexible more agile and more directed.

And I think that's going to be the winning workforce strategy in the future. You know of my prepared remarks I highlight of the study I read that came out of ceridian.

Produced by a research firm and you know in talking to the client.

And that we have every day. They really are finally, starting to ship their workforce strategies in ways that are that are not aligned with the partnership track of the past I'd also tell you some of our recent wins in the financial services industry is because that industry is recognizing their overreliance on the big 4.

On Covid has given them both the courage and the cover to make different decisions. So you're right. My remarks are more optimistic than we've been in the past, but I think for good reason and tied to both research and trending information that we see in the macro environment.

Well said thank you.

Mhm.

Thank you. Our next question comes from Mark Mark on with Baird. You May proceed with your question.

Okay, Kevin and Jim.

Really nice to hear the the improvement occurring and it sounds like it's really broad based.

First question is for Tim perhaps as the.

You went through a list of the offices could seem like they're improving.

Sounds like it's really broad based kind of how would you.

Assess.

The leadership across the the office footprint.

How many offices of what percentage of the ox is do you feel like are optimized from that perspective.

Hi, Mark Thanks.

Thanks for the question, yes, it is broad based.

We have we do have a lot of market. So of course, we're not going to have every marketing hitting.

Going full speed at the same time, but what I would tell you is that.

Both from a performance standpoint.

I listed off markets that the sequentially and year over year, but we had a much broader base of actually grew sequentially and then when I look at forward looking metrics from our pipeline for the business.

I've, even probably even more positive picture of it goes directly to what you were talking about I feel like our leadership structure is.

As broad and deep as it's been in a while we have some pockets where we were.

Involved in probably of doing more turnaround from the pieces of the country, where we are still.

Still working through.

Both of them from a personnel standpoint in the go to market standpoint of getting to an optimal level of those.

Of those pieces are.

On a smaller group than they've been in the past.

That's great to hear and then the.

The 8% to 14% growth that you talked about what are what do you think price is going to be within that.

Opposed to volume because it would seem like bill rates should be continuing the pace up.

As well as pay rates.

Yeah, I think of it more I don't have a specific breakdown.

Jen might because we've been doing our 5 year planning.

On <unk>.

And so I think of it more as increasing our share in the consulting marketplace than pricing.

Strictly from the standpoint that we are launching Hugo we will see some new revenue streams with a lower margin profile and so I think.

That will there will be a trade off and how we're growing the.

The overall business and growing shareholder value.

Thank you Andrea Thank you on out there.

Yeah, I mean, I think I think we definitely have additional attrition of our feeling in terms of all bill rate without a doubt.

Great.

Can you elaborate with what you meant the party with.

With regards to Hugo in terms of.

How that would end up impacting the pricing.

Well I think that we should expect slightly.

Lower margin in that business than our more experienced.

Project based or even management consulting based resources. So if you think about it we're going to launch in a and adjacent space where.

Some of the other staffing companies are probably more dominant.

And we'll be competing against those margin profiles, which have generally been lower than our G. P. A.

And so we expect that I think that the product that we're developing or the pathway. If you think about you go is really of service delivery pathway for us that's new more efficient.

And therefore can operate with just the strong profitability with lower margins.

And so if we're talking about say a payroll manager.

The marketplace is telling us that that probably isn't the 40% margin piece of business, it's something lower but it's incumbent on us to create the experience that so delightful for our clients that the.

That's the pathway they want of Hughes and Oh by the way we're building net with lower cost of sales. So we can deliver bottom line profitability within our financial metrics. So I hope that helps.

Not really debt guys. Thank you and then can you talk a little bit about.

What youre seeing from a from a pipeline perspective and even during the most recent quarter.

In terms of the amount of work that's coming from financial transactions, whether it's.

Destocking situations companies going public.

On the things along those lines, where things are obviously picking up quite a bit.

Yeah, Mark of just a comment on overall pipeline and bookings I would say.

From the bookings perspective, 1 of the strongest quarters, we've had in recent memory.

And our pipeline as of.

The end of the last quarter or 2 of very very consistent levels of is still very strong looking.

Looking out on sort of the 2 quarter vantage point.

In terms of the things that are happening from transactions I would say that we are getting.

A lot of stock work.

I don't know that I think the some of the larger.

Engagements that we're working on really have are more transformative in nature versus transactional in nature, but the.

But both sides of that business are tracking of.

So there are a number of <unk>.

The <unk> acquisitions on a recurring we're in the mix for helping with integration and doing some of the front end of diligence on some of that.

But I would tell you that the sort of the larger larger engagements that were getting into the things on a kind of that are filling up of our pipeline right now have more to do with <unk>.

Any of that have started transformations of maybe slowed them down a little bit and realizing now the kind of come out is the normal fee that they need to speed up again really quickly.

And with that that piece of the pipeline is speeding up.

Probably the fastest rate.

That's great to hear and then.

In terms of Europe.

Despite the restructuring it sounds like things are really hum.

Going well over there can you talk a little bit about what youre seeing.

And across the various countries and to what extent have you seen any sort of impact.

From Delta on on your London operations.

Not much impact from Delta yet.

Again, I'm knocking on wood for sure on that.

I'd tell you that our UK practices.

Has been very strong has been 1 of the restaurants practices, if not the strongest practice in Europe.

I think our German practice has been strong all year.

Force volume.

Task Force business and the German RCP business operating on the same leadership they actually.

Year over year growth.

On a on a year to date basis, so a very strong performance there.

But we shrink our footprint there. So we don't do business or we don't have physical presence in.

In Italy, and France anymore, and we don't have business of the Nordic.

In our Netherlands practice, which was.

The problem is down a little bit year over year, but it's really focused on on.

On our key clients there. So overall remain from the operational leverage standpoint doing well.

But from the top line standpoint in the U K is really sort of leading the charge.

Great. Thank mark Mark keep in mind that sorry to jump in here, but keep in mind.

We are still delivering mostly virtually and remotely which keeps our population healthier and less less risk.

Oriented and we can do that given the level on the caliber of people that we are employing and then deploying to our clients.

That's great to hear and can you talk a little bit about the increasing attractiveness of you know.

Hybrid work in virtual work and what Youre seeing just in terms of the candidate profiles and how how easy or difficult. It is to fill the positions that.

That are coming open for Ya.

Yes, let me jump in and I'm sure Tim will have some color to sente them on our head of.

Talent reports directly to Tim, but what I see in the marketplace is really this great what we're calling the great reassessment.

It's talent professional level talent.

Signing up for a different kind of exchange with an employer and its not about as I said before you know climbing 1 corporate ladder, it's creating what we call the portfolio of experiences with some of the most beloved brands in the world and that's what we can offer talent, we have long standing.

The client relationships with some of the most innovative the loved brands companies doing really interesting things and we can offer them access in their career development to those kinds of projects.

I am bedding debt that is.

The way of the future and if you talk to younger professional talent across the board. They will tell you that's what they're looking for.

So as we said before maybe this business model was built a little too soon but we're certainly built for now and therefore, we have to continue to improve how we deliver our services to.

2 both of our clients and consultants in order to attract the very best talent is that's what everybody is shooting for now and the paradigm has shifted.

So I think that's driving that from a macro perspective.

It certainly makes our platform that much more attractive as Keith noted and if you think about the taxes.

<unk> done a bunch of different pathways for our consultant population to working on clients.

When you think about hybrid.

The example is not nothing is all or nothing anymore, and so that could mean anything from looking across time zones, and we actually have in may of <unk>.

This example, before.

Salt is working in Florida for our clients.

In Washington, The Washington State.

The pre pandemic that likely wouldn't have happened, but as we start to open up I think the other pathways that are.

That are actually going the very impactful as well or that youre going to have people who work on site for part of the week.

Totally from the rest of the week of that really wasn't an option before and if you think about.

Just the practical element of commuting that opens up the filters with people who are thinking about the types of the type of clients that would be within.

Within within the sphere of considerations opening up broadly in the does the same for for clients because it opens up a catalog of the talent that they're willing to work with and engaged in the different way, we're already starting with the.

Great.

Are you seeing in terms of fill rates I mean.

Everybody is pursuing top talent show.

Our fill rates are still very consistent in fact.

1 of the things you know 1 of the things of that probably anomalous coming through the pandemic of that you had we had more supply than demand and the demand creeps up we still have a very healthy a form of supply of it's a lot. There's a lot of competition for it and that we see that to be a good thing, but our fill rates have not we haven't seen degradation in our fill rates.

And frankly, even thinking about what we just talked about with respect to hybrid and sort of being able to being able to utilize the talent that maybe it wasn't accessible before we hope to stay well ahead of that so that we don't have degradation issues, even as we even as we continue to climb of the demand curve.

Great and then.

Is there anything that we should.

Factor in in terms of just the forward outlook on SG&A just in terms of vote of rebuild with regards to.

Travel and entertainment or anything along those lines debt.

Temporarily ceased.

Yeah.

Going into fiscal 'twenty 2 of our SG&A is expected to go on for few reasons..1 is as our revenue top line growth the variable comp.

A component of our SG&A will flow.

On naturally go up and to your point the traveling in the business expenses will go up a bit but we've said before that it's not going to go back to pre COVID-19 level on where we're holding our business expenses at about 50% of pre COVID-19 level.

Adopting the hybrid kind of virtual working model still and yeah. I mean, I think overall SG&A I foresee this year SG&A. We think we have made significant strides in reducing fixed costs. I think we always look at SG&A did not just solar but also as a percentage of revenue and so we do expect.

That we're going to see a meaningful.

<unk> in our SG&A percentage of the percentage compared to last year as a percentage of revenue.

Great. Thank you very much.

Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to Jay to Shane for any further remarks.

I just wanted to thank you all again for attending our Q4 and year end call and we'll look forward to talking with you again at the end of our first quarter.

The fiscal 'twenty, 2 thanks, everyone and stay healthy.

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.

Goodbye.

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