Q2 2023 Kelly Services Inc Earnings Call
Yeah.
Good morning, and welcome to Kelly services second quarter earnings Conference call.
All parties will be in a listen only mode until question and answer session of the call.
Today's call is being recorded at the request of Kelly services. If anyone has any objections you may disconnect at this time.
Second quarter webcast presentation is also available on the Kelly website for this mornings call I would now like to turn the meeting over to your host Mr. Peter Quigley President and CEO . Please go ahead.
Thank you Louis and Hello, everyone and welcome to Kellys second quarter Conference call.
Before we begin I'll walk you through our safe Harbor language, which can be found in our presentation materials.
As a reminder, any comments made during this call, including the Q&A may include forward looking statements about our expectations for future performance actual results could differ materially from those suggested by our comments and we have no obligation to update the statements made on this call.
Please refer to our SEC filings for a description of the risk factors that could influence the company's actual future performance.
In addition, during the call certain data will be discussed on a reported and on an adjusted basis.
Discussion of items on an adjusted basis are non-GAAP financial measures designed to give insight into certain trends in our operations.
For instance to organic growth in our discussion today excludes the impact of the 2022 sale of our Russian operations.
Finally, the slide deck, we are using on today's call is available on our website.
We had a lot to cover today, so let's get started in a moment I'll invite Olivier T. Rowe, our chief financial officer to provide details on our financial results for the second quarter.
We will spend the rest of our time, providing an update on the transformation initiatives announced in May that is designed to significantly improve Kelly's EBITDA margin and accelerate profitable growth.
Specifically, we'll review the aggressive actions, we've taken their immediate impact on our EBITDA margin and our expectations for margin improvement going forward.
With that I'll turn the call over to Olivier.
Thank you Peter and good morning, everybody.
For the second quarter of 2023 revenue totaled 1.2 billion down three 9% from the pile you, including 60 basis points of favorable currency impact so revenues for the quarter well done 4.5% in constant currency.
Included in that decrease is a 230 basis points of unfavorable impact, resulting from the 22020 to sale of our operations in Russia. So our revenue overall was down 2.2% year over year on the noble getting each constant currency basis.
As we look at the second quarter revenue by segment. Our Education segment continues to report significant year over year growth up 33% due to our net new customer wins strong demand from existing customers and improved seat right.
It's also continues to perform well as we anniversaried the acquisition in the quarter.
Overall continued double digit revenue growth demonstrates that our education business is a significant growth engine, even as the broader economic trends Suffolk.
In the <unk> segment revenue was down by 7%.
In the second quarter, we saw a continuation of the consideration of demand for our specialty staffing.
As well as a slower revenue growth in some outcome base stations.
Permanent placement fees were also impacted by a continued deceleration in market demand and declined 48%.
In our OCG segment year over year revenue declined 9% on a reported basis and 8% in constant currency.
The declines were primarily in <unk> PQ, one MSP revenues were nearly flat.
Revenue in our professional and then just real segment declined 9% year over year in the quarter.
Revenue from our <unk> product declined by 16%, reflecting the impact of economic headwinds, which are most noticeable in these segments. The segments outcome based business delivered again solid revenue growth of 18% as the market continues to be swung from these value added solutions.
Placement fees declined 55 person and was impacted by lower demand for full time hiring.
Whereas when you and I wanted to National and International segment declined 9% on a nominal currency basis and was down 13% on a constant currency basis, excluding the impact of the sale of our Russian operations revenue declined 1% on an organic constant currency.
They're four months very depending on geography and product for the quarter. We had good constant currency revenue growth in Mexico and bought together, but that was more than offset by declines in the U K, Switzerland, and Italy, and France and international it's permanent place placement fees were up 5%.
On an organic constant currency basis.
Overall gross profit was down eight 3% on a reported basis.
Or eight 5% in constant currency.
Our gross profit rate was 19, 8% compared to 27% in the second quarter of last year.
Overall GP rate declined by 90 basis points.
The primary driver was 70 basis point unfavorable impact from lower Perm fees, and 40 basis point of higher employee related costs. These impacts were partially offset by 20 basis points of continued improvement in structural business mix.
SG&A expenses were down 3.4% year over year on a reported basis expense.
Expenses for the second quarter of 2023 include $5 6 million of charges related to our ongoing transformation efforts. So unearned. It on an adjusted constant currency basis expenses declined by six 2% in the quarter.
Contributing to the decline was lower performance based incentive compensation related to our lower gross profit levels and we have also started to see the early positive impact of our house formation.
As we noted in our release in July we have taken additional transformation related actions in early Q suite and will recognize additional that'll go structuring cushion to suit.
Peter will provide more information on the transformation activities shortly today.
In conjunction with our comprehensive review of his journey as part of our transformation efforts. We also recognized a $2 4 million noncash impairment charge related to an under utilized leased office space.
On a reported basis our earnings from operations for the second quarter was $6 2 million compared to $8 2 million in Q2 of 2022.
As noted.
2023, Q2 results include the 8 million of charges related to our transformation activities. So adjusted earnings from operations in Q2 of 2020 suites were $14 2 million and adjusted EBITDA margin was 2% similar to Q1.
And as a reminder, kidney Q2 2022 earnings from Operation also include the impact of the 2022 noncash charge related to the impairment of our Russian operations prior to their sale in July of 2022, as well as a $4 4 million gain on the sale of some.
Assets.
Income tax benefit for the second quarter was $1 9 million compared with our 2022 income tax expense of $4 9 million.
Our effective tax rate for the quarter was 31, 4% finished.
And finally reported earnings per share for the second quarter of 2023 was 20 cents per share compared to six cents per share in 2022.
Instead U P as far as the second quarter of 2023, excluding the Tulsa automation related charges net of tax was 36 cents.
After adjusting for the 2022 asset impairment charges and the gain on sale of assets net of tax Q2, 2022, EPS was <unk> 45 cents.
So on the like for like basis EPS declined by 20%.
Now moving to the balance sheet as of the end of the second quarter.
As of the end of Q2 cash totaled 125 million compared to 154 million at the end of 2022 and we ended the second quarter of 2023 with no debt consistent we substantially no debt at the end of 2022.
We're thrilled with minions and available capacity on our credit facilities and our cash balances. We continue to have ample kept does enable to deploy.
As of the end of Q2 accounts receivable was $1 4 billion and decreased 5% year over year, reflecting a year over year decrease in DSO as well as a decrease in revenue.
Global DSO was 61 days untapped with U N 2022, and two days lower than the second quarter of 2022.
For the second quarter of 2023, we generated 32 million of free cash flow and the year to date free cash flow now totals 14 million filled.
For the quarter, we have continued to maintain a lower accounts receivable balances primarily as a result of favorable DSO trends.
A portion of those receivables are related to our MSP programs and are funded with supplier payables. So the lower a and its position as the limited impact on free cash flow generation.
We have also continued to execute against the 50 million share repurchase program that we announced in November of last year by approximately 980000 of shares for 16 million in the quarter, bringing the total rebuilt <unk> to $42 6 million program to date.
And now back to you Peter.
Thanks for those details Olivier in a moment I'll enjoyed olivier to provide our outlook for the second half of 2023.
It's important to note that our second half expectations reflect the impact of aggressive actions, we've taken to date as part of our transformation.
These actions amount to more than a cost out exercise and they differ fundamentally from the cost management actions, we reported in the first quarter, which we implemented in response to near term demand trends.
The recent steps we've taken represent a structural shift to the work we do within Kelly and how we do it.
Marking a necessary step forward on our journey to accelerate profitable growth.
And they are already producing results.
For more details on our expectations for the balance of the year I'll turn it back to Olivier.
Thank you Peter our expectations for the rest of 2023, so the second half of the current year assume a continuation of current market conditions for the second half of 2023, we expect nominal net revenue to be flat to up 50 basis points year over year.
We expect to maintain the GP rate of above 20% because of the benefit of all sexual business mix improvement, but continued softness in demand for full time hiring will continue to comprise spelling on placement fees and a few all in we expect our second half 'twenty 'twenty through GP rate to be down by.
About 30 basis points to 21%.
We expect second half adjusted SG&A to be down, 5%, 6% lower than the same period of last year.
This reflects the actions we have taken for the year to align expenses with topline trends the impact of Tulsa formation related workforce reduction actions taken in July and additional cost optimization actions, we expect to complete this year.
Given the timing of these actions, we expect adjusted EBITDA margin in the second half of the year to be two three to two 5%, reflecting a 'twenty 'twenty, we exit rate of about 3%.
So I just kind of a perspective with the benefit of a full year of expected toss formation related savings and I want to one top line expectations, we would expect to reach a normalized adjusted EBITDA margin on a full year basis in the range of 3.3 to three 5%.
And I would tell me back over to Peter for additional comments. Thanks for those insights Olivier to put our expectations into context consider that Kelly's average EBITDA margin has been approximately 2% for a very long time.
And adjusted EBITDA margin improvement of 130 to 150 basis points at between three three and three 5% will mark a significant improvement in our ability to convert revenue and gross profit to earnings.
And as Olivier mentioned, our expectations assume no change to the current macro economic environment. They are driven entirely by the substantial progress we've made on multiple initiatives to drive sustained efficiency and accelerate profitable growth.
In July we announced strategic restructuring actions that further optimize the company's operating model to enhance organizational efficiency and effectiveness. These actions followed a comprehensive review of our business and functional operations led by Air transformation management office with support from our World class.
Transformation consultant.
As part of the restructuring, we streamlined our organizational structure to reduce complexity and increase agility, we renegotiated supplier agreements and real estate contracts to secure terms that match our needs going forward, we revamped our performance management process to drive behaviors that will sustain these structural.
And we made the difficult decision to implement a workforce reduction plan.
To align our resources with our new ways of working.
These actions among others are on track to deliver a 3% EBITDA margin exit rate in 2023.
We're committed to sustaining these efficiencies having established rigorous controls that provide clear visibility into resources and expenses across the enterprise. These measures are designed to ensure the longevity of the structural changes we've made and serve as the foundation for further EBITDA margin expand.
And going forward.
With our efficiency actions, creating the necessary financial headroom to invest in our future. We're quickly switching gears to the next phase of our transformation driving growth.
To that end, we've undertaken several initiatives that will accelerate profitable growth over the long term.
The scope of these initiatives encompasses our go to market strategy with technology and systems that underpin our operations as well as organic and inorganic growth opportunities. Some examples include developing a comprehensive go to market strategy with innovative offerings to capture a greater share of wallet with large.
Enterprise accounts committing to our inorganic investments and identifying additional high margin high growth targets are.
Aligning incentive programs to these initiatives and their expected outcomes and sharpening our focus on DSO to drive free cash flow the.
The growth initiatives, we're undertaking will be additive to the structural changes we've made to drive efficiency, which are the basis for our expectations for EBITDA margin improvement together, they will unlock the potential of our specialty strategy and accelerate both top and bottom line growth.
I will share more details with you about our growth initiatives on our third quarter earnings conference call in November .
Reflecting on the past several months of work I can say with confidence that this transformation is fundamentally different than any other effort during the more than 20 years I've been with the company.
Different in terms of the depth of our analysis, the speed and precision with which we're executing and most importantly impact the change we set out to create within Kelly is no longer hypothetical this transformation is delivering results.
And while I'm pleased with the progress we've achieved thus far our success will be determined by our ability to deliver on the important work that lies ahead.
I have every confidence that the collective strength and resilience of team Kelly will continue to propel us forward on our journey as it has over the last few months. Indeed, the past 76 years as we navigate this period of change together, our commitment to our talent and customers remains steadfast.
Grateful to them and to our board of directors and shareholders for recognizing the value creating potential of this company lowest you can now open the call to questions.
Thank you and ladies and gentlemen, if you wish to ask a question. Please press one and then zero on your Touchtone phone you will hear at colony, indicating that you'd been placed in the queue and you may remove yourself from queue at any time by repeating the Monday I'll come on and if you're on a speakerphone. Please pick up your handset before pressing that number what's going to be.
A question. Please press one to zero at this time.
Our first question is from.
Hum.
Northcoast research. Please go ahead.
Just trying to on the transformation side.
I'd be interested just timing of normalized EBITDA margins.
When you would expect to achieve that I know you said the exit rate coming out at the end of this year will be three.
Are you assuming that you can achieve your normalized.
Normalized EBITDA margins by at some time in 2024.
Yes, I mean, its clearly 2024 and again to make it clear.
The improvement we have laid out.
Especially on a full year basis, three three to three five is assuming the current.
Top line trends.
Given the current economic environment.
The GP rate, we are in now and the full year impact of this transformation.
So and it does not include anything about the phase two of these transformation, which is about growth.
It's really the.
The pure impact of the efficiency.
Initiatives that Peter was talking about and that should be basically our starting point for 2024.
And then obviously you've talked about businesses that you'd like to accelerate growth, but are there any businesses that you might deemphasize.
As a result.
All these initiatives.
Well, we are continuously reviewing our portfolio to ensure that we're I have opportunity to create value. There is no specific.
A business line that we've identified as a result of the transformation activities, but we have identified ways to improve the operational efficiency in each of our businesses and we expect to see the benefits of that starting immediately.
And just one last question would be aged.
Trends in July maybe.
What you saw kind of how they differ.
More different than June if they work.
But I would say when I look at the Q2 exit for 18 demo for revenue and what is that.
To see in the beginning of Q3, I would say no real big change no improvement I would say, which is not a surprise because I've seen the market conditions are pretty similar to what they were in Q2. So I would say we have started to swing pretty similar.
Situations.
Q2, the only thing that I would like to mention is all about education seasonality.
You know that basically Q suite.
Basically Q3 is a low quarter because of the school year.
And that of course is something you need to consider when you look at Q3.
Because of the seasonality with of course.
Hi in the peak season again in Q4.
And just I apologize.
FX standpoint would you expect FX to be neutral in the second half of this year.
Well when I was talking about nominal revenue edge to flat to up <unk> five.
Expectation now based on.
What we have seen so far he's a positive FX impact between let's say 100 120 basis point.
Thank you very much I appreciate it.
Thank you. Thank you.
Thank you and the next question is from gel Comms from Nobel Capital. Please go ahead.
Good morning, John and Bonnie.
So I'm just trying to wrap my head around the whole program.
Looking in your.
Sure.
[laughter] excuse me pardon me in the <unk>.
<unk> from this morning.
Page 16, new gas Big chart. There you know the operating model lines to be specialties.
Redesigned operating model to drive profitable growth in our chosen specialties and I went back and I'm looking at some of your older presentations and basically its the same chart.
By the same graph.
Each one of the different segments in the revenues.
So as everything exactly the same so I'm really trying to figure out.
What is really going to be different and academy.
Kind of Relatedly, you talked about doing more tech investment.
<unk> done a lot of tech investment.
Over the past two years or so what more tech investment needs to get done in order to to really drive what you're looking to accomplish.
Well, Joe I would say.
While the structure hasn't changed in terms of the number of our business units the way in which we're both going to market, but also the.
The changes we made as part of the transformation that we announced in.
I announced in May and then we effected in July .
We're structurally taking complexity out of the way, we work reducing spans and layers that slowed decision, making we have stopped.
Non core are nice to have them.
Initiatives, and we've moved targeted resources and decision, making closer to the business.
So we not only achieve.
Substantial.
Expense savings, but we also have improved the or optimize the operating model. The technology is going to be an ongoing.
We have to continue to make investments in technology.
Whether it's AI driven digital tools.
Or other.
Other.
Advances that in order to not only stay competitive but to create market differentiation our helix.
Solution and our OCG practice has been game changing in terms of customers' reception.
We will continue to invest in.
State of the art solutions like that that require investment in technology.
Okay. Thanks for that Ken.
Yes.
On the tech side again.
Yes.
Quarter, we talkative about your your.
Your new digital workers program, and you said that at that point Youre getting some positive feedback I was wondering you know maybe get a little quick update on how that program is unfolding.
I would say, it's still early but the number of customers that have expressed interest in understanding.
How it would work in their operations continues to incur.
Increase and it's generating a lot of I would say ancillary benefit because we can help customers review, how theyre getting work done and that provides opportunities it's not a digital worker than it is potentially our outcome based business that could benefit from that.
Conversations with customers around the future of their work.
Okay, and then one last one for me if I may.
Nice job in the quarter.
Again on the buyback.
I think Olivier you said you were about 42 million now it was a $50 million program.
The buyback.
And I understand the board has to approve that stopped but how does that kind of fit and two to the new model.
It is something that you would.
Should continue or would you be looking at hey, maybe those dollars or better invested and unfolding or our new model.
Yeah, Joel I'll, let Olivier.
They'd be where we are but the.
Share repurchase is part of.
Our capital deployment conversations with that.
We have at the board.
Regularly.
It's we're going to finish it.
The share repurchase program, we announced last November you know to the extent you know where.
<unk> able to and <unk>.
We'll include it as part of our future conversations with the board yes.
Yes, I mean, when you think about where we are 43 million almost 43 million program to date.
I think when you look at that we are on track I seem to complete this program.
As we Anniversaried this program in November .
If you combine it with <unk>.
What we have done in Q1 of last year with the.
First of all cross shareholding, we have both about $4 3 million of shares for a total amount of $70 million.
So it adds a meaningful.
Impact on our EPS because of the reduction of the number of shares but as Peter was saying.
We are going to need to reflect a little bit on what else. The next steps and this is something that as Peter mentioned, we are discussing with the bolt on a regular basis, but again 50 million out of.
Our overall capital allocation.
We always say that I think that's the reality that does not impact you know our focus on growth, whether it's organic or inorganic.
Because it is a.
$50 million is meaningful, but not something where we can say we do it in the teens detrimental to our core focus which is.
Putting our capital towards schools.
Okay, Thanks for that and I'll get back in queue. Thank you.
Thank you Joe.
Thank you. Our next question is from Kevin Spanky Barrington Research. Please go ahead.
Hi, Kevin Good morning.
Morning.
Just wanted to get a sense.
Sure.
The revenue expectations for 2020 for as much as you can speak to it you talked about the three three to three point.
5% EBITDA margin.
Goal for 2024, assuming.
Current economic conditions. It just directionally should we think about.
You know a slight or modest organic constant currency revenue declines in 2024 similar to that.
What you're expecting for the second half of 2023 are flattish.
Yeah, Directionally, what are you incorporating into that 2024 margin outlook.
Yeah too to make it clear that three three to three five is not a 2020 outlook, but it is a multi say we can rent trends is no change.
Whether it's revenue or margin or gross margin, if you're seeing about the full year impact of our current transformation. We would go for three three to three five but again it is not an outlook for 2024. It is more of a assuming well is decent environment continues.
And basically the Q1 trend we have the current revenue we have as well as the gross margin rate are similar in the future. The full year impact of these transformation would lead us to move from 2% EBITDA margin to three <unk> suite to suite five.
Now thinking about 2024, it's probably too early to call on what is going to happen, where we are actively working is not just waiting for a better economic environment as Peter was saying we have.
I'm Douglas efficiency, a lot of growth initiatives that should help us to gain market share.
Without assuming any specific change in the current economic and market environment.
Yeah.
Okay.
I mean, presumably you know.
You'd have to beg some sort of revenue expectation and did it by region.
That's the only thing I was getting at but I understand your you arent biting us too severe.
Yes.
Yes to make it very clear I mean, the three three to three points.
Basically what we did was to take our expectation for the second half of the year.
2023 get it annualized keeping the GP mile Gina was talking about and then basically adjusting I was G&A based on the full impact of the transformation.
Okay. Okay.
Is that the Yoghurt and get the three three to three five.
Okay perfect. Yeah, that's very helpful. Thank you.
And just.
Talking more about the transformation here.
Laying a foundation for future EBITDA margin expansion.
Yeah.
Is it.
Assume then that when.
Revenue does start growing again that.
Expenses in the future will grow more slowly than they have in the past us being able to accelerate your trajectory of margin expansion.
Basically in what your slide on page 14, you talk about establishing controls to provide clear visibility in the resource and expenses I'm. Just wondering if something has changed with this transformation where are you.
We're going to maybe control or monitor expenses more closely.
As revenue is growing and get more leverage out of that growth in the future.
Yes, definitely that's a primary.
Outcome from the transformation initiatives and the <unk>.
Work, we've done with our outside consultant to create a governance.
Our process to manage and control expenses going forward. It is a fundamental part of the transformation to ensure that.
Our growth in the future.
Is it advantaged by the significant and aggressive actions, we've making made on the expense line in.
And ensuring that those expenses don't come back of course, we're in a business where when we're growing quickly we need to add resources. We are adding resources for example in education, because it's growing right.
Now, but we are going to be managing.
Certainly any other kind of non revenue GP producing expenses very tightly and.
Making sure that even with the other resources that we bring back.
We're doing so.
In a very disciplined with strong governance.
Just add back to <unk>.
Sustainable transformation.
One of the key to you and to keep yeah. We are going to continue to use and expect to improve significantly which is called incremental conversion rate.
How much of you.
<unk> <unk>, we can convert to revenue historically or conversion rate was about 15% cost of the transformation is to make sure that our incremental conversion rates in the future is significantly better than the 15% we have seen in the past.
Okay great.
Very helpful.
Just thinking about the current environment here.
In terms of the slowdown you've been seeing is it.
More weighted towards existing customers cutting back or if you're also seeing the new business pipeline slowdown.
Provide kind of that mix that you're seeing in terms of.
The demand trends.
Yeah, Kevin I would say in both cases, it's not necessarily.
A significant impact on on demand.
Demand or the pipeline as much as it is a cautiousness in that.
Decision, making the the volume that.
People are.
Planning for and.
The just the overall.
Cautiousness that.
Leads to.
Customers and pipeline taking longer to develop and that's what we're seeing of course, you have fluctuations depending on industry among our customers in the pipeline, but I would just say overall there is a.
Some headwinds that people are feeling this.
Reflect is reflected in their demand and our hiring decisions.
Okay. Thank you just lastly.
I'll jump back in the queue.
Kind of a cadence of the quarterly progression that we should think about in the second half.
Yeah in terms of just the growth in margin or is it.
Would you expect them to be relatively similar in terms of the.
Growth rates and margins.
I think the first gate at least initially speaking is going to be this exit rate of EBITDA margin that sweepers since leaving 2023.
But as Peter was saying we are going to continue to.
Inform you on the progress we are making.
The outcome, which should be.
Significantly and quick improvement of EBITDA margin.
And as Peter mentioned in November we are going to spend much more time on the growth of.
These transformation.
Okay.
So when you say exit rate for 3% does that imply like a 3%.
For the full fourth quarter, yes. It is Q4 I would not use December to do it because December is a specific nodes. So exit rate is going to be really useful to the entire Q4.
Alright, great. Thank you jumped it. Thank you. Thank you Kevin.
Thank you I want to get if you do have a question. Please press the one day and say well. Our next question is from Mitra <unk> from Sidoti. Please go ahead.
Yes, hi, good morning, Thanks for taking the questions good morning Farzana.
Hi, Good morning, Olivier first a couple of questions for you I think.
Into Q2 restructuring charge was about $8 million.
How should we think.
About it for the second half of the year. So Q3, four and do you expect even additional charges heading into 'twenty four.
You mean, the restructuring charges possible emission challenges yeah, yeah, I mean, the issue, but you know already because that's something we have disclosed in July that we have this event at the <unk>.
Front end of the July debt.
That will.
We'll create seven and a half two eight and a half million of Costa.
But of course.
As I said in my comments, we have further initiatives underway that would trigger additional restructuring cost of transformation cost in the course of Q3 and Q4 and potentially in the first half of next year, yes.
Okay, Thanks and.
And in terms of the tax rate I know you had a tax benefit that this quarter, but.
How should we think about that for the remainder of the year yeah. It's.
Our tax rate I mean, if it just accelerates is really.
I would say.
Blaine nibble, but sometime a little bit.
Sure.
Difficult to.
Forecast.
I would say on a normalized basis, we are keen on.
Mid mid teens to high teens.
And of course, we have a lot of events that are impacting our effective tax rate. If I take the example of Q2 why basically we've got.
Benefits instead of the child's and an effective tax rate of 32 and a half is basically because.
Of our MST MST program, where we have basically.
Technically some investment.
Through some insurance program that are basically tax deductible and when market conditions are good.
The MFP program is providing some upside basically we've got a benefit on our income tax and that is the main reason why in Q2.
Our tax rate.
Basically.
<unk> was basically a credit, but I would say on a more normalized basis and the team.
Suggesting something between 15% to 19% effective tax rate.
Okay, No that's great.
And Peter you mentioned.
Inorganic opportunities something Youll continue to look at but is that more of a medium longer term.
Vision in light of the extensive transformation that youre doing in the near term.
Well, we will continue to do.
Develop a pipeline of.
Opportunities are market right now is.
And to use that term little cautious there's not as many.
High quality assets.
<unk> on the market right now or that are willing to come off the sidelines based on proactive.
Inquiries, but we think that in the areas that we've identified are insiders science engineering and technology business unit inside of education.
Inside OCG, we will continue to look for high quality high margin high growth.
Assets that we can add to the portfolio to complement the organic growth initiatives that we.
We're undertaking.
Okay. Thanks for taking the questions.
Thank you. Thank you.
And when do you have a follow up question.
Kevin Spanky. Please go ahead.
Yes. Thank you just one follow up.
Continuing on with the question about <unk>.
Yeah like opportunities.
And you mentioned that as Youre working on.
Strategic in it.
Issues related to inorganic opportunities I mean as part of the transformation.
Do you expect to be even more aggressive.
In seeking acquisitions or is it more about that.
Types of businesses, you're targeting as you.
Think about what might have changed.
This transformation initiative.
Well as Olivier commented, Kevin we have ample.
Capacity and I.
I don't think I would describe it as more aggressive we're already.
Comparatively well.
We're already acting more aggressively than we have.
In the past few years, we've acquired a number of companies and we're pleased with the progress we're continuing to look for.
Properties that will contribute again high margin high growth.
Kelly portfolio.
I don't but I don't we're we're acting with urgency and a great deal of excitement, but we're not going to overspend and we're not going to settle for.
Hum properties that don't.
Satisfy the attributes that I mentioned.
Okay. That's that's perfect. Thank you very much.
Thanks, Kevin Thank you.
And at this time there are no further question. Thank you. Please continue.
Our lowest if there are no further questions I think we can end the call.
Thank you and ladies and gentlemen that does conclude your conference for today. Thank you for your participation.
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