Q1 2020 Earnings Call

Good day, ladies and gentlemen, thank you for your patience you've joined the HR blocks first quarter fiscal 2020 earnings conference call.

At this time all participants are in a listen only mode.

Later, we will conduct a question and answer session and instructions will be given at that time should you require any additional assistance during the call. Please press Star then zero on your Touchtone telephone as a reminder, this conference maybe recorded.

I would now like to turn the call over to your host VP of finance and Investor Relations Colby Brown you may begin.

Thank you Jackie good afternoon, everyone and thank you for joining us to discuss our fiscal 2021st quarter results on the call today are Jeff Jones, our president and CEO and Tony Bowen our CFO .

We posted today's press release on the Investor Relations website at HR block Dot com.

Also on the web site, you will find a link for the webcast continuing today's presentation, which will be posted after this call.

Some of the figures that we'll discuss today are presented on a non-GAAP basis.

We've reconciled the comparable GAAP and non-GAAP figures in the schedules attached to our press release.

Before we begin our prepared remarks, I'll remind everyone that this call will include forward looking statements as defined under the securities laws such statements are based on current information and managements expectations as of this date and are not guarantees of future performance.

Forward looking statements involve certain risks uncertainties and assumptions that are difficult to predict as such our actual outcomes and results could differ materially.

You can learn more about these risks in our Form 10-K for fiscal 2019, and our other SEC filings HR block undertakes no obligation to publicly update these risk factors or forward looking statements.

At the conclusion of our prepared remarks, we will have a Q and a session.

During June a we ask that participants limit themselves to one question with a follow up after which they may choose to jump back into the queue.

With that I'll now turn the call over to Jeff.

Thank you Gabi good afternoon, everyone and thanks for joining us.

As you May remember from our last call we made tremendous progress in our tax business last year, we achieved the high end of our financial outlook and strengthens our growth trajectory through the acquisition of way.

Today I'd like to provide initial thoughts and our plans for fiscal 20, the second year of our strategic journey.

Tony will then discuss how we're reporting waves financial results, our first fiscal quarter and our full year outlook.

Starting with Wade we announced the acquisition on June 11 in the transaction closed a few weeks later.

We are delighted to have the week team officially on board.

As the two teams have come together post acquisition, we are more excited than ever about how the combined entity can deliver value for small business owners.

We've been working with the team to establish the appropriate operational cadence to enable their sustained growth.

We're also prioritizing the numerous growth in monetization opportunities that lie ahead for the business as wave continues to innovate.

An example of this is the recent launch of instant payouts.

Managing cash flow is one of the most critical issues entrepreneur space, resulting in significant day to day stress and causing small businesses to fail.

When entrepreneurs excess payments due credit cards were 88 from a third party. It typically takes up the two business days to process.

Leading than waiting longer for their cash.

With a wave instant payouts, they can get their cash in seconds significantly reducing the time it takes to receive funds and ultimately making it easier to manage cash flow.

This is one simple example of how wave is constantly innovating on ways to serve the needs of entrepreneurs.

We continue to store trends by posting 50% revenue growth this quarter when compared to the same quarter in the prior year.

New product innovation and organic growth.

Wave is generated consecutive year over year quarterly revenue growth of greater than 40% over the last several years.

It's clear from these results that wave is solving challenges for entrepreneurs and delivering value.

By improving its world class offerings in developing new solutions that simplify the financial lives of entrepreneurs wave will drive monetization and increase its user base.

And the way the team is excited about the additional capabilities that HR block bring that can accelerate them on this path.

This acquisition is a key element of our strategy as we invest for the long term.

Wave is a strong strategic fit that will allow us to accelerate our efforts in serving small businesses driving overall growth and enhancing shareholder value.

In the Cat business, we're coming off the first year of our multi year strategy.

We made excellent progress against our long range objectives.

We achieved strong results in assisted Dion why and virtual taking share overall.

Our associates and franchisees delivered significant improvements in how we serve our clients.

We led the industry with upfront transparent pricing.

And we made tremendous progress on our technology roadmap.

As we enter the second year, we're building on our learnings to continue innovating across all our platforms, providing better service to our clients and enhancing our brand relevance.

In assisted we'll remain focused on operational excellence and improving our value proposition.

By concentrating our efforts on the standard operating procedures that matter. The most we're simplifying our approach in driving consistency within our offices.

And we will further leverage upfront transparent pricing, which was extremely well received by both tax pros and clients.

In the ROI will advance our challenger strategy to continue our growth and share gains.

We're investing in enhancements to the user experience, which is earning accolades from independent reviews.

This includes better help within the product to drive consumer confidence and conversion.

Leveraging AI to personalize the experience.

And effectively setting expectations upfront and threw out on price.

These enhancements will be complemented by competitive pricing and aggressive marketing to ensure consumers know about our award winning product.

And in virtual will continue to lead in this emerging segment building on the success of the past year in which we attracted new clients to our brand through innovative products.

This year, we are taking the feedback we received from clients to improve our offerings and better leverage our tax pro network as we provide expertise and care in new ways.

All of these efforts enhance our value proposition, which in turn elevates our brand relevance.

We are demonstrating in very tangible ways, what consumers should switch to HR block.

To wrap up we're building on our momentum from the last few years, we have great plans in place that align with our strategy and position us for success I'm excited to share more details closer to the start of the tax season.

With that I'll now hand, the call over to Tony Thanks, Jeff Good afternoon, everyone.

Before I get into the details of Q1 I'd like to discuss how we are reporting ways financial results waved revenue will be reported as a separate line within our Mdna table.

Like most high growth technology companies expenses related to waive consist primarily of investments in people and technology.

These expenses will largely be included in compensation and technology related expenses and our Mdna table.

Additionally, each quarter, we will provide relative relevant commentary regarding wave that we believe will be helpful to investors.

We will not report wave as a separate segment given its size relative to our overall business. We will continue to evaluate our segment reporting as our business evolves.

Additionally, we are in the process of completing the purchase price allocation.

We expect to complete this work by the end of our second quarter and will provide an update on expected amortization for the fiscal year.

Turning to our Q1 results as a reminder, we typically report a loss during the fiscal first quarter due to the seasonality of our business. Therefore first quarter results are not representative of our full year performance.

Starting with revenues, we saw year over year increase of $5 million or 4% to $150 million wave contributed $3.6 million, representing one month of activity.

Additionally, pre season results in us tax business have been strong, resulting in increased tax prep revenues and assisted and DIY.

Our international revenues also increased as Australia seen positive results in the first part of its tax season.

These results were partially offset by a reduction in reported revenues from our peace of mind product related to the timing of how we recognized deferred revenue.

Turning to expense total operating expenses increased $18 million or 6% to $346 million.

This was due to planned increases in compensation and technology related expenses as well as way.

The changes in revenue and expenses resulted in an increase in pre tax loss from continuing operations of $8 million.

Loss per share was unchanged at 72 cents driven by the increase in pre tax loss and lower shares outstanding.

Offset by an increase tax benefit due to favorable discrete items.

As a reminder, while beneficial on a full year basis, the lower share count negatively impacts EPS in quarters in which we reported a loss.

And discontinued operations there were no changes to accrued contingent liabilities related to same came in during the quarter for additional information on sand Canyon. Please refer to disclosures in the company's reports on forms 10-K, and 10-Q and other SEC filings.

Turning to the balance sheet. This quarter, we implemented the new lease accounting standard, which requires recognition of liabilities and assets for leases previously cap classified as operating.

As of July 30, Onest, we have recognized right of use assets totaling $486 million and a lease liability of $479 million.

This change will have no impact on our income statement or cash flows going forward.

Regarding capital our priorities remain unchanged.

At the top of the list is maintaining adequate liquidity for operational needs to account for our seasonality.

We ended last year with a strong cash position after another year of solid cash flow generation.

We then make strategic investments back into the business, we believe deliver value to our clients ultimately benefiting our shareholders.

Making prudent investments to drive sustainable growth remains a key element of our capital allocation.

Last we will deploy excess capital through quarterly dividends and share repurchases with respect to dividends to health of our business and our outlook for the future has allowed for dividend increases over the past four years over that time, our quarterly dividend has increased 30%.

We will perform an annual review of the dividend after each fiscal year.

Regarding share repurchases, we remain committed to at a minimum repurchasing shares to offset dilution from equity grants.

During the first quarter, we repurchased a total of 1.6 million shares for $44 million at an average price of $27.68.

We will continue to be opportunistic in our share repurchase approach.

I'd now like to provide thoughts on our outlook for the year, which remains unchanged from what we provided during our call in June .

The way transaction close slightly earlier than anticipated.

Resulting in an immaterial change to expectations and no impact to our total company outlook on revenue and margin.

For revenue, we continue to expect growth of 1.5% to 3.5% in fiscal 2000, driven by growth in the tax business. Following a reset year and the addition of way.

With respect to earnings we anticipate total EBITDA dollars to be slightly higher than fiscal 19, as we returned to revenue growth.

We will offset the operating losses from wave with other cost reductions to maintain a strong EBITDA level.

As a result, we expect revenue growth will outpace outpace EBITDA growth, which will impact our margin.

Therefore, we continue to anticipate EBITDA margin of 24% to 26% for fiscal 2000.

We also expect our effective tax rate to be 23% to 25%. This may fluctuate should unanticipated discrete items occurred during the fiscal year.

We'll provide additional details on our financial outlook, along with our tax season plans on our Q2 call in December .

We look forward to updating you on our progress throughout the fiscal year with that I will now turn the call back over to Jeff.

Thanks, Tony.

We had great momentum coming off a strong year and are committed to executing our strategy.

We're on the right track with the tax business, making prudent investments to improve in key areas.

And we've added a great strategic asset with wave, which enhances our growth profile.

We're focused on driving another year of strong results and I look forward to sharing more in December .

With that we'll now open the line for questions.

Let's see.

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Our first question comes from the line of Scott Schneeberger of Oppenheimer. Your question. Please.

Thanks, Good afternoon, everyone.

I guess, Jeff could you could you speak to how you're thinking about balancing price and volume in the assisted channel going forward just some high level thoughts now that we're well past last season and well in advance of next season and.

I know it it seems to be an aspiration of the company to drive positive volume growth in assisted just anything at this time of year, you might be able to share with us regarding that for the coming season. Thanks.

Yes, absolutely Scott Thank you.

No doubt our aspiration is to return to growth in the assisted business. You know we're on a multi year improvement in our trajectory that's absolutely our goal and where we're headed.

Price and volume in the first thing I want to reiterate is we do not intend to reset prices again.

We took the price reset a year ago.

We knew that we had just gotten too high and what that was doing was it was keeping the value conversation from really happening in the office.

At the pricing levels were at we feel really good that were that we've made nice progress you know we look at a lot of different factors, what we hear from the consumer what we hear from the tax pro and in both cases it made a big difference in their choice of block.

With the consumer we saw the improvements we talked about at the end of the year in price for value.

From the tax pro what we heard was we don't have to spend time now.

At the end of the of the tax event to try to convince people about what the prices. We can focus our time on delivering value providing expertise delivering tips.

And so we feel good about where our prices. Our intention is we are not going lower as we've said, we want to keep prices essentially flat going into 2020.

We believe that as we continue to we build the trust and credibility of the brand improve the value proposition.

We believe we can get back to inflationary level price increases in the future.

But that's not what we're going to be due on in 2020.

Great. Thanks, I appreciate that for my follow up I will turn into wave.

And just kind of a two part question your initial impressions.

Just on on wave organic growth, what you see there and what you see as potential and then to the extent you can comment at this juncture.

Any cross selling opportunities you see of of the of the strategic pairing of HR block in way. Thanks.

Yes, two two great questions. So what we saw in the revenue growth. This year is the kind of year over year quarterly growth theyve been seeing for several years.

We were excited to see that performance continue.

We take a step back from the business.

We love. The fact that this is a brand that is still unknown.

So we still see opportunity to deliver this value proposition to more people.

Remembering the who wave is focused on.

Our small business owners that are currently using nothing.

They are using shoe box or using excel and so the strength of the value prop.

Combined with the fact that not enough people yet know about them. We believe is opportunity on the upside and one of the things we were excited about in the deal.

We also see them really doing a nice job on the product pipeline.

So continuing to think about new products all in how they serve the small business owner more and more.

When we did the deal the deal economics did not assume any revenue or cost synergy.

But as I shared in my prepared remarks.

We've already begun the conversation about how block clients can benefit from their offering and how their clients can benefit from blocks offering, but we're taking a long term view on that.

We really want to make sure that given the product pipeline. They have in place that we can do everything we can to support that innovation pipeline, but also know overtime. There is absolutely synergies between our two businesses.

Thanks appreciate that.

Thank you.

Thank you. Our next question comes from Jeff Goldstein of Morgan Stanley . Your line is open.

Hey, good afternoon.

You've talked about implementing cost reductions to offset the way of dilution. This year can you expand on where exactly those reductions are coming from and where you could see maybe upside or downside is expected savings.

Asia also this tee it up by saying that what Tony is about to share with you are all things that are identified and plans in place that are not go dues as the year plays out.

And I'll, let Tony talk to you about exactly what those things are yet it's a bunch of.

Smaller items that we've identified that is going to allow us to offset the operating loss from wave. The biggest bucket is the office closures than we did last year, which resulted in a one time.

Expense, that's obviously not recurring this year, so thats rolling off that would probably be the largest number that was about 11 or $12 million from last year. The rest of it is smaller $1 million to $3 million guidance that we've identified to Jeff's point, they're already kind of.

Actions that are put in place.

Thats going to allow us to to offset that loss.

And maintain a strong EBITDA level going into fiscal 2000.

All right. That's helpful. And then just given that you bought back $44 million of stock in the quarter, which is less than you did Q1 last year, just how should we be thinking about the pacing for the remainder of the year. So does the wave acquisition inhibit your ability at all to accelerate repurchases from here just just how should we be thinking about that.

Yes, so we we deployed about 400 million of capital for the wave acquisition, but we believe we still have excess capital or deploy opportunistically for share repurchases. As you pointed out we did $44 million during Q1, and there's a number of factors that we take into account when deciding do share repurchases obviously.

Trading volatility number of trading days in a particular quarter.

A number of factors that all come into play we typically don't guide on when or how much we will doing share repurchase, but I think we've proven over the last several years that we will be opportunistic and take advantage of volatility and.

And buy shares when it makes sense.

All right thanks for the color.

Thanks, Jeff.

Thank you. Our next question comes from Kartik Mehta of Northcoast Research. Your line is open.

Hey, Jeff I, just wanted to get your thoughts on the DIY product, obviously I understand you don't talk about strategy for next tax season, but this tax season, the strategies seem to be wanted to gain market share you improved the product to replace lower than turbotax and I'm wondering if you as you move forward do you anticipate.

The similar type of arrangement, where you are trying to maintain a gap between for at least the pricing gap somewhat of a pricing gap between you and your competitor.

Hey, Kartik. So first of all I feel really good about the multi year progress in the DIY business. Both in terms of the results.

But I think especially important in terms of the product improvement.

The team is.

Completely focused on more and more personalization and making it easier and easier that's what all the product roadmap is about.

I Love. The fact that the product is now being recognized by third parties, we're getting great accolades about those improvements.

And I do think the broad strategy remains intact.

We have to have a product that is great and getting better all the time.

We believe that we have a great price to value relationship relative to the market and competitors and we will constantly test pricing to maintain that advantage.

And then the third piece of the puzzle, which you've seen us do is.

To be aggressive in how we market that value proposition.

We as we've talked before we we still don't believe and no people even know were in that business.

And so we still see upside in all three pieces of that puzzle.

And then.

Maybe.

Certainly for you just.

A little bit of understanding on the wave. One is is the client growth in line with the revenue growth that Youve quoted and would you anticipate wave two then become margin accretive in fiscal 21.

So first on the client side, we share their overall client numbers approximately 400000, we shared that in June when we announced the transaction, we're not breaking out specifically at this point what their incremental client growth is but I will say that margin is grow our excuse me revenue is growing at a rate a little faster than clients.

And that's because they are growing their client base, but theyre also figuring that incremental ways to to grow revenue through additional monetization.

As far as the accretion the near term goal is to continue to focus on top line growth and growing the base.

And we believe they have a plan to get to profitability in the future, but like I said that the main focus is growing the top line and continue to invest in new products grow the pipeline grow the awareness and grow the overall user base as kind of job, one and profitability as a secondary.

All right. Thank you very much appreciate it.

Thanks, Larry.

Thank you. Our next question comes from Alex Paris of Barrington Research. Your question. Please.

This is Chris how sitting in for Alex Good afternoon, everyone.

Chris.

Hey.

First question pertains to ways and then my follow up question is on product improvements.

As it relates to where you mentioned the 50% revenue growth that you are that you saw year over year in the quarter and the consecutive year over year revenue growth of over 40% that you're seeing.

Can you parse out in the quarter.

What portion of revenue growth was attributable to North America outside of North America.

Almost all of it is in North America, they have very little monetization outside of North America today.

Most of those clients are finding the product organically and almost all of the revenue growth is in North America with the majority of that being in the United States.

Okay and then.

This is to satisfy my curiosity, you talked a lot about product improvements and the different investments you're making within each phase.

As I dig deeper into these improvements how would you break out what portion come from internal observations versus external observations that you're seeing within the competitive environment.

So all tee it up and Tony can add in if you want so without trying to put.

Precise percentages on it I would say the overwhelming majority is based on consumer and user feedback.

So we do a number of things across all of our products, especially digital products.

In home observations surveys net promoter scores tracking verbatim.

That's really the primary source of product improvement is really listening to the unmet needs of the consumer and then creating solves for those problems.

We always pay attention to competition to be you have to be smart to be aware of your competitors, but we spent way more time, focusing on what we hear from consumers than anything else.

Okay. Thanks for taking my questions I'll hop back in the queue for now.

Thanks, Chris.

Thank you. Our next question comes from Michael Millman of Millman Research. Your line is open. Thank you. So first question.

I'd like to follow up Scott's question in Recon to what you see assisting act assisting returns actually ending.

For the year and what's your expectation for assisted returns next year.

Michael just one clarification, you mean for the industry or specific HR block well I meant the industry, but [laughter] have you add on the ladder.

Yes.

Last year, we make with the little bit of an anomaly.

You know the category had a lot of unusual things occur starting off with the government shutdown and then obviously tax reform led to in our belief a lot more extensions being involved.

You know a lot of those extensions are now being converted in the in the extension season, if you will but going into next tax season. We have no reason to believe that we will return to historical levels of growth of approximately 1% for the overall industry.

Assisted being flat to slightly up and DIY growing 3% to 4%, which is what we've seen over the last several years.

No for HR block, specifically, we've been on a multi year improvement quite trajectory in the assisted business. We've obviously grown in the DIY business for several years and taking market share.

We expect that trajectory to continue to improve we're not guiding specifically whether that means positive growth in assisted or or slight improvement trajectory, we've seen but over the long term we definitely expect.

The assisted business to be growing along with the DIY business.

Okay and the other question was sort of discussion question.

Two areas, one and it has to do with Intuit you seem to be moving in sort of same direction in terms of small business.

In ways and Theres small business growth.

And secondly in terms of.

Pro using proceeds.

They're using pros to take assisted and move it.

To them and do it yourself and you seem to be using pros to hold onto assisted.

Maybe you can discuss.

If you feed.

This is the appropriate way to look at it or.

We should look at it a different way.

Always.

All all tee that up and I'll answer the second one first actually because I think what we what we are doing is building a platform to serve consumers any way they choose.

And one of the advantages that we know we have.

His or her team of 70000 tax pros.

That's all they do is taxes.

As you may recall from prior on average they had 10 years of experience only doing taxes.

Every year they go through 48 hours of training on taxes.

So we know we have a great asset base in that expertise.

And our ability to scale up or down how the tax pros serve people is a really important part of the strategy.

Obviously in the assisted business in the virtual business in the multiple products. We offer we're essentially giving people choice on how much expertise. They won in how do they want to receive it.

Keep in mind that in R&D Iwai business two of these product or add on to the why what we call tax pro go in tax per overview.

And Thats really because we saw that there are many consumers that are very confident doing taxes themselves. In DIY is the right method. We also know there are many that didnt like that choice by itself, but also Didnt love the alternative of full assisted silver them they get extra help on their terms.

So that's really how we're thinking about the expertise of our tax pros in how we can match their expertise to how the consumer wants it with this range of options.

On your first question one of the first things. We did was look at our current business today, and we know that we serve just under 2 million people in our tank business today that our small business owners.

We know in our franchisees. They currently do a range of business services in bookkeeping for small business owners.

So as we think about the evolution of our strategy, we know that we're starting from a place where we're already serving small businesses.

So wait was really a chance to add to that by a different offering doing it digitally and really targeting small business owners, specifically not the accountant.

So thats really where that decision came from was looking inside our own business today and the fact that we already have this asset base and we believe there is more upside and more that we can do.

I appreciate that thank you.

Thank you.

Thank you. Our next question comes from George Tong.

Goldman Sachs. Your question please.

Hi, Thanks, Good afternoon, we're still several quarters away from tax season, but can you provide some thoughts on how your approach to marketing and promotions will be different this year compared to last year, specifically what worked well for you last year that you'd like to keep and what didn't work, so well that you'd like to change.

Yes, Hi, George So alive.

I won't give you the play by play quite yet, but theres a few things I would highlight that that worked very very well that will continue.

All started in the macro which is the broadest television advertising the spokesperson that we introduced this year.

She was incredibly effective.

We saw our advertising metrics all improved.

And we know that she is incredibly related both to the customer that we're serving so we think we have a great success in Lisa.

However, the opposite ends of the spectrum.

This year, we really shifted our investment in our mix into more performance marketing.

Really finding micro targets of consumers that we could test messages again and watch their behavior at a very very micro level.

That capability continues to grow with the company and that also was quite successful. So those those are broadly two things that you will continue to see us do.

Youve television in lease up to deliver the broad big messages to help people understand why they should switch to block.

And use performance marketing in the very micro targeting.

To deliver individual mitt messages to individual consumers, knowing there's a lot of things that we could say, but we don't have to say to everyone.

Got it that's helpful. You've indicated that you won't be decreasing prices next year in assisted with pricing no longer a driver can you elaborate on the operational excellence levers that you hope to lean on to improve market share performance this year versus last year.

For sure I mean, we continue to think about things like what we call schedule readiness.

A really important operational level lever, which is all about matching the person to the pro at the right level of expertise when they want to be served an incredibly important part.

One that we refer to as work in process.

There are consumers that visit in office.

And for some reason need to leave the office and we can do a lot better job of making sure that when they leave they come back to there's a lot of operational protocols around work in process.

This is very retail tactical, but how we answer the phone.

A very important part of the first impression to get the right appointment made to serve somebody when they come in so.

We wrap it all up into five standard operating procedures, but those are a few of the examples and the one thing I would add Georges I don't think that upfront transparent pricing is completely leverage.

We rolled that out last year is a big change for the business in a big change for the industry and I think theres a lot more that we can do this year building on the momentum we had from last year.

In year two of of that change.

Great. Thank you.

Thanks George.

Thank you. Our next question comes from the line of Jeff Silber BMO capital markets. Your line is open.

Thanks, So much I just want to go back to last path is and forgive me if I asked this question before.

But I'm just curious if you saw a lot fewer filers that itemized this past year relative to the prior year and if so do you think we might see more of a shift to de Iwai next year now that will be in year, two post tax reform and these folks might be a little bit more comfortable.

Yes, Thanks, Kevin Stoning.

We definitely saw fewer people itemizing I think that was true in HR block as well as entire across the entire industry I think the IRS provided some stats on that that.

Given the tax reform change and the increase in the standard deduction that there were a lot fewer people itemizing.

There's obviously always switching between assisted and DIY some people their life situation changes and they may feel more comfortable doing their own taxes or vice versa. So that that has always been true and will be true for this upcoming year and.

I have no doubt there will be some clients it because of tax reform will feel more comfortable taking a shot at doing their own taxes, but we also know that theres DIY clients last year that got stuck needed help along the way and maybe didnt get the tax outcome that they wanted so there could be migration to assess it as well.

How that all shakes out our base expectation is that the net migration from assisted to DIY will be somewhat in line with what we've seen over the last several years.

Okay, Great that's helpful and to focus on a quarter that you just reported and I know this is minor, but I think there were a lot more extensions. This past tax season than we saw in the year. Prior do you think that helped boost revenue in the July quarter, you just reported and if so roughly how much.

Yes definitely had an impact.

Client volume has been strong in both assisted and DIY and I think thats, partly due to the extension filers that that filed at the end of last tax season that now converting in the pre season.

It was offset by lower net average charge, those but that's because especially seasoning in the assisted business.

Now the pricing changes we made last tax season are now carrying over into the pre season, where we have the same upfront transparent pricing model in the pre season are now what we're calling extension season.

So that had an offset to the increase in clients, but but theres no doubt the extension filing activity. We saw at the end of last tax season is carrying forward into the extension senior.

Great and then some extra probably help you in the current quarter as well ending in October correct.

Yes, I would expect that to continue into Q2 as well.

Okay, great. Thanks, so much.

Thanks, Jeff.

Thank you at this time I'd like to turn the call back over to Colby Brown for any closing remarks Sir.

Thank you everyone for joining us and this will conclude today's call.

Thank you, Sir ladies and gentlemen. This concludes the call you may disconnect. Your lines at this time have a wonderful day.