Q1 2020 Earnings Call

Good afternoon, ladies and gentlemen, and welcome to the resources connection incorporated conference call. At this time all participants are in listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require assistance. During the conference. Please press the Starkey followed by the zero button on your Touchtone phone and you'll be connected to an offer.

<unk>, who will assist you as a reminder, this conference call is being recorded at this time I would like to turn the call over to your host for today's call Miss Alice Washington General Counsel of resources connection Miss Washington, You mean now began.

Thank you operator, good afternoon, everyone and thank you for participating on this call joining me here today, Okay do Shane our Chief Executive Officer, Jim brought me, our Chief operating officer and Jennifer.

<unk> interim Chief Financial Officer.

During this call will be commenting on our results for the first quarter ended August 20, 420 lighting by now you should have a copy of today's press release.

You need a copy and unable to access it on our website. Please call Shannon mixing that's seven one for fourth we'd be was 60 363.

During this call we may make forward looking statements regarding future bets on future financial performance of the company.

Such statements or predictions and actual events or results may differ materially.

We see all report on Form 10-K for the year ended May 20 to 29 team for a discussion of risks uncertainties and other factors such as seasonal and economic conditions.

Such factors may cause our business results of operations and financial condition to differ materially from results of operations and financial condition expressed or implied by such forward looking statements made during this call.

I'll now turn call over to our CEO can do Shane. Thank you Alan Good afternoon, everyone and welcome to our TPS first conference call in fiscal 20.

I'll start by welcoming Gen to the call into her role as our interim Chief Financial Officer.

I'm very pleased to be working directly with Jim and Im impressed with the impact she has made in our accounting and finance group.

She contributed significantly to this strategic actions, we took this quarter and while Gen joined our GP in April it does feel like she's been with that's far longer given her insights decisiveness judgment and technical knowledge Jan. Thank you for your outstanding contribution that's far.

We expect to make the Chief financial Officer decision permanent by the end of the calendar year.

Next I'll turn to briefly discuss our financial performance in the first quarter given the significant activity. We've completed in the past 90 day. These include an acquisition a divestiture and an office closure.

Our total revenues for the first quarter fiscal 20 472.2 million. This represents a 3.6% decline over Q1 of fiscal 19, primarily because of the continued slow down in Europe .

The expected decline in our technical accounting revenue in North America, given project completion, and some slowing of client decision, making related to revenue opportunities in our largest market.

As we pivoted to higher level project in advisory work, we are also experiencing longer sales cycles.

Tim will provide more color on the actions, we're taking to strengthen pipeline and momentum in Q2 and the balance of the fiscal year.

The revenue bright spot this quarter is Asia Pacific region that delivered strong growth of 11.8%, 13% constant currency. This growth is led by Japan, India, and Singapore, which we continue to see as expanding market.

The second bright spot in our financial performance. This quarter is gross margin, we achieved gross margin of 39.2% up from 38.2% in the quarter a year ago. This improvement is largely attributable to improve bill pay ratios as Jan will discuss later in the.

Oh.

We are also increasingly utilizing the seller do where leaders within our advisory and project services team throughout the sales cycle, which will positively impact our results moving forward. In addition, as we have shared previously we're building more advisory and strategic work in our client base, which improved.

The halo effect in positioning and pricing.

With respect to ask DNA performance in the quarter I want to provide further details. So you better understand some of this strategic moves we've made in the past 90 days to strengthen the business in the mid to longer term.

While we delivered results within me asking that we provided during the previous earnings call, specifically 57 million detects DNA number includes approximately 2.3 million of one time expense tied to two notable activities.

First we incurred onetime expenses related to the divestiture of the Nordics business and the closure of the Belgian practice.

This decision followed an in depth critical review of our geographic footprint and the number of strategic client we serve in various markets.

Market the practices, we exited were not directly align to strategic client and it's been a drain on shareholder return for several years.

We are bearing Pos now to enhance our financial performance in the mid and longer term.

In fiscal 19, Sweden, and Belgium practice resulted in negative operating profit of <unk> point Fivemillion.

The other notable activity in Q1, which increased our S.G. nice band with the completion at the acquisition of Voracity consulting group to remind everyone Brasil. He had been advisory and consulting business based in Richmond, Virginia with approximately 110 employees. This consulting firm allows to dive deeper and more.

Broadly in the digital innovation space, especially in the health care ecosystem. The healthcare industry is right for transformation and has enormous opportunity for improvement through digital innovation.

Voracity offers broad capabilities banning strategy in road map design in brand and client and employee experience.

They also brings deep technical expertise and best in class technology partnership.

Including service now site core a cooling Mina and Youre soft. This is an important acquisition for the future of RG P. as we expand our mix of services and offer additional advisory advisory level digital and technology transformation services.

Following the close of this acquisition and working closely with RG piece digital innovation function. We have implemented 800, they plan to build pipeline an opportunity across the two enterprises.

We are particularly focused on building opportunity in our top health care clients, who have significant project interest and budget dedicated to digital transformation as well as a targeted group of our Sep clients with interest in this space.

As I outlined on her last earnings call. Our digital innovation group is also focused on building products could be delivered within our finance transformation project management and risk and compliance services.

This team has nine products in development, both internally and externally focused.

Which include an internal audit automation tool I digital life project management framework and attacks automation product.

This team will be commercializing two to three products throughout the balance of this fiscal year.

We remain committed to enhancing our services delivery through digital innovation to drive better outcomes in our client projects with speed and value.

The third area of focus to our digital innovation team is the bills of our digital engagement platform or human cloud product, which is one of the products mentioned above.

I'm very pleased to report that this week, we launched the digital match feature internally across North America, Our talent management group will now be using the product to assist them in improving alignment between supply and demand closing opportunities with greater efficiency and speed and testing needs.

Algorithm to ensure we are getting the outcomes, we desire before taking the platform to the external market.

The team behind this product is led by Steve go back here, who joined our GP from a small digital disruptor, which he founded in 2010 adaptive professional solutions.

Steven its team just returned from the collaboration in the gig economy conference in San Diego, which was hosted by staffing industry analysts and they are very excited about our product positioning and the opportunity ahead.

A main differentiator for RG piece product is our focus on employees not independent contractors I'll share more in a minute about why we think that matters to take away right. Now is that our vision. It's clear the product strategy is down and our timeline is credible.

Let me close my remarks by addressing two macro trends that support our business model and Ken underpin further growth as we move through fiscal 20 and beyond.

First.

A b side, which is the newly enacted independent contractor law in California. It became law on September 18 2019.

A b phygen posted significant additional hurdles and risk on companies, who engage with independent contractors directly for project work.

In California as many of you know Miss classification of independent contractors carries with it dipped civil and statutory penalties that can entitled contractors to collect various wages and benefits well also exposing company to scrutiny by taxing authorities.

In most instances 85 softens the standard by which companies are subjected to these risks.

It is a law intended to challenge directly the good workforce operating outside the employer employee relationship.

Though is written it has even broader impact.

We believe this regulatory change, which is likely to be followed by other state offers expansion opportunities for our G.P., because we run a traditional enplanement model will be important and desirable gig features.

Typically we provide our consultants a curated employment experience with a full suite of associated benefits and at the same time, the flexibility transparency and choice.

Project work offered with a gig orientation.

That.

Our GPS model does not create risk for our client base as we operate Foley ads that consultants employer.

We believe this isn't important differentiator.

Second Theres continued research in survey data around the future of work trends, which are perfectly aligned with our GP is client service and talent platform.

As I've said before clients want to engage talent in more agile ways and talent wants to work in more flexible ways.

Wanstead forthright issued results of a new survey last week dating that 25% of global enterprises in midsize companies are shifting permanent roles to contingent conditions. This year to remain agile.

The executive is responding to the survey said that these workers are having the same if not more impact upon the company's talent strategies.

On the supply side of the equation more than 55% of working professionals indicate that they're more open to two non traditional work arrangement.

Then they have been in the past.

This new research continues to build on the change that is happening in the professional services landscape toward new approaches to total talent management and is validated through our own experience in inner facing with our most important clients.

Again, Archie piece platform fits perfectly into the new realities surrounding the future of work.

I'll now turn the call to Tim for additional color on operations and priority initiatives and trends in Q2. Thank you Kate and good afternoon, everyone. I will highlight trends of initiatives that directly impacted our results and operations for the first quarter provided an update on our fiscal 20 operational priorities and discuss early trends.

In the second quarter.

Okay noted we continue to see some quite uncertainty prompted by concerns related to the global economic environment. Despite these choppier waters. We believe there is an opportunity to capture market share. Many companies continue to engage in crucial transformation and a flight to value typically incident.

The previous quarter, we made positive strides with operational improvements in sales productivity cost containment and delivery efficiency I will briefly touch on each of these key operational objectives.

Global revenue decreased 3.6% from the prior year quarter, we did see global productivity gains, including increases and outreach meetings generated an average pipeline from the same period. In addition, gross margin percentage increased by over 100 basis points. During the same period, reflecting an increase in bill pay ratio and a strong increase and bill rate from the U.S. business. These are.

Works and sustain sales motion and disciplined pricing governance and pipeline building helped to offset some of the macro factors discussed earlier and a meaningful drop and velocity due to natural completion of the project related to the implementation of new accounting regulations.

Later, John will provide more detail around revenue gross margin and bill rates.

We are encouraged by the productivity strides yeah, we recognize the urgency to increase revenue velocity, particularly in our largest markets, which are the group has not performed to desired levels. As a result, we have adjusted leadership team focused and or structure to ensure directed and granular concentration on go to market opportunity in several key markets, including Germany in the.

The other ones, which we discussed last quarter as well as Tri State, California, and Texas markets and the Midwest region.

These changes are intended to ensure we have deployed our best resources against the Richards opportunities and that market teams are laser focused on increasing new demand generation accelerating deal through the pipeline and quickly marshaling our resources for the point of attack. In addition, we have made strategic hires and in the southeast Northern California and in the UK, where we hired.

Dan Hyndman, as senior Vice President and head of Europe .

Dan brings a strong background and experience in sales and operational leadership and is chartered with accelerating our transformation and revenue growth and not operational theater.

We're in an after a search for a liter and Tri state and we will continue to be opportunistic in the pursuit of top talent in key markets.

Today, we feel good results in certain parts of North America, Philadelphia, Atlanta, Charlotte in Seattle to name a few markets and in our county, and Executive search businesses Task Force continues its strong performance along with Asia Pac as a whole we are Boyd buddies bright spots, but we'll continue to focus relentlessly on our sales efforts globally.

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Lets discuss cost containment and productivity, where we've made positive gains this quarter.

We reduced yesterday and an increased operating margin on a combined theater basis, when compared to the prior year quarter during the quarter, we invested in some key hires and our talent and field organizations in Asia Pac, which has been on a strong well performance and we're already seeing returns.

As I noted last quarter, we're committed to investment prudence and the move to a more centralized operating model to gain scale to that end, we continue to shift human capital to the places it off of the largest sustained return while maintaining a tight lid on overall headcount and other controllable expenses.

Additionally of kit noted earlier this quarter, we sold our practice in the Nordics shutdown or practice in Belgium, while we have no immediate plans to part with other practices, we remain committed to revenue growth and profitability and serving our clients as one RGB.

Now onto our progress around delivery excellence last quarter, we discussed the reorganization of our advisory and project services organization or a P.S., whose mission is to provide strong scoping and development on complex deal and delivery excellence once engaged in P.S. is already demonstrating strong positive impact, resulting in the unearthing of larger perspective.

And I've lived in client satisfaction on complex project delivery.

Additionally, this team's ability to open the operator of opportunity at the point of sale have elevated our cross and Upselling abilities.

Yes is expected to provide both operational and pricing leverage as we continue to achieve organizational altitude selling into higher levels of client organizations quite focused isn't enterprise imperative RGB and if U.S. is key to providing an integrated and Cmos customer experience.

Last quarter I laid out five main priorities for fiscal 23 of which evolving into a preeminent field organization operational transformation in Europe , and a commitment to delivery excellence have already been mentioned, let me provide an update on the other two priorities better serving our clients globally and improving alignment of our supply and demand curve, we're purposefully explore.

The way to better execute a global coalition to serve our largest quiet. This was accomplished principally through a focus on global growth in both our strategic quiet and key account program, but perhaps more importantly, it has done through appropriate alignment of priorities and incentives across the hitters combined quarter over quarter growth for these important quite program approximated 7%.

Additionally, we saw key wins in Asia Pac in Europe that would direct result of strongly aligned cross border pursuits in U.S. headquartered Fortune 500 company, we will continue to make untouchable strides in this opportunity rich area as we believe that operating our agile talent platform, especially across borders provides a significant competitive advantage said another way we love.

Besides the GE for global NRG Pete.

Finally, let me discuss the alignment of supply and demand, which is an x. factor for RG peak in the future of work.

Since inception, we are focused on attracting attracting and retaining top talent globally on a good basis. It is likely our greatest operational competency.

As we mature our sales and delivery organizations penetrating new markets acquiring clients and climbing organizational levels, all ability to efficiently batch oscillating demand what I touched on supply will become a crucial point of differentiation them a consulting market.

Especially one in which books wasn't pallet are rapidly adopting a gig orientation to that and we are diligently working to rationalize core processor lovebirds, rather David datasets for enhanced this isn't decision, making and be transparent throughout the sales cycle, allowing for better supply chain management and the ability to delight, both our clients and consultant.

Before I conclude my remarks, I want to provide some commentary about second quarter trends through the first four weeks of a quarter trailing average enterprise run rate for the highest they've been in several months and we're seeing upward momentum in southern <unk>. Some of our key North American markets, including Tristate Detroit in Southern California.

Some of the slipped we see a typical of this time of year, but we're also seeing some gave some pipeline pull through and project starting that were delayed from previous quarters also although the requirements for private company. We've got an implementation have been delayed we are beginning to see some strengthening of demand around these initiatives.

While we were encouraged by these early trends and strengthening of our overall pipeline. We know we have to remain extremely focused and we're committed to pushing hard on accelerating revenue velocity.

I'll now turn the call over to Jim for more detailed review of our first quarter results.

Thank you Kim good afternoon, everyone and thank you Kate for the kind of Mark I really enjoyed getting to know this organization since joining in April and it's been great to work more closely with Kate 10, and the rest of the executive team this quarter.

Inspired by Keith vision, and the long term prospects when a company.

Now I will start by getting detail on our first quarter financial results and will then discuss the trends we're seeing in a second quarter fiscal 2020.

Starting with an overview of our first quarter results.

Total revenue for the first quarter fiscal 20 was 172.2 million a 3.6% decrease from the comparable quarter fiscal 19, and a 5.4% decrease sequentially.

On a constant currency basis revenue decreased 3% year over year and 5.3% sequentially.

Our first quarter gross margin was 39.2% up 100 basis points from the prior year first quarter, primarily due to improvement in our bill pay ratio, reflecting the favorable impact of our internal pricing initiatives.

Actually in expenses for the quarter, well 57 million or 33.1% of revenue compared to 56.4 million, 31.6% of revenue last year as Keith mentioned earlier actually in the first quarter fiscal 20 includes a number of onetime items, which I will discuss later in detail.

Our net income for the first quarter was 4.9 million or 15 cents per diluted share compared to 5.7 million or 18 cents per diluted share in the prior year quarter.

In Q1, adjusted EBITDA, which we defined as EBITDA before stock compensation and contingent consideration adjustment was 11.9 million was 6.9% of revenue compared to 13.2 million was 7.4% of revenue in the prior year quarter.

Now, let me provide some color around our first quarter revenues geographically.

Our U.S. revenue, excluding our recently acquired entities Voracity decreased 4% year over year, and 5.2% sequentially ferocity contributed 1.4 million to our first quarter revenue.

As Keith said earlier, we're seeing prolonged decision, making around initiative, our existing and potential clients.

The sequential decrease also reflects the impact of to U.S. holidays and summer holiday break taking bar a consultant there were no paid holidays in the fourth quarter fiscal 19.

Your first quarter revenue decreased 9.3% year over year, However, just 5.5% on a constant currency basis.

Sequentially first quarter revenues in Europe decreased by 13.1% or 12% on a constant currency basis.

Notable practices to call out in Europe , Our task force and UK Taskforce continues to grow and outperform compared to the prior year period, while the UK lied largely due to the uncertain political environment.

Further we also experienced a significant decreases in revenues from the Nordics and Belgian market, which we have recently divested.

Excluding revenue from these practices in both Q1 fiscal 20 and fiscal 19, Europe's revenue would have just decreased by 4.2%.

Asia Pac first quarter revenue increased 11.8% year over year, but decreased 3.5% sequentially.

Uh huh constant currency basis, apacs revenue increased 13% year over year and decreased 3.5% sequentially.

The growth in Asia Pac is primarily led by Japan, as we continue to penetrate deeper into our SVP client base.

Turning to early revenue trends for the second quarter fiscal 2020 based on early revenue trends and if the trends continue we expect our second quarter revenue to fall in a range of 180 185 million compared to 188 million in Q2 fiscal 19 second quarter revenue forecast incur.

The impact of veracity and excludes these revenue, resulting from the divestiture of our Nordics business and closure of the Belgian practice.

As Tim mentioned earlier, the momentum of technical accounting implementation work has slowed down notably in revenue recognition with the thousands recent proposal to postpone effective date of lease accounting adoption for private company to 2021, some clients and prospects are delaying the implementation project.

However, this also provides us with a longer timeframe to identify and close opportunities we might otherwise have missed.

Despite the headwind North America is continuing to grow in many markets.

At a slower pace in the last several quarters.

We're seeing excellent growth in Seattle, the Carolinas and Detroit in early second quarter.

On the international front top fourth in Japan are showing a healthy growing trend.

Now turning to gross margin.

Gross margin in the first quarter increased 100 basis points from the prior year equivalent period, you had decreased 90 basis points sequentially. The year over year increases related primarily to an improved bill pay ratio driven by internal initiatives to improve pricing.

That initiative has been successful in the U.S. the less so international masking some of the meaningful progress we've made when looking at our consolidated bill rate.

The sequential decrease is primarily due to holiday pay for consultant. So the memorial day and fourth of July .

In the U.S.

There were no paid holidays in the fourth quarter fiscal 2019, the bill pay ratio remained the same between the two quarters.

For the first quarter, a gross margin in the U.S. was 40.6% compared to 39% last year and our international gross margin was 32.7% compared to 34.9% a year ago.

The average Alan Bill rate for the quarter was approximately $122 compared to $124 in both prior year and sequential quarters.

Newest average bill rate increased 5%, while international outage Billy declined mainly as a result of the revenue growth in Asia Pac contributing to a more significant share of international revenue as we shared previously Asia Pac historically has had the lowest outage bill rate across our operational theaters.

As a result of geographic mix similar to average bill rate the average pay rate for the first quarter fiscal 2020 was $61 a dropped from 63 and $62 in the first and fourth quarters of fiscal 19, respectively.

In the second quarter fiscal 20, we expect our gross margin to be in the range of 39.5% to 40% compared to 38.9% a year ago.

We expect to continue making strides in including Bill rate and gross margin in deal.

In addition, as Tim mentioned, we believe the formation of our Ats organization will further enhance our ability to achieve better pricing leverage I driving a shift in our engagement mix towards more complex and higher value advisory services.

As a reminder, hourly rates are derived based on prevailing exchange rates during each given period.

Now looking at other components of our first quarter financial results actually any expenses were 57 million with 33.1% of revenue.

This compares to I've seen a 56.4 million or 31.6% of revenue in the first quarter fiscal 19, and 56.9 million or 31.2% of revenue in the fourth quarter fiscal 19.

As I mentioned earlier as she needs for the first quarter fiscal 20 includes a number of onetime items totaling 2.2 million of which the primary items are.

Point 9 million of retention bonus and severance costs.

6 million of exit costs in connection with the divestiture of our Nordics business and the closure of the Belgium office.

And point 6 million and transaction costs related to the acquisition of veracity.

Excluding these costs actually made for the first quarter fiscal 20, what I've been 31.7% of revenue.

Looking ahead to the second quarter fiscal 2020, we expect SGN HD in a range of 55 to 55.5 million.

Turning to other components of our financial statement depreciation was 1.4 million in amortization with 1.1 million respectively.

Our income tax provision for the first quarter was 2.6 million, representing an effective tax rate of 35%.

Our effective tax rate is primarily impacted by valuation allowances on a foreign and allow on a cash basis, our tax rate was approximately 30%.

Our GAAP HOPPS rates for each of the upcoming quarters is difficult to predict and could fluctuate as a rate will be dependent on several factors, including the operating results of our U.S. and foreign locations each of which I passed or benefited at different statutory rape and offset of the tax benefit of foreign losses in certain locations by valuation.

In allowances.

Finally, many trying to our balance sheet cash and cash equivalents at the end of the first quarter was 45.7 million receivables at quarter end were approximately 129.6 million compared to 233.2 million at the end of the fourth quarter fiscal 2019.

Days of revenue outstanding were approximately 67 days compared to 62 days in prior year and 66 days in the fourth quarter fiscal 19. The addition of veracity of outstanding receivables toward the ended the quarter negatively impacted our dsos for the first quarter.

We recorded 41.5 million of right abuse assets and 48.6 million of lease liability upon adoption of ASV 842, the adoption of the new lease accounting pronouncement did not have a material impact on our results of operation.

Capital expenditures were <unk> point 5 million during the quarter, we expect capex to be in a one to 2 million range in Q2.

We will continue to return cash to shareholders through a quarterly dividend, we paid 4.1 million in dividends during the quarter.

Our board of directors approved an 8% increasing our dividend for fiscal 2020.

This is a ninth consecutive year that we've increased the dividend, we expect quarterly dividend payments to be in 4.4 million range for the rest of the fiscal year.

We did not repurchase stock during the quarter to preserve cash for the Voracity acquisition.

Our stock buyback program has 90.1 million remaining.

Due to the proximity and the timing of our incentive compensation and annual bonus payments and the close of the Voracity acquisition in the first quarter, we followed 35 million under our credit facility.

Well continue evaluating uses of cash to reduce debt and to facilitate our growth both organically and strategically.

Our shares outstanding at the end of the first quarter were approximately 32 million.

Now I'd like to turn the call back to cater for some closing comments.

Thank you Jim looking ahead, we are committed to improving the revenue trajectory investing in the right capabilities to compete successfully in the future and delivering solid financial returns to our shareholders. We are excited about the work ahead and physical 20 and look forward to updating you as we progress.

Before turning to questions as usual I'm happy to report our client continuity statistics for Q1 fiscal 20.

Client continuity remained strong during our first quarter. We served all of our top 50 clients from fiscal 19 and 49 at the top 50 from 2018 in the quarter. We have 281 clients for whom we provide services at a run rate exceeding 500000 feet.

This number is consistent with fiscal 2019. In addition, our top 50 clients for the quarter represented 37% of total revenues, while 50% of our revenues came from 103 clients our largest client for the quarter with approximately 3.3% if revenue.

We ended the first quarter, 94% of our top 50 clients have used more than one type of service or solution.

This penetration reflects the diversity of relationships, we are building within our clients organization and reinforces the opportunity for growth.

That concludes our prepared remarks, and we're now happy to answer any questions.

Ladies and gentlemen to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby, while we compile the Q and a roster.

Our first question comes from Andrew Steinerman with JP Morgan. Please proceed.

Hi, Tim you mentioned positioning the company that gain market share I'm. So I'd be curious to know what's your vendors you see resources, gaining market share from and why and if I could I'm going ask a second question of Jan could you just go over the revenue impact in the second quarter of the first quarter.

Acquisition divestiture and Belgian office closing.

Sure.

Excellent question Andrew.

Well I was referring to is that what we've seen in other scenarios where macro impacts.

Yeah affect the marketplace is that there's a slight to value and what I mean by that is that our clients who are.

We'll go through large initiatives and transformation and they need assistance to do it but there are less likely to use a big ticket big consulting firms and so we believe that in that environment, we have the ability to picture.

Okay.

Hi, Andrew.

Yeah. So already forecasting to include Voracity and also includes the fees revenue from our Belgium, Sweden.

And honored.

It's a net increase.

But you choose threatened.

Could you tell me how much.

I think we're still working through Andrew what run rate for Voracity, they've been in our financials for a short period of time, we're still working through some of their projections. They had one client that has.

Reduced.

Their service needs from us.

And they are just onboarding another client that is likely to have more significant positive impact in the quarter, but I wouldn't want to.

Provide any answer right now without really understanding the impact of those two.

Maybe just right one other way Jan maybe look back on the first quarter. I think you said revenues for total revenues constant currency was down 3% year over year, what would it be on I kind of organic constant currency year over year basis.

Comparing Q2 forecast acute no first question I'm, saying, let's let's let's look back at the first quarter, we just reported and I'm, saying instead of just look at constant currency lets make adjustments for divestiture and the acquisition and think about you know what the year over year revenue change would be.

In the first quarter just reported.

It would be first to a wash Andrew okay.

So.

Really need I mean, the bottom line is we need more experience to give you a more credible answer to your question for Q2, and I don't want ask their provide something that we're not comfortable with yet.

So we'll be prepared as we continue to work together and get more sense just needs to get visit with that client.

Excuse me that that part of our company.

In more detail following the close of this quarter and should be doing that shortly okay. That's fair Kate Thank you.

You're welcome.

Thank you as a reminder, ladies and gentlemen, the Star then one to ask a question.

I'm not showing any further questions at this time I would now like to turn the call back over to Kate Mcshane for any closing remarks.

Okay. Thank you operator, thank you again, everyone for attending this calling for your interest in our GP. We look forward to talking with you again after or on our next earnings call. Following the close of our second quarter. Thank you.

Ladies and gentlemen, this concludes todays conference call. Thank you for participating you may now disconnect.