LECG Corporation Q4 2008 Earnings Call Transcript

LECG Corporation (XPRT)

Q4 2008 Earnings Call Transcript

February 10, 2009 at 5:00 pm ET

Executives

Brooke Deterline - Investor Relations

Michael J. Jeffery - Chief Executive Officer

Steven R. Fife - Chief Financial Officer

Analysts

Tim McHugh - William Blair & Company, LLC

Rob Young - WM Smith & Company

Andrew Fones - UBS

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the fourth quarter 2008 LECG Corporation earnings conference call. My name is Jason and I will be your coordinator for today. At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. And I would now like to turn the presentation over to your host for today’s call, Brooke Deterline, Head of IR. You may proceed.

Brooke Deterline

Thank you, Operator. Good afternoon everyone and thank you for joining our fourth quarter 2008 conference call. Michael Jeffery, LECG’s Chief Executive Officer and Steve Fife, our Chief Financial Officer will present prepared remarks and Bill Hamm, head of our Economic Segment, will join the call for the question-and-answer session.

I would like to remind you that in our financial news announcement released today and also on this call, LECG is providing specific forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 concerning LECG’s future businesses and operating and financial conditions. These forward-looking statements are based upon management’s current expectations as of today, February 10^th, 2009, after which there maybe events that can occur that cause actual results to differ materially from expectations. Information on these risk factors is included in the Company’s filings with the Securities and Exchange Commission, which we urge you to consider. The Company cannot guarantee any future results, levels of activity, performance or achievement, and undertakes no obligation to update any of its forward-looking statements after the date of this press release.

Finally, you can find a reconciliation of the non-GAAP financial measures that we use in our news release and on this call to GAAP financials in today’s earnings release. With that, I will turn the call over to Michael Jeffery for opening remarks. Michael?

Michael J. Jeffery

Thank you, Brooke. Good afternoon everyone and welcome.

I will begin the call with a few comments on our fourth quarter performance. How we see the macro environment affecting our business in the near and longer term and the strategic steps we are taking. Steve will review our financials and then we will open up the call for questions.

As the worldwide financial crisis and market dislocation continue to take its toll, we experience a precipitous drop in revenues in the fourth quarter particularly in November and December. The severity of the economic crisis has meant that many matters on which we have been engaged, were deferred with no revenues yet built, as companies pushed expenses into 2009. The declines were widespread across both our economics and financial accounting services practices.

Overall revenue fell to $17 million, 18.6% below the third quarter. Additionally, our revenue mix changed as experts deleveraged causing a disproportionately large reduction in billed hours and gross profit margins.

While we saw a lower volume of work in the quarter, we did continue to work intensely on a number of high stakes, high-profile matters, engagements that are absolutely critical to our clients. Our largest assignments in the quarter include the antitrust and competition matters in the technology and telecom industry, a very large investigation in the banking industry related to fair lending practices and a number of complex damage disputes across a variety of industry.

In addition, we provide a high level expert advice to a handful of the world’s largest financial services firms facing potential liability of the complex financial products and abandoned mergers.

Our strongest sector was damages and IP, as clients increase their efforts to protect intellectual property rights and profits. We also initiated work on a number of bankruptcy engagements, deploying our expertise in these matters when clients required industry specific knowledge, most notably, in energy and petrochemicals.

Despite our pockets of strength, however, the quarter’s overall results run counter to our long running experience of being insulated from economic downturns. Until November 2008, this strength held true and in the last two months of the quarter, we saw approximately a 27% decline from October and an 18% from the core of our business across most practice areas.

In this challenging period, we took decisive strategic action to improve financial performance and in December we quickly executed a restructuring program. This included the elimination of 29 client service staffs, 6 experts and 37 corporate staffs including a number of high level management roles. We also closed three offices. These restructuring actions along with many other cost reduction initiatives will result in 2009 cost savings of approximately $15.7 million, comprising of $10 million in G&A and $5.7 million in cost services.

We will continue to actively manage expenses and resources, balancing the need to improve financial results with the need to maintain sufficient resources, capacity, to meet upcoming increases in demand for our services, and leverage the investments already made in core areas in 2008.

The key questions we need to answer are why, when, and how we will benefit from the current crisis. LECG has generally profited from all of the economic slowdowns and crisis over the last 20 years. It stands to reason that this market dislocation should be no different. However, the downturn from this crisis has been so rapid and extensive that it has reached a level to which LECG and the law firms we serve are affected.

The resulting uncertainty and the economic changes at year end caused clients to defer litigation and push expenses into 2009. However, the legal process cannot be forestalled indefinitely. As the macroeconomic picture stabilizes we do expect to see normal levels of dispute activity to reemerge in 2009 and with it our business.

For LECG and for the lawyers we work with the key question again is when. We can attempt to answer this by looking at the economic environment the information of the marketplace and at internal pipeline data.

The key to our success will be the speed at which the economy stabilizes. We do not need the economy to return to growth for our business to pick up. In our last earnings discussion I stated that we could not expect a surge in our business without clarity around the regulatory environment, better indications of asset values and some reasonable stability in the market.

At that time, the economy was in free fall, the political picture was uncertain and the world financial markets were in upheaval.

Today, while our outlook is far from positive, it is, at least more predictable. As clients get a clearer view of the future of their own businesses and will be able to make more considerate decisions about the litigation activity. This will be an inflection point for our business.

On a broad level, many indicators point to greater stability in the near term. First, in terms of the micro and regulatory environment, we are beginning to see more stability in interest rates, commodity prices, energy prices and currency that we saw in the fourth quarter. Second, we are now assured that we are in a worldwide recession, rather than wondering which way the economy will go. Third, the basic functionality of financial markets does remain intact, despite some ongoing challenges.

Also, in the aftermath of the financial crisis, government turn costs towards increased regulation which will also reduce risk and identify forward stability. The primary factor driving greater economic certainty will be the impact of the Obama Presidential Administration. Beyond its stabilizing force, the new administration appears ready to introduce a more rigorous, regulatory environment particularly the financial services and antitrust, which will cause a significant increase in demand related to investigations, litigation and regulatory consulting.

We anticipate these changes will play to the sweet spots of LECG’s service offerings and our financial services and antitrust global competition sectors. The potential for regulatory change covers a wide spectrum where we have specific and relevant skills to name a few regulations of governments and risk management, regulation of hedge funds and derivative markets, SEC investigations and of course the movement to internal accounting standards.

We still expect the financial crisis to drive secular demand for our service and we continue to work hard to extract the greatest value from the opportunity the crisis presents.

On this front, we have been engaged in some of the highest profile disputes related to collapsed institutions and abandoned mergers. Our business development team continues to track over 300 credit crisis related matters. These cases represent a good basket of opportunities for LECG and the list is growing steadily at a rate of about 20 case filings per month.

We must recognize, however, that the impact of such events on our core business always lags occurrence. These opportunities are spaced at little different stages of the litigation process from initial filing, to motions to dismiss, and eventually to trial.

On the whole, only the cases that were filed in 2007 have reached the stage where lawyers and clients will require more intensive, expert analysis, advice and testimony. Fortunately, 15% of the cases being tracked have reached the motion to dismiss phase. Overall, we have estimated about 20% of the 300 cases currently being tracked will be dismissed, leaving approximately 214 potentially large cases carrying it over 10% per month in the next year.

Many of these will require expert analysis and testimony and as they gain momentum and proceed through the next stages of the litigation process in 2009, we expect to see demand for our services grow. Our internal pipeline data parallels the demand trends indicated by economic factors and sector drivers.

While the event driven nature of our business carries a natural and unavoidable degree of uncertainty, we do have the ability to take a comprehensive and quantitative look at our future business by analyzing our conflict check data. Conflict checks are part of our internal process for initiating client engagements.

The experts generate real opportunities for new engagements. They run a conflict check to insure that LECG can take the new place. With improvements in our systems, we can now use this data as part of our pipeline estimation process.

We have found that the volume of matters opened in a period have strong positive correlation to future period revenues, 70% to 80% of conflict checks convert two active matters. As it stands today, the conflict check system shows the largest backlog of matters we have ever seen. More particularly, those conflict checks where be have been engaged but have yet to start billing is larger that it has ever been.

In the fourth quarter of 2007 we had 144 matters in this category. As of the end of the year, this number has grown 88% to 270 in the fourth quarter of 2008. The opened matters, our backlog of pending conflict checks that is cases where we have not yet finalized an engagement letter but for which we anticipate work to begin has also grown from just 44 in the fourth quarter 2007 to 230 in the fourth quarter of 2008.

The conflict check data confirms what we have heard from experts and reported to shareholders since the summer. We are suffering from a widespread deferral of spend as clients push back expenses by delaying the start of our engagement. While not all of the 500 backlogged matters will become billable, the data does provide the degree of comfort in the strength of our pipeline and in the existence of material pent up demand.

Going forward, as the economy stabilizes our financial crisis related matters mature, we expect the log jam in our pipeline to break, with an assured return to normal levels of revenue to LECG.

We had nonetheless positioned to ourselves to endure our continued revenues softness in the near term and we are shifting the staff of the firm to directly engage in immediate demand generating activities in our core markets. We will focus on areas with the greatest potential to produce from real results. We expect a low staff utilization rates to continue in the near term as we maintain our capacity to capture future demand. At the same time we will continue to streamline operations and manage costs to generate cash and sustain profits at lower revenue levels.

We are leveraging the investments we made in 2008 particularly FAS to grow our market share as the demand returns. Although challenging to forecast the exact timing, we believe demand will rebound later in the year and similar to past crisis will drive gradually and sustainable revenue for many years. Steve?

Steven R. Fife

Thank you Michael and good afternoon everyone. Total revenues for the fourth quarter fell 18.6% or $16 million to $70 million. Overall gross margin was 21.7%, compared with 31.9% in the third quarter and adjusted EBITDA from continuing operation was a loss of $6.8 million in the fourth quarter compared to $4.9 million in the first quarter starting in the last quarter. Including restructuring in impairment charges, we lost $3.70 per share on a GAAP basis compared to $0.08 on the income in the third quarter.

We recognized a $133.7 million in restructuring, impairment and divesture charges in the fourth quarter, of which $127.2 million was non-cash. These pre-tax charges are comprised of $118.8 million of goodwill impairment, $5.4 million of other impairments, $6.4 million in restructuring charges and a $3.1 million divesture charge. In addition, we recorded a pre-tax charge of $765,000 in mark-to-market losses related to the deferred compensation plan and a $3.7 million valuation allowance against deferred tax assets. Excluding these charges, non-GAAP EPS was a loss of $0.19.

On a consolidated basis, total gross fee revenues were $70 million, down $16 million or 18.6% from the third quarter. This decline was primarily due to weakness across the majority of our sectors with a decrease of billable hours representing approximately $12 million of reduction in revenues, currency depreciation against the US dollar accounting for approximately $3 million of this decline and subcontractor and affiliates accounting for the remainder.

Utilization allowance was $3 million or 4.3% of gross fee-base revenue, a 110 basis points increase over the third quarter. Reimbursable revenue increased to 4.4% of total revenues, also an increase of a 110 basis points. Our sequential same expert revenue declined 17.7%, partially offset by approximately $2.3 million in revenue generated by new experts during the quarter. On a segment basis, economics revenues for the quarter were $28.9 million, down $8.5 million or 22.6% from the third quarter. The revenue shortfall was due to lower gross fee-base revenue of $8.6 million, a 22.8% decline over the last quarter and an increase in the realization of allowance to 3.8% of gross fee-base revenue.

Reimbursable revenues were $932,000. Our economic segment experienced weakness across all sectors with the exception of labor and employment which increased to more normalized level after a softer third quarter. The larger fall off in our global competition sector which has been the hardest hit by the economic slowdown. A slight up tick in the sectors affected bill rate was offset by an across the board decreases of billable hours. In the FAS segment, revenues for the quarter were $41.1 million, down $7.5 million or 15.5% from the third quarter.

Gross fee-base revenue decreased $7.4 million or 15.4% from last quarter and the realization allowance decreased to 4.6% of gross fee-base revenues in the quarter. Reimbursable revenues were $2.2 million. FAS saw decreased revenue and billable hours in most sectors except for higher education. This was primarily due to collective slowdown of work in the US and continued strengthening of the US dollar against all of our major foreign currencies. The consolidated quarter end billable headcount was 783 compared to 801 in the third quarter. Our average billable full time equivalents this quarter increased by 13 to 633 and our period average billable headcount increased 1.4% sequentially. Professional staff paid utilization declined to 62.4% from 75% in the third quarter, well below our targeted range of the mid to high 70s.

Consolidated gross fee-based margin decreased to 33.8% versus 41.4% last quarter. The primary driver of the decline in margin was the decrease in billable hours from our professional staff which carry a high fix cost element. Finder fees, which are included in our fee-based cost, were 10.7% of professional staff gross fees, down a 150 basis points from last quarter. The economic segment continues to show greater profitability yet the gross fee-based margin declined to 37.1% from the 45.3% whereas gross fee-based margin in our FAS segment decreased to 31.4% from 38.3% due to salaries for new hires who have yet to contribute significantly to revenue.

Non-cash compensation expense for the quarter was flat at $5.2 million. This includes stock-based compensation of $1.2 million and bonus amortization expense of $4 million. Total operating expenses decreased a $125,000 to $23.7 million from $23.8 million in the third quarter excluding one time charges. Included in the fourth quarter operating expenses is a $1.3 million accrual for a proposed legal settlement. Depreciation and amortization was $1.5 million and equity compensation and G&A was $708,000 in the quarter.

Our effective tax rate changed from 40.6% in the third quarter to a benefit of only 34.3% this quarter. This was primarily due to a loss of a tax deduction on approximately $12 million of goodwill resulting from a stock acquisition that was written off. In addition, we recorded a $3.7 million allowance against deferred tax assets arising from foreign tax credits.

Turning to balance sheet metrics and cash flow; we ended the quarter with $19.5 million in cash and no borrowings against our credit line resulting in a net cash improvement of $7.2 million over the third quarter. The improvement in that cash was the result of strong US collections with DSOs improving to 109 days versus our 116 days last quarter. Also, as announced in our SEC filings today, we recently renegotiated our credit facilities. Capital expenditures are $1.1 million and acquisition settlement and earnout payments were $5 million in the quarter.

Free cash flow after earnout payments was $8.6 million compared to $6.3 million in the third quarter. Cash flow from operations in the quarter was $14.7 million versus $9.7 million in the third quarter. As we discussed, our restructuring plan lowers our cost structure by approximately $10.5 million a year. Going forward, we will undertake additional cost reduction activities to lower our cost structure even further and to establish a targeted breakeven point of $70 million in revenue a quarter with a 30% gross margin and operating expense of approximately $20.5 million.

Now, let me discuss the outlook. Given the economic downturn has continued and will continue into the foreseeable future, we will add clear visibility to our business at this time. We remain committed to our longer term targets of 8% to 12% revenue growth with EPS growing more quickly than revenues. We will continue to track our business and will offer updates where appropriate as significant news occurs as well as updates on our key metrics and the state of the market we serve.

Now, I would like to turn the call over to the operator for Q&A. Operator?

Question-and-Answer Session

Operator

(Operator's instruction) Your first question comes from the line of Tim McHugh - William Blair & Company, LLC.

Tim McHugh - William Blair & Company, LLC

Yes, first about your comments, Steve, you made about the extent structure. You mentioned making ongoing cost cutting initiatives there. At what point, I am assuming that is not that you are not at that kind of $79 million expense structure right now. How long do you think that takes you to get there?

Steven R. Fife

Well, we provided the target of where we want to be. We consciously, Tim, did not give any guidance because of this uncertainly but we are doing all that we can to kind of align our resources internally and manage our cost so that we can get to that level of profitability of breakeven when our revenue is at $70 million.

Michael J. Jeffery

Tim, it is Michael. I am glad you touched on that. As I mentioned in my piece, yes we got direct saves from our restructuring costs and of that cost save initiatives that we have introduced that will result in approximately $15.7 cost saves in 2009.

Tim McHugh - William Blair & Company, LLC

Okay and I know you have not given guidance but you kind of talked about some of the demand trends or the backlog that you have seen. It generally sounds like though there has not been a significant change in the kind of January and I guess we are more than half here to the first quarter. So, without looking forward I guess, can you give a sense what you have seen during the first half, the first quarter here? Is that a continuation of what we have seen during the fourth quarter or any sense for improvement or weakness throughout?

Michael J. Jeffery

I think when it comes down to the business, it is about utilization and hours billed largely with professional staffs and we have seen, as we got into the year and as we have come out of the holding period, we have seen some improvements in those numbers and with the continual improvement in those numbers from the end of January, continuing to improve into February. So, we have seen a pick up.

Tim McHugh - William Blair & Company, LLC

Can you give us a sense, is that a meaningful pick up or is this at the margin or that you can quantify that with the utilization rate or just qualitatively?

Michael J. Jeffery

I think I mentioned is in [28.26]

Tim McHugh - William Blair & Company, LLC

Okay. And then the cash flow was strong here in the quarter. I know because you also restructured your credit facility there, I was wondering if you could provide some more color there and then maybe Michael, strategically what are you thinking about in terms of the balance sheet in cash flow this year obviously the stock price is pretty low right now? What do you do? What your repurchase be included in the discussion of that?

Steven R. Fife

Yes, I will take the, on the credit facility Tim, we also filed an 8-K today that you should look at. We outlined in a fair amount of details the changes to the facility. The amendment was largely a result of actually a technical definition in our previous facility that was as a result of our impairment would have caused us some problems have we not amended it. So, we proactively reached out to the bank as soon as we were aware of the potential for impairment to go through and actually the amendment cost is with them. But the 8-K will give you some detail in terms of the other changes.

Michael J. Jeffery

If I understand your question correctly, Tim, I think on the balance sheet we will always consider the best options to improve that position.

Tim McHugh - William Blair & Company, LLC

Okay and then lastly, if you could comment just qualitatively on the reaction internally of your consultants to the fourth quarter weakness and the stock price reaction now. I know there is not a lot of or stock ownership is not as widely held here as some professional services front but I am sure it is noticeable to the consultants and I am just curious what their reaction has been.

Michael J. Jeffery

I think that the, well first of all, I think as you all know, the fact that over 70% of our experts are on the at-risk model. They are somewhat immune from the fortunes of the Company and so that has for us reinforced and shown that we had great retention of experts over the long haul and that is certainly the case right now. So, the fortunes of the Company and the stock price of the Company is not necessarily just because of the lack of widespread ownership of the Company by people but because of the way they are compensating this. They are fairly new.

I would say that what largely worried about is the drop off in revenue which was widespread. I saying now top generators felt in November and December. It was almost as we would know, it does not matter what industry you look at, I mean there is an article in the New York Times today about the two land cruisers, despite everything else, the sales were going to 82% until November. It is almost like the world had a severe heart attack in November and certainly affected us November, December. So, I would say right now that overall, certainly people are disappointed and the experts are worried about their demand and are more aggressively out there pursuing new opportunities.

Operator

Your next question comes from the line of Rob Young - WM Smith & Company.

Rob Young - WM Smith & Company

My first question relates to the utilization decline specifically excluding the laid off 72 personnel. Do you have any metrics of utilization exclusive of those personnel?

Steven R. Fife

Well, the first drop, the 72, there is only 39 perceptional staff so I would say utilization is just tied to our professional staff and the majority of those actions we are taking mid to late December. So, our quarter end utilization number of 62% included the under utilization of those individuals that were on the books for the bulk of December.

Rob Young - WM Smith & Company

Right, I guess I am just trying to get a going forward utilization rate even if it this troubling period kind of continues from a revenue perspective. If you exclude those 30 some people from the mix, how does your utilization rate improve if you exclude those?

Steven R. Fife

Yes, for the longer, our target is to be around 78% utilization. So, we have a long way to go before we get there but probably even more important than not in the short term is the number of billable hours because we can very easily increase our utilization percentage by reducing staff further. As Michael said, we are totally in the line here around maintaining an appropriate level of capacity and just driving a utilization percentage number. We will continue to monitor that especially as demand for the services stays flat or does not increase as we anticipate and we will take additional actions but in the short term here, we anticipate that our utilization will be below our targeted levels just as we tried to balance the demand that we believe is coming.

Rob Young - WM Smith & Company

Okay and then relative to revenue with your current employment that you have, what level of scale do you have before you need to hire more billable professionals?

Steven R. Fife

So, again at 62% utilization and going up to 78%, there is millions of dollars of revenues that that would translate to. In addition to that, we have capacity that has been up again just on the professional staff side. We also have actually within our expert range primarily in the area of FAS side of the business where we growing on a number of experts during the year and they have yet to ramp up and many of them are on salaries and so we have been carrying the cost of that and yes, there are revenue generation that is below our long term expectations are.

So, as those experts and other experts ramp up, we see increase revenue, growth opportunity and then also we have significant capacity with our existing staff base.

Rob Young - WM Smith & Company

Okay, great. And then just if I could jump back to the rate of personnel, what is the, I guess what is the historical trend with specific utilization? What I am trying to get at is if they were like go due to their current economy specifically being now or was that related to somewhat of a historical under utilization that they were carrying?

Steven R. Fife

I think as we go through the evaluation of not just the staff but the experts and then also in the corporate side, I think we did the same thing that most companies do. They look at their underperformers and make the call on the underperformers first and logistic if someone has a low utilization is not the sole trigger for a decision like that especially in the short term that when we look at and there was chronic under utilization or practice areas where there is excess capacity, I guess those where the two bases for the decisions that we made.

Michael J. Jeffery

Just to make sure we look the number straight if someone is going to be confused along the way, there were just 29.

Steven R. Fife

I think I said 39.

Rob Young - WM Smith & Company

Oh, okay.

Michael J. Jeffery

Twenty nine client service staff, not 39, 6 experts and 37 corporate staffs. The corporate staff is all associated with G&A so the line share of cuts that we made is with G&A level.

Rob Young - WM Smith & Company

Okay and then just one more quickly, you just spoke about I believe about $10.5 million drive down in G&A expenses on an annual basis as a result of this restructuring plan that you are going through. How did that flow through in terms of the years? Is that back half weighted? Is it smooth? How does that go through?

Steven R. Fife

There is some partial credit in Q1 because a portion of that is headcount related and although people were notified, some of them had termination dates in January and to February so partial in Q1 but full benefit in Q2 and beyond.

Operator

(Operator's instruction) Your next question comes from the line of Andrew Fones - UBS.

Analyst for Andrew Fones - UBS

Hi. This is Jim, I am sitting in for Andrew. You have mentioned potentially looking at some further cost reductions and I was wondering if you could just talk a little bit about what you might be targeting for those reductions.

Michael J. Jeffery

Say that again, I am not quite sure. If you want to know what the additional cost reductions are or...?

Analyst for Andrew Fones - UBS

What types of things you will be looking at to tear down cost, generally?

Michael J. Jeffery

So apart from the cost associated with the restructuring program, we have substantially cut discretionary spend in such areas with outside consulting services, recruitment process and things such as that. We will continue to invest in business development and marketing but we are able to take the other amounts of quite easily out of our ongoing discretionary cost spend.

Analyst for Andrew Fones - UBS

Okay. That is helpful. Last quarter, you have mentioned perhaps seeing a bit of pick up in-demand for forensic accounting and I think that, I just wanted to see if that perhaps survived the demand downturn better than any of the other practices or if it is fairly uniform.

Michael J. Jeffery

Not as bad and forensic accounting tends to feed off a lot of other business. Some of the activities going on in the bankruptcy and restructuring area require investigations. For instance in the areas of the financial services area in the fair lending practice matter that we were talking about which is not getting quite huge case because of forensic support. A lot of things that is happening to us of course, a world like this exposes a tremendous amount of forensic cases and we have been, with the forensic accounting people that joined us somewhat on the leading ponds of schemes experts both for all of the impact. But seriously, we did not know the decline when they joined us but now we found ourselves in the fortune situation of having a couple of the top leading experts in ponds of schemes with us. So those were also the business associated with the proliferation of fraud that we are seeing coming through right now.

Analyst for Andrew Fones - UBS

Okay. That is helpful. Given the improvement in days sales outstanding, I was wondering if your long-term target was still around the 100 days or if you perhaps thinking you might be able to push that a bit lower given the big improvement in Q3.

Steven R. Fife

I would like to think that, Jim but the reality is, there is some cyclicality to our DSOs. The last couple of years, our DSOs have come down in Q4. I think we continue to make a lot of progress in terms of internal activities and working with experts and putting tools in place to make it more efficient in collecting our cash. I do not know if I am ready to come off of our 100 days target at this point in time.

Operator

And at this time, we have no further questions so I would like to turn the call back over to your host for today for any additional or closing remarks.

Michael J. Jeffery

Thank you very much. Thank you everybody for joining the call, patience and thank you for your questions.

Operator

This does conclude today's teleconference. You may now disconnect and have a great day.

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