Navigant Consulting, Inc. Q4 2008 Earnings Call Transcript

Feb.24.09 | About: Navigant Consulting, (NCI)

Navigant Consulting, Inc. (NYSE:NCI)

Q4 2008 Earnings Call

February 24, 2009 10.00 am ET

Executives

William M. Goodyear – Chairman & Chief Executive Officer

Thomas A. Nardi – Executive Vice President & Chief Financial Officer

Jeff Green – Vice President & Business Unit Leader, North American Dispute & Investigative Services

Sharon Siegel Voelzke – Vice President & Business Unit Leader, North American Business consulting services

Julie M. Howard – President & Chief Operating Officer

Analysts

Timothy Mchugh – William Blair & Company

Andrew Fones – UBS

Joseph Foresi – Janney Montgomery

Tobey Sommer – Suntrust Robinson Humphrey

David Gold – Sidoti

Rob Young – WM Smith & Company

Daniel Leben – Baird

George Sutton – Craig-Hallum

Operator

Good morning and welcome to the Navigant Consulting’s Fourth Quarter and Full Year 2008 Earnings Call. At this time I would like to inform all parties their lines will be on listen-only until the question and answer portion of today’s call. Today’s call is being recorded. If you have any objections, please disconnect at this time.

I would like to introduce today’s speaker, Mr. William Goodyear, Chairman and CEO of Navigant Consulting. Mr. Goodyear, you may begin.

William M. Goodyear

Good morning, with me in Chicago today is our corporate team, Tom Nardi our CFO, Julie Howard our President, Dave Wartner Controller, Bill Dickenson, and Jeff Green are actually in Chicago today so there here is Sharon Siegel Voelzke is on by phone.

Before we begin, I want to remind everyone and point you to our disclosures at the end of our earnings release that relate to the forward-looking statements that we may make or may be discussed on the call. We’ve also posted our earnings release on our website. Please review that information along with our SEC filings for disclosure of factors that may impact subjects discussed in today's call.

As we have in the past we will be discussing one or more non-GAAP financial measures today. So, you can review our earnings release on our website for all of those disclosures as they are required by the SEC, including the appropriate reconciliations.

With that said, let me start off by saying that we are very pleased and I think you would agree when you look at some of the numbers with our fourth quarter and really full year 2008 performance. Revenues were up – earnings were up nicely. All of our margins were up. We had a very nice cash flow fourth quarter and full year, liquidity improved, balance sheet strengthened, and all of this was accomplished in what we would all acknowledge was an increasingly challenging economic environment in the second half of 2008.

We had very good G&A management. I think that came through particularly in the fourth quarter. We will need to do some more of that in 2009. When we look at 2008, we had a series of what we think are very important accomplishments that are going to be key to 2009 and 2010 performance and beyond frankly. We further developed our topical excellence and our domain excellence in the exploding credit crisis litigation space, both our healthcare and energy teams had record years and are positioned to benefit from the recently passed Federal stimulus packages more on that to come.

We had an successful integration of our investments in 2007 that we made in the UK to build that international platform, and we acquired the strategically important Chicago Partners Economic Consulting business which fits nicely into our business model and it’s going to be a very important capability as we look out into 2009 and 2010 and beyond. So, from an overall standpoint, we hit a number of our strategic objectives and feel very good about the financial performance that we delivered.

A comment about the fourth quarter revenues, Tom Nardi is going to fill in some more granular detail here, but at a high level, we came in at a $194 million, that was down 5% or about $9 million from a year ago. Two comments on that, one, is that we had a $6.5 million sterling negative impact in terms of our revenue basis, sterling hit a 23-year low, precipitously during the fourth quarter. And we also had $4 million less approximately of the non-economic reimbursement revenues. Those revenues relate to the large investigative jobs typically that we do that have larger contractor expenses and as those wound down we had less reimbursement revenues.

So, we have about $10.5 million of reimbursement revenue decrease and/or currency exchange risk. If you take that out, we had a very similar quarter to a year ago, which was a nice quarter for us, and also if we look sequentially third to fourth quarter, we were basically in the same run rates.

EPS came in inline with or expectations, and EBITDA was - came in strongly for the quarter and for the year and that really reflected some of the margin improvements that I commented on earlier. We were pleased to get our bank facility down to $230 million. That was from a high of 310 mid-year after the Chicago Partners acquisition. We also had let cash build up a bit on our balance sheet you’ll note at year-end we have $20 million. We typically run with 10, given the world that we live in now we thought it was a little more appropriate to run with higher cash levels. We are going to talk about earnings per share ranges in a minute. I will come back to that and also our revenue ranges.

From a full year standpoint, I just want to point out that each of our segment’s operating profits increased year-over-year and I think that was job well done given the markets that we are operating in. DSO was down to 73 days, which I think it is our best DSO level in a number of years. Attrition continued its downtrend and our trailing 12 was 19% and it dropped significantly just in the fourth quarter alone vis-à-vis a year ago. So I think that attrition thing is responding to our programs that we’ve put in place, as well as obviously to the market conditions.

Some high level comments about the two segments. Lets take the dispute segment first. We’ve got some cross currents there. I think we’ve talked about these in the past, the negative cost current is the big investigative heavy forensic accounting sorts of engagements as we look back into 2008 wound down, as the year progressed, that also did impacts these reimbursement revenues, the non-economic revenues that I commented earlier. That has continued into the first part of this year and really to some extent it would relate to I think the SEC changeover, we can talk a little bit more about that later. But clearly those big investigative jobs were absent in the second half of the year.

Our core commercial litigation dispute business was steady. It might have slowed a bit, but not precipitously. To some extent, that may relate to the challenges in our law firm legal channel partners. It also may reflect the fact that, well, we don’t talk about it very much. There is a growing numbers of courts across the country they are also taking cost cutting measures that include postponing trials, shutdowns, difficulty in filling judicial vacancies. So there is somethings obviously going on there that relates to the overall economy slowdown some of the budgetary pressures.

Our financial markets, our credit markets litigation, successes build - very build steadily throughout the year, more on that in a minute. And positively in the fourth quarter our construction and infrastructure team if you will had a very strong fourth quarter and we would see that continuing into 2009 as particularly as some of the stimulus bill packages rollout.

In terms of the business consulting segment, the financial services industry, there is some discussion in the press yesterday and the day before that December and January are the two worse months on record for the financial service industry, December of last year, January of this year. After what we went through in 2008 it’s hard to believe that somebody can say that that December and January were actually the two worse months when we look back on some of the things that happened earlier in the year, but I would concur with that and that obviously continued to impact the discretionary spending in our financial services consulting vertical. It was down a bit quarter-to-quarter, but not precipitously like it had been earlier.

The insurance space actually stabilized in the fourth quarter and the insurance team did a nice job, and then within the segment both healthcare and energy had very strong fourth quarters as they had strong years. Our corporate finance capability has been very active in the hedge fund restructuring area. We have a, what we call a financial institutions restructuring solutions team, acronym first and we probably worked in the second half of the last 10 or 12 hedge funds. We would obviously see that, that continuing. So you’ve got interesting cross currents in the consulting segment, which really mirrors the issues that we have in our economy not surprisingly.

The company’s international operations as you can see were impacted significantly by the currency conversion, but we had kind the of quarter internationally that we expected to have if you pull out the currency the sterling deterioration.

The - our economic consulting segment formerly Chicago Partners performed very well, high utilization. We had a number of joint wins within the company. So the industrial logic on that investment back in May continues to look and having said even better than it did at the time. So, we’re very, very pleased with that and we think that’s going be an important skill as we go forward.

Let me make a few comments now about 2009 at a high level, and then I’m going to ask Tom to make some more granular comments on the fourth quarter and 2009. I think we all agree that this is not an environment that would relate to aggressive forecasting and we’ve tried to be very careful in our assessments. We’ve done a number of downside scenarios, the upsides are easy, the downsides are a little more complicated.

We do expect our first quarter to be under some pressure. Some of the trends that we saw accelerating in the fourth quarter spilled into January, February looks a bit better. So we’ve taken some actions to be careful to preserve our flexibility to be able to play some offense here and we want to be ready to some extent, if the economy turns even further soft.

So we’ve frozen salaries. We’ve actioned and are actioning some selective staffing reductions, probably a 100 sort – in round numbers 100 sorts of individuals. Tom will talk a little bit more about that. As I said we’re holding our base salaries constant and we’ve gotten much more aggressive in terms of what is discretionary spending. What do we need to do? What should we be careful on, particularly the first half of the year and then we’ll see how things evolve. So, we’ve got some of that built into the high level ranges that I’m going to provide you.

So when we look out at the environment we see an economy where deleveragings turned very ugly. We’re essentially having regime change in the financial markets, whether we want to call at that or not. We’ve got multiple Black Swan events, confidences at a low ebb. So we’re trying to frame that from Navigant standpoint and we see positives, we also see negatives. So, with that, sort of a set – setting the stage, lets talk about ’09.

And first of all, I want everybody to pickup their pencils and write down a number called $810 million. That is our GAAP revenue for 2008. Now subtract $30 million, and that is the difference between non-economic reimbursement revenues last year and the previous year actually of about $80 million to where we see those revenues running this year which is a $50 million run rate because we’re not anticipating the big uglies where you have a lot of that reimbursement expense that’s attached to it.

So you take 810 less 30 down to 780, which would include $50 million of reimbursables and then take $20 million off that, which is the last year’s sterling dollar exchange rate of a $1.84, and the current run rate of about $1.45. I have looked this morning it might be worse. So take $20 million off of that, so you get a base rate, a base GAAP revenue number of 760.

Now put a range around the 760, go to – put 750 on the down side, and put 825 on the upside. 825 would be an 8.5% growth rate on an apples-to-apples basis and 750 would be hopefully we deliver the same type of year in ’09 that we did in ’08 and I said in our release, that we expect to be able to grow earnings per share and when we certainly do that, from an earnings per share range, we would have $0.85 beside the 750 and we’d have a dollar on the 825.

So, it’s going to be an exciting year. In Q&A and when Tom throws it back to me for the wrap, I’m going to talk about somethings that would pushes up into the top-end of the range also somethings that would keep us down at the bottom end of the range. So you can get a feel for how we see the year progressing. So Tom, would you give a little more granularity to the quarter and to ‘09?

Thomas A. Nardi

Okay, Bill. Thank you, and good morning. As Bill said, we are pleased with fiscal 2008’s financial and operational performance. Bill already highlighted and recapped some of the key metrics. So, I will get right into it. Each business segment increased operating profits in 2008 over the prior year. Chicago Partner’s acquisition contributed $37 million of revenue, and $14 million of operating profit.

Average utilization improved to 79% from 77% a year ago, and average bill rate increased from $236 in 2007, to $260 in 2008. These positives were somewhere offset by adverse currency movements and weakness in some of our practices as Bill discussed earlier.

G&A as a percent of revenues before reimbursement was relatively flat versus 2007, but absent the impact of higher bad debt it was down almost to 4 percentage point to around 18.5%. Bad debt increased almost $11 million over 2007 levels to about $20 million. Our continued focus on managing working capital paid off as days sales outstanding improved to 73 days at the close of 2008, from 77 days a year prior. Also, and as you know we have worked to lower our facility costs and they came in approximately $700,000 under 2007 levels.

Lower market interest rates and lower borrowings outstanding resulted in a nice decline in interest expense from our original 2008 expectations, although still up $4 million from 2007.

Assuming no significant acquisitions and stable interest rates, 2008 should be the high watermark in borrowing costs, as debt related to the 2007 stock buyback continues to be paid down. Cash flow from operations totaled about $90 million for the third year in a row, which combined with strong working capital management and somewhat lower than typical CapEx, resulted in a $20 million of debt reduction as well as funding the Chicago Partners acquisition.

Debt as a percent of capitalization decreased to 39% at year-end, from 43% a year ago. Our coverage ratios under our revolving credit agreements are in good shape, and let me remind you that our facility is in place until 2012, happy to remind you that.

Let me now briefly comment on the fourth quarter. While revenues came in slightly lower than expected and about 3% lower than last year, lower practice costs, along with lower G&A and interest expense allowed the company to post earnings per share above last year’s levels and inline with our expectations. Utilization remains stable at 77% overall and average bill rate improved 7% over the prior year to $257.

Chicago Partners continued their strong utilization run rates hitting 98% in the fourth quarter. As experienced by almost all U.S. businesses, we have international operations fourth quarter comparisons were harmed by adverse currency impacts. In our case, the decline accounted for about $6.5 million of revenue before reimbursement drop-off and impacted our average bill rate by about $10.

Let me now turn to our 2009 outlook. As stated in the press release and as Bill said it earlier, we are taking a cautious approach to 2009. We remain focused on growing earnings per share even in a lower growth environment. And our outlook estimates that EPS adjusted for other operating costs will range from $0.85 to $1 per share on revenues before reimbursement that range from $700 million to $775 million. Those are the RBR numbers that go with the gross numbers that Bill mentioned earlier.

Operating EBITDA is estimated to be between $120 and $145 million. Again this outlook excludes other operating cost related to real estate consolidation, and also excludes severance cost that will be incurred related to the staffing reductions Bill mentioned earlier.

In anticipation with uncertain economic picture in 2009, we are proactively employing expense reviews and taking meaningful and prudent cost reduction measures as needed. By taking these actions early in the year, significant cost savings conserve as a buffer against the lower growth environment and protect profitability. I have more to say on these actions in a minute.

So let me recap a few of our key assumptions driving this outlook. Our revenue outlook again calls for more modest growth with an RBR range of between $775 million, to which you should add around $50 million of reimbursable expenses to derive total revenue.

The full year impact of Chicago Partners will benefit year-over-year comparisons, but unfortunately will be largely offset by adverse currency impacts. Regarding the currency issue, our revenue and earnings outlook is based on $1.45 pound sterling to the dollar ratio, which approximates the 2009 year-to-date average.

Each $0.10 change in that ratio means about $4 million in revenue. Of course results of across to offset. As a result we will likely face a significant adverse impact from a stronger U.S. dollar in 2009 revenues of about $20 million when compared to the full year 2008 level.

Bad debt in 2009 is expected to run around 2% of RBR level. I belive that's what’s included in our outlook, improved over the levels of 2008, but still somewhat higher than our long-term average. We are very focused on managing receivables and on accurate and timely billing, but in light of the very weak economy we feel it’s prudent to assume somewhat higher levels than we had historically achieved.

Depreciation and amortization expense is expected down about 5% from 2008, while facility costs were expected to move up a bit due to the addition of Chicago Partners and other office moves.

Fiscal 2009 capital expenditures are estimated to be in the $15 to $20 million range compared to 2008’s level of $9 million, as we finance an ERP implementation in certain committed office relocations.

Interest expenses should continue to benefit from low market rates. Keep in mind that about a $165 million of our debt is fixed via swaps at around 6.5%, the remainder is being accrued at today's short-term rates. Overall, assuming current rates continue for most of the year and projected cash flows, interest expense should decline about 10% or $2 million from 2008 levels.

Cost saving initiatives as Bill mentioned earlier including selective staff reductions and restricted salary increases are expected to generate approximately $20 million in cost savings and avoided costs from our original plans for fiscal 2009. We expect these savings to begin being fully realized in the second quarter.

Lower compensation and benefit costs are expected to generate most of these savings. In total, we expect to reduce staffing around 100 positions with a number of those coming from the G&A areas. Other compensation savings will result from a temporary freeze on salary increases for all employees, and finally all other spending will be limited including marketing, non-billable travel and overtime.

Let me comment briefly on the first quarter and Bill also mentioned this. First quarter 2009 results are expected to be under some pressure, as second half 2008 revenue softness and ongoing economic turmoil is expected to continue at least through early 2009. In addition, savings from many cost reduction actions will only be partially realized in the first quarter, while severance costs associated with the productions will lay on the first quarter results. And finally currency impacts will be significant, as the exchange rates have changed from around $2 last year to around $1.45 so far this quarter.

Lastly, we announced that the Board of Directors authorized a common stock repurchase program totaling $100 million over the next three years. This replaces prior authority which had expired December 31 2008. While we have no current plans to begin repurchasing shares that could change depending on market conditions, the company's cash flow and investment outlook. And with that I will turn it back over to Bill.

William M. Goodyear

Thanks, Tom. Let me talk a little bit about the drivers that would impact pushing us up to the top of the range or pushing us down to the bottom of the range. And they are basically timing drivers and I’ll go through a few of them. Embedded in this guidance is a continued strong year for our economic consulting practice, our energy practice, and healthcare practice, and in expectation that our construction practice as it demonstrated in the fourth quarter is in a very nice spot here. We also have some expectations for continued ramp up in financial, in the financial litigation space.

Let me just start with that. We have not released our fourth quarter financial litigation review which we update on a quarterly basis. I would expect, at least another 100 major cases filed in last year’s fourth quarter, which would put us at the - around 850 major cases. Reference the Resolution Trust S&L crisis that ran for 7 years. The total case load there was 559. So we’re at 800 and counting over the last 24 months versus 559 in that cycle. So our expectation in our original concept that this was going to be multiples of Resolution Trust crisis obviously has turned out to be accurate.

Interestingly, if you go back to the ’07 vintage where we’re now calling these vintage years. So we’ve got the ’07 vintage, the ’08 vintage, there were 294 cases in the ’07 vintage year. We’ve tracked those 70% made it through the motions to dismiss in the various legal machinations.

So that you now have 70% of that vintage year, where it’s time now to deploy forensic and litigation resources together with legal counsel. We’re obviously feeling the benefit of that. We went back and looked at if we – active engagements, last year in the fourth quarter we had active, we call them sub-prime at that time, now we’re just calling credit litigation cases, we had six major active litigation cases a year ago in the fourth quarter, this year we had 42.

So, you can – as the ’07 vintage matured, with our domain excellence you can see that we’re definitely benefiting from that. And the question is, how quickly do these things continue to ramp and if they do, then that would offset some of the weakness in the other areas of the dispute in the forensic practice. So, that one can push us either way. Two other big ones. And these are, in my opinion ifs not when’s.

And the first one would be the energy stimulus part of the package that was approved in Washington and Bill may want to comment on this during the Q&A, but there are significant resources allocated in the Recovery Act to green sorts of investments and all kinds of state and local energy efficiency initiatives and so forth. We are absolutely ideally positioned to assist clients at multiple levels on that and it will be significant. The question is, is it going to be significant in the second quarter? Is it going to be significant in the third quarter, the fourth quarter? It will definitely be significant no attempt. So the question is when not if.

The other really big one that jumps out is right now is the Recovery and Reinvestment Act had out of the 787 billion, had 34 billion that was specifically tagged for infrastructure projects, highways, bridges, transit. So there is an unprecedented amount of cash that’s going to flow to as we’ve learned a new term shovel-ready projects.

There are all kinds of federal accountabilities in reporting requirements at multiple levels on this stuff, for anybody receiving the funding. Navigant with our and we have an infrastructure team that’s what we call it 20 years of experience, deep experience, these are adults estimating the engineering in the oversight of large infrastructure projects like the big dig.

We’ve got the CPA’s on hand to audit and monitor the cost involved. We can analyze the projects. We’ve worked with 70% or more of the top infrastructure contractors in the country. So there is a big role for to play here. Now exactly what their role is, how it rolls out and when it rolls out remains to be seen, but it’s an – it’s not an if, it’s a when. And on the last piece which is a little less clear right now, is the healthcare initiatives there that will flow from the Obama administration with Daschle having to withdraw his nomination and so forth, that is a little less clear at this point in time. But, there is no question that that is going to be a major initiative at later this year and that clearly would impact favorably our healthcare practice.

So, depending upon when these things hit, that would push you more up towards the top of the range versus down to the bottom of the range. So as we step back and look at 2009, and particularly 2010, we have great opportunities in front of us. We also have the reality that we’re in a free fall economy. So that’s why we have the wide range on guidance, and that’s why we’ve taken what we think are some imprudent financial and managerial initiatives. That’s why we are going to be tied - continue to be tied on our G&A and we are going to focus hopefully with – to use an abuse term laser like focus on the financial ligation space where we know we are a winner and also the infrastructure, and the energy areas, and then subsequently healthcare that comes out of the stimulus bill. And then we’ve got our core business that we think will sustain us as well.

So, with that, I would just say we got opportunities ahead of us. There are going to be winners and losers here. We are committed to being careful and prudent this year and we’d hope and expect to have a decent year. And now open it up now to some Q&A.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question comes from Tim Mchugh with William Blair & Company.

Timothy Mchugh – William Blair & Company

Yes first wanted to ask about the disputes or kind of the investigation side of the disputes and investigation segment? You didn’t include that as one of kind of the swing factors for your ’09 guidance. Are you at a point where you kind of assume that remains weak throughout 2009? And just in general can you give us some color on when you expect potentially that that end of the market to pick up?

William M. Goodyear

Well, Tim. I listened to your delight call, thank you for that. So the - our view is that that is also an - if as opposed, but we are not so sure - that’s not an if, it’s a when. Yesterday’s New York Times had our new SEC Chief, Mary Schapiro featured that was page one, with the headline SEC Chief pursues Reversal of Years of Lax Enforcement. So the drums are beating, but having said that, was there a game or movie outwards Waldo, if we look back on 2008, we had - there were no SEC driven sorts of engagements that we had. I shouldn’t say no, but very modest. So that is definitely one of those things that would push us, one way or the other in terms of our range and I would fully expect it to happen but it has not happened as of whatever today's date is. But, yes that’s a good question. We would expect it to clearly have some impact as the year progresses.

Timothy Mchugh – William Blair & Company

Okay and then….

William M. Goodyear

Tim, Jeff Green is raising is hand here Jeff.

Jeff Green

Yeah, the only thing I would add to that Bill, is the, you referenced one of the big drivers - potential drivers here is the increasing activity in the financial markets related litigation. And I would add to that investigation, certainly a lot of what we’ve seen the activity that we’ve seen and we are currently executing on investigative in nature and we would expect that the SEC's activity is going forward as well as the activity of other regulators will continue to drive activity around the financial markets that we would consider to be investigative.

Timothy Mchugh – William Blair & Company

Okay and then along the same lines for that business, what do you, do you have any color on what type opportunities might come about there is a few bills and Congress talking about regulating hedge funds more actively, as well as the derivatives markets. Are those significant opportunities for you guys or are those more…?

William M. Goodyear

Tim, I would say they definitely are, and I’d make a statement – I’m probably repeating myself from our last call. But we expect the most extensive re-regulation of the financial services industry since the 1930s. There was a quote that was out, the day before yesterday from the President, that he is requested that these reforms be in place in advance of the G20 Meeting. We checked our calendars, the G20 Meeting is April 2. Now, I hope that – frankly I hope we don’t have the regulations done between now and April 2. But if we do, there will be a lot of work to be done and that relates to our financial services segment and if you go on to our website, we have a number of timely pieces that are out there, identifying what we would expect from a hedge fund regulation, from a reporting and transparency, from a business model impact standpoint, things that our clients are going to need help with and we are ready to do that. We do not have much of that in this year’s guidance to be honest.

Timothy Mchugh – William Blair & Company

And, I’m assuming then you are not seeing any work in an anticipation of those bills it’s or more something you would see after they kind of proceed and are finalized?

William M. Goodyear

Well actually we have seen a bit of a pick up. Sharon, do you want to comment on that?

Sharon Siegel Voelzke

Yeah, I am on it and I would say that right now, I think the pickup is really coming with respect to investor confidence and due diligence. So, being retained to just conduct thorough reviews of funds and sub advisors. So, I think it’s starting. I think we stand very well when it comes to how we would actually help hedge fund advisors register, creating the transparency, the underlying programs that would support and be necessary to comply with whatever act ultimately get released and produced. So yes.

Timothy Mchugh – William Blair & Company

Okay and the last question if I could slip it in, the economic consulting segments obviously very good performance again, and you said you expect a strong 2009. Can you just contrast that a little bit what you are seeing out there, there has been some other companies in the space that have stumbled a little on this area and seen more of a pushback in work but you continue to do well. What are you seeing very, versus what perhaps they maybe seeing?

Thomas A. Nardi

Well we’re, I’m not sure what they are saying, but we’re so allow and – where resource constrained and what we want to do is add I know one area we are going to be really working to add resources to from a capital and allocation standpoint. And it’s really – that area and it’s the classic competences that that they bring to the table in terms of antitrust, in terms of security ligation. There has been anytime we get into a down cycle, there is a lot of labor litigation for disadvantage classes. And we have a couple of experts there in Chicago Partners that have outstanding reputations in that area. Bill, do you?

William M. Goodyear

Let me just add a little color on that is and this is not to be taking as the absolute definitive answer, but most of the economic practices of our competitors have large elements of merger analysis work looking at M&A activity and as some would you may know, M&A activity right now is not an all-time high. And so if you are in that business and that’s what you’re doing you are seeing a slackening in demand. We do - we have the capabilities but that’s not the focus.

Thomas A. Nardi

Yeah, and, Tim if you look forward, Christine Varney has been appointed to - she was FTC from 94 to 97 and but she is going to be DOJ Antitrust. And she is known to support much more aggressive enforcement of anti-competitive practices. John Leibowitz is the currently of the FTC, is going to lead the FTC and he has the same reputation. So, I think there is going to be a reinvigoration of antitrust issues, but if you don’t have any deals, don’t matter there is nothing to enforce. So, but having said that, the table is set. Okay?

Timothy Mchugh – William Blair & Company

Okay, thank you.

Operator

Our next question comes from Andrew Fones with UBS.

Andrew Fones – UBS

Yes, first, I was wondering if you could just clarify whether the severance you expect in the first quarter, is within the EPS guidance range you gave us?

Thomas A. Nardi

No, the guidance we gave excludes the impact of those severance charges.

Andrew Fones – UBS

Okay.

Thomas A. Nardi

Yeah, Andrew, we are not sure, what they are yet, so we couldn’t really, but we will break them out in the second quarter.

Andrew Fones – UBS

And then also, I just want you to check on that the kind of the bill rate increase you saw year-over-year, obviously up 7% and more than that on a constant currency basis. How should we think about price increases, that you putting through given you said that the, you’ve helped the salaries steady?

Thomas A. Nardi

Well, what do you think?

William M. Goodyear

We are in a deflationary environment though our law from channel is partners are challenged. Every business in the country is doing exactly what we are doing and trying to manage that G&A so, we are being so very cautious about pricing expectations, but we never predict prices and I certainly wouldn’t expect anything near what we had last year because that was a great year.

Andrew Fones – UBS

Okay, and then on the 100 people that you said that you expect to reduce headcount by and obviously it sounds like economic you’ll be potentially growing headcount there we’ll 100 be spread amongst other divisions or will it be any one in particular?

William M. Goodyear

Well it’s, I mean first of all that the you’re – you’re probably going to action that people that you should be action in anyway. Your less productive people if you look at you put some sort of G&A versus consulting mix on that we’re talking about 2 or 3% of our consulting staff. So, this is not, a major effort, but Julie might want to comment a little bit on, on headcount expectations for the year she is usually keeps her books on that do you want to comment Julie?

Julie M. Howard

You know I guess I would be under the year about 1930 consultant and notwithstanding some of headcount reductions we are going to make we would estimate that we would be looking out right now I know we have a full 10 months ago we will probably be flat generally flat and headcount over the course of the year and that would include some of the selective reductions we are making, but we were also doing some various strategic hiring in those areas where we have an opportunity in total balance each other out generally.

William M. Goodyear

Yeah there are some great resources out there and we think that we can add to the business phase here.

Andrew Fones – UBS

Okay and I think you mentioned as well as some of the headcount would be G&A as well?

William M. Goodyear

We did – we did.

Andrew Fones – UBS

Okay, thanks and then just kind of to finish off in terms of you point out, interestingly that with all these money being spend is now Obama is saying can provide a lot of oversight in like insure, it was spend correctly that there is going to be a lot of reporting back through is that kind of way you think some of the could have the greatest impact for you in helping the relative, that various parties that we see the stimulus actually, kind of report that spending back to federal government?

William M. Goodyear

Well, yes. But I wouldn’t limited to that area Andrew. When you've got 20 years worth of experience with infrastructure team you are able to look at a project it can be a highway project, it can be a bridge rehab, it can be any one of these things with your experience in engineering skills and you can say that project is scoped properly the budget makes sense, the timeframes makes sense. So, there it’s not just okay A plus, B plus C equals D and here is the report to some federal agency. It’s a much more robust and I think interactive opportunity for us. And you know you can combine this, we all know that Navigant one of the things that we really bring to our client is the unique insight into the interface of government contracting a complaints issues with the marketplace and it’s unimaginable, how many of those issues there going to be when you are talking about hundreds of billions of dollars of funds that are trying to be spend under potentially unrealistic timeframes. So, I think that this going to be a very significant opportunity in our construction area. And the energy area, likewise we talk about meeting to upgrade the grid, we need to talk about energy efficiency when the all this green sorts of initiatives and you need to insightful analysis and advice on that stuff and people will know what they are doing and we have got the contracts in place in energy and we should be able to benefit from that significantly so its much more than our I would envision much more than reporting.

Andrew Fones – UBS

Got it. Thanks, that’s was really helpful.

Operator

Our next question comes from Joseph Foresi with Janney Montgomery. Your line is open.

Joseph Foresi – Janney Montgomery

Hello. My first question is I think you guys talked a little bit about dollar rates is being potentially lower next year and the consulting stuff being about even I would assume that based on potential reductions that utilization would be somewhere you might be able to get some incremental improvements, maybe you can give us some idea what your thoughts are and the utilization metric heading into '09.

William M. Goodyear

Well, we don’t guide on utilization and I am certainly not going to do with this year. So I can't help you on that and I did not say that bill rates are going to be lower and I just said that I didn’t anticipate the same sort of lift that we had last year.

Joseph Foresi – Janney Montgomery

But I mean would you expect utilization to be generally the same or is something that you are looking to drive or.

William M. Goodyear

I want utilization to be absolutely high as we can have will be, but I am not going to estimate or project.

Joseph Foresi – Janney Montgomery

Okay. I guess and just talking about sort of were we left maybe last conference call you talked about utilization running little bit higher. And it’s sounded like there was some of discretionary work was making it’s way out of your numbers I was wondering if you could maybe tell us on what is change in your view over the last couple of months and maybe what surprises or to be upside to the downside?

William M. Goodyear

Well the last time we visited we were just closing our October books, which turned out to be the all time record months for Navigant. And then, November was fine and then December was pretty chaotic and we all know the stuff that was going on because we had live through it which is continued into January and hopefully we get some sort of stabilization here released in the markets in the economy as whole. So kind of a whole world had another jump shift. And that’s why we are taking these cautionary actions now to be careful because we are not exactly share where things are going and that’s why we've got a range that probably looks pretty wide that you guys in terms of our guidance because we just think that that’s kind of where we see the world right now we can talk ourselves and being really positive and we can talk our sales and being really negative and the real worlds probably somewhere in between.

Joseph Foresi – Janney Montgomery

Okay but there was any – anything that surprise you on either end I mean obviously the general trends were – were lower but is there anything in particular that surprise you.

William M. Goodyear

What I will tell you what surprise me personally is that the deleveraging process turned incredibly ugly and we are basically, have regime change in the financial markets. And you know, if you go back to last October, whenever we visited, we were talking about nationalization of the banks, we thought that things have been to some extent sorted out. We weren’t talking about multiple blacks one of them and confidence being completely destroyed in the equity markets. So, this – it’s a different world have been it was just a quarter ago and I frankly expect that when we visit three months from now, it might be a different world than right now, so, that ‘s why management has to stay on it toes I thing there are great opportunities here, but we are going to have to stay very focused and frankly cautious until we can see real clarity and where this economy is going. There will be winners and losers that come out of this thing and we would certainly hope that Navigant can come out of this cycle whenever that is, as a winner and that’s our objective and that’s our commitment to those at own stock in the company and there we are?

Joseph Foresi – Janney Montgomery

And then looking at the stimulus package do you currently do project management work in your infrastructure practice?

William M. Goodyear

Yes.

Joseph Foresi – Janney Montgomery

Do you expect to increase would that be one of the areas?

William M. Goodyear

Let me be more definitive we are outstanding in that area. So, I don’t want to say we do it we have seen all over the world right now. We probably got some people dial in from Brazil while we working on a huge project for the Germans big steel plant so yeah we're there.

Joseph Foresi – Janney Montgomery

So you do the design as well and part of your management….

William M. Goodyear

We do oversight we don’t do design, I mean design is called liability we will overview that, but we are not going to do it.

Joseph Foresi – Janney Montgomery

Okay. And are do you feel like I mean if you are looking at areas that could ramp obviously we talked about economic consulting would this be an area that you might wrap as well, assume the funding started to come through.

William M. Goodyear

Well we are committed to matching resources with demand and every single day this management team is talking about the trade-offs between ramping demand once it is going to hit versus should we carry this capacity if its not kicking so those are daily discussions and we just we are going to make the best decisions we can with the data that we have. It will ramp I am just not sure when and we are not going to ramp our hiring and recruiting I mean we are taking some heads out so obviously we are being careful here.

Joseph Foresi – Janney Montgomery

Okay.

William M. Goodyear

We are not taking any out of construction, but we are taking some heads out.

Joseph Foresi – Janney Montgomery

Okay, one last question I guess you can maybe you just give us a breakdown of how the infrastructure practice breaks down between project management some of the other service offerings.

William M. Goodyear

Not it's all tidy I couldn’t do that, even if I could I wouldn’t want to, but it's we have got a great team. We got good capacity we've got a good resources, I used to tell this story about the only people that’s smiled and were the guys who went down into the tunnel everyday, playing cards and then came up at 5 clock in Navigant.

Joseph Foresi – Janney Montgomery

Okay. Thank you, very much.

Operator

Our next question comes from Tobey Sommer with Suntrust Robinson Humphrey. Your line is open.

Tobey Sommer – Suntrust Robinson Humphrey

Thank you my first question has to do with the legal investigation that you are doing involving the credits issues right now. You had an up in a dramatic fashion in terms of the volume of that you described year-over-year. I was wondering from an activity level or they at earlier stages, middle, later. If you could characterize them on average?

William M. Goodyear

That’s a good question. I would say early/middle but not middle. I would say early Jeff is nodding his head so he kind of agrees with me on that.

Tobey Sommer – Suntrust Robinson Humphrey

Okay so from a kind of momentum standpoint more ahead of you then behind you in that volume?

William M. Goodyear

Yeah I said we had 42 engagements that we build on in the fourth quarter. We want more engagements and I think we’re into 60’s in terms of total engagement, but I want to know how many that we actually send invoices on in the fourth quarter. And that was 42 and, it ramp pretty significantly if you go quarter-to-quarter it went from 6 of last year in the fourth quarter to 14 to 29 to 35 to 42. So, this is a good trend line, but it probably I can’t imagine it’s going to reverse itself. And we hope it doesn’t. We have got some this built into our guidance but, there we are.

Tobey Sommer – Suntrust Robinson Humphrey

Okay, thank you. That’s very helpful and then I had a question for you on the, the financial consulting, which did, I guess it was down sequentially. Wondering how big that is as a slice of revenue now I know it was never all that significant but after been down sequentially as probably shrunk a little bit in terms of the – overall ability to impact results?

William M. Goodyear

It shrunk significant we don’t break that out as a some sort of the segment. But your observation is accurate.

Tobey Sommer – Suntrust Robinson Humphrey

Okay, is that an area in which there is going to be a little bit more focus in terms of headcount reductions?

Jeff Green

We're right, where we want to be? I mean Gilbert, I don’t I can’t comment on the specific individual but assurance done and Bill management team here did a very good job of taking a practice that fell precipitously and managing through that keeping it together and protecting some profitability.

Tobey Sommer – Suntrust Robinson Humphrey

Thank you. I'll ask one last question. It seems like you are going to be ability in a position to generate quite a bit of cash this year and I’m wondering given what you see out there in terms of opportunities for demand over the next two or three years if there are capabilities you want to add others through acquisitions or you know perhaps some lift out hires that you can identify for us?

William M. Goodyear

Well, we are - I mean, we mentioned economic consulting obviously. We see a bright future in both energy and healthcare and you are always kind of as good as your last year. So we are feeling very good about both of those spaces. We have some interesting ideas as it relates internationally, but they are in the kind of early developmental stage. But, as I said in my wrap up comments, we see some great opportunities out there. The week – it was at the first week or second week of March, Julie where we’ve got all of our practice leadership in Chicago, with their ideas and hopes. Maybe not expectations in terms of use of capital. So we are going to grind through those things and see how they fall out. We will not lag for investment opportunities. I hope that we didn’t declared victory early on the year. We said that first quarter is going to be under some pressure. We’ve got a good model for cash flow and I would agree that I think we are going to have a solid cash flow here, but we got to spend some money. We didn’t spend any money at all last year. So we’re going to have to spend some this year.

Tobey Sommer – Suntrust Robinson Humphrey

Okay. Thank you very much.

Operator

Our next question comes from David Gold from Sidoti. Your line is open.

David Gold – Sidoti

Hi good morning.

William M. Goodyear

Hi David.

David Gold – Sidoti

Couple of questions. One, on the $20 million in cost saves, is that what's already in place or that will be the whole number ones we’ve done with the adjustments we are making right now?

William M. Goodyear

That, that’s the whole number, David.

David Gold – Sidoti

Okay and…

William M. Goodyear

Wait, let me add. Julie, do you want to make an add on that?

Julie M. Howard

I want to make an add on David.

David Gold – Sidoti

Sure.

Julie M. Howard

So, if you understand that that – that estimates of costs savings or specific costs reductions that offer our ’09 plan and our ’08 actuals. We made some decisions towards the end of the year as we did our planning and budgeting. And then as we saw how things were going to shifting daily in the market we have made, other decision since then if I don’t want you guys all go out there as your models just $20 million out of cost of services in G&A.

William M. Goodyear

Yeah – yeah, that’s a very good point. It has an example, when we put our ’09 plan together in November of ’08, right.

Julie M. Howard

We have high hope for certain.

William M. Goodyear

We just.

Julie M. Howard

Not any event…

William M. Goodyear

Well, we have. Yeah, we had record October, we were good to go and then we got into the December and January, and we said okay, those salary increases that we’re going to shower upon our selves gone, that marketing program gone.

Julie M. Howard

Right.

William M. Goodyear

So that’s Julie’s point as well taken that’s not just and Tom was careful in his comments on that but.

Thomas A. Nardi

Yeah, it is the mix of cost reductions in terms of if you are going down a people, that is a cost reduction. It’s also a mix of avoided costs Julie and Bill are making sure that we may clear.

William M. Goodyear

Yeah, we can circle back on that to offline too David if you want.

David Gold – Sidoti

Sure, because, and I guess the next question maybe, it’s worth just trying to get online. Since we don’t know what the plan will look like before as a way to give us base half of say ’08. So we can get a sense for what’s been chopped out?

William M. Goodyear

Not at this moment.

David Gold – Sidoti

Okay

William M. Goodyear

But, we can try to work on that.

David Gold – Sidoti

Okay, fair. And then one other and beside of attrition, presumably, it sounds like one might think that some of the decrease is the job market. But also it sounds like you guys are confident, that you have seen some attraction of major head weight to, so just curious if anything, if we have changed anything that would sort of drive that?

Julie M. Howard

Well, we have talked. I don’t that I want look through all these things. We have talked for several years, David about new programs and I think that we are doing in the firm to build our cultural foundation and changes have been made to our comp programs. So I think we believe that a lot of that is taking hold with our professionals. So, you can offer ignorant fact that in these market conditions, you thought it going to be really hesitant for move. Our fourth quarter attrition was down significantly and continues to trend down, or here in the first quarter.

David Gold – Sidoti

Okay, so, would it be safe to say sort of a nutshell there maybe some of the programs that are being implemented over past couple of years maybe taken sometime to you know to see real sort of attraction but as they mature, we’re seeing more of it, would that be, fair way to look at it?

Julie M. Howard

Think that’s a fair statement. Yeah.

David Gold – Sidoti

Okay, perfect. Thank you Bill and thank you all.

Julie M. Howard

Thank you.

William M. Goodyear

Thank you.

Operator

Our next question comes from the Rob Young with WM Smith & Company.

Rob Young – WM Smith & Company

Yes, good morning and thank you for taking my call.

William M. Goodyear

Yeah.

Rob Young – WM Smith & Company

I was hoping that you could talk a little bit. You mentioned that the year-over-year fiscal year '09 to fiscal year '08 was going to basically be flat from hiring outlook. Can you comment on the people that you will hire though as a result of the 100 people that you dropped in terms of what level you all anticipated to be?

Julie M. Howard

Well as you know in our organization, we have overall a pyramid structure and that differs depending upon the practice that we’re talking about. So we might have something a little less pyramid shape and maybe more rectangular in energy versus other practices. But embedded in those numbers as an estimate of having campus, continued campus recruiting this year that will be at a lower level. So we are talking the past that we generally bring on about a 100-ish campus tiers over the course of the year and that will be down clearly, this year but not significantly, so that’s embedded in there and then we have a number of senior level strategic hires that where in conversation with right now and we would expect to add for the next I think you will see a balance, a continued balance in our impairment structure.

Rob Young – WM Smith & Company

Okay and then Bill, you talked about 70% or so of the cases flow down or what you seeing is flow down to the legal forensic accounting level which you would hope to benefit from. How does that compare to prior periods of disturbance, is that greater than, less than or roughly inline?

William M. Goodyear

Well, the - I can't answer that question, 70% this was the 2007 vintage year. So we don’t know yet on '08 and so we had 294 cases that we could track through '07 to see and 30% of those got dismissed, that’s a pretty 70% getting through and that is a pretty good number so I do not have that number for the, if you will the resolution trust seven year cycle so I can't….

Rob Young – WM Smith & Company

Okay.

William M. Goodyear

Specifically, but the 70% was a higher number than we would have thought.

Rob Young – WM Smith & Company

Okay and then obviously, with the events to happened in December with the alleged Ponzi schemes that how quickly do those actually get reflected typically, in during the numbers for federal filings, are they fairly rapid or does it a fairly smooth process or?

William M. Goodyear

Yeah, well I can't comment about a specifically how many made of filings are been? There was a period of shock and all, were I think people are like paralyzed over the magnitude of this thing and then that was followed by some filings. But I can’t tell you other than we are doing, obviously we are doing some work I think we have three made of related engagements that are quite interesting frankly, but so that was relatively, within 90 anyway.

Rob Young – WM Smith & Company

Okay and then last year, just last quickly question. Last year, you talked about the meanings that you specifically are having though with some of your, with respect to the leaders, and how are those progressing and has anything new come from them?

William M. Goodyear

Well, something, if I am doing my job every other Tuesday something we have a target that we like to come out of each Tuesday evening session, where we talk to all the practice leaders and their team, it’s not just the leaders and all of our executive team on the phone, we’ll like to come of out that with three or four good ideas.

Rob Young – WM Smith & Company

Okay.

William M. Goodyear

And actionable ideas and the – out of about I don’t know it was sometime ago, we action the infrastructure we said, we have to get all over this infrastructure thing and that came out one of those calls. So that when the bill was passed, we had our packages ready and likewise energy we early on identified some things, so those are calls where you are looking to connect with us to bring the firm’s resources in a focused way and really push on some things.

Rob Young – WM Smith & Company

Okay appreciated thank you.

Operator

Our next question comes from Dan Leben with Baird.

Daniel Leben – Baird

Great, thank you. Just wondered, if you can comment, you said that February has picked up, if you could talk about some areas of the business that you saw pick up in February that be helpful?

William M. Goodyear

Well the actually that was pretty much across the board. So the corporate finance, I think was strong, but it was - it was pretty much across the board, but look we’re - we’re just in the mid February or whatever. I don’t even have last week’s numbers you have but it was, dispute was a little bit better, pretty much across the board now and I thinking a lot.

Daniel Leben – Baird

Okay great that’s helpful and when you guys worked on the downside scenarios obviously, you have some of your scenario now, would be lower in the low-end of guidance. Just trying to get a sense of what you would take that in term of one of downside scenarios what type of bad first half would kind of initiate additional around and taking a look at the costs structure and so far?

William M. Goodyear

Well, we’ve got I mean if there are further downside scenarios outside of the guidance that I gave you, believe me we got our plans in place. So.

Daniel Leben – Baird

Okay, I’m just getting a sense of what would be the kind of things for you would look out and you would see the market and you would trigger to the thought that how this - we are not going to see a big enough second half uptick in litigation and regulatory or the stimulus probably these other things to where some additional actions would need…

William M. Goodyear

Well, wait first you just start with your conflict checks and you start with your project, your engagement acceptances, and you are safe the businesses is coming in. If it’s not coming in or falling off, then it’s bad news. It’s not too complicated.

Sharon Siegel Voelzke

And it’s evidenced in your, we do weekly analysis of our utilization productivity at the first.

William M. Goodyear

Yeah, we got plenty of data. Sometimes we don’t have as much information as we’d like, but we got all kinds of data. And we’ll see it and hopefully we are committed to reacting to it. And we do have plans in place should we need to.

Daniel Leben – Baird

All right, it’s fair enough. And then lastly, could you talk a little bit about the deals with economic consulting this quarter that came in, that brought in business on the other areas?

William M. Goodyear

Well, I don’t talk if I can talk about specific names of engagements, but I’ll talk about some concepts. Valuation is an example, is evaluation and related issues are at the core of many, many engagements that we are working on right now, whether they in the financial litigation area or investigations or whatever, what's the value of the asset a lot of this toxic waste, what was the value at the time? Was the value communicated properly? Was it analyzed properly or computed properly? Were the marks done? Who did what to whom? Our Chicago Partners team and Navigant in total has wonderful skills there. So we have a number of engagements in that 42 that relate to a composite of some Chicago Partners that are consulting, or economic consulting resources, our financial services resources and then all likelihood our- investigative resources from our dispute segment. So that would be one example and that’s not unique. I mean, that’s one of the reasons why the industrial logic has played so well is it, we thought we could bring volume to them and they could help us when engagements that we otherwise wouldn’t get and that’s been absolutely the case.

Daniel Leben – Baird

Great thanks. That’s helpful.

William M. Goodyear

Okay I think we are – we got a one – we got to wrap up. We will take one more question and then we got to get going.

Operator

Our next question comes from George Sutton from Craig-Hallum. Your line is open.

George Sutton – Craig-Hallum

Well. I’d like to say Ola’ to any of the folks dialing in from Brazil. With respect to your pipeline, how much of that is awaiting public policy clarity?

William M. Goodyear

Well, that’s a good question. Our pipeline which we don’t disclose or we call backlog George as you know, but backlog is signed engagement letters that are committed. So then, beyond pipeline you have your sales discussions and you got all of that that kind of data. But we don’t have any committed stuff that we would – well the construction may actually have some anticipatory work. I’m not exact that shoot that answers your question, but?

George Sutton – Craig-Hallum

So, if we do get full clarity on public policy over the next couple of months, I’m wondering what kind of an impact that might have on your business?

William M. Goodyear

Well, it would certainly pushes up towards the top end of that range. That’s why I try to do the range thing.

George Sutton – Craig-Hallum

Okay

William M. Goodyear

It would push you up more towards the top. I mean, the President is absolutely committed with, with incredibly tight timeframes on this stuff. Now, whether the bureaucracy can respond to that is, is obviously the question. The President can be committed, but if the bureaucracy can’t and if you don’t have people in place and spaces filled, decisions to be made, it is, let me just say it is our sense is it’s extremely chaotic in the house of Federal government right now.

George Sutton – Craig-Hallum

Okay and then final question. You obviously have great expertise and capabilities having done years of work on these plus this trust. Is there anything in some of these major public policies for example, the healthcare national database that would lend that strength to those sorts of opportunities?

William M. Goodyear

That’s what I like to have you on these call, because you always ask us a really – you should join our Tuesday night deals George.

George Sutton – Craig-Hallum

I’m happy to dial in.

William M. Goodyear

Yeah, I don’t know Jeff or Sharon was a – I have thought of that, I don’t know.

Jeff Green

I guess one thing I have to mention and Sharon jumps in here too. That team over the year as I should say over the decades has developed a great skill set and expertise around large-scale program management. In that case where it involves massive amounts of claims.

Sharon Siegel Voelzke

Data.

Jeff Green

And data exactly, and a lot of the things that we’ve been nulling on here behind close doors, as we anticipate the needs that come out the stimulus plan involve just that, helping the government and government entities at the federal state level, and local levels, manage new informations needs, large scale flow of cash through the systems claims being put to the federal government for draws of public moneys. So, as I think it was mentioned earlier, a lot of things - one thing that is exciting about much of what we see ahead with respect to the stimulus program, is that it implicates a lot of the skills sets that we drop on here and that can whether it’s our program management, our project risk management capabilities, our industry expertise, or an infrastructure construction, energy, healthcare, et cetera.

George Sutton – Craig-Hallum

Okay. Thanks guys.

William M. Goodyear

Okay, we are done and thank you all for joining this morning and we’ll talk at the end of the second quarter, probably we have whole different world to look at.

Operator

Thank you for participating on today's conference. The conference has concluded. You may disconnect at this time.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!