Harris Interactive's CEO Discusses F4Q 2013 Results - Earnings Call Transcript

Aug.22.13 | About: Harris Interactive, (HPOL)

Harris Interactive Inc. (NASDAQ:HPOL)

F4Q 2013 Results Earnings Call

August 22, 2013 05:00 PM ET

Executives

Michael Burns - IR

Al Angrisani - President and CEO

Eric Narowski - CFO

Analysts

Brian Horey - Aurelian Management

Jim Zimmerman - Lowell Capital

Bill Sutherland - Emerging Growth Equity

Scott Smallman - Wedbush Security

Operator

Good day, ladies and gentlemen, and welcome to your Harris Interactive, Inc. Q4 and Full Year Fiscal 2013 Earnings conference call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions).

I would now like to introduce your host for today’s conference, Mr. Michael Burns. Sir, you may begin.

Michael Burns

Good afternoon and thank you for joining us to discuss Harris Interactive fourth quarter and full year fiscal 2013 financial results.

With me today are Al Angrisani, our President and CEO; and Eric Narowski, our Chief Financial Officer. The format for today’s call will include Al’s commentary, and Eric’s financial recap of both the fiscal year and Q4. After the formal remarks, both Al and Eric will be available for questions.

A webcast replay of this entire call will be accessible via the Investor Relations section of our corporate website later today and will be archived there for at least 30 days. However, no telephone replay of this call will be provided. We will post a transcript of the call as soon as possible after today’s call.

We would like to take this opportunity to remind you that certain statements made during this conference call are forward-looking statements for purposes of the Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995. These statements include beliefs, predictions and expectations related to the Company’s future financial performance, other business and operating metrics, as well as statements regarding the company’s future plans and operations. They involve a number of risks, known and unknown, that could cause actual results, performance and/or achievements of the company to be materially different from the beliefs, predictions and expectations discussed on this call.

Factors that could cause the company’s results to materially differ from the forward-looking statements made today and which are incorporated by reference herein are more fully described in today’s press release, as well as the company’s SEC filings, particularly under the Risk Factor section of the company’s most recent Annual Report on Form 10-K.

You are urged to consider these factors carefully in evaluating such forward-looking statements and are cautioned not to place undue reliance on them. The forward-looking statements are only made as of the date of this call and the company undertakes no obligation to publicly update them to reflect subsequent events or circumstances.

We will also be discussing non-GAAP financial measures including adjusted EBITDA with the add-back of restructuring and other charges. These items are reconciled to GAAP financial measures in today’s press release and the reconciliation is also posted on the Investor Relations section of our website.

And with that I’d now like to turn today’s call over to Al. Al?

Al Angrisani

Thanks, Mike, and good afternoon everyone. Fiscal 2013 was a pivotal year in our turnaround process, and we delivered strong results in many key areas. Some of the highlights include exceeding our most recently stated adjusted EBITDA guidance of $14 million to $15 million by achieving adjusted EBITDA of $15.3 million, representing an adjusted EBITDA margin of 10.9% and year-over-year adjusted EBITDA growth of 25%.

Second, meeting our most recently stated revenue guidance of 139 million to 141 million with revenue of 140.3 million. Third, stabilizing the rate of decline in both bookings and revenue. In constant currency, bookings and revenues were down 1% and 4% respectively compared with fiscal 2012.

Next, achieving net income of 6.9 million or $0.12 per fully diluted share, the first time the company has achieved full fiscal year net income since 2007. Next, paying off all of our outstanding debt prior to the fiscal year end and building our cash position from 11.5 million at the end of fiscal 2012 to 15.7 million at the end of fiscal 2013; and finally, improving our net cash position by 10.3 million during the fiscal year.

The improvement in our financial performance during fiscal 2013 was significant and I'm very pleased with our results.

Moving on, as you saw in today’s earnings release and as Eric will cover later, we’ve decided to give adjusted EBITDA guidance for fiscal 2014. We believe that investors should fully understand the financial metrics and dynamics associated with transitioning away from the turnaround that's been underway the last two years to a business model focused on creating long-term shareholder value through selective and targeted investments in the business.

Let me highlight some of the key areas of potential investments that we're looking at for fiscal 2014. First, investment in our intellectual capital by selectively adding talent in areas of our business where we believe there are opportunities for profitable growth. Item area number two, investments in new technologies that are driving the industry, which may involve an increased level of capital expenditure. And finally select investment with clients and partners and some of the new data and information techniques being used to transition the industry.

As a matter of fact, we've already started to make some selective investments. We’ve brought some new sales, research and consulting talent into the company and we expect to do more in the coming months, and in another vein we recently partnered with Google to offer our clients a new self service research platform QuickQuery instant which combines a fast and flexible Harris brand interfaced with our survey design expertise. These are just a few examples.

Although investments of this nature will inevitably slow down the rate of adjusted EBITDA growth that we’ve become accustomed to in the past couple of fiscal years, we have no choice but we must invest in order to make a successful transition into this next phase of the model which is focused on shareholder value-creation for the long term.

Let me close with a cautionary note. As you know it’s never all good news with me. I want to caution investors that we’ve gotten off to a slow start in Q1 and have seen some softness in a couple of areas of our U.S. business. This reflects market and economic conditions as well as other business obstacles that we will need to overcome.

Our slow start aside, you will also recall that we’ve cautioned investors for the past several quarters not to focus in on any one quarter, but to view our performance on the full fiscal year basis. So I am hopeful that we will deliver on the guidance we have given today for the full fiscal year.

And with that I will now turn presentation over to Eric.

Eric Narowski

Thanks Al and good afternoon. Recapping the fiscal year, revenue was 140.3 million down 5% from 147.5 million for the same prior year period. Excluding foreign currency exchange rate differences, revenue was down 4%. The decrease was driven by declines in the UK and Canada due in large part to our concerted effort to shed unprofitable and low margin work and a downsizing of our UK business.

Bookings were 144.3 million down 1% compared with 145.3 million for the same prior year period. Excluding foreign currency exchange rate differences bookings were down 1%. Similar to what we saw with revenue the bookings decrease was driven by declines in the UK and Canada.

Our operating income was $7.5 million compared with an operating loss of $2.7 million for the same prior year period. Fiscal 2013 operating income included $1.3 million in restructuring and other charges related to additional lease impairment at certain of our office facilities compared with $7.5 million for fiscal 2012.

Our net income was $6.9 million or $0.12 per fully diluted share compared with a net loss of $5.6 million or $0.10 per fully diluted share for the same prior year period. Cash provided by operations was $11 million compared with $3.9 million and cash provided by operations for fiscal 2012. The increase in cash provided by operations was mainly due to the impact of our improved financial performance.

Non-GAAP adjusted EBITDA with restructuring and other charges added back was $15.3 million compared with $12.3 million for the same prior year period. At June 30, 2013 we had $15.7 million in cash and as Al mentioned we had no outstanding debt at the end of the fiscal year as a result of making the two remaining payments due under our credit agreement in Q4.

Secured revenue at June 30, 2013 was $46.5 million up 9% compared with $42.5 million at June 30, 2012. Excluding foreign currency exchange rate differences secured revenue was up 10% compared with fiscal 2012.

Regarding Q4 performance, revenue was $36.7 million compared with $36.5 million for the same prior year period. Excluding foreign currency exchange rate differences, revenue was up 1%. Bookings were $28.2 million, down 1% compared with $28.5 million for the same prior year period. Excluding foreign currency exchange rate differences, bookings were down 2% compared with the same prior year period.

Our operating income, which included $1.3 million in restructuring and other charges was $1.5 million compared with an operating loss of $326,000 which included $2.2 million in restructuring and other charges for the same prior year period. Our net income was $1.3 million or $0.02 per fully diluted share compared with a net loss of $932,000 or $0.02 per fully diluted share for the same prior year period. Non-GAAP adjusted EBITDA was restructuring and other charges added back was $4.2 million compared with $3.9 million for the same prior year period.

Now, I'd like to finish with our financial outlook for our fiscal 2014. Based on our current market conditions and forecast, our fiscal year ended June 30, 2014 we are projecting that adjusted EBITDA will be between $14.5 and $16.5 million.

I'd now like to turn the call back over to Mike.

Michael Burns

Thanks, Eric. And I think now we can open it up for questions, operator.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Brian Horey of Aurelian Management. Your line is open.

Brian Horey - Aurelian Management

Thanks for taking my question. Congratulations on a good year, good finish to the year. I was wondering if you could first of all quantify what you think the investment this year in the various growth areas that you talked about will be from maybe from a P&L and a CapEx standpoint.

Al Angrisani

I'll try to respond to that Brian, I mean and this is sort of a work-in-progress approach to the investments, we are reacting to opportunities as they present themselves to us. And it's a bit of picket fencing where if we're comfortable with, but we're putting some money right now into the things that I mentioned on the phone and if we're comfortable with our financial results moving along we’ll put more in. So we're not going at it with a fixed hard dollar amount, sort of more of a willingness to put the money into good opportunities balanced against an ability to pay from the cash that we generate.

Brian Horey - Aurelian Management

Okay. I mean can you bracket it at all in terms of range or percent of revenue anything like that?

Al Angrisani

I wouldn’t want to do that at this time, because as I said it's sort of reactive to the opportunities that are present.

Brian Horey - Aurelian Management

Okay. The additional lease impairment charge that you talked about is that as a result of vacating additional space or not getting the sublease results that you thought you'd get or can you just add some color on what gave rise to that.

Eric Narowski

Sure. It's predominantly related to vacating further space, there is some adjustments, some minor adjustments to some of the facilities that we continue to have impaired and haven't been able to sublease. And that's - it's - the charges are related to charges in the UK and a small amount in France and a small amount in Canada.

Brian Horey - Aurelian Management

Okay, and then lastly, Al I wondered if you could maybe expand a little bit upon the new data and information techniques that you talked about trying to incorporate into the business. I know you mentioned the Google partnership but if there's any other color you can add in that front, that will be helpful.

Al Angrisani

Sure, I'll try. I think the industry, as everybody knows is rapidly changing. Market research is moving to, I guess, into a new world as we all like to say but it's one that’s not terribly well defined but there are some key drivers of it. And one of those is the ability to collect data from multiple sources not just in the traditional survey techniques to be able to collect an aggregate data along many fronts. And to be able to do it in a way where it provides actually some of the insight on its own.

No one really has the magic bullet yet. Everybody is sort of experimenting with different things. So I would say the easiest way to describe that in terms of the investments that we're trying to make is a good examples, the one that I gave with partnering with Google to find a more efficient way to collect data from a broad variety of clients that allows us to do this product called - that we’ve called QuickQuery instant, which delivers a faster, better and cheaper result to our clients.

So it's a multi-headed dragging of opportunities and different areas of experimentation that hopefully over the next couple of years will work out into the next generation of market research product and we're trying to place some bets in a variety of areas that we think may be the winners in that race.

Brian Horey - Aurelian Management

Okay. Thank you.

Operator

Our next question comes from the line of Jim Zimmerman, Lowell Capital. Your line is open.

Jim Zimmerman - Lowell Capital

Thank you. Congratulations you guys, great job again. I feel like I'm repeating myself in every conference call. Question for you guys, what was the, did you say what the CapEx was in fiscal ‘13 and any sense of what it might be in '14 absent the investments you might make?

Eric Narowski

Yeah, Q4 CapEx was around $400,000 our full year was over $1 million and as Al mentioned, we’re probably that piece, slightly above that as we go into fiscal ‘14 but we are working through those plans as well.

Jim Zimmerman - Lowell capital

And then Eric, was there anything in the cash, we don’t have a K yet, so just wondering anything unusual in the cash generation of $11 million cash from ops in '13 or is that a sustainable number or how should we, because I mean it looks like you threw up $10 of free cash flow in fiscal ‘13 and that’s a lot?

Eric Narowski

Yes, those are the actual numbers when you look at remember our cash, our cash generations as last year was hindered by our debt, we had $6 million of debt payments throughout the year around $3 million worth of restructuring charges some related to severance earlier in the year and the facilities impairment that we had talked about and then the CapEx but us going into next year now being debt free, we should start to throw off more cash clearly next year.

Jim Zimmerman - Lowell Capital

Any more cash charges you are looking at to come off the balance sheet or are those kind of behind you. I know there could always be a downsizing or cost cutting project but just wondering.

Eric Narowski

Sure. Yeah, our thought is right now there is no more the facility charges that we had just mentioned. But like you say, we never know where the business is going. But as we stand right now we don’t have any more.

Jim Zimmerman - Lowell Capital

Okay, and then Al when you talk about these investments, it sounds like, this would seem like it’s your style but just wondering you are going to keep a fairly short leash on those in terms of risk reward and the amount of the investment based on what you are getting back from that or just wondering how the company is going to think through, how it sizes and make those investment and gets the payback on them and those kind of stuff. Because obviously there is a lot of moving parts in the area of the world you are in.

Al Angrisani

Yeah and that is a great question, a very astute question because it’s not just being able to make the investments and we have little extra cash now as you and Eric were just speaking about. But I mean it really is a matter of balancing that against a bunch of other variables, especially since we have to be aware of as I just alluded to in the call the health of our business at any one quarter and I have already said we are off to a slow start in Q1. So that impacts my thinking about how much money we put into something, because we are a public company and we have to produce EBITDA results.

The next thing is the factor here quite frankly is there are an awful lot of people in the industry who are trying to figure out, what the right investments are and what the right products for the future are, and what the right technologies are, and there is no page to go to to figure that out. So you are going to end up making multiple debts in the hopes that a couple of them are right. So the ROI and the short leash that you referred to is critical and it’s a science and quite frankly its bit of an art and it really comes down to the style and the temperament of not only the CEO but the company.

And our style and temperament on this is a very short leash. I mean we are not going to do anything to put the corporation at risk, but quite frankly some of these investments that we choose to make the opportunity show up, could as we’ve said in the prepared text of our earnings call, maybe take the few bucks off of EBITDA going forward into next year.

But at the end of the day, we know with 10.9% of return in terms of the EBITDA profit on the company $0.109 of profitability in every dollar which for practical purpose is 11% on every dollar of revenue. We are not going to try much more results by just continuing to play the hand that we have. We have to now start to venture out into some of the potential growth areas of the future, and that’s where we need to have an intelligent and carefully balanced investment strategy.

Jim Zimmerman - Lowell Capital

Okay, do you feel like the market place out there might be moving towards what you are doing I mean I [own] - I think I kind of [touched] you before [Axiom] some of these data Google, I mean it just seems like all of these big companies they are getting more surgically about how they are spending money and Google can do processes but the studies you guys are doing, the information it would seem like it helps these big companies spend their money much more effectively and that could be highly valuable to somebody. Am I thinking about that right or just kind of on the strategic end?

Al Angrisani

I think you are thinking about it properly and partnering is one way to control your risk, when you are looking to do new things and partnering with the Google's of the world and some of the other clients and on some added value product and technology strategies is a very safe way to evolve your product line, and then there are just some areas, where you've got to put some money out ahead at the curve and try to develop it yourself.

But I wanted to clear about this to everyone, I mean we've been in a very difficult turnaround in the last two years and it's come around I think in an okay way. We are not ahead of the industry in terms of this philosophy of making these investments. There have been people out there putting money into various forms of social media data and other technologies well ahead of us. And in a way that's a disadvantage and in a way it's an advantage. So disadvantage that they have been doing it ahead of us, it's an advantage and that we sort to get a little bit, we get an opportunity to achieve here and see what's working and what isn't working.

So, this is a real balancing act, and as I said it's an art and assignments to get it right. And so you just going to have to stay tuned and track our progress carefully. And we're going to try to do this while we deal with the difficulties of a market research industry that’s not growing and a matter of fact there are a lot of people think it shrinking, keep our profitability inline and run our business extremely efficiently.

Jim Zimmerman - Lowell Capital

Well, thanks a lot. Great and best of luck for next year.

Operator

Our next question comes from the line of Bill Sutherland of Emerging Growth Equity. Your line is open.

Bill Sutherland - Emerging Growth Equity

So, Al you normally kind of tick through three or four or five of the groups, how they are doing at this point and maybe you could do that on this call and potentially reference which one is off to a slow start than which ones.

Al Angrisani

Bill, we decided not to do that at this point in time. We might do that at the end of Q1. We wanted to focus on the year right now and quite frankly there are some strategic reasons why we don’t want to get in to that level of detail at the moment. So I am not going to be able to answer your question, unfortunately it's just a decision we made. But we didn’t want to get in to that level of detail on this call.

Bill Sutherland - Emerging Growth Equity

Okay, but the reportable segment, the geographic, any commentary there?

Eric Narowski

Overall, as you mentioned, we were pleased with our overall performance of our U.S. business. Clearly, we’ve had some struggles in that earlier in the year and as you look at our trend throughout the year, we’ve made significant progress both on the sales and revenue side when we move over to our UK and Canadian operations. As I mentioned, we strategically pulled away from some work there, lower margin work, downsize our UK business and we're pleased with the overall performance there and our friends in Germany, our German operations also performed very well throughout the year. So we're pleased with that.

Bill Sutherland - Emerging Growth Equity

Al should we think of QuickQuery as a situation where it’s just utilizing the Google platform or is there more of a partnering sort of arrangement to it?

Al Angrisani

What it really is quite frankly it’s a pretty good example of what I was saying a few minutes ago about the changes in the industry that you need to respond to. I mean that QuickQuery part of the industry which is you know is a quick three questions, four question type of survey product, I mean is becoming less expensive to produce, the price points are coming down on it rapidly, the technology is allowing that to happen and the clients are demanding it. And so rather than try to build the technology our self, we’ve decided that it would be more efficient for us with regard to this product to partner with Google and we think quite frankly has the very best technology available to meet the needs of our clients.

So I would say it’s more like looking at the Google platform, it’s certainly not exclusive to us, but it’s something that we are, I think probably the first in the queue to use and we are hopeful that this will move us along the path to, in this particular product, move to the next generation of product.

Doesn’t mean we are going to stop there, we might do other things with Google, we might develop some of our on bells and whistles around this. But for now it seems might the best way to move in to the next generation product as it relates to QuickQuery without developing it ourselves.

Bill Sutherland - Emerging Growth Equity

Right, and then just looking at your guidance on adjusted EBITDA for ‘14 and obviously its kind of in line at the midpoint with what you’ve got done in ’13, and you have been saying that there is a level of profitability that seems quite a good area to be and in addition to that of course you're going to be making some investments this year. But does it presuppose kind of just a stable revenue line I mean or are we may be looking at an impact on margins on a growing revenue line not that you're guiding on revenue but just help us think about that? Thanks.

Al Angrisani

Yeah, we chose, Eric may want to comment on this, we chose not to guide on the revenue line because we though things got too complicated. I think what we're saying with that guidance range, but we intend to run our business steady state.

We're going to try to grow, we'll going to grow profitably not for the sake of growing we are going to try to maintain steady returns on our projects and to maintain our project profitability and to keep our business model intact, but we want to leave a little room in here to spend some money on the things, we've been talking about mostly on this call which is these transitional investments that we need to begin to make.

And the key point here is that I think early on the call, I forgot who it was alluded to it, you all rely on these things may not be, though right away it may take sometime we just don’t know. So we're trying to provide sort of a general framework for investors to understand our downside case and our upside case this year as we begin to move away from the turnaround model.

And Eric if I left anything out maybe you want to comment.

Eric Narowski

Yeah- no, I agree with everything you said there, Al. I think you know, we just want to be cautious about the revenue we know feel we're comfortable with the EBITDA guidance and we are working to do that.

Bill Sutherland - Emerging Growth Equity

Okay. That’s all I have thanks to both of you.

Eric Narowski

Thank you.

Operator

Our next question comes from the line of Scott Smallman of Wedbush Security. Your line is open.

Scott Smallman - Wedbush Security

Thank you. I got a couple of questions, and the first one is around the Google relationship, what are your responsibilities and what are theirs and can you talk at all about the economics of that?

And then secondly, beyond investing the cash that you built last year and new initiatives, do you have any other intended uses of that cash?

Al Angrisani

Yeah, I don’t want to comment too much in detail on the Google relationship, but I thought what we said on that, we talking about the terms of the contract and all that, I mean that is valuable competitive information. All I can say is we're using their platform to advance our product in that area and we've come to an agreement, that's mutually satisfactory to both of us and makes us good partners.

I really don’t want to go any deeper in that because competitors do listen to these calls, and I certainly don't want them trying to invent what we've just created.

As far as the cash, Eric?

Eric Narowski

Yeah, there is no current other uses of cash, we're going to continue be responsible with that and invest it and use it where appropriate to drive shareholder value, but as right now there is no other uses.

Scott Smallman of Wedbush Security

Thank you.

Operator

Our next question comes from the line of (inaudible). Your line is open.

Unidentified Analyst

All right, thank you so much for hosting the call. I really appreciate it. I want to say thank you before anything else. I noticed in last quarter, there was the call from David Hodges asking about Greenfield Online versus the [first] Harris outcomes, and you answered that question included the comment about Al's compensation package, is that okay if I ask the question based on the compensation package, please?

Al Angrisani

I mean we don't take compensation questions here on --

Eric Narowski

What's your question? Yeah

Al Angrisani

What's your question?

Unidentified Analyst

Yeah. So I'm noticing that when the interim contract was published as in 8-K on June 7, 2011. There was no clause about a lump sum payout for (Inaudible) control. And when there was the 8-K filed on February 29, 2012, there is a particular clause added. I'm wondering if this clause is typical of prior engagement that Al had, or if this is actually different from prior arrangements that Al made in different engagements, please.

Eric Narowski

Yeah. I think our view there would be that we wouldn't have any comment on that, in terms of a specifics of Al's prior engagements and things of that nature.

Unidentified Analyst

Okay. So if it's appropriate to ask that you have no comments, (Inaudible) perspective, I'm looking at the Al Angrisani.com website, where there's it's five phases of a turnaround. The fifth phase includes the word reinventions, I'm curious what reinvention could mean in the Harris context, if there's any color or clarity of what this might mean in this circumstance please?

Al Angrisani

I think the word is reinvest, exit versus reinvest, I guess you talking about right?

Unidentified Analyst

What's it's that's on the triangle, but there is a deliverable of liquidity for shareholders work reinvention. So I'm not sure what reinvention means?

Al Angrisani

Okay. Well I mean what you're referring to is classic decision that Boards of Directors have to make when a turnaround model falls into place and that your margin start to reflect of fully profitable company. So at that point of time, the Board of Directors has to make a decision about, do they take that now.

The cash, that's coming from the operations of the business. Invested into future opportunities because those opportunities can drive shareholder value or quite frankly, they get to the point where they feel like do they have to look at selling the company or finding a home for the company where a larger shareholder could in fact or a larger partner could in fact better maximize shareholder value and that’s a fairly typical mental process, the Boards of Directors go through as turnarounds become complete.

Unidentified Analyst

And the Al Angrisani website has basically different months, is it appropriate to comment where we are?

Al Angrisani

Quite frankly, if you want a tutorial on the model, I would suggest that we set up a separate call and I'd be more than happy to answer your questions. This isn’t the place for this type of questioning.

Operator

That's okay, this is phenomenal, thank you so much.

Al Angrisani

Thanks.

Operator

Our next question is a follow-up question from the line of Brian Horey.

Brian Horey - Aurelian Management

My question was kind of asked earlier, but maybe I'll just take another swing at it. In terms of the softness that you're seeing, would you characterize that as deals not closing or projects coming in smaller than you thought or getting delayed and maybe you can just talk about what you are seeing in terms of client budgets and just propensity to spend generally?

Al Angrisani

Good question. I obviously highlighted it for a reason. It's not a cost of business. It's not an international sector. We're quite frankly seeing healthy start to the year there. It's mostly in our U.S. business and it's in two specific areas that I am not going to mention on the call and mostly in one and quite frankly it seems to me that this clients over the summer months not ready to press the button on some fairly large projects that’s happened that’s part of this business.

And as Eric have said many, many times over for investors, you can’t really look at this business a small public company on a quarterly break because there to [main] variables that go into driving a specific result. So what we're really doing is giving investors just full disclosure on the fact that in that particular part of our business, which I'm not going to name on the call were up to a slightly lower start that we'd liked to be it could impact Q1 for the no way should people view that as anything more than what we’ve said before that you can’t measure this business quarter-to-quarter as precisely as I know you guys would love to do in your modeling.

Brian Horey - Aurelian Management

Okay. And just with respect to spending until where (Inaudible) obviously you’ve got a couple of projects that have hit snags, but generally speaking our client spending in line with kind of where you though they would be at the beginning of the, let's say a six months ago?

Al Angrisani

Obviously, we want to see client spend more money, but I think the quite if you got to look at the trend line it's not what we think, I mean you can look at the other public company reports from market research companies and you'd have to be blind not to see that the industry is not growing like it did several years ago, the industry has been in my opinion flat to down that just my opinion and that’s reflected in all customers’ budgets.

Quite frankly, most of the competitors all have the same clients. So it’s a phenomenon in the industry that we’re all dealing with and I would say that in general from, a general rule of thumb I would just say that it’s harder to get clients to spend as much money as we like them to today than it was several years ago.

Brian Horey - Aurelian Management

Okay thanks for the color.

Operator

And I am not showing any further questions at this time I would like turn the call back to Michael Burns for closing remarks.

Michael Burns

Well, thanks again to everyone for joining us today. We look forward to speaking with you in early November when we release our Q1 fiscal 2014 results.

Operator

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program. And you may all disconnect. Everyone have a great day.

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