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NCI (NASDAQ:NCIT)

Q3 2013 Earnings Call

October 29, 2013 4:30 pm ET

Executives

Ali Ferguson

Charles K. Narang - Founder, Chairman, Chief Executive Officer, Chairman of NCI Information Systems Inc, Chief Executive Officer of NCI Information Systems Inc and President of NCI Information Systems Inc

Brian J. Clark - President and Director

Lucas J. Narel - Chief Financial Officer, Executive Vice President and Treasurer

Marco F. de Vito - Chief Operating Officer

Analysts

Tobey Sommer - SunTrust Robinson Humphrey, Inc., Research Division

William R. Loomis - Stifel, Nicolaus & Co., Inc., Research Division

Edward S. Caso - Wells Fargo Securities, LLC, Research Division

Operator

Good day, ladies and gentlemen, and welcome to the NCI, Inc. Third Quarter 2013 Earnings Conference Call. My name is Sherlan and I will be your conference operator today. This call is being recorded. I would now like to turn the presentation over to your host for today's call, Ali Ferguson, Corporate Communications Manager for NCI. Please, go ahead.

Ali Ferguson

Good evening, and thank you for participating in NCI's conference call today. By now, you should have a copy of the press release we issued a short time ago. If not, it is available on our website at www.nciinc.com.

With us are Chairman and CEO, Charles Narang; our President, Brian Clark; and our Chief Financial Officer, Lucas Narel; all of whom will deliver a prepared remark. Our Chief Operating Officer, Marco de Vito, is also here to participate on the Q&A portion of the call.

Before we begin our discussion, it is important that we remind you that on this call, we will make statements that do not address historical facts and are thus forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to factors that could cause actual results to differ materially from anticipated results and include the risk and uncertainties defined in our earnings press release under the caption Forward-Looking Statements. For a full discussion of these factors and other risks and uncertainties, please refer to the section entitled Risk Factors in NCI's Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. Also, we undertake no obligation to update any of the forward-looking statements made on this call.

I will now turn the call over to Charles Narang.

Charles K. Narang

Thank you, Ali, and good evening. NCI continued to perform well in a difficult environment in the third quarter. Once again, our quarterly revenue was at the high end of the guidance we issued in last quarter's call. Earnings per share is still at the high end of our guidance by $0.04. Our current outlook for the full year also exceeds the expectations we set out on our first call in 2013. Bookings for the quarter were also very encouraging. However, given the political environment, sequestration, the debt ceiling fiascoes and the indecisions regarding next year budgets, it seems that 2014 will be even more challenging than 2013. Shrinking budgets, award delays, protests and intense competition, even the lowest-priced, technical acceptable contracting environment also appear to be norm before the foreseeable future. That said, we see focusable opportunity that could allow NCI to withstand, even thrive in this environment. Our pipeline of new business is clearly focused on near-term opportunity that fits clearly in our core competencies and also have solid funding streams. Brian will explain this in more detail.

I want to show everyone that NCI will continue to aggressively pursue new business and not be content to withhold the storm. Of course, we will continue to control cost, to boost profitability and earnings per share. However, we are also aggressively pursuing new opportunities, especially those where income as performance will be questionable and likely to be reevaluated. We see very near possibilities for meaningful new wins and strong performance in 2014.

I will now turn the call over to Brian. Brian?

Brian J. Clark

Okay. Thanks, Charles, and good evening. I'll start with a review of NCI's results for the third quarter, and Lucas will follow with more details and guidance for the fourth quarter and full fiscal year.

I'll come back online with updates on business development initiatives and pipeline metrics, as well as commentary on the areas of opportunity we see in the current environment.

Third quarter revenue came in at $78 million, at the high end of the guidance we provided on last quarter's call. Earnings per share was $0.15, which exceeds the top end of our guidance range by $0.04. As we told you last quarter, we expected certain one-time gains to come in the second half of this year. In the September quarter, we, in fact, benefited from a one-time gain related to the settlement of a purchase contingency stemming from the AdvanceMed acquisition that added $0.04 to EPS in the third quarter. Excluding the impact of this one-time gain, EPS would've been $0.11, at the high end of our guidance range and corresponding to the $78 million of revenue that represents the top end of the expected revenue range for the quarter.

We're continuing to meet or exceed forecasts for revenue and EPS, and expect to finish the year much stronger than anticipated at the beginning of the fiscal year. Cash flow and DSO were also favorable, although the government shutdown earlier this month could put pressure on both of these metrics in the fourth quarter, depending on how long it takes for customers to clear backlogs and have things back to normal.

Net bookings in the second quarter represented a book-to-bill ratio of 0.8:1. However, significant new awards and plus [indiscernible] to existing contracts added approximately $86 million to backlog in the third quarter, representing 1.1x revenue. I'll provide greater detail on these awards in a few minutes and also share some perspective on how NCI is responding to the current procurement environment, which continues to be significantly challenged.

For now, I'll turn the call over to Lucas to go through the financial results in more detail. Lucas?

Lucas J. Narel

Thanks, Brian. For the third quarter ended December 30, 2013, revenue decreased by 11.9%, or $10.5 million, to $77.9 million compared with the same period a year ago. The decrease is primarily due to approximately $3.1 million of lower revenue attributable to services provided on NCI's PEO Soldier contract; $7.4 million in reductions in scope of work, including the impact of sequestration; and the expiration of certain task force and contracts, partially offset by revenue from recent new awards and growth on existing programs.

During the third quarter of 2013, NCI's PEO Soldier program accounted for 14% of revenue compared with 16% of revenue for the same period in 2012. Contracts for NCI's prime contractor accounted for 90% of revenue for the quarter, up 1 percentage point from last quarter and up 3 percentage points year-over-year. DoD and Intel contracts made up 74% of revenue, while Federal and Civilian contracts comprised 26%. The portion of Civilian contracts was up 1 percentage point sequentially and up 1 percentage point year-over-year. Fixed-price contracts accounted for 30% of revenue, up 1 percentage point sequentially and up 3 percentage points year-over-year. Time and material contracts were 16% of revenue, down 7 percentage points sequentially and down 8 percentage points from the third quarter of last year. Cost-plus fee contracts accounted for 54% of revenue and up 6 percentage points sequentially and up 5 percentage points year-over-year.

As we said last quarter, we expect the percentage of total revenue from the cost-plus fee contracts to increase their percentage of total revenue from time and materials contracts to decrease for the remainder of the year. G&A expenses decreased 6.9% or about $400,000 for the 3 months ended September 30, 2013, as compared to the same period a year ago. The decrease is primarily due to lower compensation expenses as a result of reduced headcount, partially offset by our continued investment in business development initiatives.

Operating income for the quarter was $3.5 million compared with an operating loss for the third quarter of 2012 of $91.7 million. Operating income for the third quarter of 2013 included a gain of approximately $900,000 from the resolution of our purchase contingency related to the AdvanceMed acquisition in April of 2011.

Operating loss for the third quarter of 2012 included cost resulting from a goodwill impairment charge of $92.8 million and a cash tender offer of approximately $2.3 million for certain out of money stock options held by current and former NCI employees. Excluding the effects of these items, NCI reported operating income of $2.6 million for the third quarter of 2013 and $3.4 million for the third quarter of last year. Adjusted operating margin was 3.3% for the third quarter of 2013 and 3.8% for the third quarter last year.

Adjusted operating income and margins for the quarter decreased due to lower revenue and reduced absorption of indirect cost on the lower revenue base, respectively.

Net interest expense was approximately $200,000 for the quarter compared with $300,000 for the third quarter of 2012. This decrease is primarily attributed to a lower overall loan balance. Net income for the quarter was $2 million compared with a net loss for the third quarter of 2012 of $55.2 million. Excluding impacts of the purchase contingency gain, adjusted net income for the third quarter of 2013 was $1.4 million. Excluding the impact of goodwill impairment charge and the stock option tender offer, adjusted net income for the third quarter of last year was $1.8 million. The decrease in adjusted net income year-over-year is attributable to the factors affecting operating income, offset partially by the lower interest expense.

Diluted EPS for the quarter was $0.15. Excluding the purchase contingency gain, adjusted diluted EPS was $0.11. Excluding the impairment charge and cost associated with the stock option tender offer, adjusted diluted EPS for the third quarter of last year was $0.14.

Days sales outstanding or DSO was 56 days as of September 30, 2013, down from 69 days as of June 30, 2013.

Cash provided by operating activities was $7.8 million for the quarter and $16 million for the 9 months ended September 30, 2013. During the quarter, cash on hand and cash flow from operations was used to pay down debt outstanding, borrowing under our senior revolving credit facility by $8.5 million, leaving an outstanding debt balance of $1.5 million at September 30. We expect our debt balance to be slightly higher at year-end.

NCI reported total backlog at September 30, 2013, of $555 million, of which $163 million was funded. This compares to total backlog at June 30, 2013, of $570 million, of which $142 million was funded.

And now moving on to guidance. For the fourth quarter of 2013, we expect revenues to be between $67 million and $73 million, and diluted earnings per share to be $0.09 to $0.11 on a weighted average diluted share count of 12.8 million shares. We are raising our full-year 2013 revenue forecast to $319 million to $325 million, and diluted earnings per share to $0.54 to $0.56 on a weighted average diluted share count of 12.8 million shares.

We estimate interest expense will be approximately $200,000 for the fourth quarter and $800,000 for the full-year. Depreciation and amortization is expected to be about $1.5 million for the fourth quarter and $6.3 million for the full year. Stock comp expense is expected to be approximately $400,000 in the fourth quarter and about $1.4 million for the full year.

With that, let's turn the call back over to Brian.

Brian J. Clark

Okay. I want to first talk a bit about our guidance for next quarter and the full fiscal year. As Lucas said, we've raised the full year revenue range to $319 million to $325 million. It reflects a higher than expected revenue contribution from new awards and plus-ups to existing contracts that have occurred over the last several months. This is why our new revenue guidance range is $10 million higher than we guided to on last quarter's call.

On the earnings front, the midpoint of our annual EPS guidance is $0.10 higher than it was last quarter. As I mentioned before, $0.04 of the raise was attributable to the AdvanceMed purchase contingency gain. The rest is explained by the higher anticipated revenue in the second half of 2013, as well as continued savings from reductions in indirect spending during the year. I should add that just as we saw in the third quarter, we could see benefits from additional one-time pickups and other gains that could add up to $0.03 to $0.05 to the high-end of our fourth quarter and full-year 2013 EPS range. Again, given the uncertainty in the timing and extent, we thought it best to exclude these potential upsides in our published guidance.

Now, I'd like to provide an update on our overall business development and pipeline activity during the third quarter. We posted gross bookings of approximately $86 million consisting of new awards and increases to existing contract values. Reductions in funding and several debookings brought net bookings to $53 million or 0.8x revenue.

Barring an abnormal calendar year and flurry of awards, we expect fourth quarter bookings to be seasonally light. Although we're facing an increasingly challenging environment with the budget mess and the recent government shutdown, we are very pleased with our new business awards during the third quarter. These awards reflect initial success in our new business pursuit model, as well as our improved effectiveness in exploiting tactical opportunities on our suite of IDIQ and GWAC contract vehicles. It also reflects success in pursuing larger, higher-end, better discriminated work where best value awards still prevail. We'll be announcing the details of these awards in the coming days and weeks as we get customer approvals to do so.

One award I'd like to call out for special attention is our recent award of a prime position on the new multibillion dollar Department of Homeland Security EAGLE II contract vehicle. NCI is one of 15 companies that will compete for task orders in the areas of system design, development, implementation and integration, software design and development and operations and maintenance for DHS and its component organizations. It's important to note that EAGLE II's predecessor vehicle generated approximately $1.4 billion in task order awards in government fiscal year of '12 alone. And approximately 1/3 of this work was performed by incumbents that did not win a seat on the EAGLE II contract vehicle. We expect it will take some time for the dust to settle and protests to be resolved before EAGLE II starts to gather speed. But I can tell you that a lot of existing work will come up for a re-compete over the next 9 to 12 months. And we're ramping our efforts to ensure NCI will be well-positioned to win our share of the work from this important vehicle.

EAGLE II will be a major focus of our business development activities and investments in the year ahead and beyond. Over the last 1.5 years or so, we have talked a lot about the changes and investments we've been making at NCI in terms of business development, including new processes and new people. And largely, as a result of this investment, during the third quarter, we were able to submit approximately $600 million of additional new proposals. And as of today's call, we have over $500 million of bids submitted and awaiting award. We expect that most of these bids will be adjudicated in the first half of 2014.

Today, our new business pipeline stands at greater than $10 billion in both the qualified portion and the average bid size of opportunities showed increases from last quarter. Of this over $10 billion pipeline, we expect to submit approximately $500 million in new bids in the fourth quarter. And that expectation factors in the delays that we've seen in RFPs actually hitting the Street.

In closing, as Charles said, it's no secret that the federal procurement environment is a train wreck, especially for IT services, and 2014 could be even more challenging for NCI and its peers. The recent report by one of the analysts covering our space read like a doctors chart for a terminal patient. If there was a theme for today's call, it would be that we see clear pockets of opportunity for NCI amid the chaos. EAGLE II is just one example. We continue to see the potential for new moving [ph] awards, as well as the incremental plus-ups and takeaways in the coming quarters. And I believe we have the major pieces in place to show stability and then growth in the second half of 2014, and I look forward to updating you on our progress.

With that, operator, we'll open the call up to questions.

Question-and-Answer Session

Operator

[Operator Instructions] To our first caller Tobey Sommer, SunTrust.

Tobey Sommer - SunTrust Robinson Humphrey, Inc., Research Division

It sounds like you've got a more positive tone that you're going to be able to navigate rough seas. Is there something -- would you describe that kind of, I guess, improving level of confidence to your internal changes or is something also occurring in the market?

Brian J. Clark

Tobey, this is Brian. There's definitely nothing in the market. It's more gaining confidence in what we've -- all the actions we've taken over the last year, 1.5 years, 2 years that we've been talking about. As we said, now, we're happy to start seeing some of the results of that effort in the form of new contract bookings. The other thing that's been -- that's really plagued us through this year has been just the delays and the opportunities to be able to bid on things. And so as there are things that we're -- a proposal we're working on right now, and there's, as a matter of fact, there's one that we've just submitted in the last couple of weeks that we're saying they were part of a slew of proposals we expected to have submitted several quarters ago. And of course, award decisions should have been made by then. So those are just going in now. But the important message there is that they have come out, we have some -- we are working on them and/or submitting them. So I think that's an important factor there, and that's just all the better position to deal with responding to them with all the due disciplines we've got in place and new people, et cetera, that we've been talking about. And as we said, obviously, a highlight for us and something we're very excited about is the opportunity that the DHS EAGLE contract brings to us. We are going to, as I said, be putting a -- some real dollars of investment behind that. And we think that's a great place for us to focus on, and we'll do so over the coming quarters here.

Tobey Sommer - SunTrust Robinson Humphrey, Inc., Research Division

Your -- what was the performance of the business like during the shutdown? And what did you learn about the vulnerability, or lack thereof, in your contract mix and in revenue?

Brian J. Clark

Yes. We -- I think all things considered, and I've talked to folks from a lot of other companies, I think we faired pretty well. And I think that has a lot to do with the amount of preparation we put into it leading up to the shutdown. We assumed that it was going to happen and worked pretty hard and pretty steadily, consistently on that for a good couple of weeks leading up to it. So we were well prepared in trying to think through all the issues we could run into and made contact with all of our customers numerous times, and in most cases, finished all of our work before -- by the end of the week foreseeing the shutdown. We had secured go aheads and authorization to proceed in any case from our customers. Now having said that, we did have some limited pockets and a couple of -- for a couple of days, we had a couple of significant programs that were off. And we had -- and then one of them got back to work after a couple of days towards the end of that first week. The other one, unfortunately, we had about 120 people out on one -- with one customer for about 2.5 weeks. But they are all back now and as we sit today, we've got...

Marco F. de Vito

We have one program, a handful of folks that probably won't start till the beginning of November. From a corporate standpoint, we faired pretty well. We had some folks that went through some real pain, both direct labor folks and indirect labor folks. And it's tough on morale all the way around and the uncertainty of things. I think it's tough on everybody, whether they were able to go back to work or not. And as we see the possibility in January of maybe a repeat performance, it's certainly a challenge to keep morale up and keep people focused on things. So you're preparing, you communicating as best you can and you deal with the bumps as they come.

Tobey Sommer - SunTrust Robinson Humphrey, Inc., Research Division

One last follow-up. Do you -- could you quantify what the foregone revenue impact will be in the fourth quarter?

Lucas J. Narel

Yes, so this is Lucas. Like Brian mentioned, we had a couple of large programs that were along the sidelines there for 1 week or 2. I'd say overall, during the shutdown, maybe 15% to 20% of our programs were impacted. And over the course of the quarter, I'd say it's probably going to impact revenue by maybe 3% to 4%.

Operator

And we'll go next to Bill Loomis, Stifel.

William R. Loomis - Stifel, Nicolaus & Co., Inc., Research Division

Looking at the trends that you're seeing, the book-to-bill has been below 1 for a while. Your revenues are declining sequentially, but holding up very relatively good. How -- can you just tell us -- I know you're not giving '14 guidance, but kind of looking at it sequentially and based on the better awards you had in the quarter, when do we start to see the sequential improvement in revenues? Is that in the next few quarters or is it longer-term?

Brian J. Clark

Yes, Bill, I mean, our -- internally, we're focused on that happening sometime next year. We're hoping, as I kind of alluded to in my comments, sometime mid next year, it's -- we need to pick up 1 or 2 meaningful awards that will kind of get us heading back the other direction. But as you get -- as you can see, the pace of the dropoff has slowed down considerably and we're just trying to get to the levels set and start moving back up again. I think one of the things that's important, as you pointed out, we have had a number of quarters with bookings below 1x, and that is problematic. But there's also -- some of that had to do with, as we've talked about, we've had debookings every quarter. That's why we started talking about some of the gross bookings numbers the last few quarters so you can see some of that fresher revenue coming in, or resources of revenue coming in, so you can understand what that is. But some of that is -- some of those larger programs will get back a number of years, which is all going to burn all that backlog, and it was sitting in there, such has been a constant evaluation. But that's getting better over time. So I think that we're certainly encouraged to see us get a quarter here where on a gross basis, we were clearly above 1x. Yes, we're not going to see that and now, we don't expect to see that again. This type of quarter could happen, but it's not our expectation. We've just given what we know is in the submitted pipeline and what the expected award dates are. I think we're -- we feel good about where we sit now. The things that we've done are starting to pay off and that over the longer stretch here, we can get back to being above 1:1. It's where we got to be, obviously.

William R. Loomis - Stifel, Nicolaus & Co., Inc., Research Division

So you've had debookings for a while now. Why -- what's the main driver recently? And is it the customer, is it sequestration-related? Is it the customer just ended program? Because I thought you cleaned out your backlog pretty aggressively in the past and you're still getting debookings. What's the -- like in last quarter, can you talk about a couple of the larger ones?

Lucas J. Narel

Bill, this is Charles. This goes back about a few year ago that when we won the large contracts like PEO Soldier or PEO STRI. And there were some ceiling numbers when we got the contract awards, as we booked the ceiling numbers instead of the real budgets. And as time went by, the customer cut back on it and did not use the ceiling numbers and is still cutting back on those numbers. And as a result, we have to make sure the backlog is consistent with what customer is willing to spend.

Lucas J. Narel

Yes, I think expectations, frankly, have changed as budgets tightened down. We saw a run rate on certain contracts at a certain level and their current level's lower than that. And we're trying to be in line with that and adjusting to that. And I'll tell you, on the new bookings, we're frankly a little conservative just to kind of offset that trend. But we are seeing customers that expected to spend at a certain level and don't have that amount of money. You can call it sequestration, you can call it new budget constraints. It's our current reality and I expect we'll see more of that in '14.

Operator

[Operator Instructions] We'll proceed next to Edward Caso, Wells Fargo.

Edward S. Caso - Wells Fargo Securities, LLC, Research Division

Can you talk a little bit about the competitive environment, what you're seeing, are there new players that you hadn't seen before, maybe some of the bigger companies coming down into your market? And what you're seeing on pricing and re-compete [ph] win rates? We had heard the old 75% win rate numbers could be getting as low as 50% or less.

Brian J. Clark

Well, there's no good news. Are you looking for good news in that, Ed?

Edward S. Caso - Wells Fargo Securities, LLC, Research Division

No, I'm just trying to get a sense of the market, that's all.

Brian J. Clark

Well, I'll let Marco try and -- Marco another time in here as well. But just to hit a couple of things you asked about, I mean -- and I think we have talked about this before. We've certainly, on the competitive landscape, it's certainly intensified over the past several years. And a lot -- and a number of reasons for that. One, as you said, you got lot of the larger guys coming down and competing for work that is kind of more in the sweet spot for companies of our size, but where you got some of the platforms going away and where they can allocate corporate level resources and come down on bids that are significantly smaller size than where you really saw them compete for in the past. That's certainly been an issue in terms of having a larger field of competitors. On the pricing front, as we see more and more things moving to low-priced technically acceptable means of procuring work, that's created even more issues there. And what we're seeing -- and you see things that there are -- it really don't make a whole lot of sense going both ways where you're coming in sometimes, you're the low guy and you can't win, sometimes you're -- you cannot possibly understand how somebody could have ever gotten to a low price that they got to. So that's the source of frustration. I think that's a source of frustration for every company in our space right now. There's somebody -- some of these things, the response to the RFPs are going, the works are being made or on an irrational basis, but that's kind of the -- that's just the way it is. And I think -- and I hate to say that we get to the point where we think that a 50% win rate on your re-competes is a good thing. We certainly -- I would certainly never subscribe to that. But I think the -- your point's right on, I mean the days of -- and I wouldn't put it at 75%, I'd put it at north of 90%, of maintaining at least 90%, 95% of your re-compete work. Those days are clearly gone. And we try to look at that from a different -- with a different lens and say, there's things in the past where you wouldn't go after because somebody's been in there for a while, has been entrenched for a long time. And so there is some good here and some of this higher competition in pricing and things like that. It does open the field up more because you can get in there and be technically acceptable, and you can get -- and you can beat the little guy, then you have a chance of going after work that you didn't previously have the opportunity to do so. So it's a -- it's not a lot of fun on the one hand, but we're trying to look at it as also not being the end of the world here either. It is also a way of creating opportunity for us.

Edward S. Caso - Wells Fargo Securities, LLC, Research Division

Can you offer your recompete exposure through the end of calendar '14, say, as like a percentage of revenue?

Brian J. Clark

Well, that would -- we suppose that we'd tell you -- we'd be telling you what our guidance plans are for next year.

Edward S. Caso - Wells Fargo Securities, LLC, Research Division

As a percentage.

Brian J. Clark

It's -- I'm just trying to think it's...

Lucas J. Narel

We do have a few programs that are coming out for recompete next year. I can't tell you what the percentage is, but obviously, we're tracking those. And some of these items that are coming up, we've seen that they may get extended next part of next year as well. So it's tough to put a number on that for '14 right now.

Edward S. Caso - Wells Fargo Securities, LLC, Research Division

Any big ones?

Brian J. Clark

Go ahead.

Lucas J. Narel

Sure. The other thing to keep in mind is when we bid them in '14, there may be some revenue exposure in '14, but it's mostly past '14 that you'll see the exposure. So we have some exposure maybe in the second half of the year. I would say that '15 is more impact. It is -- there's a couple of the trends that Brian didn't mention but we've talked about in the past, and one of them is evaluation periods are getting longer and longer. And so that makes it tougher to take work away and plays to your advantage to some extent, and work where you have ongoing performance and it gets extended. So -- and timing of that has been tough to predict. Our customers are starting to get used to the budget uncertainties. And so the things that we waited for for a long time are now starting to come out. We'll see what that means in terms of extensions on our existing business.

Edward S. Caso - Wells Fargo Securities, LLC, Research Division

I think you mentioned the EAGLE II was under protest. Does that -- has that been cleared? Are they able to issue awards yet under EAGLE II?

Marco F. de Vito

They did issue the contract awards. We're anticipating protest, more than know that the protest has been filed. I think they're still going through the process of debriefing the bidders. And that really sets the clock going for protest.

Brian J. Clark

And just to clarify for you on the re-competes, I mean, I think we told you about 20% next year, that's about the right number. It's just not terribly scientific because some of that is -- are things that will -- we noticed that the work was going to change direction a little bit, some of those things are going to go flip over and go to a small business, some things where customers already [indiscernible] are going to stretch out and provide the extension. So it's just not an easy a number to get your arms around as it used to be. But if you look at it on the current run-rate basis, it's about 20% will be impacted, and some will be dealt with in some fashion the next year.

Operator

[Operator Instructions] It appears we have no further questions in the queue. That does conclude the question-and-answer portion of the conference call. That also concludes today's conference. Thank you for joining us today.

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