Volt Information Sciences' (VISI) CEO Michael Dean on Q4 2016 Results - Earnings Call Transcript

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Volt Information Sciences, Inc. (NYSEMKT:VISI) Q4 2016 Earnings Conference Call January 11, 2017 4:30 PM ET

Executives

Lasse Glassen - IR, Addo Investor Relations

Michael Dean - President and Chief Executive Officer

Paul Tomkins - SVP and Chief Financial Officer

Analysts

Joseph Gomes - William Smith & Co.

Gregg Hillman - First Wilshire Securities Management

Operator

Greetings, and welcome to the Volt Information Sciences Fourth Quarter and Full-Year 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. An interactive question-and-answer session will follow formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I’d like to turn the conference over to your host, Mr. Lasse Glassen, Investor Relations. Thank you. You may begin.

Lasse Glassen

Good afternoon and thank you for joining us today for Volt Information Sciences fiscal 2016 fourth quarter and full-year earnings conference call. On the call today is Michael Dean, President and Chief Executive Officer; and Paul Tomkins, Senior Vice President and Chief Financial Officer.

Before beginning today’s call, let me remind you that some of the statements made today will be forward-looking and are made under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those projected or implied due to a variety of factors. We refer you to Volt Information Sciences’ recent filings with the SEC for a more detailed discussion of the risks that could impact the company’s future operating results and financial condition.

Also on the today’s call, our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors. A reconciliation of those measures to GAAP is included in the earnings release issued this afternoon, January 11, 2017.

With that, it’s now my pleasure to turn the call over to Volt’s President and Chief Executive Officer, Michael Dean. Michael?

Michael Dean

Thank you, Lasse. Good afternoon and thank you for joining us today for our fiscal 2016 fourth quarter earnings conference call. I’ll begin today’s call with an overview of our results from this past quarter along with recent highlights of the progress we’re making towards our plan to improve both financial and operational performance. Paul Tomkins our CFO will then discuss additional details about our fourth quarter financial results, including an update on our year-end balance sheet and liquidity position. A question-and-answer session will follow after our prepared remarks.

I’d also like to point out that in an effort to provide improved visibility and transparency for our investors and to better align the company’s businesses with our operating strategies, the company completed certain changes to our management reporting structure. As a result for financial reporting purposes, we’ve updated our operating segment disclosure to now include three reportable segments plus other and corporate compared to the one segment and other reported previously. Paul will provide additional details on our segments in his remarks.

With that said, we wrapped up fiscal 2016 with a solid fourth quarter highlighted by strong year-over-year growth in gross margin percentage along with careful expense management that helped produce the most profitable quarter for Volt on a net income basis in five years.

In addition, we continued to add our book of business with several significant new customer engagements. This coupled with a slow rate of revenue decline from existing customers, is helping to stabilize revenue from our core North American Staffing business. And importantly, actions taken throughout fiscal 2016 to divest non-strategic assets has helped to shore up our balance sheet and solidify our liquidity position.

As we head into fiscal 2017 as a financially stronger and more streamlined company, I’m confident we can continue to build on the foundational strengths of our core staffing business to achieve our longer-term goal of sustained profitable growth.

Looking at our fourth quarter results in more detail, net revenue of $341.6 million was down $22.4 million, or about 6% compared to the fourth quarter last year. Within our North American Staffing segment, which comprises nearly 80% of consolidated revenue, we saw revenue only decreased by $5.6 million, or about 2% compared to the prior year’s quarter, as [low] [ph] demand from existing customers and some customer attrition outpaced revenue from new customer engagements in the quarter, although at a lesser extent than in prior quarters.

Paul Tomkins will provide details on our International Staffing and our Technology Outsourcing Services and Solutions segments later in his remarks. At the bottom line, we reported net income from continued operations in the fourth quarter of $2.8 million, or $0.13 a share, compared with income of $0.1 million, or less than a $0.01 per share in the fourth quarter last year.

Income from continuing operations in the fourth quarter of 2016 included special items that reduced income by $1 million, which Paul will describe in more detail in a moment. Excluding the impact of these items, income from continuing operations for the fourth quarter of 2016 would have been $3.8 million, or $0.18 a share on a non-GAAP basis.

As we noted earlier, this past fourth quarter was the single most profitable quarter since the fourth quarter of fiscal 2011, or five full years ago. While our profitability [indiscernible] needs to be it longer-term, I’m encouraged by this clear sign of progress. Over the past year, we’ve made steady headway on the Volt turnaround plan.

As I’ve mentioned on previous calls, we focused on three key pillars; strengthening our balance sheet and company foundation, streamlining our business and improving our cost structure and margins, and achieving top line growth. To this end, the fourth quarter was another productive period for Volt, and I’d like to highlight some of our key accomplishments.

Subsequent to quarter-end, we successfully amended and extended our short-term financing program with PNC Bank. The new agreement maintained the capacity of the facility at $160 million, while extending the term to January of 2018. Following multiple discussions with a number of banks, we’re pleased to have completed this extension with PNC, which enables us to continue moving forward with our turnaround plan.

Turning now to our objective of improving our cost structure, during this past year, we made significant progress in rightsizing our administrative support functions to better reflect our streamlined business and strategic focus on our core staffing operations.

As part of our overall initiative to improve efficiencies, competitiveness, and profitability, we continue to reduce staffing levels during the fourth quarter, bringing the total headcount reduction net of new hires now to nearly 200 for fiscal 2016 alone. This effort included cuts in staff at both corporate level and within business units. Due to these actions, the implementation of other initiatives to create efficiencies and the sale of non-core assets, during fiscal 2016, we significantly improved our cost structure. For the full-year, we reduced selling, administrative and other operating costs by net total of $27 million, or nearly 12% compared to the prior year. This is quite an accomplishment considering the significant cost headwinds we faced during the year, as well as investments made to improve our sales organization and leadership.

We’re also making investments in our business that we believe will result in lower overall cost and improved efficiencies going forward. To this end, we’re nearing the deployment of new information technology that we’ve discussed on previous calls. Our goal with the new IT system is to align our support infrastructure with the requirements of the business.

Ultimately, these upgrades will improve our time to market and competitiveness in sales, delivery to support Volt’s future growth. The project remains on schedule to go live in the first-half of 2017. In addition to the improved functionality, we anticipate this will generate additional cost savings of approximately $5 million to $7 million annually to be realized beginning in the latter half of fiscal 2017 and more significantly in 2018.

With all of these foundational building blocks in place, our management team’s main area of focus now for fiscal 2017 is [bending] [ph] the last several years revenue decline into growth. Heading into the new fiscal year, we expect to see the benefits from our completely restructured and realigned sales and client-facing organization. This includes the fortification of our sales team during the second-half of the past year with the addition of significant amount of new talent at all levels.

We’ve also completed the revamping of all our domestic compensation plans and structure within our sales and delivery organization to reduce complexities and incentivize profitable growth. In regards to our compensation structure compared to prior years significantly more employees now have more of their compensation at risk, tied specifically to our revenue and operating income budget objectives.

We feel these actions were necessary in driving a pay for performance culture at Volt and aligning incentive structure with companywide strategy and metrics. We’ve also been focused on correcting three issues to return our top line to growth, which are slowing the attrition of existing business, expanding our business with existing customers, and adding new customers. While the clients are still outpacing the areas of new business growth, we’re seeing progress in all three of these areas, especially in our North American Staffing business.

First, we’re slowing the attrition. The number of clients lost outright in our traditional staffing business has decreased every quarter for the last seven quarters, cutting the attrition by almost a third over that period of time. Furthermore, the amount of quarterly revenue shrinkage from existing clients has been cut by about one-third over the last year as well.

Second, we’re expanding our business with existing customers. The amount of growth from expanding clients has increased 6 consecutive quarters and 60% more than a year ago.

Lastly, we continue to bring in new customers. In our traditional staffing operations, our pipeline of new business, i.e., the profitability weighted revenue in our sales funnel has grown from the last eight consecutive months. And with respect to converting this pipeline to firm business, we continue to win significant new clients.

For example, during the fourth quarter, we won a contract with a leading business services and solutions company to provide call center support that we estimate will generate about $8 million annually. We also signed a significant contract with a global engineering and logistics company providing service, tech and industrial positions that is expected to drive approximately $6 million of annual revenue.

In addition, we signed a new agreement with one of the world’s largest designers and manufacturers of home grids that is expected to generate annual revenues of approximately $3 million. And we signed four of the large clients in this quarter each of which we expect will generate $2 million to $3 million in revenue annually. While much work remains, we continue to see evidence of our progress particularly within our North American Staffing business, which as I noted earlier is approximately 80% of Volt’s revenue.

Since the current management team watched our turnaround plan five quarters ago, the revenue trend in the North American Staffing business has continuously improved each quarter on a year-over-year basis from a 14.3% decline to 12.4% to 9.4% to 4.0% and finally 2.0% during this most recent quarter. There’s no doubt, we’re moving in the right direction and I’m pleased to say, we’re getting closer to achieving year-over-year revenue growth in our core traditional staffing business.

To conclude, we made solid progress executing our turnaround plan in the fourth quarter and throughout fiscal 2016. Our results from this past quarter are strong evidence that we’re on the right track and I’m encouraged by the progression of our three strategic pillars.

I look forward to continued execution of our strategy enhancing our financial and operational performance and driving shareholder value as we move forward.

Now, I’d like to turn the call over to Paul to discuss our fourth quarter and full-year financial results in more detail. Paul?

Paul Tomkins

Thank you, Michael. Good afternoon Today, I’ll provide additional details on our fourth quarter financial results as well as discuss our balance sheet and liquidity position. Before I begin, I would like to briefly discuss the change to our financial disclosures.

As Michael mentioned, our earnings press release issued this afternoon now includes a breakdown of revenue and operating results by our new reportable segments. We’re very pleased to begin presenting more detailed information about our Staffing businesses, which we believe will improve overall transparency and provide better insights into our turnaround efforts going forward.

Turning now to our financial results. Our revenue in the fourth quarter was $341.6 million, up $11.0 million, or 3.3% on a sequential quarter basis. Our sequential revenue increase is primarily attributed to the regular seasonal uptick in the fourth quarter when our customers increased the use of continued labor, as well as a 2% increase in workdays in the fourth quarter compared to the third quarter.

When compared to the fourth quarter of fiscal 2015, total company revenues declined $22.4 million, or 6.2% on a year-over-year basis. This is an improvement from a year-over-year decline of $34.2 million, or 9.4% in the prior quarter.

Our fiscal 2015 fourth quarter included non-core businesses, which we have sold or shutdown. In addition, the fourth quarter of fiscal 2016 included an unfavorable foreign exchange impact to revenue compared with the fourth quarter of last year, partially due to Brexit. Excluding non-core businesses and the impact of FX, the year-over-year revenue decline would have been 3.3% on a same-store basis.

Turning now to our revenues by segment. Revenue for our North American Staffing segment, which provides a broad spectrum of continued staffing, direct placement, recruitment process, outsourcing and other employment services was $270.6 million, up $7.6 million, or 2.9% on a sequential basis.

Revenues decreased approximately $5.6 million, or 2% on a year-over-year basis. The year-over-year decline was evenly split between lower demand from our top 30 accounts and the change in our overall mix from technical to A&I skill sets.

Revenue for our International Staffing business, which includes the company’s contingent staffing, direct placement and manage program businesses in Europe and Asia was $31.7 million in the fourth quarter, down $0.9 million, or 2.6% compared with the prior quarter.

On a year-over-year basis, revenues decreased $5.9 million, or 15.6%. The year-over-year decline was a result of the foreign exchange rates due to Brexit and the closure of several offices. Excluding the impact of the exchange rate, our contract revenues in the UK and France were up $0.9 million year-over-year.

Our Technology Outsourcing Services and Solutions segment revenue, which includes quality assurance, business intelligence and analytics and customer service support for companies in a variety of industries was $30.5 million in the fourth quarter, up 28%, or $6.7 million on a sequential quarter basis. Compared to the fiscal 2015 fourth quarter, revenues decreased $2.6 million as a result of lower volume from a large customer in both our application testing and call center service offerings.

And finally, looking at our corporate and other businesses, which is primarily comprised of BCG, our managed service programs and Maintech, revenues were $27.6 million in the fourth quarter. This was unchanged from the prior quarter but down $10.1 million, or 26.9% on a year-over-year basis. The year-over-year revenue decline was primarily attributable to a loss of revenue in our non-core businesses, which were sold during fiscal 2015 as well as a decision not to pursue continued business with a certain customer.

On a same-store basis, excluding businesses we sold or shutdown, revenue for these businesses declined $5.8 million, or 17.5% year-over-year. Income from continuing operations in the fourth quarter of 2016 was $2.8 million, compared to a loss of $4.6 million in the third quarter and income of $0.1 million in the fourth quarter last year.

Income from continuing operations in the fourth quarter of 2016 included restructuring and severance costs of $1.2 million and 400,000 related to an impairment of capitalized software. These costs were partially offset by $0.5 million related to amortization of a gain of the sale of the real estate. Excluding the impact of these special items, income from continuing operations for the fourth quarter would have been $3.8 million on a non-GAAP basis.

Adjusted EBITDA, as highlighted in our earnings press release was $8 million for the fourth quarter of fiscal 2016, up nearly 11 times compared to $0.7 million on a sequential quarter basis and up 1.5 times compared to $5.3 million in the fourth quarter of last year, as a result of our significant cost-cutting efforts.

Moving onto the profitability of our core segments. Operating income for the North American segment was $10.6 million in the fourth quarter of 2016, compared to $6.7 million in the third quarter of 2016 and $6.9 million in a year-ago period on a consistent basis.

We are pleased with the sequential and year-over-year improvement in our North American segment, which increased by 58.8% and 53.1%, respectively. These results are a demonstration of the progress we have made in our turnaround plans, of which our North American Staffing segment was a primary focus.

This past year, we dedicated our attention to restructuring our leadership team and improving our employee compensation plan to be in a better alignment with the company’s goals and objectives. We now believe our North American Staffing business is running linear and more efficiently. We remain focused on the health of this business and believe we’re in an improved position to execute our growth plan in the coming year.

Looking at the other segments, the Technology Outsourcing Services and Solutions generated operating income of $3.1 million, while our International Staffing segment generated operating income of $0.8 million.

Overall, gross margin percentage during the fourth quarter was 16.7%. On a year-over-year basis, gross margin improved by 70 basis points. The year-over-year increase in gross margin percentage was primary a result of improved margins in our North American Staffing segment, driven in part from an increase in direct hire revenue and from favorable year-over-year workers’ compensation expense. Our cost cutting initiatives in our International Staffing segment also contributed to our direct margin improvement.

Selling, administrative and other operating costs in the fourth quarter increased $1.1 million, or 2.2% compared to the prior quarter. On a year-over-year basis, selling, administrative and other operating costs decreased $4.6 million, or 8.4%. The year-over-year decline was primarily due to lower headcount across all businesses and facility consolidations resulting in a companywide cost reduction plan implemented at the beginning of fiscal 2016.

As Michael touched upon earlier, we are pleased with the overall results of our cost reduction plan, which reduced annual selling, administrative and other operating costs by 11.7% on a year-over-year basis. During the course of the year, we were able to extract approximately $27.1 million of selling, administrative and other operating costs out of the business, net of investing in our sales force and other resources, which we expect to help contribute to an improved fiscal 2017.

We incurred restructuring and severance costs of approximately $1.2 million in the fourth quarter as a result of our continued cost-cutting initiatives. Looking ahead, we expect the actions taken this year will result in annual savings of approximately $15 million going forward, excluding Maintech.

I’d like to now provide an update on our process to divest Maintech, our information technology infrastructure services business. In the last few months, we’ve made substantial progress with respect to the sale of Maintech, our only remaining non-core business.

We’re engaged with more than one perspective buyer. However, we are in the final stages with the lead buyer. This progress is a direct result of our continued negotiation with this particular buyer since our last earnings call, negotiations which have been especially active over the past two months. That being said, a definitive agreement has not yet been signed.

Turning now to our balance sheet and liquidity position, our total debt balance at the end of the fourth quarter was $97.1 million, up $5.1 million from the prior quarter, but down $10.2 million from the fourth quarter of last year. The year-over-year decrease was primarily due to the payoff of our mortgage for our Orange, California property following our sale-leaseback transition – transaction in March 2016.

As Michael noted, subsequent to the end of fourth quarter, we successfully amended and extended our $160 million financing program with PNC through January 31, 2018, which shifted debt under this facility on our balance sheet to long-term. In addition, we amended our program with PNC Bank to reduce the minimum liquidity covenant level from $35 million to $20 million. The minimum liquidity covenant will increase to $25 million upon receipt of proceeds of either the sale of Maintech or the IRS refund. In addition, the amended facility also includes a minimum EBIT covenant.

At the end of the quarter, we had $48.5 million in global liquidity for working capital requirements, which is $13.5 million higher than our minimum required liquidity covenant. We believe our cash flow from operations and planned liquidity will be sufficient to meet our projected cash needs for the next twelve months.

In addition, as we have highlighted on previous calls, we have significant tax assets, including recoverable tax receivables of approximately $16 million. We have fully completed the process with the IRS and we are pleased that they have submitted the results of their audits to the joint committee for approval, which could take up to four months. As a reminder, this involves amending federal income tax returns for seven years.

At the end of fiscal 2016, we also had federal net operating loss carry-forwards, which are fully reserved with a valuation allowance of $145.1 million. Capital loss carry-forwards of $55.4 million and federal tax credits of $47.9 million, which we may be able to utilize when our profitability improves or in conjunction with the sale of capital assets. These tax assets can be a tremendous source of future value for Volt.

We also remain focused on our capital allocation plan. Our top priorities are to ensure that there’s adequate liquidity for working capital purposes to effectively manage our business and to invest in growth, including tools and advanced technologies to support our improving Staffing business. Our strategy also includes returning excess capital to shareholders. We also have been and will continue to derisk the business by deleveraging our balance sheet.

In closing, while there’s much important work to be done, our results this quarter are early evidence of the progress we have made in our turnaround plans. This year, we have taken significant steps to build the solid foundation, to execute our growth plans in the coming year, and I’m confident we’re moving in the right direction.

Thank you for joining the call. And at this time, I’d like to open it up to questions. Operator?

Question-and-Answer Session

Operator

Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] And our first question comes from Joe Gomes from William Smith. Please go ahead.

Joseph Gomes

Good afternoon, Michael and Paul.

Michael Dean

Hi, Joe, how are you?

Paul Tomkins

Hey, Joe.

Joseph Gomes

Good. First one, I – we all appreciate the better and expanded financials. But one thing it does obscure again is, last quarter was the first time we’ve really got to look at Maintech as a standalone and allowed some of us at least to look at what could that possibly be worth? And now it’s buried again back into corporate, given that Maintech is for sale, is there anyway you can give us a little more insight or detail into the Maintech business itself and how that did in the quarter in profitability?

Paul Tomkins

Well, Joe, this is Paul. What I would say is that, that is true. Maintech was the only non-core business in [indiscernible] piece of the business and certainly that’s not why it’s in there now. We’re trying to get more transparency in the business in other kinds of - in the main businesses on the ongoing business. And I think, obviously, it doesn’t rise to a segment level. It didn’t meet the criteria for a segment, so it’s not why it’s broken out. But the bottom line is, we’re also in a process to sell the business. So, obviously, it’s a – it’s not going to be in our ongoing structure.

Joseph Gomes

Okay. And on again just a little bit more on Maintech, if you can. In last quarter, you talked about, you had reached the key terms agreement. In this quarter, you’re saying, you’re still in negotiations with the lead buyer. I mean, just maybe you can give us some insight as to what could possibly be a stumbling block that is taking this long to come to terms with this buyer? I mean, is it a real buyer? It just seems to be taking for ever for these guys to either say yes or no?

Paul Tomkins

Well, as I said, we’re talking to two buyers right now, but there clearly is a lead buyer that we’re very far along with. And they are very serious, actually both buyers are very serious. But the lead buyer, we’re further along than we have been last quarter and we’re not going to put any date around it. But we can tell you that we’re moving forward to a – to what we believe is a conclusion on this.

Joseph Gomes

Okay. And it’s impressive to me that quarter after quarter you talked about all the new business that you’ve been able to sign, which is a great accomplishment. I just wonder if you might be able to just touch on some of the ones that you talked about in previous quarters how is that implementation going, is it moving along as expected, any hiccups, any detail you can provide on that?

Michael Dean

Yes, Joe, I’ll take that one. As you know how this business works, every quarter we sign new clients. So the ones that we just talked about on this call, we signed in this quarter and we gave you numbers that are annualized potential revenue, but it takes often one, two, or even three quarters for that revenue to ramp. So in the fourth quarter on the income statement, it was revenue from new clients that had been ramping from prior quarter that we signed from prior quarter.

So it’s always sort of a delayed add to the P&L. So every time we announce new clients, it doesn’t mean - the announcements that I make this quarter were the ones that we signed this quarter and that revenue is due to hit future quarter’s P&L. And it takes – and most of our clients take between one and three quarters to ramp up to sort of their full capacity. And so in prior quarters of the new clients that we announced to my knowledge all of the ones that we’ve announced have been ramping up at various levels.

Joseph Gomes

Right. Okay, that’s good – great. And just what are you seeing in the industry itself right now? If you read some of the other reports out there, there has been some discussion that the temp health businesses industry in itself has been somewhat flat – flattish, given somewhat of the flat unemployment rate here recently. And just wondering what you’re seeing out there in the industry itself?

Michael Dean

We’re actually, obviously, we’re close to it. The industry is slowing a little bit, but it’s been a pretty high growth for a while. So the slowing is ultimately, I guess, expected. You’d love if it can grow forever. But it’s not, I don’t think it’s a point of a concern yet, it’s just slowing a little bit and domestically a little bit more than like in our Europe business.

Particularly for us, our trends are going the other way actually unfortunately as the opportunities, it’s a big market and the opportunities are sort of spot. We pick our spots and the slight slowing that I think is occurring in the industry, we actually haven’t seen. I mean, we have some – we have impacts of clients that they’re slowing and we – so we have some sort of client demand declines that’s where some of our declines have been.

But from the temporary staffing industry itself, I think, we’re finding actually opportunities that sort of defy some of those metrics so far industry-wide, which as we start defining our group, we haven’t been impacted by a small slowing under business yet, at least.

Joseph Gomes

Great. Thanks, guys. I appreciate it.

Michael Dean

Thank you, Joe.

Paul Tomkins

Thank you, Joe.

Operator

The next question is from Gregg Hillman from First Wilshire Securities Management. Please go ahead.

Gregg Hillman

Yes. Hi, good afternoon. Hey, Michael, could you just talk about the progress in the CRM and also speed to fill in IT?

Michael Dean

Sure. I’ll take the CRM and Paul could take the IT. The CRM is something that I’ve talked about quite a bit and it’s – I consider very important. When we talk about CRM, a lot of people think CRM as a technical solution. And when we talk about it here it’s all encompassing, it’s sort of a much broader purview, which includes technical systems with CRM, which is the IT project Paul can talk about this. There’s a number of components in the IT we do.

We’re baking into much more capability to really follow and track our clients better and in more depth and that sort of thing. But we also made significant progress in developing a core capability on client relationship management that is significantly more robust than what we had in the past.

And I think what we had in the past is the deficiency there as a capability was – is a real significant piece of the reason why we’ve been losing share in clients faster than the rest of the industry is that, I think, we haven’t been as good as we should be at sort of understanding our clients and managing them well and growing with them as opposed to sort of being left behind. And we’ve significantly upgraded that both from a systems and a process side, and actually we did it on the process side first and the capability so that we were designing the systems. We can take that functionality. We knew what to create in the system side of it, because we already done a lot of the process stuff. So for that reason, we think it can actually be a source of the advantage going forward when it was a detriment I think in the past.

Paul, do you want to talk a little bit about the IT?

Paul Tomkins

Sure. On the front end, which is really what you’re asking about Gregg, because we’re doing an end-to-end ERP. On the front end, we have new software that we’re installing with actually new – a new hardware as well, which will merge the CRM and the Applicant Tracking System that we have on the front end.

And so think of the two of those today that are separate. When an order comes into our CRM and we’re actually looking to fill that order, we have to then go to another system and take the ATS, the Applicant Tracking System and find 100 programmers in Seattle to start on Monday, whereas with this new process and system and software, it’s merged. So the order can automatically be filled when it’s in its final state, that’s [indiscernible] design on speed to fill.

Gregg Hillman

Is that up and running, or is that that still couple of months away right?

Michael Dean

Yes, that’s what – that goes live with the rest of the ERP really of the whole company, so that goes live in the first-half of this year.

Gregg Hillman

Okay. Okay, thanks for the update.

Paul Tomkins

Okay. Thank you, Gregg.

Operator

Thank you. We’re out of time for questions today. I’d like to turn the floor back over to Mr. Dean for any closing comments.

Michael Dean

Thank you very much, operator. I appreciate some words from shareholders and thank you again for joining us on today’s call. We look forward to speaking to you again next time when we report our fiscal 2017 first quarter results in early March. Thank you very much.

Operator

This conclude today’s teleconference. Thank you for your participation. You may disconnect your lines at this time.

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