NIC Inc
Q3 2017 Earnings Call Transcript

Published: 2 Nov 2017

[Operator:]

Good day and welcome to the NIC Inc. 2017 third quarter earnings announcement. Today's conference is being recorded. At this time, I'd like to turn the conference over to Angela Davied. Please go ahead.

[Angela Davied:]

Thank you, operator. Good afternoon, everyone. And welcome to NIC's third quarter earnings call. The press release for NIC's third quarter 2017 earnings announcement was issued 30 minutes ago. Our earnings release is also available on our corporate website egov.com/investor-relations. You may also call our headquarters at 877-234-3468 and we will email the information to you. Following a reading of our cautionary statement regarding forward-looking information, CEO Harry Herington; Chief Operating Officer, Robert Knapp; Steve Kovzan, NIC's Chief Financial Officer will deliver prepared remarks. Then, we'll open for questions. Any statements made during this call that do not relate to historical or current facts constitute forward-looking statements. These statements include estimates, projections, expected length of contract terms, statements relating to the company's business plans, objectives and expected operating results, statements relating to possible future dividends and other possible future events, and the assumptions upon which those statements are based. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially from the forward-looking statements, including regional and national business, political, economic, competitive, social and market conditions, including various termination rights of the company and its partners, the ability of the company to renew existing contracts and to sign contracts with new states and federal government agencies, as well as possible data security incidents. You should not rely on any forward-looking statement as a prediction or guarantee about the future. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the sections titled Risk Factors and Caution About Forward-Looking Statements of the company's most recent Forms 10-K and 10-Q filed with the SEC. These filings are available at the SEC's website at sec.gov. Any forward-looking statements made during this call speak only as of the date of this call. We undertake no obligation to update or revise publicly any forward-looking statements whether as a result of new information, future events or otherwise. Now, it is my pleasure to introduce Harry Herington, NIC's Chief Executive Officer and Chairman of the Board.

[Harry Herington:]

Thank you, Angela. Welcome to our third quarter earnings call. When I think about the growth of our company, I think about it in several ways. Earnings per share, top line and bottom line growth are very important indicators of the health of our business, but there are also other aspects of our business that must evolve and grow in order for us to be successful over the long-term. It goes without saying that we must grow the core business by launching more digital government services. More services, like permits, registrations and filings, have always been foundational to the success and growth of our business. Growth also includes expanding our use of technology and investing in innovation. We won't be successful if we simply rely on the technology of today. Technology is evolving too quickly and citizens' expectations are increasing and driving change. Sticking with the status quo will sink any business, especially one driven by technology. And growth also involves expanding our team and hiring the best and the brightest within our industry. We're only as good as the talent we hire and we've always prided ourselves on creating the right environment to attract the very best. During the third quarter, we did all of these things. We grew the core business, saw investments in new innovations take off, and added new leadership to our organization. Let's take a closer look at the core business first. It performed well this quarter, with same-state revenue growth from Interactive Government Services, or IGS, revenues up 10% year-over-year. Specifically, services such as motor vehicle registrations in Colorado and corporation filings in South Carolina were some of our mainstay services that helped drive growth in our core business. We can't lose sight of the fact that even in this day and age, there remains hundreds of government services throughout our partner states that can still be brought online or enhanced with better user experience. Investing in new technology is also the key to the success of our business. Many of you have heard me talk in the past about our investment in our citizen-centric Gov2Go platform. I'm pleased to report that one of the main highlights of the quarter was expanding the platform to add new national services. Now, people in all 50 states can access government information using the platform to look up election information, receive detailed amber alert notifications, and even purchase a federal Your Pass Now digital park pass. These new national services are a great step in making government information accessible for every American. Plus, Gov2Go is generating momentum and getting the attention of our government partners. In fact, in October, West Virginia became the latest NIC partner to deploy a more comprehensive suite of services on the platform. People in West Virginia can now receive reminders and alerts for state-estimated tax payments, annual business reports, business unemployment quarterly filings, state income taxes, county property assessments, county property taxes and real estate taxes. This suite of services will allow citizens to more quickly process these various tax payments and business filings. Our partners in West Virginia understand the power of the platform and our team in Charleston expects to continually add more citizen-centric services in the future. In addition, I'm also pleased to announce that we're bringing the power of Microsoft to Gov2Go. As soon as Microsoft was introduced to it, they wanted to partner with us. They knew this solution would be a game-changer in how citizens interact with government, and they were excited to get behind it. We've entered into a mutually beneficial partnership with Microsoft. In addition to hosting Gov2Go in the Azure cloud infrastructure, Microsoft is bringing all of the resources to the table to promote the platform with government. And we have leveraged their full suite of functionality like microservices, biometric authentication, artificial intelligence, checkbox and more, so that the platform is built with the latest innovation. All of our government partners will benefit from the Microsoft services as they accelerate our R&D and allow us to quickly bring even more novation to the digital government services we develop. And NIC's leadership position with the digital government industry brings value to Microsoft. Just recently, we presented about Gov2Go at Microsoft Government Cloud Forum, where we shared about this transformative platform with hundreds of federal government decision-makers. We look forward to collaborating with Microsoft to bring the most innovative functionality to the Gov2Go platform. Finally, as I said earlier, we must grow by bringing top talent to the organization. I am pleased to welcome Doug Rogers to the NIC family as our Senior Vice President of Business Development. In this role, Doug will serve as a member of NIC's senior management leadership team. He will lead all of the teams responsible for sales efforts across organization – state, federal and payment processing. Prior to joining NIC, Doug was the vice president at Cerner, a publicly traded company and leader in health information technology solutions. Doug led the team that sold Cerner's software-as-a-service solutions across multiple domestic and global markets, including federal and state government. He brings an exceptional sales leadership track record to NIC. And I look forward to Doug putting his leadership and experience to work to attract new government partners and share our story of digital government excellence. I was pleased with our positive momentum in this quarter. We continue to grow the core business, our investments in innovation took off and we added new leadership in NIC. I know we're doing the right things to keep this business headed down a successful path over the long term. With that, I'll turn the call over to Robert Knapp, NIC's Chief Operating Officer, for additional insights into our operations. Robert?

[Robert Knapp:]

Thank you, Harry. During the third quarter, we had great momentum in our portals as they develop new services on behalf of our government partners. In particular, we continued to develop unique outdoor recreational vertical opportunities. First, I'm pleased to report our federal Your Pass Now solution continues to make visiting national parks and US Forest Service sites more convenient. Not only is the purchase of Your Pass Now available on Gov2Go, as Harry mentioned, but you may recall, last quarter, we shared that the price of a senior citizen lifetime National Park pass was increasing on August 28 from $10 to $80. The National Park Service increased the fee to help pay for park enhancements and major projects. To assist with the unprecedented demand for lifetime senior passes, we were able to make senior passes available through Your Pass Now. After just 12 days of development, the service was up and running in late July. The response was phenomenal. From July 27 through August 28, Your Pass Now processed 635,000 senior passes with 90,000 senior passes purchased in one day alone. I am very proud of our government partners and federal team members who were able to collaborate and quickly bring this efficient solution to senior citizens. We were also able to share the success of Your Pass Now on Capitol Hill. In late September, Angela Fultz Nordstrom, our vice president leading NIC's federal business development efforts, was asked to testify on the benefits of Your Pass Now before the Senate subcommittee on national parks. As she shared before the subcommittee, the objective of the pilot program was to test the premise that people were open to purchasing digital park passes. And the response has been a resounding yes. We appreciate the confidence both the National Park Service and US Forest Service continue to place on us. I look forward to the continued enhancement and expansion of this program. Senior pass sales had a sizable positive impact on our results for the quarter, which Steve will discuss in more detail in a moment. Also, within the category of outdoor recreational services, our government partners and teams in Utah and Arkansas continued to deliver more convenience in their state's hunting and fishing services. In Utah, we partnered with the state's Department of Natural Resources to allow the agency to provide paper vouchers to private landowners. Landowners distribute the vouchers to designate who may purchase a big game permit to hunt on private land. Our online hunting and fishing license system in Utah is now being used to redeem these private land vouchers. And so far, thousands of vouchers have been redeemed using the system. This is a great example of an existing digital government service being expanded to serve the unique needs of a state. Arkansas is another example of NIC providing hunting and fishing online convenience. Our team is working with the Arkansas Game and Fish Commission to provide payment processing services, call center services and mobile game checks. Work is underway by our team in Little Rock to rebuild the popular Arkansas Game and Fish Commission's mobile app, which is used by 90,000 hunters to check their game. This partnership serves as a reminder that our business model truly takes a holistic approach to digital government services. It is much more than just developing an online service. Our partnership also includes payment processing, customer service support, mobile integration and much more. Next, I would like to congratulate all of our government partners and teams who have been recognized recently with a variety of honors, celebrating their digital government excellence. First, one of the biggest honors within the digital government industry in the past has been to receive a Best of the Web award from the Center for Digital Government. Last year was the final year of the Best of the Web awards, which made way for this year's Government Experience Awards. The Center for Digital Government recognized that interacting with government has evolved far beyond a Web-based experience. This new award celebrates much more than government's .gov presence. The Government Experience Awards were created to provide a greater focus on the overall online experience citizens and businesses have with government. I am proud to report that NIC partners were recognized in four out of the top five awards. Utah took first place in the overall state government category, with Indiana in second place, Arkansas in third and Mississippi in fifth. Our partners in Texas were also recognized as a finalist in this category. In addition, the State of Utah won three more awards. A Government Experience Innovation Award for the use of Google Now and Amazon's Alexa, a State Government to Citizen Experience Award for hunting and fishing services, and a Government to Government Experience Award for the Public Meeting Notice Service. Other partners honored with Government Experience Awards include West Virginia, which won a State Government to Citizen Award for their DMV Skip the Trip program; Virginia, which received a Government to Government Experience Award for the redesign of the Department of General Services' website; and Wisconsin, whose prescription drug monitoring program was honored with a Government to Business Experience Award. Congratulations to all of our state government partners – Utah, Indiana, Arkansas, Mississippi, Texas, West Virginia, Virginia and Wisconsin. Several other of the top industry associations also recognized digital government accomplishments during the third quarter. First, the National Association of State CIOs recognized the State of Utah's use of Google Now and Alexa technology. The association awarded the state a 2017 Recognition Award for emerging and innovative technologies in the public sector. Gov2Go was also honored by two national industry associations this quarter. The National Association of Secretaries of State awarded Arkansas' deployment of Gov2Go with its top honor, the Ideas Award, for bringing election information to citizens. And the American Association of Motor Vehicle Administrators recognized Arkansas' deployment of Gov2Go with both a regional and international excellence in government partnership award for the use of Gov2Go to drive adoption of vehicle tag renewals. Congratulations to our partners in Utah and Arkansas for receiving these top honors from industry associations. Next, I would like to congratulate two of our portal teams. Both our Arkansas and Maine teams were honored as one of the state's 2017 Best Places to Work. In Arkansas, the award is given to companies that benefit the state's economy, workforce and businesses. And in Maine, the honor goes to companies that have outstanding workplace environments. Both of these teams work hard every day to collaborate with the government partners and advance digital government in their states. I am proud of their accomplishments and congratulate both teams on receiving this award. Finally, I will close my remarks today by thanking the State of Indiana for continuing to place their confidence in us. We recently signed a new contract with the state following a competitive rebid process. The new contract includes a four-year base term, plus one four-year renewal option the state can exercise that could take the contract through October 2025. Again, thank you to the State of Indiana for your long-term partnership with us. We look forward to continuing to advance the state's digital government innovations long into the future. And with that, I'll turn the call over to Steve Kovzan, NIC's Chief Financial Officer. Steve?

[Steve Kovzan:]

Thanks, Robert. And good afternoon to everyone on the call. Total quarterly revenues grew 5% to $84.5 million and earnings per share came in at $0.21 for the quarter. Before I cover our results for the core business, I would like to provide some color on our effective tax rate, which affected the comparability of our earnings between quarters. Our 30% effective tax rate in the current quarter reflects an increase in the previously estimated research and development tax credit for the 2016 and 2017 tax years upon the filing of our 2016 federal tax return during the third quarter and the release of reserves for unrecognized income tax benefits due to the expiration of statutes of limitations for certain tax years. Combined, these tax items increased earnings per share in the current quarter by approximately $0.02. And as a refresher, our lower effective tax rate of 20% in the prior-year quarter was driven primarily by favorable tax benefits relating to the domestic production activities deduction for the 2015 and 2016 tax years and an increase in the previously estimated research and development tax credit for the 2015 year upon the filing of the company's 2015 tax return during the prior-year quarter. Combined, these tax items increased earnings per share in the third quarter of 2016 by approximately $0.05. Now, on to the core results for the quarter. Total same-state portal revenues grew 5% for the quarter. breaking down the components of same-state revenue growth, same state IGS transactional revenues grew 10% this quarter, due mainly to strong results from corporate filing services and motor vehicle registrations in various states. Same-state DHR transactional revenues were up 1% in the quarter. And finally, same-state portal software development revenues decreased 41% for the quarter due to fewer project-based time and materials initiatives, which we expected. As I've shared on past earnings calls, we expected same-state T&M revenues to be somewhat of a headwind this year after an unusually strong year of nearly 20% growth in 2016. Just a few housekeeping items on the portal business this quarter. First, revenues from our Louisiana portal were included in the same-state category for the first time this quarter. Also, revenues from the legacy Tennessee portal contract totaled approximately $1.7 million in the prior-year quarter. And revenues from the legacy Iowa portal contract totaled $500,000 in the prior-year quarter. Recall that our contract with the State of Tennessee expired on March 31, 2017 and the Iowa contract expired on November 30, 2016. Moving on, software and services revenues grew 51% for the quarter. As Robert mentioned in his remarks, this reflects a one-time spike in Your Pass Now volumes, driven by the senior pass fee increase, which took effect on August 28. In total, the sale of senior passes using Your Pass Now from late July through August 28 resulted in approximately $2.8 million of revenue and $1.6 million of gross profit for the company in the quarter. While this was a one-time event and revenues from the senior pass will not continue at this level going forward, it does speak to the potential of Your Pass Now service if we were to be successful in securing multiple additional federal parks and sites in the future. Our operating income margin in the current quarter was 24%, down from 25% in the prior-year quarter. As was the case in the second quarter of 2017, this margin compression reflects higher development costs for the new enterprise licensing and permitting platform for the State of Illinois and other NIC partner states, which I'll touch on in a moment; the loss of contribution from the legacy Tennessee portal contract; and higher selling and administrative expenses, due mainly to costs to enhance enterprise technology, security, portal operations, including continued development of the Gov2Go platform that Harry referenced. Moving on to our work in Illinois, during the third quarter, we incurred approximately $900,000 in costs related to Illinois, which we largely anticipated and factored into our annual guidance this year as part of the previously announced $2.5 million investment in the enterprise licensing and permitting platform. Work continues to build out the platform and we believe we are on track to deliver the first phase of the core platform by the end of the year. However, keep in mind, as we discussed last quarter, because of the proximity to year-end of our currently expected completion date of this first phase, there is a risk that delivery and acceptance of the system may not take place until early 2018. Any incremental revenues from Illinois would be potential upside to our current annual guidance. And finally, as we disclose in our earnings release today, our Board of Directors declared a regular quarterly cash dividend of $0.08 per share to be paid on December 19, 2017 to stockholders of record as of December 5. With that, I'll turn the call back over to Harry.

[Harry Herington:]

Thank you, Steve. As I said in my opening remarks, we grew the business in several ways. This quarter, we posted solid financial results due to the continued performance of our core business, as well by investments in innovation such as Your Pass Now. And we added new top-tier talent to our senior management leadership team. We're making the right investments as we continue to look ahead to what the future will bring to digital government services. I am pleased with the national rollout of Gov2Go and know this platform will continue to disrupt and transform the delivery of citizen-centric government services. With that, operator, we will now open the call for questions.

[Operator:]

Thank you. [Operator Instructions] And our first question will come from Brian Kinstlinger with Maxim Group.

[Brian Kinstlinger:]

Hi. Good evening, guys. I'm sure your pipeline is building on multiple fronts. Where do you see the most opportunity to grow revenue outside of same states over the next few years?

[Harry Herington:]

Outside of same states. This is Harry. That's a really interesting question, the way you phrased it. Absolutely, we still believe strongly in the enterprise-wide model. We've got states that are still expressing interest there. As we stated before, the federal opportunity, although slow to take off, I think we are gaining momentum. I'm very pleased with the Your Pass Now progress that we've got. And then, I see the new channels that the Gov2Go platform and other platforms we're working on will open up for us.

[Brian Kinstlinger:]

Okay. Two more. The first one is, according to the Texas RFO, and I'm now looking for any information, integrations, sessions, due diligence and final negotiations are expected in October, which has passed, and November. Can you share any information that has been shared to you and the other competitor potentially or are you not able to share anything?

[Harry Herington:]

Yeah. No, we're not able to share. It's our policy – and we've got to be very careful with procurement rules from state to state. We've created this universal policy that, once we are in a procurement like this, we just cannot speak to that procurement.

[Brian Kinstlinger:]

Okay. Lastly, Steve, if Illinois does accept a licensing and permitting app before year-end, can you just remind us, is there then a one-time revenue recognition of $2.5 million in that quarter or will it be spread out over some period of time?

[Steve Kovzan:]

No, we would expect that we would recognize it in that quarter, Brian. So, it's $2.4 million. And then, shortly thereafter, we expect in early 2018 sometime or the first half of 2018 another approximately $600,000 that we would recognize in all likelihood, potentially, in the quarter.

[Brian Kinstlinger:]

Okay, thanks.

[Steve Kovzan:]

Thank you.

[Operator:]

Our next question will come from Peter Heckmann with D.A. Davidson.

[Peter Heckmann:]

Good afternoon, everyone.

[Harry Herington:]

Hi, Pete.

[Steve Kovzan:]

Hi, Pete.

[Peter Heckmann:]

Just a quick housekeeping question on Indiana. I know that that contract is maybe a little bit different than your pure self-funded model states. First question, was it a full rebid or just the portion that was related to kind of time and materials? And then secondly, with the multiyear renewal, would we expect to see any material change in terms of conditions that would be noticeable in the financial statements?

[Robert Knapp:]

Hi, Pete. This is Robert. It was a full-blown rebid. And, no, there is no material changes that it is worth noting.

[Peter Heckmann:]

Okay, okay. And then, just one quick follow-up. And I think I know the answer here. But on the recreation one-stop, are we still delayed from final contract being given litigation by the incumbent? And if so, was there any material amount of expense related to the contract?

[Steve Kovzan:]

I guess, Pete, I will address the first question. In terms of material amount of expense, I don't think our run rate was dramatically different in the third quarter than it was in most recent quarters. We have a fully dedicated team to that opportunity, but I don't think our run rate was materially –

[Robert Knapp:]

And, Pete, relative to the –we continue moving with the same commitment and there are – obviously, it's ongoing from the legal, but it's not impacting the effort and focus we're putting on that.

[Harry Herington:]

Or that Booz Allen Hamilton's putting on it.

[Robert Knapp:]

Or that Booz Allen Hamilton's putting on it.

[Peter Heckmann:]

Okay, great. Thanks for the update.

[Harry Herington:]

Absolutely.

[Operator:]

[Operator Instructions] Our next question will come from Saliq Khan with Imperial Capital.

[Saliq Khan:]

Hi, everyone.

[Harry Herington:]

Hello.

[Saliq Khan:]

Hey, guys. A couple of questions on my end. The first one, could you highlight a little bit more about the partnership with Microsoft and how do I think about the revenue opportunity that you have in front of you, particularly as it relates to that partnership?

[Harry Herington:]

The Microsoft partnership is a great partnership. As we are promoting what we're doing with Gov2Go and the strength of Gov2Go, Microsoft saw that as a – what they saw as a game changer out there in digital government and approached us about how they could strengthen our position. And so, we – developing the relationship that we've got with them – moved it to Azure. And they are brought different resources to bear for us that helped us, I would say, accelerate some of our development [indiscernible]. Their teams are out there communicating all the time with both state and federal governments, are showing them the strength of the Gov2Go platform and introduce some people do and I see that might not have had a firsthand exposure to us. We are known throughout the industry, but ofttimes we don't have those firsthand exposures. As far as revenues, that's a whole different topic. As we continue to push out Gov2Go – because, right now, we have it as an additional channel within our existing states or contracts. We see it as an opportunity to drive new services at non-NIC states and in the federal level. But the proof of that and what that would bring, that's still a little bit out there.

[Saliq Khan:]

Got it. And the other thing that I'm thinking about is – so, you're saying it's – I suppose it might be a little bit too early to be able to understand how modified is the Gov2Go platform. So, as I'm thinking about it in the out-quarters or the out-years, is the revenue potential going to be a combination of how many citizens download and use the actual application or is it some part of that with the combination of the number of government agencies that actually plug into the platform? Anything that you can give to me will really be beneficial.

[Robert Knapp:]

Yeah. What I would tell you at this point – and it is early to try to model out out beyond the NIC states – is that it's a combination thereof. And it's going to start, of course, with – as we bring more services on, that will drive more individuals to want to be – download and use that. There is an advantage to the Gov2Go platform that crosses not only state agency boundaries, but state boundaries, so that we have individuals from one state that can certainly do business conveniently from state to state, especially in your border states. So, we see a tremendous opportunity. We've got, as you can imagine, a very strong strategic plan here, but it's too early for us to, I'd say, reveal too many of those cards right now.

[Saliq Khan:]

Got it. And then, one last thing is, because you wanted to mention Doug Rogers and him really leading the effort for business development, talk a little bit about how his role differs from what it is that you had someone else do in business development. How is his technology background going to really help you accelerate the growth that you're looking for?

[Harry Herington:]

Absolutely. The team that we had in – I'm pretty much an open book on things that I can speak to. What we had here is, we had an individual Ron Thornburgh, who's very – a great individual within the organization. He is still with the organization. He came as secretary of state for the State of Kansas for, I believe, 15 years. He drove digital government within the secretary of state as well as throughout the country because he was the leader that was the first to deploy UCC online filings, those types of solutions. But what I discovered and what we discovered as an executive team is his skill set was more in developing relationships and understanding where policy was headed versus driving what I would say closure of some of deals. And so, we move them to a place where we think his strength brings better results. And that is more of a government affairs relationship and monitoring what we have a new status as well as existing states from a legislative standpoint and building relationships there. Doug brings a different skill set. As we look around and saw it appears like we might have a weakness within our national sales team, we did a national search to go out and look for the right resource that could bring experience in this industry from state, federal that had basically danced that dance, understood how the procurements work and also understood how to develop relationships and drive it. Also someone that had a technology background and certainly with the health industry – has the technology background to understand who to speak to and be able to speak that language. Doug brought tremendous success in his previous role. He was head and shoulders above many people that we had interviewed and was the right selection here. We're very excited to have him on board.

[Saliq Khan:]

Great. Thank you, guys.

[Harry Herington:]

Thanks.

[Operator:]

Our next question will come from Gary Prestopino with Barrington Research.

[Gary Prestopino:]

Hi. Most have been answered. Harry, on this Gov2Go app, in terms of – the states have to put the services on the app or the ability to access the services on the app correct for it to work for the user.

[Harry Herington:]

Sort of. We have to have access to the government services, so that we can deploy those on the platform. So, yes. There is building the relationship there.

[Gary Prestopino:]

So, how – between partner states and non-partner states – because, again, my understanding is this is not being charged for by either partner or non-partner states. Are you differentiating the amount of services that can be accessed between partner states and non-partner states to say – non-partner state, if you took the full gamut of services, this is what you could get eventually?

[Robert Knapp:]

Yeah. Gary, this is Robert. What I would say is, certainly, with our partner states, we are aggressively bringing as many services to bear through Gov2Go as we can possibly bring. And that process allows us to demonstrate to non-partner states the capabilities. And similarly, we launched, as Harry referenced in the script, three services this quarter for all 50 states with that same principle in mind, is let's show the capabilities and the types of services. But as we launch more direct transactional secure payment processing type services that go through Gov2Go, it will absolutely be a – serve as an example to other states, to non-partner states.

[Gary Prestopino:]

Okay. And that the services you did nationwide were amber alert, Your Pass Now and the election information. Is that correct?

[Robert Knapp:]

Election information and the amber alerts were both no charge or free services. Your Pass Now, as we've spoken to before, you can actually go in and buy a national park pass from one of the six parks and two land services that we currently are providing that service for. So, that's actually fully functioning, integration, back to the payments and to the park pass.

[Gary Prestopino:]

So, all 50 states can do that through the app?

[Robert Knapp:]

That's correct.

[Gary Prestopino:]

Okay, thank you.

[Robert Knapp:]

You bet. All right, thanks.

[Operator:]

And that doesn't include a question-and-answer session for today. And at this time, I would like to turn the call back over to Harry Herington for any additional or closing remarks.

[Harry Herington:]

Thank you, Melissa. And thank you to everyone who joined us this afternoon. I look forward to sharing more developments about the company on our fourth quarter earnings call next year in February. Thank you.

[Operator:]

That does conclude the conference for today. Thank you for your participation.