Sykes Enterprises, Incorporated
Q4 2019 Earnings Call Transcript

Published: 1 Mar 2020

[Operator:]

Good day, and welcome to the Sykes Enterprises, Inc. Fourth Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded.On the call today is the Sykes management team, including CEO, Chuck Sykes; CFO, John Chapman; and IR Head, Subhaash Kumar. Management has asked me to relay to you that certain statements made during the course of this call, as they relate to the company's future business and financial performance, are forward-looking. Such statements contain information that are based on the beliefs of management as well as assumptions made by and information currently available to management.Phrases such as our goal, we anticipate, we expect, and similar expressions as they relate to the company are intended to identify forward-looking statements. It is important to note that the company's actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements were identified in yesterday's press release and the company's Form 10-K and other filings with the SEC from time to time.I would now like to turn the call over to Chief Financial Officer, John Chapman. Please go ahead, sir.

[John Chapman:]

Thank you, Karen [ph]. Good morning, everyone, and thank you for joining us today to discuss Sykes Enterprises' fourth quarter 2019 financial results. On today's call, I'll make brief remarks about the quarter and walk you through the numbers, and then turn over to Q&A for Chuck and I.To begin with, we are extremely pleased with our fourth quarter operating performance. Underlying results were strong across the vertical, virtually all key metrics. Fourth quarter 2019 saw a nice acceleration in revenue growth, healthy expansion of margins, growth in diluted earnings per share, and increase in capacity utilization. We continue to reinvest in our business while maintaining our sturdy balance sheet with strong quarter results underpinned by actions taken on capacity rationalization, exiting sub profitable accounts, and rebalancing our delivery footprint, we are setting up for a strong 2020. As we enter 2020, demand indications are better than initially expected. We are seeing solid growth in both new and existing clients across virtually all verticals.Operationally, we are also making solid progress. In particular, the challenges around elongated ramp of large client programs, we discussed in our third quarter are on a glide path of remediation. Separately, while wage inflation in US remains a concern, clients are being constructive about replacing contracts to target levels of profitability.On the strategic front, we continue to innovate, simplify, and integrate our business while simultaneously refining our go-to-market messaging. Our value proposition around full lifecycle offerings, encompassing engagement services, digital marketing, and digital transformation continues to resonating in the marketplace. With additional demand backdrop on healthy operational momentum underlying fundamentals remain on an upward trajectory. Even if the uncertainty around the Coronavirus create some short-term bumps along the way.I would like to discuss our quarterly financial results, particularly key P&L, cash flow, and balance sheet highlights, after which I'll turn to the outlook for the first quarter and full year.We had an overall solid quarter. Let's start with revenues. In the quarter, we reported revenues of $425.3 million versus our third quarter outlook of $415 to $420 million. This was roughly $8 million above the midpoint of our business outlook. Of the $8 million out performance, approximately $7 million was due to broad-based demand spanning of vertical mix. The remaining $1 million was a foreign exchange benefit. Looking at revenues on a year-over-year comparable basis, we are up 2.4% on the reported basis, and up 2.8% on a constant currency basis. By vertical market and on a constant currency basis, healthcare was up around 35%, financial services up 14%, technology up 10%, and transportation in leisure up 7%, all of which more than offset 17% decline in communications and 12% decline in the other vertical.It's worth noting that stripping out the impact of the two communication clients, we have called out in the past few quarters, one of which we have now completely exited and the other was an once-largest client, communications vertical which have swung to high-single digit growth.Fourth quarter 2019 operating margin increased to 7.8% from 6.7% for the comparable period last year. On a non-GAAP basis, which excludes the impact of acquisition related intangible and fixed asset write-offs, charges and merger and integration costs, fourth quarter operating margin was 9.2% versus 9% in the same period last year. The increase in the comparable operating margins was due to strong overall demand, higher capacity utilization and rationalization of certain client programs with sub-par profitability.Fourth quarter 2019 diluted earnings per share were up 40% to $0.56 versus $0.40 in the same period last year, driven mostly by a combination of the aforementioned factors combined with lower other expenses in the current quarter, lower effective tax rates, and lower shares outstanding due to share repurchases.On a non-GAAP basis, fourth quarter 2019 diluted earnings per share was $0.69 versus $0.58 on a comparable basis, driven by the same factors. Relative to the business outlook range of $0.64 to $0.68 per diluted share, the $0.03 per diluted share beat [ph] relative to the midpoint of the range was mostly due to a lower effective tax rate.Turning to client mix for a moment. On a consolidated basis, our top 10 clients represented approximately 41% of total revenue for the fourth quarter of 2019 unchanged from a year ago period. The top 10 clients in the fourth quarter of 2019 compared to the top 10 clients same period last year, grew by more than 2%. The remaining client portfolio outside the top 10 grew even faster compared to the same period last year. We have no 10% client in the quarter versus one just shy of 10% a year ago period, driven by broad-based growth in the fourth quarter despite lower demand from our once largest client in the communications vertical.Now, I'd like to turn to some select cash flow and balance sheet items. During the quarter, capital expenditures increased to 3.3% of revenues from 2.4% in the year ago period. The increase in capital intensity was largely driven by expansion of seats mostly offshore and in EMEA, coupled with a technology refresh.Trade DSOs on a consolidated basis for the fourth quarter were 79 days, up 3 days comparably, and up 2 days sequentially. The DSO was split 78 days for the Americas and 83 days for EMEA. We collected roughly 10 days' worth of DSOs within a few days of the year-end.Our balance sheet at 31st December 2019, remains strong with cash and cash equivalent of $127.2 million, of which 98.5% or $125.3 million was held in international operations. At 31st December 2019, we had $73 million in borrowings outstanding down $4 million sequentially under our $500 million credit agreement. We continue to hedge some foreign exchange exposure for the first quarter and full year 2020, we are hedged approximately 76% and 57% at a weighted average rate of PHP52.42 and PHP52.26 to US dollar. In addition, our Costa Rica Colon exposure is hedged approximately 71% and 40% [ph] at weighted average rate of CRC606.56 and CRC590.29 to the US dollar.Now, let's review some seat count and capacity utilization metrics. On a consolidated basis, we ended the fourth quarter of approximately 48,200 seats, down approximately 600 seats comparable. Almost all of the comparable reduction was related to actions around capacity rationalization. The fourth quarter seat count can be further broken down to 40,200 in the Americas and 8000 in the EMEA region. Capacity utilization rate at the end of the fourth quarter of 2019 were 76% for the Americas and 72% for EMEA versus 70% for the Americas and 75% for EMEA in the year-ago quarter.The increase in the Americas utilization was driven by higher demand and capacity rationalization of under underutilized excess capacity, while the reduction in EMEA was due to capacity expansion and utilization for our at-home platform as a complement to our brick and mortar facilities. The utilization rate on a combined basis was 75% versus 71% in the prior year-ago period. With the increase mainly due to higher demand coupled with capacity rationalization of the underutilized capacity.Now, let's turn to the business outlook. We continue to see broad based increase in client demand across most verticals. In fact client demand projections for 2020 are significantly better than we initially indicated in our third quarter 2019 earnings release. To service this higher demand, we expect higher than planned ramp costs, which are expected to be front-end loaded. Our first quarter and full year 2020 revenue and diluted earnings per share do not reflect the impact of the Coronavirus, given its uncertain path within and beyond China. However, China generated roughly $36 million of revenue in 2019, with operating margins, net of overhead allocation, roughly in line with current Company average.We believe the revenue and diluted earnings per share impact for the first quarter could be in the range of $1.5 million and $2 million, and $0.03 to $0.05, respectively, based on our current labor participation levels at the facilities and home agent utilization post Chinese New Year.Our revenue and earnings per share assumptions for the first quarter and full year are based on foreign exchange rates as of February 2020. Therefore, the continued volatility in FX between US dollar and the functional currencies of the markets we serve could impact positive or negative on revenues and both GAAP and non-GAAP earnings per share relative to the business outlook in the first quarter and full year. We anticipate total other interest income expense, net of approximately $1.2 million for the first quarter and $3.8 million for the full year. The full year 2020 amount is in line with 2019. The amounts in other interest income expense, however, exclude the potential of impact of any future foreign exchange gains or losses.We expect our full-year 2020 effective tax rate to be in line with 2019. Considering the above factors, we anticipate the following financial results for the three months ending 31st March 2020.Revenue is in the range of $417 million to $422 million. An effective tax rate both GAAP and non-GAAP of 25%. Fully diluted share count of approximately 41.5 million. Diluted earnings per share of $0.39 to $0.43. Non-GAAP diluted earnings per share in the range of $0.49 to $0.53. Capital expenditures in the range of $15 million to $20 million. For the 12 months ending December, 31, 2020 we anticipate the following financial results. Revenue is in the range of $1.7 billion to $1.72 billion. Effective tax rates, both GAAP and non-GAAP, of 24%. Fully diluted share count of approximately 41.6 million. Diluted earnings per share of approximately $2.02 to $2.16. Non-GAAP diluted earnings per share in the range of $2.36 to $2.50. And capital expenditures in the range of $50 million to $60 million.With that I'd like to open the call up for questions for myself and Chuck. Operator?

[Operator:]

We will now begin the question-and-answer session. [Operator Instructions] The first question will come from Josh Vogel of Sidoti & Company.

[Josh Vogel:]

Thank you. Good morning. Good morning, Chuck and John. I guess my first question. We've seen the telco business shrink to about $350 million now. And John, you did mention that outside of the two largest clients, you actually did see high single-digit growth in the remaining of the vertical, but I'm just curious about the sector in general. Is it potentially structurally broken or the business that you're growing into does it make as much money as the legacy business? So just wondering what you could, any insights you could share there.

[John Chapman:]

Yes, yes, I mean -- I mean, Josh. Telco as a vertical is not broken. I mean we did describe that -- let's call our telco business, where we had pricing that has been compatible with where we're delivering the services from. We were delivering onshore services. Clients were going, looking to go offshore. We had labor challenges, et cetera, et cetera. And that applied to both once largest client and the other client where the relationship ended. We still like the telco vertical. It is operationally intensive. We are winning new telco pieces of business. Is it more operationally intensive in some verticals? Yes. Are the margins worst? No. Are the margins what we need them to be? Yes. And so I don't think the telco vertical is structurally broken. I think we had a business that was structurally broken in telco vertical. That's by and large behind us now, in fact, that is behind us now.As we cycle through Q1 and Q2, we still have that year-over-year revenue headwind, but you will see even excluding the two clients who keep calling out, you'll see revenue in the vertical grow from Q3 onwards, even excluding growth. So we are optimistic about the vertical. We do want to be a significant player. It's still a significant piece of the market, and we absolutely believe we can succeed where you price the contracts and where the service is delivered, mainly in the telco vertical, that's going to be on a nearshore and offshore basis.

[Josh Vogel:]

That's helpful. Thank you. Shifting gears a little bit when we think about your digital business, Clearlink, Symphony, the investments you're making in EXL, how big was that business in 2019. How did it perform versus '18? And what are your expectations for this year that are built into your guidance?

[John Chapman:]

Okay. Do you mean digital business are then those three businesses or do you mean digital clients or do you mean us providing channels, as support in the digital channels jobs.

[Josh Vogel:]

I guess what you would [indiscernible]. Yes, I know it's a broad term, but I guess what you would classify as your digital business, the AI, RPA that type of stuff.

[John Chapman:]

Okay. Well, if we look at -- I mean, we don't -- the Symphony remember was a small asset. We delivered about $7 million of revenue in Symphony, but that grew close to 100%, and not consolidated, because we only bought that last year. But that has really nice growth, and the margins better than the average. Again Symphony acquisition was not about growing up large consultancy. This will add to our portfolio of services. So that piece of the digital business is $30 million. Clearlink, we've said, is always about the 15% of revenues. We did talk about how, we were trying to grow on the property and casualty insurance in the digital marketing space. And last year, the revenue growth in Clearlink was, it was pretty flat. But as a result of us making that decision on P&C, the actual operating margins improved. And So again slightly better than corporate average last year. But we expect that to go back to its double-digit growth in 2020. And in terms of EXL, we obviously don't consolidate their numbers, but increasingly we are seeing us using EXL as part of our capability within our sales, within our Clearlink business. We see that growing. But as a Company, I'm not going to say if we had EXL as it is a private company. But we are very, very excited with the growth that we've seen in 2019. They're more than doubling their business, and we are looking to use more and more of their capabilities. And we love having them in, [indiscernible] that really educate us in what's happening in the AI World as the services become more AI enabled. So, yes, so I guess that probably adds up to close to 20% of our revenues being around Clearlink and Symphony and Qelp, which is exciting because that's roughly around the same number, it is the amount of business we do in the non-voice channel. So the digital voice channel is the same -- end up can effectively 20% of revenue.

[Chuck Sykes:]

Josh, it's Chuck. If you can [indiscernible] obviously I'm not well, my voice is not going to work here today, but when you're talking to us. I would think in the context of three dimensions, one is digital business. Now for us, we're talking about our clients in that case, and when we think about our clients in that case, we think of three characteristics. Typically companies that are very light and physical assets. Some people refer to that as information enabled assets. The second thing is that they're very high velocity model businesses where the consumer can get immediate consumption of the products or services. The third is that they possess the ability to rapidly scale. So those are the characteristics. Now it's starting to get a little tricky, because traditional businesses that have lot of physical assets, are trying to embrace characteristics of digital businesses. But for us, at the time being, that's what we think of the digital business. So Uber and Netflix and some fintech companies, you know that type of stuff. And to John's point that's about 17% to 18% of our Company today.Now, we want to grow with those businesses because they're growing so fast. But on the other hand, today, they're pretty small. Now, the second component is digital channels. And yes, we're seeing there and the thing there is that, when you think about our channels today, 20% of our business is related to those channels. But here is an interesting caveat, many on the digital businesses that we're serving are using only voice channels at least that they are outsourcing to us. And on the other hand, many of our traditional clients are outsourcing to us digital channels. So that's where it is confusing, I am sure if you guys when you're talking. So our nomenclature will be a digital business is describing the client, and the digital channel is the medium in which we're supporting our clients.And then in terms of our companies inside, we refer to them as digital technology units. So now on those units, we really want that capability to just become embedded in our operational infrastructure. We really don't want to sell it as a separate ad hoc service. We just want it to be the way how we deliver our traditional engagement services and we will create new areas of value and differentiation. So anyway, that's the way that we got to think of the business in that sense. I hope [indiscernible] understand me.

[Josh Vogel:]

No, I did. It's always great to hear your voice. And I appreciate all the insight there. I just have one more quick one on seat count. I've noticed that it's increased sequentially the past few quarters. Can you just talk about your plans for 2020 and where you're looking to add seats?

[John Chapman:]

Yes. We suspect, you know, what, well, it was included in our estimate just now. It was about 2,500 seats, Josh. The majority of them will be added in the second half of the year. And virtual without exception being a near- and off-shore addition, because that's where we see, where we look forward and see the growth that we see. That's where we see, where we want to be adding seats, getting ready for continued growth in the 2021.

[Josh Vogel:]

Okay. And I'm sorry, if I could just sneak in one more, just thinking about China. I was curious, how many home agents you have there? And then can you just maybe talk about what your business continuity plans are in case the facilities there can't be open, where you'll roll-in that volume over to?

[John Chapman:]

Yes, that's a really interesting question, because before Chinese New Year, we have zero home agents. Within the week-and-a-half after Chinese New Year, we had 60% -- I think it's 63% of people working, 40% of them were at home. So even though, I guess we didn't have a formal what I call is business continuity plan, we obviously were able to use our scale as an understanding of that model, what you need to do to stand up that quickly. And we went from zero agent to 40% of those 63% at home. Now the good news is we know that over 80% of people are working in a combination of brick and mortar and at home, but it just showed you the advantages of having that capability, understanding how you ramp up quickly at home agent. So again that's a huge shout out really to Chinese management and employees that they were quickly able to use their skills and knowledge that have in them and the Company, but quickly pivot and be agile enough to get to the point where 40% of agents were at home within two weeks of getting back.

[Josh Vogel:]

Yes, for sure. Well, thank you guys for taking my questions.

[John Chapman:]

Thanks, Josh.

[Operator:]

The next question will be from Bill Warmington of Wells Fargo.

[Bill Warmington:]

Good morning, everyone. And so I have a question for everybody, but Chuck. So Chuck, just rest your voice. I hope you feel better?

[John Chapman:]

There is no, Bill, there is no NP [ph], he sounds like.

[Chuck Sykes:]

It is down.

[Bill Warmington:]

I guess it's hurting us more than it's hurting you.

[Chuck Sykes:]

And that's why John read the script.

[Bill Warmington:]

All right. Well, for the first question, I just wanted to ask you if you could talk a little bit about what gives you confidence in the sustainability of the mid single-digit revenue growth that you're talking about?

[John Chapman:]

And what gives us confidence is the number of new clients that we've been adding. What gives us confidence is the number of large clients who are maybe for whatever reason, looking to add a new vendor where our portfolio of services that we are speaking to them about, getting excited that we have the kind of client that even if they're going to buy traditional engagement services today, that we could be their digital partner to grow with in the future. Because if you remember, we always talk about this business being a 10-year relationship. And so, again if you think about, let's call previous years, we did have disproportionate growth across one large client. And this is all about guidance. We need to try and diversify over index in any one geography with any one client, and any one vertical. What we'd say Bill, is we're really excited by the breadth of growth we've got across both, let's call it the digital businesses that Chuck was referring to, as well as traditional clients that we've been winning. So all I would say is it's broad-based in terms of countries, in terms of clients, in terms of verticals that gives us confidence that -- we're not saying we're going to always be above the 46% range, but obviously the last couple of years, when we get a client that went from 20% in revenues down to 5%.So it is really difficult to deliver any kind of growth, which we have managed at least echo a little bit in 2019, but going forward, we're really hopeful that those new clients, new relationships, expanding lines of business, good list of clients who are winning new business that they're then giving us pieces of -- we're getting more comfortable obviously in terms of the revenue guidance, it's great for this year. And we believe that based on that broad-based it's going to be much more sustainable going into the future years.

[Bill Warmington:]

So for my follow-up question, I wanted to ask Coronavirus question. And based on what's happening in China, how much of your US capacity could you convert to home agent, how long would it take? How much would it cost?

[John Chapman:]

It's interesting, because in China it's a -- we have clients that said it would not be at home, but then for them that is the only auction we were able to do that. And considering the US, it's where we've got most of our home agents. And we've got a biggest amount of infrastructure in place today and the biggest knowledge of what we would do, I wouldn't like to give you an answer in terms of looking at client by client, but absolutely I believe, we'd be in the best position both the US would be the -- and the best position in the Sykes Company to react to that. And I think Sykes would be in one of the best positions in the market to react to that.We just don't -- we don't envisage that happening today, but we certainly believe that we could do more than even what China was able to do within two weeks, which was just phenomenal, to turn 40% of people who are active at home within two weeks. And then, a few words by Chuck.

[Chuck Sykes:]

Bill, I bet you, if our clients literally with our few existing people [indiscernible] center and work from home, I think we could do almost the entire US in less than 90 days.

[Bill Warmington:]

Wow.

[Chuck Sykes:]

Because you don't have training, you don't have recruiting, and people have desktops, and it will just be the…

[John Chapman:]

[Indiscernible] be careful.

[Bill Warmington:]

Yes.

[Chuck Sykes:]

We just need communications infrastructure and a lot of it is hosted in the cloud now. So it will be pretty quick.

[Bill Warmington:]

Wow! Okay. Well, again, Chuck, I hope you feel better, and thank you very much for your answers.

[Chuck Sykes:]

Thank you, Bill. Thanks.

[Operator:]

The next question will come from Dave Koning of Baird.

[Dave Koning:]

Yes. Hey guys, thanks. Congrats on a nice year. It was good to see margins up so much in 2019, and revenue for next year, it's great to see. So I guess first of all in, if we look at 2016, 2017, 2018, those years you had margins come down, 2019, they went up nicely. How much of that was just core and how much was -- I know you had some like Symphony, you did some of the acquisitions in there, if you'd break down the margin expansion by just core and acquisitions, how would that kind of mix?

[John Chapman:]

The acquisitions are so small, it makes no difference, David. Even though it's incremental, I mean, I think if you look at EMEA, over the year Symphony's 30 basis points. But when you actually look at over the consolidated, it doesn't even get the rounding number. It's hard to say, all of the things that contributed to it, other than all the things that we've kept mentioning. We have removed suboptimal program. We got the US programs we kept, we got them adjusted, still they work for both the client on their selves. We've improved their facility utilization, and we know has much that benefits as we still got a long way to go, but that is also part of that. And the new business we're winning, we're winning at today's prices, at today's margins, at the target. So it's a combination of all of those things, David. I wouldn't, definitely not acquisition basis, is what I'm saying. It's all about the operational maneuvers that we proved over the last 18 months.

[Dave Koning:]

Yes, okay. Okay. And then on the China conversation, I guess it's all delivery out of China, right? It's not China-based revenue from the standpoint, it's not China clients buying from China call centers, it's more, the delivery is in China serving other countries, is that right?

[John Chapman:]

It's a mix, David. We've got China support on international clients, vast majority is international clients, but some of it is supporting those clients in the Chinese market, but we do have a multilingual capability in China as well. So we'll do Japanese support from China, et cetera. So it's a mix. I'm looking at the box, because I don't really know the exact mix between Chinese delivery then, but I guess [indiscernible].

[Chuck Sykes:]

It's 85%. Yes, 85% are…

[John Chapman:]

Chinese consumers? Yes.

[Dave Koning:]

Okay. And when you did the quick ramp up. I mean, it's pretty impressive that 40% could get into just at home right away delivery. Is the service, is there any like do you have clients ever -- calling something change and is it completely unnoticeable and no service issues?

[John Chapman:]

I'd not be able to answer that strictly just no, David. All we're, is we're capable of doing service, we've the employees that are trained to do the service, right? I mean, undoubtedly the client is going to have seen an impact. There is no doubt about that. And again that's part of what we've included as our estimate of the impact in Q1. I don't think I've got any feedback in terms of -- I'm sure the client is ecstatic but it could have been 100% down and know that only 50% down, but I don't have any formal feedback that I could give you, David.

[Dave Koning:]

Okay, now that's fine. And then, and then the last one, just the, the mix between first half and second half earnings, the last couple of years. I'm looking at, it looks ballpark, in the low 40s percent in the first half of earnings, and the back half is maybe high 50s percentage of the year. Is that kind of what you're expecting in this year?

[John Chapman:]

Yes, you won't see much change, David. Yes.

[Dave Koning:]

Okay, great. Thanks guys. Nice job.

[John Chapman:]

Thank you.

[Operator:]

The next question will be from Vincent Colicchio of Barrington.

[Vince Colicchio:]

Yes, I'm curious. How are you? Are you benefiting from consolidation in the market.

[John Chapman:]

Yes, I mean we, it certainly not the lion's share of the things we're running, but we did call out that when two large providers come together and our client then assesses risk profile about too many of the eggs in one basket, then they go out to the market. And we all know that business is great in terms of client tenure is 10 years. What that does do us, it makes it difficult to break in. And so, the beauty is that where the opportunities happen because of consolidation. And we've showed up, we've showed up with all of our capabilities and the clients have told us that we are showing up differently, and they then awarded us business as a result of that differentiation. So sometimes they've given us little bits and pieces of RPA, sometimes is mainly engagement services, but we have benefited from clients looking to expand their vendor list because of consolidation, yes.

[Vince Colicchio:]

And are wage inflation and attrition levels staying -- are the levels the same they were last quarter? Any change either in the US or internationally?

[John Chapman:]

No. And in the US our attrition has come down. But it's actually a function of us exiting those sub-profitable programs and having less telco. Telco does drive higher attrition, both in the US and outside the US, but US is described as stable in terms of, in terms of labor rates. And in terms of offshore, not much to report in terms of change, Vince. What does that mean -- we have got a lot of growth in the Philippines. I think a lot of people have been growing in Philippines. There is a new phenomenon there, it's kind of like, call it sign-on bonuses that we get, and these are, these can't be materialized as you've got huge ramp in any one quarter. That's the new thing we're seeing where if somebody stays six months, there is kind of bonus at the end of that, if they come and meet the quality metrics and stay. But again, that's not material cost. And there is no unknown. And so that's included in how we price. So the overall for salaries and attrition, no real news to give you compared to Q3.

[Chuck Sykes:]

One thing, Vince, I would add is at, in the US, particularly with new business, I would say the margin in terms of pricing as adjusted to allow us to pay the targeted wage rates as well. So that's really encouraging.

[Vince Colicchio:]

And I have a sort of qualitative question on Symphony. To what extent do you think adding it to the portfolio has helped that, you know, perception your existing clients have of, you know, what you can offer them?

[Chuck Sykes:]

Yes. And I think the best way we can answer that is what business, we have one. It has absolutely been affirmed in the market that it change the perception of the value we can deliver long-term. So remember again with the relationship built in years, clients, I think, John made the comment, a digital partner you can grow with, and so they love seeing these digital technical technology capabilities that we have. So it is encouraging. But, so I mean, the best thing is just from the clients themselves.

[Vince Colicchio:]

Thanks, guys. Nice quarter.

[John Chapman:]

Okay, thanks.

[Operator:]

And this concludes our question-and-answer session. And this also concludes our conference call for today. We want to thank everybody for joining. You may now disconnect. Have a great day.