Sykes Enterprises, Incorporated
Q3 2013 Earnings Call Transcript

Published: 5 Nov 2013

[Operator:]

Good morning and welcome to the Sykes Enterprises Third Quarter 2013 Results Conference Call. [Operator Instructions] Please note, this event is being recorded. 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 is 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 indeed 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 in 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 Mr. Chuck Sykes, President and Chief Executive Officer. Please go ahead, sir.

[Charles E. Sykes:]

Thank you, Chad. And good morning, everyone, and thank you for joining us today to discuss Sykes Enterprises third quarter 2013 financial results. Joining me on the call today are Mike Kipphut, our Chief Financial Officer; and Subhaash Kumar, our Vice President of Investor Relations. On today's call, I will provide a quick summary of our operating results, after which, I will turn the call over to Mike Kipphut, who will walk you through our financials. And then, we will open up the call to questions. I want to start out by congratulating our employees worldwide for a job well done. Through their solid execution, we exceeded what we outlined in our business outlook. We beat our third quarter revenue and non-GAAP diluted earnings per share range at handling. And we continued to carry that financial outperformance through to our year end revenue outlook. Considering that the last 3 years have been uneven demand-wise, we are often asked about the underlying health of the customer contact industry in this hyper digital age. While economic cycles will continue to influence our industry, as it does others, we continue to believe in the customer care industry's long-term growth prospects. We live in a world where switching costs among brands are almost negligible. Our clients and customers, be it consumers or enterprises, continue to gravitate towards brands that are synonymous with quality and value. With customer experience weighted equally, with innovation and affordability, the industry's value proposition of driving a great customer experience every time by being our clients brand ambassadors becomes even more essential. As such, our employees and our industry's mission to drive the right business outcomes for our clients, remain as relevant today as ever. And with our simple, yet powerful operating formula of focus, capabilities and financial strength, we believe we are well-positioned to capitalize on trends, driving the economic landscape in our highly fragmented industry. With that, let me provide a brief summary of our financial results. Consolidated revenues were up 14.8% during the quarter. Underlying business drivers were better than expected. In fact, they were fairly broad, helped by solid end market demand, coupled with share gains from competition and shift from our client's in-house operations. More specifically, we saw demand within various lines of business and services, including wireless, broadband, retail banking and tech support. Alpine meanwhile continued solid performance streak, sustaining its double-digit revenue growth trajectory, even without Alpine Access and the currency effects, revenues grew approximately 11%. This double-digit organic revenue growth rate during the quarter represents the fastest pace of growth for the company in over the last 20 quarters. Turning to our operating margin performance. Through ongoing productivity initiatives around facility rationalization, at home agent platform integration and cost optimization, through sharing the best practices with Alpine, operating performance improved nicely. We delivered respectable operating margins at 7.1%, better than what was implied in our business outlook. We did this even as we made significant investments in facilities and embarked on significant agent ramps. And finally, we closed the quarter with a diluted earnings per share increase of 25.4% comparably. Cash flow from operations was robust during the quarter, which enabled us to pay down some debt. And with the strong balance sheet, we believe we have the resources and flexibility to continue investing in our business and fund future growth. In conclusion, we are extremely pleased with our third quarter results. Considering the somewhat mixed macro economic environment and a volatile political landscape, fourth quarter is shaping up to be another solid revenue growth quarter. This will make it 3 consecutive quarters of comparable revenue growth. Demand is expected from both new and existing clients with a greater bend toward new clients, accompanying the better than expected revenue growth however, are significant ramp expenses, which we are currently incurring. While the pace of growth in the fourth quarter will dilute our near-term margin profile, we believe the opportunities are strategically compelling enough to warrant a short-term trade-off. We recognize the task ahead, and we remain focused as ever. We continue to execute against our strategic and growth objectives, just as we delivered on the turnaround in EMEA. We have now delivered on the revenue growth engine. And we are now directly maximizing margin expansion, as we are in a better position to control the levers of demand. Through the actions we have taken and continued to take, including leverage in Alpine's platform and processes, rationalizing capacity and driving operating efficiencies, we believe we're on the right track to restore financial profile and unlock value for our shareholders. With that, I'd like to hand the call over to Mike Kipphut. Mike?

[W. Michael Kipphut:]

Thank you, Chuck. And good morning, everyone. On today's call, I'll focus my remarks on key P&L, cash flow and balance sheet highlights for the third quarter of 2013. After, which, I'll turn to the business outlook for fourth quarter and full year 2013. During the third quarter, revenues were $322.1 million. They were $14.6 million above the midpoint of the business outlook range of $305 million to $310 million. The revenues increased relative to the midpoint of our business outlook, was driven largely by run rate demand across the broad spectrum of client programs spanning the communications, financial services and technology verticals. On a comparable basis, third quarter 2013 reported revenues were up by 14.8%. The increase by verticals is as follows

[Operator:]

[Operator Instructions] Our first question comes today from Josh Vogel from Sidoti & Company.

[Josh Vogel:]

If I run the numbers, I'm getting about 25% revenue growth from AT&T and considering you put up 33% growth from the entire sector, obviously, you're seeing just broad-based demand there. I was just curious, can you talk to whether this is from new or existing logos? And how broad are the growth drivers here? And also, are you winning share? Or is this just overall volume pickup with the existing base?

[Charles E. Sykes:]

Mike, do you want to grab that? Or do you want me to...

[W. Michael Kipphut:]

Sure. You want to talk about -- I'll start off with the existing and new business. As we look at the sequential growth rate, about 2% of it is coming from new and 98% from existing. So it's pretty solid growth rate from the existing clients. If you look at it on a year-over-year basis, that picture is a little bit different. 30% is coming from new, and that's principally from the telecommunications vertical, both here and the U.S., as well as in EMEA, and then 70% coming from existing.

[Josh Vogel:]

Okay. And now, just looking at organic volume trends, which are obviously very positive. I was just curious, are we at a point where we should expect to see seasonal patterns resume typically where you see a dip from like Q4 to Q1? Or should we -- I'm just trying to get a sense of -- I know you're not giving guidance, but I just wanted to give a sense of how Q1 should look relatively to Q4?

[W. Michael Kipphut:]

Yes. I understand, Josh. And you're right, we're going to stay away from 2014, but I think if you look historically, our pattern is not going to change. Usually, going from Q4 to Q1, our revenues are generally off 2% to 3% and that's just due to the volume downturn in the latter part of the first quarter. Q2 is generally our trough quarter and typically, Q3 and Q4 is our strongest quarters.

[Josh Vogel:]

Okay. And just lastly, and I'll jump back in the queue. The 1,000 incremental seats, where are they going to be mostly built out?

[W. Michael Kipphut:]

Yes, it's really split pretty evenly between the U.S. or -- it's all in the Americas region, but it's principally in the U.S. and to a smaller extent, over into the Asia-Pacific region.

[Josh Vogel:]

Okay. So based on current demand trends in EMEA, you feel comfortable with the 85% utilization?

[W. Michael Kipphut:]

Yes, I mean, it's our target range as you know, the 85% utilization. But in that target range, we look for 8% to 10% operating margins, and that's not changed, we still see the same trends as we have previously. However, as we have pointed out in the past, as well, that once you have some substantial revenue growth and that's in an excess of 5% to 6%, so like the 10 double-digit level, you will see a lead lag effect. So we do have brand cost and facility cost associated with those new revenues and so, once those settle in, which usually takes a quarter, you should be able to take back to that 8% to 10% range with 85% capacity utilization.

[Operator:]

Our next question is from Dave Koning with Baird.

[David J. Koning:]

I guess, first of all, we've often asked about just the margin progression over time and now you feel like 8% to 10% is possible overtime. It looks like the -- the second half of the year looks like -- this quarter was about 7% and it sounds like guidance was around 7% margins again in Q4 with some headwind from ramp cost. How should we expect that going forward? I guess others, it seems like there was some cost early this year that are probably going away. Is this -- I guess, can margins keep going up from here as the revenue gets layered on, I mean, should we expect pretty nice expansion into next year?

[Charles E. Sykes:]

Yes, Dave, I know, with this being -- coming into fourth quarter, we're going to get bumped up as to how much we want to start talking about next year, so I apologize for that already. But just to kind of answer your question, and I think to put in perspective, year to date, in Mike's comments, he had talked about how we've added 1,800 net seats on a gross basis, 5,300. So the 5,300 alone is certainly a significant cost to us, building the facilities and then the people we're putting in to it. But we also have cost in getting rid of the 3,500, and that's what making, I think, the margin profile right now just a little bit skewed towards not as good as it should be in the normal state if we were just adding new seats in growth. Going into next year, we don't see that the readjustment, if you will, of all the exiting of seats quite at this magnitude. If you recall over the year, besides the steps we took in Europe to focus on the markets where we felt we could win, but at the same time, is that as a company, I'm saying we continued to mature and with our focus from around customer excellence, we restructured our company to build more domain vertical expertise, really empower our people managing relationships. I think we're beginning to see the success in that in our growth. And what's happening is that again, when we win deals now, clients are wanting their own dedicated sites that are pretty significant. And that's what's misaligned with the way that we had vacancy in our seats. So that's kind of again going back while we're having to add some of these seats while we're winning and you'd see the compounding revenue growth. So next year, I would anticipate seeing a little more of a normalization toward we just shouldn't see quite of all the new seats, all the seats being taken out kind of simultaneously. We all wanted to be a little careful of how much we try to guide for you guys from the 2014 and I apologize for that. But I'm just trying to give you a little color to it.

[David J. Koning:]

Yes -- no, that's helpful. The other thing is, cash flow was really good this quarter, but year-to-date, I think it's still, if we calculate that right, about $0.12 or so on the pre-cash flow per share compared to EPS of maybe $0.80-some now. So do we expect some more normalization in Q4, meaning a pretty big free cash flow quarter just to get it close to EPS for the year?

[W. Michael Kipphut:]

Yes. I think there will be some catch up. Yes, it really depends on the receivables and the DSO. As you know, a lot of the companies play a little game right at quarter end to dress up the balance sheet a little bit and you have to play along. So if you look at historically, our collection of receivable 5 days after quarter end, it typically is almost -- well, at least 5 days right of the top. So depending on the timing in the fourth quarter, where it becomes even more prevalent, the cash flow from operations can swing either way, but other than that, the EBITDA is a good proxy, CapEx we provided you guidance. And so, everything should be pretty much in line with previous years.

[David J. Koning:]

Okay, great. And then, I guess finally, just from a big picture perspective, tell us how you think -- and WEST posted their guidance down a little bit, just due to weakness in the core call center business. So it just seems like the environment is a little choppy out there, but there's something that you guys are obviously doing right. Is it just a share gain situation right now? You're winning deals compared to others you think? Or maybe do we get a wrong read on the environment from those 2? I'm just kind of interested in your perspective.

[Charles E. Sykes:]

Yes, Dave, this is always a tricky answer to me. Because right now, I mean, we're really pleased with our numbers. We've got our challenging times and I think sometimes people have a tendency to extrapolate out that we're losing and we kept trying to explain the investments we were making. Remember, the market is so fragmented, that I think most of the issues that we're all facing are just indicative of our portfolio of clients in many, many cases. In our particular reporting today within that portfolio, we are winning good account share and we do like the momentum that we're seeing within our portfolio now as we look to expand. But it's just difficult for me to say without understanding all the companies that they're specifically serving, just exactly how it compares to what we see. I have to say though again -- I mean, and it's in our comments, I mean the economy is certainly is in a better place than it was a few years ago, but it still has an air of uncertainty and that is the thing that always just keeps us again cautiously optimistic. I don't know how long we are going to be in that phase, but it just feels to me right know, it's just an unpredictable time.

[Operator:]

The next question is from Shlomo Rosenbaum from Stifel.

[Shlomo H. Rosenbaum:]

I have a couple of questions here. First of all, I want to avoid talking about 2014, so I'll phrase the question this way. How long are the ramp costs going to extend in the numbers?

[W. Michael Kipphut:]

Well, typically -- there's a quarter lag. And I don't think that's anything different than what we're experiencing here right now. A lot of the growth in every one of the verticals, with the exception of healthcare, kind of fits that same mode. So you may have training out there 12 to 15 weeks at the most in some cases, 2 to 4 weeks. So there's a mix there. We're also dealing with, though, is the facility preparedness as well. So you've got a lot of those things going on. But typically, Shlomo, I don't think it's going to last more than a quarter at a time. Now, as our revenues continue to grow, there's a lead lag effect and so if the growth levels slow down to about 5%, you should be able to see better margins as you move across without the ramp affect taking place.

[Charles E. Sykes:]

Shlomo, there's -- and I hate giving you guys answers sometimes and it's really not an answer, it's just giving you more of the things to consider. But really, I think of 4 things that affect that. I mean, if we're -- first of all, the client programs how long their training is, is a big component of it. Some client programs literally are 2 to 3 weeks of training and some run in 10 to 12 weeks and that's a big factor. The other thing is that if it's going into an existing center versus if we're having to build a new center, that ends up, not affecting the answer to that question. And the other thing is that if it's going to be brick-and-mortar or if it's going to be virtual. Virtual, we can ramp a program, 70% faster than we can in brick-and-mortar. Sometimes the ramp expenses can be a little more intense from a labor standpoint on the virtual model side, but the speed is way, way faster. So what happens is you have a mix of all those things that are taken place and that's what affects the answer to that question. So it's hard to give you just black and white, but -- from what we are saying today.

[Shlomo H. Rosenbaum:]

Are the ramp costs out by the first quarter of next year? Or I mean, of the stuff you signed, I'm not talking about, look, if you guys have a good -- you guys have done a really good job of extricating yourself from the client weight that you have for the last 3 years and it would up kind of hurting you...

[W. Michael Kipphut:]

Yes, but the majority of them will be, Shlomo, but some programs do ramp up right at the last of December as well. So -- but substantially, that is correct. Yes.

[Shlomo H. Rosenbaum:]

Okay. And then can you just give us a little bit more color on what's going on in the healthcare vertical? Is it a specific to Canada? Is there anything else going on that has to do with what's happening in the political environment in the U.S.?

[Charles E. Sykes:]

Yes. For us, again, and just to keep it relevant with us, we still see financial services communications even in our technology space near-term be in our opportunities healthcare, we absolutely are seeing opportunities the acute situation that you're seeing in our numbers today is very much relevant to the program that we have in Canada, which is our largest program. And volume with that program is still directly correlated with how much the provincial Government of Ontario really markets and creates awareness of that program. We did have a couple of programs too that we actually migrated from the U.S. to offshore and that's a little bit mixed in there as well. But in regards to some of the legislation, we are seeing now on our shelf [ph] opportunities with the insurance companies, as they prepare to build a readiness for the -- what's anticipated to be a consumer marketplace. So we're still pretty keen on the healthcare vertical longer term.

[Shlomo H. Rosenbaum:]

Okay. And then, in terms of new customers versus existing customers. Can you talk a little bit more about both the opportunity long term and then, the economics of ramping a new customer versus an existing customer? Is it significantly different or is it really dependent on the programs? Just because you are getting new more customers in the mix, which seems like a good and healthy long-term prospect.

[Charles E. Sykes:]

Yes, long term, I mean, for us, when you look at the 4 key verticals that we have set our sights on. We just believe that the trends of those companies, one, continuing to outsource, and 2, the fact that they absolutely want to use fewer suppliers. We do believe that the investments that we've made with the investments with ICT 3 years ago and then with Alpine last year, has really strengthened our delivery capability and has given us the scale to where those companies can outsource significant business to us. And we just -- we're in the path of progress for that. So we're pretty keen on -- as we looked on the outside for the growth prospects long term. What's going to happen though, it's interesting in our business, because it does seem to move in kind of a lumpy way, in that it seems like first part of the year may be disproportionate to existing and then the other part may shift, and disproportionate to new. But I think over time, we want to be in the position that we're going to continue to see a nice healthy mix from our existing base of business. In terms of ramp expense, they both can be expensive. I mean, ramping an existing client typically is a little less money, but that's only because we already have the IT infrastructure in, and we have management in. But if we're building a new site or the growth is that significant, there really isn't a big difference at all, because we still have to hire site management, provision the IT, and go through all the same things. The predictability of it is probably a little better. Certainly, when you're ramping a program that you know well. I think you have more confidence in what to expect and get things up and running in an optimized fashion. I'm not giving you a specific answer, just the color around it. But that's where we see it, Shlomo.

[Shlomo H. Rosenbaum:]

Can I just sneak in one last question, and I'll get out of the queue over here? Just in terms of Alpine, are you having success selling customers to migrate a lot more of their volumes or incremental volumes to Alpine? And then, as an adjunct to that, can you generate higher margins from the Alpine business than the brick-and-mortar business?

[Charles E. Sykes:]

The value prop that we had with Alpine is that for us, it wasn't as much that the net bottom line profit margins were superior to things that we have. But it is where we saw a really nice growth opportunity. Again, we think that the domestic market delivery is going to move to where about 1/3 of that business is delivered in the virtual world. And we feel like we're positioned to capture that. So it's more of a growth story there that you see with margins that are a least the same. They can't possibly be better. So I don't want to tell you they can't, but they're certainly not less, but we see really good growth rates there. The other thing is that as companies continue to reduce the number of suppliers, they continue to want great delivery capabilities from those suppliers. They need versatility. And we're beginning to see that play out for some of our existing clients. And the other thing is that as we tackle the facility utilization that we have, our problems today is that we'll work at a site, maybe we'll have 400 seats in that site and we only have 75 empty seats. But the way we win business today, we typically need a minimum of 100 to maybe 200 seats. So we are able to get and we're having nice success today with getting some of those programs to migrate out of their centers to go to virtual and now, we free up a nicer segment of seats that are more relevant to the way we're winning business. So we are beginning to see now a nice effort there and accomplishment in continuing to tackle our facility utilization. So we're real pleased though. We're exactly on the trajectory of where we were hoping to be when we did our investment thesis with those guys. So it's going well. We're happy with that.

[Operator:]

The next question is from Eric Boyer with Wells Fargo.

[Eric J. Boyer:]

Just in general, are volumes coming in line with your customers' forecast? Or are you seeing any change in the variances there?

[Charles E. Sykes:]

That's an interesting question. I think in a general sense, we are seeing some companies doing better than others. There is a real disruption that is taking place in a number of industries. I think in the technology space, we are beginning to see some of the volume trends that are changing dramatically. Some of our consumer electronic companies are having major, major adjustments on a downturn basis, if you will, around the outlook of their business and then, they're moving to other segments that have good growth. So that alone create volatility in their guidance for us. On their core business, and maybe it's deteriorating, they're not doing the great job of being accurate and then on their new business, sometimes they're underestimating the growth. So that's part of the thing about 2 folks earlier when we were talking about the macroeconomic environment. It is adding complexity in our business. So I think in a general sense, the volatility in that is -- it's prevalent, it's prevalent. It's not as accurate as it has been in the years passed.

[Eric J. Boyer:]

With that said, how do you manage that process with new clients and visibility for the company overall?

[Charles E. Sykes:]

Well, I'll tell you what, with the last 3 years of unprecedented economic volatility, we certainly are learning a lot. Sometimes, we will go in to a program and depending who it is, we're really emphasizing the change to bill rate structure. If we go in and we just now based on what we've learned, if we think it's too volatile, we really push for it to be an hourly program. If we have better confidence in the growth trajectory, we're okay on a permanent basis to do that, to get things set. We're also, just as we sit down with our clients, I mean, if there's relief in penalties or things for their misses around volumes, we're getting smarter in being able to sit down with them and just show them how it's not working. But those are probably some of the key things, is the structure of your billing rate and then looking at the fairness of you're incentives and penalties that you have in her contracts. In context of what's going on with our clients' business.

[Eric J. Boyer:]

All right. And then just finally, just back to the line of questioning about the ramp cost. As we sit here today, the underlying improvement in margins that lower exit costs and better utilization next year, should that offset ramp cost, which would mean -- I guess we shouldn't expect margins to be down year-over-year going forward?

[W. Michael Kipphut:]

We're going to shy away from giving forecast for 2014. Eric, we're really just getting into the 2014 timeframe. So if the -- really too early to give any type of guidance in that area. I understand what you're question is, it does make logical sense. But you have to understand where the puts and takes are and where the growth is and what verticals and what clients before you can make that assertion. But we're not ready to do that at this point.

[Operator:]

Our next question is from Mike Maloof with Craig-Hallum.

[Ross Licero:]

This is Ross Licero on for Mike. I had a question, just a follow-up on Alpine. I think last quarter, you said you were getting a 5

[Charles E. Sykes:]

Consistent with the new. On the new programs that we're winning, I mean, today, certainly, with the seats and all that we're adding, we're still seeing a really nice growth in the brick-and-mortar side. The conversion rates that we had talked about, with going through our existing clients and the success in getting those clients to agree to move to virtual, so we can tackle and try to work with our facility. That's where we're continuing to get good acceptance into transition. The other thing that's been really interesting is even in some of the new growth that we've experienced with our fabulous brick-and-mortar clients that's in this revenue number, we have now mixed a greater percent of that actually being involved in using virtual. So it's a combination of brick-and-mortar and the virtual platform, and that's been a really nice trend as well we see. So I'm not sure if I'm answering your question though the way with the specifics you're looking for.

[Ross Licero:]

No, that's great. And do you still expect that to be -- the integration to be complete pretty much by the end of the year?

[Charles E. Sykes:]

Yes. I mean, in the heavy lifting sense though, the org [ph] changes and all that things we've gone through, yes, we do.

[Operator:]

Next question comes from Howard Smith with First Analysis.

[Howard Smith:]

With the Alpine and a stronger at home option now, has it adjusted your internal decision-making process, as you think about adding physical facility base capacity? And do you feel the probability of when you're building a new facility of having that in the wrong geography or tough to fill going forward is different today if you lose a program than it was, say, 1.5, 2 years ago?

[Charles E. Sykes:]

Yes. Given that, again, we see -- just like we did with offshoring, we never really felt that more than 1/3 or so of the total market would go offshore. And again, we still only believed that 1/3 or so of the programs about domestically will go virtual and we could be wrong in that. But that's our feeling for it. And with our confidence that we have in the platform, there's no doubt that from a top of mind standpoint, when we are working with our clients and we really understand the nature of their business and what they're striving to achieve, we are submitting that they use a virtual platform, when it make sense and we think it's the right solution for them. So in that sense, we are pushing more for it. But we're okay with growing in all the countries we're in, brick-and-mortar, virtual, near shore, whatever it is. We're okay in growing that way. But -- so I don't want to say we favor one over the other. We're more about just trying to give smart, relevant solutions to each of our clients that we have. So the location issue is a very valid point and it's something that we talked about, I know, probably for the last year. And that is that we are seeing today the more simple transactions continuing to have a little more of a self-serve approach taken off with technology. What happens is that the remaining transactions are becoming longer and more complicated and that is going to have an effect on the quantity of people and the caliber of the people in our training programs. So in that case, we are really trying to put a lot of good due diligence in our site location strategy when we do decide to build a center. So it is an issue that we're -- is top of mind for us.

[Operator:]

Our next question is from Kevin McVeigh with Macquarie.

[Kevin D. McVeigh:]

Chuck, you kind of alluded to capturing greater percentage at wallet share through some vendor consolidation, things like that. Where are we kind of industry wide today? And where do you see that going as you think about the business going forward?

[Charles E. Sykes:]

I think we're going to continue to see the trend. And this, again, kind of goes into the portfolio of who your customers are and where they are and the outsourcing maturity cycle so to speak. But as we look at our current clients and even as we look at ones that we're striving to break in to, we still believe there's room there. You're going to see a little furthering of the supplier consolidation. It's hard for me to give you a direct answer on how far I think that's going to go, but right now, I mean it's probably going to continue to be, I'm going to guess maybe 20%, could be as high as 30% of some of the source of our growth in the future. I think right now the majority of our growth though is still relevant more to people wanting to outsource in a volatile environment. They're trying to get that flexibility of all the benefits of outsourcing. And that seems to be, right now, the bigger trend for our growth.

[Kevin D. McVeigh:]

Got it. And then as you think about -- any sense of holiday impact into Q4 relative to the last couple of years? Just based on client conversations?

[Charles E. Sykes:]

Well, Mike, how do you...

[W. Michael Kipphut:]

No, I mean, we reflected the volumes anticipated in our business outlook and it's relatively consistent with prior years during the fourth quarter, where you get upticks in volumes. The biggest story here is the new revenues coming in and the ramps associated with it. But there's nothing that we're seeing that's outstanding with the -- any of the specific clients are expecting 30%, 50% volume increases or anything like that. So it's pretty normal expectations for the seasonal fourth quarter uptick.

[Operator:]

There appears to be no further questions at this time. I'd like to turn the conference back over to Chuck Sykes for any closing remarks.

[Charles E. Sykes:]

All right. Well just as always, everyone, thank you very much for your interest in our company and thank you for questions. And we look forward to updating you guys at next quarter. Everybody have a good day.

[Operator:]

Thank you very much. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.