Michelle MacKay: Sure. I’m very bullish for the recovery and that point of view hasn’t changed. But the current outlook is for some short-term pullback in capital markets as the mood of the market has changed significantly in the last couple of weeks. I think we’ve all witnessed volatility there, but as that mood can swing to the positive on a couple of key pieces of data or as the market digest data. But like, let’s not lose the plot line here, calling what happens next quarter might be interesting, but our long-term view, which is how we work and how we think is for a strong market recovery.
Alex Kramm: Okay, fair enough. And then, maybe very big picture just since we’re here, like you obviously for the last few quarters have talked about your strategic review and I think you looked at all the different kind of businesses. So, I know that, that stuff never gets finished, but do you feel like you’ve essentially completed the biggest area of focus and anything new that you can share of that review, or is that still ongoing?
Michelle MacKay: No, I think that we’re, to your point, it’s always ongoing, but I think the first quarter performance shows that we’re capable of executing on those priorities, and we did what we said we would do, and we’re going to continue to do that and be really intentional and opportunistic with it. So, just to reiterate, to strengthen the core, we reduced leverage and interest costs by repricing the term loan and paying down some tax and debt. We continue to operate with rigor, even the revenue is flat, we improved margin and leasing is growing. We’re prioritizing better services contracts. I’ve made a couple of references to walking away from less accretive deals. That’s an active way of managing the strategy. And you’re going to continue to see us, no matter what the backdrop is here in terms of the economy, take advantage of every opportunity.
So, we’re highly activated. I would say we’re working differently than we have historically, at a pace unlike what the firm has seen before with an awareness of exactly where we need to be focused at all times.
Alex Kramm: Okay, very good. Thank you.
Operator: The next question comes from Ronald Kamdem with Morgan Stanley. Please go ahead.
Ronald Kamdem: Hey, just two quick ones. So, one, starting with the cash flow statement, and I sort of appreciate the comments in the press release. It seems like there is certainly a greater focus on free cash flow. It seems like cash from operations, you said it was a net use, but it almost seemed like a $100 million delta versus a year ago. So, I guess my question is really, can you talk about what drove such a great performance on the cash flow? How much is that as one-timers versus something that’s sustainable going forward?
Neil Johnston: Yes, great question, Ron. Look, we’ve been extremely focused on free cash flow, and it’s starting to really pay off and you start to see it as you say in the results. You’re absolutely right, first quarter of this year, this first quarter a year ago, it was $9,500 better, so, great performance, primarily driven by working capital. And so, as we look at that performance, I would say probably about 50% of it is timing and 50% of it is real actions that we took. So, we were able, for example, in accounts receivable to reduce our DSOs from around 61 days to 59 days, or 58 days actually. And so, we saw three days of improvement in the quarter and so feel very good about free cash flow as we look. We have not given full guidance for the year on free cash flow, but certainly feel like the start of the year has been a good one.
Ronald Kamdem: Great. And then, my second one was just; I remember we talked about deleveraging and the potential for asset sales and so forth. Any sort of update there? Is that still a plan? How is that going? Thanks.
Michelle MacKay: Yes, we do have a couple of assets out in the market, that is still the plan. We have identified several smaller assets in the organization to consider for sale, and I would say that in the latter-half of the year, we’ll be able to give you an update on that.
Ronald Kamdem: Thanks so much.
Operator: The next question comes from Stephen Sheldon with William Blair. Please go ahead.
Patrick McIlwee: Hi, you’ve got Pat McIlwee on for Stephen today. Thanks for taking my questions. So, first one, I just wanted to dig in on this a little bit more. I know you’ve talked about it. But even adjusting for the contract reimbursables, it looks like service revenue came in a touch light this quarter. I mean, can you just talk a bit more about what’s driving this repositioning of the platform, if it has to do with asset turnover at all, if you’re seeing any competitive pressure, or what exactly is driving that and then how you might expect the rest of the year to play out so you can achieve that kind of low single-digit growth guidance here?
Neil Johnston: Sure. Pat, as I think about it, there really are three things driving it. First of all, remember we did have that contract change. That accounts for about $25 million in the quarter. So, our services overall instead of being down three, would have been flat for the quarter. Not where we want them to be, but certainly not declining flat and certainly that is sort of the baseline. The second thing is, as you say, we are looking for accretive growth. This is more self-inflicted pain. It’s probably the best way to describe it. We’re looking at our contracts. We’re looking at our margins. We have found that the services we provide, clients are prepared to pay for. So, in certain cases, we’ve actually walked for contracts, and those clients have actually come back to us and said, no.
Actually, we did like it to work. And so, that is us looking at the portfolio and saying we really, we need margins to improve in our services business. And we’ve also seen that in Europe. We saw that services business in Europe was down. That’s where we actually took a very hard look at our project management business and said, you know what, if contracts are not making money and that’s a short-term business, so it’s much easier to walk out of more quickly. And we said if it’s not making money, we’re not going to do that work. We’re going to drive profitable growth because every bit of growth takes resources, and it’s all about capital allocation and reallocation. And then, the third thing in services is very focused on our GOS global platform.
We did have a couple of contract needs. We’re sort of seeing the tail end of that, early on in this year. But if you look at the pipeline there, we’ve seen a very nice strength, and we’ve had some nice global wins in that business. We’re very excited about GOS as we look forward.
