Information Services Group, Inc. (NASDAQ:III) Q2 2024 Earnings Call Transcript

Information Services Group, Inc. (NASDAQ:III) Q2 2024 Earnings Call Transcript August 6, 2024

Operator: Good morning, and welcome, everyone, to the Information Services Group Second Quarter 2024 Conference Call. This call is being recorded. [Operator Instructions] Now, I’d like to turn the call over to Mr. Barry Holt for his opening remarks and introductions. Mr. Holt, please go ahead.

Barry Holt: Thank you, operator. Hello and good morning. My name is Barry Holt. I’m a Senior Communications Executive at ISG. I’d like to welcome everyone to ISG’s second quarter conference call. And I’m joined today by Michael Connors, Chairman and Chief Executive Officer; and Michael Sherrick, Executive Vice President and Chief Financial Officer. Before we begin, I’d like to read a forward-looking statement. It is important to note that this communication may contain forward-looking statements which represent the current expectations and beliefs of the management of ISG concerning future events and their potential effects. These statements are not guaranteed of future results and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated.

For a more detailed listing of the risks and other factors that could affect future results, please refer to the forward-looking statement contained in our Form 8-K that was furnished last night to the SEC and the risk factors section in ISG’s Form 10-K covering full year results. You should also read ISG’s annual report on Form 10-K and any other relevant documents, including any amendments or supplements to these documents filed with the SEC. You will be able to obtain free copies of any of ISG’s SEC filings on either ISG’s website at www.isg-one.com or the SEC’s website at www.sec.gov. ISG undertakes no obligation to update or revise any forward-looking statement to reflect subsequent events or circumstances. During this call, we will discuss certain non-GAAP financial measures, which ISG believes improves the comparability of the company’s financial results between periods and provides for greater transparency of key measures used to evaluate the company’s performance.

The non-GAAP measures which we will touch on today include adjusted EBITDA, adjusted net earnings, and the presentation of selected financial data on a constant currency basis. Non-GAAP measures are provided as additional information and should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. For the reconciliation of all non-GAAP measures presented to the most closely applicable GAAP measure, please refer to our current report on Form 8-K, which was filed last night with the SEC. And now, I’d like to turn the call over to Michael Connors, who will be followed by Michael Sherrick. Mike?

Michael Connors: Thank you, Barry, and good morning, everyone. Today, we will review our sequentially stronger results for the second quarter, our perspective on the demand environment and our outlook for Q3. ISG delivered sequentially stronger profits in Q2 with adjusted EBITDA up more than 60% at $7.1 million. Our adjusted EBITDA margin at 11% was up more than 400 basis points versus Q1 on an improved product and service mix. And our utilization improved more than 800 basis points sequentially to reach a record high of 78%, reflecting a pickup in demand we saw in the back half of the quarter. Our revenue base stabilized in Q2 at $64.3 million, even with the first quarter. So good sequential progress in a challenging market where client decision-making and spending continue to be impacted by the macro environment.

While reported results were down versus the prior year, we also had record revenues in Q2 last year, making for a difficult comparison. Our recurring revenue streams continue to be a strength for ISG, led in Q2 by our Research and GovernX businesses. We generated $32 million of recurring revenue in the second quarter, representing half of our firm-wide revenue with recurring growing 5% now in the trailing 12 months. One early sign of improving demand can be found in the contract value flowing through ISG Tango, our new digital sourcing platform. Total contract value or TCV, on ISG Tango has reached $4 billion in just the first 100 days or so since we launched the platform. ISG Tango is a growth and margin enhancement opportunity for ISG. This innovative AI-powered solution accelerates speed to value for our enterprise clients and the provider community.

It also supports our margin expansion and allows us to extend our addressable market to midsize companies. Indeed, more than 25% of the current TCV on ISG Tango is for midsize companies. We also see the adoption of AI as a catalyst for growth. Our experts leverage ISG’s towering strengths in operating model design, sourcing advisory and governance and our deep knowledge of the entire provider ecosystem to guide our clients in deploying AI at scale and accelerate business outcomes. Our ISG research team has recently produced a series of detailed surveys on AI. That have been a key source of guidance for our clients. This includes a deep dive generative AI software, Buyers Guide from our Ventana Research team. As clients progress from proofs of concept to full-scale implementation, ISG will be with them every step of the way, making sure they have the right platforms and operating models in place and are using AI effectively and responsibly.

And with the momentum of AI, there will be a knock-on effect in other areas with increased spending on cloud-based infrastructure, software-defined networking and advanced data and analytics to name a few. In short, AI is a net positive for ISG. With that, let me turn to our regions. As I mentioned at the outset, our revenues were stable quarter-over-quarter, but on a reported basis, we faced a difficult compare with a record Q2 last year. In the Americas, reported revenues at $40 million, were down 2% sequentially and down 5% versus the prior year. During Q2, we saw double-digit growth in our manufacturing industry vertical and in automation and GovernX. Key client engagements during the second quarter included Thermo Fisher Scientific, Carnival, GE Aerospace, GE Vernova and Centene.

During the quarter, ISG won a $4 million engagement to renew the intelligent automation ecosystem of a clinical research business. ISG has delivered a range of services and has been a trusted adviser to this client for more than 7 years. We’re also realizing new opportunities by way of divestitures. Because of our long-standing relationships with large enterprise clients, ISG is well positioned to support spin-offs as they separate from their parent companies. For instance, in Q2, we signed a $1 million plus transformational technology sourcing engagement with a global aerospace spin-off with further growth opportunities on the horizon. And we won a 3-year nearly $2 million GovernX engagement with a new global health care company that was spun off from a large Fortune 500 firm.

Also of note, we recently announced a new partnership with CoreTrust, one of North America’s largest group purchasing organizations. Under the agreement, ISG will initially provide a custom package of intelligent automation services to CoreTrust 3,200 member companies. Importantly, the partnership represents a bigger opportunity to serve the cost optimization needs of these 3,200 companies with additional ISG services, such as network, software and sourcing to be offered in the future. Turning to Europe, our Q2 revenues of $19 million were up 6% sequentially, down 23% from last year. During the quarter, Europe delivered double-digit revenue growth in our consumer and insurance industry verticals and in our network, software and research businesses.

Key client engagements in Europe in the second quarter included Volkswagen, Xcite, Allianz and BASF. During Q2, ISG was awarded a sourcing engagement with a new client in Germany, a leading science and technology company with opportunities for expansion. Significantly, we won this business on a referral from another large client base in Germany, underscoring the strength of our client relationships. That strength is represented in ISG’s global client experience scores, which are among the highest in the industry. Currently, 98% of our clients express both broad satisfaction with our services and a willingness to recommend ISG to other companies. Now turning to Asia Pacific. Our Q2 revenues of $5.5 million were essentially flat on a sequential basis, down 31% from last year.

Key clients in the quarter included the Australian Taxation Office, Department of Home Affairs, Endeavor Group, another spin-off client and new client Smart Group, a provider of salary packaging and fleet management services. Now let me turn to guidance. As I mentioned at the outset, our higher-margin mix and strong utilization positions us well as the market begins to recover. Our blue-chip clients are telling us that technology modernization remains a top priority and investments will slowly catch up as macro conditions improve. Efficiency, cost optimization and transformation remain the key themes. As clients become more cautiously optimistic, we expect demand to inch up in the months ahead. In line with this view and considering the seasonality of summer holidays, especially in Europe, we remain cautious on Q3 guidance.

So for the third quarter, we are targeting revenues of between $64 million and $66 million and adjusted EBITDA between $7 million and $8 million. We remain confident in our strategy and stand ready to capitalize on new business opportunity as growth returns. So with that, let me turn the call over to Michael Sherrick, who will summarize our financial results. Michael?

Michael Sherrick: Thank you, Mike, and good morning, everyone. Revenues for the second quarter were $64.3 million, down 14% compared with the second quarter last year. Currency had a modest $180,000 negative impact on reported revenue. Similar to Q1, our Q2 ’24 results faced a difficult compare with a year ago when we generated our highest second quarter revenue ever. I would also note that second quarter revenue was flat sequentially, supporting our view that demand has stabilized. In the Americas, reported revenues were $40 million, down 5% versus the prior year. In Europe, revenues were $18.8 million, down 23%. And in Asia Pacific, revenues were $5.5 million, down 31%. Second quarter adjusted EBITDA was $7.1 million, down from $10.1 million in the year ago period, resulting in an EBITDA margin of 11.1% as compared with 13.6% in the year ago quarter.

Sequentially, our adjusted EBITDA improved by $2.7 million, while margin rose 420 basis points, fueled in part by our record utilization and corresponding gross margin. For the quarter, gross margin reached 39.5%, up a strong 340 basis points from the March quarter. ISG had a second quarter operating income of $3.7 million compared with operating income of $4.9 million in the prior year. Our reported net income for the quarter was $2 million or income of $0.04 per fully diluted share compared with net income of $2.3 million or $0.05 per fully diluted share in the prior year. Second quarter adjusted net income was $3.8 million or $0.08 per fully diluted share compared with adjusted net income of $5.3 million or $0.11 per fully diluted share in the prior year second quarter.

I would note again that sequentially, we saw adjusted net income and earnings per share increased by $3.1 million and $0.07, respectively. Headcount as of June 30, 2024, was 1,497, down 100 professionals compared with the prior year and down 64 from Q1. For the quarter, consulting utilization was a record 78% as compared to 70% in the first quarter and 72% in the prior year. For the quarter, net cash provided by operations was $2.2 million as compared to generating $2.8 million a year ago. We ended the quarter with cash of $11.8 million, down from $14 million at the end of the first quarter. During the second quarter, we repurchased $2 million of shares and made earnout payments of $1.7 million related to prior acquisitions. Our next quarterly dividend will be paid October 4 to shareholders of record as of September 6.

We ended Q2 with a debt balance of $74.2 million, down $5 million from Q4 and flat quarter-on-quarter. Our average borrowing rate for the quarter was 7.3%, up from 6.6% last year. We ended the quarter with 49.7 million fully diluted shares outstanding. Overall, our balance sheet continues to provide us with the flexibility to support our business over the long term. Mike will now share concluding remarks before we go back to Q&A.

Michael Connors : Thank you, Michael. To summarize, we made good progress in Q2 with strong sequential profit growth on an improved mix and higher utilization. Our revenue base stabilized and our strong pipeline provides clear signs that demand could pick up late this year as macro conditions improve. Our recurring revenue business remains strong, representing about half of our total firm-wide revenues. And we are confident that our operating model and our product and service portfolio, including ISG Tango and AI, positions us for success. As always, we are focused on creating shareholder value for the long term, and we are steadfast in our mission to deliver operational excellence to our clients. So thank you very much for calling in this morning. And now let me turn the session over to the operator for your questions.

Q&A Session

Operator: [Operator Instructions] And your first question comes from the line of Joe Gomes of Noble Capital Markets.

Unidentified Analyst: [indiscernible] calling in for Joe. So yes, just congrats guys and give that utilization rate up to about the 78% mark, how do you guys kind of expect that going forward throughout the year? Do you guys want to — do you guys kind of — are seeing it you guys wanted to have that steady or do you guys expect that maybe the trend upward very slightly?

Michael Connors: So on utilization, 78% is, I’ll call it, lava hot in terms of utilization levels. And again, just to remind everyone, we use [20/80 hours] as our denominator, so we don’t take out any hours there. So that 78% is probably top decile and utilization. That level is not a sustainable level, I don’t think. I think our target is kind of in the mid-70s on an ongoing basis. So if we can be in that range and especially with summer holiday season, we would not expect to be able to have that level of utilization of that often and certainly likely not in the summer holiday season. So something in kind of the mid-70s is our ongoing range and that would produce a very good outcome for us if we can attain that on an ongoing basis.

Unidentified Analyst: Okay, great. And then just kind of shifting towards the pipeline, what are you guys seeing during the quarter? Was there any kind of growth there, any more discussions with other clients? And are those clients kind of still wanting you guys to spend more time upfront on projects or have clients kind of started wanting to have the company start to move quicker on those?

Michael Connors: So first of all, a couple of things just in terms of kind of the industry segments. The 2 hottest segments right now are manufacturing and consumer, and they’re slightly different. The manufacturing are really pushing on a lot of transformation and consumer is higher on cost optimization, just to give you a flavor of the 2. Both of those are growing at a significant double-digit rate right now for us. And I think as we look at what the demand environment, our pipeline is pretty robust. The issue is getting the pipeline out and then once we get it out, the pace of execution. We’ve not seen that change yet. Our sense is, is that the macro environment needs to lighten up before we’ll see any kind of speed in the pace of burning through that pipeline.

But we’re very encouraged by the pipeline, we’re very encouraged with the discussions. So I don’t see it moving at a faster clip than what we saw in second quarter for the third quarter. But we do believe with the pipeline pent up that we might be able to see that move at a faster pace when we get to quarter #4. That’s our view at the moment.

Unidentified Analyst: Okay. And just on the recurring revenue side, you guys had about half of revenue this quarter and about half of revenue last quarter. Are we still kind of on track for a goal of $150 million in 2024 or how is that looking today?

Michael Connors: Right. So our goal of $150 million is to exit 2025 at $150 million, sitting at $126 million today, I think we are sitting in a pretty good place. So yes, we think that, that level makes sense for us. And then once we attain that level, I’m sure we’ll have a new goal. But it was not that long ago we were sitting at $82 million, $83 million of recurring. So sitting these numbers up kind of in the [120s] looks pretty good for us. So yes, we’re tracking at a good pace. We’re continuing to do all things recurring when we can and being at half the revenue is a good spot for us right now.

Operator: Your next question comes from the line of Vincent Colicchio from Barrington Research.

Vincent Colicchio: Just curious if you could highlight which geographies have the strongest pipelines and which geographies should have the relatively best performance in the second half?

Michael Connors: Well, first of all, I think the Americas is definitely ahead of the rest of the world, both in terms of the pipeline in terms of what we would expect as we close out 2024. And I think part of it is the macro environment in Europe when you throw in the geopolitical environment there as well, adds a little more uncertainty in that market. So when you compare kind of the U.S. and the Europe, U.S. is going to move at a faster clip. And I think I would see us seeing a return to year-over-year growth in the fourth quarter, definitely in the Americas and Europe will follow that, I think, Vince.

Vincent Colicchio: And then I didn’t hear what you said on Tango, the percent that was for midsize companies and the total contract value, what was that?

Michael Connors: 25% is from our midsize companies right now on Tango of the $4 billion.

Vincent Colicchio: And is that a number that you were targeting? Were you pleased with that?

Michael Connors: Yes. It’s actually a little faster clip. I don’t know if that can be sustainable yet. That’s a pretty fast clip to go to kind of from a small number of the 25% is the mid-market for us, for the most part, will be all incremental — all incremental type revenue for us because that’s not a market we had previously tackled because we thought that our premium pricing might not be able to do that. So I’m looking here at just a couple of the stats that we have on these things. The margins look about the same with the mid-market as it does with the large clients. And I think — I don’t know if 25% will be the ultimate number in the short term. But certainly, in the long run, that would be a good number for us if we were able to achieve that.

Vincent Colicchio: And how are you thinking about product mix in the second half? Will that work to your advantage?

Michael Connors: Yes. I mean, I think you should see the product mix. Again, third quarter is going to look like second quarter. But overall, I think that the margins are going to be healthier as we turn into the fourth quarter and into next year and we should get back to margins that we all are used to. All we need is just a little bit of cooperation with the macro environment for the top line because we’re going to be able to leverage our fixed cost with the incremental revenue that we think is on the horizon.

Operator: Your next question comes from the line of Marc Riddick with Sidoti & Company.

Marc Riddick: So I was wondering if maybe you could stay on Tango for a moment. So we’re looking at $4 billion, up from — I think it was about $2.6 billion, if I remember correctly, at the end of the first quarter, which is a pretty good clip for sequential, if I have those numbers right. Can you talk maybe a little bit about maybe the — you talk about the size of the customers, you talk about maybe the industry verticals that are maybe attracted to Tango and are working with it and/or maybe what that type of mix looks like?

Michael Connors: Yes. So first of all, the Tango is going to be good for all the industry segments that we serve. It’s really industry agnostic. And what we’re seeing is what we expected, which is Tango as a digital platform is looking like and it’s early days, but it looks like it’s going to achieve kind of 2 pieces of objectives. One, is to accelerate time to value for the enterprise. So think about a sourcing transaction that a client wants and it takes x number of weeks to get done. Under this scenario, we think it will be something less than what they previously did, which means that the value and savings and efficiencies that they were able to achieve will get done sooner. So that’s for the enterprise. For the tech providers, so think Accenture, the IBMs and others who are on the platform, what it does for them is also accelerates an outcome for them.

So what might have taken a bit longer to get to a solution and an outcome and a win now will go a little quicker, which means their revenue begins earlier than it did before Tango. So that’s why both the enterprise and the provider are on Tango and see it as a win-win for them. For us, as ISG, we think of it as efficiency, speed and productivity and will help us in our margin expansion plans over the next few years because we can get it done in a more efficient way, a more productive way and therefore, the margin ultimately will be higher and that will help for our overall firm expansion. So early days, but I think it is moving to what we think the objectives were and we’re looking to accomplish those over the next 12 to 18 months, and you’ll see our margins expand as a result of that as we go through 2025.

Marc Riddick: And then you touched on the sort of the AI playbook, if you will. Can you maybe bring us up-to-date on the Ventana benefits that you’ve seen and it’s been — we’re closing in — I guess we got a few more months, but we’re closing in about a year. So — but certainly from a perspective of leading the way of mindshare and that AI playbook that you referred to. Can you talk a little bit about how that’s kind of gelled into the organization and what you’re seeing there?

Michael Connors: Yes. Good question, Marc. So first of all, Ventana Research is fully integrated now into ISG and we will be referring to it more as our ISG software arm than Ventana Research in the future. But number one, it’s fully integrated. The team is completely intact and is augmenting and has been a great help in broadening out our business, especially on the software side. Just as a couple of examples, this year, we’ve been able to double the number of what we call software Buyers Guides that we send out into the market to help clients think about things like AI. And I think I referenced the AI buyer guide earlier, which reports on kind of objective, independent assessments of AI software providers. And that is very helpful.

We use it with our clients. We are using it with our ISG Tango. We use it in what we call our CPQ, our Candidate Provider Qualification. So it has been a, I’ll call it, an outsized advantage for us. And as we move into 2025, the software industry itself is $800 billion moving to $1 trillion. So being able to report out in a very analytical way like we do with all of the kind of service and tech providers is really a leg up for us, we believe. So we kind of focus on AI platforms, GenAI platforms and kind of machine learning ops, if you will, or LLMOps, if you will, the 2 of them. Those 3 areas, AI platforms, GenAI and then the ML and LOM kind of ops. That’s where Ventana Research has been very helpful in helping us evaluate the providers that are out in the market and provide some kind of independent assessment.

So we’re very pleased with Ventana Research. Mark Smith, who’s the founder of that and his team have been terrific and we’ve gotten them involved in a lot of broader areas than they had even prior to joining ISG. So all in all, a very good start.

Marc Riddick: Great. And then the last one for me. I was wondering if you could maybe give us an update on your thoughts on the potential acquisition pipeline or what you’re seeing out there and maybe thoughts on valuations and there are some things that might be attractive to add to the platform at this point.

Michael Connors: Yes. So we remain, as we always have, very active in the market. I think there is a little bit of some reluctance on the buy, sell side as the market softened a little bit over the last year. The expectation levels have not softened the way the market has softened, so you continue to kind of balance value. But we are optimistic. We continue to look for areas around digital and recurring revenue streams. And if we find something that we think can give us an acceleration of growth or capability, then we will pounce on that. So that remains an active area. I would say the balance of value, though isn’t quite where it was. I think sellers still have a value expectation that may be a bit higher than the buyers at the moment. But a little bit of time helps ease that.

Operator: Your next question comes from the line of Dave Storms from Stonegate.

Unidentified Analyst: Barry, Mike, this is Rob filling in for Dave. Just have a few questions for you here. I wanted to start by asking just 1 question on guidance. Just wanted to touch on that. Could you just help clarify the key factors influencing your Q3 guidance? I understand your Q3 guidance is consistent with Q2. Does this imply that we might just face the late client decision making in regards to demand for the latter half of 2024 and possibly not experience the same growth going into the second half of the year?

Michael Sherrick: This is Michael. I’ll take the question. So I think as we said, I mean, Q2 saw stable revenue quarter-on-quarter and obviously, significantly improved profitability. We expect those trends to continue as we look at Q3 but also recognize that there’s a seasonality in Q3, in particular, summer vacations, Europe specifically, but also in the U.S. So as I think it was asked earlier with regard to utilization, we wouldn’t expect the business to run as hot as a result of that type of seasonality. And for those reasons, that’s why we’ve given the guidance that we provided earlier on the call.

Unidentified Analyst: Okay, great. And I’ve just got one more here for you. Regarding ISG Tango, I know that continues to grow and there’s some new sectors or clients that you — client types you can see or expect. Are there any specific sectors or client types that you expect to use this platform to have the most impact forward-looking?

Michael Connors: I think Tango is industry agnostic. And we would expect to have nearly – by the time we’re in the middle of this time next year, we would expect to have nearly all of our sourcing transactions flow through ISG Tango. And that means it’s any industry and that means basically any service infrastructure, applications, et cetera, all would flow through Tango. And with that, that enables us, as I mentioned earlier, we think to – from our perspective, in addition to the benefits that the enterprise and the tech providers get by using it, this will allow us to be a bit more efficient, speed things along, which means productivity will be better and ultimately, it helps our overall firm margin. So when we think about margin expansion, Tango is one of the elements, not the only, but one of the elements that we think will get us back into kind of the mid-teens margin that we are targeting.

Operator: Your next question comes from the line of [indiscernible] of Singular Research.

Unidentified Analyst: So maybe given the highly competitive market for AI talent, what strategies or incentives are you guys employing to attract and retain top AI professionals? And given that the interest in AI is still at proof of concept stage, is this a temporary headwind for margins? And then I have a follow up.

Michael Connors: First of all, on the AI, if you will, we are developing our internal team and training them up on AI. We have a full AI training university that we are sending many of our consultants — consultants through. So our first course of talent is our workforce globally around the world and we are making very good progress on training all of our teams in the areas that we need them to skilled up in relative to AI. So I would say that’s kind of our source. We have very low turnover for our industry. We’ve always been at the low-end turnover. So we feel very confident of investing in our teams around the world to get AI, if you will, skilled up. So that’s objective number one. I don’t think, from our standpoint, we see AI as a headwind, we see it actually potentially as a tailwind for us.

As I mentioned earlier, we think being able to help our clients around a lot of areas around AI is whether that’s building kind of the new operating model for them or helping them do a strategic partner selection process for some of their AI initiatives or from kind of helping them with proof of concept moving into production and then scaling and then governing. We think all of those areas will be beneficial to us. So that’s our view on AI.

Unidentified Analyst: I just have one follow-up. I’m relatively new to this name. So can you help me understand the revenue model for ISG Tango and how that ties into $4 billion number? And also, I guess, you kind of mentioned that it requires for Tango to be a successful, it needs adoption both on the — from the client perspective — from the client and as well as the vendor side. So how is the adoption on the vendor side going and is there any objections and how are you guys [indiscernible] those objections?

Michael Connors: So first of all, we have not really come across any objections. The vendor side, we have a great relationship with the entire supplier vendor community. They have used our methodologies for years. This is just an extension, if you will, of how they’ve operated with ISG with enterprise clients. The only time we might see an issue on Tango might be if there was a government contractor that might have an issue with a particular platform, we’ve not run across it. But if we did, we would still use Tango for our internal purposes. So we do expect more than 90% of our client base that is doing a sourcing transaction would use our Tango — ISG Tango platform going forward. So we’ve had great adoption. We trained over 100 of the vendors on ISG Tango. In fact, it’s closer to 200 to date and they’ve all received it quite well and all of them are using it on any transaction that we are working with enterprise clients on. So we feel pretty good about that.

Unidentified Analyst: And if you could just help me understand the revenue model for ISG Tango, how does that…

Michael Connors: Yes. So the revenue model, the way this works is that we charge a fee to the enterprise client depending on whatever their sourcing transaction is, the $4 billion number is the amount of value that a tech provider would receive if a transaction went to them. So think about us working with a hypothetical hotel and you have an Accenture or an IBM or a Capgemini bidding for those businesses, the hotel would be on the platform, the providers would be on the platform, ISG would be on the platform, we would be advising the enterprise to ultimately make a selection. They make a selection if their particular contracts worth $250 million, then that’s $250 million that’s on the platform. Our fee to that particular enterprise client might be $500,000, it might be $1 million, et cetera, our fee arrangements are direct with the enterprise. So that’s how the model works.

Operator: And I’m showing no further questions. I’ll turn the call back to Mike Connors for his closing remarks.

Michael Connors: Well, let me close by saying thank you to all our professionals worldwide for the progress that we made in Q2 and for your continuing collaboration and dedication to clients and driving our long-term success. Our people have a passion for delivering the best advice and support to our clients as they continue their transformations in both uncertain times and in better times ahead and I could not be more proud of them. And thanks to all of you on the call for your continued support and confidence in our firm. Have a great rest of the day.

Operator: This does conclude today’s teleconference. You may disconnect at any time.