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spk05: Please stand by. We're about to begin. Good day and welcome to the Information Services Group third quarter 2021 results conference call. Today's call is being recorded and a replay will be available on ISG's website within 24 hours. At this time, for opening remarks and introductions, I'd like to turn the conference over to Mr. Barry Holt. Please go ahead.
spk00: Thank you, Operator. Hello and good morning, everyone. My name is Barry Holt. I'm a Senior Communications Executive at ISG. I'd like to welcome everyone to ISG's third quarter conference call. I'm joined today by Michael Connors, Chairman and Chief Executive Officer, and Bert Alfonso, 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 guarantees 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'll be able to obtain free copies of any of ISG's SEC filings on either ISG's website at www.isg-1.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 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 that 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 8K, 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 Bert Alfonso. Mike?
spk02: Thank you, Barry, and good morning, everyone. Today, I will review our strong third quarter results, our continuing business momentum, and our outlook for the fourth quarter. ISG had an outstanding third quarter, positioning the firm for the best year in our history on nearly every financial metric. In the quarter, we generated record global revenues of $71 million, up 15%, including record revenues in the Americas and Asia Pacific. We continue to expand our recurring revenues up 10% from last year to $23 million and $69 million year-to-date. We delivered just an EBITDA of $10 million, up 24%, with an EBITDA margin of 14%, up 100 basis points. And we generated more than $18 million of cash from operations during the quarter, bringing our cash generation to $46 million over the last 12 months. We ended the quarter with a cash balance of nearly $55 million, up 43%, and a net debt to EBITDA ratio under one. Again, a record low. During the third quarter, we also held our first in-person event since the start of the pandemic, our signature ISG Executive Providers Summit in Chicago. We did not include this event in our previous forecast, given the uncertainty over COVID. but it delivered $1 million in revenue upside for the quarter, a nice addition. This is our fifth consecutive quarter of outstanding results coming out of the pandemic. Our portfolio of products and services built around all things digital is in high demand, and our success is being amplified by our ISG Next operating model, which continues to deliver value for our clients and our shareholders. Enterprises are wasting no time modernizing their technology environments for greater efficiency and using technology to reach customers in new and profitable ways. Getting it right is complicated. It's not just about choosing the right technology or the right ecosystem of third-party providers. It's about fundamentally changing the way clients do business, changing cultures and operating models to make everything work. And this is where ISG comes in. Companies continue to turn to ISG to get their digital transformation right, and that is creating great opportunities for our firm. Our market-leading portfolio of digital-ready products and services, coupled with our ISG Next operating model, with its solution-centric approach and IFLEX global delivery network, means our clients have access to ISG talent and solutions anywhere, anytime. It is a winning formula that continues to deliver results. Now, from a client perspective, we served 500 clients in Q3. Of that total, 67 were brand new to ISG, an increase of 16% year over year, a healthy sign for a growing business. Furthermore, we are growing our business with existing clients thanks to our ISG Next solution-centric approach, which allows us to bring together a range of capabilities to solve client needs. Year-to-date, our revenues from existing clients grew by 17%. Turning to our regions, the Americas delivered an outstanding performance. We achieved a record $43 million of revenue in the quarter, up 22% versus the prior year. During the quarter, we saw double-digit growth in our consumer services, banking, and media industry verticals. Among our services, consulting, automation, and research were all up double digits. Key client engagements during the third quarter included Comerica, Merck, Bell Canada, and CIBC. One key client win in Q3 came when we signed a new finance transformation engagement with a major medical technology company worth nearly $1 million. The win came as a referral from two technology providers involved in the RFP who recommended bringing in ISG as an independent third party to advise on the transformation project. Additionally, ISG has been awarded a series of engagements worth $1.4 million with a longtime strategic client of ISG, a leading manufacturer of construction and mining equipment. We will advise our client around technology for their smart manufacturing capabilities and provide them with ongoing technology research. We also want a two-year, nearly $3 million engagement with a top five U.S. bank that leverages our new training as a service capability, an exciting new innovation from our ISG enterprise unit that provides platform-based learning and development to clients. We see great opportunity for this new recurring revenue business in a fast-changing world where employees are asked to adapt to new operating models and technology as part of their company's ongoing digital transformation. Turning to Europe, our Q3 revenues of $20 million were down 4% versus the prior year. The European macro environment remains cautious due to uneven vaccination rates and approaches to the pandemic across the region. Clients have not yet adopted cloud-based technology at the same pace as the U.S., but we are seeing signs that demand is accelerating with increasing velocity expected in 2022. For Q3, Europe delivered double-digit revenue growth in our research business and in our public sector, insurance, and media industry verticals. Key client engagements in Europe in the third quarter included Volkswagen, Nestle, Solvay, which is a Belgian chemical company, and the UK Ministry of Defense. During the third quarter, ISG was awarded a $3 million engagement with members of the German Cooperative Finance Group to provide technology strategy around cloud computing and provider ecosystems. ISG was selected based on the client-oriented solution we designed and our industry banking experience. Now to Asia Pacific. This region had a record-setting performance with revenues at $8.1 million, up 42% versus the prior year, driven by growth in our energy, banking, insurance, consumer, and media industry verticals. Key clients in the quarter included the Australian government, where we are doing work across multiple departments, Worley, which is an engineering services company to the energy and chemical sectors, Insurance Australia Group, Suncorp, Rio Tinto, and AGL Energy. We continue to expand our relationship with a leading banking and insurance industry client in Australia, executing a significant extension to support digital operating model design and enterprise change management. We have now undertaken 10 different engagements for this client alone, generating $1.5 million in revenue this year, our fourth straight year in working with them. Now moving to our dividend. Shareholders of record at the close of business on December 3rd will receive a fourth quarter cash dividend of $0.03 per share of common stock, payable on December 17th, part of our ongoing efforts to enhance shareholder value. Now let me turn to guidance. The pandemic continues to have lingering effects on several client industries and in certain markets in Europe where vaccination rates and COVID responses are still a bit uneven. As I mentioned at the outset, the demand environment remains strong, especially in the U.S. and Asia Pacific. Overall, clients are accelerating their digital investments coming out of the pandemic with the pace varying by country and industry. We see a structural shift to more cloud adoption and digital transformation, with demand for ISG services moving in lockstep with these market dynamics. Balancing increasing demand, tempered somewhat by the lingering impact of COVID and the upcoming holiday season, we are targeting revenues of between $67 and $69 million, and adjusted EBITDA between $9 and $10 million. So with that, let me turn the call over to Bert, who will summarize our financial results. Bert? Well, thank you, Mike, and good morning, everyone. Looking at the quarter, our momentum continues following the outstanding first half results. Revenues for the third quarter were a record $71.1 million, up 15% on a reported basis, and up 14% on a constant currency basis compared with the third quarter last year. Currency positively impacted reported revenue of 0.7 million versus the prior year. In the Americas, reported revenues were a record 42.8 million, up 22% versus the prior year, and the second consecutive quarter of plus 20% growth. EMEA revenues were 20.1 million, down 4%, while Asia Pacific reported a record $8.1 million, up an outstanding 42%. Third quarter 2021 adjusted EBITDA was $10.2 million, up 24% from last year's third quarter. Third quarter operating income increased 144% to $7.3 million, compared with $3 million in the prior year. Net income was very strong for the quarter, at $4.4 million, or $0.09 for fully diluted share, compared with net income of $2.1 million or $0.04 per fully diluted share in the prior year. Third quarter adjusted net income was $5.9 million or $0.12 per share on a fully diluted basis compared with adjusted net income of $5.2 million or $0.10 per share in the same prior year's third quarter. Consulting utilization for the third quarter was 74%, up 200 basis points versus the prior year, reflecting the impact of our new ISG Next operating model. Our balance sheet continues to have the strength and flexibility to support our business over the long term. In fact, our balance sheet has never been stronger. Net cash provided from operations for the third quarter was $18.5 million, and we ended the quarter with $54.5 million of cash, up 43% from $38.1 million in the prior year. We repaid $1.1 million of debt in the quarter, lowering our debt balance to $75.6 million and our net debt to EBITDA ratio to a record low of 0.6 times. In addition, we paid $1.5 million in dividends to ISG shareholders and repurchased $2.1 million of ISD shares. Our average borrowing rate for the quarter was 1.9%, down 27% from last year. And we ended the quarter with 49 million shares outstanding as of September 30th. Mike will now share concluding remarks before we go to the Q&A. Back to you, Mike. Thank you, Bert. To summarize, we continued our outstanding performance in the third quarter. Record Q3 revenue up 15%, EBITDA up 24%, with revenue, EBITDA, and EPS all beating expectations. Our balance sheet remains strong, nearly $55 million of cash and a record net debt to EBITDA ratio down below one times EBITDA. Our new operating model, ISG Next, is driving a more profitable enterprise with a 100 basis point improvement and our EBITDA margin in the quarter. We see strong demand for all things digital playing to the ISG sweet spot. We rewarded our shareholders with a third consecutive quarterly dividend, and we have good momentum as we head into 2022. 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, Now let me turn the session over to the operator for your questions.
spk05: Thank you. If you would like to ask a question, you may signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, star 1 to ask a question. We'll take our first question from Mark Riddick with Sidoti.
spk01: Hey, good morning. Hey, good morning, Mark. Morning, Mark.
spk04: So very strong results and certainly very encouraging for the remainder of the year. I was wondering if you could talk a little bit about maybe some of the initial findings that you're seeing as far as some clients that maybe were either hesitant. I know some either industries or groups or verticals were sort of moving a little faster than others. I wonder if you could sort of talk about maybe how that shift is has evolved a bit as we as we're heading toward the end of the year and then maybe what that might indicate for initial 22 plans.
spk02: Yeah, OK, thanks Mark. Good questions. So look, first of all, maybe highlight some of the strongest industries right now. Banking, financial services up, you know, call it in the 35% range. Consumer services up 40% just to give you a flavor there. Media and technology services industries are almost double what they were a year ago. On the flip side of that, I would say that the whole health sciences area is still just emerging. So think about that as kind of flat to a few points up in terms of growth year over year. So they're a little slower growing. on moving forward, I would say, with digital transformation. And most importantly is manufacturing. With all of the supply chain issues that have been going on, the manufacturing sector is not moving at a rapid pace on change, on digital, and on spending because of the supply chain issues. So we see the manufacturing segment, it was down in the quarter, and we expect it to be down on a full year basis. with a slow return during the early months of 2022. So that maybe gives you a little flavor as to how we're seeing the industries fall out, Mark.
spk04: Okay, great. That's excellent to hear. And then I was wondering if you could talk a little bit about, I think if I caught the number right, that you made mention of existing client spend growth exceeding I believe it was about 17% is what was in the prepared remarks. And I was wondering if you could talk a little bit about how that's kind of evolving with I don't know if cross-servicing is the best way to ask it, but whether it's coming from existing services, spending more within what they would normally do, or if you're beginning to see the benefits of touching other parts of existing enterprises.
spk02: Yeah, good question, Mark. So on the existing clients, I would probably categorize What we are seeing there is maybe, when I think about all things digital, I think they're looking at kind of five different areas, I would say. One is cloud. Two would be cyber. Three would be the customer experience. So think about the experience that they are trying to convey to their consumers and their customers. Modernizing their technology would be the fourth area. So think about modernizing their applications, et cetera. for the New World Order, and data, data and analytics. Those five areas, cloud, cyber, customer experience, modernizing their tech and data, those are the areas that we're seeing with our existing client base, their focus, their attention, their emerging of willing to spend more, and I'd probably put it in kind of those five categories, Mark, if that helps.
spk04: No, that helps a great deal. And then I guess the last part for me is kind of on the flip side of that. It seems as though there are areas that may be paused while these other areas are prioritized and then maybe other areas will kick in like maybe a year or so down the road. One of which I was kind of thinking about given all the labor concerns is around automation. And so I was wondering – I don't know if automation would be an area that would fit that bucket, but do you think there are other areas that could end up emerging as the next wave of spending growth with the customer base? Thank you.
spk02: Yeah, look, Mark, I think kind of the workplace of the future or how the workplace is going to be evolving, and as many of them saw during the COVID and the shutdown and the working from home situation, And think about network, the whole network area we think could explode in the next couple of years. You know, there's a little bit of a slowdown on 5G with, I'm sure you've seen with the Verizons and the AT&Ts. But the reality is the network has become even more important in kind of the new future of work. So we would expect the network area to emerge over the 22, 23 timeframe. We think we're well-positioned. We have a terrific network business with great data for our clients to be able to access. And probably artificial intelligence might be the other area that, you know, I would say that you would see emerging in, not only from kind of the, if you will, the RPA space and automations, but moving it up the stream, if you will, And I think AI will also emerge over the next couple of years. A lot of talk about it, a little bit of work, but I think that will be another area that would emerge over the next couple of years more.
spk04: That's really helpful. Thank you very much.
spk02: Yep, thank you.
spk05: We'll take our next question from Vincent Colicchio with Barrington Research.
spk03: Yeah, Mike, terrific quarter. Good morning, Mike. So in terms of Europe, what gives you confidence that next year will be a better year aside from the obvious lingering pandemic impact? They're behind the U.S. in terms of upgrading in some key areas. Have you guys done a good job building a pipeline, keeping a pipeline there? And what have you done in particular to keep the clients engaged?
spk02: Yeah. Look, good question on Europe. So here's where we think Europe will emerge next year. First of all, we do think Europe will emerge and return to its normal kind of growth patterns. And the reason we think that is that we are seeing it, first of all, at the government level. So think about work around the Ministry of Defense and the UK government. We have just We're just closing on and will close on some significant work with the Italian government during the fourth quarter. So as we think about the government beginning to move into digital, you know that the commercial clients as they emerge out of here also will go digital. And cloud, cyber, and the customer experience areas and the kind of modernization that needs to occur in a lot of industries we think will pick up. Keep in mind one thing, the manufacturing sector, especially over in Germany, has been hit hard by the supply chain area. And so we do not expect that to emerge rapidly. But we do think a lot of the other industries, with the government being kind of a very interesting bellwether for us, will emerge. And we see that kind of growing as the year 2022 emerges.
spk03: And for Q4, is part of the decline, seasonality is one of the factors, but is part of it difficult comps? What are your thoughts on that?
spk02: Well, I think certainly on the fourth quarter, we're trying to balance the COVID environment. We got the holiday period. Everybody's been cooped up. We expect the whole leisure industry, frankly, to have a significant uptick during the back half of December and into January as people begin to emerge and head out into the world again, if you will. And we're not planning any physical events, so the one that we had in the third quarter won't be repeated in the fourth quarter. So I think we're trying to be relatively conservative on what we see, and of course we are full boat ahead on all things digital.
spk03: And has there been any change in the willingness to accept price increases given the wage inflation in the industry?
spk02: So, look, I think pricing, very interesting. As you know, we are a premium-priced firm. And one of the things we always look at is to be sure we can firm up, if you will, our pricing. So we are getting some price movement as we move into 2022. With existing clients, a little more challenging to get pricing in, but we firm our pricing there. With new clients, we're looking at higher rates, if you will. So yes, we do believe that pricing will be an additional factor for us in 2022. We'll balance that because a lot of clients are dealing with supply chain issues. That impacts their business. That impacts what they can spend. So, you know, we'd rather have $1 million than try to get $1.5 million. So we have a pretty good discipline around firming and keeping our premium pricing without going too far ahead and using expansion of our work to get more revenue on a per-client basis.
spk03: And one last one for me, if I will, Ken. Is the acquisition pipeline substantial? And also, what does pricing look like? Is it largely too high for your taste at this point?
spk02: So we continue to be active as we have for years on the M&A front. We are disciplined. Of course, everybody believes that the value of their asset is greater than we probably think it is. So it is a dance, but, you know, we will stay disciplined, and we believe we'll be able to execute on the M&A during 2022 at levels that would make sense for ISG.
spk03: Thank you, and great job. Thanks, Vince.
spk05: We'll take our next question from Joe Gomez with Noble Capital.
spk01: Good morning, and thanks for taking the questions. Good morning, Joe. Mike, I was wondering if you could talk a little bit here on ISG automation and then haven't really talked a whole lot about it. Previously, we had been talking about maybe something in the $30 million type revenue level for that segment. Just wondering if you might give us a little more color and detail how that segment is doing and where you see that going.
spk02: Sure, absolutely, Joe. So look, our ISG automation business is humming along very nicely. It is growing at double digits. Demand is, you know, is up for automation to help, you know, speed cloud adoption, to help develop on apps and streamline, you know, some business processes, you know, as clients continue their kind of digital transformation. So, You know, the automation business is good. It is strong. It is having a good year, as you might expect, with all things digital. And we expect that to continue as we evolve into 2022.
spk01: Are you still thinking – you used to talk a little bit about how undervalued you thought that segment was. Are you still thinking the same thing here?
spk02: Yes. We continue to believe that this asset – is an asset that is not valued in our share price today. And we'll continue to investigate ways to unlock that value.
spk01: Okay. Thanks for that. And just looking at the income statement, you know, SG&A came down, you know, sequentially and as a percent of revenues, it was kind of hitting a nice low level. Is there anything unusual in there? Is that a good either level, run rate level going forward here? Do you see that popping back up some?
spk02: Good morning, Joe. I would say that that's an area that we pay particular attention to in terms of our cost control. And you're quite right, whether you look at it on a three-month basis or a nine-month basis, we're about 500 basis points better on SG&A as a percentage of our revenue, while we're relatively flat with our direct costs, which are more linear with our top line. And so we believe that we can maintain the levels where we are today. It's giving us a terrific bump in our operating income, which is up about 500 basis points in the quarter, and just about the same on a nine-month basis. So that's an area that we focus on a lot. We believe that's part of our leverage. and we don't think it will bounce back up in any significant way.
spk01: Okay, thanks for that. And one last one, if I may. You know, things are looking really good. You've done a great job this year. It looks like we've got a lot of momentum going into, you know, 2022. You know, outside of the pandemic, which we're all aware of, you know, what other hiccups do potential hiccups could you see out there, Michael?
spk02: The only thing, Joe, that we're also keeping an eye on is what are the implications in the U.S. of these, if I may call them those, these vaccination mandates, and what, if any, disruption will that cause for certain industry segments? You know, we know that the retail industry lobbied very hard to make these vaccine mandates effective after the holiday season to limit the issue on their staffing. And so it is the one area that I think that could be a bit of a challenge for certain industry segments. What does that mean? Is it just a short-term blip or is it something else for them for a period of time? So we'll watch that. And then, of course, we have all of, in the U.S., we have all of the noise regarding the spending bill, the tax rates, and so forth. I don't think that will have a Q4 impact. We'll just have to see what does that mean for industries and clients for 2022. You know, both of those are kind of out of our control, so to speak, but when you ask what do we kind of think about, that would be the other area that we're thinking about, primarily on the one with the vaccinations and what the impacts that would have on staffing levels of businesses, and therefore their thinking around spending.
spk01: Great. Great quarter. Keep it up. Thanks, guys. Thank you, Joe.
spk05: Thank you. We'll take our next question from Marco Rodriguez with StoneGate Capital Markets.
spk02: Good morning, guys. Thank you for taking my questions. Hey, good morning, Marco. Morning. Mike, I was wondering if maybe you could expand a little bit more on the new program or service that you discussed in your prepared remarks, the training as a service. I'm assuming that was just launched this quarter. Maybe if you can give us a little bit of background on how that sort of came about and if you can discuss what sort of content and the delivery methods in which customers get that. So this is a brand-new kind of innovation from what we call our enterprise unit. As you know, we kind of broke our business into digital enterprise units. And this is a very, very large, big-name bank. And what their problem, their business problem that they asked us to help them solve was really around with the distribution and the work from home and the change in the work style, so to speak, that they had. Could we help them think about a new model for training and educating their teams in math? And so we came up with a new model. We call it training as a service, TAS, if you will, capability for us, which is really a platform-based learning and development capability. It's a recurring revenue stream. In this particular case, the initial term is two years. And the value, I think, was close to $3 million, if I recall. And this is all about trying to ensure that their employees of the bank understand their new world of work, how they're operating it, how they're going to access knowledge management, how are they going to ensure that they have the confidentiality and the sensitivity around, you know, all the banking scenarios that they may have. There's a lot of regulations, of course, and now with a lot of bank employees working from home, what does that mean? Are they educated? Are they up to date? Are they aware of those things? So essentially, you know, you might look at it as almost outsourcing their digital training capabilities to ISG if you wanted to look at it kind of from a simple way. But that's essentially what it is, and it's our first one. And it's a big one because it's a big-name client, and, you know, we're just evolving it, and we're excited about it because it's recurring revenue. Great. Very helpful. And then, Mike, as you guys kind of head into fiscal 22, can you maybe talk about what your top three priorities are to drive growth? Well, number one is kind of what we call internally all things digital growth. And when we say all things digital, I kind of outlined to you kind of the five areas that our clients are working on. And therefore, from a growth standpoint for us, these are all five areas we think are growth areas. And that's cloud. You know, we brought in, as I mentioned, I think a quarter or two ago, we brought in an executive from the outside, a partner from the outside to lead enterprise cloud. Cyber is another area. Our cyber practice business is both U.S. and in Europe. We have co-leads. We're evolving that business. That is on the advisory side of things. Customer experience. Think about the retailers, the travel and hospitality. We just signed two brand new airlines that we have not done business with for a number of years. Why? Around customer experience. modernizing the technology. So think about the applications. We just got an assignment with a client that will be a multi-million dollar, probably two-year assignment. They have 5,000 unique applications. They want to take the 5,000 and make it 500. How do we do that? How can we modernize it? And then the whole data analytics. What do we do with all this data that we have through our customer experience? When we think about our growth area, that is the areas that we are focusing our time and energy on and investment dollars primarily, not exclusively, but primarily in those areas, if that helps, Marco. Very helpful. Thanks for that. Another question for you, Michael, just kind of higher level. I mean, we You've always done a very good job here in positioning the company with the trend of digital transformation, and obviously companies have been accelerating that transition there as well, and this is obviously reflected in the results. But can you maybe talk about what sort of competitive reactions you may have seen from other industry players? And if you haven't seen much, are you anticipating any sort of reactions? So I would say the number one area there is a different work model from the peer group. You may recall, Marco, we built and we were born virtual as a firm. We did it likely for a different reason when we did it, which is we didn't want to put a lot of real estate costs on our books on a global basis. So we built our firm to work at client sites or from home. And Because of that, when this COVID thing kind of hit, our workforce, our teams around the world, it was very natural for them to evolve into the kind of environment that we have today under our ISG Next model. We call it iFlex, where we can flex our workforce globally now because primarily they're working from home. Well, guess what? The peer groups who did not build their model that way, who have brick and mortar, I've learned that they also can begin to deliver from home, which makes it a competitive, if you will, think about the pricing. When we don't have to spend money on travel, et cetera, then the client is going to get a better value for money. So I would expect that our peers also would see that aspect of that. But we think we have kind of a unique combination of the ability of the relationships that we have built over time And the fantastic ROI that we deliver to our clients based on the fees that we have versus the returns that they get is a competitive advantage that we think we will continue to have for a long time. But that's how we probably look at it. Great. Very helpful. And last quick question for me. The cash balance is pretty healthy here. It's been going up significantly. every quarter here, the last few quarters. Just can you update us with thoughts there in terms of the level of cash you want to hold on the balance sheet and what you might be looking at, how you might be looking at deploying that excess capital? Sure. I mean, we don't target a particular level of cash. You know, the business is a good cash-generative business. It's really more about, you know, where we think the uses are going and Since we put the dividend in place, we're very committed to that dividend. And obviously, you know, we'll have discussions with the board around, you know, where and what might be the right time to increase that over time. Certainly share buybacks, while there wasn't as much buyback in this quarter, I wouldn't look at that as an outlier of any sort. We've got a new authorization from the board and we're committed to returning value to shareholders through that mechanism. We'll continue to reduce our debt. You know, it's quite low. If anything, we're under leveraged, so with a great rate. So, you know, we're not in a hurry to accelerate, you know, reducing the debt. But certainly, you know, we'll continue to pay that down. And then finally, you know, the question was brought up earlier around inorganic growth. We're quite disciplined in how we look at things. We're looking for opportunities where we can get accretion in year one. and find opportunities that will give us more capability or other areas that we can invest in going forward. So we're hopeful that we can put some money to work in that space, although it's somewhat unpredictable. But those are our focus areas, and we'll continue to focus on those four areas going forward.
spk01: Understood. Thank you, guys. I appreciate the time. Great. Thank you, Marco.
spk05: That will conclude our question and answer session. At this time, I'd like to turn the call back over to our speakers for any additional or closing remarks.
spk02: Well, let me just close by saying thank you to all of our professionals worldwide for going above and beyond to serve our clients, primarily remotely, and delivering these terrific third quarter results. There's been no let up in our passion for delivering the best advice and support to our clients as they continue their digital journeys. And I couldn't be more proud of our team. And thanks to all of you on the call for your continued support and confidence in our firm. Stay well, everyone, and have a great rest of the day.
spk05: That will conclude today's call. We appreciate your participation.
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