Earnings Call Transcript - HCKT Q3 2020

Operator, Operator

Welcome to the Hackett Group Third Quarter Earnings Conference Call. Your lines have been placed in a listen-only mode until the question-and-answer session. Please be advised that the conference is being recorded. Hosting tonight's call are Mr. Ted Fernandez, Chairman and CEO; and Mr. Rob Ramirez, Chief Financial Officer. Mr. Ramirez, you may begin.

Rob Ramirez, CFO

Good afternoon, everyone, and thank you for joining us to discuss The Hackett Group's third quarter results. Speaking on the call today and here to answer your questions are Ted Fernandez, Chairman and CEO; and myself, Rob Ramirez, Chief Financial Officer. A press announcement was released over the wires at 4:05 PM Eastern Time. For a copy of the release, please visit our website at www.thehackettgroup.com. We will also place any additional financial or statistical data discussed on this call that is not contained in the release on the Investor Relations page of our website. Before we begin, I would like to remind you that in the following comments and in the question-and-answer session, we will be making statements about expected future results, which may be forward-looking statements for the purposes of the federal securities laws. These statements relate to our current expectations, estimates and projections and are not a guarantee of future performance. They involve risks, uncertainties and assumptions that are difficult to predict and which may not be accurate, especially in light of COVID-19. Actual results may vary. These forward-looking statements should be considered only in conjunction with the detailed information, particularly the risk factors contained in our SEC filings. At this point, I would like to turn it over to Ted.

Ted Fernandez, CEO

Thank you, Rob, and welcome, everyone, to our third quarter earnings call. As we normally do, I will open the call with some overview comments on the quarter. I will then turn it back over to Rob to comment on detailed operating results, cash flow, as well as to comment on outlook. We will then review our market and strategy-related comments and then we will proceed to Q&A. I would like to start by continuing to acknowledge those dedicated individuals who have continued to work non-stop and under very dangerous circumstances to support us all during this pandemic. I also want to acknowledge our associates and clients that quickly and successfully adapted to the remote delivery requirements around the globe. It goes without saying; we eagerly wait for the conditions that will allow us to return to our next normal. As we communicated at the end of Q2, we were experiencing increased meeting counts and engagement and we expected both, revenue and profitability to start to recover in Q3. This increased activity continued through the quarter and I am pleased to announce today that our actual Q3 results exceeded our expectations. This afternoon, we reported net revenues of $57.8 million and pro forma earnings per share of $0.17. Net revenues were up 10% sequentially, with EPS up strongly from our lockdown-compromised Q2 results. U.S. sequential revenue growth was led by the strong bounce back of our Strategy and Business Transformation Group and the continued growth of our SAP and OneStream practices. On the international front, Europe was also up strongly sequentially. The investments we have made to fully digitize all of our IP, the development of our IP-as-a-Service platforms, Quantum Leap, our state-of-the-art global-leading benchmarking platform, and our proprietary Hackett Digital Transformation Platform, or DTP, are highly differentiating our offerings and will continue to be important drivers of our growth for many years to come. Additionally, our investments with rapidly growing eProcurement, cloud analytics, EPM, and other workflow automation providers also continued to be key to our digital transformation strategy and are important future drivers of our growth strategy as well. On the balance sheet side, our ability to generate strong cash flow from operations has allowed us to continue our dividend, buyback stock, and fund acquisitions we identify while continuing to invest in our business. It is important to reiterate how important it was to start the year with such a strong cash position and no outstanding debt which has provided us with the ability to properly manage the demand disruption that we have experienced. With that said let me ask Rob to provide details on our operating results, cash flow and also comment on outlook. I will make additional comments on strategy and market conditions following Rob's comments.

Rob Ramirez, CFO

Thank you, Ted. As I typically do, I'll cover the following topics during this segment of our call: an overview of our 2020 third quarter results, along with an overview of related key operating statistics; an overview of our cash flow activities during the quarter; and I will then conclude with a discussion on our financial outlook for the fourth quarter of 2020. For purposes of this call, I will comment separately regarding the financial results of our Strategy and Business Transformation Group or S&BT; our ERP EPM and Analytics Solutions Group or EEA; our international group; and the total company. Our S&BT group includes the results of our North America IP as a service offerings, our executive advisory programs and benchmarking services and our business transformation practices. Our EEA Solutions Group includes the results of our North America Oracle, SAP solutions and OneStream practices. Our international group includes the results of our S&BT and our EEA resources that are based primarily in Europe. In addition, please note that all references to net revenues represent revenues excluding reimbursable expenses. Reimbursable expenses are primarily project travel-related expenses passed through to our clients and have no associated impact to our margin or profitability. Given the limited amount of business travel due to the pandemic we encourage investors to focus on net revenues to assess revenue and growth trends. During our call today we will reference certain non-GAAP financial measures which we believe provide useful information to investors. We included reconciliations of GAAP to non-GAAP financial measures in our press release filed earlier today. Additionally, my comments today are based on results from continuing operations. For the third quarter of 2020, our net revenues increased 10% sequentially and decreased 13% to $57.8 million when compared to the prior year which is above the high end of our revenue guidance range. The Q3 reimbursable expense ratio on net revenues was 0.3% as compared to 8.9% for Q3 of the prior year. Net revenues and reimbursable expenses were both affected from economic disruption of the COVID-19 pandemic and as we transition to a remote service delivery model throughout the U.S. and Europe. Net revenues for our S&BT group were $22.2 million, a decrease of 21% when compared to the same period in the prior year. However, S&BT was up strongly on a sequential basis by 25% as the group reversed much of the disruption it experienced during the second quarter. Net revenues for our EEA Solutions group were $29.7 million, a decrease of 1% on a year-over-year basis and 2% on a sequential basis. This was driven by growth from our SAP and OneStream practices offset by declines in our Oracle practice as we rebuild backlog during the quarter after efficiently maintaining momentum and outperforming during the second quarter of 2020. Our U.S. operations which currently represent 90% of our total company net revenues for the third quarter were down 11% on a year-over-year basis, but up 8% on a sequential basis. Net revenues for our international group were $5.8 million, a decrease of 30% on a year-over-year basis and an increase of 32% sequentially as the group's performance improved from its recent declines. Total company international net revenues accounted for 10% of total company net revenues as compared to 13% in the third quarter of the prior year and 8% in the prior quarter. Our recurring revenues, which include our executive advisory, IP as a Service and AMS groups accounted for approximately 24% of our total net revenues and approximately 36% of our total company pretax practice profitability in the quarter. Total company pro forma cost of sales, excluding reimbursable expenses, totaled $37.8 million or 65.4% of net revenues in the third quarter of 2020, as compared to $41 million or 61.5% of net revenues for the same period in the prior year. Total company consultant headcount was up 2% sequentially to 923, as we hired consultants as demand improved during the quarter. This compares to the total company headcount of 908 in the previous quarter and 1,036 at the end of the third quarter of 2019. The year-over-year decrease was a result of the actions taken in the second quarter of 2020 to reduce our global workforce by approximately 10% in response to the ongoing disruption from the pandemic. Total company pro forma gross margin on net revenues was 34.6%, up sequentially from 26.6% and down as compared to the prior year of 38.5%, primarily due to the COVID-19 pandemic disruption. S&BT gross margins on net revenues, was 42.4%, up sequentially from 26.4% and down as compared to the prior year of 49%. The variances were primarily driven by the pandemic disruption. EEA gross margins on net revenues was 27.5%, down sequentially from 29.7% and down as compared to the prior year of 33.7%. The year-over-year margin decrease was primarily due to modest revenue declines and increased utilization of subcontractors in the quarter, partially offset by lower headcount. International gross margins on net revenues, was 40.7%, up sequentially from 5.1% and up as compared to prior year of 22.9%. The margin increase related to increased sequential revenues and the restructuring actions that took place in the prior quarter which more than offset the year-over-year revenue declines. Pro forma SG&A was $12.7 million or 22% of net revenues in the third quarter as compared to $14.1 million or 21% of net revenues in the previous year and $11.4 million or 22% of net revenues in the prior quarter. The year-over-year dollar decrease of $1.4 million was primarily due to decreased travel-related selling and marketing activities throughout the quarter. Pro forma EBITDA was $8.2 million or 14% of net revenues in the third quarter, as compared to $12.5 million or 19% of net revenues in the prior year and $3.4 million or 7% of net revenues in the prior quarter. Total company pro forma net income for the third quarter of 2020, totaled $5.4 million or $0.17 per diluted share. This compares to pro forma net income of $8.7 million or $0.27 per diluted share in the third quarter of 2019. GAAP diluted earnings per share was $0.09 for the third quarter of 2020, as compared to earnings per share of $0.21 in the third quarter of the previous year. The company's cash balances were $43.2 million at the end of the third quarter as compared to $37.4 million at the end of the previous quarter. Net cash provided by operating activities in the quarter was $10.1 million, which was primarily driven by net income adjusted for non-cash items and increases in equity expenses. Our DSO or days sales outstanding at the end of the quarter was 57 days, as compared to 64 days at the end of the previous quarter. Given our strong cash balances, the company's $45 million credit facility remained unused during the third quarter. During the quarter, we repurchased 83,000 shares of the company's stock for an average of $12.57 per share or at a total cost of approximately $1 million including purchases from employees to satisfy income tax withholding triggered by the vesting of restricted shares. Our remaining stock repurchase authorization at the end of the quarter was $4.7 million. In July of 2020, the Board declared a quarterly dividend of $0.095 per share, which was paid in October 2020. At its recent meeting, the Board declared the next quarterly dividend of $0.095 per share which will be paid in early January 2021. Before I move to guidance for the fourth quarter, I would like to remind everyone of the seasonality of our business, specifically the increased holiday and vacation time that is historically taken in the fourth quarter will decrease our available billing days by approximately 8%, when compared to the third quarter. As Ted mentioned in his comments, although economic uncertainty from the pandemic continues to be high, the company's current estimates suggest that net revenue for the fourth quarter of 2020 will be in the range of $55 million to $58 million. We expect sequential revenues for S&BT to be up; EEA revenues to be flat and Europe to be down, primarily due to an expected managed services contract exploration. We estimate pro forma diluted earnings per share in the fourth quarter of 2020 to be up sequentially and in the range of $0.20 to $0.22. We expect pro forma gross margin on net revenues to be approximately 36% to 38%. We expect pro forma SG&A and interest expense for the fourth quarter to be approximately $12 million. We expect fourth quarter pro forma EBITDA on net revenues to be in the range of approximately 17% to 18%. We expect cash to be up, when excluding dividend payments and share buybacks. At this point, I would like to turn back over to Ted to review our market outlook and strategic priorities for the coming months.

Ted Fernandez, CEO

Thank you, Rob. As we look forward, let me share our thoughts on the short-term as well as the long-term demand environment and on the growth opportunity it offers our organization. It goes without saying that we've entered an unprecedented period where the demand disruption necessitated to ensure our safety has required extreme measures. But it is now also clearly evident that the digital transformation era, which was just beginning, has been rapidly accelerated by the pandemic. This means that digital innovation in emerging enterprise cloud applications, analytics and infrastructure, workflow automation, process mining, and artificial intelligence is dramatically influencing the way businesses compete and deliver their services. Digital transformation is redefining all activities at an accelerated pace, forcing organizations to fundamentally change and adopt these new capabilities in order to remain competitive. On the demand side, the short-term environment continues to improve as our clients now understand that they must continue to transform and that the buyers will continue to disrupt our lives until a vaccine and therapeutics are readily available to all. This means all organizations must adapt to this new environment, while we sort through the changes, which will result from the pandemic. Specifically, the increasing momentum we experienced in Q3 is continuing into Q4, as our clients and our sales and service delivery model acclimate to the next normal market requirements. This should position us well for 2021 and should allow us to return to pre-pandemic levels of target growth as well as profitability. Additionally, we continue to see significant increase in the interest from potential partners that desire to license our Quantum Leap and Digital Transformation Platforms to bolster their business case development and value selling efforts by leveraging our credibility in IP. We now have more than 10 opportunities with more than half of them with formal proposals outstanding. Strategically, our focus will remain the same, which is to continue to build our brand with our new offerings and capabilities focused on digital transformation around our fully digitized and unmatched benchmarking and best practices, intellectual capital and platforms. This should allow us to serve our clients strategically, increasingly remotely and whenever possible continuously. Specifically, we will continue to redefine our global benchmarking leadership through the enhancements we have made to our Quantum Leap digital transformation software-as-a-service solution. As I've mentioned in the past, this platform allows us to deliver more information with significantly less client effort. It also allows our clients to leverage our IP and track transformation initiatives over the life of their respective effort. We believe that there is no comparable platform in the market. And as I previously mentioned, we have been experiencing increasing interest from potential strategic partners in leveraging our platforms, and also leveraging our brand and IP and credibility. We will also continue to refine and improve our Digital Transformation Platform to further differentiate our unique IP and related capabilities. DTP, unlike Quantum Leap, allows us to fully digitize our best practice IP, aligned with proven configuration organizational solutions to help clients drive transformational change. DTP is a core asset to both our business transformation and cloud implementation offerings. We have added a 20-minute demo to our Investor Relations page of our website so that investors can become more familiar with the unique capabilities of our platform. Lastly, even though we believe that we have the client base and offerings to grow our business, we continue to look for acquisitions and alliances that strategically leverage our IP and scope scale and capability, which can accelerate our growth. In summary, we continue to believe we are well positioned to resume our growth as the demand disruption subsides. Clearly, Q3 was a welcome relief after the significant lockdown disruption of Q2. We are also encouraged to see that the power of our brand and the focus of our offerings along with a sound financial position has allowed us to positively address the most challenging economic events. This validates our focus and investments that we're making on our platforms, our expanded cloud capabilities and our IP-as-a-Service offerings, which provide us as I said highly differentiated offerings and strategic access to most of the leading global companies. As always, let me close by thanking our associates by asking them to remain safe for their tireless efforts and urge them to stay highly focused on our clients and our people regardless of the short-term challenges we continue to encounter. Those conclude my comments. Let me turn it over to our operator and let us move on to the Q&A section of our call.

Operator, Operator

Thank you. We will now start the question-and-answer session. Our first question comes from Jeff Martin with ROTH Capital Partners. Your line is open.

Jeff Martin, Analyst

Thank you. Good evening Ted and Rob.

Ted Fernandez, CEO

Good morning Jeff.

Jeff Martin, Analyst

I didn't catch the specifics on cloud growth this quarter compared to on-premise. I understand that on-premise has largely run its course. How did cloud perform in the quarter?

Ted Fernandez, CEO

Our cloud revenue continues to grow. I’m not sure if Rob has specific statistics, but if not, we can send them to you, Jeff. The key point to understand about the growth this quarter is that the SAP and OneStream groups continued their sequential growth, which offset some of the transition we previously mentioned regarding our Oracle group. The Oracle group significantly outperformed in Q2 as it efficiently worked through its backlog, using the second quarter to essentially rebuild it. When you look at our overall activities, nearly everything we’re doing is cloud-oriented. The cloud mix on the Oracle side is now over 80%, and it exceeds 95% for SAP. Additionally, all of the OneStream work is considered next-gen cloud when we refer to it.

Jeff Martin, Analyst

Okay, you mentioned that process mining and AI are part of the opportunities for Hackett. How is Hackett positioned to enter the process mining market? Do you have any tools available to tackle that market?

Ted Fernandez, CEO

It's an excellent question. I mean this takes us all the way back to 2010 when we actually launched HPE as you know which was really the most aggressive way to build and drive a totally automated process mining solution. As you can now imagine a large portion of the work that we do within Quantum Leap is in fact process mining where we continue to gather in both import and extract data that we use for some of those initiatives. So, the question for us really relative to process mining will be just how aggressively we want to invest in that category in years to come. As the category is now defined with new entrance being funded at meaningful valuation, we continue to believe that process mining as a category and opportunity for the firm longer term not 2021 remains a very significant opportunity. The second part of your question Jeff was not process mine, but what was it? I'm sorry?

Jeff Martin, Analyst

You mentioned AI as part of the…

Ted Fernandez, CEO

We have several initiatives related to AI, particularly from our IP as a Service channel, where cloud analytics and infrastructure companies are seeking our assistance in leveraging our intellectual property and database for their value selling and go-to-market strategies. This engagement with clients presents us with significant opportunities. Initially, we aim to ensure that the performance assessment information we provide to clients regarding business outcomes also incorporates a data or content performance aspect. Although it’s still in the early stages, we plan to enhance our capabilities in driving business performance as it relates to cloud analytics and infrastructure throughout 2021. This is an initiative we have commenced and intend to pursue further this year.

Jeff Martin, Analyst

Okay. And then final question for me is, you mentioned 10 opportunities for IP as a Service in the pipeline with half or more than half in formal proposal mode. Are those ones you solicited? Or are those inbound increase from opportunities? And how would you characterize, how that takes your business and perhaps give you some new benchmarking data that you didn't previously have?

Ted Fernandez, CEO

That has a lot of great benefits for us, Jeff. Let me first address the initial part of your question regarding where the opportunities are emerging from. I would estimate that 75% of the opportunities have come from inbound requests. Individuals familiar with one of our platforms have reached out to inquire about accessing data or Quantum Leap as a means to enhance their go-to-market strategy. This has initiated discussions on how they can utilize these tools effectively. What's most encouraging is that these companies, which come from various categories and different scales, recognize the value and credibility of our data and performance assessment in front of leading global firms. It’s about adapting our intellectual property to their specific solutions, enabling them to understand how they can leverage it for prospecting, selling, or even serving their clients. The additional value is significant; not only can we assist them in these efforts, but if we succeed with any of these proposals, we know it has also been beneficial to ADP, who helped us launch this initiative a couple of years ago. Furthermore, the data capture aspect is substantial, particularly in how it expands our brand's reach into new categories, especially in emerging cloud areas where we’re receiving new requests. For us, it’s not just an efficient model; it allows us to utilize our intellectual property and platforms while also providing our own services. This business model differs greatly since it enables us to tap into other companies' go-to-market opportunities, capturing data and gleaning insights from that process. This, in turn, significantly broadens the range and depth of insights we gather from the data we collect. We believe that we possess the most extensive enterprise benchmarking database compared to any of our competitors, reflecting our capabilities and insights.

Jeff Martin, Analyst

Very helpful. And good to see the sequential improvements and nice to see you're back in the $0.20 range for EPS this quarter.

Ted Fernandez, CEO

We are delighted. We're glad to see that we can get there next quarter. So it is very well.

Operator, Operator

Our next question is from Andrew Nicholas with William Blair. Your line is open.

Trevor Romeo, Analyst

Hi. This is actually Trevor Romeo in for Andrew. Thank you for taking our questions. Nice to see the sequential uptick for S&BT in the quarter and the positive outlook for next quarter. Was just wondering if I could ask for your confidence level in a sustainable rebound for business transformation going forward. And could you speak a bit more about how your conversations with potential clients are going on that side of the business?

Ted Fernandez, CEO

It was crucial for us as that side of the business has a higher level of client engagement compared to the technology projects in the EEA sector, which faced significant disruption in Q2. It was encouraging to see demand for that business grow throughout the quarter. What does that indicate for our future? Clearly, clients recognize the need to address their performance improvement challenges. To achieve this, they may either manage it internally if they have the necessary resources or seek assistance from organizations like ours. Furthermore, it shows that clients are becoming comfortable with remote engagement in over 90% of these activities, which is very noteworthy. We believe that with each passing month, clients are growing more at ease with the disruptions caused by COVID in their businesses, which allows them to allocate time to focus on ongoing digital transformation, performance improvement, and productivity efforts that are essential to navigate this volatility. All these aspects are significant. The engagement has been positively received in our communications, discussions, interactions, and collaborations with clients, as we have found ways to ensure they perceive value from our interactions across all our groups. Overall, this trend is positive. Most importantly, it highlights our adaptability and how we persevere through challenging circumstances to meet the obligations we have to our respective organizations. This is occurring at our client organizations as well as within ours, enabling us to celebrate the success achieved, and I commend both our clients and our teams for their efforts. Client engagement not only continued throughout the quarter but also increased as we move into the fourth quarter.

Trevor Romeo, Analyst

Okay, great. That's good to hear. And I just wanted to ask a follow-up on the cost side. Could you just speak to how you see your expense base evolving over the next year or two? Particularly regarding some of the expenses like travel-reimbursable expenses, office expenses and things like that that have kind of changed as a result of the pandemic. And then also just your thoughts on whether staffing levels are adequate given current demand? Or if you're looking to add headcount in certain areas going forward? Thank you.

Ted Fernandez, CEO

Let me begin by addressing your points. As Rob mentioned, we've increased our headcount this quarter to meet rising demand, reflecting our ongoing growth. There is some variation in this acceleration across different practices based on where we’re experiencing the most demand, but generally, it’s widespread as client engagement has broadened. When it comes to costs, we can highlight three significant areas. It’s noteworthy that you immediately pointed out travel expenses, which are particularly visible in our reimbursable expense figures. Unfortunately, these are significantly down—last year, travel accounted for 8.9% of expenses, but now it's just 0.003%. This drastic change indicates that most of our engagements are currently being delivered remotely. As Rob pointed out, this shift has resulted in fewer travel-related costs, which greatly benefits both our clients and us. Moreover, the efficiency of our remote selling efforts has helped in enhancing client engagement. While we miss the personal interactions that are vital to our business, we’re realizing that the frequency and speed of engagements, including sales efforts, have become much more efficient. This efficiency provides us more capacity to work with existing clients or to pursue new prospects. Additionally, because many tasks can now be done virtually, we can utilize different resource models. Certain skills of our team do not require them to be physically present on-site, enabling us to consider offshoring or nearshoring some of our operations. This transition not only helps reduce costs but also allows us to tap into specialized skills that may vary by region. Overall, we are gaining flexibility with non-chargeable travel expenses and how we organize our teams, allowing us to share some of those benefits with clients while also safeguarding our margins. Lastly, regarding facility resources, we are continuously reviewing our real estate needs, and I am confident we will find a more efficient real estate strategy that suits our business demands, which will yield benefits over time along with other related agreements.

Trevor Romeo, Analyst

Okay. Got it. Well, thank you. That was very helpful.

Operator, Operator

Our next question comes from George Sutton. Your line is open.

Adam Kelsey, Analyst

Thank you. This is Adam on for George. Ted, I enjoyed the branding in the press release related to the next normal. I was hoping you can help us understand what that means in terms of what you mean by that specifically and what strategic adjustments you've made to help people in that environment?

Ted Fernandez, CEO

Let's first consider the accelerated digital transformation, which is crucial for enhancing how we engage and support our clients remotely and more efficiently. This digital shift affects all aspects of our business. We assist clients in recognizing opportunities not just for customer engagement but throughout their service delivery models. Importantly, we initiated a formal process to digitize our client interactions, resulting in significant investments that led to the creation of two major platforms. This change has transformed how we interact with clients, allowing us to deliver intellectual property more effectively and build a new business model where our platforms can be licensed to clients, creating additional revenue without affecting our existing operations. This level of transformation allows us to leverage resources globally, offering exceptional talent remotely, which is a significant benefit. This model applies to all knowledge work across various industries. The acceleration of digital transformation represents a substantial shift in how industries operate and how we live our daily lives, as emphasized by various advertisements.

Adam Kelsey, Analyst

And on that point, with respect to the investments you have made for digitization, how big of an advantage has that proven to be so far when you compare yourself against competitors?

Ted Fernandez, CEO

Well it's just starting. But imagine an organization like ours, where our single biggest weakness is our scale. And to some extent not – we've got incredible talent but there is no doubt that the IP and insight we gather from all of our benchmark and research exercises is a key strategic reason that clients engage. That ability to drive that knowledge more efficiently without necessarily all engagements requiring a lot of resource, I think allows us to at least feel or execute, as we look forward. We think it will allow us to feel and execute, as if we had much greater scale because our ability to leverage expertise and leverage that insight to our platforms dramatically more efficiently.

Adam Kelsey, Analyst

And then one last question for me. With looking ahead to the next normal, how has that affected what you've seen in terms of opportunity for M&A and then your preferences in M&A?

Ted Fernandez, CEO

Well, we're rekindling our work – our pursuits and our interest. The answer is that we would like to get larger. And we have specific areas that we want to continue to focus on. They're expanding now through this period. So if you've asked me have they changed? Have the areas of interest change from a pre and post COVID? The answer is yes. they have. So increasing interest into cloud analytics and infrastructure areas that we weren't really discussing or considering pre-COVID. Obviously, we continue to look for areas to bring in scale in IP in – across functional areas that we have expertise in, as well as the cloud enterprise application areas we focus in on. To some extent the pandemic has put some of that activity on hold. I believe for us it helps us identify a broader set of categories that we want to consider investing in. And I think it also will allow us to continue conversations in areas where we were already focused on. It is important though, as you look at both our needs and the target needs that you have a full understanding of what the pandemic impact is this pre and post assessment. And so the art of the deal for lack of a better term will come in understanding what that impact is and what a fair transaction and what a meaningful opportunity is as we look at 2021.

Operator, Operator

Thank you. Our next question comes from Vincent Colicchio with Barrington Research. Your line is open.