VOLT - NASDAQ

Greetings, and welcome to the Volt Information Sciences Incorporated Fourth Quarter and Fiscal Year 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation [Operator Instructions]. Please note this conference is being recorded.I will now turn the conference over to your host, Joe Noyons, Investor Relations. Mr. Noyons, you may begin.

Thank you, Amir and good afternoon everyone. Thank you for joining us today for Volt Information Sciences' fourth quarter and fiscal 2019 earnings conference call. On the call today are Linda Perneau, President and Chief Executive Officer and Herb Mueller, Senior Vice President and Chief Financial Officer.After the market closed this afternoon, the company issued a press release announcing its results for the fourth quarter and fiscal year 2019. The release is available on the company's Web site at volt.com, as well as the EDGAR SEC Web site filed as a form 8-K. Before we begin today's prepared remarks, I would like to remind you that some of the statements made today will be forward-looking and are made under the Private Securities Litigation Reform Act of 1995.Actual results may differ materially from those projected or implied due to a variety of factors. We refer you to Volt Information Sciences’ recent filings with the SEC for a more detailed discussion of the risks that could impact the company’s future operating results and financial condition. Also on today’s call, management will reference certain non-GAAP financial measures, which we believe provide useful information for investors. A reconciliation of those measures to GAAP measures is included in the earnings press release issued this afternoon.With that, I would like to turn the call over to Volt's President and CEO, Linda Perneau. Linda?

Thank you, Joe. And welcome everyone to our fourth quarter and full year fiscal 2019 earnings call. I am proud of the evolution that has occurred within the organization since I joined 18 months ago. With my appointment as CEO in November of 2018 and with the majority of our newly hired executive team in place, we've made tremendous strides in multiple aspects of our business.During the year, we attracted top industry veterans for leadership roles across our organization and began a deliberate process of changing to a performance based culture. We exited or deemphasized less profitable business and we put a greater emphasis on growing business with attractive margin profile. We did this while implementing significant organizational and profit changes and updates to our systems.The results of these changes improved our year-over-year financial results in many areas. We improved gross margin by 50 basis points. We reduced adjusted SG&A by $18.9 million. All three business segments showed operating income growth. And importantly, during 2019 adjusted EBITDA improved by $14 million to a positive $1 million, our first positive full year of adjusted EBITDA in three years.Before I go into more detail, I'll turn the call over to Herb Mueller, our CFO and then come back to talk about our strategies and outlook. Herb?

Thank you, Linda and good afternoon everyone. Our fourth quarter year-end results positively reflect the changes we have made to the organization. We're beginning to see growth in some of the most profitable parts of our business and improvement in profitability overall. Before I review our results, I'd like to remind everyone that our fiscal fourth quarter of 2019 includes a 14th week compared to a normal 13-week quarter, and our fiscal 2019 results consist of 53 weeks of operation versus the usual 52 weeks.In my review, I will go over actual comparisons, as well as provide the numbers related to the extra week, which will allow for an apples-to-apples comparison. Also, we are modifying our language regarding same-store sales. To avoid any confusion with the traditional definition of this term going forward, we are referring to this metric as adjusted revenue, which excludes the extra week as well as the effects of foreign currency translations and businesses exited.I'll begin by reviewing our fourth quarter results. Revenue for the fiscal fourth quarter was $258.4 million, including approximately $18.9 million related to the extra operating week. On an adjusted revenue basis, revenue for the fourth quarter of fiscal 2019 decreased 5.7% year-over-year and was within the range of our guidance provided on our third quarter call.Looking at our business segment results. North American Staffing represented 84% of overall revenue during the fourth quarter. Revenue from this segment was $216.6 million, including approximately $15.8 million associated with the extra week. Adjusted revenue decreased approximately 8.7% year-over-year. The decrease is attributable to continued workforce adjustments from certain larger clients, specifically related to changes in their businesses, partially offset by business wins with new clients. Our two other segments delivered solid growth during the fourth quarter. The international staffing business, which represented 12% of total sales in the fourth quarter increased by 12% year-over-year to $30.6 million.Adjusted international revenue increased by approximately 8.8% year-over-year, primarily due to stronger results in Belgium, the UK and Singapore. At about 5% of total revenue, North American MSP is our smallest yet fastest-growing business segment. Revenue increased 42% to $11.7 million during the fourth quarter. Removing the extra week for the comparisons, North American MSP increased 31%. The increase is primarily attributable to expansion within existing clients and new wins for managed service programs and payroll services.Moving down the P&L. Gross margin for the fourth quarter was 16.6%, similar to the year ago quarter. I want to point out that last year's fourth quarter included $2.2 million favorable California federal unemployment tax credit. Without this credit in last year's fourth quarter and adjusting for the 53rd week, gross margin would have increased approximately 80 basis points year-over-year. The primary driver for the improvement in gross margin was related to the growth in North American MSP and International Segment, which tend to generate higher gross margin.SG&A expense for the fourth quarter was $39.9 million, excluding the approximately $2.6 million associated with the 14 week. And SG&A expenses decreased $1.1 million from the third quarter of fiscal 2019 and $4 million from the prior year quarter. For the fourth quarter of fiscal 2019, we reported a loss of $749,000 or $0.04 per share compared to a loss of $2.9 million or $0.14 in the fourth quarter of fiscal 201. The loss during the fourth quarter of 2019 included $2.1 million of restructuring, severance and impairment costs related to the separation agreement with the global chief financial officer, decommissioning of our customer care solutions business and the remaining costs related to ongoing restructuring efforts throughout the company.Turning to full-year results. Full year fiscal 2019 revenue was $997.1 million, including approximately $18.9 million related to the extra operating week compared to $1 billion in fiscal 2018. Adjusted revenue for fiscal 2019 decreased 3.5% year-over-year.Looking at our business segment results for the year. North American Staffing represented 83% of overall revenue during fiscal 2019. Revenue from this segment was $830.9 million, including approximately $15.8 million associated with the extra week. Adjusted revenue decreased 5.1% year-over-year. Despite the revenue decrease on an adjusted basis, operating profit from North American staffing increased by approximately $5.1 million or 42.1% year-over-year to $17.2 million. International staffing business segment decreased by 2.5% year-over-year to $114.4 million. Excluding approximately $2.2 million of contribution from the 53rd week and $6 million foreign exchange differentials from the comparison, INTERNATIONAL revenue increased by 1.3% year-over-year. On an adjusted basis, operating profits from the international segment increased by approximately 5% to $2.7 million.North American MSP business segments increased 30% to $39 million during the fiscal 2019 or 27.1% on an adjusted revenue basis. On an adjusted basis, operating profit from North American MSP was $4.8 million, almost a threefold increase from the prior year. To recap, while we've had mixed top line performance in our three business segments, each has delivered improved profitability.Moving down the P&L. Gross margin for fiscal 2019 was 15.3%, a 50 basis point improvement from the 14.8% reported for fiscal 2018. We saw margin improvement across each of our segments, in particular from our North American MSP business, which was our highest gross margin segment. Margin improvement was mostly revenue mix related during fiscal 2019. Also contributing to the gross margin expansion were our improved pricing discipline and lower payroll taxes in our North American segment.SG&A expense was $157.1 million, including approximately $2.6 million related to the extra operating week compared to $173.8 million in fiscal 2018. Excluding the 53rd week from the comparisons, SG&A expense would have decreased $18.9 million or 10.9% year-over-year. The reduction is primarily due to our strategic approach to optimize resources, greater productivity across the organization and real estate consolidation of underutilized regional and corporate offices.Operating loss for the year improved to $9.8 million from $28.4 million in fiscal 2018. The year-over-year improvement reflects improvements in all three of our segments, a strategic shift towards higher margin business, reduced G&A and lower restructuring and severance costs. I will also point out that the operating loss in 2019 included $2.5 million loss from the customer care solutions business, which we exited in early June 2019. During the past three years, we have divested or exited several non-core assets and non-core businesses and today, we are purely focused on our core businesses, which we do best.Net loss for fiscal 2019 was $15.2 million or $0.72 per share compared to net loss of $32.7 million or $1.55 per share in fiscal 2018. The loss during fiscal 2019 included $5.3 million of restructuring, severance and impairment costs related to decommissioning of our customer care business and the separation agreement with a former CFO, with the remaining costs related to ongoing restructuring efforts throughout the company.Moving on to a few CIO from cash flow and the balance sheet. At the end of fiscal year 2019, we had $28.7 million in cash and equivalents and an additional $12.8 million in restricted cash and short term investment. Our long term debt was $55 million with a weighted average interest rate of 4.1%, and we had a total available liquidity of $42.2 million. Also announced in today's release is the amendment of our financing program to extend the maturity date by two years.We generated $7.4 million in cash flow from operations in fiscal 2019 with capital expenditures of $9.1 million. Finally, I want to remind everyone that we have considerable tax assets as a result of accumulated losses. At the end of fiscal 2019, we have approximately $456 million in federal, state and international NOLs and tax carry forwards available to offset future income.I'll now turn the call back over to Linda who will give greater detail on our outlook and review our strategies.

Thank you, Herb. We are midway through our strategic transformation in which we plan to restore the business to market growth rate and generate meaningful profitability. There's a lot of hard work and heavy lifting that had to be done to achieve the progress during 2019.Going forward, progress should be more straightforward, basic blocking and tackling led by our talented management, operations and sales team. Throughout 2019, we presented our strategic priorities and goals to investors. These included driving top line growth, reducing our SG&A and improving profitability. Overall, we made significant progress towards these objectives. So let's first talk about top line growth. We achieved growth in two of our segments, international and North American MSP.We are seeing traction with our initiatives in the international segment. Growth from this segment, which represents about 12% of revenue, began to accelerate during the second half of the year following a change in leadership. This segment is 100% focused on both contract and direct hire placements and professional skills sets, including technology, telecommunications, engineering, and life sciences.Customer relationships in these end markets tend to be longer lasting and more strategic, and produce a higher overall margin profile than our average gross margin. We are cautiously optimistic about continued momentum in our international segment in 2020. We are carefully monitoring the macro conditions in Europe, particularly the effect of the potential Brexit. We remain focused on a strategy we implemented in 2019, which yielded positive momentum and will adjust accordingly as conditions change.We are also seeing traction within our North American MSP business. In this segment, which is our highest gross margin segment, we manage the client's entire talent solutions, including hiring, on-boarding, payroll and the affiliate vendor process. Our North American MSP segment have a strong tenured team that is receiving accolades and awards from clients and industry leading organizations, including recently being named Supplier of the Year by Nokia. This segment's top line grew by more than 30% and operating profit nearly tripled during 2019. Growth in this segment came from a full year of contributions from new accounts we implemented in 2018, as well as new accounts added during 2019.We also placed greater focus on growing our payroll service offering in 2019, which contributed to growth in this segment. We expect our growth in 2020 to be positively affected by ongoing momentum within this segment. Early trends show continued double-digit growth similar to what we experienced in 2019. Our third segment, representing more than 80% of revenue, North American staffing, also saw pockets of growth. However growth in these areas were not enough to fully offset as overall decline for the year.Over the past four quarters, we have addressed the headwinds we faced throughout 2019. We experienced some unexpected reduction from a couple of clients early in the year, specifically exiting fiscal Q1 and entering fiscal Q2. Throughout the remainder of the year, we were impacted by reduced demand in a small percentage of larger clients to which we attribute about 80% of the revenue decline.We also weathered the normal fluctuations inherent to the staffing industry as client projects were completed. Simultaneously, we have been transforming the culture of the organization; restructuring the sales and delivery functions of the organization to better align to our client's needs; building a robust sales team, focused on $1 million to $10 million client prospect; and shifting to an every one sells mentality throughout our field organization. This shift is paramount and extensive change management occurred throughout the year. This change was disruptive in parts of our organization and as we anticipated, caused meaningful turnover in some locations.Frankly, identifying and hiring the right people capable of succeeding in this new culture did take longer than initially expected. Because of this shift in our sales culture, at certain points in time last year, one-third of our field staff positions were left unfilled, including several open positions for branch managers. We saw improvement in our sales effort as they evolved and matured, and sales initiatives started to take effect more broadly. With this completely revamped sale structure, we managed to make up 75% of overall client decline for the full year and slowed the pace of decline in adjusted revenue. The rate of decline, specifically in North American staffing, was 5.1% in 2019 versus the decline of 6.1% in fiscal 2018.Today, all of our branch manager positions are filled and the number of open positions for field staff is now below 10%. Clearly, being fully staffed should contribute to further slowing the pace of decline in this segment. I will now talk about our goal to reduce SG&A. We reduced our adjusted SG&A expense by $18.9 million during fiscal 2019. This is on top of the $23.8 million reduction in SG&A for fiscal 2018.The actions taken this year were not just about cutting headcount. Our effort was centered on driving efficiencies and productivity gains across the organization. We completed multiple restructuring events during fiscal 2019; focused on repurposing of dollars from non-revenue generating functions to revenue generating ones; consolidation of operational functions into regional support roles; productivity gains and reductions of unprofitable locations.We recognize the need to continue to reduce our overall SG&A expenses, and have begun to implement additional strategic plans to do so. We recently announced internally our plan to transition certain back office functions to Arctern, a Volt company based in Bangalore, India. We expect this, combined with our continued strategic cost savings initiative, to yield approximately $3 million in savings in 2020 and potentially more than $10 million for full fiscal 2021.Next, I will cover our goal to improve profitability. As Herb led out earlier, we reported increased gross margin and operating income across all three business segments. Combined with our strategic reductions in SG&A, we reported significant improvement in our operating loss for the year, as well as positive full year EBITDA for the first time since fiscal 2016. Our goal for gross margin was to improve results in multiple ways. Most importantly, by focusing on higher margin business, implementing our new price discipline and balancing our portfolio mix. We also made investments in our international and North American MSP segment to drive growth, and we are seeing results of those investments. We maintained pricing discipline across the organization and new business that we are selling today is at a higher price point than before.I also want to highlight the profitable growth from our retail customers in the North America Staffing segment. As a reminder, when we use the term retail, it is not in the context of staffing for retail stores. We refer to retail as the part of our North American staffing segment, typically targeting small to medium size clients in multiple industries with less than $1 million in annual spend, typically service locally by one of our branch or regional delivery teams. Retail makes up about 15% of North American staffing segment revenue and is one of the highest margin businesses in this segment; typical industry margin for retail business on the commercial side range from 17% to 20% and on the technical side, 22% to 26%. We set a goal in 2019 to hit 20% combined margins in new retail business across our branch network, and we exceeded that goal.As you may recall from prior calls, we invested throughout the year in business development managers or BDMs for our retail business. Collectively, the BDMs exceeded their internal gross margin target and new business sold by this team exceeded the combined retail margin across all of the branches. In 2020, we will continue to execute our retail strategy and plan to complete this shift to everyone selling by the end of March 2020. At that time, we will have essentially quadrupled our feet on the street in a one year period. We have a goal to double the revenue related to our retail business over the next three years.Simultaneously, our shift towards customers in the $1 million to $10 million annual spend range will be a continued focus for us in 2020. As you may recall, the benefits of targeting middle market and smaller accounts includes generally higher gross margins of faster sales cycles and more developed customer base that is less dependent on the ebbs and flows of a few large clients. Going forward, the primary emphasis of our organization will be to build a balanced portfolio of retail, middle market and large accounts. I will note that attracting and retaining large national accounts will remain important to both success, and we will pursue when the opportunities are right. Let me also state we will not take on lower margin or less appealing business just for the sake of growing revenue.Not all of our gross margin expansion initiatives show the expected progress. In particular, our direct hire business did not execute well to our North American staffing segment and decreased year-over-year. Direct hire is not an intuitive task and arguably the turnover and on-boarding of new hires impacted performance. We have taken action, realigning training, modifying the compensation program to encourage more collaboration and reward for driving direct hire business and including individual requirements aligned to branch financial performance expectations. I want to emphasize that growth in this business represents incremental growth, and would not cannibalize our staffing business. Direct hire has the potential to be very accretive to our overall gross margin and our ability to successfully execute in this candidate driven job market is critical.Moving on to the outlook. As a reminder to those that have followed us for some time, as well as backlogs for those that are new to our story, almost everything that could have gone right for us in the first quarter of fiscal 2019 did, including positive adjusted revenue and unprecedented demand from many of our larger clients. This means we are up against a difficult comparison in the first quarter of 2020.Our first quarter adjusted revenue is expected to decrease 10% to 12% compared to the prior year quarter. Third quarter revenue comparisons will continue to be impacted by lower demand from certain large customers due to issues specific to their businesses. While our quarterly performance is not likely to be linear for 2020, we do expect to see substantial progress as a result of our strategic transformation and a substantial improvement in profitability.Given our focus on securing higher margin business, it is likely our progress will show up faster on the bottom line rather than in top line results. Our longer term goals include top line growth following a transition period while our strategies have time to take full effect. Last but not least. The recent efforts transform our back office operations, including our IT platform will drive more efficiencies for our clients, our candidates and our internal operations.Over the next three years, we believe our strategies will allow us to achieve a targeted adjusted EBITDA margin goal of 3%. The steps to reach this goal include the continued mix shift within our revenue base through higher margin business, garnering greater operational efficiencies, successfully maintaining pricing discipline and greater operating leverage across our business. We expect to see adjusted EBITDA margin improvement during each of the next three years, and the pace of improvement will accelerate as we resume revenue growth and gain operating leverage. Overall, I am optimistic about fiscal 2020 and our future.Before we open up the call to take questions, I'd like to take a moment to thank all of our employees at each of our business units for their hard work and dedication to Volt. Their contributions are vitally important, and we are proud of the progress made in 2019 and our motivation to take even greater strides in 2020.Now, I would like to open up the call for questions, operator?

At this time, we will be conducting a question answer session [Operator Instructions]. Our first question is from Josh Vogel, Sidoti and Company. Please proceed with your question.

It's good to see the broad based from movements across the business here in the face some of those revenue headwinds in North America. I guess my first question here is I was hoping you could just provide a little bit more color on the transition to Arctern. Maybe how long you expect us to take and what exactly you are transitioning over there?

I'll take that, and Herb you can certainly add commentary after I do. So we're going to leverage the global capabilities of Arctern. We have spent the last several months looking at very closely and have a strategically selected certain roles that today are based in Orange, California, as well as in the UK. We will be moving those functions over to Arctern. There are 125 employees that are impacted. The plan is to allow for 60 to 90 day transition once those employees are selected and in place in Bangalore.We have already begun the process. The internal notification occurred last week. We've begun the process of hiring individuals to take on those functions in Bangalore. And we will continue to be doing that aggressively over the next couple of months. We will see the majority of the impact of these savings accelerate towards the latter part of the year as those transitions of the rules begin to take place.

Okay, that's helpful and that actually kind of led into my last question, or my second part of the question is, when -- how we should think about that $3 million savings more of a second half event. I guess I'm curious, will there be some upfront cost involved in this, whether the transition of those 125 employees impacted that could be a little bit of a margin drag in Q1 or potentially in Q2?

Yes, you'll have a little bit of an impact on the SG&A line, again, because most of these are back office support positions. As we bring these people on, we have some overlap we're managing that very aggressively. And then of course, as we mentioned, you'll see there'll be some restructuring costs related to the severance associated with this as well.

I don't expect any impact from a gross margin perspective, Josh. So that should not at all impact. And our outlook on the savings for 2020 takes into account all of the transition and any upfront cost that will go into place.

I guess I have a question around the guidance. You gave a little bit more in terms of expectations adjusted revenue down 10% to 12% year-over-year. So obviously, that excludes the call center operation. So I just kind of want to get a little bit, a better handle there. When you're saying adjusted revenue, I know it includes or excludes that, as well as some FX. Could you just tell me what -- how you're getting to that number, maybe get a little bit more granular when we're looking at largely North America, because that's where we're seeing the bulk of the headwind?

And that's -- it is on the staffing side where you have there. And again, we had an exceptional quarter last year. We had unbelievable holiday season a year ago with several clients that really blew it out. So over half the decline is really I think related to that. And then we still have the overhang of -- that we talked about going back in the third quarter, impact of these clients businesses that pulled back, so you have that as well. Overall, I mean I think we're still healthy and I think we'll have a solid year. But Q1 definitely got some headwinds because of the exceptional performance last year.

And I guess we should be -- obviously, a tough comp in Q1 last year. But that's kind of annualized by the end of this month. So it's safe to assume that the -- whatever declines you potentially see in Q2, from a consolidated basis, will be softer than what we're seeing -- or lower decline and what we're seeing for Q1?

That would be fair.

Is there any other insights you can share at broad level on gross margin and SG&A as a percent of revenue when we think about 2021 when we're sitting here a year from now and we're looking at 2020 results versus 2019. Obviously, we're seeing nice improvement on that front. Is there any kind of broad level commentary that you can share for the full year?

I think we're going to continue to see improvement in all -- both of those areas. Continuing to work on both the mix shift and pricing that will improve our gross margin. The SG&A cost savings again were heavily focused on this transition project. So you won't see positive impact in the first half of the year, but you'll start to see that gaining momentum in the second half, and of course, carrying over into 2021.

And Josh, I would even just add to that and say that I believe we've demonstrated our ability to improve margin consistently. It has improved consistently over the past four quarters. Operating income and EBITDA have also improved every quarter, at least since I've been here. So we have been seeing improvement. We've got some momentum, so to speak, within those areas and those are the areas that we will continue to see ongoing momentum.

And I guess just one more if I could sneak in here. We have been seeing an industry that's been going through consolidation. Your business is stabilized. You're doing better. I know in the past you would entertain being for sale, but that is no longer the case. And I think we can assume that maybe you're in an acquisitive mode now. And if so, I was curious if you could -- how you're evaluating acquisition opportunities in the marketplace, maybe what multiples are you seeing for various businesses that could be of interest to you, whether it's in North American staffing, international or MSP domestically and abroad. And I guess just to build off of that when you're thinking about potential deals with this? Is your strategy more to potentially enter a new geography or gain access to new client vertical or staffing sector altogether? Any insights there would be appreciated.

Well, I appreciate you're calling us inquisitive. I think I'm not sure if it's an adjective we'd use to describe ourselves because we're heads down running the business fast and furious and driving gross margin and profitability. What I will tell you is I agree with you. We absolutely are in a much stronger position than we were a year ago. Operationally, we are much stronger. Our foundation is stronger. We have a best in the industry leadership team in place. We've got our seats of -- the majority of our seats build, nearly all of our seats filled. We're in a much better positioned and we'll be opportunistic, should an opportunity present itself.

Our next question is from Paul Mislah, Glacier Peak Capital. Please proceed with your question.

I just had a couple of questions. I believe its $2 million prior year due to California adjustment. Would that have been for the North American staffing business?

That's correct, the majority of it would be.

So when I look at the operating income for last year, the fourth quarter it actually was around $6 million when you back that out versus $7.2 million this year…

Right.

So basically its 2.7% margin versus 3.3% margin is probably the right way to look at that when thinking about how the business actually did adjusted for one-time items?

I think it's ended up having 80 basis points impact in Q4.

I'm just saying it was actually a lot better than it look…

Right, exactly…

Because you guys didn't put that in the adjustment in the schedule, so that's despite an 8.7% decline and your margins went up and your profitability actually adjusting for that given sale lines have been up. I know that everyone's going to hear this 10% decline for Q1. Should we expect margins to be improving in Q1, or it will -- how should we think about margin percentages in Q1?

Yes, typically we haven't given guidance on margin in there. What I will say is that overall we've been working on that and had positive trends through, expect that throughout the year.

Let me just jump in there and say, Q1, at least a portion of Q1, Paul, is always impacted by the reset [indiscernible] credits at the beginning of the year that does impact our margin. It is an event that has occurred historically. So you'll see it every single year, it impacts one month of our Q1, that's generally resets itself somewhat toward the end of Q2. But at Herb's point, we continue to expect ongoing margin expansion.

So I'm just kind of looking at this, well, revenue was down 8.7% in Q4 but the margins went up. So hopefully we'll see the same thing for Q1. The other thing -- so when we think about the -- just one comment on the acquisition that was brought up. I kind of assumed that while you guys certainly aren't for sale any more just take the other side of that question if that one came along at a good price for international or any other businesses that you would also be willing to listen to that on the selling side, not from a buying side. Is that fair or are those smaller businesses not for sale?

I would just say, we're focused on running our business right now. And as Linda mentioned, some great deals came in and made sense but I can't -- that's not our focus right now.

And then I would piggyback on that and say, certainly, I believe both Herb and I would absolutely be willing to look at anything that would come along that would make any sense from an international perspective. Keep in mind international is accretive to the business, because they do higher margin business, because they generate a significant amount of operating income, they are accretive to the organization and align really with our strategy around focusing on our core businesses and our core skill sets. So it is not something that is on the radar today.

And then as we think about the CapEx, I mean you guys did a nice job this year maintaining your cash position. As we think about CapEx going forward, is that $9 million high this year or is that kind of what we should be expecting?

Yes, slightly. I mean, I think we still have a series of IT projects that we're going to be working on and then there's other maintenance capital. But I'm not expecting anything north of that.

Okay, that's it from me. Congrats on the profitability. I think you guys are absolutely focused on the right thing. What matters is the money coming in after you paid all your expenses, not necessarily your revenue line items. So congrats on that.

Thank you very much.

Thank you.

We have reached the end of the question-and-answer session. And I will now turn the call back over to management for closing remarks.

Thank you for your participation in today's call and for your continued interest in Volt. We look forward to speaking with you again when we report our fiscal first quarter 2020 results in March.