Alexandra Delanghe Ewing - MDC Partners, Inc. Scott L. Kauffman - MDC Partners, Inc. David B. Doft - MDC Partners, Inc..

Daniel Salmon - BMO Capital Markets (United States) Peter C. Stabler - Wells Fargo Securities LLC Leon G. Cooperman - Omega Advisors, Inc. Ivan Kara - Phoenix Investment Adviser LLC Anuj Gulati - Morgan Stanley Investment Management Jason A. Bauer - T. Rowe Price Associates, Inc.

Avraham Avi Steiner - JPMorgan Securities LLC Jeremy Kahan - North Peak Capital.

Good day, and welcome to the MDC Partners Second Quarter Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would like to now turn the conference over to Alex Delanghe, Chief Communications Officer. Please go ahead..

Thank you. Good afternoon, everyone. I'd like to thank you for taking the time to listen to the MDC Partners conference call for the second quarter of 2018. Joining me today from MDC are, Scott Kauffman, Chairman and CEO; and David Doft, Chief Financial Officer.

Before we begin our prepared remarks, I'd like to remind you all that the following discussion contains forward-looking statements and non-GAAP financial data.

Forward-looking statements about the company are subject to uncertainties referenced in the cautionary statements included in our earnings release and slide presentation and are further detailed in the company's Form 10-K and subsequent SEC filings. For your reference, we've posted an investor presentation to our website.

We also refer you to this afternoon's press release and slide presentation for definitions, explanations and reconciliations of non-GAAP financial data. And now, to start the call, I'd like to turn it over to our Chairman and CEO, Scott Kauffman..

Thank you, Alex, and good afternoon, everyone. I'm going to focus on three specific topics, our financial results, the actions we're taking to address our cost structure and our go-forward strategy to grow and create shareholder value.

As we indicated would be the case during the first quarter call, the second quarter continued to be challenging for the business as we expected, and therefore, we are maintaining guidance for the full year.

As we also indicated on the first quarter call, we've taken and continue to take the necessary steps to improve and solidify our financial prospects and protect margin for this year and beyond. I'll elaborate on these actions in just a moment.

Turning to our results, organic revenue growth in the quarter was down 1.7% and down 0.5% for the first six months.

There was little impact of pass-through revenue in the quarter, meaning that on a net revenue basis, the organic revenue decline improved by 70 basis points, despite a meaningfully more difficult year-over-year comparison, as growth in the second quarter of 2017 was by far the strongest of last year.

The headwinds, as previously discussed, were a prolonged new business sales cycle and the impacts of client cutbacks, which continued to impact performance.

In the second quarter, we took targeted actions to preserve profitability and cash flow, closely reviewing our portfolio of agencies, while also continuing to selectively invest behind our world-class talent and strategic offerings in growth areas.

For the first six months, we've incurred one-time costs of over $12 million on initiatives that are not part of our run rate cost structure going forward. For example, we've driven improvements in the cost structures of several agencies resulting in $7 million of severance year to date.

In addition, the real estate moves taken in the first quarter had an upfront cost of almost $2 million. And finally, we've spent almost $4 million this year on our efforts to adopt the new revenue accounting rules.

To reiterate, through the second quarter, we've spent over $12 million on initiatives that are not part of our run rate cost structure going forward. And the $7 million in severance delivers an annualized savings of $33 million across our network.

The cost reduction moves have continued into the third quarter as well with an additional $9 million of annualized staff cost savings, meaning that through today, we have reduced annualized staff costs by over $40 million in total.

On top of that, I took a closer look at how we at MDC serve our agency partners and our clients, and I determined that we could do so more efficiently, while also setting ourselves up to be more effective in the future.

Last week, we restructured the MDC Corporate Group, which sits on top of the portfolio of operating units and includes our consolidation and reporting functions, as well as the centralization of certain operating and strategic initiatives.

We parted ways with a number of individuals resulting in a smaller real estate footprint, which generates additional efficiencies. While costing us approximately $2.5 million to implement in 2018, the restructuring will deliver annualized savings of over $4 million.

While these difficult moves were necessary in the face of an evolving competitive landscape, our success as a company and our ability to deliver shareholder value, of course, has to be focused on more than just cutting costs.

As part of that, we're continuing to look at our portfolio of agencies to ensure we're maximizing its value and to determine where each fits within our strategic growth plans going forward. And we have to continue to do great work for our clients and win more assignments, which is where all of our agencies are focused.

These efforts have borne some fruit in the latter part of the second quarter, as our new business pipeline began to accelerate. Net new business wins totaled $17 million in the quarter, with notable wins from Ally Financial, Hyatt and incremental brands from MillerCoors.

And in our media business, we extended our relationship with 21st Century Fox and will now manage media planning and buying for the Fox Networks' Digital Consumer Group.

As we cycle past our most difficult comparison of last year in the second quarter, combined with positive net new business, we expect to return to organic revenue growth for the balance of the year.

Better revenue trends, combined with our savings initiatives and a substantial reduction in one-time costs also sets the company up for materially improved profitability in the second half of the year and with a much stronger run rate heading into 2019. David will discuss this in more detail in a moment.

From a strategic standpoint, we're clear on the direction of our network and on how to leverage our significant differentiation in the face of an increasingly competitive landscape.

We're refocusing on our core growth pillars, which include our award winning creative and communications agencies and our progressive digital strategy and data analytics offerings. We believe these efforts will help to fortify MDC's place as a category leader and help us capture key growth opportunities in the future.

We continue to capitalize on the importance of digital and data analytics to the growth of our business in a world where traditional ad agencies are being disrupted. Our wins in the quarter and our go-forward pipeline are increasingly propelled by data-driven opportunities.

Taking a closer look at the all other segment grouping which is home to our data analytics and pure play digital offerings, as well as healthcare, we experienced organic growth in excess of 20% year to date.

And our acquisition of Instrument early in the second quarter meaningfully bolsters our digital offerings and brings a stellar pipeline of new opportunities.

MDC's agencies continue to create groundbreaking and engaging campaigns that are led by some of the brightest and most innovative talent in the industry and in keeping with our proud tradition as the place where great talent lives, I am thrilled to announce the return of Alex Bogusky to Crispin, Porter & Bogusky and the MDC Partners family.

To those of you who have been around our company for a while, Alex needs no introduction and for those newer to us, Alex has steered many of the most transformative marketing campaigns of recent memory, campaigns that have defined what it means to build brands in the post digital world.

Alex has rejoined the CPB leadership team as Co-Founder and Chief Creative Engineer, further bolstering one of the core growth pillars of our network. To be clear, we are intensely focused on the second half of the year.

Our decisive cost reductions are strategic and our selective investments and hires at the agency level are positioning the business for growth. David will now go over some of the financials..

Thank you, Scott and good afternoon. I want to focus my comments on the key issues. Our organic revenue growth of minus 1.7% is a deceleration from the 1% reported in the first quarter. On a net basis, excluding zero margin pass-through revenue, the organic decline was an improvement of 70 basis points.

This, despite the meaningfully more difficult comparison as the second quarter of 2017 was our strongest growth quarter by far. As our comparisons ease in the second half and as recent new business wins ramp, we expect to return to organic revenue growth for the balance of the year.

From a profitability standpoint, we are now focused on improved profitability in the second half of the year. When we last spoke on the first quarter earnings call, we indicated that we've experienced the slowdown that impacted April results. It should be expected then that Q2 profitability continues to lag.

Our agency leaders work hard to restructure their respective operations when needed, as across the portfolio, a meaningful amount of costs were removed to counter the lower revenue from our initial plans. The benefit from the over $40 million of annualized staff cost savings will be apparent in the second half.

As you look at Q2 EBITDA, included in the results were one-time costs totaling $6 million related to incremental professional fees associated with the adoption of the new revenue accounting rules and restructuring related severance. This is in addition to the $6 million of similar costs in the first quarter.

This will largely fade in the second half of the year, though modest restructuring initiatives are ongoing in Q3. In terms of our outlook, we're maintaining our prior underlying view of the business with two items to note. First, the U.S.

dollar remained strong, which means that foreign exchange will have a neutral impact for the full year versus our prior view of a favorable impact to revenue of 50 basis points, based on where rates were at the end of Q1. This costs us $1 million to $2 million of adjusted EBITDA for the full year.

Second, as Scott just mentioned, last week, we executed a restructuring at the MDC parent company impacting a number of senior executives. The cost of the restructuring was approximately $2.5 million and annually, this will save the company approximately $4 million or about 15% of corporate staff costs.

Our updated guidance excludes these costs, which will be added back in our adjusted EBITDA reconciliation in the third quarter. Now let's talk about the balance sheet. Given the poor first half results, our strategic investments and continued volatility of working capital quarter to quarter, our leverage ratio increased during the quarter.

While it is closer to our total leverage covenant that we would like, it is within the range and based on the seasonality of cash flows and improved profitability in the second half, we expect a sharp drop in the ratio beginning in Q3 and for the remainder of the year.

To be clear, EBITDA as used in our covenant calculations is a negotiated, contractual number, which adds back certain one-time costs. This is different than the adjusted EBITDA we report to the Street. At quarter end, covenant EBITDA on a trailing 12 month basis was $187 million.

I want to reiterate our commitment to maximizing value for our shareholders and to taking any and all steps necessary to get the business and stock on the right track. With that, we'd now like to take your questions..

We will now begin the question-and-answer session. The first question comes from Dan Salmon of BMO Capital Markets. Please go ahead..

Hey, good afternoon, everyone. Two questions maybe, Scott, just or maybe the first one for David, the second one for Scott.

David, in the table that you present in the slide deck regarding year-over-year growth by category, we've seen CPG slip into the negative side and I think there's been some incremental news here reported in the trade press around that category and some losses as well. No secret that that has been a very tough category for the industry.

We'd just like to hear a little bit more about the company specific trends for yields (00:14:08). And then, Scott, we'd just love to hear a little bit more about Alex's return. That's quite a surprise, I think, to most everyone. Just any background that you can provide on that.

And where do you think he could be most impactful in coming in right away? That would be great. Thanks..

So, Dan, I'll start out. So you're right, CPG slipped from a growth category in 1Q to a decline category in 2Q, actually very, very modest decline and there's definitely ins and outs within that category as there is with any other category we have.

Overall, we continue to see CPG as a substantial growth opportunity for the company and many of our larger opportunities in our pipeline relate to the CPG category. So we have high hopes going forward and hopefully we'll be able to convert..

Hi, Dan. So Alex's return is something that we have been talking about for a couple of months and there was a real meeting of the minds, if you think about where the industry was and where it's headed and the need to literally redefine what it means to be an agency today.

There was such a high level simpatico of thought that it became clear to me that Alex could be a catalyst. That was true, too, of the leadership team at Crispin, Porter & Bogusky.

And given what he's been active in in the time he's been away from the industry, it seemed very relevant to where the industry is headed, what corporations need in the form of brand citizenship today. And as I said on the call, we're – in the formal remarks, we're just thrilled to have him back.

I mean, as far as the generation of creative leadership, I can't think of a more prominent name and his name is on the door and we're just thrilled to have him..

Great. Thank you..

The next question comes from Peter Stabler of Wells Fargo Securities. Please go ahead..

Thank you. Just wondering as you talk about the second half improvement in organic growth, I'm looking at slide 10, just wondering if you could help us in terms of where we're going to see the improvement in terms of the organic growth.

Weakness, obviously, in a number of segments, the integrated agency is going to be coming back or is media have a brighter outlook for the second half? And then, one for David, lots of puts and takes here on exclusions and that kind of thing, wondering if you'd be willing to put a finer point range on the adjusted EBITDA for the full year as you guys used to do? Thank you..

Thanks, Peter. It's a combination of things, we've got our core growth pillars and we continue to invest behind those. The pipeline that we've been talking about is starting to shake free a bit. Some of the conversations in the more challenged verticals that the industry is aware of are some of our most fruitful conversations.

And so – and if you look at the all other segment that we highlighted where we continue to make investments, in data-driven capabilities, in healthcare, that's been an area of great growth for us. And so, we expect it to be a combination of those things..

Yeah. And just to add, we have not historically guided by segment. So ultimately, we're talking about the portfolio and the opportunities are – they are across all segments. Ultimately, some will do better than others. And we'll talk about that when it happens.

In terms of the second question, if you run through the math, you basically get to $198 million, $199 million on the low end, and kind of $208 million to $209 million on the high end. And so, the only real difference is the change in FX rates which is not – we don't forecast FX.

We take rates where they are and we tell you what it means, if they stayed there the rest of the year and they moved a little bit. So that move hurts us $1 million to $2 million of profit and otherwise (00:18:25), but from an underlying operating standpoint, we've left the guidance unchanged..

Thank you. That's helpful..

The next question comes from Lee Cooperman of Omega Advisors. Please go ahead..

Yeah, Hi.

On the EBITDA of $198 million to $209 million, what kind of CapEx and interest expense are you assuming for the year?.

Sure. CapEx, we're looking at about $20 million. We have reduced our CapEx expectation. Previously, we were looking at about $25 million. So we've been managing that as well in addition to other costs in the portfolio, so $20 million.

From an interest standpoint, that's somewhere in the low-$60 million, say $61 million, $62 million, depending on volatility of what's – of how much is in the revolver from time to time..

And then did you pay much in the way of (00:19:28) cash taxes?.

Our cash taxes, we expect to be in the range of $8 million to $10 million..

Right. So there is a significant (00:19:36) amount of free cash flow here, because you keep promising about paying down debt. But when I look at the balance sheet, the debt keeps going up.

Where is the debt going to be at the end of the year versus where it is now?.

This may be an unfair statement, but I don't think it is, I'm [ph] not trying to be, but I think the handwriting as on the wall (00:20:36) that things were slower than you thought.

Why did it take so long to do your cost structure? I mean, shouldn't have we been reducing costs 6 months, 9 months, 12 months ago rather than doing something [ph] well (00:20:49) now, the $40 million you referred to? [indiscernible] (00:20:52).

So I understood – I understand the question, I think. So last year was quite a strong year for us as a company, we had 7% organic growth. There was a number of expansion investments at agencies that we're winning business and doing well.

Ultimately, this year, the visibility on the business began to fade away in (00:21:19) Q1 as we talked about in the first quarter call. We began to make moves in the first quarter.

Those moves continued throughout Q2, we do have 29 different operating units here, so it's business by business and not just one decision across one business and so, it does take a little bit longer given our structure, that's true. But ultimately, I think we acted early in the year.

We will benefit from that this year with the savings that will accrue to us over the course of the second half and we'll be in much better shape heading into 2019..

Okay. Thank you..

The next question comes from Ivan Kara of Phoenix Investment Adviser. Please go ahead..

Hey, Scott and David, congrats on the quarter. Just wanted to know if you can anecdotally give some color on kind of like the tender activity out there that you saw in the quarter versus last year and then also like your win ratio relative to the year before, if you don't mind..

Yeah. We had talked previously about a robust pipeline and the frustration of decisions not making it across the finish line. So that – we continue to see great demand for our agencies.

If you think about what some of the other holding companies have done in homogenizing or commoditizing brand names, we still are a network of agencies, powerful global platforms and so there are still a lot of opportunity, you (00:22:59) get invited to a lot of pitches.

Some of those is starting to come loose, we mentioned a couple of key wins in the quarter, others, to be announced. Some, you don't know about them until the campaigns break and that's the province of the client. So there's a lot of activity right now. You hear a lot of CMOs talking very openly about their shifting needs.

We've anticipated those needs in many respects and there is an advantage to being smaller and more nimble, of bringing data to the center, getting more conversant in analytics across our agency networks and being able to bring multiple solutions to the table.

So in that respect, we see the second half of the year as we said go into (00:23:38) improve, increase, heat up. And some of those long-standing reviews are coming across the finish line now..

And to add a little more color around the second quarter new business wins, because I think this goes to the root of the matter.

When we had our first quarter investor call, which at that point was the end of the first week of May, we were talking about the delayed pipeline and really in the first six, eight weeks of May, there wasn't a lot of wins that converted. Decisions weren't being made. And so, the vast majority of the wins for 2Q came in June.

So, it really started to move as we moved through June and the pace of that seems to continue through July and hopefully maybe we'll have (00:24:25) summer vacations in August, but we will see. But hopefully that will continue for the next few months and if that's the case, I think we'll all be very happy..

Thanks, guys..

The next question comes from Anuj Gulati of Morgan Stanley Investment Management. Please go ahead..

Hi. Thanks for taking my call. I just had a question. I appreciate the fact that you have cut costs to pay down debt.

But is there any way that you can accelerate that through asset sales, whether it be a non-core asset or particular agency or anything else like that?.

Sure. Hi. Look, when David said, we're looking at any and all steps necessary, I mean that includes an evaluation of the portfolio, continuing to invest behind our growth pillars, but also looking at the possibility of dispositions of assets that are not core or might be more valuable in someone else's hands.

So, it's an ongoing conversation around the table and when we have something to announce, we will..

Great. Thank you..

The next question comes from David Arbre (00:25:44) of Credit Suisse. Please go ahead..

Hi, guys. Thanks for taking the question. I appreciate it. Some of the business questions have already been asked, but I wanted to follow up just quickly on the balance sheet if I could. You guys mentioned 5.4 turns of leverage versus the 5.5's test (00:26:02).

So my question is, how should we think about how close you are to the covenant, given the guidance and the outlook? And what remedies do you have should you miss it? And then, I had some follow-ups on liquidity. Thank you..

Sure. So let's start with we don't expect to miss it.

The point of the year where we use that the – the room under that covenant the most is always the middle of the year, because of the timing of working capital, flows of our business and the timing of our deferred acquisition payments and it's exactly why we negotiated that covenant with the banks when we set up that credit facility.

So we do expect a dramatic improvement immediately in the third quarter and for it to continue to come down as we move to the end of the year, where we'll have a (00:26:54) and hopefully towards the lower part of the fourth (00:26:57) by year end.

We're pursuing other ways as it was just asked on the last question, that could also accelerate that, which is the part of our review of our portfolio, which would also create incremental buffer..

Very good. That's helpful. And then just on liquidity, I guess, the debt balance is the highest, I think we've seen on record.

So my question is, what's the current availability under the revolver with the higher revolver balance quarter over quarter? I understand the seasonality you just described, but sort of where are we in terms of revolver availability this quarter? And how do you think about that, given where you stand today and the deferred acquisition costs that are also current? And that's it for me.

Thanks very much..

Sure. So we are extremely comfortable with the revolver balance and availability that we have. The commitments under the facility is $325 million, the borrowing base is $244 million. So either way you look at it, there is significant room there. The deferred acquisition considerations are minimal in the second half of the year.

And so, largely, we will be seeing the improved profitability of the company, combined with the improved seasonal aspect of working capital flows in the second half of the year, with little to offset it besides an interest payment in November..

Very good.

But just to be clear, under the commitment, the revolver availability is probably in the hundreds of millions, just given the commitment size, is that the right way to think about it?.

It is a $325 million revolver, so that's the commitments that we have from the banks..

Right. But the actual amount that's available to you is what? (00:28:50).

And with the borrowing base – the borrowing base is currently $244 million..

Right.

And there's $115 million drawn on it currently?.

Correct..

Got it. Okay. Thank you..

The next question comes from Brian Che (00:29:08) of Wells Fargo. Please go ahead..

Hi. Thanks for taking the question.

I wanted to ask if you could break down perhaps any particular drivers in the working capital usage during the quarter as opposed to generating some cash in the prior-year period?.

So there is between 2Q and 3Q year to year, you'll see if you look back the last five, seven years, flip-flops often (00:29:39) between the timing of cash around working capital, typically, as is the case, this year, it (00:29:46) relates to timing of media plans of our clients and how that impacts the flows through our balance sheet.

So 2Q was a little worse than last year, 1Q was consistent with last year. And so, in aggregate, the first half, a little worse than last year and then, we expect to reverse in 3Q with improvements throughout the second half..

Okay. Thank you.

And then my other question here is, for the Instrument acquisition, you used – it was partly funded using MDC equity and, is that something that you would be more relying upon for future discussions as opposed to returning to usage of deferred acquisition considerations for future transactions?.

Every transaction or potential transaction is a custom negotiation. The use of deferred acquisition consideration is one tool in order to align MDC with management teams to drive performance and ensure we get what we pay for. The Instrument deal had a slightly different construct, where there is no deferred acquisition consideration.

There was equity paid as about 20% of the upfront price, but there is minority interest in the agency in the hands of management and that's where the alignment comes from as well. So we'll see from time to time, but right now, to be clear, we're not focused on meaningful acquisition activity. We are focused on delivering second half performance.

We're focused on our review of our existing portfolio and that's where we're spending our time..

Great. Thank you very much..

The next question comes from Jason Bauer of T. Rowe Price. Please go ahead..

Appreciate the time, guys.

Just to follow up on, I guess, Lee Cooperman's question earlier and maybe keep scratching at the leverage, what are the prohibitions or the willingness of the company to buy back bonds in the open market as we work our way out of the revolver and cash flow grows through the back half of the year? Certainly, it could be accretive with them trading here in the mid to high-80s, and I'm curious to know sort of your appetite for that.

And also any prohibitions against doing that? Thanks..

Sure. We surely have room within our baskets to do so. The – ultimately, I think in the short-term, it's not something we're looking at as we continue to focus on driving improvements to the business.

I think we'd like to show progress on the balance sheet and our overall borrowings before we consider using our liquidity for that, but as we move through the end of the year, if there continues to be a disconnect on our bonds and there's opportunity, it's something we may consider..

The next question comes from Avi Steiner of JPMorgan. Please go ahead..

Thank you. I've got a couple here. One, just a clarification.

Just, of the cost saves you outlined, how much is flowing through the second half and what will be incremental in 2019, please (00:33:23)?.

As we said, there was north of $40 million of staff cost savings. So, we will get six months' worth largely of that. A few million of that was moves took place in early 3Q. So, we may not get the full impact of that and that was about $9 million of the $42 million based on the math we gave in the prepared remarks.

So, of the $33 million, we will get 50% of that through the first half of the year.

Of the $9 million, we will get a smaller percent of that, because some of that happened in July and some frankly is happening this week, so and it (00:34:09) might hit August, but ultimately, we expect to have substantial amounts of benefit the second half of the year.

Flowing into 2019, it gives us a strong cost base, off of which to build our 2019 planning. Given that it's agency to agency, it gets a little complex to say that 100% of that is going to sustain into next year, because it depends on where there might be investment decisions made.

But ultimately, we go into next year with a cost base that has a $42 million lower starting point. And that's before you get to the $4 million of corporate, so say $46 million lower starting point, which gives us a tremendous amount of flexibility around our planning for next year..

Thank you for that. And then, just following up on couple of questions around the revolver.

Do you expect to be out of the revolver at year end? And can you do that without selling assets like you would hope to do?.

I think there is a scenario where we'd be out of the revolver and there's scenarios where we might be modestly in the revolver and it depends on a bunch of different things. So I think we're still hopeful we'll be out of the revolver, but there's really a chance we might be modestly in the revolver..

Okay. And my last one if I can. It's August 1, we've talked about how the visibility in the business has changed.

But I'm just trying to get a sense of your confidence and comfort, you've obviously reaffirmed guidance today, but maybe just talk about visibility and how confident we should be that you will hit your numbers given that visibility? Thank you very much..

Sure. So visibility has been challenging for the industry as marketers have slowed down their thought process and their decision-making, but we are close to the market. David mentioned 29 points of presence with our agency, so close working, active relationships and we're managing and monitoring those relationships.

And so, as you look to see spending plans for the remainder of the year, campaigns that are being contemplated or launched, the new business pipeline, these are all of the elements that we have evaluated in coming to the determination that we are comfortable reaffirming guidance..

Thank you..

The next question comes from Jeremy Kahan of North Peak Capital. Please go ahead..

Hi, guys. Two questions, first on the balance sheet. I was wondering if you can give us any color on where you think leverage will be at the end of 2019.

And then, also on the new business pipeline, I was wondering if you can give us any metrics or any sense for sort of how robust that is, because I think we've been hearing for a number of quarters that it's been robust and it doesn't necessarily always flow through into the net new business number? Thank you..

Sure. Thanks, Jeremy. From a leverage standpoint, obviously, we haven't guided 2019 EBITDA, so it's difficult for me to give a metric from that standpoint. But I think one of the things that we've said historically is that, if we can deliver a little bit of growth in the business, we should be able to delever as much as half the turn a year.

So it depends on what growth forecast that you want to put on our business to come up with that number and we'll update that obviously when we give guidance for 2019..

And Jeremy, when I talk about the robustness of the pipeline, I'm looking at the number of reviews that we are in and not a number that we disclose, the number of agencies within our family that are in those reviews, the size of the business that is up for grabs and in the overall tenor of what is being asked for.

So, size of business being scope of work and fees. Net new business, of course, is a net number. And so, as we said, we win more than we lose. So it's a combination of winning the new business and also keeping existing business. So a lot of moving parts. It is not a number that we have offered up from quarter to quarter.

It is an amalgam of thought and analysis based on experience of where the market is headed, where our agencies are positioned and how well they're doing in the process. To date, the challenge has not been about not being competitive or not winning business, it's about decisions not getting made.

Those decisions are starting to come loose now and we'll start to see some of that activity in the third quarter and beyond..

Great. Thank you..

This concludes our question-and-answer session. I would like to turn the conference back over to Scott Kauffman for any closing remarks..

Thank you, operator. I just want to thank everyone for joining us today, and David and I certainly appreciate the robust number of questions and we look forward to seeing you again in about 13 weeks. I bid you all good afternoon from New York City. Thank you..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..