Good afternoon. And welcome to the Exela Technologies Fourth Quarter 2019 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Will Maina. Please go ahead. .

Thanks, Grant. Good afternoon, everyone, and welcome to the Exela Technologies Fourth Quarter and Full Year 2019 Conference Call. I'm joined here by Ron Cogburn, Exela's Chief Executive Officer; and Shrikant Sortur, our Chief Financial Officer.

Today's conference call is being broadcast live via webcast, which is available on the Investor Relations page of Exela's website at exela.com. A replay of this call will be available until June 16. Information to access the replay is listed in today's press release, which is also available on the Investor Relations page of Exela's website. .

During today's call, Exela will make certain statements regarding future events and financial performance that may be characterized as forward-looking under the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are subject to known and unknown risks and uncertainties and are based on current expectations and assumptions. We undertake no obligation to update any statements to reflect the events that occur after this call and actual results could differ materially from any forward-looking statements.

For more information, please refer to the risk factors discussed in Exela's most recent filed public report on Form 10-K along with the associated press release and the company's other filings with the SEC. Copies are available from the SEC or the Investor Relations page of Exela's website. .

During today's call, we will refer to certain non-GAAP financial measures. We believe these non-GAAP measures provide additional information on how management views the operating performance of the business. Reconciliations between GAAP and non-GAAP results we discuss on today's call can be found on the Investor Relations page of our website.

Please note the presentation that accompanies this conference call and investor fact sheet are also accessible on the IR page of our website. .

I would now like to turn the call over to our CEO, Ron Cogburn.

Ron?.

Good afternoon, and thanks, everyone, for joining us today. Before we begin, on behalf of Exela, I would like to say that our hearts go out to those affected by the COVID-19 pandemic.

These past few months have posed unprecedented challenges worldwide, and we're doing everything in our power to ensure the continued safety of our global team members while delivering the level of service that our customers have come to expect from Exela.

I am incredibly proud and thankful for all of our team members rising to this challenge and working tirelessly to ensure that we continue to serve as a trusted partner to our customers. .

I'm also pleased to announce that this morning, we filed our 10-K for 2019 with the SEC, which includes restated and audited financials for the years ending December 31, 2017 and 2018 and restated quarterly financials for the first 3 quarters of 2019.

We continue to work to finish our March 31, 2020, Q1 reporting and we expect to complete that process by June 24. Our goal has been to complete this entire process as soon as possible while ensuring that our efforts were comprehensive. .

We have a lot to cover today. I will begin with a brief overview of our 2019 results and some recent highlights. I'll then turn the call over to Shrikant Sortur who will discuss our fourth quarter and full year 2019 results in more detail, including the impact of the restatement on our financials.

Shrikant will also provide some key updates for the first half of 2020 and our thoughts for the rest of the year. After Shrikant's presentation, I'll come back and talk about our key business objectives for 2020 and beyond.

Finally, I'll close by addressing the impact of COVID-19 on our business and discuss our positioning and response in this evolving situation. .

Let's begin with Slide #6, and I'll discuss our 2019 financial summary and recent highlights. Our full year 2019 total revenue on a constant currency basis was $1.57 billion, down 0.5% year-over-year but exceeding the high end of our revised guidance provided in November of 2019.

Full year revenue, excluding postage and postage handling and the previously announced low-margin client exit, grew 2.9% to $1.28 billion in 2019, details of which can be found in the fact sheet and our earnings release and presentation. .

We generated $256 million of adjusted EBITDA on a constant currency basis in 2019, meeting our prior revised guidance range. Our adjusted EBITDA margin was 20% when excluding pass-through and low-margin client exit revenues.

In early 2020, we improved our liquidity position by executing against the strategic initiatives we announced last November, including entering into a new accounts receivable facility in January and completing Phase 1 of our noncore asset divestitures in March. As of May 29, we had approximately $106 million of total global liquidity. .

Finally, we strengthened our Board and our senior management team in the past couple of months. First, we appointed Marc Beilinson and William Transier to our Board of Directors, and I believe we will benefit from their combined experience and fresh perspective. Also, we are excited to promote Shrikant Sortur as our new CFO.

Shrikant brings tremendous financial leadership and experience and unparalleled knowledge to our complex financial operations, having served as our Executive Vice President for Global Finance since 2017 and as the SVP of Finance for SourceHOV for the 13 years prior to that.

Shrikant is a trusted colleague and I believe is the right choice to help take Exela forward and execute our strategies in 2020 and beyond. .

With that, I'll turn the call over to Shrikant.

Shrikant?.

Thanks, Ron. Let me start by saying that it's a pleasure to join this conversation and help share our story and vision. I'm excited to continue contributing to the growth of Exela in my new role as CFO. I will begin by providing an update on the restatement of our prior-period financial results. .

First, the impact of the restatement to our reported revenue and adjusted EBITDA was not material; Second, there was no material change in our revenue recognition principles from the restatement; Third, there were no change in our cash accounting policies with all historical cash balances remaining unchanged except for a reclassification between restricted and unrestricted cash.

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a net cumulative reduction of $4.5 million or minus 0.1% to our cumulative reported revenue; an increase of approximately $20 million or 3.6% to our reported net loss; a reduction of $12.8 million or minus 1.7% to our reported adjusted EBITDA, a non-GAAP measure; and no impact on cash and cash equivalents.

All cash corrections were in the nature of classification adjustments, but no changes to total cash. .

Now digging a little deeper. There were 5 primary issues that were corrected during the restatement process. First, the nonaccrual of a loss contingency related to dissenting shareholders arising out of the Novitex business combination, which we also refer to as appraisal action.

The correction of this misstatement resulted in a $43.1 million of accrued liability through the end of September 30, 2019. That includes the fair market value of the shares and for cumulative quarterly interest. .

Second, we had 2 revenue recognition related adjustments. We made a correction of $6.4 million to 2017 revenue related to a multiple element arrangement that included a software license under the previous revenue recognition guidance in ASC 605. The correction of this error was recorded as an adjustment to our ASC 606 implementation in 2018.

We also corrected for gross versus net presentation guidance under ASC 606 for a contract in 2019, which resulted in an increase of $1.9 million in revenue for the 9 months ended September 30, 2019. .

Third, we made corrections to expense certain contract costs that were previously capitalized under ASC 34040 for cost of fulfilling contracts. These are under the category outsourced contract costs on our balance sheet.

The correction was limited to the capitalization of employee training related costs during the setup phase as cost of fulfilling contracts, which would have been expensed under ASC 34040.

The cumulative impact of these adjustments through September 30, 2019 was an increase of $15.4 million to the cost of revenue, offset by a reduction of $13.3 million of amortization of expenses for a total net impact of $2.1 million to net lots. .

Fourth, we made expense reimbursement adjustments for certain related party transactions. We made corrections to the under accrual of secondary offering expenses, premium payments and legal expenses resulting in a cumulative total of $12.4 million charged to related party expense in our consolidated income statements. .

And fifth, cash flow classification due to the incorrect interpretation and retrospective application of ASU 2016-16 on the topic of classification of certain receipts and cash payments.

In 2018, we classified the loss on extinguishment of debt as cash flows from financing activities instead of cash flows from operating activities, which resulted in a $0.1 million and $34.5 million understatement of operating cash flows and overstatement of financing cash flows for the years ended December 31, 2018 and 2017, respectively.

There are no changes to cash and cash equivalents due to this misclassification. .

Finally, moving forward, there will be 1 primary impact to our reported results arising from restatement. As I just mentioned, we will no longer capitalize employee training-related costs during the setup phase and we'll expense them in the period in which they were incurred in accordance with ASC 34040.

This change will modestly reduce our gross profit in future periods but will have a netting effect on our adjusted EBITDA. For additional details regarding adjustments, please refer to our 2019 10-K.

The restatement and related impact is covered extensively on our explanatory notes on Note 3 for the restatement of previously issued financial statements and Note 20 for unaudited quarterly financial data. .

Now I would like to provide a review of our financial results for the fourth quarter and full year 2019. Moving to Slide 7. I will begin with our fourth quarter 2019 results. Revenue for the fourth quarter totaled $393.6 million. On a constant currency basis, Q4 revenue was $395.4 million, representing a decline of 1.5% year-over-year. .

In looking at our segments, revenue for our ITPS segment was $306.7 million, a decrease of 5.4% year-over-year from $324.3 million in the fourth quarter of 2018.

This decrease was driven primarily by the impact of the low-margin contract exit which we have discussed in the third quarter of 2018, partially offset by growth from existing customers and new business wins. .

Our Healthcare Solutions segment revenue totaled $69.8 million, up 24% year-over-year from $56.3 million in the fourth quarter of 2018. Our results in Healthcare Solutions were driven mainly by acquisition, new client growth and increased volume from existing clients. .

Our Legal and Loss Prevention segment revenue or LLPS, was $17.1 million in the fourth quarter compared with $19.1 million in the fourth quarter of 2018. As a reminder, our results in LLPS are event-driven and project-based, which causes our revenue to be lumpy between quarters. .

Gross profit margin for the fourth quarter was approximately down 330 basis points year-over-year. The gross margin decline was primarily due to our revenue decline and wage increases offset by continued transformation and cost-saving initiatives.

As part of our fourth quarter review, the company concluded that a triggering event had occurred for an interim impairment analysis. As a result, during the quarter, the company recorded a noncash impairment charge to goodwill of $252.4 million related to the write-down of carrying values for our ITPS and LLPS segments. .

Operating loss for the fourth quarter of 2019 was $249.5 million compared with operating loss of $40.6 million in the fourth quarter of 2018.

The year-over-year increase in operating loss was primarily due to the noncash impairment charge of $254.4 million that I just discussed versus an impairment charge of $48.1 million in the fourth quarter of 2018, as well as our lower gross margin partially offset by lower D&A expenses. .

Turning to EBITDA and adjusted EBITDA. In the fourth quarter of 2019, we generated an EBITDA loss of $234.5 million. Our largest adjustments to arrive at adjusted EBITDA included noncash and other charges and optimization and restructuring expenses. We recorded noncash and other charges of $271.9 million in the fourth quarter.

This bucket includes the noncash impairment charge, costs associated with employee cash severance, onetime cost and customer exit cost. Our adjustment for optimization and restructuring expenses totaled $14.7 million in the fourth quarter of 2019. .

Adjusted EBITDA for the quarter totaled $53 million, a decrease from $72.7 million in Q4 of 2018. Adjusted EBITDA margin for the fourth quarter was 13.5% compared with 18.2% in the fourth quarter of 2018. Excluding pass-through revenues and the low-margin client exit, our Q4 2019 adjusted EBITDA margin was 16.4%. .

Now turning to a summary of our financial year 2019 results. For the full year 2019, revenue totaled $1.56 billion. Our 2019 revenue in constant currency was $1.57 billion or down 0.5% year-over-year, exceeding our prior guidance range.

From a segment perspective, ITPS revenue totaled $1.23 billion in the year, a decline of 3.1%, driven primarily by the low-margin client exits and adverse currency translation impact. Healthcare Solutions revenue was $256.7 million, up 12.6% year-over-year, driven mainly by the same factors impacting our Q4 health care results.

Finally, our LLPS revenue totaled $71.3 million compared to $84.6 million in 2018, primarily driven by projects that generated lower revenue in 2019 compared to 2018. Excluding pass-through revenue with nominal margin and the low-margin client exit, our fiscal 2019 revenue totaled $1.28 billion, an increase of 2.9% over 2018 comparable results. .

Gross profit margin for 2019 was down approximately 190 basis points versus 2018 and impacted by top line performance and wage increases that was offset by ongoing transformation and cost-saving initiatives. Gross margin net of pass-through revenues and low-margin contract exit was 26.3% in 2019.

SG&A for 2019 totaled $198.9 million, up 7.6% year-over-year and represented 12.7% of revenue. Growth in the 2019 SG&A primarily reflects higher RSUs and legal and professional fees, partly offset by savings realization. .

Depreciation and amortization expense for the year was $100.9 million, down from $138.1 million in 2018 due to the fact that in prior years, we had accelerated amortization of trade names that are no longer being used. Operating loss was $321.2 million in 2019 compared with operating loss of $10.7 million for 2018.

The change in operating loss was mainly attributable to noncash goodwill and trade name impairment charges of $349.6 million recognized in 2019 as compared to the $48.1 million of noncash charges recognized in 2018 as well as the lower revenue and higher SG&A offset by lower D&A costs. .

EBITDA loss in 2019 was $237.1 million. Our adjusted EBITDA for the full year 2019 totaled $254.8 million compared to $276.2 million in 2018. Adjusted EBITDA margin was 16.3% compared with 17.4% in 2018. On a constant currency basis, the 2019 adjusted EBITDA was $256 million, in line with our prior revised guidance.

Our adjusted EBITDA margin, excluding pass-through revenue and low-margin client exit was 19.8% in 2019 compared with 22.1% in 2018. .

Turning to Slide 8. As Ron covered this in the financial highlights summary, we are pleased to have achieved our revised full year 2019 guidance for revenue and adjusted EBITDA. Our 2019 revenue of $1.57 billion was above the high end of our guidance range. .

Now turning to Slide 10. I would like to discuss some key first half 2020 highlights. As we have discussed, one of our key priorities is the successful execution of our debt reduction and liquidity improvement initiative, which we formally announced in November 2019.

I'm pleased to say that we have made significant progress in executing our plans so far in 2020, increasing our liquidity to $106 million at the end of May, supported by 2 important transactions. First, in January, we completed a 5-year $160 million accounts receivable securitization facility, improving our overall liquidity position.

This facility is an addition to our existing $100 million revolver which matures in 2022. The interest rate on the facility is LIBOR plus 675 basis points and is relatively covenant light. Regarding the second transaction, in March, we completed the sale of our tax benefit group, or TBG business, to Gainline Capital for $40 million.

The TBG business mainly provides tax strategy services to CPA firms and their clients and generated $20.7 million of revenue in 2019. The deal represents a 2019 revenue of approximately 1.9x.

TBG was not central to our long-term business strategy and the sale enabled us to increase our financial flexibility while advancing our priority to focus on our core business. From the buyer's perspective, we believe we have acquired a great asset, and we believe the TBG business will benefit going forward from being a Gainline portfolio company.

We continue to pursue additional non-core asset sales, targeting $150 million to $200 million in total proceeds from asset sales including TBG. .

Moving to the first quarter of 2020. As Ron mentioned, we're working diligently to complete our March 31, 2020 10-Q, and currently expect to finish that process by June 24. On a preliminary basis, we currently expect our Q1 total revenue to be $362 million to $365 million, representing a decline of 9.7% to 10.5% year-over-year. .

Turning to Slide 11. Our liquidity at December 31, 2019 was $31 million, and our total net debt was approximately $1.5 billion. As I mentioned, we are pleased with the improvement we have made in our liquidity position in 2020.

Helped by our AR facility and asset sale, our total liquidity improved from $31 million at December 31, 2019, to $97 million at March 31, 2020. As of May 29, 2020, we had total liquidity of approximately $106 million. .

Before turning the call back to Ron, and as we noted in our earnings press release, given the continued uncertainties surrounding COVID-19 and its impact on our visibility, we are delaying providing financial guidance for full year 2020.

However, I would like to provide you with some color on the key factors that we expect to influence our results for the balance of this year. First, we currently expect the adverse effects of COVID-19 on customer volumes and our financial results to have the most impact in the second quarter before improving in the second half of 2020.

We've cautioned, however, that a continuation of COVID-19 outbreaks could further impact the market and our performance. .

Second, our focus for 2020 and beyond is to continue to drive growth in our base business by expanding with our existing clients, especially among our top 200 and within our BFSI and health care customer portfolios and winning new client logos. In this light, we continue to win new business and are pleased with our pipeline momentum in early 2020.

At the same time, as part of the strategy, we are increasing our focus in 2020 on exiting certain underperforming contracts with little or no margin contribution. .

Third, we'll continue to pursue noncore asset sales at valuations that are accretive to our business. Fourth, in response to COVID-19, we're adjusting our capacity and cost structure, including scaling back on FTEs and certain discretionary compensation. We will also experience additional cost savings as a result of reduced travel and the like.

And finally, our capital allocation policy is to prioritize improving our liquidity and cash flow. As mentioned, we continue to pursue an incremental $110 million to $150 million in noncore asset sales in support of this strategy over the next 18 months. .

With that, I'll turn the call back over to Ron.

Ron?.

Thanks, Shrikant. Let's turn to Slide #12, where I'd like to spend some time on our priorities for 2020 and beyond. The top half of the slide covers the good progress that we've made against our debt reduction and liquidity improvement initiative by executing on the AR facility and the noncore TBG business sale.

We are focused and committed to fully executing this initiative, and I look forward to providing you with updates on our progress over the coming quarters. The bottom half of the slide discusses our 3 key objectives to driving improved operating income and cash flow generation.

These objectives include, first, amid the COVID-19 disruption, we're increasing our focus on helping customers accelerate their digital transformation with solutions that address the new normal. Necessity is one of the greatest motivations for innovation.

For example, we've seen an uptick from our customers seeking digital solutions such as our digital mailroom offering which enables work from home, mobile or in-office employees to digitally receive mail enabling performance of critical functions. I'm a huge fan of DMR, I use it daily. .

Second, we are focused on driving growth of our core or what we call our base business. This includes expanding with existing and new clients within our BFSI and health care industry segments where we provide mission-critical billing and payment solutions.

We believe our unique digital transformation and intelligent automation capabilities will continue to enable Exela to win large contracts in these markets that are long-term with high-margin potential over time. .

Regarding our third objective. As part of our focus on our base business and also improving our liquidity, we will continue to exit certain nonstrategic businesses via asset sale.

As we've discussed above, our goal is to raise an incremental $110 million to $160 million of total proceeds through this process for a total of $150 million to $200 million, which I mentioned last quarter. .

Now let's turn to Slide #14. Notwithstanding the economic impact of COVID-19 on our results, we are very pleased with our rapid execution of initiatives that have helped to mitigate the near-term disruption of the pandemic on our business.

Shortly after the onset of the pandemic, we put in place rigorous business continuity and employee safety plans, which enable us to maintain 96% of our business processes deliveries to our customers. We also established a rapid response solution framework that was going to address the needs of our customers in the context of the COVID-19 pandemic.

As of last week, the pipeline associated with that solution framework has grown by almost $70 million since mid-March. .

Equally as important and fortunate for us, we have a resilient business model, which is supported by our strong customer base, the mission-critical nature of the solutions we provide, favorable customer contracts and our unique global delivery model, combining on-site with nearshore and offshore delivery.

For example, Exela was deemed an essential service provider in the Americas and EMEA for services, including payment processing, bills and related exceptions for the financial sector, health care industry and local and state and federal governments.

Our employee distribution with over 60% of our employees based in the Americas and EMEA is also proving to be a clear differentiator versus our competitors who have struggled with the widespread lockdowns in geographies where the majority of their delivery personnel reside.

We also have minimum volume clauses in many of our contracts, which helps limit the downside impact from macro events like COVID-19. Finally, we have a scalable and flexible business model with elasticity between volumes and capacity. We adjusted our active FTEs by approximately 14% in response to the volume reductions due to COVID-19.

Some of the volume reductions are a result of the increased delays in our pipeline, which is partly due to the changes in our customers' priority in this current environment as they explore a larger transition to digital transformation, including our DMR, payments and billing digital solutions.

Our capacity will be brought back online by a combination of digital transformation and increased FTEs to meet the increasing demand as volumes begin to recover. .

Now turning to Slide #15. I want to highlight this slide because these testimonials illustrate how important our partnership and our solutions are to our customers and how we have stepped up to help them navigate these challenging times.

I am incredibly proud of all of our global team members for their unwavering commitment to Exela and to the customers we serve. .

In closing, while there is a significant uncertainty in the world today, we are confident in our plan for 2020 and beyond. In the near term, Exela is very well positioned to deliver mission-critical services and solutions to our clients in these uncertain times.

Longer term, we have set into motion a plan that focuses on growing our core business, improving our operating income and cash flow, increasing our liquidity and reducing our debt. Our previously announced debt reduction and liquidity improvement initiative is a very important component of this plan, and we are pleased with the progress thus far.

I believe that we have the right plan and team in place to deliver improved profitability, a stronger balance sheet and long-term value creation for our stakeholders, and I look forward to sharing details of our progress in future quarters. .

Thank you for your time. And this concludes our formal conference. .

[Operator Instructions] Our first question will come from David Foropoulos with Unum. .

Can you talk about, going forward, where you see your margins, your EBITDA margins playing out? They've been on a downward trend here for a while. And I know you're facing some headwind -- demand headwinds right now with COVID and such.

But where do you see these getting back to as we move forward? And then along with that, can you talk about maybe what your process transformation charges could be this year, just ballpark?.

Sure. Thanks for the question, David. From a margin perspective, obviously, we want to continue executing with Q1 and Q2 as it is, as you briefly heard some of the discussions. We will continue to see softness potentially, but we expect by the end of the year to be in the range that we have been historically. We do not give out guidance right now.

So I'll probably stick to not giving you specific numbers, but a lot of initiatives are on to get our margins back up. .

And in terms of your second question. Again, we're not guiding to where our optimization and restructuring expenses will be. We continue to invest a lot in the business. So we expect transformational cost -- to incur transformational costs. Again, we wouldn't want to guide anything at this point in time. .

Great. If I can have a follow-up on that.

On the legal liability that was part of the restatement, $40-plus million or so, is that anything that's imminent in terms of hitting cash flow in terms of that payment?.

This -- the company does not typically comment on an ongoing litigation in a forum such as this. There are discussions on, there are actions on that management has to take. So I would say, yes, there's potentially an impact, but still nothing at this point in time that we can share. .

Our next question will come from Brandon Osten with Venator. .

Sorry, not a lot here until we see the Q1. But can you talk about your -- I mean, we talked about deleverage.

Can you talk about using some of your new found liquidity, the buyback, essentially debt in the open market? I mean, you can spend $25 million right now to take out $100 million in debt, and that would take out like $8 million in annual interest expenses.

So can you give me a sense of your capability to do that or your desire or interest to do that?.

Brandon, thanks for the question. The way I kind of -- if you look at some of the priorities that we listed, the key call out would be our immediate focus is to conserve liquidity and grow cash flows to buy back debt from open market. It's not something that we have kind of discussed, it's just to conserve cash at this point in time. .

Our next question will come from Howard Yim with Avenue Capital. .

Hope everyone is doing well. I have 2 main questions.

First is, can you provide any color on contract renewals and any new wins? In the conversations you're having with clients, are you seeing any deferrals, are you seeing any pushback or in terms of any dialogue with how people are thinking about their contracts during COVID?.

Sure. Howard, first of all, we are doing well. Hope the same with you. Thanks for asking. I'll put it this way, we have not lost any contract during this phase. We do see that customers are focused on getting their house back in order, work from home, whatnot. What I'll do say is we're seeing a lot of interest and demand for our DMR, the digital mailroom.

So that's where all of our focus has been. So while there's a slowdown in volumes, last part of Q1 and almost all of Q2, from a sales perspective, from a pipeline perspective, you're seeing good growth right from middle of March, actually. .

This is Ron. Let me jump in there as well, Howard. I mentioned some of the uptick in the interest in some of our solutions and services that really facilitate the work from home model. We had some of our larger customers that we were able to help pivot toward the DMR solution.

And literally overnight, they were able to put thousands of their employees on that solution, much like Exela. We use that ourselves. And I think you heard me mention, I'm a big fan, I use it every week. And it really does facilitate a gap and a need in the market right now as we get back to whatever this new normal is. .

That's helpful and great to hear. And just to clarify on that point about DMR.

Are you seeing that demand come from new potential customers as well? Or is that primarily you're seeing that from existing customers who are rejiggering some of their services?.

Well, that's a good question, Howard. I think for the most part, we see a lot of it from our existing customer base because, number one, we're a trusted partner with them. And number two, they are more familiar with our solutions and services. But we have seen a few new logos, believe it or not, during this very unusual time.

So we're very encouraged about what we see going forward. And I would say, a little bit of glimmer of light when it comes to what we think about the second half of the year. .

That's great. If I could squeeze 1 more question. I saw the valuation multiples for the TBG business in the presentation, that was helpful.

As you think about the additional divestitures for the remainder of the year, are you thinking similar range of multiples or attractiveness in terms of value?.

Well, we typically don't talk about the multiples. But everything we do has to be accretive for us. So as that information becomes available, we will share it with you. .

Our next question will come from Matthew Sandschafer with Mesirow. .

I wanted to ask a couple of questions here.

One is, can you tell us what the balance was on the accounts receivable securitization facility as of June 5 or whatever the liquidity date was you provided?.

Did you mean the balance? Okay, when you say balance, are you talking about the borrowing base or are you talking about availability or?.

Yes.

I believe you stated it was fully utilized as of June 8, right? How much is that -- what is full utilization on that facility based on the borrowing base that you had as of June 8, I guess?.

Right. We have not guided -- kind of disclosed what -- how much we have utilized. It's $160 million facility. Our borrowing base is not the whole $160 million. At this point in time, we have used up all of our borrowing base. It's -- the way it works for purchase receivables, the balance changes on a daily basis.

We have certain availability as of the date that we provided. I believe it's May 29 that we talked about the liquidity. And because it changes, I prefer not to kind of disclose it. The other thing that I would like to say is the ineligibles do change quite a lot.

We have levers of work -- we have -- we've been working on levers to get the borrowing base increased as well. I know I'm not answering your question. I'm side stepping it. It's just because it's a moving number, therefore, prefer not to talk about it. .

Okay. Can you -- you mentioned in the press release, other customer -- certain other customer exits.

Can you provide some sort of sizing on the revenue loss there, revenue foregone, I guess?.

In your -- again, that would tantamount to providing a guidance. We have -- we've been so busy trying to wrap up the 10-K which, as you know, we've gone through the whole restatement process and the delays. We would probably guide to it or provide more details on our Q1 call. .

Okay. Then last question here. I guess we'll see if I can go 0 of 3.

Can you provide any kind of size on the total cost savings related to the FTE reduction, cut in travel, anything like that so I have some idea what the cost base might look like going forward?.

Okay. Again, I love you -- sorry that I kind of -- I'm giving you cagey answers here, right.

So let me talk about it in this way because again, it tantamount to a guidance that we are still not put out there, right? So what I would say is from a cost savings initiative, particularly the topic that I touched upon, knowing that potentially COVID impact is there for Q2, we are adjusting our costs to make sure that our margins are not eroded as a result of the revenue decline.

Let me put it that way. And then on top of it, we continue to execute on our savings initiative. .

Our last question today will come from Jerry Wang with Carlyle. .

My question was really around just the cost savings. If you could quantify it, it sounds like maybe would be difficult to do so.

I guess the question, so when you say that you would, I guess, decrease your expense base in line with your revenues, would you -- are you finding success in that, I guess? Or do you find it difficult to do that when you're kind of rightsizing?.

We are, right? We are from the perspective, be it furloughs, be it initiatives that are on. We do have a certain aspect of variable cost element built into it. We are not 100% variable when it comes to our cost structure. But then when there's a revenue decline, there is a variable element that also is taken care of. .

Can you say what piece of your expense base is variable?.

Mainly to do with our capacity, right? Mainly to do with our capacity and people. They're hourly based employees, there are the furloughed employees to adjust to our revenue. .

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

Thanks, Grant. Once again, we appreciate and thank everybody for their participation today. As I mentioned in my remarks, as soon as about June 24, you will see and hear from us again as we report on Q1 2020. Thanks again, everyone, and we'll see you then. .

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