Good day. And welcome to the Exela Technologies First Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note, this event is being recorded.

And now I would like to turn the conference over to Marc Griffin. Please go ahead..

Thank you. Good morning, everyone, and welcome to Exela Technologies First Quarter 2022 Earnings Call. I'm joined today by Par Chadha, Exela's Chief Executive -- Chairman; and Shrikant Sortur, our Chief Financial Officer. Following prepared remarks by Par and Shrikant, we'll take your questions.

As a reminder, during the Q&A session of today's call, we will not be able to take questions on the pending exchange due to legal restrictions commenting on securities issuance. Today's conference call is being broadcast live via the webcast, which is available on the Investor Relations page of Exela's website at exelatech.com.

A replay of this call will be available through May 17, 2022. Information access this replay is listed on today's press release, which is also available on the Investor Relations web page of Exela's website.

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

These statements reflect management's current beliefs, assumptions and expectations as of today, May 10, 2022, and are subject to a number of factors, which may cause the actual results to differ materially from these statements.

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 see the Risk section discussed in Exela's most recently filed periodic Form 10-K along with today's press release and other filings with the SEC. Copies are available at the SEC or on the Investor Relations page of Exela's website. During today's call, please, 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 our 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 is also accessible on the Investor Relations page of our website. With all the mandatory Regulation FD disclosure out the way, I'm pleased to turn over the call to our Executive Chairman, Par. Par, please go ahead..

Good morning, and thanks to all of you who joined us on our first quarter 2022 call. Some of you who don't know me, my relationship with Exela goes back to 2007 when I acquired Lason, the platform company that became Exela in 2017.

As you know, I recently stepped in as Executive Chairman, it seems like only a few months, but seems like a year, September 2021. My clear mission when I joined was to focus on four objectives. This is on Slide 3. Invest for growth. What does that mean? Typically, we slowed down investments when the businesses are slowing down.

We are expanding or increasing our investment because we see it's the right time to invest. We see the signs of growth. We see some of the early signs of wins that we'll discuss in a little -- a couple of slides later. The second bullet, cash is king. In Exela's life business now would be more important.

We had a lot of debt with all of your help, we were able to raise over $0.5 billion last year, and we raised $119 million in the last quarter. When I took this position, I outlined the objective to shed debt, to reduce debt and refinance the debt and such that the maturities will be extended. We materially have accomplished that.

Now our objective is to build more cash and liquidity so that we could be strong, financially strong company for our investors, our clients and our employees. My next important, equally important, was I noticed the team that built the business. We're still running it, but we have grown many times more.

So we invested in bringing on new talent, which I look forward to sharing with you in a couple of days. As a reference, we were a $150 million company in 2007 and we clocked in last year, $1.167 billion, which is almost eight times growth. And I'm honored that we have the same team that built the business is still driving it.

However, the business has expanded. I've gotten older. And there is a need for additional leaders to expand our debt, not only for today, but also for tomorrow. I believe in a hybrid business model, which, to me, means you have a current business that's vibrant growing and you need management for that.

And then you also need to build for tomorrow, sort of like startups where you give opportunity to your business leaders who want to inspire, to build and expand our business in areas where we are not present.

And great examples of that include our small, medium business channel that we created, our intelligent document-processing business, which is one accolades and more recently, an uberization of workforce, among many such examples.

Our mission, I should say my mission, is to distribute power to the business leaders, align their goals with the company's and incentivizes Exela for success. We'll share this leadership, expanded leadership on our websites and our associate channels shortly.

We noticed that we were missing some endpoints as we were busy with doing things for the company, fixing its capital structure that we have not invested as much in the endpoints. For example, payment as a service and healthcare as a service. Although we had invested and build its platforms and thrive in those -- that space.

But these end points meant we needed to do some strategic tactics. We were lucky to find these valuable investment opportunities. And this -- they are strategic, and they will open door for additional opportunities for them -- for us. But also, these companies are positioned to grow on their own. So we'll benefit both ways.

I'm a great believer in revisiting our strategy, especially in light of what we have been through. And as we execute the four objectives I shared with you today, it's equally important that we polish up and share with you our plans for the future, both for the long-term and the short term. Let's switch to Slide #4.

As you may have read from today's release, we delivered $279 million of revenue with an adjusted EBITDA of $36 million. But I am very, very excited about is the 14 points I selected to share with you today, which really talks about the entire -- that in some of the performance of the company in these 14 bullets.

I'm humble to tell you that our TCV grew year-over-year by 130% and it's the highest in over the five quarters -- past five quarters. We had -- we added 41 enterprise logos. This does not include the many, many more logos we added in our SMB business. Adding 41 enterprise logos is no easy task.

I will say humbly that it's probably not possible to repeat this performance every quarter, all -- across all sectors, but we are seeing positive momentum in the business, and we are grateful to our customers all around the world, giving us the opportunity to grow with them.

I would -- I had never expected with a company with 16,500 people, I would have to say this, but we did not have enough people even after investing in a bench so that we could meet demand. We missed approximately $5 million of revenue because we did not have enough people who received clearances on time to perform the need to work.

It is somewhat disappointing, but the work we do is mission-critical and requires often clearance, background checks and security clearance, which can sometimes we are odds with our desire to meet SLAs. We are planning to offset this particular impact in certain ways. One of the ways you do that is by productivity improvement.

You see on four -- on the slide number four. We improved our productivity by 2% with 400 less FTEs over Q3 of 2021, we delivered same amount of revenue. We invested in a bench, which is on an annualized basis, that investment will cost us $18 million, but it's important for us to meet our customer forecast.

And we previously shared our desire to migrate to a work-from-home, work-from-anywhere model. And in Q1, about 50-plus percent of our FTEs, full-time employees, were already in that.

But we have to add -- but we have to add more people and demands, the inflation, the job markets, the markets in the U.S., the markets in India, two of our big -- most of our employees are present are going through very constrained markets and will increase as rising.

So we have adopted the uberization model that I'll cover in a couple of more slides. The second important -- third important is savings. Because of the uberization and work from anywhere, anytime, our annual rent reduction is about 20% of our total rental expense, which is about $6.3 million.

We also have some dark facilities, which cost us another $2 million. So if we are successful, that's another area for additional savings. We also executed some of the cost measurements, both in -- I talked about rent. But in addition to rent and adding technology and optimizing our business such that we could save another $5.5 million in full 2023.

I also want to clarify that the annual rent reduction I talked about for 2022 will be fully benefit -- full year benefits will be in 2023. We also did some good work on the balance sheet. We knew that we needed to work on our 2023 maturities. So we added a revolver for $51 million to existing $115 million facility.

We also added $150 million in PNC securitization facility. It's not closed yet, but we expect to close it in the next few weeks. And the best part about this facility is the 4% interest rate, which will lead to $6 million or so in annual interest savings. However, we also reduced debt by $35.7 million.

By adding this facility plus the reduction of debt, our total savings from interest now run at about $37 million, which includes the $10 million from the announcements today. We raised $119 million through the sale of common stock and we invested most of that in our business and to retire debt.

Liquidity as of March 31 was -- March 31, 2022, was $71 million, and it does not include the benefits of the revolver we added in the $51 million revolver, it includes maybe a small portion, but not the entire as we'll make that revolver fully available to us during the course of this year. Moving on to slide five-- six, I'm sorry.

I wanted to give you a couple of insights into our revenue on sales. Our goal is obviously to grow profitable revenue, but a couple of very important business highlights. Our SMB business growth -- customer growth rate, 39% quarter-over-quarter. They continue to grow at an amazing rate, DrySign, 200%. But these are still tiny businesses.

And our current business that we talk about on a healthcare segment or ITPS or our exchange for builds and payments business or our legal business, the fact that we won $78 million, which is over 130% increase year-over-year. We also succeeded in obtaining 93% of the renewal rate.

If you remember, we had the -- renewal rates have fallen into the 80s when over the last couple of years when we were struggling with COVID, but it's very nice to see that we have been awarded with all the SLA and the work we did for our customers that they are back up towards 93%.

I'm also very happy to report the healthcare solutions is on track to grow over 7% year-over-year. We have suffered with some of the constraints I mentioned about with people, that business suffered in this last quarter with some of those.

And we are hopeful the bench and the efforts we are taking will allow us to not only improve its profits, but also attain this very good growth rate. The other part of our business, which is ITPS, if some of -- just for reference, ITPS business is $847 million in total over the last trailing 12 months.

The biggest chunk of that business is exchange for build and payments business. And we are seeing very good traction. We're seeing good pipeline. We reported some several wins in the last couple of months, and we are hopeful and excited that this pipeline that we are building up is going to also show growth.

Why we are excited about this is that in the previous years, because the number of payments have declined, we saw a decline in this business. So the fact that we are seeing pipeline and wins gives us great confidence as we look towards 2022 and beyond.

We are also happy to report we're beginning to see our customers, especially in the on-site space, beginning to ask for plans -- our plans and their plans as they ask their employees to come to work. And as they come to our, we see our sales momentum also will rise in that space, which has also gotten hit during the COVID.

So three big -- however, our public sector business is still lagging. We have not succeeded even though we have a lot of backlog where we have not succeeded even with bench in attaining the full revenue potential of that business.

So that's another thing we plan to do fix with the help of the government agencies we work for and the business leaders who run that business to see if we can get that business with the backlog it has to start contributing, but at a level that it can produce higher -- much higher profits than it has done in the last several quarters.

Moving to slide number six-- seven. This is a very important slide from the operations -- from the operating perspective for the company. I talked about the bench, I talked about the -- maybe I didn't talk about the attrition, but our attrition is 2.2% average per month. That's a lot.

But with the job market as it is, it's hard for us to retain all the talent we need to retain. Together with the attrition and the amount of work or budget, plans that we have, we need to add approximately 5,000 people.

And most of our employees or majority of our employees are in America, our second largest segment or geography that our employees live is India. And third is Europe. And where we are seeing problems is U.S. and India. Our plan, which we talked about briefly in the previous quarters is to change how and where our employees and how they work.

We call it the uberization of our captive delivery FTEs to add part-time employees. And the ratio for part-time employees to full-time employees is we need 8 part-time employees that work approximately one hour a day versus a full-time.

The biggest benefit for this, for us would be, we will be able to obtain SLAs, maintain SLAs, which is service-level agreements with our customers, we'll be able to -- we'll be able to expand our workforce so we can deliver the work of approximately 5,000 people. To do this, we have about 11,000 people today enrolled in our uberization platform.

We need to grow that to about 25,000 because we don't plan to have 100% dependency on this, which means some ratio between uberization and our full-time employees will be somewhere between 2,500 people in our full-time employees roles and about 25,000 people working part time for us.

The result, our delivery organization costs will be lower by approximately 10% and I'm not going to break it out for you today. But at some point in time in the near future, we will break that out because this is a very important competitive change in how we are positioned in the market.

Majority of our competition doesn't do it this way, and we believe we can achieve Nirvana with our cloud-hosted platforms. And live up to the SLA for customers as well as achieve better profits. Let's move to slide number eight. I'll briefly touch upon this. I've discussed this in my previous few minutes.

Because of WFA, we are continuing to lower our dependency on real estate. And 20%-plus of our 2023 real estate expense will decline, which is about $30 million today. If you exclude dark facilities, which, together, that rises up to about $8.3 million of savings. So we are aggressively focused on driving that out of our operating business.

Slide number nine, please. Many of these things I've covered before in the previous few minutes, but I'll point out some of the important ones. Why we're doing all these things is to prepare for refinancing our long-term debt? There is no surprise our debt cost is very high, 11.5%. Blended coupon is 11.1%.

But I'm excited about the PNC securitization facility because it sets a benchmark of 4%. That is the lowest cost of debt in our group. And that's -- I don't think that's what's possible for our larger long-term facilities, but they do our no-call feature for those facilities does expire at the end of this year.

So our goal is to continue to work hard and continue to drive cost, debt down -- cost of debt down, better performance and get prepared for a potential refinancing before 2026 maturity date.

Our liquidity, when we talked about liquidity was $71 million, and I mentioned the $51 million of revolver that we added, primarily we added it for repurchase of 2023 loans. However, it's available to us to use for general corporate purposes as well.

So we will continue to build up more dry powder as to fund our business, but also to take off any looming maturities of 2023. You will see some additional debt facilities that we’ll add so we have more dry powder they will be not of the long-term nature, but more to focus on 2023 maturities.

With that, I will turn back over to Shrikant Sortur, our Chief Financial Officer. And he will cover deeper dive into the revenue and the EBITDA on our income statements. Thank you..

Thank you, Par. Thanks to everyone for joining us this morning. I'll cover our consolidated results and segment revenue for our first quarter 2022 performance and provide an update on our growth and balance sheet initiatives. As we have done in the past, we are reporting both GAAP and non-GAAP numbers.

The reconciliations are in our filings and in the appendix of the presentation. Let me touch upon some highlights of our first quarter 2022 financial performance. As Par mentioned, we had a strong first quarter TCV sales attainment over a 130% increase year-over-year. And on a reported basis, revenue was $279.4 million.

It was down 6.9% year-over-year, however, on a constant currency basis, it was $283.1 million, down 5.6% year-over-year. Gross margins were impacted due to lower volumes and rising costs, including investment in bench cost for some of our business units. And as it was touched upon, adjusted EBITDA of $36.1 million or 12.9%.

Let me turn over to Slide 10 and discuss our Q1 2022 revenue. If you're following along on our slide, you will find the revenue bridge for the changes to revenue compared to the year-ago period.

The puts and takes are important because excluding currency, staffing impact, COVID and transition impact on our revenue, our revenue grew $10.3 million from increased volumes. Within ITPS segment, we are experiencing volume and revenue growth on our Excipient SAG [ph] group.

Volumes from our healthcare customers and projects on LLPS are also experiencing growth. All of these are positive. And as Par briefly touched upon, we continue to be impacted by COVID and other transition exits within our on-site communication services and public sector business on our ITPS segment.

We are encouraged by new wins and also expect our investment in bench to convert to billable revenue as customer demand picks up. Now let's turn to Slide 11 and discuss our first quarter 2022 results. Again, revenue for the first quarter totaled $279.4 million.

Breaking it out by our segment revenue, revenue for our ITPS segment was $205 million, a decrease of 11.6% and from $231.9 million in the first quarter of 2021.

This decline, as I briefly mentioned, predominantly on the ITPS is coming from continued softness on -- or delaying the return of pre-COVID volumes on some of our businesses within ITPS along with transition revenue impact.

Q1 was also impacted by staffing impact and in addition to the adverse impact of $3.7 million attributable to the currency changes as compared to the first quarter of 2021. Our Healthcare Solutions segment revenue totaled $56.6 million, an increase of 10.8% from $51.1 million in the year-ago period.

Revenue from provider business was up 18.5% year-over-year primarily driven by higher volumes and expansion with existing client relationships. Payer business experienced higher volumes as compared to prior year and was up by 7.1% year-over-year.

Our Legal and Loss Prevention segment revenue was $17.8 million, a 4.1% increase year-over-year, driven by higher project revenue. Overall, our current revenue base continues to be stable with a diversified customer base and a substantial backlog. Turning over to the gross profit.

Our gross profit came in at $55.9 million, down $11.6 million or 17.2% year-over-year. The cost of revenue declined by a net $9.1 million for the comparative period. However, gross profit would have been higher by approximately $4.5 million for the bench cost that we carry in the quarter.

As indicated, we are also experiencing rising personnel costs this year compared to the last as a result of tight job market and cost inflation. Our gross profit margin for the first quarter was 20% and up 9 basis points sequentially, but down 248 basis points year-over-year.

Adjusted EBITDA was $36.1 million, down 22.2% from $46.5 million in the prior year period and down 8.6% sequentially, primarily driven by lower gross profit changes in the comparative period.

Our adjusted EBITDA margin for the first quarter was 12.9%, down 50 basis points from the prior quarter and 256 basis points from 15.5% in the first quarter of 2021. Let's turn to Slide 12 and discuss our investments and continued deleveraging initiatives.

Strategic investments to grow our business are paramount, and we are excited about the launch of ExelaPay, our new third-party payment processor with the acquisition of all operating assets of Corduro.

It's an omnichannel, full-stack processing, commerce and engagement platform, Corduro delivers integrated payments, prebuy link, intelligent routing and digital wallet capabilities, enabling any site organization to transform from business into a seamless commerce solution to reach customers anywhere anytime.

Additionally, we continue to expand our health care solutions with the investment in UBER-DOC, an innovative health care platform that connects patients with available board-certified doctors and specialists for in-person and telemedicine appointment at a transparent price.

We continue our deleveraging initiatives and decreased our debt by $35.7 million in the first quarter, with an estimated interest expense reduction of approximately $10 million annually, including the switchover to newly announced B Riley facility.

We expect to either retire or refinance the B Riley facility of $72 million and the Stub portion of senior-secured notes and term loan of $111 million. On April 18, 2022, we launched our second tender offer, we expect to exchange -- we expect the exchange to close on May 16.

We are not providing a formal outlook for FY 2022 for modeling purposes as indicated on our Q4 call to suggest that investors use our historical 2021 metrics to forecast. As macro conditions ease and inflationary pressures normalize, we'll consider providing more details on the outlook.

For reference, last quarter and for the last year, we had indicated modeling assumptions of revenue greater than $1.16 billion, gross profit margin greater than 23%-24% of revenue, adjusted EBITDA margin greater than 15% of revenue, CapEx levels of approximately 1.5% of revenue and working capital trends in line with historic levels.

In closing, we would like to emphasize the objectives for 2022 that we covered on the earlier slides. Briefly, investing from business growth and talent; financial flexibility; build more cash and liquidity; and third, focus on strategic plans for 2022 and beyond.

Before I conclude for questions, just wanted to say a few words about Ron Cogburn, our CEO. As you likely know, this was his last quarter leading us, and I wanted to thank him for his many contributions to Exela and his friendship and support these many years. On behalf of all accelerators, we wish him great success in the future.

We look forward to updating you on our progress following the second quarter. And with that, Tom, please open the line for Q&A..

Thank you. We’ll now begin the question-and-answer session. [Operator Instructions] And our first question comes from Josh Siegler with Cantor Fitzgerald. Please go ahead..

Yes. Hi. Thanks for taking my question today. I know Exela doesn't have any formal guidance. But as you outlined for modeling purposes, it implies some business acceleration as we progress through 2022.

Can you please walk us through specific areas of the business you expect to improve both on the revenue side and the margin side in order to reach those numbers?.

Happy to do that. Let me take a first stab at it from a number perspective and Par can add color on the business as necessary. Josh, I think during the call, we touched upon relevant specific items, including the key for us. In Q1, we are very encouraged to see the close business, including the TCV events. These will start converting.

And as Par had indicated, the XBP is an area where we are seeing traction in terms of new business wins. That's very encouraging. That said, to reemphasize on the growth areas, we are already seeing uptick in volumes in health care, in special projects or projects on LLPS and from XBP, then with ITPS.

Now what we need to see is the pre-COVID volumes return up to a certain stage for public sector on-site and the communication services businesses. From a margin perspective, Josh, Q1, for a lack of a better term, had headwinds, whether it's cost inflation or the bench cost that we incurred or invested in.

In the quarters that follow, particularly with the bench cost, we expect that to translate to billable revenue. So that's an uptick from a margin perspective that we can expect.

Second, at a great length in detail, we covered our plans on both personal, real estate and other savings related initiatives that will get us to a higher margins in the following quarters.

Is that helpful, Josh?.

Yeah, very helpful. Thank you. And for my follow-up, I'd love some more color on the significant 41 new enterprise logos.

Is this a reflection of the healthier balance sheet? And are those conversations going better than they were a year ago, for example?.

Shrikant, maybe I can take this one. .

Yeah..

Josh, for sure, it's a reflection of a healthier balance sheet, also our teams, we have expanded our debt and taken advantage of the opening of the COVID to reach out and start discussing about our strength in technology, analytics. And so that's -- it's not one thing, it's many things combined.

But more certainly, balance sheet change has been very productive. To add towards your first question, why we are so exuberant is, reason for our healthcare business being low compared to our expectation is that we have the business. We just don't have enough people in the right spot. Same problem with our public sector business.

We already have the backlog. We just don't have the approvals to deliver at the amount of volume that we are -- we can deliver. When you combine that with PCB wins, it gives us a very good indication of how many people we need to add.

And I mentioned about 5,000 people, including attrition, which at $69,000, $69,000 per employee can give you an indication of where we are trending.

The fact that some of the business has more technology component and less people component means our margins are going to rise as our volumes in this XBP, space-wise in our health care, space-wise that are driven by instead of traditional people, technology to higher technology component, we are going to benefit. Thank you. .

Thank you very much for the color. .

The next question comes from Zach Cummins with B. Riley FBR. Please go ahead..

Yeah. Thanks for taking my questions. And congrats on the strong contracting activity here in the first quarter. Shrikant, I just wanted to ask around the free cash flow number here in Q1.

I mean can you talk about some of the maybe onetime impacts that impacted that number here in Q1? And should we be expecting some improvement from here as we continue to build through the coming quarters?.

First of all, Zach, thanks for the question. Specific to the cash flows, in particular, let's say, the operating activities to one timers, I would call out is the $40 million payment to the -- for the appraisal action settlement. And I called that out because it's a quarter where traditionally the even quarter we incur the bond interest payment.

We didn't have that because we settled that in Q4 as part of the exchange offer. So we should have seen a positive. You don't see that mainly because of that $40 million onetime. If there's -- and then on the financing section, obviously, you will see all things and out.

Happy to discuss more, if you would like to get into the specifics, but really high level to call out is the $40 million payment on the cash flows. That's exceptional..

Understood. That's helpful. And in terms of the plans to pay down debt over the next 15 months, I mean, maybe either you or Par could speak to the means that you have available to you, whether that be additional debt capacity or additional equity that you could use to pay down the debt maturities here over the next 15 months.

Just kind of curious of how you would weigh using debt versus equity to accomplish that goal here in the coming quarters?.

Shrikant, maybe I can take that. Zach, the -- our goal is to find a balance between debt and equity. We've used equity heavily in the last year as well as this quarter. We'll continue to rely on equity.

But because of improved balance sheet, and the refinancing that we have done, we have put in place structures that allow us to add capacity to our existing debt facilities. You saw that with our change that we made to our BR, B. Riley facility.

You saw the change that we made to our AG, Angelo Gordon facility where we switched to PNC, lowered our interest.

But we plan to add additional similar capacity, not large facilities, but small facilities, maybe $50 million to $100 million so that we could manage movements between equity and debt more efficiently to prepare for takeout of the -- take out of the maturities in 2023 and prepare for with performance, the refinancing of the overall 2026 debt.

I hope that answers your question..

Yeah. Absolutely. Thanks for taking my questions. And best of luck here with the rest of Q2..

Thank you..

Thanks, Zach..

[Operator Instructions] And the next question comes from Randal Klein with Avenue Capital. Please go ahead..

Hey, guys. Thanks for taking the call. Actually, the last two callers, more or less touched on my primary questions. So I'll try to kind of see if anything else. On the first one, I was going to focus on the fact that Q1 versus Q4, gross margin went up a little bit, SG&A came down a little bit, but obviously, sales was a big issue.

And I know you weren't going to give formal guidance, but you did just give some, I guess, you call it formal or modeling guidance, which was helpful.

Based on what you just said and what I'm reading into my question was going to be, how do you see sales kind of 2022 versus 2021, given you were down in the first quarter? I guess what I'm hearing is you're hoping it's flat to up, but correct me if I'm wrong. And then I didn't think you were going to touch on margins.

But again, it sounds like you're hoping and expecting margins directionally to improve both on the gross margin and the EBITDA line. Any color on the SG&A would also be helpful. And I've got a follow-up..

Sure, Randal. First of all, again, thanks for your question as well. For the first one, let's say, for the revenue flat to up is right. That's why we retained our Q4 assumptions or we talked about retaining the 2021 modeling assumptions.

Regarding gross margins, as you rightly pointed out, we started off the year with 20% and some one timers, as we discussed as well on the call. But maybe I'll point out to, if you look at the trailing 12 months, including Q1 of this year, we are still at the 23% margins. So it is something that's achievable.

And what we outlined on the deck, various initiatives, right, automation, savings, where our focus is on from a cost perspective. All of that is what it is factoring in. SG&A, I think this quarter is a good baseline. We have started seeing a reduction in the professional fees that we pay since the balance sheet initiatives are on the wane.

I would probably use a baseline of $40 million for SG&A on a steady-state business, anywhere from $39 million to $40 million on a steady-state basis..

Got it. Okay. That's very helpful. I appreciate the extra color on that. My second is going to be about kind of the refinancing of your '23s. I think you kind of carved that already.

It sounds like basically, you've got between the 51 revolver, the PNC and maybe some incremental facilities on top of that and hopefully or potentially tapping equity at some point that more than takes care of the '23 maturity.

So I'll skip that question unless you have any more color on that and flip to, you're not the only company out there with problems with inflation and people shortages. So I mean, I guess that's the key issue. It's a key issue for you to actually attain your revenue stability and growth.

And you talked about it a lot today, but any other kind of thoughts on how you go about successfully managing that? It's -- no one having an easy time with it.

And so kind of curious on how you guys are going to be able to manage both the inflation side so that you can still hit your gross margins and have the people so you can hit the revenues?.

Sure. I probably like part time, but before that, a real quick -- yeah, Randal, since you specifically said about PNC, I just want to clarify, right, it's a securitization facility. We certainly have availability, but it's not a revolver type.

Again, we can talk about it specifically later, but I just wanted to clarify because I don't want to miss the presentation or misinterpret..

That's fine. Yeah, no problem. Yeah..

Par, sorry. Go ahead..

Yeah. So before we talk about the people and the inflation and how we manage it. Our healthcare business is -- we are expecting it to grow by over 7% year-over-year, much higher margin business. Our SBP business is also much higher margin business are also expected to grow. And the drags were the public sector, where we have backlog.

And if we can manage the people being approved, that business will grow, but more importantly, it will start to contribute profits. So we are seeing the signs of growth and higher-margin growth revenue and challenge being people. So 5,000 people, how do we add those? I don't think we can add 5,000 people successfully in U.S. markets.

And at the same time, deliver our revenue, which is why we created this uberization model, where we can induct people with security, with protecting the data for our clients in countries where there is high unemployment rates or people cannot get to a delivery or location. That platform had very small number of people last year.

And earlier this month, we crossed 11,000 people. We still are not using them fully but our plan to use them scale that up to 25,000 people will give us ample capacity to continue to ramp up with no bench cost because we pay for these part-time people when they work. And this gives us a balance between full-time employees that we are hiring.

We have 1,900 job openings today or this month. And we are continuously adding to this mobilization platform. And we are opening up into new countries, which will -- it's good for us to deliver our revenue, but it's also good for the communities where there are no jobs that we are creating jobs.

So very -- it's a very competitive shift to this model and where we -- I don't know of any other company who is managing transitioning this way in our peer group. I believe we are the first. And we continue to grow this model and go after business that currently we don't have from our existing clients that they've given to our competitors.

So I'm very excited about not only winning more business, delivering current business but also preparing for 2023 with a platform that's going to be very helpful for us to win more. Thank you..

Got it. Yeah. That’s very helpful. Thank you. I’ll stop there and let someone else jump in. Thanks. .

Thanks, Randal. .

Thank you..

We have no further questions. This concludes our question-and-answer session. And I'll turn the conference back over to management for any closing remarks..

I want to thank all of our shareholders and stakeholders and lenders for your support. And I look forward to our next call, which will be sometime in early August. Thank you very much..

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