ABM Industries - Earnings Call - Q4 2015
December 9, 2015
Transcript
Speaker 0
Good day, ladies and gentlemen, and welcome to the MBA Industries Fourth Quarter Full Year twenty fifteen Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, today's conference is being recorded.
Speaker 1
Thank you, Michelle. Welcome, everyone. I'm David Farwell, Senior Vice President, Investor Relations. Here with me today are President and Chief Executive Officer, Scott Salmiers and Anthony Scaglione, Executive Vice President and Chief Financial Officer. There's a slide presentation that accompanies today's call.
You may access this presentation now by going to our website at www.abm.com, and under the tab Investors, you'll see Events. Please select this tab and click View Presentation. Now turning to Slide two of the presentation is our agenda. I need to tell you that our presentation today contains predictions, estimates and other forward looking statements. Our use of the words estimate, expect and similar expressions are intended to identify these statements.
These statements represent our current judgment of what the future holds. While we believe them to be reasonable, these statements are subject to risks and uncertainties that could cause our actual results to differ materially. These factors are described in the slide that accompanies this presentation. During the course of this presentation, certain non GAAP financial will be presented. A reconciliation of those numbers to GAAP financial measures is available at the end of the presentation and on the company's website under the Investor tab.
I will now turn the call over to
Speaker 2
Scott. Thanks, David. Good morning and thanks everyone for joining us today. By now, I'm sure you all had a chance to review last night's press release discussing our fiscal twenty fifteen fourth quarter and full year results as well as this morning's announcement of the Westway acquisition in The U. K, a provider of technical services.
2015 was a defining year for AVM in which we announced a bold new vision and began our transformational process from a services led company to a solutions driven business. I'm very proud of what our company and our employees have accomplished this year and feel an increased level of energy and excitement and commitment throughout the entire business as we begin the journey towards our 2020 vision. Anthony will go through the numbers in much more detail, but at a high level, we reported a good quarter with revenues up 6% to nearly $1,300,000,000 compared to the same period in fiscal year twenty fourteen and we achieved solid organic growth of 3.7%. Our adjusted EBITDA for the quarter was $69,400,000 which translated into a 5.4% margin. So the takeaway here is that we're keeping our eye on the ball as we move through our transformation, something that I've always signaled is critically important.
Our adjusted income from continuing operations per diluted share came in slightly above our narrowed guidance, which was last communicated at Investor Day. This was not only a result of our operational performance, but due to our decision to adjust a portion of the year end bonuses to reflect our insurance results we spoke about in the third quarter. We felt this was important to do as we are focused on aligning our compensation to our business strategy and our financial performance. I'm also proud of the fact that in fiscal twenty fifteen, we were able to return just over $67,000,000 in the form of dividends and share repurchases, and our Board approved a 3.1% increase in our quarterly dividend. I now want to spend a few minutes highlighting some exciting and growing areas of our business.
We continue to see strong growth within our AirServe segment. AirServe revenues have grown double digit over the past year and has one of our highest client retention rates in the company at roughly 98%. Going into 2016, the AirServe segment has a strong pipeline for new business opportunities and is well positioned for the New Year. Within our Building and Energy Solutions segment, our Abe's technical services business demonstrated record sales in the fourth quarter, which was enhanced by new bookings from our CTS acquisition, which we completed in May. You may remember that in my first quarterly earnings call as CEO, I said that I believed in this group and their ability to accelerate their performance given a slow start in the first and second quarter.
I'm happy to report that they exceeded every expectation I had. In On-site, which comprises janitorial, facilities and parking, revenue closed the quarter up 2.6. And we're so pleased with our tag sales in our janitorial business which were up 16% for the quarter. We've also seen good expansion in high-tech and in our sports and entertainment business including announcing an extension of our contract with the New Orleans Saints. In addition, we continue to stay focused on technology innovation.
A great example is the enhancement of ABM applications to leverage BLE technology, which is more commonly referred to as Beacon technology. BLE allows ABM to track employees and assets in real time within facilities. As an example, by tracking employees and hard assets within airport terminals, we can dynamically route employees to arrivals and departures that require wheelchair services or to facilities that need attention. This has tremendous implications for the management of human logistics and driving improvements for our clients, we've been working closely with Microsoft and AT and T on this initiative. So if you think about 2015, we achieved solid performance in a year that saw a great deal of change.
This included transitions at some of the most senior levels of management and the announcement and articulation of our new strategy to align our business to a vertical industry focused model. I was also pleased that we're able to accelerate one of the components of our 2020 vision with the sale of our security business to Universal Protection Services. We are now in a key transition year where we will align our new organization structure to fit our vertical approach and we will be investing in the necessary tools to support our 2020 Vision initiative. This is critical as it's going to position our company for long term top and bottom line growth that we expect to achieve through our new operating model. The entire management team is focused on our business transformation, but also clearly understands how necessary it is to continue to run our day to day business.
And I believe that our results in the fourth quarter are a further indicator that we can adeptly handle that balance. Looking ahead at the macro environment, we believe our business will remain stable as we move through 2016 and we do not foresee any immediate headwinds. Finally, I'm excited to announce today's acquisition of Westway Services. Not only does it start out our year on a very positive note, the acquisition is an excellent strategic fit and in line with our focus on technical services that deliver higher margins. This also builds upon our strength in The UK with Omniserve and last year's GBM acquisition and this will allow us to deliver complete facility solutions.
To summarize, for me, 16 is about navigating a year of transition and delivering on the results you expect from us and the guidance we provided. With that, let me turn the call over to Anthony Scaglione, our Chief Financial Officer, who will provide further details on our financial results.
Speaker 1
Thank you, Scott, and good morning, everyone. As Scott discussed, fiscal twenty fifteen was a defining period in the company's one hundred and six year history. Our 2020 vision clearly provides a road map for enhancing shareholder value, and I see that the sale of the Security business for pretax proceeds of 131,000,000 was a significant step. I will start with a high level review of the fourth quarter. Note that the company's financial results take into account the sale of security, which is now classified as discontinued operations.
Please turn to slide five. Revenues were up 6%, 3.7 organically compared to the prior year. Adjusted income from continued operations increased 16.7% when compared to the 2014. There are a number of items in the quarter that impacted results. The contribution from one less working day, the strong performance of our technical service business and a bonus reversal of certain incentive plans more than offset the increase in SG and A payroll and higher insurance expense, resulting in an increase of adjusted EBITDA margin of 5.4%.
During the quarter, our continuing operating cash flow was $39,500,000 down 40% primarily from the timing of changes in working capital from Q3 to Q4. For the year, continuing operating cash flow was $144,400,000 up 26% and the full year benefited from approximately $20,000,000 of cash flow from our insurance captive. Now let's move to Slide six for a review of operations for the fourth quarter. The Janitorial segment recorded overall growth of 3.4%, benefiting from the acquisition of GBM, which has been rebranded ABM UK. Organically, the Janitorial segment decreased by $8,100,000 primarily due to strong work order or TAG revenue.
The janitorial operating profit margin benefited from low labor expense resulting from one less working day. And for the year, janitorial operating profit margin was 5.6%, consistent with the guidance we provided on the third quarter call. Moving to Facility Services. Revenues were slightly down compared to the prior year period. As anticipated, operating profit margin was down for the quarter due to the timing of a KPI award, which will now occur in the 2016.
For the year, profit margin was higher than the guidance given on the third quarter call. Rounding out the On-site business, our parking segment was generally in line with expectation with margin slightly down due to certain one time account adjustments compared to the previous guidance. Turning to Slide seven. Operating profit margins increased due to higher revenues from jobs associated with our technical services. As previously communicated, we expected our aids business to have a strong fourth quarter and they delivered.
In addition, the AVE business ended the year with a record backlog. Wrapping up the fourth quarter segment operational results, AirServe achieved another quarter of double digit organic growth due to strong sales in our U. S. Operations. OmniServe, our aviation presence in The UK, continued to perform well and contributed to the growth in operating profit due to higher margin TAG project work.
Turning to fiscal twenty fifteen results on Slide eight. Overall revenues increased by 5.3% as compared to fiscal 'fourteen. The increase in revenues was attributable to organic growth of two 0.9 percent and $112,000,000 of incremental revenues from acquisitions. Adjusted income from continuing operations for fiscal twenty fifteen was $92,900,000 or $1.62 per diluted share compared to $80,200,000 or $1.41 per diluted share for fiscal twenty fourteen. The increase was primarily driven by contributions from discrete tax items and the operational points previously provided.
Adjusted EBITDA grew to $2.00 $6,000,000 and we ended with an adjusted EBITDA margin of 4.2%. Moving to our capital structure. Please turn to Slide 10 for a look at the company's leverage profile. We ended the quarter with approximately $158,000,000 of debt outstanding under our $800,000,000 line of credit. Including letters of credit of approximately $113,000,000 we ended the quarter with an adjusted leverage of 1.31.
As mentioned, we announced the acquisition of Westway Services today, which will increase our pro form a adjusted leverage ratio going forward. Turning to Slide 11. During the quarter, we repurchased 403,000 shares at a cost of approximately $11,000,000 leaving $189,000,000 available for future repurchases under our $200,000,000 share repurchase program. We will continue to allocate capital prudently to drive long term shareholder value, while maintaining a strong balance sheet to ensure we have adequate liquidity to execute our strategic plan. And yesterday, I'm pleased to announce the Board increased the quarterly dividend by 3.1% to $0.01 $65 per share.
This will be the company's one hundred and ninety ninth consecutive dividend. Before going into our fiscal twenty sixteen guidance, I wanted to ensure we explained the impact of a couple of significant items from fiscal twenty fifteen that when recast impacts the beginning run rate for fiscal twenty sixteen. Now turn to Slide 13. First, let's bridge adjusted income from continuing operations per diluted share. As described in our press release, including securities, we would have achieved adjusted income of $1.81 per share, which was $01 better than the top end of the guidance previously provided.
Factoring for the sale of securities, adjusted income from continuing operations was $1.62 per share. Now let me bridge a few significant items. As previously described, our insurance expense for 2016 is expected to increase by roughly 35 basis points or $0.16 to $0.20 per diluted share due to the increase in our main insurance programs. Other changes include the estimated benefit of our 2020 Vision savings, which is primarily driven by the organizational design, the projected absence of the bonus reversal in fiscal 'fifteen and one additional working day. With these adjustments and no assumed benefits of discrete tax items, which I will discuss in further detail, the 2016 guidance for adjusted income from continuing operations is 1.3 to $1.4 per diluted share.
Now a little more detail on the discrete tax items. The GAAP effective tax rate for 2015 was 25.3% compared to 39.5% for 2014. The effective tax rate for 2015 was lower than the rate for 2014, primarily due to employment based tax credits, a benefit related to the recognition of previously unrecognized tax position and tax deduction for energy efficient government buildings. In aggregate, on an EPS basis, fiscal twenty fifteen fifteen included approximately $0.21 of these discrete tax items. For fiscal twenty sixteen, we have not assumed any discrete tax items will be recognized.
Therefore, our guidance does not include benefits of up to $0.40 per diluted share from the potential 2015 and 2016 WOTC, energy tax credits or other unrecognized tax benefits. Moving to adjusted EBITDA margins on Slide 14. As mentioned on our third quarter call and at our Investor Day, the increase in our insurance rate is anticipated to adversely impact adjusted EBITDA margins going forward. In addition, the reversal of the bonus accrual in the 2015 increased margins for the full year. Taking into consideration these two items, our recasted adjusted EBITDA margin would have been roughly 3.8%.
Adding in the projected savings benefits from our 2020 Vision plus one additional working day, we expect full year adjusted EBITDA margins to be in the range of 3.9% to 4.1% in fiscal twenty sixteen. Turn to Slide 15, which summarizes our main assumptions for our fiscal twenty sixteen outlook. Fiscal twenty sixteen is the year when ABM will begin the transformation for achieving 90 to 110 basis points of adjusted EBITDA margin improvement by fiscal twenty eighteen. We recognize that the improvement will come from a combination of operational realignment and better business mix as we move towards becoming a more vertically focused solution provider. Our 2016 guidance assumes savings between 10,000,000 to $20,000,000 from 2020 Vision, which is consistent with the numbers I shared at our Investor Day.
This is primarily related to organizational design, including putting the right people in the right seats to accelerate our vertical focus. Let me emphasize this is realized savings, not run rate savings. Partially offsetting these savings is one additional working day. To note, the acquisition of Westway is not expected to materially impact our guidance. With that, I'll turn the call over to the operator for Q and A.
Operator?
Speaker 0
Thank you. Our first question comes from the line of Andy Wittmann with Baird. Your line is open. Please go ahead.
Speaker 3
Hey, guys. Thanks for taking my questions. I wanted to, I guess, start and just dig into a couple of things on the guidance. And maybe, Anthony, I'll pick up with the tax, the up to $0.40 of tax. So the items for 2015 were $0.21 WOTC energy employment tax credit seemed like the buckets where that came Obviously, you're not guiding, but $0.21 is probably the benchmark that most people will work off of.
What gets you the other $0.19 It seems kind of like a lot and maybe some color around that would be helpful.
Speaker 1
Sure. So Andy, when you look at the tax credits that came into fiscal 'fifteen, primarily the WOTC, the energy tax credits and when we had some reversals from previously unrecognized tax benefits. If you think about retroactive and prospective WOTC, that could be anywhere in the range of 20% to 25%. And it's hard to pin down based on the cumulative impact. The remaining items, which we described are like the energy tax credits, 179,000,000, again, based on legislation passing.
And then there's certain unrecognized tax positions from the previously positions that we have on our balance sheet that will bridge the remaining zero one nine dollars in your mind.
Speaker 3
What has to happen for the previously unrecognized items? What has to break for those to come out? Do you have to is it those don't sound like legislation at all. Those seem like operational things that the company would have to achieve or not achieve for those to be recognized. Is that right?
Speaker 1
It's really based on a passage of time. We have positions that we've taken related to previously unrecognized items associated with acquisitions in the past and those positions based on the passage of time. So it's really the statutory passage of time that will allow recognize that, but it's always subject to risk and audit.
Speaker 3
Yes. Okay. So those passage of time credits would have been part of the $0.21 last year and some amount of those is certain for 'sixteen. We just you just don't know how much you're not guiding to or how much. Is that a fair way I to summarize that?
Speaker 1
Would say it's reasonably certain.
Speaker 3
Yes. Okay. And then just was there any what's the share count, Anthony, that's assumed in the guidance?
Speaker 1
Roughly $57,000,000
Speaker 3
Okay. So nothing incremental beyond what you've already announced here today then?
Speaker 1
That's correct.
Speaker 3
Okay. And then Scott, on Westway, I guess any more detail that you could provide there in terms of what you expect? We heard EPS not a lot of accretion probably because of the amortization, but expectations out of that deal, a deal multiple. And then it's always been our assumption that your U. K.
Business was largely through your AirServe business. I know that's not totally true, but trying to understand the cross selling opportunity here. Is your base business there big enough to cross sell through or is this really the launch point for your UK on-site work?
Speaker 2
So well, first of all, I want to say, we're just so excited about this acquisition because when we started so we've had the Omniserve business through the AirServe acquisition, as you know, and that's really sequestered towards airports, airlines. And we did the GBM acquisition, which got us into kind of our core on-site businesses that we're traditionally known for, but that was primarily janitorial. So we didn't have a complete facility solution because we didn't have a high-tech portion, which is as you know, and in our 2020 vision, what we're looking to do is leverage these high margin businesses. So for us, this kind of completes our ability in The UK to now service clients in a more, I would say more thorough and complete way because before we couldn't offer these services. So we're excited about this and they're such a high quality company.
We spend a lot of time on due diligence talking with the principal. So I think what you're going to see now as our total UK business approaches $250,000,000 which is a big shift, right, from where we were a few years ago. You're going to see us really be able to operate as a complete ABM business in The UK with this offering. And again, for what we are trying to articulate as a firm, which is to move up our margin profile, this is going to be tremendous for us.
Speaker 3
Are there any financial details at this time that you can give us? And when do you expect us to close?
Speaker 1
Andy, we actually closed today. So we're excited about having Westway as part of our portfolio. It's a great book of business, as Scott mentioned. It's a high single digit, low double digit EBITDA margin business. So the blend is going to be a great story over the next couple of years.
Speaker 2
Yes. Andy, what I would say is if you think about our Abe's business in The U. S. And how that's been performing and what it does, it's literally a mirror image.
Speaker 3
Yes. Okay. Thanks, guys.
Speaker 1
Thanks, Andy.
Speaker 0
Thank you. Our next question comes from the line of Michael Gallo with CL King. Your line is open. Please go ahead.
Speaker 4
Hi, good morning. One follow-up and then a couple of questions. Anthony, I'm not sure if I heard you right in response to Andrew's question. Did you say the WOTC in perspective, WOTC was $0.20 to $0.25 or $0.02 0 to $0.25 the tax items?
Speaker 1
20%, 25%. So that's Okay. That's
Speaker 4
what I thought. I thought you said I thought I heard percent, but great. Second question I have is just what kind of organic growth rates do you have embedded in 2016? I mean, obviously, you had a very strong quarter organically. Do you think you can continue to grow organically in the 3% area?
Because 3.7% was quite strong, and obviously, you had a good quarter in a couple areas there.
Speaker 2
Yes. So as you guys know, we don't give revenue guidance. But I would tell you, you could look to 2015 as you think about 2016. We feel like there's no real economic headwinds that's going to get in our way. The business continues to perform just as it's been performing.
So for us that's kind of how we'd want you to look at 2016.
Speaker 4
All right. Okay, great. And then question for you, Scott. I know you've had a little more time now to kind of start the transformation and the integration and start to really move the company forward on the new path. I was wondering what you're seeing early on, what kind of reaction you're seeing in the organization and kind of how that's going relative to your expectations at this point?
Speaker 2
No, that's great. Well, so it's a tremendous amount of work as you can imagine, because we're this is really process where we're changing our operating model, our go to market model. We're moving from a company that's been focused on services and thought about as janitorial, engineering, parking to now moving towards industry focus. So there's just a lot of work in redesigning the organization. But I think one thing that's been so positive for me is people are really embracing it in the organization.
I think our employees know that this is essential for our long term. So there's just a lot of energy around it. And because it's such interesting and I think exciting work, people are just energized by it. Because typically, it's around the holidays, don't want to be working twice as hard as you've been working. But again, so far so good.
We're on track. We've laid out a pretty well articulated process that we're sticking by. We're on track. And so far, I just have to say double thumbs up right now.
Speaker 5
Great.
Speaker 0
Thank you. And our next question comes from the line of Joe Box with KeyBanc Capital Markets. Your line is open. Please go ahead.
Speaker 6
Hey, good morning, guys.
Speaker 2
Hey, Joe. Good morning, Joe.
Speaker 6
So, Scott, thanks for the commentary on the organic growth on FY 2016. I just want to dig into that a little bit and the EPS bridge slide that you have. One thing I noticed was there wasn't an EPS contribution from organic growth or M and A in that 130,000,000 to 140,000,000 Clearly, you guys have some good momentum in a few of your businesses. And if you're expecting more of the same in 2016, why aren't we seeing that contribution in the bridge? Is that really just maybe conservatism as you start to execute on 2020 Vision?
Speaker 2
When we build these bridges, there's so many things we can add. And what we're trying to do is kind of be as simple as we can to create clarity and not overwhelm. And because we see so much consistency, we didn't think it was relevant enough to highlight as a major bridge. But Anthony being the architect of the bridge, you may have another comment on that, Anthony.
Speaker 1
I think you articulated well. So Joe, if you think about what we've tried to accomplish is the major driver of the change year over year to try to provide transparency around the items that impacted FY 'fifteen and how those items would impact FY 'sixteen or unique items for FY 'sixteen. So if you think about the base book of business and then what we characterize other, that's intended to capture some of that pull through business from an organic standpoint or pull through margin from an organic standpoint.
Speaker 6
Okay. Thank you for that. What is pro form a debt accounting for Westway? And I guess is Westway the sole reason why interest expense is going to end up being flat year over year?
Speaker 1
Yes, so thinking about Westway, we're not disclosing the purchase price at this point. But if you think about Westway, the impact is going to increase our leverage from where it ended on FY 'fifteen. And then projecting going forward, we see slight increases in base rates based on where we think the Fed may increase rates. So we built a little bit of that into our plan for FY 'sixteen. So the combination of those two events is why we see our interest expense to be relatively flat year over year.
Speaker 6
Okay. And then, Anthony, can you just talk to your insurance claims in the quarter? I'm curious if maybe they took a step back from that more elevated level that we've had over the last couple of quarters, maybe implying that there could be an insurance reversal at some point next year.
Speaker 1
Well, Joe, that's really tough for us to forecast any adjustment to insurance at this point. We've committed to is to continue to look at safety and risk management as a key component of our strategy going forward. We feel confident that the rates that we have built in our plan for FY 'sixteen are the right rates for the business. Those rates have been cascaded down to the business, so fully transparent from that standpoint. So it's too early to say whether that's the right rate on a long term basis, either up or down.
Speaker 6
Okay. I mean, did you see a trend in line with the claim levels for last quarter or has there been a significant change?
Speaker 1
No significant change at this point.
Speaker 6
Okay, great. I'll turn it over. Thank you, guys.
Speaker 1
Thanks. Thanks.
Speaker 0
Thank you. And our last question for today comes from the line of David Gold with Sidoti. Your line is open. Please go ahead.
Speaker 5
Hey, good morning. Just a couple of points to follow-up. So first, when we look at the 1.3 to 1.4 guidance, so given, I guess, everything we put out there, is the zero one zero dollars variance largely from that $00 to $0.20 band that you gave for 2020 savings? In other words, is that the only area of upside right now that we're pointing to?
Speaker 1
No, I don't think so. I think that the 130,000,000 to 140,000,000 is typically we provide guidance range for other things that are unknown. So we want to have some flexibility in the range for things based on our budget or based on our view are unknown. So 10 to 20, we feel real confident about that. I mean, we articulated that.
And as I mentioned earlier, that's a realized savings bonus. It could place a factor in the 130, whether there's at the low end or the high end, but we feel confident that the plan that we have in place will allow us to achieve the range or the guidance that we've provided.
Speaker 5
Okay, all right. And then just following up on Joe's question, it sounds like on the organic side for contribution, you've taken a fairly conservative approach then to next year. Would you consider that to be fair?
Speaker 1
That's fair. I think as you look at 2020 and as we start to migrate from a service led business or for vertical business, one of the things that we want to make sure that we articulated, that process is obviously going to take time, but it's also going to allow us to continue to look at our contracts and where we may want to grow more aggressively or not grow as aggressively. So the pluses and minuses makes it a little bit challenging in 2016 to really peg what we feel comfortable from a long term trajectory our organic growth rates could be. And that's why with those changes this is why we have the guidance that Scott or at least the range that Scott articulated.
Speaker 5
Perfect. And then just one last one. On the TAG revenue side, can you give a little bit more color there as to if there are particular pockets where that's coming from? Obviously, it's consistent with the ABM story and what we'd expect or certainly supports what we'd expect at this point in the cycle. But just outlook there and how you're feeling about things and what the drivers are just now?
Speaker 2
Sure, sure. So particularly in this quarter, we had strong TAG revenues in the Northeast and the West. And there's not a lot of strategic reason why it's happening in one region versus another. This stuff runs in cycles, David. So I think the bigger picture here about TAG revenue is as we're going through this 2020 vision, as we're learning more and more about our business, we're figuring out where to focus.
And as you know, over the years, TAG revenue is higher margin business, right? So and as we get focused on raising our margins, we're keenly adept to areas where we can pull those levers. So for us, there's been a big focus on TAG revenue. And I'm hoping we're going to continue to be able to tell you the story about how TAG revenues are increasing, because when you hear that, you know that that means it's a focus on margin. So I don't think it's necessarily an economic trend.
I don't think there's good reason again why it's East versus West. Next call, we may say it's in the Midwest. We don't know, but we do know that there's a tremendous focus on where we can push our margins.
Speaker 5
Perfect. Thank you both.
Speaker 2
Thanks, David.
Speaker 0
Thank you. And I'm showing one final question from the line of George Tong with Piper Jaffray. Your line is open. Please go ahead.
Speaker 7
Hi, this is Adrian Paz on for George Tong. Can you discuss how pricing trends have evolved over the last few quarters in the janitorial segment? And where do you think those trends could go to?
Speaker 2
Yes. So I don't know that there's been any significant trends in pricing over the last few quarters. Like anything else, we're always working in a difficult environment where we're fighting every day for business and for coming forth with the right pricing to retain and win business. So for us, no real pricing trends. And the good news is, once the economy remains relatively strong, we're not seeing pressures from customers to cut back on services.
It's been a very stable environment right now in the janitorial business.
Speaker 7
Alright. And so I know previously you guys had, pushed back on some of these customers that were really looking for pricing concessions and walking away from some of these contracts. I don't know if do you expect that to continue? Or are you seeing better negotiation leverage now that the economy has improved?
Speaker 2
No. I think for us, I would take us back to kind of that 2020 vision and how we're trying to grow in certain segments. And we'll be looking at our portfolio constantly now of where we're making money, where we're not making money, clients that we can grow with. So I don't think there's any real change here.
Speaker 7
All right, great. Well, thank you.
Speaker 2
Thank you.
Speaker 0
Thank you. And I'm showing no further questions at this time. And I would like to turn the conference back over to Mr. Scott Salomars for any closing remarks.
Speaker 2
Well, everyone. Thanks for joining. And, hopefully, we answered everybody's questions. And I just want to wish everyone a safe and happy holiday season. Thank you very much.
Speaker 0
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone have a great day.