TTEC Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 12, 2023

There are 10 speakers on the call.

Operator

Greetings, and welcome to the Parq Loan Corporation's First Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode and a question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Jennifer Hay. Ma'am, you may begin.

Speaker 1

Thank you, Ali, and good morning. This is Jennifer Hay, the Chief Strategy Officer and General Counsel at Parkland. Thank you for joining us today on our 2023 Q1 earnings call. Before we begin our prepared commentary on the quarter, please note that you can find a detailed breakdown of Our 2023 Q1 results in our financial statements and MD and A, which are available on our website and on SEDAR. Today's call is being recorded and a replay will be available after the call.

Speaker 1

Please be aware that certain information discussed today is forward looking in nature. Any such information is subject to risks, uncertainties and assumptions that could cause actual results to differ materially. Please see our public filings for more information regarding forward looking statements. During the call, we will reference non IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial performance, they are not recognized measures and do not at standardized meetings under IFRS.

Speaker 1

Please see our public filings for additional information regarding our non IFRS financial measures, including for reconciliations to the nearest IFRS measures. I will now hand the call over to Parkland's CEO, Brad Greene to open our discussion

Speaker 2

Thank you, Jennifer, and good morning, everyone. In addition to Jennifer, with me on the call today is our CFO, Dan Millett. We are very pleased with our Q1 operating results in that we showed strength against tough economic headwinds and a comparable quarter that was heavily impacted by the COVID-nineteen pandemic. While there were some lingering impacts of the pandemic, which continued throughout 2022, They significantly decreased following the Q1 of 2022 and we expected this to be the last quarter of exceptionally difficult comparison. As the impact of COVID-nineteen subsides, our focus continues to be on implementing incremental improvements in our operations and making selective and strategic growth decisions that drive shareholder value.

Speaker 2

As a result, our revenue continued to grow year over year increasing 4%, while adjusted EBITDA decreased slightly with the decline in the death rate. The results from our cemetery operations were strong during the quarter as preneed property sales increased over the comparable quarter, primarily due to our large cemetery businesses continuing to perform well. Additionally, the merchandise supply chain continues to self correct, resulting in greater merchandise deliveries than we experienced in the same quarter last year. Overall, despite the significant variance in the death rate as compared to the Q1 in 2022, our total cemetery revenue from comparable operations decreased only about 1% year over year. We attribute this largely to the refocus on the heritage in our parks through cemetery property sales.

Speaker 2

Ultimately, we believe that focusing on property sales will continue to improve our overall cemetery sales program and its strength throughout the year. As expected, our atneed sales in both our funeral and cemetery businesses were impacted as a result of the drop in the debt rate. Although, We are pleased that the decline in our same store call volume decreased significantly less than the national average. More specifically, recent CDC data suggests deaths the United States were approximately 14% lower during Q1 2023 versus Q1 2022. However, in looking at our comparable operations, we only saw a decrease in call volume of approximately 11%, which was not only lower than the national average, but also compares favorably to our peers.

Speaker 2

Also based on CDC data, we have seen the concept of excess debt begin to lower in the U. S. During the Q1 of 20 3, and believe we're beginning to see a more normalized operating environment for death care. During the quarter, we also completed a significant acquisition in the Sioux City and South Sioux City markets, which resulted in PLC entering the states of Iowa and Nebraska. And subsequent to the quarter, we completed another premier acquisition in the Greater Kansas City Metropolitan market further expanding our commanding presence in Missouri.

Speaker 2

The completion of these two transactions alone takes us a long way towards our annual goal of completing $75,000,000 to $125,000,000 a year in acquisitions. As we have stated in the past, we have a robust pipeline of premier acquisition opportunities and we continue to believe that our previously stated range of $75,000,000 to 100 Construction of an open Waco Memorial Funeral Home on Waco Memorial Park. As a result, we have the 1st and only on-site offering in Waco, Texas. With that, I will turn the call over to Dan, who will provide some additional detail regarding our Q1 results.

Speaker 3

Thank you, Brad, and good morning, everyone. My comments this morning will focus primarily on our operating results from the Q1 2023 relative to Q1 2022. For the Q1, we saw revenue increase approximately 4.3% as acquired operations continued to contribute to Parkland's positive However, overall revenue from comparable operations decreased approximately 5.6% year over year, which was expected considering the heavily impacted COVID-nineteen comparable quarter. Over the past year, We have seen significant volatility in mortality due to the direct impact of the COVID-nineteen pandemic and more recently the indirect impact of the pandemic. However, we believe in Q1 2023, we saw the beginning of a return to historical mortality in both the U.

Speaker 3

S. And in Canada. As Brad mentioned, based on preliminary information from the CDC, we have seen While this obviously impacts our atneed sales, our teams have been focused on managing costs to the number of cases Our cemetery sales have maintained their strength primarily due to continued group sales in our Northeast region. Also on the cemetery side of the business, Recall that in Q1 2022, we discussed the impact of the supply chain on the delivery of cemetery merchandise. And While delivery times have not completely restored the pre pandemic lead times, they have normalized as compared to the Q1 2022 supporting cemetery revenue.

Speaker 3

For the 3 month period ended March 31, 2023, our operating expenses, including our direct cost of sales, general and administrative, advertising and Selling and maintenance expenses increased approximately $3,200,000 over the same period in 2022. This increase is primarily due to acquired operations, That was partially offset by various labor costs including field level bonuses and benefits as well as changes in structuring and reporting relationships. As we've been promising, this quarter you will see additional detail in our disclosure, which has been made possible by the implementation of facts Another incremental improvement in our systems and processes. Beginning this quarter, you will see information detailing the results of our cemetery businesses and funeral home businesses as well as our corporate costs. Our cemetery businesses saw strong adjusted field EBITDA margin this quarter of approximately 34%, An increase of approximately 2.5% as revenue stayed flat, while general and administrative costs decreased.

Speaker 3

This decrease is primarily the result of operational changes made to labor costs following the sharp decline in debt rate and the external impacts from the macroeconomic environment in the first half of twenty twenty two. Further, we also received benefit from certain structural changes such as moving to a self insured health benefits plan and the reallocation of labor costs. On the funeral home side, our adjusted field EBITDA margin decreased 33.7% to approximately 31% for the 3 month period ended March 31. While we did see similar improvements in labor on the funeral home side, Same store call volumes and margins from our acquired businesses decreased funeral field margins year over year. Again, this is a direct result of the sharp decline in debt rate from the prior quarter, which was heavily impacted by COVID, as well as the usual impacts from integrating new businesses.

Speaker 3

Overall, our adjusted field EBITDA margin decreased a mere 50 basis points to 32.2%. On the corporate side, while we have been forecasting and expected to see an increase in the corporate costs as a result of our growth, In the Q1, these costs were slightly higher than we anticipated. These costs increased primarily as a result of the current inflationary environment as well as full operation of fax and continued systems improvements and integration. In addition, we also reallocated some costs between the field level and corporate business Going forward, we will expect corporate costs to be elevated in the near term as we plan, execute and execute on initiatives That will set Parkland up for a next stage of growth, but we do expect these costs in the medium term to revert back to historical norms of 7% to 8% of revenue. Turning to the balance sheet, at March 31, 2023, we had approximately $172,000,000 outstanding on our credit facility, Other debt of approximately $13,600,000 finance leases of approximately $5,400,000 and cash on hand of approximately $4,100,000 Excluding our debentures, our net debt was $157,000,000 as at March 31, 2023.

Speaker 3

We remain conservatively levered at the end of March as our leverage ratio was approximately 1.95 times based on the terms of our credit facility of 2 point 4 times including our outstanding debentures. We continue to believe our balance sheet provides us with an opportunity to grow in a very difficult capital environment. During the quarter, we have taken steps to mitigate the impact of rising interest rates and have entered into 3 interest rate swaps covering a notional value of $100,000,000 in debt for the near Interest rates have had a negative impact on our financial results for the Q1 by approximately $0.05 per share And we have seen underlying interest rates increase 500 beats in the past year. We believe this is a prudent decision to manage interest rate risk on our credit facility. Ultimately, these tough comparisons resulted in a decrease in net earnings for Q1, 2023 relative to Q1, 2022.

Speaker 3

Net earnings for the Q1 was $4,600,000 or $0.32 per share compared to $8,700,000 or $0.25 per share in Q1 2022. Furthermore, the adjusted net earnings for the Q1 of this year was approximately $8,600,000 or 0 point to $11,200,000 or $0.321 per share in Q1 2022. I'll now turn the call back to Brad for some closing comments.

Speaker 2

Thanks, Dan. The significant fluctuation in the death rate during the COVID-nineteen pandemic certainly created some challenges for Parklawn. Rather than panic or significantly alter our course, we met those challenges head on and actively sought out ways to improve our organization So that we can better serve our families and create shareholder value. We are not talking about improving our sales function, we did it. And now we're not only maintaining our historically strong sales, we're improving them.

Speaker 2

We are not talking about creating an ERP system. We've built our own, Rolled it out and are currently experiencing the benefits of facts, which we only expect to improve. We are not talking about being good stewards of our precious capital or the benefits making large acquisitions and improving them, we do it annually over and over again, which has resulted in unprecedented growth. It's important to keep in mind that the above decisions and actions as well as those we are taking today are aimed at establishing Parklawn as of funeral homes and cemetery businesses that happens to grow through acquisitions. It is this understanding which is shared by our entire team that makes us different and is fundamental to our success in the debt care profession.

Speaker 2

That concludes our prepared remarks, and I will now turn it over to Ali for any questions.

Operator

Thank you. At this time, we will be conducting a question and answer session. One moment please while we poll for questions. Thank you. Our first question is coming from Merton Landry with Stifel GMP.

Operator

You may proceed.

Speaker 4

Hi, good morning guys and thank you for the additional disclosure. It's very much appreciated. My first question is on your average revenue per call. It was up 1.5% year over year, And I think that was fueled by a price increase. So I was wondering if we exclude the price increase, Was your revenue per call lower on a year over year basis?

Speaker 4

And also

Operator

trying to understand

Speaker 4

a little bit How the economic slowdown is impacting your merchandise and services? And wondering if you're seeing a bit of a trade down in Merchandise and Services?

Speaker 3

Yes, Martin on the first it's Dan here. On the first part of the question regarding, If I understood your question correctly regarding revenue, if our revenue was down year over year from our funeral homes Primarily due to the decrease in mortality, the decrease in coal volume, that was slightly offset By the increase in average, it has been something we've talked about probably since Our Q1 2022 conference call that our changes Our changing pricing, excuse me, is not something we do lightly and we've been focused on that all year In 2022 and that's not going to stop throughout 2023. We continue to face inflationary pressures And we're very actively reviewing on a location by location, market by market basis Our averages. So again, we're constantly looking for quarter over quarter increases. But Absent sheer price increases, we are also looking to make sure we're giving our customers the right product mix And what they want to honor their family and loved ones to help drive additional average revenue.

Speaker 4

Okay. And just maybe the second part of my question. Are you seeing a trade down in merchandise and services sales due to the slowdown?

Speaker 2

Yes, Martin, this is Brad. We are actively watching that. I mean, I read and listen to the same things you are, which is And it varies from there is a slowdown, there's a slowdown coming, there's a slight slowdown, there's a massive slowdown coming at the end of the year or the Q1. So we're definitely paying attention to what our consumer is doing and what they're choosing. And the short answer is no, We're not seeing that right now.

Speaker 2

Now we're going to be sensitive to it, which is why going back to Dan's answer and Answers in previous quarters. That's why we're very cautious about our price increases. We don't want to see a price increase impact market share Because of macroeconomic factors that are going on in our consumers, our customers and customer families' lives. So the short answer is we're looking for it. We're sensitive to it, but we haven't seen it yet.

Speaker 2

And I think that's indicative even when you look at the Small increase we have in cremation year over year and quarter over quarter.

Speaker 4

Okay. Okay. And then last question, you mentioned that your call volumes, you're lapping an easier comp on a go forward basis. Wondering how do your call volumes look like from an organic standpoint for Q2?

Speaker 2

Well, we've only had 1 month into Q2 and making a decision on a monthly basis In this profession is a very dangerous game to play. But I will say that what we've seen so far in the beginning of the quarter is definitely in line with our expectations And what we anticipate to curve throughout 2023.

Speaker 4

Okay. Okay, that's it for me. Thank you.

Operator

Thank you. Our next question is coming from George Doumet with Scotiabank. You may proceed.

Speaker 5

Yes. Good morning, guys. Congrats on a good quarter. Brett, I just want to get your thoughts on the outperformance that we've had versus the peers and maybe What's driving that, do you think?

Speaker 2

The outperformance on the same store sales?

Speaker 5

Yes. Correct. The market share gains, I guess.

Speaker 2

Yes. So it's hard to say compared to other folks. I would just Take a step back for a second and remember when we were coming into the pandemic is when this executive team effectively took over in March of 2020. And we managed through a pandemic, which saw significant ups and then significant downs in 2022. What I would say that this management team is That isn't always the case in both our public and private competitors Is that we consistently see market share growth in businesses that we acquire and businesses that we run for a long time.

Speaker 2

So in a normal environment, George, we don't see a situation where our comparable volume drops or our same store sales drop. And So I think as we just manage to that and we continue doing our job there and we focus on the businesses we run and we focus on our pricing and things of that nature, That just takes care of itself. So that's a long way of saying historically, I would expect this management team to be able to keep same store volumes At or increasing and that's what we managed to. And how that compares to the other folks that's just going to they're going to have to sort that out in house.

Speaker 5

Okay. Yes, that's helpful. And just a clarification to prior question. The expectation for you guys for Q2 and for the rest of the year is closer to flat organic growth rate?

Speaker 2

Correct.

Speaker 5

Okay. One last one for me, Brad. On the M and A landscape, I know you've been focused on smaller deals, But are you seeing anything perhaps in the medium to larger deals? Are you perhaps seeing valuations maybe start to creep down a little bit?

Speaker 2

Yes, that's an interesting question. And from quarter to quarter, kind of for the last couple of years, it hasn't changed a lot. I would say it's starting to change now. And by that I mean obviously with a 500 basis point, 550 basis point increase in Interest rates, those people who are either highly levered or those folks who We use primarily borrowing to buy businesses mostly the private equity backed consolidators. I mean they're seeing a significant Increase in their borrowing costs.

Speaker 2

I mean, even one of the publicly traded companies, I think, is still sitting at 5.5 times leverage. I mean, that's something that we don't have a problem with. And then you hear the largest consolidator in the industry For the first time verbalize that they're sitting on tremendous amount of capital waiting for people that are over levered or have too high of interest rate To stumble, so they're ready to pass, and I believe the words that were used. You kind of look at that environment and you apply that to the M and A context, And you can imagine that there has been a cooling. I can see it.

Speaker 2

I can see there are either less businesses that are coming through the consolidators or even when I'm Talking to people that sorry, coming through the brokers, even people I'm talking to are recognizing that there are pressures being put on people who May have been more willing to pay up for businesses in 2020 to 2022. Have I seen that come through in what we're buying right now? No. But I also didn't see the multiples go up during that period of time. We kind of Have sourced the deals at our own multiple levels.

Speaker 2

So it's not really creating a problem for us, but I do sense that out there in the You're going to see some changes if the interest rates continue at this level, both in seller expectations and what buyers are willing to buy.

Speaker 5

Great. Thanks, Jirka. Thomas?

Operator

Thank you. Our next question is coming from Irene Nattel with RBC Capital Markets. You may proceed.

Speaker 6

Thanks and good morning, gentlemen. First of all, yay On the incremental disclosure as a result of facts, thank you, which leads me to my first question, which is Now that you have all of this accurate, lovely detail, can you walk us through the specific areas that you're going Target where you see the greatest opportunities perhaps to surface some incremental dollars from the existing footprint?

Speaker 2

Yes. So again, we're in the early stages of this Irene and I think as a management team, Most people have now gotten that we deliver on what we say we're going to do. And I think at the beginning of last year, Dan said that we were going to start delivering on some of the segmented reporting and it was going to get more detail. VAX is giving us information that allows to do what you've But it's also giving us information to do things that we are not necessarily comfortable disclosing yet, but we will. So Dan will be the first one to tell you that you'll see those disclosures improve over time as the information coming out of facts gets more detailed and we get more comfortable with it.

Speaker 2

If you apply that to what we're doing in operations, it's the same thing. We've been allowed in a very short period of time To take the information that's coming out of facts and be able to drill down to specific areas and businesses, if not specific And as a result of that, we're even in the process of tweaking our operating model to be more specific based on what we have And that might sound like we're changing something we're not. We're making it better and it's being very well received From the field. So I noticed you know that I haven't said anything specific yet, other than to say Our normal KPIs that we're looking at, the normal things that we use to manage our cemeteries and funeral homes, we're now able to get that information more granularly and quicker. And as we're able to do that, we'll be able to run those businesses better, right, and we'll be able to disclose more.

Speaker 2

Now, I'm not really ready to roll out the different how we've changed, how we look at some of our KPIs in the funeral homes and cemeteries and how we're using that information. But you can expect to hear some more of that from us in the next quarter or 2.

Speaker 6

That's really helpful, Brad. And If you could, just something that you said was really interesting, which is, it's being well received in the field, which obviously is critical in order to get adoption. Are you finding that it's actually they're thirsting for that kind of help and information input from you to improve their results?

Speaker 2

Yes. I would almost be I almost wonder whether or not you bugged our conference room. But that is exactly right. In other words, For a long time, we were basically managing the businesses with information that was either a little later than we wanted or not as specific as we wanted. But But at the same time we're doing that, we have people that are running the businesses, our managers that want to do whatever they can To serve the families better and improve their businesses.

Speaker 2

So they're wanting the information. They're wanting it more detailed and they're wanting it more quickly. So as we're rolling this stuff out and they're getting You're exactly right. It's like when can you do more. And the biggest joke or the biggest tumor I have in this is we push pause On rolling facts into Canada, so we can improve part of it in the U.

Speaker 2

S. Just because it was well received and the information was being used In a manner that we could immediately see. And now I've got my operators in Canada saying, Hope, that's cute. When are we getting it up here? Like We need this now.

Speaker 2

So you're right. The thirsting for information very well received, probably the most Excited I've been in a long time about a singular thing that we're doing at Parkland is that system.

Speaker 6

That is wonderful. Thank you. And then just finally, we're hearing from other companies that they're Still getting request they're still seeing cost pressures, whether it's labor, whether it's materials. Can you talk a little bit about what you're seeing And how we should be thinking about inflation on the cost side in your business?

Speaker 3

Jeremy, it's Dan here. Yes, no, we would Echo that statement of some of our peers, right? You just need to look at the economic data to know that, yes, well, Inflation is decreasing year over year. It's still much higher than historical norms and We are not immune to that in any way shape or form.

Speaker 5

When we

Speaker 3

talk about some of our suppliers, some of our largest suppliers, For example, on the merchandise side, we have fixed contract increases with them. So we get to manage that Through those contracts, but I find a lot of the inflationary costs and that probably Encompasses a whole lot of things. It's very prominent on the corporate side of the business. We talked about How we expect to see those costs go up and that's a component of it and a big component of it. In the field, Yes.

Speaker 3

We are continuing to see those pressures. The largest cost we have is labor. And while this is nothing new, it's not a deep pool. It's not like an accountant where Go down to the accounting firm down the street to find a new funeral director. Yes, but that's something we've dealt with Our entire lives and well, my life hasn't been that long in the profession, but for many others around here it has been.

Speaker 3

So we are feeling those pressures. We're going to continue to manage that relative to our cases and call volumes And that continues to be a stress point of this industry.

Speaker 6

That's helpful. Thanks, Dan.

Operator

Thank you. Our next question is coming from Zachary Evershed with National Bank Financial. You may proceed.

Speaker 7

Thank you. Good morning, everyone.

Speaker 3

Good morning.

Speaker 7

With the additional granularity of information available with facts, Do you think you'll be restructuring sales commissions and incentives to target specific things?

Speaker 2

We've been working on our sales commission And restructuring and to target specific things for a while now, but not in the manner that you might be asking the question. It's not that it's broken. It's not that we're changing anything in a significant way. We've altered the way that We take some things out so that our sales counselors are focused on particular sales and particular sales that would impact our results. So as but what VAX allows us to do is it's calculating the sales internally, it's telling us what to do on trust, it's doing certain things that take I take some human capital resources and put them inside of the system that then allows us to use Our sales managers and VPs of sales to focus on other things.

Speaker 2

So we've already been doing that, Zach, is the short answer. But to expect some Huge overall change, don't expect it. Yet I will say if you look at our results and our preneed sales and even compared to Some of our competitors out there, I'm pretty pleased with how we've navigated those waters through the pandemic and especially through 2022 in the Q1. So I think we're doing a pretty good job at that right now.

Speaker 7

No, wouldn't expect you guys to oversteer. That's great color. And then changing topics, Thinking about the bulk cemetery sales, is there a natural cap on that, maybe a point at which they'll phase out?

Speaker 2

So it's interesting, we just bought some new property, physical property that we can develop another cemetery on that's in close proximity to where those Carry on, that's in close proximity to where those bulk sales are occurring now. As a matter of fact, Jennifer and I traveled there not too long ago and we're standing in the field looking at it with the operators, which is a lot of fun To see a vision of where that's going to go when we just left a field that I was standing in 2019 and it looked the same and now it's a full blown cemetery. But my point is, we think towards the future of where we're going to get those group sales and how that's Going to continue, but even in the parks that we're selling the group sales, there's still going to be openings and closings. There's still going to be monument sales. There are things that are going on in that park That's going to make them revenue producing for the company going forward.

Speaker 2

Right now, do I believe they're I mean, they're always going to be chunky. We Reached that over and over again. There's going to be some quarters and some years it's going to be higher or lower, but we have a master plan in place so that the cadence of those Should be consistent at least for the foreseeable future at Part 1. And as we need to, we look at our master plan, we'll add property. We're thinking about those things.

Speaker 2

I don't anticipate there to be a cliff where that just stops. And if we do see that clip, we will see it some years out and we will start warning people so they can get ready for that.

Speaker 7

That's good color. Thanks. I'll turn

Speaker 3

it over.

Operator

Thank you. Our next question is coming from Daryl Young with TD Cowen, you may proceed.

Speaker 8

Hey, good morning, everyone. You actually basically just answered my question with your last response. I was just curious about the CapEx profile on the cemetery properties this year and how you felt about the inventory you had available to sell and Whether it was coming from new or I should say recently acquired properties versus your legacy properties, but you gave some pretty good color already.

Speaker 2

Yes, I'll just add to that. The process of us building out our cemetery inventory and property is something that we believe just to be Kind of core to what we're supposed to do. So I mean that starts out at a rooftop level. It goes through the management. It goes to the VPs.

Speaker 2

It's sorted out with Jay and Matt at the executive level. Expenses are discussed extensively with Dan and we put a plan in place. We are always Looking to replenish and grow our inventory where we need to and plan for that. So I mean Dan will lay out the numbers, Dan will lay out the expectations at the beginning of the year, But it's not like we wake up in the beginning of 1 year and think, oh my gosh, we need to do something in X Cemetery this year. That's already been planned and we've been marching towards that by the time that year rolls around.

Speaker 3

If that makes sense. Got it. Yes. No, that's good color. And then one more if

Speaker 8

I can. Just in terms of your customer profile and just trying to figure out if maybe you might have more or less of an Exposure to the market to a lower income consumer, just in light of the recessionary conditions and possible implications for preneed sales?

Speaker 2

Yes, I think that opens up almost a Pandora's box because then you get into the conversation of Which socioeconomic group is more impacted by preneed sales? Is it the individual who's in the lower middle class that's looking to Spend a few $1,000 or is it someone that's in the upper class that's looking to spend $500,000 on a mausoleum. And that's normally not our customer. And when you hear SCI refer to those large sales, that's what they're talking about at times. Our customers are lower down on that, but more of the middle class, I would say.

Speaker 2

Most of it and then we have some markets where we have Definitely higher end customers. So it's kind of a stand. And in some markets, we've got from the lowest end all the way up to the premier business in the particular market. So I wouldn't say that we had any particular exposure to any socioeconomic group if you look at the company as a whole. I'd almost put us right down the middle, right?

Speaker 2

We're not low end heavy and we're not high end heavy. And as a result of that, we should be able to Navigate whatever the economic environment is thrown at us from both the preneed and an atneed perspective.

Operator

Thank you. Our next question is coming from John Zamparo with CIBC. You may proceed.

Speaker 9

Thank you. Good morning. I'll also echo my appreciation for the new disclosure. I wanted to get back to the M and A environment And you mentioned the ready to pounce comment from your peer. I wonder, do you think the economic environment we're in changes the prospects for a deal of 1 of the industry's larger private players for

Speaker 3

you?

Speaker 2

The short answer is yes. I think that if we are in a sustained economic environment where Interest rates are high or we find ourselves in a recessionary environment. I think that puts pressure On lots of people who have found themselves either in an over levered position or in a position that they don't have capital to grow Anymore. I don't think we're in either. So that allows us I mean, I don't have the balance sheet to say that I'm willing to Pounds on anything, but I do have the balance sheet that allows me To make the decisions that we need to make to grow.

Speaker 2

So, yes, I think that very well could open up the doors, John, in the very near future, if we stay in this environment and we're constantly talking to folks and they're constantly talking to us. It's not a large profession. And I'd like to think that we have a good reputation. And you know what, now that's being way too I know we have a good reputation And I think there are other private players out there that we would certainly like to join us and if they want to the door is open for discussion.

Speaker 9

Okay. That's very helpful. Thank you for that. And then just one more for Dan. Relative to the corporate costs, I think you said targeting 7% to 8% as a percent of sales.

Speaker 9

I think it was 8.5% in the quarter. I'm wondering how we should interpret The goal of medium term, is that a multi year goal? Is that a multi quarter goal? And is there any seasonality to that number we should be aware of?

Speaker 3

Yes. So first, I just need to clarify, I'm not going to say it's a target. That's not something we're targeting at this point, but It's kind of been where we've been historically and feel that that's a good range We should be in for kind of the normal run rate of this business. Secondly, I think going into this Year, I said we kind of be at the high end of that range for call it the near term. So Let's say 9 to 15 months.

Speaker 3

I don't think there's a lot of seasonality in it. It's really focused on a, our growth profile, b, as we've talked about the various systems And the consolidation of the systems and the integration of those systems including facts within our organization, there'll be incremental cost there. And We're working on projects that figure out more long term, how we can utilize all those systems more efficiently and effectively To actually reduce costs with a much bigger portfolio. So but to do that we've got to spend money to get the support and help that we need to kind of think through it. Yes.

Speaker 3

We also part of the increase in this quarter is we in the effort to get Some of this segmented disclosure out over the past longer than year and a half at least, probably 2 years, we've really been trying to focus on Separating where people sit within the broader structure, sometimes we will acquire a business With a very strong individual and that individual will become a vice president of something say for example sales and sit with that Yes. Funeral Home or Seneca, excuse me, will be for Seneca for a period of time. And we're really focused on making sure those people are falling into the right bucket. So as we kind of got this information, as we're trying to put it out there and discuss our story about Yes, of the way we look at the business or guidance, if you will, but I hesitate using that word.

Operator

Thank you. We have reached the end of our question and answer session. So I'll now turn the call back over to Mr. Millett for any closing remarks.

Speaker 3

Thank you very much, Eli. As the well documented romantic of the team, I just wanted to take these quick Closing remarks to wish my wife a very happy birthday. 30s never looked so good. So just Wanted to do that and as well wish all the mothers out there a very wonderful Mother's Day. So thank you very much everybody for attending today and we'll talk to you soon.

Operator

Thank you. This concludes today's conference and you may disconnect your lines at this time. And we thank you for your participation.

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Earnings Conference Call
TTEC Q1 2023
00:00 / 00:00
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