Trading Update

Jul 16, 2020

Earnings release

Hello, and welcome to Hayes Q4 analyst call. My name is Jose, and I will be your coordinator for today's event. Please note that this conference is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions that 00, and you will be connected to an operator. I will now hand you over to your host, David Phillips, Head of Investor Relations to begin today's conference. Thank you. Thanks, Jose, and good morning, everyone. Welcome to Hays' quarterly update call for the 3 months ended 30th June 2020, fourth quarter of FY 'twenty. I'm David Phillips, Head of Investor Relations. I'm here with Paul Venables, Group Finance Director. Before we begin, please be aware that this call is being recorded with the recording accessible using the number and code provided in the release. Please be aware that our discussions may contain forward looking statements that are based on current expectations or beliefs as well as assumptions on future events. There are risk factors which could cause actual results to differ materially from these expressed in or implied by such statements. Hayes disclaims any intention or obligation to revise or update any forward looking statements that have been made on this call, Regardless of whether these statements are effective as a result of new information, future events or otherwise, I will now hand you over to Paul. Thank you, David. Good morning, everybody and thanks for joining us. Before I summarize the key elements of today's updates and take questions, I want to reiterate Alice's comments in the statement regarding the superb response of all of our colleagues of the crisis. The past few months is the same unprecedented peacetime disruption to economies, families and individuals, our priority throughout and remains today to protect our colleagues in all aspects of our business and to continue to deliver excellent service to all of our clients and candidates. We're proud of the efforts and resilience shown by our people in navigating the efforts of this pandemic. I will now review the business performance in the quarter as usual, all net fee growth percentages will be on a like for like basis versus prior year. Key points. Net fees in the quarter declined by 34% with all of our markets greatly impacted by the pandemic. Net net fees were down 26% and permed down 44 term. The magnitude of the overall decline in fees to date is comparable to the 2089 financial crisis but the speed of decline was much greater, occurring over a period of 6 weeks versus the 7 months in 2008. That said, after falling sharply in March April, net fees were broadly sequentially stable in May June. I'd highlight the following key features in the results. 1, conditions in each region were extremely tough. That said, fees in AMZ, the USA and Asia, performed slightly better than the group average, with the UK and parts of Continental Europe hit harder. At the specialism level, IT, which represent 29% of group net fees in the quarter was relatively resilient with fees only down 17%. The group's periodic cost base was reduced by 21 percent from GBP 73,000,000 pre COVID to GBP 58,000,000 as we exited the quarter. This was driven by variable and discretionary costs being significantly below normal levels, clearly exacerbated by the fact that all of our were in lockdown for large parts of the quarter and also by group headcount down 9% in the quarter. Additionally, on 30th June, 18% of our group employees were either in job support schemes, short time working arrangements, or had voluntary reduced their pay, including senior managers. And also given current conditions, the executive directors have agreed that no FY 'twenty bonuses will be paid to them or members of the management board. 3. While we'll continue to tightly manage our costs, we expect our periodic cost base to increase as we enter FY 2021. We will incur more normal levels of operating and employer costs as normal working practices begin to resume the job support arrangements end and as we reversed the voluntary pay reductions. 4, since lockdown started, our business continuity was seamless. As colleagues transition to remote working in a matter of days. And today, excluding the UK, 85% of our offices are currently open, and we are working under a hybrid model. And 5, cash performance was excellent and we ended the quarter with GBP 365,000,000 net cash, excluding the GBP 120,000,000 of short term deferrals of tax payments This performance and our equity raise of $196,000,000 in April puts Faves in a very strong financial position. I'll now comment on the performance in each division in more detail. Australia and New Zealand. Net fees in Australia and New Zealand declined by 28%, While market conditions were very difficult, the Australian lockdown restrictions were relatively less impactful on our business than elsewhere, especially on construction sites, 10 fees, which represented 80% of our ANZ business showed relative resilience and declined 18% helped by some significant short term COVID related business wins and perm decreased by 52%. Public sector fees fell by 22% and private sector by 31%. Our Australian business also net fees down 20 percent in New South Wales and Victoria, together 52% of our Australian business, fees fell by 35% 31%, respectively, Queen from decreased by 27% while Western Australia fell 16% and ACT 12%. And at the Australian Specialism level, CMP, our largest business, declined by 34%, while office support and accounts in finance personnel by 48%. IT was relatively resilient than 13% as was our larger client haystack solution business down 4%. Our New Zealand, which is 4% of our employees had a more severe lockdown in Australia and fell 42%. Consult headcount in ANZ decreased 13% in the quarter and by 20% year on year. Germany. Fees in Germany decreased by 33% heavily impacted by the pandemic and specifically by underutilization in our 10 business. Business confidence remains low overall, particularly in the manufacturing and automotive sectors, although other sectors such as IT And Life Sciences are showing clear signs of stability. Our contracting business, which represents 70% of German fees, and where we operate a freelance model was relatively resilient and declined by 12%. Most assignments were able to continue under remote working. In contrast, Kemp, where we employ workers as required in the German law and has a greater exposure to automotive and manufacturing sectors and this was significantly weaker and fees declined by 72%. There were 3 main drivers of the fee decline, First, our average camp volumes reduced by 22% as less new projects were started across the quarter as clients tightly control costs. 2nd, as many clients closed their workplaces due to the lockdown, there was historically low utilization of temp workers with many assignments impacted. This led to reduction in billable hours and thus reduced net fees of GBP 6,800,000 or 30% year on year. Which was net of government support on the German short time working scheme. And third, given the significantly reduced level of demand from our client, of a tough market outlook, we took the decision to release 420 tanks and incurred a GBP 4,300,000 of severance costs which further reduced net fees by 20% year on year. Finally, perm fees fell by 29%. Moving on to Specialisms, IT, our largest nationalism, which represented 47% of German net fees decreased by 23%. Engineering, our 2nd largest best is in the 20 percent of net fees, was much tougher and fell by 52%, impacted by the temp effects noted earlier. Life Sciences performed much better and declined by 12%. Our German Public Sector business now 15% of fees were formed relatively well and decreased by 13%, while the private sector was down 36%. And consultant headcount decreased by 6% in the quarter and by 12% versus prior year. And finally, as we briefly mentioned at the interims, in Q3, we restructured our German business Our new organizational structure provides greater regional focus on the SME sector, on Mittelstand, alongside a dedicated division focused on our large corporate account clients. As part of this process, we've rationalized the management structure in Germany, and we will include an exceptional charge to the related restructuring costs in our FY 2020 results. UK and Ireland. UK and Ireland, which represented 21% of the group, enjoyed extremely tough market conditions and net fees decreased by 42%. The private sector, which is 68% of the business, fell by 46% Public Sector was less impacted down 30%. Our temp business 70% of UK and Ireland fees declined by 30% whilst perm was even more difficult than 58%. All regions traded broadly in line with the overall business, although London, our largest UK region, slightly outperformed, down 37% whilst the northwest declined by 53%. The HTS business was less impacted and declined by 28%. And our Irish business, which is 4% of UK and Ireland fees, decreased by 44%. Across our largest specialists, IT performed well, down 9% However, accounting, finance and office support, support, both fell by 53%, while CMP declined by 51%. But life sciences boosted by some COVID related contracts grew an excellent 25%. Consult headcount decreased by 7% in the quarter, and by 6% year on year. Rest of the World. In our largest division of Rest of the World, which consists of 20 eight countries, Net fees declined by 31%. And perm, which comprises 61% of divisional fees fell 39% whilst 10th decreased by 13%. Europe ex Germany decreased by 32%, our largest rest of world country, France declined 44% as in Belgium, while Spain declined 47%. Switzerland performed very well with fees of 6% while Poland also fared better down 14%. In the Americas, net fees decreased by 30% at USA, the largest rest of the world country, fell 18% with relative strength in IT, partially offsetting very difficult conditions in construction property. Canada was tougher down 45% as was left in America down 51%. And in Asia, fees decreased by 28%, our 2 largest Asian markets went to China in were down $33.29, respectively, although we did see improvement through the quarter in China and all of our offices have reopened. Malaysia had a superb quarter up an excellent 23%. And overall consultant headcount in the division was down 10% in the quarter and 8% year on year. Cash flow and balance sheet, we ended the period with net cash of GBP 365,000,000, excluding GBP 120,000,000 of net short term deferrals of tax payments This was driven by strong cash generation, including GBP 110,000,000 inflow due to the partial unwind of the 10 tray data book, and a strong performance by our credit control teams throughout the world, which reduced better days to 34 days to 30 35 days last year. On the second of April 2020, we raised GBP 196,000,000 via an equity raise with heavy participation from our long term shareholders and we are highly grateful for their support. Our considerable financial strength underpins our strategy and gives us significant confidence for the future. Despite heavily in certain markets. The avoidance of doubt, which is unlikely that the board will resume dividend payments FY 2020, But looking forward, we remain conscious of the importance of our dividends to shareholders and will look to return paying dividends as soon as it is appropriate. And finally, during the quarter, we were admitted into the Bank of England's uncommitted CCFS scheme. This scheme has provided great support to UK PSE However, I'm pleased to say that based on current forecast, we are highly unlikely to utilize this facility. And of course, this is in addition to our 210,000,000 revolving credit facility, which runs through 2024. Current trading and guidance. In addition to the comments I made at the start, I would highlight 5 further points. The group traded at broadly breakeven level through the fourth quarter. And we expect full year operating profit before exceptional items to be in the 1,000,000 to 1,000,000 range. Additionally, as I mentioned earlier, we expect to incur exceptional costs, both in the restructuring of our German business and other such programs and also as we perform our normal year end reviews of items such as goodwill and acquisitions. Secondly, we estimate the group's net fee exit rate was in line with the level of fee decline for the quarter overall. And while current activity levels have improved, we've seen no signs yet of positive fee momentum. 3, as I stated at the beginning of the call, While we will continue to closely control and monitor our costs, we expect our periodic cost base to increase as we enter FY 2021. The combination of cost increases and continued tough market conditions mean that we anticipate being modestly loss making over Q1 FY21. The return to profitability thereafter will require a sequential increase in fees, which in the early phase of recovery should deliver a very high rate of incremental profit drop through or we have recently completed a strategic return to growth review of each division and agreed significant accelerated investment projects in attractive structural growth markets including IT and large corporate accounts. We are confident that these investment projects would accelerate our medium term growth and position us to take market share. After taking this investment into account, we may well be modestly loss making in the first half of FY 2021. And 5, although currency translation has no impact on like for like net fees in the quarter, exchange rate movements will remain to your sensitivity to the group's reported results. In conclusion, this has been a very tough quarter and the most challenging work environment I've ever faced. On behalf of our board, I'd like to express again our collective thanks to our shareholders, colleagues, and other stakeholders for their deep support and commitments. The combination of our significant financial strength, highly experienced management teams and leading market positions gives us confidence for the future despite the many uncertainties ahead. I will now hand The first question comes from Rory McKenzie from UBS. Please go ahead. Good morning, all. It's Rory here. 3 for me, please. Firstly, I appreciate there's a lag from client activity to your fees. Would May, June, stable overall Did you see any evidence of improving net fees in any countries or regions? I guess a follow on to that. The second question you had a a net feed drag from releasing temps in the q 4. Shouldn't we expect more drags in, the Q1 of the current financial year? Those two first please. And Rory, just one clear on the second one, is that a generic question across the board or specific to Germany? Specifically in Germany, given that's what you called out in the same year. Okay. So So I guess there's kind of 2 related positives, Arthur. The first is that we would draw this sequentially stable across May June. If we thought there'd been any material changes in trends across this, we would have raised them in here, but as it is June, for example, was exactly in line with the overall fee part. Clearly, it's a regional level, for example, Asia, was slightly worse in June, simply because as most people will know, it was coming out of its original lockdown. And as we came across March. And therefore, April was a bit better that some of those markets went back into lockdown as we went through May into June. But again, I think from a materiality standpoint, it's not that significant. And then I guess on the other side of it, Europe, certainly Europe ex Germany, and performed slightly better as we went across June, but no real material trends there. And on the activity, look, there's kind of 2 or 3 separate things here. First of all, Activity levels have remained reasonably strong across the lockdown phase. Clearly, all of our guys and girls are working incredibly hard on talking to candidates and clients. And whilst activity trends have picked up as we've gone across June, modestly, most of the markets. It's unclear to me yet when those will convert into fees, Rory, and I think there's 2 or 3 things in the back of my mind. Clearly, the benefits of having done this job for, you know, more than 14 years now. The first part of it, I think, is for a lot of clients who perhaps didn't didn't do any hiring in that early phase of recovery. What it's hard to tell you is some of the activity we've got at the moment is that just filling the urgent jobs? I mean, is that going to be sustainably on period of time. And then secondly, of course, I'm very conscious as in every year that we normally see a slowdown in activities as we go across Europe, And, you know, specifically in places like France and Spain, you know, activity levels tend to reduce, we lose visibility. So My positives are fees are stable and activities a bit higher, but it's too early to see that converting into fees. And on the 10th part of it, look, I think the positive, is, of course, that most of our clients operational sites have opened our opening. It doesn't mean that in the automotive sector, of course, that all of the car manufacturers have restarted all of their operations. Quite a lot of it is on a phased basis. Without a doubt, we've had some of the worst idle time across this period of time. And you've seen that in the reduction of billable hours. And I expect the reduction in billable hours to continue into certainly for the next 3 to 6 months because I don't think at clients are going to bring that full utilization of everybody. At the moment, we've still got about 500 temps who are on the bench and who are inactive. And we have about 6 hundred taps who are working part time. So there are some hours, and then we have 2 and a half 1000 attempts that are working fully. So certainly in a better position at the end of June than we were in the middle of May. What it's too early to tell is as clients return to work Now do they then look across their activity levels and determine what their temps what temps they need going forward? So I think we'll have more uncertainty over the next couple of quarters. But instinctively, I think we've we've certainly had we've had the worst month so far But from a magnitude standpoint, kind of the, you know, the $6,800,000 and the $4,300,000, we may well have similar numbers over the next 6 months. So I think we've had the worst, but I still think there's some uncertainty. And what's fascinating, of course, is when you compare temp and contracting in Germany, The contracting part of it is, is an interesting situation because fees down 12%, that is actually better than the than the volume, volume declined by a bit more than that, but contractors who were all able to work remotely primarily in the IT space you know, all of them were pretty much required by our clients, and that's continued as is. Where I think with temps, whilst they're still highly paid our average ten burns about 80,000 a year, if they work for a full year, I think, I think that's going to be a more gradual recovery because As I said, most of the manufacturing and car plants are only bringing back part of their activity. So I think we've had the worst quarter but I think we may have a similar magnitude over the next 6 months, but time will tell. Yeah. Thank you. Yeah. That's helpful. And then just a final question was on the investment projects you mentioned. We lost you, Rory. Hopefully not. Jose, are we still on? Sorry about that. Roy, you can continue now. We lost it, Morgan. I'm afraid. That's alright. No worries. I'll have it go again. So the final question, we're just on the investment projects. Can you talk more about what scale and form they will take, and how you assess payback given the obviously difficult outlook in in general? I I don't think we're really focused on payback, Rory. I mean, I think one of the benefits, that we've got such an experienced management team that, you know, Alastair and myself have been running the business now for the last 13, 14 years. If we know our business incredibly well, we've done the markets very well. And you can see across all of these results that IT's been, you know, from the large specialists, our best performing specialists. And so you know, we are we are very determined that in our tenure that we will become the largest global IT recruiter, we're probably already the largest quoted global IT recruiter, but of course, there's some big U. S. Businesses, and we're determined to invest in that market. So a lot of this is effectively increasing head cancer investment, it's moving, it's headcount that we would have let go otherwise. It's increasing headcount in the IT Specialism. It's increasing management. It's also in our corporate account business adding a lot more account managers, because what we have seen certainly in all of the work we've done in Germany and the U. S. Over the last few years that we've got lots of opportunities. So we finished that work. We're talking in the region of £20,000,000 worth of revenue investment, in FY 2021. And I think one of the benefits of strong financial position that we're in is that we can use that firepower and and deploy that. So this is not really focusing on what is the returning in FY 2021. That's of limited interest. What it is making sure is, you know, almost ahead of market stabilizing that we position ourselves really well So when markets do stabilize, we can be very aggressive in our, in our fee growth, and that can drive fee growth in FY 'twenty two and FY 'twenty three. So the investment is in a number of regions and specialisms across the world. Alastair, when we come to the August results presentation, well, we'll take everybody through this in detail, but mainly it's in it, it's in our large corporate accounts. It's in life sciences, and it's aimed around most of our major businesses: Australia, Germany, UK, love very large investment in the U. S. And I think that's the benefit of the financial strength we're in. Great. Thank you very much. The next question comes from Hans Clojers from Kepler. Please go ahead. Yes, good morning gentlemen. You pointed out that also you're expecting some restructuring cost you already mentioned there were various costs for Germany. Of course, you can imagine that from the goodwill side, you still, of course, have to do all the calculations Could you give could you give some more, let's say, detail on what level of restructuring costs do you expect excluding goodwill impairments? Yes. So look, I think we're expecting 2 exceptional items. The first is restructuring that's predominantly in Germany, where we've incurred about £13,000,000 worth of costs. We expect that to return, give us annual returns of about 10,000,000 a year and course, we were we we we actually did all that work in hand times in in February. The timing was quite good because it was all completed by the end of February and therefore ahead of going into COVID. And on top, as you will expect that we've, you know, we've also looked at all management positions around the world and some additional costs. So I would expect in total, we're going to have a restructuring exceptional cost in the region of GBP 20,000,000. And then I think we're done. So we're not expecting to have anything further in FY 2021. Certainly, anything else will be modest. We finished all of that work. We've been very busy over May June. And then secondly, for those of you that are active readers of our annual report, you will have seen over kind of 2 over the last 4 years. We've raised that we've had limited headroom over our u on goodwill on our US acquisition. You know, RIM's kind of perverse situation. We've got a great business. We're very proud of it. It was performing incredibly well going into the pandemic. It's done well during it because we think good slug of that business now is in construction properly. That's a difficult market. And therefore, we are up to lead the term. We've got a strong management team who are impressed very heavily in don't want to as the CFO. To feel hamstrung in the amount of investment we do, this is also justifying the goodwill on our balance sheet, of course, you've always got to be looking at returns you're going to get over the next 2 or 3 years. And therefore, similarly, we're expected to do a goodwill write down in the region of 1,000,000. And I think the purpose of that is that removes any concern then of goodwill going forward where we will keep 1,000,000 on the sheet, but it enables us to do all of the right things in building a large US business. I mean, if you actually look at the numbers across this quarter, which is why I got my tongue tied earlier on, The US was our 4th largest business, in this quarter, and we're determined with the strong team we've got to really put some rocket fuel behind it. And And just getting rid of the goodwill means we can do all the right things going forward, and it's a kind of an opportune time to do it this year. So hopefully that gives you, the answers you wanted. Yes. One follow-up question on the investments here. Well, you mentioned, let's say, a group like IT and large accounts, but also any specific countries where you expect invest more in the coming quarters? Yeah, the main, look, we're really putting this is material. This is outside of the normal investment that a country will do. So this is Material Group Financial Firepower and therefore it's going to be in our countries that move the dials. And most of the investment will be, in the U S, in Australia, in Germany, in the UK, and in France, but also we've got a lovely Asian business, and we want a bigger one. And therefore, there will be investment in Japan and in China, specifically we've got a great business in the multinational market at the moment that we're determined to crack the domestic market, and we need more investments in that space. But again, Alastair will cover this in detail. I'm sure David will enjoy doing a few slides for him for the, for the August presentation. Okay. And then maybe one last question from my side. Looking at headcount, it reduced by 9% in Q4. What's your expectation for Q1 or maybe or maybe H1 of the coming fiscal year? Yeah. We're trying to get the balance right. I think the same with every other business, we're trying to protect as many jobs as possible. A number of the markets we've kind of adjusted where we want to get to and it's in the right position. We got a bit of more work to go in, in the next quarter. So absolutely, I expect our headcount to to go down further in the next quarter, but I think we've done most of the adjustments. So certainly any further reduction will be less than, than we've done over the quarter. Okay. Thank you. The next question comes from Anvesh Agarwal from Morgan Stanley. Please go ahead. Hi, good morning. I got a couple of questions. First, just on the cost base, and as you're guiding that it's going to increase from where the current levels are. But when we sort of compare or in your budgeting, when you look at FY21 versus FY20, we should sort of still assume that on a sort of full year basis, given the revenue or net fee situation, you'll still be sort of able to bring that down. Obviously, it will increase from a monthly cost level where it is right now, but on a full year basis, it should sort of still be as it has been in the previous cycle. And second, it's slightly backward looking, but sort of when you when you look at when we look at your net cash position and then the derace you've done. It's clearly you don't need that money right now, but so sort of if you can just give us some indication of what are what are your plans to use the cash that is sitting on the balance sheet apart from some of the investments you have flagged? Yes, look, on the cost base side, it started it. Amish, I would actually look to be in a position next year that our cost base is higher than it was across this year because that would suggest that our fees are revalued very strongly, but that's not what I'm expecting. So Clearly, what we were trying to get over is, yes, we've got feasibility, but all of us know that a lot of businesses have been helped, not just our own work that we've done, on our own cost base and our own headcount. But we've also had this kind of strange situation where every single office around the world for large part for this quarter has been locked. And nobody can travel or see anybody. So you have an artificial reduction in your cost base, which is unsustainable. Clearly, going forward, very tight cost control, and that's, you know, a last part of my job. We will be very tight on cost control. We will reduce headcount a bit further. That's kind of all all in saying all we were trying to get over is on a monthly basis, if we kind of been breakeven across this quarter, we are expecting to see our cost base. Absolute leveling costs increased by, you know, when you get rid of all the government schemes, which have been worth about $3,000,000 a month to us, and you get and you're going back to a more normal cost base and things like incentives and everything else, I think we're expecting to see a net increase in our cost base of something like 5000000 a month. And that will be after we've, reduced our headcount. So and that's kind of why I got into part, we're going to be modestly loss making over this quarter. Then the real key part is is what do we is there any fee rebound in September or October? Because traditionally, things quite another summer, you then get a large rebound in and we're in this year more than most, you would hope that we would get up, but for obvious reasons, we have to be very uncertain. So what we don't want to do though, and I think this is where the coming onto your second one is really useful. I think what we don't sorry, and on that part of it, look, in this initial bounce back, outside of what we're doing on the growth stuff, we'd expect to take a good 75 percent plus of any fee increase to the bottom line. So I mean, we've done that over the past, we'll do it again. But one of the benefits of having such a strong cash position is that we can sustain some operational losses if they're the right thing to have. And therefore, we're trying to get this balance right between maintaining muscle in our business, keeping all as many of the good consultants as possible, and using them to accelerate A growth in targeted areas that we want to do. And then B, as hopefully, the market returns to some growth to really attack those market quite aggressively, and the financial firepower enables us to do that. And then I guess moving on to whether, you know, we have too much cash any time will tell. Quite frankly, you know, a week ago, we're in this kind of luxury position where pretty much all of our offices outside the UK were open. Sitting here today with every office in the U. S. Closed with every office in Victoria closed. So the one thing we know is there's a lot of certainty that's going to come over the next 6 months, year, 2 years. We are in an incredibly strong financial position. That gives us lots of options both to organically invest But also at the right point, we turn to paying suitable levels of dividend. And, you know, we will, in discussions with our shareholders, we will set out our dividend policy this year, and, you know, one of the benefits of having cash is that we can return to that before, but also the other bit is we're not hamstrung in any capital investment we need your revenue investment. And I think that's a good position to be. And just to be clear, when you said that the net increase of around 5,000,000, that is excluding of the 20,000,000 of the investment you are planning over and above. Correct. Yeah. Correct. And that's why I shifted at the end to say, look, If from a simple trading standpoint, we would have been loss making for, you know, modestly loss making in the first quarter. I think when you add the investment on top, It's quite possible that we'll be modestly loss making for the 1st 6 months. Clearly, the unknown is will we get any meaningful sequential increase in fees. Personally, I think the next 6 months will have a quite modest recovery because I think most companies will be waiting until after the summer. And of course, the risk is unless they see a pickup in demand in their business, then they decide to wait into the next financial year ambition. They want to make a positive at the moment for the whole of this crisis. We've had very measured discussions with all of our major clients around the world, but The nice position we're in is that rather than wait for recovery to have happened and then to start to invest, we can actually take some preemptive decisions we're trying more of a headcount and attack a number of markets so that we're really in a very strong position to drive growth when when markets start to return to growth. We have no questions coming through Perfect then. So if that's All the questions for today, we'd like to thank you again for joining the call. I look forward to speaking throughout our next 20 results on 27th August 2020. And of course, as always, should anybody have any follow-up questions, David Charles and myself are available to take your calls? For the rest of the Thank you for joining today's call. You may now disconnect. Hosts. Please stay on the line and away for further instruction.