FCN
#I don't have the exact forecast in front of me.
Maybe someone could dig this out.
But let me just say a couple of things about that more conceptually.
First of all, the goal of having all of our businesses be growth engines, means that ---+ growth engines will typically at least have 5% growth in headcount a year.
And if you look at the businesses which we said were positioned to be growth engines as of now, we talked about in that way earlier this year, you'll see the numbers are much higher.
My sense is that Corp Fin, E-Con, strat-com ---+ those businesses average closer to 10% headcount growth, than they do 5%, or at least in the middle of that.
And over a couple of years even higher, I think crop-fin might be up close to 25% over two years.
Which is probably not sustainable, but is this measure of, when you have the businesses positioned ---+ we have the ability to attract great people, and when you have a business positioned and you go after it, it happens.
The issue is, as we have been sequentially working through businesses, and figuring out where we have a right to win, it's meant we've cut back other places.
So if you looked at strat-com, which has grown a lot over the last year, and the first year, actually looked like it did not grow it headcount at all, and that was because we were investing some places, like Brussels and some places, and we were exiting other places.
And so you look at things and see net headcount zero, or down in certain sub-parts while you're doing that focus.
And that's what we've been going through this year with tech and some parts of FLC.
And so I think the three parts of the business which we have thought we had got fundamentally to a good place, are well on that way, and well north of 5%, I think if you look at the numbers year on year, and will be at the end of the year.
The issue is how much corrective action had to take place in some of the other places.
And how much does that drag.
And it is the net of those that will affect the end of the year numbers.
You know, and if you remember, FLC you know we exited 85 people in a business in Brazil.
We took some overhead actions, and some actions in various overseas places, and then we've had all of these movements that we have been doing in tech.
My view was earlier, not withstanding all of that, the net of that would come out in the mid-single digits.
I was targeting 5% at the end of the year.
Whether our current forecast is 3.8% or 5.2% I don't know, but probably somebody could get back to you on that if we disclose at that level.
But it still mid-single digits for this year.
There is no hold on that at this point.
I put temporary hold on it while <UNK> was getting on board just so that I would not make all sorts of decisions, that he then said, what the heck did you do, <UNK>.
But we don't make any commitments as to when we are going to use that.
If you think about this company's history, we've done a lot of share repurchases and in retrospect, we did it at market peaks, and you know ---+ what I'm trying to do with this company, is cumulate enough cash that we can take advantage of lots of things in the marketplace.
If ever the stock fell out of favor you want to have cash.
I remember starting this company and the company had just bought back stock at $0.42 and shortly after, the stock was then at $0.29 and I wanted to go buy back shares and we did not have any money to buy back shares.
I said but four weeks before I joined you bought it back at $0.42.
And they said, so what's your point.
I mean, we are never get into the situation.
But also, I think the cash ---+ we have been very careful about acquisitions.
My sense is great acquisitions come along when they come along.
I always want to have the cash available for great acquisitions when we have it.
So we are not ---+ one of the things that happens in professional services firms is ---+ sorry, a little philosophy ---+ if you look at industrial companies they are flush with cash when the markets are booming, and that's when they do their acquisitions.
And then when the markets are in troughs, nobody has any money to do acquisitions.
We are never going to do that.
I want to have cash available to be opportunistic on share repurchases, acquisitions, when the time is right.
And we have moved this company into that position.
The balance sheet of this company I think is never been as strong, and I don't know that there are very many stronger ones in this industry.
So we have no constraints, no artificial blockage, on share repurchases, but nor are we making any specific commitments as to timing on any of that.
Does that at least address your question.
Great.
Do we have any other questions.
The number I always use is net.
On gross, we add a lot of people.
In professional services there is always turnover, right.
I don't know many professional services firms that don't have, you know, 15% turnover in a given year or whatever.
So if you're going to grow X you have to grow 15 plus X; so it was net.
So I don't know where the 3% number comes from, so let me answer the question conceptually.
All right.
I think it is a good question.
We will always have ongoing pruning which is day-to-day stuff.
We will also always have some businesses where we made bets, where we thought they would work, and have some fix agendas.
So the notion of saying, we are not hitting our head count needs because of fix agendas, is, if used universally is not an appropriate thing to do.
I think the way to think about this though, is in the last two years, what we have done is done a systematic move that, I don't think we have ever done in this company, in a business-by-business, sub-business by sub-business, turning over each business, and saying where do we really have the right to win in strat-com.
Which subparts of it are we betting on.
Which subparts are we retreating from.
Where do we have the right to win in each of the other businesses.
And that systematic process as we have gone business by business, has led to, in my experience, a bigger set of resets both positively and negatively than you would do on an ongoing basis.
And so when I exclude Brazil, I do it because that is a consequence of a more systematic process that hadn't been done in this company for a long period of time.
Going forward, I think if it's normal routine attrition, when we're saying each business should be headcount for growth, net of all that we ought to be growing headcount 5% or more, even including all those things.
Did I address your question, <UNK>.
<UNK>, we don't break it down to that level of granularity, I'm afraid.
But you can see, that if you look at the year-to-date, you can see the technology, the e-con, the corporate finance, which are the big engines doing quite well.
And you can see that the technology side and some of the FLC sides, not as much.
And that is, virtue of some of those situations which we have addressed.
That is a good question.
And it is one that I'm having active discussion with internally.
So, look, we'll give you updates as we always do, we will give you updates as any material strategic changes occur.
It obviously can't take four years before you sign new contracts, or else you're kidding yourself, right.
That's just not the way professional services work.
We have some people pretty focused on it, and there's a lot of interest in the market, to be honest, at this very point in time.
So we'll figure out the right way in the normal course of updates to keep you guys informed.
Good morning, <UNK>.
Are you a Cubs guy.
Good luck.
If there is more technical answer, I will let <UNK> ---+ but that's going to stay as one reporting segment, at this point.
We're not going to be breaking those out at this point.
The answer there, the opportunity there is to expand our market opportunity by allowing us to use channel partners as well.
It is a future [stake].
It probably wasn't universal but it was broad-based.
It was very broad-based.
We just had, and I think it just happens sometimes, you had a lot of stuff end; some of it we expected, some of it we did not expect.
Sometimes litigation ends abruptly, usually because of good things for your client.
But we had a bunch of stuff end, and then if people have been working as hard as they were in the first half of the year, and it happens to be July and August, people don't necessarily return phone calls.
They sort of say, can we meet in three weeks after I take my vacation.
So we always have lots of vacations in July and August, but we had a lot of vacations in July and August.
So it was pretty broad ---+ widespread.
It was just more than I expected.
But we had good pipeline of work and people kept reassuring me that September would be better.
And I was like, alright, is August going to be better.
And so August was better.
It was not fabulous, but it was better.
So then you get reassured.
And then September actually has been good, but it was pretty widespread.
It wasn't like one spike.
I'm not sure it was worse in 3Q than it was in 2Q.
Here's the thing, I think we have good leadership in that group at this point, who is really focused on the right stuff.
It's actually probably the most bonded leadership team.
It's not a big of a partner group in there, it's probably 20 partners, maybe 25.
And they're all focused on the right stuff at this point in time.
I think they're heading in the right direction.
Part of your question was, do I think it's where I want it to be now.
No.
Do I believe it will be there pretty soon.
Yes.
They are working on the right stuff.
And I think that's the same thing for some of the other sub-parts of FLC that were lagging.
That's why I believe, this FLC as a whole, will be returned to being a contributor to organic growth beginning next year, because I think the weakest parts we have really good attention on.
And the good parts ---+ it works.
It's interesting, I took a look at a chunk of North America, where I think we are so strong.
And I looked at how many headcount we had added over the last two years, and it was 100 heads ---+ billable heads.
And I looked at what our revenue per billable person was, in that part from two years ago and this year, and we added 100 heads to that sub-part.
And the revenue per billable head changed $1.00 a year.
For that sub-part ---+ maybe I shouldn't say the exact numbers.
When we add headcount behind the right set of professionals, in the right markets, it just continues to grow the business.
And maybe there's a six-month delay, or maybe you get a headwind but it works.
It's a matter, sometimes we've had some positions where we've been not focused on realistically assessing how strong or weak we are in doing the things that we needed to.
And I think we now have management focused on that.
Some places you wish had it happened a little earlier, but I think we have management focused on that everyplace.
And I that's why I have the confidence that we're going to have all the businesses turned into a sustainable engine for growth beginning next year.
Did I address your question, <UNK>.
I don't know that specifically, I will let <UNK> think about this.
My experience is that you don't have the full effect in the third quarter, because you don't have that many ---+ the third quarter is July, August, September.
You don't typically have the new hires from campus starting in July.
They usually start in September.
Now the lateral hires can start pretty evenly through.
And those tend to be more expensive people, the sheer numbers, the numbers are usually in the third quarter, the numbers are mostly the campus hires and those usually come in September.
It's about half-and-half, and your characterization in terms of the months is correct.
Well good.
Thank you very much.
Just to reiterate where we were.
I think the quarter actually came in very much where we expected, and we are reaffirming guidance.
I think the more important issue is the progress we're making on all of these businesses, and I'm excited about that.
And as some of your questions point out, we are not through all the fix agendas, but we are not that far away either.
And it does not mean we will not have fix agendas in businesses going forward, you always do.
But this first systematic walk though all of our businesses.
I think we're near completion.
And when you look at the places where we have completed it, and the trajectory they have and the confidence that the people have, as we heard in the town hall, or where you see in the results.
It's fun.
And sometimes this business can be pretty fun, so thank you very much your time and attention and your support.
Have a good day.
