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Edited Transcript of III.OQ earnings conference call or presentation 11-Mar-20 1:00pm GMT

Q4 2019 Information Services Group Inc Earnings Call

STAMFORD Mar 27, 2020 (Thomson StreetEvents) -- Edited Transcript of Information Services Group Inc earnings conference call or presentation Wednesday, March 11, 2020 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Barry Holt

Information Services Group, Inc. - Senior Advisor

* David E. Berger

Information Services Group, Inc. - Executive VP & CFO

* Michael P. Connors

Information Services Group, Inc. - Chairman & CEO

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Conference Call Participants

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* Joseph Anthony Gomes

NOBLE Capital Markets, Inc., Research Division - Senior Generalist Analyst

* Marc Frye Riddick

Sidoti & Company, LLC - Business and Consumer Services Analyst

* Marco Andres Rodriguez

Stonegate Capital Markets, Inc., Research Division - Director of Research & Senior Research Analyst

* Vincent Alexander Colicchio

Barrington Research Associates, Inc., Research Division - MD

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to the Information Services Group fourth quarter conference call. Today's conference is being recorded, and a replay will be available on ISG's website within 24 hours.

At this time, for opening remarks and introductions, I would like to turn the conference over to Mr. Barry Holt. Please go ahead, sir.

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Barry Holt, Information Services Group, Inc. - Senior Advisor [2]

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Thank you, operator. Hello and good morning. My name is Barry Holt. I'm a Senior Communications Executive at ISG. I'd like to welcome everyone to ISG's fourth quarter conference call. I'm joined today by Michael Connors, Chairman and Chief Executive Officer; and David Berger, Executive Vice President and Chief Financial Officer.

Before we begin, I'd like to read a forward-looking statement. It is important to note that this communication may contain forward-looking statements, which represent the current expectations and beliefs of the management of ISG concerning future events and their potential effects. These statements are not guarantees of future results and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated.

For a more detailed listing of the risks and other factors that could affect future results, please refer to the forward-looking statement contained in our Form 8-K that was furnished last night to the SEC and the Risk Factors section in ISG's Form 10-K covering full year results. You should also read ISG's annual report on Form 10-K and any other relevant documents, including any amendments or supplements to these documents, filed with the SEC. You will be able to obtain free copies of any of ISG's SEC filings on either ISG's website at www.isg-one.com or the SEC's website at www.sec.gov. ISG undertakes no obligation to update or revise any forward-looking statement to reflect subsequent events or circumstances.

During this call, we will discuss certain non-GAAP financial measures, which ISG believes improves the comparability of the company's financial results between periods and provides for greater transparency of key measures used to evaluate the company's performance. The non-GAAP measures, which we will touch on today, include adjusted EBITDA, adjusted net earnings and the presentation of selected financial data on a constant currency basis. Non-GAAP measures are provided as additional information and should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. For the reconciliation of all non-GAAP measures presented to the most closely applicable GAAP measure, please refer to our current report on Form 8-K, which was filed last night with the SEC.

And now I'd like to turn the call over to Michael Connors, who will be followed by David Berger. Mike?

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [3]

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Thank you, Barry, and good morning, everyone. ISG had a strong fourth quarter with growing profitability, strong cash generation and continued progress in digital.

In the quarter, EBITDA margins rose again to nearly 15% as we delivered $10 million of EBITDA, up 12% year-over-year. This capped a strong second half that saw us achieve our most profitable 6 months ever with record EBITDA of nearly $20 million. Fourth quarter operating income also rose strongly, up 52% to $5 million. Our more profitable mix of client solutions is driving our margin expansion. Revenue from higher-margin digital services was more than 45% of our total in the fourth quarter. For the quarter, revenues were $66 million, a bit lower than projected due to the timing of a few engagements. Among our regions, Asia Pacific returned to double-digit growth, up 15%.

We also continued to invest in the development of our ISG platform for clients. Our first product off this platform is a compliance and third-party risk management product called GovernX 2020 that will add to our subscription-based recurring revenues. GovernX 2020 is now operational and producing results for such blue-chip clients as McDonald's, Carnival, Johnson Controls, Marriott and Abbott. Globally in the quarter, we saw double-digit revenue growth in our insurance and technology industry verticals and our research organization change management and HR tech services.

We finished the year in a very strong financial position. In the fourth quarter, we generated $15 million of cash from operations, allowing us to reduce our debt by a further 10% or $10 million in the quarter. Our strong financial position also allowed us to renegotiate our credit agreement. We were able to reduce our required principal and interest payments by more than $14 million over the next 2 years, freeing up cash for the firm while extending our maturity date to 2025, among other favorable terms. This was a great outcome.

We continue to execute on our strategic plan for growing our ISG Automation asset. This business provides advisory and implementation services to help clients adopt and scale robotic process automation or RPA across the enterprise. We see an opportunity to be a consolidator of advisory businesses in this space and ultimately to unleash the combined value of this business. Although about 10% of our commercial revenues at present, we believe ISG Automation should command a multiple several times that. Given the value we see in this business, we've invested significantly in ISG Automation during the last several months, especially in the U.S., including doubling our sales team and adding additional resources. These investments will have a negative impact of about $1 million in Q1 EBITDA. However, we expect to return to more than double this investment in 2021.

Digital is the new normal for our clients, as more of them shift workloads to the cloud, adopt SaaS solutions, leverage automation and embrace other digital technologies such as data analytics and IoT. This demand is reflected in our digital revenues, which were more than 45% of our total in the fourth quarter.

Now turning to our regions. The Americas delivered $37 million in revenue in the quarter, about $1 million below what we previously expected due to the timing of a few engagements that were pushed into 2020. During the quarter, the region saw good industry growth in our technology and insurance verticals and in our change management, digital services and ISG Research service lines. Key client engagements in the fourth quarter included Nutrien, Humana, IMF, Conduent and CNO.

Among our notable wins in the Americas, ISG expanded its relationship with a major East Coast utility company, adding $1 million engagement to provide technology advisory services for the development of a number of new IT operating models and supplier relationships as well as related change management services. ISG also has been awarded the second phase of a technology change management project worth nearly $7 million for a major agricultural products company. The work, which begins this month, is focused on an SAP 4 HANA (sic) [SAP S/4HANA] implementation impacting over 10,000 employees.

Turning to Europe. Our revenues declined 6% in the quarter as we experienced some softness in Germany. Our pipeline in Europe, however, is robust, and we expect the region to deliver good growth in 2020, including double-digit growth in the U.K. in Q1. In our industry segments in Europe, we saw good growth in our banking, financial services and energy verticals and in our automation and sourcing services. Key client engagements in Europe in the fourth quarter included BASF, Fresenius, TNT Express, BNP Paribas and Ericsson. ISG has been awarded a nearly $1 million engagement by a major German auto manufacturer to support their autonomous driving initiative. ISG will leverage innovative technologies, including artificial intelligence, machine learning and cloud orchestration for this engagement.

ISG has also been awarded 2 additional $1 million engagements in Europe: One, to provide technology advisory services for a large supplier of industrial gases in Germany using our advanced FutureSource process; and the second, to advise a large European bank on network and technology transformation and governance to support their bank 3.0 digital initiative.

Finally, in Asia Pacific, we returned to double-digit growth with revenues up 15% to $5 million. I just returned from a trip to Australia where I met with several clients, including government officials who say the public sector has turned the corner and is spending again. Key clients in the quarter included Rio Tinto, The Australian Taxation Office, the Australian Department of Defence, the Department of Home Affairs, EnergyAustralia and the insurance company IAG. A large mining company has awarded ISG a $2 million technology advisory engagement in the region assisting them with ServiceNow sourcing and integration services and using our proprietary UserX research to ensure supplier excellence.

Turning to our strengthening financial position. As I mentioned earlier, we generated $15 million of cash in the fourth quarter, adding to the nearly $40 million of cash we generated over the last 2 years. With this cash, we paid about $10 million of debt in the fourth quarter and $30 million over the last 2 years. Our strong second half, coupled with our debt-to-EBITDA ratio falling below 3x, allowed us to negotiate a new credit agreement with much more favorable terms. David will provide details shortly.

Now just a few comments on the coronavirus. First of all, our employees are safe and continue to serve our clients. Travel between some of our Asian countries like Singapore and Malaysia and in South Europe such as Italy have been curtailed, with a few of our clients asking us to work off-site. ISG is prepared for this, as we are already a mobile virtual company with over 80% of our people working remotely.

Assessing the impact on our business, we are postponing a few of our ISG events over the next 60 days. And if feasible, our plan is to reschedule them for later in the year. In addition, we could possibly see our clients further limiting the on-site work of our adviser teams, which could impact our account expansion activities. And finally, client decision-making may slow as they grapple with virus-related disruptions to their supply chain and overall business. On the flip side, however, we also have opportunities to help clients, especially in travel and hospitality, with our rapid cost takeout services. And in fact, we have begun a number of these projects already this month.

Now turning to guidance. ISG is positioned for long-term growth with our expanding digital capabilities and portfolio of products and services, including new platform solutions, software subscriptions and recurring revenues. And the automation market remains high. We believe our investment in all things digital, including our ISG platform, will yield strong returns.

We expect good year-over-year growth for 2020. As always, we'll continue to monitor the overall macro environment, including trade, the economic and political climate and the impact of the coronavirus, and are ready to adjust our business plans as conditions may warrant. While these factors may affect the timing of client decision-making, they also present opportunities for our cost optimization services.

Under the current macro conditions, we plan to provide guidance on a quarterly basis in the near term. For the first quarter, we expect strong profitable growth, even with our automation investments and the impact of the coronavirus. We are forecasting EBITDA to increase by approximately 50% year-over-year in the first quarter to about $5 million on revenues of $64 million to $65 million.

So with that, let me turn the call over to David Berger, who will summarize our financial results.

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David E. Berger, Information Services Group, Inc. - Executive VP & CFO [4]

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Thanks, Mike, and good morning, everyone. Revenues for the fourth quarter were $65.5 million compared with $67.9 million in the prior year, a decrease of 2% in constant currency and a decline of 4% on a reported basis. Currency negatively impacted reported revenues by $1 million versus the prior year. Reported revenues were $37.3 million in the Americas, down 2%; $23.2 million in Europe, down 6% in constant currency and down 8% on a reported basis; and $5 million in Asia Pacific, up 15% in constant currency and up 11% on a reported basis. Fourth quarter 2019 adjusted EBITDA was $9.6 million, up 12% compared with $8.6 million in the prior year's fourth quarter.

We reported fourth quarter operating income of $5.1 million, which was up 52% compared with operating income of $3.3 million in the prior year. Net income for the fourth quarter was $2.1 million compared with a net loss of $900,000 in the fourth quarter of 2018. Reported fully diluted earnings per share was $0.04 compared with a fully diluted loss per share of $0.02 for the same period in 2018. Adjusted net income for the 2019 fourth quarter was $4.8 million or $0.10 per share on a fully diluted basis compared with adjusted net income of $2.3 million or $0.05 per share on a fully diluted basis in the prior year's fourth quarter. Consulting utilization for the fourth quarter was 63%. Quarter end head count was 1,287, essentially flat with last quarter, as we continue our own automation and productivity initiatives.

Our balance sheet continues to have the strength and flexibility to support our business over the long term. Net cash provided by operations for the fourth quarter was $14.6 million or $20.4 million for the full year. We paid down $9.6 million of debt in the fourth quarter and $12.3 million for the full year, lowering our debt balance to $87 million. On the balance sheet, we ended the quarter with $18.2 million of cash. We repurchased $500,000 of stock in the fourth quarter and a total of $3.4 million for the full year, within the limit of our credit agreement in place at that time. Our average borrowing rate for the quarter was 5.3%, and we had 47 million shares outstanding as of March 4.

We were pleased to announce yesterday our amended credit agreement with significantly improved terms based on the strength of our last 6 months of performance, which included a gross debt-to-adjusted EBITDA leverage ratio of 2.8x. The main provisions included extending the maturity out 5 years to March 2025; increasing the commitment to $140 million, of which $86 million is term loan and $54 million is revolver, with the latter up $24 million, giving us added flexibility; eliminating restrictions on share buybacks as long as our ratio stays below 3x debt-to-EBITDA; reducing amortization to $4.3 million a year, freeing up significant additional cash; this compares with our previously scheduled amortization of $11 million in 2020 and the $8.3 million of principal we paid in 2019; increasing the required leverage ratio for the term of the loan to 3.25x; and lowering our interest rate by 50 basis points to below 4%.

In terms of modeling for 2020, we are looking at interest expense of between $4 million and $4.5 million for the year, plus an approximately $300,000 noncash write-off of prior bank fees in Q1, a $2 million year-to-year reduction; depreciation expense of between $3 million and $3.5 million; intangible amortization of around $3.5 million; stock compensation expense of about $10 million, the same as the last 2 years; cash taxes of between $5 million and $6 million; capital expenditures of approximately $3 million; and an effective tax rate of 60%.

Mike will now share concluding remarks before we go to Q&A.

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [5]

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Thank you, David. To summarize, building on our second half momentum, we enter 2020 a stronger firm in terms of cash, financials and flexibility. We had one of our most profitable quarters ever in Q4, capping a second half that saw us deliver the best adjusted EBITDA in our history of nearly $20 million. Our Go Digital strategy continues to work with our more profitable digital services representing more than 45% of our firm revenue. We generated $15 million of cash in the quarter, lowered our debt balance by 10% or nearly $10 million. As always, we are focused on creating shareholder value for the long term, and we are steadfast in our mission to deliver operational excellence to our clients.

So thank you very much for calling in this morning, and now let me turn this session over to the operator for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Mr. Joe Gomes with NOBLE Capital.

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Joseph Anthony Gomes, NOBLE Capital Markets, Inc., Research Division - Senior Generalist Analyst [2]

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Just wondering if you might be able to touch on the ISG automation. I know you had set a goal this year to be north of the $30 million revenue range. Is that still what you guys are expecting? Or given some of the headwinds, how do you think that's going to be a little bit lighter this year?

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [3]

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Well, for 2020, we definitely think we will have significant double-digit growth. We are targeting internally to be in and around the $30 million level, and we'll see how the market conditions warrant. But it will certainly be a significant growth. But that is our target.

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Joseph Anthony Gomes, NOBLE Capital Markets, Inc., Research Division - Senior Generalist Analyst [4]

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Okay. Great. And nice work there on the new credit agreement. And you talked in the past about, especially here, again, on the ISG automation and some on the call today, about possibly being a consolidator. And do you guys have a pipeline of acquisitions that you're looking at? I mean how should we think about that in terms of timing?

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [5]

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Yes. So we do have a pipeline of possible acquisitions, both in automation and in some of the other growth areas that we are working on that drive recurring revenue, software, digital areas. So we are looking at those. As always, we're very disciplined in our approach but more news later on those. But we do have a good solid pipeline.

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Joseph Anthony Gomes, NOBLE Capital Markets, Inc., Research Division - Senior Generalist Analyst [6]

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Okay. Great. And then just -- I'll ask one more and then get back in the queue. So your guidance for Q1 is suggesting basically flat year-over-year revenues. Is that kind of all the virus-related this year? Or is there some other parts of the business that are a little bit softer than you guys had expected?

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [7]

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No, it's -- we're being conservative with the virus, frankly. So we have a plan. We know that several of our events were canceling during the first quarter in March. We are anticipating a little bit of a slower decision-making. So we're doing that as our best kind of knowledge for today and trying to be as conservative as we can based on what we know. So that's why we're coming in there. But you'll note that the mix will be better. And thus, the profitability despite that will be higher, much higher than a year ago, at least that's what we think our plan is based on what we know today, Joe.

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Operator [8]

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Our next question comes from Mr. Vincent Colicchio with the Barrington Research.

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Vincent Alexander Colicchio, Barrington Research Associates, Inc., Research Division - MD [9]

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You had mentioned that some engagements were pushed out in the Americas. Could you give us some more color on that and if you expect that to come back?

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [10]

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Yes. So primarily around network and a few automation engagements, were pushed out into, we think, will be the first quarter. I will say that they are slow to get closed. On the network, in particular, we cannot recognize a revenue until we have sign-off. With the virus, I would say there's a little bit of a distraction factor. But it was small. I would say it was in the $1 million kind of arrangements, but we do expect to have all of that revenue. But right now, I don't know if it will end up being closed in Q1 or not.

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Vincent Alexander Colicchio, Barrington Research Associates, Inc., Research Division - MD [11]

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And David, you had mentioned you expect flat head count in Q1 as you continue automation initiatives. Maybe Mike wants to start with this, too. Are you ramping that up? And should we see better productivity going forward? Or am I just looking too far into that?

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [12]

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Well, I think -- first of all, I think the productivity is higher. If you look at the profitability over the last 6 months, we're continuing to utilize our India center of excellence and moving work to India, the client work to India, which is enabling us to improve, if you will, our productivity. And the second aspect of this, Joe, is that the mix that we have with some of our recurring revenue streams and our digital services, which are in higher demand, therefore, we can have a bit more of a premium pricing, if you will, in those areas. Those factors are all included into why the profitability is higher and why we can see more profitability per dollar of revenue.

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Vincent Alexander Colicchio, Barrington Research Associates, Inc., Research Division - MD [13]

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And Mike, you mentioned we've got some cost takeout project opportunities around the virus. How substantial an opportunity is that? Could that be meaningful?

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [14]

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Yes. I think the 3 areas that we see that are the demand -- the high demand that we're being called in right now is travel, hospitality and oil and gas, all 3 hit, as you well know, quite harshly. So they're looking at our rapid cost takeout services that we can help them with. And as I said, we are now deployed in several clients at the moment, executing as quickly as we can with the clients in cost takeout. So we think that will help us as we -- especially when we move into Q2, as enterprise clients are now reacting here in March to what is happening, and we're getting kind of mobilized with the client. So we believe it could help us nicely in Q2.

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Operator [15]

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Our next question comes from Mr. Marc Riddick with Sidoti.

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Marc Frye Riddick, Sidoti & Company, LLC - Business and Consumer Services Analyst [16]

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So I really appreciate all the color around the opportunities that you're seeing and especially the commentary around what you're seeing with the enterprise clients. I was wondering if you could spend a little bit of time -- a lot of the comments, of course, that we've heard from companies are around the avoidance of co-location in order to provide opportunities to avoid the disease spread. I wanted to see if there was any sort of historical examples or some commentary that you might be able to provide as far as the opportunity for future revenue growth generation opportunities from those efforts, if there's something that you could sort of -- to talk about a little bit there.

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [17]

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Well, first of all, from an enterprise client standpoint, some of the work that we have been asked to come in and help is if you think about a lot of the large service and technology providers that have very large employee counts under a roof or under a campus setting like you see in Bangalore and Mumbai, et cetera, and when there is disruption or shutdown, what does that mean for the enterprise client? How will they continue to be able to mobilize, execute against their initiatives, et cetera? And we are working in concert with all the service providers and enterprise clients to minimize business continuity issues.

Now in terms of what it might bring down the road from future, I don't have a good answer for you today on that. But I would say to you that I think many are looking at this as more of a temporary or near-term issue versus some type of a sustainable change in their business structure going forward at this point in time, although it's early. So I don't know that we see that yet, if I can respond that way. I would say on the flip for ISG, we are, in some ways, in a good position because we are a mobile virtual company anyway. That's how we were born that way here. So we have about 80% of our teams that work in a virtual environment or a client environment every day.

So having our work move from, for example, at an enterprise client site to off-site or to remote is very natural for all of our team members. So at least from that standpoint, from an ISG standpoint, it's quite natural, if you will, for us to operate our business that way. But on the enterprise side, that's what we're seeing at the moment.

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Marc Frye Riddick, Sidoti & Company, LLC - Business and Consumer Services Analyst [18]

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Okay. Great. And I was wondering then switching to -- wanted to see if they could -- a little bit of an update around the use of cash priorities. And certainly, it's been a significant progress that you guys have made as far as debt reduction, sort of getting to where you are now. And now that you've kind of -- and then now that you've gotten there with the work that's been done over the last several quarters, so wondering if you could sort of give a bit of an update there as to now that you have a little bit -- well, meaningfully more flexibility than where you were, say, a year ago.

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David E. Berger, Information Services Group, Inc. - Executive VP & CFO [19]

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Yes. Thanks for that. As we indicated, we did generate $15 million in the quarter. We paid down $10 million of debt. In terms of 2020, we would be looking at increasing the amount of share buybacks. As you know, we were limited. Last year, we did $3.4 million. We would see increasing that, and we would see continuing to drive our leverage ratio down to around 2.5x and then as Mike indicated, evaluate some of these opportunities, acquisition opportunities in the pipeline.

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Marc Frye Riddick, Sidoti & Company, LLC - Business and Consumer Services Analyst [20]

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And then one last thing for me. So you made mention as far as what you're looking at with events, which is certainly understandable. I was wondering if you could just sort of -- just a quick reminder as to maybe the timing of events during the course of the year and sort of how that flows through. Because I think you had more -- a few more scheduled this year than last year. So I was wondering if you could just touch on what we should look for there.

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [21]

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Yes. So we had approximately -- I think it was 19 or 20 events in 2019. We had planned on that being in the 25 range this year. And they are scattered relatively evenly, relatively evenly across the quarters through the course of the year. So what we're looking at, at the moment is the balance of March and April, where we're going to postpone what we had on the schedule. And our plan at the moment is we're going to retain what we have May going forward, pending how this evolves and unfolds over the next month. If it stays in this kind of environment, then we would likely move our May events as well. But we don't need to make that call at the moment. But that's kind of how our events roll out.

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Operator [22]

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Our next question comes from Mr. Marco Rodriguez with Stonegate Capital Markets.

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Marco Andres Rodriguez, Stonegate Capital Markets, Inc., Research Division - Director of Research & Senior Research Analyst [23]

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I have a couple of quick follow-ups. First off, on the ISG Automation business, what was the revenue run rate you guys exited in Q4 at?

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [24]

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We are not communicating the exact number, but the overall revenue is in or around 10% of our revenue.

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Marco Andres Rodriguez, Stonegate Capital Markets, Inc., Research Division - Director of Research & Senior Research Analyst [25]

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Got you. And the -- I was wondering if maybe you could help frame a little bit more the timing of hitting that $30 million kind of revenue run rate goal. Or is this more kind of a second half or do you think it's a Q4 fiscal '20 type event?

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [26]

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We currently have -- our plan would be to exit 2020 with a $3 million. That's the current plan. We'll see how the market conditions warrant and the speed, but it will be a significant growth this year.

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Marco Andres Rodriguez, Stonegate Capital Markets, Inc., Research Division - Director of Research & Senior Research Analyst [27]

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Got it. Then in terms of your guidance, I just wanted to clarify something here for Q1. Adjusted EBITDA at about $5 million, if I'm remembering correctly, but I do recall hearing some investments that you'll be making in Q1 as well that will, I guess, kind of act as a $1 million headwind. So is that inclusive of -- your $5 million guidance is inclusive of that additional investment? Or is that something that will bring that down?

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [28]

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Yes. No, Marco, that is inclusive. And without the investment, of course, that number, we would have had it higher. But we did spend some money, and we think it will be prudent. But that is inclusive.

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Marco Andres Rodriguez, Stonegate Capital Markets, Inc., Research Division - Director of Research & Senior Research Analyst [29]

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Got you. Okay. And then lastly, just kind of wondering if you could help frame a little bit better, and I know this is difficult, just your overall general sense of fiscal '20 growth. You guys have obviously said that you're looking for some growth in fiscal '20 on the revenue side. Obviously, a lot of unknowns right now with the coronavirus' impact here. Are you kind of thinking the growth might be a little bit more muted first half just in terms of the impact of the coronavirus? Or are there some other thoughts you have around how that growth kind of plays out through fiscal '20?

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [30]

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Well, of course, we're moving this in real time, Marco. But the answer is, of course, the early half is going to be a little slower than the back half with the virus. So I think the answer is, we would see acceleration as we go through the year. Q2, we have good plans, good growth plans in Q2. We have to see how the environment and will adjust accordingly. So we're not giving the full year guidance only because I think there's a little bit too much unknowns, but we do have growth plans in place. But I would expect the acceleration certainly to be greater in the second half than the first half because of the virus.

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Marco Andres Rodriguez, Stonegate Capital Markets, Inc., Research Division - Director of Research & Senior Research Analyst [31]

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Got it. And last question, if I might. Just in terms of the acquisition landscape for you guys. Is your anticipation or are you leaning more towards the smaller kind of bolt-on acquisitions that you can maybe deploy just cash? Or are you thinking of more type of transformational, Alsbridge-type acquisitions there?

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [32]

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Well, we have -- we always have 2 streams going, Marco. One is what we call our string of pearls approach, which are the bolt-on, using cash and an earn-out concept that we've been very successful at in the past. And then the second stream, of course, is we're always in the market if there is a transformational deal that makes sense. And so both of those are always on the table for us.

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Operator [33]

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Speakers, at this time, we have no other questioners in the queue.

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Michael P. Connors, Information Services Group, Inc. - Chairman & CEO [34]

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Yes. Sorry. Well, let me just close by saying thank you to all of our professionals worldwide for their both individual and collective contributions in writing the chapters in our growth story and for the strides that they are making on behalf of the road ahead and working through this coronavirus with our enterprise clients in the weeks ahead. And thanks to all of you on the call for your continued support and confidence in our firm. So have a great day.

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Operator [35]

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Thank you. Ladies and gentlemen, that concludes the Information Services Group fourth quarter conference call. You may disconnect your phone lines, and thank you for joining us this morning.