Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Brian Ruttenbur – Morgan Keegan.
Brian Ruttenbur – Morgan Keegan
First question I have is about the cash flow in the quarter. It appears just by you giving us the cash and debt that you had a negative about $15.7 million of cash generation. Is that correct, or am I missing something?
John Lamson
No, I think you may have missed something.
Brian Ruttenbur – Morgan Keegan
All right, help me out. From last quarter your debt and cash, at least what I had written down and I may have a mistake in there, but tell me about cash generation in the quarter and what happened there.
John Lamson
For the quarter, the cash provided from operations was $12.9 million, and our CapEx was $5.9 million. So that gives us free cash flow of about $7 million.
Now our debt went up because we paid out $23 million for acquisitions during the quarter, not new acquisitions, but we bought the remaining minority shareholder interest in Lead Click and we had a earn out payment on the Electronic Discovery business. But free cash flow from operations was $7 million.
Brian Ruttenbur – Morgan Keegan
Gross margins going forward, should they be at these levels? It looks like a year over year comparison your gross margins are down significantly. Is this the level we should be looking for over the next couple of quarters, low to mid fifties?
John Lamson
I think what happened this quarter was because we had the large surge in revenue in our Data Services business on the E-Advertising business, and that's as we've discussed a lower operating and gross margin business, so I think historically our gross margins have been running in the fourth quarter of '08 we were 62% almost and in the first quarter we're about 71.5% and this quarter we're about 57% gross margins. I think what you'll see us getting back to is the low 60's range.
Brian Ruttenbur – Morgan Keegan
You mean in the next couple of quarters?
John Lamson
Yes, throughout the remainder of the year.
Brian Ruttenbur – Morgan Keegan
Revenue and earnings, are they sustainable at these levels? First quarter levels I know first quarter was tough economically but can you maintain these levels or better of both revenue and earnings with the cost cuts you've implemented?
Anand Nallathambi
I think by and large we see some upside opportunities in some areas like we talked about. In Employer Services, even though we feel like there's economic reports indicating it worsening trend in the short term before things get better, we have seen a couple of major wins which means that market share is kind of shifting amongst traditional creditors.
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