ALJ Regional Holdings, Inc. (NASDAQ:ALJJ) Q4 2019 Earnings Conference Call - Final Transcript

Jan 16, 2020 • 04:30 pm ET

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ALJ Regional Holdings, Inc. (NASDAQ:ALJJ) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Our first question is from Eric Moore [Phonetic], a Private Investor. Please go ahead.

Analyst
Eric Moore

Hey, how is it going, Brian?

Executive
Brian Hartman

Good.

Analyst
Eric Moore

Good. Hey, I was just wondering if you can talk a little bit more about the kind of the footfalls from the Faneuil side of things and how they relate specifically to the, call it, $18 million we spent building out new call centers?

Executive
Brian Hartman

On the $18 million of new call centers, two or three new ones put in, there was an incremental 1,200-plus seats added from the existing call centers that we left. And then that volume of seats has been filled, so we built it -- we've sourced new contracts, added the seats, got new customers from it. So we feel good that we've made the right choice. The incremental $18.5 million itself will pay off over time, but it brought us customers like Humana, Enterprise and a few other large, reputable -- large customers that we didn't have before that are more marquee nameplate in a sense.

With regard to some of the Faneuil quarterly issues that we had this time, we did have one contract that we talked about previously that we're in wind down with them, and we'll be ending that in the end of March and early April, where we provided them notice of termination. That one had a significant loss in the quarter. We've also included that there were two other contracts that we've talked about in the past as well, one related to the Vertex acquisition, that was a loss. Since the Vertex acquisition, we've actually restructured that, and we're in the final process of getting the contract signed for that to where that will go from a loss to an income item, which would be great in turning things around. And then we're also in -- with the third contract, we're in discussions here to change the actual pricing of the contract. So we're trying to go back to basics and look at each of the contracts, make sure that we have the right pricing, the right KPIs in place and the right structure to take what's been holding us back for some time and now to sort of shed that -- those losses and turn those into profitable contracts or exit them at the right time.

Analyst
Eric Moore

So it sounds like none of the, I mean, we're restructuring three contracts, losing one. So it sounds like the $18 million, it's not as if we just spent that and we haven't filled up the -- that we don't have a bunch of excess capacity, I guess, is the right way to say it?

Executive
Brian Hartman

No, we've been great in filling. I mean, the ones in Wichita is fully sold out, one in Orlando fully sold out and the one in Sacramento, California is almost all sold out. And during the peak season, it's just about there. We had a press release recently about a facility in Albuquerque, New Mexico, that was