Good day, ladies and gentlemen, and welcome to the Healthcare Services Group, Inc. 2013 First Quarter Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. The discussion to be held and any schedules incorporated by reference into it will contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are not historical facts but rather are based on current expectations, estimates and projections about our business and industry, our beliefs and assumptions. Words such as believes, anticipates, plans, expects, will, goal and other similar expressions are intended to identify forward-looking statements. The inclusion of forward-looking statements should not be regarded as a representation by us that any of our plans will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Such forward-looking information is also subject to various risks and uncertainties. Such risks and uncertainties include, but are not limited to, risks arising from our providing services exclusively to the healthcare industry, primarily providers of long-term care; credit and collection risks associated with this industry from having several significant clients, who each individually contributed at least 3% with one as high as 6% to our total consolidated revenues in the 3-month ended March 31, 2013; our claims experience related to workers' compensation and general liability insurance; the effects of changes in or interpretations of laws and regulations governing the industry; our workforce and services provided, including state and local regulations pertaining to the taxability of our services; and the risk factors described in our Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2012,…

Yes, thank you, Ally, and thank you, everybody, for joining us. We released our first quarter results yesterday after the close, and we'll be filing our 10-Q during the week of the 23rd. And I guess before we begin, I think anybody who has been on these conference calls before will confirm that Ally just did the best job of reading our cautionary statements in the history of our conference calls. So thank you, Ally. But as we announced last week with preparation of our Proxy Statement, we announced the appointment of Jason Bundick, Corporate Counsel, as Chief Compliance Officer, due the retirement of former Chief Financial and Chief Compliance Officer, Rich Hudson. Before we start, with thanks, we only wish Rich the very best in his retirement. We also announced the retirement from the Board of Directors of Joe McCartney effective after the shareholder meeting in May. Again, after 30 years on the board, we thank Joe for all his hard work and contributions to the Board of Directors during that period of time. If elected, the new slate of board members will be made up of 2/3 outside directors. We also announced the modification of a relations -- our relationship with 2 of our corporate clients, which impacted revenue growth for the quarter, below our historical targets of double digits. Although 2 clients remained -- although the 2 clients remained customers, we reduced the services, and therefore, obviously, the revenue procured from those clients. So with that, I'm going to turn it over to Ted Wahl, and Ted's going to talk about the results in a little more detail.

Thank you, Dan. Revenues for the first quarter of 2013 increased over 5% to nearly $274 million, which reflects the impact of the relationship modifications we made with the 2 corporate clients Dan just described. Q1 of '13 also had one less day of leap year revenue when compared to the prior year's corresponding quarter. Housekeeping and laundry revenue for the quarter grew about 4%. Dining and nutrition was up nearly 9%. Net income for the quarter rose over 74% to $15 million or $0.22 per share compared to $8.6 million or $0.13 per share in the first quarter of 2012. The retroactive reauthorization of the Work Opportunity Tax Credit for 2012 favorably impacted EPS by about $0.02 per share for the quarter. Both net income and earnings per share were company records. Direct cost of services for the quarter came in at 85.8%, which is slightly below our target of 86%. The districts and regions continue to give proper attention to our existing clients and make progress with the new business we added last year by implementing operational changes and getting the jobs on budget in a timely manner. Going forward, our goal is to manage direct cost of services under 86% on a consistent basis and work our way closer to 85% direct cost of services. Selling, general and administrative expense was reported at 7.6% for the quarter, but after removing the impact of the $890,000 gain in the deferred compensation investment accounts held for and by our management people, our actual SG&A was 7.3%. That 7.3% includes about 35 basis points of expense related to the certification of the 2012 WOTC credits. As we discussed in past quarters, SG&A also includes gross receipt taxes paid to states like Ohio, Michigan and Texas, as well as the additional…

[Operator Instructions] Our first question comes from Rob Mains of Stifel. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: One balance sheet question. Notes receivable went up in the quarter. Is that related to the contract restructurings? Or is that something else?

That's -- that really has nothing to do with the 2 clients. We've used the promissory notes before if a client got beyond the terms that we box them into a promissory note, and that's the longer-term portion of one of the clients on some of The notes that we entered into during the course of the quarter. But it has nothing to do with the 2 clients that we modified the services with. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: Okay, because it was up from where it was at year end. I assume I shouldn't read into...

[indiscernible] Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: Pardon me?

It was about $1 million I think [ph] . That's the longer-term portion of the receivable. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: Right. But I shouldn't read into that any kind of trends in terms of client credit?

No. Our credit issues are really still client specific, and when we enter into these notes, it's just a vehicle to enhance the collection efforts. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: And then when you kind of look at revenue growth, obviously, the 2 contracts kind of put you a little bit behind the 8 ball to start the year. But in the past, you've talked about that the dietary division might be able to sort of accelerate growth. Are you still thinking the 10% to 15% long term is the right number? Or are you thinking that we should be -- might that thinking be changing as the year progresses?

No. I mean, internally, that's still our growth target and therefore, externally. But the difference is when you have the impact of these changes, which is highly unusual for us in a quarter, it's just going to take us a couple of quarters to execute to get back to double digits. But if we execute properly, incrementally, the revenue increases should start to bump up. And by the end of the year, we should be back close to double digits. The thing that's constrained our growth mostly has been the development of management people. With the skinny down of services in this case, we really now have a surplus of management people, which will allow us in certain areas that have been impacted by this to grow at a more rapid rate than they would have had they not. But it's going to take us a couple of quarters to continue to execute, add the new business in some areas at a more accelerated pace than we would have otherwise because of the management resources available. And it's -- by the end of the year or the -- certainly, the beginning of 2014, we still expect 10% to 15% to be our target growth rate. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And in the past, you've talked about -- looking at the runway that you've got, particularly in dietary, is something that, that could potentially, positively impact long-term growth rates. Are you still kind of evaluating that, I guess?

Yes. I mean, Rob, I believe our objectives continue to be on the dining side, the higher end of the 10% to 15%. But as we talked about on some of the prior calls, we've digested successfully the expansion in the second half of 2011 and into the first half of 2012. And over the next few months, certainly, our target and what we should be able to grow at the higher end of that range, 20%, 25% some quarters, but that'll depend on the adds and where we decide to geographically layer in the business. I'm not saying it's the easy part, but it's certainly the easier part on the dining and nutrition side is growing that top line and managing the businesses given the depth that we have in our management structure today. Robert M. Mains - Stifel, Nicolaus & Co., Inc., Research Division: Got it. Okay. And then one last question, specifically on the dietary in the quarter, when you look at the new contract adds that you had, roughly what proportion of those are with existing housekeeping clients versus non-housekeeping clients?

It's still the majority continues to be with our existing housekeeping clients.

It's almost all of them.

Our next question comes from Ryan Daniels of William Blair. Ryan Daniels - William Blair & Company L.L.C., Research Division: I want to start with a quick follow-up on the revenue outlook given the contract modifications. Curious if you can give a little bit of color when those took place. Meaning, is that a January 1 type change so that the full impact was seen this quarter? Or did it happen mid-quarter such that we'll see a little bit more slowdown when it kind of fully run rates through the numbers in Q2?

It was really a phase-in. One of the clients was at the beginning of the quarter, and the other client was kind of incrementally adjusted during the course of the quarter. But I'd say the lion's share of the impact is reflected in the first quarter revenue numbers. Ryan Daniels - William Blair & Company L.L.C., Research Division: Okay. That's helpful. And then in the past, you've talked a little bit -- another follow-up question here to Rob about the food services infrastructure and kind of given us updates at the start of the year on the development and ability to kind of ramp that as an initial sale. Can you just give us the latest state of the union on the food services group and how the capacity looks there?

Yes, I mean, it's similar to kind of where we were over the last couple quarters. We continue to have an underutilized dining and nutrition infrastructure at the district and regional level compared to the model that we've successfully implemented in housekeeping and laundry, as well as certain areas in dining and nutrition. So if we're averaging 10 to 12 facilities per district in housekeeping, we're still at that 7 to 8 facilities per district in dining and nutrition. And at the regional level, 4 to 6 districts per region in housekeeping. We're averaging 3 to 4 districts per region in dining and nutrition. So obviously, that's what's allowing us trying to accelerate the growth in dining and nutrition and grow at a faster pace relative to what we've done historically, this underutilized management infrastructure, but it will also benefit the margins going forward. It won't happen in 1 quarter or over a 12-month period, but if we execute properly, by layering in the dining and nutrition business into this existing infrastructure, we'll see over the next 2 to 3 years the margins continue to take up and ultimately, near those of housekeeping and laundry. That's our goal. Ryan Daniels - William Blair & Company L.L.C., Research Division: Okay. That's helpful. And then either Dan or Ted, maybe one final one. Maybe I'm looking at your website too much, but it seems like you've got more material up of late on the hospital market, talking on the dining about your Personal Select and your Classics Café and then a little bit more focused there on the IntelliClean for the hospital services as well. So I'm curious if that's something you've always had. I know you've had a little bit of focused on the hospital market and had some contracts there. Are you pushing that as more of a novel growth opportunity? Or is that just kind of a little bit more marketing focus or description on the website?

You know what it is, Ryan? We've been invited to more RFP situations than we have in the past. So what we've concentrated on doing over the past 12 months was really amalgamating best practices from throughout the country and making sure we have a consistent effort when we are -- when we do have that opportunity to propose on a hospital. But it still continues to be a situation that we're invited to propose rather than us pursuing a hospital in a given market.

And we've always done about 100 or so hospitals, and we've just tried to maybe have more resources available to our people in the field to be able to demonstrate we have that expertise, too. So we're not pigeonholed into only doing the long-term care segment of the healthcare industry but certainly have the ability and resources and the track record to where we can successfully convert our services to hospitals. The difference is somebody else is marketing them the idea, and we're invited in to bid when we're in those marketplaces as opposed to long-term care where we're starting from scratch. Ryan Daniels - William Blair & Company L.L.C., Research Division: Right. And has that become a bigger portion of your growth, then, over the last 12 months? Or is that not yet really manifested with seeing more, I assume, quite larger hospital clients coming in the revenue mix?

I think it's been proportionate to what it's historically been. I think the bigger difference is we've added food service in some of the larger community hospitals and governmentally run hospitals that weren't housekeeping and laundry clients. And that's been different. We've made been invited in the RFP process to bid for the food service and have been pretty successful, where they're not housekeeping and laundry clients, and they don't have the interest for the time being in that. And that's been a little differentiation from our normal approach.

[Operator Instructions] Our next question comes from A.J. Rice of UBS.

A couple of questions. And I got on a couple of minutes late, so I may have missed this if you gave it in your prepared remarks. But has the reworking of the 2 contracts that you guys have been highlighting for the last few weeks led to any other clients coming forward and asking for a change in terms?

No, because really the modifications were, in some cases, mutually dictated depending on the customer and the geography that we transitioned. So this has -- each client, we look at on an individual basis and really, on a facility-by-facility basis. So there was no impact with any of our other customers.

Okay. And then I know long term, the discussion's been around getting the dietary margins up to the level of the housekeeping, and that you've put that out as a long-term goal. Can you comment about what you're seeing in terms of opportunities to get margin leverage on the dietary side and how that'll play out over this year and into next?

I think the best indicator of what we're going to do in the months and years ahead is just what we've done over the past 2 years subsequent to making the investment in the infrastructure and the consistent margin improvement that we've demonstrated. But we'll be filing the Q in a couple of weeks, and it'll be there for everybody to see. But the margins, we will expect to continue to move in a positive direction. And again, ebb and flows quarter-to-quarter is high. We're looking at it more from a year-to-year basis. If we continue to execute and continue to layer in the business successfully into the existing infrastructure, then the margin improvement, the margin expansion both in dining and nutrition and really the company as a whole will continue to benefit. But really, the last 1.5 years, every quarter, the food service margins have continued to improve from the previous years, so we've been on track to, a couple of basis points a quarter, look to improve them until we work our way closer to housekeeping and laundry's margins.

Okay. And then maybe just lastly, I know a lot of the details in the 10-Q, but on the cash flow in the quarter, any comments there on usual items? I saw current liabilities, I guess, was down a little bit year-to-year or at least versus the year end. Anything interesting to highlight on the cash flow statement?

Yes, I think current liabilities specifically is impacted by our -- the cutoff of and the timing of our accrued payroll, so that's really the biggest difference of quarter-to-quarter depending on when the cutoff is. But no, other than that, there was really nothing specific.

Our next question comes from James Terwilliger of Benchmark.

Dan, a couple of quick questions. I've been jumping from some different calls. On the -- so I apologize if this was asked previously. On the accounts receivable, it's kind of trended up here for the quarter and it kind of trended up here in terms of actual dollars. I know your revenue's growing, but in terms of actual dollars, it's kind of trended up here the last, say, since really last 4 or 5 quarters. Do you have a DSO for the quarter? And can you remind me of kind of your target DSO range that you like to run the company at?

Our target DSO rate was always 60 days, but the guys have done a much better job recently. And frankly, we've managed the credit more rigidly than we had the last 5 years, than we had the previous 30 years of the company's existence and frankly, less more buildings for credit issues. They've been able to keep the receivables below 50 days, which if I had a lie detector test 10 years ago, I would assume we'd never get there. So 60 days is our aggregate target, but certainly managing the credit the way we have before has put us in the cash position that we've enjoyed the last 10 years and enabled us to either through the buyback or more recently, the dividend increases, be able to fund it. But 60 days is our general target, but our receivables have been below 50 days for the last few quarters, including this quarter.

Okay, great. Next question, very quickly, as it relates in terms of just customer demand out in the industry. It seems like there's a lot of cross currents, a lot of headwinds. We had the fiscal cliff people were worried about. We've got sequester out of D.C. We've got ObamaCare, which people are talking about. How do you -- can you talk about, in terms of the core customer demand, how is your customer's tone with all these headwinds and crosswinds?

As far as new opportunities, it's always been that no matter what the buzzwords or the overall environment and publicity had been, the operators have never been reimbursed generously enough to where they didn't have to be cost efficient, and it was a lot easier for them to outsource in a cost-efficient way to support service areas rather than the direct patient care areas, our type of services. That's the case today even more so. The tighter they get squeezed, the more they look for outsourcing options of all kinds, including our type of services to be the beneficiary. As far as the impact on the existing clients, it really manifests itself in the credit. And we've always said that we have to manage the credit client by client that good customers in more difficult times still pay their bills, and bad operators even in good times have some issues. So we have to manage the credit the same way we have before no matter what the environment is. but certainly, if we're going to write a scenario for ourselves, the demand for the services has still never been greater.

And really just add to what Dan mentioned, the biggest, the most significant constraint on our growth continues to be our ability to develop the management team that's capable of delivering the services. So all the rhetoric around the operators getting squeezed and tighter Medicare and Medicaid reimbursement considerations, we need to continue to develop the management people and make sure, obviously, the activity is there on the housekeeping and laundry side, and we have the management depth on the dining and nutrition side to turnkey that housekeeping and laundry business.

I'll move to my next question. When you talk about your field employees, are you seeing any type of wage pressure from your field employees at the facility level? Or would you define the wage pressure or any type of wage trends as stable as it relates to your employees at the facility level?

I think it's been stable, but really, it's been dictated by what the client does with its blue-collar workers and our participation and matching of their conditions of employment. So it's never done unilaterally. If the client is in a position where they can't be as generous as they would have otherwise with wage increases, for example, then we're with them shoulder to shoulder. On the other hand, if they determine they have to be more generous with the bump-up to get the kind of staff that they're looking for, then it triggers our pass-through clause, and we give the same increase to our employees but pass the appropriate billing adjustment to the client because that's what we agreed to when we began servicing them.

And lastly, Dan, what -- I know every quarter, you add new customers, and to some degree, you might lose a customer. You might pull the plug on a customer for a payment issue. What is a historical range of, say, customer losses on a quarterly basis? And could you give any more color to these 2 clients where we've reworked the contracts? I know you gave a timing issue. Can you tell us maybe the number of facilities that were involved, even though you maintain this as a customer? Was the revenue shortfall, was it split between food services and housekeeping and laundry and linen? Or was one larger than the other?

I think, first, we've always used 90% as the threshold for acceptable client retention internally, and I'm sure we voiced that in our discussions with the outside world as well. But when you have a base of 3,500 facilities, that means you're going to lose 350 during the course of the year. Primarily, it's not credit that creates our issues. Where we're most at risk is when there's a change in the decision maker who engaged us in the first place. Administrators and directors and nursing change jobs often. If a new administrator comes in and weren't part of bringing us in the first place wanting to put their own imprint on the property, we have to resell them. They don't have the before and after to compare it to, and that's where we're a little bit vulnerable. If one of the clients do an acquisition, a new owner operator comes in that didn't historically outsource and wasn't familiar with us and we're unable to resell them, we're at risk there as well. So the bulk of our losses are typically in that scenario, although the only reason I mention the credit issues, it's because it's different than how we operated 25 years from the company's beginning that we've left, where I think I could count on 1 hand the customers we left the first 25 years. The last 10 years, we've managed the credit much more rigidly with less flexibility for the client. And these particular clients, one of the change -- they're both still clients, and that's what made the issue a little more complicated than it would have been otherwise. One of the clients was predominantly food service, where we're still doing all their housekeeping and laundry and skinny down the food service that we provided that impacted the revenue on the dietary end. And the other client was primarily housekeeping and laundry with a little bit of food service that we skinny down, and we're still doing about 150 of their properties. So we don't like losing one piece of business, so we're not nonchalant about this but put us in a position, and now we have to grow faster to get back to our target of 10% to 15%.

I'm showing no further questions at this time, and I'd like to turn the conference back over to Mr. Dan McCartney, CEO, for any closing remarks.

Okay. Thank you, and thanks, everybody, for joining us today. But now we're well into 2013, we expect to continue to expand our client base, both in housekeeping and laundry, and food service within our historical targets. Food service will be on the higher end because of the capacity of middle-management people that still have a ways to go before they're up to the levels our model calls for. And Housekeeping and Laundry, there's still enough pent-up opportunity and demand for our services, even though it's the bigger piece of our business that we expect to grow. Housekeeping and laundry may be at the lower end of the rate and food service at a higher and, but quarter-to-quarter, that could fluctuate depending on our adds for that period of time. The demand for the services is still as great in both areas as it's ever been, but we have to control our growth and balance the expansion with our ability to manage it. The client satisfaction levels, for us, still are a critical component on how we measure our success rather than trying to outsell our mistakes. The recent expansion in food the last 12 months have gone well, and we've demonstrated that our model not only works, but our guys are executing better quarter-to-quarter, and that'll be reflected in the improved food service margins when the Q comes out like it has been for the past year. The attention on the new business, while keeping track of the old business, is still a balancing act. We'll look to get and keep our direct cost below 86% and over the next few quarters, if we execute properly, work our way closer to 85%. The changes in the tax policies in some of the states that Ted mentioned, as well as being the beneficiary of the various job tax programs that bumped up our SG&A expense a little bit, but were more than offset by the tax benefits, we think the SG&A is going to stay in the 7% and 7.25% range without any deferred comp impact. Our tax provision is going to be in the 35% range, give or take a couple of basis points quarter-to-quarter depending on the hiring impact. In general, our business is still as strong as ever. The demand for both services is greater than we can really do. The constraint is really our ability to continue to have a pipeline and develop management people. We believe we're going to continue to operating on budget consistently going forward as we expand. So overall, these are still very good times for us. Thanks, everybody, for joining us and onward and upward.

Ladies and gentlemen, this does conclude today's conference. You may now disconnect, and have a wonderful day.