Q3 2020 Atlas Technical Consultants Inc Earnings Call
Greetings and welcome to the <unk> West, Texas Technical consultants third quarter Twentytwenty earnings call at this.
This time, all participants are in listen only mode a brief.
Just a question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host David <unk> Chief Financial Officer. Please go ahead.
Thank you for joining our third quarter Twentytwenty conference call.
We hope that you have seen our earnings release issued after the market close today.
No. We have also posted a presentation in support of this call, which can be found in the investors section of our website at one outlet dot com.
Before we begin I would like to remind you that today's call may include forward looking statements.
Any statements, describing our beliefs goals plans strategies expectations projections forecasts and assumptions our forward looking statements.
Please note that the Companys actual results may differ from those anticipated by such forward looking statements right variety of reasons, many of which are beyond our control.
Please see our recent filings with the Securities and Exchange Commission, which identify the principal risks and uncertainties that could affect our business prospects and future results.
We assume no obligation to update publicly any forward looking statements. In addition, we will be discussing while providing certain non-GAAP financial measures today, including.
Adjusted EBITDA and adjusted EBITDA margin.
Please see our release and filings for reconciliation of these non-GAAP measures.
To their most directly comparable GAAP measure.
Moving to our agenda on slide three.
I'm joined today by our Chief Executive Officer, Joe Boyer, who will run through our business overview and operating update.
I will follow with a discussion of our financials and our improved outlook before we open up the call for questions. At this point I will turn it over to Joe to pick up on slide four.
Good afternoon, and thank you for joining us.
As this pin debit continues I hope you and your families are staying safe and healthy.
I would also like to again recognize the Atlas team and thank each and every one of them.
10 year commitment and dedication and the challenges of these past several months.
The safety of our employees and surrounding communities remains our top priority. It continues to guide our operating strategy.
So moving to slide five please.
Our third quarter results reinforce our excitement about our purpose built business that result in Atlas Deanna resilient leader Nondiscretionary compliance driven infrastructure services.
Our strong third quarter results were in line with our expectations and showed a continuation of positive market momentum since mid year as well as super execution by the entire Atlas team.
We produced gross revenue of 120.5 million with stronger revenues, our infrastructure focus business.
Weighting of our business towards the Sunshine State and our transportation focused or drive the combined benefit from rapidly grow in states that are not only increase in their infrastructure spending but also outsourcing more work.
These mission critical services in this end market allowed us to partially offset the impact of COVID-19 related disruptions that are private sector work.
Our net revenue performance in excess of 80% of our gross revenues continues to demonstrate the success of our strategy of self perform in more work and cross selling all of our services across our plant network.
The higher mix of self performance provides margin enhancing opportunities to our business.
Along with tight management of staff utilization and quick implementation of overhead controls, we were able to generate $19 million of adjusted EBITDA at a margin over 19% of net revenue.
All of these favorable trends support our improved 2020 adjusted EBITDA outlook.
Our M&A pipeline remains strong and we're executing on our de leveraging M&A strategy as an acquirer of choice.
Our three announced acquisitions this year add to our geographic and service line expansion.
More importantly, the deals are accretive to our earnings is structured in a way that reduces net leverage on our balance sheet.
This de leveraging benefit is important to us because we're very focused on improving our capital structure.
We took a major step down that path with our recently announced warrant exchange tender offer which will produce a substantial increase in the free float of our stock. Upon completion later this month.
Now turning to the current market landscape can I, please refer to slide six.
We are pleased with the resiliency and performance of our business during these times.
As I mentioned earlier, the nature of our mission critical services as well as our end market mix has allowed Atlas to respond very well to the COVID-19 complexities.
Our government based business, particularly in our transportation work showed growth over the prior year period.
We expect this trend to continue and to help offset the pressure points in our private sector work.
Were inconsistent shelter in place orders throughout the U.S. and commercial project impacts have slowed the timing of some work.
The impact of shutdowns is most pronounced in the northeast and northern California resulted in delays in our commercial sector.
On a more positive note previously delayed projects are increasingly starting or resuming work and we are seeing sequential quarterly improvements in our revenue trends.
It is important to note that we have not experienced material project or contract cancellations.
And we have Fortunately continue to win projects in both the commercial and government sectors.
I'll expand on that point move into backlog and key project wins on slide seven please.
We've had another solid quarter of winning our share of projects and contracts throughout our regions.
Demand conditions continue to remain strong.
Capello by regulatory compliance driven essential services.
As well as the upward trend, but municipalities and state agencies outsourcing program management and other quality assurance services to private companies like Atlas.
In addition, with approximately half of our business in government base due to our long term client relationships, we see stability and predictability in our revenue streams throughout these complex times.
We've provided a summary of a few select wins over the quarter.
Two key tenets of our organic growth strategy are providing more services to existing clients and pursuing larger projects.
Which we define as projects that are greater than 5 million in revenue.
Our growing scale, and becoming a public company or helping on both fronts.
When that county in Georgia has been our customer for more than 30 years and in September they selected us for 7 million dollar contract to.
Provide comprehensive transportation program management services.
Which is renewable for an additional four years.
During the quarter. We also continue to win environmental service projects, which represent a sizable portion of our work.
In August Engineering News record magazine named Atlas among the top 10 firms and the environmental management market segment as measured by revenues in compliance due diligence audits and information technology in the environmental space.
Overall, we continue to take advantage of our strong qualifications, our national scale and up the resources to continue to win more marquee projects in contract awards, which are added to our record backlog of 638 million, including 29 million for the recently.
Completed acquisition about the Vista.
Backlog now represents roughly 140% coverage or guided gross revenue for 2020.
Moving to slide eight please.
In addition to organic momentum, we also continue to execute accretive and tuck in acquisitions that deepen our technical capabilities and expand our client base, while also de leveraging our balance sheet.
Our acquisition of long engineering to February is performing well and ahead of budget, while also helping us to expand transportation services into Alabama and Georgia.
In September we were pleased to close our acquisition of Alta Vista, expanding the size and the scale of our transportation services in California.
Initial integration is progressing very well and we couldn't be more excited to officially welcome. These high quality professionals to the Atlas family.
Our definitive agreement to acquire West test is poised to add another solid leading regional firms to further strengthen our transportation infrastructure services in our central region.
All three of these acquisitions possess the key elements of what we're looking for in our M&A strategy.
Their infrastructure focus with a range of highly technical services to drive high margin recurring revenue.
The sellers have all roll considerable equity and Atlas they haven't powered their tendered workforce to drive outsize growth on our scalable platform.
We are extremely confident we have the right strategy in place to continue our growth trajectory.
As we integrate these complementary business, we are increasing our ability to cross sell more services and self perform or work through expanded technical capabilities.
We accomplished that I educated all of our technical resources door Atlas type of organization, which we refer to as our ATM.
Our ATM aligns up our technical capabilities I discipline throughout the company and then matches that the regional leads to ensure that we are effectively cross selling our wider service mix.
Assess further amplified our customer relationships and there are few peers of our scale and service capabilities in the end markets that we're focused and.
We remain confident that the underlying earnings power of Atlas remains unchanged. We are aggressively continuing our strategy of growing this business organically and through de leveraging acquisitions that expand our technical service offerings and geographic footprint with a focus on those states benefit from increased government.
Infrastructure spending.
But they let me turn it back to you. Please.
Thanks, Joe.
Good afternoon, everyone.
I'm very pleased to be speaking to you today about our third quarter results, which reflects solid momentum in our business and continued optimization of all facets of our operations.
Gross revenue of 120.5 million was down 6% compared.
Compared to the prior year quarter.
There are several takeaways in relation to that or.
Formats first the non discretionary mission critical nature of our services was again evident in transportation and infrastructure, where revenue continued to increase compared to the prior year.
Second.
Private sector work demand strengthened as the quarter progressed.
While business disruptions from COVID-19, certainly remain a headwind for our business and our private sector work, especially in the northeast and in Northern California. We are encouraged that our business is showing ongoing improvement across our geographies and end mark.
Yes.
Moving to net revenue.
We generated approximately $98 million, which represented an increase of 81.2% of gross revenues and nearly three percentage point improvement from where we were just a year ago.
This shows a continuation of positive results in our strategy to cross sell and self perform more services.
Our highly variable cost structure allowed us to align our resources with estimated project timing, which helped us to counteract the revenue shortage and maintain strong labor utilization levels during the quarter.
Together with the benefits of our previously implemented cost measures, we were able to deliver adjusted EBITDA of $19 million this quarter, representing 19.4% of net revenue.
On a year to date basis, the benefit of our self perform efforts variable cost structure and cost savings actions are even more evident.
The first nine months of 2020 compared to 2019, we delivered adjusted EBITDA at 47.2 million at a margin of 16.9%.
This margin held with the prior year period, despite lower revenue, which reinforces the inherent strength of our business model.
I'll now move to our capital structure and deployment on slide 10.
We have implemented a multiyear plan to streamline and optimize our capital structure of our organization to support our growth objectives through both organic enhancement and de leveraging M&A.
A disciplined cash management protocols put in place at the outset of coal bed have continued to generate working capital improvement and strong operating cash flow.
During the quarter, we generated $16 million of operating cash flow.
Excluding onetime cash expenses related to our public company formation acquisitions, and COVID-19, we've generated $60 million of operating cash flow over the past 12 months.
This represents approximately 92% of adjusted EBITDA over that same time Kerry.
As Joe mentioned M&A plays a key role in our de leveraging strategy.
Our acquisitions have typically been funded with roughly half cash and half stock and involve some form of earn out over a two to three year period that aligns with our overall growth expectations.
Our acquisitions of Orthovisc and West test fit this mold.
They are not only great additions to our platform.
Lets structured with a combination of cash and stock to be quickly accretive and de leveraging.
We will continue to fund future acquisitions in this manner and we have the capacity to continue doing so.
We remain committed to getting our net leverage down to three times, while at the same time continuing to grow our business.
We are also looking at taking direct actions to provide maximum financial flexibility and to create additional value for our shareholders.
In October we announced a warrant exchange tender offer which is expected to close on November 16.
Any shares not tendered during the exchange window will be converted to a 10% discount.
Accordingly, the 4.4 million shares that are expected to be issued in exchange for the warrants are a great step forward towards meaningfully expanding our publicly tradable shares.
Moving to our full year outlook on slide 11.
Our third quarter and year to date results put us on track to deliver on our full year 2020 performance expectations.
The trajectory of our end markets continue to move in the right direction.
With government based work expected to be positive year over year.
And in the private sector, we expect sequential volume improvement into the fourth quarter.
Based on the strength of our backlog, we are providing an improved full year outlook for adjusted EBITDA.
Which we now expect to be in the range of $61 million to $64 million.
This reflects a 3 million dollar a 5% improvement in the low end of our prior range of $58 million to $64 million.
With our updated visibility and the timing of work. We are also tightening our revenue outlook to a range of $455 million to $462 million.
The resulting improvement in our adjusted EBITDA margin versus our prior outlook reflects improving logistics operating efficiency.
And utilization, allowing us to scale, our resources as local economies get better.
Our full year outlook implies fourth quarter revenues and adjusted EBITDA advancing back towards pretend down at quarterly performance levels.
Turning to our strategic growth trajectory on slide 12.
Our company is rapidly scaled in recent years through both organic growth and accretive acquisitions, we expect to continue our strategy of growing the business organically and through accretive and de leveraging acquisitions, especially those likely to benefit from increased government infrastructure spending.
With $638 million of backlog and improving end market fundamentals, we are confident in our ability to deliver on our 2020 objectives and.
And to answer 2021 with solid momentum behind us.
Thank you and I'll turn the call back to John for closing remarks on slide 13.
Thank you David I appreciate it.
We believe our performance as demonstrated the exceptional resilience of our business model.
We have delivered outstanding performance in a safe manner, as we position ourselves to capitalize on the nation's continuing economic recovery.
We have a proven business model that has produced strong margin performance and record company backlog and extremely difficult market conditions.
We are encouraged by the reliability of our recurring services throughout our diverse end markets, particularly in our government based business.
We're still working through COVID-19, complexities, which is primarily in our private sector work.
We believe we have rebounded from the bottom of the cobot induced downturn and we expect to exit the year with our volume of work back to near prior year levels.
The forward momentum or business has allowed us to advance our growth strategy through organic cross selling as well as accretive deleverage in acquisitions to drive improved returns.
We will continue to focus on our strategy of keeping our people safe and.
I'm working hard to further optimize our capital structure as we drive additional value for shareholders and to 2021.
So again, thank you for joining us.
Operator, we can now open up the lines for Q and a.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad a confirmation total indicate your line is in the question queue. You May Press Star two if you like to remove your question from the queue for.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
Our first question comes from Kathryn Thompson with Thompson Research. Please go ahead.
Hi, Thank you for taking my questions today.
The first focusing on the government that a square it could you give a little bit more color in particular, that's driving greater demand.
Separating those local and municipal work versus federal work and if you could give a little bit more color by geography. It there are certain geographies that are outperforming relative to others.
Thanks, Catherine this is Joe.
Both the state and local market and transportation markets have been strong markets for us.
Which have performed really well during cobot and also during economic downturns in the past. So you know as we see those markets our transportation business, we see as a growth business for us and going forward in the fourth quarter.
As well as the 2021 in regards to.
The state and municipal markets.
You know that business has been obviously, a little bit of a a tighter budget concern I think that it's a business that is strong the business that we're watching carefully.
We're we're optimistic on the business I relationships tell us that at all of those markets, although they've seen a little bit of a squeeze in a budgets, we do anticipate them.
Still performing well going forward, so I'm not giving up on on that market as well I think act geography wise, we're still favoring loved the Sunshine State states that are really being proactive and.
I'm finding ways to manage their infrastructure spend being creative and and and how their funding. There. There there are gaps not waiting on federal spending so states like Texas, Georgia, and California, we like going up in the southeast the love DC, Maryland markets as well, Colorado doing well so for US we still see try.
Expectation as a big growth area for us going forward.
Hope that helps okay Yep Yep could you flesh out more color on the Alta Vista a acquisition in terms of government work and how does this asset fit into that portfolio and the strategic traction company.
Sure, where Alta Vista has been on our target list for a long time horizon, absolutely great business solid regional player technical expert in the field of transportation.
Transportation market markets Bridge inspection work specialist belt.
Vessel inspection Brown bridges so.
Well, we like that business for us in the market. It allows us to get into the transportation space in California at market has really been predominantly a commercial market force and transportation. So.
The growth, so and add an optimist and will allow us to grow and in California into the transportation space as well as a New York City as well so both of those areas transportation, our strategic fits to our business and from a really strong player.
Okay, how we're at California operations impacted by the wildfires and Q3 and it did have a greater relative impact to your private or public and market focused operations.
So you know we we obviously have seen some minor impact from the wildfires on the on the West coast, and it's probably a little bit of an impact on both private and public as well just from the disruption of services in that marketplace I wouldn't say, it's substantial you know, it's probably a hub.
You know small impact maybe a you know a five or 10% impact on on Northern California is probably my estimation, but a a sense since rolled back and and our services or are just about up to speed not not quite to pre cobot levels, but but doing fairly well and increasing.
And are these did well is it private versus public habits better relative impact.
Yep.
Probably more of a of a commercial and private impact and I'd say commercial but I'm just thinking about the you know just the disruption to the general General population out there with you know with the Hasan Pires out there as well, but probably more of a private impact than commercial I mean, sorry than than government.
Okay on the private side, what end markets or geography saw greater relative sequential movement and prevent me I understand you pointed to geography said it had more extended locked down.
But and other areas that.
Maybe getting back to a little bit more normal.
What markets are improving and places tell you about the economy about future demand.
Yeah Catherine Good afternoon. This is David I'll take that one.
And you know we've spoken about the impacts to a greater New York or business in the northeast and we've spoken about the impacts and.
Northern California, those would be the areas that we saw solid rebounds in the third quarter I would say northern California minus the fires that we just discussed.
Is basically back ramped up to you know near pre co bid levels, New York City, we still got a bit of an extended Paul there I mean, Europe as well as you as well as everybody sort of aware about the migration from New York City, So that's going to take a bit more time.
I with the addition of I will mention with the addition of Altavista total portfolio and the strength they bring in the transportation infrastructure side of the business now to New York City, that's kinda contribute made to the acceleration of the rebound we see there.
Cannot let me add just a little bit on your question on future demand I think.
You know we are.
Cautiously optimistic on the commercial markets.
Markets, we're not giving up on that market space, we see growth and you know our environmental business that area is the strategies there, but also in the commercial space the growth in data centers, obviously logistics communications as a as an area for growth in that business as well as we believe our due diligence services rebound.
It's pretty nicely in this quarter and into 2021 as well as the pipes as the financial markets have recovered. So those areas that we like not to mention as we mentioned before transportation still an area we like for growth.
Okay, and then on guidance or maybe.
Maybe give a little bit more details on the assumptions that.
Specifically point to further sequential improvement private sector work, it's just more geographic or is it just more of a broad economic.
What are the signs sauflon and how much relative improvement I think so far as we hadn't hadn't to that clarity here.
Yeah, great Catherine Thank you so.
Let's talk about just I guess I'll start broadly on it. So we did revise our guidance we've tightened our projection around volume.
For the reasons, we discussed we're seeing sort of broad improvements, particularly in northern California, and New York.
We we generally have better economic visibility at this point following an improved third quarter from the second quarter.
Our backlog levels continue to increase another new record at 638 million. So it's got strong visibility of the timing of our work into year end.
You know I'd say the ongoing resilience were seeing in our <unk> government business.
Along with steady project execution that we've delivered and the operating efficiency of the business and utilization levels reached new highs in the third quarter couple of out with a.
Follow through on the cost measures that we enacted.
On it put us in a good place to to round out.
Your guidance for the year and actually bump it up a bit and of course, we have off the vista coming in to the third quarter, which is also reflected in that raised EBITDA guidance.
Okay Perfect and then just final point on all purpose I know you may not.
Comment on specific assets and has held to profitability, but it.
When you look at say.
EBITDA margin.
And this quarter versus a year ago.
You see some definite improvement is often that are more in line with.
Current EBITDA margin.
Or is it a type of there's some additional improvement as you integrate into Atlas network.
And that may be.
It absolutely does yeah. So obviously, we look to acquire good solid businesses and Alta Vista fits squarely with that their margins are consistent with where the business is operating now that being said the more we scale this business.
And benefit from our operating leverage we're going to be able to continue to expand our bottom line and EBITDA margins.
Okay, great. Thank you for taking my question Paul.
Sure. Thanks, Kathryn now.
Next question, Rob Brown Lake Street Capital markets. Please go ahead.
Hi, Dave.
Hey, Rob Hey, Rob.
On the quarter in a tough environment.
I think you said appreciate it guys. Thank you.
Yeah, I think you said coming out of the year, you expect to be sort of near pre cobot levels is that is that really a comment on the commercial side of the market coming back and I guess this follows from that.
Coming out of Kinda downturns do you see some pent up demand come through that that accelerates things or does it resume more of a normalized situation and then grow from there.
Yeah, Great question, Rob So.
I would say the largest component of it is sort of a re ramp on the private side of our business. That's kinda assorted ride. The continued improvement we see a into yearend. However, you know the.
Government related side of our business.
Continues to really perform well so we expect strong performance into yearend as we move into next year.
And.
Beyond that we see our backlog continuing to expand.
So three quarters in a row of this year, we set new record levels on on backlog.
So yeah, I believe there's a little bit of a pent up demand there and with a coverage ratio of 130%.
We feel pretty good about going into next year, we still are seeing a little bit of a delay on the lending side of work that we're bidding our pub pipeline currently is high it's larger than it's ever been so the opportunities are there it's taken a little bit more time for our customers to try and the awards around.
So again qualify and everything from a problem at standpoint, assuming we don't see something material second wave, we do expect momentum in improvement going into next year.
Okay, great. Thank you and then given the acquisition pipeline now that you've got.
This next set sort of sort of in the fold what what's your thinking on.
Further acquisitions sort of timing and maybe.
Thank you.
Right.
Yeah, Rob I think as you know, we did announced the signing of definitive agreement with West test and that that acquisition is expected to close in the fourth quarter should be soon this month here, so that will really help us in our transportation.
And then CMT space and services in Colorado, as well, so a great great opportunity for US there with a really solid company as well so continuing what that pipeline. We have several opportunities that are in different stages along the.
M&A process, obviously, not going to be able to disclose much more than that but our pipeline looks really really strong. We still have that you know geographic focus on on on on areas of population growth positive infrastructure spend is high so we're looking for for farms in that space. So there's the market.
It's highly fragmented I see lots of runway for growth.
Continuing with our with our proven model and our strategy of buying these businesses as.
As well as being accretive and de leveraging to our balance sheet. So.
Nice opportunities in front of us.
Okay, great. Thank you I'll turn it over.
Next question comes from Brent Thielman with D.A. Davidson. Please go ahead.
Yeah, great. Thanks.
Maybe following up on that question how critical is that you said.
You're looking at M&A, they maintain their sort of 50 50.
Public private exposure going forward.
Well.
Well I I will tell you Brent that that we have seen that that move a little bit last year, our our government sector business was a little bit smaller.
Smaller than our commercial business, we have seen it grow into where it is now about 50 50.
That has been a growing business for us and continue to grow as well as their engineering services, so that will likely.
Be improving overtime I think in regards to.
Yeah, our M&A activities, obviously transportation is just a a business that is proven to be really resilient and has really grown for us. There are these really challenging cobot time. So it is a real growth area for us. It will it will continue to be our focus particularly in the <unk>.
Sunshine states than in those states that are really active infrastructure spend so if we can get to the you know the the winter in our sales from a from a federal perspective in a an infrastructure bill that would be even better for us. So it is a market that we like and will continue to be a focus for us certainly the near term.
Yes and.
And you mentioned pretty pretty strong pipeline, there Joe I guess.
Question is no I think it's a little more certainty some to be returning to the market or the economy hopefully here.
They have the conversation picked up more from where you stood a few months ago trimmed the dialogue with and.
And these potential targets.
Yeah, Brent I think I talked a little bit about this last quarter. So you know in in Q2, there seem to be a slow down period for that for that initial period in late March through through May where really no conversations are happening people were really focused in on their existing businesses just because of the unknowns right. So since then it.
Really has picked it quite that we have we haven't seen a lot of disruption.
In our pipeline conversations are ongoing now pretty regularly and as if.
I should say is a potent didnt happen, but certainly it's not that big of a focus as it was in the past, it's we're sort of getting on the next side of that so.
It's really a strong and our pipeline looks strong and I feel good about continuing on a growth trajectory through the model that we've employed.
Yep got it David there's there's lingering sort of cobot business disruption costs I think was in that six to 7 million.
Or within that.
It does sort of fade away here in the fourth quarter is going to be some of that.
And that 10 years old.
Yeah, So actually brand if you look at the Cove it related costs right a little over 3 million year to date, just to clarify clarify that piece, but.
Again with the qualifier that we don't see any sort of re ramp with a second wave yeah. We wouldn't expect to have anything going as we move out into and out of the fourth quarter.
Got it.
Maybe maybe one more as another way to ask about your visibility in the next year and your backlog is obviously.
Very strong some deals contributed to that can you just talk a little bit about.
The visibility you have going into the new year.
No at this time of the year here in November so relative to where you were in the last couple of years, how you frame that up for.
Maybe just one or organic basis.
How.
How do you feel like you've got visibility in into the next year and relative to where you yeah Brent.
Thank you. So again first of all just reinforcing the point from backlog coverage standpoint, we're continuing to see that improve as you know our backlog level improves by in any given year, we'll start a year with somewhere between 60% to 65% of our plan year end backlog.
We're working through our annual budgeting right now so I'll be looking forward to talking more precisely about this on our next quarter call, but if anything I would say based on our strategic focus going into next year, we're probably towards the upper end of that.
Going into going into next year, and the point I made moments ago around the strength of our pipeline.
And the level of bidding were doing currently.
In concert with the magnitude of the offer opportunities both projects and programs that were bidding and securing right.
Breeds confidence that again will go into next year, assuming the market cooperates. We'll go into next year, we have excellent visibility and strong confident on.
Our ability to deliver on our revised projection updated projection for next year. So.
Let me, let me add to that Brian I think it's important to note that.
We have literally hundreds of large master service agreements him assays that are sort of repetitive in nature year over year work. So.
We have a lot of insight into what our revenues look like in 2021, we obviously as part of our strategy to pursuing more larger projects.
Which is which has now increased it in our backlogs that those projects are a one to three year earn so much.
More.
Again more visibility into what the revenue streams look like in 2021 as well.
Great helpful color. Thank you.
Next question Noelle Dilts with Stifel. Please go ahead.
Hi, I guess and congrats on the quarter.
I do I know.
Hi, Thanks. So my first question was just a.
Kind of targeted at outsourcing just curious when you're looking at sort of the state and municipal agencies being under some budgetary pressure do you think that could actually increase.
You know the extent to which they're looking to outsource some of that work to private service providers.
No I think it's a great actually we have seen that we have seen contingent of outsourcing I do I do believe as you suggested that that I think those that budget tightening will in fact push maybe even some more outsourcing opportunities to to the private sector in areas of quality assurance quality control project.
Management program management type services, even engineering and in some aspects we have seen growth in our engineering services during the quarter times as well. So so I agree with you that we are seeing it and I think it will continue.
Okay. Thank you.
And then I'm just curious in terms of you know some of these M&A targets that you're looking at has has sort of the cove. It covered in the economic uncertainty and change the number of folks who are reaching out to you or who are looking to generally become a part of a larger company I'm just curious if it's if it's.
Anything from that perspective.
Yes, I will say that the firms that reach out to us I think we have seen an increase in that whether it's a you know a cobra related to market conditions I I I really believe that its much to do with US you know.
Becoming a public company our brand name being out there becoming more of an acquirer of choice now like in the model that we employ I I think the other thing is we.
We have a really good track record of retaining our technical resources are you know.
Turnover is a is lower we also retain our technical staff and our principals in that business. So I think that gets around and I do.
I do believe that that adds to our firm's reaching out to us that that matches up their desire. So we have seen increased them, reaching us obviously, we we prefer relationships that we generate on our own and are driven from our technical resources. The firms that we like to acquire than in an open process. So.
Yes, I'd say that it has been increasing.
Increasing and it's a continuous increasing from a quarter to quarter.
Okay, great. Thank you.
And then my last question just given the elections any thoughts on.
How the outcome may strengthen or represent a headwind for any of your businesses and any change in how you're thinking about the potential for an infrastructure bill.
So I'll tell you I've thought about this a lot I've been asked that question a lot [laughter].
Oh wait his 30 years for an infrastructure Bill I got to say.
We have done well under both administration driver both parties our business has grown so I really haven't seen and a difference either way I'm still waiting for that is that that federal infrastructure build to come in place now I can't say that that I have any.
More confidence that it's coming out I can just tell you that we are well positioned if it is to come out the benefit from that.
I do believe that you can't keep kicking the can down the road it will come to roost and and hopefully, we'll we'll have that and this administration, but.
ER, it's only going to be a bonus Santa Ana to our you know.
To our projections and our growth trajectory for sure.
Thank you that's it for me.
Thank you I would like to turn the floor over to Joe Boyer for closing remarks.
Thank you so much Ah. Thank you everyone for joining us today. We appreciate it we appreciate your support of Atlas Technical consultants and we look forward to updating you on our progress. Thank you very much.
This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.