Q2 2021 Montrose Environmental Group Inc Earnings Call
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Okay.
Greetings and welcome to Montrose Environmental Group incorporated second quarter 2021 earnings call. At this time all participants are in a listen only mode. A question on only 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.
I would now like to turn the conference over to your host Rodney dossier of Investor Relations.
Okay.
Thank you Jeff.
Welcome to our second quarter.
2021 earnings call joining me on the call are VJ mandatory for data, our president and Chief Executive Officer, and Al Index, Chief Financial Officer.
Our discussion today, we will be referring to our earnings presentation, which is available on the investors section of our website. Our earnings release is also available on the website.
Moving to slide two I'd like to remind everyone that today's call will include forward looking statements that are subject to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.
Actual results may differ in a material way due to known and unknown risks and uncertainties that should be considered in evaluating.
Our operating performance and financial outlook, we refer you to our recent SEC filings, including our final prospectus filed with the SEC on July 23, 2020, which identify the principal risks and uncertainties that could affect any forward looking statements as well as well as future performance, we assume no obligation to update any forward looking statements.
In addition, we will be discussing or providing certain non-GAAP financial measures.
Including adjusted EBITDA and adjusted EBITDA margins, we provide these non-GAAP results for informational purposes, and they should not be considered in isolation from the most directly comparable GAAP measures.
Please see the appendix to the earnings presentation for our earnings release for a discussion of why we believe these non-GAAP measures are useful to investors and a reconciliation thereof to their most directly comparable GAAP measure.
With that I would now like to turn the call over to BJ beginning on slide four.
Okay.
Thank you very much Rodney and welcome to all of you joining us today I will provide you with a few business highlights and then hand it over to Alan for our financial review and we will then open it up for Q&A.
I will speak generally to pages four through eight of the presentation made available to you, but before diving into the let me start.
Saying, we are and we're pleased to see what we believe are long term tailwind for our business continue driving strong results, including in the second quarter and first half of this year in 2021.
We could not have achieved these results without the focused execution of our team members and I am truly grateful for them and their dedication to providing excellent service to our clients and supporting each other continues to differentiate Montrose.
The second point I would like to make is that though the Q2 and first half 2021 results speak for themselves our team's emphasis on quality safety and teamwork are further highlighted in our in our inaugural ESG report, which we published at the end of July.
You can find on our website.
The report touches on many of the themes, we value culturally and the impacts of our culture on our business performance and we look forward to engaging with all of you on how we can continue to integrate ESG into our operating decisions.
And finally before delving into some of the themes for the quarter I would like to reiterate our previous message around how we look at Montrose in our business.
Demand for our environmental services does not follow a fiscal quarter patterns Montrose disburse assessed on annual results. This is how we manage and forecast our business and how we expect others to view our results as well.
So with that and given our solid results in the first half of the year. We believe we will exceed our 2021 objective of over 20% annual revenue and EBITDA growth I will expand on the trends in a few seconds, but our results and increased guidance for the year are driven by a strong organic growth across all of our.
Segments accretive acquisitions, and a robust set of investment opportunities.
Since our last earnings call in May.
Our organic growth and strategic rationale for acquisitions remains supported by several key trends. We believe continued private sector emphasis on environmental stewardship, coupled with evolving federal and state or provincial environmental regulatory initiatives across our key markets. We will drive continued demand for our services in the years to come.
For example, the U S EPA announced a few weeks ago and it will set stricter requirements for how coal fired power plants dispose of wastewater with arsenic lead and Mercury.
It also expects to add the first new hazardous air pollutants under the clean Air Act since 1990 and on the greenhouse gas from the U S Department of transportation notified pipeline operators expect to curb methane emissions from compliance for 2020.
And at the U S state level. The continued regulation of <unk> is creating opportunities for our remediation of water treatment businesses with main recently, passing and Wisconsin, proposing new builds regulating people from the environment.
As another example in Canada. There are two changes to Canadian regulations, beginning in January of 2022, driving market growth for our <unk> businesses Reg.
Regulations focused on upstream oil and gas companies require more of them to monitor report emissions three times a year and in addition, new Canadian rules require implementing comprehensive eldar programs and petrochemical facilities.
In Australia, we were pleased to renew on multi year contract with the Australian.
The operate and maintain water treatment systems at three of the country's military basis, highlighting their commitment to responsible piedmont's remediation and minimal waste generation.
In terms of upcoming regulations or political initiatives. This week, we were happy to see the U S infrastructure package passed the Senate with bipartisan support. This is a great example of how we see tailwind to our business from both sides of the political spectrum, just as we see increasingly great leadership and innovation by both Republican and Democratic leaning.
States here in the United States.
Okay.
We are also excited to see our customers engage us on environmental stewardship initiatives driven more by corporate ESG strategies, then regulations for.
For example, proactively measuring in reducing emissions for addressing the rising issue of EPS compounds in the environment.
We also expect net corporate responses to infrastructure redevelopment and decommissioning initiatives will continue to drive the environmental assessment market and associated activities.
It is important to note that our business remains resilient and largely insulated from political swings.
We're encouraged to see increased political will across parties on helping the environment and we are particularly optimistic about the recent emphasis on environmental stewardship by the capital markets.
We've discussed variations of these themes in.
In our past calls with you, but as our expectations and outlook starts to get realized or manifest themselves, we remain and in many.
We're increasingly upbeat about the future of Montrose and our environmental solutions.
On pages 610, and 11 of the presentation I'll point to some year to date and L. P. M numbers to help keep focus on the importance of measuring our performance over a longer time periods.
Excluding the impact of discontinued services in the prior year period year to date 2021 revenue has increased 106%.
Additionally, we were very pleased to see 9% organic growth in the first half of 2021, excluding our response teams dth and 47% organic growth, including our team.
T H.
Adjusted EBITDA on a year to date basis grew 94% compared to the prior year period, given revenue growth and this strong year to day performance has put us on track for another year of record results.
At the segment level within our assessment permitting in response segment. Most of this segment is Cte H. The leadership team at GTH has done a stellar job and they've converted the pandemic response and business continuity service into long term strategic contracts with new and large industries. The technology in the media Entertainment industries in particular.
<unk>.
I've mentioned to you before net GTH, where historically at $60 million to $80 million annual revenue business.
And we now believe that run rate has increased organically to an annual 75% to $95 million business and there are three main reasons for this one there are more crises driven by climate change or otherwise examples of which are hurricanes floods fires or recently the pandemic.
The June fire in the Midwest, which is part of their traditional response service and required air quality monitoring and evaluations is the most recent example.
They have a larger market share the number of our strategic Msas as increased double digits in 2021.
And last but certainly not least they have more services or software for example, help states administer responses to environmental emergencies in as a new source of value to customers.
These variables are multiplicative and intrinsically tied into the broader mantras footprint and I'm thrilled with the team and our strategic expectations for the combination of CCH in Montrose are starting to manifest themselves as we continue to execute.
As one cohesive team.
As it relates to supporting clients through the pandemic, we said last quarter that we expected the revenue surged to taper in Q3 into Q4 of this year what.
What the team now sees is that the delta variant the sustaining demand for for their business.
And as a result, they expect demand.
That is an elevated revenue levels to continue into Q3 and Q4 of this year.
Within the segment and excluding Cta, which are higher margin assessment permitting an ecological service businesses are seeing a nice organic uptick.
Examples of drivers for our services include the new renewable fuel standards rulings under the American innovation manufacturing active phase down Hydrofluorocarbons and client questions related to various net zero initiatives.
Our acquisition of environmental intelligence in California.
Positions us to capture what we believe to be a growing demand for ecosystem services.
I'm incredibly excited about debt team, joining montrose as well.
Within the measurement and analysis segment demand continues to grow and remains strong the revenue increase versus Q2 of 2020 is due to increasing demand across all of our environmental testing services spin.
Specifically, we're seeing high demand for specialized air test methods and RP force analytical services.
Our RFP Fox capabilities were bolstered by the recent acquisition of Vista analytical in California, which is another stellar addition to our MLP franchise. We're also seeing increased demand from non regulatory drivers example, the ode GMP gold standard certification, which is really encouraging for all of us.
And then our third segment remediation and reuse within that segment, we are seeing strong organic growth driven by both our pizza hut's water remediation technology and our waste to energy services with our recent acquisition of the MSC group in January which I mentioned on the last call coupled with our unique IP for water contaminated with high concentrations of P for us.
We believe we have further positioned ourselves in the U S federal environmental sector, where we're seeing more remedial investigations remedial design and remediation for issues such as PFS.
In terms of our opportunities to allocate capital into our business into research development talent.
Our strong organic growth across each of our business segments as a function of our continued investments in environmental technology and innovation and our people.
Since the launch of our new R&D Department in 2020, we have made great strides in building out our patent portfolio and supporting the creation of new solutions for our clients our work around P. Fast destruction for example continues to resonate.
On our recruitment and retention of top talent, we continue to do well, especially at the director level or above retention remains strong.
And I am thrilled for the caliber of the team we've built here at Montrose.
Our business is our people and we remain invested in their continued success.
Our M&A pipeline also remains very strong so far in 2021, the acquisitions of MSC Vista.
And sensible Iot are not only strategically and financially accretive, but put us very close to achieving our annual goal of $10 million on acquired EBITDA.
We are already seeing cross selling success in several key areas highlighting the benefits from these transactions and this Monday, we announced the addition of sensible Iot to the Montrose platform.
Augmenting our software and data analytics capabilities.
So in summary, I would like to end, where I started by extending a big Thank you for Montrose teams for their hard work and dedication over the past 12 months.
July marked our first full year as a public company and we performed as we did because of the dedication of our team members around the world.
Thank you for all of you for your efforts. These results belong to you and as I've said before we are also grateful for and appreciate the continued support of all of our shareholders as we push forward into what looks like an increasingly exciting future.
With that let me hand, it over to al. Thank you. Thanks.
Thanks Vijay.
We are extremely pleased to have delivered solid second quarter results, which reflect the resiliency of our entire team the focused execution of our growth strategy and the and I'm on nature of our environmental solutions, we produced strong year over year performance from our core businesses and have continued to execute on our M&A strategy with the recent closing of our fourth acquisition.
<unk> in 2021.
Moving to our revenue performance on slide 10.
We continue to drive strong growth across our business during the uncertainty of the COVID-19 pandemic.
Our second quarter revenue increased 85% to $136.2 million compared to the prior year quarter.
Year to date revenues were up 100% versus the prior year period to $270 million. The primary driver of revenue growth was organic growth across all of our business segments.
As well as our acquisitions of GTH in early April 2020, and MSC in January of the current year.
As we have discussed on our prior earnings calls we completed the process of discontinuing service lines early in the second quarter of 2020, which partially offset our year to date and second quarter 2021 comparisons.
Excluding discontinued service lines revenues would've increased 88% in the second quarter of 2021, and 106% year to date.
We don't discuss organic growth on a quarterly basis as year over year quarterly comparisons can be misleading.
However, on a year to date basis organic growth was 47%.
We also monitor organic growth without C. T H given the episodic nature of GTH is emergency response revenues and the benefit from pandemic response.
<unk>, which are not necessarily part of the long term run rate revenues yet.
Year to date organic growth without the GTH with 9% on the high end of our expected seven to nine 9% annual organic growth expectations.
Looking at our adjusted EBITDA performance on Slide 11.
Second quarter, adjusted EBITDA grew 51% for $21 million.
And adjusted EBITDA margin declined 340 basis points to 15, 4% of revenue.
Year to date, adjusted EBITDA grew 94% to $37.8 million and adjusted EBITDA margin declined 40 basis points to 14% of revenue.
The improvement in adjusted EBITDA was primarily driven by higher revenues.
The year over year change in margins for both periods was mainly due to business mix the planned and expected normalization of margins in certain business lines. Following temporary COVID-19 related cost mitigation actions taken in the prior year, which have now been reversed and public company costs in the current year.
An important part of the mantra story that I will reemphasize is that our performance needs to be assessed annually.
This is how we evaluate the business due to the stronger predictability of the business on an annual basis.
This is also consistent with how we highest staff allocate resources and manage the company.
Turning to our business segments on slide 12.
In our assessment permitting in response segment second quarter revenue grew to $70.1 million from $18.6 million in the prior year and adjusted EBITDA improved to $14.8 million from $5 million in the prior year.
The significant year over year increases in both revenue and adjusted EBITDA was mainly driven by C th.
Which has seen an acceleration in demand to provide pandemic response related services as well as organic growth in our other business lines in the segment.
TTS revenues in the second quarter was $65.9 million.
The decline in segment adjusted EBITDA margin to 21, 2% was the result of lower margin Covid work performed by Cte edge.
And our measurement and analysis segment.
Second quarter revenue increased 7% to $39.7 million, primarily attributable to increase organic growth.
Adjusted EBITDA margin declined to 24% due to business mix and the reinstatement of certain costs that had been temporarily suspended at the outset of the COVID-19 pandemic.
And finally in our remediation and reuse segment second quarter revenues increased 46% year over year to $26.4 million, reflecting growing organic demand for P fast remediation and waste to energy services as.
As well as the acquisition of MSC.
The 320 basis point increase in the remediation and reuse adjusted EBITDA margins of 16, 3% was the result of operating leverage as we begin to realize the benefit of the investments made in the segment.
Adjusted EBITDA margin in the segment continues to reflect the impact of elevated fixed costs and investments in anticipation of further growth and geographic expansion.
Moving to our capital structure on slide 13.
The other day cash flow used in operating activities was $17 million, a decrease of $15.4 million compared to the prior year.
Cash used in operations includes payment of acquisition related contingent consideration of $15.5 million and $6.2 million in the current and prior years respectively.
Excluding these acquisition related payments.
Year to date cash used in operating activities was $1.5 million in the current year compared to cash generated by operating activities are for $6 million in the prior year, a decrease of $6.1 million.
This decrease was driven primarily by a $39 million increase in working capital versus the prior year change in working capital the increase in working capital in the current year is as a result of an increase in revenues in the current quarter versus the fourth quarter of 2020.
This increase in working capital was partially offset by higher year to date earnings before non cash items versus the prior year of $23.3 million.
Cash flow from operations in the second quarter of 2021.
For the payment of contingent consideration was $12.4 million or 59% from adjusted EBITDA.
We continue to expect strong cash flow from operations for the balance of the year and the long term conversion of adjusted EBITDA into operating cash flow at a rate in excess of 50%. This incorporates our expectation that as a growing company. We will continue to be very focused on balancing the generation of cash with investments in technology.
R&D and infrastructure to ensure continued scalability.
As of June 32021, we had cash of $40.2 million.
Total debt of $240 million, our net leverage ratio at June 32021, as calculated under our credit facilities was three one times within our longer term target leverage range of between two five and three five times.
As discussed during last quarter's call in April we entered into a new sustainability linked credit agreement, which expanded our borrowing capacity to $300 million and reduced our cost of borrowings at our current leverage ratio to LIBOR, plus 2%, while providing for some nominal basis point pricing adjustment based on outperformance against certain.
On an ability and ESG related objectives.
As a reminder, our series H preferred stock has no maturity date, and we have the option, but not the obligation to redeem the preferred shares at any time for cash subject to a make whole payment in the first three years.
We view this preferred equity instrument is favorable to the value potential in the business given its flexible dynamics. If you include the $182 million balance of the series a true equity in a market cap of total equity capitalization stands at approximately $1.7 billion.
Moving to our full year outlook on slide 14.
Based on the momentum evident in our business, we are increasing our full year adjusted EBITDA estimate for a range of $70 million to $75 million, which is up from previous guidance of $63 million to $70 million.
Our updated guidance implies adjusted EBITDA growth.
Of 29% to 38% year over year the.
The increase from our prior range reflects our strong results in the second quarter and.
An expectation of some continued on.
<unk> of elevated CCH results from Covid response, with a continued stream of project wins and our recently closed acquisitions.
As a reminder, this outlook is based on a combination of high single digit organic growth.
<unk> C T H plus the contribution of completed acquisitions.
Though we expect to continue adding strategically and financially accretive acquisitions. Our outlook does not include any benefit from future acquisitions.
So in summary, we are thrilled to build upon our strong first quarter results in the second quarter.
I'm on for our services remains resilient and our raised outlook for 2021 reflects a unique opportunity to deliver value through our differentiating focus on environmental solutions.
The timing of projects can influence quarterly performance, we are confident in our ability to produce another year of excellent results.
Further ahead, we are.
Main optimistic on the economic and political drivers and a growing addressable market as customers seek to distinguish their business through ESG stewardship, and additional rules and regulations begin to take shape as the environmental impact of industrial activities in emerging contaminants such as people become more central political issues.
Accretive M&A opportunities will continue to be a focus for this team as we seek to continue to expand our geographic footprint and offer more value through additional service lines and technologies to our customers and our immense addressable market.
We look forward to the opportunities ahead, and we sincerely appreciate your interest in mantras.
Thank you all for joining us today.
We are ready to open the lines for questions.
Ladies and gentlemen at this time, we'll be conducting a question and answer session.
I'd like to ask a question. Please press star one on your telephone keypad a confirmation so on strength of your line is in the queue.
You May press Star two if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
Our first question is from Tim Mulrooney with William Blair. Please proceed.
Good morning, VJ good morning, Alan.
Hey, Jim.
So I just want to make sure I've got a couple of things straight at it looks like it looks like maybe you raised your guide for organic growth.
Annual organic growth for 2021, a little bit maybe.
It was mid single digit to high single digit range last quarter and now according to the the outlook section of your press release, it looks like the guidance inclusive of more like high single digit organic revenue growth. So maybe you raised it to the for the high end of the.
Your typical annual range is that primarily being driven by the strength in C. T H relative to your prior expectations or is that primarily coming from other areas of the business. Thank you.
Hey, Tim this is Vijay.
We are we continue to assert that the we expect the business to grow mid to high single digits. So we're not changing that narrative, but you are correct given the strong performance through the first half of this year, we expect to be at the high end of that range. This year.
But we're not we're not changing our broader narrative around our expected trajectory vis vis the industry in the medium and long term.
And the high single digits is exclusive of Cte which does not include their performance.
<unk> C T H are.
We are closer to 50% organic.
And so the mid to high single digits that you are referencing and the 9% that we alluded to in the release is excluding <unk>.
Okay I got you I wasn't sure I Don T. T. H was strong in the back half of last year. So I wasn't sure. If you were expecting some headwinds there, which I guess, maybe it gets me to my next question.
Do you expect you know expect CCH revenue to remain elevated in the second half of the year I was wondering if you could unpack that a little more for US is this is this elevated above normalized levels is kind of you know $20 million a quarter.
Or or significantly elevated levels similar to what we've seen through the first two quarters of this year.
Yeah, it's and so Tim just stepping back the $20 million per quarter that you referenced was off of the legacy kind of 60 to 80, and we now think it's more like 75% to 95 per year. So so think 20 to 25.
We believe they will be elevated above their run rate through Q3 and Q4.
It's hard to peg exactly what the number will be.
Because of the nature of the response services on the business continuity services they are providing.
But the team is doing a great job and they remain pretty optimistic that the demand cycle will continue through the back half of this year. So when we talk about elevated we usually referenced that basically what we would expect to be their annualized quarterly run rate.
Understood. Thank you very much.
Our next question is from our.
Our next question is from Andrew <unk> with Bank of America. Please proceed.
Hi, yes, good morning.
Hey, Andrew.
Hey, how are you.
Just I guess I'll ask more questions on its U K H.
Look clearly there are some structural changes on the best notes you sort of talked about more services better market share.
Could it become a more stable business.
How do you think about margin profile change and more importantly going into 'twenty two.
How should we think about Q T. H can it stay flat given everything you've done to the business so far.
Let me let me, let me try to let me try to parse that a little bit Tim that the team and simple.
For question simple question, Yeah, Yeah, Let me so let me let me take that piece by piece. So in terms of more services more market share.
I believe that that has.
Structurally shifted the business in a very positive direction and we've spent some time with the GTH leadership team to understand the various levers there.
So, let's take incidents like the pandemic, but like the hurricanes floods fires that we've referenced before and the increased frequency, let's take that aside for a second the structural shifts that they've done an exceptional job.
Of executing on is signing up more msas, so as opposed to kind of one time relationships with many of these clients. These are now long term strategic partnerships, which give us collectively more of an opportunity.
Those clients environmental needs.
And then when we talk about more services. Andrew. An example of that is the utilization of their software capabilities, which I've alluded to on prior calls.
To help administer for our clients.
The government and private sector level theyre variance for their various response needs. So it's a very nimble.
Our software architecture and it provides the team it's kind of a unique advantage and a real value proposition for clients and thats its real value that can be monetized on so you take kind of those two variables and that's why we think structurally it is both stable and at a higher level vis vis where they were two years.
So.
Now your second question, we will they sustain kind of the current run rate.
As Alan alluded to they've done kind of north of a $130 million through the first half of this year that is an exceptionally strong year and no. We don't expect that to be their new baseline.
Got it turned out great answer thank you and just to clarify.
You have closed a couple of deals last quarter.
Can you just tell us what's the contribution EBITDA contribution from the deal.
For Q closed so far versus your prior guidance for second half for.
Mary.
Yeah.
So let me let me touch on the deal specifically Andrew.
So MSC was very typical of that segment on a on a run rate basis kind of high teens EBITDA margin.
Vista is within the measurement analysis segment in labs tend to typically tend to run a single digits for this runs double digits.
On the <unk> testing side.
And environmental intelligence is in our advisory ecosystems.
Side and that tends to run kind of Twentyish percent EBITA margins again in aggregate I'm talking about the segments generally speaking in these businesses.
Puts and takes a little bit for for each individual one, but they largely fall into that very consistent narrative.
And so no. They haven't really if you think about the acquisitions in the context of our broader portfolio, it's really going to be a back half of the year impact and no. It's not shifting our margin expectations materially the one variable that's worth noting is the.
As Alan alluded to on the call because of the outperformance of the CCH business and they are differentiated margin profile.
That may impact kind of <unk>.
End of year results because of business mix reasons, but the core.
The non <unk> part of Montrose continues to perform exactly as we've articulated to you.
Before Andrew if that makes sense.
Okay great.
Great performance.
Thanks.
Thank you.
As a reminder, if you would like to ask one question you May Press Star one on your telephone keypad, a confirmation tone will indicate your line is from Q.
Our next question is from Jim Ricchiuti with Needham <unk> Company. Please proceed.
Thank you good morning.
So.
On the CCH business.
If we see a little stronger revenue from at least for Covid related business.
In the previous quarters.
I think a lot of that was testing that win.
In some cases outsourced to other labs should we assume that there will be a similar type of margin profile as that business.
It was a little stronger on the second half.
We're working.
We're working with the team to kind of.
Mitigate the impacts of the <unk>.
Testing services through the Th P&L Jim.
And so we're hoping that that's not a continued trend we don't believe it will be.
But into the foreseeable future I think thats from a modeling perspective, I think thats a fair assumption for.
For the back half of the year for now.
Got it.
And.
Sorry, and just to just to reiterate we do expect over time for those margins to normalize back to their historical run rates.
Got it thanks for sure yes.
I know, it's early days as far as discussion and speculation about the infrastructure Bill and what it could mean for modules.
Curious.
For how you guys are looking at it internally.
And the second question I have is I don't normally that's how we think of you doing a lot of outreach, but is this an area, where we might lend itself in some ways to outreach as you start seeing.
Needs arise in certain markets.
What do you mean by outreach Jim Okay.
Mark first of all let's let's take a step back and say you know what as you look at structured price preserve yeah look you've had a chance to maybe go through parts of it where do you see the biggest opportunity now for one for you.
Shall we.
The infrastructure build to us.
Represents opportunities primarily on the advisory and on the testing side, Jim and what I mean by that is the.
The enactment of initiatives related to upgrading or building bridges or roads or water infrastructure creates inherent assessment and.
Testing needs for our clients and.
And so we expect to see downstream demand from the startup of those initiatives in select instances.
Aspects of those programs May result, in the need to redevelop or remediate existing water tables for soil and then also represents opportunities for us since we're adjacent to as you know, we're not going to build a road or bridge the environmental assessments remediation on testing associated.
With that activity is beneficial to us and so that's where we see the near term opportunity does that does I'm hitting on.
It does it for you you would assume that it would be more.
Demand slowing in not necessarily Nu Shang opportunities that may be.
Reaching out to clients too.
At least talk.
Talk about what you might be able to price.
Okay.
Well, we are well, it's just a slight point of clarification or through the investment and commercialization efforts that we've made.
We are very active in dialogue with clients around our capabilities and we're seeing.
And I've alluded to this on prior calls just the increased ability to not only cross sell services to provide kind of an integrated set of solutions for our for our clients and so that that is occurring.
Independent of the infrastructure Bill, Jim, but certainly as a result of activities related to the bill we're going to we expect to be beneficiaries of that.
And last question for me is just on the one of the acquisitions of.
Caught my eye on California.
Our vessel intelligence obviously.
Just given their expertise and wildfire mitigation, which unfortunately continues to be on the news and I guess, what I'm wondering is to what extent are there potential synergies opportunities with your other lines of business I'm, even thinking or with respect to something like a C. T H.
Yeah, Yeah, I mean, well so I think there's a couple of levers of opportunity, which again, we tend to think of transactions over the long term Jim so in the in the immediate term, it's going to be more about the integration of that team and cultural assimilation, which we're really excited about it's a great group of for.
<unk>.
And we're thrilled to have them as part of Montrose.
But.
If you think about what they specialize in which is eco certain biological services.
Particularly related to our fire mitigation for.
For the utility industry, it's very complementary to some of the capabilities, we have in the northern part of California and the.
On the demand for just the fundamental service continues to increase.
Which is really encouraging for us the next immediate set of opportunities. We believe will more likely be Jim on the testing side right. So as a result of.
Fires for example, or the mitigation process, there's going to need theres going to be a need for both data analytics, which is going to be very complementary to our recent acquisition of the sensible Iot platform, but also testing right you can imagine the impact on the air quality as a result for some of these fires and then potentially the ongoing.
Remediation on the other part that some of our customers have started to talk to us about though it's not immediately actionable for us right now.
Is a lot of these fires are put out my compounds that have P. Foster on them and as you know that's an area, where we're strong and so I would see both of those as near term opportunities C.
<unk> response expertise is certainly very value add the question becomes kind of who the customer is as you know we tend to focus a little bit more on the private sector.
And the allocation of liability and risk.
In an instance, like a fire is a little less clear.
And so there is certainly opportunity, but I would consider that more long term.
And I would add.
Ankur, a little bit more on the testing and the immediate remediation capabilities as near term cross selling synergies if that if that makes sense true.
Yes, it does.
Got it.
Yeah.
There are no further questions at this time I would like to turn on the call back.
J mento for Gatto for closing remarks.
Thank you and thank you again to all of you for joining US. This morning, we're incredibly excited.
About what the future holds and we appreciate all of your support take care and be well.
This concludes today's conference you may disconnect. Your lines at this time. Thank you very much for participation profit great day.
Okay.
Okay.