Q1 2022 Montrose Environmental Group Inc Earnings Call
[music].
Good day and welcome to the Montrose Environmental Group, Inc. First quarter 2022 earnings Conference call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.
To withdraw your question. Please press Star then two.
Please note this event is being recorded.
I would now like to turn the conference over to Rodney dossier with Investor Relations. Please go ahead.
Welcome to our first quarter 'twenty two earnings call.
Joining me on the call are Vijay made three <unk>, our president and Chief Executive Officer, and Allen <unk>, Chief Financial Officer during our call.
We will be referring to our earnings presentation, which is available on the investors section of our website at Montrose Dash E <unk> Dot com.
Our earnings release is also available on the website.
Moving to slide two I would 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 annual report on Form 10-K for the fiscal year ended December 31, 2021, which identify the principal risks and uncertainties that could affect any forward looking statements as well as future performance, we assume no obligation to update any forward looking.
Shipments.
In addition, we will be discussing or providing certain non-GAAP financial measures today, including adjusted EBITDA and adjusted EBIT margin. We provide these GAAP 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 or our earnings.
Release for a discussion of why we believe these non-GAAP measures are useful to investors.
Certain limitations of using these measures and reconciliations thereof to the most directly comparable GAAP measures with that I would now like to turn the call over to Vijay beginning on slide four.
Thank you and welcome to all who are joining us today.
I will provide you with a few business highlights and then hand, it over to Alan <unk> for National review.
We will then open it up.
Q&A.
I will speak generally to pages four through seven of the presentation.
As for the first quarter of 2022, we were pleased to see the strong demand for our environmental solutions continue.
I'm thankful to our teams for their continued efforts.
They are executing our strategy and collaborating with one another to provide exceptional service to our clients and create great value for our shareholders.
As we discuss our first quarter results and as we say in each update given its importance our environmental services don't map neatly to fiscal quarters mantras is best assessed on an annual basis, which is how we manage our business as well.
With that qualification in the first quarter of 2022 was really about three key themes.
First.
We continue to see notable organic revenue growth acceleration in our environmental solutions, excluding Cte H R.
<unk> water solutions, and our negative carbon intensity energy or biogas teams were a big contributor to the surge in organic revenue growth.
Second is the deceleration in Cte <unk> COVID-19 related work.
As we shared with you last quarter.
It is proceeding as planned given the ongoing unwinding of pandemic related restrictions and testing requirements across the United States.
The decline in Cte H was more than offset by growth in the rest of our business, which is very encouraging to see.
Third is the continued accretion of our operating segments adjusted EBITDA margin.
In addition to our solid overall performance in the quarter. We were also happy to bring additional talent 14 through the acquisition of environmental standards.
As was the case with previous acquisitions environmental standards is immediately accretive to our results and contributed to our overall revenue growth in the first quarter.
Complementary acquisition such as ESI.
Remain one of our key growth and value creation drivers are.
Our M&A pipeline remains robust and our thesis and strategy remain unchanged.
Furthermore, looking at broader market regulatory developments with.
Continue to see many growing environmental needs that validate our strategy and our mission statement of helping to protect the air we breathe the water we drink in the soil.
Let me take a few minutes to walk through some recent developments and some of the catalysts that we see for our business moving forward.
On the regulatory front, we see opportunity.
In connection with the proposal by the U S Securities and exchange commissions to create standardized financial disclosure of climate risk to ensure companies provide sufficient consistent comparable and reliable information.
This proposed rule would require companies to include an analysis of risks opportunities and business impacts associated with climate related strategy outlook and transition plans.
Additionally, public companies would be required to provide climate risk disclosures as well as the materiality of their carbon footprint within the context of scope, one two and three emission reporting requirements.
Proposed rules such as this one reflect the growing recognition of the need for standardized environmental reporting which is one of Montrose distress.
So this will be adopted we would expect to see upside to our business given our existing services such as climate risk analysis emissions inventory verification and reporting and the development of climate risk targets and goals.
Another theme we've mentioned on prior calls is <unk> TFS.
Actions to control and remediate the environment continue to advance at a rapid pace leading to increased activity across all of our segments.
Sure.
We expect the designation of <unk> and Cfos by the EPA as hazardous substances under the comprehensive environmental response compensation on liability.
Or the surplus act will have our precautions across the many industries. We currently support <unk>.
Including chemicals refineries landfills and wastewater facilities.
The passage of this designation will greatly increase the need for environmental assessments testing remediation and treatment.
We also expect increased due diligence requirements for property transactions and business acquisitions will be needed to assess the potential presence of <unk> and PFS from historic activities.
Additionally.
Increased P fast testing and water testing in particular will be needed as the epa's fifth unregulated contaminant monitoring rule or the <unk> side gets.
It gets underway next year.
DFAST monitoring will expand to include all public water system, serving between 30 310000 people.
Of note one of our specialty laboratories has been approved by the EPA for participation in this program.
Separately later this year the EPA will be publishing its first analytical method for the analysis of non potable water and other constituents for us.
Our Montrose lab has been selected to join the small group of commercial and government labs participating and the method validation study for the EPA.
<unk> are testing team well for upcoming wastewater monitoring requirements that will be implemented.
In addition to the federal regulations I just discussed over 250 state bills addressing <unk> are currently under consideration.
These proposals further underpinning the anticipated growth in demand for our services as monitoring litigation in these areas.
Will require our services.
And beyond the U S. We're also seeing the adoption of low E glass limits and water across northern Europe , which continues to create market opportunities for our <unk> technology.
Though the impact of <unk> treatment of testing needs are already in our financial results. This quarter. These regulatory developments are why we remain very optimistic about future market opportunities.
Looking beyond our Pizza services, we're also seeing the growing importance of greenhouse gases or <unk> and net zero goals and client environmental mandates driving demands for our unique services targeting greenhouse gas emissions.
Voluntary actions to address the <unk> reductions are on the rise in practically every sector we serve.
We are seeing many opportunities to help clients with the development of their GHT baselines and establishing plans to reduce <unk> emissions.
Recent engagements of note include companies in the oil and gas construction materials and metals industries, where we are developing net zero implementation plans and identifying reduction strategies.
We are also active in helping clients to determine which ghd reporting frameworks are the most appropriate.
Their operation stakeholders.
Client activities such as these allow us to work across the mantras portfolio, including advisory services source emissions testing leak detection community monitoring and environmental permitting and compliance.
We believe mantra exceptionally well positioned to help customers navigate rapidly evolving priorities mandates regarding environmental stewardship as.
As environmental remediation and protection continues to become more and more central to corporate and governmental policies now and in the future.
With that next I will discuss our first quarter business performance by segment.
First within our assessment permitting in response segment.
Despite the planned as expected deceleration in CCH revenues most of the revenue in this segment continues to be driven by Cte H.
<unk> said, we were pleased to see continued strong performance from our acquisitions of environmental intelligence in July 2021 Horizon in November 2021, and the environmental standards in January 2022.
As it relates to GTH supporting clients through the pandemic, we've mentioned on our prior calls that the revenue surge began to moderate during Q3 of 2021.
Trend, which continued through Q1 of 2022.
While demand is still elevated compared to the historical run rate for this business.
We anticipate the continued normalization of Cta shred it was through 2022 compared to 2021.
As such we expect revenue from CCH to slightly exceed their $75 $95 billion revenue run rate, let's stay well below their 2021 performance of over $200 million.
It is important to note that the impact of the pandemic is very difficult to predict so we will stay close on the revenue transition process.
Within the segment and excluding Cta, which are higher margin environmental assessment permitting an ecological services continued to see nice organic revenue growth tailwind.
Clients have needed regulatory environmental services to maintain operations regardless of Coke.
Next within our measurement and analysis segment.
And for our services remains very strong and drove strong organic revenue growth during the first quarter.
We remain well positioned to capture further opportunities in this segment given our position as a market leader in air quality management and paper testing in particular.
We remain optimistic on continued growth in this segment given for example, the momentum is environmental regulatory requirements and shareholder pressure around retail gas emission measurement as mentioned earlier.
Margins in this segment remained higher than industry averages given our business model and we expect them to remain at the high teens to 20% as previously discussed.
And finally within our remediation and reuse segment.
Our trajectory of strong organic revenue growth in the first quarter was again driven by demand for our <unk> water treatment and renewable biogas or negative carbon intensity energy service.
Margins are accretive as we noted on prior calls and as expected, but they remain below normal levels with an ongoing investments as our teams our geographic footprint and our technology grow and mature.
As an important point for all the work we do across our segments last year, 18% of our revenue was sourced from multiple service lines.
We expect to increase that cross selling success in 2022, and we will disclose the cross selling percentage at the end of each year, which is core to our organic revenue growth thesis.
So in summary.
I would like to once again, thank the Montrose team for their hard work and dedication during this quarter.
I'm truly grateful for the team, we've built and could not be happier with their execution.
With our solid organic revenue growth, excluding Cte H, we reaffirm full year guidance.
Looking ahead, we remain as optimistic as ever and future opportunities building momentum across our businesses.
With that let me hand, it over to Alan.
Thank you Vijay.
Our results in the first quarter reflect the continued resilience and strength of our business model.
<unk> in our business reflects the emerging themes, we've discussed over the past several quarters as new environmental regulations and corporate mandates are now at the forefront of regulators and executive Mike.
Our growth story remains intact as.
As we saw the benefits from a strong core businesses integration of accretive M&A and cross selling strategy drive results during the first quarter.
Moving to our first quarter performance on slide nine.
We drove strong organic growth across our business during the first quarter.
Total revenues for the first quarter increased 6% to $134 7 million compared to 133 8 million in the prior year quarter.
The primary driver of revenue growth in the first quarter.
With organic growth.
<unk> and analysis and remediation and we use segment.
As well as our acquisitions of Vista.
<unk>, Verizon and environmental standards.
First quarter, adjusted EBITDA was $16 5 million compared to $16 8 million in the prior year quarter.
First quarter adjusted EBITDA margin was 12, 2% compared to 12, 6% in the prior year quarter, mainly due to higher corporate costs, partially offset by improved operating segments. Adjusted EBITDA margin of 17, 8% in the current quarter.
From 17, 3% in the prior year quarter.
As we've discussed on prior calls.
<unk> performance needs to be assessed annually. This.
This is how we evaluate the business due to the stronger predictability of the business on an annual basis.
This is consistent with how we hire staff allocate resources and manage the company.
Turning to our business segments on slide 10.
In our assessment permitting and response segments.
Revenue and adjusted EBITDA decreased to $45 6 million and $9 6 million respectively.
The year over year decreases in both revenue and adjusted EBITDA were driven by lower revenue from COVID-19 related services provided by GTH.
Partially offset by the acquisitions of <unk>.
Horizon and environmental standards.
As BJ mentioned, the normalization of our Dth revenues was expected as the demand for a pandemic related services Wain. Following the reduction of COVID-19 testing and prevention requirements in the U S.
Segment, adjusted EBITDA margin was 21, 1%.
Slightly higher than the prior year quarter.
And our measurement and analysis segment rare.
Revenue increased 18, 9% to $39 8 million, primarily attributable to organic growth as well as the acquisitions of Vista and Dci.
Segment, adjusted EBITDA margin increased to 15, 9% as a result of the high revenue.
And finally in our remediation and reuse segment revenues increased 96, 4% year over year from $49 3 million, reflecting a significant increase in demand for <unk> services.
And organic growth in our biogas.
The 630 basis point increase in segment adjusted EBITDA margin for <unk>.
16, 2% was a result of better operating leverage on significantly higher revenue.
Segment adjusted EBITDA margin continues to reflect the impact of elevated fixed costs and investments in anticipation of growth and geographic expansion.
Moving to our capital structure on slide 11.
Looking at the first quarter cash flow used in operating activities was $18 3 million.
A decrease of $4 4 million compared to the prior year quarter.
Cash flow used in operating activities in both quarters.
Included the impact of seasonality the payment of annual bonuses and the payment of acquisition related contingent consideration.
Excluding acquisition related payments.
Cash from operating activities was $1 2 million in the first quarter of 2022.
The cash used in operating activities of <unk>.
$13 9 million in the first quarter of 2021, an increase of $15 1 million.
This increase was driven primarily by an increase in working capital in the current year of $12 5 million compared to an increase in working capital in the prior year.
$27 1 million.
Our leverage ratio as of March 31, 2022, which includes the impact of acquisition related contingent earn out obligations.
Was one one times.
Down from three one times at the end of the prior year quarter.
In January 2022, we entered into an interest rate swap transaction.
Fixing the variable component of our interest rate on $100 million of borrowings until January 27 2025.
<unk> such as this and our follow on equity offering last quarter.
Give us further financial flexibility to execute on our growth objectives.
Our series a 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 payments prepaid prior to April 2023.
We view this preferred equity instrument is favorable to the value creation potential in the business given its flexible dynamic.
You include the 182 million balance of the series a two equity in our market cap. Our total equity capitalization stands at approximately $1 5 billion.
Looking at a review of our base business trajectory on slide 13.
As we've discussed over the past few quarters.
We anticipate an annual revenue run rate of $75 million to $95 million for our Cts business.
Although cta revenue continues to normalize.
Most of the TTS revenues with $70 4 million in Q1 of 2021.
<unk> fell sequentially each quarter during 2021 and into 2020 twos to end Q1, 'twenty two at $29 9 million.
TTS revenues remained elevated compared to our expected revenue run rate for this business.
As we've seen in our first quarter results.
<unk> for COVID-19 related services is expected to be transitory in nature and is not expected to recur at the same level in coming years as the impact of COVID-19 related demand continued to wane.
When excluding the above trend revenue from PTH.
<unk> of our revenue is what we refer to as our base business, which includes the normalized revenues, we would expect to see from Cte H.
Our base business continues to grow at a solid trajectory.
Collecting the organic tailwind as we've discussed on this call.
Moving to our full year outlook on slide 14.
Based on our strong start to 2022.
We expect a deceleration in our Dth business.
We reiterate our outlook for full year 2022 revenues to be in the range of $520 million and $570 million.
And adjusted EBITDA to be in the range of 73 million to 78 million.
Our 2022 outlook is anchored in our expectation for double digit organic growth excluding Cta.
What's the contribution of completed acquisitions.
While first quarter margins were lower compared to the prior year quarter.
Due to the reversal of prior cost containment efforts and investments in our corporate infrastructure. We were pleased to see total operating segment margins improve.
Our outlook remains unchanged for consolidated adjusted EBITDA margin expansion.
Four to five year period.
In conclusion.
We started 2022 on solid footing.
As demand for our pre salt blocks related services are gaining traction with customers at a time when demand for these types of projects has not reached maturity.
This nascent opportunity as well as the increasing momentum in our renewable biogas.
And greenhouse gas businesses.
Corporate customers beginning to take decisive action.
Execute towards their ESG priorities.
These corporate actions.
And the developing regulatory drivers that we've discussed gives us visibility into the ongoing demand for our services through 2022.
With our talented team members and investments in our business through R&D and accretive M&A transactions, we remain confident.
And our ability to produce another year of strong results.
We are excited for what's to come in the years ahead as we work to drive further value for our shareholders and grow our market share in the environmental solutions industry.
Sincerely appreciate your interest in Montrose and want to thank all of you for joining us today.
Operator, we are ready to open the lines for questions.
Thank you we will now begin the question answer session to ask a question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
We please ask that you limit yourself to one question and one follow up.
If you have additional questions you may reenter the question queue.
At this time, we will pause momentarily to assemble our roster.
And the first question will be from Tim Mulrooney with William Blair. Please go ahead.
Good morning, Alan and Vijay Congrats on a nice quarter.
Hey, Tim Thank you.
So I know you didn't talk about this a lot in your prepared remarks, but I wanted to.
Ask about the step up in corporate investments that youre, making to support the growth.
Strong organic growth. This year can you just talk a little bit more detail for everybody about exactly what those investments are.
Yeah.
So I don't know Alan do you want me to take the first part of that and then you can maybe walk through.
Categories.
So Tim the context of the of the step up is because our revenue accelerated faster than we thought.
And so as we think about losing our emerging growth status and getting to a <unk> 5 billion of revenue a couple of years ahead of schedule, we have to put in place.
A series of investments to help us get to <unk>.
150 to a $1 billion of revenue and that includes a series of categories like.
Our internal audit function.
And.
All the Sox work that's associated with it.
Investments as our cyber security obligations increase.
Yes.
Our.
Investments in new geographies, some of which are at the segment level and some of which are at the corporate level.
As aspects of our revenue surge.
Our in new New places a lot of which we talked about with you on prior calls. So those are some examples of where those investments have been made Alan I don't know if you want to maybe step through some specific categories in terms of the total dollars.
Yes, I would just add Tim.
Right.
Fast growing company.
There are a lot of.
Resources.
Have needed to be added over the years, we've always managed corporate.
<unk> of revenue, so that we don't get too far over our skis.
So theres been a constant cadence of adding capabilities like.
Boosting our.
Centralized sales efforts marketing branding.
Particularly around security.
What are you seeing up our ability to.
To address more federal work.
Internal audit.
Sox compliance the ability to do an accelerated orders as we've locked out ESG status in an hour.
Large accelerated filer, so all of these capabilities of things.
12 to 18 months ago, we didn't really have.
And so we can invest quicker to get to where we need to be but.
Really the percentage of revenue that we manage to.
And that 6% and you should see us be at around 6% this year.
And then we've largely built for that and would expect beyond 2022 to start seeing the operating leverage as the company continues to grow organically, our corporate start to shrink as a percentage of revenue.
Yes, So I'll answer your question Tim.
That's really helpful. Thank you I mean, what I guess my.
My second question will kind of.
Shed the light why im asking that first question a lot of those do sound fixed.
But what I'm really trying to get through here, let's say, you're R&R segment grows.
Lot faster than what you're even expecting after 2022.
We have to make additional growth investments beyond what you're making this year what investors see another step up.
Beyond that 6% or R&D investments youre, placing this year adequate enough do you think that.
Even if growth were to accelerate more from here.
They would be adequate enough.
Do you understand what I'm, saying.
We do yes.
Tim Tim one way to think about it is again because revenue.
Apprised us to the upside in terms of our growth.
We certainly expect to step corporate down as a percentage of revenue to that 3% to 5%.
ZIP code over the next couple of years. So that's the.
When you think about our messaging around IPO, we talked about being.
$4 to $4 50 of revenue.
And hoping over a five year period from IPO to get to that.
The three.
3% to 5% corporate as a percentage of revenue Twentyish percent total margins. So as we think about our segment profiles as the R&R segment surges.
We've made the appropriate investments, obviously theres some incremental investments that need to be made but we think corporate as a percentage of total revenue continues to step down over the next couple of years.
Okay. So nothing about these growth investments kind of pushes out that approaching high teens low 20% EBITDA margin over the next several years.
Nope.
Okay. Thank you so much.
Okay.
Okay.
Thanks, Tim for the next question. The next question is from Andrew <unk> from Bank of America. Please go ahead.
Hey, Good morning. This is Emily <unk> on for Andrew Logan.
Emily.
Hey.
Can you provide any color on how the Cte H business post COVID-19 and non COVID-19 related businesses.
Formed in April and May month to date and.
Sort of like what's driving demand for the non COVID-19 related services. Thanks.
We don't publicly disclose monthly revenues Emily so.
Let me talk more conceptually as to what's happening at CCH. They are at core response business.
And and in 2020 and 2021.
The Covid response requests from clients is what drove that surge.
As you think about their excess of $225 million that they produced last year, which was incredible.
About 60% of that happened in the first half of the year.
Last year in 2021, and so as we think about that step down Emily right. As an example, $70 million of revenue in Q1 of 2021.
And about $30 million.
In Q1 of 2022.
It is just a normalization process as they come off of their all time highs.
What drives their core business remains various.
Various incidents that occur.
Due to aging infrastructure for example.
Or various climate change related events.
Like certainly hurricanes or floods or fires.
So that remains kind of core to what drives their business and we certainly anticipate as the rest of this year progresses.
What's always driven their business will continue to drive their business and various incidents will occur and the team is really well positioned to capitalize on them.
That answer your question Emily.
Yeah that does thank you.
And then my follow up my follow up is are you starting to see any benefit from the federal infrastructure Bill that was passed last fall or.
Is that more of a 2023 story in terms of when funds are.
Put to us.
It is not in our forecast.
As we sit here today Emily we've seen.
Some early activity specifically as it relates to some of the permitting.
Work, but it is it is too early to determine exactly what the impact of that is going to be this year. So we certainly think of that more as a 2023 and beyond.
Alwyn.
Okay, Great I'll pass it on.
Thank you.
And once again, if you have a question. Please press Star then one.
The next question comes from Chris <unk> from Needham. Please go ahead.
Hi, good morning, and thanks for taking the question.
Hey, Chris on gross margins.
Could you discuss what.
<unk> drove the improvement year over year and sequentially and weather.
Youre observing any impacts from.
Raw material or wage inflation.
Thank you.
Alan do you want to take that.
Yep Yep Yep.
Our gross margin to answer the first part of your question is.
Is largely impacted by business mix and segment mix.
In 2021 with CCH was a much more significant part of our overall revenue than it was in Q1.
Their gross margins were much lower than the rest of mantras, because if you recall a lot of their work covet work was outsourced lab testing so significant external costs that drove up the cost of sales and margins down as the Cts revenue has continued to decline.
And again, a much smaller percentage of the overall revenue in Q1 that impact is starting to reverse.
That's all that is.
Are we seeing the impacts of inflation.
We're no different to anyone else.
Certainly on the on the labor side, which is still the predominance of our overall cost.
Again, we've had this.
Pass through merit increases hiring.
Hiring folks has become a little more difficult but.
But we've also had a lot of success in being able to pass those costs through and as a result.
Our margins have.
Largely held.
At the business line level.
Got it thank you.
Just a follow up.
In the presentation that <unk>.
Mapped the pilots and the technology demonstrations in Northern Europe was helpful. How would you characterize.
Where the U S is along those same lines.
<unk>.
What typically happens after the pilot concludes is that does that convert into a longer term recurring revenue opportunity.
Yes, Chris why don't I take that.
Yeah.
The European standards in some ways are more stringent and are more focused on.
Drinking water at this point.
And what's unique about them is that the EU set certain standards and then various countries can then deter.
Determine how they want to implement.
If not we can be more stringent in meeting those standards and so.
That's a very similar dynamic that we're seeing here with the federal versus state.
Limits, obviously, none of which had been fully established.
Formally yet.
And so we see opportunities in both markets as it relates to our pilots converting to full full projects.
It depends on the efficacy and the success rates of the pilots what we've been really pleased with and encouraged by is that the pilots are going really well and demonstrating in most of these instances the.
Superiority of our technology.
As it relates to removal of some of these specific <unk> compounds and so we certainly expect these pilots.
To the extent they continue performing the way they have been to convert to full projects.
Timing and the sequencing of that is a bit tough to predict because.
Some of that is predicated on funding releases from the governments.
And the establishment of formal guidelines.
And so we still believe that this is kind of a longer term opportunity set.
The reason for putting it in the slide deck is just demonstrates that the activity levels have really started to accelerate suggesting.
The attention being put in the market opportunity ahead of US remains strong in the European market as it is here in the United States does that make sense Chris.
Yes, thank you very much.
Okay.
And once again, if you have a question. Please press Star then one.
The next question is from Stefan <unk> with Jpmorgan. Please go ahead.
Hi, good morning.
Hi, Stephanie.
I also wanted to ask about <unk>.
Hmm.
Can you give us an idea of how.
Fox is as a percentage of revenue by mantra on what they are at the crowd in that particular business grew above the double take you right for the total company.
So Stephanie we don't break out contaminants specific revenue streams.
And what I would say is that it is a substantive portion of our remediation reuse segment.
But also a contributor to our measurement analysis segment, and then to a lesser extent our PNR segment.
And yes it is.
A reason for our accelerated organic which is in excess of the of the double digit average that we talked.
<unk> talked about for 2022.
Okay. Okay. That's helpful.
And just on the cross selling.
Kind of momentum.
Great to hear and thanks for the disclosure.
I just wanted to clarify whether that 18%.
Kind of customers purchasing from multiple segments three segments that you report or is it customers purchasing multiple items that could be within the same segment as you guys report, but it's just different.
Different pieces for.
For your business and I know you have a lot of different service offerings.
Wanted to see how you define that cross selling.
<unk>.
It's multiple services Stephanie.
So yes.
For example.
You work with us on the remediation side, you may right. So remediation of a contaminant from soil or groundwater. You may then choose to utilize our labs to assess the impact or the quality of the remediation work that was done.
Or you may work with us on the advisory side, and then migrate into.
Testing or treatment, so it's across our service lines not necessarily across our segments.
Okay, Okay, and I guess, if so this is not just I guess this is the first year that you had the data to calculate what that percentage is but it will kind of be a cumulated numbers, though it's not customers that signed up for a new service for multiple services in the first year.
Mike when we look into 2022.
The customers currently who have multiple Sir first question Vishal.
Additional cross selling opportunities, that's going to be kind of like a cumulative number going forward.
Okay.
Well, that's a bit tough.
To articulate because the projects don't necessarily run multiple years spread as you know most of our projects tend to be short cycle, so, it's less likely to be cumulative and more or better.
Articulation of kind of the true cross selling occurring across our businesses.
If that makes sense alright, its not like we have.
Multiple projects spanning multiple years and then therefore, it's adding one year onto the next.
Much less likely scenario.
Okay. Okay, great. Thank you.
Thank you.
Ladies and gentlemen, this concludes our question and answer session.
Before we do that looks like we have a last minute entrant into the question queue and that is from Noelle Dilts with Stifel. Please go ahead Noelle.
Hi, guys.
Sorry, if I missed this I was jumping between calls but could you just I know.
You were talking about well how are you.
Well. Thank you I know you were talking about cross selling opportunities, but maybe could you expand a little bit on.
Just kind of where you stand in terms of your development and investment.
Our commercial processes basically or your sales force.
Where.
What additional steps youre, taking during 2022 and kind of where you see yourself venturing 23 from that perspective. Thanks.
So noelle in the context of where we were this time last year. When we were talking more about the continued development of our commercial infrastructure I would characterize it today as mostly mature.
The leadership is in place the teams are largely in place obviously, there's going to be marginal puts and takes.
But both on the marketing branding and on the sales side.
The team is quite well established and it's starting to hit rhythm.
That coupled with our implementation of Salesforce, which gives us visibility into client behavior patterns.
As proved.
<unk> continues to prove.
It has helped quite additive to our efforts to cross sell so we're really pleased.
The investments at this point will mostly be marginal the team and the processes is established and mature and we're excited to continue to share some of those successes as we progress through the rest of this year and next.
Okay, great. Thank you.
A question.
It does thank you and then just on stock based comp what are your expectations for the remainder of the year.
Let me take care.
Uh huh.
It should largely go ahead.
Yes.
With Q1.
Okay, I don't expect much bench, yes, yes.
Okay. Thank you very much.
And ladies and gentlemen, this now concludes our question and answer session I would like to turn the conference back over to Vijay <unk> for any closing comments.
Thank you and thank you all again for your time and for joining US today take care stay safe and we look forward to speaking next quarter.
Thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.
[music].