Q2 2022 ICF International Inc Earnings Call
Yeah.
Welcome to Icf's second quarter 2022 earnings conference call. My name is Michelle and I will be your operator for today's call. Please note that this conference is being recorded on Wednesday August three 2022 and can.
Not be reproduced or rebroadcast without permission from the company at this time all participants are in a listen only mode. Afterwards, you'll be invited to participate in the question and answer session. During the question and answer session. If you have a question. Please press star.
Then one one on your Touchtone phone.
We will now turn the call over to Lynn Morgen of Advisory Partners Lynn you may begin.
Thank you Michelle good afternoon, everyone and thank you for joining us to review Icf's second quarter 2022 performance with US today from ICF for John Watson, Chairman and CEO to very brightest CFO joining them as James Morgan Chief Operating officer. During this conference call, we will be making forward looking statements to assist you in.
Understanding ICF management's expectations about our future performance. These statements are subject to a number of risks that could cause actual events and results to differ materially.
I refer you to our August three 2022 press release, and our SEC filings for discussions of those risks. In addition, our statements today. During this call are based on our views as of today, we anticipate that future developments will cause our views to change. Please consider the information presented in that light.
At some point elect to update the forward looking statements made today, but specifically disclaim any obligation to do so.
I will now turn the call over to Icf's CEO , John Watson to discuss second quarter 2022 performance John .
Thank you Lynn and thank you all for participating in today's call to review, our second quarter earnings and discuss our business outlook I am pleased to report that this was another quarter of strong performance for ICF.
First we continue to build our position in high growth markets led in the second quarter, but by our work in digital transformation public health and disaster management.
Together, our growth markets, which also include utility consulting as well as climate environment and infrastructure services now account for over 70% of our service revenue.
Second profitability continued to improve adjusted EBITDA at the service revenue increased by 20 basis points year on year, while we continued with our investments in people and technology to support future growth.
Third we ended the quarter with a one.
One point to one trailing 12 month book to Bill ratio strengthening our full year revenue visibility and a record $8 7 billion new business pipeline, which we expect to result in considerable growth in contract awards in the second half of this year.
Last but certainly not least in the second quarter, we announced the definitive agreement to acquire submitted bids which was an exceptional strategic success for ICF and is a key factor in our increased full year revenue and margin guidance. We subsequently closed the transaction transaction on July 13th 2022.
Second quarter revenue growth was again led by federal government client work, which increased by 23, 6% and reflected organic growth and the acquisition accretive systems and consulting, which we completed at the end of 2021 the.
The acquisition is performing well in line with our expectations for mid teens revenue growth and we see significant opportunities for revenue synergies by bringing and create a substantial expertise in salesforce and Microsoft platforms to our broad roster of civilian agency clients.
The somatic bits acquisition represented a step change in our digital transformation capabilities.
As one of the industry's leading digital service and platform providers using open source semantic this expertise across 30 technology platforms using a fully agile approach complements our existing capabilities in this fast growing market.
Our demonstrated success in executing large health IP projects together with Icf's deep domain expertise will enable us to support larger more complex projects across federal civilian agencies.
We are seeing a lot of large open source opportunities across our civilian space and adding semantic pits increases our potential win rates.
At the same time, but the vast majority of its revenues drive from the centers for Medicare and Medicaid services Semantically, it's opens up a large new addressable market for us, giving icf's scale at CMS and agency with substantial and growing budgets.
Submitted bids are digital transformation business has an annual run rate of approximately $500 million.
Additionally, as you can see by our revised guidance for the full year. This is a strongly accretive transaction for ICF on our non-GAAP EPS basis with only five five months of ownership.
And additional digital transformation public health remained a robust growth market for ICF with revenue increasing at a double digit rate on track for an annualized run rate of approximately $350 million.
Of note is our recent win is one of the five awardees of the new idea IQ by the National Cancer Institutes Division of cancer Epidemiology and genetics research we.
We will be competing for up to $320 million over 10 years to provide epidemiological and clinical operations support for studies and other research activities to discover the causes of cancer and inform future prevention.
The department of Health and human services is our largest client by far and the 11% increase they received as part of the 2022 budget provides substantial funds for programs that are squarely within our sweet spot like this IQ we just won.
Additionally, we are seeing an accelerated effort behind preparing for the next pandemic both at the centers for disease control and as part of the plan of reorganization that will create the administration the strategic preparedness and response, our asper as a separate division that will be charged with the nation's response to health emergencies.
<unk> is well positioned at both the CDC and legacy asper to assist in this phase of the post pandemic response.
Also as.
As we have discussed on past calls at our Investor Day. This past may ICF is well positioned to gain new contracts relating to the infrastructure and jobs Act or <unk>.
But we've already been taxed under existing federal agency contracts to provide a range of services, including technical assistance assistance to states and communication and management support for Iga program.
Asking today is in excess of $12 million.
Our federal government pipeline was at a record $5 9 billion at the end of the second quarter and the backlog of pending awards and the federal government is significant so we expect to see considerable growth in contract awards in the second half of this year.
We also saw strong growth year on year of nine 5% and our revenues from state and local government clients led by our disaster management World Laidlaw.
Late last year, the department of housing and urban development announced more than $2 billion in CTV GTR mitigation funding for disasters occurring during 2020 'twenty one cycles.
Of the grant recipients for that cycle ICF won work on more than half the awards to support those recoveries in the second quarter, including in Iowa, Colorado, New Jersey.
The Kentucky in Michigan.
Competitive procurements or extensions of existing contracts.
Additionally, we continue to see government at all levels ramping up spending on mitigation and ICF is now working on mitigation efforts for 30 plus clients in 2014 states.
We do have a unique set of strength and understanding the complexity of mitigation projects across multiple federal programs, including successfully managing applications, and then orchestrating execution to meet environmental regulatory and legislative requirements to bring such projects to fruition.
These capabilities give us a competitive advantage, which we expect to become more important.
Funds flow through state and local agencies.
As expected revenues from international government clients were lower year on year due to the completion of a short term project with significant pass through revenues that drove exceptional growth in this client category in 2021.
Excluding that project revenues were similar to the year ago second quarter levels, even though our work for the European Union has not fully recovered from pandemic impacts.
In addition to contract modification and add ons to our existing international public sector work ICF continuing to win multiyear framework contracts in this market, including two large recompete with the European Commission, one to provide consulting support on technical projects throughout member states. The other to promote and market agricultural products and countries out.
Slide the EU.
So we have a strong at the pipeline for international public sector clients comprised of opportunities that leverage the Ics capabilities. Both our typical is a subject matter expertise as well as our cost cutting competencies in training and technical assistance program implementation communications and event management.
Moving to our commercial client category similar to the first quarter lower year on year revenue comparisons continued to reflect the softness in commercial marketing services and the exceptional growth we had in commercial energy in last year's first half, which has made for difficult comparisons this year.
We continue to closely manage commercial marketing services as they work to recover from pandemic related impacts on key verticals.
Second quarter revenues accounted for less than 7% of our total revenues and were stable on a sequential basis and early indicators that the business may be bottoming out.
We've also had some preliminary conversations with a couple of clients in the hospitality sector recently about potential increases in support for their loyalty programs with business travel demonstrate sustainable improvement in the second half of this year.
Lastly, our aviation consulting business continues to perform very well growing at a double digit rate.
Of course, the major long term growth area within our commercial business energy markets, which accounted for 62% of second quarter commercial revenues.
Second quarter trends in energy were almost identical to those of the first quarter energy markets were up about 1% after having increased 11, 4% in the similar period last year energy efficiency work was up the same one 3% that it was in the first quarter and energy markets Advisory revenue increased at a mid single digit rate.
The only year on year declines in our environmental and infrastructure work, but the timing of projects can impact a quarter to quarter revenues, we expect higher year on year comparisons in the second half of this year.
As also discussed last quarter, the energy market pipeline remains strong for ICF support services and energy efficiency program implementation beneficial electrification utility marketing services and advisory consulting.
Our utility programs and services practice has a pipeline in excess of $1 billion and we see expansion opportunities in new states, including Connecticut, Oregon, Colorado, and the district of Columbia, as regulators and legislators set aggressive new goals.
For for beneficial electrification, our pipeline is now more than triple our pipeline in 2021 and the pipeline for our energy Advisory business is the strongest it's been in the past three years.
Similarly, we are seeing increased demand for our climate services in this area, we serve federal state and local government and commercial clients in each of these clients categories is growing.
The U S. Environmental Protection Agency recently selected ICF has an awardee under.
Under the New multiple award environmental analytical research technical and hybrid or otherwise known as Earth support services like a purchase agreement to provide or provide a broad range of environmental consulting services to the office of air and radiation.
This five year BPA has a ceiling value of $5 7 billion across five awardees with $700 million of the award allocated to professional services.
And of course, we're pleased to hear that the Congress appears much closer to passing climate related legislation as part of the inflation reduction Act, which will provide ICF with opportunities across our government and commercial clients.
To sum up in the first half of 2022, we've continued to build our capabilities in key growth markets. We have identified and we are approaching and many opportunities in front of us with increased scale deep domain expertise and substantial experience in executing a large and complex project.
This combined with a record pipeline of over $9 billion as of July 31, and a trailing 12 month book to Bill at one to one at the end of Q2, all support our expectation for significant growth in 2022 and beyond.
Now I will turn the call over to Barry <unk>, our CFO for a financial review. Thank you John and good afternoon, everyone. I am pleased to provide the details of our second quarter's financial performance and.
In addition, I will share the updated guidance metrics for full year 2022 that reflects the impact of our semantic acquisition.
Second quarter total revenue increased seven 8% to $423 1 million and service revenue was up eight 9% to $306 million or.
Our second quarter revenue growth reflected many of the same business drivers as this year's first quarter and was led by strong double digit increases.
Revenue from our federal state and local government clients.
Gross margin on total revenue was 36, 4% and gross margin on our service revenue was 53%. These.
These figures compare to 37.2 and 51 eight respectively in the second quarter of last year, which benefited from the timing of several fixed price energy efficiency contracts.
Our indirect and selling expenses of $114 $4 million were up seven 7% as we continue to invest in people and technology to support future growth. However on an adjusted basis. These expenses declined 170 basis points as a percentage of service revenues to 35, 9% down from <unk>.
37, 6% for the same period last year, reflecting positive leverage.
Additionally, we delayed certain infrastructure investments to 2023 to focus in on the integration of our recent acquisitions.
Our second quarter interest expense was $4 1 million, an increase of $1 5 million as compared to the same period last year, reflecting higher debt balance related to the acquisitions of creative in effect as well as an increase in our interest rates.
For the full year 2022, we now expect interest expense to range from $20 million to $22 million, which is an increase of approximately $10 million from the guidance. We gave at the beginning of the year and includes an additional rate increases anticipated in the second half of this year.
The increase reflects the impact of somatic this acquisition as well as higher interest rates, we expect to offset a large portion of this impact through additional back office efficiency gains and cost containment initiatives.
Second quarter EBITDA was stable at $39 8 million as compared to $39 7 million in the second quarter of 2021.
Excluding special charges totaling $2 4 million largely related to M&A activity and noncash rent expense of $1 9 million, which was associated with our new route to Virginia headquarters adjusted EBITDA grew at a faster pace than revenue, increasing 10, 3% to $44 1 million. This compares to $40 million in the second quarter.
Of last year.
Adjusted EBITDA to service revenue margin expanded 20 basis points to 14, 4% as we benefited from a favorable mix high utilization levels are increased scale as well as our real estate consolidation initiatives.
Operating income was $29 8 million as compared to 32 million, we reported last year's second quarter.
Which included the benefit of approximately $4 million from the fixed price energy contracts I previously noted our.
Our second quarter tax rate was $28 28, 6% compared to 37% in the second quarter of last year.
Net income totaled $18 4 million and diluted EPS was <unk> 97 per share in the second quarter, which includes 17 and tax effected special charges of which 16.
Our M&A and facility related.
This compares to last year's net income of $20 3 million or $1 seven per share.
On a non-GAAP basis, which excludes the impact of special charges and the amortization of intangibles, our EPS increased 11, 8% or $1 33 per share.
Now shifting to our cash flow our first half operating cash flow was $6 4 million, which was in line with last year's historic seasonal trends our capital expenditures were $11 million, which included the investment in our new headquarters.
Days sales outstanding for the second quarter were 82 days, which was the same as last year's second quarter.
Our debt was $450 1 million at the end of June which compares to $421 6 million at the end of 2021.
The increase in our debt reflects the historic seasonality of our collections and expenditures our net leverage ratio at the end of June was 311, following the semantic pits acquisition. Our net leverage ratio was three four and we expect to Delever by approximately 50 basis points by the end of this year, assuming no additional acquisitions.
With respect to capital allocations, we have been an active acquirer over the last several quarters and we continued to expand and build a significant scale and the growth markets. John spoke about our strong financial position, including our substantial cash flow provides us with the ability to provide ability to support organic growth initiatives and can.
Sidor further strategic M&A, while we continue to pay quarterly dividends and reduce our debt and repurchase shares to offset dilution, resulting from our employee incentive programs.
During the six months ended June 32022, we repurchased 176375 shares for $17 million. In addition, today, we declared a quarterly cash dividend of <unk> 14 per share payable on October 13th 2022 to shareholders of record on September 19 2022.
For modeling purposes.
Our expected full year 2022.
Expectations, which revised which our revised to incorporate this metric best acquisition as a reminder.
We announced this acquisition, we noted that their annual revenue for 2022 would be $135 million approximately $115 million of that revenue is expected to be reoccurring in 2023, given the completion of several small business contracts.
And its EBITDA margin is expected to be in the high teens. Additionally, our depreciation and amortization expense is now expected to be in the range of $20 million to $22 million.
Amortization of intangibles should be approximately $28 million and our full year tax rate will be approximately 28, 5%.
We expect a fully diluted weighted average share count of approximately $19 1 million cap.
Capital expenditures are anticipated to be between 33% and $37 million, including approximately $15 million of expenses related to one time lease hold improvements associated with the new reps in headquarters we have increased our operating cash flow estimate to $140 million from the 130 million, we previously guided to and with that I'll turn the call back over to John for his closing remarks.
Next.
Thank you Barry we are pleased to have increased our full year guidance across almost all of our financial metrics.
The details are in our release I would just point out that at the midpoint. We are now expecting service revenue growth of 17% and an adjusted EBITDA margin margin on service revenue of 14, 8%.
Of the 90 basis point margin increase above our prior guidance.
Nearly one half is tied to the semantic pits acquisition.
Also non-GAAP EPS is expected to range from $5 50 to $5 80, which at the midpoint represents a year on year increase of 17, 2%.
<unk> the impact of higher interest rates in 2022.
Most of Ics revenues come from our work in areas that also positively contribute to society. This has enabled us to retain and attract likeminded people, who are passionate about their work while enhancing our profile as a preferred acquirer firms with similar cultures and with that operator, let's open the call to questions.
Thank you we will now begin the question and answer session. If you have a question. Please press Star then one one on your Touchtone phone.
One moment, while we compile the Q&A roster.
The first question comes from Joseph Bob with Canaccord. Your line is now open.
Hey, guys good afternoon.
A bit of a congratulations to James I heard a new title there so.
<unk> on that James.
Thank you, maybe just kind of start at a high level here I know that pipeline is pretty big I know, John you mentioned JA and all of that but is that built into the pipeline yet or is that a pipeline before the infrastructure Act at this point.
I think.
Specific.
Opportunities we've identified to date are built into the.
Pipeline, Joe, but I mean, I think those those opportunities are still forming and were still identifying more so I still think we're in the early stages of building out the pipeline.
Jay.
Certainly the growth in our pipeline is being driven by opportunities in our five growth markets I would certainly say that it.
As you would note I think with the passage of the federal budget here midyear.
Certainly in the second quarter, we've seen it.
Slide a significant.
Pickup in proposal opportunity certainly in the federal sector.
In the second quarter.
Got it and then.
I guess your footprint now.
I would say pretty much critical math right.
A lot of capability across.
A lot of different technologies, and a lot of different agencies and.
And I know your Tam getting pretty big now by obviously, adding more in Medicare and Medicaid and the like but just.
Just kind of two questions on the strategy from here and clearly a lot of opportunity where you sit now does it makes sense to do more M&A in right now and then secondly, with the footprint that you have now have you considered expanding out into more into the <unk>.
At this point given how big those budgets are or is there plenty to do.
Kind of where you are in the markets you're in now.
Sure.
I'll answer those questions in the order you asked them.
I agree we're seeing tremendous opportunity.
Modernization arena.
I do think that we feel like we've built out the core capabilities, we need to tackle that market. Both in the low code no code and across the open source.
Portions of that market.
And so.
We are always out in the market on M&A looking for opportunities, but I really see if we were to do anything in a T. Modernization I think it would be much more of a small tuck in acquisition focused on.
Specific new technology, we may need, but I think we really have the core of what we need to drive growth here.
Our federal client base.
I would say on.
The potential of going into <unk>.
As you know, Joe I mean, 95% of our <unk>.
Portfolios in civilian markets, we have very deep domain expertise and I think we're just seeing such significant opportunity in the civilian markets, where we have client relationships, where we can.
The white space between our domain expertise and our exceptional capabilities.
That really is the focus that's not to say, we do do some work for <unk>, but but I think given our given the domain expertise and how we really differentiate ourselves as working that white space between domain in it.
Capabilities I think we're primarily focused on Iot I mean im sorry on civilian.
That doesn't mean that down the road, we might not look there, but I think we remain.
I'm quite focused on our civilian.
Great and then maybe just talk.
One or two for Barry here Jeff.
Just got a little bit of margin expansion on gross margin on services revenue, which is good there is a lot going on out there.
Bid and proposal it sounds like I'm wondering how you are looking at balancing.
Vesting more in bid and proposal engine versus.
Margin expansion on operating level, and then I might've missed if you had that.
Organic federal growth rate and services. Thanks, a lot guys.
Yes.
Thanks for the question I think we are able to balance.
<unk>.
Expanding our BD capabilities in our proposal engine.
With.
Achieving the gross margin expansion.
We've talked about I think from a bidding perspective, we have very good feel for our clients that we work with.
We have a good understanding of the pricing.
And that is reflected in the bids that we've won and how we perform and execute on those particular contracts. So I think we've got a good balance between investing in our growth which includes the.
The proposal activity the BD engine.
And executing on those contracts sufficiently too.
The margin expansion that we've talked about.
Great and then.
Organic federal Barry.
In the quarter, Yes, I think that I don't have the number right now I mean, we were in double digit.
Organic growth in the <unk>.
<unk>.
Got it okay.
That's great Marty I. Appreciate you guys follow up with you on that specific number yet.
Please standby for our next question.
Our next question comes from Kevin Steinke with Barrington Research. Your line is now Ben.
Hey, good afternoon, everyone. So.
You mentioned, 80% of.
Year to date contract wins.
Coming from new business.
Just wondering what's really driving that high level of new business should we think about that as mostly it modernization work or is it maybe a more balanced mix.
Well I think it modernization is certainly.
Playing a significant role there, but again I would point back Kevin to the five growth areas.
I think we've talked generally about ICF scale in each of those are in terms of the revenue certainly.
Within those five growth areas. It modernization, we now have a $500 million business there that's going to play.
Quite robustly.
The 15%.
Obviously driven by the pipeline.
Public health $350 million business again, that's driving the pipeline.
And then the additional areas, so, but it's really being driven by the.
The five growth drivers.
<unk>.
Okay great.
You mentioned the accelerated efforts.
By the federal government to move on to.
Planning for responding to the next pandemic.
So do you think we've kind of moved beyond the response phase here and moving into more of that recovery and reinvention phases and if so do you.
<unk> see some sizable contract opportunities.
Coming out of the out of those efforts.
Yes.
I guess I would say I hesitate to.
Say, we're out of the immediate response I mean, the pandemic proof fit.
The ground can shift very quickly, but I do think we are seeing the clients that I mentioned CDC asper.
Beginning our focus on being a discuss on some of the longer term steps that can be taken.
<unk> taken to improve future responses to the pandemic as we've talked about in the past is that matures I think there will be potentially sizable opportunities for ICF.
And so we're pleased to see some of that focus and.
Our following that very carefully and ticket.
Now we can really we can really help clients on that front.
Okay. Good.
You mentioned.
Part of the.
Increase.
The increase in the adjusted EBITDA margin guidance, representing the <unk>.
Push out of planned corporate investments.
I don't know if I missed it but could you elaborate on that a bit more.
Sure. Thanks.
Thanks for the question.
One of the things that we really decided to do was focus in on the acquisitions that we've made and make sure that the integrations of those acquisitions.
Run very smoothly and are integrated into the company.
With that we wanted to.
Really focus on that and push off some of the investments that we're looking at from a new systems perspective, and some of the processes and the back office.
Activities that.
We still are actually engaging on but just kind of slow slowing down the spend and activity on those initiatives. So they are important to the company.
But so is.
Integration of these acquisitions, so we're still working on them, but just not at the same rate that we had initially planned and so we will continue to pick those up in the.
Later half of this year and more so into 2023.
Okay. Thank you and just lastly.
I wanted to ask about the commercial marketing services business you mentioned is still.
Operating below pre pandemic levels, but perhaps some green shoots coming in the second half of 2022 with some of your hospitality clients.
As you think about that business longer term do you think it's.
One there can return to and eventually exceed pre pandemic levels and also be.
A growth business for you over the long term.
Alright, I think that.
Yes, I think if we take a long term view, we certainly think that.
Sure.
Commercial marketing so in the hospitality sector, given the loyalty platform, we have in the proprietary.
Our system that that underlies it.
Can return to growth.
I think it remains an industry leading product.
But it's going to require obviously the rebound in the us.
Hospitality sector, particularly around business trials and as you said, we are seeing some green shoots there and so.
Those are early but positive signs.
As we've talked previously Kevin we have not assumed a material improvement in commercial marketing services and our guidance for this year, but we're pleased to see the green shoots I think.
As I said.
The material improvement in commercial marketing services and our guidance for this year, but we're pleased to see the green shoots I think.
As I said I think we've managed it pretty carefully.
I think in the longer term view there will be.
Growth opportunities there and as we've also talked about.
No.
The skills and capabilities that have resulted in the commercial market because I just do want emphasize or we've had challenges with those commercial so most commercial verticals, we do continue to leverage those capabilities into our energy work.
Our federal government work and that has allowed us to grow those businesses. So.
There is a synergistic.
Benefit of having those skills and capabilities and some of our other markets.
Okay, Great. That's very helpful. Thank you for taking the questions.
Good to hear from you.
Please standby for our next question.
Our next question comes from Tobey Sommer with <unk>. Your line is now Ben.
Hey, good afternoon. This is jasper bibb on for Tobey. Thanks for taking our questions. So I just wanted to ask about energy revenues you talked about some projects may be moving to the right there.
Are you expecting those projects to restart in the second half and more broadly maybe you could speak to your expectations for energy over the balance of the year.
Yes, I think as I.
I talked about in my remarks, I mean I think.
Well first of all I think we certainly see ongoing improvement in energy in the second half of the year I think we.
I have talked about at least mid single digit growth. There I think we've had some tough comps we grow.
11, and 12% in the first half of last year.
And so the comps will improve and I think we certainly see a pickup in our energy business in the second half of the year given given the pipeline and the sales we've had so.
And so.
So that's certainly the outlook there.
The.
In terms of our <unk>.
Moving to the right I mean, we did have.
A bit of movement of revenue service, whether it's the right in Q2, but I think we we have not changed our guidance on on on service revenue and I'm talking about our guidance prior to the Symantec base acquisition that guidance remains the same so we do expect to.
Two.
Anything Thats smooth O'reilly, who we think will pick up by the end of the year and then obviously with layer.
Semantic pits on top of that has taken our guidance from 12% service revenue growth, 17% service revenue growth for the year.
Thanks, and then the book to Bill was a bit lighter in the quarter.
The more I guess defense focused peers have talked about bottlenecks or delays in getting past quarters cleared.
Something youre seeing in the federal business and are you expecting any improvement there in the last two months of the fiscal year.
As I said in my remarks, I mean, we've really seen.
Yes.
Our sense is certainly the proposal activity.
Post the passage of the budget.
Federal Federal budget in the spring.
Certainly up to the level of new proposals for new base, we saw coming out on the federal front.
<unk>.
Gave us a sense that the clients. The contracting officers are focused on kind of getting the nucleus of our new contracts out given those budget increases on the civilian side and what's that done is it's kind of slowed.
Award decisions as the new proposals all come out I think our view is that that backlog will clear.
And in Q3 as you know Q3 is usually our strongest sales quarter and Theres a lot of pent up.
Proposals awaiting award.
And so I think we certainly expect to see.
Significant improvement in sales for Q3, and I would expect that would continue into Q4. So we're certainly expecting a pickup here in the second half of the year.
Thanks for that.
Last question for me I was just hoping you could provide a bit more color on some of the opportunities.
Might come out of this latest climate, though.
We've recently passed.
Sure So I think that.
And this bill has been out for a week and it has the past yet so I don't want to count my chickens before.
Before we anyway.
I think to build at a high level I mean, the outlines of about $370 billion in government spending in an energy security and climate programs over the next 10 years.
And that spans a variety of renewable energy type efforts and programs and tax incentives wind solar geothermal battery.
Clean energy type activities, and so I think the.
And as we've talked about quite a bit and then we have a broad array of capabilities across energy efficiency distributed energy electric vehicles.
Mitigation adaptation.
So I think there will be potentially material opportunity for us here.
Leveraging the expertise, we have across energy and climate and resilience.
It's far too early for me to provide.
Got it.
Specificity to that I think we were we're obviously quite pleased to see the bill.
Return and.
Following quite closely and I'm sure, we'll have more to say on that front.
Alright.
Yes.
Yes, it makes sense. Thanks for taking the questions guys. Thank you.
As a brief reminder to ask a question. Please press Star then one one.
Please standby for our next question.
Our next question comes from Marc Riddick with Sidoti. Your line is now open.
Hey, good evening everyone.
Mark.
So a lot of my questions have been answered, but I did want to touch a little bit on maybe what youre seeing.
And what you're expecting as far as adding of talent.
Organically.
Certainly.
On the acquisition side of things was maybe if you could touch a little bit about what your expectations are maybe for the remainder of the year for opportunities as well as availability and maybe some key areas that you'd like to agile.
Sure. So I mean, I think we've talked about at our level I mean, I think our organic growth expectations remain high single digit organic growth for the year and obviously as a consulting professional services firm.
Need to have the head count to support that growth.
And so generally I would think that if we're in the.
In the high 7% range, we're going to have to add.
Our head count we'll have to go up six 5%.
We always try to get a little leverage from existing staff and so.
In the first half of the year.
I think our head count is up about four.
445% four 5% to 5%.
And so I think we continue to add head count as we've talked about in the past.
We're certainly investing significant recruiting.
Everything we can to retain our staff.
The growth is in again as we've talked about 70% of our revenues are in our five high growth markets I think thats, where most of the focus is on the recruiting front.
In terms of the markets right.
Alright, and then as far as.
Pricing in.
Your commentary about maybe shifting some of the some of the.
The plans for maybe by a couple of quarters yourselves does that also take into account the I would imagine that takes into account availability of talent, but.
Are there any particular areas where that might be a little more difficult currently than maybe what you were expecting at the beginning of the year or has that changed much.
To add to what your expectations were no I don't think we've seen any change in our expectations. There I mean, I think the talent market remains.
As it has been for the last year.
Several quarters.
As a challenging market, particularly in.
In parts of the business where.
High growth and there's a strong demand for talent across it modernization and energy and climate.
And those types of areas cyber.
<unk>.
But generally I would say that we've <unk>.
Generally been able to add to head count we need we are investing significant recruiting.
And but.
But it is a challenging and.
Highly competitive environment right now.
Okay, great. Thank you very much.
Okay. Good to hear you Mark.
Okay.
We have no further questions at this time I would now like to turn the conference back to management for closing remark.
Thank you for participating in today's call. We appreciate your participation and look forward to seeing you at upcoming investor events.
Thank you.
Thank you, ladies and gentlemen, ladies and gentlemen, this concludes in France. Thank you for participating you may now disconnect.
The conference will begin shortly to raise your hand during Q&A you can dial one one.
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Okay.
Yes.
Yes.
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Yes.
Yes.
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Thank you.
Yes.
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Yes.