Q1 2023 BigBear.ai Holdings Inc Earnings Call
Thank you for joining the Big Bear AI first quarter conference call.
Call is being recorded.
At this time all participants are in a listen only mode and a question and answer session will follow the presentation. If anyone should require operator assistance during the conference. Please.
Press Star Zero on your telephone keypad.
To reach a live operator, I will now turn the call over to Shane Karp, Vice President marketing and Communications. Please go ahead Mr. Clark.
You can find the GAAP and non-GAAP reconciliations within our earnings release.
Now I'd like to turn the call over to Mandy.
Yeah.
Thank you Shane and thank you all for joining today's call.
The results we posted in Q1 are a testament to our capabilities across autonomous system, cyber security and supply chain and logistics.
Our 16% revenue growth year over year, despite a challenging macroeconomic environment is a remarkable achievement for the entire team and.
And speaks volume to the value, we are bringing to our clients.
We are winning in complex markets.
<unk> is the part in the industries, we operate in and positioning us for long term growth.
Our established position and ability to execute are evident and new partnerships.
New wins and extensions of our business with existing customers.
As you may have seen in our recent press release, we are excited about our new strategic partnership with L. Three Harris.
Big Bear AI is now their exclusive partner to deliver AI ml based forecasting situational.
Situational awareness analytics and computer vision capabilities for L. Three Harris unmanned surface vessel.
This integrated and collaborative approach brings significant long term opportunities and our partnership with <unk> Harris is another proof point and our continued focus on execution and long term growth.
We are also continuing to bring our autonomous systems software capabilities to market like with the U S Navy, where our analytics and computer vision capabilities continue to be assessed and demonstrated in live exercises has shown most recently with <unk> 59, and <unk> 2023.
We are incredibly excited by the Navy's April announcement to continue to scale unmanned platform integrating unmanned systems into their fourth fleet and central and South America and Operationalize. The concept task Force 59 has worked tirelessly to develop.
In addition, we believe the Navy's decision to scale unmanned platforms to the fourth week and their engagement with us through task Force 59, underscores the importance of autonomous system and future battlefield.
Our advanced AI ml capabilities enable autonomous systems to operate with unparalleled efficiency and safety.
<unk> higher risk missions.
Spanning operational reach and most importantly saving lives.
As the Battle space continues to evolve autonomous systems will play an increasingly significant role.
As a leader in providing AI ml based forecasting.
Situational awareness analytics and computer vision capabilities for these autonomous system.
Our opportunities to support this type of work are only just getting started.
We're continuing to see more rapid adoption of AI and ml based solutions and technologies throughout the entire department of defense.
Innovative approaches to acquiring these AI focused capabilities, such as the chief digital and artificial intelligence offices trade win initiative.
Provide a marketplace for D O D leaders to rapidly sourced fund and develop solutions in the AI ml digital and data analytics spaces.
We are excited to announce the recent addition of two of our products to the trade when marketplace.
Observed is our massive distributed data collection capability focused on capturing publicly available information of scale.
And has a proven track record of providing actionable decision intelligence for our customers.
For more than eight years.
Additionally, our AI ml based forecasting situational awareness analytics and computer vision capabilities originally developed for autonomous system.
That will be widely available for many other Dod use cases.
We look forward to Onboarding other portfolio solutions into the trade wind marketplace in the coming weeks and months.
This is all in the service of supporting the speed efficacy and accuracy of our customers' decision making processes.
We continue to operationalize artificial intelligence and machine learning at scale by creating order from complex data.
Identifying blind spot and building predictive outcomes.
And we're not just winning at the federal level and in defense.
The pandemic and subsequent disruption demonstrated the dramatic impact of uncertainties on supply chain and establish the need for intelligent contingency plans to minimize the impact on operations.
AI has the power to revolutionize the way we handle logistics optum.
Optimize production processes and improve overall efficiency.
Through decision intelligence algorithms machine learning and real time data analytics.
We can better forecast demand.
Minimize inventory costs and ensure on time delivery of products.
AI can play a similarly impactful role in manufacturing, helping to detect quality issues early on improved product designs automate repetitive tasks and help free up valuable time and resources for higher level work.
Ultimately, we're looking to provide a higher form of decision intelligence empowering businesses to make smarter and data driven decisions at streamline operations and help drive profitability.
We've already been making a lot of progress.
We recently extended our relationship with a global Fortune 500, food company that has been using big bear AI stimulation tools since 2020.
They work with us to extend discrete event simulation modeling to evaluate production of existing lines and also support design test and evaluation of potentially new production areas.
In support of these solutions, we've integrated resources directly with the company to perform the project management and data collection responsibilities to ensure successful and on time delivery of set objectives.
The stimulation solutions that are being created seek to identify bottlenecks and opportunities for process improvement.
While also providing the confidence that any new design or build option is tested thoroughly before any major investments are made.
We're enabling similar decision, making and a large diesel engine manufacturer, that's looking to allocate capital to phase out all designed and drive extensive design work capital equipment deployment and plant modifications.
Given the capital and resource intensive nature of this endeavor extensive verification and validation efforts of the proposed changes must be executed.
To unleash their success, we're building a comprehensive discrete event simulation model of their current and future state production system, enabling scenario analysis and experimentation and a digital twin.
As a result of our customer will be able to deploy capital and effect change faster and with greater confidence and success.
Our work in health care continues to pay off as we signed a number of new contracts with hospitals, such as the children's Hospital, Colorado, and Thomas Jefferson University hospitals for future flow, our acts and med model.
For Thomas Jefferson, We designed the department level simulation to support future state operation for observation extended recovery patients and to inform long term staffing needs.
This is incredibly important as the staffing crisis and health care continues and as the pressure on hospitals and health systems increases with the aging population needing more care.
While it's easy to focus on the headline wins the.
The foundational work we are doing to ensure our long term success continues to be a part of the team is focused.
During the quarter, we continued our move towards a streamlined approach with a simplified reporting framework and a sustained rigor on cost management.
Our work this past quarter focused on improving our operating processes and tightly managing discretionary spending.
Cost discipline will remain a priority as it forces rigor and prioritization around decision, making and unlocks growth opportunities by fueling the most impactful areas of our business, while also putting us in a much better position to deliver meaningful shareholder returns over time.
With much of our restructuring now behind us our new operating model is positioned for positive operational cash flows in the back half of 2023.
Bigger picture AI continues to experience an unprecedented wave of excitement as the entire ecosystem of enterprise application looks for new ways to leverage this disruptive technology.
Winners and losers will emerge from this period of rapid maturation and those with the ability to grow and execute at scale will be well positioned to take share across various end markets.
The industry has received a lot of attention over the last year and while the races, only getting going big bear AI has a meaningful head start.
It is with this head start that we've been able to make strategic hires such as norm loudermilk, who will be taking over the role of chief operating officer.
<unk> has 30 years of technical and executive level experience and has served in a number of roles, including Chief Operating Officer, Chief Technology Officer, and Chief Information Security Officer.
He has experience in both startup and fortune 50 companies across federal and commercial markets.
We are also promoting Greg Goldwater to chief growth Officer.
As Chief growth Officer, Greg will continue to develop strategies to drive growth across the entire big bear AI business and identify new opportunities that align with our capabilities and our core mission to deliver clarity for the worlds most complex decisions.
Lastly, many of you've likely heard the recent calls for pausing AI development.
My thoughts on this are simple.
Powerful technology that has the ability to change the world does not come without risk.
And pausing is the option that our adversaries would love for us to choose.
As an organization, who works every day to protect our nation and what it stands for.
Our role is to leverage these capabilities responsibly and ethically and put them to work where they can make a difference in our national security and then the other environments that we serviced.
That is what we do.
And it is why we are the company that our customers call when the hardest problems needed to be solved.
We have been a leader in providing a higher form of decision intelligence for more than 20 years.
We are our customers Northstar and this AI driven industrial Revolution, and we are doing so with a strong foundation to ensure a lasting impact for the company and for our shareholders.
We are a leaner more nimble business today and.
And we will hire and retain those who are here for the mission and can do things that others cannot.
We are now stronger and more resilient than we were six months ago and we are just getting started.
With that I will turn the call over to Julie for a detailed review of our financials.
Thank you Mandy.
Before I dive into the financials I'd like to address the consolidation of our legacy cyber and engineering and analytics segments into one reportable segment beginning this quarter.
As Randy discussed we continue to reorganize the business to drive improved operational efficiencies and as part of the leadership announcements. We've made today, we're moving into a more functional structure that will ensure we go to market develop products and solutions.
Drive delivery execution as one team.
Segment changes were implemented as of Q1 2023 and historical data in a new segment is available as a consolidated view.
Now, let's turn to our first quarter results.
Revenue for the quarter was $42 2 million up 16% year over year and compared to $36 4 million in the first quarter of 2022.
This is primarily driven by growth with our army customer through contracts, such as global force information management or <unk> phase II and other key programs.
As we have stated in the past I do want to reemphasize that our revenue can be lumpy and can fluctuate meaningfully depending on the quarter in which contracts are awarded milestones.
While stones achieved or contracts complete.
Total gross margin was 24% in the quarter at 300 basis point decrease from 27% in Q1 2022.
Driven by additional cost on the <unk> phase III program, which completes in the second quarter of 2023.
We're performing well on this program, but continued to invest in critical capabilities to maintain our strong position as we move towards the production contract.
We are in active discussions to continue this important work through GAAP funding until the production contract can be funded with 2020 for government fiscal year funding.
Backlog was $197 million at the end of the first quarter, which is down 10% or $22 million compared to fourth quarter of 2022.
This is driven by the removal of Virgin orbit from our backlog due to the uncertainty from their recent bankruptcy announcement.
Now turning to expenses for Q1 operating expenses were $22 2 million, which.
Which includes R&D expense of $1 1 million and SG&A expenses of $20 4 million.
On a year over year basis total operating expenses were lower by 15% this year in Q1.
As a reminder, we began to ramp up indirect hiring in late Q1 last year.
With hiring hitting a peak in Q2 2022 before declining substantially through the rest of the year.
We will continue to be disciplined in our expense management and focused on implementing scalable processes operating rigor and driving overall efficiency across our business.
Net loss was $26 2 million in the quarter versus $18 8 million in Q1 of 2022.
Net loss of $26 2 million for the first quarter of 2023 included $10 6 million of noncash expense related to the change in fair value of pipe warrants that were issued in January 2023 three.
$3 8 million of equity based compensation and.
And <unk> 8 million related to restructuring charges.
Net loss for the quarter of 2022.
It was $18 8 million.
Adjusted EBITDA was a loss of $3 8 million in Q1 2023 compared to adjusted EBITDA loss of $2 5 million in the fourth quarter and.
And $3 9 million in the third quarter of last year.
Q1, adjusted EBITDA was impacted by a onetime bad debt reserve booked against receivables owed by Virgin orbit, who announced bankruptcy in April .
In addition to the gross margin compression from investments in the quarter on key programs such as C. Some phase II.
And review of the balance sheet at the end of the first quarter, we had cash and cash equivalents of approximately $21 8 million.
This increase was due to the pipe transaction that we completed in January we continue to focus on lowering our cash burn and second half of 2023 to get to positive operational cash flow, which excludes nonrecurring and nonoperational items, such as interest payments transaction fees and tax payer.
For stock vesting.
In addition to lowering our cash burn.
$500 million shelf registration that we filed in April will allow us to more easily access capital markets moving forward and supportive organic and inorganic growth at this pivotal time in the AI industry landscape.
Now turning to our financial outlook.
Today, we are reaffirming our guidance of expected 2023 revenues in the range of $155 million to $170 million.
We continue to expect adjusted EBITDA to be single digit negative adjusted EBITDA in millions for 2023.
As Mandy previously stated 2023 continues to be a foundational year for us as we build out our operational rigor and enhance our go to market capabilities, but we are thrilled with the progress we've seen so far.
We're very excited about our new strategic partnership with L. Three Harris to deliver AI ml capabilities to their unmanned surface vessels as well as emerging opportunities, we as we expanded our core and adjacent markets.
We will continue to be disciplined in cost management, and we will make targeted investments to accelerate our position as an industry leader in AI.
I'll now turn to Mandy for final remarks, before we turn to Q&A.
Yeah.
Thank you Julie.
I'm extremely excited about the pipeline ahead, and our ability to deliver as we move forward.
Our cost cutting initiatives have been challenging, but we continue to be proud of the focus and the agility of the big Barry I team to collaborate and innovate and changing times.
Operator, we are ready for questions. Thank you.
Thank you if you have a question. Please press star one on your telephone keypad at this time.
At any time. Your question has been answered you can remove yourself from the queue by pressing one.
Again, ladies and gentlemen, if you have a question or comment. Please press star one on your telephone keypad.
One moment, while we poll for questions.
And our first question comes from Mike Latimore.
Please go ahead.
Alright, great. Thank you.
Super results very nice to see and congrats on the new partnership there.
Thank you Mike Thanks, Mike.
Yeah.
Starting with autonomous.
Economists vessel program partnership.
Can you just provide a little more color there.
Sure.
Maybe start with the type of revenues you would see the software professional services data.
Could we sort of Simplistically say, you'll get a certain amount of revenue per vessel shift, but maybe just characterize that kind of opportunity to Walmart.
Absolutely happy to so.
As we articulated in our joint press release.
One of the things that we're really excited about it and this is like I say comprehensive teaming agreement that allows us to deliver AI for their autonomous surface vessel now what this means for us right and where we've been working is our current projects have been focus on the <unk>.
Office of Naval research doing operational demonstration with the integrated solution right, which is our capabilities running on health rehearses autonomous are fulfilled and at the conclusion of the exercise our intent at that point is that kind of gain a deeper understanding of not only the progress that we've made but how we really.
To scale. It so I think the short answer Mike is that.
We're still in the early days of figuring out how with embedded capability.
Bring it and kind of go faster right from an execution standpoint in terms of delivering more to the customer, but I think it's fair to assume that it's really on a per vessel basis right because as the vessel base grows we will deploy more of our instances and we will see growth for Matt does that answer your question.
Yes definitely and.
Clearly the.
The forecast for these autonomous vessels is for a pretty pretty steep curve youre right.
That's right. It's it's I think one of the most dynamic and rapidly growing parts of our industry and we feel really privileged to be able to partner with such a great organization like health regards.
Great great.
And then on the <unk> you mentioned I think you said that the phase III concludes this quarter.
And then you might get some gap funding until the production phases.
Yes, so we are doing really well.
The U S. Army's Global Force information management program and that is the one where we're sole source for phase two.
And as we talked about previously while the final contract winner for Phase III has not yet funded now.
We are really well positioned following that work continuing our delivery and our relationship with the customer we are anticipating a six month extension to the current phase of G for them to complete some added functionality before moving to the production contract.
And we're expecting a more normal margin profile associated with this project as it moves into production.
Got.
It sounds like what that extension you would continue to.
Do work and can see revenue.
That's correct, yes, and then the next phase of the contract is obviously being finalized by the U S Army, but it's our intent to continue to work in progress. So that when it's time to go to production, we are as ready as possible.
Okay great.
Sounds good and then just lastly on the consolidation of the reporting segments.
Is it fair to say that you know a lot of the projects you're working on basically are using the resources from analytics and cyber just sort of makes sense to kind of have it as one.
Maybe can you just touch on that and how much crossover there actually.
Yeah, I mean, basically we are instead of continuing to focus.
Focus on these two different segments, what we recognize is in order to streamline and really focus and part of it is the announcements we've made today with a with Greg and with norm joining the team. We are thinking that we're much more functionally organized and this is really going to help us just to streamline the way we deliver.
Our services to our customers as well as just operationally much more efficient. So it's really just a combination of those two and it just allows us to be much more efficient in how we're thinking about the business.
Great. It makes my modeling little easier too.
We liked.
Anything we can do [laughter] alright.
Thanks, very much best of luck.
Thanks, Mike Thanks, Mike.
Our next question comes from Louie Dipalma.
William Blair. Please go ahead Sir.
Mandy and Julia good afternoon.
Hi, Louise.
Hi, and congrats on the partnership with L. III Harriss.
Thank you very much we're incredibly proud.
You May have mentioned this in the prepared remarks, but what is the scale of.
L. Three Harris partnership in terms of the number the number of unmanned vessels that you will be deployed on I think in the answer to the previous question.
You suggested that you would be.
Based upon that.
The number of vessels, but did you actually give out the number of vessels that are planned for the initial phase.
Yeah.
We did not because the I mean frankly the plan is that we will scale together.
<unk> role in the partnership is to supply all three Harris with our computer vision predictive analytics and related AI application to improve or to improve demand on muscle unmanned teaming.
On the water and so our.
How we're looking at it is that as additional vessels are built in our release and begin to operate that our software will be running on that.
Okay, So will it be.
Be focused more on new vessels versus the existing suite or will it be a combination of both.
No. It's a combination of both and that's a that's a great question. So there is obviously a go forward market associated with new unmanned surface vessels that are built but theres also a market associated with retrofitting existing.
Rustles around the water and are tend to be able to support and service both.
Great and.
Someone on the same topic, Oh, three Harris, there, obviously, a huge contractor and they do a lot more than just these unmanned vessel unmanned vessel in which it seems that there are many more partnership opportunities for you is.
Is there the potential that.
Your data analytics platform can also work with their space systems in there like tactical communication systems and now they're cameras that are deployed on aerial drones are you in discussions for any of those other opportunities.
It's a great question I think it's something that's important and important to note.
Part of our relationship with all three here is that we have had a relationship with over here for a long time, we're already in many ways an integrated partner when we work in a variety of different parts of their business. This particular.
Strategic partnership is focused on the maritime used cases for autonomous surface vessel.
I would love to stay in the future and I think as we continue to be successful together end market I have no doubt that additional market opportunities will open up and it's our job to.
It will be a great partner in that so that we earn that right together.
Thanks.
And for Julie I think you referenced the upfront costs associated with the phase two of the the <unk> contract because you're incurring these.
Upfront costs.
The margin profile for.
The production contract expected to be.
More attractive than the margin profile for.
Jason Phase two.
Yes, absolutely I mean, you know that that is part of the the overall you know O T. A structure of the way the federal government is not doing some of their contracted and so.
We move forward from a phase one which is basically an investment upfront to Esa two which as you know.
Some investment as well as hopefully some shared some profitability you're you're proving out your capabilities you are making sure that things are working correctly and then as you move into production. That's when you would expect the margin to two significantly get better.
So we are looking forward to that day, when we can prove out that capability and we move into the production, but that is just to be clear on that but we've you know we would expect that to be.
Very late this year based on the timing that we're currently hearing I mean, we're hoping sooner, but we know that theyre going to continue to support us.
With GAAP funding until that can happen so.
That probably will not happen until later later in the year FY 'twenty for funding.
Great and in terms of your end markets, there's been a lot of focus on the macro economy and the recession, but you seem to indicate that your software is gaining traction for supply chain use cases, and you mentioned.
Yourself, where is deployed in different hospitals.
Are you continuing to exceed growth even in this.
Difficult macro economic environment from your commercial customer base.
It's a great question and I think the short answer is yes.
The longer answer is that our software capabilities in the commercial side right. The core area, where we're seeing a lot of growth as it related to our discrete event simulation capabilities and if you think about what those are and the purpose that they serve they really sit in the critical path from an operational decision.
Making standpoint, and so if youre going to organization that's dealing with.
The macroeconomic pressures that we've been talking about and you're looking for opportunities to be able to deploy capital as efficiently as possible to be able to scale and optimize the work that you do.
Either from a manufacturing standpoint, or a distribution standpoint, or even how youre running your warehouses.
Our tools fit right into that and there's a lot of companies are going through the process of figuring out how to deal with shifts in demand as well as continued shifts in technology and the evolution of their products, we fit into the modeling capabilities around that because that's our core right. We do digital twins.
We do simulation scenarios for that type of planning. So we do continue to see that part of our business grow, particularly when paired not only with the product side, but also with the services side associated with.
The subject matter expertise that we bring to a lot of those use cases right like we've talked about previously hospitals and health systems with life Sciences manufacturing and shipyard, that's what we know how to do.
Fantastic. Thanks, Julian Thanks Mandy.
Very welcome thanks for it.
And our next question.
Oh.
Please go ahead.
Yeah, Hi, Thank you for taking my questions. This is a promising on behalf of the Taj had drawn so firstly.
There's been a lot of talk in the last few months on generative AI and then we've seen a lot of things.
In the public domain and wanted to get a sense from you Mandy.
How does that figure into what big data offering today, what are you working on.
Whether it helps you a commercial side youre governments out of the business.
Now it seems a lot of this is going to come off.
Sure I mean, I think as we talked a little bit about on the.
The last earnings call right large language models and these capabilities have been in use straight by ourselves as well as others for a while I think what's really extraordinary about what's happening today is that we're seeing the scaled implementation and availability of them and are really democratize fashion.
We're still very early days in how this type of technology is going to be used in the broader consumer community, but from an application to the industries that we service rate focused on defense Intel complex manufacturing and industrial.
We absolutely right leverage those types of models as a part of our portfolio of offerings and the services that we deliver and we will continue to do so.
So maybe just diving into the you know some of the things that have been beneficial maybe just mentioned digital twins, but I've been very machine learning type models right and now we're seeing things that are.
How should I say are kind of a brief one transformer models. So it seems to be a bit of a leapfrog here wanted to get a sense just broader sense as soon as a technology.
What is your view of transformer models getting adopted in domain specific I mean, I would imagine you talked about discrete events within manufacturing health care.
That would be the next step right I believe theyre not in implementation today, but how do you view that.
Maybe five years.
Yeah. It's a fair question I think you have to break apart the use cases and I think your point on <unk> is important because they're going to be certain environments that we're going to see the applicability of these types of.
Models.
The earlier right just as a result of whether it's the regulatory environment or a security environment.
Maybe better suited right for early adoption and those use cases.
Your point about discrete event simulation is excellent because we do see a lot of use cases emerging around things like predictive maintenance right being able to do further optimization is a derivative of running past scenarios and being able to really lean into the infinite compute that we can tap into today. So.
Yes.
A transformation happening under our feet.
Unquestionably are we.
Starting to I think wrap our arms around the multi threaded implications of it also yeah.
Seeing a lot of announcements at the market in terms of being able to put these types of interfaces in front of traditionally kind of engineering focused experiences.
Are the markets that we service and fit in tend to be highly technical and tend to require a little bit more hands on in terms of the data science and the role of the engineer, but do I see opportunities for efficiency and scale, yes, right, we're continuing to make investments in those.
Great well. Thank you so much so maybe you could help me just tie this into what.
What youre seeing on the commercial revenue side, obviously that used to be an area of growth for a big bear.
But now you're also combined your analytics division CNA. So is there a shift in the way where you view your commercial business or should we also view that as an optionality going forward and something that would be more than 10% at some point in the next few years.
As I mentioned previously we're continuing to see our commercial business grow just as we're seeing our broader federal business grow.
I continue to believe that both of those sides of our portfolio are going to be successful and as we cross that threshold. We will certainly begin to talk about them in that way.
Got it and I would imagine the gross margin profile of that business would be would be closer towards software towards.
When did you see with the new defense contracts.
Right.
I think what's important to remember is that at the end of the day. We're a technology led solutions organization. So the products that we offer the software capabilities that we offer in most cases are highly tailored to a very complex environment right. The industrial community, we bring services along with those because of the subject matter expertise.
Specific so I would say, we'll probably be in the realm of other tech led services providers.
That's helpful. Thank you.
And then maybe looking at the full year revenue guidance and you had a pretty solid quarter.
It just seems like it's going to be flat for the rest of the year right is pretty standard across the board for the remaining three Hughes.
Given all the contracts and the relationships that you talked about today.
We owe to the relationship.
The progression with <unk>.
Essentially you know something from the IV IC contract coming into play.
Why wouldn't we see revenue improve through the rest of the year.
Yeah.
Yeah, I was going to say this is a reminder, that we mentioned this in our in our statement earlier, but or because of the nature of the work that we do our revenue can be lumpy.
Its based on when contracts start it's based on milestones. It's based on some contracts are completing.
And so I would be just I would advise you to make sure you're thinking about that overall structure of our type of business. I mean, I think that will smooth out over time, as we become more mature and and getting larger but as of right now would be lumpy.
And so we're just really looking at our profile in terms of what we have visibility to as of now and as of today and what we see it down the pike. So.
We just wanted to make sure that we're providing the right the right guidance based on what we're seeing and as those things come up.
Assess them and decide if that's the right time to make a change but right. Now. This is this is our guidance.
Okay. That's fair. Thank you so much for the clarity.
And then maybe one last question.
The shelf registration.
Particularly should it be that you would need maybe one other round of funding before you get to cash flow positive.
Take away from it or it's just something to keep on the back burner.
As a safety net.
Well no I would say you know in terms of our liquidity and our cash flow forecast I mean, we are saying that we believe that with our cost with our restructuring efforts that we've done so far and with our cost structure that we have in place based on our profile that we expect to be cash flow positive in the back half of the year on an operational basis.
And nonrecurring so what I mean by that being if you look at our true operations are recurring operations and take out you know I'll say interest payments and.
Things like tax payments on vesting truly recurring operations, we expect to be positive you know that said, we didn't do the shelf.
To allow us to have access to those capital markets. So that we can go much more easily.
Look at opportunities whether that through inorganic growth or through just overall operations are accelerating our pace that we can go to the capital markets, if we need to but right now we're saying as we stand today with our liquidity profile, we feel okay about the back half of the year being cash flow positive from an operational perspective.
Well. Thank you so much I'll get back in books.
Thank you.
Thank you. Thank you.
There are no further questions at this time.
[noise].
This concludes.
The conference call. We thank you for your participation.
Please disconnect your lines at this time and have a great day.
Yeah.
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