Q1 2025 The Descartes Systems Group Inc Earnings Call

Operator: Good afternoon, ladies and gentlemen, and welcome to the Descartes Systems Group quarterly results conference call. At this time, all lines are in listen-only mode.

Good afternoon, ladies and gentlemen, and welcome to the <unk> systems Group quarterly results conference call at this time.

Scott Group: Listen only mode. Following the presentation, we will conduct a question and answer session. If at any time. During this call you had quite you need assistance. Please press star zero for the operator. This call is being recorded on Wednesday May 29, 2024, and I would now like to turn the conference over to Mr. Scott began thank.

Operator: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, May 29, 2024.

Scott Group: Please go ahead.

Scott Group: Yes.

Scott Group: Thanks and good afternoon everyone. Joining me remotely on the call today are Ed Ryan, CEO, and Allan Brett, CFO. I trust that everyone has received a copy of our financial results press release that was issued earlier today. Portions of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities laws. These statements are made under the safe harbor provisions of those laws. These forward-looking statements include statements related to our assessment of the current and future impact of geopolitical, trade, and economic uncertainty on our business and financial condition, Descartes' operating performance, financial results, and condition, Descartes' gross margins and any growth in those gross margins, cash flow and use of cash, business outlook, baseline revenues, baseline operating expenses, and baseline calibration, anticipated and potential revenue losses and gains, anticipated recognition and expensing of specific revenues, Potential Acquisitions and Acquisition Strategy, Cost Reduction and Integration Initiatives, and other matters that may constitute forward-looking statements.

Thanks, and good afternoon, everyone. Joining me remotely on the call today are Ed Ryan CEO and Allan Brett CFO I Trust that everyone has received a copy of our financial results press release that was issued earlier today.

Scott Group: These forward-looking statements involve known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results, performance, or achievements of Descartes to differ materially from the anticipated results, performance, or achievements implied by such forward-looking statements. These factors are outlined in the press release and in the section entitled Certain Factors That May Affect Future Results in Documents Filed and Furnished with the SEC, the OSC, and other Securities Commissions across Canada, including our Management's Discussion and Analysis filed today.

Scott Group: Portions of today's call other than historical performance include statements of forward looking information within the meaning of applicable securities laws. These statements are made under the safe Harbor provisions of those laws.

Scott Group: These forward looking statements include statements related to our assessment of the current and future impact of geopolitical trade and economic uncertainty on our business and financial condition Descartes operating performance financial results and condition.

Scott Group: <unk> gross margins and any growth in those gross margins cash flow and use of cash business outlook baseline revenues baseline operating expenses and baseline calibration anticipated and potential revenue losses and gains anticipated recognition and expensing of specific revenues and expenses potential acquisitions and acquisition strategy.

Scott Group: Cost reduction and integration initiatives and other matters that may constitute forward looking statements.

Scott Group: Yeah.

Scott Group: These forward looking statements involve known and unknown risks uncertainties assumptions and other factors that may cause the actual results performance or achievements of descartes to differ materially from the anticipated results performance or achievements implied by such forward looking statements.

Scott Group: These factors are outlined in the press release and in the section entitled certain factors that may affect future results in documents filed and furnished with the SEC the OSC and other securities commissions across Canada, including our management's discussion and analysis filed today.

Scott Group: We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future. Please be cautioned that such information may not be appropriate for other purposes. We don't undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions, assumptions, or circumstances on which any such statement is based, unless as required by law. And with that, I will turn the call over to Ed Ryan.

Scott Group: We provide forward looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future. You are cautioned that such information may not be appropriate for other purposes.

Scott Group: We don't undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward looking statements to reflect any change in our expectations or any change in events conditions assumptions or circumstances on which any such statement is based.

Scott Group: Sept as required by law.

Speaker Change: With that let me turn the call over to Brian.

Edward J. Ryan: Hey, thanks, Scott, and welcome, everyone, to The Call. Today, we're reporting record first-quarter results, continued strong organic growth, improvement in our operating margin from a year ago, and two new businesses that have joined the Descartes team. We're excited to go over these results with you and give you some perspective about the business environment we see right now. But first, let me give you a roadmap for The Call.

Brian: Hey, Thanks, Scott and welcome everyone to the call today, we're reporting record first quarter results continued the strong organic growth.

Brian: Moving to our operating margin from a year ago, and two new businesses that have joined the Nucor team.

Speaker Change: We're excited to go over these results with you and give you some perspective about the business environment, We see right now, but first let me give you a roadmap for the call I'll start by hitting some highlights of last quarter and some aspects of how our business performed I'll then hand, it over to Alan who will go over the Q1 financial results in more detail after that I'll come back and provide it.

Edward J. Ryan: I'll start by hitting some highlights from last quarter and some aspects of how our business performed. I'll then hand it over to Allan, who will go over the Q1 financial results in more detail. After that, I'll come back and provide an update on how we see the current business environment and how our business was calibrated as we entered our second fiscal quarter. And we'll then open up to the operator to coordinate the Q&A portion of The Call. So let's start with the quarter that ended on April 30th.

Speaker Change: Update on how we see the current business environment and how our business was calibrated as we entered our second fiscal quarter and will then open up to the operator to coordinate the Q&A portion of the call.

Speaker Change: So let's start with the quarter that ended April 30th key metrics. We monitor include revenues profits cash flow from operations operating margins and returns on our investments for this past quarter. We again had outstanding performance in each of those areas total revenues and services revenues were both up 11% from a year ago adjusted.

Edward J. Ryan: Key metrics we monitor include revenues, profits, cash flow from operations, operating margins, and returns on our investments. For this past quarter, we again had outstanding performance in each of those areas. Total revenues and services revenues were both up 11% from a year ago. Adjusted EBITDA was up 16% from a year ago. Adjusted EBITDA margin was steady at 44% and up two points from a year ago.

Speaker Change: EBITDA was up 16% from a year ago, adjusted EBITDA margin was steady at 44% and up two points from a year ago.

Edward J. Ryan: And we generated $63.7 million in cash from operations, representing 95% of adjusted EBITDA. At the end of the quarter, we had almost $270 million in cash, and we were debt free with an undrawn $350 million line of credit. This is after we used about $140 million in connection with acquisitions near the end of the court. We remain well-capitalized, cash-generating, have strong organic growth, and remain ready to continue to invest in our business. Let me talk a bit about the $140 million that we invested in acquisitions. At the end of March, OCR Services joined our business.

Speaker Change: And we generated $63 $7 million in cash from operating operations, representing 95% of adjusted EBITDA.

Speaker Change: The end of the quarter, we had almost $270 million in cash and we were debt free with an undrawn $350 million line of credit.

Speaker Change: This is after we used about $140 million in connection with acquisitions near the end of the court.

Speaker Change: We remain well capitalized cash generating strong organic growth and remain ready to continue to invest in our business.

Speaker Change: Let me talk a bit about $140 million that we invested in acquisitions at the end of March OCR services joined our fitness OCR is a great business and a natural fit with our global trade intelligence team.

Edward J. Ryan: OCR is a great business and a natural fit with our global trade intelligence team. OCR's strengths are in sanctioned party screening and export compliance, a great complement to our existing trade compliance business. As I've mentioned on past calls, sanctioned party screening is where you review your transactions, shipments, customers, and or employees against lists published around the world to identify people and companies who are subject to sanctions. These sanctions often result from conflicts between countries, such as the numerous new sanctions introduced over the past two years related to the Russia-Ukraine conflict, with a number of geopolitical conflicts going on right now. The importance of insurance compliance with the web of international sanctions is critical to many businesses, and consequences include massive fines and prohibitions on trading.

Speaker Change: Our strengths are and sanctioned party screen and export compliance a great complement to our existing trade compliance business.

Speaker Change: As I've mentioned on past calls sanctioned party screening as you review your transactions shipments to customers and to our employees against list published around the world to identify people and companies who are subject to sanctions. These sanctions often result for conflicts between countries such as the numerous new sanctions introduced over the past two years really.

Speaker Change: Two the Russia, Ukraine, Ukraine conflict with a number of geopolitical conflicts going on right now the importance of insurance compliance with the web of international sanctions is critical to many businesses. The consequences include massive fines and prohibitions on tree and.

Edward J. Ryan: In addition, OCR has been leveraging AI solutions in the gathering, compilation, and presentation of trade and sanctioned party information, so there are potential efficiencies to be gained as we integrate the businesses together. OCR's expertise in export compliance also enhances our wider global trade management solution portfolio. In particular, they have great strength in export license procurement, tariff classification of goods, and helping companies comply with complex trade regulations, such as the International Traffic and Arms Regulations, ITAR.

Speaker Change: In addition, OCR has been leveraging AI solutions in the gathering calculation and presentation of trade and sanctioned party information. So there are potential efficiencies to be gained as we integrate the businesses together.

Speaker Change: <unk> expertise in export compliance also enhances our wider global trade management solutions portfolio.

Speaker Change: In particular, they have great strength in export license procurement tariff classification of goods and helping companies comply with complex trade regulations, such as the international traffic in arms regulations ISR.

Edward J. Ryan: OCR has some large multinational companies as customers that we believe are great prospects for further Descartes solutions. More generally, as we look at this market, we see continued opportunities with our combined solution set as the challenges with global trade and compliance increase even more, for example, with the recent tariffs and sanctions issued by the US with respect to China.

Speaker Change: OCR has large multinational companies as customers that we believe are great prospects for further Descartes solutions more generally as we look at this market. We see continued opportunities with our combined solution set as the challenges with global trade and compliance increase even more for example, with the recent tariffs and sanctions issued by the U S with.

Back to China.

Edward J. Ryan: OCR is larger than some of our recent acquisitions. We believe their team of trade professionals in the United States and India is a great complement to our business, and we're motivated to show our customers the additional value we can add as a combined team. Welcome to the entire OCR team.

Speaker Change: Let's see our is larger than some of our recent acquisitions. We believe 13 trade professionals in the United States in India are a great complement to our business and are motivated to show our customers. The additional value. We can add as a combined team welcomed to the entire OCR team, we're looking forward to great things.

Edward J. Ryan: We're looking forward to great things working together. In the latter days of the first quarter, we also combined with ASD, who also uses the brand name Time, T-H-Y-M-E. ASD has two principal areas in their business. First, ASD is involved in customs and regulatory services for trade with a very strong presence in Ireland. This is a great complement to our existing customs business in Europe and allows us to provide our customers with an even more comprehensive solution for customs and security.

Speaker Change: Working with you.

Speaker Change: And the later days for the first quarter. We also combined with AIP ASD, which who also uses the brand named time T. H Y N E.

Speaker Change: ASB has two principal areas of their business first ASD is involved with customs and regulatory services for trade with a very strong presence in Ireland. This is a great complement to our existing customers business in Europe and allows us to provide our customers with an even more comprehensive solution for customs and security filings.

Edward J. Ryan: The second area of their business is focused on helping the air community get visibility into assets. This is a very natural and exciting complement to our existing low-energy Bluetooth solutions that help air carriers and ground cargo handlers track air cargo containers at airports around the world. We're excited that we're joined by a team that has a similar mission to help the wider supply chain community of shippers, carriers, logistics service providers, and customs authorities connect and collaborate to manage the lifecycle of shipments. Welcome to the whole team, and we're looking forward to working with you.

Speaker Change: The second area of their business is focused on helping the air community to get visibility into assets. This is a very natural and exciting complement to our existing low energy Bluetooth solutions that help air carriers and ground cargo handlers are perfect containers at airports around the world.

Speaker Change: We're excited that we're joined with the team at a similar mission to help the wider supply chain community of shippers carriers logistics service providers and customs authorities connect and collaborate to manage the lifecycle of shipments and welcome to the whole team and we're looking forward to getting after it with you.

Edward J. Ryan: As mentioned, these acquisitions represent $140 million in investment on behalf of our customers in the solutions we can offer them. This is consistent with our historical plan and what we intend to do going forward. Our business is designed to generate and have access to capital that allows us to complete acquisitions that complement our business. In addition, we make organic investments in our business to keep growing what we already have. Both are important for us as we continue building a company that our customers can rely on to meet their supply chain and logistics technology needs over the long term. Our focus is on total growth, both organic and inorganic, specifically total growth and adjusted EBITDA.

Speaker Change: As mentioned these acquisitions represent $140 million of investment on behalf of our customers into the solutions. We can offer them. This is consistent with our historical plan and what we intend to do going forward. Our business is designed to generate and have access to capital that allows us to complete acquisitions that complement our business. In addition, we make organic.

Speaker Change: <unk> investments in our business to keep growing and what we already have both are important for us as we continue building a company that our customers can rely on them to meet their supply chain and logistics technology needs over the long term.

Speaker Change: Our focus is on total growth, both organic and inorganic specifically total growth in adjusted EBITDA. This focus has served us well to build the company we have today and the company we continue to build for the future.

Edward J. Ryan: This focus has served us well to build the company we have today and the company we will continue to build for the future. We've talked on past calls about the investments we've made in organic growth, and our financial results have been showing the benefits of those investments. We invested in our customer success function to help our customers understand how they can make further use of our solutions and differentiate ourselves from other competitors that are out there.

Speaker Change: We've talked on past calls about the investments we've made in organic growth in our financial results have been showing the benefits of those investments we invested in our customer success function to help our customers understand how they can make further use of our solutions and differentiate ourselves from other competitors that are out there.

Edward J. Ryan: We invested in geographic and product-specific personnel in our commercial organization to help prospects understand the value that Descartes Solutions can bring to their organization. And we invested in our service group to help customers accelerate their ability to activate and use our solutions. Those investments have been paying off for our customers and for Descartes. We had another solid quarter of organic growth.

Speaker Change: We invested in geographic and product specific personnel in our commercial organization to help prospects understand the value that the card solutions can bring to their organization and we invested in our service group to help customers accelerate their ability to activate and use our solutions.

Speaker Change: These investments have been paying off for our customers and for Descartes, We had another solid quarter of organic growth. The four principal areas driving growth where are our global trade intelligence business, a real time visibility business, our routing and scheduling business and our ecommerce business in past calls Ive made detailed comments about those areas.

Edward J. Ryan: The four principal areas driving growth were our global trade intelligence business, our real-time visibility business, our routing and scheduling business, and our e-commerce. In past calls, I've made detailed comments about those areas of our business and the growth drivers, so I'll just make some brief comments on each here today. The first area of growth is global trade intelligence, which encompasses sanction party screening, goods classification, and trade content. Growth here has been influenced by the continuing importance of compliance with global sanctions that I spoke about earlier in connection with OCR, the continuing changing landscape with tariffs and duties, and changing trade routes and modes influenced by factors such as challenges with navigating through the Red Sea and Panama Canal.

Speaker Change: Our business and the growth drivers. So I'll just make some brief comments on each here today.

The first area of growth as global trade intelligence. This encompasses sanctioned party screening goods classification and trade content.

Speaker Change: Growth here has been influenced by the continuing importance of compliance with global sanctions that I spoke about earlier in connection with OCR continue changing landscape with tariffs and duties and a changing trade routes and most influenced by factors such as challenges with navigating through the Red Sea and panic in the Panama Canal.

Edward J. Ryan: The secondary growth area is in real-time visibility. These solutions help customers get visibility into shipments in motion across multiple modes of transportation. Growth here has been influenced by the strength of our existing network of carriers and our continued investment in ways to get new carriers activated on our network quickly, whether by Descartes or by our customers using our self-activation tools. We continue to be among the best, if not the best, providers in the industry at actually getting you visibility into your shipments. With some of the highest tracking rates in the industry, we believe that we are the premier provider of real-time visibility.

Speaker Change: Second area of growth is in real time visibility.

Speaker Change: These solutions help customers get visibility to shipments in motion across multiple modes of transportation growth here has been influenced by the strength of our existing network of carriers and our continued investment and ways to get new carriers activated on our network quickly whether by Descartes, whereby our customers using our self activation tools, we continue to be among the best if not the.

Speaker Change: The best providers in the industry and actually getting your visibility you visibility for your shipments to some of the highest tracking rates in the industry. We believe that we are the premier provider for real time visibility.

Edward J. Ryan: The third area of growth is routing and scheduling. This includes solutions that help customers use vehicles and their fleet efficiently, promote driver safety, and improve the customer delivery experience. Our ground cloud safety solutions are really providing value to customers in the market and distinguish themselves with rapid driver feedback and coaching.

Speaker Change: Third area of growth is routing and scheduling. This includes solutions that help customers use the vehicles in their fleet efficiently promote driver safety and improve the customer delivery experience. Our grant about safety solutions are really providing value to customers in the market and distinguish themselves with rapid driver feedback and coaching our continued strength.

Edward J. Ryan: Our continued strength in last mile delivery has also made us a solution of choice for many fleet owners. And the final area of growth is in e-commerce, shipping, and fulfillment. Our solutions help customers navigate e-commerce logistics challenges as they grow and include shipping and warehouse functionality. We saw good shipment volumes with smaller e-commerce sellers. The wider parcel shipment market is really in flux in the United States, with the United States Postal Service changing its pricing and go-to-market model.

Speaker Change: And last mile delivery has also made US a solution of choice for many fleet owners.

Speaker Change: And the final area of growth is in e-commerce shipping and fulfillment our solutions help customers navigate e-commerce logistics challenges as they grow and includes shipping and warehouse functionality.

Speaker Change: We saw good shipment volumes with smaller e-commerce sellers the wider parcel shipment market is really influx in the United States with the United States Postal service changing its pricing and go to market model Amazon logistics. Some Anthony itself is the second biggest player parcel shipping behind the United States Postal service <unk> recovering.

Edward J. Ryan: Amazon Logistics cemented itself as the second biggest player in parcel shipping behind the United States Postal Service, UPS recovering from past labor challenges, and FedEx relying more and more on third-party contracted delivery partners. We work with each of the US Postal Service, Amazon, UPS, and FedEx to help our customers get the most affordable and best service for their delivery.

Speaker Change: Past labor challenges and Fedex, relying more and more third party contracted delivery partners, we work with each of domestic postal service Amazon logistics, EPS and Fedex to help our customers get the most affordable and best service for the deliveries.

Edward J. Ryan: We've done a good job working with these partners to help drive growth for our business. We're pleased our business grew as it did during the quarter, when there was pressure on global shipment volumes. Going into the quarter, we saw caution from various logistics service provider customers about the potential for slow growth or declining volumes. However, as the quarter progressed, we saw various logistics service providers increasing their forecasts for shipping, in particular in the ocean, where the Red Sea challenges created strong demand and increased pricing for shipping.

Speaker Change: <unk> done a good job working with these partners to help drive growth for our business.

Speaker Change: We're pleased our business grew as it did during the quarter, where there was pressure on global shipment volumes going into the quarter. We saw caution for various logistics service provider customers about the potential for slower growth or declining volumes as the quarter progressed, we saw various logistics service providers, increasing their forecast for shipping in.

Speaker Change: And ocean, where the rest of the challenges it creates strong demand and increased pricing for shipping.

Edward J. Ryan: In the past, we've seen strength in the oceans subsequently translate to increases in truck shipments to move those goods that originated on the ocean, so while this quarter saw slower growth in international and U.S. domestic shipping volumes, logistics service providers have signaled increased optimism for their own businesses in the rest of the year. Overall, our business grew well again and has shown its resiliency in a quarter with some global shipping volume challenges.

Speaker Change: In the past we've seen strength in ocean subsequently translates to increases in truck shipments to move those goods that originally on the ocean. So while this quarter saw slower growth in international and U S. Domestic shipping volumes logistics service providers have signaled increased optimism for their own businesses and the rest of the year.

Speaker Change: Overall, our business grew well again has shown its resiliency in a quarter with some global shipping volume challenges in short our business performed as designed.

Edward J. Ryan: In short, our business performed as designed. So with that, let me just summarize and hand it over to Allan to give the full financial details for the quarter and year. We had record financial results, the business performed well, and we believe that it's a good reflection of the value that our customers continue to get from our solutions and the hard work that our team continues to put in for our customers. We ended the quarter with almost $239 million in cash, $350 million in available credit, and a market opportunity where we can continue to grow the business for our customers both organically and through acquisition.

Speaker Change: So with that let me just summarize as I hand, it over to Alan to give the full financial details on the quarter and year, we had record financial results. The business performed well and we believe that it's a good reflection of the value that our customers continue to get from our solutions and the hard work that our team continues to put in for our customers. We ended the quarter with almost 239.

Alan: In cash $350 million in available credit and a market opportunity, where we can continue to grow the business for our customers both organically and through acquisition.

Edward J. Ryan: We remain focused on profitable growth so that we continue to ensure that our customers have a secure, stable, and growing technology partner that can help them with their challenges well into the future. My thanks to all Descartes team members for everything they've done to contribute to a great quarter and continue to put our business in an enviable position for future success. With that, I'll turn the call over to Allan to go through our Q1 financial results in more detail.

Alan: We remained focused on profitable growth. So that we continue to ensure that our customers have a secure stable and growing technology partner that can help them with their challenge is well into the future.

Alan: Thanks to all Descartes team members for everything they've done to contribute to a great quarter and continue to have our business in an enviable position for future success with that I'll turn the call over to Alan to go through our Q1 financial results in more detail.

Allan Brett: Hey Ed, as indicated, I'm going to walk you through our financial highlights for our first quarter, which ended on April 31st. We are pleased to report record quarterly revenues of $153.1 million this quarter, an increase of approximately 11% from revenues of $136.6 million in Q1 of last year. While there was some revenue in the quarter from our recent acquisitions completed late in Q1, namely the OCR and TIME ASD acquisitions, growth in revenue from new and existing customers was again the main driver of growth this quarter when compared to last year.

Alan: Hey, Thanks, Ed as indicated I'm going to walk you through our financial highlights for our first quarter, which ended on April 30th.

Alan: We are pleased to report record quarterly revenues of $153 $1 million. This quarter, an increase of approximately 11% from revenues of $136 6 million in Q1 of last year.

Alan: While there were some revenue in the quarter from our recent acquisitions completed late in Q1, namely the OCR and time ASD acquisitions growth in revenue from new and existing customers was again the main driver in growth this quarter when compared to last year.

Allan Brett: We continue to see good growth in several areas of our business, including global trade intelligence solutions, as well as our macro point third party visibility solution, while the full effect of both recent acquisitions will be more fully seen in Q2. Consistent with past quarters, our revenue mix in the quarter continued to be very strong, with services revenue increasing 11% to $137.8 million, compared to $124.1 million in Q1 last year, and consistent at 91% of revenue in each period.

Alan: We continue to see good growth in several areas of our business, including global trade intelligence solutions as well as our macro 0.3rd party visibility solution.

Alan: While the full effect of both recent acquisitions will be more fully seen in Q2.

Alan: Consistent with past quarters, our revenue in the quarter continued to be very strong with services revenue, increasing 11% to $137 8 million compared to $124 1 million in Q1 last year consistent at 91% of revenue in each period.

Allan Brett: Licensed revenue came in lower at only $500,000 in the first quarter, down from licensed revenues of $1.4 million in the first quarter last year, while professional services and other revenue came in at $13.0 million, or 9% of revenue, up 17% from $11.1 million in the same period last year, as revenue from past acquisitions, in particular GroundCloud, contributed nicely to our growth in professional services revenue in the quarter. In addition, we should mention that there was also a slight decrease in revenue from FX this quarter, as the U.S. dollar continued to strengthen slightly against the Euro, Canadian dollar, and British pound compared to the same period last year.

Alan: License revenue came in lower at only 500000 in the first quarter down from license revenues of $1 4 million in the first quarter last year, while professional services and other revenue came in at 13.0 million or 9% of revenue up 17% from $11 1 million in the same period last year as the revenue.

Alan: From past acquisitions, and particularly ground cloud contributed nicely to our growth in professional services revenue in the quarter.

Alan: In addition, we should mention that there was also a slight decrease in revenue from FX. This quarter as the U S. Dollar continued to strengthen slightly on the euro Canadian dollar and British pound compared to the same period last year.

Allan Brett: We would estimate that our growth in services revenue without the impact of recent acquisitions or foreign exchange changes would have been nicely north of 8% in the quarter. Gross margins for the first quarter came in at 77% of revenue this year, up slightly from 76% realized in Q1 last year as operating leverage from growth in the business continues to drive a slight improvement in our gross margin ratio. Our operating expenses increased in the first quarter.

Alan: We would estimate that our growth in services revenue without the impact of recent acquisitions or foreign exchange changes.

Alan: Would have been nicely north of 8% in the quarter.

Alan: Gross margins for the first quarter came in at 77% of revenue this year.

Alan: Up slightly from gross margin of 76% realized in Q1 last year as operating leverage from growth in the business continued to drive a slight improvement in our gross margin ratio.

Alan: Our operating expenses increased in the first quarter. This was primarily related to the impact of adding one month of the results from the recently acquired OCR business, while labor related costs.

Allan Brett: This was primarily related to the impact of adding one month of the results from the recently acquired OCR business, while labor-related costs. We're also up, but only slightly when compared to Q1 last year, as again, we continue to experience really good operating leverage in our growth in services revenue. As a result, we continue to see adjusted EBIT growth of 16% to a record $67.0 million, or 44.3% of revenue in the quarter, up from 57.7 million, or 42.2% of revenue in the first quarter last year.

Alan: Were also up but only slightly when compared to Q1 last year as again, we continued to experience some really good operating leverage in our growth and services revenue.

Alan: As a result, we continue to see adjusted EBIT growth of 16% to a record 67 zero million or 44, 3% of revenue in the quarter.

Alan: Up from $57 7 million or 42, 2% of revenue in the first quarter of last year.

Allan Brett: As we indicated last year, the addition of the ground cloud business in Q1 last year, while profitable, came to us with much lower adjusted EBITDA margins out of the gate than the rest of our business. Consistent with our plans with that acquisition, we have worked to integrate the ground cloud business into our current business and, in the process, have improved those ground cloud operating margins over the past year or so. In addition, as mentioned earlier, we simply continue to benefit from operating leverage that we experience as we grow our business organically across several different product areas.

Alan: As we indicated last year. The addition of the ground cloud business in Q1 last year, while profitable came to us with much lower adjusted EBITDA margins out of the gate and the rest of our business.

Alan: Consistent with our plans with that acquisition, we have worked to integrate the ground cloud business into our current business and in the process if improve those ground cloud operating margins over the past year or so.

Alan: In addition, as mentioned earlier, we simply continue to benefit from operating leverage that we experience as we grow our business organically across several different product areas.

Allan Brett: From a GAAP earnings perspective, net income came in at $34.7 million, up 800% from net income of $29.4 million in the first quarter of last year. With these strong operating results, cashflow generated from operations came in at $63.7 million, or approximately 95% of adjusted EBITDA in the first quarter, up a very strong 30% from operating cashflow of $48.9 million or 85% of adjusted EBITDA in Q1 last year. Note that Q1 is typically a seasonally lower cash flow collection quarter for us, so we are extremely pleased with the strong collections that were realized in the quarter.

Alan: From a GAAP earnings perspective, net income came in at $34 7 million up 18% from net income of $29 4 million in the first quarter of last year.

Alan: With these strong operating results cash flow generated from operations came in at $63 7 million or approximately 95% of adjusted EBITDA in the first quarter up a very strong 30% from operating cash flow of $48 9 million or 85% of adjusted EBITDA.

Alan: Q1 last year.

Alan: Note that Q1 is typically a seasonally lower cash flow collection quarter for us. So we are extremely pleased with the strong collections that were realized in the quarter.

Allan Brett: So, as Ed mentioned earlier, we are pleased with these strong operating results in the first quarter, as continued organic growth and some contribution from our recent acquisitions resulted in 11% growth in revenue, and, more importantly, a 16% growth in adjusted EBIT DOT for the quarter. If we look at the balance sheet, our cash balances totaled $239 million at the end of April, down from cash balances of $321 million at the end of January.

Speaker Change: So as Ed mentioned earlier, we are pleased with these strong operating results in the first quarter as continued organic growth and some contribution from our recent acquisitions resulted in an 11% growth in revenue and more importantly, a 16% growth in adjusted EBITDA for the quarter.

Speaker Change: If we look at the balance sheet, our cash balances totaled $239 million at the end of April down from cash balances of $321 million at the end of January.

Allan Brett: Despite continued positive cash flow from operations, we used just under 140 million of our cash balances to complete both the OCR and ASD time acquisition. As a result, we still have almost $240 million of cash as well as $350 million available for us to draw under our credit facility for future acquisitions. We continue to be very well capitalized to allow us to consider all acquisition opportunities in our market consistent with our plan.

Speaker Change: As despite continued positive cash flow from operations, we used just under a $140 million of our cash balances to complete both the OCR and ASD time acquisitions.

Speaker Change: As a result, we still have almost $240 million of cash as well as $350 million available for us to draw under our credit facility for future acquisitions.

Speaker Change: We continue to be very well capitalized to allow us to consider all acquisition opportunities in our market consistent with our plans.

Allan Brett: As we look forward to the balance of our fiscal 2025, we should note the following. After spending $1.8 million on capital additions in the first quarter, we expect to incur approximately $4 to $5 million in additional capital expenditures for the balance of this year. Simply put, our business will continue to be non-capital intensive.

Speaker Change: As we look forward to the balance of our fiscal 2025, we should note the following.

Speaker Change: After spending $1 8 million on capital additions in the first quarter, we expect to incur approximately four to 5 million in additional capital expenditures for the balance of this year simply put our business will continue to be non capital intensive.

Allan Brett: After incurring amortization costs of $15.0 million in Q1, we expect amortization expense will be approximately $51 million for the balance of this year, with this figure being subject to adjustments for foreign exchange and future acquisitions. Our tax rate in Q1 came in at 24.9% of free tax income, slightly lower than our expected range of 25-30%, and this was mainly as a result of a few smaller tax benefits realized in the first quarter.

Speaker Change: After incurring amortization costs of $15.0 million in Q1, we expect amortization expense will be approximately $51 million for the balance of this year with this figure being subject to adjustments for foreign exchange and future acquisitions.

Speaker Change: Our tax rate in Q1 came in at 24, 9% of pretax income slightly lower than our expected range of 25% to 30% and this was mainly as a result of a few smaller tax benefits realized in the first quarter.

Allan Brett: Looking at the balance of the year, we currently expect our tax rate to trend much closer to our expected range of 25-30% in the next few quarters, meaning that our tax rate for the year is likely to end up in a range between 23-28% of pre-tax income, so somewhere on either side of our blended statutory tax rate of 26.5%. However, as always, we should add that our tax rate may fluctuate from quarter to quarter from one-time tax items that may arise as we operate internationally across multiple countries.

Speaker Change: Looking at the balance of the year. We currently expect our tax rate will trend much closer to the to our expected range of 25% to 30% in the next few quarters, meaning that our tax rate for the year is likely to end up in a range between 23 and 28% of pretax income so somewhere on either side of our blended statutory tax rate of 25.

Speaker Change: $26 five.

However, as always we should note we should add that our tax rate may fluctuate from quarter to quarter from onetime tax items that may arise as we operate internationally across multiple countries.

Allan Brett: Additionally, after incurring stock-based compensation expense of $4.3 million in the past quarter, we currently expect stock-based compensation to be approximately $16.6 million for the balance of fiscal 2025. As we have mentioned in the past few quarters, we estimate the payments of contingent consideration for earn-out arrangements accrued for at the end of the quarter will be approximately $35.5 million for the balance of the year, subject to any necessary adjustments resulting from the final earn-out calculation.

Speaker Change: Additionally, after incurring stock based compensation expense of $4 3 million in the past quarter. We currently expect to stock stock based compensation will be approximately $16 6 million for the balance of fiscal 2025.

As well as <unk>.

Speaker Change: We've mentioned in the past few quarters, we estimate the payments of contingent consideration for earn out arrangements accrued for at the end of the quarter will be approximately $35 5 million in the <unk>.

Speaker Change: Balance of the year subject to any necessary adjustments, resulting from the final earn out calculations of the estimated $35 5 million balance to be paid $9 2 million relates to the portion of the earn out arrangements accrued for at the time of acquisition and will be reflected in the cash flow from financing activities, while the remaining balance of <unk>.

Allan Brett: Of the estimated $35.5 million balance to be paid, $9.2 million relates to the portion of the earner arrangements accrued for at the time of acquisition and will be reflected in the cash flow from financing activities, while the remaining balance of just over $26 million will be reflected in cash flow from operating activities, most likely in Q2, when these balances are paid. And finally, going forward, subject to unusual events and quarterly fluctuations, we expect to continue to see strong cash flow conversion and generally expect cash flow from operations to be between 80 and 90 percent of our adjusted EBITDA in the quarters ahead. I will now turn it back over to Ed, who will wrap up with some closing comments and our baseline calibration.

Speaker Change: Over $26 million will be reflected in cash flow from operating activities. Most likely in Q2. When these balances are paid.

Speaker Change: And finally going.

Speaker Change: Going forward subject to unusual events and quarterly fluctuations, we expect to continue to see strong cash flow conversion and generally expect cash flow from operations to be between 80% to 90% of our adjusted EBITDA in the quarters ahead.

Ed: I will now turn it over back over to Ed who will wrap up with some closing comments and our baseline calibration hey, great. Thanks, Alan So we're a month into Q2 and things are progressing as planned.

Edward J. Ryan: Hey great, thanks Allan. So we're a month into Q2, and things are progressing as planned. We've got two new acquisitions that we're integrating and who we think will contribute more to our calibration as we become more experienced in operating them together. We're mindful of some weakness in U.S. domestic truck and parcel volumes, but also mindful of some logistics service providers expressing some optimism about international ocean and airships. We keep these things in mind as we set our calibration for the core.

Ed: Two new acquisitions that were integrating and who we think will contribute more to our calibration as we become more experienced and operating them together, we're mindful of some weakness in U S. Domestic truck in parcel volumes, but also mindful of some logistics service providers expressing some optimism about international Ocean and air shipments we keep.

Ed: These things in mind, as we said our calibration for the quarter.

Edward J. Ryan: Our business is designed to be predictable and consistent. We believe that stability and reliability are valuable to our customers, employees, and our broader stakeholders. To deliver this consistency, we continue to operate from the following principles.

Ed: Our businesses are designed to be predictable and consistent we believe the stability and reliability are valuable to our customers employees and our broader stakeholders to deliver this consistency we continue to operate from the following principles.

Edward J. Ryan: Our long-term plan is for our business to grow adjusted EBITDA 10-15% annually. We grow through a combination of organic growth and acquisition. We take a neutral party approach to building and operating solutions on our global logistics network. We don't favor any particular party.

Our long term plan is for our business to grow adjusted EBITDA, 10% to 15% annually, we grow through a combination of organic growth and acquisitions, we take a neutral party approach to building and operating solutions and our global on our global Logistics network, we don't favor any particular party, we run our business for all supply chain participants.

Edward J. Ryan: We run our business for all supply chain participants, connecting shippers, carriers, logistics service providers, and customs authorities. When we over-perform, we try to reinvest that over-performance back into our business. We focus on recurring revenues and establishing relationships with customers for life, and we thrive on operating a predictable business that allows us forward visibility to our revenues and investment payback. In our annual report, we provided a comprehensive description of baseline revenues, baseline calibration, and their limitations.

Ed: <unk> shippers carriers logistics service providers and customs authorities.

Ed: When we ever performed we try to reinvest that over performance back into our business.

Ed: We focus on recurring revenues and establishing relationships with customers for life and we thrive on operating a predictable business that allows us forward visibility to our revenues and investment paybacks.

Ed: In our annual report, we provided a comprehensive description of baseline revenues baseline calibration and their limitations as of May one 2024, using foreign exchange rates of <unk> 70, <unk> to the Canadian dollar.

Edward J. Ryan: As of May 1, 2024, using foreign exchange rates of $0.73 to the Canadian dollar, $1.07 to the euro, and $1.24 to the pound, we estimate that our baseline revenues for the second quarter of fiscal 2025 will be approximately $136 million, and our baseline operating expenses will be approximately $84 million. We consider this to be our baseline adjusted EBITDA calibration of approximately $52 million for the second quarter of fiscal 2025, or approximately 38% of our baseline revenues as at May 1st, 2024.

Ed: Seven to the Euro and $1 24 to the pound we estimate that our baseline revenues for the second quarter of fiscal 2025 are approximately $136 million and our baseline operating expenses are approximately $84 million.

Ed: We consider this to be our baseline adjusted EBIT calibration of approximately $52 million for the second quarter of fiscal 2025 or approximately 38% of our baseline revenues as at May <unk> 2024.

Edward J. Ryan: We continue to expect that we'll operate in an adjusted EBITDA operating margin range of 40 to 45%. However, our margin can vary in that range given such things as foreign exchange movements and the impact of acquisitions as we integrate them into our business, like we saw with GroundCloud last year. We've got lots of exciting things planned for our business. It remains a challenging economic supply chain and compliance environment for our customers, but we believe our proven track record of execution, solid capital structure, and customer focus will help us serve them well.

Ed: We continue to expect to operate in an adjusted EBITDA operating margin range of 40% to 45% our margin can vary in that range, given such things as foreign exchange movements and the impact of acquisitions as we integrate them into our business like we saw with Brown cloud last year.

Ed: We've got lots of exciting things planned for our business. It remains a challenging economic supply chain and compliance environment for our customers, but we believe our proven track record of execution solid capital structure and customer focus will help us serve them well. Thanks.

Edward J. Ryan: Thanks to everyone for joining us on the call today. As always, we're available to talk to you about our business in whatever manner is most convenient for you. And with that, operator, I'll turn it over to you for the Q&A portion of the call.

Ed: Thanks to everyone for joining us on the call today as always we're available to talk to you about our business in whatever manner is most convenient for you and with that operator, I'll turn it over to you for the Q&A portion of the call.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star, followed by the 1 on your telephone keypad. You will hear a prompt that your hand has been raised. And should you wish to cancel your request, please press star, followed by 2. If you are using a speakerphone, please lift the handset before pressing any button. Your first question comes from the line of Justin Long from CFANS. Please go ahead.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star one on your telephone keypad USG problem that you had has been in place and should you wish to cancel your request. Please press star followed with you if you're using a speaker phone. Please lift the handset before pressing.

Speaker Change: Your first question.

Justin Long: From the line of Justin long from Stephens. Please go ahead.

Justin Long: Thanks and good afternoon. Allan, you talked about the services growth being nicely north of 8% organically. That's a slight moderation from what we saw in the prior quarter. So I'm curious if you could give a little bit more color on what drove that moderation. And then as you think about the logistics customers expressing more optimism about the trends ahead,

Justin Long: Thanks, and good afternoon.

Speaker Change: So Alan you talked about the services growth being nicely north of 8% organically.

Speaker Change: Slight moderation from what we saw in the prior quarter. So I am curious if you could give a little bit more color on what drove that moderation and then as you think about the logistics customers Express.

Speaker Change: Expressing more optimism about the trends ahead would you expect organic growth to reaccelerate as we move into the second quarter.

Allan Brett: Yeah, I'll just start, Justin, and then turn it over to Ed, but as far as the past quarter, organic growth was very, very solid in that mid-8% range, 8.5% is slightly better. There were a few little adjustments in Q1 of last year, a few little extra pieces of revenue that came in, which would have impacted the growth rate slightly this quarter, pulling it down a little bit.

Speaker Change: Yeah, I'll just start Justin and then turn it over to Ed, but as far as as far as the past quarter. So.

Speaker Change: Organic growth was very very solid.

Speaker Change: In that mid <unk>.

Speaker Change: 8% range, eight and a half slightly better there is a few little adjustments in Q1 of last year accused little extra piece of revenue that came in which would have impacted the growth rate slightly this quarter pulling it down a little bit.

Speaker Change: So that's what we experienced as far as far as going forward at any any comment yes sure. Thanks Justin.

Allan Brett: So that's what we experienced as far as going forward. Ed, any comments? Yeah, sure. Thanks, Justin.

Edward J. Ryan: So we're hearing from and we're seeing in OceanStats that the ocean carriers are picking up and certainly processing more transactions and also charging more as they're trying to have to get their customers around some of the problems in the Red Sea and the Panama Canal. We've typically seen that translate into domestic volume increases in the U.S. and Europe, which we think will benefit us. You know much difference between this quarter and last quarter and you know going forward You know we think we like the environment certainly in our subscription businesses We continue to sell well And I think that's going to be a tailwind for us for a long time to come with More people putting money into solving logistics and supply chain problems You know we'll see what happens with the transaction volumes It's looking all right right now But we have to see if some of these domestic truck volumes come through that would obviously be a tailwind for us if it If it does happen and You know we look back over the last 10 years.

Speaker Change: So.

Speaker Change: We're hearing and we're seeing an ocean stats at the ocean carriers are picking up.

Speaker Change: Certainly.

Speaker Change: Processing more transactions and also.

Speaker Change: Charging more as they are trying to have to get their customers around some of the problems in the red Sea in the Panama Canal.

Speaker Change: We've typically seen that translate into domestic volume increases in the U S and Europe, which we think will benefit us.

Speaker Change: You you described is a moderation we kind of see it all in the same range right now we're in the high eights to low nines.

Speaker Change: Over the past several quarters and we think that's good for our business in <unk>.

Speaker Change: Much difference between this quarter and last quarter.

Speaker Change: And going forward.

Speaker Change: We think we like the environment certainly in our subscription business as we continue to sell well and I think that's going to be a tailwind for us for a long time to come with more people, putting money in to solving logistics and supply chain problems.

Speaker Change: We will see what happens with the transaction volumes as it's looking at a rate right now, but we have to see if some of these domestic truck volumes come through that would obviously be a tailwind for us if it does happen.

And.

Speaker Change: When we look back over the.

Speaker Change: Last 10 years, let's say.

Edward J. Ryan: Let's say we're pretty happy to be in the high single digits in terms of organic services growth, so we'll see what happens, but, you know, we like what we see right now.

We're pretty happy to be in the high single digits in terms of.

Speaker Change: Organic services growth so.

Speaker Change: We'll see what happens.

Speaker Change: We like what like what we see right now.

Justin Long: Okay, good to hear that it's helpful, and I guess secondly I wanted to ask about the two acquisitions OCR and ASD. It was good to see the capital deployment in the quarter. Anything we should be mindful of in terms of the impact these acquisitions could have on margin, similar to what we saw with ground cloud, and any high-level commentary on the impact to overall organic growth as well based on how these businesses have been trending?

Okay. Good to hear that's helpful. One.

Speaker Change: I guess secondly, I wanted to ask about the two acquisitions OCR NASD. It was good to see the capital deployment in the quarter anything we should be mindful of in terms of the impact. These acquisitions could have to margins similar to what we saw with ground cloud and any high level commentary on the impact to AUM.

Speaker Change: They're all organic growth as well based on how these businesses have been trending.

Edward J. Ryan: Yeah, so we love these acquisitions. I mean, if you look at them, they're both in an area that we've done very well in in the past with acquisitions. But they are both coming in slightly below our margin levels at the moment.

Speaker Change: Yes.

Speaker Change: We love these acquisitions I mean, it's.

Speaker Change: You look at them. They are both in an area that we've done very well in the past.

Speaker Change: With acquisitions, they are both coming in slightly below our margin levels.

Edward J. Ryan: We think we have a great opportunity to raise that over time up to our margin levels on average or even better, as we have performed in some of those areas, in, you know, Sanctioned Party Screenings and I-Party Screenings and some of the other businesses we've acquired over the years. So we're very optimistic about that, and we think they bring a lot to the table in terms of providing new solutions in those areas to our customers.

Speaker Change: At the moment and we think we have great opportunity to raise that over time up to our margin levels on average or even better as we have performed.

Speaker Change: In some of those areas.

Speaker Change: Essentially party screens in our party screen some.

Speaker Change: Some of the other businesses, we've acquired over the years so.

Speaker Change: We're very optimistic about that and we think they bring a lot of the table in terms of providing new solutions in those areas to our customers. So.

Edward J. Ryan: So we think there's a great opportunity there with those two acquisitions. We put some of what we see from them into calibration so far; we probably haven't put it all into calibration yet because it's a new business for us, and we want to get comfortable with where the revenue numbers actually fall out as we're running them. But we put a bunch of it in, maybe not all of it, and hopefully, in the next quarter, we'll be able to do that.

Speaker Change: I think theres, a great opportunity there with those two acquisitions.

Speaker Change: We put some of them into some of what we see from them into into calibration. So far we probably didn't put them all into the calibration yet because it's a new business for us and we want to get comfortable with where the revenue number is actually fallout as we're running them but.

Speaker Change: We put a bunch of it and maybe not all of it and.

Speaker Change: Hopefully the next quarter or two as we get more comfortable with the revenue production from those businesses will put it all into the calibration number.

Speaker Change: Moving forward, but net net we are happy to have them here for our customers because we took out some stuff that they want we've also had a lot of success running these businesses.

Speaker Change: We've bought businesses like there was in the past. So we're excited about the opportunity to make these businesses, making more money over time like we have with some of the past acquisitions and the sanction party space.

Justin Long: Okay, great. I appreciate the time.

Speaker Change: Okay, Great I appreciate the time.

Speaker Change: Hey, Thank you Justin.

Operator: Thank you. And your next question comes from Paul Treiber from RBC Capital Markets. Please go ahead.

Speaker Change: Thank you and your next question comes from the line of Paul <unk> with RBC capital markets. Please go ahead.

Paul Treiber: Thanks very much and good afternoon. A question just on the comment regarding strong ocean volumes didn't translate into domestic, and I guess international trucking volumes. Is that primarily timing-related, or are you referring to something else that impacted that? No, no, we're...

Paul: Oh, thanks, very much and good afternoon.

Paul: It's a question just on.

The comment regarding a strong ocean volumes and translate into domestic.

Speaker Change: Internationally, our trucking volumes or is that primarily timing related are you, referring to something else that impacted that.

Edward J. Ryan: No, no, what we're saying is that just in the last short while here, the last few months, we're seeing ocean volumes pick up, and over the next couple of months, we expect that to translate as it has in the past.

Speaker Change: No no what we're saying is we're just in the last short while here last few months, we're seeing ocean volumes pick up and over the next couple of months, we expect that to translate as it has in the past in the domestic volumes.

Speaker Change: Increases.

Paul Treiber: Okay, that's helpful to understand that dynamic there. Then is that reflected in baseline, or no? Because baseline reflects, I mean,

Speaker Change: Okay. That's helpful and I understand that dynamic there is that reflected in baseline or are no because baseline reflects.

Speaker Change: Or.

Edward J. Ryan: I know it wouldn't be reflected in baseline because baseline reflects, you know, visible and recurring revenue at the start of the year.

Speaker Change: No it wouldn't be reflected in baseline good baseline reflects visible and recurring revenue at the start of the quarter.

Edward J. Ryan: Okay, that's helpful. In the recent acquisitions, you deployed a lot of capital and two fairly large acquisitions. Has that consumed your internal teams for the time being? Are you still in the hunt for acquisitions of the capacity, internal capacity to make acquisitions here?

Speaker Change: Okay. That's helpful.

Speaker Change: Just given the acquisition you deployed a lot of capital in two fairly large acquisition, how does that conclude your internal teams for the time being or are you still on the hunt for acquisitions with the capacity internal capacity to make acquisitions here.

Edward J. Ryan: Now we really like what we see ahead of us in terms of the acquisition environment. I think I mentioned this on the last call, same thing. We see a lot of stuff for sale and the settling of prices for things that we've taken a look at that we think we can have an opportunity to get a bunch of deals done. Uh... certainly not all the time of our team. We're busy, but uh... but uh... you know we're happy to get those two acquisitions done and look forward to having more in the future.

Speaker Change: Now, we really like what.

What we see ahead of us in terms of the acquisition environment.

Speaker Change: And maybe on the last call same thing.

Speaker Change: We see a lot of stuff for sale and a settling of the prices for for things that we've taken a look at that we think we can.

Speaker Change: Have an opportunity to get a bunch of deals done.

Speaker Change: Certainly it is not taken up all the time of our team were busy but.

But.

Speaker Change: Happy to get those two acquisitions done and look forward to having more in the future.

Speaker Change: Okay. Thanks for taking the questions I'll pass the line.

Paul Treiber: Thanks for taking the questions; I'll pass the line.

Speaker Change: Hey, Thank you Paul.

Operator: Thank you, and your next question comes from the line of Dylan Becker from William Beer. Please go ahead.

Speaker Change: Thank you and your next question comes from the line of your line that goes from William Blair. Please go ahead.

Dylan Becker: Hey guys, thanks for taking the question. Maybe to continue kind of the idea of ocean recovery to a certain extent. And given that you guys have been in a better position here over the last several quarters of monetizing customers and kind of more of a challenged volume environment, how do you think about your positioning here, with maybe greater wallet share for that potential impending kind of recovery from a volume perspective?

Speaker Change: Hey, guys. Thanks for taking the question.

Speaker Change: To continue kind of the idea of ocean recovery to a certain extent and given that you guys have been in a better position here over the last several quarters of monetizing that customers and kind of more of a challenge.

Speaker Change: Volume environment, how do you think about your positioning here.

Speaker Change: Maybe greater wallet share for that potential and then get a recovery from a volume perspective.

Edward J. Ryan: Yeah, I mean, we're excited about it. The big news and what's been driving our growth rates over the past year in a lackluster transportation environment is that, you know, our subscription services are selling quite well, and we see that strength continuing. You know, we're happy to hear the ocean carriers start to say things are taking off. We think that'll not only benefit us in the ocean space but potentially in the airspace, which tends to follow along with it in the international and domestic space because eventually, when one of the goods lands, it has to move that cargo. So, you know, domestically, so, you know, we see some opportunity for ourselves in that.

Speaker Change: Yes, I mean, we're excited about it.

Speaker Change: Sure.

Speaker Change: The Big news and what's been driving our growth rates over the past year.

Speaker Change: In a lackluster transportation environment as our subscription services are selling quite well and we see that strength continuing.

Speaker Change: We're happy to hear the ocean carriers start to say things are picking up we think that will not only benefit us in the ocean space potentially.

Speaker Change: The aerospace, which tends to follow along with it in the because of both international and the domestic space and eventually when and when the goods lands has to move that cargo. So.

Speaker Change: Domestically so.

Speaker Change: We see some opportunity for ourselves in that.

Edward J. Ryan: Okay, great. And then, obviously, the kind of the two acquisitions here, following a common theme of content and compliance, and maybe there's, there's certainly kind of a localization component to that. But also, how do you think about kind of the leverageability of those resources over time, the compounding value that you can deliver, and maybe kind of deeper, deeper levels of automation throughout that intelligence? Yeah, so I'm glad you asked that

Speaker Change: Okay, Great and then let me say that kind of the two acquisitions here following a common theme.

Speaker Change: And compliance and maybe Theres, certainly kind of our localization component of that but also how do you think about kind of the leverage ability of those resources over time compounding value that you can deliver and maybe kind of depot deeper levels of automation throughout that intelligence network.

Edward J. Ryan: Yeah, so I'm glad you asked that. Thanks. So, you know, specifically with OCR, they have some things that we didn't have before acquiring them. And we look forward to taking that around to the rest of our customers. They certainly have a hazardous goods capability that we picked up in the process that we didn't have before. And maybe most significantly, they have a bunch of AI processes, artificial intelligence processes that help them collect more data and also harmonise.

Speaker Change: Yes, so I'm glad you asked that thanks.

Speaker Change: So specifically with OCR or they have some things that we didn't have before acquiring them.

Speaker Change: And.

We look forward to taking that around for the rest of our our customers. They certainly have a hazardous goods capability that we picked up in the process that we didn't have before and maybe most significantly they have a bunch of AI.

Speaker Change: Processes artificial intelligent processes that help them.

Speaker Change: Collect more data and also harmonize.

Speaker Change: Commodities within or for their customers and we think thats a set of capabilities that we can expand.

Edward J. Ryan: Commodities within or for their customers, and you know, we think that's a set of capabilities that we can expand with our customer base and take advantage of in the coming years as we roll all that functionality out to our customers, so we're excited about it.

Speaker Change: With our customer base to take advantage of.

Speaker Change: Over the coming years, as we roll all of that functionality out to our customers. So we're excited about it.

Ed: Great. Thanks, Ed.

Speaker Change: Okay. Thank you.

Operator: Thank you. And your next question comes from the line of Daniel Chan from TD Cowen. Please go ahead.

Speaker Change: Thank you and your next question comes from the line of Daniel Chan from TD Cowen. Please go ahead.

Speaker Change: Ted in the past when you made the acquisition.

Speaker Change: For any of our growth.

Speaker Change: <unk>.

Are you expanding but are there more costs.

Speaker Change: These data acquisition.

Speaker Change: Other business segments that you can extract out of these acquisitions to drive.

Speaker Change: Even more operating EBITDA margin expansion that you typically would.

Speaker Change: Sure.

Daniel Chan: I don't know about more, but there's certainly a bunch. I mean, you know, these...

Speaker Change: I don't know about more there is certainly a bunch of these.

Speaker Change: We have operated a lot of these businesses well north of our average EBITDA margins. They operated both of these business operated let's say just south of those margin levels. So we see an opportunity over time to bring them up to our levels.

Speaker Change: There's also the concept that they are collecting in a lot of cases some of the same data that we're collecting and can we consolidate some of that and create some of the opportunity that I think you're referring to and that's a possibility in some areas.

Speaker Change: Our primary focus in buying the company, but it's certainly something we think we might be able to take advantage of over the next several years as.

Speaker Change: As we look to improve operating margins in those businesses and bring them up to levels that were accustomed to running our businesses in and those segment same segments. So we'll see but we like what we like what we see so far we bought companies that are in some of the best business areas that we operate there are both growing at a decent clip.

Speaker Change: We see the opportunity to make them more profitable all things, we'd like to see in an acquisition and all of those things exist in this one where it needs to.

Speaker Change: That's helpful. Thanks.

Daniel Chan: Thanks. And then maybe just a more general question on sales cycles. And we're still hearing about long sales cycles from a lot of peers, including those in the logistics space, but it seems like you guys are still not, like the growth rate is suggesting those sales cycles are still holding fine. Why do you think you're not seeing some of those sales cycles rankings where a lot of your peers are? Well, I think, you know...

Speaker Change: Then maybe just more general question on the sales cycles and of course, we're still hearing about long sales cycles from a lot of.

Speaker Change: As you May know.

Speaker Change: Logistics space, but it seems like you guys are still.

Speaker Change: Breaking up the growth rate is suggesting those sales cycles are still holding in fine. What do you think you're not getting some of those sales cycles, whereas a lot of your peers are.

Edward J. Ryan: Well, I think, you know, I've mentioned this a bunch of times over the last several years that we're in a circumstance where, after the pandemic and some of the supply chain challenges that went on during the pandemic, a lot of our customers got much more focused on improving their supply chain operations. I'm not sure what other types of companies you're talking about, but to the extent that we're very focused on areas that they think they need to improve in, a lot of their investment dollars tend to go there.

Speaker Change: Well I think.

Speaker Change: And I've mentioned this a bunch of time frame for the last several years that we're in a circumstance where after the pandemic.

Speaker Change: And some of the supply chain challenges that went on in the pandemic a lot of our customers got much more focused on improving their supply chain operations and you know what.

Speaker Change: I'm not sure what other types of companies you are talking about but.

Speaker Change: To the extent that we're very focused on areas that they think they need to improve in a lot of their investment dollars tend to go there.

Edward J. Ryan: Probably regardless of what they're seeing on a day-to-day basis in their business, they're saying, hey, we need to improve our supply chain over time, and we're willing to make investments there. Even if we're maybe not making them in some of the other areas in our business as fast as we might, when a customer sees day-to-day challenges in their business, and they might say, hey, I'm not going to do this and I'm not going to do that, but that supply chain project, we're going to keep going. And I think that that may be the answer to your question.

Speaker Change: <unk> regardless of.

Speaker Change: What they are seeing on a day to day basis in their business, they're saying, hey, we need to improve our supply chain over time, and we're willing to make investments there even if we're maybe not making them and some of the other areas in our business as fast as we might when we see when a customer sees a.

Speaker Change: Day to day challenges in their business and they might say, hey, I'm not going to do this and I'm not going to do that but that supply chain project, we would keep going with and I think that may be the answer to your question.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Thanks, Dave.

Operator: Thank you. And your next question comes from Stephanie Price from CABC. Please go ahead.

Speaker Change: And your next question comes from the line of Stephanie price.

Speaker Change: Please go ahead.

Stephanie Price: Good morning or good afternoon. I was hoping you could talk a little bit more about what you're seeing in e-commerce. I think you added it to the growth vectors commentary this quarter for the first time in a few quarters. Maybe touch on what's changed there and maybe a bit about what you're seeing with Amazon logistics as well.

Good morning, or good afternoon, I was hoping you could talk a little bit more about what you're seeing in E. Commerce I think you added to the growth sectors commentary this quarter for the first time in a few quarters, maybe touch on what changed there and maybe a bit about what you're seeing with Amazon logistics.

Edward J. Ryan: I mean, Amazon and some of the larger providers there continue to kind of switch around. You've seen Amazon rise up to the number two provider for local delivery in the e-commerce business, which is fine with us. I mean, the big growth that we have and the bulk of our customer base in that e-commerce business is in small and medium-sized e-tailers, and we continue to do very well there.

Speaker Change: I mean, Amazon and some of the.

Speaker Change: The larger providers there.

Speaker Change: Continue to kind of switch around you've seen Amazon rise up to the number two provider.

Speaker Change: For local delivery and then e-commerce business, which is fine with us I mean, the big growth that we have in the <unk>.

Speaker Change: Bulk of our customer base in that ecommerce business is in the small and medium sized E. Tailers and we continue to do very well. There you heard me mentioned as a as a growth area for us and I think it will be for some time to come.

Edward J. Ryan: You heard me mention it as a growth area for us, and I think it will be for some time to come, as we believe that e-commerce is going to continue to grow, and when it does, we're going to continue to help those service providers with the picking, the packing, the labeling, and then the parcel manifesting so that they can actually ship the goods. They all need help with that. Those small and medium-sized e-tailers are growing not only in number but also in size once they get into the market, and we're one of their main software providers in helping them solve some of the biggest challenges they have, and we think that's created a great opportunity for us, and you can see it in the numbers in that business, and I suspect it's going to continue like that for some time to come.

Stephanie Price: Thanks. And then Allan, maybe one for you.

Speaker Change: As we believe that e-commerce is going to be continue to grow and when it does we're going to continue to help.

Speaker Change: Those service providers with.

Speaker Change: Picking the packing.

Speaker Change: Labeling and then.

Speaker Change: The parcel manifesting so that they can actually ship the goods.

Speaker Change: They all need help with that Theres small and medium sized E. Tailers are growing not only in number but also in size once they get into the markets.

Speaker Change: They are made.

Speaker Change: Maine.

Speaker Change: Software providers and helping them solve some of the biggest challenge that they have and we think thats created a great opportunity for us.

Speaker Change: You can see it in the numbers in that business and I suspect, it's going to continue like that for some time to come.

Allan Brett: LTM adjusted EBITDA growth is above your 10 to 15% growth target. I'm just curious about the opportunity to raise growth targets given the solid organic growth and your continued margin improvement.

Speaker Change: Thanks, and then Alan maybe one for you LTM adjusted EBITDA growth.

Speaker Change: 10% to 15% growth target.

Speaker Change: Curious about the opportunity to raise growth targets, given the solid organic growth and continued margin improvement.

Allan Brett: Yeah, we've this has been our target for years. We're targeting, you know, 10 to 15 percent growth in a justification, but And and I think we've over performed. I think our 10-year average is 18 percent. I think I think you could expect more of the same. We're going to set a target. We're going to strive to overachieve and do better than that target, and And we see a lot of opportunity to continue to do that.

Alan: Yes. This has been our target for years were targeting 10% to 15% growth in adjusted EBITDA.

Speaker Change: And I think we over perform that I think our 10 year average is 18% I think I think you could expect more of the same we're going to set a target we're going to strive to overachieve and to do better than that target and we see a lot of opportunity to continue to do that nothing is guaranteed but.

Allan Brett: Nothing's guaranteed But but with the acquisition opportunities with solid organic growth That's going to continue to be the target and and we do operate, you know at the high end of our of our EBITDA Margin range at 44.3 our range being 40 to 45 that Ed mentioned earlier and and same sort of theme there We're going to continue to run our business to try to improve our EBITDA margins Probably have to see us operate above that 45 for a number of quarters before we would entertain any increases But you know more of the same as I think what we would like to see and expect to continue to see from our business Great, thank you very much.

Speaker Change: But with the acquisition opportunities with solid organic growth.

Speaker Change: That's going to continue to be the target and we do operate at the high end of our <unk>.

Speaker Change: Of our EBITA margin range at $44 three a range being $40 to 45 that Ed mentioned earlier and same sort of theme. There we're going to continue to run our business to try to improve our EBITDA margins.

Speaker Change: Probably have to see us operate above that 45 for a number of quarters before we would entertain any increases.

Speaker Change: More of the same as I think we would like to see and expect to continue to see from our business.

Stephanie Price: Great. Thank you very much.

Speaker Change: Great. Thank you very much.

Dave: Okay. Thanks, Dave.

Operator: Thank you. And your next question comes from Steven Li from Raymond James. Please go ahead.

Speaker Change: Thank you and your next question comes from the line of Steven Li from Raymond James. Please go ahead.

Steven Li: Thank you. Hey, Ed, Scott, Allan. I want to also ask about your acquisitions, OCO, and NESD. Like, what were their growth rates, let's say last year? I mean, can I say teens, or was it low double-digit or maybe single-digit?

Scott: Thank you Scott.

Steven Li: I wanted to also ask about.

Steven Li: Acquisitions, <unk> and ESB.

Steven Li: Like what are the growth rates, let's say last year.

Speaker Change: Can I think teens or was it double low double digit or maybe single digit.

Steven Li: Yes.

Edward J. Ryan: Yeah, they're both coming in high single digits, low, low double digits over the last couple of years, which is maybe a little lower than what we're seeing in the same areas in our business, but in the same ballpark.

Steven Li: Yes.

Speaker Change: Coming in high single digits low double digits over the last couple of years, which is.

Consistent maybe a little lower than what we're seeing in the same areas in our business, but in the same ballpark, let's say.

Steven Li: Okay, I was going to ask you, so you said that OCR is tracking a little bit slower than, let's say, your own MKO, Visual Compliance.

Speaker Change: Okay I was going to ask you. So you.

Speaker Change: He said the <unk> is tracking a little bit slower than lets say youre on MTO visual compliance.

Edward J. Ryan: Yeah, but close enough. It's in the range. It's maybe a little smaller, but close.

Speaker Change: Yeah, but close enough it's in the range.

Speaker Change: Maybe a little smaller but growth, but but but but close yes, okay got it got it and then.

Steven Li: Yeah, okay, got it, got it. And the calibration you gave, 136, last quarter was about 130 and a half. Can I think that that delta is the contribution from ASD and OCR?

Speaker Change: Calibration, we gave was 136.

Speaker Change: Last quarter was once again you have okay can I think that that delta is the contribution from ESB and OCR.

Speaker Change: Yes.

Allan Brett: You know, Steven, we've, as Ed mentioned earlier in the call, we haven't run those businesses for a long time, and consistent with the way we've always done calibration on new acquisitions, part of those acquisitions, and a good part of them, have been reflected in our calibration. That's why the numbers jumped up more than maybe you would expect. But we do expect to fine-tune that, and we do see upside as we continue to, well, operate those businesses for a longer period of time. So, partially reflected in calibration, the two acquisitions are certainly partially reflected. Got it. Thanks.

Yes, Steven as Ed mentioned earlier in the call we haven't run those businesses for a long time and so consistent with the way we've always done calibration on new acquisitions.

Speaker Change: Part of those acquisitions and a good part of them have been reflected in our calibration. That's why the numbers jumped up more than maybe you would expect but we do expect to fine tune that and we do see upside as we continue up well.

Speaker Change: As we operate those businesses for a longer period of time, so partially reflected in calibration. The two acquisitions are certainly partially reflected there.

Steven Li: Got it. Thanks. Thanks, guys.

Speaker Change: Got it thanks, Thanks, guys.

Speaker Change: Thank you.

Operator: Thank you. And your next question comes from the line of Kevin Krishnaratne from Scotiabank. Please go ahead.

Speaker Change: Thank you and your next question comes from the line of Kevin <unk> from Scotiabank. Please go ahead.

Speaker Change: Hey, there good evening, just a follow up on e-commerce, So a couple of years ago.

Kevin Krishnaratne: Hey there, good evening. Just a follow up on e-commerce. So a couple of years ago, you bought NetCHB, which I think had technology for expedited shipping for small packages, the type 86 filings. It sounds like, you know, there have been some recent changes in the U.S. that might require more scrutiny on how quickly customs are cleared under that type of filing. And I think some brokers are seeing their ability to ship beyond the pause.

Net CHP, which I think had technology on expedited shipping for small packages. The pipe 86 filings. It sounds like there has been some recent changes in the U S that might more fiber more scrutiny on how quickly customers are cleared under that type of filing and seeing some brokers are seeing their ability to ship on pause. So I guess my question to you is.

Kevin Krishnaratne: So I guess my question to you is, how do you think about that business? It seems like it could be a short-term headwind. But on the other hand, maybe it's a bit of a tailwind if the changes sort of increase demand for some of your other customs services. So I'm just wondering if you could comment on that. It seems relatively new.

How do you think about that business. It seems like it could be a short term headwind, but on the other hand, maybe it's a bit of a tailwind if that changes sort of increased demand for something bigger either custom services I'm. Just wondering if you could comment on on this relatively new.

Edward J. Ryan: Yeah, thanks, Kevin. We've enjoyed some great gains in those businesses over the last couple years, and, in general, we like our long-term prospects in that business.

Speaker Change: Yes. Thanks.

Speaker Change: Kevin.

Speaker Change: First of all we've enjoyed some great gains in those businesses over the last couple of years and in general we like our long term prospects in that business I.

Edward J. Ryan: The government is starting to ask for more information from those types of providers, and we think that's going to be a good thing for our business long term because we're the guys that collect the information and give it to the government as opportunities for us to provide a more significant service to our customers. There are also ones that have had some challenges, let's say, with the government and have either been asked to stop filing or to do a better job at filing.

Speaker Change: I agree with you the government is starting to ask for more information from those types of providers and we think thats going to be a good thing for our business long term is where the guys that collect the information and give it to the government opportunities for us to provide a more significant service to our customers.

Speaker Change: There are also ones that have gotten in some.

Some had some challenges, let's say with the government and either finance the stockpiling or do a better job of filing we also kind of see that as an opportunity for us one to the extent some of what's been asked to stockpiling.

Edward J. Ryan: We also kind of see that as an opportunity for us, one, to the extent someone's been asked to stop filing, because we have the bulk of the filers in that business, we believe we're going to pick up that volume with other providers. And to the extent the government's asking for more information, we think it's an opportunity to provide a more enhanced service to our customers in the long run. Net, net; we see this because of the Instagrams and TikToks of the world, where a lot of these products are being sold.

Speaker Change: Because we have the bulk of the filers in that business. We believe we're going to pick that volume up with other.

Speaker Change: With other providers.

Speaker Change: And to the extent the government asking for more information, we think that's an opportunity to provide.

Speaker Change: A more enhanced service to our customers in the long run net net we see this because of the Instagram TIK talks of the world where a lot of these products are being sold.

Speaker Change: The growth is coming from that hasn't slowed at all it's growing and continues to grow and as the largest file are out there for type 86, we think we're going to continue to benefit from that in the long run.

Kevin Krishnaratne: The growth that's coming from that hasn't slowed at all. It's growing and continuing to grow. And as the largest filer out there for type 86, we're going to continue to benefit from that in the long run.

Kevin Krishnaratne: Got it. No, I appreciate it. That's all for me.

Speaker Change: Got it appreciate it that's all for me thanks.

Kevin: Thanks, Kevin.

Operator: Thank you. And your last question comes from the line of Scott Group from Wolf Research. Please go ahead.

Speaker Change: Thank you and your last question comes from the line of Scott Group from Wolfe Research. Please go ahead.

Scott Group: Hey, thanks. Hey, guys, I'm on the road. Hopefully, you can hear me. Okay. So, Ed, when you guys do a couple of relatively large acquisitions in a quarter, is the thought that, you know, from here, you pause for a little bit and see how they perform? Or, or do you think that there's more to go on in terms of M&A activity over the course of the year?

Scott Group: Hey, Thanks, Hey, guys I'm on the road hopefully you can hear me okay.

Speaker Change: Yes, so and when you guys do a couple of relatively large acquisitions in the quarter is the thought that from here you pause for a little bit and see how they perform or where do you think that there is more to go in terms of M&A activity over the course of the year.

Edward J. Ryan: Thanks, Scott. Yeah, we can hear you fine.

Scott: Thanks, Scott Yeah, we can hear you.

Speaker Change: We are.

Speaker Change: We have a pretty significant corporate development function at this point and think we have certainly the bandwidth to do more acquisitions.

Scott Group: We, you know, we have a pretty significant corporate development function at this point and think we certainly have the bandwidth to do more acquisitions. We're also in a position where we see a lot coming at us right now, a lot of things for sale, a lot of things that we think, you know, are in a price range that we think is reasonable. And, you know, we'd like to take advantage of that. So I don't think you're going to see us slow at all, www.descart sys.com.au

Speaker Change: Also in a position, where we see a lot coming at US right now a lot of things for sale a lot of things that we think.

Speaker Change: Or in a price range that we think is reasonable and.

Speaker Change: We'd like to take advantage of that so I don't think youre going to see us slow at all.

Speaker Change: Based on based on the last two acquisitions, we did certainly.

Speaker Change: They were significant it was one of them was significant.

Speaker Change: That's great good.

Speaker Change: Good addition for our business, but we also have the ability to get more done and the ability to get more people working on getting more acquisitions done while we integrate the ones that we just did so.

We're taking advantage of the breadth and size of our business to do that so.

Speaker Change #100: Okay. Good and then just a couple of follow ups on like some of the market color do you have.

Edward J. Ryan: Okay, good. And then just a couple of thoughts on some of the market color. Do you have thoughts on this pretty dramatic increase in ocean spot rates and how sustainable it is? And then definitely, you made a comment about changes at the post office. And I'm just wondering, you know, how that impacts you, good or bad.

Speaker Change #101: Thoughts on like this pretty dramatic increase in ocean spot rates.

Speaker Change #102: Sustainable It is and then separately you made a comment about changes.

Speaker Change #103: The post office and I'm just wondering how.

Speaker Change #103: How that impacts you good or bad.

Edward J. Ryan: I mean, the ocean stuff, a lot of their price increases don't really impact us, other than it's a sign of what's going on, right? They're increasing capacity, you know; it's a very capacity-focused business, right? When they have excess capacity, their rates tend to go down, when they have increased capacity... Sorry, when they have increased capacity, their rates tend to go down, when they have less capacity, their rates tend to go up, and we're seeing that, and I think some of the challenges I mentioned with the Red Sea and the Panama Canal are contributing to that. I probably also just have to...

Speaker Change #104: I mean, theres just a lot of it a lot of their price increases don't really impact us.

Speaker Change #104: Other than as the sign of what's going on right. They are increasing and its a very capacity focused business right when they're when they have excess capacity there rates tend to go down when they have increased capacity sorry, when there are interest capacity, there, which tend to go down when they are.

Speaker Change #104: Less capacity their rates tend to go up and we're seeing that I think some of the challenges I mentioned with the Red Sea in the Panama Canal are contributing to that.

Probably also just have they're doing a REIT right now so.

Edward J. Ryan: They're doing all right right now, so they're taking that opportunity to raise rates. It doesn't really impact us much, but we see it happening.

Speaker Change #104: Taking that opportunity to raise rates it doesn't really impact us as much we see it happening.

Edward J. Ryan: You know, we charge by the transaction, so we're not really impacted by their rates so much. You know, we take it as a good general sign, not only for the ocean space, but air tends to follow along with it closely, and as I mentioned earlier, domestic trucking also tends to follow along. So, I think that's a good sign. We have a lot of opportunity in that e-commerce business, and some of it relates to the U.S.

Speaker Change #104: We charge by the transactions that were not really impacted by their rates.

Speaker Change #104: So much.

Speaker Change #104: We take it as a good general sign not only for the ocean space, but air tends to follow along with the closely and as I mentioned earlier domestic trucking tends to also follow along with it.

Speaker Change #104: Pretty quickly.

Speaker Change #104: Thereafter.

Speaker Change #104: On the U S postal service.

Speaker Change #104: We think we have a lot of opportunity in that ecommerce business and some of it relates to the U S Postal service.

Edward J. Ryan: The Postal Service and several of the other providers in that business, Amazon, UPS, FedEx, and a bunch of other guys that are smaller than them that we do a lot of business with, and as their business picks up, we expect to benefit from that as we always have.

Speaker Change #104: Several of the other providers in that business.

Speaker Change #104: <unk> U S UBS Fedex and a bunch of other guys that are that are smaller than them.

Speaker Change #104: That we do a bunch of business with them as their business picks up.

Speaker Change #104: Expect to benefit from that as we always have.

Scott Group: Okay, thank you for your time, guys. I appreciate it.

Speaker Change #105: Okay. Thank you for the time guys I appreciate it.

Edward J. Ryan: Hey, thanks, Scott. I appreciate it.

Scott: Hey, Thanks, Scott appreciate it.

Edward J. Ryan: Thank you. That concludes our question and answer session. I will now hand the call back to Mr. Ed Ryan for any closing remarks.

Speaker Change #106: Thank you that concludes our question and answer session I will now hand, the call back to Mr. Andrew <unk> for any closing remarks.

Edward J. Ryan: Hey great, thanks everyone. We appreciate your time on the call and look forward to reporting back to you on our Q2 results in September. Thanks, and have a great day.

Speaker Change #107: Hey, great. Thanks, everyone. We appreciate your time today on the call and look forward to reporting back to you on our Q2 results in September Thanks, and have a great day.

Operator: This concludes today's call. Thank you for participating. We all disconnect.

Speaker Change #108: This concludes today's call. Thank you for participating you may all disconnect.

Speaker Change #108: Okay.