Q2 2024 Bowman Consulting Group Ltd Earnings Call
All lines have been placed on mute for the presentation portion of the call with the opportunity to questions and answers at the end.
Operator: Thank you for the opportunity to ask questions and answers at the end. In addition, on today's call, the company will discuss certain non-GAAP financial information such as adjusted EBITDA, adjusted net income, and net service billing. You can find this information together with the reconciliations, the most directly comparable gap information, in the company's earnings press release and 8K filed with the SEC and on the company's investor website at investors.bowman.com. Management will deliver prepared remarks, after which they will take live questions from published research analysts. Throughout the call, attendees on the webcast may post questions for management to answer on the call or in subsequent communications. But there will be no live Q&A from the webcast attendees.
Operator: Please note that many of the comments made today are considered forward-looking statements under federal securities laws. As described in the company's filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and the company is not obligated to publicly update or revise these forward-looking statements.
Speaker Change: Please note that many of the comments made today are considered forward-looking statements under federal securities laws.
Operator: In addition, on today's call, the company will discuss certain non-GAAP financial information such as adjusted EBITDA, adjusted net income, and net service billing. You can find this information together with the reconciliations, the most directly comparable GAAP information in the company's earnings press release, and 8-K filed with SEC, and on the company's investor website at investors.bomin.com.
Speaker Change: In addition, on today's call, the company will discuss certain non-GAAP financial information such as adjusted EBITDA, adjusted net income, and net service billing.
Speaker Change: You can find this information together with the reconciliations, the most directly comparable gap information in the company's earnings press release and 8K filed with SEC and on the company's investor website at investors.bowman.com.
Operator: Management will deliver prepared remarks, after which they will take live questions from published research analysts.
Operator: Throughout the call, attendees on the webcast may post questions for management to answer on the call or in subsequent communications, but there will be no live Q&A from the webcast attendees. Replays of the call will be available on the company's investor website.
Speaker Change: Throughout the call, attendees on the webcast may post questions for management to answer on the call or in subsequent communications.
Gary Bowman: Replays of the call will be available on the company's investor website. Mr. Bowman, you may begin your prepared remarks. Thanks, Megan. Good morning, and thank you for joining the Bowman Consulting Group second quarter 2024 earnings call. With me this morning is Bruce Labovitz, our CFO. We also want to welcome all of our new employees, including everyone who joined us recently from Element Engineering in Colorado and the SCS Group in Washington State
Gary Bowman: Mr. Bowman, you may begin your prepared remarks.
Gary Bowman: Thanks, Megan. Good morning, and thank you for joining the Bowman Consulting Group second quarter 2024 earnings call. With me this morning, Bruce Labovitz, our CFO.
Speaker Change: Thanks, Megan. Good morning, and thank you for joining the Bowman Consulting Group second quarter 2024 earnings call. With me this morning, Bruce Labovitz, our CFO .
Gary Bowman: We also want to welcome all of our new employees, including everyone who joined us recently from Element Engineering in Colorado and the SCS Group in Washington State. This morning, I'm going to start off with some introductory comments, after which Bruce will discuss our financial results.
Speaker Change: We also want to welcome all of our new employees, including everyone who joined us recently from Element Engineering in Colorado and the SCS Group in Washington State.
Gary Bowman: This morning, I'm going to start off with some introductory comments, after which Bruce will discuss our financial results. I'll then come back on the line for some additional remarks about our trajectory into 2025 and end with Q&A. Okay, during the three months ended June 30, 2024, we generated record quarterly gross and net revenue, surpassing $100 million in a single quarter for the first time. While short of expectations, it is a meaningful advance toward our goal of a $500 million annual gross revenue pace within our first five years as a public company.
Speaker Change: This morning, I'm going to start off with some introductory comments, after which Bruce will discuss our financial results. I'll then come back on the line for some additional remarks about our trajectory into 2025 and end with Q&A.
Gary Bowman: I'll then come back on the line for some additional remarks about our trajectory into 2025 and end with Q&A. During the three months ended June 30, 2024, we generated record quarterly gross and net revenue, surpassing $100 million in a single quarter for the first time. While short of expectations, it is a meaningful advance toward our goal of a $500 million annual gross revenue pace within our first five years as a public company. The acquisitions we made during and after the quarter expand our geospatial business, increase our public sector revenue, add capabilities around renewable energy engineering, and they broaden our growing national water services practice.
Gary Bowman: The acquisitions we made during and after the quarter expand our geospatial business, increase our public sector revenue, add capabilities around renewable energy engineering, and broaden our growing national water services practice. I'm pleased with the evolving position of the firm in the marketplace and the strategy that we're using to grow the business. It gives me great confidence in our collective ability to execute on our long-term vision.
Gary Bowman: I'm pleased with the evolving position of the firm in the marketplace and the strategy that we're using to grow the business. It gives me great confidence in our collective ability to execute on our long-term vision. So during our quarterly calls, and as we meet with investors, we spend a lot of time distinguishing between organic and acquired revenue and associated growth rates. It's sometimes a tricky distinction to make because, while we're highly acquisitive and much of our growth has been through acquisition, we are also both committed to and highly proficient at post-closing integration. By the time required, firm reaches its 12 month anniversary closing, it is often challenging to distinguish it within the overall organization and even more difficult to disaggregate it from our overall results of operations.
Bruce: I'm pleased with the evolving position of the firm in the marketplace and the strategy that we're using to grow the business. It gives me great confidence in our collective ability to execute on our long-term vision.
Gary Bowman: During our quarterly calls and as we meet with investors, we spend a lot of time distinguishing between organic and acquired revenue and the associated growth rates. And sometimes this is a tricky distinction to make because while we are highly acquisitive and much of our growth has been through acquisition, we are also both committed to and highly proficient at post-closing integration. By the time an acquired firm reaches its 12-month anniversary closing, it is often challenging to distinguish it within the overall organization and even more difficult to disaggregate it from our overall results of operations. While this enables us to be efficient at work sharing unconstrained by geographic boundaries or legacy affiliations, it makes reporting on organic and acquired growth a challenge.
Bruce: So during our quarterly calls and as we meet with investors, we spend a lot of time distinguishing between organic and acquired revenue and the associated growth rates.
Bruce: By the time an acquired firm reaches its 12-month anniversary closing, it is often challenging to distinguish it within the overall organization and even more difficult to disaggregate it from our overall results of operations.
Gary Bowman: In most cases, we have by that time integrated the systems, individual practice areas, and professional staff throughout Bowman, while this enables us to be efficient at work sharing, unconstrained by geographic boundaries or legacy affiliations. It makes reporting on organic and acquired growth a challenge. As opposed to seeing this as a negative, it's an aspect of our approach that we're proud of, and we believe distinguishes this from many of our peers and adds value for our shareholders. Bruce will present a deeper dive into growth rates in his presentation, but suffice it to say we believe our diversification efforts have been extremely impactful.
Bruce: In most cases, we have by that time integrated the systems, individual practice areas and professional staff throughout Bowman.
Gary Bowman: As opposed to seeing this as a negative, it's an aspect of our approach that we're proud of and believe distinguishes us from many of our peers and adds value for our shareholders. Bruce will present a deeper dive into growth rates in his presentation, but suffice it to say, we believe our diversification efforts have been extremely impactful. With this, I'm going to turn the call over to Bruce to discuss the financial results. Bruce.
Bruce: As opposed to seeing this as a negative, it's an aspect of our approach that we're proud of and we believe distinguishes us from many of our peers and adds value for our shareholders.
Bruce: Bruce will present a deeper dive into growth rates in his presentation, but suffice it to say, we believe our diversification efforts have been extremely impactful.
Bruce Labovitz: With this, I'm going to turn the call over to Bruce to discuss financial results.
Bruce Labovitz: Bruce, thanks, Gary.
Bruce Labovitz: Thanks, Gary. Now, let's turn to slide four. As a quick reminder, we refer to net service revenue, net service billings, and net revenue interchangeably. It's a non-gap revenue metric that eliminates pass-through billings associated with subcontractors and outside production costs. Since pass-through billings are generally without markup, net revenue is meaningful because it reflects margin-contributing revenue generated by our workforce. Reconciliations of all non-GAP metrics we'll discuss are available in the press release we issued last night. Let's start with the quarter.
Bruce Labovitz: Let's turn to slide four. Quick reminder, we refer to net surface revenue, net service billings, and net revenue interchangeably. It's a non-GAP revenue metric that eliminates pass-through billings associated with subcontractors and outside production costs. Since pass-through billings are generally without markup, net revenue is meaningful because it reflects margin-contributing revenue generated by our workforce. Reconciliation of all non-GAAP metrics will discuss are available in the press release we issued last night.
Bruce: Reconciliations of all non-GAP metrics we'll discuss are available in the press release we issued last night.
Bruce Labovitz: Let's start with the quarter. Gross revenue for the second quarter was $104.5 million, which, as Gary mentioned, is a milestone for us. Net revenue was $94 million, representing a 27% increase over second quarter 2023, with a 90% net-to-gross ratio, which shows growth of net revenue is keeping pace with the gross revenue. Gross margin was slightly improved during the quarter of 52% compared to 50% last year, with SG&A holding steady around 52% of net revenue. Net loss before tax increased by about a million dollars to a loss of 3.2 million from a loss of 2.2 million.
Bruce Labovitz: Gross revenue for the second quarter was $104.5 million, which, as Gary mentioned, is a milestone for us. Net revenue was $94 million, representing a 27% increase over the second quarter of 2023, with a 90% net to gross ratio, which shows growth of net revenue is keeping pace with the growth of gross revenue. Gross margin was slightly improved during the quarter at 52% compared to 50% last year, with SG&A holding steady at around 52% of net revenue. However, net loss before tax increased by about $1 million to a loss of $3.2 million from a loss of $2.2 million.
Bruce: Gross revenue for the second quarter was $104.5 million, which, as Gary mentioned, is a milestone for us.
Speaker Change: Net loss before tax increased by about $1 million to a loss of $3.2 million from a loss of $2.2 million.
Bruce Labovitz: Net loss after tax increased by approximately 1.4 million to a net loss of 2.1 million. Our tax benefit in the quarter was approximately 1.2 million after accounting for the unwinding of our uncertain tax position relating to Section 174 R&D expenses. More on that in a bit. Adjusted EBITDA was up 21% or 2.4 million for the quarter at 13.4 million, which is a 14.3% margin on net revenue. Not where we had hoped it would be, but up 20 basis points over first quarter 2024 nonetheless, to in the right direction. We're committed to holding overhead, and we're taking actions to ensure our labor is right size for our adjusted revenue projections, which position us for higher margins in the second half.
Bruce Labovitz: The net loss after tax increased by approximately $1.4 million to a net loss of $2.1 million. Our tax benefit in the quarter was approximately $1.2 million after accounting for the unwinding of our uncertain tax position relating to Section 174 R&D expenses. More on that in a bit.
Speaker Change: Net loss after tax increased by approximately $1.4 million to a net loss of $2.1 million.
Bruce Labovitz: Adjusted EBITDA was up 21% or $2.4 million for the quarter at $13.4 million, which is a 14.3% margin on net revenue. Not where we had hoped it would be, but up 20 basis points over first quarter 2024 nonetheless, so in the right direction. We're committed to holding overhead, and we're taking actions to ensure our labor is the right size for our adjusted revenue projection, which positions us for higher margins in the second half. Fortunately, this does not require extreme or dramatic action to accomplish.
Speaker Change: We're committed to holding overhead, and we're taking actions to ensure our labor is right-sized for our adjusted revenue projections, which positions us for higher margins in the second half.
Bruce Labovitz: Fortunately, this does not require extreme or dramatic action to accomplish.
Speaker Change: Fortunately, this does not require extreme or dramatic action to accomplish.
Bruce Labovitz: Turning to the first half of 2024, gross revenue for the six months ended June 30 was 199.4 million. Net revenue was up 27% or 38.3 million at 179.7 million as compared to the first half of 2023. Gross margins for the sixth month was slightly improved if 52% compared to 51% last year, with SGNA up around 1% at 52% of net revenue. Net loss after tax increased by approximately $2.8 million to a net loss of $4.6 million. Adjusted EBITDA was up 23% or $4.8 million for the six months at $25.5 million, which is a 14.7% margin on net revenue.
Bruce Labovitz: Turning to the first half of 2024, gross revenue for the six months ended June 30 was $199.4 million, and net revenue was up 27%, or $38.3 million, at $179.7 million as compared to the first half of 2023. Gross margins for the sixth month were slightly improved at 52% compared to 51% last year, with SG&A up around one percentage point at 52% of net revenue. Adjusted EBITDA was up 23%, or $4.8 million for the six months, at $25.5 million, which is a 14.7% margin on net revenue. Let's turn to slide 5.
Speaker Change: Turning to the first half of 2024, gross revenue for the six months ended June 30 was $199.4 million. Net revenue was up 27%, or $38.3 million at $179.7 million as compared to the first half of 2023.
Speaker Change: Net loss after tax increased by approximately $2.8 million to a net loss of $4.6 million.
Speaker Change: Adjusted EBITDA was up 23%, or $4.8 million for the six months, at $25.5 million, which is a 14.7% margin on net revenue.
Bruce Labovitz: Let's turn to slide 5. Non-cash stock compensation was just under $6.1 million in the second quarter, down nearly 12% from the second quarter of 2023 and nearly 23% from the first quarter of 2024. We're currently projecting non-cash stock compensation for 2024 to be in the range of $24 to $26 million, including the tranches for 2024 related awards that will not be issued until early 2025. I'll point out that the number in the future expense table in the .com footnote of the 10-Q is limited to issued awards only.
Bruce Labovitz: Non-cash stock compensation was just under $6.1 million in the second quarter, down nearly 12% from the second quarter of 2023 and nearly 23% from the first quarter of 2024. We're currently projecting non-cash stock compensation for 2024 to be in the range of $24 to $26 million, including accruals for 2024 related awards that will not be issued until early 2025. I'll point out that the number in the future expense table in this dot com footnote of the 10-Q is limited to issued awards only.
Speaker Change: Non-cash stock compensation was just under $6.1 million in the second quarter, down nearly 12% from the second quarter of 2023, and nearly 23% from the first quarter of 2024.
Speaker Change: We're currently projecting non-cash stock compensation for 2024 to be in the range of $24 to $26 million, including accruals for 2024 related awards that will not be issued until early 2025.
Bruce Labovitz: Let's turn to slide 6. Based on net losses in the quarter and the six months, basic and diluted EPS are the same in each period: a negative $13.4 for the quarter and a negative $0.24 for the year. Basic and diluted adjusted EPS, also a non-get metric, were both negative $3.3 for the three months, and there were positive $0.17 and positive $16, respectively, for the six months.
Bruce Labovitz: Let's turn to slide 6. Based on net losses in the quarter and the six months, basic and diluted EPS are the same in each period, at negative 13 cents for the quarter and negative 24 cents for the year.
Speaker Change: Let's turn to slide 6.
Speaker Change: Based on net losses in the quarter and the six months, basic and diluted EPS are the same in each period, at negative 13 cents for the quarter and negative 24 cents for the year.
Bruce Labovitz: Basic and Diluted Adjusted EPS, also a non-GAP metric, were both negative $0.03 for the three months, and they were positive $0.17 and positive $0.16, respectively, for the six months. Now, let's turn to slide 7. Second quarter gross revenue by vertical was impacted by the introduction of SIRDEX as their revenue was allocated to the emerging markets vertical. This resulted in a slight dilution of the other verticals with building infrastructure at 53%, transportation at 18%, power at 19%, and emerging markets at 9%. CertEx-related revenue will continue to be included in emerging markets for the remainder of the calendar year. Now, let's turn to slide 8.
Bruce Labovitz: Let's turn to slide 7. Second quarter gross revenue by vertical was impacted by the introduction of Surdex as their revenue was allocated to the emerging markets vertical. This resulted in a slight dilution of the other verticals, with building infrastructure at 53%, transportation at 18%, power at 19%, and emerging markets at 9%. Surdex-related revenue will continue to be included in emerging markets for the remainder of the calendar year.
Speaker Change: Let's turn to slide 7.
Speaker Change: This resulted in a slight dilution of the other verticals with building infrastructure at 53%, transportation at 18%, power at 19%, and emerging markets at 9%.
Bruce Labovitz: Let's turn to slide 8. Now I'm going to take a few minutes to discuss organic growth in a bit more detail. In our earnings release, we reported organic growth consistent with how we reported it in the past. This approach to organic growth eliminates acquisitions from the acquired revenue bucket after their 12-month closing anniversary and reclassifies their prior period revenue as non-acquired, with end-compare the results. On June 30, 2024, the acquired revenue pool included Excellence, Dentists, CFA, Blanket Ship, IMASA, Pest-Round Tree, TCE, Speech Lewis, Surdex, and more. Richter, Fisher, Holmontas, MTX, and infrastructure converted to non-acquired.
Bruce Labovitz: Now I'm going to take a few minutes to discuss organic growth in a bit more detail. In our earnings release, we reported organic growth consistent with how we've reported it in the past. This approach to organic growth eliminates acquisitions from the acquired revenue bucket after their 12-month closing anniversary and reclassifies their prior period revenue as non-acquired. We then compare the results.
Speaker Change: Let's turn to slide 8.
Speaker Change: In our earnings release, we reported organic growth consistent with how we've reported it in the past.
Bruce Labovitz: On June 30, 2024, the acquired revenue pool included Excellence, Dennis, CFA, Blanketship, iMesa, Hess Roundtree, TCE, Spiess-Lewis, CertEx, and more. Richter, Fisher, Homontez, MTX, and Infrastructure converted to non-acquired. Based on that approach, the underlying disaggregated organic growth of net revenue in the second quarter by vertical was 33% for emerging markets, 17% for transportation, 10% for power, and effectively zero for building infrastructure, resulting in the reported weighted average of just around 6%.
Speaker Change: Richter, Fisher, Homontez, MTX, and Infrastructure converted to non-acquired.
Bruce Labovitz: Based on that approach, the underlying disaggregated organic growth of net revenue in the second quarter by vertical was 33% for emerging markets, 17% for transportation, 10% for power, and effectively zero for building infrastructure. This resulted in the reported weighted average of just around 6%. By the same approach, the underlying disaggregated organic growth of net revenue by vertical for the first six months of 2024 was 57% for emerging markets, 23% for power, 15% for transportation, and around 2% for building infrastructure, resulting in the weighted average of just around 10%.
Speaker Change: Based on that approach,
Speaker Change: The underlying disaggregated organic growth of net revenue in the second quarter, by vertical, was 33% for emerging markets, 17% for transportation, 10% for power, and effectively zero for building infrastructure, resulted in the reported weighted average of just around 6%.
Bruce Labovitz: By the same approach, the underlying disaggregated organic growth of net revenue by vertical for the first six months of 2024 was 57% for emerging markets, 23% for power, 15% for transportation, and around 2% for building infrastructure, resulting in a weighted average of just around 10%. This quarter, however, we went a little further and evaluated organic growth for the first half of 2024 in two additional ways. First, we looked at it on a pro forma as adjusted basis, whereby we increased the base of revenue in the first half of 2023 to add pro forma first and second quarter results for the companies acquired during the second quarter of 2023.
Speaker Change: The underlying disaggregated organic growth of net revenue by vertical for the first six months of 2024 was 57% for emerging markets, 23% for power, 15% for transportation, and around 2% for building infrastructure.
Bruce Labovitz: This quarter, however, we went a little further and evaluated organic growth for the first half of 2024 in two additional ways. First, we looked at it on a pro forma as adjusted basis, whereby we increased the base of revenue in the first half of 2023 to add pro forma first and second quarter results for the company that is acquired during the second quarter of 2023. This effectively normalized their revenue for the periods, although it no longer ties to our reported revenue. For the first half of 2024, we again eliminated revenue from the company that is acquired after the second quarter of 2023.
Speaker Change: Resulting in a weighted average of just around 10%.
Speaker Change: This quarter, however, we went a little further and evaluated organic growth for the first half of 2024 in two additional ways.
Bruce Labovitz: This effectively normalized their revenue for the period, although it no longer ties to our reported revenue. For the first half of 2024, we again eliminated revenue from the companies acquired after the second quarter of 2023. The second approach, we looked at it on a pro forma as eliminated basis, whereby we eliminated all revenue from acquisitions completed in both 2023 and 2024 from both 2023 and 2024 revenue. This effectively created a level playing field of revenue for the first half of 23 and 24 based on the end of 2022. In the first case, pro forma as a justice.
Speaker Change: whereby we increased the base of revenue in the first half of 2023 to add pro forma first and second quarter results for the companies acquired during the second quarter of 2023.
Speaker Change: This effectively normalized their revenue for the periods, although it no longer ties to our reported revenue.
Bruce Labovitz: Second approach, we looked at it on a pro forma as eliminated basis, whereby we eliminated all revenue from acquisitions completed in both 2023 and 2024 from both 2023 and 2024 revenue. This effectively created a level playing field of revenue for the first half of 2023 and 24 based on the end of 2022. In the first case, pro forma as adjusted organic growth of net revenue disaggregated by vertical for the first half of 2024 was 57% for emerging markets, just under 20% for power, is under 15% for transportation, and negative 1.4 for building infrastructure, with a weighted average of 7.1% for the six months.
Bruce Labovitz: Organic growth of net revenue disaggregated by vertical for the first half of 2024 was 57% for emerging markets, just under 20% for power, just under 15% for transportation, and negative 1.4 for building infrastructure, with a weighted average of 7.1% for the six months. In the second case, Proforma as eliminated organic growth of net revenue by vertical for the first half of 2024 was 50% for emerging markets, 9.7 for power, 11.4 for transportation, and negative 10 for building infrastructure with a weighted average for the six months of 14% for non-building infrastructure and negative one overall. Keep in mind, this approach ignores all organic growth associated with acquisitions from the first half of 2023 and beyond. Let's turn to the slide now.
Speaker Change: In the first case, pro forma as adjusted.
Bruce Labovitz: In the second case, pro forma as eliminated organic growth of net revenue by vertical for the first half of 2024 was 50% for emerging markets, 9.7 for power, 11.4 for transportation, and negative 10 for building infrastructure, with a weighted average for the six months of 14% for non-building infrastructure and negative 1 overall. Keep in mind this approach ignores all organic growth associated with acquisitions from the first half of 2023 and beyond.
Speaker Change: Proforma has eliminated organic growth of net revenue by vertical for the first half of 2024.
Speaker Change: 9.7 for power.
Bruce Labovitz: Let's turn to slide 9. Transitioning to the balance sheet, we had approximately 71 million dollars of net debt at the end of the quarter, with 23 million dollars in cash and over 72 million dollars available on the renew revolver. Our debt to adjust the EBITDA ratio was just under 1.4 times on the trailing four quarter basis. There's no distress with respect to our capitalization and capabilities to continue to invest in growth. With respect to cash flow, we generated $5.6 million of cash from operating activities during the six months, which is roughly two and a half times last year's results.
Bruce Labovitz: Transitioning to the Bound. We had approximately $71 million of net debt at the end of the quarter with $23 million in cash and over $72 million available on the new revolver. Our debt-to-adjusted EBITDA ratio was just under 1.4 times on a trailing four-quarter basis.
Speaker Change: We had approximately $71 million of net debt at the end of the quarter, with $23 million in cash and over $72 million available on the new revolver.
Speaker Change: Our debt-to-adjusted EBITDA ratio was just under 1.4 times on a trailing four-quarter basis.
Bruce Labovitz: There is no distress with respect to our capitalization and capabilities to continue to invest and grow. With respect to cash flow, we generated $5.6 million of cash from operating activities during the six months, which is roughly two and a half times last year's results. CapEx spending was roughly $7.5 million, or 3.7% of gross revenue during the first half, which I will point out is the total of the purchase of property and equipment and property and equipment acquired under financed leases lines on our statement of cash flow. It is important that you add those two together.
Speaker Change: There is no distress with respect to our capitalization and capabilities to continue to invest in growth.
Speaker Change: With respect to cash flow, we generated $5.6 million of cash from operating activities during the six months, which is roughly two and a half times last year's results.
Bruce Labovitz: Cap expending was roughly 7.5 million or 3.7% of growth revenue during the first half, which I will point out is the total of the purchase of property and equipment and property and equipment acquired. Under finance leases, lines on our statement of cash flow important that you had those two together. We're pleased with our 70% free cash flow conversion from adjusted EBITDA after Cap X.
Speaker Change: CapEx spending was roughly $7.5 million or 3.7% of gross revenue during the first half.
Speaker Change: Which I will point out is the total of the purchase of property and equipment and property and equipment acquired under finance leases lines on our statement of cash flow. Important that you add those two together.
Bruce Labovitz: We're pleased with our 70% free cash flow conversion from adjusted EBITDA after CapEx. Shares outstanding on June 30, 2024, will be $17.6 million. As of today, including subsequent acquisitions, buybacks, and withholding to cover activity, and activity under our incentive bonus plan, the count is approximately 18 million, with approximately 1.3 million of those shares being subject to forfeiture. Additionally, there are an additional 700,000 shares of performance stock units, which are based on total shareholder returns over the next four years. Those are not included in today's outstanding share count.
Speaker Change: We're pleased with our 70% free cash flow conversion from adjusted EBITDA after CapEx.
Bruce Labovitz: Shares outstanding on June 30 of 2024 with 17.6 million as of today, including subsequent acquisitions, buybacks, and withhold to cover activity and activity under our incentive bonus plan to count to approximately 18 million. The approximately 1.3 million of those shares being subject to forfeit. There is an additional 700,000 shares of performance stock units, which are based on total shareholder returns over the next four years. Those are not included in today's outstanding share count.
Speaker Change: As of today, including subsequent acquisitions, buybacks and withhold-to-cover activity, and activity under our incentive bonus plan, the count's approximately $18 million, with approximately $1.3 million of those shares being subject to forfeiture.
Speaker Change: There's an additional 700,000 shares of performance stock units, which is based on total shareholder returns over the next four years. Those are not included in today's outstanding share count.
Bruce Labovitz: Returning to R&D, we reversed the uncertain tax position this period in anticipation of finalizing our 2023 returns in October. Between diminishing likelihood that the Senate would act on the House resolution to repeal the tax change retroactively. And increasingly unfavorable guidance, we decided it was time to unwind the position. The reversal alone had no effect on the PNL, with only reclassifications between long and short-term liability accounts on the balance sheet. The only real net impact was the reversal of approximately $5 million of previously accrued penalties and interest through our tax provisions. In the future, if the tax is repealed, we will adjust our accounting accordingly.
Bruce Labovitz: Returning to R&D, we reversed the uncertain tax position this period in anticipation of finalizing our 2023 returns in October. Between the diminishing likelihood that the Senate would act on the House resolution to repeal the tax change retroactively and increasingly unfavorable guidance, we decided it was time to unwind the position. The reversal alone had no effect on the P&L, with only reclassifications between long- and short-term liability accounts on the balance sheet. The only real net impact was the reversal of approximately $5 million of previously accrued penalties and interest through our tax provision. In the future, if the tax is repealed, we will adjust our accounting accordingly. Otherwise, this is a case closed.
Speaker Change: Returning to R&D, we reversed the uncertain tax position this period in anticipation of finalizing our 2023 returns in October .
Speaker Change: The reversal alone had no effect on the P&L, with only reclassifications between long- and short-term liability accounts on the balance sheet.
Speaker Change: In the future, if the tax is repealed, we will adjust our accounting accordingly. Otherwise, this is case closed.
Bruce Labovitz: Otherwise, this is case closed.
Bruce Labovitz: Let's turn to slide 10. As Gary mentioned in the release yesterday, backlog is at 19% year-over-year and 5% compared to the end of last quarter. The distribution of backlog on June 30 was 48% of building infrastructure, 27% transportation, 18% power, and 9% emerging markets. This relative increase in transportation after the increase for emerging markets is reflective of some of the issues we've been having with transportation starts.
Bruce Labovitz: Let's turn to slide 10. As Gary mentioned in the release yesterday, backlog is up 19% year-over-year and 5% as compared to the end of last quarter. The distribution of backlog on June 30th was 48% building infrastructure, 27% transportation, 18% power, and 9% emerging markets. This relative increase in transportation after the increase for emerging markets is reflective of some of the issues we've been having with transportation starts.
Speaker Change: Let's turn to slide 10.
Speaker Change: This relative increase in transportation after the increase for emerging markets is reflective of some of the issues we've been having with transportation starts.
Bruce Labovitz: Let's turn to slide 11. Lastly, as detailed in the press release, we're reviving and narrowing our outlook for 2024 net service billing to arrange a $375 to $385 million. And our likewise adjusting our outlook for adjusted EBITDA to arrange a $58 to $63 million, implying a midpoint margin of around 16%. Well, we're not pleased with having to lower guidance for the first time as a public company. We look forward to the reset and the ability to return to our old patterns with respect to guidance. As always, that guidance does not contemplate additional acquisitions we expect to announce between now and your end.
Bruce Labovitz: Lastly, as detailed in the press release, we're revising and narrowing our outlook for 2024 net service billing to a range of $375 to $385 million and are likewise adjusting our outlook for adjusted EBITDA to a range of $58 to $63 million, implying a midpoint margin of around 16%. While we're not pleased with having to lower guidance for the first time as a public company, we look forward to the reset and the ability to return to our old patterns with respect to guidance. As always, that guidance does not contemplate additional acquisitions we expect to announce between now and year-end. Gary
Speaker Change: Let's turn to slide 11.
Speaker Change: Lastly,
Speaker Change: As detailed in the press release, we are revising and narrowing our outlook for 2024 net service billing to a range of $375 to $385 million, and are likewise adjusting our outlook for adjusted EBITDA to a range of $58 to $63 million, implying a midpoint margin of around 16%.
Speaker Change: As always, that guidance does not contemplate additional acquisitions we expect to announce between now and year-end. Gary?
Gary Bowman: Gary?
Gary Bowman: Thank you, Bruce.
Gary Bowman: Thank you, Bruce. Now we turn to slide number 12. Before opening the call to Q&A, I want to take a few minutes to address the markets, share some recent successes and awards, touch on areas of our business where we are excited about them for the future, and reassure everyone that we are laser-focused on the performance of our operations. In 2022, we acquired Anchor Consultants. It's a small company in Philadelphia focused on bridge and marine engineering.
Gary Bowman: Now let's turn to slide number 12. Before opening the call to Q&A, I want to take a few minutes to address markets, share some recent successes and awards, touch on areas of our business where we are excited about for the future, and reassure everyone that we're laser-focused on the performance of our operations. In 2022, we acquired Anchor Consultants. That's a small company in Philadelphia focused on bridge and marine engineering. This acquisition and its talent and staff laid a foundation for it for what is now a flourishing expanded ports and harvest group. With added depth of leadership, the submarket of our transportation vertical is now proving to be an extremely promising practice area.
Gary: Thank you, Bruce. Now let's turn to slide number 12.
Gary: Before opening the call to Q&A, I want to take a few minutes to address markets, share some recent successes and awards, touch on areas of our business where we are excited about it for the future, and reassure everyone that we are laser-focused on the performance of our operations.
Gary: In 2022, we acquired Anchor Consultants. That's a small company in Philadelphia focused on bridge and marine engineering. This acquisition and its talented staff laid a foundation for what is now a flourishing, expanded ports and harbors group.
Gary Bowman: This acquisition and its talented staff laid a foundation for what is now a flourishing, expanded Ports and Harbors. With added depth of leadership, this sub-market of our transportation vertical is now proving to be an extremely promising practice area. The group's been very active lately with several wins up and down the East Coast from private and public port operators, both as a prime and as a team member with some of the biggest firms in the industry.
Gary Bowman: The group has been very actively with several winds up and down the east coast from private and public port operators, both as a prime and as a team member along some of the biggest firms in the industry. Leveraging our extensive skills in geographic information systems, or GIS for short, our ports and harvest group is providing delivery to clients utilizing sophisticated integrated technology that has distinguished us as a leader in port asset conditions tracking assessment management. Porton Harbor, they are an interesting micro-economies into themselves exhibiting diverse demands for land and water-based infrastructure, logistics, safety, and sustainability planning.
Gary: The group's been very active lately with several wins up and down the East Coast from private and public port operators, both as a prime and as a team member, along with some of the biggest firms in the industry.
Gary Bowman: Leveraging our extensive skills in Geographic Information Systems, or GIS for short, our Ports and Harbors Group is providing delivery to clients utilizing sophisticated integrated technology that has distinguished us as a leader in port asset condition tracking, assessment, and management. Ports and harbors are interesting micro economies and to themselves exhibit diverse demands for land and water based infrastructure, logistics, safety, and sustainability planning.
Gary Bowman: I'm really excited about the inroads we're making, the successes we're seeing, and the potential for the future of our ports and harbors practice. Over the past couple of years, the growth in our capabilities related to geospatial, high-resolution imaging, mapping, and GIS services has kept pace with the other practice areas. At Bowman, we've gone from being a terrestrial-based surveying firm to one that offers multiple altitudes of geospatial imaging, LiDAR and scanning, including both aerial and underwater. Accelerated by the recent addition of Surdax, we've added a variety of new scanning services to our portfolio. As an example, aerial scanning to the methane emissions provides enormous long-term potential.
Gary Bowman: I'm really excited about the inroads we're making, the successes we're seeing, and the potential for the future of our ports and harbors practice. Over the past couple years, the growth in our capabilities related to geospatial, high-resolution imaging, mapping, and GIS services has kept pace with the other practice areas at Bowman. We've gone from being a terrestrial-based surveying firm to one that offers multiple altitudes of geospatial imaging, LIDAR, and scanning, including both aerial and underwater. Accelerated by the recent addition of CERDEX, we've added a variety of new scanning services to our portfolio. As an example, aerial scanning to detect methane emissions has enormous long-term potential.
Gary: I'm really excited about the inroads we're making, the successes we're seeing, and the potential for the future of our ports and harbors practice.
Gary: Over the past couple of years, the growth in our capabilities related to geospatial, high resolution imaging, mapping and GIS services has kept pace with the other practice areas at Bowman.
Gary: Accelerated by the recent addition of CERDEX, we've added a variety of new scanning services to our portfolio.
Gary: As an example, aerial scanning to detect methane emissions provides enormous long-term potential.
Gary Bowman: By combining GIS, high- and low-altitude scanning, and terrestrial-based mobile mapping, we've developed a comprehensive end-to-end method detection, documentation, remediation planning, and information management offering that is well-aligned with numerous federal, state, and local funding opportunities available over the foreseeable future. The combination of multiple acquisitions, including 15, 19, surveying, spatial acuity, MTX, excellence, the Surdax, and others, has enabled us to credibly pursue this long-lived opportunity.
Gary Bowman: By combining GIS, high and low altitude scanning, and terrestrial-based mobile mapping, we've developed a comprehensive end-to-end methane detection, documentation, remediation planning, and information management offering that is well aligned with numerous federal, state, and local funding opportunities available over the foreseeable future. The combination of multiple acquisitions, including 1519 Surveying, Spatial Acuity, MTX, XFLTS, CER Elsewhere throughout the company, we're seeing interesting transitions and evolutions in markets.
Gary: by combining GIS, high and low altitude scanning, and terrestrial-based mobile mapping.
Gary: We've developed a comprehensive end-to-end methane detection.
Gary: documentation, remediation planning, and information management offering that is well aligned with numerous federal, state, and local funding opportunities available over the foreseeable future.
Speaker Change: The combination of multiple acquisitions including 1519 Surveying, Spatial Acuity, MTX, XFLTS, CERDEX, and others has enabled us to credibly pursue this long-lived opportunity.
Gary Bowman: Elsewhere, throughout the company, we're seeing interesting transitions and evolutions in markets. As an example, the demand for usable data center land is voracious, and commercial and residential landowners along major overhead electric quarters are utilizing us to assess the viability of land use modifications. Climate change and alterations of historical weather patterns have led to significant storm preparedness and response assignments and areas that have and have not been susceptible to extreme weather in the past. As a real-time example, just yesterday, it was announced that Tropical Storm Debbie was predicted to dump 4 to 10 inches more rain on Charleston than the city experienced a mere nine years ago during what was then categorized as a thousand-year storm.
Gary Bowman: As an example, the demand for usable data center land is voracious, and commercial and residential landowners, along major overhead electric quarters, are utilizing us to assess the viability of land use modification. Climate change and alterations of historical weather patterns have led to significant storm preparedness and response assignments in areas that have and have not been susceptible to extreme weather in the past. As a real-time example, just yesterday, it was announced that tropical storm Debbie was predicted to dump four to ten inches more rain on Charleston than the city experienced a mere nine years ago during what was then categorized as a thousand years.
Speaker Change: Elsewhere throughout the company we're seeing interesting transitions and evolutions in markets. As an example, the demand for usable data center land is voracious, and commercial and residential landowners along major overhead electric corridors are utilizing us.
Speaker Change: to assess the viability of land use modifications.
Speaker Change: Climate change and alterations of historical weather patterns have led to significant storm preparedness and response assignments in areas that have and have not been susceptible to extreme weather in the past.
Speaker Change: As a real-time example, just yesterday it was announced that Tropical Storm Debbie was predicted to dump four to ten inches more rain on Charleston than the city experienced a mere nine years ago during what was then categorized as a thousand-year storm.
Gary Bowman: We have a very active presence in Charleston. We recently added senior executive level leadership to our team with extensive experience in climate change, sea level rise, and coastal resiliency. As public utilities and their municipalities struggle to attract professionals to manage their operations, demand for utility services and staff augmentation is increased. As an example, we were just awarded a five-year contract valued at approximately $10 million to embed staff within a local jurisdiction in California. This was a direct result of our infrastructure engineers' acquisition in 2023. In Austin and Houston, we were recently selected for county roadway projects that added more than a million dollars, with the opportunity to add construction management and inspection services known as CEI as the project progresses.
Gary Bowman: We have a very active presence in Charlotte. We recently added senior executive level leadership to our team with extensive experience in climate change, sea level rise, and coastal resilience. As public utilities and their municipalities struggle to recruit professionals to manage their operations, demand for utility services and staff augmentation is increasing.
Speaker Change: We have a very active presence in Charleston.
Speaker Change: We recently added senior executive level leadership to our team with extensive experience in climate change, sea level rise, and coastal resiliency.
Gary Bowman: As an example, we were just awarded a five-year contract valued at approximately $10 million to embed staff within a local jurisdiction in California. This was a direct result of our Infrastructure Engineers Acquisition in 2023. In Austin and Houston, we were recently selected for county roadway projects valued at more than a million dollars with the opportunity to add construction management and inspection services, known as CEI, as Project Progressive. The CEI opportunity in Texas is a result of skills exported throughout the company from our Chicago operations.
Speaker Change: This was a direct result of our Infrastructure Engineers Acquisition in 2023.
Speaker Change: In Austin and Houston, we were recently selected for county roadway projects valued at more than a million dollars with the opportunity to add construction management and inspections services, known as CEI, as the project progresses.
Gary Bowman: The CEI opportunity in Texas is a result of skills exported throughout the company from our Chicago operation. Also in Texas, we were recently awarded a 2,500-acre solar engineering project, which is a result of other renewables-oriented acquisitions such as CEI and more. In Arizona, a significant heap-leach construction support and quality assurance assignment is just one of several recent substantial mining wins. While building infrastructure has lagged in terms of organic growth over the past 12 months, we have both experiential and anecdotal evidence that causes us to proceed a likely rebound ahead. In both Texas and Arizona, we were recently awarded new engineering contracts for single-family master plan communities valued at over $2 million.
Speaker Change: The CEI opportunity in Texas is a result of skills exported throughout the company from our Chicago operation.
Gary Bowman: Also in Texas, we were recently awarded a 2,500 acre solar engineering project, which is the result of other renewables-oriented acquisitions, such as SEI and more. In Arizona, a significant heat bleach, construction support, and quality assurance assignment is just one of several recent substantial mining waves, while building infrastructure has lagged in terms of organic growth over the past 12 months. We have both experiential and anecdotal evidence that causes us to foresee a likely rebound ahead.
Gary Bowman: In both Texas and Arizona, we were recently awarded new engineering contracts for single-family master plan communities valued at over $2 million. We expect forthcoming reductions in rates to reignite subverticals of the building infrastructure market, particularly multifamily and built for rent. Convenience stores, quick service restaurants, and even big box retailers are active, with many of our well-known national brand customers engaging us with new projects. Our growing national MEP practice is poised to benefit from recent EPA regulatory changes to HVAC refrigerant standards.
Gary Bowman: We expect forthcoming reductions in rates to reignite sub-verticals of the building infrastructure market, particularly multifamily and low-ferrent housing. Convenient stores, quick service restaurants, and even big box retailers are active, with many of our well-known national brand customers engaging us with new projects. Our growing national MEP practices poised to benefit from recent EPA regulatory changes to HVAC refrigerant standards. Fire protection, part of our buildings practice, catalyzed by the acquisition of Fisher Engineering last year, has been notified of a new nav-fact assignment to perform surveys of hazardous materials, storage facilities worldwide, including Marine Corps bases in the continental US and Japan.
Speaker Change: We expect forthcoming reductions in rates to reignite sub-verticals of the building infrastructure market, particularly multifamily and built-for-rent housing.
Gary Bowman: Fire protection, part of our buildings practice catalyzed by the acquisition of Fisher Engineering last year, has been notified of a new NAVFACT assignment to perform surveys of hazardous materials storage facilities worldwide, including Marine Corps bases in the continental U.S. and Japan.
Speaker Change: Fire protection, part of our building's practice catalyzed by the acquisition of fissure engineering last year, has been notified of a new NAVFAC assignment to perform surveys of hazardous materials storage facilities worldwide, including Marine Corps bases in the continental U.S. and Japan.
Gary Bowman: This is a good example of our complimentary philosophies of not expanding our footprint internationally and serving customers anywhere, anytime is needed. We were also recently notified of a pending award to perform small and medium-scale spill and fire testing to support alternative fire protection approaches for aircraft hangers. The public sector clients we are working for in fire protection provide tremendous crossover synergy opportunities.
Gary Bowman: This is a good example of our complementary philosophies of not expanding our footprint internationally and serving customers anywhere, anytime, as needed. We were also recently notified of a pending award to perform small and medium-scale spill and fire testing to support alternative fire protection approaches for aircraft hangars. The public sector clients we are working for in fire protection provide tremendous crossover synergy opportunities. Okay, now let's turn to slide 13.
Speaker Change: This is a good example of our complementary philosophies of not expanding our footprint internationally and serving customers anywhere, anytime as needed.
Speaker Change: We were also recently notified of a pending award to perform small and medium-scale spill and fire testing to support alternative fire protection approaches for aircraft hangars.
Gary Bowman: Okay, now let's turn to slide 13. The bottom line to all of this is that our growth plan is working. Every day we're winning assignments that, while not necessarily newsworthy individually, are collectively propelling our growth. I've been in the industry a long time. My experience tells me this is the time for adjacent diversification across complimentary verticals with skill sets. And that's what I'm committing to advancing at Bowman as we grow. And while the growth and opportunity of that growth and opportunity I've outlined is promising, we all recognize it must be accompanied by sustainable improvement of bottom-line results.
Gary Bowman: The bottom line to all of this is that our growth plan is working. Every day, we're winning assignments that, while not necessarily newsworthy individually, are collectively propelling our growth. I've been in the industry a long time.
Gary Bowman: My experience tells me this is a time for adjacent diversification across complementary verticals and skill sets, and that's what I'm committing to advancing at Bowman as we grow. And while the growth and opportunity I've outlined is promising, we all recognize it must be accompanied by sustainable improvement and bottom-line results. This is a business where success is built around a right-sized workforce and rationalized overhead. We constantly assess our workforce and overhead, considering evolving visibility to both short and long-term revenue, customer demand, and quality issues.
Speaker Change: We all recognize it must be accompanied by sustainable improvement of bottom line results.
Gary Bowman: This is a business for success is built around the right size workforce and rationalized overhead. We constantly assess our workforce and overhead, considering evolving visibility to both short and long-term revenue customer demand and quality assurance. As needed, we have, we are currently, and we will again in the future adopt our crop adopt our cross structure to changing circumstances as they evolve.
Gary Bowman: As needed, we have, we are currently, and we will again in the future, adapt our cross structure to changing circumstances as they evolve. With that, I'll now turn the call back to Megan for Q&A. At this time, I would like to remind everyone, in order to ask a question, press star, then number one on your telephone keypad. We'll pause here for just a moment to compile the Q&A roster. Your first question comes from the line of Aaron Spychalla with Greg Hallam.
Operator: With that, I'm not turned to call back to Megan for Q&A. This time I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause here just a moment to compile the Q&A roster.
Speaker Change: With that, I'll now turn the call back to Megan for Q&A.
Megan: At this time, I would like to remind everyone, in order to ask a question, press star, then the number 1 on your telephone keypad. We'll pause here just a moment to compile the Q&A roster.
Aaron Spychalla: Your first question comes from a line of Aaron Spachala with Greg Halem. Your line is open.
Aaron Spychalla: Your line is open. Yeah, good morning, Gary and Bruce. Thanks for taking the questions. First, for me, last quarter, you kind of noted you were looking for a very strong year for building infrastructure and now, you know, calling out organic contraction in the first half. Can you just kind of talk about what's changed in the past few months? You know, what end markets are you seeing slow down the most? And what areas are you maybe excited about data centers in the past that we've talked about? I'd appreciate that. Thanks. Good morning, Aaron.
Aaron Spychalla: Yeah, good morning Gary and Bruce. Thanks for taking the questions. You know, first for me last quarter, you kind of noted you were looking for a very strong year for building infrastructure, and now, you know, calling out organic contraction in the first half.
Speaker Change: Yeah, good morning, Gary and Bruce. Thanks for taking the questions. You know, first for me, last quarter you kind of noted you were looking for a very strong year for building infrastructure and now, you know, calling out organic contraction in the first half.
Gary Bowman: Can you just kind of talk about what's changed in the past few months? You know what end markets are you seeing slow down the most and what areas are you maybe excited about? Data centers in the past that we've talked about. I appreciate that thing. I'll say we still do believe in the aggregate the building infrastructure is going to be a strong performer. I mean, it's when you start to, you know, to assess it in very granular detail between organic and acquired. But, but it isn't. We are investing in it. We think it's a, you know, it's a good place to be.
Speaker Change: Can you just kind of talk about what's changed in the past few months, you know, what end markets are you seeing slow down the most and, you know, what areas are you maybe excited about data centers in the past that we've, that we've talked about? I'd appreciate that. Thanks.
Gary Bowman: I'll say we still do believe, you know, in the aggregate that building infrastructure is going to be a strong performer. I mean, it's when you start to, you know, assess it in very granular detail between organic and acquired. But we are investing in it. We think it's a good place to be. It's not somewhere we want to withdraw from.
Aaron: Good morning, Aaron. I'll say we still do believe, you know, in the aggregate that building infrastructure is going to be a strong performer. I mean, it's when you start to, you know, to assess it in in very granular detail between organic and acquired
Gary Bowman: It's not somewhere we want to withdraw from. So we do think it's, you know, that there's going to be strong performance there.
Aaron: But we are investing in it. We think it's a good place to be. It's not somewhere we want to withdraw from. So we do think that there's going to be strong performance there.
Gary Bowman: So we do think that there's going to be strong performance there. Gary, let's talk a little bit about which parts and what. We're selling work in multifamily, but it's being booked, but it's being put on hold, waiting for a more promising or a more favorable interest rate environment. So, that's what we're seeing amongst our clients, but they're both rationalizing their business models for a new interest rate environment and sitting tight, waiting for the interest rates to decrease.
Gary Bowman: Gary, let's talk a little bit to the sort of which parts of what we're, we're selling work in multifamily and, but it's, it's, it's being booked, but being put on hold waiting for a more promising or a more favorable interest rate environment. So that's what we're; we are, we are seeing optimism amongst our clients, but they're both rationalizing their business models for a new interest rate environment and sitting tight, waiting for the interest rates to decrease. It's sort of general, I think confusion of late, you know, even the last few months in the marketplace between, you know, impacts of discussion of changing evolution in the trajectory of rate discussions, you know, a lot going on, certainly in the geopolitical world and uncertainties.
Gary Bowman: You know, there's been sort of general confusion of late, you know, even the last few months in the marketplace between, you know, the impacts of discussion of changing evolution in the trajectory of race discussions, a lot going on, certainly in the geopolitical world and uncertainty.
Gary Bowman: And those have impacted it impacted us more quickly, I think, than, you know, the circumstances like these in the past has, but I think they're temporary as you think it's still a promising market. Data centers obviously very strong. We've got big box retailers who are issuing new orders for new stores, we've got a lot going on in healthcare, we've got a lot going on in the MEP world and, you know, talked about in terms of sort of preparing for transitions and regulatory environments and fire protection, all in that group, but they're definitely the submarkets of multifamily, certainly.
Gary Bowman: And those have impacted us more quickly, I think, than circumstances like these in the past have, but I think they're temporary. I do think it's still a promising market. Data center is obviously very strong.
Aaron: and those have impacted
Gary Bowman: We've got big box retailers who are issuing new orders for new stores. We've got a lot going on in healthcare. We've got a lot going on in the MEP world, and it's talked about in terms of preparing for transitions in regulatory environments and fire protection, all in that group. But there are definitely the submarkets of multifamily, certainly urban commercial, which doesn't really... dramatically affect us, you know, our drag area.
Aaron: and fire protection all in that group. But there are definitely the sub-markets of multifamily, certainly urban commercial, which it doesn't really.
Gary Bowman: Urban commercial, which doesn't really dramatically affect us, you know, our drag area market that was very strong for us up until a year ago, was the built-for-rent market, and that has really slowed down. But we hear from our clients in that market that they're poised to reignite once interest rates start coming down.
Gary Bowman: A market that was very strong for us up until a year ago was the billed-for-rent market. And that has really slowed down, but we hear from our clients in that market that they're poised to reignite once interest rates start coming down. Okay, understood. Thanks for the color there.
Aaron Spychalla: Okay, understood. Thanks for the color there, and then on transportation, you noted multiple large projects where you've been selected, you know, that are still working through final contracting and notice to proceed. Can you give a little bit more detail on what items are causing those delays, you know, how confident you are that they'll start up in the second half and that they'll are they still to be added to backlog and what could this mean for kind of segment growth as we look towards 25. Yeah, so the process in that is, you know, you submit, you get awarded. In broad strokes here, you get awarded and you go through a negotiation. You've submitted a price target and a characteristic of your package, but then you still have to go through a negotiation, get the contract executed, and then get a notice to proceed.
Bruce Labovitz: And then on transportation, you noted multiple large projects where you've been selected that are still working through final contracting and notice to proceed. Can you give a little bit more detail on what items are causing those delays? You know, how confident are you that they'll start up in the second half and that they'll, are they still to be added to the backlog? And what could this mean for kind of segment growth as we look towards 25? Yeah, so the process in that is you submit, you get awarded in broad strokes here. You get awarded, then you go through a negotiation.
Aaron: Okay.
Speaker Change: Understood. Thanks for the color there. And then, you know, in transportation, you noted multiple large projects where you've been selected, you know, that are still working through final contracting and notice to proceed. Please give a little bit more detail on what items are causing those delays, you know, how confident you are that they'll start up in the second half and
Speaker Change: Are they still to be added to backlog and what could this mean for segment growth as we look towards 2025?
Speaker Change: Yeah, so the process in that is, you submit, you get awarded.
Bruce Labovitz: So you've submitted a price target and a characteristic of your package, but then you still have to go through a negotiation, get the contract executed, and then get a notice to proceed. That just has seemed to take longer in the last six months. You know, more recently, they don't get added to backlog until they're contracted. So there's the process of getting a contract and getting it into the backlog and then getting everybody in the authorities lined up to proceed.
Bruce Labovitz: Bruce Labovitz
Gary Bowman: That just has seemed to take longer in the last six months, you know, more recently. They don't get added to backlog until they're contracted, so there's the process of getting a contract to get into backlog and then getting everybody at the authorities. is lined up to proceed. In some cases, as Gary talked about, with shortages of personal things, are just sort of dragging a little bit longer than we anticipated with some of these larger projects. We are in touch with these DOT clients continuously, and they give us a lot of reason to be confident that he will indeed commence in the second half of this year.
Bruce Labovitz: That just has seemed to take longer in the last six months, more recently. They don't get added to backlog until they're contracted.
Bruce Labovitz: So, there's the process of getting a contract, getting it into BASOC, and then getting everybody at the authorities.
Bruce Labovitz: In some cases, as Gary talked about, with shortages of personnel, things are just sort of dragging a little bit longer than we anticipated with some of these larger projects. We are in touch with these DOT clients continuously, and they give us... a lot of reasons to be confident that it will indeed commence in the second half of this. All right, thanks for taking the questions. I'll turn it over.
Bruce Labovitz: lined up to proceed. In some cases, as Gary talked about, with shortages of personnel, things are just sort of dragging a little bit longer than we anticipated with some of these larger projects. We are in touch with these DOT clients continuously, and they give us
Speaker Change: A lot of reason to be confident that it will indeed commence in the second half of this year.
Aaron Spychalla: All right. Thanks for taking the questions. I'll turn it over. Thanks, Aaron. Thank you.
Speaker Change: Alright, thanks for taking the questions. I'll turn it over.
Aaron Spychalla: Thanks, Aaron. Thank you. Your next question comes from the line of Andy Whitman with Baird. Your line is open. Great morning.
Karen: Hi, Karen.
Andy Wittmann: Your next question comes from a line of Andy Wittmann with Beard. Your line is open.
Karen: Thank you. Your next question comes from the line of Andy Whitman with Baird. Your line is open.
Andy Wittmann: Great.
Andy Whitman: Thanks for taking my questions, guys. I guess I just had a question here about, Bruce, you mentioned that like some of the multi-family awards. It sounds like you've got the contract, but the developers are kind of holding off and waiting for interest rates or something else to happen before you are able to get to work. In a situation like that where you have the contract but the job isn't moving yet, you don't have the notice to proceed, does that still wind up in backlog, or do you also need the notice to proceed for you to feel comfortable putting that in your backlog number?
Andy Wittmann: Good morning. Thanks for taking my questions, guys. I guess I just had a question here about Bruce. You mentioned that, like, some of the multifamily awards. It sounds like you've got the contract, but the developers are kind of holding off and waiting for interest rates or something else to happen before you are able to get to work. So, in a situation like that where you have the contract work, but the job isn't moving yet, you don't have the notice to proceed. That's still one up in backlog, or do you need also the notice to proceed beautiful, comfortable putting that in your backlog number.
Andy Whitman: Thanks for taking my questions, guys.
Andy Whitman: It sounds like you've got the contract, but the developers are kind of holding off and waiting for interest rates or something else to happen.
Speaker Change: before you are able to get to work. So in a situation like that where you have the contract but the job isn't moving yet, you don't have the notice to proceed. Does that still wind up in backlog or do you also need the notice to proceed for you to feel comfortable putting that in your backlog number?
Bruce Labovitz: So a little bit different in the multifamily world. You don't get the same sort of big contract number. It generally comes in phases more so than like a single, you know, big contract with one notice to proceed. But our philosophy is when it's under contract and there is a reasonable determination that is going to proceed. It goes into backlog. Got it. Okay. So given all of this and giving your comments in the prior answer about just how things are taken a little bit longer. Is it a fair assumption to think about the backlog that you are reporting this quarter is maybe extending out in time, or do you think the burn rate will be consistent with historical averages?
Speaker Change: So, a little bit different in the multifamily world. You don't get the same sort of big contract number. It generally comes in phases more so than like a single, you know, big contract.
Speaker Change: with one notice to proceed. But our philosophy is, when it's under contract, and there is a reasonable determination that it is going to proceed, it goes into backlog.
Speaker Change: Got it. Okay, so given all this and given your comments in the prior answer about just how things are taking a little bit longer, is it a fair assumption to think about the backlog that you are reporting this quarter as maybe extending out in time? Or do you think the burn rate will be consistent with historical averages?
Bruce Labovitz: You know, I think there may be on the long end of what is normally, you know, in the backlog. So you sort of figure that, you know, 70, 80% of your backlog turns in a 12-month period; the rest of it turns a little longer. Or, you know, maybe the turns a little longer part turns a little longer than it normally, you know, then it otherwise was, and that maybe there's a small portion of the of that current portion still turns within the 12 months, but it might be a little bit later in the 12 months right now.
Bruce Labovitz: You know, I think there may be some on the long end of what is normally in the backlog. So you sort of figure that, you know, 70, 80% of your backlog turns in a 12 month period, the rest of it turns a little longer, maybe the turns a little longer part turns a little longer than it normally would, you know, than it otherwise would have. And maybe there's a small portion of that current portion that still turns within the 12 months, but it might be a little bit later in the 12 months.
Speaker Change: You know, I think there may be on the on the long end of what is normally
Speaker Change: You know, in the backlog, so you sort of figure that, you know, 70, 80% of your backlog turns in a 12 month period, the rest of it turns a little longer, you know, maybe the turns a little longer part turns a little longer than it normally, you know, than it otherwise was, and that maybe there's a small portion of the of that.
Speaker Change: current portion still turns within the 12 months, but it might be a little bit later in the 12 months right now, you know, than previously. But I don't, I mean, it's delaying, but we do continue to backfill with shorter term projects.
Bruce Labovitz: Right now, you know, then previously, but I don't, I mean, it's delaying. But we, we do continue to backfill with shorter-term projects. Yep, that makes sense. Okay, I'm going to leave it there. Thank you very much, and some of the moving pieces within that. I mean, if I kind of go back and tally up the deals you guys have done since the second quarter last year, it's around 60 million in annualized net service billing on our conversion of labor to revenue and associated profitability. Yeah, maybe push on it. I would actually, yeah.
Bruce Labovitz: You know, then, then previously, but I don't, I mean, it's still laying, but we do continue to backfill with shorter term projects that come and go out of backlog. So yeah, it's probably a little bit of an extension there. I don't know that I would say it's like, okay, now it's two years, you know, as opposed to a year. Yep. Okay. Appreciate that perspective.
Speaker Change: that come and go out of backlog. So yeah, there's probably a little bit of an extension there. I don't know that I would say it's like, okay, now it's two years, as opposed to a year.
Bruce Labovitz: And then part of, and you started to reassess the second and a half of the year, or so, okay, contemplating that there may be a little bit of drag. In, you know, in that backlog. Yep. That makes sense.
Speaker Change: Yep. Okay. Appreciate that perspective. And part of it is part of the reassessment, the second half of the year is okay, contemplating that there may be a little bit of drag.
Speaker Change: in that backlog.
Bruce Labovitz: I just thought I would ask you to just comment on kind of your outlook for free cash flow this year, Bruce. I don't know what you're thinking, but I thought maybe you could form to kind of talk about which your expectations are on that. So, you know, everybody, I talked to four people, I get five definitions of how they think about, you know, cashflow conversion and free cashflow, in the absolute sort of simple with the sense of saying, well, adjusted EBITDA, net of, net of catbacks, you know, we're, we're running in that 70% range on it, adjusted EBITDA to, you know, two cats, cashflow. Things are going to get a little bit impacted this year by the change in the tax for us, if you just think about, you know, having to write a big advance of our taxes this year, so that's going to have a short term negative impact on cashflow conversion from adjusted EBITDA, because that, that portion of, of real money that goes out the door for taxes going to go up. But if you think about on a gap basis, not accounting for timing change, you know, I think we're still consistent with where we are today, you know, going forward.
Speaker Change: So, you know, everybody, I talked to four people, I get five definitions of how they think about, you know, cash flow conversion and, and free cash flow in the absolute sort of simplest of senses saying, well, adjusted EBITDA.
Speaker Change: net of net of cap X
Speaker Change: We're running in that 70% range on an adjusted EBITDA to cash flow. Things are going to get a little bit impacted this year by the change in the tax.
Speaker Change: For us, if you think about having to write a big advance of our taxes this year, so that's going to have
Speaker Change: basis, not accounting for timing change. I think we're still consistent with where we are today, you know, going forward.
Andy Wittmann: Got it.
Andy Wittmann: Okay, I'm going to leave it there. Thank you very much. Thanks. Thank you, Andy. Thank you.
Brent Thielman: Your next question goes to line of Brent Fieldman with DA Davidson. Your line is open.
Speaker Change: Thank you.
Speaker Change: Your next question goes to the line of Brent Thielman with D.A. Davidson. Your line is open.
Brent Thielman: Order Brent. Yeah, thanks.
Brent Thielman: Bruce, I guess hoping you can create maybe a little more of a bridge from the EBITDA this year versus last in some of the moving pieces within that. I mean, if I kind of go back and tally up the deals, you guys have done since the second quarter last year, it's around kind of 60 plus million in annualized net service billions. But, you know, we're up two and a half million in EBITDA from last year. So, you know, understand some of the moving pieces you've given, you've given from your organic perspective, but maybe just around EBITDA, what's working against you and what's working for you?
Speaker Change: Order breath
Brent Thielman: Yeah, thanks. Bruce, I guess, hoping you can create maybe a little more of a bridge to the EBIDTA this year versus last.
Brent Thielman: kind of go back and tally up the deals you guys have done since the second quarter last year. It's around
Speaker Change: $60 plus million in annualized net service billings, but we're up $2.5 million.
Speaker Change: and EBITDA from last year. So, you know, understand some of the moving pieces you've given from an organic perspective, but maybe just around EBITDA, what's working against you and what's working for you, because I would have thought we'd seen a bigger increase just from those deals.
Bruce Labovitz: Because I wouldn't have thought we'd seen a bigger increase just from the deals. Yeah, I mean, I think what's working against us is we're not hitting the revenue that we expected the labor force we have to be able to generate. And that, you know, we are, our cost structure is designed for a higher revenue based on we are addressing how to optimize that, you know, that cost structure in a somewhat adjusted revenue expectation. But I think that the answer is that we're a little out of whack on our, you know, on our conversion of labor to revenue and associated profitability.
Speaker Change: Our cost structure is designed for a higher revenue
Speaker Change: We are addressing how to optimize that cost structure in a somewhat adjusted revenue expectation. But I think that the answer is that we're a little out of whack on our, you know, on
Speaker Change: on our conversion of labor to revenue and associated profitability.
Bruce Labovitz: Okay, and, you know, obviously there's an implied kind of back half ramp in EBITDA here, and it seems like a lot of that, correct me if I'm wrong, is contingent on converting this sort of transportation towards your backlog. You know, being in August now, is there is there any evidence in the business that's happening that, you know, Garrett, I heard you give a couple of signals there, but any other details that kind of give you a confidence that's going to convert here in the second half. I would actually suggest to play a little bit differently, Brent, that the revision in our outlook contemplates that we think there is some delay in revenue, and we do have a strong base of business.
Speaker Change: and correct me if I'm wrong, is contingent on converting this.
Speaker Change: sort of transportation awards or backlog. You know, being in August now, is there any evidence in the business that's happening? You know, Gary, I heard you give a couple signals there, but any other details that kind of give you a confidence that that's going to convert here in the second half versus…
Speaker Change: that we think there is some delay in revenue. And we do have a strong...
Bruce Labovitz: We have a strong demand from clients of good backlog, and we do feel that there is the reason we've adjusted to where we have is that that is visible to us. At this point in time, and believe that that's achievable, we don't need additional cost structure to generate additional revenue, so we think we can increase in pace in the second half, with upside from some of the things that we think are scheduled a little later than we think, coming in a little sooner than we think.
Speaker Change: We have a strong base of business. We have a strong demand from clients, a good backlog, and we do feel that there is
Bruce Labovitz: The reason we've adjusted to where we have is that that is visible to us at this point in time and believes that that's achievable. We don't need an additional cost structure to generate additional. So, you know, we think we can in, you know, that. But it seems as though you are taking on a larger sort of assignment. Does that mean we should sort of, impact on them can be bigger, some bigger projects could have, in terms of whether they're in their first year period or not from the way we think about it? One, integration, and two, the ability to take their services across your business, to go to a new provider, that being ourselves, are seeing successes and getting over that reluctance.
Gary: The reason we've adjusted to where we have is that that is visible to us at this point in time and believe that that's achievable. We don't need additional cost structure to generate additional revenue. So, we think we can...
Bruce Labovitz: Okay.
Bruce Labovitz: And just the last question is, you've evolved the business here in the last few years and agree, the diversity has benefited you in the long run, but it seems as though you are taking on larger sort of assignment. Does that mean we should sort of expect more bumpiness? Is that the new normal in the business, or do you sort of consider the kind of isolated issues? I think they're isolated issues that, frankly, may be a little more regularity to the isolation. We are growing, we are getting bigger, we are taking on bigger assignments. Impact to them can have bigger short-term effect; they can also, but they're also very productive in the long run to have. So I'm not sure I would call it the new normal; it may be a little more extreme, but I think there is, in this period where we are transitioning, there can be some more impacts from them.
Speaker Change: And I think at this period where we are transitioning.
Bruce Labovitz: We will get to the other side of that where there are enough of them and they are the norm and they really don't have effect. I think we're in that sort of roast spurt where they could, for the short-term, have a little bit more visibility if that makes sense.
Brent Thielman: Okay, I'll pass it on. Thank you.
Speaker Change: Yeah, okay. I'll pass it on. Thank you.
Alexander Rygiel: Your next question comes from the line of Alex Rygel with B. Ryley.
Alexander Rygiel: Your line is open. Thanks, good morning, Gary and Bruce. Good morning.
Speaker Change: Good morning, Alex. Thanks, good morning, Gary and Bruce. Good morning, Alex. A couple of questions here. With a softness...
Bruce Labovitz: With the softness and organic growth, are you seeing any pressure on billing rates and any thoughts directly on gross margin over the next report? We're not seeing pricing pressures downward. We are that's that's not been an issue that we're seeing in the marketplace.
Speaker Change: We're not seeing pricing pressures downward.
Speaker Change: That's not been an issue that we're seeing in the marketplace.
Bruce Labovitz: And then I don't think this question really came up yet. Net service million growth is up kind of 27% year of year, year of year, year of backlog growth is only up about 90%. So what do you think organic growth inside backlog is right now? I'm only positive because it's a little complicated, and some respect it depends sort of set when when it delivers at what point in the lifecycle of an acquisition. You know, in terms of whether they're in their first year period or not from the way we think about it. There is, you know, I'm not exactly sure how to parse it out.
Speaker Change: I'm only pausing because it's a little complicated and some...
Speaker Change: It depends to a certain extent when it delivers, at what point in the life cycle of an acquisition in terms of whether they're in their first year period or not from the way we think about it.
Speaker Change: You know, Alex, I'm not exactly sure how to parse it out. There's a what organic growth is in BADFOG. I would expect that it's slightly consistent.
Bruce Labovitz: There's of what organic growth is in backlog. Let me say I would expect that it's slightly consistent overall with our, you know, mid single-digit organic growth rate.
Alexander Rygiel: Okay, thank you. Hi, Alex. Thank you.
Jeff Martin: Again, if you would like to ask a question, press star, then the number one on your telephone keypad. Your next question comes from the line of Jeff Martin with Ross MKM.
Alex: Thank you.
Speaker Change: Again, if you would like to ask a question, press star then the number one on your telephone keypad.
Speaker Change: Your next question comes from the line of Jeff Martin with Roth MKM. Your line is now open.
Jeff Martin: Your line is not open.
Jeff Martin: Thanks for joking, Bruce.
Gary Bowman: One of the drill down one more on transportation segment. Those new awards are those existing markets are those new markets and is the funding is funding the primary issue or are there other factors that are delaying starts. It's not funding at all. That's really not the issue, and when you say new markets, they are, they're, they're existing geographies. They're generally existing clients. Sometimes they are new services within the portfolio of things that are due because the authorities are expanding the range of things that they're subcontracting and, you know, outsourcing. So there are, we are continually a sort of adjacently expanding the capabilities in those markets.
Speaker Change: Thanks, Gary and Bruce.
Jeff Martin: I wanted to drill down a little more on the transportation segment. Those new wards, are those existing markets or those new markets and is funding the primary issue or are there other factors that are delaying the starts?
Speaker Change: It's not funding at all. That's really not the issue. And when you say new markets, they are.
Speaker Change: They're existing geographies, they're generally existing clients. Sometimes they are new services within the portfolio of things we do because the authorities are expanding the range of things that they're subcontracting and, you know, and outsourcing.
Speaker Change: So there are, we are continually, as such, we're adjacently expanding the capabilities in those markets.
Gary Bowman: Yeah, I just reinforce with my Bruce said the big contracts that we're sitting tight to get notice to proceed on. They are; they are in markets that we've been serving.
Speaker Change: Yeah, I just reinforce what Bruce said, the big contracts that we're sitting tight to get notice to proceed on, they are in markets that we've been surveying.
Jeff Martin: Okay, great. And, and then you've answered X almost four months now.
Speaker Change: Okay, great. And then, you've owned CertX almost four months now. I know that's not a long time, but just was curious if you could provide an update on, one, integration, and two, the ability to take their services across your business lines.
Gary Bowman: I know that's not a long time, but just was curious if you could provide an update on one integration into the ability to take their services across across your business lines. We're very pleased with the pace and progress and integration, and also very pleased with some of the synergies. Even this, this early on, there's been a good bit of cross selling. The folks are, are very excited about the cross selling opportunities. And, and I mean, I'm hearing anecdotally that some of the folks that may be have initial summer reluctance to go to a new provider, that being ourselves, are seeing successes and getting over that reluctance.
Speaker Change: We're very pleased with the pace and progress and integration.
Speaker Change: And also very pleased with some of the synergies, even this early on. There's been a good bit of cross-selling. The folks are very excited about the cross-selling opportunities.
Speaker Change: And, I mean, I'm hearing anecdotally that some of the folks that may have initial some reluctance to go to a new provider, that being ourselves, are seeing successes and getting over that reluctance. So, we're quite pleased with these.
Bruce Labovitz: So we're quite pleased. Prospective synergies. Yeah, hi again, guys. I just had one.
Gary Bowman: So we're quite pleased. with the prospect of synergies.
Speaker Change: Prospective synergies.
Gary Bowman: And then one more, if I could. You mentioned, you know, a market focus in labor adjustments. Just was curious if you could elaborate on that one, and two, what kind of timeline you anticipate that to be over. Well, Jeff, we're looking at, you know, we want to be able to deliver, you know, improved margin by, you know, during the course of the rest of this year, particularly fourth quarter have it be evidenced. It's not; we're not going through and, you know, and making huge, you know, adjustments. It's, you know, it's assessing where we can be better at labor sharing, you know, as opposed to growing labor.
Speaker Change: Great, and then one more if I could. You mentioned, you know, a market focus and labor adjustments. Just was curious if you could elaborate on that one, and two, what kind of timeline you anticipate that to be over.
Speaker Change: Well, Jeff, we're looking at, you know, we want to be able to deliver.
Speaker Change: you know, improve margin by, you know, during the course of the rest of this year, particularly fourth quarter, have it be evidenced.
Speaker Change: It's not we're not going through and you know and making huge you know adjustments it's you know it's assessing where we can be better at labor sharing.
Gary Bowman: It's, you know, it's looking around and deciding where we, where and how, you know, we can optimize the, you know, the revenue factor, you know, on our, on our business units by, you know, addressing how we utilize labor around the system.
Speaker Change: as opposed to growing labor. It's looking around and deciding where and how we can optimize what we call the revenue factor on our business units by
Jeff Martin: Thank you.
Speaker Change: Thank you.
Aaron Spychalla: Your next question comes from the line of Aaron Spychalla with Craig Hallum. Your line is open.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Aaron Spychalla with Craig Hallam. Your line is open.
Aaron Spychalla: Yeah.
Andy Whitman: Yeah, thank you. I just had one follow-up question on guidance. Can you just talk about how you're thinking about the split between, you know, the third and fourth quarter? Are you still trying to be somewhat conservative on 4Q, just given some of the issues last year? And then maybe just a breakdown on, you know, organic growth in guidance. Seems like it might be kind of mid to high single digits, but just wanted to confirm the rate for the year.
Bruce Labovitz: Hi again, guys. I just had one. Yeah. Thank you. I said one follow-up on guidance. You just talk about how you're thinking about the split between, you know, third and fourth quarter. Are you still trying to be somewhat conservative on 4Q, just given some of the issues last year? And then maybe just a breakdown on, you know, organic growth in guidance seems like it might be kind of mid to high single digits, but just wanted to confirm. Yeah. So I think, you know, at the moment, we're kind of looking at the third and fourth quarter, relatively rateably, maybe a slight, you know, marginal higher than fourth, but not dramatic, certainly.
Aaron Spychalla: Yeah, hi again, guys. I just had one. Yeah, thank you. I said one follow up on on guidance. You just talk about how you're thinking about the split between you know, third and fourth quarter. Are you still trying to be somewhat conservative on 4Q just given
Speaker Change: some of the issues last year, and then maybe just a breakdown on, you know, organic growth in guidance. Seems like it might be kind of mid to high single digits, but just wanted to confirm.
Speaker Change: Yeah, so I think, you know, at the moment we're kind of looking at the third and fourth quarter relatively relatively maybe a slight
Speaker Change: you know, marginal, higher third than fourth, but not dramatic.
Bruce Labovitz: As I look ahead, kind of at, at year end, at the midpoint of the guidance, and I think about on the performance adjusted basis that we talked about in the call, you know, maybe in the 6% to 68% organic rate for the year, that's not going to tie to our actual revenue, right, because we're doing a sort of on a pro forma basis, but that's about being mid single digits. Right. Okay. No, I think that's helpful to just kind of try to parse that out. So thanks for that. Check. Thank you.
Speaker Change: Certainly. As I look ahead, kind of at year end, at the midpoint of the guidance, and I think about on the perform as adjusted basis that we talked about in the call, maybe in the 6% to 6% to 8% organic.
Speaker Change: rate for the year.
Speaker Change: that's not going to tie to our actual
Speaker Change: revenue, right, because we're doing this sort of on a pro forma basis, but that's about, you know, mid-single digits.
Speaker Change: Right. Okay. No, I think that's helpful to just kind of try to parse that out. So thanks for that.
Speaker Change: Sure.
Operator: Thank you. Again, if you would like to ask a question, press star then the number one on your telephone keypad. This concludes today's conference call. You may now disconnect.
Operator: Again, if you would like to ask a question, press star, then the number one on your telephone keypad. All right.
Speaker Change: Thank you.
Speaker Change: Again, if you would like to ask a question, press star then the number 1 on your telephone keypad.
Operator: There are no further questions at this time.
Gary Bowman: Mr. Bowman, I turn the call back over to you. Great. Thanks, Megan.
Speaker Change: There are no further questions at this time.
Speaker Change: Mr. Bowman, I turn the call back over to you.
Operator: Just to wrap up, we've had a very successful run in our first three years of the public company. But that said, we are not going to rest on our laurels. We've got a lot of work to do to achieve our profitability in long-term organic growth goals. Rest assured that both operational excellence and organic growth are and will continue to be a primary focus with both myself and our entire leadership team. I want to thank everybody for the participation in this morning's call.
Mr. Bowman: Great, thanks Megan. Just to wrap up, we've had a very successful run in our first three years as a public company.
Mr. Bowman: But, that said, we are not going to rest on our laurels. We've got a lot of work to do to achieve our profitability and long-term organic growth goals.
Mr. Bowman: Rest assured that both operational excellence and organic growth are and will continue to be a primary focus for both myself and our entire leadership team.
Good morning. This concludes today's conference call. You may now disconnect.
Speaker Change: I want to thank everybody for the participation in this morning's call. Good morning.
Speaker Change: This concludes today's conference call. You may now disconnect.
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