Q3 2024 Exponent Inc Earnings Call
Speaker Change: Good afternoon everyone and welcome to the Exponent Inc. 23, 2024, our name is conference call.
Speaker Change: All participants will be in a listen-only mode, treating a assistance to single-compens specialists by pressing the star key followed by zero.
Speaker Change: After today's presentation, there will be an opportunity to ask questions to ask a question, may press star and then one using a touchdown telephone, so withdraw your questions you may press star into.
Speaker Change: He's also note today's event is being recorded. It's time I'd like to turn the floor over to, Joni Konstantelos, managing director with Riveron. Please go ahead.
Joni Konstantelos: Thank you. Good afternoon, ladies and gentlemen. Thank you for joining, Ex-Tone and Staircorder, 2024, Financial Results Conference Call.
Joni Konstantelos: Please note that this call will be simultaneously webcast on the investor relations section of the company's corporate website at www.investors.exonent.com
Joni Konstantelos: This conference calls the property of exponent and any taping or other reproduction is expressly prohibited without prior written consent.
Joni Konstantelos: Joining me on the call today are Dr. Catherine Corrigan, President and Chief Executive Officer, and Rich Schlenker, Executive Vice President and Chief Financial Officer.
Joni Konstantelos: Before we start, I'd like to remind you that the following discussion contains forward-looking statements, including, but not limited to exponents, market opportunities, and future financial results that involve risks and uncertainties that may cause actual results to differ materially from those discussed here.
Joni Konstantelos: A Dissional Information that could cause actual results to differ from forward-looking statements can be found in exponents periodic SEC filing, including those factors discussed under the caption risk factor, and exponents most recent form 10Q.
Joni Konstantelos: The forward-looking statements and risks in this conference call are based on current expectations as of today. An exponent assumes no obligation to update or revise them whether as a result of new developments or otherwise.
Speaker Change: and now I will turn the call over to Dr. Catherine Corrigan, Chief Executive Officer. Catherine?
Catherine Corrigan: Thank you, Joni, and thank you everyone for joining us today. I will start off by reviewing our third quarter 2020 Ford Business Performance. Rachel then provides a more detailed review of our financial results and outlook, and we will then open the call for questions.
Catherine Corrigan: We are pleased with the alignment of our operating model with Market to Man, which drove 6% income growth and expanded EVID-19 in the third quarter.
Catherine Corrigan: This marks the third consecutive quarter of increased utilization year over year, as we continue our commitment to efficient resource management.
Catherine Corrigan: As expected, revenues before reimbursements were flat in the quarter. Our proactive business returned to year over year growth, driven by a healthy rebound in consumer electronics.
Catherine Corrigan: but this was largely offset by persistent headwins in the chemical sector and an exceptionally high-bentchmark of over 20% growth in our reactive services last year. The inherent strength of our diversified portfolio continues to provide stability in a dynamic operating environment.
Catherine Corrigan: Thanks for your engagement, CINMORED detail. Collective engagements in the quarter were driven by increased user experience studies and products development consulting in the consumer electronics sector, as well as risk-related work in utilities.
Catherine Corrigan: Clients in electronics turns you exponents for a breadth of expertise across the product's life cycle. Whether that is curating machine learning training data at the development stage, adding novel features to existing products, or addressing performance issues when incorporating more sustainable materials.
Catherine Corrigan: We are capitalizing on the increased use of wearable sensors in health applications, which is driving opportunities at the intersection of electronics and life sciences.
Catherine Corrigan: These healthcare-related applications are not only driving gross, but are also serving to the Versacia Airport Folio and to mitigate future challenges related to product life cycle timing.
Catherine Corrigan: In the utilities sector, our growth was driven by asset integrity management engagements, advising our clients on the resilience of their infrastructure as they face increased regulatory scrutiny and challenges related to climate change.
Catherine Corrigan: Activity and our reactive work continues to moderate from the exceptionally high growth in the prior year. Drittendice Seferl significant litigation projects which have since then completed.
Catherine Corrigan: Engagements in the quarter included product liability and regulatory consulting in the transportation industries, including performance and safety evaluations of advanced driver assistance, technologies and battery systems.
Catherine Corrigan: In energy, we consulted on infrastructure disputes involving wind, solar and large-scale energy storage.
Catherine Corrigan: During the quarter, we continued to see headwins in the chemical sector, consistent with the significant restructuring occurring among several major companies in this space. This resulted in some clients moderating near-term litigation budgets, as well as regulatory work.
Catherine Corrigan: While the year-over-year comparisons in our reactive services are challenging, our leading market position and doors grounded in our deep, failure analysis routes.
Catherine Corrigan: Clients continue to seek our advice for the most complex regulatory, safety and performance challenges across the diverse array of industries and technologies, supporting stability and long-term growth potential.
Catherine Corrigan: Turning to our segments.
Catherine Corrigan: ExpoMence Engineering and other scientific studies have resented 84% of revenues before reimbursements in the third quarter. Revenants before reimbursements in this segment increased 2%. Driven by demand for excellent services across the consumer electronics and utilities sectors.
Catherine Corrigan: Exxonants Environmental and Health segment represented 16% of revenues before reimbursements in the third quarter. Revenants before reimbursements in this segment decreased 6% to 2 headwinds in the chemicals and life sciences sectors.
Catherine Corrigan: This year, we have made significant strides to strategically align our resources to market demand. We have executed this plan over the last several quarters and it has resulted in a robust utilization rate of 75% for the first nine months of 2024.
Catherine Corrigan: Considering this progress, we are raising our margin guidance while maintaining our revenue guidance for the full year.
Catherine Corrigan: While our head count was lower than anticipated in the third quarter, we will continue our focus on strategic recruitment efforts and anticipating sequential head count growth in each quarter of 2025 to need market demand.
Catherine Corrigan: As we close out the year, we are diligently focused on delivering exceptional service for our clients' current needs while preparing to solve their future challenges.
Catherine Corrigan: We continue to build upon our multidisciplinary expertise as the increasing expectations for safety, health, and the environment to drive our business forward.
Catherine Corrigan: While macroeconomic conditions are never certain, exponents is strengthened by the breadth and depths of our increasingly diverse portfolio, which allows us to navigate challenges while pursuing future growth opportunities.
Catherine Corrigan: Looking into next year, we remain encouraged about market trends as we continue to expand our offerings to meet the evolving needs of our clients.
Catherine Corrigan: I'll now turn the call over to Rick for my more detail on our third quarter results, as well as discuss our outlook for the fourth quarter and the full year 2020.
Rick: Thank you, Catherine, and good afternoon, everyone. Let me start by saying all comparisons will be on a year over your basis, unless otherwise noted.
Rick: For the third quarter of 2024, total revenues increased 2% to 1.36.3 million dollars.
Rick: Revenue is before reimbursements, or that revenues as I will refer to them from here on. We're flat at $125.1 million as compared to the same period in of 2023.
Rick: Netting come for the third quarter increase to 26 million dollars or 50 cents per diluted share. As compared to 24.5 million dollars or 48 cents per diluted share in the prior year period.
Rick: The Realized Tax Benefit.
Rick: Associated with the Counting for Sheriff-based Awards in the third quarter of 2024 was $532,000 or 1 cent per deleted share. As compared to an immaterial impact in the third quarter of 2023.
Rick: Inclusive of the tax benefit from share-based awards, Expendance Consolidated Tax Rate was 20.5% in the third quarter of 2024, as compared to 27.9% for the same period in 2023.
Rick: Even though I'm for the quarter, increased 4% to 35.8 million dollars producing a margin.
Rick: of 28.6% of net revenues, as compared to 34.5 million dollars or 27.6% of net revenues in the same period of 2020-3.
Rick: This year over year increase in margins was driven by an increase in utilization during the third quarter of 2024. Bill of Bflowers in the third quarter were approximately 362,000, a decrease of 5% year over year.
Rick: The average technical full-time equivalent employees in the third quarter were 949, which is a decrease of 10% as compared to one year ago.
Rick: Head count is down year over year, as we have aligned our resources with demand, allowing us to achieve strong utilization in margins.
Rick: The third quarter was 73.4% up from 69.6% in the same period of 2023.
Rick: The Realized Rating Crease was approximately 5% for the third quarter as compared to the same period a year ago.
Rick: In the third quarter, after adjusting for gains and losses in deferred compensation, compensation expense decreased 3%. Included in total compensation expense is a gain in deferred compensation of 7.2 million.
Rick: As compared to a loss of 2.8 million in the third quarter of 2023, generating a $10 million variance.
Rick: As the reminder, gains and losses in deferred compensation are offset to miscellaneous income and have no impact on the bottom line.
Rick: Stockbase compensation expense in the third quarter was $5.5 million as compared to $4.9 million in the prior year period.
Rick: Other operating expenses in the third quarter were up, 9% to $12 million. Driven primarily by the increased non-couch expense of our Phoenix Arizona lease renewal.
Rick: Included in other operating expenses is the appreciation and amortization expense of $2.4 million for the third quarter.
Rick: GNA expenses declined 12% to 5.3 million dollars for the third quarter.
Rick: This decrease was primarily due to a decrease in travel and meals as we postponed to 2025 are in-person managers meeting which is typically held at the end of September.
Rick: Interest income increased to $2.6 million for the third quarter, driven by an increase in interest rates year over year.
Rick: The Selenia Syncom, excluding the deferred compensation gain, was approximately 375,000 in the third quarter.
Rick: During the quarter, capital expenditures were $1.7 million and we distributed $14.2 million to share holders through dividend payments.
Rick: Turning to our outlook.
Rick: For the fourth quarter of 2024, as compared to one year prior.
Rick: We expect the revenues before reimbursements to grow in the mid-singled digits and EBITDA margin, EBITDA to be 23.5 to 24.5% of revenues before reimbursements.
Speaker Change: As Catherine mentioned, we are maintaining our revenue guidance and raising our margin of expectations for the full year of 2024.
Speaker Change: For this cult year 2024, we expect revenue before reimbursements to grow in the low to mid-singual digits.
Speaker Change: and EBITDA to be 20, 7,9 to 28,1% of revenues before reimbursements, as compared to 27,7% for fiscal year 2023.
Speaker Change: Both our current and previous guidance are inclusive of the extra week in the fourth quarter, which occurs approximately every six years.
Speaker Change: and is estimated to contribute an additional 4.5% to net revenues in the fourth quarter or 1.1% for the year.
Speaker Change: Since the extra week includes the New Year's Hall of Day and significant vacations, it has a negative impact on utilization and margins.
Speaker Change: We expect average technical full-time equivalent employees to be slightly declined sequentially in the fourth quarter of 2024. Despite our increased recruiting activity,
Speaker Change: As typically new hires wait until the new year to start.
Speaker Change: As a result, average FTEs for the fourth quarter will be down approximately 7% year over year.
Speaker Change: Our full year average FTEU will be down approximately 7 to 8% on a year over year basis.
Speaker Change: We will end the year with approximately 945 FTs.
Speaker Change: which will be 5-6% lower than the first quarter of 2024.
Speaker Change: We expect our increasing recruiting effort to result in quarterly sequential and count growth of approximately 1 to 2% each quarter of 2025.
Speaker Change: As a result, we expect year over a year headcount growth in the third quarter of 2025.
Speaker Change: We expect utilization in the fourth quarter to be 66 to 67 percent as compared to 65 percent in the same quarter last year.
Speaker Change: As a reminder, utilization is seasonably lower in the fourth quarter due to more holidays and vacations compared to other quarters.
Speaker Change: We expect the full year utilization to be 72 to 73% as compared to 69% in 2023.
Speaker Change: We still believe our long-term target of sustained mid-70s utilization can be achieved as we continue to strategically manage a count and balance utilization based on market demand.
Speaker Change: We expect the 2024 year-over-year realized rating increase to be 4.5% to 5% through the fourth quarter and full year.
Speaker Change: For the fourth quarter, we expect stock base compensation to be 4.8 to 5 million.
Speaker Change: For the full year, we expect stock base compensation to be 23.2 to 23.4 million.
Speaker Change: For the fourth quarter we expect other operating expenses to be 12.8 to 13.2 million.
Speaker Change: For the full year we expect other operating expenses to be 46.5 to 46.9 million.
Speaker Change: As a reminder, on June 19th, 2024, we exercise an option to early extend the lease for our testing and engineering center at Phoenix, Arizona.
Speaker Change: This resulted in an increase in our non-cath, re-expence of $1.1 million during the third quarter. And we'll have a similar impact again in the fourth quarter.
Speaker Change: For the fourth quarter, we expect GNA expense to be 6.2 to 6.8 6.7 million. For the full year, we expect GNA expense to be 23.2 to 23.7 million dollars.
Speaker Change: We expect interesting to be 2-2.5 million for the fourth quarter.
Speaker Change: In addition, we anticipate Missileinius income to be $100,200,000 in the fourth quarter.
Speaker Change: This includes an expected sequential decrease in rental income in the fourth quarter due to the loss of a tenant in our minimum park owned building.
Speaker Change: For the remains, they're of 2024. We do not anticipate any additional tax benefit associated with share-based awards.
Speaker Change: For the fourth quarter of 2024, we expect our tax rate to be approximately 28% compared to 30.4% in the same quarter a year ago.
Speaker Change: For the full year 2024, the tax rate is expected to be 26.7 to 26.9% as compared to 26.2% in 2023.
Speaker Change: The increase in the tax rate is due to less tax benefits from share-based awards in the first quarter.
Speaker Change: In closing, we are pleased with the alignment of our operating model with the market demand, and we remained focused on long-term growth. I will now turn the call back to Catherine for closing remarks.
Catherine Corrigan: Thank you, Richard.
Catherine Corrigan: As Industries transform a breakneck seed, the nexus between innovation and safety health and environmental impacts grows increasingly complex.
Catherine Corrigan: The examples are many.
Catherine Corrigan: New form factors and more sophisticated sensors being deployed in wearable technologies, bringing data and insights into human health like never before. Novel electronic devices like eyeglasses that are radically transforming the way a human being engaged with the world around them.
Catherine Corrigan: The increasing penetration of electric power trains into the vehicle fleet with all of its safety-related challenges.
Catherine Corrigan: The novel artificial intelligence platforms that can boost the capacity of the electric grid in the phase of power hungry data centers.
Catherine Corrigan: The accelerating use of artificial intelligence to make safety critical decisions as the deployment of Robo Taxis for its to more and more cities around the world.
Catherine Corrigan: These are just a few of the places where exponents insights and expertise will add critical value. Looking ahead, we are focused on growing our team and expanding our capabilities, and we are confident in our ability to deliver long-term, profitable growth. Operators, we are now ready for questions.
Speaker Change: Ladies and gentlemen, at this time we'll begin that question and answer session. To ask a question you may press star and then one using a touched on telephone. So with draw your questions you may press star and two.
Speaker Change: If you are using a speaker phone, do ask the police to pick up the handset prior to pressing the numbers to ensure the best sound quality.
Speaker Change: once again let us star and then one to join the question queue.
Speaker Change: will pause momentarily to assemble the roster.
Speaker Change: i
Speaker Change: In our first question today comes from Toby Somer from TURUS. Please go ahead with your question.
Speaker Change: Hey, good afternoon. This is Jasper Good Bonnetovia. I just want to clarify something from the prepared remarks. You say there is an expectation for F.E. growth in the second half of 25.
Speaker Change: and if that's accurate I just kind of stepping back. I would be cadence of that key growth next year. I potentially look like it's you know wrap up your recruiting efforts from where you know that these are ending the year and you're four cue guidance.
Speaker Change: So, yes, what we indicated as we expected in the year.
Speaker Change: at around 945 FTEs.
Speaker Change: We would expect that in each of the quarters of 2020 that five that we would gain one to two percent sequentially across those. So that's our expectation is that we will grow from that base one to two percent a quarter.
Speaker Change: Okay, thank you for that. And then I just want to ask about the weaker reactive performance this quarter, is that primarily a function of just more difficult cops with some more during digits last year, or has anything changed between clients, manage that spend differently?
Speaker Change: Yeah, thank you, Jonfer for that question. It really is about...
Speaker Change: The portfolio and about timing, right? We continue to have an incredibly strong market position when it comes to our failure analysis, work, product defect investigations, litigation and dispute and so forth. We did see
Speaker Change: really strong growth in Q3 of 2023 and frankly pretty strong growth in Q3 of 2022 as well. We also had a number of engagements earlier in this year and late last year that were really going at full speed which have since completed across a couple of different.
Speaker Change: We had talked about engagements in life sciences and the energy sector around renewables and so there are some of those things.
Speaker Change: That has come to completion. We've got a lot of activity that continues along as we talk to our business units. We see the opportunities continuing to flow in. So we do think there is.
Speaker Change: really, it's about the comparison rather than some kind of fundamental change in the market.
Speaker Change: Thanks for making sense. Last question for me, how should we think about underlying
Speaker Change: Instructor Trends into 25, obviously lower levels of consumer electronics work.
Speaker Change: was a headwind this year you also call that chemicals.
Speaker Change: She was thinking about that as having stabilized at this point and anything we call on others as far as particular strength or weakness in our industry, or better than the next year.
Speaker Change: Yeah, so I think what I heard is, you know, asking about electronics as well as chemicals and sort of how we're feeling about
Speaker Change: that going forward. Yes, we're very happy with sort of this sequential increases around the electronic side that we've seen. We've gotten that back to a healthy level.
Speaker Change: We're not where we were necessarily at our peak.
Speaker Change: and later 22. But we're, you know, where we consider a nice level to be able to now look toward growth in the future. And you know, I highlighted a few of the examples of the kinds of things that are going on in that industry in terms of the new product pipeline. You know, we're seeing glasses. We're seeing the new devices that are oriented toward human health and wellness applications. And so there's this nice diversity of clients as well as products.
Speaker Change: that we think gives us a good opportunity to continue growth. And of course the continued rollout of AI-related features.
Speaker Change: and the challenges around performance and curating the data that drives and trains those algorithms is yet another place where we continue to build our market position. So I'm enthusiastic about what we're seeing in the electronic side going forward. The chemical industry, you know, this is one where we've seen a lot of the major players.
Speaker Change: Undergoing Significant Restructuring. And you know, when this happens, like it happened to the electronics industry 12 to 18 months ago, or I guess almost almost starting two years ago now.
Speaker Change: They are having to restructure their teams and that kind of impact.
Speaker Change: does bleed over to us as they sort of tighten their belts, they think a little bit differently about their schedules for various projects and so forth because of their uncertainty. So it's a smaller impact on our business because it's not as big as, you know, consumer electronics is, but we are nonetheless.
Speaker Change: Seeing some of that, you know, belt tightening on the regulatory side as well as some of the litigation work. But look, when I think about that industry longer term, I see an industry that has...
Speaker Change: Incredible challenges around the pressures on their products with regards to safety, which regards to health and environmental related effects.
Speaker Change: You know, this is not going to go away anytime soon on the emphasis on making their operations more sustainable. There will always be fights about the level of regulation and alleged health effects of chemicals, and so we're well positioned for that. We're fully engaged with our clients around that, and we think that those fundamental market drivers will be there over the long term.
Speaker Change: Thank you for taking my questions. You're welcome.
Speaker Change: Our next question comes from Andrew Nicholas from William Blair. Please go hug with your questions.
Andrew Nicholas: Hi, thank you. I think it afternoon. I want to be follow up on the chemical piece. I realize.
Andrew Nicholas: a smaller part of your business than consumer electronics. But are we too understand? I think the first time that you mentioned some of these pressures was forced to go to the last year is...
Andrew Nicholas: are the cops at least getting a little bit easier there, such that it would be, or you wouldn't expect it to be as big of a headwind in the fourth quarter and to start 25 or this.
Andrew Nicholas: and New Lake Lower recognizing that you're still optimistic about it over the medium term.
Speaker Change: Andrew, I think that the hurdle is lower as you get to the fourth quarter. Definitely, I think that...
Speaker Change: What we saw in the fourth quarter was really the pausing of some spend on certain litigation matters or larger litigation portfolios.
Speaker Change: and with the message at that time that, you know, those will likely come back early in the year. I think what we've seen that industry goes through now is...
Speaker Change: A broader set of economic challenges and which is led to restructuring or disruption in their workforce.
Speaker Change: as Catherine described and I think that...
Speaker Change: needs to work itself out and people need to settle back down who remain and get back to work and they will have to push their products through regular, through the regulatory body. They will have to deal with the litigation portfolio that they have and they will have to move through that.
Speaker Change: Just a little bit different environment, but sort of a little bit similar to what we saw in the electronics where...
Speaker Change: They needed to get back to product design and product development and moving things forward. So I think that the bar is lower in the fourth quarter than the third of a year ago in that area. This is a segment that's about, you know, was about 10% of our revenues here in the third quarter of, you know,
Speaker Change: Thank you very much. Maybe for my follow-up question. I believe on Headcounts, I appreciate all the color on Headcount growth expectations both through year and end and throughout 25. But if I'm not mistaken.
Speaker Change: I thought that you had said that you expected to Quintilh-Hud Count Gross last quarter, or at least heading into this year third quarter. So I'm just curious.
Speaker Change: If there's any explanation for why that didn't come to fruition, are you pruning in areas that you previously didn't expect to prune or is it?
Speaker Change: You know, a little bit.
Speaker Change: and taking a little bit longer.
Speaker Change: to recruit new talent. Any kind of thoughts on maybe the timing of that onboarding? I know you mentioned some professionals wanting to wait to the end of the year. Maybe that's all that, but any color there would be helpful.
Speaker Change: Yeah, no thanks Andrew and you know there is in Q3
Speaker Change: We saw a bit higher turnover than we had anticipated. You know, we are...
Speaker Change: We have and continue to increase the efforts on the recruiting side.
Speaker Change: We are seeing, for example, higher rates of interviews. And this is a good leading indicator for us that...
Speaker Change: The demand in the businesses is strong and our business units are going out to do that recruiting and we're getting very consistent yields of our recruiting process.
Speaker Change: So I really do think it is more related to a little bit higher turnover than expected rather than...
Speaker Change: Any particular challenge or change in the talent marketplace and so forth. I mean, our employee value proposition remains strong and we have good confidence going forward as we increase the activity level and recruiting that we will be able to return to that head count for.
Speaker Change: Very helpful. Thank you.
Speaker Change: New Walker.
Speaker Change: Once again, if you would like to ask a question, please press star and one.
Speaker Change: Our next question comes from Josh Chan from EVS. Please go ahead with your question.
Josh Chan: Hi, good afternoon, Catherine Rich. Thanks for taking my questions.
Josh Chan: It sounds like in the reactive business, it was the first quarter that perhaps it kind of turned a little negative. I realized that it's come, yes, could you review for us what you expect the reactive business trajectory to be in the coming quarters? For example,
Josh Chan: What's embedded in Q4 with that missing of the digits within reactive and any thoughts into the shape into 25 if you have this building in the depth. Thank you.
Speaker Change: Yeah, so um...
Speaker Change: We definitely, you know, as we had indicated a year ago, we in the second and third quarters of even last year we're at 20 plus percent.
Speaker Change: Year Over Year Gross in 23, over 20.
Speaker Change: 2, as we got into the fourth quarter last year, that was still and the first quarter of 24. That was still at a mid-tune.
Speaker Change: Year Over Year Growth Rate. So, you know, we've historically seen this reactive business growing mid to high single digits growth rate.
Speaker Change: We are...
Speaker Change: and the West of the...
Speaker Change: In Gagements, we got, we're not a one big 11345% of revenue engagement. It was...
Speaker Change: If you recall a diversified group, engagement we had.
Speaker Change: that materialized into engagements that were running one and a half percent of revenues. But there were a few of them in the energy sector, a few of them in the life science sector, a few of them in the transportation sector, so they were just...
Speaker Change: A little more, but nothing that was unusual, but clearly we were getting the calls when the stakes were high and things were coming in.
Speaker Change: What we've seen is still a strong demand for us, but the particular engagements on going right now, we don't have as many that are of that size. We still are seeing the volume we just don't have as many at that size.
Speaker Change: So, well, I think the hurdle in the fourth quarter and into the first quarter is...
Speaker Change: Little bit lower than the third, it is still above normal. And I expect us to continue to grow our vis our underlying sort of volume here of vis this.
Speaker Change: Over time and to work through that. That's where things are laying out at this point in time. And I would expect that, you know, we're going to...
Speaker Change: for the long-term future of the company. And even out into next year, the goals start to see you over your growth in the reactive business.
Speaker Change: Too many, you know, I think we've got the leading market position. We're evolving our services and the issues are continuing to get more complex.
Speaker Change: which is why we're quite encouraged by when we're getting called and why clients need exponent because of our multidisciplinary teams because of the issues are more complex.
Speaker Change: and that makes sense. Thank you for the call there. On the FTE, I think this is the second quarter where FTE was less than expected. I guess is there a point where you think the less than expected FTE could start to?
Speaker Change: Impact Growth going forward. It's obviously driving the utilization now, but just wonder how you're thinking about the growth out book given the staff and level.
Speaker Change: Thank you. Well, thank you, Josh. I mean, we do.
Speaker Change: When we think about growth, right, head count obviously is a big driver on that but there are other drivers as well. You know, we still have the ability to search.
Speaker Change: with regard to our utilization. This team is ready to meet the needs for clients, whatever it takes and they are accustomed to doing that.
Speaker Change: and so you know and we look we've demonstrated the ability to operate at you know 75% for the year and so as that demand increases you know even if even if
Speaker Change: The Head Count Growth is lagging, we have the ability to capitalize on that demand.
Speaker Change: Yeah, so I think you're here.
Speaker Change: Assessment of a long-term model is you can't, you know, that can't continue forever. But in the short-term meeting, you know, fourth quarter, as we turn into the first quarter and begin to hit that growth or if there was something as you say that delays that, can we take that on in the short-term? Yes, in the long-term, we need the right demand, but we also will need the right demand. We need the people to meet that demand.
Speaker Change: That's really helpful color, thanks for the color and thanks for your time.
Speaker Change: and welcome.
Speaker Change: and ladies and gentlemen, with that we'll be concluding today's question and answer session, as well as today's conference call. We do thank everyone for attending and may now disconnect your lines.