Earnings Call: Q2 2021

Aug 16, 2021

Hello, and welcome to the Atlas Technical Consultants Second Quarter 2021 Conference Call. Currently, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. David Quinn, Chief Financial Officer of Atlas. Thank you. You may begin, Mr. Quinn. Thank you for joining our Q2 2021 earnings conference call. We hope that you have seen our earnings release issued after the market closed today. Please note that we have also posted a presentation in support of this call, which can be found in the Investors section of our website atoneatlas.com. Before we begin, I would like to remind you that today's call may include forward looking statements. Any statements describing our beliefs, goals, Plans, strategies, expectations, projections, forecasts and assumptions are forward looking statements. Please note that the company's actual results may differ from those anticipated by such forward looking statements for a variety of reasons, many of which are beyond our control. Please see our recent filings with the Securities and Exchange Commission, which identify the principal risks and uncertainties that could affect our business, prospects and future results. We assume no obligation to update publicly any forward looking statements. In addition, we will be discussing and providing certain non GAAP financial measures today, including adjusted EBITDA, adjusted EBITDA margins, adjusted net income and adjusted EPS. Please see our release and filings for a reconciliation of these non GAAP measures to their most directly comparable GAAP measure. Moving to our agenda on Slide 3. I am joined today by our Chief Executive Officer, Joe Boyer, who will provide an overview of our business and give an operations update. I will continue with the discussion of our financial results and outlook before we open up the call for your questions. At this point, I'll turn the call over to Joe to pick it up on Slide 4. Thank you, David. Good afternoon and welcome investors. This truly is an exciting time for all of us. In my 32 plus years, this may be the best market that I've had the opportunity to anticipate in. And we're seeing drivers aligned to produce tremendous demand for renewed investment and our aging infrastructure in the natural environment, things I haven't seen in my entire career. And I'm excited to be leading Atlas into it. Our company is purpose built to ensure quality, Longevity and sustainability in our nation's public and private investments in the natural and built environments. I'm proud to represent 3,600 plus Atlas Associates working hard on mission critical projects across the U. S. Such as the Neutrino facility at the South Dakota Sanford Underground Research Complex, which demonstrates The expanding range of our technical capabilities. And it's just one of many critical infrastructure projects across the country where our teams are making a purposeful impact on our world. Now today, I'll detail 3 key themes, which not only reinforce the purposeful work that we perform, but also the earnings power of our business and the value creation for our shareholders. First, our positive 2Q results demonstrate the predictability of the Atlas platform through solid execution by our teams, delivering record revenue and margin growth through the cross selling of integrated acquisitions. Secondly, Atlas is focused and well positioned in growing public and private end markets that are being propelled by strong and expanding macro tailwinds that are in addition to those proposed in the federal infrastructure bill. And lastly, our ability to successfully win work in all service areas and to consistently advance our acquisition integration and into 2022 beyond. Now let's turn to Slide 5 please to discuss the highlights of our results. I'm very pleased with the continued strong performance in the Q2, thanks to the execution by our teams and the continued end market demands for our services. We have nearly 17% year over year revenue growth with acquisitions performing as planned. Our adjusted EBITDA was $18,200,000 It was in line with our expectations and an 18% increase year over year. We had a tremendous quarter in winning work as our backlog was up. We had another record at $751,000,000 with another roughly $150,000,000 of new awards that are pending contract execution that have yet to be added to our backlog. Our results show increased end market momentum, while battling some sluggishness in the public markets and continued impacts of COVID. We did execute on our plan and positioned ourselves to deliver growth and increased profitability in the second half of the year and beyond. Our M and A continues to be a key piece of our growth strategy as exemplified by the acquisitions of AEL and OSG during the Q2, and I'll discuss these accretive continue to benefit from strong secular tailwinds that are driving growth in our markets and service areas. Our aging infrastructure requires critical investment to curtail further deterioration and necessitates upgrades to extend their useful life. Recent building and bridge collapse Tragedies remind us all of the importance quality assurance and asset monitoring plays in keeping us safe, which is driving growing demand for a higher safety, regulatory and code compliance environment. We continue to see growth in outsourcing by state DOTs, cities and municipalities for project and quality assurance services to companies like Atlas. And the growth of environmental, social and governance for ESG has increased awareness and demands on sustainability and societal impacts of infrastructure assets. Our clients are looking for healthy buildings in which to operate, protect their employees and build a more sustainable future. In addition to these macro drivers, the Senate just passed a $1,000,000,000,000 infrastructure bill, which has the potential to accelerate investment in the vast array of infrastructure. And at Atlas, we're exceptionally well positioned to benefit for the infrastructure bill. A large part of the contemplated spending in the bill is core to our service offerings and it's in markets addressable to Atlas from transportation to housing and education and finally water and utilities. We look forward to expanding our support for our government clients partnering with them to deliver innovative and effective solutions. I want to remind everyone, our current guidance does not include any benefit from incremental investment arising from the passage of the federal bill. Now on a micro level, we are seeing state transportation work ramping up recently in Texas, Georgia, Indiana, Utah and California to name a few, with some significant sized Projects planned for kickoff in Q3 and Q4. New federal work in general continues to be slow to get The water and wastewater services are showing signs of increased planning Inviting with federal stimulus funding and state supporting lower project interest rates. And finally, the level of activity supporting education in New York, Detroit has increased and our Building Sciences Group showing signs of second half expansion. Please turn to Slide 7. I would like to highlight the increased demand for Environmental Solutions Services, which increased to over a third of our revenues in the quarter. Our environmental work touches all end markets, And we're particularly proud of these contributions to ensure our children have safe and healthy educational environments to learn, socialize and FlourishN. This includes analytical testing of the water they drink and the quality of the buildings they populate And when construction is necessary, making sure it is done safely and with quality. Now I'd like to highlight our ESG commitment and progress. Our core business is inherently connected by ESG, Environmental sustainability is the key responsibility of our work. Our ESG strategy really focuses on 3 key pillars: Providing safe and healthy infrastructure, sustainable and resilient systems, And finally, diverse, equitable and inclusive community. Our environmental solutions are central to our capabilities, allowing us to help our clients achieve various g goals through analytical testing, planning compliance and remediation that resolved environmental Now as a heart led organization, Corporate governance and our core values serve as the foundation of our company culture. We've demonstrated our commitment to advancing diversity inclusion by appointing a Chief Diversity Officer and forming a leadership council dedicated to our diversity and inclusion efforts. We have also launched 7 employee resource groups that As CEO, I've also joined the CEO Action for Diversity and Inclusion Coalition. It's important for me to lead as I've taken the pledge to do my part in reshaping our future beyond this company. Now let me talk about another highlight and address some of our 2nd quarter key wins. We are enjoying an incredible quarter in winning a large number of major wins across all services and geographies. We saw particular strength in new awards in our PCQM and Environmental Solutions sales channels. As you can see on Slide 9, the strength and diversity of our service offerings plays well to the increased demand for our infrastructure and environmental capabilities, which in turn drives backlog growth and future predictability. The success we are enjoying and winning work, it is a direct reflection of our effectiveness in integrating our acquisitions technical capabilities into our platform and then cross selling these expanded services to our client network. This strategy is at the core of our growing revenues, backlog and continued confidence in future earnings. Moving to Slide 10. We added to our M and A accomplishments during the Q2. In April, we acquired AEL to align with expected growth in our key markets of New York and New Jersey. And as expected, AEL has performed solidly and began contributing to our results in the Q2. But we also closed the strategic acquisition of OSG at the end of June, expanding our presence in the Pacific Northwest, which is a key growth focus area for us and providing unique specialty services in light rail, Construction Quality Assurance and Environmental Solutions. OSG will begin contributing to our results in the Q3 of 2021. I'm excited about our M and A pipeline as it continues to be very strong with proprietary prospects. We continue to focus on strong, well performing regional firms and geographies experiencing population growth and offering creative alternative funding for infrastructure. Our strategy continues to focus on technical service expansion, which drives integrated cross selling growth. We will continue to drive strategic accretive M and A deals funded with a mix of cash and stock that continue the progressive reduction of our net leverage. And with that, I'll turn the call over to David. Thanks, Joe, and good afternoon, everyone. Please turn to Slide 11. Overall, we are very pleased to deliver another quarter of growth and predictability for the business. We grew revenues and increased margins and cash flow. Our longer term perspective is bright as we continue to grow our backlog with over $150,000,000 of recent awards pending contract not yet included in the $751,000,000 we reported. Now for the details of the quarter, gross revenues of $131,600,000 were up 16.7% compared to the prior year quarter, driven by strong execution across all of our service offerings. We delivered both organic and acquisitive growth, which contributed to the notable double digit jump over the prior year. Our Environmental Solutions Services saw the biggest gains in the quarter as we continue to see larger projects and programs enter our portfolio. Net revenue of $106,300,000 was up 16% over the prior year period and represented nearly 81% of gross revenues consistent with our strategy to cross sell and self perform more work. We realized improved utilization rates even as we grew our workforce during the quarter. Like many businesses, we are feeling some labor capacity constraints and have expanded our internal and external recruiting resources to ensure client demand is met. Adjusted EBITDA of $18,200,000 represented 17.1 percent of net revenue, up 30 basis points from 16.8% in the prior year quarter. Higher revenue was the primary driver of EBITDA growth, which helped offset project mix, wage and onboarding cost impacts as we move into our busier work season. For the Q2 2021, we produced adjusted net income of 3,500,000 and adjusted EPS of $0.11 versus 0 point 0 $7 in the prior year quarter, with some differential related to Class A share counts between the periods. Moving to Slide 12. As we mentioned last quarter, following our recapitalization in February, we have a focused plan to reduce net leverage to less than 3 times for the business. We will accomplish this by growing our business organically, generating strong operating cash flow and continuing to prioritize accretive and deleveraging M and A transactions. Along these lines, we were pleased to have generated almost $8,000,000 of operating cash flow, up 23% versus the prior year quarter. We also paid down $13,000,000 of debt on our revolver while expanding our liquidity by 30% over last quarter. We grew our adjusted EBITDA by 18% year over year with more than half of that being organic. We closed 2 accretive and deleveraging acquisitions during the quarter, which by design minimized cash out and reduced our net leverage ratio. As business volume continues to increase in the second half of the year, We are well positioned to reduce our net leverage further to approximately 5.5 times by year end 2021, right in line with expectations, while remaining on track with our ultimate goal of less than 3 times. Moving to our full year outlook. As Joe mentioned, we did experience some ongoing Pandemic related sluggishness during the quarter in addition to some wage inflation as the competition for talent heats up with the economy coming back. Given our business is approximately 90% cost reimbursable, we actively mitigate this as we price new contracts and seek relief from our clients' own existing ones. There is some time lag to this, which may pressure near term margins. However, we don't see this as an issue longer term. With this, we reiterate our increased guidance from Q1 for the full year 2021. Revenue is projected to be in the range of $520,000,000 to $540,000,000 with adjusted EBITDA in the range of $73,000,000 to $80,000,000 This implies a 22% increase and adjusted EBITDA at the midpoint compared to our full year 2020 results. This outlook reflects the continued strength of our backlog, the current visibility on the timing of work and the contributions from recent acquisitions. Separately, I would highlight the steady increases to the run rate of our business as we continue to grow. Looking at adjusted EBITDA on a pro form a run rate basis, Assuming our AEL and OSG acquisitions had been closed on January 1, 2021, We see an annualized range upwards of $76,000,000 to $83,000,000 In addition, we will deliver a step up improvement to operating cash flow in the second half of the year compared to the first half. Thank you. And I'll now turn the call back to Joe for closing remarks on Slide 14. Great. Thank you again, David. We are all proud of our accomplishments since becoming a public company. Our business has once again delivered solid results in Q2, and our organic growth efforts are gaining steam, complemented by the additions of AEL and OSG. We believe the performance continues to validate our resilient business model recovery and particularly the growing national commitment to infrastructure investment. I firmly believe in the power of this organization and our ability to deliver strong margin performance and continued earnings growth, all while rapidly deleveraging our balance sheet. I look forward to continuing our positive momentum in the second half of twenty twenty one and many years to come. Thank you again for joining us. Operator, we can now open the lines for Q and A, please. At this time, we will be conducting a question and answer session. One moment while we poll for questions. Our first question comes from the line of Rob Brown with Lake Street Capital Markets. You may proceed with your question. Good afternoon. Good afternoon, Rob. Hi, Rob. I just your experience in the past and how these programs work and sort of how quickly the impact can fall here? Sure. So let me say, I guess, first of all, that I'm glad to be having this conversation for us to What I believe to be close to closing a transaction and a federal infrastructure bill, which I think is long overdue. Rob, according to what we've read, where the administration is focused on the end markets of transportation, Housing Education and Water and Utilities, those are end markets that our firm is really well positioned for and currently are in our core business and end markets. We believe that all of our services from best in inspection to environmental solutions Through program construction quality management and lastly engineering design, all those core services directly align with the Proposed spending of the bill. So, we feel really great that we're well positioned. And if there is that bill was to be passed, obviously, We'd benefit tremendously from those services. I'd say, although it's really tough to say How the spending may flow through, likely to come through states and municipalities is my experience. Timing on that, It really is just very speculative, Rob. I would say, certainly, if something was to be passed relatively soon here, you're looking at late 2022 before you'd see any kind of lettings and transactions going out and most of the revenue really probably coming in around 2023. Great. Thank you. And then just in terms of the new business environment, you cited a number of areas, In particular, you're seeing strength, but really is it a state level? You're seeing kind of higher end, I assume, of your organic growth rates. But is it state level That's coming through and are there things that I think you mentioned a number of projects, but what's really driving that state level spending increase at this point? Well, let me say, I believe that as I had mentioned, there's a number of really Key market tailwinds that are driving this business. We're continuing to see the continued outsourcing of Services from the municipalities to the private sector and I think that's due to staffing levels, but also just the level of infrastructure investment that's going in. So clearly seeing that as well. I'd say as far as our growth, we saw a fairly even distribution of our growth in both public and private markets. Rob, I think really a little bit slower in the Transportation area than we anticipated, and of course, the federal markets are slow to get started. But We did see some changes in our service mix. And I think that that's really attributed to our testing and inspection And certification business being down in the commercial markets, which is acceptable, I mean expected there. Our environmental solutions grew, and that's from a pickup from our building sciences and our industrial hygiene group that had been down in the past. But I think that's really driven by our clients really interested in healthy buildings And a focus on that and then property transactions are really is really where our environmental services grew for the quarter. We have seen overall a growth in our program, Construction and Quality Management and that's really coming mainly in the public sector, but it's on this renewed focus on quality, both construction quality and design quality review. So a market area that we have seen substantial growth in, obviously, as you've seen from some of our wins for the key in the quarter were substantial in the area of PCQM. And then lastly, just our engineering design business has been relatively steady. That help you out? Yes, very helpful. Thank you. And then last question just on the M and A environment. I think you had very good free cash flow in the quarter and So this should continue in the back half of the year, but how does that sort of influence your M and A activity at this point and what's sort of the outlook for the rest of the year? Yes, great, Rob. So from a cash flow standpoint, correct. We had a very solid quarter, delivered Just about $8,000,000 of operating cash flow. At the same time, we paid down about $12,000,000 on our revolver and increased liquidity by About 30%. You couple this with the delayed draw term loan that we have in place, That's really going to continue to fund our active investment in M and A. Pipeline is flush right now and we've got several opportunities that are looking really good. As a result, and achieving 5.5 times net leverage, which is about a full term reduction for the year By the time we get to the end of 'twenty one. Rob, what you just you asked about the M and A pipeline, I think let me just comment on that in Dave's comments. So we feel really great about our pipeline, both the depth And the width of our pipeline opportunities. I think that Our deals are mainly proprietary opportunities. So they're not driven by for the most part, not driven by broker led opportunities. So we're excited about that. We feel that we've sort of made a name and continue to be an acquirer of choice with the Success we've had in bringing on smaller firms onto our platform and growing those businesses. So we like our opportunities for growth. We're focused in some key geographies and some and continuing in the service expansion area that I talked about. So We like and we'll continue to really focus on our M and A activities going forward. Great. Thank you. Very helpful. Nice job on the quarter. I'll turn it over. Thank you. Thanks, Rob. Our next question comes from the line of Noamal Dils with Stifel. You may proceed with your question. Hi, guys. Congrats on the nice quarter, particularly the backlog. On that note and sorry if I missed it, but I was curious how much of the backlog in the quarter was acquired versus organic? Yes, great question. So Again, the differential, we went from $689,000,000 to $751,000,000 So we saw a $62,000,000 increase And about $45,000,000 of that was acquired additions to our So about $17,000,000 of that related to organic growth. And Noel, I want to add, you Got a note on our slide there. We have $150,000,000 of contracts we have been awarded that have yet to be signed. When they're signed, it will be moved to backlog. So that's in addition to the 751. Just want to make sure I was clear on that. Okay, perfect. Yes, that came across. I just wasn't sure if I missed the other part. And then just on the pandemic related sluggishness that you're seeing, I'm just kind of curious If the Delta variant is worsening this, were you starting to see some relief and then it's kind of coming back? I'm just Curious, sort of the trends you're seeing and how this is playing into your thinking about the rest of the year? Noelle, that's a fair question. We are seeing it ourselves. We had the highest COVID impact We're probably 6 or 8 months, just last prior month. So we are seeing our own employees impacted By the variant or at least the renewed wave, if you would. It's helped obviously to we've just continued and we have never left Our procedures in regards to monitoring temperature, still having procedures in place and monitoring those with potential exposure and occupied office spaces with us. So we have seen impacts there. In the marketplace, We have seen impacts continue in the COVID environment. I can tell you that in the public and municipality markets, we still Have yet to see our clients come back in full force. They're continuing to work from home, which is driving Later lettings and also later executions, I believe that $150,000,000 that we have pending out currently is a direct reflection of COVID and not being able to get those contracts through procurement and get signed. So we're continuing to see that. Watching it closely, I don't know, Dave, you want to add anything else that you'd say to that? Well, I think we're talking to sort of this generalized Pandemic related sluggishness and what is unique that we're seeing is the level of activity around bidding and winning work is like nothing we've ever seen. As you can see, we're following up quarter after quarter with record backlog. And if you look at The $150,000,000 Joe referenced and the size of the awards within that, they're bigger than we've ever seen. And there's no risk to our risk tolerance or profile relative to the work we're taking on. They're just bigger opportunities. So the business is fine. It's operating well. It's just it's not throttling up and breaking out The way we would have anticipated by now. So we're continuing to bring resources on and push Driving volume in the Q3 and just based on the wave of work that has to get done, it's not if, it's really when. Right. That makes a lot of sense. And then I guess just my last question with all of this work that you have in backlog that's pending, you talked about Investing resources to try on recruitment and that sort of thing. Just curious, I mean, do you see yourselves ramping now for a few quarters as you really try to meet That demand, I guess my question really surrounds how are you thinking about building resources and the resultant if there's a little bit of a drag on margin. Should we expect that just as you kind of prepare to do a lot of this work that's out there, both that you've been awarded and that you may be able to secure over the next couple of months? So, Noelle, that's exactly our focus. It has been for over the last two quarters as we've coming out Of COVID, seeing our markets increase, we've been adding on resources. Obviously, there's As I've always said, this industry has always had tight labor. So we knew this on and knew this early on and rely heavily on our Internal recruiters to help us stay ahead of our demand. We've added another recruiter on to that staff and also gone to outside So it will be a continual focus for us as we anticipate the growth of not only these market drivers that I've talked about, But if and when the federal infrastructure book comes through, that will also be a further demand for us. So high on our priority list, and we deal with that on a weekly basis. Perfect. All right. Thank you very much. Thanks, Noelle. Our next question comes from the line of Brent Thielman with D. A. Davidson, you may proceed with your question. Thanks. Hey, Joe, David. The $150,000,000 in pending awards, I guess, I hadn't heard you guys kind of quote a number like that before. Can you give us any feel for what that compares to the abnormally high kind of what you expect post quarter? Just trying to get some perspective on that. Yes. That's a good question, Rob. And I think I don't know that I wouldn't compare it to the past. It certainly is higher And it's taken longer, Brent, to get these contracts signed since I can't recall being out There are $150,000,000 in pending award. I will tell you that we just signed an $8,000,000 contract out of that $150,000,000 a week. So we're looking to drive that along and I think that's because our Department of Transportation clients are starting to really gear up towards a new Fiscal year. So it seems to me to be high. I can't tell you that I know exactly what it is. I mean, Dave, do you want to? Yes. Brent, I would So here's the couple of points relative to this. Typically, we'd see what we call our selections pending contract Rolling somewhere between $80,000,000 to $100,000,000 But what's significant about this is that $80,000,000 to $100,000,000 average contract Size was maybe $1,000,000 right? What we're seeing now is Certainly an increase as we jump into $150,000,000 But if you look at the magnitude of the top four contracts in there that we're Excited to hopefully be talking about next quarter or maybe the early Q4. There are multiples, multiples Larger than what we've seen before in the tens of millions. So we're really starting to see a shift where strategy of the platform is playing out. We're bringing client relationships together. We're going after bigger opportunities and securing them. And with this, it's improving With these larger projects and programs, it's improving our visibility as we look out not just in next 6 months, but into 2022 2023. Okay. And then I guess on the I guess with the new acquisitions you've done, you've got a pretty large book of Business, good sizable piece of pending awards. I guess I'm just wondering why you wouldn't have better Visibility into year end and hence move the guidance higher at this point. Is it just some caution around COVID and The ways at the customer level primarily, is there anything else I'm missing there? Sure, sure. So well, of course, We're monitoring what COVID is doing, right? And it certainly hasn't helped recently. I would Remind you that we did raise guidance in Q1. We moved revenue up by $20,000,000 and adjusted EBITDA by $3,500,000 at the midpoints. And we have closed AEL prior to reporting. So we talked about that. Now OSG is a terrific addition to our Platform, this is added to 90 person firm. And at this stage in the year, really when you break it down, it fits within the guidance that we had previously provided. I think the more important point here though, Brent, is as we start to really focus in on the earnings power and the momentum of the business going into 2022. And again, if you look at our adjusted EBITDA on a pro form a run rate basis, assuming We got AEL and OSG done at the beginning of the year. We're looking at annualized adjusted EBITDA ranges of 76 to $83,000,000 So we're quite optimistic as we look ahead to next year. Okay. Just the last one, the jump up in operating expenses this quarter, I mean, it looks like there's sort of $5,000,000 ish of Kind of one time items in there, but if you back that out, is this the sort of run rate you'd expect as costs kind of come back into the business post pandemic? Yes, I mean, Q2 definitely was a heavy investment quarter for us. We had $2,400,000 of M and A related transaction costs for AEL and OSG, we had a couple of million that came through Non cash related to a fair value adjustment related to earn outs on acquisitions, we had $1,000,000 related to Non cash equity comp, I would point out, Brent, that not for those items, if you back them out and look at our operating Expense as a percentage of revenue were actually down. So the business is operating efficiently, but not for these one time items. You're really looking at Something closer to a normalized operating expense run rate for us moving ahead. Got it. Okay. Thank you. Best of luck this quarter. Thanks, One moment while we poll for questions. Our next question comes from the line of Kathryn Thompson with Thompson Research Group. You may proceed with your question. Hey, good afternoon. This is actually Brian on for Catherine. Thank you for taking my questions. I guess I wanted to see Where the Building Science Services stands now compared to pre COVID levels, I think before it was hit pretty hard during COVID and then last quarter saw a Nice rebound, I think, like 75% of pre COVID levels as people came back to high rises, education started to come back. Can you talk about where that is now and maybe the potential for the delta variant of COVID taking that back down at all? Yes. I'd say that and I'm a little bit speculating here, but I'd say we're very close back to Pre COVID levels to that group, we have added to it. I would tell you that we have active positions open in industrial Now currently because of anticipated growth and expansion of those services into Qs 34. So very close to pre COVID levels. We might be right back out where we were, but anticipated growth in that in Q3 and Q4. Does that help? It does, yes. And then are you seeing I mean, I guess what's the downside potential if the Delta variant Things go backwards. Could that drop as far as it did at the initial COVID level? Or are we not going to see that level of A decline. Well, I think I'd have to speculate a little bit. I don't want to do that. But I would say this, the two areas that Really hit us in COVID was, as you mentioned, was our Building Sciences Group because people were coming out of the high rises and we had school shut That's impacted our business tremendously. And we didn't have environmental transaction because the financial markets tied Originally, so those markets are now continuing on and our environmental transaction business is actually doing quite well as the financial markets are rolling. I think With where the schools are in dealing with exposures and master, I can't really say where that's going to go, I just feel that the school systems are more used to dealing with it And so their work is continuing on because a lot of our work is maintenance and sort of continuation of code that you can't really pass up. So I don't believe we'll be hit as if it was to turn, I don't think we'd see the sort of turndown that we experienced In the first COVID experience in March, April May of last year. Okay. Yes, very helpful. Thank you. And Second follow-up, I guess. Is the post COVID world now, has that had any meaningful impact to DOT's pace of outsourcing work? I guess, are you seeing more increasing amount of work because of COVID? Or is that not really factoring into DOT's outsourcing decisions? I would say that And that's a generalization because obviously I can't speak for all the state DOTs, but we did see that during COVID, I I think in order to keep the resources busy, they sort of didn't rely as much on outsourcing in the first Couple quarters of this year that we anticipated. I think that's now picking up as fundings anticipated. You got your new fiscal years rolling. So, I don't anticipate that there'll be much change. I should say this way, we're going to see an increase going into Q3 and Q4 from our current transportation business as the outsourcing will now pick up as the Projects are picking up levels and they don't have the staffing levels of support. So more outsourcing is what I suspect is headed our way. Got it. Thank you. Sure. Ladies and gentlemen, we have reached today's question and answer session. I would like to turn this call back over to Mr. Joe Boyer for closing remarks. Thank you very much. Appreciate everyone joining us today. We appreciate your support of Atlas and we look forward to updating you on our progress Next quarter. So thank you very much and have a great afternoon. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and enjoy the rest of your day.