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spk02: Please stand by. Good day and welcome to the Exponent, Inc. first quarter of fiscal year 2022 financial results conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Joni Constestalo. Please go ahead, ma'am.
spk06: Thank you, operator. Good afternoon, ladies and gentlemen. Thank you for joining us on Exponent's first quarter 2022 financial results conference call. Please note that this call will be simultaneously webcast on the investor relations section of the company's corporate website at www.exponent.com backslash investors. This conference call is the property of Exponent and any taping or other reproduction is expressly prohibited without prior written consent. Joining me on the call today are Dr. Katherine Corrigan, President and Chief Executive Officer, and Rich Lenker, Executive Vice President and Chief Financial Officer. Before we start, I would 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. Additional information that could cause actual results to differ from forward-looking statements can be found in exponents periodic SEC filings including those factors discussed under the caption risk factor in Exponent's most recent Form 10-Q. The forward-looking statements and risks in this conference call are based on current expectations as of today, and Exponent assumes no obligation to update or revise them, whether as a result of new developments or otherwise. And now I will turn the call over to Dr. Katherine Corrigan, Chief Executive Officer. Katherine?
spk07: Thank you, Joni, and thank you, everyone, for joining us today. I'll start off by reviewing our first quarter 2022 business performance. Rich will then provide a more detailed review of our financial results and outlook, and we will then open the call for questions. We had a solid start to the year, achieving year-over-year growth in revenue and EBITDA while continuing to advance our long-term goals. Our business model persists in demonstrating our resiliency against a challenging macroeconomic environment. as evidenced by the strong demand we are seeing for our services across the business during the quarter. I'm pleased that clients are increasingly relying on Exponent for our scientific and engineering expertise to help solve their most complex problems. Growth in the first quarter was driven largely by work related to the consumer electronics, utilities, chemicals, and life sciences sectors. On the proactive side, demand was driven by clients seeking optimization of their product designs and performance, as well as risk mitigating data analytics. On the reactive side, we saw a continued rebound in our litigation related work, as well as increased activity related to product recalls. We are excited about the evolving opportunities related to digital health, as we are continuing to see positive momentum in life sciences driven by increased work with medical devices and pharmaceuticals. Looking ahead, our expertise will be increasingly sought after as the world places greater emphasis on safety, health, and environmental issues. We are well positioned to capitalize on this trend as we help our clients build safer and more sustainable products and processes. Turning to our engagements in more detail, within our proactive business, we continue to see elevated demand for machine learning data studies and user experience research across a range of end markets. Momentum continued with our consumer products and electronics clients as demand for virtual and augmented reality work continues to increase. Within the automotive end market, we are seeing an increase in engagements in the electric vehicle space, particularly around the performance and safety of battery packs of the future. Clients are coming to Exponent to understand the performance, reliability, and safety of their next generation designs. Our risk and vulnerability work with utilities continued to increase as a result of the broadened scope of our risk models, and we expect further growth in this area. International arbitration work was also robust during the quarter, further amplifying our brand recognition in this arena. Across the business, Exponent is well positioned to capitalize on macro trends, including escalation in safety, health, and environmental concerns, that will have a substantial effect on our overall business over the next several years. We are excited about the evolving opportunities related to energy storage, vehicle electrification and automation, consumer electronics, and digital health, which we expect will deliver increasing impacts over time as we continue to execute on our long-term strategy. Further, as the energy sector decreases dependence on foreign oil, We expect that the secular trend toward renewables will drive future engagements with Exponent. On the recruiting front, we remain focused on building upon our differentiated position by growing and developing our world-class engineering and scientific team to meet the evolving needs of our clients and the market. Although the job market remains highly competitive, our hiring pipeline remains robust. and we continue to rely on our strong reputation and targeted outreach to add exceptional talent. We are confident in our ability to attract and retain talent to support the future of Exponent. Turning to our segments, Exponent's engineering and other scientific segments represented 81% of our net revenues in the first quarter, increasing 9% as compared to the prior year period, with continued strong demand for Exponent's services across the utilities, consumer electronics, and life sciences sectors. Exponent's environmental and health segment represented 19% of the company's net revenues in the first quarter. Net revenues in this segment increased 4% compared to the same period in the prior year. Growth in this segment was primarily driven by Exponent's work evaluating the impacts of chemicals on the environment. As we mark our 55th anniversary this month, We are encouraged to see Exponent growing in new emerging verticals and constantly evolving to meet the needs and challenges of our clients while maintaining our reputation for technical excellence, objectivity, and disciplinary diversity. As standards and regulations evolve around environmental, social, and governance issues, clients will increasingly reach for Exponent's trusted advice to help them improve the safety and performance of their products and processes. Our first quarter results exemplify the strength of our adaptable business model, unique market position, and strong client relationships, which will continue to drive enhanced profitability and long-term value for our shareholders. I'll now turn the call over to Rich to provide more detail on our first quarter results, as well as to discuss our outlook for the second quarter and the full year 2022. Rich?
spk01: Thank you, Kathryn, and good afternoon, everyone. Let me start by saying all comparisons will be on a year-over-year basis unless otherwise noted. For the first quarter of 2022, total revenues increased 10.3% to $128.5 million, and revenues before reimbursements or net revenues, as I will refer to them from here on, increased 7.6% to $117.9 million, as compared to the same period in 2021. Net income for the quarter decreased to $29.6 million, or 56 cents per diluted share, as compared to $30.8 million, or 58 cents per diluted share in the prior year period. Excluding the realized tax benefit for share-based awards, earnings per share would have been up 3 cents. In the first quarter of 2022, the realized tax benefit for share-based awards with $6 million or 11 cents per diluted share as compared to $8.8 million or 16 cents per diluted share in the first quarter of 2021. Excluding the tax benefit, Exponent's consolidated tax rate was 28.2 percent in the quarter as compared to 26.8 for the same period in 2021. EBITDA, for the quarter increased 8.6% to $34.5 million, producing a margin of 29.2% of net revenues, as compared to 29.0% in the first quarter of 2021. Available hours in the quarter were 374,000, an increase of 4.8% year-over-year. Utilization in the quarter was 76.5%, up from 75.7% in the same quarter of 2021, which was at an all-time high. We averaged 939 full-time equivalent employees in the quarter, which is an increase of 3.6% over the first quarter of 2021. and up 1.9% sequentially from the fourth quarter of 2021. Adding more top talent to our world-class team of experts remains a top priority. The realized rate increase was approximately 3% for the first quarter as compared to a year ago. In the first quarter, compensation expense after adjusting for gains and losses in deferred compensation increased 6.5%. included in total compensation expense is a deferred compensation loss of $4.7 million as compared to a gain of $5.6 million in the same period of 2021. Stock-based compensation expense in the quarter was $6.9 million as compared to $6.3 million in the prior year period. Other operating expenses In the quarter, we're up 5.9% to $8.2 million, driven primarily by increased activity at our offices as employees continue to gradually return. Included in other operating expenses is a depreciation expense of $1.7 million for the quarter. G&A expenses were up 29.2 percent to $4.2 million for the quarter. The increase was primarily due to higher business development and recruiting activities as in-person activities increased. Interest income was $21,000 for the quarter. Miscellaneous income net of deferred compensation was approximately $768,000 for the quarter. Moving to our cash flows during the quarter, capital expenditures were $2.6 million. In the quarter, we distributed $12.5 million to shareholders through dividend payments and repurchased $48.6 million of common stock at an average price of $87.87. At quarter end, the company had $215 million in cash and short-term investments. Turning to our outlook, our full year 2022 outlook is unchanged. For the second quarter, we will have a challenging comparison to the prior year when utilization was 79%, a record high level. Additionally, our employees in in Shanghai face uncertainty as to when they will be permitted to leave their residence and return to work in our laboratories as the COVID-19 lockdown in Shanghai enters its seventh week. Our Shanghai office represents 2% to 2.5% of our net revenues. For the second quarter of 2022, we expect revenues before reimbursement to grow in the mid single digits and EBITDA margin to increase 250 to 300, to decrease 250 to 325 basis points as compared to the prior year. For the full year 2022, we expect revenues before reimbursements to grow in the mid to high single digits and EBITDA margin to decrease 200 to 250 basis points as compared to 2021. We continue to benefit from the success of our recruiting efforts. As a result, we expect year-over-year FTE growth in the second quarter and the full year to be 4 to 6 percent. We expect utilization in the second quarter to be 75 to 77 percent as compared to 79 percent in the same quarter last year. Utilization in the second quarter will be tempered by the increased headcount as well as seasonally higher vacation and holiday time during the summer months. We expect the full year utilization to be 73 to 74 percent as compared to 75 percent in 2021. We continue to believe that as we build critical mass in our offices and practices and increase our proactive work, our average utilization will be sustained in the mid-70s. We expect 2022 year-over-year realized rate increase to be approximately 3%. For the second quarter of 2022 and each of the remaining quarters, we expect stock-based compensation expense to be $4.4 to $4.9 million. For the full year 2022, we expect stock-based compensation to be $20 to $21 million. For the second quarter, we expect other operating expenses to be $8.3 to $8.6 million. For the full year, we expect other operating expenses to be $34 to $35 million. As we return to the office on a regular basis, We believe working in person at our office location supports collaboration for our interdisciplinary teams and staff development, resulting in higher value for our clients and retention of our employees. G&A expenses will also gradually scale as recruiting, business development, and travel activities increase. For the second quarter of 2022, we expect G&A expenses to be $5 million to $5.3 million. For the full year of 2022, we expect G&A expenses to be $22.2 to $22.8 million. As a reminder, these expenses include an in-person managers meeting at the end of September. While this meeting costs approximately $1.5 million, we believe it is valuable to bring our team together, especially after such a long period of fiscal separation. We expect interest income to be approximately $50,000 per quarter. In addition, we anticipate miscellaneous income to be approximately $700,000 per quarter. For the remainder of 2022, we do not anticipate any additional interest tax benefit associated with share-based awards. So the full-year tax benefit is estimated to be $6 million. As a reminder, we had $10 million of tax benefit from share-based awards in 2021. So this difference will reduce net income by $4 million and earnings per share by 8 cents. The tax benefit from share-based awards is determined based on the change in value of the share-based awards between grant and issuance dates. For the remaining quarters of 2022, we expect our tax rate to be approximately 28%. For the full year of 2022, the tax rate is expected to be 23.2% as compared to 19.6% in 2021. CapEx for the full year 2022 is expected to be approximately $10 million. Our stock repurchase program has $169.9 million remaining available. In close, we delivered yet another solid quarter and remain well positioned to continue our profitable growth. I will now turn the call back to Catherine for closing remarks.
spk07: Thank you, Rich. For 55 years, Exponent has been committed to the advancement of science and has leveraged its expertise to advise clients on the causes of failures, as well as how to produce safer, healthier, more sustainable, and more reliable products and processes. As our clients' needs continue to evolve and increase in complexity, our team of engineers and scientists positions itself ahead of the curve utilizing deep knowledge and multidisciplinary capabilities to deliver unique solutions. As we've done throughout our history, we will continue to leverage our core competencies as we deepen our client relationships, expand our reputation, and bring new talent to the firm. With strong market drivers and a world-class team of experts, Exponent is primed to deliver growth in 2022 and beyond. Operator, we are now ready for questions.
spk02: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star 1 to ask a question. We'll pause for just a moment to allow you to signal for questions. We'll take our first question from Andrew Nicholas with William Blair.
spk03: Hi, good afternoon. Thanks for taking my questions. First one I had was just on the competitiveness of some of the new markets that you're entering or ones where your businesses are a little bit less scaled at this point. Is there any meaningful difference in the competitive dynamics or number of competitors or size of competitors in those new and emerging verticals relative to where you have you know, bigger, more legacy businesses? Or is it comparable in terms of you kind of being the largest, most scaled, multidisciplinary player in those areas?
spk07: Yeah, thanks, Andrew. So, you know, one example of these new verticals that I think really applies to your question is going to be over in the life sciences and particularly in the pharma space. And so, you know, what we're looking to do in that marketplace is really to ensure that we maintain our differentiation. You know, there are aspects of consulting in pharma that are quite crowded. If you think about, you know, clinical research organizations, if you think about real-world evidence platform type of companies, et cetera. But what we're looking to do is is to specifically bring our multidisciplinary value proposition to that marketplace in a new way. And so we're looking for those areas where we have an offering that is truly unique and brings in, for example, our data sciences expertise, as well as our human factors expertise. and a variety of other things. And so we are seeing it in a similar way in the sense that the overlap between us and competitors in the space is relatively small. There's not going to be a single competitor who is going to have that sort of multidisciplinary approach to what we do. But as we enter these new verticals, I think it is incredibly important for us to be maintaining our discipline around premium services and our multidisciplinary approach so that our value proposition really can shine in that way.
spk03: And is the talent market in those verticals any different or meaningfully different? I would imagine life sciences, sticking with that example, still quite a bit of interest in that space, highly attractive. talent sources. Just wondering if recruiting is any more difficult there than it's been in other previous areas of expertise.
spk07: Yeah, thanks for that follow-up. You know, there's no doubt that the competitive landscape for talent in those spaces is, you know, I would characterize it as equally competitive with our traditional engineering disciplines. That's always I mean, that's part of our value proposition, right, that we're trying to bring in the best and the brightest, kind of peel off that top layer of folks, if you will, whether that's at the junior level, the mid-level, as well as at the senior level. But what we're finding as we go out to recruit in these new areas is that folks are getting very excited about the novelty of and the new and fresh thinking that we're bringing to the industry in terms of what we're offering. And so that's how we're able to get them excited about what it is that we're doing because we're bringing this new sort of multidisciplinary approach, bringing the wearable technology approach into the life sciences area, bringing our traditional strength in measurement and real-world data and thinking about that in unique ways. That's really the leverage we have in getting that top layer of talent really excited about joining Exponent.
spk03: Great. Thank you. And then just one more follow-up, if you don't mind, for Rich. I think you mentioned in your prepared remarks or you made a comment about the Shanghai office and it being 2%, 2.5% of net revenues. I apologize if I missed it, but is the implication there that that that is effectively at zero for that seven-week lockdown period or just some portion of that typical run rate that's not coming through given the lockdowns? Thank you.
spk01: Thanks, Andrew. Yeah, look, it's not – no, it's not zero. Our staff there are – able to do some work from home. Our teams here globally are trying to leverage those people to do things that can be done outside of the laboratory, although that location in particular is very laboratory intensive in the work that they do. Additionally, we are hopeful and expecting that staff will be able to return to work in the office sometime during the quarter. And we expect that that may even be fractions of them, as it appears that the Chinese government may be moving towards allowing particular residential areas to come back into the community and go to work if there is no cases within their residential location. So hopefully those things begin to move forward and we can gradually get people in. So that's our expectation as we move forward in the quarter.
spk03: Great. Thanks for the clarification. I appreciate it.
spk02: Thank you. And we'll move on next to Alexander Leach with Barenberg Capital Markets.
spk04: Hi. Thanks for taking my question. I was just wondering on margins, why margins performed a little bit better than you guided to for the quarter. Was it just utilization was stronger than expected? And if so, what was driving that? Or, you know, or was just less of a return of travel and marketing expenses than you guys expected? I imagine the return to the workplace progressed as normal.
spk01: Yeah, so all of the above contributed. We ended up sort of at the higher end of the range that we expected. on utilization. So utilization had a positive contribution to that. In addition to that, our expense profile ended up slightly lower than the bottom end of our range, so we got a good combination of the two, where we ended up on the revenue generation and leverage of the compensation out of that strong utilization, and then just performing just at the bottom or slightly below on the G&A and other operating expenses. So all of those contributed to us being able to be a beat on the margin side.
spk04: Okay, great. Thanks. And just to follow up to that, you know, for your guidance for margins remain unchanged. Is that, given the fact that you have performed on margins in Q1, is that just going to be balanced out by an acceleration in hiring through the next few courses?
spk01: I think it is a balance of, you know, still at this point in time in the year, not feeling that we had enough information to move out of that range of, let's say, the utilization being in the 73 to 74% range. or that the expenses marginally were going to be much different. The expenses might be a little bit higher in a later quarter. You only have one quarter of data that provides there. So clearly it gives us a little bit more support to confidently be in the range. but when we sat down and penciled it out, it wasn't really at a point that we could move the range much at this point in time. It ended up still fitting within that. So, you know, that's where we are.
spk04: Okay, great. And if I could just fit one more in, can we get an updated proportion of litigation work that's come back from pre-COVID? I think you said it was around 90% to 95% last quarter. Do you have that same stat that you can give us?
spk07: Yeah, so I'll go ahead and sort of comment on that. So we are finding our litigation activity to be quite strong in the quarter. And, in fact, we have exceeded 2019 levels, you know, for the first time since the start of the pandemic when we look at just the litigation part of the business, which is about, you know, low 40s percent of the business. This has been pretty broad-based, so whether it's the product liability arena, we're seeing strength around advanced driver assistance systems, we're seeing strength around chemical and toxic toward an environmental litigation, the international arbitration side as well. So it's broad-based across the markets that we've got. And what we're seeing just in terms of the actual cases of what's going through the court system, you know, there aren't that many delays as there were, let's say, a year ago. We're really seeing those in-person jury trials go forward. We're not seeing the deadlines get pushed because of COVID-related restrictions. Of course, they always get pushed just because of delays that happen typically in the legal environment. But I'm very pleased to see that we really seem to be back at a the kind of rate well ahead of 2019 levels where we would like to be. Of course, we don't have a perfect crystal ball on the future. We could still have more waves around COVID, but I think those transients are definitely working their way out of the system, and we seem to be in a much better and sort of more predictable pace of growth on that side.
spk04: Okay, great. Thanks, and looking forward to hosting you guys at our conference in a few weeks' time. Cheers. Thanks so much. Thank you.
spk02: Thank you. And once again, ladies and gentlemen, I want to start one if you'd like to ask a question. And we'll take our next question from Toby Somer with Truist Securities.
spk05: Thanks. A follow-up on the China and Shanghai information. How much of the company's total revenue is in China? Because based on the approach in that country, it's possible that other cities could have similar experiences?
spk01: Thanks. Yeah, so Toby, as far as our staff, we only have one office in Mainland, which is there in Shanghai. As I've commented, we do have another office in Hong Kong. And that office represents another one to one and a half percent of our revenues. So a total of somewhere between three and a half and four percent of our revenues are in the Hong Kong, Shanghai locations. And so that represents the revenues produced by those employees that are in those two offices. Okay, thank you.
spk05: And then I wanted to ask a question that we get from investors periodically. And it goes to the success over a long period of time that Exponent has sort of been in existence and in a public company and thrived so significantly. Why is it that there haven't been you know, sort of successes, successful, uh, uh, kind of copycat businesses. You know, uh, there are a lot of smart people out there and some of them are private equity players and have a, have a pile of money. So what is it about that smarts and pile of money that couldn't, uh, kind of create a smaller version of expo over the years? How do you see that?
spk07: Yeah. Thanks Toby for that question. I, I don't necessarily want to be giving away all my secrets here, but I think there are certainly elements that I, having spent my entire career at Exponent, that I think I can personally speak to. The emphasis that we have on professional development of our teams from day one, I think that is something that's relatively unusual. And the amount of investment that we put into that so that we can have not only long-term succession to replace our talent as they retire, but we're growing into new areas as part of that development program. But it's also the integration that we have been able to achieve over time. And when I say integration, this is the integration across disciplines. You know, exponents is so much more than the sum of its parts. We do divide ourselves into technical practices so that we can be organized and do our recruiting and do our financials and things like that. But the reality is that our teams engage seamlessly across those disciplines. And as a company, we facilitate that and we incentivize that through our various programs that we have related to compensation and otherwise. And so We haven't been perfect at all of this from day one, but as we've grown as a company, we have strengthened across these paradigms, and I think that's a big part of the secret to why we've been able to grow what we're growing and be able to work on the most fascinating and interesting and high-scale sorts of endeavors.
spk05: Thank you very much. That's helpful. We talk often about new areas that you're growing into and sort of hiring into. And I was curious if on the other side of the ledger, there are historically with your, with your vantage point and experience at the firm, uh, areas or practices that for whatever reason, either changes in that industry and or, uh, changes in, in, in pricing that the company has sort of sunsetted or deemphasized over time. so that we can understand sort of the life cycle of the company's involvement in different industries.
spk07: Yeah. Yeah. Thanks Toby. We look, we've got a paradigm of being ahead of the curve and evolving our portfolio of work to meet the most acute needs of our clients. Right. And so when I look back at the portfolio of the company, when I first started 26 years ago, It was much smaller then, but it also was very different. When I think about how we've grown over that 26 years in terms of our work in consumer electronics, this is an industry 26 years ago where we weren't doing a whole lot, but as the innovation began to accelerate and as the technologies became more and more complicated, we were able to grow and expand such that now this is This is a significant part of a much larger business that we have today. And we continue to push at being ahead of that curve and sort of around the corner. But at the same time, we're also doing work related to utility infrastructure that's 100 years old. And we have been looking at those sorts of issues from a structural engineering perspective and a risk perspective. We've been in that area for decades, but we've evolved the methodologies and the sophistication with which we're looking at that, right? Now, there certainly are areas that we have grown into and sunsetted over the course of time, you know, engagement in our technology development work for the military that was done, you know, Rich may have the dates better. It's sort of in the late 90s, early 2000s sort of timeframe. You know, we had taken advantage of opportunity with the US military and other military around the world for the technology development side. But it came a point where that was, you know, we didn't see the future of that and we decided that we needed to focus on other areas, right? Around life sciences, we've been in medical devices for many years and we've grown that, but now we're looking at this whole new vertical of pharmaceuticals where we believe there's lots of opportunities. It's really our overall model and our vision that we're going to be continuing to evolve the portfolio, which involves the sunsetting of things on the back end as well as the movement into new areas on the leading edge.
spk01: Yeah, I would add to that that there are areas, even when you look at different industries, and technologies that that industry has applied that if we didn't evolve or move to the next technology that they were going into, we would be commoditized through the work that we did. You know, Catherine's probably in a better place to talk about it, but I'll briefly just say the auto industry is a good example of that. You know, in the founding years, Back in the 70s, absolutely, the firm was working on automobile accidents and focused on injuries that occur in the automobile, but it was all focused around the performance of a lap belt and then a shoulder belt. It's not that we don't get a little bit of that. Then it moved to airbags. and the seats and the performance of all that. And those things all evolved over time into much more dynamic, robust systems in the vehicle to the point that maybe some of the sled tests and active crash tests that we might have done at a higher volume in those days that now with more knowledge are better simulated by software or the issues have moved on in that environment. As you're probably aware, we had a tremendous amount of work on vehicle rollovers. as SUVs became a very popular vehicle and the challenges around that across the vehicle fleet. Well, now with automated steering and ADAS systems and things, we're seeing a substantial reduction in that. But the next issue comes along that challenges that industry more. more than ever before in automated vehicles and electric vehicle systems. And when we look at it, we have more opportunity over the next decade in that industry than we've ever had on an annual basis. So it's very interesting to, if you move along, and I always tell people, How do we get there? We get there absolutely by our existing employees evolving and doing their research and doing their development, but we also have the benefit of that we're hiring in 150 or 200 new people into the firm, and most of them have come out of the top research institutions in the world studying the next unsolved problem in technology there that might not come into commercialization for several years, but they're bringing that into our organization and evolving our knowledge together by bringing their knowledge into the system.
spk05: Thank you very much for that answer. Just a couple of numbers questions, if you could refresh me, related to guidance. What's the targeted range for FTE growth in the year and the expected realized price increase? I know it's ahead for the quarter, but I can't remember how to frame it for the year.
spk01: Thank you. Yeah, so on the headcount front, we're expecting a year-over-year headcount growth from 2021 to be somewhere in the 4% to 6% average full-time equivalent employee growth through that. We're expecting that the net headcount growth from the end of 2021 to the end of 2022 to be in the you know, 50 to 70, you know, net headcount growth range and such. And then on the rate side, we are expecting a net realized rate increase of approximately 3 percent. As a reminder, you know, that the increases that we put through for our existing staff as far as bill rate increases, We're 6-plus percent as of January 1. In addition to that, you've got turnover in the middle of the organization, naturally, and at the top. And you bring in more at the bottom, and that's what creates a realized price increase of approximately 3 percent for the year. Thank you very much.
spk02: Thank you. And we will take next a follow-up from Alexander Leach, Barenburg Capital Markets.
spk04: Just one more from me. Just on capital allocation, what are your priorities for the remainder of the year? Where are you going to put your cash?
spk01: Yeah. So we've obviously, as we announced, going to be continuing with our dividend program. As a reminder, that dividend is up 20% from what it was in 2021. So we've stepped up the dividend significantly. In addition to that, we continue to plan on being active with our stock repurchase program. We were fortunate and able to use that program on the stock pullback in the first quarter. When that occurred there in that February timeframe, we were able to acquire $48.6 million of of stock in the repurchases at $87.87. We will continue to be looking for opportunities where those things are out of balance and we can come in and be opportunistic with that repurchase program. You know, although we haven't done an acquisition in over 20 years, We continue to evaluate those opportunities. I wouldn't expect something short-term, but it is where we continue to look for strategic opportunities to provide seeds for growth in these areas where we might not be as an established player in the market or a unique geographic region that they play out in. But ultimately, the goal still remains to bring our cash balance down into that $50 million to $70 million range over the next three to five years. Great. Thank you.
spk02: Thank you. And it appears there are no further questions. Ladies and gentlemen, that will conclude today's teleconference. We do appreciate your participation. You may not disconnect.
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