FirstService Corporation

Good day and welcome to the second quarter investors conference call. Today's call is being recorded. Legal counsel requires us to advise that the discussion scheduled to take place today may contain forward-looking statements and involve known and unknown risk and uncertainty. Actual results may be materially different from any future results, performance, or achievements contemplated in the forward-looking statements. Additional information concerning factors that could cause actual results to materially different for those in the forward-looking statements is contained in the company's annual information form as filed with the Canadian Securities Administrators and in the company's annual report on form 40S as filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is July 23rd, 2026. As a reminder, if you would like to ask a question, please press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. If you would like to remove yourself from the queue, please press star one again. I would now like to turn the call over to Chief Executive Officer, Mr. Scott Patterson. Please go ahead, sir.

Thank you, Lisa. Good morning, everyone. Thank you for joining our Q2 conference call. I'm on today with our CFO, Jeremy Rakusin. I'll kick us off with some high-level comments. Jeremy will follow with more details. Let me start by saying that we're generally pleased with our Q2 results in an economic environment that continues to be quite challenging. We're also pleased with the progress we made during the quarter on a few fronts that we believe puts us in position to achieve a stronger second half of the year and gain momentum into 2027. Total revenues for the second quarter were up 2% over the prior year, half organic growth. EBITDA for the quarter was up 3%, reflecting a consolidated margin of 11.2%, up 10 basis points over the prior year, and better than expectation primarily within our brands division. Jeremy will walk through the detail in his prepared comments. Finally, our earnings per share were up 2% over the prior year, in line with top line growth. Looking at our divisional results, First service residential revenues were in line with expectation and up 5% organically. The reported revenues were slightly less at 4% reflecting the sale of our residential pool maintenance operations early in the quarter. We separated and sold residential accounts that have accumulated over the years to focus solely on commercial pool maintenance and management. Our core property management business continues to perform solidly on expectation, and we expect similar results for the balance of the year. Moving on to first service brands, revenues for the quarter were up 1% with strength at Century Fire, tempered by approximately flat results at our restoration and home service brands, and largely offset by revenue declines within our roofing operation. I'll walk through each of the segments. Revenues for our two restoration brands, Hall Davis and First Onsite, were down slightly from the prior year. As we pointed out at the last two quarter ends, we entered the year with a weakened pipeline due to the mild weather experienced in Q4 of last year, which has impacted us in the first half of this year. Towards the end of Q2 and into July, we made significant progress in signing work and bolstering our pipeline back to historically healthy levels. In particular, we won a number of large loss projects across North America that will convert to revenue over the next 12 to 18 months. In addition, we're seeing opportunities for specialty construction projects that have arisen through our restoration work with certain customers and in certain verticals. Looking forward, we expect to show approximately 5% year-over-year growth in the back half of the year for our restoration brands. It's a modest outlook relative to the uptick in activity as it's difficult to forecast how quickly the recent backlog additions will convert to revenue. Our experience suggests that scoping, permitting and insurance navigation could create delays in generating revenue. Storm and hurricane activity in the coming months could add to the backlog and improve this growth outlook. Moving to our roofing segment, revenues for the quarter were down approximately 6% on a reported basis and 10% organically, lower than our expectation. There are a few factors that impacted our top line during the quarter. First and foremost, the market remains stubbornly weak and ultra-competitive. Both the new construction market outside of data centers and the re-roof market. And the market conditions are particularly acute in two of our larger branch regions, Las Vegas and Southwest Florida. In both markets, we have intentionally moved away from certain low margin work that was in our pipeline. The other factor during the quarter was the delay of a few large reroof projects that we expected to complete during the quarter. The delays accounted for half the mess relative to our expectation. All the projects remain in our backlog. The roofing market has been a challenge for us in the past year. It's been a difficult environment, and with ongoing macroeconomic uncertainty, it's unlikely to improve materially in the near term. That said, we strongly believe that the long-term thesis is unchanged. Roofing is a huge market and an essential service with long-term tailwinds. We believe in our team and are focused on continuing to build the platform. As evidence of our ongoing belief in the opportunity, we closed on the acquisition during the quarter of Sheffers Roofing in Kansas City. Sheffers is a leader in the market serving customers throughout Missouri and Northern Arkansas and strengthens our presence in the important Midwest region. Looking forward to Q3, we expect our roofing operations to be down slightly with organic growth off in the mid-single-digit range. Moving to Century Fire, we had another strong quarter that was right on expectation and mirrored our Q1 results. with revenues up over 10% versus the prior year, including high single-digit organic growth. During the quarter, we announced the acquisitions of Titan Fire Protection, based in Tampa, Florida, and GSC Fire and Security, based in Austin, Texas. Titan is a sprinkler installation company serving commercial customers across Central Florida. GSC is an alarm installation and service company serving the Austin and San Antonio markets. In both cases, Century will look to partner with the management teams to broaden the service capability and provide both sprinkler and alarm install and service across the respective customer bases. Looking forward for Century, we finished the quarter with an improved backlog sequentially and expect similar strong 10% plus year-over-year growth for the third and fourth quarters. Now onto our home service brands, which as a group generated revenues that were up slightly versus a year ago, modestly better than our expectation. As a reminder, our home service brands include California Closets, CertiPro Painters, Floor Coverings International and Pillar to Post Home Inspection. Activity levels at these brands are closely tied to the housing market and consumer sentiment, both of which continue to hover around 10-year lows. The teams continue to do a great job driving increases in close ratio and average job size to eke out revenue gains. We're not getting any helpful market improvement, and we're not expecting any over the back half of the year. Market indices and economic forecasts all suggest continued weakness in the housing market and consumer confidence. Looking forward for our home services group, we expect the teams to continue to take market share to drive similar results for the third and fourth quarters with revenues that are slightly up year over year.

Let me now hand off to Jeremy. Thank you, Scott. Good morning, everyone. As always, I'll provide details of our segmented financial performance, summarize our cash flow, capital deployment, and balance sheet position, and close out the commentary with a look forward. But first, a recap of our consolidated financial results. Revenues for the second quarter were $1.45 billion, up 2% year over year, and we reported adjusted EBITDA of $161.7 million, up 3% versus the prior year. Adjusted EPS came in at $1.75, a 2% increase over Q2 2025. This brings our year-to-date consolidated financial performance for the first half of the year to revenues of $2.77 billion, an increase of 4% over last year. Adjusted EBITDA of $267 million, representing 3% growth over the $260 million last year, with a margin of 9.7%. down 10 basis points year over year. And adjusted EPS for the first half of the year sits at $2.69 versus $2.63 in the prior year period. Our adjustments to operating earnings and GAAP EPS to calculate our adjusted EBITDA and adjusted EPS respectively have been summarized in this morning's press release and remain consistent with our disclosure in prior periods. Reviewing the second quarter segmented financial performance, I'll lead off with our first service residential division. Quarterly revenues came in at $617 million, up 4% over the prior year, and as Scott mentioned, up 5% organically. EBITDA for the quarter was $69 million, a 6% year-over-year increase, with an 11.2% margin, up 20 basis points over the 11% margin in Q2 of last year. For the first half of 2026, our division EBITDA margin sits at 9.9%, up 30 basis points compared to the equivalent prior year period. During the remainder of the year, we expect margin improvement to continue at similar pacing to the year-to-date performance as our teams continue to extract efficiencies in various areas of the enterprise. Shifting to the First Service Brands Division, our financial metrics for the second quarter were relatively comparable to last year's Q2, including revenues of $832 million and EBITDA at $96 million, both up 1%. Our margin during the quarter was 11.5% down 10 basis points, with the quarter-over-quarter performance better than both Q1 and our expectations heading into the current quarter. In particular, home services margins performed relatively better as we continue to optimize the balance of marketing and promotional investments in support of lead flow. Turning to our cash flow profile, we generated $112 million in operating cash flow during the second quarter prior to working capital movements and in line with the prior year. Cash flow after accounting for working capital changes was $130 million for the quarter and sits at almost $220 million year-to-date. Our capital expenditures during the quarter were a little over $30 million and with our year-to-date total at $60 million, we expect our annual CapEx to be roughly $130 million, less than our initial target of $140 million we provided at the beginning of the year. Acquisition spending on tuck-under deals during the quarter was just over $40 million. The combination of our recent free cash flow performance together with conservative debt levels on our balance sheet supported our decision during the second quarter to also execute share repurchases under our normal course issuer bid. During the quarter, we purchased more than 1.8 million shares at a total cost of almost $250 million or an average price per share of US dollars, $135.91. With these buybacks, our leverage as measured by net debt to EBITDA increased modestly to 1.8 times from the 1.5 times level at the end of Q1. Our leverage remains conservative and we still have ample liquidity with more than $800 million of cash on hand and undrawn bank credit Thank you for joining us today. when we see acceptable acquisition valuations and target return thresholds. Concluding with an outlook, our first service residential division will deliver growth in the balance of the year largely mirroring recent quarters. Mid single digit top line growth with modest year over year margin improvement. For the brands division, Scott has provided top line growth indicators for each of the operating businesses which aggregates to mid single-digit revenue growth in the back half of the year. This performance will be skewed to the fourth quarter and influenced by the amount of restoration backlog to revenue conversion from the increased pipeline activity levels that Scott referenced as well as capitalizing on any potential seasonal spikes in weather activity in the coming months. Putting it all together on a consolidated basis, for the upcoming third quarter, we expect both revenue and EBITDA growth to be similar to the second quarter in the low single-digit range. For the full year, consolidated revenue growth is expected to be similar to or modestly better than our year-to-date top-line growth, and we are anticipating mid-single-digit annual EBITDA growth over 2025. That concludes our prepared comments. Lisa, you may now open the call to questions. Thank you.

Thank you. As a reminder, if you would like to ask a question, please press star 1-1 on your telephone. If you would like to remove yourself from the queue, press star 1-1 again. We also ask that you please wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster. Our first question will be coming from the line of Stephen McLeod of BMO Capital Markets. Please go ahead.

Thank you. Good morning, guys. Morning. Morning. I just wanted to just circle around on the roofing business. You know, obviously the backdrop is quite weak, and you referenced a continued competitive environment. I'm just curious if you see any, I mean, I know you gave the outlook for the balance of the year, but just curious kind of what factors you're looking for to potentially see a light at the end of the tunnel with respect to some of the re-roofing projects that have been delayed and how your backlog currently looks.

Yeah, let me start with the backlog, Stephen. It's down year over year, but but it is up in June sequentially over May and May was up sequentially over April. So we are moving in the right direction but slowly and I would say battling headwinds. You know the misses in Q2 were really as I suggested from some jobs that were delayed. They all still remain in our backlog, but we don't have start dates. There's a number of factors associated with each. The largest is an insurance claim relating to hail damage, and it's caught up in negotiations between the owner and insurance carrier. It will take place. It's just a matter of when. and then as I suggested, we've intentionally moved away from jobs that were in our pipeline due to the tight pricing which was beyond our comfort level, particularly in Southwest Florida.

Okay, that's helpful.

And I guess you noted that one of the largest sort of project in the backlog was related to an insurance claim. How much of the delays you're seeing are attributable to factors such as that versus the macro backdrop and companies just saying, we'll do this next year when we have better visibility?

I think the delays are primarily related to delays in construction, and whether that's other contractors finishing their bid on time and pushing it out, or insurance related issues. Because all of these projects, the projects I'm referencing were in our pipeline and we expect it to complete. But in terms of building the pipeline more quickly, We're seeing softness in the market.

Okay, that's helpful. Thanks, Scott. And then maybe just one for Jeremy. Just on the NCIB, you're obviously very active in the quarter. And I know you talked a little bit about the balance between funding M&A as well as being active when the stock price is materially dislocated from fair value. I'm just curious how you prioritize those two things. and how active you expect to be on the buyback in the back half of the year.

Yeah, I mean, we've been buying at current levels and you can be sure that we will continue to do so just given our balance sheet is still quite conservative under two times. I mean, we'd feel comfortable going at least to the mid twos level, like two and a half times would be a strong comfort level for us. We're always going to look at our pipeline. So if we see imminent deals that are of size and provide attractive returns, that would take priority. But we think we can do both with our current balance sheet and the $800 million plus of liquidity. We can do them in tandem. So a lot of flexibility to use the buyback program as well as not compromise our tuck under acquisition prospects.

That's great. Thanks, Jeremy.

Thank you. One moment for the next question, please. And the next question is coming from the line of Stephen Sheldon of William Blair. Please go ahead.

Hey, good morning. Thanks. Scott, I wanted to dig in a little more on restoration and some of your comments and prepared remarks. It sounds like sales activity pipeline is picked up there in the quarter and not tied to big storm activity. So can you just refresh us on the progress building out relationships with larger, more national accounts? Is that becoming more impactful to the trajectory of the business? And then would also love more detail on where the team is finding success with more specialized and complex restoration services like you kind of alluded to in the prepared remarks.

Right. Well, certainly, you know, we've been talking about it for a few years, how hard the team's been working in terms of developing and enhancing the national account roster, but also at the same time really developing expertise in a number of different verticals, healthcare and government, and generally developing a reputation for large loss claims. Really the last four to six weeks, I'd say, we've signed, as I said in my prepared comments, a number of large loss projects that will benefit us over the next 18 months or so. The projects, they're not related in any way, they're all tied to various regional weather events or specific fire or water damage claims, factories, large warehouses, government buildings, big box retail, multifamily across North America. So it is a significant sort of rally for us that certainly has enhanced our backlog. And as I said, not likely to help us materially in Q3. These projects are still being scoped. The sizes are not clear. We'll see some in Q4, but it's certainly going to help us in 2027. and you had a question right at the tail end, Steven, can you repeat that?

Oh yeah, I think you answered it just with like healthcare and government, but just yeah, where you're seeing, I guess.

Yeah, you asked about the, I made a comment about specialty contracting and that really has evolved from our expertise and depth of experience in the healthcare sector. You know, we have a number of team members that have specific certification and training around the mitigation and construction in a sensitive healthcare environment. This expertise and reputation has led to other construction opportunities in healthcare. And then beyond that, other contracting opportunities in general and talking about retrofits and capital improvements and some new construction opportunities. So we've been asked to submit bids on unique situations based on our experience and we have a few wins with some pending and I would say momentum building.

Got it, very helpful. Maybe just following up on restoration then you know I think you talked about five percent growth in the back half of the year so I want to make sure I heard that right and then I know you don't want to talk about next year, but I guess if some of these things are starting to pick up, I mean, I know a lot can happen with big storm activity, but excluding that, I guess, as we think about heading into next year and especially the first half, if some of the stuff picks up, would we be in line to have even better growth, I guess, and potentially even more than if storm activity gives you opportunities as well? I guess, yeah, just how are you thinking about it in the next year?

Yeah, I mean, we should. We're feeling good about our restoration because, you know, the pipeline where it is today and we're just heading into storm season and who knows, right? But we do feel good about the position we're in, heading into the back half and into 27 for sure.

Great, thank you.

Thank you. One moment for the next question. And the next question is coming from the line of Daryl Young of Stifel. Please go ahead.

Hey, good morning, everyone. I wanted to touch on residential and your new cross-selling initiative that you announced. I think it's called Resilience First. That looks to be a concerted effort to cross-sell restoration with residential. Could you maybe expand on what that is and the opportunity and whether there's any other cross-sell opportunities you're pursuing expressly?

Yes. You know, that effort and program is between First Service Residential and our restoration brands and roofing operations. You know, it is cross-selling, but I really think about it as a focus on bringing value to our managed communities and differentiating first service residential from its competitors. And the goal is to reduce the frequency of loss events and then, so prevention, and then minimizing the severity of losses. So we're talking about complimentary inspections training, education, storm preparation, you know, most of the losses we see in our communities are water losses. And simply educating residents and property managers around water shutoff, certainly when they leave on vacation or, you know, you get water into one unit, it seeps into neighboring units and that's the typical are all in the same loss scenario in our communities, and they can be prevented. And that's what we're focused on, access to a proprietary leak detection program for our communities. If we're successful, it will reduce the number of claims, reduce the severity of loss, and drive down insurance costs for our communities. And again, the focus is on differentiating first service residential.

And then just moving to margins, performances I'd say continue to be quite strong despite maybe a softer organic growth environment. So I'm wondering if when organic growth recovers, can you hold the existing benefits or will there be some costs that maybe come back as activity levels pick up? I guess said differently, is there operating leverage still to come from here?

Yeah, Darrell, you've got to look at it business by business. Property management, it's a lot of variable costs as we grow, and that business is performing right down the fairway. We've got a little bit of margin expansion built in, as I said in my prepared comments. On the brand side, pretty well every business, and we obviously speak about the optimistic outlook for growth and restoration, Those businesses do generate good operating leverage when you get the top line growth, even if there are some investments that come in support of that growth. It's a net positive to the margin.

Okay. That's it for me. I'll get back in the queue. Thanks.

Thank you. One moment for the next question. And our next question is coming from the line of Aaron Kyle. of CIBC. Please go ahead.

Hi, good morning. Thanks for taking the questions. I just wanted to go back to the roofing segment and maybe follow up on an earlier question. But maybe in your view, in terms of what's impacting this segment from a macro perspective, what would you say is most Meaningful or substantial to customer decisions there? Is it rates, inflation, is it the Middle East conflict and oil prices, all of the above? What would you say really needs to change for award activity to really start converting there?

Well, remember, Erin, that first of all, new construction outside of data centers is down year over year. And that's a big chunk of the market. So that's a driver. and a lot of new construction focused roofers have turned their attention to the re-roof market. So the re-roof market is probably flat nationally, but the level of competition around re-roof has increased significantly. I think that everything you mentioned You know, interest rates, Mideast war, inflation, all of that is impacting both of those markets. But, you know, re-roofs can be deferred, but longer term, they're non-discretionary. So it is a matter of time. and I think that the competitive environment will normalize because some of the pricing is not sustainable and particularly in a few of our markets that I've referenced. You know, Southwest Florida is a unique situation right now. I mean, we know from our major suppliers that The market's particularly weak relative to the rest of the U.S. And in fact, the data we have, we're off less than the market in general. And a lot of that, you know, there's a couple things going on. Hurricane Ian effectively pulled forward a few years of re-roof work. And our businesses benefited at the time, but The last two years, we've seen declines off those peaks. And post-hurricane, there were a number of roofers that expanded to Florida to capitalize on the surge. So right now, there is overcapacity in that market, and every job is ultra-competitive. We have a very strong position, and we'll be fine. We just need to let the market settle out. The capacity will normalize. We know operations are pulling out and closing their doors. It'll just take some time, but we'll be fine in Florida.

Okay, that's helpful there. And then maybe just on the M&A side, just looking at the spend year to date, Last quarter, I think you flagged that there's been fewer bidders as some funds have pulled back in this environment. But, you know, first service M&A spend remains modest compared to historical. It's in line with 2025. So just looking back here, you know, as you think about your capital deployment here, are you taking a more conservative approach as you're evaluating targets? Or how should we think about the M&A spend on a go forward basis?

We're not necessarily taking a more conservative approach. We're sticking to our discipline, being patient. Frankly, we're not seeing many quality companies come to market, and certainly we're seeing fewer companies come to market. So I think there are fewer opportunities. We're being very patient, focusing on the right partnerships and ensuring that it's a fit both in terms of service line geography and culture. So I would sort of confirm that we expect this year to be similar to last year at this point based on the opportunities in our pipeline. But nothing's really changed for us. It's just the number of opportunities that we're seeing.

Got it. Thank you. I will pass the line. Thank you. One moment for the next question, please. Next question is coming from the line of Himanshu Gupta of Scotiabank. Please, man. Please go ahead.

Thank you and good morning. So first on Century Fire, which has been strong for a few years now, I mean, are we going to face Tough comps at some point of time. I mean, just wondering how long these tailwinds can last in this business. What makes it so special?

It's not in our sight line, Hemanshu. We continue to experience growth in both the sprinkler and alarm installation side, so half the business. and on the repair service and inspection side. We're seeing strength in multifamily. We've talked about some exposure to data center work, but it's approximately 15% of our backlog is data center, so it's not the key driver. We're really, throughout our branch system, we just have we just have a strong local branch network that are winning and you know we grew the backlog sequentially in the second quarter and it's well up over prior year so we expect continued continued growth as I said in my prepared comments.

That's a great color thank you and then Moving to obviously roofing, a lot of questions have been asked. I think you mentioned already elaborated on the Florida branch. I'm just wondering on Las Vegas, we saw a fair bit of weakness last year as well in that branch. And again, I think you mentioned in Q2, is there anything particular, anything peculiar about this market, Las Vegas, leading to this softness?

Well, again, there's a couple things there. The market is weak, and we see that in our other businesses. So we know there's weakness in Vegas that is more significant than anything we might see nationally. The other issue for us in this market is that we're more weighted towards new construction. It's well over 50% versus 30% on average across our portfolio. So it's really that historical reliance on new construction that, and we were strong in that business in 23, 24. So we're coming off two years in a row from some real strength, new construction strength in Vegas, including some very large projects in 24.

That was very helpful. And then if I look at overall roofing, you know, organic growth was down like 10% in Q2. Is it like new roofing is down like 20 or 30%? Is that the lion's share of all this underperformance happening for the entire segment I'm looking at?

Yeah, I mean, new construction, you know what, I actually haven't looked at it that way. Maybe Jeremy has, but... Yeah, we definitely wait towards new construction.

Yeah, and industrial warehouse deliveries, if that doesn't improve next year, rather down double digits, so then that will further push new roofing in that regard.

Yeah, I'm not sure I understand the question, Manchu.

So I'm saying that if new roofing is tied to industrial warehouse construction, new construction, and if industrial warehouse construction is likely to be down double digits next year in the U.S., that will not help the roofing recovery in the near term.

Yeah, it won't necessarily help our recovery, but our backlog is heavily weighted right now towards re-roof. and so that's really our focus go forward. Our recovery is going to be driven by re-roof. New construction will certainly help. Agreed. When it happens.

Got it. And just one last question on capital allocation. Obviously buyback is a big focus now. Have you reached a point when M&A is less accretive than buyback? or are there verticals where you will still prefer M&A over BIMAC?

We target a mid-teens return on any of our capital deployment initiatives. And again, growing through Takanda Acquisitions and adding strategic assets to our brands is really the primary focus. But again, as I said earlier, we're able to do both at this juncture. and given the discount in the valuation of our business versus some other assets, we just think it's highly compelling that we're buying back our stock at this juncture. So we're not at the point with our conservative leverage to, it's not an either or, we're able to do both at this point and we're not gonna compromise a normal bread and butter tuck under program. It's just balancing that versus the opportunities. And as Scott said, some of the opportunities are a little lesser today. And so we're pursuing both paths equally.

Fantastic. Thank you so much, and I'll turn it back.

Thank you. One moment, please. Our next question is coming from the line of Frederick Bastin of Remy James. Please go ahead.

Thank you. Scott, I believe you're in the midst of a brand optimizing exercise at RCA, sort of investing in the platform. Can you offer an update on that?

Yeah, we're continuing and committed to it. It's really implementation of an enterprise-wide financial system that pulls together 14 different operating systems. It will give us much better information and certainly ability to forecast and manage the businesses. So that continues. It's on track. And then we continue to invest in people and generally in the platform, Frederick. As I said in my prepared comments, were committed about long-term opportunity in this business and committed to continue to invest.

Will that exercise yield, in your view, better growth opportunities or enhance margins or both?

I think it will. and enhance margins, not materially. It's not something we're sort of modeling out, but it just, it's what we need to do to pull the business together and move forward strategically. We need better information. And it's very similar to what we did at First Service Residential years ago and First Onsite more recently and Century Fire. It's a similar exercise. just put us in a better long-term position to grow this business.

Understood. That's helpful. Jeremy, I have one for you. Can you clarify if the 1.8 million shares bought back include purchases in July or does that just pertain to the first six months of the year?

First six months of the year.

Can you indicate or tell us whether you've been active since?

No, we were in blackout. We had an automatic share purchase program, and the trigger points were not activated. We had to do it before we went into blackout, so the parameters were not. But we'll be out of blackout on Monday, and then we can be active without our hands tied due to the blackouts.

Got it. All right. Thanks, Si. That's all I have.

Thank you. One moment for the next question. And our next question is coming from the mind of Tim James of TD Securities. Please go ahead.

Thank you. Scott, I'm wondering, you know, you've talked about fewer M&A opportunities coming to the market. I'm just wondering if you could talk about, like, in your view, why that is. It seems there are some particularly challenging conditions in roofing and to some extent in restoration. Part of me would have thought that maybe would have kind of churned out a couple more opportunities and so either be a greater set. But I'm just curious on your thoughts as to why you think there are fewer businesses coming to market.

Well, I think in those two areas, Tim, it's because they're not performing. And so the owners are, they're coming off numbers that were better in 23, 24. and they want to get back there before they put the company on the market. And many of these businesses are owned by private equity and so if the companies aren't performing, it would mean that they would need to crystallize a loss and I think that they're reluctant to do that at this point.

Okay, that's helpful. My second question, really looking big picture here, Do you think there are any structural changes in any of your businesses or structural changes in the ability to roll out capital? And I guess what I'm thinking there is about PE and multiples being higher. Or would you say the challenge is that across the business you're seeing today are just purely related to market forces that should normalize and kind of get you back on the path with kind of the same structural reasons for your strategy as has been the case for many years?

Well, I don't think that there are structural changes in the business models. As it relates to acquisitions, certainly the level of private equity capital that we're competing with you know increases every year so that has changed over the years and I guess could be defined as a structural change in how we operate but in terms of our businesses and the fundamentals I don't see any change. Does that get at what you were asking?

Yeah, yeah, I'm just, you know, thinking if we want to kind of look forward and pick our time when we think market conditions normalize, there's no reason to think for services any different than it was, you know, prior to this challenging period. No, right. Okay, thank you.

Thank you. And that does conclude today's programming. Thank you all for participating. You may now disconnect.