Kelly Services, Inc.

Good morning and welcome to Kelly Services first quarter 2025 earnings conference call. All parties will be on listen only until the question and answer portion of the presentation. Today's call is being recorded at the request of Kelly Services. If anyone has any objections, you may disconnect at this time. I would now like to turn the meeting over to your host, Mr. Scott Thomas, Kelly's head of investor relations. Please go ahead.

Good morning and welcome to Kelly's first quarter conference call. With me today are Kelly's president and chief executive officer, Peter Quigley, and our chief financial officer, Troy Anderson. Before we begin, I'll remind you that the comments made during today's call, including the Q&A session, may include forward-looking statements about our expectations for future performance. Actual results could differ materially from those suggested by our comments. We do not assume any obligation to update the statements made on this call. Please refer to our SEC filings for a description of the risk factors that could influence the company's actual future performance. In addition, we'll discuss certain data on a reported and on an adjusted basis. Discussion of items on an adjusted basis are non-GAP financial measures designed to give insight into certain trends in our operations. For more information regarding non-GAP measures and other required disclosures, please refer to our earnings press release, presentation, and once filed, Form 10Q, all of which can be accessed through our investor relations website at .KellyServices.com. I will now turn the call over to Kelly's president and chief executive officer, Peter Quigley.

Thank you, Scott, and good morning, everyone. I'll begin with some reflections on the first quarter. Kelly delivered organic revenue growth that was in line with our expectations, and once again, we outperformed the market. Our operating model demonstrated its resilience with each of our businesses making strategic contributions in the quarter, notwithstanding changes in demand among our U.S. federal government business. Our education business remained a source of strength as our K-12 business maintained excellent fill rates on existing business while capturing a steady stream of net new customer wins. Demand for our higher margin outcome-based solutions also remained robust, particularly within the semiconductor and renewable sectors. We delivered these results by focusing on what we can control and through disciplined execution. As anticipation of global trade policy shifts increased throughout the quarter, we remained agile and ready to respond to changing external dynamics while keeping our sights set on our priorities. We stayed close with our customers as their workforce needs changed, offering our full range of flexible solutions paired with nearly 80 years of experience helping employers navigate through dynamic economic environments. This approach enabled us to uncover higher margin opportunities with multiple customers for whom we tailored solutions to bolster the efficiency and adaptability of their workforce. We remained laser-focused on driving organizational efficiency and effectiveness. To this end, we implemented targeted actions in the quarter to deliver additional structural improvements to our cost base. These actions will contribute to incremental EBITDA margin expansion later this year and beyond and underscore our commitment to enhancing Kelly's profitability over the long term. In parts of our portfolio where customers are taking a more measured approach to hiring, we took swift action to align resources with demand. This reflects our ability to anticipate and adjust in real time to changing trends across our businesses, a key element of Kelly's recently improved operational discipline. We continued to optimize Kelly's operating model, completing the unification of our OCG and P&I business units. We've already begun to see the benefits of this change, which is resonating well with both customers and talent. This streamlined structure builds upon the Enterprise Account Growth Initiative we implemented in 2023, further enhancing our ability to deliver the full suite of Kelly offerings to our largest customers and increasing our share of wallet. Through this more customer and talent-centric -to-market approach, we're poised to unlock new value-creating opportunities within attractive sectors, among them financial services, technology, healthcare, and energy. We've consolidated these businesses into a single reportable segment, Enterprise Talent Management or ETM, which Troy will provide more details on shortly. We also accelerated the integration of Motion Recruitment Partners or MRP with the conclusion of the earn-out period at the end of the quarter, enabling us to ramp up our pursuit of synergies. For SET, in addition to realigning the segments into distinct and unified business lines, as we discussed last quarter, we initiated the implementation of a strategy to modernize SET's front and back office systems that leverage MRP's leading technology stack. This will create a scalable, efficient, and integrated technology platform within SET that significantly reduces complexity. It will also enhance agility across the business by enabling the rapid integration of AI as new solutions and use cases emerge. Longer term, our vision is to implement this technology stack across Kelly. By taking a thoughtful, phased approach to implementation, we'll minimize disruption to the business while realizing the full value from these tools. Within ETM, we launched an integrated permanent hiring solutions business line by bringing together our Global Recruitment Process Outsourcing Specialty or RPO and MRP's Talent Acquisition Solutions brand, 7th Step. This combination creates a leading talent solutions offering that ranks among the top 5 globally differentiated by innovative technology, including a proprietary talent data integration and predictive analytics platform driven by AI. We're encouraged by the positive market reaction following the launch in February, which has translated to a notable increase in new business opportunities. Together, our accomplishments in the first quarter reflect Kelly's enhanced operational fitness, resulting from our ongoing focus on efficiency and our team's ability to execute in any environment. For more details on our results in the quarter, I'll turn the call over to our Chief Financial Officer Troy Anderson. Thank you, Peter, and good morning,

everybody. We're off to a positive start to the year and are encouraged by the momentum we're building and the resiliency demonstrated by our solid first quarter results. As Peter referenced, we made changes to our operating model in the first quarter, which resulted in reducing our reportable segments from 4 to 3, Enterprise Talent Management or ETM, Science, Engineering and Technology or SET, and Education. ETM combines the former P&I and OCG segments. We also shifted certain customers from SET to ETM to support a more streamlined and efficient -to-market approach. Finally, we've moved MRP's seven-step business, which includes both Managed Service Provider, or MSP, and RPO specialties, from SET to ETM as part of the integration approach for MRP. ETM and SET continue to deliver specialty talent through staffing services, permanent placement and outcome-based solutions. ETM also delivers MSP, RPO and Paywall Process Outsourcing, or PPO, which we collectively refer to as talent solutions. The 2024 results of ETM and SET have been recast accordingly. As a reminder, our reported results for 2025 include MRP and its portfolio of businesses and Children's Therapy Center, while our 2024 results only include them from their acquisition dates, May 31st and mid-November respectively. To provide greater visibility into the underlying trends in our operating results, I'll discuss -over-year changes on a reported and organic basis, with the organic information excluding these items. Revenue for the first quarter of 2025 totaled $1.16 billion, an increase of .5% versus Q1 last year. On an organic basis, -over-year revenue was up 0.2%, which includes a .8% negative impact from reduced demand for federal contractors in the SET and ETM segments. We're pleased that we continued to deliver organic revenue growth despite a rapidly evolving macro environment. In the quarter, staffing revenue trended up positively on continued strength in our education business. Our outcome-based offerings demonstrated resilience and were flat -over-year. Perm fees, which were 1% of revenue in total, reflect continued declines consistent with ongoing trends seen across the industry. Drilling down into revenue results by segment, I'll start with education, which was up .6% -over-year in the quarter, or .3% on an organic basis. The growth in the quarter reflects ongoing fill rate improvement and higher bill rates in our existing business, partially offset by fewer school days in January due to harsh winter weather in a few areas. In the SET segment, revenue was up 39% on a reported basis, driven by the acquisition of MRP. SET organic revenue was down 7% in total, but down only 4%, excluding 3% of decline related to lower demand for federal contractors. SET's targeted mix of specialty offerings and industry verticals allows it to continue to outperform the market despite variability in the macro environment and weaker demand in the technology segment. SET's organic revenue in Q1 reflects an 8% decline due to lower staffing services demand, with 5% associated with lower demand for federal contractors. Outcome-based solutions revenue was down 3%, primarily due to lower demand in certain industry verticals and with a few key customers. The outcome-based business, including our statement work suite of solutions, is a growing portion of the market where we are sharpening our focus and continuing to innovate. In the ETM segment, revenue grew .9% on a reported basis and was flat -over-year on an organic basis. Staffing services revenues declined 1.8%, driven primarily by large customer cost reduction actions and lower demand for federal contractors. Overall, we continue to see above-market performance in staffing, with our successful omni-channel strategy being a key contributor. Outcome-based revenues increased by 1.8%, reflecting strong demand for these services in a variety of industry verticals, including semiconductors and manufacturing, which more than offset continued demand pressure within our call center offering. Consistent with SET, ETM is seeing stronger demand for its innovative portfolio of outcome-based solutions that meet clients' talent needs across a variety of skill sets. And finally, talent solutions revenue increased 3%, driven by continued strong performance in the PPO specialty, partially offset by -over-year declines in MSP, reflecting reduced contingent labor demand from our customers. Reported gross profit was $236.5 million, reflecting a gross profit rate of .3% and improvement of 60 basis points compared to the prior year quarter. This includes 90 basis points of improvement from the acquisition of MRP and 30 basis points of organic decline from lower perm fees, business mix, and employee-related costs. The business mix impact, a result of strong growth in education, which has a lower relative GP rate, eased on a sequential basis. During the quarter, we saw GP rate improvement in SET as a result of the MRP acquisition, as well as improvement in education, resulting from lower employee-related costs. ETM's GP rate was nearly flat -over-year in the quarter, as outcome-based business growth and improving GP rates offset the impact of continued revenue growth in PPO, which carries a lower GP rate. We remain focused on improving our SG&A expense profile in the quarter, with reported SG&A expenses of $225.7 million. On an adjusted, organic basis, SG&A expenses were flat -over-year. Expenses increased in our education segment in conjunction with the revenue increase, while expenses declined in ETM and SET. We continue to focus on improving productivity and aligning resource levels with volumes, while also driving structural and sustainable efficiencies in our operating model. Actions like the formation of the ETM organization and the integration of MRP will drive efficiencies throughout 2025 and into 2026. In connection with these efforts, we recognize 10.7 million of charges in the quarter. Included in those charges are costs associated with improving technology and processes across the enterprise, as well as severance expenses. We expect to see a similar level of charges over the next few quarters as we continue executing these initiatives. For the quarter, reported earnings per share were $0.16, compared to earnings per share of $0.70 in Q1 2024. On an adjusted basis, earnings per share were $0.39, compared to $0.56 in the prior year. The decline over the prior year is primarily due to debt incurred for the MRP acquisition and a higher cash balance in the prior year quarter as a result of the sale of the EMEA staffing business. Adjusted EBITDA was $34.9 million, an increase of 5% versus the prior year period, while adjusted EBITDA margin declined 20 basis points to 3%. ETM and Education improved their organic adjusted EBITDA margin by 10 basis points in the quarter versus last year. Since adjusted EBITDA margin was down in the quarter, it was impacted by the timing of cost actions relative to reduced demand, including for federal contractors. We ended the quarter with total available liquidity of $181 million, comprising $28 million in cash and $153 million of available liquidity on our credit facilities. We maintained our disciplined approach to capital allocation and will opportunistically deploy capital to generate attractive returns. In the quarter, we had a $35 million net pay down on our debt, leaving us with total borrowing of $205 million at the end of the quarter and an adjusted EBITDA margin of $1.5 million. Our net debt may fluctuate from quarter to quarter based upon our cash flow and capital deployment activities. Looking forward, the dynamic macroeconomic environment is factoring into a number of our clients taking a measured approach to their workforce management strategies. We expect this may temper staffing market demand in the near term until greater clarity materializes. Even with these market conditions, we expect to capture additional market share in 2025 and capitalize on opportunities for incremental organic revenue growth and high growth specialties. As the year progresses, we also expect to expand our adjusted EBITDA margin and ultimately cash flow by efficiently converting more of our top line results to bottom line profitability through a disciplined approach to business mix and SG&A management. For our second quarter outlook, we're assuming a continuation of current macroeconomic conditions. We expect to outperform the market and to deliver total revenue growth of 6% to 7% in the quarter, which includes a 1% to .5% negative impact associated with reduced demand for federal contractors and an additional 1% negative impact related to slower economic growth relative to our initial expectations. Organically, we expect revenue to be down 1% to 2%, or roughly flat, excluding the impacts related to the federal government and slower economic growth. Our overall first half revenue expectation is in line with the outlook we provided in February, excluding these impacts. For adjusted EBITDA margin, we expect a decline of 20 to 30 basis points year over year in the second quarter, which is consistent with the first quarter decline and will yield an adjusted EBITDA margin that continues to be significantly better than our pre-transformation historical average. While we were originally anticipating adjusted EBITDA margin expansion throughout the year, given the macroeconomic environment and timing of the benefits of our efficiency and optimization initiatives, we now anticipate margin expansion in Q3 and Q4 and for the full year. Overall, we're pleased with our performance to start the year. I'm grateful to our team for the agility and discipline they demonstrated to deliver these results. As we move forward through the second quarter and the balance of the year, we'll continue to adapt as conditions evolve while remaining focused on achieving our expectations. I'll now turn the call back to Peter for his closing remarks.

Thanks for those insights, Troy. As a result of the extensive work we've done to transform Kelly, we're well positioned to navigate this rapidly changing environment and drive further progress on our specialty growth journey. Our streamlined operating model is resilient, underpinned by specialized businesses that provide a breadth of differentiated solutions to employers across a diverse range of attractive sectors. They form a winning combination that has driven Kelly to outperform the market as staffing demand pressure has persisted. We're among the largest providers in areas where we've chosen to specialize, among them education, life sciences, and engineering staffing, each of which present compelling market opportunities. And with our acquisition of MRP, we've doubled down on our technology staffing and global specialties, propelling us to among the top 10 and top five providers respectively. Our enhanced scale and formidable market positioning in these specialties will enable us to win in the market and drive growth in an improving demand environment. And as we demonstrated in the first quarter, our efficiency initiatives have improved our agility in responding to changing market conditions, providing greater visibility into expenses and productivity, and enabling us to manage resources accordingly. Moving ahead through the balance of the year, we'll harness these strengths as we execute on our priorities and accelerate profitable growth. We'll continue to implement our growth and efficiency initiatives, including the integration of MRP and building out the -to-market strategy within our realigned ETM business. We remain wholly committed to driving incremental EBITDA margin expansion as well. By executing on these priorities, we'll position Kelly to capitalize when demand rebounds. In closing, I'd like to thank our talent on assignment, our customers, and our shareholders for being with us on this journey, and to the Kelly team for their unwavering focus on delivering value for all our stakeholders. No matter the environment, I'm confident in our capacity to rise to the occasion and meet the moment, as Kelly people have done time and again over nearly 80 years. Operator, you can now open the call to questions.

Thank you. Ladies and gentlemen, if you wish to ask a question, please press star 11 on your telephone keypad and wait for your name to be announced. You may withdraw your question at any time by repeating the star 11 command. If you are using your speakerphone, please pick up the handset before pressing the numbers. Please stand by while we compile the Q&A roster. Our first question comes from the line of Joe Gomes of Noble Capital. Your line is now open.

Good morning. Thanks for taking my questions.

Morning, Joe. Morning, Joe.

I just wanted to start off, make sure I heard correctly. There's going to be ongoing integration charges of roughly the same size for the rest of the year, so about a million

plus

quarter?

Sure, yeah, Joe. This is Troy. Correct. That's what we expect, plus or minus. It will vary just based on timing of activities, but that's our current best guess.

It just seems a lot. I guess I don't know what to say. 10% of the purchase price of MRP, I don't know, maybe you can give us a little more colors to why the expenses are at the level they are.

Sure, yeah, and let's break that down. Again, it was about 10.7 million in the quarter. Roughly half was IT-related. The bulk of the remaining half was severance-related due to personnel actions that we took in the quarter or took a charge for actions that were early in the second quarter. We expect, and so that was driven by, frankly, more of the, on the severance side, driven more by the ETM consolidation and some other actions that we were taking across the enterprise. The IT-related costs, as we mentioned in our prepared remarks, we're beginning an effort to consolidate all of the set prior acquisitions. So it's above and beyond just MRP. We had not previously integrated the software acquisition, the telecom acquisitions, even some of our education acquisitions. So we're going through an effort this year and frankly probably into next year where we'll be going through systems integration and organizational integration on not just MRP but across some of our legacy acquisitions as well. So you'll see a mix. Some quarters, maybe the IT-related will be a little bit higher. In other quarters, maybe the severance will be a little bit higher just based upon how some of the actions flow. And again, the earn-out period ending 4-1, we really haven't done any of the organizational integration. We've changed some reporting lines and things like that, but we haven't really driven any of the synergy opportunity from an operational perspective without that. But at the end of this, we'll have a modern tech stack first with SET and then more broadly across the enterprise that will really propel us going forward both from an operational efficiency perspective as well as from a -to-market perspective.

Okay. Thanks for that clarity. It helps a lot. Appreciate it. And on the Fed business, I guess, where do you guys add on that now? Do you expect to see that business continue to downsize here for at least the near term?

Yeah, so we had about – this is Troy again. We had about a .8% impact overall to Kelly in the quarter, and it was more like three points to SET in the quarter. The bulk of the impact is in SET, and the bulk of that impact is around an HHS contract that we've had for some time, fairly sizable contract where we've seen some fairly swift action throughout the first quarter as the administration made some of their changes there. We think we've captured the bulk of that. It was phasing in through the quarter, so in our Q2 outlook, we're saying approximately one and a half points of impact at the Kelly level, and you'll see a little bit on the ETM side as well, and it's again, bulk – mainly HHS, and there's some other impacts both at a prime and sub-level, but much smaller across some of our other Fed business. We also see some opportunities, so hard to call what the full year impact will be. We feel pretty stable exiting Q1 to where we are currently, so we feel like we've captured the Q2 impact fairly accurately, but we're hoping we'll see some opportunities as well as the year progresses and be able to claw some of that back.

Okay, great. Give the ongoing question about the M&A environment and how you guys are looking at it, and if you're seeing any improvements in valuations and how that seems to be at this point in time.

Yeah, Joe, it's Peter. The number of properties that are either in market or available is significantly down from where it was at its peak. The quality of the properties also, it's hard to discern exactly whether the valuations match the quality of the property. We still haven't seen significant reduction in the expectations on the part of sellers, so I think it's going to be relatively quiet for the foreseeable future in terms of the overall M&A environment. With respect to Kelly, we'll be very intentional to the extent we're deploying capital. We continue to like the therapy space, so we'll continue to look there as a way of augmenting the excellent performance within our Kelly Education K-12 business, but we see opportunity there.

Thanks, Peter. Just one more for me. I did notice in your release that you got some revenue or some funds from a Purcell Kelly sale. Are you now completely out of Purcell Kelly?

Yeah, correct. This is Troy. That was a remaining option related to the original transaction with a predetermined purchase price. They exercised the option, and we've completed that transaction in the quarter.

Great. I'll get back in queue. Thank you.

Thank

you, Joe.

One moment for our next question. Our next question comes from the line of, well, Bruneman of North Coast Research. Your line is now open.

Hey, guys. How's it going? Good morning, Will. Hi, Will. So I was going to ask, are the margin benefits you're seeing from MRP in line with what you guys have expected so far when it comes to gross margin and EBITDA expansion? And do you see any further improvement there?

So, Will, this is Troy. We definitely see improvement opportunities. Because of the earn-out, we've been a bit restricted in terms of actions that we could take as the technology, as you know, the technology segment has seen some outside pressure relative to some other areas. And so that has caused a little bit of margin compression on the MRP side, given we haven't been able to really take maybe as aggressive of an approach as we would like. As we progress through the year and as we complete the integration we were referencing earlier, we're now we're creating, we talked about last quarter, where we're creating an entire -to-market organization around IT, telco, engineering, life sciences, and government with inside of SET. We'll get -to-market efficiencies. We'll get operating efficiencies. And then with the technology platform we're implementing. So really all of that combined, we'll see some significant movement on the margin in the SET business as we progress through the year and really going into next year. Okay, great.

And then I was also going to ask, how did things for you guys trend throughout the quarter? Anything worth mentioning in April? And then sort of when it comes to pricing, is there anything different there? Has it been pretty consistent throughout?

Yeah, sure. Well, Troy again, the only two areas of note I would say that moved throughout the quarter and both positively were education. We referenced the weather impacts. So January was particularly challenged in that regard. And so we saw the education growth rate move markedly across January, February, March. And we expect their Q2 performance overall from a growth rate perspective to be higher than Q1. So that trajectory continues. Also in the staffing, in the ETM side, the staffing business, again, the year started off a bit slow. You could see that in some of the industry data as well. So January was choppy in a number of areas and we saw some improvement there throughout the quarter. But otherwise, there was really no notable trends in any of the businesses up or down. January was generally a bit weaker across the board, but again, no strong trends. From a pricing perspective, we're seeing a little bit of some compression in the, really in that professional and industrial space, some cost pressures on some of the industrial players, manufacturing players, et cetera. So they're looking for cost savings and we're seeing some players in the market move a bit there as well. So we're managing that as tightly as we can, but we're actually seeing better bill rates in some of the areas and education and therefore spread. So it's a bit mixed, but a little bit of an uptick, yeah, on that professional and industrial side.

Okay, great. Thank you guys. I appreciate it.

Thanks, Will.

Thank

you.

One moment for our next question. Our next question comes from the line of Kevin Steinke of Barrington Research Associates. Your line is now open.

Thank you. Good morning. Morning, Kevin. I wanted to start out by asking about the second quarter outlook and the incremental 1% drag from macroeconomic uncertainty. Just wondering how you built up to that number? Did you kind of go through on a -by-customer basis and see where business had fallen off and just trying to get a sense as to how much visibility or how you got to that visibility of a 1% incremental drag from the economy?

Yes, good question. Thanks, Kevin. This is Troy. We feel good about our visibility sitting here today. That's honestly a bit of an estimate. The situation is evolving daily, as you know, and some of the very leading indicators around shipments and imports and exports and just various activity. We're hearing a lot of wait and see out of our customers. We're staying very close to our customers, as Peter referenced in his comments. Some who are in the news type of clients who have already announced pretty significant actions. We've contemplated those already from a workforce perspective. And so, frankly, it's a little bit of conservatism, Kevin, but just based on current trajectory and some of the very, very leading indicators out there, we expect we might see some softness tick up a little bit in the back part of the quarter.

Okay, thanks. That's helpful. So, with the integration of OCG and professional and industrial, you mentioned part of the reason for that combination was to bring the full suite of Kelly offerings to your large customers. So, could you maybe just dig a little bit more into what you think that integration can accomplish in terms of driving growth, particularly with your larger customer base?

Yeah, Kevin, it's Peter. When we set up the operating model, one of the outcomes that we were looking for, and this now is five years ago, we were looking to increase the amount of outcome-based BPO, business process outsourcing business, statement of work business that we had, particularly in our P&I segment. And we accomplished that. That business has demonstrated growth, far outpacing staffing in the industry. It has greater resilience to economic downturns. It creates a greater stickiness with our customers. But having demonstrated the ability to grow our outcome-based business, statement of work business inside P&I, we also recognize that our customers, particularly our large enterprise customers, we're looking for a more comprehensive approach to acquiring talent. And combining OCG and P&I gives us that platform. And we have even within the first quarter, we began to see the results that build on the results that we were seeing as a result of the growth initiatives we launched in 2023. So, it's really building on the success of our outcome business in P&I and the growth initiatives focused on large enterprise customers that we saw without combining the organizations, but we saw them. By combining them, we expect to see even greater synergies expanding the market share within an existing customer as well as new logo wins.

Okay. That sounds encouraging. I wanted to also follow up on a prepared remark you made about you uncovered some higher margin solutions with your clients that you are able to tailor to individual clients. And I just want to maybe tie that to your continued statement that you're outperforming the market. So, I'm just wondering if some of that ability to be nimble and work with your clients and tailor solutions, maybe if you can talk about that and if you think that's helping you gain share.

Yeah, absolutely, Kevin. I think the related to the last question, I think the new ETM organization is particularly well situated to take its now more breadth of solutions to a broader set of customers in innovative ways. The opportunities that we see are particularly in higher margin outcome-based statement of works tailored solutions to large enterprise customers. And just to give you an example, in one case, we were able to address a customer's need to basically convert a time and materials relationship into one that relied on both onshore and resources to deliver a more tailored, a more bespoke solution to the customer. And in return, we are enjoying higher margins on that transaction. I think that now that we have three business units, as well as the structural improvements we've made to the business over the last two and three years, we are more agile, we are nimble, and we are able to respond much more quickly to the dynamic environment that we find ourselves in. While there may be some downside in terms of some of the government work, we also think there's upside in energy exploration and some other areas that deregulation will benefit, and our ability to tailor solutions in those environments will be very important to our continued growth and taking share in the market.

Kevin, I would add, this is Troy, one of the other benefits within the MRP integration is they didn't have a statement works type solution to offer into their client base, and so that is already an opportunity that we're seeing. Similarly, there's opportunities with solutions that are being exchanged in the telecom space that are broadening the portfolio of offerings into both the Kelly and the MRP customer bases. So we're rapidly deploying those capabilities across the combined sales teams there as well for incremental opportunities.

Okay, great. That's helpful. Then just lastly, you specifically called out growing demand for your higher margin outcome-based solutions within the semiconductor and renewable sectors. I think you might have called that out last quarter as well, at least on the semiconductor side, but can you talk a little bit more about the demand opportunities you see there and specifically kind of maybe an example of the type of work you're doing there?

Sure, Kevin. So we've, that's Peter, we've over the past three or four years, we've focused on these higher growth areas of renewables and semiconductors, which also speaks to the new agility that we're able to pivot to areas of growth and develop solutions for our customers much more quickly. We built on our longstanding experience with a semiconductor company and went to market with a solution for semiconductor companies that were bringing manufacturing facilities to the United States, both manufacturing as well as engineering and design work, and we were able to build on our best in class, we're the leader in the semiconductor area, and added logos at a fairly regular clip because of our recognized expertise. We're working with them when they build the fabs that you read about and these billion dollar fabs that they're building, but also after the fabs are built, we have established relationships that enable us to penetrate into those operations to support the actual fabrication of wafers and the production of chips. So we feel very positive about that. These are long-term investments and notwithstanding some rhetoric about pairing back certain investments and incentives, these enterprises are here to stay and we think we will enjoy the benefits of building up that expertise and similar story in renewables. There are other areas of growth that we're staying close to our customers and developing solutions that will help us take advantage of growth where it exists.

Okay, well thanks for all the detail. I appreciate it. I will turn it back over. Yeah, thanks Kevin. Thank you, Kevin.

As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. Our next question comes from the line of Mark Riddick of Sidoche. Your line is now open.

Good morning, Mark.

Hi, Mark. We can't hear you,

Mark. Hey, Mark, I don't know if you're on mute, but we can't hear you.

Operator, can you check? Right, yes, we're seeing the

chat. Mark, your line is now open. Are you able to hear us? Please remember to unmute. Mark, is that you? It seems like we cannot

hear

him. So at this time, I am showing no further questions. So I would now like to turn the call back over to Peter quickly for closing remarks.

Thank you, operator. I think we're good for the call. Thank you everybody for attending and appreciate it. Have a good day. Thanks, everybody.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.