Atlas Technical Consultants, Inc. (ATCX) on Q4 2021 Results - Earnings Call Transcript
Operator: Hello and welcome to the Atlas Technical Consultants’ Fourth Quarter and Full Year 2021 Conference Call. Currently all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, David Quinn, Chief Financial Officer of Atlas. Thank you. You may begin, Mr. Quinn.
David Quinn: Thank you for joining us. We hope that you have seen our earnings release issued after the market close today. Please note that we have also posted an updated investor presentation in support of this call, which can be found in the Investors section of our website at oneatlas.com. Before we begin, I would like to remind you that today’s call may include forward-looking statements. Any statements describing our beliefs, goals, plans, strategies, expectations, projections, forecasts and assumptions are forward-looking statements. Please note that the company’s actual results may differ from those anticipated by such forward-looking statements for a variety of reasons, many of which are beyond our control. Please see our recent filings with the Securities and Exchange Commission, which identify the principal risks and uncertainties that could affect our business prospects and future results. We assume no obligation to update publicly any forward-looking statements. In addition, we will be discussing or providing certain non-GAAP financial measures today, including adjusted EBITDA, adjusted EBITDA margins, adjusted net income and adjusted EPS. Please see our earnings release and filings for a reconciliation of these non-GAAP measures to their most directly comparable GAAP measure. I will now turn the call over to our Chief Executive Officer, Joe Boyer.
Joe Boyer: Thank you, David. And I appreciate everyone joining us today. On today’s call, I’ll provide an overview of our fourth quarter results and talk about our strategic priorities, including the acquisition of TranSmart, which we had announced this afternoon. David will continue with the discussion of our financial results and our 2022 outlook before we open up the call for questions. The fourth quarter was a strong end to an exciting year for Atlas. We delivered robust growth, expanded EBITDA margins, generated strong cash flow and reduced our debt balance and leverage ratio. We also ended the quarter with record backlog, including the largest award in the company’s history, which combined with the growing demand we’re seeing in our services across all of our key end markets position us well for 2022 and beyond. In the fourth quarter, we delivered over 15% revenue growth and 34% adjusted EBITDA growth as compared to the fourth quarter of 2020, both to record levels. This led to a full year revenue and adjusted EBITDA growth of 15% and nearly 17%, respectively. Importantly, our growth in the quarter and year was driven by a combination of factors, both internally and externally. We continue to see robust end market demand in all of our key service areas, which we’ve been able to enhance with our ongoing cross-selling initiatives contributed from recent acquisitions. We have and will continue to implement pricing increases to cover transitory labor cost pressures. And even with these headwinds, I’m proud to say, we delivered expanded adjusted EBITDA margins. We expect further improvement in our margins as our business scales and these pricing actions flow. Been a very strong quarter for winning work and entered 2022 on solid footing. Our fourth quarter backlog, again rose to a new record level of $808 million, up 29% compared to the end of 2020. And this growth was fueled by new major infrastructure and environmental related contract awards, and included growth in all service lines. Our book-to-bill in the quarter was 1.4 times, an impressive feat as we had a record level of quarterly revenue. One of the large projects that we converted in the quarter and the largest award in Atlas history that I’m proud to have in our portfolio is the New York MTA Penn Station Access project. This $115 million contract will provide direct Metro-North service from the Bronx, Westchester and Connecticut to Penn Station and Manhattan’s West Side, providing connectivity to historically underserved communities. We are in a JV with WSP on this project and will provide project management services including construction management, design oversight, operations management and commercial management to oversee the design build team. And this project is a great example of revenue synergies obtained through the integration of technical resources and capabilities from acquired companies. Our success and winning these large marquee projects is directly related to an added enhance value to customers as we utilize the broader, full technical service capabilities, one integrated Atlas. These large professional service based projects are low risk and drive growth in our backlog, while providing longer-term, visibility and predictability into future revenues and cash flows in addition to the thousands of smaller projects that we have built the foundation of our business on and account for a significant portion of our work. Another great example of this type of project is the five-year $5 million environmental services contract we recently announced with ConocoPhillips to assess and remediate petroleum impacted soil and groundwater associated with legacy oilfield activity. ConocoPhillips is a long-tenured repeat client and we look forward to continuing to provide them with our growing portfolio of technical services. Now beyond our current backlog, we still have nearly $125 million of awards that are pending contracts execution. As we look into the remainder of 2022 and beyond, here as optimistic as I’ve ever been about the outlook and fundamentals driving our business. Secular trends such as aging of the nation’s infrastructure and increased focus on environmental, sustainability, workplace safety, among both our public and private clients, continue to drive demand for Atlas services. Additionally, we’re optimistic that we’ll begin to see projects funded of the $1.2 trillion infrastructure investment and Jobs Act begin to materialize in late 2022 with acceleration to 2023. Now let me discuss our strategic priorities for 2022. First, we’ll continue to utilize our broad service offerings and national footprint to capitalize on strong fundamentals of our market and drive organic growth. We’ve had success in our cross-selling strategy. But a meaningful opportunity remains and we’ll continue to work diligent to offer our diverse customer base with the services they need from all across our company. Whether it’s connecting smart cities, protecting our environment, making the places we live and work safer and cleaner or other technical services, Atlas is uniquely positioned to benefit from ongoing investment in new and existing infrastructure for many years to come. Second, we will continue to drive our M&A strategy. Today, we announced the acquisition of TranSmart, the technology leader in the Intelligent Transportation Systems as well as Connected and Autonomous Vehicles space, the market that is expected to grow at least 12% annually through 2030. This acquisition fits well within the Atlas portfolio, as the services we provide are critical to improving the efficiency and the effectiveness of existing and new transportation infrastructure. This software is a great example of how we plan to cross-sell throughout our portfolio. Although TranSmart business was predominantly been in the Midwest, we’re confident we can leverage the company’s technology-driven expertise in other key regional markets where we have a strong presence, such as Georgia, Texas, New York, Florida and California. Further, we have increased access to TranSmart’s relationships with transportation customers in the Midwest, where our business has largely focused on the environmental remediation. Our M&A pipeline remains active. We’re focused on adding companies with differentiated services that add to or enhance our existing service offerings and more geographic footprint. We believe Atlas offers an attractive platform for these companies, given our scale and our national footprint, and expect to announce additional acquisitions in the near-term. Our third strategic priority is to continue to make progress with improving our capital structure. Our strong financial results combined with a strict focus on working capital management led to a record-free cash flow in the fourth quarter. This allowed us to reduce our debt and we ended the year with a net leverage ratio of nearly a full turn lower and where we were post our recapitalization early in 2021. Going forward, the goal is to reduce net leverage to less than 3 times through a combination of organic growth, cash generation and deleveraging M&A. And our fourth priority is our commitment to ESG. This is the priority for us, both as a company and as we help our customers meet their ESG requirements. As a company, we believe we have strong governance practices. We’re committed to diversity and inclusion, and high safety and environmental awareness to all that we do. We are in the process of developing more formal ESG goals, which we plan to provide updates to later in the year. Additionally, I’ll reiterate that the services Atlas offers are aligned with many of our customers’ ESG goals and we’re committed to providing safe and healthy infrastructure and sustainable and resilient systems through our quality management and environmental assessment and mitigation work. So we believe these priorities and initiatives are the key factors for Atlas to drive value to our shareholders. We’ll continue to update on our progress going forward. So with that, I’ll turn the call back over to David to provide details on our financial performance and our outlook.
David Quinn: Thanks, Joe. I’m very excited to be discussing our record performance in the quarter and to be presenting a robust 2022 outlook. So let’s begin with Q4. The business delivered record gross revenue of $145.2 million in the fourth quarter 2021, which was up 15.5% compared to the prior year quarter, driven by strong performance in all of our service areas, solid end market fundamentals, including 4% organic growth and contributions from acquisitions. Net revenue of $114.1 million was up 12.5% higher than the prior year period as we had select larger projects with more subcontractors contribute to gross revenue in the quarter. Record adjusted EBITDA of $20.7 million was up 33.9% from the last year and represented 18.1% of net revenue compared to 15.2% in the prior year quarter. Adjusted EBITDA margin expansion was driven by operating expense leverage as we continue to scale the business, although was in part mitigated by project mix and timing of passing increased costs through to customers. As Joe mentioned, we expect the impact of higher labor costs to be transitory, as over 90% of our contracts are cost reimbursable. For the fourth quarter, we produced adjusted net income of $2.1 million and adjusted EPS of $0.06, versus a loss of $0.23 in the prior year quarter, with some differential in EPS related to conversion of Class B to Class A shares over the past year. Moving on to cash flow and the balance sheet. During the fourth quarter, we generated record cash flow from operations of $26.9 million, resulting in full year cash flow from operations of $29.1 million. A strong cash flow in the quarter was driven by improved working capital management, which remains the priority for us in 2022 and beyond. Net debt at the end of the quarter was $463 million, down from $486 million at the end of the third quarter. Debt reduction included paying down the balance of our revolver by nearly $30 million and consistent with this, reduction of debt and debt expense is a key priority for us. And with this, we’ve made the strategic decision not to pick 2% of interest expense in 2022 and instead, service it with cash. As expected, our net leverage at year end was approximately 5.9 times in line with the expectation we set last quarter. Our bank covenant ratio, which includes both cost efficiencies and pro forma EBITDA from acquisitions was 5.45 times, nearly a full turn lower than we were following our recapitalization in February 2021. As Joe indicated, we remain laser-focused on continuing to strengthen our balance sheet through a combination of organic growth and deleveraging M&A, and continue to target a sub 3 times net leverage level over the longer-term. Moving to our outlook for 2022. We expect revenue to expand to a range of $580 million to $620 million, an increase of 11.5% at the midpoint as compared to our 2021 results. This outlook reflects the continued strength of our backlog and visibility on timing of work, the strong market tailwinds we see and the contributions from acquisitions. We anticipate that adjusted EBITDA will expand to a range of $84 million to $90 million. This represents growth of 19% at the midpoint as compared to 2021 results. As you can see from our guidance, we expect solid top line growth and even greater profitability in margin growth. We are extremely excited by the outlook for our business moving forward. And with that, I’ll now turn the call back to Joe for closing remarks.
Joe Boyer: Great. Thank you, again, David. To sum it up, 2021 was a very solid year for Atlas. We delivered record revenue and EBITDA in the fourth quarter and for the full year. We plan to build on this momentum and 2022 is shaping up to be another record year for Atlas. We ended the year with robust backlog, solid end market fundamentals and an active M&A pipeline. I’m very proud to represent Atlas’s more than 3,600 employees were fully committed to delivering mission critical projects throughout the US in a safe and sustainable manner. So thank you again for joining us today. Operator, we can now open up the lines for Q&A, please.
Operator: Thank you. At this time, we’ll be conducting a question-and-answer session. Our first question comes from Chris Moore with CJS Securities. Please proceed with your question.
Chris Moore: Good afternoon, guys. Nice quarter.
Joe Boyer: Thank you, Chris.
David Quinn: Thanks, Chris.
Chris Moore: Sure. The gross revenue range, $580 million to $620 million, maybe just talk a little bit about kind of the drivers that would get you closer to the higher end? And the midpoint is 11.5% growth. You know, what does that represent on an organic basis?
David Quinn: Good, Chris. Thanks for the question. Yeah, so revenue range of $580 million to $620 million, as you mentioned, implies like 11.5% at the mid. And, first and foremost, us achieving that is backed by, again, another record backlog of $808 million. Put this out another high of 135% of forward-looking revenue for next year. In addition to that, we’ve introduced some large contract wins to the portfolio, we announced the New York MTA Penn Access contract. It’s the largest contract that we’ve secured in our history. So that is certainly an example of a project that can help drive revenue as we’re able to accelerate it. In addition, we added TxDOT IH35 to our portfolio, another great project in Texas, and even things like our Amazon warehouse and logistics project which is in Rhode Island, we’re starting to really build a little bit of a trend to secure new logistics type work. So these types of things are really going to be the drivers that push us this year to get closer to the top end. That, and of course, acquisitions come into play too, you know, ultimately, if you look at our overall growth of 11.5% we’re still sticking to our strategy of 50% of our growth being based on acquisitions and 50% being organic. So organic growth is targeted somewhere the 5% to 7% range.
Chris Moore: Got it, very helpful. Maybe can you just talk a little bit about the expected cadence in ‘22 you know, both from a revenue and a free cash flow perspective you know kind of on a quarterly basis, is it you know sequential improvement or how should we look at that?
David Quinn: Yeah, I don’t think – it’ll be sequential improvement and we’ve always talked about the season – the seasonal nature of our business. Our third quarter tends to be our most field-intensive season. So that’s our strongest season. Second to that is usually our second quarter and then you see our fourth quarter sort of coming in third as we wind into the holidays. And the first quarter tends to be you know our ramp up season as we come out of the holidays, we got a little bit of winter activity going on and we get ready for the ramp up in the second quarter.
Chris Moore: And from a free cash flow perspective you know looking at ‘21 you know with a really strong Q4. Is the free cash flow likely to be back half loaded or how should we look at that?
David Quinn: Yeah, it’ll always be back half loaded for us. Particularly because you know as we grow you’re really seeing the evidence of our growth peak in the third quarter of each year. So we’ll have a heavy third quarter, maybe drawn a bit of working capital and we’ll convert that in the fourth quarter similar to what we did this year.
Chris Moore: Got it. All right, I will stop there, but I appreciate the time. Thanks, guys.
Joe Boyer: Thanks, Chris.
David Quinn: Thanks, Chris.
Operator: Our next question comes from Noelle Dilts with Stifel. Please proceed with your question.
Noelle Dilts: Hi, guys. Good evening and congrats on the strong end to the year.
Joe Boyer: Thanks, Noelle. Appreciate that.
Noelle Dilts: Yep, sure. Thanks. So, I was hoping first you could start just a little bit – can you provide a little bit more detail on the Penn Station contract, I want to make sure I’m thinking about this correctly. Looks like $115 million, 86 month contract plus an option to extend. But it looks like that was awarded to the JV. Could you just talk about how we should think about the specific contribution to Atlas?
Joe Boyer: Sure. Noelle, I think one way to look at that is, we are in a 51%, 49% JV with WSP on that just to give you a general scope, we’ve taken into backlog $56 million on that project. Okay, so that – that’ll essentially be the Atlas piece of that JV revenue expected over the period of the contract.
Noelle Dilts: Okay. And sorry, an estimate to ask and how it kind of just ramped over that period? Do you expect that to be sort of a lower contribution in year 1 or how should we think about that?
Joe Boyer: Yes, it’s going to be you know that the project is currently over an eight-year period. It’s just in the initial stages as the design build team begins to complete their design, obviously our work increases. So it’s more of a back office program management commercial effort in the first I’d say you know six to 12 months there. And as the design starts to get completed in the field, you see our services pick up and increase in in years 2, 3, 4, 5 and beyond.
Noelle Dilts: Perfect. Okay. And then I was hoping you could expand a little bit just on what you’re seeing from an end market perspective, you know particularly on the commercial side. And if there’s any sort of notable trends that you’re seeing in e-commerce and data center and some of the other markets that have been you know pretty robust across the commercial construction sector recently? Thanks.
Joe Boyer: Sure. Noelle, we are seeing, remember, we’re roughly 50% public, 50% private. We have seen quite a bit of pickup and increased construction activity with the acquisition, refinance and development activities in the commercial side, which are benefiting our basically our tech, our due diligence and building sciences side of the business. So as David mentioned you know our new Amazon project is just an example of that. But, across the Board, we are seeing more construction activities, I would say in our public markets, particularly at local municipalities and state agencies really demonstrate an increase in lettings. You know we’re seeing at the city and county municipalities’ level, a real steady progress and activity in the bidding opportunities there. In general, in the public market and our transportation markets are steady with really some larger transportation and environmental projects on the horizon for us. As I mentioned, we see really improvement in our environmental building sciences and due diligence and compliance areas across the Board with increased construction activity. I think that’s – the one last thing I’d say to that is you know we’re seeing you know power projects continuing to be a steady increase in momentum. You know, we see significant energy projects going forward at Hanford and Idaho National Laboratories and TerraPower project in Wyoming. So that in our retail petroleum markets are strong. So, as in general, our retail petroleum markets have been fairly steady with our clients in the inventorying their stores and continued compliance compliance. I hope that gives you a little bit of picture there.
Noelle Dilts: It does. Thank you. Thanks. I’ll get back in queue.
Operator: Our next question comes from Rob Brown with Lake Street Capital Markets. Please proceed with your question.
Rob Brown: Good afternoon, and I’ll add my congratulations and nice quarter as well.
Joe Boyer: Thanks, Rob.
David Quinn: Thanks, Rob.
Rob Brown: Just a little bit on the M&A pipeline. It – I think you mentioned a couple of things in the pipeline. Where – what areas are you focusing on? And how do you sort of see that playing out for ‘22?
Jonathan Parnell: Hey, Rob. Jonathan Parnell here, Chief Strategy Officer. Look, I think you see with the TranSmart acquisition that exemplifies our strategy. We’re adding technical capable – capabilities to provide rich cross-selling opportunities to us and position us in target geographies with strong funding tailwinds. So that’s where we’re going to continue to focus. In terms of the pace of M&A as you well know, Rob you know the story. Well, it’s part of our DNA and a key pillar of our growth strategy. So, our pipeline is very active and we anticipate continuing to fuel 50% of our growth targets through M&A.
Rob Brown: Okay, great. Thanks, Jonathan. And then on the margin ramp that you think you can kind of get to a margin recovery, I should say with some price increases. How do you sort of see that playing out over the year? And should it be a steady increase or sort of snap back pretty quickly?
David Quinn: Yeah, great question, Rob. So, I’m very pleased with the step up that we delivered during fiscal 2021. We moved the business 400 basis points from where we were in 2020, ended up to almost 17%, 16.8%. So for 2022, it’ll be sort of a steady climb with the exception of Q3, you’ll start to see it really bounce relative to scale. As I mentioned earlier, that’s our biggest quarter. So you know looking ahead, we expect again, record revenue levels next year $580 million to $620 million. As we’ve talked about several times, we’ve instituted pricing increases with our clients. And we’re getting real traction with that. And we’re continuing to drive our operating efficiencies across the business which are contributing to our margins. Now again, for the full year next year, looking at 18.1%, which is up 1.4 percentage points year-over-year at the middle of our guidance, so we’re pretty excited about it.
Rob Brown: Okay, thank you. I’ll turn it over.
Operator: Our next question comes from Brent Thielman with D.A. Davidson. Please proceed with your question.
Brent Thielman: Hey, great. Thanks, good afternoon.
Joe Boyer: Good afternoon, Brent.
David Quinn: Hi, Brent.
Brent Thielman: Maybe just to pick up on the guidance and the implications for margins which sound like you know roughly 100 bps better in 2022. Is there any favorable mix component to achieving those margins? Or is this strictly you know some recapture of these higher expenses you’ve been incurring in the last you know few quarters? And you know effectively the contracts in the book of business today reflecting that?
David Quinn: So I think the question is more around the project types that we’re executing, more the growth side of things. And what I would say, Brent is that, we are seeing the benefit of larger contracts coming into our backlog. And with that, there’s a work mix benefit too it as well, which builds on our already low operating leverage. If you think about the dynamic, we’re adding large groups of dedicated resources to bigger longer-term contracts. So with that, we gain utilization efficiencies. And we’re also tending to see that the recent large contract awards we’ve secured are coming through our PCQM and E&D service offerings, which really continue to outperform from a project gross margin’s standpoint. So overall, we’re basically seeing the benefit both in terms of gross and EBITDA margins with these new larger contract awards.
Brent Thielman: Got it, that’s super helpful, David. And then, I’m curious are you seeing any impact to the timing of new bids? That in particular, I’m thinking about some of the public agencies, TxDOT out there, just related to some of this inflation that we’re seeing all else – seen out there in the environment right now and some resetting of cost or is it – has it been business as usual?
Joe Boyer: Rob, this is Joe – Brent, sorry. Consistent with . Leave it to me . Brent, I’m sorry for that. Brent, I think what we are seeing is actually the transportation business is really getting back to normalized levels for us actually 2020 – 2021 was a little slow, and they pulled back from the 2021 growth. So we’re actually seeing projects being let and awarded fairly quickly, so moving out. So I think the clients are you know our clients are back to work in full force. And we’re seeing lettings and awards come out pretty consistently.
Brent Thielman: That’s great, Joe. And I mean, any glimpse into what maybe your subsidiaries boots on the ground are starting to see develop behind the scenes just related to this – the set of federal infrastructure funding. They’re much more planning going on at the agency level. Are there any early contracts that are starting to come out and surface that are being supported by that funding? I know you’ve talked about it coming later in the year, but perhaps there’s some evidence that’s showing up a little earlier.
Joe Boyer: Yeah, that’s a good question. I think we can say, what we do see is our clients looking for complete use of their current contract capacities. Right. They’re really trying to squeeze everything to have the current capacity, which speaks to just speed of getting work done. You know I think there are plans to put out new contracts. So there’s discussions around that. But to be honest probably not enough significance yet for us that real clarity on the infrastructure bill revenues yet. So we’re still thinking late ’22 into 2023. But our clients are definitely utilizing current contracts to push do more projects from what we’re currently seeing.
Brent Thielman: Got it. Maybe just the last one. I mean, you’ve talked about in prior quarters, just this challenging kind of hiring and I guess retention environment as well, maybe just an update kind of where you feel like the business is? You’re obviously sitting on record backlog, a lot of work to do, but you know where do you – you feel like you’re on better footing now, Joe, the more you were a quarter or two ago just with respect to that – those issues?
Joe Boyer: Yes, I think you know as I said, and you know, we have a steady recruiting base here at Atlas, we’ve had them for years and they’ve been very, very successful at keeping up and staying ahead of our resource demand. But I will tell you that it is on a more stable footing there, it appears to us now. You know everybody is facing some form of you know of labor challenges, but we’re much more optimistic, the work is improved, our utilization and number of people headcount improved so on a much better footing going forward.
Brent Thielman: Okay, great to hear. Thank you. Best of luck.
Operator: Our next question comes from Kathryn Thompson with Thompson Research Group. Please proceed with your question.
Brian Biros: Hey, good afternoon. This is actually Brian Biros for Kathryn. Thank you for taking my questions. I guess first one in the, again, on the guidance for ’22? How are you thinking about the different segments of the business in that guidance? You know guidance I think was midpoint 11.5%, you mentioned 5% to 7% organic? How does that kind of break out across the segments either on a percentage growth or rank order from strongest to weakest?
David Quinn: So Hi, Brian, we – so we don’t run our business based on segments. I think you know the closest thing to a segment might be, if we were to speak to it relative to service offerings. And you know if you look at the trends we’ve been seeing with the business, the – as I mentioned earlier on the call, we’ve seen a real uptick with our PCQM and E&D side of the house. So I think that’s where we’re going to continue to see strong emerging growth, but you know I’ll turn it over to you pick this up?
Joe Boyer: No, I think you covered it well. I think you know we’re still seeing strong environmental performance in our business that roughly a third of our business, 25% of our business anticipated that to be the case in 2022, our PCM so our large program management side of our businesses improving to you know, 17%, 18% of our business, so some growth there as well. So, but just broadly, just general market upticks across all four of our service lines as well as broad and even distribution across our end markets as well.
Brian Biros: Got it, that’s helpful. More just yet trying to understand if there was a standout among those. So the second question on the large contract again, from the Penn Station project, you know large project, long contract, it seems like a big deal. You know, it’s a mega project, given the scale and the visibility that Penn Station has. Can you guys just talk about what attributes were drivers for Atlas winning that project?
Joe Boyer: Sure, I think you know without trying to take you know that what’s out and made public on the MTA’s procurement, I think it’s sad to just say that the combination of WSP and Atlas and their strength of the resume, their capabilities in rail, the number and quality professionals in New York experienced in this area and having relationships with the MTA having experience in with the MTA clearly led to us winning that project, I think.
Brian Biros: Thank you.
Operator: Our next question comes from Don Crist with Johnson Rice. Please proceed with your question.
Don Crist: Good evening, guys. How are y’all?
Joe Boyer: Good. Yourself?
David Quinn: Doing great, Don.
Don Crist: Hanging in there the best to knowhow. One quick question since a lot of been asked already. On the TranSmart Technologies acquisition, what type of cross-selling opportunities think you have there? And do you think any of that’s baked in the guidance that you gave today?
Jonathan Parnell: Hey, Don, Jonathan Parnell here. We have, this acquisition bringing really rich cross-selling opportunities, because the work is highly transportable across our platform. So we expect to be able to – transport these services, offer these services and geographies like California, Texas, Georgia, Florida, where they’re currently only operating in the Midwest. So, we do expect to drive revenue synergies off of this acquisition, I would say that typically it takes a little bit of time to mature as we integrate these acquisitions. So I wouldn’t expect a ton of revenue synergies in year one.
Don Crist: Okay. I think everything else has been asked, but I appreciate the time. Thanks.
Joe Boyer: Thank you.
David Quinn: Thanks, Don.
Operator: Our next question is a follow-up from Chris Moore with CJS Securities. Please proceed with your question.
Chris Moore: Yeah. Just one more follow-up on TranSmart. Just trying to get a sense you know kind of for the scope here. Aren’t your employees you know $20 million revenue was – is that way aggressive? Is that a reasonable ballpark? I’m just trying to get a sense of you know kind of where they are now. And you know you talked about that 12% growth in the market with all the opportunities. Anything you could say on the current revenue?
David Quinn: Yeah. So, Chris thanks for the question. We’ll continue to reserve providing guidance on individual – at an individual transaction level for our smaller bolt-on deals. You know that being said you know I’d mentioned that our growth will be driven 50% organically and 50% acquisitively, and beyond that you know you can do some analytics on headcount translate that to revenue, it’s not going to be too disparate from the balance of our business.
Chris Moore: Got it. And just in terms of the market that they’re in is growing about 12%. They’ve been matching that you know in the last five years something like that.
Jonathan Parnell: Hey, Chris, Jonathan Parnell. They’d be growing at a fast pace you know like I said done some acquisitions as well. But we expect to drive rapid growth, not only now we, of course, we want to drive this business to 12% growth, that’s a high bar to achieve. But we think it provides some rich opportunities for us to cross-sell these services and grow them at a rate faster than they were growing.
Chris Moore: Got it. I appreciate it. I leave it there.
Jonathan Parnell: Thank you.
David Quinn: Thanks, Chris.
Joe Boyer: Thanks, Chris.
Operator: Ladies and gentlemen – I apologize. We do have one more follow-up from Noelle Dilts with Stifel. Please proceed with your question.
Noelle Dilts: Thanks. So, two additional questions. So first, curious how we should think about – how you’re thinking about self-perform work versus outsourced versus – next for next year. And second, I was wondering if Jonathan could comment a bit on if you’re seeing any elevated competition for targets in the market or continued creep in multiples? Just what you’re seeing in terms of pricing? Thanks.
David Quinn: Right, Noelle, thanks. Yeah, appreciate the question. And obviously, this has been a priority for us, we’ve been you know affording this hard over the last you know two and a half years. And as a result, we’ve been able to drive our self-performance from call it, maybe high 77% up to where we are now you know 80% to 81%. We’re going to continue to press this along. And you know if I’m looking to full year 2022, I think maybe we squeeze out another point, get up to 81.5%, 82%. And I think that’s consistent with what we’ve discussed at a certain point you’re going to start popping out, because there are things that are outside our risk profile that we’re just not going to try and do. And we’re going to stick to what we’re best at.
Noelle Dilts: That makes sense. Thanks.
Jonathan Parnell: Hey, Noelle. In terms of the price and competition, you know when the infrastructure bill was passed we really saw an uptick in competition, a lot of people trying to get into the space. But we’re still finding plenty of opportunities in the 4.5 times to 6.5 times EBITDA range that we’ve discussed you know in the past. Our national presence really provides us with a great connections into proprietary M&A deals with some market-leading firms. So that’s filling our pipeline, keeping our pipeline very active. And it’s going to allow us to continue to be disciplined, both in pricing and deal structure to ensure that we’re doing deals that are highly deleveraging and accretive to the – for the company. I hope that’s helpful
Noelle Dilts: Great. Thank you. Great, thanks.
Operator: Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Mr. Joe Boyer for closing remarks.
Joe Boyer: Thanks very much. I want to thank everybody for joining us today and we appreciate your support of Atlas and look forward to updating you on our progress. Thank you very much.
Operator: This concludes today’s conference. Thank you all for your participation. Have a great day.
