Welcome to the First Quarter 2017 ICF Earnings Conference Call. My name is Vanessa, and I will be your operator today. [Operator Instructions] Please note that this conference is being recorded on Thursday, May 4, 2017, and cannot be reproduced or rebroadcast without written permission from the company. I will now turn the call over to Lynn Morgen of MBS ValuePartners. You may begin.

Thank you, Vanessa. Good afternoon, everyone, and thank you for joining us to review ICF's first quarter 2017 performance. With us today from ICF are Sudhakar Kesavan, Chairman and CEO; John Wasson, President and COO; and James Morgan, CFO. During this conference call, we will make forward-looking statements to assist you in understanding ICF's management's expectations about our future performance. These statements are subject to a number of risks that could cause actual events and results to differ materially, and I refer you to our May 4, 2017 press release and our SEC filings for discussions of those risks. In addition, our statements during this call are based on our views as of today. We anticipate that future developments will cause our views to change. Please consider the information presented in that light. We may, at some point, elect to update the forward-looking statements made today, but specifically disclaim any obligation to do so. I will now turn the call over to ICF's CEO, Sudhakar Kesavan, to discuss first quarter 2017 performance. Sudhakar?

Well, thank you, Lynn, and good afternoon, everyone. We appreciate your participation in today's call. We know that this a busy day for earnings releases, so we moved up the call from our usual time and will be brief in our remarks to allow enough time for questions. ICF's first quarter results were as expected, supporting the themes we discussed in our full year earnings call, which took place only 2 months ago. The pickup in business in January and February that we highlighted in the last quarter's call continued in March and for the first quarter, we reported year-on-year growth in all of our client categories. We were pleased with the overall tenor of the government side of our business. Proposal and award activity in the federal government space increased progressively throughout the quarter. The work for state and local government’s clients continued apace, and we were pleased by the positive revenue comparisons in our international government business. In the commercial part of our business, the energy markets group was a standout performer again this quarter, reflecting in large part the leadership position that ICF has attained in developing and implementing energy efficiency programs for utilities across the country. \ As you know, typically these programs are funded by public benefits charges that are approved by the various Public Service Commissions in order for the utilities to comply with state-mandated objectives to reduce energy use. Also, the relationships that we have developed with the utility clients over the years have positioned us well to assist them in working through related issues like planning around distributed energy for example. ICF is one of the very few firms in the country that has the breadth and capabilities needed to develop strategies and programs around the complex issues facing the utility industry…

Thank you, Sudhakar, and good afternoon. Our first quarter results represented a solid start to the year. We ended the quarter with a record new business pipeline of $4.7 billion and began this month with a positive outcome on the fiscal 2017 federal budget, both of which set the stage for future growth. The 4.5% revenue increase we reported for the first quarter was driven by a 9.4% increase in revenue from commercial clients and represented positive year-on-year comparisons across all our government client base as well. We saw an uptick in activity amongst our U.S. federal government clients with a progressive return to a normalized pattern of task orders and contract ramp-ups in the first quarter, which continued into April. Revenues from federal government clients were up close to 1% in the first quarter and accounted for 47% of total revenues. In the interest of time, I will not go through all of the notable contract wins in the federal space. Rather, I will single out the contract we won to provide communication services and tools to the U.S. National Institute of Health in support of the National Institute on Alcohol Abuse and Alcoholism. This award demonstrates our bench strength in communications and engagement and our deep subject matter expertise in the public health field of alcohol-related problems, prevention and treatment. And together with other recent awards, this contract shows our ability to continue to win large, federal government contracts to engage at-risk populations on public health issues. Turning to commercial, the strong revenue growth in the first quarter was driven by the continued excellent performance of our energy markets group, comprised of energy advisory work and the development and implementation of energy efficiency programs. In the first quarter, we continued to ramp-up new energy efficiency programs and expanded…

Thanks, John. Good afternoon, everyone. We're pleased with our first quarter financial performance, which reflected increases in revenues and earnings over 2016 levels as well as continued progress on reducing infrastructure cost and opportunistic share repurchases, which reflect our positive outlook. I will now walk through the income statement to provide some color on our performance as well as the outlook for the remainder of the year. First quarter 2017 revenue was $296.3 million, 4.5% or $12.7 million above last year's $283.6 million in Q1 of 2016. As John mentioned, the year-on-year increase in commercial revenue was driven primarily by commercial energy market revenues, which grew in excess of 20% over the first quarter of 2016. In aggregate, revenue from government clients increased 1.9% in the first quarter over the same period last year. Service revenue increased 3.5% to $219.8 million from $212.4 million last year. Gross profit increased 5.9% to $112.7 million from $106.4 million in the first quarter of 2016. Gross margin increased to 38% in the first quarter of 2017 as compared to 37.5% in the same period of 2016. The year-over-year gross margin variance was favorably impacted by approximately 90 basis points as a result of a change in our labor cost allocation methodology, which reduced direct expenses and increased indirect selling expenses. The change in methodology did not affect operating income. Partially offsetting the favorable impact of the labor cost allocation change was a higher mix of subcontracting revenues. After factoring in the 2 impacts, the year-over-year gross margin was essentially flat. Indirect selling expenses for the first quarter were $88.8 million, an increase of $7.2 million compared to 2016. Of the year-over-year increase, an estimated $2.5 million was due to the previously mentioned change in our labor cost allocation methodology. Also, we recognized approximately…

Thanks, James. In summary, first quarter results put us firmly on track to achieve the 2017 revenue and EPS guidance we provided at the time of our full year 2016 results announcement, namely for diluted earnings per share in the range of $2.50 to $2.75 on revenue ranging from $1.2 billion to $1.24 billion. A final note on our government business. I have been at ICF for 5 Presidential transitions, and as I have said to some of you in the past, budgets don't change as dramatically in this business as the headlines would indicate. I expect that the fiscal 2018 federal budget will be similar to this year. Significant infrastructure spending would be another potential benefit for ICF, as we have been involved in the planning and implementation phases for a broad range of government and commercial infrastructure renewal projects. We may also see increased use of contractors as usually happens under Republican administrations. While it is still early in the year, we are cautiously optimistic and we believe that ICF is well positioned to continue to grow. Operator, I would now like to open the call to questions.

Thank you. [Operator Instructions] And we have our first question from Tim McHugh with William Blair & Company.

Thanks. Just wondered if you could elaborate on, you mentioned the government spending improved as the quarter went on. Is that kind of universally true or are you seeing any variance in different departments, I guess, in terms of how they're reacting to the environment, I guess any color there would be helpful?

I mean, there's certainly variation, but I think that the expectation of greater variation, which was based on headlines which we read, did not pan through. I think the folks who are our clients in the government generally reacted uniformly. There are 1 or 2 agencies where there was a bit more conservatism, but otherwise, I think generally, it was pretty normal. So I think as people realized that things are perhaps not going to be exactly as the headlines said, things became more normal for the quarter.

Okay. And Olson, I guess, can you, what was the issue there this quarter? I mean, I think somewhat middle of last year, I felt like you guys were kind of increasingly optimistic, and I think that kind of softened a little late last year, and it seems that they struggled a bit this year, so can you elaborate on that? And then what would be a - I know you said medium term, you feel good about the targets, but I guess at this point, what's kind of the 2017 type of growth rate that you would be hoping to see from that piece of the business?

I think we expect to see mid-single-digit growth in that part of the business this year. I think that there's nothing, I think we have had some sequential revenue growth in the last 2 quarters of last year. I think this year, there was some start ups which were a little slower. There were some projects which came to an end. So I think there were some timing differences which impacted the revenue. But I think when I say medium term, I'll always think about the next 6 to 12 months. So I'm not talking years here. So I think that, that's basically our intent, but I think we're quite optimistic about it. We continue to be optimistic as we -- as you stated we were last year, and I think that they have won a fair bit of work as I said. Some of the revenues, which they have helped us win are obviously not counted in their revenues also. They're counted elsewhere within ICF. So it's sort of very hard to, but the way we have classified the revenue, we have to give you the revenue the way we have classified it. So I think that, that also yields to some ups and downs, but I think that generally, we are very pleased with what they're doing. There were some little timing issues, but I think there should be - they should sequentially improve through the year.

I would just - I would like to add. I think it was timing issues, Tim. And it wasn't really completely unexpected. I think that we rolled off a couple of significant projects at the end of the year, and then as we start the year, we had to get the new projects, the new retainers lined up, and that just took a little longer. So I really view this as a timing issue. I also think, as Sudhakar mentioned in his remarks, I think the good part of that business is a momentum business. And our wins in the first quarter were quite strong and up. Our pipeline continues to improve so we do feel like with the new staff we've added, the wins, the pipeline, we do have momentum there even given we had some timing issues on projects stopping, projects ending and new projects starting.

Okay. Thank you.

Thank you. Our next question is from Joseph Vafi with Loop Capital. Please go ahead.

Hey, guys. Good afternoon. Nice to see the guidance reiterated here. I was wondering since there was a little bit of outperformance here this quarter, and maybe a little early in the year, but I know you kind of fine-tuned down the guidance methodology entering '17, just being a little bit more conservative. And it's a little early in the year, but is the business tracking to the old guidance methodology at this point? And has the new guidance methodology ended up being conservative a little bit this year?

Yes, I guess I would - this is James, Joe. I think that certainly from an overall perspective, I'd think that things are starting off from the overall perspective, yes, it's probably more towards the old guidance methodology, but still, I would say from a high level, we're still expecting federal business to be in the low single digits, commercial to be more mid-single digits. State and local, I would say, we probably expect that to be a little bit better than what we had said before. We thought that was flat and in the future, we're looking or now we're thinking that's flat to low single-digit growth. And I would say on the international side, instead of being mid-single-digit decline, that's probably more in the flat range now.

Okay. That's helpful. And I know in Q4, there were just a couple of project delays that I think started again. Was there any kind of budget or transition-related delays that you saw in Q1 that were kind of out of the normal course of business or delays?

No, I don't think we saw any of those issues in Q1, Joe. I think we were back to kind of what we expected and how we expected the federal business to perform in Q1. So I think with those issues were - are behind us in terms of what occurred in Q1.

Okay, and then just on the office consolidations, I may have missed it. But was that related to M&A and overlapping space? Or it's just the reallocation of resources and geographies and more headcount?

I think we're making a real effort to kind of more efficiently use our space and kind of reflect how our workforce goes about the business today. And so leveraging, we'll have fewer folks assigned to individual offices. We'll be sharing offices, more open space given in the digital business, other the parts of the business. So I think we're really looking at trying to more efficiently use our space, and therefore, freeing up space that we no longer need.

That's about increasing density.

Yes.

And also, I think that more than 52% of our - the rising 52% of our population is millennials, and our office space is - has to keep up with the times. And I think that they don't like to work in closed sort of office spaces. And they also like to work in more dense spaces, so I think that we're making the office space a little more open, more collaborative. And I think depending on the business, and I think that as we grow our business I think that's likely to be more of a standard going forward. So we really don't need as much office space as we have, and that helps the business, helps the people feel better and helps us, from a cost perspective. So I think that it all sort of aligns, and we certainly intend to continue to do that as we grow the business. And I think if we - as we reduce the amount of office space, that can be either given up, if the lease is coming due or subleased. So I think that's our intent.

Great. Thanks for the color, guys and good quarter.

Thank you. Our next question comes from Tobey Sommer with SunTrust.

Thanks. As the administration settles on policies and directions, maybe could you tell us, which one of your businesses, and kind of rank order them in terms of which ones are more influenced by state regulations and local initiatives that may be insulated from potential volatility associated with changes in the way federal agencies want to conduct themselves.

Well, this is John Wasson, I'll start off, then I'll let my colleagues jump in. But obviously, I think in the energy arena, our energy efficiency business is driven by state public goods charges, and so I think that's quite insulated. I would say that the - our activities on distributed energy resources are influenced by strongly by state regulations. And so that's largely state regulation-driven. A lot of our environmental impact-related work is driven by state environmental regulations, particularly in California. And so a good chunk of that business, I think is insulated. So I think those 3 certainly are very insulated. Sudhakar, do you want to?

Yes, I think that those are clearly insulated. Clearly, I mean, I'm here talking about the – just the government business. I think in terms of the rest and pretty much the state and local business and the utility business is pretty insulated. I think the - obviously, the international government business is focused on different revenue sources. And I think in the federal arena, obviously, it has - the budget has an impact on our revenue growth. So I think that's - if I'm getting the question right, Tobey.

Yes, I think you got it. Yes, I'm curious there's been some movements, although not finalized, for some new pipelines and infrastructure projects in the country or could you comment about the company's prospects to participate if those projects are green lighted?

Yes. I think that we are always, but traditionally, the way it works is that there is some regulatory agency or someone will make sure that there is some sort of environmental impact assessment or something associated with these projects. And I think that we traditionally follow them quite closely. We work with the developers, who basically tend to submit these applications once they are approved. They are funded by the developers, but the contract is with the federal regulatory agency. So it's a very good contract to get because of their commercial rates, but the client is traditionally, the regulator. So I think that we have a long record of following these, so we're following a number of them. Infrastructure ones, there's one in the Midwest I can think of, which is a rail line, which is a pipeline being built around the Great Lakes, and there are others pipelines as you say. So we're following them all as they - as those increase I think we certainly believe that we will win our fair share.

Could you expand a bit on the small international business and kind of the revival of growth there? It surprised me a little bit given some of the potential political turmoil that's been going on in Europe. What is the - what are the principal drivers going forward of the improved outlook?

I think primarily the stability in the European Commission in terms of all the things which were dramatic that happened last year: immigration, Brexit, all those things. I think that there's much more stability there. I think people are back to sort of focusing on their portfolios. And I think that we won a few contracts, which are starting to work, and I think the work orders are coming in like they used to about 2 years ago, in a much more considered way. So we are keeping our fingers crossed, and we're hoping that, that's a trend, a longer term trend. So I think that's as always as we indicated to you, we always had the work, it was a question of whether things were going to happen in a more orderly fashion as they used to, and now things seem to be back to be more orderly. So that's what we attribute it to.

Yes, and as I think, exactly what Sudhakar said, I think we've seen more activation of work in Europe, and part of our key strategic communications business there, we will run communication, outreach events and we've seen a pickup in those types of activities in the first quarter.

Great. And then last question from me. It's been a while since you've deployed capital in acquisitions. I was wondering if you could update us on whether you've delevered enough and feel that Olson is in good enough shape that you can step out and get involved again.

Yes, I think we've always looked and as you know, we are quite particular about what we have acquired over the years. Sometimes we don't do anything for a year or 2, and at other times we do stuff, 3, 2 or 3 in a year. So I think it's just a question of whether you find the right fit. We certainly think that we are in a pretty good place. We have delevered. We'll continue to delever because that's something which we have done well over the years. And so it's not like we - there's any lack of activity on that front. It's just that we need to - a number of things need to as you know fall in place exactly right, and we are constantly looking. So there is no hesitation on our part to do something. It's just the question of whether the right, we are in no hurry to do something, but if there something appropriate which falls in place, we will certainly go ahead and do the acquisition. So I think that the leverage of the readiness, our readiness, is not in question at the moment.

Thank you very much, Sudhakar.

Thank you. Our next question comes from Edward Caso with Wells Fargo Securities.

Hey, good afternoon. It's Rick Eskelsen on for Ed. Now first question, I was just wondering if you could talk about your ability to find talent, particularly in the federal area and then also in the digital and interactive side of things?

This is John Wasson. I think as we've talked about, we've made significant investments in recruiting and finding the talent. I think and so we're - I think we generally have been successful in adding staff and finding the talent we need. I think it is - we are growing, obviously in the digital, cyber, energy arenas. There's a lot of competition for that talent, but I think we have strong market positions, certainly in the digital and energy and certain aspects of cyber. And I mean, so we're able to add the talent and as we win contracts and grow.

Having said that, I would say that certain areas are more difficult, cyber is certainly more difficult than the others. We think that in energy, we certainly have significant scale, and we are quite well known. So it's not easy, but I think to find the right people, but I think we have a good pipeline. In the digital arena, we've been actually quite successful in adding talent across the business, both in the digital business, which is focused on commercial clients as well as the digital business which focused on the federal client base. And I would just say that we've been remarkably successful for the kinds of talent we have. So I think that some of the talent likes to come to us because of the fact that we have a mission orientation in certain kinds of work we do, which they like to do. And I think that we've been quite successful there. So there hasn't been that much difficulty in the energy and the digital arena, but I think in cyber, it's a tough market, and we certainly we are successful but not as successful as we'd like to be.

And just building off that in the interactive side. There's been a lot of consolidation in that space and especially you've seen some of the larger consulting companies buying a bunch of smaller different agencies. Has that created kind of a shakeout where people who liked working in a smaller, more entrepreneurial place leave? Has that created more opportunities for you guys to add good talent, and has the wave of consolidation there changed the competitive dynamics at all over the last couple of years?

I think your point about we've been beneficiaries of some of the large consolidations, certainly last year, which happened where large holding companies acquired sort of interactive firms, which were quite well known. And subsequent to that, I think we've gotten a fair number of people from those sorts of acquisitions. So you're absolutely correct that we've been - we've benefited there. In terms of the market dynamics, I think that is -- it's still relatively new. I think things are still shaking out. I think we are - we've heard from clients and others that there is certainly scope for our kind of business with our scale on the digital side because of the fact that some of the more advertising-oriented businesses don't necessarily understand the digital space, and the more digital ones do not quite have an understanding of how advertising works in the digital arena. So I think if we can get - we think we are well on our way there, but if we can get our value statement there more clear and crisp, I think that we will certainly benefit with the changed market dynamics.

Then just 2 clarifiers. The first one on the tax rate. So was the lower tax rate in the quarter due to the new accounting standard from the stock-based compensation?

Yes, that's the driver for it. It's moving that excess. Yes, right. In the tax rate.

Right. And you just said that the first quarter is when you typically have divesting, so this is something that could reoccur or else equal in the first quarter of next year? Or Lower tax rate that is.

Right, it could, but honestly, it's hard to predict exactly what the impact will be. I mean, honestly, that depends on what the stock price is at that point in time and what options get exercised during the quarter and so forth. And just to put it in perspective, even if you look at Q1 of last year, the benefit was only about $200,000. This year, it was $1.2 million. So it can really vary based on what factors take place. But if there's a benefit, that's when it - the most of it would happen.

And in terms of like a longer-term tax rate, is still sort of barring any tax reform of 38.5%, 37%, 38% in that type of range? The right number that we'd be thinking about.

Longer term beyond calendar year '17?

Yes.

Yes. I mean, I think that from an overall perspective, it's in typically that 38%, 38.5% range.

And then, just the last one on the guidance for this year, on the share count. Does it imply that you do more share repurchases or just reflect what you did in the first quarter?

It reflects basically what we did in the first quarter, nothing significant beyond that.

Thank you very much.

Thank you. Our next question comes from Kevin Steinke with Barrington Research.

Good afternoon. So you mentioned some good proposal activity for ICF Olson in the government space. And under the new administration, I noticed that the White House created this Office of American Innovation to look to bring more commercial best practices to the government. So just wondering if you have any early indications that this is going to be a more ripe environment or an improved environment for you to bring ICF's, ICF Olson's services to the federal government.

Kevin, we certainly hope that that's going to be the case, but I think - I don't think there has been any further activity other than the announcement. And there is some conference which is going to happen sometime in June, I think. So it's too early, and I think we will keep close tabs on it, but we certainly are if that happens, that will certainly be beneficial to us.

Okay. And the decision on the California outsourcing now 60%, it seems like that happened - that decision happened a little faster than what you talked about last quarter. So just wondering if that's the case and how significantly that could build your pipeline in the energy efficiency space.

I think we had expected it to happen this year, in the first half of the year. So I don't think it was a complete surprise or significant surprise that happened here in first quarter. And I think as we said in our remarks, we see it as we get towards the end of this year into early next year, we could see some real opportunities there. We are obviously watching it closely and in early stages of identifying the specific opportunities and how we'll get them into capture and position for them.

Okay, just lastly, it seems like the Clean Power Plan is somewhat indefinitely stalled. Do you see that having any impact on your business at all? Or do you see it as just kind of business-as-usual moving forward?

I think if you recall, when we have talked about the Clean Power Plan, that if it had gone into effect, it could have had an impact on the business. After it had gone into effect because there's not - it had been stopped by the Supreme Court from being implemented almost I think 1 year, 1.5 years ago or 2 years ago. So I think that it would have had more of an impact on the energy efficiency side of the business. But I think that my sense is the administration is going to come up with an alternative to it, so whatever they come up with, we'll have to wait and watch to see. I think we had said in the past that the Clean Power Plan wouldn't have an impact until 2021, 2022, if I remember. So I think that my sense is that it will, you know, we'll see what the administration comes up with. I think that the - my sense is they'll have to - they'll stop that. Obviously, that's not going to go into effect, but my sense is they'll go into the law there, they have to come up with an alternative regulation, and that's their intent. So we'll just have to wait and watch as to what happens.

Okay. Thanks for taking my questions.

Thank you. [Operator Instructions] And our next question comes from Marc Riddick with Sidoti & Company.

Hi, good evening.

Hi, Mark.

I wanted to circle back on some of the general commentary that you'd started with, and maybe get a little more sense of the increased optimism that you expressed at the beginning of the call. Perhaps maybe if you could share sort of the greater detail in some of the commentary around the Budget Control Act and perhaps I believe you had mentioned that coloring some of your views going into next year.

Sure. I think that Budget Control Act, which was put in place, which also subsequent to all the budget issues which we've had over the last 2 or 3 years, basically indicated that if defense spending went up, the percentage by which the defense spending went up the same amount would have to be done on the nondefense side. And I think if you look at the budget and then the headlines came out that there were all kinds of cuts which are being proposed in all kinds of federal agencies. But I think if you look at the budget which was passed on this Monday, the - like the Department of Health and Human Services budget went up by 6.6%, Agriculture budget went up by 8.7%, State Department budget went up by 8.7%, Veterans Affairs budget went up by 8.0%. So there's a whole bunch of increases in the budget. And I think that the EPA budget, which was supposed to be cut very substantially was cut by 1% from $8.14 billion to $8.06 billion. So I think that really the - what was thought to be the case did not turn out to be the case. In fact, exactly the opposite is true, and that a lot of these agencies got more money. So I think that the - that is the basis of the optimism in the sense of, if the - in one case, it would have become a market share play where you have to fight for maintaining your market share and the other case if the whole market is growing then it becomes easier for you to grow. So I think that that's - that was the basis for my sort of optimism. And I personally think that the 2018 government fiscal year budget, which starts October 1, is going to be similarly based on a baseline even if it's a Continuing Resolution, which is higher than the government FY '17 budget.

'17. Right. Right.

And so I think that even '18, starting October 1, is going to be, I think higher than we've had this past year even if it's a CR. So my sense is that the budgets don't change as dramatically as the administrations would like. And while the President certainly has a lot of influence on the budget, I think Congress finally appropriates the money. And I think you have to follow what the Congressional sentiment is, rather than what the presidential sentiment is.

Okay. Thank you for the color there. I did want to sort of circle back on the prior quarter. So you'd - one of the things that was highlighted was the potential downside of EPA given where we were at that point. And I think the signal was somewhere around $15 million as the potential downside. As we're sitting here today, what type of updated number would we be looking at? And sort of how might that play out for the remainder of the year?

Yes. It's hard to tell but I think that certainly, we think that $15 million number is a good number. I would stick with it. I don't think that that's suddenly going to not happen. I do think that it's very clear that climate change stuff is not going to be done by this administration, I don't think we can suddenly decide that it's going to happen. Even if they have the budget, they'll spend it on something else. So my sense is that that's a good number to have. And we don't see any increase in that number, we don't see any decrease in that number.

Okay. Okay, that's good to know. Did want to touch a little bit on the infrastructure side of things, and I wanted to get a sense of whether you were, you felt as though there was exposure to upside in infrastructure spending. I mean, one of the things that we've certainly seen a great deal of increased local funding for infrastructure needs. But more so on a reactionary basis due to maybe some of the weather events in California and things like that. So I was wondering if you could sort of maybe give an update as to if you're seeing anything along those lines and maybe what your thoughts about the opportunity set may be for ICF.

Yes. I think that if there is more infrastructure spending by the administration, we think that we will benefit because I think that it depends on the structure of the funding and depending on what kind of funding it is and how they do it, obviously. But I think that if it is on the pattern of the Stimulus Funding in '09, 2009 through '11, we were big beneficiaries. We grew by an average of I think, an organically 13% each of those 3 years. So I think on in that part of the business, so I think that it really is just a question of how they do it. We certainly have people locally. We have almost 60 offices in the U.S., in the continental U.S. So we certainly appear local in a number of large states. We certainly have folks in the community. So we can appear local if necessary, and we could - we can certainly do national work. So I think we're well positioned to take advantage of infrastructure work, even if it's done locally. And we've benefited in the past, like for example, as you say on the extreme climate-related stuff, we're still getting a fair bit of work on Sandy, which is up in New Jersey, and we certainly are well known for disaster recovery work. Not necessarily in response but recovery work. And if that happens, I think we will certainly benefit there. So just a question of how the money is spent and where it is and how it is structured and we certainly have the physical infrastructure as well as the people to take advantage of it and the skills.

Okay, great. Thanks for the color. I appreciate it.

Sure.

Thank you. We have no further questions at this time. I will now turn the call over to management for closing remarks.

Thank you for participating in today's call. We look forward to seeing you at our upcoming conferences and meetings. Thanks very much.

And thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.