TIC Solutions Q1 2026 Earnings Call Transcript

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Provided by Quartr
May 6, 2026

Key Takeaways

  • Positive Sentiment: Q1 combined revenue was $488 million (up 4.3% YoY) with adjusted EBITDA of $57.7 million, and management reaffirmed full‑year 2026 guidance of $2.15B–$2.25B revenue and $330M–$355M adjusted EBITDA.
  • Positive Sentiment: Consulting Engineering delivered strong results with revenue up 9.5% and a 60 bps margin expansion, led by data center demand, while combined CE+Geo backlog rose to $1.12 billion (≈+14% YoY), supporting near‑term visibility.
  • Negative Sentiment: Inspection & Mitigation was essentially flat on revenue and saw margin pressure (adjusted gross margin down to 24.4%) driven by Gulf Coast LNG timing, prior site losses and shifted outage work, with recovery expected later in the year but visibility uneven.
  • Positive Sentiment: Integration is ahead of schedule on cost synergies with ~$17M of the $25M program actioned and management now expects roughly $15M of realized savings in 2026, which should support margin expansion.
  • Neutral Sentiment: Geospatial grew ~4.5% but reported lower margin due to a strategic subcontract‑heavy pilot; the company is advancing GeoAI and expects mid‑single‑digit longer‑term growth.
AI Generated. May Contain Errors.
Earnings Conference Call
TIC Solutions Q1 2026
00:00 / 00:00

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Operator

Welcome everyone joining today's TIC Solutions 1st Quarter 2026 Earnings Call. At this time, all participants are in listen only mode. Later, you will have the opportunity to ask questions during the question and answer session. To register to ask a question at any time, please press star one on your telephone keypad. Please note this call is being recorded and we are standing by should you need any assistance. It is now my pleasure to turn the meeting over to Andrew Shen with Investor Relations. Please go ahead.

Andrew Shen
Andrew Shen
Director of Investor Relations at TIC Solutions

Thank you, operator. Good morning, everyone, thank you for joining the call. Joining me this morning is Ben Heraud, our Chief Executive Officer, Kristin Schultes, our Chief Financial Officer, and Robert A.E. Franklin, Executive Chairman. I would now like to remind you that certain statements in the company's earnings press release and on this call are forward-looking statements that are based on expectations, intentions, and projections regarding the company's future performance, anticipated events or trends, and other matters that are not historical facts. These statements are not a guarantee of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. In our press release and filings with the SEC, we detailed material risks that may cause our future results to differ from our expectations.

Andrew Shen
Andrew Shen
Director of Investor Relations at TIC Solutions

Our statements are as of today, May 6th, 2026, and we undertake no obligation to update any forward-looking statements we may make except as required by law. As a reminder, we have posted a presentation detailing our first quarter financial performance on the investor relations page of our website at ticsolutions.com. Our comments today will also include non-GAAP financial measures and other key operating metrics. The required reconciliations of non-GAAP financial metrics can be found in our press release and in our presentation. For the purposes of this call, we refer to our segments as Inspection and Mitigation or I&M, Consulting Engineering or CE, and Geospatial or Geo. Any reference to combined results reflects a non-GAAP combined view of legacy Acuren and legacy NV5, where applicable, for period-to-period comparability. More details on the calculation of the combined results are included in the presentation.

Andrew Shen
Andrew Shen
Director of Investor Relations at TIC Solutions

It's now my pleasure to turn the call over to Ben.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Thank you, Andrew, good morning, everyone. Before I begin, I want to say how proud I am to lead this talented organization. Over the past several months, I've seen strong support from our leaders across the business and from the field and technical professionals who serve our clients every day. We have started 2026 with healthy momentum across the business. First quarter results reflect the strength of our combined platform, the resilience of our recurring and non-discretionary services, and the demand drivers that support TIC Solutions. This includes aging infrastructure, increasing energy demand, increasing data consumption, and the digitization of the physical world. We believe these megatrends will continue to drive demand across our business and expand the need for technical services that enable us to turn data into solutions for our clients.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

These tailwinds inform our strategic priorities, winning in essential high-demand end markets and geographies, expanding our role across the asset lifecycle and client relationships, and driving higher value growth through technical differentiation and disciplined capital allocation. These priorities are supported by the breadth of our business. Through Consulting Engineering, we help clients plan, design, and commission critical assets and infrastructure. Through Inspection and Mitigation, we help clients maintain asset integrity, reduce downtime, and address reliability needs. Through Geospatial, we help clients capture, process, and interpret asset and location data at scale. Together, these capabilities position TIC Solutions as a lifecycle partner rather than a point solution provider. Our 2026 operating objectives are directly aligned with these strategic priorities. First, to win in essential high demand end markets and geographies, we are focused on driving organic growth across the platform.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

This means expanding scope and market share and pursuing attractive opportunities to sell additional capabilities. Second, to expand our role across the asset lifecycle and client relationships, we are strengthening organizational alignment and cross-segment collaboration. That includes improving how we manage accounts, deploy resources, support our field and technical teams, and bring our capabilities together for our clients. Third, to drive higher value growth, we are focused on margin expansion and disciplined capital allocation. That means maintaining pricing discipline, improving utilization, managing costs, enhancing service mix, and directing capital towards the highest value opportunities. In the quarter, we saw growth across transportation, infrastructure, utilities, manufacturing, midstream energy, and data center end markets. We remain focused on converting these trends into sustainable, attractive, and profitable growth. With that framework in mind, I'll walk through the performance across our segments and highlight where we're seeing progress against these priorities.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Consulting Engineering delivered strong performance in the quarter, with revenue increasing 9.5% YoY. We experienced broad-based revenue growth, offsetting pressure from timing in LNG engineering and power delivery. Adjusted gross profit increased 11% YoY, and adjusted gross margin expanded 60 basis points, reflecting strong execution, improving mix, and continued demand for high-value technical services. Data centers were the largest driver of growth in the first quarter, supported by hyperscaler and mission-critical infrastructure activity across both domestic and international operations. AI, cloud adoption, and enterprise digitization continue to increase demand for data consumption storage and mission-critical uptime. Our focus is on capturing that demand where we have the right capabilities, client relationships, and return profile. Consulting Engineering also saw broad-based growth across several core capabilities, including civil program management, geotechnical and materials testing, and buildings.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Overall, Consulting Engineering's first quarter performance demonstrates the value of technical capabilities we offer across infrastructure and the built environment. The segment continues to benefit from durable demand trends tied to aging infrastructure investment, and growth in key regional markets. Our performance also shows the operating leverage that can come from better utilization, focused execution, and delivery of higher value services. Geospatial also performed well, growing 4.5%, supported by strong commercial and utility demand, healthy fleet utilization, and continued interest in Geospatial digital transformation solutions. The team continues to pursue technically complex work across multiple markets and geographies. Recent examples include deep sea hydrographic survey work tied to rare earth minerals and advanced lidar and imagery opportunities internationally. These demonstrate the breadth of our capabilities and the ability to scale and apply specialized technical expertise across borders.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

We are also advancing our GeoAI efforts with a focus on improving processing efficiency, automating workflows, and expanding higher value analytics. We look forward to discussing these capabilities in more detail at our Investor Day, including how they support our broader Geospatial platform over time. Quarter end total backlog within Consulting Engineering and Geospatial was $1.12 billion, up approximately 14% from $983 million at the prior year quarter end. This backlog expansion, combined with a solid commercial execution, supports our confidence in continued momentum and near-term outlook. Inspection and Mitigation delivered a steady result with revenue essentially flat year-over-year. While results were below our long-term expectations for the segment, the team remained focused on margin integrity, disciplined staffing, and prioritizing higher quality, higher margin opportunities.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

In the first quarter, our call-out and outage activity increased moderately, helping offset lower sustaining capital work and continued pressure in certain regions. Performance was stronger in areas such as industrial rope access, containment, and in-lab services, and we're focused on replicating that execution more consistently across the I&M footprint through disciplined opportunity selection, stronger local accountability, and a higher mix of high-value technical services. Inspection and Mitigation demand continues to vary by end market and geography. Customer focus on throughput, uptime, and critical integrity work remains intact, but broader market uncertainty is creating more variability in customer decisions around planned outages and scheduled maintenance, including timing, scope, and duration. In the quarter, certain planned outage work shifted from the second quarter to the third quarter, and some work was resized as customers remained selective on near-term spending.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Performance pressure remains concentrated in the Gulf Coast, where LNG construction timing and several 2025 site losses continue to weigh on year-on-year growth. We are managing through these dynamics while expanding in areas we have a proven track record and pursuing new white space opportunities. We continue to execute on the operating model changes we outlined last quarter, with a focus on regional accountability, cost control, and more consistent opportunity sourcing. As discussed on the previous call, we have strengthened regional leadership in the segment and are adding both new and returning leaders in key areas to drive operational efficiency and commercial focus. As we move through the year, we expect I&M performance to benefit from normal seasonality, outage activity, and stronger conversion of commercial opportunities while remaining disciplined on margin and work selection. To recap, Consulting Engineering, and Geospatial continue to benefit from strong demand and differentiated capabilities.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

While Inspection and Mitigation remains focused on improving execution, accountability, pricing, and resource deployment. Across the platform, integration is improving how we manage accounts, expand services, and control costs. Together, these actions position us to deliver durable growth, improved profitability, and stronger cash flow over time. We're looking forward to hosting our Investor Day on Tuesday, May 19th in New York City. We plan to discuss the next phase of the TIC Solutions story, including our long-term growth framework, margin expansion plans, capital allocation priorities, and how stronger execution can create additional value across the business. With that, I will turn the call over to Kristin to review the financial results for the first quarter, provide an update on integration, and offer more detail on our outlook.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

Thank you, Ben, and good morning, everyone. In the first quarter, total revenue was $488 million. On a combined basis, total revenue grew 4.3% YoY or 3.1% in constant currency. Organic growth on a combined basis was 2.2%. Adjusted gross profit for the quarter was $180 million, up 3.8% from the combined adjusted gross profit of $174 million in the prior year period, driven primarily by revenue growth and margin expansion in Consulting Engineering. Adjusted gross margin was 36.9%, roughly flat compared with the combined margin of 37.1% in the prior year period as Consulting Engineering margin expansion was offset by mix and margin pressure in Inspection and Mitigation.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

Inspection and Mitigation contributed first quarter revenue of $235 million, up 0.3%, driven by increased call-out and outage work and offset by lower sustaining capital activity. Inspection and Mitigation's adjusted gross margin was 24.4% for the quarter, compared with 25.2% in the prior year period, reflecting the impact of mix from less sustaining capital work. Consulting Engineering contributed first quarter revenue of $187 million, up 9.5%. Consulting Engineering's adjusted gross margin was 47.6%, up 60 basis points from 47.0% in the prior year period, driven by strength in infrastructure and building design and commissioning. Geospatial contributed first quarter revenue of $66 million, up 4.5%, driven by healthy demand from utility clients.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

Geospatial's adjusted gross margin was 51.0% compared with 54.2% in the prior year period, impacted by a pilot project that carries a higher proportion of subcontractor costs and a lower gross margin profile. We believe this work is highly strategic and supports higher value growth over time with a key client. Adjusted SG&A for the quarter was $123 million or 25.2% of revenue. This continues to be a critical focus area as we work to drive SG&A leverage through synergy realization as well as cost discipline in the business. Adjusted EBITDA was $57.7 million compared to combined Adjusted EBITDA of $55.6 million in the prior year period, representing growth in line with the increase in combined revenue.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

Adjusted EBITDA margin was 11.8% compared with 11.9% a year ago on a combined basis, reflecting a path towards improved operating leverage. From a cash flow perspective for the quarter, operating cash flow was $10 million and capital expenditures were $6 million. The operating cash flow reflects the expected seasonality of the business, which includes greater working capital intensity in the first half of the year. Moving now to our balance sheet and capital resources. As of March 31st, 2026, we had total liquidity of $537 million, including $427 million of cash and $111 million of available capacity under our revolving credit facility. Total term loan debt was $1.6 billion. Our capital allocation priorities remain unchanged.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

We remain focused on investing organically in the business and using free cash flow to provide additional flexibility for disciplined acquisitions while achieving lower leverage over time. Turning to integration, we continue to make great progress capturing the benefits and cost synergies associated with the NV5 combination. Importantly, we are ahead of schedule on synergy actions with approximately $17 million of the $25 million cost program now actioned on an annualized run rate basis. We now expect realized savings in 2026 to be roughly $15 million, modestly above the $12.5 million we discussed in previous quarters. These actions are intended to create lasting efficiencies in the combined cost structure and support margin expansion as our business scales. Turning to our unchanged outlook.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

For the second quarter, our guidance reflects revenue of approximately $570 million-$582 million and Adjusted EBITDA of approximately $90 million-$96 million. At the midpoint, this implies an Adjusted EBITDA margin of approximately 16.1% for the second quarter, which would represent margin expansion year-over-year. We are reaffirming our previously issued full year 2026 guidance of $2.15 billion-$2.25 billion of revenue and $330 million-$355 million of Adjusted EBITDA. At the midpoint, our guidance implies approximately 4% revenue growth and 10% growth in Adjusted EBITDA against our 2025 combined results with an Adjusted EBITDA margin of approximately 15.6% at the midpoint.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

By segment, on a combined basis, we expect CE and geo growth to outpace growth in I&M for the full year. In Inspection and Mitigation, our outlook assumes a back half weighting supported by normal seasonality and the anticipated timing of certain outage and sustaining capital work. For 2026, we anticipate net interest expense of $95 million-$105 million, cash taxes in the range of $25 million-$35 million, and capital expenditures of $55 million-$65 million. We typically see a working capital build as activity ramps through the first half of the year, followed by stronger cash conversion in the second half as collections catch up with revenue. We manage and evaluate free cash flow primarily on a full year basis, and we continue to expect healthy free cash flow generation over the full year. With that, I'll turn the call back to Ben.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Thank you, Kristin. The first quarter reinforced the resilience of our business model and the benefits of our diversified platform. As discussed at the start of the call, the trends around aging infrastructure, increasing energy demand, increasing data consumption, and the digitization of the physical world continue to support demand for the essential technical services we provide. As we move through 2026, we remain focused on the strategic priorities that define how we create value, winning in essential high demand in markets and geographies, expanding our role across the asset lifecycle and client relationships, and driving higher value growth through technical differentiation and disciplined capital allocation. We are seeing progress against our top priorities while recognizing there is more work ahead. I want to close by acknowledging the strength of this organization and the leaders across our business.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

TIC Solutions has a significant long-term opportunity supported by a highly engaged team, strong cultural alignment, and essential technical capabilities across resilient end markets. Our teams have continued to execute with discipline and focus while staying centered on our core purpose of delivering for our clients every day. With that, operator, we're ready to open the line for questions.

Operator

Thank you. If you'd like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question. We'll take our first question from Chris Moore with CJS Securities. Your line is open.

Chris Moore
Chris Moore
Analyst at CJS Securities

Hey, good morning. Thanks for taking a couple. You exited some lower margin customers contracts in Inspection and Mitigation in 2025. Just trying to get a sense if that process is still ongoing in 2026.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Yeah, we're still maintaining discipline around, you know, our pricing and approach to the market. You know, we're sort of seeing price increases amongst a number of our contracts and, you know, we will continue to stay disciplined on our pricing model.

Chris Moore
Chris Moore
Analyst at CJS Securities

Got it.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Look, just to point out, no additional lost sites since last year.

Chris Moore
Chris Moore
Analyst at CJS Securities

Got it. Thank you. In terms of the 4% organic growth that you're targeting in 2026, maybe just from a big picture perspective, can you walk through the segments or sub-segments and kinda rank those where you have the most visibility for the year and perhaps those where visibility is a little bit more limited at this point in time?

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

Yeah, sure. I'll take that. Good morning, Chris. If we look at our full year guidance at that midpoint, I think we haven't provided segment level guidance, but I would tell you that with the visibility that we have, that our outlook for growth for Consulting Engineering and Geospatial is higher than I&M. If we look at, you know, what drives confidence in our ability to deliver that, we have backlog within CE and Geo, which provides a lot of visibility. As we disclosed, that our backlog is up significantly. Also, you know, just with our internal flash and forecasting process within the I&M business, we also have good visibility. Inherently, things are moving, but we have good visibility to kind of what's to come.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

This is our high conviction number and feel good about our ability to deliver in 2026.

Chris Moore
Chris Moore
Analyst at CJS Securities

Terrific. Very helpful. This one may be more for Investor Day, but just last one. Geospatial growth has bounced around a little bit, 4.5% this quarter. Still sounds like lots of opportunities there. Just trying to get a sense for what a reasonable expectation is for a normalized annual growth rate for Geospatial.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

I think we'll continue to see good growth within it. We're pleased with the performance of Geospatial. You know, we did have a little bit of margin pressure from that one project we pointed out earlier, but for the most part, you know, there's a lot of digitization required around the world, and we have a very scalable platform that we're excited about expanding and growing.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

Chris, you'll have an opportunity to meet the leader of our Geospatial business in a few weeks at our Investor Day, and he'll speak more to the long-term growth outlook of the segment. I think what you're seeing in mid-single digits is the right way to think about it.

Chris Moore
Chris Moore
Analyst at CJS Securities

Terrific. I appreciate it. I'll jump back in line. Thanks, guys.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

Thank you.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Thank you.

Operator

We'll move next to Tomohiko Sano with J.P. Morgan. Your line is open.

Tomohiko Sano
Tomohiko Sano
Analyst at J.P. Morgan

Hi. Good morning, everyone.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

Morning.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Hey, Tomo.

Tomohiko Sano
Tomohiko Sano
Analyst at J.P. Morgan

Morning. I would like to ask about the I&M business. Could you quantify the revenue and margin impact of each key headwind you talk about? Excluding these, like what do you see as the segment's underlying growth and margin potential, and what is your outlook for the recovery, and are there any specific KPIs you are targeting in this business? Thank you.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Yeah, look, we're tracking a number of KPIs, I would say, you know, we'd point to the Gulf as being an area of focus around improvement. You know, we're seeing month-on-month improvement there. With the leadership that we put in place earlier in the year, we're now just seeing a very aggressive commercial approach to that business. We talked earlier on the call about some shift with some outage work into Q3. That was known and sort of expected. Some real positive signs also, you know, around service line expansion. Our rope access group's up 9% and our lab work is up 20%. Also good indications of the business and its potential growth later in the year.

Tomohiko Sano
Tomohiko Sano
Analyst at J.P. Morgan

Thank you, Ben. Follow-up on data centers in CE business. What is your outlook for growth in data centers? What proportions of total revenue do you expect, like these segments to represent in 2026 and 2027?

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Yeah. Use round numbers around 5%. You know, we continue to see very, very nice growth within that business. We remain very excited about it. The U.S. business is starting to really the efforts that we've put in over the last two years are really starting to pay dividends, and that is growing at a really nice clip now. It's, you know, trailing 12 months was around $80 million in revenue, backlogs of a similar amount. We have a very strong line of sight into a strong year ahead.

Tomohiko Sano
Tomohiko Sano
Analyst at J.P. Morgan

All right. That's all. Thank you very much.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Thanks so much.

Operator

We'll move next to Kathryn Thompson with Thompson Research Group. Your line is open.

Kathryn Thompson
Analyst at Thompson Research Group

Hi. Thank you for taking my questions. just first, big picture, you're approaching in June, the first full year of NV5 and as part of TIC Solutions. how is the integration as we approach the year mark? What has worked and what are areas for continued growth?

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Yeah, I'll just sort of start with a high level and then let Kristin get into some more detail. I'd just say, I've said this before, how pleased I am with the cultural alignment between the two organizations and the general level of excitement around bringing each company's services to their clients. I think that that's really starting to show in some of the activity we have around service line expansion with our clients. I'll let Kristin dig into a bit more detail.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

Yeah. Thanks, Kathryn. I'd love to talk about integration. Just a reminder, we closed in August, that's when we'll hit the one-year mark.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Yep.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

From an integration milestone perspective, you know, look, like I mentioned, we're ahead of schedule on the identification and the action. We had a few million of savings in this quarter, and that's gonna continue to ramp for the full year. We expect $15 million of savings to flow through the P&L this year, which is really exciting. I'm proud of the leadership team that we have leading that integration for us. In the quarter, we hit some key milestones. We exited or reduced four sites. We've accomplished 13 to date. I think we've got 40 on our roadmap, and those are either reductions in footprint or exits of sites.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

We have added some key leadership additions to the team in different functional areas that are helping drive really creating scalability for this organization as we continue to grow and look to become an even larger organization and continue to grow. We have hit some internal system implementation milestones. We've stood up a shared services function within the finance organization and using technology. Lots of good, exciting activity on the integration front.

Kathryn Thompson
Analyst at Thompson Research Group

Okay. Thank you. Obviously, a lot of focus on AI build-out, but also the energy build-out is critical in gaining more headlines. Really the build-out includes generation, energy storage, and transmission. When you think about those three legs of the stool, how does TIC Solutions play in the energy build-out that's supporting not just only AI, but the broad reindustrialization of the US market?

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Yeah, I mean, they're directly related, aren't they? I mean, the energy demand coming from AI and other areas. The three that you pointed out are areas that we're very well-positioned for. You know, power delivery, you know, the engineering work that we do around that, you know, right through from transmission to distribution to substation design. We actually just were awarded a energy storage project within the Consulting Engineering group recently, a first of its kind, which is really exciting.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

On, on the generation side of things, both, you know, it's an area that our NDT and Inspection and Mitigation business works in, and it's actually quite an exciting opportunity we're working on at the moment, bringing together the data center expertise that we have in engineering and Inspection and Mitigation. I think we're very well-positioned for that growth in that area.

Kathryn Thompson
Analyst at Thompson Research Group

If I'm hearing correctly, you're there for the build-out, but also for the follow-on inspection work. Is that one way to think about it?

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Yes. I'd point to Geospatial. You know, we fly 150,000 miles of lines every year. That's been growing and that's recurring work that we do for utilities.

Kathryn Thompson
Analyst at Thompson Research Group

Okay, great. When you look at, say, 12-18 months from now, where do you see kind of the end market exposure for TIC. What areas do you see growing the most as a percentage of total overall mix, and what may just by sheer growth in other markets may be shrinking? It's broader because before if you know, infrastructure with the mix was 25% and data centers were just 2%, data centers obviously has grown a bit more than that. High level, what are the areas of the greatest growth in terms of mix? Then speak to the margin profile of the growth areas. Thanks very much.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Yes, no worries. I mean, I think if I were to I wouldn't point to any areas shrinking, but there's obviously areas that we have more tailwinds and that we're more well-positioned for. Energy certainly when you look at both, you know, generation and distribution, as I mentioned, we're well-positioned for and we do expect to continue to grow. The built environment in general is an area that is going very well for us and we will continue to see. Infrastructure across all segments is an area where, you know, with just with aging infrastructure, the additional demand that is going on it, we just see a lot of tailwinds in that area and will continue to grow.

Kathryn Thompson
Analyst at Thompson Research Group

Great. Thanks very much.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Thank you.

Operator

We'll move next to Jeff Martin with Roth Capital Partners. Your line is open.

Jeff Martin
Jeff Martin
Analyst at Roth Capital Partners

Thank you. Good morning.

Jeff Martin
Jeff Martin
Analyst at Roth Capital Partners

I wanted to dive in a little bit on progress you're making with, you know, the initiatives on I&M and are you seeing an expanding pipeline opportunity there, particularly given, you know, the chemicals business appears as though it has the potential to turn around here?

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Yeah, we've actually had some positive signs on the chemical side recently in our sales pipeline. We sort of talked about the reorganization efforts that we were doing on the U.S. and particularly the Gulf, like I mentioned earlier, I don't wanna bang on it about it too much. I'm just really pleased with the leadership that we have in place and, you know, the tone in the meetings. We're definitely taking an aggressive approach to getting to new sites. We have a nice pipeline of opportunities that I see. You know, once we get through this ramp effect of the lost sites in the second half of the year, we're expecting growth. And very pleased with the progress that we've been making with the leadership there.

Jeff Martin
Jeff Martin
Analyst at Roth Capital Partners

Yep. It's great to hear you have not lost additional sites since last quarter.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Yeah.

Jeff Martin
Jeff Martin
Analyst at Roth Capital Partners

My follow-up question was on geo. I know contract renewals on the federal government level are always kind of a, you know, a tricky, you know, point as we transition out of the end of the year. You know, I know there was a little bit of headwind exiting last year on contract renewals. Just curious if you could give us an update there.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Yeah, we haven't seen any major disruption there. They've sort of been coming in at the expected clip. You know, I think the bumps in the road that we had in Q4, we're not seeing signs of continuing at the moment.

Jeff Martin
Jeff Martin
Analyst at Roth Capital Partners

Great to hear. Thank you.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Thanks, Jeff Martin.

Operator

We'll take our next question from Andy Wittmann with Baird. Your line is open.

Andrew Wittmann
Andrew Wittmann
Analyst at Baird

Great. Yes, thanks. Good morning. I guess I wanted to just ask a little bit more on the C&I segment. I heard that the call-out in the lab testing work was good. That's about half of the segment. I guess what I'm trying to understand is, you know, obviously, when you lose a run and maintain, you gotta go four quarters till the comps ease, and you talked about how that gets better in the fourth quarter. How much of the kind of softness is just the fact that, you know, two quarters ago or one quarter ago, you lost some of those contracts, and how much of it is really kind of systemic or uncertain demand? Can you talk about the uncertainty in the demand? Is that just because of volatile oil prices?

Andrew Wittmann
Andrew Wittmann
Analyst at Baird

Is it something else? What does it take for better visibility to return to that market so that you can have a better sense of the timing and the scope of services that you're likely to do?

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Yeah, I mean, you're right. The run-and-maintain business is our most stable piece, and it sort of drives some of the more higher margin work, and we need to get back to winning new sites, which sort of talking about the commercial discipline and focus that we've got, you know, I'm confident we'll get back to, you know, especially as we get past the ramp effect of these lost sites. Talking about uncertainty or volatility, you know, where we're seeing that is with the outage work, and we called out the shift in some of that work from Q2 to Q3. You know, this is non-discretionary work that needs to be done, they're gonna need to do it at some point.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

You know, we'll expect that work to start to flow in.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

Andy, Good morning. I would just add that, you know, we certainly recognize the macro volatility that's out there right now, and I think the structure of our I&M business is fairly diversified compared to some of our other comps. We've got, you know, less than 10% of our I&M revenue is outage work, which is 5% of, you know, the combined business. Our refinery oil and gas exposure is, you know, less than 15% of our consolidated results as well. We're potentially less impacted by timing, and also less impacted by direct oil prices. We're focused on staying disciplined with regard to inflation pressures, whether it be with rates and fuel charges and whatnot.

Andrew Wittmann
Andrew Wittmann
Analyst at Baird

Yeah. Just as an addendum to that question, how has the competitive environment evolved against that volatility? Obviously, anytime you're losing sites, you know, that's a competitive dynamic. Has it improved or changed at all since late last year to what you're seeing this year or before that? It sounds like you've got some initiatives there, new leadership, talking about, you know, kind of motivating the team to get these new sites. What does it take, what's it looking like right now competitively for those?

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Yeah. You know, in some cases, it's getting the culture right in the region, getting some of the leadership back that we had and that they bring work with them. We've seen some really good initiatives around that. You know, there has been some pricing pressure in the Gulf in particular. I think some of that's short-lived and, you know, we're maintaining our discipline around that. You know, we've got a good line of sight on some pretty good opportunities.

Andrew Wittmann
Andrew Wittmann
Analyst at Baird

Okay. Maybe just one last question. Just kind of looking at the cash flow statement, Kristin, it looks like, obviously, the first quarter is always seasonally weak. Understand that. Just looking in the working capital here, your contract assets were a pretty big consumer of capital. Is that a result of You had a reference to, like, a larger contract where there was some subcontracted scope. Is that what we're seeing there? Is there, like, a percentage of completion project that you're using a lot of subcontract labor? Is that why that contract asset is consuming capital right now? When do you think that account can reverse and start giving you back some of that capital?

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

Yeah, good question, Andy. It was a big focus area of mine as well. I would say that there were a two larger billings that went out in early April that should have gone out in March, and that was the driver. We've got an isolated list of what those were. If you look at what else went through the cash flow statement in the quarter that was unusual, we did clear out some contingent payments for previous acquisitions, and that impacted the cash during the quarter as well. The subcontractor costs by nature didn't drive the contract assets. Driving contract assets is a key focus of ours.

Andrew Wittmann
Andrew Wittmann
Analyst at Baird

Got it. Okay. Thanks a lot.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

Thank you.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Thanks.

Operator

We'll move next to Josh Chan with UBS. Your line is open.

Joshua Chan
Joshua Chan
Analyst at UBS

Hi. Good morning. Thanks for taking my questions. Maybe just a strategic one. I guess at the branch level, how would you say, you know, your combined company vision is, you know, being translated or proliferated at the branch level? Like, how would you assess that at the moment?

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

You know, we have a very like a centralized commercial team that is absolutely focused on educating our branches on what the services they now have at their fingertips to take to their clients. We have a very programmatic approach to that's driven from the top. You know, we drive a very entrepreneurial culture throughout the organization. You know, the leaders at the branch levels are naturally very interested in what they can be bringing to their clients, and that's something that we really cultivate as a business. You know, and that's what helps us drive our organic growth.

Joshua Chan
Joshua Chan
Analyst at UBS

Okay. I appreciate that, Ben. Then maybe on Consulting Engineering, obviously a very good quarter. What's the right run rate for that business in terms of growth? I wonder if you can think about it from a matter of volume or hours plus price. Is that how you think about growth in that business?

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

I mean, yes, volume and price, but I would say, you know, about half of it's fixed fee. You know, we really position ourselves at the higher value end of the work that we do to command solid pricing. You know, I would expect the growth path that we've got to continue. We have some really nice tailwinds with that business. I'd point again to that backlog being up 14%. That's a very strong indicator of the strength of that business right now.

Joshua Chan
Joshua Chan
Analyst at UBS

Okay, great. Thank you for the color, and thanks for the time.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

Thank you.

Operator

We'll take our next question from Stephanie Moore with Jefferies. Your line is open.

Stephanie Moore
Stephanie Moore
Analyst at Jefferies

Absolutely. Good morning. Thanks, everybody. I wanted to maybe circle back to some of the commentary around data centers. You know, look, I think obviously you're seeing some of the benefits of that growth and that those investments that are being made. Could you also talk about what this can mean from a longer term standpoint and just remind us about, you know, obviously there's the build-out opportunity, but then kind of the ongoing opportunity that we could expect to see where you guys would benefit? I think there's a little bit of a misunderstanding that there's certainly a long tail here. Thanks.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

That's good, and I'm glad you asked that question 'cause we are really focused on making sure that we're heavily involved in the ongoing operations of data centers. The services that we have position us really well for that actually. Only about 15% of the revenue we do with data centers is associated with ongoing operations right now. If you think about that's growing, and if you think about what happens in these data centers, the technology is changing all the time. As they bring these new servers in, they require engineering, retro-commissioning, CFD, computational fluid dynamics. These are all things that we do, and we're working with our clients ongoing. We also have a program management owner's rep service that applies to data centers.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

We are very focused in making sure that this isn't a one-off with all the work that we do, and that we have a strong tail with each of these sites that we touch.

Stephanie Moore
Stephanie Moore
Analyst at Jefferies

Great. That's really helpful. Maybe just thinking about, I guess just thinking about the underlying business. As you think about the cross-selling opportunity, I know you touched on this a little bit, but, you know, I think if we think back to the original, you know, merits of NV5, there were significant cross-selling opportunities. Maybe just help us focus on what might be the more immediate benefits that we could start to see. And you know, what actions I guess more importantly, what actions have been taken behind the scenes from either a management or operations level that allow you to go and capture those revenue synergies? Thanks.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Yeah. Great. We have a team that actually reports directly to me that's 100% focused on driving cross-selling through the organization. As you know, NV5 had a very strong cross-selling program, and we've extended and improved upon that for the TIC Solutions platform. You know, I would say as we're getting more mature, we are starting to see the trends in the areas that we can get more behind and focused on. Some examples is we're seeing clients really excited about the fact that we can do materials testing and quality assurance along with our NDT capabilities. Sort of a turnkey approach there. Pipeline and integrity, all segments have exposure there.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Bringing all the capabilities that we have, sort of seamlessly is also something that we're excited about. Around infrastructure and bridge inspection, that's an area where NV5 has very strong credentials, and we're bringing along our rope access and inspection capabilities. We called out some specific projects last quarter. Just a few examples at a strategic level of where we're seeing opportunity. But I'm really pleased with the activity and the momentum that we're gaining around our cross-selling program right now.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

Stephanie, I would just add that we look at cross-selling more broadly even and see tremendous opportunity for service line expansion within the segment as well. If you think about rope access opportunities in lab engineering, cross-selling within I&M, as well as Geospatial across to Consulting Engineering. From a broad perspective, tremendous opportunity from a white space perspective within our existing customer base and also within M&A markets.

Stephanie Moore
Stephanie Moore
Analyst at Jefferies

Thank you everybody for the time.

Kristin Schultes
Kristin Schultes
CFO at TIC Solutions

Thank you, Stephanie.

Operator

It does appear that there are no further questions at this time. I would now like to hand back to Ben for any additional or closing remarks.

Benjamin Heraud
Benjamin Heraud
CEO at TIC Solutions

Yeah. Well, thanks everyone for your questions and for your continued interest in TIC Solutions. We remain focused on growth, execution, and delivering on our commitments. We look forward to seeing you all at our Investor Day later this month, hopefully, and updating you on our progress next quarter. Thanks everyone, and have a good day.

Operator

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Executives
    • Andrew Shen
      Andrew Shen
      Director of Investor Relations
    • Benjamin Heraud
      Benjamin Heraud
      CEO
    • Kristin Schultes
      Kristin Schultes
      CFO
Analysts
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