ICF International, Inc.

Thank you, operator. Good afternoon, everyone, and thank you for joining us to review ICF's first quarter 2012 performance.

With us today from ICF International are Sudhakar Kesavan, Chairman and CEO; John Wasson, President and COO; and Sandy Murray, Interim CFO.

During this conference call, we will make forward-looking statements to assist you in understanding ICF 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 2, 2012, 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 our CEO, Sudhakar Kesavan, to discuss first quarter 2012 highlights. Sudhakar?

Thank you, Doug. Good afternoon, and thank you for joining us today.

ICF's solid first quarter performance was driven by the relative strength of the diversified markets we address, our business mix and the benefits of our acquisition strategy. We expect these drivers to continue to provide ICF with the resilience to produce double-digit revenue and earnings growth in 2012.

First quarter results were in line with our expectations, and we are pleased to note that both of our recent acquisitions performed as expected. Similar to 2011, revenue growth was led by our commercial business, which was up 51% year-on-year, reflecting double-digit growth in our legacy commercial business and the addition of our Ironworks acquisition.

Federal government growth of 6% reflected a mix of legacy and acquisition growth, and the 23% increase in the state and local business was due primarily to additional infrastructure project management work.

We also achieved strong growth across our 2 largest market groups. Energy, Environment and Infrastructure was up 25%, and we reported a 19% increase in Health, Social Programs and Consumer/Financial, which we renamed to reflect our increased scale in the consumer/financial vertical since the Ironworks acquisition.

Operating income grew at a faster pace than revenues even after accounting for acquisition costs and higher amortization expense related to a full quarter of the Ironworks acquisition and one month of the GHK transaction.

This growth in profitability levels reflects the changing mix of our business and efficient execution. When you consider the track record of our legacy commercial business over the last 5 quarters and you add in the Ironworks acquisition, there's substantial increase in commercial business as a percentage of our total revenue.

The rapid growth in our commercial business was outstripping the single-digit growth of our government work, and we expect that operating income and EBITDA figures will continue to benefit from this shift.

This change is particularly important because it enables us to post double-digit revenue and earnings growth despite the current headwinds in federal spending. This is a similar situation to a period 3 years ago when we were transitioning from the Road Home contract.

At that time, our building expertise in the critical areas of health, social programs, energy and infrastructure, combined with the benefit from acquisitions not only enabled us to absorb the revenue follow-up of that contract but also continue to grow at a rapid rate.

Today, we remain very well pleased vis-a-vis client spending within our largest markets. For example, in health, well, we are well recognized to both our advisory and implementation capabilities, with a strong demand from the federal government despite budgetary pressures.

Forecasts call for significant long-term growth, a 7.5% compounded annual growth rate for federal health care IT market over the next 5 years. We have substantially broadened our IT qualification, thanks to our experience in working on large implementation projects.

And this has put us in excellent position to bid for a wider range of government contract.

Another example is energy efficiency. We work with federal state, local government and commercial clients.

Total energy efficiency budget according to a survey done by the [indiscernible] electric efficiency grew 20% in 2011 compared to 2010, and our addressable market in this sector is around $1.5 billion.

A word on our recent acquisition. The addition of Ironworks has broadened our implementation service offering in the fast-growing digital interactive space, and we are in the process of cross-selling these services to our existing clients.

Additionally, Ironworks has strategic advisory capabilities in the commercial health sector that we intend to invest in and build. Also, we are seeing good growth prospects from our GHK acquisition which we began to integrate in the last month of the quarter.

We now have more than 115 professionals serving the fast-growing Asian market from Beijing, Hong Kong, Singapore, Bangkok, Manila and New Delhi, as well as over 160 professionals in Europe, including a highly experienced business development team that can leverage ICF qualifications and experience to work with European and Asian clients.

At the same time, we had a strong backlog at the end of the first quarter of $1.7 billion, of which 44% or $742 million was funded, representing a diversified mix of contracts across our key markets. Our new business pipeline was a record $3 billion at the end of the first quarter.

I would now like to turn the call over to John Wasson, ICF's President, to provide you with more insight into our operating performance. John?

Thank you, Sudhakar, and good afternoon, everyone. This past quarter, we had a good rate of sales, given that the first quarter is normally one of our seasonally slow quarters.

Our $233 million in sales represented 7.2% year-over-year growth, and was well distributed across all of our markets. So strength in both government and commercial side is reflected on our increase and funded backlog.

Many of our major sales continued to be in the energy efficiency space, where we announced 3 of our largest wins valued at a total of up to $48.5 million. These contracts were a mix of new contracts and extension of existing work with major utilities.

This mix reflects our market strength in continuing to capture new work and our ability to deliver successfully on complex programs such that we can secure extensions and expansion of existing work.

Although these were the largest sales in the commercial space this past quarter, I should again underscore that more than 300 commercial wins were logged, representing a well-diversified range of our commercial service areas. In addition to other wins in energy efficiency, this included environmental management, regulatory assessment for utilities, aviation and airport consulting and survey research and analysis for nonprofits.

The addition of Ironworks has brought important new segments of commercial sales, including interactive data applications in commercial health, retail, manufacturing and distribution and for nonprofits. Their sales in the commercial space continue to be healthy, and I will address joint efforts with both of our new acquisitions in a moment.

On the federal side, we are continuing to log sales at a good pace for a first quarter and the pipeline continues to be strong. Contract wins were well represented in all of our federal markets.

Among the largest in public health, we won an important $15.8 million contract with the Centers for Disease Control to continue the design and implementation of critical benchmark surveys on youth-at-risk behaviors, thereby reaffirming our leadership in this important area of public health.

At EPA, we won 2 contracts valued at a total of $39 million to continue our long history of supporting the ENERGY STAR program and providing analytical and modeling support for the development and evaluation of mobile source emissions from any equipment that moves such as vehicles, locomotives and aircraft.

Our acquisitions of Ironworks and GHK have been proceeding very well. We have already fully integrated Ironworks' financial systems into ICF's and developed numerous joint strategy and business development teams.

Both companies' financial progress is on track, and we are enthusiastic about the joint possibilities we foresee.

At Ironworks, on the commercial side, we are focused initially on jointly leveraging our capabilities in the commercial health and energy space, where we are finding great synergies between our domain knowledge and their technical capabilities and added customer relationships. Joint client calls and proposals are well underway, and similar efforts are underway on the federal side where we are focusing on telling the digital interactive story to legacy ICF clients.

At GHK, under Jeanne Townend's leadership as part of our new Europe-Asia group, we have created joint market-focused teams to identify specific strategies and the way forward in such areas as international development, energy efficiency, climate change, transportation and social programs. We have already submitted a number of joint bids, including bids adding ICF qualifications for specific areas within the EC directorates and have logged some early wins in climate change, adaptation and imports and aviation.

We are pleased with the early progress in this group.

As Sudhakar noted, our top line has grown to a record $3 billion. In addition to continued growth overall, we are also seeing more large opportunities.

This pipeline includes 27 opportunities valued at $25 million or greater and 43 at $10 million or greater.

Finally, our turnover rate continues to be low. Beginning this quarter, we will be reporting our turnover in a slightly different way.

You have been aware that our strategy of increasing our skills and implementation requires the operation of some back-office infrastructure such as call centers and rebate processing facilities, many of which are being located in our new facility in Southern Virginia. Employees for these functions tend to be more seasonal with a different turnover structure than the rest of the company.

We believe that a more accurate picture of our turnover rate would be the focus on the 97% of our employees who are not part of those business process operations. On this basis, for the first quarter, the turnover rate was a low 2.1%.

Now I'd like to turn the call over to our interim CFO, Sandy Murray. Sandy?

Thanks, John. Good afternoon, everyone.

Revenue for the first quarter was $227.6 million, a year-over-year increase of 17%. This year's results included a full quarter contribution from our Ironworks acquisition and one month of our GHK acquisition, which closed on February 29, 2012.

Excluding these acquisitions, organic growth was 7%. Gross profit margin was 38.4%, similar to last quarter's 38.6% but below the 39.3% of last year's first quarter when we had the impact of performance incentives.

Indirect and selling expenses as a percentage of revenues declined to 28.9% from 29.7% in the first quarter of 2012. Indirect and selling expenses were $65.9 million in the quarter, an increase of 14% over last year's first quarter, including $600,000 in acquisition-related expenses.

Our EBITDA margin was 9.5%, similar to last year's. Adjusted to reflect acquisition expenses of $625,000, EBITDA margin was 9.8%.

Depreciation and amortization was $1.8 million this quarter compared to $2.8 million in last year's first quarter, in part due to a change in the estimated useful life of certain technology-related assets, and partially due to other assets that had been fully depreciated as of March 31, 2012.

Amortization of purchased intangibles was $3.5 million in the first quarter, up from $2.4 million last year. The increase was attributed to our recent acquisitions and in line with our expectations.

Operating income in the first quarter was $16.2 million, an increase of 21% over last year's first quarter. And operating income margin was 7.1%, up from 6.9% in the 2011 first quarter.

Interest expense increased $700,000, reflective of our higher average debt balance. The effective tax rate in both quarters was 40%.

Net income was $8.9 million in the first quarter, up 16% from last year's first quarter, and diluted earnings per share was $0.45, up from $0.39.

Primarily as a result of the acquisition of GHK, our long-term debt increased to $152 million from $145 million at December 31, 2011. We ended the quarter with a debt-to-capital ratio of 27%.

Cash flow from operating activities was $11 million for the quarter. Day sales outstanding for the quarter, including the impact of deferred revenues and excluding GHK, was 78 days compared to 74 in the prior year.

While there is some impact from the increase in our commercial business, we believe this number will normalize in the 70- to 75-day range in the remaining quarters of the year.

Capital expenditures in the quarter was $5.6 million, primarily reflecting the opening of our Martinsville operation center and the consolidation of several of our Maryland offices in Rockville.

Now to update you on our full year 2012 expectations for certain line items. We continue to expect the amortization of intangibles to be approximately $14.3 million to $14.8 million, subject to change based on final purchase price allocation per acquisition.

We are lowering our estimates for depreciation and amortization expense to a range of $11 million to $11.5 million from $12.6 million to $13.1 million due to a change in estimated useful life of certain technology-related assets and the timing of capital expenditures.

We are slightly raising our expectation for interest expense of $4.3 million to $4.7 million from $4.1 million to $4.5 million. We continue to expect capital expenditures ranging from $15.4 million to $16 million, a full year tax rate of 40% and fully diluted weighted average shares for the year of 20.2 million.

Thank you. And with that, I'd like to turn the call back over to Sudhakar.

Thank you, Sandy. Based on our current backlog in our new business pipeline, we continue to expect to achieve significant growth in 2012.

For the second quarter, we expect revenue to range from $247 million to $253 million, which at the midpoint is equivalent to 17.2% growth, and earnings per diluted share to range from $0.52 to $0.56, representing 20% growth at the midpoint. We reaffirm our full year guidance which calls for revenues in the range of $1 billion to $1.04 billion and fully diluted earnings per share of $2.05 to $2.15.

Additionally, we continue to be a strong cash flow-generating company. And for full year 2012, we expect cash flow from operating activities to exceed last year's $60 million.

Operator, I would now like to open the call to questions.

You may have said this or maybe you have it at the tip of your fingers there, but I'm wondering on the growth rates between the U.S. commercial, U.S.

federal and state and local that you gave, what's the organic rate for each of those lines?

Traditionally, we have not given organic growth by line. We traditionally give organic growth overall for the company.

So we have not done that. But I think a good approximation would be, not for the state and local but for the commercial and for the government business, sort of half and half.

Okay, okay. No, that's fair.

And I think last quarter you have talked about mid-single digit growth for the federal business. I mean, there's lot of choppiness and uncertainty out there.

Do you feel good about -- still feel good about that 5% growth level? Or where do you think that will shake out?

Yes, I think we did mid-single digits this time. We expect things to remain sort of the same for going forward, unless -- and if thing changes let me tell you.

But at the moment, I think we're okay.

Okay. And Sandy, on the D&A, the full year guidance of $11 million to $11.5 million, I guess assumes that it pops up quite a bit from the 1Q levels.

What's driving that? And does it immediately pop up in 2Q?

In Q2, I think it will be about the same level. So the $11 million, $11.5 million that we are citing is for the full year.

And we brought it down from our guidance previously. So...

So I need to make sure I have the right numbers, but there's $1.8 million in the first quarter.

Right.

So that would be kind of a $7.2 million run rate. So I guess that would assume that there's some kind of depreciation coming on the back half of the year?

Yes. We will be making -- because I think you see our capital expenditures are quite high this year.

And so they will be -- as they come on, obviously, we will start depreciating them.

Okay. And then just lastly, and you've talked about the discussions you're having with Ironworks right now across your customer sets.

But I don't know if you had any specific wins or victories that you can talk about that have demonstrated that cross-selling potential?

I can give you an example. There's a commercial client we have which -- who needed some work on sort of open communication technology issues, which they took out into.

And we have since run the work. And we have, I think, 4 or 5 people working sort of full time on that work for the last month or so.

So I think that that's been the first early success. We have taken them into a bunch of utilities.

Traditionally, utilities take some time to decide. We are quite optimistic about potential decisions from them.

But we're pleased that, that client gave us the first opportunity, instead of the other way around.

But just looking at the award levels, the $233 million is obviously quite strong, and you've had stronger awards -- strong awards over the past 4 quarters. Why do you think, particularly in the federal, aren't we seeing that organic growth go even higher?

What -- you're winning the business, like for example, in the third quarter last year, the record amount of business you won. Have you seen that staff up or has there been some slowness in the customer staffing some of those wins up?

I think that, as we discussed, I think we've -- we do continue to experience some contract-specific delays and some uncertainty with our clients. And so I think we talked about that last quarter.

I think that we continue to see that. We haven't seen a change in that environment since last quarter, but there certainly is -- certainly are experiencing some delays and uncertainties that's slowing the translation of backlog into revenue.

Any way you can split that award wins as roughly federal versus the rest of the business?

I think about -- we have government versus Commercial. So we can give you that.

That includes -- yes, I think 2/3 is government, 1/3 is commercial.

Yes, just on the guidance for the revenue for the year, can you talk about kind of what you're assuming about the second half of the year? It seems to get to I guess even the lower end of the range, you need a little faster growth in the second half of the year.

Are you expecting the projects that you won late last year and early this year to start to ramp up in the federal sector? Or are there any other issues that you're expecting to benefit the second half of the year more so than the first half?

Yes. I mean, I think we certainly expect the second half of the year to be stronger than the first half and we would expect to ramp up across several of our markets.

Certainly federal and commercial, we would expect to see a stronger second half than the first half, based on the sales we've had in Q3 and Q4, and obviously, this quarter was recently good sales, too.

What type of visibility do you have into that at this point? I mean, given the things are moving out to the right -- I mean, are there specific projects that you are looking at, that you feel pretty confident on?

Or is it just kind of an expectation that given that the sales you've had, it has to kind of start to flow through at some point?

I would say that -- I think there are specific contracts that we can look at and expect to see stronger second half growth, some of our larger implementation contracts in the energy area, and then expectation that we'll see additional ramp up in our federal business like we typically do in Q3 from a seasonality point of view. So I think it's a bit of both.

It's very specific large implementation contracts where we have confidence we'll ramp up nicely in the second half of the year, and kind of an expectation that we will see the usual seasonal uptick in federal markets.

Okay, great. And then the commercial business has definitely grown very quickly, but the growth on a year-over-year basis, at least organically, was slower that you found in the second half of the year.

Are we just coming up against tough times? Or was there any part of that that I guess slowed down in terms of the pace of the demand environment that you see out there?

I don't -- I think it's hard to grow 50% organic. I think that we don't see any slowdown.

I think it's doing quite well. Our traditionally slow commercial areas are also looking -- we are quite optimistic about them.

So I think that generally, the pace of the general environment seems pretty positive. And we think that we'll be able to continue to do this going forward.

On the -- just kind of following that, on the revenue side, just maybe asking a little bit different way. The commercial demand environment, I mean, are you seeing any impacts from global macro uncertainty, any pricing impacts or competitive impacts, perhaps any investment issues or needs that might negatively impact your Ironworks margin expectations?

No, I don't think we've seen any of that. I don't think we've seen any kind of global macroeconomic issues impacting the demand for our commercial services or the pricing of those services.

I think our commercial markets remain robust. And even our aviation market, which may be one the most kind of sensitive to the global economic environment is actually showing an improvement and is growing.

Our growth grew in the past quarter, so I don't think we've -- we certainly haven't seen any kind of impacts that -- from a global economic or any of those kinds of issues.

Okay. And just, I guess, maybe kind of obvious, but the revenues toward the low end of guidance in the quarter, I mean, was this driven all by the uncertainty and delays and so forth that you've seen on the federal side?

Or was there anything else happening in any other part of the business?

I think it's primarily driven by the uncertainty we've talked about for the last couple of quarters on the federal side. I don't -- that's really -- that's driven and it's nothing in our other markets.

Okay. And couple of housekeeping questions, Sandy.

Just what were the one-time acquisition-related expenses in the quarter?

$625,000.

Okay. And do you have a more specific acquired revenue number for the quarter for the combined GHK and Ironworks?

No, we don't provide that.

Okay. And you mentioned accounts receivables, DSOs were higher even when you make adjustments for GHK and factor in deferred revenues.

And you mentioned some commercial business impact that was behind that, but you think that will normalize. Could you give us a little bit more color on what's going on there?

Well, historically, if you look, Q1 is usually DSO is much higher than Q2, so we expect to see that same trend. The commercial receivables, if there's been nothing changed, we have no outstanding problem, so we do expect it to normalize.

Okay. But was there something more specific on the commercial side?

Is what you're seeing on the commercial side any different structurally than you expected or...

No, not really. I think as you've seen, our DSO has been coming up a little bit as our commercial has been growing.

Commercial, historically, is not as quick a pay as the prompt payment act by the government, so you will see a slight impact, but I think we can keep it to a minimum.

I was wondering if you could give us an update on your new facility in rural Virginia, if the ramping of employees there is progressing nicely? Most of my other questions have been answered.

Sure. I think that facility -- we'll continue to ramp that facility up.

I think, as you know, we opened it up and began operation there as of the first of the year. I think we're north of 150 staff in that facility.

I think we've found that we can hire high-quality people at very competitive wages in Southern Virginia. And so I think we're already seeing -- we're quite optimistic about the benefits of that facility and are confident we'll be able to fully leverage that facility and fill it up in the next 18 months.

And so it's proceeding quite nicely. I think we have a ribbon cutting next week to officially open that facility with the Governor of Virginia.

And so we're quite excited about that, and so it's all going quite nicely.

And if you'd like to come, we'd be pleased to have you.

Thank you, Sudhakar. I appreciate that personal invitation.

Do you see this endeavor and kind of initiative in a rural market where the competition structure can be a little different -- Is that something that you think you need to explore more fully? Or does this facility give you the avenue that you need for now?

I think this facility obviously gives us the capacity and the capability to leverage the lower cost structure, lower wage structure for both kind of the operational or implementation-related work, rebate processing call centers. I think we ultimately hope to have north of 500 people in this facility, so we certainly have room to grow.

I will say that we also hope to put more of our classic advisory and implementation consultants into that facility, and so we are taking a hard look at can we hire folks with college degrees into that facility to do more about classic advisory-related consulting. There's a dozen colleges within 100 miles of that facility.

And so we're also hoping that by doing that, we can find ways to be even more cost competitive and improve our profit, raise our profitability on the advisory and evaluation side, hiring staff into that facility. So we're still certainly exploring all avenues to leverage that facility.

And I think we're quite optimistic about it. And obviously, if we fill that facility with 500 people, we'll certainly look at opening another one down the road.

But I think right now, we're focused on filling up the one we have.

And just to that -- just to expand on that, I think we have this facility to accommodate folks with -- in an office setting with the traditional way we do it in Virginia or anywhere else, in Fairfax or anywhere else. So I think that the facility has both the traditional operations center kind of space, as well as office space of traditional office space so that we can have both kinds of people collocated in that facility.

Yes, in the reference to the revenue by markets, right now, Energy, Environment and Infrastructure is now 44%, moving from 41%. Going forward, do you expect this sector to more effect [ph] move in that direction, become a bigger part of your revenue?

Because it seems to me like the public sector and defense has been abused [ph], and that has been picked up by the energy and environmental sector. So going forward, do you expect this sector to more effect [ph] get a bigger part of your revenue?

I think that all of our sectors contain government work, so it's not only government revenue in -- it's not only commercial revenue in the energy, environment, infrastructure section. It's got both government and commercial revenue.

So I think we expect -- obviously, if the commercial business grows more rapidly, the -- most of the commercial revenue at the moment is in the energy environment business. So I think that will be a bigger percentage of our overall business.

But I think given the size of the business, I think it will change, but I don't see any dramatic changes going forward.

Yes, I would just add on that. I do think that, as I think all of you know, the health side of our business is a major part of our business.

I think we will continue to see major growth opportunities there obviously, and continue to see growth opportunities in the federal space there. And there is a portion of Ironworks business that's on the commercial health side.

And so I agree with Sudhakar that a larger portion of our commercial business is on the energy side. But I think both will continue to grow.

And it's not out of the question, if we win a large health opportunity on the federal space that it could move that needle. So I think there are growth opportunities on both the health and the energy environment side.

Okay. And one last question.

In terms of revenue, what percent of revenue came from the backlog this quarter?

I don't know if we typically have reported what percentage of revenue is from backlog.

We didn't.

I mean, I think -- yes, I mean, I don't exactly know what the -- what the question actually means because is it backlog as of the end of the year? Because all of the revenue have to come from the stuff we win.

So I think that -- but we don't do it. It's so hard to answer the question.

Well, in other words then. Was there -- any of your revenue came from business you signed within -- between January and March?

We don't traditionally calculate that. I think most of the revenue we have, a general rule of thumb is that the federal revenue has to be in backlog and the commercial revenue has higher velocity.

But then again, it's hard to exactly calculate that.

It's actually Rick Eskelsen on for Ed. Just 2 questions.

The first one is I was just wondering if you could you update us on the status of those 2 protests that you had outstanding?

There's been no resolution on those protests.

Are you still expecting for at least one of them that will happen sometime in the second quarter?

I think we're assuming that for one of them, it will be resolved by June. But I think that -- so that contract, we have assumptions about revenue in the second half of the year, but I don't believe there's really any material amount in the second quarter for that contract.

Okay. And then just a second one, now that you've closed the GHK and you have few months, I think you mentioned in the last call that you were baking in no growth from the acquisition.

I was wondering if that was still the case and if you have an update there?

Yes, actually it's just been 1 month since we closed GHK. So it's too early to tell.

So I would just stick to what we said earlier. And we'll certainly update you in case things change.

I thought just circling back to the backlog, I was wondering if we should start thinking about the backlog slightly differently than we did, say, in the past when commercial wasn't as a large percentage of the business. Obviously, most commercial business and IT services doesn't have much of a backlog to it.

They're not really backlog-based businesses as much as federal businesses. So should we start looking at that backlog number any differently given the mix of business as it stands today?

Yes, I think that it's a great observation. I think that our business is not -- the commercial business has certainly increased in percentages, but still the business does have -- federal certainly is the majority of the business, and then we have some state and local government business.

So I think it is good to start thinking about that because I do think that, that will be the case as the commercial increases as a percentage. But at the moment, the backlog is a good measure of visibility in revenue and earnings.

And I do think that -- I do believe that at the moment, the reason why the backlog is not translating into revenues, as John was mentioning, as quickly as we're thinking is because of some uncertainties with the contract issue. So I think that it will return to normal and that will again give us a pretty good sense of at least the government revenues going forward, not necessarily overall ICF revenues, but at least the government portion of the ICF revenues going forward.

Okay. I guess just to follow up on that, is it fair to say that your commercial business has not as much backlog to it?

So as that business grows, maybe we should look at a book-to-bill and maybe some kind of discounted way to a certain degree based on the size of commercial?

Yes, I think it is true, but I would just caution that some of the energy efficiency work, which we have, has backlog because they are multi-year contracts which we get. And in fact, that backlog is -- doesn't go through re-appropriation process.

So in fact, if you have a 3-year contract, you get 3 years of backlog. So having said that, the other kinds of commercial business we have, for example, in the litigation support area or in certain aviation projects and in some of the other work we do for commercial clients is the kind of work which you are talking about.

So that is correct. The book-to-bill, et cetera, would be important.

Okay. That's helpful.

And then just on -- just a couple of the lines of business. John, I think you mentioned that the airline business was up a little bit, trended up here in Q1.

Do you think that, that is sustainable based on what you see? And then state and local business, obviously, was very strong, kind of a small base.

But are there other some specific things going on there that we should be aware of in terms of continued outsized growth? Or was that just a little positive lumpiness?

First, I think on the airlines and airports, the aviation, includes both airlines and airports. I think it's -- that business has certainly improved in the last couple of quarters.

And I think, we see a pipeline there. And so I think we're cautiously optimistic on that business that we've turned the corner and are back to growing it.

The state and local, I think, we have I guess 1 or 2 specific contracts that we've won that have been key drivers in growing that business. And so, there, I think is a smaller base.

You will see more lumpiness up and down because if you win a large contract and work it, it's a smaller base. But what's been driving that is 1 or 2 contracts we've won in the state and local market.

Thank you for your interest, and thank you for joining us. We look forward to speaking with you at our next earnings call.

Thank you.