Timothy Mulrooney

Tim Mulrooney of William Blair asked for clarification on the drivers behind the significant Q2 EBITDA margin beat, the rationale for not raising the AMS/DRS full-year growth guidance despite strong H1 results, and the performance of the Brink's Global Services (BGS) business.

Answer

CEO Mark Eubanks explained the margin beat was driven by strong underlying organic growth (masked by fewer workdays), a favorable revenue mix toward high-margin AMS/DRS, and significant productivity gains. He noted that while AMS/DRS growth is expected to accelerate in H2, the guidance accounts for the inherent lumpiness of large customer rollouts. He also confirmed the BGS business moderated to mid-single-digit growth as expected. CFO Kurt McMaken added that pricing successfully covered cost inflation during the quarter.

Timothy Mulrooney asked for a detailed breakdown of the Q2 margin guidance, the factors bridging the lower first-half margins to the guided full-year expansion, the expected full-year impact from lower Argentine interest income, and the reasons for AMS/DRS business resilience.

Answer

CFO Kurt McMaken attributed the first-half margin pressure to FX mix from the Mexican peso, a significant year-over-year decrease in Argentina interest income (quantified at $4-5 million per quarter), and higher restructuring costs. He noted margins will improve in the second half as the peso impact moderates and the company laps a large security loss from the prior year. CEO Mark Eubanks added that the AMS/DRS business is more resilient due to the vast untapped market opportunity and its subscription-based revenue model, which is less variable than the traditional, volume-based CIT business.

Timothy Mulrooney of William Blair sought clarification on the foreign currency impact, asking for a breakdown of the headwind for Q3 and Q4 and confirming the guidance methodology. He then pivoted to the strong AMS and DRS performance, questioning if the 20%-plus growth rate is a new sustainable level versus prior expectations.

Answer

CEO Mark Eubanks stated the incremental FX headwind for the second half of the year is approximately $100 million, split evenly between Q3 and Q4, driven mainly by the Mexican peso. CFO Kurt McMaken confirmed the guidance is based on September 30 exchange rates. Regarding AMS and DRS, Eubanks expressed increased optimism, suggesting the strong performance is sustainable into the first half of 2025 due to a strong backlog and customer reception, and confirmed that Q3 growth was not driven by one-time equipment sales.

Tim Mulrooney asked about the sustained momentum in residential performance from June/July into the rest of Q3, the outlook for October, and details on the Saela acquisition's outperformance, including growth, selling season, margins, integration, and EPS accretion.

Answer

Ken Krause (EVP and CFO) noted strong execution throughout Q3, with further improvement in September and a healthy pace in October, highlighting recurring residential revenue approaching 6%. Jerry Gahlhoff (President and CEO) explained Saela's revenue outpacing expectations (mid-$70M vs. mid-$60M), its balanced growth approach beyond door-to-door, and the smooth integration due to Rollins' hands-off approach. Ken Krause added that Saela and Fox acquisitions provide new geographies, Saela is slightly accretive to GAAP EPS, has a strong margin profile, and healthy churn.

Tim Mulrooney from William Blair asked for details on Q2 residential performance, including the organic growth breakdown and lead volume trends. He also inquired about the impact of generative AI on both revenue generation and cost efficiencies.

Answer

EVP & CFO Kenneth Krause noted that residential growth was choppy but ended June strong, with performance in line with the prior full year. President & CEO Jerry Gahlhoff added that while lead volumes softened due to Google AI changes, lead quality and close rates improved, leading to daily sales records in June. On AI's cost impact, Krause mentioned the company is focused on more immediate 'lower hanging fruit' for cost savings, while Gahlhoff stated the marketing team has adapted well to AI-driven search changes.

Timothy Mulrooney asked about demand trends in Rollins' consumer-facing businesses, questioning if there were any signs of a slowdown, and whether the strong commercial results were a direct payoff from recent strategic investments.

Answer

CEO Jerry Gahlhoff stated that while January and February were slower, demand improved in March with no signals that gave the company pause. CFO Ken Krause added that recurring organic growth in commercial was nearly 10% and that the company is seeing good returns on its investments. Jerry Gahlhoff further noted that the sales cycle for B2B is longer, so investments from late last year are now beginning to yield results.

Timothy Mulrooney from William Blair & Company inquired about the drivers behind the strong 6.5% organic growth in the residential business, which surpassed expectations based on third-party data. He also asked for clarification on the significant increase in sales and marketing expenses, questioning whether it reflected higher lead costs or strategic growth investments.

Answer

CEO Jerry Gahlhoff explained that external data often misaligns with their internal results and attributed the residential strength to a larger customer base and a significant Q4 surge in rodent-related service calls. Regarding expenses, both Gahlhoff and CFO Ken Krause clarified the increase was due to investments in sales staffing, particularly for commercial and cross-selling initiatives, not higher advertising costs. Krause emphasized that recurring residential revenue is growing, validating the investment strategy.

Timothy Mulrooney inquired about the 5% residential organic growth, the health of the consumer, and the split between recurring and onetime sales. He also asked if full-year incremental margins would align with the target range despite recent investments.

Answer

EVP and CFO Kenneth Krause expressed confidence in the overall 7-8% organic growth target, highlighting over 6% recurring revenue growth in the residential sector and a ~$2 million revenue impact from Hurricane Helene. President and CEO Jerry Gahlhoff added that the residential consumer remains strong, though onetime sales are more inconsistent. Regarding margins, Krause reiterated the long-term 30%+ incremental margin goal, attributing the quarterly dip to planned investments in sales, marketing, and technology, which Gahlhoff characterized as a "timing issue."

Tim Mulrooney sought clarification on how much of the backlog, excluding modular, is expected to start within the next 12 months, distinguishing between projects being pushed out versus elongated due to size. He also asked about the drivers of strength and profitability in the service revenue segment and its correlation with new construction.

Answer

CFO Bill George clarified that the majority of reported backlog represents work remaining on already started jobs, and new bookings (excluding modular) are slated to begin within a year. COO Trent McKenna explained that service business strength is execution-driven, involving Salesforce collaboration and broad market demand, growing steadily through maintenance contracts and conversion of new construction projects.

Tim Mulrooney sought clarification on the backlog, asking what percentage of the non-modular backlog is expected to commence within the next 12 months, and if the backlog's elongation is due to projects being pushed out or simply larger project sizes. He also inquired about the drivers behind the strong growth and profitability in the service revenue segment, and if there's a correlation between new construction strength and service contract conversions.

Answer

CFO Bill George clarified that the majority of the reported backlog represents work remaining on already-started jobs, and new bookings are typically for projects slated to begin within the next year, often with preliminary work already underway. COO Trent McKenna explained that service business strength is driven by Salesforce collaboration, broad market demand, and strong execution, noting that it's a steady, day-to-day business that converts new construction work into maintenance contracts over time.

Tim Mulrooney from William Blair asked for clarification on the organic decline in the land maintenance business, questioning the drivers behind lower contract services versus discretionary ancillary work and the potential for a quick rebound.

Answer

President and CEO Dale Asplund explained the decline was primarily driven by customers reducing discretionary spend, including some with 'per occurrence' contracts who stretched service intervals, rather than altering long-term agreements. He expressed optimism that the worst of these headwinds is over. EVP & CFO Brett Urban added that this trend is consistent with past macro events and that fundamentals like customer retention, which has improved by 300 basis points, remain strong.

Timothy Mulrooney asked for an update on the expected timing for maintenance land organic growth to turn positive and questioned how much room for improvement remains in customer retention.

Answer

CEO Dale Asplund and CFO Brett Urban reaffirmed their expectation for the core land business to return to growth in the second half of fiscal 2025, driven by momentum in employee and customer retention. Asplund described the company as being in the 'early innings' of improving customer retention, aiming to surpass the historical 85% rate. Urban added that stabilizing retention is a prerequisite for ramping up sales force investments later in the year.

Timothy Mulrooney from William Blair & Company asked about the expected trajectory for core maintenance land growth in fiscal 2025, noting the positive trend of a decelerating decline in recent quarters.

Answer

President and CEO Dale Asplund stated the goal is to exit fiscal 2025 with mid-single-digit land growth, driven by improved customer retention and trust leading to more ancillary spending. CFO Brett Urban detailed the improving trend, with the core land business shrink moving from 4% in Q1 to 1% in Q4, and projected a return to growth in the second half of fiscal 2025. Dale Asplund emphasized that the 200 basis point retention improvement was the first since the company went public, underpinning their confidence.

Tim Mulrooney of William Blair asked about trends in the portable storage business, referencing positive commentary from a competitor, and sought clarification on a statement about pricing being 'flat on new contracts.'

Answer

President & COO Timothy Boswell confirmed that WillScot did see sequential improvement in storage units on rent during Q2, though year-over-year order rates were still down. He clarified his earlier comment on pricing, stating that spot rates on new contracts in the modular business were flat year-over-year in aggregate, which he views as stable. He noted this was also largely similar for the container side of the business.

Timothy Mulrooney asked about recent activation trends for March and April and inquired about the sequential dip in average monthly rental rates from Q4 to Q1, which is atypical. He sought to understand if this was due to pricing changes or other factors like mix and seasonality.

Answer

CFO Matthew Jacobsen reiterated that March/April activations were flat YoY for modular and up 3% for storage, showing improvement. President and COO Timothy Boswell explained the sequential AMR dip was not due to lower spot prices, but rather the seasonal roll-off of higher-rate climate-controlled storage units after a strong Q4. He expects modest sequential AMR gains to resume through 2025.

Timothy Mulrooney of William Blair & Company inquired about the assumptions for activation volumes and seasonality embedded in the 2025 guidance. He also asked about the recent pause in share repurchases and the outlook for buybacks in the coming year.

Answer

CFO Matt Jacobsen and President & COO Timothy Boswell confirmed that the 2025 guidance assumes a more normal seasonal pattern for activations. Boswell added that while Q1 activations are down, this was forecasted, and net order rates are showing strong sequential increases. Regarding buybacks, CEO Bradley Soultz and CFO Matt Jacobsen stated there has been no change to their capital allocation policy, noting they were out of the market for a period last year for reasons discussed previously. Soultz emphasized that buybacks remain a powerful lever and the new dividend is an additional, not replacement, avenue for capital return.

Tim Mulrooney of William Blair asked for more detail on Tetra Tech's backlog, questioning if the flat year-over-year growth indicated slower revenue or a shift in the federal procurement cycle. He also inquired about the margin profile of the current backlog compared to the previous year.

Answer

Dan Batrak, CEO, President & Chairman of the Board, explained that while contract issuance remains steady, the conversion to funded, authorized backlog has slowed due to personnel changes within government contracting offices. He characterized the situation as a shift to a 'book and burn' model with shorter visibility, not an impact on revenue potential. Batrak confirmed the backlog's margin profile is increasing, supporting the company's goal of 50 basis points of annual margin expansion, driven by a shift to higher-value front-end services and more fixed-price contracts.

Timothy Mulrooney asked about the potential for reduced federal expenditures to negatively impact the state and local business, and how Tetra Tech is preparing for potential environmental deregulation at the EPA.

Answer

CEO Dan Batrack responded that he does not see near-term pressure on state and local projects, citing the stability of multiyear programs and strong budgets in key states like Florida and Texas. Regarding the EPA, he explained that approximately 90% of Tetra Tech's environmental work is driven by state and local regulations. He added that federal focus on emerging contaminants like PFAS could present opportunities, particularly with the Department of Defense as a key client for cleanup.

Timothy Mulrooney asked about the assumptions for USAID work within the fiscal 2025 guidance, particularly what is factored in at the midpoint and the company's confidence that projects will resume after the 90-day review.

Answer

CEO Dan Batrack explained that the guidance is conservative, assuming only about half of the originally forecasted USAID work for the remainder of the year. He noted that the midpoint of the guidance could be reached even if contracts are terminated, through recoverable demobilization costs. Batrack expressed confidence that a large portion of the work, which is critical to U.S. national security in regions like the South China Sea, will be reviewed and reinstated, potentially pushing results to the high end of the guidance range.

Timothy Mulrooney inquired about the potential impact of the recent U.S. election on Tetra Tech's renewables practice, its current size, and its recent performance. He also asked for an update on capital allocation priorities for fiscal 2025, given the company's reduced leverage.

Answer

CEO Dan Batrack explained that the renewables practice is a $200 million business, primarily driven by hydropower and growing offshore wind projects, which he believes are resilient due to strong economics and state-level mandates, not just federal policy. CFO Steven Burdick outlined capital allocation priorities as: 1) organic growth, 2) dividends, and 3) strategic acquisitions, noting that the stock buyback program will be more closely considered now that leverage is at 1.0x EBITDA.

Tim Mulrooney of William Blair & Company inquired about the specific drivers behind the Q2 revenue beat and the reasons for the gross margin decline in the Specialty Services segment.

Answer

EVP & CFO David Jackola explained that the revenue outperformance was due to strong contract and project activity, along with some pull-forward of materials from rising costs. He attributed the Specialty Services margin pressure to an increase in new project starts, which are more material-heavy upfront, as well as rising material costs and weather impacts, noting that margins are expected to improve sequentially.

Timothy Mulrooney of William Blair & Company, L.L.C. questioned the primary driver for Q1 organic growth coming in at positive 2% versus the guided decline, and asked about demand trends for the projects business, specifically if customers are delaying projects due to tariff uncertainty.

Answer

EVP and CFO Glenn Jackola clarified that the outperformance on Q1 organic growth was mainly due to pulling forward material purchases ahead of potential tariff-related price increases. President and CEO Russell Becker added that the company has not seen any significant project delays or pullbacks due to tariff noise, and the backlog continues to build.

Timothy Mulrooney of William Blair & Company requested an update on the three specific project delays from 2024 and asked about the company's exposure to federally funded projects.

Answer

President and CEO Russ Becker clarified that of the three major delays, one is complete, one is progressing, and the third is moving forward despite some winter-related slowdowns, with all factors built into the 2025 plan. He stated there are no new, similar large-scale delays anticipated. Regarding federal projects, he noted the exposure is not material to total revenue and that the company is more focused on managing potential tariff impacts on material costs like steel pipe.

Tim Mulrooney of William Blair & Company questioned why Ecolab maintained its full-year guidance despite a strong Q2, asking if this reflected conservatism or other underlying factors.

Answer

Christophe Beck, Chairman & CEO, explained the decision is a combination of conservatism and a strategy to increase investments in high-growth areas. He reaffirmed the company's commitment to delivering 12-15% adjusted EPS growth, noting that any over-performance would be shared between incremental investor returns and further reinvestment into growth engines like Life Sciences and Data Centers.

Timothy Mulrooney inquired about the expected cadence and primary drivers for Ecolab's operating income (OI) margin expansion toward its 20% target by 2027.

Answer

Christophe Beck, Chairman and CEO, expressed high confidence in reaching the 20% OI margin target by 2027, projecting the company will surpass 18% in 2025. He attributed this to steady top-line momentum, solid value pricing, innovation, and productivity gains. Beck also highlighted that new, high-growth engines like Global High-Tech and Ecolab Digital are expected to contribute margins well above 20%, further fueling the expansion.

Timothy Mulrooney inquired about the trajectory of volume growth moving into the fourth quarter, asking for details on the key drivers, particularly within the Institutional business.

Answer

CEO Christophe Beck expressed satisfaction with the 2% volume growth in Q3, attributing it to strong value pricing and new business wins. He highlighted that the growth was broad-based across most businesses and geographies, with Institutional & Specialty notably gaining share in a declining market. Beck also pointed out that growth outside of a flat Europe was particularly strong.

Tim Mulrooney from William Blair asked which business lines or sectors drove the strong 9% organic growth in Q4, which surpassed both consensus estimates and the company's implied guidance.

Answer

President & CEO Todd Schneider confirmed the quarter exceeded expectations, attributing the outperformance to business momentum and some discrete, one-time benefits. Specifically, he highlighted a strong performance in training services within the First Aid business and a robust 9% growth in the Uniform Direct Sale business, which he characterized as a strong but bumpy close to the year.

Tim Mulrooney of William Blair asked which business lines drove the strong 9% organic growth in the fourth quarter, which surpassed both consensus estimates and the company's implied guidance.

Answer

President & CEO Todd Schneider attributed the outperformance to strong business momentum, along with some discrete, one-time benefits. He specifically highlighted a great performance in the training area of the First Aid business and a strong 9% growth in the Uniform Direct Sale business to close out what he described as a 'bumpy year' for that segment.

Timothy Mulrooney asked about the slight reduction in the high end of the organic growth guidance and inquired about the drivers behind the exceptionally strong 60% incremental EBITDA margins, questioning if any one-off factors were involved.

Answer

CEO Todd Schneider and CFO Mike Hansen clarified the guidance adjustment was minor fine-tuning, with the implied second-half outlook remaining consistent. Schneider confirmed there were no one-off factors for the high margins, attributing them to strong revenue leverage and ongoing efficiency programs in supply chain, engineering, and Six Sigma initiatives.

Tim Mulrooney of William Blair inquired about ABM's cash flow, specifically questioning the details of the RavenBold earn-out and how the company plans to bridge the significant gap from negative first-half free cash flow to its positive full-year guidance. He also asked about the organic growth outlook for the Business & Industrials (B&I) segment for the second half of the fiscal year.

Answer

EVP and CFO Earl Ellis clarified that the RavenBold earn-out is largely a financing cash flow item and reiterated the normalized full-year free cash flow guidance of $250M to $290M. He attributed the first-half shortfall to temporary billing delays from the new ERP system, noting a $138M sequential improvement in Q2 and expecting further progress in Q3 and Q4. President and CEO Scott Salmirs expressed confidence that the B&I segment has now entered a period of sustained positive organic growth.

Timothy Mulrooney asked for context on the 24% quarterly improvement in commercial office leasing activity and inquired about ABM's revenue exposure to federal buildings within its B&I and Technical Solutions segments.

Answer

President and CEO Scott Salmirs explained that the leasing improvement reflects a continuous positive trend of return-to-work momentum rather than seasonality. He clarified that ABM has almost no risk from federal building footprint reductions, as their minimal federal work is in protected, mission-critical environments like data centers.

Timothy Mulrooney inquired about the better-than-expected performance in the Manufacturing & Distribution (M&D) segment, specifically the status of a major customer rebalancing, and also asked about a $4 million remediation charge in Technical Solutions.

Answer

President and CEO Scott Salmirs explained that the M&D customer rebalancing has proceeded better than anticipated but is not yet complete, with two more phases expected in fiscal 2025. He added that ABM has also won new sites with this client. Regarding the charge, Salmirs and EVP and CFO Earl Ellis clarified it was a rare, anomalous technical issue related to a specific portion of a large project initiated in 2018 and is not expected to recur.

Timothy Mulrooney asked for clarification on the updated EPS guidance, questioning why Q3 was stronger than the Q4 forecast. He also inquired if the significant margin improvements in segments like Aviation and Manufacturing & Distribution (M&D) were sustainable into 2025.

Answer

EVP and CFO Earl Ellis explained that the Q4 forecast reflects the full impact of a previously discussed customer rebalancing in the M&D segment, which was not fully present in Q3's outperformance. President and CEO Scott Salmirs affirmed the margin strength is sustainable and a result of high performance across the board, not one-time events, expressing confidence in the company's continued execution.

Timothy Mulrooney asked about the potential risks and opportunities from the Trump administration's proposed environmental deregulation, the strong performance of the Measurement and Analysis segment, the impact of EPA workforce reductions, and the company's leverage ratio targets after redeeming its preferred stock.

Answer

Vijay Manthripragada, President and CEO, explained that unwinding regulations is legally complex and time-consuming, and that clients are maintaining their environmental strategies due to long planning cycles and the significant influence of state-level regulations. He attributed the Measurement and Analysis segment's strength to sustained, broad-based demand and operating efficiencies rather than a single driver. He also noted that EPA workforce reductions could slow regulatory changes but have not altered client behavior, as they focus on long-term compliance. Allan Dicks, CFO, stated that after the final preferred stock redemption, the leverage ratio is expected to be under 3.0x, with a long-term target of operating below 3.25x while resuming M&A.

Timothy Mulrooney from William Blair & Company questioned the 2025 guidance, asking why adjusted EBITDA margins are projected to be flat year-over-year despite strong organic growth. He also inquired about the 2024 operating cash flow conversion falling short of the 50% target and the reasons for confidence in hitting that target in 2025.

Answer

CEO Vijay Manthripragada acknowledged opportunities for margin accretion, particularly in the Remediation and Reuse segment, but described the guidance as a conservative, 'middle of the fairway' outlook. CFO Allan Dicks explained the 2024 cash flow miss was due to timing issues, specifically the delayed collection of receivables from the City of Tustin and stronger-than-expected Q4 revenue growth, expressing confidence in a rebound for 2025.

Tim Mulrooney asked about the potential business impact of the Trump election, the recent departure of the COO, and the integration performance of recent acquisitions like Origins and Spirit.

Answer

President and CEO Vijay Manthripragada explained that the company grew significantly during the previous Trump administration and expects consulting and treatment services to perform well. He clarified that the COO is stepping down from the role for personal reasons but will remain with Montrose to assist in a transition. He also confirmed that the Origins and Spirit acquisitions are performing exceptionally well, integrating smoothly, and driving accretive growth and cross-selling opportunities.

Timothy Mulrooney asked about the timing of the peak impact from the new administration, the updated value of contract terminations, the revenue contribution from the AEG acquisition, and the outlook for the IT modernization business amid increased government scrutiny.

Answer

Executive John Wasson stated that the federal environment remains fluid, with impacts in Q2 and Q3 expected to be similar to Q1. CFO Barry Broadus updated the multi-year backlog impact from contract terminations to $375 million. Management noted they are pleased with AEG's performance but do not break out its revenue separately. John Wasson also confirmed the IT modernization business is expected to decline 5-10% for the year due to award delays, not significant contract cuts.

Timothy Mulrooney of William Blair inquired about the drivers for the reduced annual revenue guidance, the expected revenue cadence for the year, the net impact of severe weather, and the company's capital allocation priorities following a special dividend.

Answer

Executive Iain Humphries clarified that the revised guidance reflects a measured view of the full year, not just the Q1 shortfall, and that the 45-55 first-half/second-half revenue split is still expected. He confirmed this year's weather impact was more severe than the prior year's. Executive Bruce Young noted the special dividend payment should be added to the reported net debt. Humphries reiterated a balanced capital allocation strategy, while Young highlighted an increased focus on M&A opportunities.

Timothy Mulrooney inquired about the expected cadence of EBITDA growth throughout fiscal 2025, the current fleet utilization rate, and any potential risks to infrastructure project funding under the new administration.

Answer

CFO Iain Humphries stated that EBITDA growth will be back-half weighted, aligning with a return to normal seasonality, and that fleet utilization remains around 70% with room for improvement. Executive Bruce Young expressed optimism about infrastructure, viewing the new administration as a potential catalyst to accelerate project starts by easing requirements for already-allocated funds.

Timothy Mulrooney of William Blair & Company asked for a breakdown of the 2025 revenue growth guidance between organic and acquired sources, and inquired about the composition and risk profile of the record backlog.

Answer

CFO Edward Codispoti detailed that the guidance assumes 5% to 7% organic growth and includes approximately $17 million from acquisitions already completed in 2024, with no future M&A factored in. Executive Chairman Dickerson Wright emphasized the high confidence provided by the record $904 million backlog, which covers 88% of the low-end guidance. Wright and CEO Ben Heraud added that the backlog has a healthy mix, with significant growth from utility clients, and has seen minimal disruption from federal activities.

Timothy Mulrooney of William Blair & Company noted that Core Laundry margins held up well but that full-year guidance implied back-end pressure, asking for clarification. He also asked for long-term targets to help frame the Board's rejection of the Cintas offer and questioned the nature of the 'executive transition costs' in the non-GAAP reconciliation.

Answer

CFO Shane O'Connor explained that Q1 is typically the most profitable quarter and some Q1 benefits may have been related to timing, with the full-year profitability trend expected to mirror the prior year. CEO Steven Sintros reiterated long-term goals of mid-single-digit growth and high-teens EBITDA margins. He also clarified that the executive transition costs were related to the onboarding of a new COO and the departure of a senior operating VP.

An analyst on behalf of Tim Mulrooney asked about the performance assumptions for the Uniforms and Workplace Supplies segments in the 2025 outlook and for details on improved frontline employee retention.

Answer

CFO Rick Dillon stated that while Uniform wins are expected to pick up, Workplace Supplies will likely continue to outpace Uniforms in growth. CEO Kim Scott attributed improved employee retention to a step-change in engagement, better training, and a new regional structure with smaller leadership spans of control, all contributing to making teammates feel more valued.

Tim Mulrooney from William Blair & Company asked for quantification of the revenue and profit contribution from the Baptist Health JV embedded in the 2019 outlook. He also sought clarity on the drivers for G&A expense reduction in 2019 and inquired about a historical restatement in the healthcare segment's revenue.

Answer

CFO Stephen Lieberman stated the Baptist Health JV has a long-term RBR run-rate target of $75 million to $100 million and will see significant progression towards that in 2019. CEO Julie Howard explained that G&A reductions will be achieved by eliminating trapped costs through real estate consolidation, IT contract renegotiations, and program reductions. She also confirmed that a life sciences regulatory consulting practice was moved from the divested disputes business into the healthcare segment, which accounted for the change in historical figures.