Acuren Corporation - Earnings Call - Q3 2025

Executive Summary

• Q3 revenue was $473.9M, up 56% YoY on a combined basis, with Adjusted EBITDA of $77.3M and GAAP EPS of $(0.08); TIC reaffirmed FY25 revenue of $1.53–$1.565B and Adjusted EBITDA of $240–$250M.
• Results reflected two months of NV5 contribution post-close (Aug 4) and early integration progress; cost synergy target raised from $20M to $25M, expected at full run-rate by mid-2027.
• Mix was helped by higher-margin consulting engineering and geospatial; inspection and mitigation faced softer chemicals and LNG project timing headwinds, partly offset by run-and-maintain and call-out strength.
• Balance sheet strengthened with an October $250M PIPE at $12; liquidity was $282.9M (cash $164.4M, revolver availability ~$118.5M) as of 9/30/25; term loans ~$1.6B.

What Went Well and What Went Wrong

What Went Well

• Diversification and integration momentum: “Our third quarter results demonstrate the strength of our platform... combining the legacy Acuren and NV5 businesses... We have increased our identified cost synergy target from $20 to $25 million.”.
• Margin mix: Adjusted gross margin expanded to 36.1% versus ~29.6% in the combined prior-year period, reflecting contribution from NV5’s higher-margin services.
• Data center and secular tailwinds: “Data center work for our hyperscaler clients more than doubled over the TTM... infrastructure buildout, grid modernization and energy transition are multi-year growth drivers.”.

What Went Wrong

• Chemicals end-market softness and LNG timing weighed on inspection and mitigation; segment revenue down ~3% YoY despite run-and-maintain resilience.
• Adjusted EBITDA margin of 16.3% was slightly below the 16.9% combined prior-year comp as integration and higher SG&A mix from NV5 weighed on the quarter.
• Federal shutdown created limited, non-material delays in Q4 purchase orders/work orders (government exposure ~20% total, <10% federal), adding some near-term execution friction.

Transcript

Speaker 0

Hello, and welcome to the Tick Solutions Third Quarter twenty twenty five Earnings Conference Call. Currently, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Andrew Shen, Director of Investor Relations.

Thank you. You may begin.

Speaker 1

Thank you, operator. Good morning, everyone, and thank you for joining the call today. Joining me this morning is Tal Paisi, our Chief Executive Officer Kristin Schultes, our Chief Financial Officer and Robbie Franklin, Executive Chairman Ben Hurad, our President and Chief Operating Officer, will join us for the Q and A session. Before we begin, I'd like to remind you that certain statements in the company's earnings press release and on this call are forward looking statements, which 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. Our statements are as of today, 11/12/2025, 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 third quarter financial performance on the Investor Relations page of our new website, reflecting our recent name change, www.ticksolutions.com. Our comments today will also include non GAAP financial measures and other key operating metrics. The required reconciliations of our non GAAP financial metrics can be found in our press release and in our presentation.

Before we begin, let me outline the flow of today's prepared remarks. Tal will cover business performance and key operational highlights. Kristin will review our financial results, provide an update on our outlook and share progress on our integration program. Robbie will share perspectives on the strategic alignment of the combined company and how Tech Solutions is positioned for long term growth. It's now my pleasure to turn the call over to Tao.

Speaker 2

Thank you, Andrew. Good morning, everyone, and thank you for your continued interest in TIC Solutions. Welcome to our third quarter twenty twenty five earnings call. As you may have seen, our new name TIC Solutions reflects the unification of Acurin and NV5 under a single platform dedicated to reliability, innovation and service excellence. During the quarter, we brought together these two strong organizations under the TIC solutions banner.

This creates a unified tech enabled TIC and engineering services leader with scale, diversification and momentum across infrastructure, energy transition and data centers that deliver comprehensive asset integrity and infrastructure solutions. I am pleased with what I'm seeing in these early months. Our teams are collaborating well and we're laying the groundwork for meaningful synergy capture as integration actions move from year end into 2026. The new name also reflects our intention to continue to expand the markets we serve and the services we provide within the tick and engineering space. Let me start with our strategic vision, recent performance and market momentum.

As a combined entity, we now support clients across the full lifecycle of critical assets and infrastructure from design and construction through commissioning, operation, ongoing maintenance compliance and decommissioning. Our technicians and technology collect critical data on asset condition, whether the asset is as small as a pressure safety valve or as large as a data center, a bridge, or a shoreline. Our engineers then analyze that data with capabilities to use artificial intelligence to assess integrity, extend life and where needed mitigate risk through our industrial rope access and remediation capabilities. We are not simply larger, we're more capable and that matters in serving the complex regulated needs of our end markets where reliability, safety and compliance are paramount. Equally important is the diversification we've achieved through the combination.

We're now at $2,000,000,000 plus business with balanced exposure across multiple attractive end markets. On a combined year to date basis, we delivered year over year revenue growth of approximately 5% across our three segments. Our growth was supported by double digit expansion in our consulting engineering segment. The exciting data center work for our hyperscaler clients more than doubled over the trailing twelve months reflecting accelerating demand from AI and cloud infrastructure build outs. As hyperscalers expand into new geographies, we're growing with them both domestically and internationally.

Activity in infrastructure conformity assessment, building planning and design, and building digitization also continues to strengthen alongside infrastructure build out across North America. Finally, infrastructure investments supporting grid modernization and the energy transition are creating new opportunities across all three of our segments. These are not short term trends. They are multi year growth drivers. Reinvestment in both new and aging infrastructure expands our addressable market and our combined capabilities position us well to compete and win.

Moving to geospatial, our geospatial data collection and analytics services performed well with steady mid single digit growth against the prior year as well as a compelling margin during the quarter. Performance was supported by healthy utilization, increased momentum in aerial hydrospatial and stable demand across both public and private sector clients. The Inspection and Mitigation segment has delivered year to date growth despite the negative impact related to the timing of capital projects such as LNG construction, softness in the chemicals customer base and foreign exchange headwinds. In the third quarter, growing run and maintain activity along with stable call out work helped offset these declines. Turning to integration and cross sell execution, we are having meaningful conversations with our clients about delivering more solutions than either business could provide independently.

In several cases, we're already collaborating on opportunities that leverage our combined capabilities and these joint efforts will translate into tangible revenue wins and new value for our clients as we further integrate. We've seen examples of tangible cross selling momentums. I'll provide two. Our consulting engineering team is partnering with our inspection and mitigation team on a nationwide laser scanning and digital blueprinting initiative covering more than 1,000 retail sites with expansion into Canada planned for next year. The program integrate integrates legacy Atkiern field workforce and legacy NV5's digital modeling capabilities to deliver high resolution data rich building scans that support real time asset tracking and space management for the client.

The scans enable the technology to achieve roughly 99% accuracy for tracking both quantity and location of individual retail products, providing a scalable foundation for future digital inventory applications. We're also collaborating on a digital twin initiative for a major mining operator in Canada, combining our site access and inspection expertise with our modeling and analytics capabilities for one of our long standing clients. The program covers more than a dozen facilities and is focused on creating asset level maintenance models that allow the client to track individual asset component condition, age, and replacement needs to optimize long term reliability. These examples demonstrate how the combined organization is actively unlocking opportunities that neither could have pursued independently as stand alone companies, highlighting the practical value of our value creation for our clients. More broadly, the strength of the platform lies in the essential nature of our work.

Our customers rely on us to keep critical assets, buildings and infrastructure operating safely and efficiently. Our work is fundamental to how these assets are managed. Our recurring run and maintain business provides stability while our specialized offerings command premium pricing when timing is critical and when deep technical expertise is required. Together, these factors drive a resilient business model with durable performance through varying business cycles. As we move forward, our focus is on disciplined execution, growing the business, advancing integration, capturing synergies, both revenue and cost synergies, enhancing margins and driving long term value creation for our stakeholders.

We clear opportunities to invest prudently in the growth, improve efficiency and continue strengthening our platform for scale. I will now hand the call over to Kristen to walk through our financial performance in greater detail.

Speaker 3

Thank you, Tal, and good morning, everyone. Third quarter revenue of $473,900,000 grew substantially year over year, reflecting two months of NV5's contribution following the August closing. This growth reflects continued performance across our core end markets. If we look at the growth of the business as if the acquisition had happened on 01/01/2024, the third quarter growth of the combined business would have been approximately 2.4%. On a year to date basis, the combined business grew approximately 4.7%.

Beginning with this 10 Q, we've introduced segment level reporting that aligns with how we lead and manage the business and how we plan to communicate about the business going forward. We felt it was important to provide a clear view of the different parts and how each contributes to our performance. Our Inspection and Mitigation segment, which is primarily the legacy Accurin business, generated approximately $293,000,000 in revenue, down approximately 3% from the prior year period and up approximately 1% year to date. Strong activity in our run and maintain business, along with steady demand in our call out work, was offset by the impact of less project work, along with softness in our chemicals end market and FX headwinds. Our Consulting Engineering segment, which is primarily legacy NV5's infrastructure and buildings and technology businesses, contributed approximately $122,000,000 during the two month stub period following the close, with strong momentum across infrastructure, buildings, and data center services.

If NV5's results were included for the full quarter, consulting engineering revenue would have been approximately 189,000,000 or roughly 11% higher than the prior year on both a quarterly and year to date basis, reflecting data center growth as well as revenue from acquisitions. The Geospatial segment contributed about $62,000,000 during the same two month period. Including MB-five results for the full quarter, Geospatial would have been about $90,000,000 approximately 4% higher than the last year and 5% year to date, driven by steady federal and utility program demand. On a consolidated basis, adjusted gross profit, which excludes depreciation, was approximately 171,000,000 with adjusted gross margin of 36.1%, up from the prior year period, reflecting the favorable gross margin mix from added NV5 services. For our Inspection and Mitigation segment, adjusted gross margin was 28.5% for the quarter and 27.7% for the full year to date period.

In the third quarter, consulting engineering and geospatial both generated strong gross margins of 51.448.4%, respectively, supported by favorable project mix and strong operational execution. Adjusted SG and A for the quarter was approximately $93,000,000 or 19.7% of revenue compared to 12.9% in the prior year period. The increase was primarily due to the inclusion of MB-five operations, which have a higher proportion of SG and A as a percentage of sales. Adjusted EBITDA for the third quarter was $77,300,000 representing an adjusted EBITDA margin of 16.3% compared to $51,300,000 with a margin of 16.9% in the prior year period. The year over year increase in dollars reflects the addition of the '25 without the impact of realized synergies.

We expect to begin realizing cost synergies late in the fourth quarter of this year and into 2026. Operating cash flow for the nine months ended 09/30/2025, was approximately 45,000,000 reflecting efficient working capital management and the inherent cash generative nature of our services based revenue model. Capital expenditures for the first nine months totaled approximately $21,000,000 or 2.1% of revenue. This is slightly below our historical average due to the MB5 acquisition. Turning now to an overview of our balance sheet and capital resources.

As of 09/30/2025, we had total liquidity of $282,900,000 including cash and cash equivalents of $164,400,000 as well as $118,500,000 of available capacity under our revolving credit facility. Total term loan debt was approximately $1,600,000,000 In October, we completed a $250,000,000 private placement of approximately 20,800,000.0 shares of common stock and prefunded warrants at 12 per share to an existing shareholder. This transaction strengthened our balance sheet and provides additional flexibility to fund selective growth opportunities as well as accelerate deleveraging. These proceeds enhance our capital position and provide ongoing opportunity to allocate capital to our accretive tuck in acquisition strategy, as well as considering more material opportunities as they arise. Our balance sheet is in a solid position, and we remain focused on using free cash flow to reduce leverage over time.

We continue to target a long term net leverage ratio below three times through disciplined cash generation and integration execution. Now turning to our outlook. We are reaffirming our full year 2025 guidance, expecting revenue in the range of 1,530,000,000.00 to 1,565,000,000.000 and adjusted EBITDA in the range of $240,000,000 to $250,000,000 This outlook reflects steady year to date performance and continued confidence in demand across our core markets. For illustrative purposes, if NV5 had been included for the full year, these guidance ranges would equate to approximately 2,110,000,000.00 to $2,150,000,000 of revenue in 2025 on a combined basis. Looking ahead to next year, we expect revenue to grow between 35% relative to the 2025 combined company baseline, and adjusted EBITDA margin should be in the range of 15.5% to 16.5%, including the impact from cost synergies as they are realized.

We look forward to providing a more detailed update in connection with our fourth quarter and full year 2025 results in March. Next, I'd like to touch on the work the team is doing to integrate these businesses. At the end of this month, we will conclude the planning phase of the integration program and move into our execution phase. Our teams are working hard, and I am excited to announce that we have increased our cost synergy target from $20,000,000 to $25,000,000 and we expect to be at that full run rate by mid-twenty twenty seven, within our original timeline of eighteen to twenty four months post close. The largest area of savings are coming from overlapping corporate resources and service providers, system consolidation, real estate footprint optimization, and procurement and vendor optimization.

Integration is advancing with discipline. A dedicated integration management office with leadership from both legacy companies is driving execution against defined milestones, and we look forward to continuing to update you on our progress. With that, I'll turn the call over to Robbie to talk through the long term strategy for Tick Solutions.

Speaker 4

Thank you, Kristen, and good morning, everyone. With the NV5 transaction complete, we're seeing the benefits of bringing these complementary businesses together, creating new opportunities and measurable value for clients. The early success comes from how naturally these businesses fit together. Accurin's inspection and mitigation expertise combines with NV5's engineering design and geospatial intelligence to cover the full asset integrity life cycle, enabling us to move quickly and deliver broader solutions for our clients. Culturally, this combination is working because both organizations share the same foundation, technical excellence, professional integrity, and a client focused mindset.

This shared culture gives us confidence in the long term success of the platform. Looking ahead, TIC Solutions now has the characteristics of a long term compounder: meaningful scale in fragmented markets, diversification that drives resilience and exposure to secular tailwinds such as infrastructure renewal, energy transition, and investment in digital infrastructure. The company also has both the scale to invest across geographies and the financial flexibility to invest selectively where we see attractive returns. The work we do is essential. Critical infrastructure across the globe depends on our services, ensuring asset integrity, verifying compliance, designing resilient systems, and delivering geospatial insight.

Demand for these capabilities is nondiscretionary, and the complexity of modern infrastructure creates sustained need for our expertise. We're building TIC solutions for the long term, disciplined execution, consistent cash generation, and durable value creation for shareholders, while offering meaningful careers for our people and reliable outcomes for our clients. Thank you. With that, let me turn the call back to Tal for closing remarks.

Speaker 2

Thanks, Robbie, and thank you, Kristin. Our third quarter results demonstrate that we're executing effectively through a milestone year for our company. We completed a major acquisition, are integrating large teams while continuing to deliver for our clients without interruption. This is a testament to the dedication and professionalism of our people across both organizations. We've built a platform with meaningful scale, technical depth, and diversification across attractive end markets.

The inspection and access capabilities that define Accurin now connect seamlessly with NV5's engineering and geospatial expertise, creating opportunities neither business could have achieved alone. The structural trends supporting our markets remain powerful, aging infrastructure, increasing regulatory and technical complexity, and the acceleration of AI, data center and clean energy investment. Our priorities remain clear, operate safely, deliver exceptional service and translate growth into strong cash flow and long term value. We are executing on a unified operating model, accelerating cross selling across end markets, aligning our people and processes under one culture, and focusing on high growth capabilities like data centers, renewables, and grid modernization. Finally, I want to recognize our 11,000 team members across more than 250 locations across the globe.

Combining two organizations while delivering for our customers every day requires focus, flexibility, and commitment. Our people are rising to that challenge, and their professionalism reflects the culture we've built, one centered on safety, quality, and a higher level of reliability for our clients. With that, I would now like to open the call for questions.

Speaker 0

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. You. The first question is from Chris Moore from CJS Securities.

Please go ahead.

Speaker 5

Hey, good morning guys. Thanks for taking a couple. So you did the $250,000,000 equity raise in early October. That leaves leverage

Speaker 2

a little above

Speaker 5

three times based on at least my 26 adjusted EBITDA. Just trying to get a sense of a reasonable range for annual free cash flow after the integration is a little bit further along.

Speaker 3

Hi, Chris. Good morning. This is Kristen. Thanks for the question. I think cash flow for us is a big opportunity for us with regard to kind of the scale and the profitability of the combined business.

I think if you step back, the business continues to be a high free cash flow business, low CapEx, high margin. If we just mentioned some of the building blocks for that, we haven't provided guidance on free cash flow yet. But from a building block perspective, we've got the cash interest of roughly $105,000,000 And a reminder that assumes no repayments and no changes to the current interest rate environment. On the cash taxes piece, we're in the range of about 20,000,000 to $30,000,000 And then again, we've talked about this in the past, but our CapEx is roughly 3% of revenue. And from there, it would just be any changes in working capital.

Speaker 5

Got it. I appreciate that. So NV5 had a, I think, $400,000,000 revenue target for data center in four to five years a little while ago. Just trying to get a sense, is that still the target? And does the combination with Accurin, does that potentially accelerate anything?

Speaker 3

Yeah. That's a great question. The data center business is something that we're really proud of and very excited about the way we've been able to grow that. I would tell you that the revenue on a quarter and year to date basis is up over 100%. It's still only about 3% of our revenue, but we're excited about where it's headed.

We started outside of North America with our data center business, And it was fairly limited in scope, it continues to grow. And we're looking for ways to expand services from there. I'll let Ben comment if Chris, he wants to add

Speaker 4

it's Ravi. I would say we're in the process of sort of building out our our strategic like, our five year strategic plan. And I I think the targets that that the company that m d five had historically, were great and very ambitious, and I think that there's a glide path to get there. The the opportunity for us in this combination is really to marry the the kinda the on the ground services that that Acurin can provide within the data center environment with with sort of the technical expertise and the and the commissioning side, that MD5 had historically. So it's certainly a big area of focus for us given sort of the secular tailwinds you see in the space.

Speaker 5

Got it. I appreciate that. And maybe just the last one for me. Q2, Akron was still exiting some lower margin customers' contracts. Just trying to get a sense, that did that still happen in Q3 and kind of where that process is?

Speaker 3

Yeah. Thanks, Chris. Margin is important for us. We're continuing to look at relationships and, if needed, exiting those relationships through pricing. I think softness you see in the third quarter is primarily timing, project related and LNG construction related.

And so we'll continue to look at that, but we're also really excited about the growth opportunities that we see heading into 2026 in that segment.

Speaker 5

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

Speaker 3

Thanks, Chris.

Speaker 0

The next question is from Justin Hawk from Robert W. Baird. Please go ahead.

Speaker 6

Great. Thank you very much. And I appreciate the new segment disclosure. That helps kind of understand the moving pieces a little bit better. I guess I wanted to ask about the geospatial.

I mean, was good in the quarter. I'm just curious because in the past, it's been levered to kind of activity with the federal government and funding and things like that. So I'm just curious if there's been any impact from the shutdown in the fourth quarter or how we should think about that business at the year end?

Speaker 3

Yes. Good morning, Justin. Thanks for the question. Yes. So, on a consolidated basis, we have roughly 20% exposure with government work, less than 10% from a federal perspective.

I would tell you that there has been a nonmaterial limited impact here in the fourth quarter. So far, we're optimistic that the reopening is happening and that it will be quick in terms of individuals getting back to work and getting through the stack of papers on their desk, there's limited impact from issuing POs and work orders for our business. But aside from that, that's really it. Okay.

Speaker 6

Thank you. And I guess my second question would just be in the inspection and mitigation segment. You talked about the weaker turnaround activity as kind of timing related, maybe separate from the oversupply in the chemical markets. But the specific to the turnarounds, I'm just curious because that's also seasonal, how that's trending in 4Q. Have those kind of snapped back?

Or are you still kind of waiting for turnaround releases on that?

Speaker 7

Thank you.

Speaker 2

Can take that.

Speaker 3

Ahead, Tal.

Speaker 2

Kristin, the turnaround activity is not really material change this quarter for us. The decline we mentioned was related to the timing of the starting and ending of LNG projects. We see a a pretty good multiyear horizon in construction of LNG facilities. It's an area of particular expertise for the Accurane business. And, as these projects come to an end and the next one starts up, there can be gaps there, and and that's what we saw in the quarter.

And and as we indicated, the end market pressure we saw was really the chemicals. But the the outage business for us is not as spiky as some companies and I don't really see that as a big issue in the quarter or the year.

Speaker 6

Okay. All right. Thank you for clarifying that. I appreciate it.

Speaker 0

The next question is from Kathryn Thompson from Thompson Research Group. Please go ahead.

Speaker 8

Hi. Thank you for taking my questions today. And I appreciate the color that you're also providing the 10 Q that you filed today on the segments. Just circling back to the synergies that you outlined, appreciate you bumped it up to 25,000,000 Could you give a little bit more color on the driver for the upside? And how much of this of the components of the synergies are more cost driven?

And do they include any revenue synergies that can come from the combination?

Speaker 3

Morning, Kathryn. Thanks for the question. Yeah, I would tell you I'm very excited about the momentum that the integration team has internally so far, given that this acquisition just recently closed in August and we really didn't kick off the integration until after Labor Day, I'm pleased with the way that we've accelerated the progress in identifying cost synergies. I would tell you that the 25,000,000 is purely cost synergies, nothing with revenue. It's kind of a different topic for us.

And it's primarily back office support and the way that we're organizing the business and supporting the business to sell and execute work. So we're going to continue to push on that number, but excited about the progress we've made so far.

Speaker 8

Do you have any, on a ballpark standpoint, any type of early assessment of what the revenue synergies could be?

Speaker 3

Yeah. So Robbie mentioned some of the long term strategic planning we're doing and to put a number on that. But it's an area of immense focus within the team right now, and we're really excited about some of the early momentum and the opportunities. We have cross selling opportunities inter company as well as inter segment as well as across segment. And so we are looking to provide some internal targets on that front, but nothing to share externally yet.

Speaker 8

Okay. Thank you. And then on slide seven of the deck that you published today, conjunction to earnings, has a nice breakout of the diversified end market mix for the combined entities. And you can see that data centers is technically 2% of the mix. But from our visiting side of a construction site, we know that there's more involved than just the center itself.

There's the the power of the utilities. There's, you know, kind of the energy side. When you step back and look at broad, not just data centers, but the reindustrialization, what of your main buckets that you've you've outlined in your end market mix touches on both, data center build out and reindustrialization secular trend in The US?

Speaker 3

Yeah. So, Catherine, in terms of end market mix, I'll just highlight a few kind of areas or bright spots or areas that we're excited about as it relates to some of the megatrends that we're seeing aside from data centers. Our renewables business is up significantly. I think our wind business in the inspection mitigation segment is up 30% year over year. And we also see a lot of opportunities within the manufacturing and fabrication space, to your point.

And also, would just add the RoPAC, the Access Solutions business that we have, is largely untapped, and there's a tremendous amount of opportunity to grow that across the globe. Tal, is there anything you want to add to that?

Speaker 2

Sure. I think, you know, there's a lot of excitement around data centers for sure, and we are working on the individual with the individual segments to think of the cross selling opportunities, things like Accurin technicians performing commissioning tasks, the undergrounding team dealing with power delivery and utilities, coming to and from. And then, of course, the the generation of PowerX itself is is quite exciting as we see more and more companies looking at, gas powered turbines as well as in the future. I'm sure we'll see small package nuclear facilities. So, you know, these are all areas we're gonna pay attention to.

And and, Ben, you you may have some comments on this as well as as you've been working on the data center business.

Speaker 9

Yes. I mean, when we started the data center business, it was with a very narrow range of services. It was really just MEP and commissioning. As we bought and that was in Asia Pacific largely a couple of years ago, we really invested in bringing those services in the sector heavily to The States. And what that enabled us to do is start layering in other services.

So this we talk cross selling, but this has actually been happening actively over the last couple of years where we're bringing substation design, power delivery, fire protection, security, structural engineering and then more recently bringing the NDT work. And so it enables us to generate more revenue per megawatt of data centers. And And so it's sort of a double edged sword, while those traditional services we were providing continue to grow rapidly. We layer on these additional services, both here in The U. S.

And now international. So it's sort of a compounding effect in terms of our growth on the data center side.

Speaker 8

Okay. Thank you. Helpful. Just one follow-up question on the somewhat related to the government shutdown. When we, based on our conversations with state departments of transportation, it does not appear that at least right now their flow has been impacted which would would obviously impact your infrastructure, roughly a quarter of your business.

I just wanted to confirm that that has also been your experience but that has been our feedback from our industry contacts.

Speaker 3

Yeah, I think so, Kathryn, like I mentioned, our impact is not zero, but it's also not significant. I think there's some individual departments within the government that have had an impact, and some of it is just more timing, like we said. So, I think getting through this and getting things up and running again quickly will be really helpful.

Speaker 9

Would echo your thoughts around the infrastructure side of the business. That's not where we've been seeing impact.

Speaker 8

Okay, great. Thank you. I'll jump back in the queue.

Speaker 0

The next question is from Josh Chan from UBS. Please go ahead.

Speaker 10

Hi, good morning. Thanks for taking my questions. I know that you said some of the Q3 choppiness was timing related. So kind of setting those aside, on the chemical side, do you expect that softness to kind of persist into Q4 and into 2026? And does that kind of color the range that you kind of gave us for 2026?

Thank you.

Speaker 3

Good morning, Josh. Thanks for the question. Yeah, I would say, you know, what we're seeing is that we hope that it stabilizes in the chemical space. But, when we look at our guidance for Q4 and into the next year, I would tell you that we're modeling a little bit of the same and hope that there's some upside there. But in general, we're excited about our ability to deliver against the Q4 and next year results and hope that there's some bright spots within the chemical space soon.

Speaker 2

Great. No. What I could add to that is

Speaker 10

Okay. Hit that.

Speaker 2

Maybe I could just add to that. In the chemical space, I thought it'd be helpful to play out what it looks like when they're under pressure. Because we know the work we do is really essential services to maintain the integrity of facilities and and if our customers are are under stress financially, you know, it's not wise for them to push inspection very far. So what what we might have seen is if you have 20 inspectors on-site, maybe they reduce head count to 15 or if they have an outage, you know, they might be able to replace some aged equipment. We refer to that as sustaining capital investments.

And those sustaining capital investments have been smaller and and deferred. So often when we see that there can be a bounce back at some point because these facilities are not closing, they're still operating and, they need to operate safely. So we do expect at some point to be a bounce back because this is essential work that we do.

Speaker 10

That makes a lot of sense. Yes, I appreciate that color there, Tal. I guess, on the margin front, I think the level that you gave for 2026 may be roughly in the same ballpark as what it might be in 2025. So is there any thoughts on why that wouldn't be maybe a little bit better given the realization of at least some of the cost synergies?

Speaker 3

Yes. Thanks, Josh. So the range that we provided of 15.5 to 16.5 does include some slight margin improvement, as well as the impact of realizing some of the synergies that we've identified.

Speaker 10

Okay, great. That's encouraging. Thanks for the color and good luck in Q4.

Speaker 3

Thank you.

Speaker 0

The next question is from Stephanie Moore from Jefferies. Please go ahead.

Speaker 7

Hello. This is Harold Lanto on for Stephanie Moore. So I think in your prepared remarks, you discussed some premium pricing in some of your specialized services. So, I guess, thinking about organic growth in 4Q twenty five or '26, and just trying to get a sense for what was premium pricing in the quarter? How should you expect it to run next quarter?

And then I guess in 2026 and then just any comments on, I guess, in that I think the revenue guide you gave for 2026 was 3% to 5%. If you could give us a sense for what percent of that is organic and then what you need to see the high end of your EBITDA margin range target? Thank you.

Speaker 3

Good morning. Thank you. Can you clarify the first part of your question again please?

Speaker 7

Yes. So you discussed some premium pricing and some of your specialized services. So, I wanted to get a sense for what pricing was in the quarter and then in 4Q and then I guess your expectations for 4Q twenty twenty five and 2026?

Speaker 3

Yeah. I think we're excited to be providing guidance for 2026. It does include some margin improvement. And in terms of specialized or premium pricing during the quarter, I think we've provided the adjusted gross margin in the tables. But I think it's important to point back just given the noise with the timing of the acquisition back to our adjusted EBITDA margin.

And I think that's the best way to be looking at the business in the short term given the noise of the transaction.

Speaker 7

Got it. I guess just at a high level, I guess, from where the company is today, we discussed it, I guess, the data center opportunity a little bit. I guess where do you see the most opportunity for growth in the business? Is it still data center? Is it expanding infrastructure into Canada or doubling down on geospatial?

We'd love to hear your comments of, I guess, which area of the business gets you most excited. And then I guess on a separate point, I think you discussed having a balanced capital allocation view given the PIPE transaction. So I know debt pay down is a focus, but also wanted to hear any comments on M and A and which side of the business you would like to gain exposure in through M and A?

Speaker 2

Okay. I can take the first part of that question. I think the biggest opportunity really realize the potential of these three companies working together, these three segments working together, there are there's a lot of white space to fill in the total value chain or the life cycle of an asset and and the engineering design leading to a plan for inspection, leading to an inspection and collecting data, and then back to engineering design. And I know that we have also, a lot of white space in Canada as an example where NV five has almost no presence and Accurin has a a very strong, stable base of customers. So as we fill in these holes to connect the engineering, the consulting engineering, the geospatial, and the inspection mitigation is a great opportunity for us.

Of course, there are, you know, stronger end markets, and as we think about mix of work to the extent that consulting engineering, geospatial, the higher gross margin work has higher growth, then then that will, you know, realize a better mix for us. So so I I I think there's a lot of work to be done on just filling white space between the companies and and following the the end markets, things like data centers. I think, Kristen, you could probably talk to the

Speaker 3

Yes. I'll take the question on capital allocation. So, yeah, we're excited about the opportunity that the additional pipe provides from a flexibility perspective. I would tell you that we're going to continue to be opportunistic and disciplined from a capital allocation perspective. We have a very strong pipeline of bolt on M and A.

We closed two deals during the quarter and nine on a year to date basis, and we've got a few more in the hopper for Q4. And those are businesses that we're buying in the four to six times range, so immediately accretive for us. And we'll continue to be deploying capital there. The ones we've done so far this year have been across all three segments.

Speaker 7

Thank you. And I'll hop back in the queue.

Speaker 0

This concludes the question and answer session. I would like to turn the floor back over to Tal Pisi for closing comments.

Speaker 2

Thank you, everyone, for joining us today and for your thoughtful questions. We appreciate your continued support and look forward to updating you on our progress as a combined organization next quarter. We're excited about the opportunities ahead and we remain committed to executing our integration successfully while we remain focused on the business operational excellence and customer service. Have a great day, everyone. Thanks.

Speaker 0

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.