Colliers International Group Inc

NASDAQ:CIGI

Earnings Call Analysis

Colliers International Reports 6% Revenue Growth and Strategic Acquisitions

Colliers International reported a strong second quarter with revenues reaching $1.1 billion, up 6% from the previous year. The company saw substantial growth in leasing revenues, up 13%, driven by activity in office and industrial asset classes. Adjusted EBITDA also rose to $156 million with a margin increase to 13.7%. Notably, Colliers completed the acquisition of Englobe, enhancing their engineering and project management capabilities. Looking ahead, the company maintains a positive outlook, expecting a recovery in capital markets by the end of 2024 and consistent high single-digit revenue growth in outsourcing and advisory service lines.

Strong Quarter Performance

Colliers' second quarter demonstrated notable growth and success across all service lines and segments. The company reported revenues of $1.1 billion, marking a 6% increase year-over-year, with internal growth at 5%, primarily driven by double-digit gains in leasing within the Americas and EMEA regions .

Leasing Revenue Growth

Leasing revenues saw substantial increases, going up by 13%. This growth was fueled by strong activity in office and industrial asset classes in the Americas and EMEA. Specifically, office leasing was up 18% globally, with a significant 32% increase in the Americas alone .

Capital Markets and Debt Finance

After a period of stagnation, Capital Markets saw its first growth since the second quarter of 2022. Colliers outperformed industry benchmarks and expanded market share. Debt finance operations in North America improved significantly, especially in the multifamily asset class. However, despite the high volume of loan originations, profitability per loan has been lower due to a mix shift towards less profitable non-GSE originations .

Diversified Growth

Revenues from high-value outsourcing advisory services increased by 5%, with strong pipelines and visibility extending through the end of the year. Additionally, significant new capital commitments raised by the Investment Management segment during Q2 amounted to $1 billion, contributing to $1.5 billion raised year-to-date .

Englobe Acquisition

A key highlight was Colliers' acquisition of Englobe, a multidisciplinary engineering, environmental, and inspection services platform. This acquisition is expected to enhance Colliers' engineering capabilities and deliver exceptional returns. It aligns with Colliers' strategy to increase high-value recurring revenue streams, now representing 72% of the company’s earnings .

Financial Stability and Outlook

Colliers maintained its financial outlook for 2024, with an anticipated partial year impact from Englobe. The company's balance sheet remains strong with a financial leverage ratio of 2x as of June 30, expected to rise temporarily to 2.5x in Q3 before returning to approximately 2x by year-end. This stability is expected to support predictable, high single-digit annual internal growth moving forward .

Market Sentiment and Future Prospects

Market sentiment is shifting positively, with expectations for capital markets activity to recover in the latter half of the year, continuing into 2025. Colliers is well positioned to capitalize on these improvements. The company’s three complementary segments—Real Estate Services, Engineering, and Investment Management—are collectively poised to deliver strong long-term returns for shareholders .

Earnings Call Transcript 2024-Q2

[Operator]

Welcome to the Colliers International Second Quarter Investors Conference Call. Legal counsel requires us to advise that the discussion scheduled to take place today may contain forward-looking statements that involve known and unknown risks and uncertainties. Actual results may be materially different from any future results, performance or achievements contemplated in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the company's annual information form as filed with the Canadian Securities Administrators and in the company's annual report on Form 40-F as filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is Thursday, August 1, 2024. And at this time, for opening remarks and introductions, I would like to turn the call over to the Global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir.

[Jay Hennick, executive]

Thank you, operator. Good morning, and thanks for joining us for the second quarter conference call. I'm Jay Hennick, Chairman and Chief Executive Officer of the company. With me today is Chris McLernon, CEO of Real Estate Services; and Christian Mayer, our Chief Financial Officer. As always, this call is being webcast and is available in the Investor Relations section of our website, along with a presentation slide deck. During the quarter, Colliers delivered solid results with growth across all service lines and segments. Leasing revenues exceeded expectations, while capital markets saw modest growth for the first time in 24 months, albeit from a relatively low bar. With lower interest rates, greater availability of debt and the narrowing of bid-ask spreads, we anticipate the deal activity and therefore, sales volumes for Colliers should begin to recover from here. As expected, our high-value recurring service lines, outsourcing and advisory and investment management continued to deliver solid and predictable growth during the quarter. Assets under management were slightly over $96 billion. Since our business continues to meet expectations, we're maintaining our financial outlook for the year as Christian will elaborate on shortly. Earlier this week, we completed the previously announced acquisition of Englobe, a leading multidisciplined engineering, environmental and inspection services platform. This acquisition establishes Colliers as one of the top players in Canada, complements our rapidly growing engineering operations across the U.S. and Australia, and aligns with our strategy of increasing our high-value recurring revenue streams, which will now represent 72% of our earnings. Having such a large percentage of recurring earnings further underscores the Colliers highly differentiated business model and sets us further apart from the others. Since 2015, our committed leadership team with substantial ownership has continued to reposition our company to create growth and value for shareholders. One step at a time, we have grown Colliers into the global leader it is in commercial real estate and then expanded our business to include three complementary growth engines. Real estate services, engineering and investment management. With the acquisition of Englobe, our engineering and project management capabilities have now reached scale with over 8,000 employees generating about $1.3 billion in annualized revenues. As a result, beginning in the third quarter, we will be realigning our segment reporting to focus on these three specific growth engines. This change will enable investors to better appreciate the value, strength and potential of Colliers as a well-managed, growth-oriented professional services and asset management business with a 30-year track record of delivering 20% annualized returns for shareholders. Now let me ask Christopher McLernon to discuss some highlights. Once he's completed, Christian will provide his financial report and then we'll open things up for questions. Chris?

[Christopher McLernon, executive]

Thank you, Jay. Good morning, everyone. Colliers had a successful second quarter, marked by growth across all our service lines and segments, reflecting the strength of our diversified platform. Leasing revenues were up 13%, driven by strong activity in the office and industrial asset classes in the Americas and the EMEA regions. As occupiers are becoming more confident in their business plans, coupled with the improving return to work trends and the flight to quality offices, we are seeing an increased velocity of leasing transactions. For example, office leasing was up 18% globally and notably up 32% in the Americas. We also witnessed strong office leasing growth in several other countries, including Germany, France, the Netherlands, New Zealand, China, Hong Kong and India. As Jay mentioned, Capital Markets showed the first period of growth since the second quarter of 2022. We outperformed industry benchmarks and continued to gain market share, a direct result of our decision to strategically invest in our business and our people. A great example is our debt finance operations in North America, where we saw substantial improvement in loan origination activity particularly in the multifamily asset class. Meanwhile, our high-value outsourcing advisory services continued to deliver solid growth this quarter. Revenues were up 5% with solid pipelines and revenue visibility across our service lines through to the end of the year. As Jay mentioned, we are extremely excited to welcome Englobe to Colliers. The platform significantly bolsters our engineering and project management capabilities and will deliver exceptional returns over the coming years. Our performance to date is a testament to our strong enterprise and culture. A unique culture that we have cultivated over many years that is hard to replicate. Colliers has become the platform of choice for entrepreneurial professionals who want to leverage their careers for success. Our latest global engagement survey, which had an impressive 88% participation rate and high engagement scores that exceeded external benchmarks shows that our people remain engaged, motivated and passionate about our business and accelerating success of our clients. Now I'll turn things over to Christian who will provide more details on our financials.

[Christian Mayer, executive]

Thank you, Chris, and good morning. Please note that all references to revenue growth made on this call are expressed in local currency and that the non-GAAP measures discussed here today are as defined in the materials accompanying this call. Our second quarter revenues were $1.1 billion, up 6% relative to the prior year period. Each of our service lines and segments reported revenue growth for the quarter. Internal growth was 5% overall and was led by double-digit gains in leasing in the Americas and in EMEA. Second quarter adjusted EBITDA was $156 million, up 6% over the prior year period with the margin increasing slightly to 13.7%. We continue to be agile in managing our operating costs to match the expected pace of revenues in our transactional businesses. The benefit of these actions was most evident in the Asia Pacific region, where margins were up 120 basis points on essentially flat revenues.

In our Investment Management segment, we raised $1 billion of new capital commitments during the second quarter, bringing our year-to-date fundraising to $1.5 billion. Our full year fundraising estimate is at the lower end of our previously stated $5 billion to $8 billion range, with the weighting to the fourth quarter. However, our fundraising pipelines are growing and investor interest in our highly differentiated alternative infrastructure and credit strategies as well as more traditional real estate asset classes continues to gain momentum. Second quarter assets under management were flat at $96.4 billion. Growth from fundraising was offset by: one, dispositions of assets and older vintage funds, returning capital to investors; two, redemptions in certain open-end funds; and three, modest mark-to-market adjustments, which totaled less than 25 basis points across the portfolio. As we mentioned previously, disposition activity in our funds is a healthy process, resulting in the realization of gains and recycling of capital back to investors, which should position us well for future fundraising. We are maintaining our financial outlook for 2024, except for an increase to reflect the partial year impact of newly acquired Englobe. Our operating expectations remain unchanged. We continue to expect a recovery in capital markets activity in the third and fourth quarters, although there is still a risk that this could be delayed to early 2025. In our recurring service lines, outsourcing advisory and investment management, we continue to expect mid- to high single-digit revenue growth for the balance of the year. Regarding our balance sheet, our financial leverage ratio as defined as net debt to pro forma adjusted EBITDA was 2x as of June 30. We expect leverage to rise to the 2.5x range, on account of Englobe, for Q3. Then to decline to approximately 2x by year-end as we generate seasonally strong cash flows and pay down our revolving credit facility. Looking ahead beyond the current year, I am very excited about the prospects for our business. Our new Real Estate Services segment, which will include capital markets and leasing as well as outsourcing is very well positioned for the coming rebound in transactional activity. Our Engineering segment will benefit from public and private sector infrastructure tailwinds in the coming decade and beyond. Our investment management business is poised for an increase in capital flows to its highly differentiated investment strategies.

These three complementary segments collectively are expected to deliver predictable, high single-digit annual internal growth in the years ahead. In addition, our time test and track record of balancing strong internal growth with strategic acquisitions, done the Colliers way should continue to translate into exceptional long-term returns for our shareholders.

That concludes my prepared remarks. I would now like to open the call for questions. Operator, can you please open the line?

[Operator]

[Operator Instructions] Your first question is from Stephen MacLeod from BMO Capital Markets.

[Stephen MacLeod, analyst]

Just a couple of questions. When you think about the new reporting structure, which I think is going to be well received, will you be giving sort of pro forma historicals that we can incorporate into our model and investors can use to assess sort of the margin profile for each of these segments?

[Christian Mayer, executive]

Yes, Steve, we'll be definitely doing that and look for those with the Q3 reporting.

[Stephen MacLeod, analyst]

Okay. Okay. That's great. And then just on the investment management business with respect to just some of the puts and takes on dispositions versus fundraising. Can you talk about kind of the fundraising that's weighted to Q4? Where that's coming from? Where are you seeing that demand coming from? And then how you expect that to potentially grow or evolve into fiscal 2025?

[Jay Hennick, executive]

Yes. So as Christian mentioned, our pipelines -- our fundraising pipelines are stronger than they've been for a long time. And I know I've said that a couple of quarters consistently. What is happening is it's not translates -- translating faster into investments now. We're seeing it this year, but there's a lot of lookers. There's a lot of re-ups. I was just meeting with one of our key guys yesterday, and they were talking about their current fund that's closing this year. And they had 100% re-ups in LPs. The big guys are returning with the same or slightly more investment. The smaller guys are cutting their investments back a little bit because they're being required to reallocate capital, especially in areas where they can't get the money out of some of the funds. Some of the closed-ended funds where they're committed.

So we think there's a little bit better traction so far in the first half of the year. We're cautiously optimistic that we'll have a good finish to the year. But I think, as Christian said, a little bit lighter than our forecasts, are a little bit lighter than probably we had when we went into the year. I don't think it's going to impact our estimate of profitability. But I think realistically looking at fundraising for the balance of the year might be slightly below where we expect.

[Stephen MacLeod, analyst]

Okay. That's good color. And then maybe just turning to the capital markets side of the business, obviously, a nice, modest positive inflection in the quarter. Just curious if you can give a little bit of color into what you're hearing on the ground from your broker network and what your pipeline of visibility -- or what your visibility looks like into the pipeline for activity into the balance of this year as well as into 2025?

[Christopher McLernon, executive]

Stephen, it's Chris here. In regards to your question, I'd say sentiment is shifting to more positive outlook for sure. As there's more certainty in the interest rates that will be coming down, we've seen reductions in Canada, the ECB and now the U.K. today. So there's a lot of confidence that the Fed will do the same thing sometime in the fall. So what we're seeing is that there's a huge increase in activity, a lot more meetings, a lot more pipeline. Our pipeline is growing. And -- but we don't expect normalized market probably into '25. We think it's going to be more of a gradual approach to increasing the market activity. The other thing that I could tell you is that the last 18 months have been incredibly slow on the investment volume, and it's been smaller tickets of $25 million to $100 million. And now we're starting to see a few larger $100 million-plus transactions in the different regions. And this will start to set the transparency of pricing and probably spur more transaction activity. So I think we're very well positioned to take advantage of the pending improvements and we look forward to leveraging our great teams and platform going forward.

[Operator]

Your next question is from Stephen Sheldon from William Blair.

[Stephen Sheldon, analyst]

Nice results here. First, just in Outsourcing & Advisory, continued good growth there, but a little deceleration year-over-year. So anything to call out in terms of what's driving that slowdown? Was that driven by any specific business units within that segment? And how are you thinking about underlying growth there over the rest of the year, excluding, obviously, the inorganic boost from Englobe that will be coming on?

[Christian Mayer, executive]

Yes, Stephen, I mean, the one thing I'd point out there is just ongoing flatness in our valuation business. As you know, our clients are on retainers there. And the new flow comes from capital markets transactions, which are still at depressed levels. So the valuation revenues as a result were pretty flat in the quarter. On a full year basis, obviously, I noted in my comments, we expect mid- to high single-digit growth in Outsourcing & Advisory overall. And I'd say we're well on track to achieve that.

[Stephen Sheldon, analyst]

Got it. Makes a lot of sense. And then, yes, for Christian, any framework on how we should think about interest expense over the rest of the year as we think about our models, especially with I assume it will likely increase from capital in the acquisition?

[Christian Mayer, executive]

Yes. Certainly, Englobe. We raised capital earlier this year, as you know, that was applied to repay the revolver. That revolver has now been utilized to finance the Englobe acquisition, which is about USD 480 million when we closed on Monday. So you have to add that to your thinking as you map out the rest of the year for interest expense.

[Operator]

Your next question is from Jimmy Shan from RBC Capital Markets.

[Khing Shan, analyst]

Obviously, a big quarter for the leasing business. I was wondering...

[Christian Mayer, executive]

Jimmy, can you speak a little louder? We are having trouble hearing you.

[Jay Hennick, executive]

Jimmy a little louder, if you could.

[Khing Shan, analyst]

Sure. Can you hear me better now?

[Jay Hennick, executive]

A little better. Go, you're good. Jimmy?

[Operator]

Jimmy has disconnect his line. We will proceed with the next one. It's from Himanshu Gupta from Scotia Bank.

[Himanshu Gupta, analyst]

So just on the leasing front, I mean it looks like leasing was better than expectations. And I think you mentioned about the office leasing strength in a number of markets. Can you speak to industrial leasing as well? I mean is that an area of strength there as well?

[Christopher McLernon, executive]

Yes. So Colliers has a strong industrial Leasing and Sales platform. And Leasing and Industrial was up 11% globally for us this year. So we continue to see some good strength there in industrial.

[Himanshu Gupta, analyst]

Okay. And was it like mostly Americas? Or are you beginning to see in Europe as well?

[Christopher McLernon, executive]

We're seeing it in Europe as well.

[Himanshu Gupta, analyst]

Okay. Okay. And then just turning to the capital markets, again, showing some stabilization and improvement. Would you say that June was better than April and May, I mean, given the late movement? Or was it like across the board?

[Christopher McLernon, executive]

I would say that, yes, it was slightly better June. But as I mentioned, this is going to be a gradual increase in the activity. I don't think there's a major catalyst moment where there's going to be a rush of transactions. This is really going to grow into Q3 and Q4 and probably hopefully normalizing in '25.

[Jay Hennick, executive]

Which I mean, I might add, it's all upside if you think about it because Colliers has said, great year-over-year growth across all sectors with capital markets being flat to the prior year. So as capital markets comes back, it impacts us greatly on the positive side, both in transactions itself, but let's not forget the large investment we made a couple of years ago in debt origination, debt placement et cetera Colliers mortgage. And so there's a lot of upside, I would say, that is pent up, that will start to come back gradually over time, as Chris said. But the way we look at it is it's just net upside for us and just another catalyst to the future.

[Christopher McLernon, executive]

Just to add to the conversation, another sign that the market is turning is that land is being transacted again. And so in Q2, land was 19% of our overall sales. So that's a positive sign.

[Himanshu Gupta, analyst]

Got it. And then as you mentioned that capital markets could be normalizing, let's say, next year, what's your definition of normal? I mean, is it the elevated COVID period 2021, '22? Or are we talking like pre-pandemic period? I mean, how do you -- like where does the final capital market share may settle that?

[Christopher McLernon, executive]

I mean I think what we're hoping is that it gets to the 10-year average in terms of investment volumes.

[Christian Mayer, executive]

So the other thing to think about here is that if you look over the past 3 or 4 years, we've acquired a business in the Nordics, which is a leader in capital markets, which added a tremendous skill set in that area. We've also been recruiting folks in capital markets, debt advisers as well as capital market sales professionals. So our capacity, I think, now is stronger than it ever has been in this space. And certainly, that will be additive as well.

[Himanshu Gupta, analyst]

Sure. Last question is on Investment Management. I think Q2 EBITDA margin came a bit lower. I mean, it looks like you're doing some investments, some additional expenses. So can you speak to it? And then are they done? Or should we continue to see increased investments for the rest of the year?

[Christian Mayer, executive]

Yes. I mentioned we've been making investments in investment management resources and infrastructure over the last year or so, adding capability on fundraising, which means staff and the related costs associated with that staff. It also means spending on new strategies. So that is legal fees to set up new funds, adviser fees, other costs set those funds up. And then to execute on those new funds, you also need people to do -- to run those funds and to execute on their asset acquisition plans and so forth. So I think we're going to continue to see some of those costs in the EBITDA result over the next little while. But as the fundraising picks up, the revenue will exceed the incremental costs, we'll see some margin rebound.

[Operator]

SP1 Your next question is from Frederic Bastien from Raymond James.

[Frederic Bastien, analyst]

Great to see you gain further scale in engineering and also nice to see your stock being rewarded with an improved valuation here. Now Jay, as you look to surface additional value and as the engineering and investment management businesses continue to grow in size, does it make sense to start considering another split, basically a repeat of what you did with FirstService in 2015.

[Jay Hennick, executive]

Well, Fred, you've known us for a long time. So we consider all kinds of options, I don't know, daily maybe three times a day. So we're always looking at those opportunities. For investment management, in particular, we're doing lots of great things. As Christian mentioned, we're investment spending in that business to increase the number of investment strategies we have. We've invested in technology. We've invested in people and fundraising is a little soft. So we wouldn't do any -- there's no rush to do anything until we have good momentum and good strength going forward. And we're building it one step at a time as we always have. But we're going to have to look at those kinds of things generating incremental share value because as you know, a company like Colliers, which is as well managed as it is and global in proportion and great growth engines we believe that we're trading at substantially below the value that we should be trading at on an ordinary in a normal circumstance. So yes, we're considering all options. But there's no rush for us.

[Operator]

Your next question is from Jimmy Shan from RBC Capital Markets.

[Khing Shan, analyst]

Sorry about that earlier. My question was about the leasing revenue and how are you thinking about the revenue growth in the back half of the year?

[Christopher McLernon, executive]

Yes. So I think the revenue growth from leasing will continue at this pace. As we see -- the leasing is usually linked to GDP growth. And if there's more confidence in the economy, we'll continue to see leasing strength.

[Khing Shan, analyst]

Okay. So that 13%, if you don't see that as a bit of an anomaly or that is a reflection of sort of the catch-up of prior leasing decisions by tenants being delayed? It's sort of is more of a function of a recovery of the market as opposed to a catch-up? Is that -- would that be fair?

[Christian Mayer, executive]

Well, I mean, look, Jimmy, leasing is up 8% year-to-date. I think in that range is a good number for the full year. And we can't predict when leasing activity is going to fall exactly or not -- when it's going to occur exactly, that's a better way to put it. But certainly, there are strong signs as Chris mentioned, to continued growth.

[Jay Hennick, executive]

I mean the other thing I would mention just from a standpoint of looking at the components of our business, and realizing value. Leasing has demonstrated over this entire period that it is as resilient as the other pieces of our business. In fact, more so. It's almost recurring in nature. If you take a look at it going back quarter-for-quarter, over the same, let's call it, 24 months that has impacted capital markets. So when you step back and you look at this business and you take a look at the various component parts, the only part that is really cyclical is capital markets. The rest is very consistent, give or take, and leasing has surely demonstrated that to me over the course of the last couple of years.

[Khing Shan, analyst]

Yes. No, that makes sense. And then you mentioned the loan origination business seeing big growth. I wondered what sort of growth did you see in the quarter? And how big of a business is that now sort of relative to the overall capital markets business?

[Christian Mayer, executive]

Yes. So it's still quite small on an overall basis. We saw tremendous growth in loan origination during the quarter, up almost double the prior year's quarter. But we are seeing is the profitability per loan being originated is lower and the mix is a little bit different. The Fannie Mae GSE originations are more profitable. Those have not rebounded to levels we saw previously. There's a lot of refinancing happening in multifamily. There are debt funds and other investors coming in with short-term capital on these, and we are participating in placing that debt but at lower margins because it's not the same as doing a Fannie Mae type of origination, and it doesn't have the same kind of profit potential. So it's a nice part of our business. We generate today a little bit north of $100 million of revenue in that segment but has potential to be significantly more than that as the market rebounds.

[Christopher McLernon, executive]

And another key factor to the growth in this area is our recruitment. So we've had a number of strong recruitments both in Canada and the U.S. bolstering this business.

[Jay Hennick, executive]

But it's not yet really paid yet because of the slowness in capital markets. Again, it's another segment of our business that's there. We have a national platform, both in Canada and the U.S. and we haven't realized the benefits yet. And to us, it's just upside over the next couple of quarters, we hope are longer.

[Operator]

Your next question is from Daryl Young from Stifel.

[Daryl Young, analyst]

I just had one on the Englobe acquisition. Just wondering if there's any cross-border element to this in terms of leveraging some of the specialty capabilities Englobe has under the U.S. team? And then also how you're thinking about building from here? I know you've mentioned there's tucked under opportunities from here, but are you at a scale now that you can start recruiting professionals organically and this starts to really spool up the organic growth side of things on maybe even a global basis?

[Jay Hennick, executive]

So let me unpack a couple of those things. First of all, one of the beauties of Englobe was that it was entirely a Canadian platform that was coast to coast. And we see a great opportunity to continue to consolidate and strengthen that business across Canada. The other thing that people don't really appreciate is that in addition to Englobe, Colliers project leaders is the largest project management firm in Canada by a country mile. And all of the other engineering firms have project management and Englobe has no project management in it. If you put the two of them together, Englobe might be one of the top three or four players in Canada. So we're very excited about that acquisition. We're very excited to be able to marry the relationships between Colliers project leaders and Englobe, which will be rebranded as Colliers over time. And so that's sort of the first question you asked. The second question is there is a lot of international, primarily right now, U.S., Canada, business and more importantly, perhaps is expertise in certain areas that can be transferred Canada-U.S., U.S-Canada and professionals can work on the same types of projects regardless of the border. So we see over time that accelerating. And obviously, for Canadian investors, you'll know that the costs, the labor costs in Canada are actually lower than the labor cost on average in the U.S. And so there's some opportunities, I think, to gain some additional synergies there. So, as Christian said in his comments, we're very excited about that acquisition. We had our eye on that for probably 3 years, 4 years, and it had to work its way through the system. But for us, it was the perfect addition and it filled us out in North America. But we see great growth opportunities for that business in Europe. And obviously, Australia is growing rapidly, New Zealand. And so we think that there'll be lots of growth yet to come over the coming years.

[Christian Mayer, executive]

Just to add to that, Jay, I think Daryl was asking specifically about Canadian tuck-in opportunities. And I do think there are a significant number of tuck-in opportunities for us, and we've got a pipeline already that we're actively pursuing. So we hope to be able to execute on a few of those to build scale -- additional scale for Englobe and additional practice areas, additional geographic coverage for Englobe in the years to come.

[Operator]

[Operator Instructions] There are no further questions at this time. Please proceed.

[Jay Hennick, executive]

Okay. Thank you, operator, and thanks, everyone, for participating, and we look forward to visiting again on our third quarter conference call. Thank you.

[Operator]

Thank you. Ladies and gentlemen, this concludes the conference call. Thank you for your participation, and have a nice day.