TIC Solutions, Inc. Q1 FY2026 Earnings Call

Hello, and welcome, everyone, joining today's TIC Solutions First Quarter 2026 Earnings Call. Please note this call is being recorded, and it is now my pleasure to turn the meeting over to Andrew Shen with Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining the call. Joining me this morning is Benjamin Heraud, our Chief Executive Officer; Kristin Schultes, our Chief Financial Officer; and Robbie Franklin, Executive Chairman. I would now like to remind you that certain statements in the company's earnings press release and on this call are forward-looking statements that are based on expectations, intentions and projections regarding the company's future performance, anticipated events or trends and other matters that are not historical facts. These statements are not a guarantee of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. In our press release and filings with the SEC, we detailed material risks that may cause our future results to differ from our expectations. Our statements are as of today, May 6, 2026, and we undertake no obligation to update any forward-looking statements we may make, except as required by law. As a reminder, we have posted a presentation detailing our first quarter financial performance on the Investor Relations page of our website at ticsolutions.com. Our comments today will also include non-GAAP financial measures and other key operating metrics. The required reconciliations of non-GAAP financial metrics can be found in our press release and in our presentation. For the purposes of this call, we refer to our segments as Inspection and Mitigation, or I&M, Consulting Engineering, or CE and Geospatial or GEO. Any reference to combined results reflects a non-GAAP combined view of legacy Acron and legacy NV5, where applicable for period-to-period comparability. More details on the calculation of the combined results are included in the presentation. It's now my pleasure to turn the call over to Ben.

Thank you, Andrew, and good morning, everyone. Before I begin, I want to say how proud I am to lead this talented organization. Over the past several months, I've seen strong support from our leaders across the business and from the field and technical professionals who serve our clients every day. We have started 2026 with healthy momentum across the business. First quarter results reflect the strength of our combined platform, the resilience of our recurring and nondiscretionary services and the demand drivers that support Tech Solutions. This includes aging infrastructure, increasing energy demand, increasing data consumption and the digitization of the physical world. We believe these megatrends will continue to drive demand across our business and expand the need for technical services that enable us to turn data into solutions for our clients. These tailwinds inform our strategic priorities: winning in essential high-demand end markets and geographies, expanding our role across the asset life cycle and client relationships, and driving higher value growth through technical differentiation and disciplined capital allocation. These priorities are supported by the breadth of our business. Through Consulting Engineering, we help clients plan, design and commission critical assets and infrastructure. Through Inspection and Mitigation, we help clients maintain asset integrity, reduce downtime and address reliability needs. Through Geospatial, we help clients capture, process and interpret asset and location data at scale. Together, these capabilities position Tech Solutions as a life cycle partner rather than a point solution provider. Our 2026 operating objectives are directly aligned with these strategic priorities. First, to win in essential high-demand end markets and geographies, we are focused on driving organic growth across the platform. This means expanding scope and market share and pursuing attractive opportunities to sell additional capabilities. Second, to expand our role across the asset life cycle and client relationships, we are strengthening organizational alignment and cross-segment collaboration. That includes improving how we manage accounts, deploy resources, support our field and technical teams and bring our capabilities together for our clients. Third, to drive higher value growth, we are focused on margin expansion and disciplined capital allocation. That means maintaining pricing discipline, improving utilization, managing costs, enhancing service mix and directing capital towards the highest value opportunities. In the quarter, we saw growth across transportation, infrastructure, utilities, manufacturing, midstream energy and data center end markets. We remain focused on converting these trends into sustainable, attractive and profitable growth. With that framework in mind, I'll walk through the performance across our segments and highlight where we are seeing progress against these priorities. Consulting Engineering delivered strong performance in the quarter with revenue increasing 9.5% year-over-year. We experienced broad-based revenue growth, offsetting pressure from timing in LNG engineering and power delivery. Adjusted gross profit increased 11% year-over-year and adjusted gross margin expanded 60 basis points, reflecting strong execution, improving mix and continued demand for high-value technical services. Data centers were the largest driver of growth in the first quarter, supported by hyperscaler and mission-critical infrastructure activity across both domestic and international operations. AI, cloud adoption and enterprise digitization continue to increase demand for data consumption, storage and mission-critical uptime. Our focus is on capturing that demand where we have the right capabilities, client relationships and return profile. Consulting Engineering also saw broad-based growth across several core capabilities, including civil program management, geotechnical and materials testing and buildings. Overall, Consulting Engineering's first quarter performance demonstrates the value of technical capabilities we offer across infrastructure and the built environment. The segment continues to benefit from durable demand trends tied to aging infrastructure, infrastructure investment and growth in key regional markets. Our performance also shows the operating leverage that can come from better utilization, focused execution and delivery of higher-value services. Geospatial also performed well, growing 4.5%, supported by strong commercial and utility demand, healthy fleet utilization and continued interest in geospatial digital transformation solutions. The team continues to pursue technically complex work across multiple markets and geographies. Recent examples include deep sea hydrographic survey work tied to rare earth minerals and advanced LiDAR and imagery opportunities internationally. These demonstrate the breadth of our capabilities and the ability to scale and apply specialized technical expertise across borders. We are also advancing our Geo AI efforts with a focus on improving processing efficiency, automating workflows and expanding higher-value analytics. We look forward to discussing these capabilities in more detail at our Investor Day, including how they support our broader Geospatial platform over time. Quarter end total backlog within Consulting Engineering and Geospatial was $1.12 billion, up approximately 14% from $983 million at the prior year quarter end. This backlog expansion, combined with the solid commercial execution supports our confidence in continued momentum and near-term outlook. Inspection and Mitigation delivered a steady result with revenue essentially flat year-over-year. While results were below our long-term expectations for the segment, the team remained focused on margin integrity, disciplined staffing and prioritizing higher quality, higher-margin opportunities. In the first quarter, our callout and outage activity increased moderately, helping offset lower sustaining capital work and continued pressure in certain regions. Performance was stronger in areas such as industrial road access, containment and in-lab services, and we're focused on replicating that execution more consistently across the I&M footprint through disciplined opportunity selection, stronger local accountability and a higher mix of high-value technical services. Inspection and Mitigation demand continues to vary by end market and geography. Customer focus on throughput, uptime and critical integrity work remains intact, but broader market uncertainty is creating more variability in customer decisions around planned outages and scheduled maintenance, including timing, scope and duration. In the quarter, certain planned outage work shifted from the second quarter to the third quarter and some work was resized as customers remain selective on near-term spending. Performance pressure remains concentrated in the Gulf Coast, where LNG construction timing and several 2025 site losses continue to weigh on year-on-year growth. We are managing through these dynamics while expanding in areas we have a proven track record and pursuing new white space opportunities. We continue to execute on the operating model changes we outlined last quarter with a focus on regional accountability, cost control and more consistent opportunity sourcing. As discussed on the previous call, we have strengthened regional leadership in the segment and are adding both new and returning leaders in key areas to drive operational efficiency and commercial focus. As we move through the year, we expect I&M performance to benefit from normal seasonality, outage activity and stronger conversion of commercial opportunities while remaining disciplined on margin and work selection. To recap, Consulting Engineering and Geospatial continued to benefit from strong demand and differentiated capabilities, while Inspection and Mitigation remains focused on improving execution, accountability, pricing and resource deployment. Across the platform, integration is improving how we manage accounts, expand services and control costs. Together, these actions position us to deliver durable growth, improved profitability and stronger cash flow over time. We are looking forward to hosting our Investor Day on Tuesday, May 19, in New York City. We plan to discuss the next phase of the Tech Solutions story, including our long-term growth framework, margin expansion plans, capital allocation priorities and how stronger execution can create additional value across the business. And with that, I will turn the call over to Kristin to review the financial results for the first quarter, provide an update on integration and offer more detail on our outlook.

Thank you, Ben, and good morning, everyone. In the first quarter, total revenue was $488 million. On a combined basis, total revenue grew 4.3% year-over-year or 3.1% in constant currency. Organic growth on a combined basis was 2.2%. Adjusted gross profit for the quarter was $180 million, up 3.8% from the combined adjusted gross profit of $174 million in the prior year period, driven primarily by revenue growth and margin expansion in Consulting Engineering. Adjusted gross margin was 36.9%, roughly flat compared with the combined margin of 37.1% in the prior year period as Consulting Engineering margin expansion was offset by mix and margin pressure in Inspection & Mitigation. Inspection & Mitigation contributed first quarter revenue of $235 million, up 0.3%, driven by increased call-out and outage work and offset by lower sustaining capital activity. Inspection & Mitigation's adjusted gross margin was 24.4% for the quarter compared with 25.2% in the prior year period, reflecting the impact of mix from less sustaining capital work. Consulting Engineering contributed first quarter revenue of $187 million, up 9.5%. Consulting Engineering's adjusted gross margin was 47.6%, up 60 basis points from 47.0% in the prior year period, driven by strength in infrastructure and building design and commissioning. Geospatial contributed first quarter revenue of $66 million, up 4.5%, driven by healthy demand from utility clients. Geospatial's adjusted gross margin was 51.0% compared with 54.2% in the prior year period, impacted by a pilot project that carries a higher proportion of subcontractor costs and a lower gross margin profile. We believe this work is highly strategic and supports higher value growth over time with a key client. Adjusted SG&A for the quarter was $123 million or 25.2% of revenue. This continues to be a critical focus area as we work to drive SG&A leverage through synergy realization as well as cost discipline in the business. Adjusted EBITDA was $57.7 million compared to combined adjusted EBITDA of $55.6 million in the prior year period, representing growth in line with the increase in combined revenue. Adjusted EBITDA margin was 11.8% compared with 11.9% a year ago on a combined basis, reflecting a path towards improved operating leverage. From a cash flow perspective for the quarter, operating cash flow was $10 million and capital expenditures were $6 million. The operating cash flow reflects the expected seasonality of the business, which includes greater working capital intensity in the first half of the year. Moving now to our balance sheet and capital resources. As of March 31, 2026, we had total liquidity of $537 million, including $427 million of cash and $111 million of available capacity under our revolving credit facility. Total term loan debt was $1.6 billion. Our capital allocation priorities remain unchanged. We remain focused on investing organically in the business and using free cash flow to provide additional flexibility for disciplined acquisitions while achieving lower leverage over time. Turning to integration. We continue to make great progress capturing the benefits and cost synergies associated with the NV5 combination. Importantly, we are ahead of schedule on synergy actions with approximately $17 million of the $25 million cost program now actioned on an annualized run rate basis. We now expect realized savings in 2026 to be roughly $15 million, modestly above the $12.5 million we discussed in previous quarters. These actions are intended to create lasting efficiencies in the combined cost structure and support margin expansion as our business scales. Now turning to our unchanged outlook. For the second quarter, our guidance reflects revenue of approximately $570 million to $582 million and adjusted EBITDA of approximately $90 million to $96 million. At the midpoint, this implies an adjusted EBITDA margin of approximately 16.1% for the second quarter, which would represent margin expansion year-over-year. We are reaffirming our previously issued full year 2026 guidance of $2.15 billion to $2.25 billion of revenue and $330 million to $355 million of adjusted EBITDA. At the midpoint, our guidance implies approximately 4% revenue growth and 10% growth in adjusted EBITDA against our 2025 combined results with an adjusted EBITDA margin of approximately 15.6% at the midpoint. By segment, on a combined basis, we expect Consulting Engineering and Geospatial growth to outpace growth in I&M for the full year. In Inspection & Mitigation, our outlook assumes a back half weighting supported by normal seasonality and the anticipated timing of certain outage and sustaining capital work. For 2026, we anticipate net interest expense of $95 million to $105 million, cash taxes in the range of $25 million to $35 million and capital expenditures of $55 million to $65 million. We typically see a working capital build as activity ramps through the first half of the year, followed by stronger cash conversion in the second half as collections catch up with revenue. We manage and evaluate free cash flow primarily on a full year basis, and we continue to expect healthy free cash flow generation over the full year. With that, I'll turn the call back to Ben.

Thank you, Kristin. The first quarter reinforced the resilience of our business model and the benefits of our diversified platform. As discussed at the start of the call, the trends around aging infrastructure, increasing energy demand, increasing data consumption and the digitization of the physical world continue to support demand for the essential technical services we provide. As we move through 2026, we remain focused on the strategic priorities that define how we create value: winning in essential high-demand end markets and geographies, expanding our role across the asset life cycle and client relationships and driving higher value growth through technical differentiation and disciplined capital allocation. We are seeing progress against our top priorities while recognizing there is more work ahead. I want to close by acknowledging the strength of this organization and the leaders across our business. Tech Solutions has a significant long-term opportunity supported by a highly engaged team, strong cultural alignment and essential technical capabilities across resilient end markets. Our teams have continued to execute with discipline and focus while staying centered on our core purpose of delivering for our clients every day. With that, operator, we're ready to open the line for questions.

And we'll take our first question from Chris Moore with CJS Securities.

So you exited some lower-margin customer contracts in Inspection and Mitigation in 2025. Just trying to get a sense if that process is still ongoing in 2026.

Yes. We're still maintaining discipline around our pricing and approach to the market. We're seeing price increases amongst a number of our contracts, and we will continue to stay disciplined on our pricing model. Just to point out, no additional lost sites since last year.

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

Yes, sure. I'll take that, Chris. If we look at our full year guidance at the midpoint, we haven't provided segment level guidance, but I would tell you that our outlook for growth for Consulting Engineering and Geospatial is higher than I&M. What drives confidence in our ability to deliver that is backlog within GEO, which provides a lot of visibility. As we disclosed, our backlog is up significantly. Also, with our internal flash and forecasting process within the I&M business, we have good visibility. Things are moving, but we have good visibility to what's to come. This is our high conviction number and we feel good about our ability to deliver in 2026.

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

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

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

We'll move next to Thomas Sano with JPMorgan.

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

Yes. We're tracking a number of KPIs, and I would point to the Gulf as an area of focus for improvement. We're seeing month-on-month improvement there. With the leadership we put in place earlier in the year, we're seeing a very aggressive commercial approach to that business. We talked earlier on the call about some shift with some outage work into Q3; that was known and expected. Some positive signs also around service line expansion: our rope access group is up 9% and our in-lab work is up 20%. Those are good indications of the business and its potential growth later in the year.

And follow-up on data centers in GEO business. What is your outlook for growth in data centers? What proportion of total revenue do you expect these segments to represent in 2026 and 2027?

Use round numbers around 5% growth for data centers. We continue to see very nice growth within that business. The U.S. business is starting to really show returns from efforts we've put in over the last couple of years, and that is growing at a strong clip. Trailing 12 months was around $80 million in revenue. Backlog is of a similar amount. So we have a very strong line of sight into a strong year ahead.

We'll move next to Kathryn Thompson with Thompson Research Group.

Just first, big picture, you're approaching in June the first full year of NV5 as part of Tech Solutions. How is the integration as we approach the year mark? What has worked and what are areas for continued growth?

I'll start at a high level and then let Kristin get into more detail. I'm pleased with the cultural alignment between the two organizations and the general level of excitement around bringing each company's services to clients. That's starting to show in activity around service line expansion with our clients.

Thanks, Kathryn. From an integration milestone perspective, we closed in August, so we'll hit the one-year mark soon. We're ahead of schedule on the actions. We had a few million of savings in this quarter, and that's going to continue to ramp for the full year; we expect $15 million of savings to flow through the P&L this year, modestly above prior expectations. I'm proud of the leadership team leading the integration. In the quarter, we hit key milestones. We exited or reduced four sites this quarter; we've accomplished 13 to date and have 40 on our roadmap, which are reductions in footprint or exits of sites. We have added key leadership to functional areas that are creating scalability as we grow. We have hit internal system implementation milestones, stood up a shared services function within finance, and are leveraging technology. Lots of positive activity on the integration front.

Obviously, a lot of focus on AI build-out, but also the energy build-out is critical and gaining headlines. The build-out includes generation, energy storage and transmission. When you think about those three legs, how does Tech Solutions play in the energy build-out that's supporting not only AI, but the broader reindustrialization of the U.S. market?

They are directly related. The energy demand coming from AI and other areas is driving need across generation, storage and transmission. We are well positioned for power delivery and the engineering work from transmission to distribution to substation design. We were recently awarded an energy storage project within Consulting and Engineering, which is a first of its kind for us and exciting. On the generation side, our NDT and inspection business is active, and there are exciting opportunities bringing together our data center expertise in engineering and inspection and mitigation. We're well positioned for growth in that area.

So you're there for the build-out but also for the follow-on inspection work, correct?

Yes. Also, Geospatial supports these efforts — we fly 150,000 miles of lines every year. That's been growing, and that's recurring work we do for utilities.

When you look 12 to 18 months from now, where do you see the end market exposure for Tech Solutions shifting? Which areas do you see growing most as a percentage of mix, and what is the margin profile of those growth areas?

I wouldn't point to areas shrinking, but there are areas with more tailwinds and where we're better positioned: energy — both generation and distribution — the built environment, and infrastructure across all segments. With aging infrastructure and additional investment, we see continued tailwinds and growth in those areas.

We'll move next to Jeff Martin with ROTH Capital Partners.

I wanted to dive in on progress you're making with the initiatives in I&M. Are you seeing an expanding pipeline opportunity there, particularly given the chemicals business appears to have the potential to turn around?

Yes. We've had positive signs on the chemicals side recently in our sales pipeline. We reorganized the U.S., particularly the Gulf Coast, and I'm pleased with the leadership; they're taking an aggressive approach to getting to new sites. We have a nice pipeline of opportunities. Once we get through the ramp effect of the lost sites into the second half of the year, we're expecting growth and are pleased with the progress.

Great to hear you have not lost additional sites since last quarter. My follow-up on GEO: contract renewals at the federal government level can be tricky. There was some headwind exiting last year on contract renewals. Any update there?

We haven't seen any major disruption there. Renewals have been coming in at the expected clip. The bumps we saw in Q4 are not showing signs of continuing at the moment.

We'll take our next question from Andrew Wittmann with Baird.

I wanted to ask a bit more on the I&M segment. The callout and lab testing work was good and that's about half the segment. How much of the softness is because you lost some of those contracts a quarter or two ago and how much is systemic or uncertain demand? Can you talk about what is driving the uncertainty — volatile oil prices or other factors — and what it takes for better visibility to return so you can sense timing and scope of services?

The run-and-maintain business is our most stable piece and drives some higher-margin work. We need to win new sites; that's where the commercial discipline and focus comes in. The uncertainty we're seeing is with outage work; we called out the shift from Q2 to Q3. This is nondiscretionary work that will need to be done, so we expect that work to start to flow in.

Andy, I'll add that we recognize macro volatility. The structure of our I&M business is fairly diversified. Less than 10% of our I&M revenue is outage work, which is about 5% of the combined business. Our refinery oil and gas exposure is less than 50% of consolidated results, so we're potentially less impacted by timing and direct oil prices. We're focused on staying disciplined regarding inflation pressures, whether in rates or fuel charges.

How has the competitive environment evolved with that volatility? When you're losing sites, that's a competitive dynamic. Has it improved or changed since late last year? What does it take to capture new sites?

In some cases, it's about getting the culture right in the region and restoring leadership that brings work with them. We've seen good initiatives around that. There has been some pricing pressure in the Gulf, but we maintain discipline. We have a good line of sight on solid opportunities.

One last question on cash flow: your contract assets were a pretty big consumer of capital. Was that due to a larger contract with subcontracted scope? Is there heavy use of subcontractors and percentage-of-completion projects driving contract assets? When do you expect that to reverse?

Good question. There were a couple of larger billings that went out in early April that should have gone out in March, and that was the driver. We have an isolated list of what those were. Also, we cleared out some contingent payments for previous acquisitions, which impacted cash in the quarter. Subcontractor cost by nature didn't drive the contract assets; managing contract assets is a key focus for us.

We'll move next to Josh Chan with UBS.

Strategic question: at the branch level, how is the combined company vision being translated and proliferated? How would you assess that at the moment?

We have a centralized commercial team focused on educating branches on the services they now have to take to clients. We have a programmatic approach driven from the top and we cultivate an entrepreneurial culture throughout the organization. Branch leaders are naturally interested in what they can bring to clients, and we cultivate that to drive organic growth.

Appreciate that. On Consulting Engineering, what's the right run rate for growth? Do you think about growth as volume or hours plus price?

Yes, volume and price are both drivers, but about half of our Consulting Engineering work is fixed fee. We position ourselves at the higher-value end to command solid pricing. I would expect the growth trajectory to continue. Our backlog being up 14% is a strong indicator of strength for that business right now.

We'll take our next question from Stephanie Moore with Jefferies.

Circle back to data centers. You're seeing benefits of that growth. Could you talk about the longer-term opportunity — the build-out and the ongoing opportunity where you would benefit? There's a long tail here.

I'm glad you asked. We're focused on being involved in ongoing operations of data centers. Only about 15% of data center revenue is associated with ongoing operations today, but that's growing. As technology changes and new servers come in, they require engineering, retro commissioning and CFD (computational fluid dynamics) work — these are services we provide and ongoing work we do with clients. We also provide program management and owner's rep services for data centers. We are focused on ensuring this is not one-off work and that we build a strong tail with each site we touch.

I'll add that we see tremendous cross-selling opportunity across service lines. Examples include offering materials testing and quality assurance alongside NDT capabilities for a turnkey approach, pipeline and integrity work across segments, and bridge inspection where NV5 has strong credentials. We see white space within existing customers and M&A as opportunities to expand service mix.

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

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

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