Q2 2020 Earnings Call
Greetings and welcome to the construction partners Inc. second quarter earnings fiscal 2020 conference call.
At this time, all participants how to listen only mode. A question answer session with all the formal presentation who'd like to ask a question you might press star one on your telephone keypad at anytime.
Which require operator assistance during the conference. Please press Star Zero on your telephone Keypad. That's reminder, this conference is being recorded it's now my pleasure to introduce your host request of Investor Relations. Thank you Sir you may begin.
Thank you operator, and good morning, everyone. We appreciate you joining us for the construction partners conference call to review second quarter fiscal 2020 results.
Calls also being webcast can be accessed through the audio like audio that's a presentation page of the Investor Relations section well construction partners Dot net.
Information recorded on this call speaks only as of today may eight 2020. So please be advised me time sensitive information they no longer be accurate as of the date. So many reads like.
I would also like to remind you. The statements made today's discussion so they're not historical facts, including statements of expectations.
Sure.
For future financial performance are considered forward looking statements made pursuant to the safe Harbor provision for the private Securities Litigation Reform Act 1990 fives we.
We will be making forward looking statements as part of today's discussion there by their nature.
Certain an outside of the company's control actual results may differ materially.
Please refer to the earnings crush leased it was issued today for our disclosure on forward looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with Securities and Exchange Commission.
Men, who also refer to non-GAAP measures, including adjusted EBITDA reconciliation to the nearest GAAP measures can be found at the end of our earnings press release construction partners assumes no obligation to publicly update or revise any forward looking statements.
Now I'd like turn the call overage construction partners executive Chairman and that's why I mean no.
Thank you Rick and good morning to everyone.
With me on the call today, or Charles Owens, President and Chief Executive Officer, and Alan Palmer, Our Chief Financial Officer.
First I would like to take them all went to address our view and perspective of these current unprecedented times.
Most importantly, we want to extend our thoughts and prayers to those most affected by the cobot 19 crisis.
Well, we're doing everything we can to support the health and safety of our employees and to assist with the recovery of our communities. During this crisis, we are especially grateful for all the hard work a first responders and healthcare workers. These people have truly been an inspiration to all of us.
As this pandemic has bought countless business isn't industries to a halt in recent weeks companies in the infrastructure industry are doing essential businesses.
Therefore, due to the resiliency of our employees and the effectiveness of the safety protocols, we have put in place to counter the curb pandemic. Our company has experienced only minor disruptions and we expected to remain resilient through.
Through this crisis.
Before Charles that Alan discuss 2022nd quarter results.
I would first like to provide a perspective on the business and how it has historically responded during economic downturns.
This was a good quarter that met our expectations.
As we move into the second half about fiscal year, CPR, historically generated 60% of its revenue for the year and margins expand.
The continued strength of the company will be reflected in the 2020 outlook. We will discuss later, we remain confident in the company's ability to continue year over year growth and have revised our fiscal year 2020 outlook to reflect the current your visibility we have for the business.
In the past we've spoken about the differentiated nature of the shipyard business model.
The fundamental aspects of the business and are more than two decades of operating CPR provides several key strategic factors that have driven the business overtime burst demand for road repair.
And maintenance projects in our footprint with funding mechanisms in place for infrastructure second the recurring nature of road repair and maintenance projects.
Third shorter duration projects not mega projects.
Sure.
Article integration on the hot mix asphalt manufacturing and the services side to the business.
Lastly, our advantage in 35 distinct markets benefiting from scale expertise technology vertical integration and flexibility to move crews and equipment.
All of which have led to consistent and profitable growth.
All of this under the direction of an experienced executive management team and leaders across the whole organization working together with an extremely talented hardworking and stable workforce.
The combination of all these factors contribute to our confidence that the business model is resilient inconsistent in different economic and competitive environment.
However, certainly none of us if ever experienced anything like this pandemic and the economic uncertainty that is unfolding across our country. While we certainly do not think we're immune from this current crisis. We do believe our proven strategy differentiate us and provides a compelling path forward, we will continue to be.
Be prudent as we navigate forward through these dynamic economic times.
With that I would like to turn the call over to Charles and Alan to discuss our second quarter results and they will answer your questions Charles.
Thank you Dan and good morning, everyone. We remain focused on the safety and welfare of our employees customers and the people when they communities, where we live served and work.
[noise], we're pleased with our second quarter results during the second quarter, we acquired too hot mix asphalt plants in the Florida Panhandle.
These two locations, we expect to pursue a variety of public private.
And department of advanced projects.
In addition, our asphalt terminal and Panama City, Florida will supply linked but asphalt to both of these plants.
In addition, during the quarter, we announced plans to construct a glass cyan manufacturing facility adjacent to one of our aggregate facilities in Georgia, the new facility will process material from the mine to produce furnish radius Cheyenne, obviously sufficient quality.
To be used in the manufacture a glass.
This new facility demonstrates our team's ability cheaper sure pursue creative solutions.
It satisfying the needs of our customers our business model and they construction project work, we perform benefit from geographic diversity.
As we operate in multiple states and 35 distinct local market.
Our business model gives us flexibility by market to pursue both private and public projects.
As we progress through physical 2020.
We plan to continue to pursue.
Control profitable growth utilizing our three primary leavers doing more work.
And our current markets make it makes it strategic acquisitions and expanding through Greenfield opportunities. We continue to have conversation, but companies both inside and outside of our current footprint that represents potential future acquisition.
Lastly, we are pleased that there is currently and ongoing national discussion about the need for federal infrastructure funding and our country.
Recent gas tax increases in a number of states have demonstrated public awareness of the need to adequately fund road repair and maintenance projects.
With the fact expiring later this year, we believe that federal law makers, recognizing economic and public safety benefits of supporting infrastructure projects and we are confident that they will find a long term funding solution prior to the end up.
This year.
For the repair maintenance and improvement of one of our countries most valuable assets our Rouge.
Before turning the call Roberta Alan I like to thank our leaders and more than 2300 employees for their commitment dedication and hard work and I was asked to execute our strategy during these challenging times.
And with that I love to turn the call Rover to our CFO Allen Tolmar Alan.
Thank you Charles and good morning, everyone.
I want to start by highlighting our key performance metrics on the second quarter.
Revenue for the quarter increased a $168.7 million up $4.4 million over the same quarter last year.
The increase included 11.6 million of revenue attributable to acquisitions completed subsequent to March 31st.
2019, which was offset by 7.2 million dollar decrease in revenues in our existing markets.
Gross profit for the second quarter increased to $21 million up approximately $1.2 million over the same period last year, primarily due to higher revenue and a higher gross profit margin.
General and administrative expenses were $16.8 million into second quarter of 2020 compared to last year of $14.8 million.
The 2.0 million dollar increase was primarily the result of up to 700000 dollar increase in management payroll and benefit cost $700000 attributable to acquisitions that were made subsequent to March 31.
2019, and $400000, a noncash stock compensation expenses.
Net income was $1.5 million compared to $4.2 million and earnings per share was three cents compared to eight cents.
Our says the same periods last year.
The changes are primarily due to increase in general and administrative cost explained a moment ago.
And $2.2 million of unrealized losses recorded in quarter two on swap arrangements.
Regarding the swap arrangements, we recorded a 1.4 million dollar noncash charge to interest expense related to an interest swap on our outstanding debt and an 800000 dollar noncash charge to other expense related to fuel swaps that we entered into to take advantage of historically low diesel fuel costs.
Yes.
We record these derivative instruments that their fair value and reflect changes in the fair value in current earnings.
These derivative instruments were significantly impacted by financial volatility during March 2020, due to covert 19, and other macro economic factors.
Adjusted EBITDA increased to $14.2 million up from $14 million in the prior year core.
The quarter to adjusted EBITDA margin was 8.4% this year compared to 8.5% in the second quarter last year and it was impacted by our noncash fuel hedge charges and increases in our general and administrative expenses for the quarter as discussed earlier.
Turning now to the balance sheet at March 31st 2020, we had $53.8 million of cash and $4 million of availability under our $30 million revolving credit facility after deducting outstanding letters of credit.
As of the ended the quarter our debt to trailing 12 months EBITDA ratio was <unk> 0.83.
On April Thirtyth, we borrowed $18 million under our existing credit facility.
We will remain focused on maintaining sufficient liquidity and a strong balance sheet to support our ongoing operations and the to enable us to execute on growth opportunities as they arise.
Cash provided by operating activities was $20.5 million from a six month ended March 31st 2020, an increase of $15.2 million from the six months ended March 31st 2019.
Capex for the second quarter was $10.9 million compared to $12.4 million in the same quarter last year.
For fiscal 2020, we have reduced our capital expenditures to be in the range of $40 million to $42 million that excludes the 11.5 million dollar purchase of equipment previously subject to operating leases.
This amount does include $4.1 million for the class San manufacturing facility mentioned by Charles and also $1.8 million per plant and equipment upgrades related to the Florida acquisition, we closed in March.
[noise] project backlog at March 31st 2020 was $579.1 million compared to $539.1 million at December 31.
2019, and $584.8 million at March 31st to 2019.
Of our current $579.1 million backlog, approximately 60% or $360 million.
Is expected to be completed during the remainder of our fiscal year.
We maintain a construction backlog composed primarily of recurring maintenance related projects that we typically prefer and we continue to see opportunities to bid on these types of projects in our markets.
Keep in mind that we focus on our backlog and 35 distinct markets and we strive to have six to nine months of backlog in each of these markets.
We also maintained a disciplined approach as we strategically focus on recurring maintenance and repair projects historically backlog bills during our second and third quarters as more of these projects are typically let in February through my.
Looking forward, while our operations in the second quarter were largely unaffected by cobot 19, a longer term impact on public and private construction projects is less clear at this time.
Due to lower demand for gasoline, which negatively impacts gas tax receipts the effect on state and municipal road repair and maintenance projects are less clear.
This could slow down our ability to pick up additional repair and maintenance projects typically started and completed in the second half of our fiscal year and on the private side, there could potentially be delays due to the uncertain economic conditions across our markets.
Taking these factors into account as well as our current project work in current backlog, we're revising our fiscal year 2020 outlook with regard to revenue net income and adjusted EBITDA as follows.
[noise] revenues of 820 to 830, Megan compared to $783 million in fiscal year 2019.
Net income of $30 million to $34 million compared to $43.1 million in fiscal year, 2019, and adjusted EBITDA of $88 million to $91 million compared to $92.3 million in fiscal year 2019.
In summary, we are pleased with our second quarter results and we continue to see positive market trends and project demand in fiscal 2000 to win.
With that we'll now take questions operator.
Thank you with of course open for questions.
A question. Please press star one on your telephone keypad at this time.
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Let's start what's your what's your questions at this time. Our first question is coming from Andrew Wittmann of Baird. Please go ahead.
Oh, great good morning.
Morning.
Thank you.
Maybe on the top of everybody's mind, just kind of what you guys just talked about.
A slowing economy here. So the company has been around for 20 years, but hasnt been public all that time. So I was hoping you could.
Talk to us about the 2009 timeframe since the last kind of big downturn, and maybe talk about how your public revenues fared during that time.
On an organic basis I know you guys took advantage of the downturn did some M&A and so the company I think drew in total, but I think I think most people are wanting to understand what the organic growth was so if you could couch that in.
Maybe looking at one of your more stable operating subsidiaries I think your Wiregrass operating unit.
I was kind of inorganic operating unit during that time I was just hoping you can maybe quantify or get some context on how that fair.
Yes, Indeed this is Alan.
You mentioned about the public in one of the things that we've seen we saw in that period and we've seen another periods, where there's an economic downturn that.
Mostly affects the.
Private work side is it often the public work side as an area where we can.
Picked up additional work.
Does the that's generally more stable.
In those time in some of those times there was also a.
Contraction in the amount of gas taxes that were being collected which is something that we're certainly looking at facing now, but what we saw is it most of the touch Indio t. budgets work to the large projects.
Where you have long terms too.
Developed plans so they would.
Cut back on the planning money being spent for plans to obtaining ride away east and actually in some cases, we saw more money going to.
Repair and maintenance type projects so typically.
If there is a slow down there's an emphasis on.
Doing a lot of repair and maintenance type work and keeping those construction employees working and certainly what we saw when.
Eight nine and 10 and.
Our expectation is that that could play itself out again.
During this pandemic time.
Got it thanks is there.
Yes, I guess as you talk to your state local customers today.
I realize things are changing rapidly up or what have you heard for your customers about their ability.
And desire to move forward with projects. So far are you seeing them responding to maybe submitted RFP slower.
Down RFP that maybe you expected what's been there that behavior from those customers that you've seen through made here.
Hey, Andy this charge was up from.
From an audio T. standpoint.
We're still where we're seeing a little bit a slow down and obviously with the.
Back of the tax revenue coming in from the fuel.
Thank you everyone. It's taken a slowdown approach, but we still see and where taxes were in place and money has been condo.
Put in reserve for projects like CDN counting we still see in some of that but.
We still have been landings and bidding on work in from.
Our commercial standpoint, private work standpoint, when it first.
Acquired you know we've had a couple of.
Okay.
Projects that were put on.
No stand down and how would that like we'd be doing some stuff and bases in that lasted about.
Two to three weeks and then they turn this on both be the he ended so those people we're feeling good about backend projects in right now.
We don't have any projects that I can recall that we've had to postpone our stop work on.
Great. Thanks, just my last question is.
Just trying to understand how the decline in crude prices might affect you on positive side.
In that obviously, you consume a lot of diesel fuels in your and your liquid asphalt as well so.
Alan can you help us understand maybe what percentage of revenue.
Fuels represent in liquid asphalt represents and what you're seeing in those marketplaces.
Since we can see the diesel prices, but asphalts, a little bit more OPEC, yeah, just talked about how that could positively.
Impact or if its positively impacting your margins in other words are you able to keep the savings on that or.
To your customers went up benefiting more than you.
Yes.
On the diesel as you said, that's very apparent because people can look at the published prices for last so.
One of the things that we did.
And I mentioned in the comments about half that gag before.
Normally we will hedge a portion of our diesel fuel, 40% to 50% of our usage using kind of short term all swaps and purchase contracts and with the unprecedented drop that we saw in March we locked in so much longer contracts.
On that going on in well into through our fiscal year 2021.
All the long term impact of that as it we will be able to buy the diesel.
I'll, even going it through 2021 at a much reduced price from what we've got in lot of our bids and what we.
Historically paid the short term impact was recalls.
The diesel just kept dropping.
There and actually went negative on.
All than we had to book about 800000 dollar noncash charge, which negatively impact this quarter, but.
The long term future benefit as will be buying that fuel at a very reduce price so that one's fairly obvious on the.
Asphalt submit side.
We just I've said before while it is related to the price of all it is not is directly correlated is you have with the diesel and normally during the winter much.
Liquid asphalt will draw the calls or the lower utilization and Thats. One of the reason we put in the terminal and we saw that happening.
This year, where December January February and normally it cannot be ends in March we saw that happening, but with the trough in the price of oil we've continued to see that.
That price go down some more.
Since then but.
As we've said before most of the asphalt. So there is a pass through cost.
On our jobs as it drops we are able on our non index projects to retain some of that savings.
All in that.
A little extent was reflected in our first six months operations, but most of the drop really happen.
When it would normally be going up again in March and we didn't see it go up and we've actually seen it in late March April and even into now drop so the indexes in the states have dropped.
Some in the last 60 days and.
If that stays down, which we expect it to we should be able to to gain.
Little bit a margin on that.
All in the second half, but generally is not a material amount.
Because.
About 40% or so of our contracts.
Our are going to be hedged I mean by the index. So.
We've we've anticipated from a financial standpoint, we've anticipated that our revenue.
We'll be reduced in this last six months about $3 million to $4 million, but there will be about a three to 4 million dollar price reduction. So that's one of the reasons. Our revenue estimate is down is factoring in the effects of asphalt cement price, where we've got to get back part of that to the stage.
Got it.
Thank you.
Thank you. Thank you. Our next question is coming from Michael Feniger of Bank of America. Please go ahead.
Okay.
Hey, everyone. Thank you for a.
For taking my my questions.
We're hearing that really well.
We're hearing that road in highly work has been.
Relatively okay, because there's no traffic out there. So that's some area the project it keeps have been going forward with.
I'm curious if you're seeing that based on really from your comments about some delayed and letting so is are you seeing current projects you're working on right now being delayed or are you or is it more of the caution and concern that being able to build that backlog.
Through this quarter and maybe even next quarter could could be an issue.
Because of what you versus stressing before it with that with gas gasoline down and tax receipts.
Yes.
There have been no delays in the.
The OTI projects as matter of fact.
A number of the stage IV.
Escalated the time period in which we can work some of our contracts around.
Large cities and on Interstates is primarily done night work and.
Several the stakes worry and they've allowed us to move those today time and when you do them at night, you might be only actually able to be on the project about eight or nine hours were on day time, we can be on their 10 or 12, so we've actually seen an acceleration of.
The ability on some of our projects and of course as you mentioned there is less traffic and.
The stage.
Goal on a lot of these maintenance type projects is to accelerate that work that we can do.
So they can get the roads in better shape, because there's less traffic out there. So we're we're actually seeing that is a very positive thing.
While the I think Charles as comment about the Deo T. Liftings, we've not other than North Carolina, which theres a lot of information out there on.
We've not seeing the other states actually delayed lettings, but we would anticipate that.
That could happen.
Later in this calendar year and more into our next fiscal year.
We also have you know we've got projects that normally or let during this time that what we call book and burn and so.
With the what's going on out there.
Our ability to get and book and burn that many projects is something that was factored into the guidance that we gave but through our fiscal year end of September Thirtyth, we do not anticipate any.
Draw back in the projects that were able to work goal.
Are you hearing anything that we should monetary and keep our eyes out for in terms of a care act two or a stimulus that would potentially bailout state I'm curious how.
Obviously infrastructure conversations would be would be positive for you guys, but in terms of what you're spit specifically exposed to and budget you're exposed to is there anything that we should be monitoring when it comes to DC care Act to that would have a more direct impact on you.
Hi, Michael There is Charles I think one thing you need to look at is obviously.
They were seeing less receipts coming in from gas tax, which is the funding mechanism for powertap work and be looking a lot of the research has been done.
There's about a 50 billion dollar.
Shortfall that would call this call. It a backstop video tease that would need to go in place to shore up about a 30% reduction in revenue.
Part of that we're going to fund 2020 and.
Giardia that would go into 2021, just anticipating the short fall. So that's number one number two is we'll have the fast Act then just going to be coming to an end to end or September and so we need a long term highway bills and as you know the both parties had been they.
Favorable for.
These highway Balers and I think that.
That's something that we really don't realize and see.
Okay, and then at the end of the day one.
The legislating towards look at everything our roads, there is a very very valuable asset and.
No, they're just going to continue to deteriorate right now we have about I'd.
Great on our Rouge, and when they look at it from a standpoint one of the.
Moving now products from place to place and but the most.
Valuable thing will move around is our.
As our people and our children and it is a huge safety factor.
Nice to keep the roads in place and we feel very confident that.
That even in these hard times that they will be some funding.
Make sure that though the roads don't completely care.
Yes that Michael just to add to that the two things Charles talked about would be upcoming legislation that we would.
You would be looking for the other thing that's already been passed and part of the cares Act is that the states had been allocated substantial amounts of money too.
Kind of shore up their operations and what's going on in several of the states are looking at potentially taking part of that money that's been allocated to their states and put it into the deity, which we hope would even if the 50 billion is not done would be used to shore up some of that.
Shortfall so.
Two of them or kind of national items. The other the other one where the money that's already been allocated as possibly using some of that four of video teas to.
Maintain.
In the short run what their show income shortfall is but.
Did you said have already been led and or under contract.
Those are pretty much funded.
But for those projects are laid out so we do not anticipate any projects being stopped.
The public type like that.
Was that funding is already in place.
Okay and that that was helpful. And you guys gave great contacts you to Andrew's question about 2009.
I was just curious just come the is different than 2009 I know you guys are operating like liquid asphalt plant you mentioned.
Yes, the glass manufacturing facility.
Hopefully give us a little bit more color I'm just wondering if.
This this new full array and this expansion for road.
Is this bringing new operational challenges that we should be aware of that now you're operating use other type of facilities.
Okay.
No I mean, we're really just doing the same thing. We did then just in more locations I mean really the only thing that has changed as the geographic diversity that we have now and I think thats a positive because in 2008 and nine we were only in Alabama, and Florida now we're in George.
Merger and North Carolina, So you know 95% of what we do is exactly the same.
The the glass sand plant I think as we discussed before all it is taking a product that we already produced in our aggregate facility in that plant will merely a modify it slightly so that it can be used in the specialty industry. So it's not.
It won't be a substantial portion of our business.
It's just really.
Taking a product we already have and making a slight modifications. So we now we now have a different customer than we.
Would have had before.
For just a small part of that.
Product this produced.
Thank you.
Your next question is coming from Adam So.
And David Please go ahead.
Hey, good morning, guys. Congrats on a good looking at.
That's not a solid Q2 and thanks for continuing to give annual guidance here.
I wanted to start first on them margins for the back half.
It looks like you're guiding to down.
Kind, the 150 basis point range from those quarters.
Is there some conservatism.
Baked into that or.
Someone asked me to data warehouse.
Well of Chuckle, a little bit we consider it telling you what we can see but the primary reason for Adam is that.
Typically this time of the year.
We would have.
A more clear picture on the amount of work that we have to book and burn because as we disclosed we've got.
About.
80% of the contract backlog that we would complete between now and September Thirtyth under under contract. So there is about $77 million that we've got to get and complete in there. This is the time of year, where that is done.
But.
[music].
We have done as we looked at that and said with all this going on and that being a little bit larger number than it normally is we have not built into that and booked a backlog that we're going to be able to obtain yet at the same margin that is in our current backlog.
Because we've got to bid that we got to get it we can complete it but we've not assumed that that contract revenue will have the same margin that our current backlog and that's really a substantial portion of that back side a drop in revenue another part.
That is part of that revenue that we will get in the last six months includes the acquisition that we've made and the margin on that work that we book, while it's not a substantial amount of backlog.
We are assuming that what we book and burn on those out of those plants will also be at a lower margin comparable to what the backlog he is which is.
Ill.
Frankly about half of our our backlog so that acquisition as having a little drag in it.
And so I mean.
Our projection is based on what we know and what we can see.
I hope it ends up being conservative but.
There's a little bit more uncertainty given the current environment.
As as our ability to book and burn that backlog at the same or better margins than we currently have on jobs in progress.
Okay.
That makes sense and then what what should we be thinking in terms of here and I guess, there's a lot of uncertainty, but in terms of backlog build potential in Q3, because you mentioned that normally you would built in April and May.
And that I think the public side, it's pretty clear, but what are you guys stand in terms of private bidding right now.
Hi.
Adam This Charles on the private side, we're still seeing no.
People move forward on the residential tap.
Construction, and we're still seeing people and our market did some moving forward on the commercial.
So I can read reports just like everyone else sand that Iran is down in the book commercial is down in.
We're in some pretty good markets they still continued.
The markets, where people want to be in so no we're fortunate to be in the town.
These gross state that's one reason, we like the southeastern not markets, where we are because oh.
Were ones.
No one's immune to what's going on here, but some of these.
Areas have common stayed up a little bit stronger than than other places.
Okay, and then last one for me at all.
Go ahead, sorry, I was going to say yeah. I was just don't say ironically, while you know we have a lot of next year's backlog, we've still got to get.
At March 31st our backlog to be completed in next year's actually higher than it has been in the last two years. So we leased we're not starting behind the eight ball for next year's and typically in this quarter or the the our third and fourth quarter. We are a lot.
Of the backlog that we add his future year backlog.
In addition to that that will book and burn so.
Okay. That's good color and then last one from me on North an idea how concerned.
Should we be about that situation for you guys. Some of our private contacts in North Carolina have said, Hey look fiscal 20 held up pretty well, but man fiscal 21 could be really ugly and North Carolina what are your thoughts.
You know.
We share a little bit of that kind of thought process.
2020, we think there's going be good coming into 2021.
Obviously, there is going be a shortage there and.
Thats why were paying a lot of attention and making a lot of contacts with our.
Leaders in Washington that.
In order to maintain the safety and the Rouge.
We felt like something's going have to be done and we feel like than they are AG, but as forwarders North Carolina. This panel a little bit of old news going we've been talking about North Carolina FHFA, several I think several quarter.
Now that though well know they they over span at one period of time and then we had.
Things kind of look and then.
Good direction and south supplied into into the terminal where things would turn it and then we started dealing with co but not teen and that's kind of thrown something a you know a shortage in there, but you know North Carolina basically has a great system and then really don't have a.
Issue other than lack a revenue coming in from taxes Amarin things in place once we get everything swinging back in the economy that there's not going to be any funding issue. We're going have to just worked through this process and.
You know going after just above.
Do what we've been doing for the last six months, we saw already own kind of what was going to own and we moved some of our product.
Mix around what we were doing then and then lastly site, we got 35 deferred.
Areas and North Carolina is just one of them, but we're still very bullish on North Carolina.
Yeah, and great and Adam we had actually we had actually to Charles as point I'm, an art last six months North Carolina's.
The OTI, we had already moved away.
Recoded.
From about you know dropped our percentage that was with North Carolina Diodati.
By about a third so while co which is a short term impact there.
So we feel like is Charles said long term they have a very strong funding mechanism and though.
There you know the there would definitely be new and fewer and they've said this publicly of the large mega projects, but they've got it they've got roads I've got to maintain a there and we think that's going to bode well for us once I kind of get some of their short term funding issues resolved.
Understood I will turn it over thanks guys.
Thank you.
Next question is coming from Josh Wilson of Raymond James. Please go ahead.
Good morning, I Hope you and your family so well.
Thank you John here too.
First on the glass plant could you give us a some quantification as to the timing of the spending and any color on the financial impacts that might have.
Yes.
4.1 million as the budget to construct a facility.
We expect that to be probably 90% complete by September thirtyth.
And then we're currently targeting being able to produce.
Oh that.
Glass plant ready cyan by October or November so the other than the capital expenditure this year, which we built into our estimate.
That's showing thing that will happen.
This year.
Okay, and then remind us as it relates to your states.
How much of your funding is exposed to the gas taxes versus other sources of revenue.
[noise] of I mean as far as the the DMT budgets.
I don't know an exact percentage, but the between the federal money that they disperse and the state gas taxes I would imagine that.
75% to 80% or more is that different stage have license fees and now Alabama taxes.
Thank you for the of.
Cars or don't learn gas the battery operated and those so but those other fees I would not thing would account for more than.
15% of their total budget, so it's primarily from the gas taxes.
And.
Those are the diesel interestingly is not down that much because the truckers are still out there trucking probably more than they were as I can get more miles and because there's very little traffic is the gasoline that's down.
But I think Charles said that for 21, 20, and 21, the backstop that the feds, we're looking at putting in.
Would would replace about the 30% drop so I think there they are estimating that average dropping gasoline taxes across all the states both at the federal and state level would be about 30%.
And as that mix true also the local.
Very little of the local work is done with gasoline taxes. Most of those are special taxes sales taxes.
Near the cities and counties that have so far and delayed projects.
Got good luck with the next quarter.
Thank you [noise].
Question having.
Mmm F.D.A. Davidson. Please go ahead.
Hey, Thank you good morning, thanks for taking the questions.
<unk>.
Just quick question regarding backlog acquired from.
The business in Florida.
It was very small and Mary even smaller Morgan. So I mean, it was there was only about $5 million.
Got it okay baklava for them.
Okay, perfect and is there a big difference in terms of the states that you fear per day between how much private work you do versus public you know relative to the overall numbers you guys provide or is it pretty similar across all those markets.
Well, it's not so much by state is it is bad.
The individual 35 market <unk>, that's how we really look at it. So we have you know the <unk> have a lower percentage of private work just because there's not as much development as you would have an you know Birmingham <unk>.
Layer Tallahassee, even hustle Huntsville, but so it really varies from the the individual markets not so much my state.
And we're fortunate to be as Charles I think mentioned earlier in some really high growth areas in some of our markets and I don't think that demand is really changing that much with at least in the short term with with Cove and so.
Oh.
We're still seeing a good strong.
Demand in that private private work.
Okay.
And is there any difference in the profit margins attach that private work versus public is that a little better because correct competitive or is that.
<unk>.
[noise].
Yeah, and it it varies from marketing to more good, but it's really not I mean in some cases that you might have more biters because qualifications to bid on D.O.D. projects and to have quality control in in in quality inspections and stuff like that.
Oh, and the bonding requirement, sometimes eliminates some of the smaller competitors, but you and a lot of our market <unk>. We were we sell f. obey to those smaller competitors that due primarily file private work and even use them, sometimes there's subcontractors. So there's really not.
Significant difference in the the margin profile between one type or the other and that's part of the flexibility that that we have is to be able to do multiple types of work, whether B.D.O.T.C.D. counting private and it really doesn't impact the margins.
That much to shift the.
Percentages in certain markets from one to together and we try to maintain a reasonable margin for what we do and so.
Okay, Okay, and <unk> <unk> <unk> <unk> it looked like that the at their picked up but that again I.
I think you talked about some changes and.
Processes that maybe some of the agency's last quarter that without an effect. There I'm just wondering what caused the pick up again I think from one q.
[noise] well actually.
The the way, we calculated and I'm talking about this before.
Is you know our March was a really high revenue month.
For the average for the quarter.
And so calculating it based on the sales that we had during that quarter. It actually went down about.
12 days.
If you break down on the core into the months. So we saw an improvement in March.
You know based on that calculation versus just a total revenue calculation ghost receivables were but our our sales in March compared to our sales in December were significantly different. So I think you'd have to look at it that way and so that was down about 12 days and I know.
One of the things that we did.
Oh, we have done and we're monitoring every week is.
One of our concern when coded came about was that for private work customers, we needed to make sure that we kind of increased our efforts to make sure that customers, who did always paid us well didn't get behind him didn't get into length. One so we.
Chores to companies with every week, we have a call with the presidents and C.F.O.'s and discuss the receivables aging and then the other thing that we had some concern about from a cash flow standpoint.
US whether working from home, what's gonna call some of the O.T.V.'s and the cities and counties because they have a process. They have to go through especially the counties and cities that have to have you know commission meetings and things like that concern was those might could stretch out some more.
So far we've really kind of seeing the opposite of that we even had as a kind of a side note we had.
One county in Georgia, where they were so concerned about it they wrote checks out by hand and mail to us.
So.
I think so far we've found that our customers had been very conscientious about making sure that they're disruption dislike what we're experiencing is not negatively impacted them. So, but we monitor that from C.B.I. with a call with me on.
Every week to make sure that that doesn't that doesn't happen.
Okay.
Appreciate you guys, taking the question that the rock and they say.
Thank you you too.
I'd like to turn the floor back over to management.
Closing comment.
[noise], Okay [noise].
Oh, thank everyone would be a known to call and or just want to make sure that you know that our company in our industry or is taking go that 19.
All the precautions very seriously and we're working hard to make sure that we keep on people safe and our customers and the general Patton, but that we walk around and I think everyone, but like I said being known to call. It and they were one be safe and when Tom Ti later.
Ladies and gentlemen, thank you for your parking.
Okay.
You may disconnect.
Crime and have a wonderful day.
Oh.
[music].