Q4 2020 Orion Group Holdings Inc Earnings Call

[music].

Greetings and welcome to Orion Group Holdings, Inc. Fourth quarter 'twenty 'twenty conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keep.

Please note. This conference is being recorded I will now turn the conference over to Frances Okay, net skis, Vice President of Investor Relations. Thank you you may begin.

Okay.

Good morning, everyone and welcome to Orion Group Holdings for quarter 2020 earnings conference call and webcast.

My name is Fran Okoniewski I'm, Vice President of Investor Relations and joining me today are Mark Stauffer Orion Group Holdings, President and Chief Executive Officer, and Robert Tabb, Our Vice President and Chief Financial Officer.

Regarding the format of the call we've allocated about 10 minutes for prepared remarks, and which Mark and Robert will highlight our results and update our market outlook.

We will then open the call for questions.

Through the course of this conference call, we'll make projections and forward looking statements regarding among other things our end markets revenues gross profit gross margin EBITDA EBITDA margin backlog projects and negotiation and pending awards as well as our estimates and assumptions regarding our future growth.

Administrative expenses and capital expenditures.

These statements are predictions that are subject to risks and uncertainties, including those described in our 10-K that may cause actual results to differ materially from those statements.

Moreover, past performance is not necessarily an indicator of future results.

By providing this information we undertake no obligation to update or revise any new projections or forward looking statements, whether as a result of new developments or otherwise also please note that adjusted net income adjusted earnings per share EBITDA and EBITDA margin are non-GAAP financial measures under the rules of this.

Securities and Exchange Commission, including regulation G. Please.

Please refer to the reconciliations and definitions inclusive for the most comparable GAAP measures and reconciliation tables accompanying this earnings call within the press release issued yesterday.

The press release can be found on our website at Www Orion Group Holdings, Inc. Dot com.

Also for additional discussion of risk factors that could cause actual results to differ materially from our current expectations. Please refer to our quarterly and annual filings with the SEC, which are also available in the investors section of our website.

And with that I'd like to turn the call over to Mark Stauffer, President and Chief Executive Officer Mark.

Thank you and good morning, everyone. Thanks for joining us today.

They will discuss our fourth quarter and full year 2020 results provide an update on the benefits. We continue to read for ISG and other operational improvement initiatives and discuss our outlook for 2021.

I'll begin with an overview of the fourth quarter. Robert will then discuss our financial performance and provide an update on expectations for 2021 and.

Then I'll come back to discuss our markets and provide an update on our ERP implementation before we turn to Q&A.

I'd like to start by noting that our operations in Texas resumed this week after being impacted last week by the winter storms.

Many of our employees across Texas were affected by the winter storm and we are working through our HR support programs to provide assistance to our team members most impacted.

I'd like to thank our team for their strong performance and ability to overcome obstacles hardships and challenges this past year.

I'm proud of our entire team on all of our project sites vessels construction yards shops, and field support offices and their continued resilience and commitment to improve our performance.

Along with our focus on operational and financial performance. Our full Morris priority is that all of our employees go home to their families at the same way they came into work healthy and injury free.

As such we remain deeply committed to our target zero program to support our vision of an incident free workplace.

Turning to our financial results. During 2020, we made significant progress in our financial performance with near record level adjusted EBITDA.

This progress is directly attributable to the implementation of our ISG initiatives, especially around labor and equipment efficiencies.

Overall end market demand remains positive as evidenced by our Q4 year over year bookings growth of 30% and the approximately $1 6 billion in bids outstanding at the end of 2020.

We continue to see bid opportunities in both of our segments and we expect to see bid opportunities increase as the COVID-19 vaccine rollout intensifies and the headwinds from the pandemic abates.

Our new infrastructure Bill would also add an additional catalyst for a bid opportunities.

These factors combined with the operational transformation, we've implemented through ISG support our ability to continue to deliver improved results as we progress through 2021.

Now I'll turn the call over to Robert to discuss our financial results for Q for Robert.

Thank you Mark and thanks, everyone for joining us.

Today I'll review the financial results for the for quarter 2020 for.

Provide an update on the company's liquidity position and discuss the company's full year 2021 outlook.

Starting with the financials revenue for the fourth quarter 2020 were $170 million compared to $199 8 million in the fourth quarter of 2019. This decrease was due to the timing and mix of projects in both the marine and concrete segments in the current year period.

Fourth quarter year over year gross profit Rose 13, 7% for $21 7 million. This.

This increase was a result of continued project execution gains and better labor utilization across both segments as a percentage of revenues gross profit margins expanded 320 basis points to 12.8 per cent.

Turning to our segments in the fourth quarter of 2020, our Marine segment had revenues of $97 6 million and an adjusted EBITDA of $13 One day.

This equates to an adjusted EBITDA margin of 13, 5%.

In the prior year period, we had revenues of $111 2 million and an adjusted EBITDA of $12 1 million, resulting in an adjusted EBITDA margin of 10, 9%.

The year over year revenue decline was due to timing and mix of projects in the current period. Despite this we were still able to improve our profitability in this segment as a result of better labor and equipment utilization.

Our concrete segment had fourth quarter revenues of 70 $225 million compared to $88 6 million in the fourth quarter of 2019 adjusted EBITDA for the concrete segment was a loss of 580.

80000, compared to a loss of 577000 in the current year period.

Our concrete segment's year over year revenue decline was driven by a decrease in production volumes, resulting from the timing of startups on certain newly awarded projects.

That being said, we were able to more than offset the year over year revenue decline to improve operating margins.

Adjusted SG&A expenses for the fourth quarter were $16 6 million or nine 7% of revenues the year over year increase is due to an increased accrual in the current period for the annual incentive compensation plan.

Net income for the for quarter 2020 was $3 7 million for 12 cents diluted earnings per share, which includes a 150000 of non recurring costs and other charges predominantly related to ERP initiatives.

Adjusted net income was $3 5 million or 12 cents per share.

Fourth quarter adjusted EBITDA grew nine 5% for $12 6 million. This represented an adjusted EBITDA margin of seven 4% compared to $11 5 million for an adjusted EBITDA margin of five 8% in the prior year period.

Now to bidding metrics and win rates.

For the fourth quarter 2020, we'd been on approximately $954 million worth of opportunities and were successful on $181 million.

This resulted in a book to Bill ratio of 1.06 times and a win rate of 19% for the quarter.

As of December 31, 2020, our backlog was $440 million of which 203 million was associated with our marine segment and $237 million for the concrete segment. Additionally, we were the apparent low bidder or have been awarded subsequent to the end of the fourth quarter 96 million worth of opportunities.

Of this 46 million is related to the come to the marine segment while for.

50 million is related to the concrete segment in total currently we have over $535 million of projects between backlog and low bid.

Now I'll turn to the balance sheet as of December 31, 2020, we had approximately $1 6 million in cash and $63 million of availability under our revolving credit facility.

We ended the quarter with $35 million of outstanding debt 5 million of which was related to the revolver and $30 million related to term loan. This translated into a 0.89 times leverage ratio and a fixed charge ratio of 4.05 times, both well within the covenant requirements are current.

Liquidity position provides us with flexibility to execute on our strategy pursue new awards and perform work in backlog.

Regarding our outlook for 2021, while we expect the COVID-19 pandemic to continue to impact certain end markets.

Based on our current backlog and bid opportunities, we expect adjusted EBITDA to be in the mid to high $40 million range, which is comparable to 2020 normalizing gains on the sale of assets.

As macroeconomic factors develop such as increases in nationwide distribution of the COVID-19 vaccine.

We will provide an EBITDA update as the year progresses.

Overall 2020 was a successful year the company achieved record high revenues and gross profit leading to a near record annual adjusted EBITDA.

We are pleased with the progress that was made last year for <unk>.

Main focus on execution and continued improvement in 2021, now I'll turn the call back to Mark.

Thanks Robert.

Turning to our markets as I've stated previously while pandemic related uncertainty has pushed some bidding opportunities in certain sectors to the right. Other end markets continue to function normally and we continue to pursue projects in both of our segments.

Our focus is on profitably bidding these opportunities and our ability to adjust between different end markets continues to serve us well.

Additionally, we continue to target select larger and longer duration projects in both segments to provide us with greater operational visibility.

In our Marine segment, we continue to pursue opportunities in the public sector at the federal state and local levels, including Port expansion projects D. O T work involving bridges over water, maybe facilities and environmental and flood control projects.

We're also continue to see bid opportunities materialized in the private sector with expected upcoming projects in the energy space and the Caribbean market.

In our concrete segment, we are continuing to pursue projects in our project opportunities and functioning end markets, including the Tech e-commerce and large retail sectors.

We are also pursuing larger structural projects involving high rise residential or mixed use towers similar to those we are currently working on in Austin and Houston.

Throughout 2020, the changes we previously implemented through our ISG initiatives have resulted in improved operational effectiveness as we focus on labor management equipment management project execution and corporate process at.

And all of these areas, we've implemented enhancements and improvements leading to improved efficiencies and cost control.

As part of our push to improve our operational efficiency. We have continued with the process of our new ERP system implementation.

This will not only solidify our operational efficiencies, but also allow us to scale. These efficiencies as we grow in the future.

As a reminder, as a result of the acquisitions. We've made we currently operate on separate data platforms across our segments.

ERP is crucial to achieve full system integration across our businesses and critical functions, including CRM project management, HR payroll and financial.

But come at an increased cost over its short term our investment in the new ERP system will provide a scalable platform crucial for us to execute our strategic plan.

We have performed incredibly well in a difficult and challenging environment and we continue to improve our liquidity and strength our balance sheet.

This past year has been one of challenges hardships and tragedy.

Through it all our team has proved to be resilient and focused and I'm proud to lead such a great group of people.

I'm confident in our team's ability to perform in the current environment and the challenges it brings along with it.

We have shown that we were able to improve operational effectiveness and profitability by focusing on business development execute efficiently executing the work on our projects and controlling indirect costs in particular, unabsorbed labor and equipment.

Through the hard work and dedication of our team we are incredibly well positioned with the with options to execute our growth strategy as we move forward and look towards a post pandemic economy.

We remain confident in the diversity sustainability and long term drivers of our markets and we believe we are well positioned to capitalize on both current demand and post pandemic demand across our end markets.

Lastly, we'd like to thank our customers suppliers and shareholders for their continued support.

With that I'll turn the call back to the operator for Q&A.

Thank you.

I'd like to ask a question. Please press star one on your telephone keypad income.

Formation total indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue and for.

All participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Julio Romero with Sidoti and company. Please proceed.

Hey, Good morning Hope you all are well.

What are the other how are you doing.

I'm. Good. Thanks. So my first question was just on the guidance.

Wanted to ask about what are the big swing factors that get you to the high end of your EBITDA Guide range.

Well I think you know this is kind of where we are right now I mean.

Coming into the year, we feel good about where we are with respect to the backlog of bid opportunities. We see in front of the comments we made in the remarks.

But we've still got the uncertainty around the COVID-19.

19 of our focus is to meet or exceed the guidance like we did last year.

Got a good plan, we've got good people a good team.

So we're focused on the kind of the same thing we did in 2020 and just.

We're focused on on beating it and.

Uh huh.

Certainly if we see an infrastructure bill that that'd be a positive catalyst for that.

Again, we've got functioning end market now and we expect those to improve as the year for dresses.

Okay.

On the ERP implementation can you just talk about how.

How much investment you.

Expecting for 2021 and if.

You're still expecting to realize the full annual benefit beginning of 'twenty three.

Yeah.

As we've clearly stated we think that the total cost is going to be somewhere in the $15 million range. Once it's all said and done.

In 'twenty and 'twenty and 'twenty one.

We'll spend somewhere between four and $6 million on the expense side and then another two or three on the Capex side.

But as far as realizing the benefits yeah. We're still on schedule, we think that we'll be able to start seeing those gains in.

In 2023.

Okay, and I guess just on the I S T plan.

Can you maybe discuss the labor and equipment efficiency as you saw in the fourth quarter.

Can they progress throughout the year and if so what's kind of the cadence of that.

Of those gains throughout the year.

Well I think we've kind of seen other than throughout 2020. So I think you know a lot of the improvement we saw in 2020 was related around better control around indirect indirect labor indirect equipment.

If we look for Q4, we actually we continue to have.

<unk> and indirect so we actually had a lot of improvement in the production efficiency on the projects.

So there's a little in the fourth quarter, a little more weighted to that.

Does the project efficiencies as we noted in the earnings release.

But yeah, I mean, our our focus has been to.

ISG is to consistently.

The focus on our consistent have consistent performance with respect to controlling those costs.

We've demonstrated that as we went through 2020 are.

Our mission is to keep people on that as we as we go forward and I think where we've done a good job with that and I think as we kind of noted in the remarks that with the implementation of ERP, that's just going to enhance our ability.

To manage the manage those costs as we go forward even better so right.

Right now it's about <unk>.

Consistency, we've I think we've demonstrated that in the last four quarters.

And we just we just keep on with that too.

We continue to have consistency in our performance.

Okay I'll pass it on and circle back with any follow ups. Thank you.

Hello.

Our next question is from Alex Rygiel with B Riley FBR. Please proceed.

Thank you for a nice quarter gentlemen.

Thanks, Alex.

Mark have you seen any early proposals of the infrastructure.

Infrastructure, Bill and how the army corps' budget could be impacted where possibly could you address.

You know how their budget was impacted in previous infrastructure bills.

Yeah, no. It's a good question and I think I'm you know a couple of things one I think the overall spend on the core relative to kind of some of the numbers that we've heard and right now we've heard and consistent things are I think if you know.

On the president transition website.

Talking about a pretty significant two trillion dollar type infrastructure.

So I think lots of remains to be seen about the details of it but to your debt.

The latter part of your question.

For the corps of engineers relative to whether we see it.

Uh huh.

That's really in dollars trillion $5 750 billion dollar stimulus I think the course piece will be relatively small compared to that overall.

Infrastructure, Bill, but relative to the corps budget can be very very significant and by way of example.

Back in 2009, when we had a.

Kind of a stimulus bill is a little bit different than infrastructure for the stimulus bill.

The core budget operations budget kind of doubled with the so they sort of saw a 100% I add to their to their normal budget with the.

With the stimulus. So again, we think it can be very very significant for the corps of engineers.

We think we can see other opportunities for D O T.

Other transportation surface transportation projects that kit.

Potentially you funded by infrastructure.

We think it'll be a very good catalyst for us.

Across our business.

That's great and then turn it to the concrete segment for a second backlog is holding up pretty well.

Can you address the intermediate term sort of bidding environment and do you have any plans to extend this more aggressively from a geographic standpoint.

Yeah. So I think the first part of the question is yes, I mean, if you. If you go back for the Q2 and Q3 of last year, you saw kind of a pull back in or a book to bill.

Just as sort of the markets adapted and.

As we've said in the remarks.

You know, there's a there are functioning and markets.

I think the good news is for us.

The end markets that are being impacted we think that deferred demand. We think that those those projects will eventually come back. So that's a positive for our future bid opportunities, but right now yeah, Yes, we saw in Q4, a very nice.

Very nice bookings for our.

Our concrete business that we've seen that continue on with some other project announcements you've seen in.

The first quarter so far.

And yes, we are we are already stretching beyond the Texas borders for a bid opportunities.

As I've said before where.

Our mantra internally is is to focus on backlog.

We're going to we're going to focus on the project opportunities that are coming out, but along with all other work that we've done in our concrete group in this past year and.

Really the improvements and the strides we've made.

We are expanding our reach with our potential opportunities with a lot of our a lot of our customers and we are currently pursuing work outside the state of Texas, both in Louisiana and in Florida, and we think we'll have some.

News on that as the year progresses in terms of our project wins.

That's great and lastly, Robert maybe you could help us to sort of understand the first quarter, a little bit in light of the difficult weather in Texas. This month, and how we should think about sort of revenue and EBITDA or EBITDA margins.

Yeah, I think if you if you're looking at a year over year comparison for 2020.

I expect the revenue to dip back maybe a net 5% range.

Range I expect us from a profitability standard.

Standpoint, too to be you know a little bit closer to breakeven than we were in 2020.

For Q1, 2021.

As you know as we've laid out that full year guidance. So we did reflect a pullback.

In Q1, because of the winter weather, but we think as the year progresses, and we'll make it up.

Thank you very much.

Thanks, Alex.

Our next question is from Marco Rodriguez with Stonegate capital markets. Please proceed.

Good morning, guys. Thank you for taking my questions debt.

I was wondering if maybe you could talk a little bit more about your backlog prepared remarks. It seems like things are going pretty well youre feeling pretty good about what you have in there. If you can talk maybe about what the margin profile kind of looks like in that backlog and while I understand that the concrete backlog is pretty quick turn stuff.

If maybe you can kind of help us understand by.

By the by the two segments, how that backlog she's sort of flow into fiscal 'twenty one.

Well I think a couple of things one.

We've obviously factored that into what we've talked about with guidance again it it depends on the type of work at the projects as the number of bidders on projects.

I think again, we feel good about where we are relative to the relative to the macro economic factors right now.

Yes, no as we said in the Marine segment.

Got.

A lot of opportunities in the public sector space, we are expecting as we said you know private sector opportunities to stock Mark lagging and we've already seen evidence of that.

So I think again it just it depends on the opportunity of weather.

<unk>.

How competitive the bid pricing is going to be.

We'd always like to say that that price upward in our view, but.

We're focused on.

Yeah pursuing those opportunities as we said in the remarks pursuing those opportunities that we think give us the best the best.

Option and opportunity.

Given what else is out there to achieve our objectives. So we want to focus on the opportunities that are that are out there of course, but we also want to focus on those that we think will give us the.

The best.

The best profitable projects to achieve our objectives. So.

You know again.

I think.

Some of that by saying you know look we feel comfortable with the backlog and the opportunities we have and think it support.

What we've talked about for 2021 and of course.

As always and I touched on earlier.

We're going to focus on beating that out just like we did in 2020.

Got it and then in terms of the bids outstanding in the quarter, you're at 1.6 billion level there.

Can you maybe talk a little bit about that rate. There just I believe in prior conference calls you had discussed the fact that obviously with Covid.

Some of the bid market had kind of been pushed in and we're kind of slower just because of the decision, making and obviously not having everybody.

Maybe in offices to make these sorts of decisions.

Outstanding still sorting.

Reflecting that impact or is that sort of kind of cleared away our free cash.

I think it's largely cleared away I mean, I think again.

I think.

He has learned how to work in the Covid environment over the last three quarters and so I think at the year end.

Reflection of Uh Huh.

Kind of.

Fairly normal churn in it.

And the business development process. So you know our.

R B.

Bids outstanding quoted work, it's very dynamic you know theres projects coming on on that Theres projects coming off that we may bid a project and then it turns out it gets reshuffled somewhere in the deck and get deferred or gets rebid or you might price something you know two or three times all of that is fairly normal.

So I think as we look at that we feel good its up year over year versus what we had in it our.

You know quoted work in bids outstanding at the end of 2019, which was again pre COVID-19 at that time, Inc.

Over the where we saw that at the third quarter. So we think that's a that's a good sign we did see as we got into in the latter part of the year.

An uptick in AR.

Book to Bill.

You can see that over one for fourth quarter, where we were below one in Q2 and Q3, So I think it's indicative of.

Just kind of a I'm not going to say normalization of the end markets, but I will say of a functioning end markets and the environment and so again, that's a good indicator for us and again as we look at that both at that and the opportunities we see upcoming.

We feel good about that obviously, we think that could improve even further.

As COVID-19 started to abate or at least.

Vaccine rolls out and hopefully.

Other parts of our end markets begin functioning more normally as a result for that.

Okay.

And then another question here on the concrete business.

In relation to your prior remarks for an answer on that question.

Expanding your baked into Louisiana, and Florida now can you maybe talk a little bit about what is necessary from an infrastructure standpoint to support that business, assuming that you start to want to see to win some bids there.

Yeah, well obviously it's.

Stepping out from the normal footprint, but in both cases, our Louisiana, we have a lot of.

Experience working in the state.

It's a neighboring state taxes.

So it's not a two.

Too far of a destined for like I said, we've got we have a lot of experience on the marine side Marine segment working in that state. So we feel confident in our team's ability.

Just to step into that market Likewise with Florida, We've had a big presence in that state for 20 years.

And you know from a legacy perspective, even longer than that.

So we've got a lot of infrastructure around that stay with our marine segment and we're focused on leveraging that that presence with our concrete group then again feel very confident.

And our ability to execute that work.

Got it and if I can just sneak one last one in and then I'll jump back in queue can you provide an update on the non operational losses, it sounds like Tampa, Portland, Mark and East Ms Jones.

Yeah, I'll start with the Tampa there was a hearing with the city Council on February 11th.

The bars group basketball, we're continuing with the city wanted a couple other concession.

Concessions made to their designs and their drawings and airplanes. So they will reconvene back on April eight.

And we'll get an update on what day.

Net rezoning gave on April eight well as far as the Port Lavaka property. The bar continues to work with their bank to finalize their funding.

We were all waiting pattern today.

Wrap up the financing piece.

But they're working through that.

East West Jones.

No no real update to report here I can say that they had been.

Increase or an uptick.

Interest and activity. So we feel good where that property is in.

We feel comfortable debt.

We will be able to get a transactional net property.

For the next call it six to 18 months.

Got it thanks for that guys I really appreciate your time.

Yes.

Our next question is from Paul Frat with Noble capital markets. Please proceed.

Yeah, just a quick follow up on the Tampa sales deferred.

They're going to come back with the Mt.

Modified development plan, hopefully it'll be approved by the city Council.

If it's not if it's not rezoned is there a drop dead date on that and is there a deposit that you sort of what are the economics of it if they work.

Yeah.

We have a contract in place.

No.

We're going to go through.

The process from the hearing.

And see where that shakes out.

I don't want it.

Total negotiate over a conference call, but what I can tell you is that we have significant interest.

In the property beyond the party debt.

We have a contract with.

And we feel comfortable debt.

This property is marketable and we will get a transaction.

We'll get a transaction zone.

Just to clarify, though Robert is for a drop dead date, there you know they they.

They they're rescheduling issues at the city Council, where they were talking about potentially going to the April 22nd meeting, but the buyer has said that they couldnt do that for them.

Contractual standpoint.

Can you just address that and also do they have a deposit down.

Would they forfeited but the positive thing if they work.

Again, we typically yes, we typically have drop dead day, some contracts and it's fair to say that we do have one there we do have a they do have money up on this contract. So again as Robert said, we're not we don't want to get into negotiating publicly but there is a there is a termination date, if we don't get a transaction done or group.

Two an extension and but right now we're focused on working through the issues with this buyer and the city and getting a transaction closed as Robert said, we felt this property as a <unk>.

Very very marketable and.

We will get a transaction done on it.

Great.

And then if you could just address the fourth quarter. You know you were above the range for EBITDA and I bet, you gave of 10 to 12 million.

You know it was all because of marine.

Can you address one how sustainable the marine performance is.

And then second just clarify what happened with.

Concrete.

It seemed like you had a head start with some of the deferrals that you saw from the shift from the third quarter ended the fourth quarter. There yet revenues were down quarter over sequentially on top of that profitability was disappointing.

Disappointing can you just address what happened in the fourth quarter.

Yeah, well a couple of things one other marine side as you know that if we look at the full year 2020.

<unk> said previously that we want to consistently be targeting a 10% to 12% EBITDA margin and we've done that if you look at 2020.

That's the range we are in obviously as we've also said we want to try to outperform that and I think you can see that we we were able to do that somewhat in the marine business as well. So again. This has been a huge focus of our ISG initiative that we spoke about earlier and.

Again, that's our objective is to keep that sustainable and again I think we've demonstrated that through the last four quarters with respect to concrete.

A couple of things one.

We've made tremendous progress in and that.

Segment in that.

Business for us.

<unk> got a great team in place.

We continue to make changes kind of from the <unk> perspective.

Into the first part of.

2020.

So again, we are very confident in our team and the progress we've made.

Throughout 2020 with respect specifically for the fourth quarter.

Again as Robert mentioned in his remarks.

Yeah. It really has to do with the startup of <unk>.

Chart up of projects again, if you go back and look at what the book to Bill was in Q2 Q3.

Yeah, we were substantially less than one in the segment and.

But we as we got into the end of the third quarter and the fourth Florida had a substantial pick up in that work again timing of the startups of that of those projects.

Drove that.

Obviously, we don't report that for reported out this way, but I think.

It's fair to say that.

As the quarter progressed.

We improved our performance for that division is that work started up but clearly a lot of that work started later in the quarter than at the beginning of the quarter as we won that new work. So that's really what went on there again, we feel good about the progress we've made in that in that segment, we still have work to do.

We've said before we were targeting high single digits.

For EBITDA margins in that business.

We're not quite there yet, but we've made big progress in getting there and again, we we've got the right team to make that happen.

We're focused on on making that happen.

And then maybe Robert in that context, if you could sort of give us an idea.

Mid to high 40 million range for EBITDA.

The mix between concrete.

Marine.

That would be helpful. If you could give us a ballpark.

Yeah.

Yes, no no.

Where we are right now.

Still pretty fluid.

We expect continued.

Performance in the for Marine segment, but we also expect to take a step forward.

On the concrete side and as we sit here today and you see the book to Bill ratio.

Q4 for concrete.

Starting to build up their backlog and have a healthy backlog.

No to burn off Marine is going to go through a period here, where we have good bid opportunities in front of us.

And some work that we have to go get some awards that we have to win.

As that starts to play out.

<unk> profile will be.

From a little bit clearer.

For us, but I think the.

Mid to high 40 range.

Where we sit today is a good target as we stated in our remarks earlier as we get farther into the year, we're going to update that number and provider or much targeted number.

Just a follow up on NAV.

If you look at the Marine segment EBITDA for 2000, well first of all let's just youre, excluding ERP spending from debt to EBITDA.

Estimate just to clarify right, yes, adjusted EBITDA does not include ERP expenses.

But mark.

EBITDA was 47.7 concrete EBITDA was $6 seven for the full year.

Could you.

Give us an understanding of marine is likely to be down.

Concrete would be down to or where you'd be able to enhance the performance of concrete in 2020, 'twenty, one or 2021 relative to 2020.

Well I think I think the point is is look there. This is where we are today Po.

We're factoring in the cash.

The uncertainty around Covid, we feel good about where we are with respect to the start of the year and the awards that we've gotten and.

In concrete we've got great opportunities in marine.

Again, we're focused on.

Uh huh.

Beating this out like we did in 2020, we've kind of stated what we think the range is the targeted ranges for for EBITDA, we want to be in the 10% to 12% range on the marine side in the high single digits on.

The concrete side so.

Look this is this is kind of how we see it today and.

As we said we'll update it as we go for it but again, we're focused on consistently performing and and beating this out as we did in 2020.

Sounds good if Robert if you could just give us an idea of what your capital spending level is for 2021.

And then also.

If you could just since he SG&A is a little more controllable than other factors can you just give us an idea of how SG&A looks in 2021 versus 2020.

Yeah, so starting with the capital expenditures will guide to.

20 to 22 million that's inclusive.

The ERP spend.

But as we say every year, we managed Capex, we watch it ebbs and flows with the business with the schedule and we will continue to manage that as far as the SG&A I'll talk about it from adjusted standpoint.

We said for target of eight 5%.

We're extremely focused on on meeting or beating that debt.

Percentage.

Great. Thanks for your help.

So.

Our next question is from Gerry Heffernan with housing and company. Please proceed.

Yeah.

Good morning, everybody Mark Rob friend, Thank you for for having the call.

Net.

And I guess the backlog is the topic that I'd like to.

Focus on here and I understand a lot of people have asked the question.

Mark you made the comment that you think the.

The slowdown in the bid process due to Covid is kind of behind us.

That the people have figured it out.

However, if I look at the bid outstanding number that you've put in the release of $1 6 billion.

That's significantly higher than any number that you have had out there in.

And the last Friday quarter over the last three years.

So that's that kind of sticks out a little bit can you just tell us a little bit more as to why is that number so high.

And is there any reason not to expect a a historical hit rate on that also if you could give us any color as to.

How that breaks out between concrete and marine and how that breakout may be different from previous periods.

Yes, so I think I'll take the last one for you the breakout is pretty consistent.

Weighted towards the concrete business because that's the that's just the nature of our concrete we bet a lot more volume of work.

Because we're bidding.

Just for the nature of how how that business works and as the subcontractor and in order to get to the hit rate is a little bit lower our targeted hit rate is a little bit lower in the concrete business. So we send Uh huh.

Bid.

Two things we bid more volume in that business number one and number two the duration debt. The bids are outstanding before there's a decision on it.

Typically a little longer.

None of that's changed and from.

From prior quarters that that's consistent for the marine side again.

It's less weighted that number outstanding is less weighted for the marine side and the cycle of quoting the work and getting a decision on it is typically much quicker.

Particularly one of the things that drive that on the marine side is the public sector work largely you know when you bid it.

There's a lot of.

Open bid.

Free then you know exactly then with certainty whether you are the apparent low bidder or not.

With one of the other things that's driving that though is as again we are select.

Actively targeting larger longer duration projects in both businesses. So if you think about it from the concrete side.

The structural work, which is work that we've talked about is where.

Focused on expanding our structural.

Our market share.

So therefore, there's more of that work that we're bidding in the bid process and those are larger projects for that that contributes to that likewise on the marine side as we've.

Evolved and grown and.

Yeah.

Increased other.

The size of some of the <unk>.

<unk> that we're currently working on we're pursuing.

For more larger projects in that group as well, so that's going to impact the overall.

Outstanding number as well.

Yeah.

Okay. Okay.

I understand the idea for the marine side of targeting the larger longer duration.

Programs projects.

Are they out there right now I mean are those are we limiting ourselves as to.

What we're able to win here because of the desire for a certain demographic of a project.

No. So is that just.

I'll just be very clear, we're still pursuing all levels of projects I mean, our guys group as literary pursuing 50000 $100000 projects.

We continue to blanket.

All sizes of projects, whether its a couple of million bucks or or $10 million or $25 million.

So there is the mix of the work out there right now.

And it varies that there's large for development projects out there there's D O T Bridge work that's out there there's work for the U S. Navy that's out there.

That is it that is in the realm, we expect.

Again as the Caribbean market improves.

With the improvement of our.

Covid there are for potential large projects there as well so.

There is a good mix of work at all levels.

That drive what we what we go after.

Not exclusively or I'll say, it a different way, we're not excluding anything.

Whether it's large or small if it makes sense for us.

And it is it's a good project for us and we think it helps us achieve our objectives.

That is something that we target if it doesn't we do and again.

There is.

<unk> and that cash in that description at all levels are large and small.

Okay.

Alright.

In regards to the guidance.

Robert You are you said the mid to high Forty's for EBITDA, our adjusted EBITDA.

You cited the comparability issue to the current year.

Which came in at 54 due to the sale gain on sale of assets correct.

Yes, that's correct.

Okay, and we had about $9 million of income from the sales of assets.

Just to be clear for the guidance you're.

Assuming zero as far as gains on asset sales.

Well in that 50 50 for millions of EBITDA flow.

$3 8 million in Q3 with already removed out of it so.

So if you normalize for nine for that two eight then you're going to get out of the 50 for better give you a pretty good number.

Oh I'm sorry, you lost me what was the we have on the year to date for a total year, we have 9 million weighted.

9 million a day.

Telegraph that if you back out the $2 eight.

<unk> million from the women buoy incident, and if you use that number to back off of the 54 debt to give you a pretty good year over year comparison.

Okay. So like if I back that out I'd bring the normalized EBITDA number in.

It kind of seems for all intensive purposes, you when youre looking for a flat year on an organic basis.

In 'twenty, one versus 'twenty on an EBIT adjusted EBITDA number would that be correct.

Yes, yes.

For more debt.

But where we are.

Sure.

Where we stand a day based off of factoring in the uncertainty around COVID-19.

Yeah, again focused on beating that out like we did in 'twenty and then as things progressed in a year we'll update.

Understood understood, Yes, I'm, just it's a matter of what we see here and now and are being appropriately.

Balanced as far as how good things could be given the COVID-19 a store a real issue.

Right.

I just wanted to make sure I understood the comparison.

Uh huh.

And really I guess, it's with.

Backlog in marine.

It was a we were able to have a better scenario. There can you tell us about how you see the marine business as far as the Big picture industry is.

Got.

Excluding any possibility of an infrastructure bill just.

Is it an improving industry.

Well, yeah, I mean, I think again as the as I've said on prior calls.

The long term debt.

<unk>, we feel very positive about.

Again, some of those have been impacted by Covid.

But if we look across the both in the public and the private sector.

We think that the drivers are there for for the long term.

Again, there's a tremendous amount of infrastructure and the department of defense.

Recurring dredging that needs to be done.

Year end year out.

In my view the core is getting a lot more effective in.

Executing their work.

We'd like to see like some improvements maybe in and the pace at which they are they did work, but I think.

So theres a lot of.

You know a lot of that work that's going on in there that is recurring work.

Again, I think the energy space.

It's still going to be a driver of opportunities, we're still producing a lot of energy domestically and I think that's going to continue even with maybe some other changes in this day administration theres still going to be a lot of energy produced domestically that has.

Altered the supply chain dynamics that are driving opportunities for us.

There's even without an infrastructure bill there's still funding.

Funding and DLC work that's out there and then again in the private sector as well, we think there's a lot of pent up demand in the recreational space and that's going to drive opportunities in the Caribbean. That's a classic case of where we used to see.

Those opportunities is not going away. They just kind of slipped for the REIT with COVID-19, but we think they'll come back we think.

The demand for that is about ready to bust loose as we kind of see it.

Okay, great and if I could change focus for a second and jump over to the balance sheet.

Certainly the leverage is way down.

That's very comfortable youre going to be generating cash again next year.

Hum.

How do we see these through the formation of the balance sheet I guess I'm most interested in Oh.

How do you see the current bank agreement.

Agreement that you have which unfortunately has still some restrictions as far as.

Our capital allocation decisions that you guys counter or cannot make can you update us as to what the status of that is.

Yeah, so as far as the banking relationship is it's in.

And a good place we are at a good leverage ratio well within covenant compliance.

A lot of those restrictions that youre talking about they will alleviate them here in the next several months.

But it is something that we're looking at as we look at our overall.

The strategy for the company.

And where we stand today I think our banking relationship is more than adequate and supportive of what we need to execute this year, but we will look into that and we'll be looking.

Two to make adjustments as needed.

And then Jerry I would add to that too is I think I've said this on the remarks last time and I touched on it a little bit this time.

You know again.

We've been focused on that balance sheet and strengthening it in cash flow generation. Obviously, we've got the real estate transactions hanging out there, which are just going to improve improve.

Improve us even further.

But the way we look at that as that opens up a lot of options for us and with respect to capital allocation to.

To your point and we think that's a good place to be so I think in executing our strategy or or otherwise deploying capital.

We expect to have a lot of options.

We go through the go through the year here.

Well Mark I appreciate that I really do I guess with the biggest sticking point is for you.

And the ability to repurchase shares, which when you're trading at.

Just round numbers call it five times EBITDA.

Are you now.

In my opinion seems to be a very low valuation.

A very good investments to be buying a quality company at five times EBITDA.

Particularly if.

Things are on the verge of.

Getting even better.

Having that credit agreement out there that that restricts our dividends.

Dividends on the door.

You know buybacks.

To me seems like it's it's something that should be taken care of soon.

As soon as it's possible to protect and care of.

Yeah.

Yeah, Yeah, I hear you.

Okay.

Hey, Thank you very much for the time today.

Good luck going forward.

Thanks Jerry.

This does conclude our question and answer session I would like to turn the conference back over to management for closing remarks.

Thank you everyone for joining our fourth quarter earnings conference call.

We look forward to talking with you again in late April for Q1 earnings results. Thank you.

Thank you. This does conclude today's conference you may disconnect your lines at this time.

Thank you for your participation.