Q4 2020 Orbital Energy Group Inc Earnings Call
Ladies and gentlemen, and today's conference is scheduled to begin shortly please continue to stand by and thank you for your patience.
[music].
Good day, everyone and welcome to orbital energy group's fourth quarter and full year 2020 conference call. At this time, all participants on a listen only mode.
A question and answer session with all of that managements remarks, and then.
A reminder, this conference call is being recorded and we pay.
Today's call will be available on orbital energy group's website later today and well.
Main posted there for the next 90 days.
I will now hand, the call over to Mr. Eckstein of Casey S. A for introductions and the reading of the Safe Harbor statement. Please go ahead Sir.
Thank you operator.
Hello, everyone and welcome to orbital energy group's fourth quarter, and full year 2000, and 'twenty conference call.
A copy of the company's earnings press release, and accompanying Powerpoint presentation are available for download on the events and presentations page of the Investor Relations section of the orbital energy group website.
With us on today's call are Jim O'neil.
<unk>, Chairman and Chief Executive Officer, and Dan Ford Chief Financial Officer.
Today I'll review, the highlights and financial results for the fourth quarter and the full year as well as recent developments.
Following these formal remarks will be prepared to take your questions. I would also like to remind everyone that today's call will contain certain forward looking statements made within the meaning of section 27, a of the Securities Act of 1933 as amended.
And section 21 E of the Securities and Exchange Act of 1934 as amended.
Such statements are subject to risks and uncertainties that could cause actual results to vary materially from those projected and forward looking statements.
The company May experience significant fluctuations in future operating results due to a number of economic competitive and other factors such as the COVID-19 pandemic, including among other things the company's reliance on third party manufacturers and suppliers and service providers.
Agency budgetary and political constraints, new or increased competition changes and the market demand and the performance of liabilities of its products and <unk> solutions and services.
These factors and others could cause operating results to vary significantly from those and prior periods and to those projected and forward looking statements.
Additional information on respect to these and other factors, which could materially affect the company and its operations are included in certain forms. The company has filed with the Securities and Exchange Commission.
These forward looking statements are based on information available to orbital energy group today, and and company assumes no obligation to update statements as circumstances change.
Now at this time, it's my pleasure to introduce Jim O'neil, Vice Chairman and CEO of orbital energy.
Jim. Please go ahead.
Thank you Scott and thank you everyone for joining us today on our fourth quarter and full year 2020 earnings conference call.
As most of you are aware I joined and see you on a global now overall energy group and October of 2019. The guide its transformation into an infrastructure service provider, serving the electric power transmission and distribution and telecommunications and renewable markets.
During 2020, despite COVID-19 headwinds, we began to execute on our infrastructure strategy and lay the foundation for our long term growth.
Last year, we launched orbital power services, which provides electric transmission and distribution construction and maintenance services to the electric power industry. We also acquired the reach construction group Merrell orbital solar which provides engineering procurement and construction services to the utility scale solar industry and in the first quarter.
And this year, we launched the club's foundations, which provides drilled peered foundations to the electric power industry.
We believe the powerful market drivers for our infrastructure services will only increase over time and should drive increased demand for our services for many years to come.
The drivers include the nation's transmission and distribution and infrastructure, which is aging and beyond its useful life and renewables, replacing fossil fuel generation, which is a top priority for the bond and administration as well as a 37 states and for U S territories that are mandating a reduction in carbon emissions.
Other factors such as advances in technology to provide and intelligent and secure grid and the rollout of <unk> spectrum are some but not all of the major drivers that we expect will drive our future growth.
As such we have access to capitalize on these market opportunities.
Overall power services has established a multi year Master service agreement with cooperatives, and Oklahoma, and Georgia and in the fourth quarter of last year, a major investor owned utility and the southwest which is increased orbital powers annualized revenue run rate by 30%.
We are currently in discussions with several investor owned utilities to provide crews for ongoing services to support capital projects and maintenance on their transmission and distribution systems.
Based on the steady increase and the business over last year, we expect our orbital power to be cash flow positive and the second quarter of this year and anticipate increased demand for their services going forward.
It is important to note that most of orbital power as revenues are under Master service agreements, which provide a stable and recurring revenue strength.
Complementing this on overdue solar services business as a provider of engineering procurement and construction services to the utility scale solar markets.
Our solar business and to a greater extent, the overall activity and the utility scale solar market industry at large has been limited over the past few quarters.
And this is mainly due to the effects of COVID-19, which created manufacturing setbacks and.
Delivery delays of solar panels from China to the United States as well as a pause and project momentum from people waiting on potential incentives and tariff relief from the Bard and administration.
Seasonality also plays a factor here and we will do so and the first quarter 2020 one.
And this Andrew industry most of the projects will start late in the second quarter with significant activity in the third quarter and projects winding down some time in the fourth quarter.
Our backlog of $52 million at the end of the third quarter of last year was largely around one project, which was delayed resulting in an accelerated construction timeline.
We subsequently could not come to an acceptable commercial terms on a revised pricing necessary to support this quick turnaround and as a result of project contract was canceled.
So this project was cancelled and we have maintained a strong relationship with this developer and expect that there will be opportunities to work on their future projects.
It's important to remember Theres, a considerable degree of revenue cyclicality and this service line.
Construction revenues are primarily driven by large projects.
However, we are currently evaluating our project pipeline and excess of $1 billion of which many of these projects will go to construction this year.
Based on the opportunity pipeline, we continue to believe it is reasonable net revenues for 2021 will be and the $200 million to $300 million range.
In addition to the opportunity pipeline. We are currently evaluating and January we announce that overall solar is the exclusive provider of engineering procurement and construction services. So the black Sunrise half century fun and a car.
On lighting America.
Recently, the Blackstone rasp on announce that over the next three years and we will be.
And B building over one gigawatt of solar power on retired coal generation facilities with a beginning of investment of $725 million.
Construction on on these projects will start as early as the fourth quarter of this year.
Again this is additive to the $1 billion opportunity we are pursuing this year and a multibillion dollar pipeline over the next several years.
Subsequent to quarter and we launched orbital foundations are drilled share Foundation construction company operating as Eclipse Foundation group.
And the eclipse is complementary to our other service lines, primarily to orbital power is building electric transmission or substation facilities often requires foundations.
Our ability for orbital power and eclipse to provide customers with a total solution positions orbital energy group to capitalize on more opportunities at higher margins.
Our orbital gas systems, North American business was the most impacted compared to our other service offerings by Covid and the 2020 oil price drop.
And the fourth quarter customers, particularly in the Gulf Coast refining market signaled that spending would resume in 2020 one.
As a result, and gas systems, and Houston has a 4 million dollar backlog with a high potential for additional project awards in the near future.
Of note our vision technologies sampling probes had been widely accepted and approved by our tier one our major oil companies.
These companies are now relying on orbital gas to solve their challenging probe applications specific where you're obtaining accurate and faster sampling of trace elements, such as mercury H to Wes and moisture.
This is a result of in for the first time overall gas being approved as an integration supplier to tier one customers expanding our opportunity to win larger projects.
Of note in the first quarter of 2021 overly energy services on acquired full ownership of the V technology patent portfolio.
We have also expanded our integration and technology applications into the renewable markets and received our first biogas degrade injury order this year.
We are now building momentum to win the integration of analytical past packages and also provide maintenance services for these systems and the biogas market.
Over the past three years, the recognition of orbital gas North America's workmanship, and technology and subsequent approval as a tier one vendor has significantly changed and the opportunity to grow revenues and 2021 and beyond.
The impact of Covid to the orbital gas and the U K was not as severe as in the U S.
Our U K operation has been cash flow positive since the third quarter of last year and cash flow should remain favorable through at least the first six months of this year.
This is a result of our UK operations recently expanding into developing markets outside of its traditional core gas network business.
These efforts have led to significant orders and the renewable gas markets and excess of $2 million.
Despite COVID-19 the UK operation has also taken on more staff to take over service contracts on analytical systems, replacing incumbents equipment manufacturers or Oems.
Now I'll review some highlights on our fourth quarter and full year 2020 results.
Total revenues for the quarter were $11 $3 million and 99% year over year increase compared to $5 7 million for the fourth quarter of 2019.
The year over year increase was primarily due to the cadence of business returning to pre COVID-19 levels throughout most of our operations as well as the addition of revenues from both overall solar and overall power services collectively on our electric power and solar infrastructure segment.
The revenue from our electric power and solar infrastructure segment was offset in part by lower revenues from our orbital gas systems operation and Houston, which as I mentioned earlier continue to experience project delays related to the pandemic as well as lower oil prices.
For the most part customers and service providers alike have adjusted to operating and the current Covid environment and.
We implemented appropriate standards that provide for everyone's safety, while also maintaining business continuity.
The net loss for the quarter was seven four and $5 million compared to net income of $4 5 million per the comparative period last year.
We had higher SG&A expenses compared to last year, primarily due to the addition of overhead costs associated with supporting both overall solar and overall power services operations, which commenced this year.
Also Q4 2019 net income included $7 4 million of income from discontinued operations compared to only zero point $2 million in fourth quarter of 2020.
As we stated on our last earnings call, we expect our electric and electric power and solar infrastructure services group to contribute positively to our 2021 consolidated results as revenues and this group continued to increase.
On a consolidated basis, we continue to believe that OAG is on track to be EBITDA and cash flow positive as revenue momentum continues throughout 2021 and beyond.
Dan will provide more details on our financial performance shortly.
Oag's total consolidated backlog stood at $40 4 million at the end of 2020 with an opportunity to add additional overall power Master service agreements and solar project awards to the backlog and the second quarter of 2021.
Looking at our business segments going forward.
Total power services, we're expecting to continue adding additional crews as we are seeing increased demand for transmission and distribution services.
Indeed, the number of orbital power crews has grown rapidly since inception early last year and recently surpassed 30 crews and total up substantially from 17 at the end of 2020.
The industry trends and I mentioned earlier are the drivers for the strong demand we are experiencing.
And we continue to remain confident about overall power services continued opportunities for growth.
Turning to orbital foundations.
Which we launched less than two months ago.
<unk> has built two crews and is already mobilized on his first job.
We are currently reviewing $4 million and near term opportunities and the pipeline for drilled Peered Foundation services continues to grow each week as we get established in the market.
We expect to win our fair share of this score as the leader of Eclipse is an established leader and foundation services to the electric power industry.
As I mentioned, we believe overall solar will begin to secure project awards and the second quarter and be on track to generate.
200, and $300 million and revenue this year.
We also anticipate that the engineering and design on a black sunrise half century volume.
I'll start and the next few months with construction scheduled to begin as early as the fourth quarter of this year.
We believe orbital gas systems will continue to show improvement.
And the U K, where we serve the gas grid and renewable energy customers throughout the U K and Continental Europe, the bio methane injection to great market has continued to develop under the UK government's current renewable heat incentive scheme with a notable acceleration and growth of the number.
Size and speed of execution of such projects.
Renewables represent an increasing opportunity for the U K.
Overall has also developed and all new Mitsubishi based control system platform.
Far superior to previous models, and two as competitors and Terminix functionality reliability cyber security and operator usability.
These advantages have generated repeat business from some of the major players in this market.
As a result, our U K operations is expected to improve financial performance and 'twenty 'twenty warm.
Overall gas and Houston, which largely serves the industrial and Gulf Coast refining market.
<unk> experienced a resurgence and activity in 2020 warm.
With a strong and growing backlog and our acceptance by tier one customers to work direct we believe the positive trend and the U S will continue throughout 2021.
Our <unk> technology continues to gain acceptance in the marketplace and as a result, many customers are looking to overall to solve their sampling and measurement challenges.
And last but certainly not least when I joined the overlay energy group part of our strategy was to utilize the public company equity to make accretive strategic acquisitions, and the electric power transmission and distribution and telecommunications and renewable and infrastructure markets to grow shareholder value.
For many years ago.
Last year, it was challenging and to implement our acquisition strategy and as a sub $1 stock price was not conducive to acquiring companies.
Earlier this year based on continued execution of our strategy and market trends, our stock price increased and stabilized to a level, where we could go on the offensive with our acquisition strategy.
Now we're in much better position to leverage my knowledge and relationships within these industries as well as the ability to offer a different and compelling acquisition strategy to privately owned companies, who do not want to sell into a large strategic or private equity model.
We have several acquisition targets that meet our criteria and can add immediate shareholder value.
Overall energy is a forward looking story with a significant runway to achieve profitable growth from continued growth of our existing operations to adding well established privately held companies that want to join our team and build shareholder value for years to come.
Our announcements of day to acquire Gibson and technical services or GTS is our first strategic acquisition and 2021.
G T S. Founded and 1990 is located close to Atlanta, Georgia and is a national provider of engineering design procurement and project management services to the broadband and wireless industries, serving blue chip customers under multiyear Master service agreements.
G. T. S has a diverse customer base, which includes traditional telecom and cable system providers healthcare public safety and entertainment and sporting venues.
This was an extremely attractive transaction for us as G. S anticipates multiple growth opportunities over the next several years and needed a strong financial partner to invest and these opportunities.
I'm very happy about this announcement and look forward to answering questions that you have on GTS and our Q&A.
We are also and discussion with several electric power transmission and distribution construction companies that are proven leaders and the industry and have multiple msas with blue chip customers.
We have agreed to terms with one of the targets now under LOI and due diligence has commenced.
These represent attractive acquisition candidates that we want to be part of the orbital team.
We believe the company is positioned now to make significant acquisitions like GTS that will serve to build our infrastructure offerings going forward.
And finally, as we continue to execute on our energy infrastructure strategy, a critical component of this will be creating a robust environmental social and governance platform that will be a central and reshaping the culture of our company.
Specifically, our desire to provide services that continues to reduce carbon emissions and.
Providing opportunities for people of color and other underserved or disadvantaged people to be trained employed and advanced and our industry.
We recently named a Chief Diversity Officer Officer for our company Paul White, who also serves as our vice president of human resources and as a member of our board of directors.
Paul will be instrumental and assisting me to further develop and advance our social platform within the company.
ESG is a top priority for our investors and it was also an area of responsibility for corporate executives to advance because it's the right thing to do.
And overall energy group, we intend to be the catalyst for change and the electric power and renewable construction industry, making a meaningful impact to help people improve their own lives.
In summary, overlay energy group is a forward looking story.
Today, we have already made considerable progress and building a diversified infrastructure services company focused on electric transmission and distribution and telecommunications and the renewable industries.
Going forward, we will be targeting acquisition opportunities and the electric power and telecommunication industries that primarily provides steady dependable and recurring revenue streams.
And time, the recurring business, we acquire and grow organically will more than offset the cyclicality, we experienced and the utility scale solar business.
This concludes my opening remarks, now I would like to turn the call over to Dan Ford, Our Chief Financial Officer, Dan.
Thank you Jim and good afternoon, everyone today, I'll review, our fourth quarter and full year 2020, GAAP financial results.
To remind everyone that I will focus my remarks today on the company's continuing operations.
Also please note that with the acquisition of reach construction group and April 2020, now operating its orbital solar services the company revised and segment structure.
And the electric power and solar infrastructure segment and was formed during Q2 and now includes orbital solar services overall power services and now also Eclipse Foundation group.
Previously orbital power services, which commenced operations on the first quarter of 2020 was included as part of the energy segment, which has now been named the integrated energy infrastructure solutions and services segment and includes orbital gas systems limited and the U K and orbital gas systems North America.
The former power and electromechanical segment is presented in discontinued operations as the electromechanical business was disposed off during Q3 of 2019, while the remainder of the domestic power business was divested during Q4 of 2019.
T Y Japan was divested effective September 32020, and.
And to you I can and operations were closed and assets sold in the fourth quarter of 2020.
And I'll speak more on this topic later in my remarks.
We reported total revenues of $11 3 million for the fourth quarter of 2020 compared to $5 7 million for the fourth quarter of 2019 and.
And an increase of 99%.
Year over year increase reflects the addition of orbital solar and orbital power services as well as increased customer activity during the quarter. Following COVID-19 related project delays, we experienced earlier in the year. This was partially offset by lower revenues during the quarter from our orbital gas systems operations and Houston.
Which continued to experience project delays related to the pandemic as well as lower oil prices and lower revenues from our U K operations.
U K market continued to face headwinds surrounding COVID-19, Brexit and the impact of the political environment on investments within the sector. While the U S markets also continued to face headwinds surrounding COVID-19, and the price of oil.
For the full year 2020, total revenues were $38 4 million.
63, 5% increase compared to $23 5 million for the full year 2019.
And were higher due to the acquisition of orbital solar services and.
And in development on the Companys orbital power services business.
Which were offset by lower revenues from our Houston and UK orbital gas systems operations due to the factors I mentioned earlier.
Gross profit was $3 1 million for the fourth quarter of 2020 compared to $1 5 million for the fourth quarter of 2019.
For the full year 2020, gross profit was $7 $1 million compared to $5 million for the full year 2019.
The improvement is mainly due to the increased revenues as I mentioned previously.
We expect this improvement will continue during 2021.
Gross margin was 28% for the fourth quarter of 2020 compared to 26% for the fourth quarter of 2019.
For the full year 2020, gross margin was 18, 5% compared to 24, 7% and 2019.
We would expect margins to improve during 2021 as a real power services gained greater operating efficiencies and new customers significant solar projects commence in 2020, one with improved margin and increase revenue and companies throughout the industry has continued to adapt to the new operating environment created by COVID-19.
Increased sales of higher margin products, and a better mix of integration projects and increased service revenue throughout our energy focused operations and solar projects for orbital solar are all expected to drive continued improvement to the company's profitability as well as the GTS acquisition, which we believe will.
And will be accretive.
For the fourth quarter 2020, SG&A was $8 2 million compared to $6 million and the prior year period. The increase in SG&A for the quarter was due to increased SG&A costs related to orbital power services and oral solar along with increased corporate costs largely due to strategic initiatives, which include an increase.
Professional fees and costs associated with due diligence activities related to prospective acquisitions. These.
These increases were partially offset by decreased SG&A costs, and the integrated energy infrastructure solutions and services segment and implemented cost cutting measures.
SG&A expenses for the full year 2020 increased to $29 4 million from $20 $1 million per the prior year.
SG&A expenses improved as a percentage of revenue to 76, 5%.
And <unk> to approximately 85% until 2019.
The company's operating loss was $8 $2 million for the fourth quarter of 2020 compared to $4 $9 million on the prior year comparative period due.
Due to the items previously mentioned.
For the full year 2020, operating loss of $28 8 million compared to $16 million for the full year 2019.
As Jim noted net loss for the quarter was $7 $5 million compared to net income of $4 $5 million for the fourth quarter of 2019.
Please note that the Q4 2019 net income included $7 $4 million of income from discontinued operations.
As we mentioned on our last call we experienced solar project delays through Q4, along with higher SG&A expenses during the quarter, specifically attributable to overall power services and orbital solar overhead costs, which negatively impacted Q4 results for the full year 2020, net loss of $27 4 million.
Compared to $1 $1 million for the full year 2019.
We expect and increased normal solar and oral power services activities and 2021.
For overall solar the company and expect a meaningful growth and utility scale solar market to drive significant backlog and revenue growth and 2021 and.
As Jim previously mentioned overall solar growth will be buoyed by its partnership with the Blackstone investment fund over the next few years.
We believe the earnings of orbital solar will positively impact the growth.
In addition, orbital power services should also continued to grow its business throughout the year and we currently expect this segment to achieve profitability and the second quarter of 2021.
At December 31, and 2020, our backlog was $44 million compared to $9 6 million at December 31, 2019.
On a year over year increase is due to the inclusion of orbital solar backlog and growth from orbital power. This also reflects updated timing of orders and delivery scheduled for integration customer.
Lastly, we ended the year with cash and cash equivalents of $3 million and restricted cash of $1 $5 million in Q4 cash use and operating activities was $5 $1 million.
And with the price of 951000, and Q3, $1 $3 million and Q2 and $7 $7 million during the first quarter.
Cash used in investing activities during Q4 was approximately $34000.
And with $303000 and Q3, $186000 and Q2 and $7 $4 million and Q1, which included the $3 million note receivable with reach construction debt and acquisition was allocated to the purchase.
We continue to take steps to shore up our liquidity, including disciplined management of both working capital and expenses and the first half of 2020 orbital and its subsidiaries entered into on secured loans in the aggregate principal amount of approximately $1 9 million pursuant to the paycheck protection program.
Loans and interest there on is forgivable, partially arent pool and certain conditions are met.
The company has applied for forgiveness on these loans.
We supplemented this liquidity by issuing $45 million of shares of stock and January 2021, along with a new shelf registration that allows the company to issue as much as $150 million and additional shares of common or preferred stock or public debt as we explore potential avenues for growth and acquisitions.
Before I turn it back over to Jim.
I'd like to provide and update on Seaway, Canada and COI, Japan.
Both of which were previously classified as assets held for sale and in line with our strategy to transform orbital energy group into a diversified infrastructure services platform, sorry, North American and U K customers and 2020, we completed the sale and final disposition of the assets and liabilities and both of these subsidiaries with is completed the company is fully exited.
Previous power and electromechanical operations with that ill now turn the call back over to Jim for closing remarks.
Thank you Dan.
In closing, we accomplished a great deal in 2020, Despite COVID-19 the price of oil and a sub $1 stock price.
While it was a challenging year, we laid the foundation for our future growth as an infrastructure service provider and the electric power transmission and distribution and telecommunications and renewable industries as well as positive improvement to the performance of our legacy gas system business.
Market trends for all of the industries and we serve have multiyear tail wins with significant market drivers.
And that our current stock price, we can now go on and they go offensive to make meaningful accretive acquisitions.
Which will add clarity to our infrastructure strategy significantly change oag's financial outlook and should add considerable shareholder value.
Last but not least we will be able to strong environmental social and governance or ESG platform. We take this commitment very seriously with a goal to be a recognized leader and advancing ESG and the industries we serve.
That concludes our prepared remarks now wed like to open the call for questions.
Operator, Please go ahead.
Thank you as a reminder to ask a question you will need to press star one on your telephone.
The Chinese question press the pound key please standby will be compile the Q&A roster.
Our first question comes from Liam Burke with B Riley. Your line is now open. Thank you and good morning, Jim Good morning, Dan.
Good morning, William.
Jim.
Hey, Dan and I apologize for this question, but I'm looking for clarification on.
The revenue you're discussing and 2021 is that your entire revenue estimation or is that just solar I didn't.
And so it's just solar that we still believe that we can generate two to 300 million from solar.
We should start seeing some awards here in the second quarter.
And it only takes two to three big projects to get to that point so.
We expect to see that level of activity.
Soon.
And then when thinking about it and you've also got the layer of Msas that are that are flowing through the P&L as well.
That's right, that's right and I think orbital power.
And is going to work.
And at least double revenues from what they did last year.
And because they continue to ramp and and GTS is just we're just really excited about having them on board.
They're going to break some consistent revenues and they are well established platform and they've got significant opportunities to grow both organically and through through some tuck in acquisitions that federal and had some significant synergies.
Okay, and then on the backlog composition.
Is there any solar and there or.
Or is it primarily your traditional.
Sure.
The traditional.
E&C work, where.
We do have two very small solar projects going right now, but nothing in backlog to note as of today.
Great and lastly on our first quarter of 2021, I know you don't give quarterly guidance, but in terms of weather because it is a seasonal quarter.
Has the seasonality been better than worse in Europe.
Share to your past experience.
And I think I think it's really just the fact that our solar business.
Overall, power's continuing to ramp and.
Although the gas businesses are quite active right now so it's really just the cyclicality that we're seeing and solar.
Great and happened and large project work and just.
And there's just.
A function of what could happen on that business.
Great. Thank you Jim.
Julian.
Thank you. Our next question comes from Eric Stine with Craig Hallum. Your line is now open.
Hey, Mike.
Hey, good morning Index.
Hey, good morning good.
See the forward strategy start to come together here.
Now on sheet, just curious how you think about it.
And still be a mix of acquisitions versus some of the organic steps you've taken or do you.
And it'll be skewed.
More towards acquisitions again, now that you've got the balance sheet and <unk> got a stock price debt.
You can you can take action.
And I think it's going to be a mix and how we're going to continue to grow organically, but you can you can really get some revenue ramp if you bring in an established company per acquisition.
And significant revenues.
And like GTS and they'll do their on a $48 million run rate for this year.
And so they'll make 8 million and EBITDA.
It's hard to hard to do that Greenfield and operation.
It takes a little bit of time to do that to get to that point, which.
Yes.
Function on microbial power services over and it's going to take them, a while to get there theyre growing theyre doing really well.
And to get to that level of EBITDA was going to take a low part of China.
Got it and.
Is it do you.
Are there areas and when you think about it you mentioned you've got an LOI for for an acquisition and I don't know if you can give any details there but.
Areas that you look at that would be logical places to fill in.
Now on the Gibson acquisition made.
And what are some other areas that you think makes sense as part of this platform.
Oregon on Gibson is going to be a great platform for our telecom services to grow.
A priority for us as well electric T&D and.
More specifically.
Our.
Company that has.
A significant part of our revenue is tied to master service agreements that are multi year with recurring revenue that's a priority for us right now.
Got it.
Okay, and maybe last one for me just to clarify so on the solar.
The solar outlook that $2 million to $300 million.
Right to say that that really wouldnt include anything from econ.
What would be more on the 2022 of them and invest where and that would start to support our accounting and any of the black Sunrise garnered two and so that $200 million to $300 million. It could start on the fourth quarter. This year, but most likely it'll be in the first quarter 'twenty 'twenty two.
Okay. Thank you very much thank you Eric.
Thank you and our next question comes from Jeffrey Campbell with Alliance Global Partners. Your line is now up on.
Good morning, good morning, gentlemen.
First of all your offer to talk about the GTS acquisition. So I'd like to take you up on that just like to better understand what services are advantages they bring to their customers.
Well Opex plus GTS they provide.
And engineering design and project management services to.
The telecom industry growth.
Both he and wireless and broadband.
And they.
And they work nationwide. So it was important to us to have a service provider and that provided the high and engineering services and not just the construction services and telecom and.
And they are well established and working with customers on the front and do their designs, which often leads into.
The construction.
They do mostly project management and in my past life.
The.
Areas, where ops exceeded most and telecom is when we had the high end services and did project management over and over the construction resources, especially if you work nationally youll engaged on a local partners there to do the construction.
So what we are required to cover.
The five G rollout I mean, they're doing a lot of work on the distributed antenna systems. They do a lot of inside work trying to trying to advance the technology there for <unk> to give more continuity of signal and less and less interruption of service so and.
And a lot of work on the Atlanta area, but Theyre also expanding out nationally and.
And they work with other companies strategically that would be good acquisition targets and fits within our organization to make one plus one equal three.
Okay, great I appreciate that color.
I wanted to ask you about the.
Okay.
Gas and North America, you mentioned debt and our refining business picking back up I. Just wondering should we think of this as mainly recovering a backlog of work and that put off because of the COVID-19 or is there any growth.
Beyond that possible this year and 'twenty two.
I think the $4 million and backlog they have is probably the highest and they've ever been going into a year and I think it's a combination of pent up demand from what didn't happen last year plus trying to trying to continue on their growth plans for 2021 so on.
Customers told us and the fourth quarter to get ready.
And we're getting ready to get busy and we started doing a lot of quoting and.
Responding to Rfps and the fourth quarter and that did materialize into some backlog so.
I think our customers have figured out how to work on this environment safely.
And hopefully we don't have any more interruptions like we did last year and that business due.
Due to Covid.
And my last question is with.
With regard to the.
And there's a lot on renewable natural gas projects that you made reference to.
I think thats pretty exciting news.
Can you tell us anything about why it's located or what type of customer is going to be taken on the gas output.
Yeah, I mean, we're doing.
This is a renewable or the.
And the renewable gas project, the grid and interest system that you're referring to yes.
Yes.
And I believe I believe that that project is in California, and I can't really mention who the customer is but we've got several opportunities across the nation to to build those systems.
Because.
That was a focus point of ours about a year ago to try to enter into that market and we've been successful. So we expect acceleration bare metal and Houston area, but also on our UK operation.
That's helpful. Great. Thank you I appreciate the color yes, Sir.
Thank you Mr.
I'm showing no further questions in the queue at this time I would like to turn the call over to Mr. Jim O'neil, Vice Chairman and CEO for closing remarks.
Well. Thank you all for your time today and and we look forward to your you are your continued interest and the company and we look forward to have and follow up conversations with many of you and the next few days. So thank you and have a great day.
Ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect have a good day.
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And <unk>.
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And.
And.
And.
And.
[music] loans.
And.
Okay.
And.
And then.