Q4 2020 Granite Construction Inc Earnings Call
Good morning, My name is Kate and I will be your conference facilitator today at this time I would like to welcome everyone to the granite construction incorporated Investor Relations fourth quarter, 2020 Conference call. This call is being recorded all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will.
A question and answer period to ask a question. Please press Star then one to withdraw from the question queue. Please press Star then two please.
Please note we will take one question and one follow up question from each participant today and.
And it's now my pleasure to turn the floor over to your host granite construction incorporated Vice President of Finance, Mike Barker, Sir the floor is yours.
Good morning, and thank you for joining us on.
I'm pleased to be here today with granite construction incorporated president collagen and.
And executive Vice President and Chief Financial Officer, and Lisa Curtis.
Please note that today's earnings presentation will be available on the events and presentations page of granite and granite and Investor Relations website.
We begin today with an overview of the Companys Safe Harbor language.
Some of the discussion today may include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
These forward looking statements are estimates, reflecting the current expectations and best judgment of senior management regarding future events occurrences growth.
Demand.
Strategic plans and circumstances activities performance outcomes outlook guidance backlog and committed and awarded projects and results.
Actual results could differ materially from the statements made today.
Please refer to granite most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these forward looking statements.
The company assumes no obligation to update forward looking statements.
Whether they are results of new information future events or otherwise.
Except as required by law.
Certain non-GAAP measures may be discussed during today's call and from time to time by the company's executives.
These include but are not limited to adjusted EBITDA adjusted EBITDA margin adjusted net income or loss and.
And adjusted earnings or loss per share.
Please note that some metrics may reference or exclude nonrecurring acquisition related expenses and non.
Nonrecurring legal and accounting investigation costs and noncash impairment charges.
Reconciliations of certain non-GAAP measures are included as part of our earnings press releases and and company presentations.
Which are available on our Investor Relations website.
Now I'd like to turn the call over to granite construction incorporated president and co workers.
Thank you Mike.
Morning, everybody and thank you for joining us on our call today.
Just on iron and glad to be talking with you and she reached the final chapter and weighted.
Two are delayed financials.
And we expect that our 2020 form 10-K will be filed in short order.
We'll now be able to resume our normal.
James.
I'd like to start off by providing more color around the refreshed core values and introduced during our last call and at the end of February.
And as a reminder, granite five core values our safety.
And wellbeing of our people our partners and the public is our greatest responsibility every day.
Level of and organizations use our safety culture.
Segregated and.
And we operate with integrity and the highest ethical standards.
And do what is right and we are expecting to speak up and somebody who's not right.
Excellence, we strive for a high performance culture, and continuous improvement and innovation quality and all aspects of our work.
We always perform and deliver on what the right way for our stakeholders.
<unk> from.
We value and respect the workforce diverse and perspective and experience knowledge and culture.
And are committed to an inclusive environment, where everyone feels equally valued and welcome.
<unk> were together.
And for future by integrating values and social responsibility environmental stewardship.
Clinical governance to deliver enduring economic value.
Core values guidance, and our day to day operations and service and foundation of our cultural reinvigoration.
Before I move to discussing our segments I would like to discuss grant and his commitment to sustainability.
Sustainability and granite is not a new concept and our decision to improve sustainability as a new core value and natura.
And progression to the actions we've been taking as a company.
From a long history of operating responsibly and then.
We reported on sustainability for a decade.
And the last two years, you've made a lot of progress on our sustainability program, including completing our first materiality assessment.
Part of our assessment and stakeholders directly and better understand their expectations and priorities around sustainability.
And with a better understanding of our stakeholders priorities and build new strategic foundations for sustainability.
Our four strategic foundations, our social responsibility on our mental stewardship.
And we'll economics and dependent on governance.
Help us increase transparency and provide information stakeholders want to know and completed a day to GAAP analysis standard and reporting frameworks.
In response to growing concerns about climate change and foreign.
And climate awareness task force and group of subject matter experts charged with creating and implementing a strategic approach to integrating climate awareness and agree on its operations.
And though we reported easily on sustainability.
The supplemental sustainability update in January 2021 to keep stakeholders apprised of our efforts and of our next annual report.
And focus of our current efforts is aligning to standard reported frameworks.
See the results from this effort and our next annual sustainability progress report this fall and data gaps exist we are on <unk>.
Moving and expanding and collection.
Sure.
Additionally, we are focusing on climate risk to ensure they are fully considered as part of our strategic planning process and we.
We're taking steps to reduce our carbon footprint one.
One example is on renewable diesel initiative in California.
And just to reduce greenhouse gas emissions and our equipment fleet and by 60% to 80%.
On the social side and increased our focus on inclusion and diversity and plan to share more about this program and our next investor call.
Going forward, we are integrating ESG goals and targets and your company strategy to ensure effective implementation throughout our organization and with these goals, we will reduce our carbon footprint.
Positive social impact on the communities, where we work and strengthen our position as a leading provider and sustainable infrastructure solutions.
Now I'd like to provide an overview of our segments to give you a view of granite and the various end markets and which should be operating.
I'm also discussed on a few areas of our business have changed over the past year, which maybe and refresh your percent of you, possibly and introduction to granite for others.
Let's start with the transportation segment.
And so our largest segment and includes projects both on the same core businesses box granite almost 100 years ago and.
This segment is primarily comprised of publicly funded projects and crews.
And markets, such as roads highways bridges and apartment ways and line rail systems.
While the meaningful and shrinking portion of this segment's revenue is still derived from our heavy civil operating group.
And most of our transportation projects are performed by our vertically integrated businesses, and our California and northwest operating groups are less and $5 million and size and are constructed and no more than a year.
And California operating group and is the largest driver of revenue and this segment work performed for local municipalities and private owners as well from the state of California.
And in fact grant and is the largest contractor and based on number of projects and <unk>.
Total annual project Awards from California's Department of Transportation and Caltrans.
Despite the challenges in 2020, and California operating groups annual transportation segment revenue increased over $100 million year over year and.
And Tastic result for 2020 and tremendous momentum going into 2021.
Our northwest operating group is also a significant driver of revenue and our transportation segment with its primary operations, and Alaska, Arizona, Nevada, Utah, and Washington and wireless.
As uncertainty and reach states on the northwest operating group was more significantly impacted by the unprecedented challenges of 2020.
<unk> Transportation segment performance in 2020 was still very strong.
And over 518 million and revenue.
Lastly, on civil transportation business, and the Midwestern States of Illinois, Indiana and Wisconsin.
Around 66% since 2018.
And over 140 million and annual transportation and service revenue and 2020.
And I look forward and continued growth and this business and 2021 and beyond.
And let me dive a little deeper into the heavy civil operating group.
Traditionally the group's projects and the transportation segment, and typically than either <unk> or design build procurement contracts with longer durations and.
Historically these projects from very large and complex and there is.
Is often limited time visibility at the time of it and we now refer to these types of projects is our whole and risk portfolio.
While we still pursue design build and build opportunities when they meet our revised project selection and risk criteria and.
And when we are able to appropriately priced and project risk and we're also actively focused on increasing our portfolio and best value procurement work.
Such as construction management general contractor or CPUC projects.
Value procurement work is beneficial from the owner and the contractor.
And best value procurement projects, we worked together with the owners to Moody's overall project risk during the design process, which subsequently also reduces the likelihood and skew to claims.
And that is from best value procurement Virgin gross Tobey over the last two years and now comprised of $1 5 billion from $3 2 billion year end 2020, transportation and seven committed and awarded projects per cap.
Since year end 2018, and the amount of best value procurement work and our transportation cap almost doubled.
Expect the best value procurement work to continue to grow and our transportation cap is at heavy civil operating group and rebuild this portfolio over the next one to two years.
Our heavy civil group teams have made substantial progress over the past year.
Remember these challenging projects continued to weigh on the results of the transportation segment and dampen.
<unk> performance across from other operating groups.
With regards to the transportation segment and funding we are encouraged by the public funding environment at the federal and state and local levels.
While we wait optimistically for the federal government to align around and infrastructure build this year from one year extension of the fast Act and $13 $6 billion infusions and the Highway Trust fund for 2021, and construction programs provide support for projects across the country.
Also in December 2000, Twenty's and March 2021, Coronavirus relief bills provide state governments with additional funding for infrastructure projects.
And California, our top revenue generating state SD Wan continues to be a significant drive growth with annual spending and is expected to average $6 2 billion from 2021 to 2027 and a 44% increase from the average <unk> studies suggest <unk> adoption.
Overall I believe our teams are poised to capitalize on from many outstanding transportation opportunities and all of our markets and.
And I believe the transportation segment will continue to be the primary drivers of profitability and cash flow for granted and future.
Next turning to our water segment.
And this segment has performed on all of our operating groups and crews and markets such as water transmission and delivery CPE and the income for dams locks and reservoirs and can and outlining.
And two businesses within our water and mineral services operating group are dedicated to the water segment and on the primary drivers of revenue.
Businesses are granite and liner, which is a leader and transfers and pipe rehabilitation services and operations, primarily located in the Midwest supplemented by additional operations across the southeast Eastern Canada, and water resources and the.
Our largest water well drilling businesses and the countries, which also focuses on pump sales and service, while we dilatation and water treatment and services nationwide.
And 2020, these two businesses generated approximately 80% and the total water segment revenue network comprises over 80% of water semi cap as of end of the year.
And as we discussed on our last call and water segment results.
And disproportionately impacted during 2020 on the COVID-19 pandemic to work stoppages and delays and Lettings.
While the pandemic has depressed spending on water supply and maintenance during 2020.
<unk> Bye recovery, we saw late in the year 2021.
We enter 2021 was over $300 million from water cap and momentum from our solid fourth quarter and recovery from the pandemic. We're also seeing fundings important for water related construction.
Through the water resources Development Act conservation on the 10 billion and spending on Huawei projects nationwide.
Forward to our team is taking advantage of the significant opportunities ahead of us and continue revenue growth and 2021.
Moving on to the specialty segment types of projects and this segment include site development work for a variety of private and public clients, including global technology companies and commercial builders and electrical utility operators tunnel construction.
Military facility construction and maintenance renewable.
Renewable power generation facilities installation.
Infrastructure construction and reclamation and performance at mineral exploration services from the mining oil and gas and industries.
And as you can see specialty segment revenue generated from a very diverse set of capabilities and end markets, which complement <unk> core competencies.
All of our operating groups contributing to this segment with significant growth in 2020.
Coming from the California, and federal operating groups.
The project from the specialty segment are primarily publicly funded.
And there is a significant amount of work privately funded as well.
We have been successful and growing revenue and the segment by strengthening relationships with clients, demonstrating our capabilities and experience and horizontal building projects and continuously performing above client expectations yet.
And the end markets and the specialty segment on emerging and growing whether it's site development work for industrial and commercial and residential builders expansion and renewable energy facilities from partnering with United States military.
And as demonstrated capabilities and the added value that we provide on.
I expected segment revenue continued to grow and we will build upon and vectors and specialty segment GAAP and 2021.
Finally, I want to discuss our materials segment, our construction materials business is a stable driver of profitability.
And is the foundation of our vertically integrated business construction materials revenue primarily consists of sales of asphalt and sales and higher did produce and the manufacturing of asphalt and concrete and for use as Beth Roberts.
Approximately 60% of our total annual internal and external materials revenue.
<unk> sales on asphalt on 30% and is comprised of aggregate sales yes.
We have materials assets and each of our vertically integrated markets, which we believe provides us with a competitive advantage by having a reliable and cost efficient supply from high quality aggregates.
And the last two years and strategically invested in our materials assets and increased our permanent aggregate reserves and over 125 million tonnes.
<unk> evaluating opportunities to strategically expand and strengthen our footprint and expect to continue to do so in 2021, primarily through capital expenditures.
During 2020, despite the ongoing pandemic and so overall strong demand and materials led by our California operating group.
Across the company aggregate sales volumes were up year over year, and 12% and down salt sales volumes up over 6%.
As of December 31, 2020, construction materials orders were up 34% year over year and.
And to move into 2021 demand and our markets for construction materials, both from internal construction projects and from external customers remained strong.
Going into 2021.
Pleased with our overall composition of $4 2 billion.
Continuing to pursue and market diversification to maximize opportunities for our businesses.
And transportation is our primary segment adjusted.
And growing our specialty and water segments, adding further diversity next to our overall portfolio.
And we're focused on achieving and well balanced risk profile.
And not yet where we want to be the progress and a short amount of time and <unk>.
On 'twenty one we will continue this transformation as we add more projects to cash to meet our new projects will actually criteria.
Finally, as we move into 2021, our cap portfolio is more evenly distributed across our operating groups.
Right approach and pursuing opportunities and are following that approach and the right markets with that and go and turn it over to Lisa to discuss our financial results.
Thank you Carl I'll start by discussing our performance for the fiscal year 2020 before diving into the strength of our balance sheet and our 2021 outlook.
2020 consolidated revenue grew over 3% year over year to $3 6 billion with gross profit increased from 56% to $345 million and margin just over 10%.
Within our transportation segment, we saw very strong performance and the vertically integrated construction businesses.
Hey, Kelly and the California operating group, which drove revenue growth of almost 7% year over year to $2 billion.
Transportation segment gross profit for 2020 increased 143% year over year to $134 million, resulting in gross profit margin of almost 7%.
Although the losses and the heavy civil operating group all risk portfolio decreased in 2020. These projects impacted gross profit margins significantly and dampened and strong performance by the California and northwest operating groups.
And our water segment 2020 revenue was impacted by the pandemic and decreased $28 million year over year, and we did see improvement and the fourth quarter. However, despite the revenue decline segment gross profit for 2020 increased 82% year over year to 54 million.
Resulting in gross profit margin of just over 12%.
This increase was a result of both improved project performance and 2020 and not repeat and project write downs and 2019, all partially offset by the impact of the pandemic during the first three quarters of 2020.
Moving on to the specialty segment 2020 revenue was mostly flat compared to the prior year and $723 million.
Segment gross profit for 2020 increased over 6% year over year to $92 million, resulting and a gross profit margin of almost 13%. This.
This increase was due to the exceptional performance and execution and site development work and public and private markets and our California northwest Federal and heavy civil operating groups.
This performance was partially offset by a write down related to a disputed cost overruns on and tunneling project.
And finally, the materials segment completed an outstanding year with a revenue increase of almost 7% year over year to $381 million for 2020. This.
This increase this large included favorable weather in California, and strong sales volumes.
Segment gross profit for 2020 increased 29% year over year to almost $65 million, resulting on a gross profit margin of 17%. This increase was due to a liquid asphalt cost savings with lower oil prices in 2020 operational efficiencies and higher volume.
Turning now to our non-GAAP financial metrics adjusted EBITDA for fiscal year, 'twenty, and 'twenty increased to $118 million year over year, resulting in an adjusted EBITDA margin of over 5% for the year.
2020, adjusted net income increased over 87 million to $60 million from an adjusted net loss of $27 million and the prior year, primarily due to the increases and gross profit that I discussed earlier.
As a reminder, these metrics are adjusted for transaction costs and amortization of debt discount and nonrecurring legal and accounting investigation cost and noncash impairment charges.
Despite the unprecedented challenges we experienced during the year and the write downs within the heavy civil group all of risk portfolio granite finished 2020 is strong.
Now to touch on cash and liquidity throughout 2020 granite remain focused on cash and working capital management.
For 2020, we ended the year with operating cash flow of $268 million, a record for granite compared to $111 million and the prior year.
Granite teams across the company did an excellent job and expediting cash collections, and making progress and our efforts to settle outstanding claims.
Despite the unprecedented events during the year as at the end of 2020, we've reduced granite and total debt and significantly strengthened our liquidity position granite strong balance sheet positions us well for 2021.
Before handing it back to Kyle I would like to discuss our guidance for 2021.
Granite notice and to 2021 with a strong cash position and optimism across all segments and operating periods.
We anticipate low to mid single digit consolidated revenue growth as we capitalize on the opportunities ahead of us while continuing to work through the heavy civil operating group portfolio.
This revenue growth coupled with continued strong performance and our vertically integrated businesses should offset the margin pressure from the heavy civil operating growth all risk portfolio.
To give you a sense of the cadence around project completion and this portfolio.
F&B and a 2020 and heavy civil operating group's backlog was just over $1 1 billion.
Which and little less and 700 million consistent project and the old risk portfolio.
Anticipate working through approximately 425 to 475 million of this backlog during 2021.
Which will leave approximately $225 million to $275 million and backlog to be completed primarily in 2022.
As we complete the remaining backlog at the old risk portfolio. We are assuming zero margin on these projects, which will of course continue to depress both transportation segment margin and adjusted EBITDA margin and 2021.
Based on these assumptions, we expect an adjusted EBIT margin range between five 5% to seven 5% for the year.
Additionally, we expect 2021 SG&A expense, excluding nonrecurring legal and accounting fees to be approximately eight 5% to 9% and revenue and an effective tax rate and the mid 20% range.
And 2021, we will continue to invest and our vision and change through capital expenditures between $80 million to $100 million.
Following a difficult 2020, I am looking forward to thank granite take advantage of the many opportunities ahead of us with that I will turn it back over to Kyle for closing comments.
Thanks, Lisa let me close with the following points.
And filing of our form 10-K for 2020.
Forward to be in full compliance with all SEC and NYSE filing requirements and returning to our normal reporting cadence and 2021.
Teams across all our operating groups and moved into 2021 with significant momentum and robust cash.
And strong performance from all groups.
Finally, our new leadership team is working to refresh our strategic plan and look forward to sharing our vision for the company. Once this process is complete.
I will now turn it back to you for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw from the question queue. Please press Star then two.
Please note we will take one question one follow up question from each participant today.
The first question is from Michael Dudas of vertical Research partners. Please go ahead.
Good morning, gentlemen, Lisa.
Hey, Mike Good morning, good morning, good morning.
First question for Kyle.
And as you look through 2021.
As you breakdown by segment.
How do we think about.
Margin performance bidding competitiveness on the business you need to book in 2021, given that you've already got one quarter or likely in the books as of this week.
So we're looking at 2020 as a base for gross profit margins in each segment, how what are some of the dynamics that will drive that moving forward and you did discuss on the transportation side.
Zero profit margins, but is there any more normalization or any trends that we should look at as we run through our model.
Yeah. Thanks, Mike So I think I would first refer you back to the guidance I think just in general and terms of where we see the company going.
And 2021.
Overall, but from a funding perspective, and maybe I'll start there obviously last year with the fast Act extension.
And a key funding relatively flat on the transportation side, and we hadn't released bills that came out and wanted to December one and March and so the one and December really earmarked about $1 5 billion.
Two states, where granite has VDI businesses. So we think that's going to have a nice uplift for us and 2021, perhaps a little bit later mid to late year.
And then we're optimistic still theyre going and get the federal.
Package passed sometime later this year that will allow us to see opportunities late 'twenty. One into 2022, you mentioned that we're already into two or three months into 2021 and b from a bidding perspective, we're actually seeing today across all of our businesses.
Improved bidding and terms of the amount of work that's out there to bid. So we're kind of back to pre pandemic levels for sure and then if you look at bookings.
And we're well ahead of where we thought we'd be actually in terms of bookings for the first two months and 2021.
Terrific. Thank you for that and for my follow up for lease.
Obviously, a terrific performance on cash operating cash cash generation this year.
How does that translate into 2020 one relative to.
Working capital use and meeting the requirements as the as the business grows relative to collections and maybe whats remaining thats outstanding that you might expect but that could come through into 2021. So when you look at the $2 68 to 2020, how does that reflect towards looking at more normalized basis and a 21.
Okay, Yes. Thank you. Thank you Mike.
Going into 2020, one, we basically and tend to stay on course with what we've been doing.
As a reminder, we have our capital allocation strategy, which consists of primarily four areas. One is Tim thats back and the business through organic growth.
The next day as you know from an M&A perspective, where it makes sense expanding and strategically.
Additionally share repurchases and then lastly for for dividends.
Through 2020, we were able to maintain our dividend and.
And where a lot of companies did suspend it for various reasons and so for capital those are things that we look at from a spending perspective so.
And like steady state that our teams did a great job and 2020 for expediting cash management.
Working capital and general and so we plan to continue that trend into 2021.
Excellent. Thank you very much.
You're welcome Thanks, Mike Thanks, Mike.
The next question.
And is from Steven Ramsey of Thompson Research Group. Please go ahead.
Good morning.
Maybe to follow on on the cash flow topic, I guess do you expect working capital to be a source of cash.
Again this year.
And then maybe can you share more on tap it down a bit.
Capex for fiscal year 'twenty, one do you expect that.
Mostly to go to the materials segment or are there. Other places you expect focused capex.
Yeah, Hey, Steven good morning.
Yes, we anticipate.
For 2021 carrying forward with what we did in 2020 from on operating cash perspective, again, we had good momentum.
And from a from a working capital management perspective.
<unk> again did a great job on going through 2020, we anticipate that will continue through 2021, so for Capex, what we provided for guidance.
And of 80 to 100 million really really is pretty much in line with what we've done historically I mean, obviously, that's a lever that we can we can pull if needed depending how the year goes on but that mainly so that's used for maintenance of existing <unk>.
<unk>, let's say for materials that is a larger part of the Capex budget.
And.
And also for other equipment and things of that nature as well.
And from an investment perspective and of this this doesn't include any sort of M&A related activities and we would from a materials perspective.
We're always looking for strategic expansion.
And as we come across it.
Okay, Great and then next question on.
On the guidance I guess first pretty wide.
And low end of margin guidance barely above fiscal year 'twenty and sure.
And the underlying assumption to make.
From the low to the high end and then maybe within that you can share kind of just the high end of revenue guidance not necessarily translate to.
<unk> higher and the EBITDA margin guidance, just given the moving factors.
Okay.
Thanks for the question and I'll go ahead and start with this one and Lisa can add on as we need to but I think we look at it there's three.
Primary drivers in terms of our guidance and kind of where we fall first office project execution as we've talked on our last call. We have a lot of work to build.
And then the heavy civil group bold risk portfolio as we called it so we're going to be busy and across the country delivering on those projects and.
Again, those those projects are riskier than we would be and the desired state and the future.
And so project execution is probably the number one thing we see out there that could change our guidance up and down.
We also have a lot of work that we have to go win and build and 2021 going back to Mikes question originally.
And so our teams are out there working hard to get to work on the books and actually deliver it within the 2021 year and the third piece is just weather, obviously weather has a big impact on our business, primarily in Q1, and Q4, and so well a little bit more visibility into where we're going to and from weather perspective as the year progresses.
So those are kind of the three primary drivers around our guidance.
And then I think just adding on and Theres still some lingering issues with some of the pandemic and we're not we're not through the pandemic, but I would say that that's still that's still hanging out there and what.
And we'll see where that goes.
Yeah, and Stephen you know also for US we have whether there can be a big contributing factor one way or another.
And for how how performance throughout the year.
Got you and to make sure. So if you work through a greater degree of old risk heavy civil projects. That's a short term headwind for EBIT margins and might push you to the low end, but certainly a good thing for the business longer term is that a fair assessment.
Yes, that's a fair assessment.
Okay, great. Thank you.
The next question is from Jerry Revich of Goldman Sachs. Please go ahead.
Yes, hi, good morning, everyone and congratulations for all the progress over the past year.
Yeah. Thank you Jeremy.
I was wondering if we could just talk about your.
Our win rates and California.
Pleasantly surprised by the top line performance and the comments.
And what you've laid out on on the bid environment, considering the Caltrans lettings.
It's pretty.
Pretty tough comps and good GAAP down so can you just talk about the.
Youre seeing and your California business, where are your win rates up significantly or are there other job types that are helping fill in for what might be some lumpiness in there.
Overall, caltrans numbers that we're seeing for low bid awards.
Yes, so and the state of California, we actually saw Caltrans, the bid environment and dip a little bit and the single digits last year for US we have been.
Little bit less Caltrans worked and we had in previous years looking longer term and we anticipate their spending and you go up to about $6 2 billion for the next five to seven years, that's a significant improvement over the prior years up to around.
44% or so I think that's what we see moving moving out longer term with Caltrans in terms of increased funding going out.
And to project so that $6. Two includes engineering and includes right away purchases. So that doesn't all translate into construction project. So we do think that the caltrans market.
<unk> continues to be a great opportunity for the company from a win rate standpoint.
And I won't get into specifics, but we have we have grown our market share within California, and specifically with with Caltrans.
Great. Thank you and then as you look across your footprint.
Today can you just talk about where the bid activity.
And as the strongest there can you talk about where the pipeline of works stands and aggregate.
Well just to help us.
Got it.
Flavor for the pace of activity.
This year versus last year.
Yes, I think it's really.
Across the entire portfolio I would say today as we kind of look at the first couple months within 2021, we're seeing a nice nice uptick and bidding and California as I just mentioned.
We're seeing that also and our northwest operating group, which is the other.
And to six states and in some adjacent states and the web.
Western part of United States, we're seeing it at the Midwest Division and groups that we have.
And Chicago.
And then we're seeing lots of opportunities even within our heavy civil group.
And those opportunities are within our kind of our new parameters and so thats actually really exciting for us.
Recently, the apparent low bidder on a project down in Texas on a dam project for about $160 million. So we're starting to see our teams and see some success with where we're headed with the heavy civil group as well. So I think all and all we're seeing a nice nice uptick across the entire organization.
Okay, and lastly, Lisa your EBITDA was very much back half loaded in 2020, how do you expect that to look and 21.
Yes.
Again, it depends on as you know weather can really dictate the lumpiness of that.
And so kind of anticipating kind of air quotes and normalized year.
We expect it to be it's definitely heavier and the second and third quarters, and then on tailing off a little bit on the fourth quarter kind of a normal we've assumed kind of a normal a normal pattern so to speak.
Thank you.
Youre welcome.
As a reminder, if you have a question. Please press Star then one and next question is from Brent Thielman of D. A Davidson. Please go ahead.
Hi, Thanks, good morning.
Hey, Brian.
Hey, Kyle.
Thank you guys.
Work beyond the old risk portfolio and heavy civil operating group over the next one to two years.
Is there a level and mind you but.
To manage that operating group to over time on either as a percentage of total granite revenue, where total granite cap and I guess I'm just trying to get a sense of how large you want that business to become for granted over the long term.
Yes, and that's a great question because if we go back to what we shared and Q3 of 2019, we did indicate that we wanted to heavy civil group Davita and less than 50% of the overall company revenue.
And that's changed for us on.
And going back to kind of where we've we revisited our kind of our strategic review of the heavy civil group, we talked about how we've we further shifted away from projects over $500 million and Mega projects. We've shifted to these maybe value based selection projects, we will still pursue design build projects, but smaller and.
And ones, where we can get the pricing and reflects the risk and then of course, we're still chasing big Bill work. So we're we're actually chasing different work today than we did in the past I mentioned before that the average projects and the pipeline right now are $20 million to $500 million and.
And the average job size.
Previously was around $225 million and lease last from last month or so so.
And that's kind of that.
Portfolio has changed as we look at the pipeline of work and so the 15% really isn't applicable for us anymore. So as we de risked that business and <unk>.
<unk> look a little bit more like our other businesses in some ways and we don't think we need to capex as being 15% as long as we continue with a lower risk profile and.
Hopefully that hopefully that makes sense.
Yes, it does and I appreciate that.
I guess a follow up.
Again kind of bigger picture.
Kyle as you look at the broader portfolio I mean, all things seem core to you and you sort of move beyond.
Yes.
Filings and all that sort of stuff.
I think about the water business and the other businesses within the.
The portfolio.
And you all things core here today.
Yes, I think I think we look at our business today as being core I mean, we've come a long ways certainly within the heavy civil group and as we continue to to Derisk that part of our portfolio, but and we I think our teams are doing a fantastic job of continuing to work through the projects that we have.
And I think they've done a really nice job of transforming that business for us as we are moving forward and I think once once free.
Get the overt burned off and we move the business forward I think we're going to be very pleased.
Okay. I appreciate you taking my questions. Thank you. Thank.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Kyle Larson for closing remarks.
Okay, well. Thank you for your questions and as always I want to thank all of our employees for everything you do every day for granite and for our customers. Your hard work and dedication and is undoubtedly the cornerstone of this company's success and with that thank you for your continued interest and granite moving.
Forward to speaking with everyone very soon.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.