Q1 2021 Arcosa Inc Earnings Call
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And today's program Please press Star zero.
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Good morning, ladies and gentlemen, and welcome to the Arcos <unk>, Inc. First quarter 2021 earnings conference call. My name is Mallory and I will be your conference call coordinator as a reminder, today.
This call is being recorded.
Now I would like to turn the call over to your host Gail Peck SVP of finance and treasurer for across the MS. Peck you may begin.
Good morning, everyone. Thank you for joining our first quarter two debt.
<unk> 2021 and earnings call with me today are Antonio Carrillo, President and CEO and Scott Beasley CFO of <unk>.
Western and the answer session will follow their prepared remarks.
A copy of yesterday's press release and the slide presentation for this morning's call are posted at our Investor Relations website, Www Dot IR dot our cocoa dotcom.
A replay of today's call will be available for the next two weeks instructions for accessing the replay number are included in the press release a.
A replay of the webcast will be available for one year on our website under the news and events tab.
Today's comments and presentation slides contain financial measures that have not been prepared in accordance with generally accepted accounting principles reconciliations of non-GAAP financial measures to the closest GAAP measure are included in the appendix of the slide presentation let.
Let me also remind you that todays conference call contains forward looking statements as defined by the private Securities Litigation Reform Act of 1995.
Forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from such forward looking statements. Please refer to the company's SEC filings for more information on these risks and uncertainties, including the earnings press release, we filed yesterday and our form 10-Q expected to be filed later today.
I would now like to turn the call over to Antonio.
Thank you Gail.
Good morning, and thank you for joining us to discuss our closest first quarter results and our updated outlook for 2021. Following the recently completed acquisition of standpoint materials.
Our first quarter financial performance exceeded our expectations. Despite continued challenges related to COVID-19, and the impact from winter storm jewelry in February.
These results speak to the strength and resilience of our portfolio of core infrastructure products and to the strategic investments, we've made to reduce cyclicality and drive growth and enhance margins.
Turning to slide four let me discuss a few key takeaways our results were better than expected during the quarter driven by strong construction products performance in particular, the construction business has benefited from strong demand and construction activity.
Within the engineered structures of our order activity for the utility of traffic and telephone pellet telecom structures business held strong throughout the quarter.
The fundamental drivers for these businesses remain very healthy given the investment and Greenland weighted hardening.
Increased demand coming from renewable expansions and the wireless buildup.
Transportation segment continues to be impacted by the rail cycle and high steel prices.
However, we believe the rail cycle is reaching its lowest point and will start recovering and.
One of the steel prices normalize significant pent up demand for barges will convert the new orders.
In the meantime, we're taking steps to maintain manufacturing flexibility and at the same time, we're focusing on managing our costs in April we completed the previously announced acquisition of standpoint and materials.
Top 25 U S platform that advances the repositioning of our culture.
And I'll point to have premier assets that accelerates the growth of and scale of our construction materials platform, adding market, leading positions and attractive new geographies more than 40 years of reserves and then the experienced team.
Our short term focus will be integrating standpoint and building on this platform.
Still we continue to seek out higher margin and higher growth opportunities to further expand our portfolio.
Of that and we're pleased to have a robust pipeline and we'll continue to apply a rigorous analysis to every new project organic and inorganic.
And to evaluate whether that particular investment meets our strict requirements for long term strategic value and return potential.
Our business is must compete for capital to ensure that we invest and those opportunities with the highest long term potential.
Also as I will discuss later, we published our first full year sustainability reported underscoring our commitment to ESG.
Turning to slide seven.
As an overview of our results for the quarter, while revenue was down 10% year to year. This was consistent with our expectations. Adjusted EBITDA of $56 5 million was ahead of our of our forecast even after a $4 million to $5 million negative impact from winter storm jewelry, the storm increased our natural gas cost Cigna.
Difficultly and shut down many of our facilities for over a week.
On the positive side of our construction segment performed better than expected during the quarter and helped us compensate for the effects of the storm I will now turn over the call to Scott to discuss segment performance and then I will return to update you on the outlook for the businesses.
Got it.
Thank you Antonio and good morning, everyone.
I'll start on slide eight and review our segment results from the first quarter.
Construction products revenue grew 3% to $153 2 million and adjusted EBITDA increased 2% to $32 $9 million. Despite the negative impacts from winter storm Yuri.
We estimate that the winter storm impacted construction products EBITDA by roughly $3 million to $4 million, although dry weather in March helped us recover well.
Segment EBITDA margin of 21, 5% was flat versus last year and.
Another noteworthy accomplishment given the February storm.
Let me discuss a few highlights from the quarter.
Volumes and our legacy natural aggregates business were up organically and through bolt on acquisitions, driven by higher infrastructure related work and Texas.
We continued to drive our cost per ton lower through operating efficiencies and lower maintenance costs and lower fuel costs versus the first quarter of 2020, we.
We continue to see nice price increases across our footprint, although of mix shift to a few lower asps plants resulted in a lower overall asps.
The primary headwinds and our aggregates business were oil and gas markets, which were stronger and Q1 of 2020, but the overall performance and aggregates was excellent.
The market for recycled aggregates also continues to be very healthy and both Houston and Dallas.
Margins were pressured and these businesses given the impact of the storm, but and markets are healthy and we recovered well in March as the weather improved.
And finally, we're very encouraged that the two businesses that were most impacted by COVID-19 lightweight aggregates and trench shoring products have both recovered nicely and are now performing close to or above pre pandemic levels of.
Our lightweight aggregates business was roughly flat with the pre pandemic first quarter of 2020, and trencher and EBITDA was above the first quarter of 2020 the.
Recovery of these businesses gives us confidence and the underlying health of our infrastructure markets and provides additional stability to our overall portfolio.
And we closed on standpoint and April so the acquisitions contribution will begin in Q2.
Turning to engineered structures on slide nine revenue in Q1 declined moderately to $207 million, but was roughly flat sequentially with Q4.
Adjusted EBITDA was down year over year to $26 4 million.
There were several unusual items and the quarter. We were helped by the sale of a non operating facility that produced a $3 $9 million gain but we were impacted by several unplanned expenses from winter storm here, most notably larger natural gas bills and several facilities.
And those bills increased our cost by approximately $1 million and the quarter.
Our operating teams did an excellent job recovering from the storm and we were able to meet customer deliveries despite challenges throughout the supply chain, particularly for steel.
Our revenue decline was roughly in line with expectations. We continue to ramp up of wind tower plant that we took offline and Q4 of last year and order to retool for larger towers.
We were near full production at the plant in March and it has started to contribute positive EBITDA after several months of drag.
We also made progressive improvement on the reopening of our Mexico utility structures facility, but of contributed to the year over year margin decline.
Our 12, 8% adjusted EBITDA margin and the quarter once adjusted for these positives and negatives was near the bottom end of our 12% 13% range, but we continue to expect the 12% to 13% margin for the full year and 2021.
Demand across transmission wind towers telecom and traffic structures has remained strong with healthy levels of inquiries across all of those product lines.
Combined backlog for utility wind and related structures increased to $379 5 million from $334 million at the end of 2020.
Additionally, our storage tank product lines and in the United States and Mexico continued to perform extremely well, we have been able to pass through higher steel prices and it also benefited from strong residential and commercial demand for propane tanks, driven by COVID-19 related the urbanization.
Moving to transportation products on slide 10, our year over year results reflect cyclical downturns and both our barge and rail components businesses.
Revenue was down 31% and adjusted EBITDA was down 53% as margins compressed from lower utilization and both businesses.
The barge business received $16 million of orders and the quarter and backlog decreased to $133 2 million high.
High steel prices continue to pressure the conversion of inquiries into new orders, although we are confident and the eventual recovery that will likely be led by the dry barge market.
As we have noted on the last several calls we have reduced our capacity and cost structure and barge and rail components and we made the difficult decision to announce the planned idling of our Louisiana barge facility unless demand recovers and the near term.
Note that both businesses continued to be EBITDA positive and we maintain our expectation for the segment to generate $35 million to $40 million of EBITDA. This year EBITDA.
And will likely be near the low end of this range if steel prices do not moderate and the near term.
Finishing on slide 11, and early April we closed our inaugural bond offering of $400 million.
Of the eight year unsecured senior notes to fund the stone point acquisition.
We were able to price the offering with a 4.3, 75% coupon and attractive rate of long term financing.
We received public debt ratings of double b, providing a strong access to capital and the flexibility to pursue our disciplined growth plans.
Following the acquisition and offering our net debt to adjusted EBITDA stands at roughly 1.9 times below our long term target of 2.0 to two five times we.
We had lower than expected free cash flow and Q1, partially due to higher accounts receivable from delayed shipments due to winter storm Uri as well as strategic steel purchases.
Even with this usage of working capital and Q1, we expect to be back to roughly working capital neutral for the full year.
I will now turn the call back over to Antonio for more on our business outlook. Thank.
Thank you Scott.
As Scott detailed our results exceeded our expectations and the first quarter. Despite continued COVID-19 related market challenges and the negative impact from winter storm jewelry.
Before turning to our near term outlook Slide 13 details the standpoint, the acquisition that closed in April which was an important addition for our calls.
Please turn to slide 14.
As we look towards the remainder of 2021, our near term view of our markets has not changed materially from the update we provided on our fourth quarter conference call in February.
We continue to see a robust and resilient construction activity and our key markets through the effects of the takes us and the Gulf coast benefiting our construction products business.
I'm, particularly excited about the growth opportunities from our acquisitions over the past 18 months, including <unk> strata and standpoint, which has significantly expanded our aggregates platform, adding complementary products and attractive new geographies.
Benefiting from favorable infrastructure spending trends and takes us our largest market as well as on the national scale the.
And the outlook for our construction products segment remains strong.
Within our engineered structural segment demand trends are positive we received healthy orders for wind towers and utility structures during the quarter as well as and our new offerings and crawfish and telecom markets.
We're also seeing steady demand and rising and backlogs.
For the storage tanks, and both the U S and Mexico.
While elevated steel prices remain a headwind and this segment, we will continue to stay focused on passing through price increases as much as possible.
From the demand point of view I'm encouraged by the levels of backlog and inquiry volumes overall of that we're experiencing which will reflect continued interest and investment in renewable energy grid hardening gardening and other power reliability initiatives.
As we discussed last quarter, our transportation segment continues to face COVID-19 related market challenges utilization the utilization rates in the liquid barge market, while improving remain low and high steel prices have impacted demand for the dry cargo barges.
Although steel components revenue declined year over year, and the first quarter revenue grew sequentially from the fourth quarter, suggesting these market maybe turning the corner. In addition, we have expanded our products and customer base to non rail markets, which should increase our operational leverage one of the rail market demand normalizes.
And this environment, we're taking steps to manage our expenses prudently and maintained manufacturing flexibility. It's important to remember that ramping production of the barge plants up and down is something we know how to do very well.
We remain confident in the medium and long term fundamentals of our transportation products business the <unk>.
Breast demand now due to high steel prices and COVID-19 related factors should translate into a strong market, but one of these conditions of eight <unk>.
Turn to slide 15.
And our financial guidance for the year the growth businesses, we're focused on building construction products and engineered structures are well positioned for the future.
And as I noted, we also expect a good recovery and the businesses that make up the transportation products of one short term conditions improve.
Given the completion of the standpoint the acquisition on April nine we are increasing our full year revenue guidance. We now expect revenue to be between $1 88, and $2 billion up from our prior guidance of $1 78 to $1 9 billion.
We're also increasing our 2021 adjusted EBITDA guidance, we now expect EBITDA to be between 270 and $290 million up from our prior guidance range of $250 million to $270 million we.
We anticipate that Starwood will contribute approximately $20 million and adjusted EBITDA for the full 2021, representing about eight months of ownership.
Overall, this revised forecast positions us to meet or potentially exceed our 2020 of results.
Turning to slide 16.
Finally, I'd like to highlight some achievements, we've made with respect of our environmental social and governance efforts, which represent the fundamental component of our long term strategy.
'twenty 'twenty marked our first full year of ESG disclosure and while we're early in the process. We believe strongly in the long term value that ESG brings to our stakeholders and the communities in which we operate so that and last week, we published our first year of sustainability report, which details the many ways in which our Costar prioritizes EOG.
And across the company.
And our close up there is no higher priority that employee health and safety and I am pleased with the progress we've made in this area. Following the 2019 launch of ARP 100 are enhanced safety initiative.
Of course of the members of achieved a 56% reduction and the total recordable incident rate in 2020 demonstrating the impact of our Ark 100 on improving our safety culture.
From a sustainability standpoint, our plant operations take an active role and pursuing initiatives that promote environmental responsibility last year. For example, our costar achieved of 12% reduction and greenhouse gas emission intensity through a range of energy reduction of the investments across our facilities.
In addition, we recorded a 16% reduction and municipal water intensity Butte law of conservation and therefore efforts focused on the water consumption and water recycling.
Our sustainability focus also a place of park in our capital allocation of strategy.
And we prioritize from building and expanding our growth businesses, we evaluate investments with an eye towards sustainability as well as economic returns are growing and recycled aggregates business is a perfect example of how we're closer can enhance sustainability within our operations, while generating above average margins and returns. Please.
Please turn to slide 18 and <unk>.
<unk>, our long term vision remains unchanged, we will continue to Brazil growth and attractive markets, where we enjoy sustainable competitive advantages, while reducing the complexity complexity of the cyclicality of our closer. In addition, we remain committed to improving our returns from capital and and integrating environmental social and governance initiatives and.
And so our culture of.
Operator, I would like to open the call for questions.
At this time of you would like to ask a question. Please press the star and one on your Touchtone phone.
And they remove yourself from the queue at any time by pressing the pound key.
Please ask one question and one follow up question.
Once again that of star and one to ask the question, we will pause for a moment to allow questions to queue.
Okay.
Okay.
Yes.
Yeah.
Okay.
Okay.
With our first question from Ian Zaffino from Oppenheimer.
Great. Thank you very much.
One of the answer guys.
And I know, it's a little early.
The plan is focused on the infrastructure now or what do you think your business can you maybe walk us through.
Why are you keeping and it would help you.
What we should expect and.
I believe most of the projects.
And through your own so maybe it doesn't hit until 2020 two.
And maybe discuss the timing as well.
As far as what you'd anticipate.
But on the follow up.
Sure Yes.
Good morning at the center of let me take that one the.
The.
The guidance that we gave and the the optimism we're showing in our construction and on there and.
Engineered structures business are not related to the to the infrastructure would be aware, we're very optimistic on the order of the business Saar with or without the bill and the.
And simply on seeing the condition of some of the backlog Sunday the interest and the problems that we're seeing the health of the markets of it is the markets, we see them as very healthy now having said so a eve and infrastructure Bill comes and I think when you read it.
And also attract most of our products across the the whole build and also it would have very positive impacts across the organization, but as you said most of these projects are things that take time to come through to to materialize and in many cases transmission line to get permitted and.
The projects to be developed so I think you're right I think 2022, probably mid year 'twenty two is where we would see some some of this and be able to start trickling down to where we can see it and are in our in our backlogs and in order the translate intellectual all of them. So, but overall, we're positive with or without the bill of course of the Bill would help us.
In the medium term.
Okay. Thank you and the volume side.
Is there a magic number still needs to decline to the.
Get orders back or maybe restart and madisonville.
And then also on.
Oil pricing.
And the true.
Market is getting better.
And how does that change.
And does not translate into orders.
Yeah, I'll kind of one of your customers telling you.
Sure.
So I don't think there is the magic number.
But let me give you some from some of what we're seeing we are seeing good inquiries from the dry cargo side. So there is an interest and barges and but if you think about the the percentage of all of the cost of a barrage of still represents and that's why barges. So to switch and important thing still is such an important component for body. So it's a huge per.
<unk> of the barge total cost.
So that's why and.
There's two pieces to the steel question one is.
The steel price are too high and I believe they're too high in the.
In every sense of and we've been doing this for a long time and I've never seen.
Hot rolled steel at these prices and.
And this not only of their high they went up very very fast.
But the other thing is we're coming from a very low.
The place. So if you look at a year ago, the price of steel were less than half of or the air today. So our customers have to on one side get away from the thought that we're going to get steel of $500 again, because that's not going to happen and on the other hand.
Steel mills have to come down from the expectation that people are going to buy any.
At the <unk> hundred dollars a ton that's not going to happen.
No.
I think theres some movement on both sides of that needs to happen, having said so and.
And it will come down it's just a matter of time it always happens and this goes up and it will come down and these are cyclical markets and.
And it will come down is it going to be and three months of six months I cannot tell you, but I'm optimistic that by the end of the year, we're going to see the trends and in the in a better direction.
On the demand side from our customers and.
And I agree with you I think oil prices have improved when you look at the utilization rates from our customers. They are going up theyre still in the eighties, but some of our customers just published results and they are saying they expect them to be and the nineties and thats, what really drives demand for barges when the utilization rates are very high people need them and our customers.
They want to save some money on the barge, but they really want to make money on their own business, which is moving stuff flow.
And so oil or grains or anything you want so if demand improves like gates. It is improving at some point the steel price becomes a secondary issue and we believe demand will come back and as we've talked over the last few years theres been several years already of where demand is too low and the replacement cycle has been delayed so.
We expect significant pent up demand once the once these things of eight so long answer to your question, but we're optimistic on steel prices coming down and the demand is there and we'll be there and the short term.
Okay.
One more would be and just kind of capital structure, and how you're thinking about that and I know.
And some piece of the business that may not be with you in the long term.
And then just shortly.
And now how are you thinking about maybe.
Sources.
The liquidity.
And then also on the outflow side any other acquisitions I know you've been busy.
But how do you kind of thinking about incremental deals.
Yes, sure this is Scott and.
On the and capital structure, and we did our inaugural bond offering and feel very good about our balance sheet. We stood at one nine times net debt to adjusted EBITDA after the offering and the acquisition that's still below our long term target. So we do feel some headroom headroom to make disciplined acquisitions, if they come up with.
And equally good about our liquidity by doing the offering we were able to enhance our liquidity. So.
Liquidity is non issue and the third.
And third part of your question was.
Cash flow, where we still expect to have very healthy free cash flow from our businesses that can fund both organic growth and then potential acquisition. So even after this acquisition and feel very good about our balance sheet and liquidity.
Alright, Thank you very much.
Okay.
And we will take our next question from Ben.
Tillman from D. A davidson.
Go ahead.
Great. Thank you good morning.
As Scott or Antonio I guess with respect to the guidance has there been of change and what you expect from the barge business versus couple of months ago.
Cash.
Sure. This is Scott, yes, I would say like I said in my prepared remarks, we gave the range of $35 million to $40 million of transportation EBITDA for the full year and given the steel prices have continued to move higher and the last eight weeks. Since we talked we said we expect to be now at the low end of that range closer to 35 and 40.
We do have some months old capacity and some slots and the fourth quarter, if steel prices moderated in the near term we'd be more optimistic about selling the slot they stay high.
Likely.
Those those production slots will go unfilled and wound up at the bottom end of that range. So it's really as Antonio said, we feel good about the underlying health of the markets and as demand continues to improve and <unk>.
The prices will eventually moderate that business will recover it just may not be and time for calendar year 2021.
Yeah.
Okay, but the range of style and plant. Okay. I guess the second question is on the energy structures business.
It doesn't look like steel prices are having a big effect, but maybe you could talk about.
Any concerns on margins and the next couple of quarters does that flow through should we be worried about that.
Yes, Brent this is Antonio.
And then engineered structures, we have across the company. Let me explain to you of the three types of businesses and how we treat the.
The steel so the first thing is we do not speculate with Phil we don't buy still expecting it to go up and so that's not our business our businesses from making stuff.
And the providing good value to our customers. So we have three types of business starting with the the simplest one the time of the business, which is a made to stock business and we buy we buy steel and.
And we sell things into the market without having an idea of of the price when we're selling so and that's the business that the.
And you know you have to be careful because you have to adjust prices and pass them through to the customer really fast and and and we've done that as Scott mentioned in his remarks that business has performed very well, we've been able to plastic the steel prices to customers and there is significant demand for tanks right now, which is not normal normally the tanks or not.
The old during this month because of their winter products, but demand continues to go up and our backlog is very very strong so.
The market is allowing us to pass all the the prices and the we expect that to continue to be so so we are not concerned about that the second type of business is contract business, where we have wind towers and barges out of the type of business, where we buy steel and.
Tied to our contractual we know what price of steel, we have and out in order for a bar to of wind tower, and we buy steel for that price and we pass it through to the customer and there is no uncertainty around it and.
And then the third type of business is our utility structures and that business. We also have contracts with customers and we can pass through of the steel prices, but there is normally a lack of we have contracts that are three months contract depending on the day of the of the customer three months six months of yearly contracts and there is a pricing mechanism and there can be some delay.
And I think we have thousands of orders coming through every day and I think of little portion of the lower margins Youre seeing is related to that I expect that to continue to be the case, where we have some some.
Hiccups here and there, but the margin as Scott said, we expect the margin to stay within that range of 12% to 13% for the remainder of the year I think the first quarter was on the bottom and but we are going to recover and we are we have healthy backlog step should allow us to the past roles at the those price increases so long answer again, but the way.
We're not very concerned is something we have to watch steel prices have risen very fast. So we just have to stay on top of it.
Okay. Good thank you.
Yeah.
We'll take our next question from Julio Romero from Sidoti.
Hey, good morning, Antonio and good morning, Scott.
Good morning.
Wanted to ask about the cash flow and the quarter.
And your payables continue to make progress I think you ended of.
Days payable and the Forty's, maybe if you could talk about what you did there and.
And then secondly, how should days payable and more broadly cash flow trend over the next few quarters.
Sure Yeah. This is Scott.
So for free cash flow and Q1, it wasn't a great quarter.
We did have EBITDA above our expectations, we had capex in line with our expectations, but our challenge was on working capital, where we consumed about $40 million of cash and the quarter Youre right. We did make some good progress and payables and extending terms to what we call more industry.
Norm, but then we had challenges on both receivables and inventory.
Part of that was winter storm related so we had shipments that slipped later in Q1 and therefore the receivables into Q2, we don't expect any issue collect the nose and those will normalize over the course of Q2.
Part of our inventory build was steel related.
Where are we and we brought in some inventory and in Q1 ahead of price increases.
In April.
We will continue to be very focused on working.
Working capital and we said even with the $40 million drag in Q1, we expect to be roughly working capital neutral by the end of the year and so we expect to make part of that back up and Q2, three and four so by the end of the year, we'd be back to roughly neutral.
Got it and I guess my second question and I know this has been asked kind of a couple of different ways already but you know.
And the barge business and a scenario where steel.
The remains elevated.
For a 12 to 18 month period.
How do barge how does dry barge trend there.
Do those inquiries of people will eventually give up and and.
And convert that into orders or or Conversely, the two inquiries and go away. If you could just talk about a scenario where the steel remains elevated how dry barge orders play out. Thank you.
Yeah. The Julio this is Antonio and.
We had received orders of the steel pricing. So it's a we do we do have orders coming in and.
They're just not very large now.
The first quarter for example was really bad for barge orders most of the things that deal so and the in the in the order and the numbers are components, not the largest but and the second quarter. We continued to receive all of their slate will not.
With a certain frequency.
So it's not completely debt.
As I mentioned before I think the the big the the big positive thing going on for US is that the markets are recovering and know what you are.
The watch for is the health of our customers.
And as long as our customers are healthy and Theyre going to do the best thing for their business and their business as it is.
The focus is from moving these products across the the river system. So is our customers are healthy and you'll see utilization improving youll see the grain markets as being very healthy you see grain exports are growing.
And that's going to be the most important decision making point for them now.
I think lower steel prices, absolutely will help but I think at some point in all of our customers will start making decisions with or without the price reductions when will that be I cannot tell you but I.
I don't think DTC a day.
18 months.
Okay, let's say dry spell for our barge business, where we have the completely shut down, but we will keep an eye and we have flexibility we can still lower our production rates, we have production and capacity to ramp up and case distinct improve also so over the last few years, we've invested in our plants and we can ramp up and down production faster.
And better and I think we're in good shape. So I just hope the steel prices moderate and we can we can that we can start talking about how to increase capacity.
Yeah.
Yeah.
Yeah.
And we'll take our next question from Justin Jordan from G Research.
Your line is open.
Good morning, Antonio Good morning, Scott.
Good morning.
So.
In terms of the guidance.
Just to clarify some of the <unk>.
Sort of small puts and takes what's the $3.9 million gain and sort of.
And the equivalent amount of the winter storm headwinds it looks like and anticipated when you gave the guidance.
Back in.
And the February R.
Are either of those.
Elements and new.
As part of the <unk>.
<unk> guidance.
Sure Justin this is Scott.
I'd say, neither were incorporated and the guidance.
And that we gave in February but.
Yeah, they roughly offset each other so so in Q1, we had about $45 million of storm impact we had the $4 million gain from the non operating plant. So we still thats one of the reasons, we we still feel like our full year guidance range is intact, because they roughly offset each other.
Okay, Great and then bigger picture the deals that you remain open to or are these more and the vein of bolt ons the stone point deal.
Or would you consider another deal out.
The near the size of stone point in the quarters ahead.
We are at.
The Scott mentioned, we have some room and are in our leverage but we don't having an enormous amount of room. So right now we don't have the room to do and other standpoint size of deal. So we're going to remain disciplined.
Disciplined I think what you.
Should expect to see is things that would enhance our current platforms I believe acquired over the last few years. That's what we're focusing on stone point brought from Ids share repurchase from idea and so that's what we're focusing on and it will be more bolt on there are some smaller and some bigger bolt ons, but it would be some.
And let's say additional store platforms.
Yeah.
Okay, Great and then just lastly, I know you were asked about infrastructure.
And it didn't seem like there was anything too surprising and the bill versus sort of wished for commentary we'd heard beforehand, but as you know is there any part of the bill or any part of your business, where sort of the language or amounts and the draft proposal.
Positively or negatively surprised you.
Where you thought things would turn out.
No I think it was more or less as you said in line with everything we have heard or expected probably the only thing we've seen some.
The more bullish language and short term deployment of capital for some transmission lines for renewables. That's the only thing that the has been probably more.
While I expect that I'm not sure how that happens how that.
Translates into actual work and I think theres a lot of things behind it yet, but that's probably the only thing that was there.
The little more bullish than we expected.
Okay are you referring to the Doe loans in terms of the short term debt.
<unk> okay.
Great. Thanks, and good luck of the rest of the year.
Thank you very much.
We will take our next question from Stefanos Crist from CJS Securities.
Yes.
First can we talk about the difference and you know the legacy natural aggregates versus the specialty materials and maybe.
And maybe why specialty was down year over year is that just the geographic mix or is there something else driving that.
Yes sure. This is Scott you know the the legacy business was up strongly really in all three parts of the end market were very strong infrastructure driven work strong residential demand of.
A lot of that's been driven by D organization and then the.
Nonresidential demand has been strong too with a lot of distribution center and.
And data center work. So that's all been healthy specialty products has has a bit more building products focused and and we've talked about there was destocking throughout the supply chain last year, there were a number of construction delays.
Throughout the supply chain.
That was therefore impacted more by COVID-19 and has been slower to recover.
The good news is in Q1 of our Lightwave business.
Was at or above where it was and the pre pandemic Q1 of 2020. So that gives us increased confidence that we're coming out of a lot of the worst COVID-19 impacts and and that's one of the reasons, we're particularly optimistic about this year.
Let me just have the one thing our specialty materials in the first quarter was where we had the biggest impact from the storm in terms of natural gas.
And of natural gas prices.
It was.
We have the plans that the normally had a 30000 dollar and.
The.
The Bill and it went through hundreds of thousands and so it's we.
We have a few of those and and.
The specialty materials is where we felt the biggest impact from the natural gas side.
Got it. Thank you and then just one more on back on barge.
And with steel prices, so high and.
Barge utilization and low are you seeing any customers scrapping the older barges.
Yes, yes.
I'm glad you asked that because they the good news is and I mean.
The steel price are going up of scrap prices are also very very high.
There's been times, where revised still of the price to where you can buy scrap right now so.
So we are seeing scrap scrap and scrap rates increase.
And last year was a year, where there are more the we're more barge scrubbed and built so and it's been all the way a few years. So that's.
And that's good that's why we are saying that the pent up demand for barges is accumulating the reset of the replacement cycle is coming and.
You know it has been delayed by several factors we were very bullish of couple of years ago. When we opened the plant because we see it coming with yields didn't didn't expect COVID-19 to reduce the utilization of so much but and within the space of of course, the steel prices to go like they are going so but these are temporary things and the you know it's.
Like everything we just have to wait and.
A few quarters for the store to pick up I think.
Yeah.
Perfect. Thank you Antonio and thank you Scott.
Thanks.
Yeah.
It appears that we have no further questions at this time I will now turn the program back over to Gail Peck for any additional or closing remarks.
Thank you Mallory and thank you everyone for joining US today, we look forward to speaking with you again next quarter.
This does conclude today's program. Thank you for your participation you may disconnect at any time.
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