Q1 2021 Orbital Energy Group Inc Earnings Call
Good day, everyone and welcome to the orbital Energy group first quarter 2021 conference call. At this time of participants are in a listen only mode. A question and answer session will follow management's remarks as of.
Reminder, this conference is being recorded a replay of today's call will be available water and energy website later today and will remain posted there for the next 90 day.
And I'll hand, the call over to Mr. Eckstein of Casey S E for introductions and the reading of the Safe Harbor statement. Please go ahead Sir.
Thank you operator.
Hello, everyone and welcome to the orbital energy group's first quarter 2021 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, Vice Chairman and Chief tax Officer, and Dan Ford Chief Financial Officer.
Today, we'll review the highlights and financial results for the first quarter as well as recent developments.
Following these for remarks, we'll be prepared to answer 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, and eight of the Securities Act of 1933 as amended and section 21 E of the Securities and Exchange Act of 1930 for as amended.
Such statements are subject to risks and uncertainties that could cause actual results to vary materially from those projected in forward looking statements. The company may experience significant fluctuations and future operating results due to a number of economic competitive and other factors such as the COVID-19 pandemic, including among other things of the company's reliance on third party manufacturers and suppliers and service providers.
Government agency budgetary and political constraints, new or increased competition changes in the market demand and the performance of liabilities of its products integrated solutions and services. These factors and others could cause operating results of vary significantly from those and prior periods and to those projected and forward looking statements.
Additional information with respect to these and other factors, which could materially affect the company and its operations are included and certain forms of companies filed with the Securities and Exchange Commission.
These forward looking statements are based on information available to orbital energy group today and the company assumes no obligation to update statements as circumstances change.
Now at this time it is 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 first quarter of 2021 earnings conference call during.
During the first quarter, we continued to execute on our transformational strategy to become <unk>.
The infrastructure service provider, serving the electric power transmission and distribution telecommunications and renewable markets. Just subsequent to the end of the first quarter. We successfully completed our accretive platform acquisition of 100 per cent of the capital stock of Gibson and technical services and the Atlas.
The other based telecommunications company, providing diversified telecommunication services nationally since 19 nine.
During the first quarter, we launched the new subsidiary the Eclipse Foundation group of drill shafts Foundation construction company that provides the foundation services, primarily for the electric transmission and substation markers.
Also in the first quarter orbital solar services was named the age of their procurement and construction or EPC company of choice for the newly formed Black summarize half century for them, which over the next three years expect for bill over one gigawatt of solar power with the beginning of the document of 700 and for.
$5 million with this relationship we have enhanced our programs and the real.
Global and alternative energy multiple areas by securing the strength of upcoming of utility scale projects, along with playing and follow on development for our solar division that should persist well into the next few years.
Additionally, orbital power services layer of the two additional multi year Master service agreements with the Investor owned utilities.
And finally, our orbital gas business has recently charter of the quarter as business activity of now returning to more normalized levels moving past the effects of COVID-19.
For most of last year.
I will now provide more detail on Gibson and check the whole services all of GTS, which is now of wholly owned subsidiary of <unk> and its results will be consolidated beginning with our second quarter results.
This was our first strategic acquisition of 2020, one and the first of several acquisitions and we plan to execute upon this year.
And this is filed and the 19 nine GTS does provide a superior customer services and things.
Technology solutions, and unparalleled quality to its customers and the telecommunications industry.
Gtx is customers reported talks of communication charter spectrum.
Cash communications for Roger and other industry leaders.
<unk> management team, including the CEO, Mike what Bracken, Chief operating Officer, John Martin and Chief Financial Officer, Robert Moore will remain with the company.
Very pleased with this acquisition and I believe its an excellent platform for us to build out of our telecommunications services group and to drive profitable revenue growth going for <unk>.
<unk> is a recognized leader and telecommunications, including broadband and tactical services construction and distributed antenna systems wireless capabilities and more.
Liquids from comprehensive suite of service solutions, GTS is well positioned to serve customers and a rapidly growing market close.
The telecommunications market.
The industry momentum, primarily driven by the rollout of <unk> spectrum and the ink.
Briefing.
And with requirements and areas, such as health care and entertainment and other public venues. We expect this momentum will continue for years to come and.
According to a February 2021 article by the Boston Consulting group, the economic impact of the <unk> spectrum will be significantly and are delivering faster speeds lower latency and high reliability and Bob.
<unk> will spur activity across consumer and industrial and public demand for.
For example, the <unk> spectrum could revolutionize healthcare transforming telemedicine and the remote monitoring of patients.
Over time, the indirect benefits to the U S economy are estimated to contribute an additional one to one two trillion dollars sort of the nation's GDP.
And estimated 400 of $500 billion will be spent to deploy <unk> across the nation, Bob the year 2030 and.
In addition to giving us the foothold in this attractive sector. The GTS acquisition and further Diversifies <unk> service offerings and is another step towards our transformation into a full service infrastructure platforms, helping them.
In addition to its strategic benefits this transaction as the immediate value to our shareholders for.
For the calendar year of 2020, Gcs and the audited results include gross revenues of approximately $40 million gross profit of $6 $8 million and and unaudited adjusted EBITDA of $5 $5 million for.
For calendar year, 2021, GTS expects to generate revenues of approximately $50 million and EBITDA of approximately $8 million.
Earlier. This month Gcs was successfully awarded projects with a significant number of miles for the build out of fiber optic broadband infrastructure over multiple states for several of telecommunication providers. These projects will significantly increase our reduced backlog with revenue expected.
It will be recognized over the next three for five years, we're very pleased with this development and I look forward to share several of the loop positive news with you and the future as we continue to execute on our acquisition strategy.
Yeah.
And the first quarter, we also launched the new subsidiary for the foundation for <unk>.
Quarter, and Gonzales, Louisiana, just outside of the Baton Rouge eclipses, the Drillship Foundation construction company.
Actual losses, and providing services to the electric transmission and substation industrial and communication towers and disaster restoration market sectors.
The eclipse team has approximately 30 years of industry experience and is well known for its expertise and successfully executing projects and extremely difficult operating environments, such as water mark or rock terrain.
The clips utilizes amphibious equipment vibratory caisson to construct of up to 16 foot diameter shaft at depths greater than 80 feet and March land and deeper waters and also has the expertise and equipment just successfully drilled for hard rock and forever.
The addition of eclipse.
For our electric power infrastructure platform.
The overall service offerings and an industry that has experience and growing demand.
<unk> serves as a viable area for too many of our other operations, where we can realize the operating synergies and perhaps most notably with orbital power services.
The multi year outlook for capital spending of electric power transmission and distribution infrastructure remains strong and.
And the Edison Electric Institute presentation from February of this year indicated the utility Capex spending has increased every year and the last decade, increasing from approximately $74 billion and 'twenty you can do and estimated spend of $140 billion and 'twenty each one of them.
These figures of the sum of generation transmission and distribution spending by our customers.
Additionally over the same time period, not only has the total capex spending for each with the amount of transmission and distribution spending as a percentage of the total capex has increased as generation Capex has decreased about 10% of total capex over the 10 year period.
Market drivers and includes state regulatory and legislative mandates to modernize the grid reconfigure the grid from fossil fuel generation to renewables smart grid investment and security.
In addition to our progress and Telecom and foundation construction during the first quarter orbital solar services subsidiary was named the engineering procurement and construction or EPC company of choice for the newly formed blocks of Sunrise half century for.
The Blackstone of our farm or be ex out was created in concert with icon lighting, a leading developer of clean energy projects across the globe to bring large scale solar power to North America by decommissioning coal fired plants throughout the United States and converting them into Utah.
All of the scale solar energy farms, producing clean energy.
And I mentioned previously over the next three years for expects to build over one gigawatt of solar power and beginning with the beginning of the strength of $725 million.
Orbital solar services and responsible to provide the full EPC services for the solar facilities with work commencing as early as the fourth quarter of this year.
We're thrilled to partner with the block Sunrise fun and the socially responsible and environmentally friendly endeavor, which I believe is of Great example of showing the corporate America and do well by doing good and usually.
Tell me the scale projects along with planned follow on developments will enhance our presence and the renewable and alternative energy market place well into 2020 one of the D. R.
Part of of this debenture with the Blackstone last fall and also advance is one of our key priorities, which is to raise our environmental social and governance efforts.
USG initiatives or something every call for it.
And today, you should consider our priority and.
And this endeavor will open up significant opportunities for black entrepreneurs, and black oil and companies throughout the industry.
As I've noted previously and overlay energy group, we tend to be of catalyst for change and the electric power and renewable construction industry, making a meaningful impact to provide opportunities and call.
And we are alive for people and the and this country.
Now I will review, our first quarter 2041 results.
Total revenues for the quarter for non corn.
$5 million of 67% year over year increase compared to $5 $7 million for the first quarter of 2020.
The year over year increase was primarily due to the addition of orbital solar services the ramp up of orbital power systems and the startup of Eclipse Foundation group.
This was partially offset by lower integration revenues and the orbital gas systems of operation.
The net loss for the quarter was $18 million compared to a net loss of seven $4 million for the comparative period last year.
We have higher SG&A expenses compared to last year, primarily due to the addition of overhead costs associated with supporting both the overall solar and over the power services operations, which commenced last year as well as to support our newly formed the clips operations.
We continue to see increasing opportunities here, but and the short term expect to incur costs of our Boeing fleet and related personnel. We expect the short term costs will be mitigated. Once these operations gained traction with additional customers, which we expect will happen throughout the course of the year.
We also incurred equity compensation related charges and other compensation expenses during the first quarter along with the M&A cost as we continue to pursue acquisitions.
At March 31, 2021, Oag's total consolidated backlog was $62 $1 million of sequential increase of $21 $7 million or approximately 150% from the fourth quarter of last year as well as the significant increase.
And year over year as backlog at the end of the first quarter of 2020 was $9 $5 million.
More notably second quarter backlog should increase substantially compared to the first quarter due to the GTS. The acquisition plus. The addition of broadband build out project awards that I mentioned earlier.
Also during the second quarter orbital power services added two additional multi year Master service contract with the Investor owned utilities.
More notably almost all of this backlog of recurring predictable revenues, which somewhat offsets the cyclicality and uncertainty of the large projects solar work we are pursuing.
Now, let's review our outlook for the business segments going forward.
Noted earlier, we continue to see and improving operating environment and financial performance and orbital gas systems in both North America, and and the U K.
At orbital gas systems, and Houston, the year started off as anticipated with strong backlog, which has further increased during the first quarter.
However, during the first for the production floor was slow as we completed the required engineering for several of control buildings and one bio methane skid with backlog production scheduled throughout 2020, one and based on customer schedule requirements.
Through the fourth quarter.
We expect to be heavy ended the production cycle and may need to bring and sub contractors to assist with the workload and we expect momentum to continue throughout the year as we are in discussions with several customers to build gas measurement and the sampling skids and the analyzer cabinets.
We're also experiencing an uptick and our service revenues, which are approaching activity back to pre COVID-19 levels.
As you May recall, our North American business was the most impacted compared to our other service offerings by COVID-19 and.
And the 2020 oil price drop.
Also in the first quarter of 2021 overlay energy services 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 to grid system of entry order of this year.
We continue to focus on winning the integration and analytical packages and also providing maintenance services for these systems and the biogas markets.
And our orbital cash U K operations, we continue to see a stronger resurgence of activity as the impact of COVID-19 was not as severe as here in North America.
As I noted on our last call our U K operations have been and cash flow positive since the third quarter of last year and cash flow should remain favorable the route or at least the first half of this year.
This is primarily due to our continued focus on expanding into developing markets outside of our traditional core gas network business.
Already and the second quarter, our U K operations had been notified of the significant contract award from the Irish cash and it works and have been qualified as the supplier to perform services for the U K transmission operators Rio two project, which is a five year contract to upgrade the gas net.
At work.
This project will guarantee a minimum volume of work over the contract period and first orders are anticipated in the second half of this year.
The renewable gas market is also accelerating as the UK government incentive program to build Biomethane facilities is set for in March of 2022.
As a result significant orders are expected and the second and third quarter of this year.
And finally, the orbital gas UK will complete another hydrogen project and the second quarter, which strengthens our market position as a proven service provider and this emerging market.
Looking at orbital solar services, which provides the engineering procurement and construction services for the utility scale solar.
Customers, we continue to see limited activity during the first quarter.
This is consistent with the industry at large mainly due to COVID-19, and its related impact on the manufacturing and delivery delays of solar panels from China to the United States and continuing the project delays as people wait on potential incentives and tariff relief from the by the administration.
Progress on solar awards has been slower than anticipated.
While we remain bullish about our multiyear outlook for solar opportunities of shifted into the second half of this year.
Currently we are and exclusive and final discussions with the major international utility to provide EPC services on the utility scale solar project in Pennsylvania and.
Additionally, we're exclusively negotiating the bot EPC services to several community scale solar projects that are expected to move to construction and the second half of this year. These.
And these projects combined are approximately 200 megawatts of utility scale solar.
We continue to pursue other projects and our opportunity pipeline, which is in excess of $1 billion with many of these projects planned to move to construction this year.
As I mentioned on our year end earnings call, the Blackstone rise far and project opportunity will likely be and 2022.
As I've stated in the past, we remain bullish on the multiyear outlook and.
And the utility scale solar market.
According to the U S solar market insight report.
March 2021 publication, the solar industry will see historic growth over the next decade growing four times by 2030 to 419 gigawatts of capacity.
This growth continues to be driven by factors.
Driving renewable energy development, including strong demand decline and cost gains and battery storage technology and growing incentives and the state mandates for the grid operators to move from fossil fuels for renewable power generation.
Turning to our orbital power services subsidiary, which provides the electric transmission and distribution construction and maintenance services to the electric power and industry. We continue to ramp up crews as we are scheduled to start work for two more investor owned utilities and the coming weeks under Master service agreements.
Which provide us with stable and recurring revenue streams.
The gating factor and supporting these customers to ensure our customers have qualified electric transmission and distribution crews and that can perform their work safely and efficiently.
As a result, we onboard our crews well before they are plug some of the customer system to evaluate the technical competency and the experience level of the new employees, including providing appropriate technical and safety trainer, which resulted in additional costs during the first quarter.
And also we had several lump sum projects, which were impacted by weather issues that generated losses for the quarter.
These projects are now completed and the vast majority of our electric distribution activity is now on our unit price contracts.
Since its introduction earlier last year over the power revenues continue to increase as we expand geographically and secure new customers as well as the increased crews for existing customers.
Related to this newly formed Eclipse. The Foundation group has continued to see strong demand and since we launched it in January.
During the first quarter. The eclipse successfully completed its first project, finishing the quarter with backlog of approximately $200000, which as of today and has increased to more than $1 million and as eclipse continues to build momentum and the marketplace.
In addition, we're currently reviewing several million dollars and 2021 related opportunities.
As I mentioned earlier, the eclipse is complementary to our other service lines and especially over the power as foundation work is often the part of building electric transmission of substation facilities.
With the Eclipse, we can now offer our T&D customers a complete solution package.
In conclusion, I want to reiterate that overlay energy group as of forward looking story.
With considerable prospects for both organic growth and growth through strategic and targeted acquisitions.
Our orbital gas business continues to rebound in 2020, one both in North America, and and the U K and.
In addition, orbital power continues to gain traction and the industry as we continue to speak with several of electric power transmission and distribution construction companies that already have multiple msas with blue chip customers.
Further orbital solar services, while experiencing little activity and the first half of this year ease of.
And our exclusive no secured and.
The negotiations on several projects and is pursuing additional opportunities from our robust project pipeline.
In addition, we expect meaningful revenues from our partnership for the Blackstone and Raj for them to begin next year.
Adding to this organic growth, we continue to pursue our acquisition strategy targeting attractive companies and the electric power and telecommunication industries that primarily provides steady dependable recurring revenue streams.
The Gibson and technical services acquisition and subsequent contract award is an example of the potential that established companies with the clear strategy for growth and bring to <unk> long term success.
With these dual paths, we are well positioned on the path to achieve profitable growth on a run rate basis. During the second half of this year as we continue our transformation to a diversified infrastructure services company.
This concludes my opening remarks, and now we'll pass the call on the Dan who will review our financial results Dan.
Thank you Jim and good morning, everyone. Today I'll review, our first quarter 2021, GAAP financial results and.
I'd like to remind everyone and I will focus my remarks today on the company's continuing operations also please note that with the acquisition of reach construction group in April 2020, now operating and the orbital solar services the company revised the segment structure.
Electric power and solar infrastructure segment was formed during Q2 2020 and includes the orbital solar services.
Total power services and now equal the foundation.
Previously orbital power services, which commenced operations and the first quarter of 2020 was included as part of the former energy segment the.
And the former energy segment was renamed as the integrated energy infrastructure solutions and services segment and includes orbital gas systems limited and the UK and orbital gas systems North America.
We reported total revenues of $9 5 million for the first quarter of 2021 compared to $5 $7 million for the first quarter of 2020 and increase of 67%.
For the year over year increase reflects the continued ramp up of orbital power services and the startup of each of the foundation group and the electric power and solar infrastructure services segment.
The increase was partially offset by lower revenue during the quarter from our orbital gas systems operations.
K market continued to face headwinds related to COVID-19, Brexit and the impact of the political environment on investment within the sector. While the U S. Market also continued to face the headwinds surrounding COVID-19 and associated project delays.
Gross loss was $1 $3 million for the first quarter of 2021 compared to gross profit of <unk> 6 million for the first quarter of 2020 the.
The decrease was attributable to ramp up costs and oral power services weather related impacts of the project schedule and the startup costs related to the launch of Eclipse Foundation group and lower margin projects during the period for total solar services.
We expect margins to improve substantially during 2021 and oral telecom services start to contribute over the power of services gained greater operating efficiencies and expand its crew count with new customers and as the orbital solar services began to work on significant solar project during the balance of 2021, we forecast it.
Proved margin and increase revenue as companies throughout our industry has continued to learn to cope with the post COVID-19 environment.
Increased sales of higher margin product, a better mix of integration projects.
Increased service revenue throughout our energy focused operations and solar project for orbital solar are all expected to drive the continued improvement of the company's profitability and.
Well of the Dts acquisition, which we will believe which we believe will be accretive.
For the first quarter of 2021, selling general and administrative costs was $14 5 million compared to $7 $2 million and the prior year period.
The increase in SG&A for the quarter was due to increased costs related to overpower services and orbital solar along with startup costs and Eclipse Foundation group and.
And $2 $6 million of employee and director of the related stock based compensation vesting expenses.
Also contributing to the increase were increased corporate costs and the other segment.
And so an increase and the mark to market adjustment to the executive cash based stock appreciation rights and employee performance bonuses.
Mueller systems was acquired in Q2 2020. So the addition of Asine for overall solar services, including the amortization expense related to acquisition intangibles are increased compared to the first three months of 2020, which was prior to orbital solar services acquisition.
And the company also continued to incur professional fees related to mergers and acquisitions as the company pursuit of growth both organically and through acquisitions as demonstrated by the April acquisition of Gibson and technical services the.
These increases were partially offset by decreased SG&A costs, and the integrated energy infrastructure solutions and services segment due to cost saving measures.
The company's operating loss was $17 3 million for the first quarter of 2021 compared to $7 $1 million and the prior year comparative period due to the items previously mentioned.
Jim noted net loss for the quarter was $18 million compared to a net loss of $7 $4 million for the first quarter of 2020.
We do expect to see overall improvement in revenues growth margin and net results as 2021 progresses.
We also expect an increase and global solar and overpower services activities during the second half of 2021.
For the solar the company expects the meaningful for the utility scale solar market to drive significant backlog and revenue growth during the second half and.
As Jim previously mentioned orbital solar growth will be benefited by its partnership with Blackstone rise investment and signed over the next several years and addition, overpower the she continued to grow its business throughout the year and we currently expect this segment to achieve profitability and the second half of 2021.
At March 31, 2021, our backlog was $62 1 million compared to $44 million of December 31, 2020, and $9 5 million at March 31 to the point the.
Year over year increase is due to the inclusion of overpower services increased backlog and the addition of orbital solar backlog is.
Also reflects updated timing of orders and delivery schedules for integration of customers.
Lastly, we ended the quarter with cash and cash equivalents of $34 7 million and restricted cash of $1 $2 million.
In Q1 cash used in operating activities was $13 5 million compared to $7 $7 million in Q1 2020.
Cash used in investing activities during Q1 with $3 5 million compared.
Compared to $7 4 million and Q1 2020.
The increased uses of cash during the first quarter were primarily for M&A activity related to our GTS acquisition and ramp up costs at orbital power services.
Part of cost for Eclipse Foundation group and cash used by the overall solar services operations, along with ongoing working capital requirements.
The company saw and initial cost increase from orbital power services and he could foundation group. We expect these groups to become cash flow positive from operations as the business environment Normalizes and the company continues to increase revenue generating service crews deployed.
To mitigate the short term costs, we continue taking steps to shore up our liquidity, including disciplined management of both working capital and expenses.
And as we've mentioned previously during the height of the pandemic.
And its subsidiaries entered into unsecured loans and the aggregate principal amount of approximately $1 9 million.
Pursuant to the Paycheck protection program.
Of the loans and interest thereon is forgivable, partially or in full if certain conditions are met and the company has applied for forgiveness of these loans during.
During the first quarter of 2021, we.
We supplemented this liquidity by issuing $45 million worth of common stock subsequent to quarter and we closed on $10 $7 million of debt funding to further support operating and M&A activities going forward.
Additionally, we filed a shelf registration, allowing <unk>.
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.
For these enhanced sources of liquidity, we remain confident and our ability to continue executing on our strategic growth plans.
With that I'll now turn the call back over to Jim for closing remarks.
Thank you Dan.
So in summary, and the first quarter 2021 we continue to execute on our strategy to transform overlay energy group and do and infrastructure service provider, serving the electric power transmission and distribution telecommunications and renewable energy industries, we achieved several milestones during the quarter, including all of it.
Interest and to the telecom sector with our acquisition of Gtx.
Additionally, we expanded our breadth of capabilities and electric power transmission and distribution services with the launch of the Eclipse Foundation for a turnkey the foundation construction of provider, whose skills and complements our orbital power services group.
At the same time, we continued our initiatives to organically grow our existing operations through activities such as our strategic partnership with the Blackstone of Archstone and overall power services continued expansion with existing as well as with new customers.
Looking ahead, we remain confident that our actions of laid the groundwork for orbital energy group's long term growth strategy.
We continue to build a diversified infrastructure services platform, both organically and through strategic acquisitions, we will expand both our top and bottom line growth while building value for all of our shareholders.
That concludes our prepared remarks, now I would like to open up the call for questions.
Operator, Please go ahead.
As a reminder to ask a question and you will need to press star one on your <unk>.
And the phone for withdraw your question press the pound key please standby, while we compile the Q&A roster.
Our first question comes from the line of Eric Stine from Craig Hallum. Your line is now open.
Yes, good morning, and <unk> on for Eric Thanks for taking the questions and good morning.
Good morning, and good morning.
Maybe first and on the orbital UK business can you just kind of talk about your expectations. There over the next year areas of optimism and just how that pipeline and as may be shaping up versus the last few quarters I know you talked about the.
Significant award and.
And now your land and kind of opportunities and R&D and hydrogen can you just expand on that a little bit yes, I mean, we've been and positive cash flow of our neutral cash flow since the third quarter of last year, and we expect that to continue throughout the year. So we're definitely seeing improvement I would say that the biggest part of that improvement is diverse.
Suffocation, both geographically with natural gas and then and addition of natural gas pursuing new markets, specifically, the renewable energy, which is which is.
And a big boost to the to the company's overall revenue.
<unk>.
The Rio project, we expect that to be announced.
And we participated on that in the past that there's very few suppliers that are approved and beyond that system as the.
The five year of build out that's going to have a minimum guarantee.
Of revenues per year, so that should ramp up towards the second half of this year, which we're pretty excited about that because that will be a major contributor to revenue and then we picked up the sour gas network of project, which is to maintain the.
The gas measurement systems on the network, which is a nice lift for the company as well. So we're seeing some nice increases the nice momentum in that marketplace.
The COVID-19 for sure.
Alright, thanks for the color and then.
On.
On backlog can you.
Kind of give a give a breakdown of kind of timing of recognition there and obviously.
It sounds like Theres quite a bit of opportunities that you know.
And have happened and the second quarter, and you expect to happen and the back half with solar and that can kind of be converted into revenues as well. So just trying to get an idea of kind of cadence of revenues and the back half of the year.
Sure so.
Approximately half of the backlog and that.
The power and solar segment, we would expect to channel right.
And one.
And then all of the backlog pretty much in the integrated infrastructure energy infrastructure group and the gas group, we would expect the turnover in 2021 as well.
And so we see some room to be increasing both of those.
During the remainder of the year also so we're.
Really positive on where the backlog stands right now.
And that's without the telecom edition as well of the backlog that's going to come in from Gibson and we haven't quantified the.
The Master service agreements that we have to build out the broadband over several state area.
But we will have more detail on that and hopefully the coming weeks.
Definitely by the end of the quarter and that should significantly increase backlog.
Even though the big project.
And build out is and where we're going to get started until the fourth quarter of this year.
Understood and then maybe last for me you touched on it a little bit supply chain can you just kind of talk a little more broadly about what youre seeing supply chain, not just and solar but maybe across the rest of the business.
And any kind of labor constraints that you're seeing at all and Thats a really good question I mean labor has historically been the biggest gating factor to especially on the electric power side of our business.
And now we're seeing some equipment delays.
From from COVID-19, and the manufacturing of new bulk of trucks for instance.
Typically you feel these effects and months thereafter and iron.
Most of the year after and the construction business and.
And that's what we're seeing now and we're having a.
Commitments to the equipment.
And 2022, which here.
Typically that Hasnt happened.
And in the past and this industry. So I think the big areas of or the bucket trucks.
And the digger derricks and the specialized equipment.
Net you use and both the telecom and the electric power side.
And as well as some delays in the the solar panel deliveries from China and.
And we'll work through it and we've got we've got a path to.
And to mitigate some of these issues.
Going forward, but.
But it is it is a headwind.
Alright, thanks for the color and I'll hop back in the queue. Thank you and thank you for it.
Thank you. Our next question comes from the line of Jeffrey Campbell from the lines Global Your line is now open.
Good morning, Good morning, Jeff and Jeff.
And Jimmy noted that the SG&A jumped quite a bit on the startup of ore.
All of those organic T&D businesses I just wondered does this ramp up of suggest the businesses are growing at the rate the you'd expected or they are are the ahead or behind schedule.
Perfect for right on schedule and.
We have been pursuing additional investor owned utility MSA work for the property the last.
For the six months and.
And we needed to just get a resume of working safely and efficiently, which we have so.
We've been asked to participate for these two huge two more utilities onto these massive service agreements and.
And so we got to be thoughtful about bringing people on and so forth.
We had to bring on probably close to 10 crews.
And get them through the evaluation process and training process before for we put them on the system. So the.
And to Dan's point, once we get a consistency of work.
That the.
And that can carry the profitability of that group.
Continuing to spend money to try to ramp up which is a good thing.
But it doesn't serve well of the bottom line during the transition, but I think where we are on schedule.
And where we're expected to be with the.
Electric power distribution group.
For 2021.
Okay, great. Thank you for that color.
And you noted your intention and make additional acquisitions. This year I'm wondering if you could just give us some high level color on how of that effort and is progressing and in particular at the bias for acquisitions is toward the power group for the telecommunications businesses or.
And just based on the quality of the businesses that Youre looking at.
I think I'm agnostic to whether it's the electric transmission and distribution of our telecommunications were being more opportunistic.
I will tell you when you buy a platform like Gibson.
And the power of synergies really comes from trial to find out the organizations that are synergistic with with the platform. So we're looking at tuck ins that we think will make the one plus one equal three or more factor.
But the make the major focus for us on acquisitions as recurring revenue.
Under multi service agreements, which youll get from both the telecommunications and from the electric power T&D group. So.
I think there's no preference like I said on the on which way we go whether we go to electric power of Telecom it's.
We're pursuing companies in both sectors and will be opportunistic and execute on the ones that we think will add the greatest value and the short and long term.
Okay, Thank you and for them.
For my last one I'll, just ask a little bit higher level question, you've noted that IAG has significant exposure to the T&D market.
And the administration seems poised to support strategic growth and this area, but and then be forces remain.
And impediment, even when they are tied to renewable energy and I'd refer to the new England clean energy and that project is ongoing and example, so high level.
And you see the landscape for and Interstate T&D projects, improving and to what extent.
<unk> power division exposed to this business as opposed to maintenance of existing infrastructure.
The operating right now, we're not as exposed to the tip of the bigger transmission projects that fall.
Fall under the.
The area that you mentioned.
We're doing mostly the smaller distribution and smaller transmission projects, which are the day to day.
The recurring maintenance they call and maintenance for this really small capex projects that we're doing to replace aging conductor of polls are insulators, which.
And as.
The majority of of what we do.
Okay, great. Thank you. Thank you.
Thank you. Our next question comes from the line of Liam Burke from B Riley. Your line is now open.
Thank you and good morning, Jim and good morning, Dan Good morning.
And Jim can you give us some color on what has gone on the build out on solar and terms of expectations changing from last time, we spoke on the call to now and being in the deferral of some of those revenue.
Well, it's a couple of things I mean, one I didn't want to be sitting here without us being the owner.
The contract executing the contract right now, but it is what it is I mean, there's a couple of factors. One is the project that were negotiating has been delayed to some degree.
And it would have started by now from the last call and secondly, we did lose one opportunity that we were prepared to fully bidding against the one other person so.
Look I'm still optimistic about it for the Lumpiness of this business can be frustrating to both me and investors.
But.
And I can see a path to where we're going to make significant revenues and this group.
This is a cyclical business and.
The one reason why we have a sense of urgency to diversify and to recurring revenue streams to where it takes a little a little bit of the cyclicality out of our outlook.
And.
I mean, it goes and hand in hand, with the acquisition of G T as well as the foundation the starting of the foundation business of broadens your portfolio.
The telecom MSA agreements sounds pretty exciting I know you have to be careful as to what you say, but could you give us a little more color on that.
Yes, I do need to be careful right now because we're still working through what we can say with the customer because we just we just executed this just last week.
But I mean, it's a recurring <unk>.
The revenue type project thats going to be of multiyear bills.
And what I mean.
The consistent revenue stream recurring revenue stream.
As what we expected.
I'll be serving of the.
The project management and doing a significant amount of construction of ourselves and subcontract for some of the work as well, but it's building broadband fiber so.
Throughout.
Multi state area, which is to upgrade the the fiber optic network for the <unk> spectrum.
And was this in the works when you bought and when you made the acquisition or is this something that you were able to bring and post acquisition.
It is.
And with something that I think the team was working on it.
Werent really that focused on it until and.
Until we want it.
<unk>.
We knew that the GTS team was working on this opportunity, but we werent counting on it but we were hopeful and.
We did find out post the acquisition that we were awarded a significant piece of the of that contract.
Net of the project.
Great.
Thank you Jim Thank you Liam.
Thanks Sam.
Thank you at this time I am showing no further questions I would like to turn the call back over to Mr. Jim O'neil, Vice Chairman and CEO for closing remarks.
I would like to thank everyone again for joining us on today's call and for your continued interest and overall energy group and we look forward to having follow up conversations with many of you and updating you on our progress. So thank you again and have a great day.
This concludes today's conference call and thanks for participating you may now disconnect.
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