Q3 2021 Orion Group Holdings Inc Earnings Call
[music].
Greetings and welcome to the Orion Group Holdings, Inc. Third quarter 2021 conference call.
At this time all participants are in a listen only mode.
Question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded it is now my pleasure to introduce Fran Okoniewski Vice President of Investor Relations. Thank you may begin.
Good morning, everyone.
And welcome to Orion Group Holdings third quarter, 2021 earnings conference call and webcast.
My name is Fran Okoniewski, Vice President of Investor Relations and.
Joining me today is Mark Stauffer, Orion Group Holdings, President and Chief Executive Officer.
Regarding the format of the call.
We've allocated about 10 minutes for prepared remarks in which Mark will highlight our results and update our market outlook.
We will then open the call for questions.
Through the course of this conference call, we will make projections and forward looking statements regarding among other things our end markets revenues gross profits gross margin EBITDA EBITDA margin backlog.
<unk> and negotiation and pending awards as.
As well as our estimates and assumptions regarding our future growth administrative expenses and capital expenditures.
These statements are predictions that are subject to risks and uncertainties, including those described in our 10-K that may cause actual results to differ materially from those statements.
Moreover, past performance is not necessarily an indicator of our future results.
By providing this information we undertake no obligation.
To update or revise any new projections or forward looking statements, whether as a result of new developments or otherwise.
Also please note that adjusted net income.
Adjusted earnings per share EBITDA, and EBITDA margin are non-GAAP financial measures under the rules of the Securities and Exchange Commission, including regulation G.
Please refer to the reconciliations and definitions inclusive to the most comparable GAAP measures and reconciliation tables accompanying this earnings call within the press release issued yesterday.
The press release can be found at our website at Www Dot Orion Group Holdings, Inc. Dot com.
Also for additional discussion of risk factors that could cause actual results to differ materially from our current expectations.
I used to refer to our quarterly and annual filings with the SEC.
Which are also available in the investors section of our website.
And with that I'd like to turn the call over to Mark Stauffer, President and Chief Executive Officer, Mark. Thank you and good morning, everyone. Thanks for joining US today, Please bear with me as I'm a bit under the weather.
As previously announced Robyn will be departing us this week I'll be.
Covering information he would normally cover on our call today, but I wanted to thank Robert for all his hard work, particularly over the last three years and wish him all the best in his new endeavors.
Today, we'll discuss our third quarter results discuss our markets and our outlook.
Again with an overview of the quarter, then discuss our financial performance in more detail and finally discuss our market outlook before we turn to Q&A.
I'd like to begin by thanking our fellow team members for their hard work and dedication and to remind everyone that safety of our employees is a key priority.
We want to ensure that our team members leave work the same way they came in healthy and injury free.
We remain deeply committed to our target zero program to support our vision of zero incidents zero damage zero harm.
On our last call. We noted that some of the performance that we were targeting for 2021 could shift into 2022, we.
We saw it in the third quarter as revenue was well short of our targets.
Revenue was impacted by phasing of work project win rates and timing tropical weather and COVID-19 related items.
In the Marine segment, a large portion of our year over year decline in revenues as a result of project phasing.
Last year's third quarter Salt in full full swing on a number of sizable projects, which has since completed.
In the current year prior period when rates projects, pushing whitewood and projects recently awarded that have yet to commence resulted in a GAAP in project burn for the third quarter, resulting in a negative revenue variance.
As noted in our latest project announcements recently awarded projects will begin ramping up as we move through the fourth quarter and into 2022.
We also discussed on our last call our optimism regarding the activity level in our end markets, a robust pipeline of bid opportunities and our intention to remain disciplined in our approach to bidding work.
Our disciplined approach was rewarded in the third quarter as we saw 45% growth sequentially in our backlog.
With an overall book to Bill of 2.28 times.
Our marine business, we saw a win rate of 53, 4% on a book to Bill of 4.83 times.
We remain optimistic about the trends and project opportunities across our end markets in particular, those end markets that are emerging from pandemic related impacts.
Our current level of work hard work has approximately $2 billion, which remains at elevated levels sequentially. It was almost double the level a year ago and is up almost 30% from the end of last year.
The current level of bids outstanding and improved macroeconomic environment and a potential infrastructure Bill gives us confidence that we will continue to see a robust project pipeline with bid opportunities available to grow our backlog positioning us for improved performance in 2022.
Now I'll discuss our financial results for Q3 in more detail.
Revenues for the third revenues for the third quarter, 'twenty, 'twenty, one where $139 9 million compared to $189 4 million in the third quarter of 2020, a decrease of 26, 1%.
The decrease was due to the phasing of work project win rates and timing tropical weather and COVID-19 related items.
Third quarter gross profit was $6 6 million compared to $22 5 million in the prior year period.
The year over year decline is attributable to the items just mentioned, which also increased our indirect costs for some unabsorbed labor and equipment.
As a percentage of revenues gross profit margin was four 7% in the third quarter of 2021 compared to 11, 9% in the prior year period.
Turning to our segments in the third quarter of 2021 on Marine segment had revenues of 50, $454 7 million and an adjusted EBITDA of half a million dollars equating to an adjusted EBITDA margin of 9%.
In the prior year period, we generated revenues of $112 9 million and adjusted EBITDA of $13 4 million with an adjusted EBITDA margin of 11, 9%.
Marine revenues and EBITDA declined due to the aforementioned items. However, as previously noted we announced a number of project awards for our marine business, providing backlog to support improving results.
Our concrete segment had third quarter revenues of $85 2 million compared to $76 6 million in the third quarter of 2020.
Adjusted EBITDA for the concrete segment was negative $1 million compared to $3 6 million in the prior year period.
I'll talk to each segment's third quarter results were impacted by tropical weather and COVID-19 related items, along with a cost overrun on the completion of one project.
SG&A expenses for the first third quarter were $15 7 million or 11, 2% of revenues compared to $15 3 million or eight 1% of revenues in the prior year period.
The increase in SG&A SG&A dollars compared to the prior year was primarily related to ERP implementation, partially offset by decrease in bonus expense.
Net loss for the third quarter, 2021 was $10 2 million or 33 cents diluted loss per share.
This includes a nonrecurring expense of $1 4 million for the implementation of a new ERP system.
Adjusting for nonrecurring items and tax expense associated with the movement in certain valuation allowances adjusted net loss was $8 4 million or 27 cents loss per share.
Third quarter adjusted EBITDA was negative 500000, representing an adjusted EBITDA margin of <unk>, 3%.
This compares to 17 million for an adjusted EBITDA margin of 9% in the prior year period.
Turning to operating metrics for the third quarter of 2021, we bid on approximately $1 3 billion worth of opportunities and were successful on $318 million.
This resulted in a book to Bill ratio of 2.28 times in a win win rate of 24, 3% for the quarter.
As of September 30th 2021 our backlog was $573 million up from 394 million at June 30th and $429 million at the same time last year.
$380 million of our backlog our backlog was associated with our marine segment and $193 million was associated with atopic something.
Additionally, we are the apparent low bidder or have been awarded subsequent to the end of the quarter.
$3 million worth of opportunities of this approximately $47 million related to the marine segment, while 56 million is related to the concrete segment.
Moving to our balance sheet.
As of September 30th 2021, we had approximately 900000 of cash on hand, and $29 3 million of availability under our revolving credit facility.
We ended the quarter with $19 $4 million of debt outstanding all of which is related to our revolver our leverage ratio of 134 times.
Fixed charge coverage ratio of 183 times, both well within covenant requirements.
Turning to our markets as I noted earlier, we continue to see improvement in our end markets that were impacted by the COVID-19 pandemic and to see an upward trend in project Lettings in these end markets.
Winning new awards and replenishing our backlog remains a key focus and our primary focus will be bidding on the most attractive projects that support our profitability goals.
We will remain disciplined in our bidding approach.
We continue to reach beyond our traditional project targets and geographic regions to secure quality backlog.
As we recently announced during the quarter, we secured our first project for our coffee business in the Florida markets and we are actively working to build on this success.
We will continue to target select larger longer duration projects, which provide us with greater operational visibility.
The two recently announced large projects for our marine business fit this profile with both projects scheduled to complete in 2024.
In our Marine segment, we continue to pursue opportunities in the public sector at the federal state and local levels, including Port expansion projects D. O T work involving bridges over water, maybe facilities and environmental and flood control projects.
We are also pursuing project opportunities in the private sector as evidenced by the recently announced awards for our private sector dock projects, along the Gulf Coast.
As stated before the passage of an infrastructure Bill would be an additional catalyst for our end markets. However, even without this spending bill we expect to see continued project opportunities for infrastructure projects in our markets.
Fortunately the U S are expected to spend over $160 billion over the next five years focused on capacity expansions and upgrades.
Likewise, the absent a federal infrastructure Bill we still expect Congress to address long term highway funding by alternative means.
According to the American Society of Civil Engineers over 46000 bridges in the U S are considered structurally deficient and 42% of all bridges are over 50 years old.
And our concrete business, we continue to see projects from a variety of end markets such as Tech E Commerce and large retail moving forward.
Democratic demographic trends will continue to drive project opportunities in our markets in Texas, We continue to see corporate relocations, such as our recently announced headquarter moved to Austin, similar demographic changes or opening up opportunities for us in the Florida market.
To sum up although our third quarter results were disappointing we are heartened by the solid backlog, we added during the quarter along with the overall positive bid opportunities we see ahead.
With that I'll turn the call over to the operator for Q&A.
Thank you we will now be conducting a question and answer session.
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Our first questions come from the line of Marco Rodriguez with Stonegate capital. Please proceed with your questions.
Good morning, Thank you for taking my questions.
Yeah, I was wondering if you might be able to and quantify the impacts you saw from all the headwinds in the corner.
Yes, mark or the vast majority of them were related to the project phase in a particularly in the marine business that was the biggest impact to the quarter you saw the significant drop off in.
Revenue in that segment.
That accounts for the vast where we're probably 80% or so of the of the impact we did have the hurricane in a couple of Hurricanes tropical weather, along the Gulf coast, which affected our Texas operations.
And our operations in the New Orleans area, and we had COVID-19 impacts to US just like a lot of other people thought we had a big spike in Covid.
Covid cases, particularly in some of our PMT.
Ranks with the Delta variant.
Is that the kind of spiked up in the second quarter excuse me the third quarter, particularly in August and September we've now seen that drop off than we were.
As of last week, we only have one open case.
And the company. So that's good news, but vast majority of it's just the phasing just the the gaps created by a multitude of thing.
The timing and the timing of New awards.
The run off of the prior work that we had been working on the projects pushing right word and and obviously a lot of the work that we've recently won is is we'll start starting up in the fourth quarter and then.
2022 so.
Again kind of major headwinds are the major headwind in Q3 as was around the phasing of project phasing of work, particularly on the marine side.
That's very helpful and can you give us a sort of a sense as far as what your utilization rates might have been in the marine segment and then.
In your prepared remarks, you indicated that there's obviously going to be an improvement in Q4, just kind of given all of the backlog that you have can.
Can you maybe then also put a little bit finer point on what.
Got you kind of envision your utilization rates are moving towards in Q4, and then into fiscal 'twenty two.
Yeah, I think we don't get specific on utilization rates, but just for competitive reasons, but suffice it to say because of the phasing issue that I just talked about.
Utilization rates well below normal on the marine side, which is where the bulk of our equipment is.
And of course, that's a that's a double edged sword.
We didn't have the revenue to generate higher profits higher gross profits at the job level and then of course, we have a higher rate of unabsorbed equipment and labor cost just because of the utilization so.
Utilization again.
For the third quarter, well below where we would like to see it we do expect that to start improving.
As we get into the fourth quarter and start getting some of the projects ramped up.
Particularly where we're expecting to see some of the dredging projects that we recently announced.
Again <unk>.
During the fourth quarter, so that'll start because it will start to see improvement in the utilization of those assets other equipment.
You know, we're doing laser front end loading on kickoff for new projects the little things like that so maybe later in the quarter before we start saying that but that utilization uptick on some of that work, but as we get into 2022.
And start getting into full swing on all of this recently announced work then we would expect to get our utilization rates back.
Backup into the zone, where we like to see that and one other thing that I would point out we still have even with all that positive news on that.
The trend for utilization, we still have capacity in our various markets to chase new work and of course, we're continuing to do that to.
We continue to add backlog.
Understood.
And then can you also give us a little bit of a sense as far as what is the margin profile look like for them.
The new contract that you announced here recently.
Well, we don't get into specifics on margins, but I will say this.
We set out what our targets are for EBITDA margins for both segments.
And we think these projects help to get it.
Let's move start moving towards those goals.
Again, a significant amount of uptick.
The uptick in utilization, which will will be good for us <unk> got a lot of good particularly on the marine side. Some good long term.
Kind of anchor projects, if you will that will continue.
You too.
Provide a good base to build from as we go through 'twenty two into 'twenty three and.
Again capacity level to keep.
To keep after that.
The upcoming bid opportunities and hopefully securing.
Good quality backlog, which is what we're focused on so.
I think the recently announced projects are consistent with driving us towards our our overall targets for for margins.
Got it.
Last question for me just wondering if you can kind of update us on the pricing environment for the concrete segment.
You know it varies by type of project and and geographic location.
Some markets are a little more competitive than others.
When I'm talking to Houston, Dallas, and Central Texas.
Funds on the type of project.
But we think that Oh.
Good strides in that in that division in terms of where we want to be obviously, we didn't perform.
At the bottom line level in the division.
Uh huh.
In the third quarter.
A lot of that was due to you know.
Some of the wet weather the COVID-19 impacts as I talked about earlier.
With PMT has been impacted there.
And then we had one project that we were completing a structural projects that we've completed.
Although we had cost overruns are but it's the single project and.
We were completing that and that did have a few punch list items on that so I think in terms of the overall competitive landscape.
You know, it's it's a mixed bag, but we're focused on again like I said fine and those projects are that.
Does that help us to have the most attractive.
Prospects for achieving our targeted margins and we think that works out there theres a lot of good prospects for us and in.
In the pipeline and as we've talked about New awards for a low bidder since the beginning of the quarter. We continue to recognize our new awards as well as we're moving forward here.
Got it appreciate the time thanks, Mike.
Marco.
Uh huh.
Thank you. Our next question is coming from the line of Julio Romero with Sidoti. Please proceed with your questions.
Hey, good morning, Thanks for taking the questions.
But I wanted to follow up on <unk> question on.
The margins for the recently won projects I think you mentioned that the margins are moving towards the segment target ranges, but what would that indicate that maybe the bid margins are are somewhat below the target ranges, but perhaps with some execution you can get to the target or.
Well I think let's build everything not all projects are or made the same some projects have more materials in them. Some projects may have subcontracts in them and that's why we don't necessarily get into specifics about.
Margins on an individual project, but I would say is though.
Very big positive that we picked up.
The backlog that we did.
<unk> will absorb a tremendous amount of labor and equipment.
And provide that kind of anchor base for that as we move forward provides the visibility for that equipment and in labor and.
Still we still have capacity to pursue additional work. So so obviously our objective is always to.
Beat meet or beat our bid margins.
But also keep a focus on all of the project mix that we have.
What we have in hand today, and what we're pursuing going forward to achieve our objectives and we think these projects helped us do that.
Okay, and I guess just taking.
Taking a going back to the quarter.
Don't know if you mentioned it the number of unproductive days that you might have had in and if not could you speak to that either.
On the number of days or compared to the prior and prior year quarter.
Yeah, I think it was a little bit it was up from the prior quarter, we didn't quantify it but it was.
Effectively a couple of weeks' worth of of.
The impact from weather in our in and again aggregated all that wasn't considered.
Consistent throughout but obviously they are.
The tropical weather that hit Texas impacted both our arc segments for a few days you know a good part of a week just to secure and and recover from the wet weather.
New Orleans again, we kind of had two different tropical impacts over there I want a hurricane and one of the remnant from the from the tropical weather in Texas. So again, a couple of kind of wait a couple of weeks.
<unk> shut down on that work and so yeah.
Blended in.
Across the board a couple of different a couple of weeks' worth of impact there.
Okay got it.
Last one for me is just on a quick update on an ERP and when do you expect to start seeing the results.
While the benefits from ERP I guess flow through the income statement.
Sure well as we've talked before.
Where we are on schedule and our implementation, we're getting into the meat and potatoes of that right now and we're still targeting a full implementation.
Inflation about mid year next year.
As you may be aware when you're doing that about implementation like this you know you have to run parallel for a little bit.
There's you know there's a lot involved in terms of.
Making sure that you don't turn off old system before you got new new system up and cranking on all eight cylinders.
They'll audit considerations and things like that but we are on target.
And we think as we get this implemented mid year next year fully.
We will start seeing incremental benefit from that each quarter. We go forward on that again, we think this is going to be I really.
A great opportunity for us to improve our businesses with the utilization of our.
Our new system.
Okay. Thanks, very much and best of luck in the fourth quarter.
<unk>.
Thank you our next questions come from the line of Alex Rygiel with B Riley. Please proceed with your questions.
Good morning, Mark in France.
Morning.
Mark could you quantify the cost overruns are associated with that concrete projects.
Yeah. It was a little over a million dollars and it had to do with concrete overruns than you know a lot of that is the concrete overruns were due to a number of different factors.
We are this is the first structural project large structural project, we're doing it in a new market the central Texas market.
We had issues.
With labor turnover during the course of the project. We also had some rework on some of the floors. The upper floors that we had to do.
Wound up having.
A little bit of an overrun on the quantity of materials due to the rework and some other things and so.
That impact was in the AR recognized in the third quarter the project.
Generally speaking, we're executing well and are in that division and this project is completing that was substantially complete at the end of the third quarter.
And then the project award in Daytona, which I guess is a new market can you talk a little bit about sort of your expectations for when this market might turn profitable.
Ah well, we were hoping to make a little more progress this year, but oh. This is a relatively small project for us, but we do have resource dedicated resources from our concrete division.
Located in the market, we are chasing a number of opportunities in that market and we think that right now.
We're leveraging the AR the infrastructure, if you will of our marine.
Marine business in that market. So we don't have a lot of cost in that market in and obviously any work that we pick up were going to expect to be.
Profitable work for us and so start contributing.
No our expectation.
For this year kind of got pushed into next year, but we're targeting kind of an initial foray of of about $25 million of revenue coming out of that market. That's our initial target. This gets us started on that until we get a really relatively small light commercial project, but.
But we've got it we've got a number of opportunities there.
Existing <unk>.
General contractors or customers that we have today in our in our Texas markets.
I've been asking us to quote on work in that market and so.
We've got a lot of potential opportunity up in front of us.
And you want a lot of work in the quarter, which is fantastic, but can you talk about sort of the burn rate of that work.
Is it all work that's going to get burned off in 2022 or does it going to stretch out a number of years.
It's a combination Alex a couple of the large projects that we won and announced.
The Florida D O T job that we announced in a poor job that we announced those jobs are the ones I spoke to in my remarks that go on into 'twenty. They don't complete until 2024.
So they're longer duration some of the other work that are you know some of the dredging work that we just picked up in an ounce.
Of course, that'll that'll burn off in the first half, but the first half of 2022.
And so it just kind of runs the gamut and some of the other dock work that we picked up.
Predominantly burns in 2022, so we got a mixed bag of of more near term burn burn through 2022, and then the burn beyond 2022.
Thank you.
You bet.
Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Our next questions come from the line of Paul Frac with Noble capital markets. Please proceed with your questions.
Yeah good morning.
Just to follow up on the backlog burn can you be a little more specific on.
What do you think will burn off in the fourth quarter and then also for the full year 2022.
Ah well for it in the fourth quarter again, we're wrapping up on a lot of this and ramp up means we as again some of the dredging work may start are there or will start during the quarter. Other work some of the a.
D O T projects and other projects, we're gearing up for it where youre doing or submit all are.
During the normal stuff that you would do on a startup project and getting set and prepared yeah. We may have some mobilization that comes in.
In the fourth quarter, but we probably wont start that the big burn on some of that work until we get into 2022. So again, we do expect to see improvement in utilization in Q4.
We expect to see improvement in.
You know our gross profit as we go through 2020 Q4 excuse me with this work starting up we get into it.
We get into next year.
A good chunk of the stuff we have in backlog will burn in 2022, but some of the larger works again in particular the the.
The F B O T jobs that we've recently announced the port job in Texas that we recently announced.
I will.
We'll burn that burn continues on as I said into 2024. So we've got you know again as as normal.
A.
Big percentage of our backlog is going to burn in the next 12 month period.
But we do have a we do have a.
Percentage of it that will go on into beyond 2022 again.
Nothing's changed in terms of our you know our typical duration of projects.
It was kind of in that six to over three to nine month type range.
Range and so most of our backlog I would say is kind of in that.
Three to nine to 12 months well with a few projects like the ones I just mentioned that go well beyond the next 12 months.
Guy here, so with the fourth quarter look more like the second quarter or more like this past quarter.
Well I think probably somewhere in between and I don't think it's going to look like this past quarter.
Obviously, where our focus is to try to.
Perform better obviously from where we were in Q3, we do think we will have increased utilization again as these projects start up we don't think it's going to look like the third quarter, but we keep we're grinding away. Our our objective is to you don't have positive EBITDA and and.
And move towards a move.
Moved towards improving on the bottom line as well so I think somewhere in between that is probably realistic at this point from where we see the startup of this work in Q4.
And then I didn't maybe I missed it but when you were talking about just the shortfall relative to you know you said, 80% of the shorts or what what we're facing the gap in project timing, where 80% of what number.
Should we be looking at last year's EBITDA in the third quarter to sort of look at the shortfall or would it be round could be second quarter Mark.
Well, if it would be somewhere between because obviously you know in the release, we're comparing back to the prior year period and not to say that that prior year was our target for <unk> for the third quarter of this year, but if you look at.
Even if you look at what are you know kind of the.
Closer to where our target would have been for the quarter, which was probably a little bit less than oh, not probably it was a little bit less than where we were last year, because obviously last year as we mentioned in the remarks, we had a couple of large projects that burned a lot of work. We have we continue to have some of that work as an example, the T broad project up in.
Seattle.
We burned a lot more on that project in Q3 of last year than we did in Q3 of this year. So there's a number of different things, but basically that the shortfall.
The comparison from last year is what I was speaking to about.
You know the biggest the biggest amount of that shortfall was driven by project phasing.
Got you and.
It just seems like the last two quarters has been pretty ugly just because of you.
Non.
Non forecasted events, whether it's whether phase I guess, maybe phasing you could've seen but.
And Covid is.
What percentage of your Workforces is vaccinated right now.
You have a handle on that number.
We do have a handle on that number I really don't want to give that out publicly but we do have we were making a lot of progress in getting people vaccinated.
And obviously, you know where are addressing that.
The potential for four of these mandates that are that are in the works right now.
We will be fully compliant with any mandates that come down.
We're making progress on that but as I said, we're not unlike a lot of other people that you've seen or you've seen in the numbers out there. We saw in the second quarter, our COVID-19 cases dropped dramatically from where they had been tracking.
Late last year and into the first quarter. This year as the vaccines started taking hold and things like that or or other forms of immunity.
We we are case load dropped off almost nothing by the end of the second quarter, but then third quarter. The Delta variant, we did see a significant spike up in our cases in which as you know I said earlier.
We've seen that drop off as we got through the third quarter into the fourth quarter and we're.
We're back to a very low case load and we have.
We're making progress on the vaccination front with getting a good chunk of our workforce vaccinated.
And when you look out you know is yep.
You list a host of issues that you had this quarter and potentially some lingering in the fourth quarter.
Looking at 2022 can you.
Take a stab at what 'twenty twos Gonna look like relative to you.
Similar to previous years, so hopefully, it's not going to be anywhere close to 21, I mean, it's just turned out to be a horrible year right.
Is it going to be closer to 22019 from that standpoint, I mean, it's to get to 'twenty 'twenty.
2020 from a standpoint of either earnings or EBITDA seems heroic but can you get back to where you were in 2019 Mark.
Well I think what I would say you know again, we kind of talked about this in the remarks, there's a lot of the progress we hope to make in 'twenty one it looks like it's pushing into 'twenty two again.
A lot of respects.
This has been our COVID-19 year from the standpoint, I've said that before with just the the impacts to the markets and things like that in the the substantial level of backlog that we had going into the pandemic.
Which benefited us in 2020, and then you know we were disappointed in the whole.
Economy restart in 'twenty, one and the lingering impacts from in our markets.
From the Covid pandemic that being said I do think you know we're getting through that we've obviously got some challenges out there from a macro standpoint, but we do see a good pipeline of work up there we've got we've got.
<unk> got good backlog, we've got a elevated level of war quoted an outstanding.
We continue to win work so our expectation is that we see improvement over.
21 for sure and.
Focus on getting back towards what our expectations were for 'twenty, one and that's what our focus is right now.
Great and then my understanding is Theres another bridge project in Florida. The child's forbidden December could you have the do you have enough capacity to do too.
Bridge projects simultaneously or where is that something that you're going to be looking more you know are there projects that you're comfortable with where your backlog is on the marine side now you wanted to focus more on building up the concrete side.
Well.
Of course, the resources in each division or are largely independent of each other so one wouldn't have an impact on the others that said.
We we do have capacity as I said earlier to chase additional work, which we are doing whether or not we are we do have capacity for the projects you are referencing.
Whether we are.
Go after that project to go after alternative work that were pursuing.
Is is to be determined.
But I think the takeaway is is that we have capacity to keep bidding and winning work and of course as I said earlier.
Several times in my remarks.
We will be disciplined in our approach.
We want to we want to select and go after the projects that we think have the best opportunity for us to.
Achieve our objectives and so we will factor all of that into which projects we bid on and how we bid on those projects.
What are our bed rate is and how we view our competitive.
Capability, our competitive standing on on the various opportunities that we see in front of it.
Yeah more than public private mix.
When you look at you know it.
It seems like this could be.
Memory, but you know clothing.
The sale Tampa was a really positive event you have other assets.
Asset sales potentially out there like east West Jones can you talk about the timing of potential additional act with our acquisition and asset sales and then more importantly, what are you going to do with the money you know your stock's down right now around 430.
What's your thinking on buybacks at this point in time.
Well.
The the on the.
The buyback front, obviously that that that's always a consideration for us, particularly as you say, where the where the stock is.
Again in the near term, we do have a lot of work that we just picked up so we want to be cognizant of the working capital needs too.
Get started on the volume of work that we just picked up of course, we're still working on our ERP implementation, which we just talked about and then as a reminder, we are in the process of rebuilding.
Dredge to replace capacity.
And our dredge fleet. So those are all things that are ongoing right now that are near term prospects with respect to the Uh huh.
Timing of asset sales.
Our project on a property in Portland, Voka is could could be anytime it could be this quarter it could be next quarter.
We'll have to see on that I mean, we were making progress there and getting to a close date, but don't have one set yet on east and West Jones, our we do have a that property under contract now.
But obviously there is there's a lot to do between now and our closing so it's possible we could see that.
Close in the first half of next year, but too soon to tell at this point.
Would you and I apologize for some of your questions.
That's interesting that you are under contract with East West Jones Wood.
It would seem like there wouldn't be the same zoning issues that you had tampa, so that hopefully that Jeremy.
Certainly it wouldn't be an issue, but can you quantify potentially I mean, we were thinking I think of one point 40 to 45 million is that in the ballpark for that.
So it sounds like it's less than that it's kind of it's kind of in the mid Thirty's range, we had it we.
We had it listed at a higher price, but we think the offer that we received as a as a good offer and.
So we're focused on trying to get that plus different issues of course as you mentioned then we had in Tampa, but.
Well, we'll see how we get through the diligence period end.
With this buyer and.
We're focused on getting that deal close as quickly as we can but again too soon to tell as possible that it would close.
But by mid next year.
Great. That's great News and then maybe just one last one if you wouldn't mind with capital spending you're talking about rebuilding.
Asset can you talk about capital spending in the fourth quarter and then for 2022. It seems like it's lagged a little bit through the first nine months of 2021, so that would be helpful.
Yeah, and again, we we sort of start with a base of about $40 million as a target, we obviously manage that as needed and again just given the.
Results in the third quarter as an example, we're mindful of.
Being.
Prudent about the timing of our Capex spend.
We would expect a little bit more in the in the realm of Capex.
In the fourth quarter, we should be.
Below the $20 million Mark that I think we've talked about earlier the year. So I think and again this is preliminary and subject to.
Further discussion as we.
Talk in the future on 2022, but.
Again, that's $40 million.
<unk> level is a good starting point to think about for right now and then we'll update that as we move forward.
Great. Thank you so much.
That's all I'll say.
Okay.
Thank you our next questions come from the line of Tristan Barr. Please proceed with your questions.
Yes, hi, guys I'm, just a little surprised that the overall tone of this call and I mean, obviously the third quarter wasn't I think what anybody is looking for or would have liked in fourth quarter is still a little on the weak side, but this has all the hallmarks of a trough.
Quarter end.
U E. Given the contract awards that you've announced given the fact that Theres. This increased focus on infrastructure.
You know, whether we get a federal bill or not again as is beyond my pay grade, but certainly there's there's an increased attention to the area you have $40 million worth of properties for sale.
Even if you forget your target margins I mean, if you if you kind of even approach historical margins I mean this company is incredibly cheap so a lot of the issues that you've that you've outlined for the third and fourth quarter are priced into the stock in four in a quarter.
I think you guys Mr major window by not providing kind of a wide range of guidance for 2022 at which point I think this company looks a lot different to investors and I wish you would have taken the opportunity to realize that this is the time of year, where most investors are looking towards 2022 and what companies are looking.
Do when and where the values why because again, it's four in a quarter based off of what should be reasonable expectations for 'twenty 'twenty. Two I think you guys are tremendously undervalued.
Well I appreciate the feedback and the commentary and again as you know I was talking with Perl earlier on the last questions is again, our focus is to we talked about what we were looking for in 2021 shifting into 2022.
That's what our objectives are for working back towards and so I think again, we're expecting the improvements that you just mentioned.
As we get into 2022, and we will.
We will we'll be working towards that and I made a big effort with that in the backlog that we've acquired in this third quarter and as we go forward into fourth picking up additional work in.
Improving our or building out of the backlog.
For those that are that are new to the story or newer to the story I think it would help if you remind people what you were looking for for 2021.
For 'twenty, one we were looking for EBITDA in the low to mid forties.
Range and.
That was the that's the commentary around your expectations for 2021 shifting into 'twenty two we've still got.
More work to pick up in order to achieve that but that's what our focus is on.
So taking a step back.
So you know again, I think that should be explicit and not necessarily kind of dancing around it I mean, if you say hey, these are expectations and we still need to work towards them, but this is what we think is achievable if we execute on our plans.
Again, taking that number and looking at where you currently stand, particularly you know if you now have had the other property under contract.
The stock looks incredibly cheap and I think you know while I don't think you guys should have glossed over the issues I mean, clearly you had some operational issues and some weather issues in Q3.
You know clearly some some of those are going to persist into Q4.
Again, I think there should be some you know some aspects of giving investors reason for hope because you know if you guys even approached $40 million in this company is incredibly cheap looking at 2020. So that's just my opinion.
Well, no and I agree with you and again as we I'll reiterate what I said earlier, I mean, and again, we think the big takeaway from the quarter is the like you said, we do think it's a trough. We think we will see improvement from here as we get into the fourth quarter as we get into 2022, we've got.
Significant backlog uptick in capacity for more backlog. So that's what we're driving towards.
I appreciate it thanks.
Thank you there are no further questions at this time I would like to turn the call back over to management for any closing remarks.
Okay. Thank you Daryl and thank you everyone for joining our third quarter earnings conference call.
We look forward to talking with you again in February for our year end and Q4 results.
Thank you and have a great day.
Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time.
Have a great day.
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