Q1 2022 Construction Partners Inc Earnings Call
Speaker 1: Greetings and welcome to the Confection Partners Inc. First Quarter Earnings Conference call. At this time, all participants are in a lesson on the mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press...
Greetings and welcome to the construction Partners, Inc. Fourth quarter earnings Conference call.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
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It's now my pleasure to introduce your host Rick Black.
Thank you Mr Black.
You may begin.
Thank you operator, and good morning, everyone. We appreciate you joining us for the construction partners conference call to review first quarter fiscal 2022 results. This call is also being webcast and can be accessed through the audio link on the events and presentations page of the Investor Relations section of construction partners Dot net infinite information recorded.
Speaker 2: Thank you, operator, and good morning, everyone. We appreciate you joining us for the Construction Partners conference call to review first quarter fiscal 2022 results.
Speaker 2: This call is also being webcast and can be accessed through the audio link on the events and presentations page of the Investor Relations section of constructionpartners.net. Information recorded on this call speaks only as of today, February 4th, 2022. So please be advised that any time sensitive information may no longer be accurate at the time of any replay. I would like to remind you that the statements made in today's discussion that are not historical facts.
On this call speaks only as of today February four 2022. So please be advised that any time sensitive information may no longer be accurate at the time of any replay I would like to remind you that the statements made in today's discussion that are not historical facts, including statements of expectations or future events or future financial.
Speaker 2: including statements of expectations or future events or future financial performance are forward-looking statements made pursuant to the Safe Harbourers provision of the Private Security's Ligation Reform Act of 1995. We will be making forward-looking statements as part of today's call that by their nature are uncertain and outside of the company's control. Actual results may differ materialists.
Performance are forward looking statements made pursuant to the safe Harbor's provision of the private Securities Litigation Reform Act of 995.
We'll be making forward looking statements as part of today's call.
By their nature are uncertain and outside of the company's control actual results may differ materially. Please refer to the earnings press release that was issued today for our discussions on forward looking statements. These factors and other risks and uncertainties are described in detail in the Companys filings with the Securities and Exchange Commission.
Speaker 2: Please refer to the earnings press release that was issued today for our discussions on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission.
Speaker 2: Management will also refer to non-GAAP measures, including the adjusted EVA-DA. Reconciliation to the nearest GAAP measures can be found at the end of our earnings press session.
Management will also refer to non-GAAP measures, including adjusted EBITDA reconciliation to the nearest GAAP measures can be found at the end of our earnings press release construction partners assumes no obligation to publicly update or revise any forward looking statements.
Speaker 2: Construction Partners assumes no obligation to publicly update or revise any forward-looking statement.
And now I would like to turn the call over to construction partners CEO Jule Smith jewel.
Speaker 2: And now I would like to turn the call over to Construction Partners CEO , Jule Smith. Jule?
Speaker 2: Thank you, Rick, and good morning, everyone. With me on the call today, or Alan Palmer, our Chief Financial Officer, and Ned Fleming, our Executive Chairman, as well as other members of our senior team.
Thank you Rick and good morning, everyone.
With me on the call today are Alan Palmer, our Chief Financial Officer, and Ned Fleming, our executive chairman as well as other members of our senior team.
I'll start by stating that all of our teams across five states did a great job this quarter last.
Speaker 2: Last year we acquired several companies and made several important additions to our organization to prepare construction partners for continued growth.
Last year, we acquired several companies and made several important additions to our organization to prepare construction partners for continued growth.
Speaker 2: We now have over 3,000 employees who are focused on both the safety and operational excellence every day.
We now have over 3000 employees, who are focused on both the safety and operational excellence every day.
Speaker 2: I would like to personally thank each of them for their hard work managing our business through unprecedented challenges in the economy and our industry that have persisted over the past nine months.
I would like to personally thank each of them for their hard work managing our business through unprecedented challenges in the economy and our industry that have persisted over the past nine months.
Speaker 2: Once I've given an overview of the first quarter, I will hand the call over to Allen to review the financial results in more detail.
Once I have given an overview of the first quarter, our hand, the call over to Alan to review the financial results in more detail.
Speaker 3: Then before taking questions, Ned will provide additional strategic and organizational commentary about the company in our recent history.
Then before taking questions Ned will provide additional strategic and organizational commentary about the company and our recent history.
In the first quarter construction partners achieved a record quarterly revenue of $285 million or 49% increase compared to the same quarter last year.
Speaker 3: In the first quarter, construction partners achieved a record quarterly revenue of $285 million. A 49% increase compared to the same quarter last year.
Speaker 3: We have been focused on growing our services and relative market share in our current market.
We have been focused on growing our services and relative market share in our current markets. So im pleased that approximately 30% of this increase was from organic growth, while 19% was acquisitive growth.
Speaker 3: From pleas at approximately 30% of this increase was for organic growth, while 19% was a quisitive growth.
Adjusted EBITDA in the first quarter was $26 4 million up 12% compared to the same quarter last year.
Speaker 3: The positive first quarter results were driven mainly by three facts.
The positive first quarter results were driven mainly by three factors.
Speaker 3: First we had strong operational performance. At our asphalt plants, aggregate operations, and asphalt termites.
First we had strong operational performance at our asphalt plants aggregate operations in asphalt terminal.
Speaker 3: Second, we experience favorable weather conditions during the quarter throughout our mark.
We experienced favorable weather conditions during the quarter throughout our markets.
And finally, the acquisitions, we have completed over the last 15 months are adding value and making positive contributions as expected.
Speaker 3: And finally, the acquisitions we have completed over the last 15 months are adding value and making positive contributions as expected.
Speaker 3: CPI's record project backlog of $1.09 billion demonstrates the strong demand for infrastructure services throughout our southeastern foot.
Cps record project backlog of one point over $9 billion.
Demonstrates the strong demand for infrastructure services throughout our southeastern footprint.
Also we are pleased to see our backlog margins continue to grow.
Speaker 3: Also, we are pleased to see our backlog margins continue to grow.
Speaker 3: We anticipate that backlog margin growth will help future profit margins as this backlog is converted.
We anticipate that backlog margin growth will help future profit margins at this backlog has converted.
We believe construction partners is well positioned to capitalize on future infrastructure demand.
Speaker 3: We believe construction partners is well positioned to capitalize on future infrastructure demands that the 1.2 trillion bipartisan infrastructure bill passed in November will create over the next six day year.
The $1 two trillion bipartisan infrastructure Bill passed in November will create over the next six to eight years construction.
Construction partners will participate in many types of projects being funded including roads bridges airports ports and railroad infrastructure investments.
Speaker 3: Construction partners will participate in many types of projects being funded, including roads, bridges, airports, ports, and railroad infrastructure and best.
We are monitoring the planning of how these funds will begin to be allocated from both federal and state governments and we anticipate meaningful project demand beginning in late 2022 and beyond.
Speaker 3: We are monitoring the planning of how these funds will begin to be allocated from both federal and state governments, and we anticipate meaningful project demand beginning in late 2022 and beyond.
Speaker 3: As a reminder, expected increases related to the new infrastructure bill are not reflected in our FY22 Outlook.
As a reminder, expected increases related to the new infrastructure Bill are not reflected in our FY 'twenty two outlook.
Speaker 3: As we mentioned on our last call, we have been dealing with atypical inflation in the overall economy, supply chain and labor market that continues to affect gross margin.
As we mentioned on our last call we have been dealing with atypical inflation in the overall economy supply chain and labor market that continues to affect gross margins.
Speaker 3: While normal and typical inflation is largely a pass-through item for CPI, the rapid and short rise of inflation has led us to adjust our pass-through mechanisms in an effort to lessen the impact on our newer back off.
While normal and typical inflation is largely a pass through item for CPI.
The rapid and sharp rise of inflation has led us to adjust our pass through mechanisms in an effort to lessen the impact on our newer backlog.
For example, we've been adding contingencies in our bids to deal with the uncertainty of labor materials currently.
Speaker 3: For example, we've been adding contingencies in our bids to deal with the uncertainty of labor materials current.
Speaker 3: Ultimately, once these economic reality smooth out in the future.
Ultimately once these economic reality smoothed out in the future.
Speaker 3: We are confident that inflation will continue to be passed through calls.
We are confident that inflation will continue to be pass through cost for us.
We do believe that our current adjustments for these increased costs are represented in our FY 'twenty two outlook.
Speaker 3: We do believe that our current adjustments for these increased calls are represented in our FY22 out.
Speaker 3: pertaining to labor, there continues to be a definite challenge throughout the economy in the short term and for the construction industry in the long term.
Pertaining to labor there continues to be a definite challenge throughout the economy in the short term and for the construction industry in the long term.
Speaker 3: In the current environment, I believe CPI's workforce model is fairing better than most.
In the current environment I believe CPI is workforce model is faring better than most.
Speaker 3: Meaning our local market strategy allows our people to spend every night at home with their family.
Meaning our local market strategy allows our people to spend every night at home with their families.
Speaker 3: Also, the reoccurring and steady nature of our project work offers stability to our employees.
Also the reoccurring and steady nature of our project work all for stability to our employees.
In the long run CPI will maintain our long term culture of teamwork, while leveraging our scale and footprint to create a distinct competitive advantage and offering great benefits and career opportunities to a younger generation.
Speaker 3: In the long run, CPI will maintain our long-time culture of teamwork while leveraging our skill and footprint to create a distinct competitive advantage and offering great benefits and career opportunities to a
To be one of the winners in the construction industry moving forward CPI has taken the necessary steps now to attract and retain a talented workforce that can capitalize on the investments being made in our nation's infrastructure.
Speaker 3: To be one of the winners in the construction industry moving forward, CPIs taking the necessary steps now to attract and retain a talented workforce that can capitalize on the investments being made in our nation's emperors.
Speaker 3: Turning down acquisitions, we are pleased with the acquisitions completed over the past year that have further expanded our footprint into new and growing markets and will continue to drive future organic growth and margin expansion over time.
Turning now to acquisitions, we are pleased with the acquisitions completed over the past year.
Further expanded our footprint.
Enter new and growing markets and we will continue to drive future organic growth and margin expansion over time.
The pipeline continues to expand for new opportunities to make acquisitions that strategically fit the CPI business model.
Speaker 3: The pipeline continues to expand for new opportunities to make acquisitions that strategically fit the CPI business model.
Speaker 3: As a consolidator in a fragmented industry segment, we will continue to strategically acquire businesses that expand our footprint and increase both our manufacturing and construction services vertical integration.
As a consolidator in a fragmented industry segment, we will continue to strategically acquire businesses that expand our footprint and increase both our manufacturing and construction services vertical integration.
Speaker 3: This tragedy leads to the growth of our relative market share, while also allowing us to capture more margin along the value chain of service.
This strategy leads to the growth of our relative market share, while also allowing us to capture more margin along the value chain of services.
We remain focused both on our growth strategy and operational excellence as we directly contribute to the investment in our nation's infrastructure.
Speaker 3: We remain focused both on our growth strategy and operational excellence as we directly contribute to the investment in our nation's infrastructure.
Speaker 3: with a record first quarter behind us and a historically high backlog moving forward.
With a record first quarter behind us and a historically high backlog moving forward.
Speaker 3: We remain bullish on both the organic and equisitive growth in the years ahead.
We remain bullish on both the organic and acquisitive growth in the years ahead.
I'd now like to turn the call over to Alan to discuss our financial results in greater detail.
Speaker 3: I'd now like to turn the call over to Allen to discuss our financial results in greater detail.
Speaker 3: Thank you, Duel, and good morning, everyone. I will begin with a review of our key performance metrics in the first quarter of fiscal 2022.
Thank you Julie and good morning, everyone I'll begin with a review of our key performance metrics in the first quarter of fiscal 2022.
Revenue was $285 million up 49, 3% compared to the prior year.
Speaker 3: Revenue was $285 million at $49.3% compared to the prior year.
Speaker 4: Acquisitions completed subsequent to December 31st, 2020, contributed $37.8 million of revenue, and we had an increase of $56.3 million of revenue in our existing more.
Acquisitions completed subsequent to December 31, 2020 contributed $37 $8 million of revenue and we had an increase of $56 $3 million of revenue in our existing markets.
Speaker 4: Gross profit was $33 million and increase of 7.7% compared to the same quarter last.
Gross profit was $33 million, an increase of seven 7% compared to the same quarter last year.
General and administrative expenses were $24 9 million or eight 8% of total revenue compared to $20 1 million or 10, 5% of total revenue in the prior year.
Speaker 4: General and administrative expenses were $24.9 million or 8.8% of total revenue compared to $20.1 million or 10.5% of total revenue in the prior year.
Speaker 4: In fiscal year 2022, we expect general and administrative expenses as a percentage of revenue to remain in the range of 8.5 to 9%.
In fiscal year 2022, we expect general and administrative expenses as a percentage of revenue to remain in the range of eight 5% to 9%.
Net income was $5 5 million for the first quarter compared to net income of 7.9.
Speaker 4: Net income was $5.5 million for the first quarter compared to net income of $7.9 million for the son.
$9 million for the same quarter last year.
Speaker 4: Adjusted EBITDA for the first quarter physical 2022 was $26.4 million 12.2% compared to the first quarter last
Adjusted EBITDA for the first quarter fiscal 2022 was $26 4 million up 12, 2% compared to the first quarter last year.
You can find GAAP to non-GAAP reconciliations of adjusted EBITDA financial measures at the end of today's press release.
Speaker 4: You can find gap to non-gap reconciliations of a justative at the financial measures at the end of the day's press relief.
Speaker 4: Turning now to the balance sheet. At December 31, 2021, we had $35.6 million of cash and $123.7 million of availability under our Revolving Credit Facility after the reduction for outstanding letters of credit.
Turning now to the balance sheet at December 31, 2021, we had $35 $6 million of cash and $123 7 million of availability under our revolving credit facility. After the reduction for outstanding letters of credit.
As of the end of the quarter, our debt to trailing 12 months EBITDA ratio was 249.
Speaker 4: As of the end of the quarter, our debt to trailing 12-months IVIDA ratio was 2.49.
Speaker 4: This liquidity provides financial flexibility and capital capacity for potential near-term acquisitions, allowing us to respond to growth opportunities when they arise.
This liquidity provides financial flexibility and capital capacity for potential near term acquisitions, allowing us to respond to growth opportunities when they arise.
Capital expenditures for the first quarter of fiscal 2022 were $15 $1 million.
Speaker 4: Capital expenditures for the first quarter of fiscal 2022 were $15.1 million.
Speaker 4: We expect capital expenditures for the fiscal year to be in the range of $60 to $65 million.
We expect capital expenditures for the fiscal year to be in the range of $60 million to $65 million.
We're reporting a record project backlog at December 31.
Speaker 4: We're reporting a record project backlog at December 31st, 2021 of $1.09 billion compared to $966.2 million at September 30th of 2021 and $65.6 million at December 31st.
2021 of one 9 billion compared.
Compared to $966 2 million at September 30 of 2021, and $65 6 million at December 31.
2020.
In summary, we are pleased with our overall growth recent acquisitions and ratchet record project backlog with growing margins.
Speaker 4: In summary, we are pleased with our overall growth, recent acquisitions, and record project backlog with growing margins. I'll now turn the call over to.
I'll now turn the call over to Nate.
Thank you Alan.
Speaker 4: CPI reported significant growth in the first quarter with both organic and acquisitive growth.
CPI reported significant growth in the first quarter with both organic and acquisitive growth.
Speaker 4: These results demonstrate the successful execution of our strategy to grow organically in our existing markets and acquire complementary companies throughout the southeastern region as we gain scale.
These results demonstrate the successful execution of our strategy to grow organically in our existing markets and acquire complementary companies throughout the southeastern region as we gain scale.
And add valuable services equipment, and most importantly, knowledgeable and talented people.
Speaker 4: and add valuable services, equipment, and most importantly, knowledgeable and talented people.
Okay.
As the founder of this business and someone that has been deeply involved from the beginning it is important to point out the unprecedented environment, we have been operating in for the past two years.
Speaker 4: As a founder of this business and someone that has been deeply involved from the beginning, it is important to point out the unprecedented environment we have been operating in for the past two years.
Speaker 4: as our economy, industry, and company have had to quickly and proactively adjust to multiple and significant challenges from a pandemic to inflationary pressers such as labor, materials, shortages, supply chain issues, and energy pricing swings among other events. Never before have we experienced this many macroeconomic challenges at one time.
As our economy industry and company have had to quickly and proactively adjust to multiple and significant challenges from a pandemic to inflationary pressures such as labor materials shortages and supply chain issues and energy pricing swings among other events never before have we experienced this many macroeconomic <unk>.
Challenges at one time.
Speaker 4: CPI has successfully managed through these challenges while continuing to grow organically and acquire and integrate various strategic companies.
<unk> successfully manage through these challenges, while continuing to grow organically and acquire and integrate various strategic companies.
Considering all of this makes the current success of CPI that much more impressive.
Speaker 4: Considering all of this makes the current success of CPI that much more impressed.
In addition, the leadership team in conjunction with the board has been and continues to be committed to prudently invest in the right people processes and technology to further strengthen and support this robust yet disciplined growth plan.
Speaker 4: In addition, the leadership team in conjunction with the board has been and continues to be committed to prudently invest in the right people, processes and technology to further strengthen and support this robust yet disciplined growth plan.
Speaker 4: Our investments over the past year will critical to position the organization for future growth. Now with the passage of the new federal infrastructure bill.
Our investments over the past year were critical to position the organization for future growth now with the passage of the new federal infrastructure Bill we.
Speaker 4: we see even more opportunities. Quite simply, the roads in our end markets and across the country continue to decline and need repair. This is a trend that is not sustainable. We believe CPI will benefit from renewed activity and infrastructure spending over the next several years.
We see even more opportunities quite simply the roads in our end markets and across the country continue to decline and need repair. This is a trend that is not sustainable we believe CPI will benefit from renewed activity and infrastructure spending over the next several years.
The future is very bright for CPI, we have an excellent team leading the company as we continue to grow and expand our organization as well as Cps geographic footprint, we remain committed to successfully executing our long term strategy of disciplined profitable growth to enhance shareholder value and.
Speaker 4: The future is very bright for CPI and we have an excellent team leading the company as we continue to grow and expand our organization, as well as CPI's geographic footprint. We remain committed to successfully executing our long-term strategy of disciplined profitable growth to enhance shareholder value. And finally, as a long-term shareholder of Rode, I have not sold any of the shares I have personally accumulated and I remain bullish on the future of this business.
And finally as a long term shareholder road I have not sold any of the shares personally accumulated and I remain bullish on the future of this business.
With that we'll now take questions.
Speaker 1: With that, we'll now take questions. Operator? Thank you. We will now be conducting a question and answer session. If you would like to ask a question.
Operator.
Okay.
Thank you.
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Thank you.
Speaker 1: Thank you. Our first question is from Josh Wilson with Raymond James. Please proceed with your question, Mr. Wilson.
First question is from Josh Wilson with Raymond James Please.
Please proceed with your question.
Mr. Wilson.
Thanks, and congrats on the quarter.
Hey, good morning, Josh.
Speaker 4: In terms of the year on year decline in gross margin, there's a variety of moving parts, obviously, between commodities and labor. Could you give us some more color on exactly what the contributions were from?
In terms of the year on year decline in gross margin. There is a variety of moving parts, obviously between commodities and labor could you give us some more color on exactly what.
The contributions were from the different buckets.
Okay.
Speaker 3: Um, well, Josh, uh, you know, we are focused on gross margins. And, you know, when you look out year over year.
Well Josh.
We are focused on gross margins.
When you look out year over year.
Speaker 3: You know, compared to the first quarter of 2020, where we had some real tailwind.
Compared to the first quarter of.
2020.
Where we had some real tailwind from oil and energy dropping so much.
Speaker 3: from oil and energy, you know, dropping so much.
Speaker 3: This year was the exact opposite. You know, we're still dealing with supply disruptions, the labor market, and energy prices going up.
This year was the exact opposite we're still dealing with.
Supply disruptions, the labor market and energy prices going up.
Speaker 3: you know, 50 to 55 to 60% over 2021. So, you know, it's it's tough to compare to 2020. But as I said, my remark.
50% to 55% to 60%.
Over 2021.
So.
It's it's tough to compare to 2020, but as I said in my remarks.
Speaker 3: You know, we are managing through it. We are building resiliency in our backlog to deal with the supply chain disruptions and there's our backlog margins are growing. We think that these things I've called ankle weights in the past, you know, they're gonna subside over time. So that's how we are managing through it and looking forward.
We are managing through it.
Sure.
Building resiliency in our backlog to deal with the supply chain disruptions.
And as our backlog margins are growing we think that these.
Things I've called ankle weights in the past.
Theyre going to subside over time.
So that's.
That's how we are managing through it and looking forward.
When do you think margins will start to be up year on year.
Yeah.
Speaker 3: Well, we see backlog margins growing as a good sign as we convert old backlog that obviously we bid before. We knew just the economic impacts that hit beginning about March of last year. And as we start to build backlog that has those considerations in, we see margins increasing.
What we see.
Backlog margins grow and is a good sign.
As we convert old backlog that obviously, we did before.
Before we knew.
Just the economic impacts of hit beginning about March of last year.
And as we start to build backlog that has those considerations in we see margins increasing.
Speaker 3: And we feel like that the markets, you know, are efficient and that they're going to resolve over time.
And we feel like the markets.
Efficient and theyre going to resolve over time.
Whether it be supply chain labor markets or just.
Speaker 3: you know, whether it be supply chain, labor markets, or just our past due calls being past due quick.
Our pass through costs of being pass through quicker so.
Speaker 3: So we really see that, you know, as we move forward, mornings are going to increase. We can't know exactly when the economic challenges are going to subside, but we are managing through it, and we feel like that as we go through it, we get better at managing through it.
So we really see that as we move forward margins are going to increase.
We can't we can't know exactly when the economic.
Challenges are going to subside, but we're.
Managing through it and we feel like that as we go through it we get better at managing through it.
Speaker 3: And so we could go about margins outlook over time.
And so we feel good about margins outlook overtime.
Speaker 5: And last one for me, do you still think the normal seasonality of sales first half, second half holds or does the strong organic growth in the first quarter change?
And last one for me do you still think the normal seasonality of sales first half second half holds or just the strong organic growth in the <unk>.
First quarter changed.
Yeah.
Well, we did have strong organic growth in the first quarter, Josh you're right, we've been focused on organic growth.
Speaker 3: Well, we did have strong organic growth in the first quarter. Josh, you're right. We've been focused on organic growth and building our business in our current markets. We were pleased to see that.
Building our business in our current markets and we were pleased to see that.
Speaker 3: Um, you know, as far as seasonality, uh, you know, we do play an outdoor game and so, um, we had good weather conditions in the first quarter. We tend to see our quarters balance balance out and so, uh, we don't get too excited about good weather in one quarter and we really, you know, look at the.
As far as seasonality.
We do play an outdoor game.
So.
We had good weather conditions in the first quarter.
We tend to see our quarters balance it balance out and so.
We don't get too excited about good weather in one quarter and we really.
Look at the year as a whole.
Speaker 3: As far as the seasonality, we've always said it was 40-60 because that's historically been what it is. We feel like the last couple of years it's been more like 42-58.
As far as the seasonality, we've always said it was 40 60.
Because that's historically been what it is.
We feel like the last couple of years, it's been more like $42 58.
May be dealing with as the climate evolves and we have warmer.
Speaker 3: maybe dealing with as the climate evolves and we have warmer winners and wetter summers so it could be more like 42 58 but
Winners and wetter summers, so it could be more like $42 58, but.
<unk>.
Speaker 3: We feel like largely, you know, it'll be similar to what it's always been.
We feel like largely.
It will be similar to what it's always been.
Okay.
Got it good luck with the next quarter.
Thank you Josh.
Thank you.
The next question is from Stanley Elliot, let stew.
Speaker 1: The next question is from Stanley Elliott with Steeple. Please...
Default.
Please proceed with your question.
Mr Elliott.
Thank you Hey, good morning, everyone. Thank you guys for taking Standalone call can.
Speaker 6: thank you hey good morning everyone thank you guys for taking your time recall can you talk about the little more about the labor environment i mean is any risk to the full-year guide kind of given how tight labor markets have been especially in the construction market
Can you talk about a little bit more about the labor environment is there any risk to the full year guide kind of given how tight labor markets have been especially in the construction markets.
Well as I said Stanley the labor market is indeed a challenge.
Speaker 3: Well, you know, as I said, Stanley, the labor market is indeed a challenge. You know, I stopped at Starbucks at 5.30 this morning, where I normally stop, and there was a sign on the door this morning that said, due to labor challenges, we're now open at 7 a.m., so I've got to find a new place to get coffee in the morning. So it's throughout the entire economy.
Hi.
Stop that Starbucks at $5 30. This morning, where are normally stop and there was a sign on the door. This morning that said due to labor challenges. We are now open at seven a M. So I've got to find a new place to get coffee in the morning. So it.
Throughout the entire economy.
Speaker 3: But I feel like we're using our labor model to try to compete well. And as I said,
But I feel like.
We're using our labor our model to try to compete well and as I said, having a local strategy, where our folks are in their local markets and going home every night.
Speaker 3: Having a local strategy where our folks are in their local markets and going home every night. I think it's helpful right now
I think is helpful right now but also.
Speaker 3: But also, we're doing a lot of things to attract and retain a workforce for the long run. You know, there are going to be winners and losers in the construction industry in terms of keeping a workforce, and we're committed to being one of the winners, and that takes a lot of proactive steps.
We're doing a lot of things to attract and retain a workforce for the long run they're going to be winners and losers in the construction industry.
In terms of keeping our workforce and we are committed to being one of the winners and that takes a lot of proactive steps.
As far as the outlook for this year.
Speaker 3: You know, as far as the outlook for this year, you know, we feel like we sort of had built in to our outlook that, you know, there's uncertainty moving forward in the short term. And so clearly the labor market remains a challenge, but we feel like we sort of factored that in already.
We feel like we sort of built in to our outlook.
That there is.
Certainly moving forward in the short term.
So clear.
Clearly the labor market remains a challenge, but we feel like we've sort of factored that in already.
Speaker 6: And then could you all drill down a little bit more in the strong organic growth? I mean, was it just a function of you worked three more weeks this year versus last year? You mentioned expanding the services piece, so you're obviously trying to expand the umbrella. Any sort of color there would be helpful, and then even any sort of regional commentary would be great, too.
Perfect and then could you drill down a little bit more in the strong organic growth.
A function of you worked three more weeks this year versus last year, you mentioned expanding the services piece.
Obviously trying to expand the umbrella.
Sort of color there would be helpful. And then even any sort of regional commentary would be great too.
Yes.
Speaker 3: Yes, you know as far as organic growth Stanley it is something we've been focused on and I would say there's several drivers of it The first thing is you know, we are trying to to grow our vertical integration of service
As far as organic growth Stanley. It is something we've been focused on and I would say there are several drivers of it.
The first thing is we.
We are trying to grow our vertical integration of services and so we can bid on a wider variety of projects in the markets. We're in.
Speaker 3: And so we can bid on a wider variety of projects in the markets we're in. You know, the PLT acquisition helped with that, but we also are expanding organically and building those services in markets we're in.
The PLT.
Acquisition help with that but we also are expanding organically.
And building those services in markets. We're in then.
And then the second thing is we're just in.
Speaker 3: Then the second thing is we're just in a lot more markets and so we're able to bid on a longer list of projects.
A lot more markets and so we're able to bid on a longer list of projects and so that's helping.
Speaker 3: And so that's helping drive organic growth.
Drive organic growth.
And finally, there's just a lot of demand.
Speaker 3: And finally, there's just a lot of demand. You know, on the private side, we see in the southeast.
On the private side, we see in the southeast.
Speaker 3: There continues to be a lot of private economic activity and on the public side.
There continues to be a lot of private economic activity and on the public side.
The Dot's the counties and the cities they are all.
Speaker 3: The DOTs, the counties and the cities, they're all, they have really strong programs right now. I said last May that we felt like the...
They have really strong programs right now Ive said last may that we felt like the.
Speaker 3: Lettings year over year we're going to go up 20% due to not only healthy gas taxes, but that a lot of COVID relief money.
Lettings year over year, we're going to go up 20%.
Due to not only healthy gas taxes, but they had a lot of COVID-19 relief money.
And when you look at it what really happened I think under shot it it's more like about 35% in our five states year over year increase in letting so.
Speaker 3: And when you look at it, what really happened, I think I undershot it. It's more like about 35% in our five states. You're a year increasing letting. So...
Speaker 1: I think that the man's sides are helping the drive organic growth quite a bit. The next question.
I think that the.
Demand sides, helping to drive organic growth quite a bit.
Thank you.
The next question from.
Adam climber.
Thompson Davis. Please proceed with your question Mr. <unk>.
Hey, good morning, guys nice quarter.
Good morning, Adam.
Alan I guess a question for you I was hoping you could comment on anticipated Q2 cash flow just given the really strong revenue in Q1.
Speaker 7: uh... and i guess the question for you i was hoping you could comment on anticipated Q2 cash flow just given the really strong revenue q
Yeah. Good question I mean, typically what we see a little bit in our first quarter, because it's usually a drop off from our fourth quarter is a little bit more positive cash flow, but I guess the good news was our revenue actually grew between the fourth quarter of last year and first.
Speaker 4: Yeah, good question. I mean, typically what we see a little bit in our first quarter because it's usually a drop off from our fourth quarter is a little bit more positive cash flow, but I guess the good news was, you know, our revenue actually grew between our fourth quarter last year and first quarter.
<unk>.
Speaker 4: But certainly as the revenue, as Jule said, kind of balances out in that second quarter, we should see a much more positive cash flow. So in quarters where we're going,
But.
Certainly as the revenue.
As Joel said kind of balances out in that second quarter.
Should see a much more positive cash flow so.
Quarters, where we're growing.
Speaker 4: because of you know financing those receivables and a lot of our vendors have to be paid quicker especially subcontractors and truckers. We see the opposite happen but second quarters should be a much more positive cash flow from operations.
Because of financing those receivables and a lot of our vendors have to be paid quicker, especially subcontractors and truckers, we see the opposite happened, but second quarter should be a much more positive.
Cash flow from operations.
Speaker 4: because you're collecting all of those December and type receibles. So that's what we would expect and that's what we've kind of got built into our model. And then as the third quarter ramps up, kind of the opposite of that is going to happen. But certainly...
Because youre collecting all of those December in type receivables. So that's what we would expect and that's what we've kind of got built into our model and then as the third quarter ramps up.
The opposite of that is going to happen, but certainly.
Speaker 4: should be good cash flow. And then, of course, the acquisitions that were made in the first quarter have an impact on that because we don't typically buy the receivables of the companies that we buy, so we've gotta fund that working capital for that initial quarter.
Should be good.
Cash flow and then of course, the acquisitions that were made in the first quarter have an impact on that because we don't.
Typically.
The receivables.
The companies that we buy so we've got a fund that working capital for that initial quarter.
Okay, what was the impact of that last piece.
Not as much with these two because in the case of keen we did actually buy there.
Speaker 5: Not as much with these two because in the case of King we did actually buy their Stock so it was a stock purchase and it was a platform, but with J. Miller for example, I mean typically our working capital drain is about 5% of revenue They were smaller so it was not that large in this particular quarter But for example last year when we made the four acquisitions it was it was a fairly substantial
Stock. So it was a stock purchase and it was a platform but with Jay.
J Miller for example, I mean, typically our working capital drain is about 5% of revenue.
They were smaller so it was not that large in this particular quarter, but for example last year. When we made the four acquisitions. It was it was a fairly substantial there.
Got it okay. So carrier growing revenue I mean, it's unprecedented that our first quarter of the year has exceeded our fourth quarter Thats never happened in our 20 something year history, and so thats problem to have.
Speaker 5: The growing revenue, I mean, it's unprecedented that our first quarter of a year has exceeded our fourth quarter. That's never happened in our 20-something year history. I know, so that's the problem to have.
Speaker 7: Because you talked about, I think you talked about 30 to 35 million revenue that was deferred. So obviously you got all that back in December .
Could you talked about I think you talked about 30% to $35 million of revenue that was deferred. So obviously you got all of that back in December .
In the December quarter.
Yes, Adam.
Speaker 3: Yeah, Adam, you know, we did have a lot of weather in the fourth quarter and that revenue as we said then moved into the first quarter and we did have a good first quarter and we had good weather. You know, I think it's one thing that's a real positive is not only do we have a record revenue quarter for revenue, but we actually grew backlog.
We did have a lot of weather in the fourth quarter in that revenue as we said then moved into the first quarter and we did have good first quarter and we had good weather I think it's one thing.
A real positive is not only do we have a record revenue quarter for revenue, but we actually grew backlog.
Speaker 3: and uh... you would you would expect that to be quite a strong and i think that just reflects the demand for infrastructure services in the south the
And.
You wouldn't expect that to be quite as strong and I think that just reflects the demand for infrastructure services in the southeast.
Speaker 3: So we grew back log and we grew back log margins of coming out of the first quarter. So we grew back log margins of coming out of the first quarter.
We grew backlog and we grew backlog margins.
Coming out of the first quarter.
Okay, and then just last one for me.
Speaker 7: You know, you'll just high level like what the
Joel just high level like what the.
Speaker 7: What is your comfort level on leverage? And like how do you think about acquisitions now that you're kind of two, two and a half times, on the leverage front?
What is your comfort level on leverage and like how are you thinking about acquisitions now that youre kind of two to five times on the leverage front.
Yes, Adam.
<unk>.
Speaker 3: We will continue to use leverage. If we see growth opportunities, we think makes smart strategic sense. We're very mindful of using it smartly and not having too much. Our bank covenants allow us to go up to three times, cash flow, and so we're mindful of that. But...
We will continue to use leverage if we see growth opportunities, we think make smart strategic sense, we're very mindful.
<unk>.
Okay.
Using it smartly and not having too much our bank covenants allow us to go up to three times cash flow and so we're mindful of that but.
Speaker 3: We think it makes sense to use that tool to grow and to make smart strategic investments.
We think it makes sense to use that tool to grow and to make smart strategic investments.
Speaker 3: We also want to, you know, not use it too much.
We also want to.
Not use it too much.
It sounds good to talk to you soon.
Alright, Thank you Adam.
Thank you.
Speaker 1: The next question is from Michael Feniger with Bank of America.
Question is from Michael Feniger with Bank of America.
Mr. <unk> you May proceed with your question.
Speaker 8: Thanks, hey guys, thanks everyone. Hey Mark, when we, hey everybody, when we think of last year, I know that North Carolina acquisitions weighed down on the margin. So maybe to start with that, what was the margin on that book of business?
Thanks, Hey, guys. Thanks, everyone.
Hey, Michael.
Hey, everybody when we think of last year, I know that North Carolina acquisitions.
Weighed down on the margin so maybe just to start with that what was the margin on that.
That book of business last year.
Speaker 8: last year in the first half versus second half or now, yeah, now in Q1. I'm basically trying to get at, is there me seeing, I know the margins are much lower than your corporate average, but they starting to step up a little bit.
In the first half versus second half.
Now, yes, now in Q1, I'm basically trying to get at is are we seeing I know the margins are much lower than your corporate average, but are they starting to step up a little bit.
Speaker 4: Adam, let me just say, you know, one thing in the first quarter of last year.
Yes, Adam let me just say one thing in the first quarter of last year.
Sure.
They did not have that significant of an impact on our first quarter last year, because they were made throughout the first quarter.
Speaker 4: They did not have that significant of an impact on our first quarter last year because they were made throughout the first quarter.
Speaker 4: And we went into the second, third and fourth quarter where our operations every where we're having some of the constraint.
And then we went into the second third and fourth quarter, where our operations every year.
We're having some of the constraints.
Speaker 4: But the acquisitions that we made last year have all had positive contributions in this first quarter. And you know we said, even in the fourth quarter last year, we were seeing those all of the acquisitions begin to improve. So, you know, the acquisitions you said earlier have had a positive contribution.
But the acquisitions that we made last year have all had positive contributions in this first quarter.
And we said.
Even in the fourth quarter last year, we were seeing those all of the acquisitions began to improve so.
The acquisitions you all said earlier, we had a positive contribution.
The beginning of an acquisition is always somewhat of a drain as we work through their backlog, but the backlog on the ones that were made last year.
Speaker 5: The beginning of an acquisition is always somewhat of a drain as we work through their backlog. But the backlog on the ones that were made last year, we're through that and we're into backlog that we bid and want.
We're through that and we're in the backlog that we bid and won.
Got it and I know some of this is public information, but can you just help us where liquid asphalt is right now is it actually up a lot from the end of the year when we think of January and.
Speaker 8: Got it. And I know some of this is public information, but can you just help us where liquid asphalt is right now? Is it actually up a lot from from the end of the year when we think of January ? And if it stays at at these current levels, how much will it be up year-over-year in Q2? Because the year-over-year impact was a lot in Q1 for obvious reasons, but how much would it be up in Q2 and then in the second half?
And if it stays at these current levels, how much will it be up year over year in Q2 because of year over year impact was a lot in Q1.
For obvious reasons, but how much would it be up in Q2, and then in the second half.
Speaker 3: You know, Michael, I was looking at that yesterday and, you know, oil went up 55 to 60 percent in 2021. And liquid asphalt prices went up between 25 and 30 percent.
You know Michael I was looking at that yesterday and.
Oil went up 55% to 60% in 2021 and liquid asphalt prices went up between 25% 30%.
Speaker 3: And while that is a pass-through cost, because our DOTs and our contracts largely have indexes, it creates a little bit of a headwind from a timing standpoint. Just as in 2020, when it fell, our indexes reduced, but it creates a tailwind for.
And while that is a pass through cost because our <unk> and our contracts largely have indexes.
It creates a little bit of a headwind from a timing standpoint, just as in 2020 when it fell our index is reduced but it created a tailwind for us.
Speaker 3: Already in the first quarter or the second quarter, we've seen all continue to rise and we've seen asphalt prices continue to go up.
Already in the first quarter over the second quarter, we've seen oil continue to rise and we've seen asphalt prices continue to go up so.
We.
Speaker 3: you know, you read just like we do about where all prices are going. And so it'll continue to be a pass through call sports, but as it rises, especially when it rises sharply as it has in 2021, it's a little bit of a headwind. So, but that's, we still see that in the first quarter and the second quarter, where lawless continue to rise.
You read just like we do about where oil prices are going and so.
It will continue to be a pass through cost for us, but as it rises, especially when it rises sharply as it has in 2021, it's a little bit of a headwind so.
But thats, we still see that in.
In the first quarter in the second quarter, where oil has continued to rise.
Speaker 8: Okay, good enough. And then just on the federal funding to some of the states from infrastructure, as you mentioned, it was signed in November , but some of the appropriations have been held up. I'm sure it will get released.
Okay Fair enough and then just on the federal funding to some of the states from infrastructure as you mentioned there was some.
Find in November , but some of the appropriations have been held up I'm sure. It will get released.
Your backlog was still building. So is there any are you seeing any delayed there.
Speaker 8: You know, your backlog was still building. So is there any, are you think any delayed there since you feel like infrastructure's more of a 2023 story and just on an organic basis?
Since you feel like infrastructure is more of a 2023 story and just on an organic basis. Ken can you guys organic growth actually accelerate from 2022 into 2023, I'm not asking for 2023 guidance, but if we just layer on what.
Speaker 8: Can your guys organic growth actually accelerate from 2022 into 2023? I'm not asking for 2023 guidance, but if we just lay around what the federal funding could be in the second half of this year, can we actually organic growth step up next year?
Federal funding could be in the second half of this year can we add to the organic growth step up next year.
Speaker 3: Right. Well, good question. So let's unpack that a little bit. You know, in our guidance for 2022, we said organic growth would be between five and 10%. We still feel like that that's a very reasonable expectation. We're focused on organic growth and, um, including the demand side help.
Right.
Good question, so, let's unpack that a little bit in our guidance for 2022.
We said organic growth would be between five and 10%, we still feel like that thats.
A very reasonable expectation, we're focused on organic growth and.
Clearly the demand side helps.
Speaker 3: Currently, the infrastructure bill is not a real factor in any leddings. It's not a factor in our guidance for 2022. I agree with you, the appropriations are going to happen.
Currently.
The infrastructure Bill is not a real factor in.
Andy Lettings, it's not a factor in our guidance for 2022 I agree with you the appropriations are going to happen.
Speaker 3: the program and anticipate that money, but really the lettings for this year being driven by money they already have, which is from those various COVID relief bills.
<unk>.
Starting to the program and anticipate that money, but really the lettings for this year being driven by money. They already have which is from those various COVID-19 relief bills.
Speaker 3: So long term, I think it will drive organic growth. I think both the COVID relief money in 2022, and then the infrastructure investments in 2023 and beyond, which we anticipate is gonna really last about six to eight years before that money gets spent.
So long term.
I think it will drive organic growth.
Both the Covid relief money in 2022.
And then the infrastructure investments in 2023 and beyond which.
Which we anticipate is going to really last about six to eight years before that money gets spent.
I think thats going to drive meaningful organic growth in CPR.
Speaker 3: I think that's going to travel meaningful organic growth in CPI.
Thank you.
Thank you.
Okay.
Thank you.
Speaker 1: The next question is from Justin Hawk with Bed.
Next question is from Justin Hauke with Baird.
Please proceed with your question Mr. Brett.
Speaker 9: I was hoping to get just an update on the North Carolina DOT business because that used to be good 12, 13% of your revenue and obviously it's pressure we all know and kind of dropped off but it's not disclosed here it's one of your biggest customers so it's still less than 10% of revenue and I'm just curious how the recovery is going in there and what you're seeing in North Carolina.
I was hoping to get just an update on the North Carolina business.
That used to be.
12, 13% of your revenue.
We all know and kind of dropped off.
<unk> disclosed here is one of your biggest customers. So it's still less than 10% of revenue I'm just curious how the recovery is going in there.
You are seeing.
In North Carolina.
Thanks.
Hey, Justin good morning.
Speaker 3: Yeah, Justin, good morning. You're right. The North Carolina DOT has long been one of CPI's biggest customers, and it will continue to be a major customer moving forward. You know, the recovery in North Carolina as I stated before is going really well. North Carolina did go about 18 months without letting work. That had some significant impacts in the state's construction industry.
You're right the North Carolina Dot has long been one of <unk> biggest customers and it will continue to be.
Our major customer moving forward.
<unk>.
The recovery in North Carolina, as I've stated before is going really well.
With Carolina.
It did go about 18 months without letting work that had some significant impacts.
In the states construction industry.
Speaker 3: CPI was able to pivot and to do a lot of commercial work during that time, which really helped. So it's good that our model, you know, we can do various types of construction.
CPI was able to pivot and to do a lot of commercial work during that time, which really helped us.
Good that our model.
We can do various types of construction.
Speaker 3: But now, North Carolina, I mean, we're benefiting from very healthy program in their leddings. And also, the investment, the acquisitions we made last fall and winter.
North Carolina.
<unk> income very healthy program.
And their lettings.
Also the <unk>.
The acquisitions, we made.
Last fall and winter.
Speaker 3: got into 913 new markets in North Carolina. That's really a big part of what's growing our backlog now is the DOT has a healthy program of bledings and we have a lot of geographic footprint in North Carolina to bid. So.
Got into 913 new markets.
In North Carolina, that's really a big part of what's growing our backlog Memphis.
Has a healthy program of Lettings and we have a lot of geographic footprint in North Carolina to bid so.
North Carolina looks very healthy moving forward I think.
Speaker 3: Fourth Carolina is very healthy moving forward. I think they've got a strong funding mechanism. And so with the superstructure bill, we anticipate North Carolina, the other team being a major customer in the team.
They've got us of strong funding mechanism and.
So with this infrastructure Bill we.
We anticipate the North Carolina.
Our main customer in the future.
Got it.
Speaker 9: I guess my second question, just turning back to the margins here, and maybe trying to understand the trajectory. I mean, your guidance is employing, you know.
I guess my second question, just turning back to the margins here and maybe trying to understand the trajectory I mean your guidance is implying.
Much better EBITDA margins for the year.
Speaker 9: margins for the year and you know with the one Q still pressured on the gross margin. I just want to understand kind of the trajectory of what you're expecting for the margins. I mean in QQ.
With the <unk> still pressured on the gross margin.
Wanted to understand kind of the trajectory of what youre expecting for the margins.
In Q Q.
<unk>.
Speaker 9: It sounds like this gross margin pressure is going to continue. I mean, are you expecting the margins to remain lower than they were a year ago in the second quarter and then recover in the second half? Or what's kind of the trajectory you're thinking of how the backlog transitions on the margins?
It sounds like this gross margin pressure is going to continue I mean are you expecting the margins to remain lower than they were a year ago in the second quarter and then recover in the second half or whats kind of the trajectory youre thinking how that backlog transitions on the margins.
Yeah. Good question this is Alan.
Speaker 4: Yeah, good question. This is Alan. There are things that are going to affect the second quarter that always affect the second quarter compared to the first or the third or fourth. And that generally is our lowest revenue quarter. And so the fixed cost recovery that we've been through it from mostly in the third and fourth quarter are negative drivers of the margin in the second quarter. That's always decay.
Things that are going to affect the second quarter.
That always affect the second quarter compared to the first or the third or fourth and that generally is our lowest revenue quarter and so the fixed cost recovery that we benefit from mostly in the third and fourth quarter.
Our negative drivers of the margin in the second quarter, that's always the case.
Speaker 4: The second quarter is going to still be dealing with some of the jobs that
The second quarter.
Is going to still be dealing with some of the jobs that.
<unk>.
Speaker 4: that we weren't able to get into the bid because a year ago or some nine months ago, when we bid those jobs, we didn't have some of the...
We werent able to get into the <unk>, a year ago or nine months ago. When we bid those jobs, we didn't have some of the.
Speaker 5: contingency that are in and be at its mouth. So we're working through the lower rebate kind of track Morgan jobs the third and fourth quarter would definitely benefit from the jobs to raising the gross profit margin on jobs as we're We're completing those but also the Signific improvement in margins where you've got higher volumes going through your plants in Europe
Contingencies that are in <unk> now so we're working through the lower.
Sure.
Contract margin jobs, the third and fourth quarter would definitely benefit from the jobs to raise in the gross profit margin on jobs as we're completing those.
So the.
Significant improvement in margins, where you've got higher volumes going through your plants.
Speaker 4: in those quarters. So, you know, kind of what happened last year if you went back and looked at it.
In those quarters so.
Kind of what happened last year, if we went back and looked at it.
From the first quarter to the third and fourth quarter, where normally the margins will go up because of these new pressures. These unprecedented price increases in <unk> you actually had a decline this year youre going to have really the reverse of that is what we expect is the third first quarter, even though it has.
Speaker 5: From the first quarter to the third and fourth quarter, where normally the margins will go up, because of these new pressures, these unprecedented price increases and things, you actually had a decline. This year you're gonna have really the reverse of that is what we expect. Is the third quarter, even though it had a high volume, it's dealing with lower margin jobs.
How volume.
Even with lower margin jobs, the third and fourth quarter are going to be the ones that have the higher volume and also have the higher margin jobs. So almost a reverse on the trajectory of the gross profit and EBITDA margins.
Yeah. Okay. That's helpful. Thank you guys.
Alright, Thank you Jess.
Thank you.
Next question is from Brent Thielman with D. A davidson.
Please proceed with your question Mr. Tillman.
Hey, great. Thank you Hey.
Speaker 9: Hey, great. Thank you. You're sitting here a year ago.
Sitting here a year ago.
Speaker 9: It might have been hard to fathom the kind of inflation we've seen in the marketplace obviously, but I would think you're still in the industry or better prepared for it or anticipating it one year later. I guess the question is with a new contract in awards.
<unk> been hard to fathom kind of inflation that we've seen in the marketplace, obviously EBITDA.
<unk> <unk> in the industry, a year sort of better prepared border anticipating.
One year later I guess the question is with new contracts and awards.
Speaker 9: or pursuing do you feel those sort of more effectively allow you to recapture or offset, you know, what could be a situation of $100 plus oil and, you know, diesel that's 20, 30, 40 cents, higher, you know, 2 to 3 quarters from now.
We are pursuing <unk>.
Do you feel there's sort of more effectively allow you to recapture offset.
Can be a situation of $100 plus oil.
Diesel by 2038.
<unk>.
Three quarters from now.
Brian Good morning, Brent.
Yes, I would say our pass through mechanisms.
Speaker 3: Yes, I would say, you know, our past through mechanisms.
Speaker 3: and repricing of vids, we thought we'll really help us to catch that, you know, really have been glad that the CPI project duration is six to nine months. In the last year, you know, here, you know.
And repricing of bids.
Will really help us to capture that.
Oh really.
I'll add that the CPI project duration is.
Six to nine months.
And the last.
Yes.
Because it allows us to.
Speaker 3: because it allows us to be priced and not be stuck with long-term contracts.
B price and not be stuck with long term contracts.
Speaker 3: So as we have reprised the hits, you know, we have increased equipment raised to deal with hard diesel fuel costs.
So as we have repriced bids.
We have increased equipment race to deal with higher diesel fuel costs.
Speaker 3: Now we reprised our mix to the asphalt plants deal with higher asphalt prices. So, you know, it is, you're right, it has been quite a last year dealing with sharp inflation. But we feel like we are managing through it better and better. And so we feel like, and we're going to continue to pass it through like we always have. We just learned that, you know, to pass it through fast.
No.
Repriced, our mix to the asphalt plants to deal with higher.
Asphalt prices so.
It is youre right. It is being quite a last year dealing with sharp inflation.
We feel like we.
Our managing through it better and better and so we've got a lot of it and we're going to continue to pass it through like we always have we just learned that.
Pass through faster.
Yes, okay.
Speaker 9: Yep, okay, that's helpful. Yeah, maybe just on the later situation, Joel, you obviously had to deal with this internally. It seems like...
Helpful.
Yes, maybe just on that the labor situation Julien you, obviously have had to deal with this internally on it seems like if I understood. It right. Yeah that was even more of a challenge maybe from some of the smaller sub contractors utilized within the industry are you.
Speaker 8: If I understood it right, that was even more of a challenge, maybe from some of the smaller subcontractors you utilize within the industry. Are you performing more of those functions internally now in order to get these projects to the completion line?
Are you performing more of those functions internally now in order to get these projects that the completion line.
Okay.
Speaker 3: Yeah, but you know, that's an interesting question. The answer to our home is yes. We are pulling more disturbances in the island vertically integrating because our subcontractors have a struggle with that. You know, I would say the entire construction industry has struggled with this.
Yes.
That's an interesting question to answer.
Yes, we are falling more than services now vertically integrating.
Because our sub contractors have struggled with that.
The entire construction industry has struggled with this and so on one hand.
Speaker 3: So on one hand, it's a negative and we deal with it. On the other hand, I think it's been a positive in some ways for CPI because I know we won several projects.
It's a negative and we deal with it on the other hand, I think it's been a positive and in some ways for CPI because we've won several projects.
Speaker 3: where the customer, we weren't necessarily the low bid, but the customer who ordered the project to us because we had the resources and labor force to finish the work on time. And so every construction company is dealing with it and I think we're fairing pretty well. But we are definitely doing more work in-house to just have the liability, having that workforce there.
Where the customer.
We weren't necessarily the low bid, but the customer awarded the project to US, saying, we have the resources and labor force to finish the work.
And so every construction companies dealing with it and Ferring I think we're faring pretty well.
Yeah.
We are definitely doing more work in house.
To just have the liability to having that workforce there.
Okay. Thanks, Joel I Hope you hope you found some coffee by the way.
Speaker 5: I did. Thank you, Brent. That's the luck. Thank you.
I did thank you Brent.
Best of luck.
Thank you.
Thank you.
There are no further questions at this time.
I would like to turn the floor back over to the management for closing comments.
Speaker 3: Okay, thank you operator. In summary, our new fiscal year is all too strong. We have a very busy summer work season ahead of us. But our teams are prepared and ready for the bright future we see to continue growing the company and delivering value for our stakeholders.
Okay. Thank you operator.
In summary.
Our new fiscal year is off to a strong start we have a very busy spring.
Summer work season ahead ups, but our teams are prepared and ready for the bright future. We see to continue growing the company and delivering value for our stakeholders.
Speaker 1: Thank you all for joining today's call. We look forward to speaking with you on our next copper skull. Thank you.
Thank you all for joining today's call. We look forward to speaking with you on our next conference call.
Thank you.
Ladies and gentlemen, thank you for your participation.
This does conclude today's teleconference.
You may disconnect your lines and have a wonderful day.
Yes.
Yes.