Q4 2021 Arcosa Inc Earnings Call
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Good morning, ladies and gentlemen, and welcome to the Arcos that Inc. Fourth quarter and full year 2021 earnings conference call. My name is Katie and I'll be your conference coordinator today.
A reminder, today's call is being recorded now I would like to turn the call over to your host Erin Dray back.
Director of Investor Relations for Costar, Mr. APAC you may begin.
Good morning, everyone and thank you for joining Arco's fourth quarter and full year 2021 earnings call with me today are Antonio Carrillo, President and CEO and Gail Peck CFO of <unk>.
<unk> and answer session will follow their prepared remark.
A copy of yesterday's press release and slide presentation for this morning's call are posted on our Investor Relations website, Www Dot IR dot arcos that dot com.
A replay of today's call will be available for the next two weeks.
Instructions for accessing the replay number are included in the press release.
Replay of the webcast will be available for one year on our website under the news and events tab.
Today's comments and presentation slides contain financial measures that have not been prepared in accordance with GAAP reconciliations of non-GAAP financial measures to the closest GAAP measure are included in the appendix of the slide presentation.
In addition, today's conference call contains forward looking statements as defined by the private Securities Litigation Reform Act of 1995.
Or looking statements are subject to risks and uncertainties that could cause actual results to differ materially from such forward looking statements.
Please refer to the company's SEC filings for more information on these risks and uncertainties, including the press release, we filed yesterday and our Form 10-K expected to be filed later today I would now like to turn the call over to Antonio.
Thank you Aaron good morning, and thank you for joining Arco's fourth quarter conference call.
I will start with a few key messages starting on page four.
Our coastal delivered strong fourth quarter and full year 2021 revenue and adjusted EBITDA growth in our focus areas of construction products that engineered structures, while managing the cyclical weakness in our wind towers and transportation business.
We also generated significant operating cash flow in the fourth quarter strengthening our balance sheet for.
For the full year, we reported adjusted of beat that matched last year's record level or.
Our team executed well successfully navigating inflationary pressures weather disruptions and the impact of the pandemic.
In 2021, we achieved significant progress in expanding our construction broker platform, both organically and through to natural aggregates led acquisitions.
Our result, our construction products adjusted EBITDA increased 51% in the fourth quarter and 30% for the full year.
We believe we are well positioned for continued growth supported by favorable market fundamentals.
Our strong market position unexpected tailwind from the increased infrastructure increased infrastructure spending beginning later in the year.
For 2022, our outlook forecast improvement in adjusted it beat that the midpoint of our guidance range, we anticipate double digit increase in adjusted EBITDA for our portfolio of growth businesses.
Partially offsetting this we continue to see weakness in our cyclical businesses Windpower and transportation products.
However, we are seeing early indications of improvement for these businesses and once the recovery starts we believe there will be pent up demand.
Has to be fulfilled.
At the same time the recovery in this business.
Businesses will likely start having a positive impact in 2023.
In the short term, we will be focusing on completing the integration of our recent acquisitions prioritizing strategic investments to leverage our expanded platforms and simplifying the portfolio to reduce the complexity of our culture.
Moving to slide seven our Costar has made significant progress as 2018 to position the portfolio around our growth businesses construction both on engineered structures.
As you can see on this slide we have made a number of strategic investments to create a more resilient company and improve the long term growth potential of our culture.
Most notably our construction products platform now accounts for 57% of our total adjusted EBITDA up from 33% that's been.
At the same time, we have grown our utility structures business, both organically and by adding three infrastructure related product lines.
Also contributing to the growth in engineered structures through the turnaround we perform on the storage tank business.
With market, leading positions in barge and wind towers and steel components, we are well positioned for market recovery to build on top of our growth business continuing expansion.
Additionally, we believe the recently enacted one trillion infrastructure build creates multiyear tailwind for many of our businesses I will now turn over the call to Gail to discuss our overall segment performance and then I will return to update you on the outlook for our business scale.
Thank you Antonio I'll start on slide 10, and touch briefly on our closest consolidated results fourth quarter revenues increased 14% driven by double digit sales growth in construction products and engineered structures.
The increase in revenues fourth quarter, adjusted EBITDA improved 17% benefiting.
Benefiting from solid top line expansion and stronger profitability in our growth businesses.
Through proactive price actions and diligent steel inventory management, we have maintained our broader margins despite significant compression in our cyclically challenged businesses.
Looking at full year 2021 results on slide 11.
We grew revenues, 5% and matched last years strong adjusted EBITDA. Despite an approximate 75 million dollar headwind from our wind tower in transportation products businesses.
As Antonio mentioned, we set out it's been to build a more resilient higher margin portfolio of businesses and our 2021 results reflect our progress.
Turning to construction products on slide 12 revenues grew 42% and adjusted EBITDA increased 51% in the fourth quarter due to both acquisition and organic contributions segment.
Segment, EBITDA margin increased 140 basis points compared to year ago levels supported by higher margins in our recycled and legacy natural aggregates businesses and the accretive impact of the southwest rock acquisition that closed in August .
Volumes were up in our legacy natural aggregates business, driven by higher residential and infrastructure activity.
With the exceptions of Central Texas, where we had a large highway project roll off in oil and gas related headwinds in West, Texas, We achieved broad organic volume gains during the quarter and benefited from the contribution from recent acquisition.
We experienced strong pricing increases across our portfolio supported by continued attractive fundamentals.
Volumes and pricing also increased significantly and our recycled aggregates operation with healthy residential industrial and infrastructure demand.
Turning to specialty materials.
Revenues were down slightly in the fourth quarter as an increase in volumes was offset by a less favorable product mix.
EBITDA margins increased year over year.
In addition, we were pleased to see another quarter of strong revenue trends in our trench shoring business.
Overall full year adjusted EBITDA expanded 30% following 2000, Twenty's, 50% increase through a combination of attractive new platforms and margin expansion in our legacy natural aggregates business.
Moving to engineered structures on slide 13 fourth quarter revenue increased 12% and adjusted EBITDA increased 21% to $28 million, resulting in a 12, 1% margin ahead of our fourth quarter guidance of 10%.
Results exceeded our expectations led by utility structures and storage tax, while we manage wind towers to breakeven EBITDA for the quarter consistent with our guidance.
Our utility structures business finished 2021 on a positive note with significant revenue and margin growth in the fourth quarter, we benefited from improved efficiencies associated with our production ramp in Mexico, a favorable mix and continued disciplined management of steel price inflation. Our team has done a fantastic job improving overall.
Profitability.
Revenues in our traffic and telecom businesses were also up compared to last year on favorable demand drivers and are well positioned for further expansion in 2022.
In the fourth quarter, we achieved attractive year over year revenue and adjusted EBITDA improvement in our storage tank business driven by a strong U S residential housing market for propane tanks, and proactive pricing actions to manage steel price inflation.
Turning to wind towers, we executed as planned during the fourth quarter idling, our Illinois facility to adjust costs for lower anticipated production in 2022 order activity in the fourth quarter was muted as our customers continue to await a PTC extension.
I'll wrap up engineered structures with some comments on our full year result in 2021 segment EBITDA increased 8% outpacing revenue growth and overcoming at $22 million EBITDA headwind from wind towers at the end of the year the combined backlog for utility wind and related structures was approximately 430.
$8 million up 31% from the end of last year.
Turning to transportation products on slide 14, both fourth quarter revenue and adjusted EBITDA declined year over year, our results reflected a 39% reduction in barge revenue and lower absorption associated with reduced volumes we.
Received barge orders of $13 million with pricing reflective of soft market conditions.
At the end of the quarter, our backlog was approximately $93 million all scheduled for delivery in 2022.
Turning to components, we were pleased to see a second consecutive quarter of year over year revenue improvement as the North American rail industry recovers our components business ended a two year decline with revenues up slightly for the year on second half improvement.
Fourth quarter railcar orders for the industry once again exceeded bookings, providing further momentum for the recovery and expectations for higher railcar industry deliveries in 2022.
For the full year segment revenue was $306 million down 34% year over year, and adjusted EBITDA was $24 million down 69% compared to last year, we manage the difficult operating environment, well and finished the year in line with our segment EBITDA guidance.
Moving to slide 15, we ended the year with net debt to adjusted EBITDA of 2.1 time at the low end of our targeted range during the quarter, we generated free cash flow of $65 million matching adjusted EBITA and supporting $75 million of debt repayment.
Working capital was $36 million source of cash driven by a reduction in accounts receivable and inventory full.
Full year free cash flow was $81 million lower than we anticipated going into the year due to higher working capital requirements in 2022.
Working capital will be a component of our short term incentive compensation program to sustain our yearend momentum and align with our cash focused culture. While we continue to monitor inflationary impacts we expect working capital to be a positive impact to cash flows in 2022.
I'll conclude with a few final a few financial points on slide 16.
Our fourth quarter corporate expenses were consistent with our normal $13 million to $14 million quarterly cadence after adjusting for acquisition related expenses, and an $8 $7 million legal settlement related to a previously disclosed matter regarding events that predated our closest spin off in 2022.
We expect a similar quarterly cadence of corporate expenses.
In the fourth quarter, we continued to make progress simplifying the portfolio executing the previously announced sale of one or two asphalt operations acquired in the stone point acquisition as well as negotiating the sale of two non operating facilities one in barge and one in utility structures that had both been idled since then.
We recorded a $2 $9 million impairment on the utility structures facility in the quarter and the sale closed earlier this month.
Capital expenditures in 2021 were $85 million slightly below our guidance for 2022, we see full year capex of $120 million to $140 million, including $30 million to $50 million for growth projects, primarily in construction products.
Our growth Capex includes an expansion of our plaster plant and specialty materials and two new Greenfield natural aggregates heights, leveraging our existing platform. We continue to see attractive organic opportunities to deploy capital and have a robust pipeline of investments I will now turn the call back over to Antonio for more.
Discussion on our 2022 outlook.
Thank you Gail.
Before commenting on our overall financial guidance for 2022, I would like to spend a few minutes from backing some of the factors underpinning our outlook.
We have a simple message we have high expectations expectations for our growth businesses in 2022 based on strong infrastructure led fundamentals.
We're becoming more positive about the outlook for our cyclical businesses. Although these businesses are expected to represent a small percentage of our overall to beat that in 2022, they are poised to generate significant future earnings as their respective markets recover.
Starting on slide 18, I want to highlight the success, we have had in allocating capital door girls business, which include construction products had engineered structures senior.
Since we spun off in 2018 adjusted EBIT in this business. It has grown from 90 million to 277 million in 2021.
Reflecting one strategic acquisitions that we have expanded.
<unk> expanded our market share and growth opportunity to benefit from organic growth initiatives and three favorable market fundamentals.
For 2022, we're guiding our growth businesses to achieve adjusted EBITDA of 310 to 330 million a 15% improvement at the midpoint.
Key factors supporting our favorable outlook include continuous surface transportation investment at the federal and state levels.
Roseland residential construction projects throughout our major markets, including Texas, Tennessee, and Arizona, and then improving nonresidential market additions.
Additionally, we have continued to build the pipeline of acquisitions in both our legacy unexplained this footprint and none of these opportunities are factored into our current guidance.
With these strong fundamentals, we anticipate our natural and recycled aggregates volumes will increase about 15% in 2022.
On an organic basis, we expect volume growth of 1% to 3% once we account for certain large projects rolling off in 2021.
We have strong pricing momentum in forecast average selling prices to increase mid single digits in most of the markets we serve.
We continue to actively manage fuel and raw material inflationary pressures and we are planning for full year adjusted adjusted EBITDA margins above 2021 levels.
In engineered structures, we anticipate continued solid demand for utility telecom anthropic structures in 2022.
With segment margins are expected to benefit from increased manufacturing efficiency outside of our wind towers business.
In 2022, we see low single digit revenue growth for the segment on margins in our targeted 12% to 13% range. Despite a more challenging wind power market.
To meet rising demand for electric electricity increased stress on the infrastructure utilities continue to invest in grid resilience and hardening initiatives, providing attractive growth opportunities for our utility structures business.
In addition, we are pleased with the production ramp up in Mexico benefiting from the increased availability of labor and lower turnover compared to the U S.
Overall, the outlook for utility sale related structures is very favorable.
Finally, our storage tank business remains a bright spot driven by strong market fundamentals in the U S led by residential construction.
Now turning to slide 19.
The outlook for our cyclical businesses.
Clothing, <unk> barge and rail components.
These businesses are expected to remain a headwind in 2022, combined adjusted or beat the expectations of 20% to $25 million down roughly 30 million year over year. In 2022, we forecast these businesses will account for less than 20% of their combined the beat the levels in 2018.
We believe this is suggestive of a cyclical trough, especially considering recent positive developments that may offer potential upside beyond 2022.
In our barge business for instance high place high plate prices have been a key factor limiting customer demand.
We have been encouraged by the rapid decline in hot roll coil steel prices and recent stabilization in plate prices.
Market forecasts indicate lower prices I mean, we have been able to successfully negotiate significant discount to spot prices, which leads us to believe that plate prices will be coming down soon.
With steel prices at more reasonable levels market fundamentals for dry barge replacement cycle remain very much intact aided by high barge utilization rates improving river rates in a positive brain and soybean outlook.
On the reimbursement in the fleet since 2016 combined with heavy scrapping has increased the overall age of the fleet with market estimates forecasting robust new construction needs through 2026.
Our backlog provides continuity for our two open facilities, we're managing to a breakeven level in 'twenty of EBITDA in 2022, which we believe will represent a cyclical trough for this business in.
In our rail components business racing railcar load to rail traffic or driving higher customer demand for our products, we see 2021 at the trough.
For our components business and expect higher overall revenue and profitability in 2022, our wind tower business remains impacted primarily by production tax rate uncertainty, although we continue to see interest and support for our long term expansion at the same time the long term outlook remains very positive as the energy market transitions from wholesale.
To renewable energy, which includes wind power for 2022, our backlog provides us with a baseline of production with relatively low profitability, but maintain skilled labor and operational footprint to respond effectively when demand improves.
Now lets review our consolidated outlook for 2022 on slide 20.
We forecast 2022 revenue in a range of $2, one to $2 2 billion and adjusted EBITDA in the range of 280 million to $305 million.
On the top line the midpoint of our forecast represents an increase of approximately 6% as we anticipate revenue growth in our focus markets construction. Both in engineered structural engineered structures will be partially offset by softness in our wind towers on barge business.
The midpoint of our adjusted EBITDA range represents an improvement from 2021, and we anticipate maintaining our profitability with adjusted EBITDA margins roughly flat year over year. Despite the significant expected margin headwinds from a winter some barge businesses in 2022.
This is a direct result of the strategic efforts to shift our portfolio towards higher margin opportunities.
As well as the steps we have taken over the past year to better align our cost structure with market conditions.
Turning to slide 21, ESG remains a fundamental component of our strategy and we continue to make progress on news on our ESG journey.
Over the past few months, we further expanded and diversified our board of directors with the appointments of Julie pickup and Kimberly Labelle, both of whom bring a wealth of experience and insight into our businesses as we continue our efforts to enhance long term shareholder value.
In 2021, we achieved several ESG related milestones, including the publication of our first ever sustainability report in April and this year. We're on track for the release of our 2021 sustainability report in the second quarter.
In closing 2021 was a productive year for our grocer with continued operational and strategic progress.
As we enter 2022, we will focus on simplifying our coastal growing our construction products on engineered structures I am preparing our cyclical business is to ramp up quickly when demand returns. We will do this while maintaining a disciplined capital allocation process to improve return on capital and deliver long term shareholder value operator, I would like to.
We open the call for questions.
Thank you Sir at this time, if you would like to ask a question. Please press the star and the one on your Touchtone phone you may remove yourself from the queue at any time by pressing the pound Keith again that is star and one to ask a question, we'll pause for just a moment to allow questions to queue.
Thank you. Our first question comes from Julio Romero with Sidoti <unk> Company.
Hi, Good morning, Antonio Gail Thanks for taking the questions.
Good morning Julio.
So I guess.
Wanted to ask about the wind tower business.
I know you were breakeven in fourth quarter and to $27 million in 'twenty. One if you could maybe just talk about I know your guidance of $7 million to $9 million for 'twenty. Two maybe just talk about the sequential cadence of profitability in wind towers as we go throughout the year and then secondly.
Could remind us the lead times and how long it takes for in order to turn into revenue for that business.
Good morning, Julio this is Gail.
Yes.
I'll take the cadence question and maybe I'll turn it back to Antonio for the orders and lead times, but with respect to your question about the $7 million to $9 million of EBIDTA guidance for wind towers, we did manage to breakeven as you indicated in the fourth quarter and we expect to return to profitability in the first quarter. So you'll see a relatively.
Even ramp throughout the year, we did take a significant order in the third quarter of last year, which gives us continuity for the two plants that we have open today and so you'll see as I said earlier.
Cadence to the EBITDA for the year.
Julio and the second question, we shut down our facility in Illinois, we still have two plants one in Oklahoma one in Iowa.
The Oklahoma one is very busy.
As busy but not for them.
It normally takes.
From the time, a project starts to Tommy we delivered dollars somewhere between 12 to 18 months.
What's are you I'm going to expand on the answer because I think as you as you saw in our comments prepared remarks, we said we are becoming more positive around this the business is cyclical businesses and the reason for that is even though we don't have orders, it's not like the phones are not ringing, they're a significant amount.
<unk> of work being done on a lot of let's say.
Quotes being asked for very large orders very very large orders are being asked to for us to quote.
So I think this is this business is set up to come back as soon as the <unk> 56, and that's it.
Positive that there's conversations happening I think it's now an independent build that's been disclosed rather than part of a bigger bill.
And as I mentioned in my prepared remarks, with this energy transition from fossil fuels to renewables it needs to happen soon because of the delivery times. So I'm actually excited about what I'm hearing in terms of quotes in and if you remember we also have anti dumping against many nations in this business. So we are very well set up for.
When it comes back.
Understood that's helpful I guess.
Secondly on the cyclical businesses, you, you're obviously prioritizing manufacturing flexibility and trying to be ready for a recovery.
It sounds like based on the commentary you have a better line of sight for a recovery in wind towers as opposed to barge.
Would that be fair.
I think both you know.
Six months ago, as we were closing second and third quarters.
It's hard to see the light at the end of the abdominal because plate prices. We're continuing to go up there was really no discussion on the PTC.
I think when we have the line of sight in terms of.
Orders that are actionable.
Some of them are BTC are let's say waiting for PTC, some others, those they're not waiting for that but I'm.
I'm not sure about that so I think I'm feeling very positive about how windows progressing on virtually outside I'm also seeing the light at the end of the tunnel steel prices have come down dramatically in the hot roll plate flat plate has not come down at least on the on the weekly indexes. However, if you.
Look at the forecast is coming down and as I said in my remarks, we have been able to negotiate a significant discounts to to current prices.
And that leads me to believe rates coming down and we're getting multiple a.
Multiple.
A quote for prices that are below current prices. So I think I think we're almost there too where it starts to come down and then Oh.
As I mentioned in my remarks.
Pent up demand and barge incredible we continue to get calls from customers. The barge utilization is very high on the dry cargo side and on all the fundamentals are there for them to start recovering the scrapping has been very large hard to come to a number but anecdotally it's been very very high so.
So I think the fleet is ready for replacement.
Okay.
That's helpful. Thanks for taking the questions and best of luck in 'twenty two.
Thank you.
Thank you. Our next question comes from Brent Thielman with D. A Davidson.
Hey, great. Thanks, good morning.
And Tony on the.
On the construction products business and the aggregates side in particular, you've done a good job on margins, while some of your peers.
See more challenges just related to increases in cost for diesel and other inputs. I guess the question is can we sustain these levels of margins given those cost issues is there a catch up to come that we just haven't seen yet.
Should we think about those issues going through 2022.
That's a really good question I think our team has done a very good job managing costs.
At the same time, we also.
We had two large acquisitions in 2021.
And there are synergies that we're as we're generating through those acquisitions not only in terms of cost synergies, but also in terms of.
The process synergy snow, but I think we have a really experienced team.
Our legacy aggregates, we brought a great team in both with both of the new new acquisitions and there are synergies, where we're generating by then.
Let's say, taking best practices from from all these sites and that's I think a little bit of what Youre seeing those best practice sharing and improvements in our synergies everything from pricing discipline to volume discipline to focus on margins.
Significant changing culture and some of these businesses as we refocus them towards margin rather than just pure volume.
And that's going to continue in 2022, as we continue to not only integrate these businesses, but we said we have <unk>.
With a pipeline of opportunities for bolt ons and when we do bolt ons. That's part of what we're trying to generate those synergies in terms of processes.
So.
Answering your question, but I think we have a <unk>.
Good forecast for 'twenty to 'twenty, two to continue to maintain and grow our margins.
Okay. That's helpful and then Antonio I guess with leverage now kind of near the lower end of the target range. Maybe just your current thoughts on moving to deploy the balance sheet again towards M&A or.
They want to wait and digest kind of last year's big transactions.
That's a really good question and I think the balance sheet is is.
A little bit of we have two one net debt to EBITDA.
I mentioned in my remarks, the cyclical businesses are producing 20% of what they were producing an EBIT 2018.
So so.
We are seeing feeling positive about those businesses recovering sometime in the near future.
So when you look at the balance sheet from that point of view, we I think we have even more flexibility than the books represent no.
And as I said, our main focus is going to continue to integrate these things. We do have a pipeline of bolt ons and I think you will see us do bolt ons during 2022.
We also want to work on the simplification of our culture, we have a we have a lot.
Significant amount of Av.
Opportunities to do that and finally, we have our capex. This year that is higher you saw Gail.
Our capex pretty significantly.
I'm, a big believer that the biggest return on capital for the best investment for our shareholders is through organic growth organic growth brings returns on capital that are higher than acquisitions, and we have a lot of opportunities to deploy capital. There. So I think you will see us do some bolt ons.
Of course, the balance sheet allows us if there is a good opportunity larger than than just a bolt on we will continue to evaluate it and I'm not saying we won't do it. It's a it's not the focus right now, but if something comes off that's actually very strategic and fits very well we will do it.
Okay, great. Thank you Antonio.
Okay.
Thank you. Our next question comes from Garik <unk> with loop capital.
Hi, This is Jeff Stevenson on for Gary Thanks for taking my questions.
Good morning. Good morning. Good morning. So my first question is just how construction products bidding activity has been the start out the year and then also can you talk about the benefits of the new federal infrastructure package on construction products and when it could start to show up in volumes.
Sure.
The business has been strong during the first part of the year I think we've seen this.
A strong start for our business.
You take away some of the weather that we're having today in the India it with the ice and things like that but overall very strong all over our footprint I would say.
So.
We're feeling very positive about how we're starting the year in terms of our of the infrastructure projects and the impact on our business.
I would say that.
We don't expect anything in the first part of the year, we still have a second.
We said, we would start seeing something in the second part of the year, probably a 2023.
The growth, but the beauty of it is it's it's a several year plan. So I think this gives us visibility and allows us to plan allows us to do it in a multiyear thinking process, which is to me very important is not only in construction probes that we are seeing it.
We see the infrastructure build for a utility strokes, who has been very important for profit structures for telecom for or even for our barge business and well components. We have a broad exposure to the impacts of these infrastructure Bill. So we're very excited about that I think she's not in early 2022 impact.
You were going to start seeing it in I think is going to be a ramp up.
Towards higher impact as the as the quarters go by.
Okay, that's very helpful and apparently no.
How much longer can barge orders be deferred with high steel prices are we getting close to an inflection one deferrals can be deferred much longer or any more color there would be helpful.
Yes, I think youre absolutely right.
Think of we are with the steel prices that we are seeing now I think we're at a tipping point.
We are right there I think so.
I think it's when you look at the forecast for steel.
A year ago, we were talking we don't know I think now it's a matter of months, whereas steel prices if the forecasts are correct.
We will start seeing prices come to a point where people pull the trigger.
So.
I can tell you exactly when.
Or how but I'm I'm I'm feeling positive about the timing.
Getting going getting very close.
I would add this is Gail I'd add you know we included some.
Got it.
Industry data in our in our webcast slides, so a bottoms up a demand side would say you know looking at the outlook for commodities looking at the condition of the current fleet that construction needs to.
To support this outlook needs to be north of 700 deliveries per year and you can see from some of the materials. We provided that theres been underinvestment in the fleet and the dry barge fleet for really the last five years significantly below those replacement levels.
Obviously, we need relief on the steel side, but the fundamental support you know a very strong market and pent up demand over these last few years.
Great. Thank you and best of luck moving forward.
Thank you again as a reminder, please press star one to join the queue again that is star one if you would like to ask a question or.
Our next question comes from Stefanos Crist with C. J S Securities.
Hi, good morning, Thanks for taking my questions.
Morning.
Could you talk a little bit more about organic.
Organic growth in 2021 construction products and what you expect next.
Next year.
Mr. Rather 2022.
Sure so starting with 2021.
When you strip out the acquisitions, we had a nice growth both in our traditional businesses.
I would say that.
A lot of the a lot of the growth that we expect for 2022 is coming from we are opening to Gail mentioned, two new greenfields that we that we were working on both of these greenfields one on the Greenfields came from an acquisition that was already being developed the other one didn't.
We are.
And I will split it in several pieces I would say on the aggregates side.
The new Greenfields there is also.
Growth in terms of expanding some of our minds that we have.
That we are actively working on on the shoring side I'm talking about all the products and in construction the sharing side geographic diversification, we're expanding in the west of the U S with a new whole new depots. We opened there in 'twenty two in early 2021 or late 2020.
So that's helping us grow and are showing also in and we're expanding our customer base and in lightweight aggregates. We have a lot of projects going on in specialty materials lots of projects going on everything from.
It is improving our margins by reducing our cost in energy and many other projects developing new products for our specialty materials.
And finally our.
Plaster plant.
<unk> has been a business that was impacted by the pandemic it's recovering.
But we're seeing really nice growth earlier this year late in 2021, and we have a new expansion of our plaster plant has really good margins, we have a really nice market position and customers are really excited about our plan because there is not enough supply of this product. So I think as I mentioned before organic growth.
Is something that has a significant return on capital, we're really focusing on that and that's why we're deploying capex. This year on all of the construction businesses.
Yeah.
Perfect and that leads to my next question.
I assume those greenfields projects are part of your your Capex spend.
Are there any other projects, we should be thinking about other opportunities.
Yes, yes, that's I would say you know I always say that the good news for our company as we have more projects than money.
Okay.
Having a lot of projects, we it allows us to pick and choose the best ones.
So we have projects that are being developed right now the reason, we're not more aggressive and faster this.
I'm, a big believer in having the engineering perform completely before we pull the trigger so when we value the planned for.
The plaza is going to cost $20 million. It means it's going to cost $20 million, because we have a fixed price contract with a contractor.
In this inflationary period.
We have to be very careful with starting up a plant and then you know overrunning and then the returns don't happen, though so we are working very hard on making sure that the projects we start hardly have a.
We know exactly how much youre going to cost and we can make a good decision about them. So.
Long answer to tell you we have a lot of projects.
Brexit has not been approved by our board. So we're going to be working through them this year and evaluating our capital allocation based on Capex acquisitions.
Share repurchase and dividend throughout the year.
I appreciate it thank you.
Thank you again as a final reminder, please press star one at this time, if you would like to ask a question.
Again that is star one if you would like to ask a question.
Thank you at this time it appears we have no further questions. This does end today's program. Thank you for joining us have a great day.
Yeah.
Yeah.
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