Q3 2023 Primoris Services Corp Earnings Call

November 8, 2023

Ladies and gentlemen, thank you for standing by my name is Cheryl and that'll be a conference operator today.

[music].

At this time I would like to welcome everyone to the Pelorus Service Corporation third quarter earnings conference call and webcast.

Ladies and gentlemen, thank you for standing by my name is Sharelle and that'll be a conference operator today.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

At this time I would like to welcome everyone to the Polaris Service Corporation third quarter earnings conference call and webcast.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session.

We would like to withdraw your question Press Star one again.

I would now like to turn the call over to Vice President of Investor Relations.

We would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

Oh cool.

Please go ahead.

If you would like to withdraw your question Press Star one again.

Good morning, and welcome to Super Morris third quarter 2023 earnings conference call joining.

I would now like to turn the call over to Vice President of Investor Relations. Please go home.

Joining me today with prepared comments are Tom Mccormick, President and Chief Executive Officer, and Ken Dodgen Chief Financial Officer.

Please go ahead.

Before we begin I would like to make everyone aware of certain language contained in our safe Harbor statement. The company cautions that certain statements made during this call are forward looking and are subject to various risks and uncertainties actual results may differ materially from our projections and expectations.

Good morning, and walk up for Morris third quarter 2023 earnings Conference call.

Joining me today with prepared comments are Tom Mccormick, President and Chief Executive Officer, and Ken Dodgen Chief Financial Officer.

Risks and uncertainties are discussed in our reports filed with the SEC.

Our forward looking statements represent our outlook as of today only November eight 2023.

We disclaim any obligation to update these statements except as may be required by law and.

And uncertainties are discussed in our reports filed with the SEC.

In addition, during this conference call, we will make reference to certain non-GAAP financial measures. A reconciliation of these non-GAAP financial measures are available on the investors section of our website and in our third quarter 2023 earnings press release, which was issued yesterday.

Our forward looking statements represent our outlook as of today only November eight 2023.

We disclaim any obligation to update these statements, except as maybe required by law.

I would like to turn the call over to Tom Mccormick.

Thank you Blake.

Good morning, and thank you for joining us today to discuss our third quarter 2023 financial results and operational performance.

Q3 was another strong quarter for Morris surpassed in Q2 of this year to deliver another record for both revenue and gross profit.

I would like to turn the call over to Tom Mccormick.

Thank you Blake.

Good morning, and thank you for joining us today to discuss our third quarter 2023 financial results and operational performance.

We also hit a new high for total backlog for the eighth consecutive quarter up around $100 million from the second quarter to approximately $6 7 billion.

Q3 was another strong quarter for Morris surpassed in Q2 of this year to deliver another record for both revenue and gross profit.

We have been able to achieve these milestones by earning the trust of our clients through consistent safe execution and approaching each customer relationship as a partnership in order to deliver positive outcomes.

We also hit a new high for total backlog for the eighth consecutive quarter up around $100 million from the second quarter to approximately $6 7 billion.

Of course, this can only be accomplished with our employees emphasizing our core principles each day and performing their duties.

I want to thank and congratulate them for all they do for each other for our customers and for <unk>.

In the midst of economic uncertainty and geopolitical challenges, we have shown the ability to focus on good execution and manage our business at a high level, while we are mindful of risk to our industry and the global economy over the past several years. We believe we are positioned for Morris to effectively manage through economic cycles due to our investments in renewables power.

Of course, this can only be accomplished with our employees emphasizing our core principles each day and performing their duties.

Want to thank and congratulate them for all they do for each other for our customers and for <unk>.

In the midst of economic uncertainty and geopolitical challenges, we have shown the ability to focus on good execution and manage our business at a high level.

Delivery and communications.

With a more resilient portfolio and mindset centered on controlling the things that we can control. We believe that we can continue to have similar success in the future.

We are mindful of risk to our industry and the global economy over the past several years. We believe we are positioned for Morris to effectively manage through economic cycles due to our investments in renewables power delivery and communications.

The U S will continue to need to invest in many of the infrastructure solutions, we provide in order to meet ambitious emission goals and to remain competitive in the global economy with the growing demand for safe cost effective and reliable energy.

With a more resilient portfolio and mindset centered on controlling the things that we can control. We believe that we can continue to have similar success in the future.

The U S will continue to need to invest in many of the infrastructure solutions, we provide in order to meet ambitious emission goals and to remain competitive in the global economy with a growing demand for safe cost effective and reliable energy.

Now I'll move on to discussing our operational performance more closely by segment.

Starting with the utility segment, we saw year over year improvement in revenue driven by topline growth of nearly 25% of the power delivery business.

Now I'll move on to discussing our operational performance more closely by segment.

This was driven by organic growth and an additional month of contribution from <unk> compared to the prior year.

Starting with the utility segment, we saw year over year improvement in revenue driven by topline growth of nearly 25% in the power delivery business.

Gross profit decline from the previous year in part due to lower gas utility revenues and margins from reduced activity primarily from customers on the west coast pushing work out to 2024.

This was driven by organic growth and an additional month of contribution from <unk> compared to the prior year.

Gas utilities has seen a decline in customer spending compared to 2022 levels, but we have been encouraged by our ability to adjust our costs to minimize the margin impact of the decline in revenues.

Gross profit declined from the previous year in part due to lower gas utility revenues and margins from reduced activity primarily from customers on the west coast pushing work out to 2024.

There were also some negative impacts of a slower storm season, and lower margin work from legacy <unk> projects in power delivery.

Gas utilities has seen a decline in customer spending compared to 2022 levels, but we have been encouraged by our ability to adjust our cost to minimize the margin impact of the decline in revenues.

These projects are nearing completion, and we do not anticipate these issues weighing on margins in 2020 for once they are completed and new contract rates on certain msas go into effect.

There were also some negative impacts of a slower storm season, and lower margin work from legacy <unk> projects in power delivery.

In fact, we had three key customers signed new msas or a greater rate changes that will begin to have a positive impact next year.

These projects are nearing completion, and we do not anticipate these issues weighing on margins in 2020 for once they are completed and new contract rates on certain msas go into effect.

Despite some of the challenges with legacy <unk> projects.

Our goal to win and execute a more project work in power delivery is trending in the right direction.

In fact, we had three key customer signed new msas or greater rate changes that will begin to have a positive impact next year.

We have more than doubled our non MSA revenue year to date compared to last year and we are nearing successful completion of one of the largest substation projects for more says history.

Despite some of the challenges with legacy <unk> projects, our goal to win and execute a more project work in power delivery is trending in the right direction.

We look forward to securing more major projects like this in the future to help improve our margins and attract top talent.

We have more than doubled our non MSA revenue year to date compared to last year. When we are nearing successful completion of one of the largest substation projects and for Morris is history.

Communication saw improved revenue and gross profit compared to the previous year, but declined sequentially due to the timing of spend by customers that was more weighted to the first half of the year.

We look forward to securing more major projects like this in the future to help improve our margins and attract top talent.

We are encouraged by the growth we are seeing in the rapidly growing Texas market and continue to manage to engage with new customers to expand and diversify our client base.

Communications saw improved revenue and gross profit compared to the previous year, but declined sequentially due to the timing of spend by customers that was more weighted to the first half of the year.

During the quarter, we also elected to allocate personnel and resources away from our customer requesting payment terms that were out aligned with the market.

We are encouraged by the growth we're seeing in the rapidly growing Texas market and continue to manage to engage with new customers to expand and diversify our client base.

This decision demonstrates our disciplined in balancing our ability and desire to grow top line, but not at the expense of negatively impacting our margins or cash flow.

During the quarter, we also elected to allocate personnel and resources away from our customer requesting payment terms that were out of line with the market.

Looking now at the energy segment, we delivered another solid quarter led primarily by revenue and margin growth in renewables pipeline compared to the third quarter of last year.

This decision demonstrates our disciplined in balancing our ability and desire to grow top line, but not at the expense of negatively impacting our margins our cash flow.

Pipeline for the second consecutive quarter has outperformed our expectations with solid project execution and favorable margins.

Looking now at the energy segment, we delivered another solid quarter led primarily by revenue and margin growth in renewables pipeline compared to the third quarter of last year.

For the past two quarters, we generated the revenue and margins, we expect from the pipeline business and are working to maintain these margins in the midst of a difficult market focusing on the areas, where the best opportunities and right sizing our organization in areas that are not.

Pipeline for the second consecutive quarter has outperformed our expectations with solid project execution and favorable margins.

Our ability to adjust to changes in market conditions is critical to our success and we are making progress toward delivering the results we expect.

The industrial and heavy civil businesses are also having success and we continue to see many opportunities for sustained growth in the coming quarters.

Our ability to adjust to changes in market conditions is critical to our success and we are making progress towards delivering the results we expect.

We already have approximately $2 6 billion and backlog in these businesses and are seeing the emergence of opportunities in this market that we haven't seen in more than a decade.

The industrial and heavy civil businesses are also having success and we continue to see many opportunities for sustained growth in the coming quarters.

Over the course of the next 15 months, we have more than $14 billion in identified opportunities of which 80% are for industrial engineering and construction.

We already have approximately $2 6 billion and backlog in these businesses and are seeing the emergence of opportunities in this market that we haven't seen in more than a decade.

I would like to point out that it is not just the higher volume of projects, but the fact that many of these projects fit well within our core strengths and expertise.

Over the course of the next 15 months, we have more than $14 billion in identified opportunities of which 80% are for industrial engineering and construction.

Giving us confidence in our ability to execute with a high degree of success, although we do not expect to win all the projects in our sales funnel. It does reflect the high level of demand for quality contractors as it is on the horizon.

I would like to point out that it is not just the higher volume of projects, but the fact that many of these projects fit well within our core strengths and expertise.

It also sets us up well to be selective in the opportunities we choose to pursue and gives us and our clients the best chance to be successful over a multiyear period.

Giving us confidence in our ability to execute with a high degree of success, although we do not expect to win all of the projects in our sales funnel. It does reflect the high level of demand for quality contractors that is on the horizon.

Wrapping up the energy segment, the renewables business remains a solid contributor to the segment and for Morris overall.

It also sets us up well to be selective in the opportunities we choose to pursue and gives us and our clients the best chance to be successful over a multiyear period.

Revenue and gross profit reached record high for the quarter and we were up from the previous year in part due to increased activity and successful closeouts on several projects cash.

Wrapping up the energy segment, the renewables business remains a solid contributor to the segment and for more overall.

Cash generation was also positive for renewables during the quarter as we've seen contract materials convert to cash on projects and are proactively managing our receivables we maintained a backlog of approximately a $1 $8 billion and believe we are on track to increase backlog further as we close out the year.

Revenue and gross profit reached record highs for the quarter and we were up from the previous year in part due to increased activity and successful closeouts on several projects cash.

Cash generation was also a positive for renewables during the quarter as we are seeing contract materials convert to cash on projects and are proactively managing our receivables.

We are booked the majority of the work we expect to execute in 2024 and are now focused on booking backlog that will begin work in 2025 and beyond.

We maintained a backlog of approximately $1 $8 billion and believe we are on track to increase backlog further as we close out the year.

We continue to seek out and work to retain top talent in order to build our management teams to meet the growth in demand.

We are booked the majority of the work we expect to execute in 2024 and are now focused on booking backlog that will begin work in 2025 and beyond.

We've also secured work with several new clients to broaden our customer base avoid potential gaps and scheduling and maximize our project team utilization.

We continue to seek out and work to retain top talent in order to build our management teams to meet the growth in demand.

Our pipeline of solar opportunities remained strong and we are beginning to make headway in adjacent areas such as battery storage as well as high voltage transmission and substation work, which will be executed by our power delivery business.

We have also secured work with several new clients to broaden our customer base avoid potential gaps and scheduling and maximize our project team utilization.

We are in excellent position to continue to grow our renewables business, but we also want to acknowledge some of the challenges being discussed in the industry and how we are effectively navigating and responding to them.

Our pipeline of solar opportunities remains strong and we are beginning to make headway in adjacent areas such as battery storage as well as high voltage transmission and substation work, which will be executed by our power delivery business.

First there has been a great deal of industry discussion and some concern regarding how higher interest rates may affect the financing of solar projects, including remarks from some large companies involved in the solar market higher rates and lower axis capital has the potential to negatively impact developer returns are late to projects being delayed or canceled due to these higher cost or challenges.

Firstly, there has been a great deal of industry discussion and some concern regarding how higher interest rates may affect the financing of solar projects, including remarks from some large companies involved in the solar market higher rates and lower access to capital has the potential to negatively impact developer returns are late to projects being delayed or canceled due to these higher costs were challenges.

We believe the larger and more robust developers will benefit as some of the smaller developers may opt to divest opportunities to those with greater access to lower cost of capital.

Our view is that the best projects and developers will continue to move forward with projects and we continue to align our business with high quality customers in order to minimize this impact.

We believe the larger and more robust developers will benefit as some of the smaller developers may opt to divest opportunities to those with greater access to lower cost of capital.

There is also the matter of supply chain constraints that could have future impacts in the market, particularly some continued module availability constraints.

Our view is that the best projects and developers will continue to move forward with projects and we continue to align our business with high quality customers in order to minimize this impact.

As well as high voltage equipment lead times for critical items, including Breakers, Transformers and switch gear for high voltage Interconnects.

There is also the matter of supply chain constraints that could have future impacts in the market, particularly some continued module availability constraints.

There is a growing need for this equipment globally and the production capacity of materials necessary to meet demand growth are currently facing some challenges and could face even more challenges in the future.

As well as high voltage equipment lead times for critical items, including Breakers, Transformers and switch gear for high voltage Interconnects.

We're persistently working to find alternative solutions and stay ahead of this by prioritizing customers with module supply and re sequencing projects, where an unexpected delay may occur.

We are keeping an eye toward the future in regard to our planning for longer delivery lead times and being prepared in the event that high voltage equipment begins to experience additional supply chain challenges.

We're persistently working to find alternative solutions and stay ahead of this by prioritizing customers with module supply and re sequencing projects, where an unexpected delay may occur.

This will enable us to mitigate potential disruptions to our business as we did when the industry dealt with the impact of module delays throughout 2022 and into 2023.

The last challenge, we are working to overcome that I alluded to earlier is the development retention and acquisition of talent.

This will enable us to mitigate potential disruptions to our business as we did when the industry dealt with the impact of module delays throughout 2022 and into 2023.

We are operating in a competitive landscape in a fast growing industry, where quality project management talent is at a premium.

The last challenge, we are working to overcome that I alluded to earlier is the development retention and acquisition of talent.

Our ability to self perform work for our customers is something we believe has worked to our advantage and made us true partners and helping them plan and execute their projects.

We are operating in a competitive landscape in a fast growing industry, where quality project management talent is at a premium.

We invest time and resources in developing our teams to execute on projects that for Morris way.

Our ability to self perform work for our customers is something we believe has worked hard vantage it made us true partners and helping them plan and execute their projects.

Retaining those people to train the next generation of project managers is key to our success.

Our disciplined approach to building our teams has been a huge asset and we are fortunate to be in an industry that is attracting talent.

We invest time and resources in developing our teams to execute on projects the <unk> way.

However, we must be mindful to continue operating with a high level of efficiency and cost discipline in order to prevent margin erosion as upward pressure on compensation occurs in the years ahead.

Retaining those people to train the next generation of project managers is key to our success.

Our disciplined approach to building our teams has been a huge asset and we are fortunate to be in an industry that is attracting talent.

To summarize these.

These are some of the issues, which exist that could have an impact on the industry.

However, we must be mindful to continue operating with a high level of efficiency and cost discipline in order to prevent margin erosion is upward pressure on compensation occurs in the years ahead.

However, we are confident that our strategy to choose and work with the right customers and plan ahead for potential labor and supply chain issues will prevent us from being materially impacted by these challenges.

To summarize these.

These are some of the issues, which exist that could have an impact on the industry.

I'll now turn it over to Ken for more on our financial results.

Good morning, everyone revenue for the third quarter was a little over one 5 billion an increase of $245 million from the prior year, driven primarily by growth in both the utilities and the energy segments.

I'll now turn it over to Ken for more on our financial results.

The energy segment was up over $213 million or 32% from the prior year driven by growth across all business lines pipeline renewables civil and industrial.

The utility segment was up $32 million or 5% from the prior year driven by double digit gains in power deliberately partially offset by slightly lower volumes in our gas utility operations.

The energy segment was up over $213 million or 32% from the prior year driven by growth across all business lines pipeline renewables civil and industrial.

Gross profit for the third quarter was approximately $174 million, an increase of $19 million or 12% from the prior year, primarily due to higher revenue and improved gross margins in the energy segment.

The utility segment was up $32 million or 5% from the prior year driven by double digit gains in power deliberately partially offset by slightly lower volumes in our gas utility operations.

Gross margins were 11, 4% for the quarter, which was down slightly compared to 12, 1% in the prior year.

Turning to our segment results in the utility segment gross profit was $64 7 million down $13 4 million or 17% compared to the prior year.

Gross margins were 11, 4% for the quarter, which was down slightly compared to 12, 1% in the prior year.

The decline was primarily due to productivity challenges on certain legacy <unk> projects and lower gas utility volumes during the quarter.

Turning to our segment results in the utility segment gross profit was $64 7 million down $13 4 million or 17% compared to the prior year.

These factors also contributed to gross margins declining to 10% compared to 12, 7% in the prior year. We believe that we are moving past the margin challenges that impacted our power delivery business. The completion of these lower margin projects combined with our renegotiated base rates improved equipment utilization and a growing mix of <unk>.

The decline was primarily due to productivity challenges on certain legacy <unk> projects and lower gas utility volumes during the quarter.

Work has us well positioned for margin improvement in power delivery and the overall utility segment heading into 2024.

In the energy segment gross profit was $109 million for the quarter, an increase of $32 million or 42% over the prior year, primarily driven by higher revenue and margins in the renewables and pipeline businesses.

Work has us well positioned for margin improvement in power delivery and the overall utility segment heading into 2024.

Gross margins came in at 12, 3% up from 11, 5% in the prior year.

Increase in gross margins can be attributed to another solid quarter from the pipeline business and the benefit of some project closeouts in the renewables business.

Gross margins came in at 12, 3% up from 11, 5% in the prior year.

The energy segment continues to benefit from strong <unk> in the renewables and industrial markets as well as solid execution on our backlog of projects.

The increase in gross margins can be attributed to another solid quarter from the pipeline business.

This combined with improved performance in our pipeline business has led to over 45% higher revenue and over 60% higher gross profit year to date compared to 2022.

And the benefit of some project Closeouts in the renewables business.

The energy segment continues to benefit from strong <unk> in the renewables and industrial markets as well as solid execution on our backlog of projects.

Taking a look at our SG&A expenses in the third quarter were $84 4 million, an increase of $8 7 million over the prior year the.

This combined with improved performance in our pipeline business has led to over 45% higher revenue and over 60% higher gross profit year to date compared to 2022.

The increase in SG&A was driven by incremental cost to support growth and increased head count. However, SG&A as a percentage of revenue decreased to five 5% compared to five 9% in the third quarter of last year.

Taking a look at our SG&A expenses in the third quarter were $84 4 million, an increase of $8 7 million over the prior year the.

We expect our SG&A as a percent of revenue for the fourth quarter and full year to be in the high five to low 6% range.

Net interest expense in the third quarter was $21 1 million compared to $13 1 million in the prior year.

We expect our SG&A as a percent of revenue for the fourth quarter and full year to be in the high five to low 6% range.

The increase was due to higher average debt balances and higher average interest rates, we expect our full year interest expense will be $73 million to $77 million.

Net interest expense in the third quarter was $21 1 million compared to $13 1 million in the prior year.

Our effective tax rate for the quarter was 29%, which is in line with our expectations for the full year. However, this rate can be impacted by changes in revenue mix from higher tax jurisdictions and other discrete tax items the remainder of the year.

The increase was due to higher average debt balances and higher average interest rates, we expect our full year interest expense will be $73 million to $77 million.

Net income was $48 million or <unk> 89 per diluted share up $5 million from the prior year, primarily due to higher operating income, partially offset by higher interest and taxes.

Adjusted EPS was $1 two per share down <unk> 10 from the prior year, primarily due to higher tax rates and interest costs associated with the <unk> acquisition, partially offset by higher operating income.

Net income was $48 million or <unk> 89 per diluted share up $5 million from the prior year, primarily due to higher operating income, partially offset by higher interest and taxes.

Adjusted EBITDA was $120 million for the quarter, an increase of $11 million or 10% compared to the prior year.

Adjusted EBITDA was driven higher by increased revenues and gross profit previously mentioned.

Moving onto cash flow, we generated $74 million of cash from operations in Q3, an increase of over $84 million from the prior year.

Adjusted EBITDA was $120 million for the quarter, an increase of $11 million or 10% compared to the prior year.

The primary drivers for the increase in operating cash flows were improved working capital, which remains a top priority and an area, which we are continuing to make progress.

Adjusted EBITDA was driven higher by increased revenues and gross profit previously mentioned.

Moving onto cash flow, we generated $74 million of cash from operations in Q3, an increase of over $84 million from the prior year.

We ended the quarter with $167 million of cash and net debt of approximately $945 million.

The primary drivers for the increase in operating cash flows were improved working capital, which remains a top priority and an area, which we are continuing to make progress.

Our trailing 12 month net debt to EBITDA ratio was around two six times at the end of Q3 down from approximately three three times EBITDA at the end of third quarter last year.

We ended the quarter with $167 million of cash and net debt of approximately $945 million.

We continue to be in a strong liquidity position and remain focused on further reducing our leverage toward our goal of below two times range by the end of 2024.

Our trailing 12 months net debt to EBITDA ratio was around two six times at the end of Q3 down from approximately three three times EBITDA at the end of third quarter last year.

Total backlog at the end of the quarter was around $6 7 billion compared to approximately $5 5 billion in the prior year, an increase of 22% and another record.

We continue to be in a strong liquidity position and remain focused on further reducing our leverage toward our goal of below two times range by the end of 2024.

Fixed backlog increased to $4 6 billion up over $1 2 billion or around 36%, primarily due to strength in our energy segment from renewables industrial and heavy civil project wins MSA.

Total backlog at the end of the quarter was around $6 7 billion compared to approximately $5 5 billion in the prior year, an increase of 22% and another record.

Fixed backlog increased to $4 6 billion up over $1 2 billion or around 36%, primarily due to strength in our energy segment from renewables industrial and heavy civil project wins MSA.

MSA backlog was mostly flat compared to Q3 of 2022 at around $2 1 billion, but up around $150 million from the beginning of the year.

We expect 100% of our utilities backlog and 56% of our energy backlog to convert into revenue over the next four quarters.

MSA backlog was mostly flat compared to Q3 of 2022 at around $2 1 billion, but up around $150 million from the beginning of the year.

Wrapping up with guidance, we are reaffirming our EPS range of $2 15 to $2 35 per share and adjusted EPS of $2 60 to $2 80 per share. We are also affirming our adjusted EBITDA guidance of $360 million to $380 million for the full year 2023.

We expect 100% of our utilities backlog and 56% of our energy backlog to convert into revenue over the next four quarters.

However, due to the pull forward of revenue and our strong performance in the first three quarters of the year, we expect our earnings to trend towards the upper half of our guidance ranges for EPS adjusted EPS and adjusted EBITDA.

As is typical with our fourth quarter, we expect a normal seasonal declines in our utility segment, depending on timing of customer spend and weather impacts.

In the energy segment, we expect revenue to increase sequentially, but our mix of revenue to be less favorable compared to the third quarter as pipeline projects are completed and fewer renewable project Closeouts are expected.

As is typical with our fourth quarter, we expect the normal seasonal declines in our utility segment, depending on timing of customer spend and weather impacts.

Although we are still in the early planning stages. We are optimistic that we will continue to see improved revenue and earnings across most of our businesses that will provide another record year in 2024.

With that I'll turn it back over to Tom.

Thanks, Ken.

Before we take questions I'd like to summarize some key takeaways from the quarter.

First I want to again highlight our employees efforts through the first three quarters of the year, we place a great emphasis on safety and productivity and they are delivering both at a high level.

With that I'll turn it back over to Tom.

Thanks, Ken.

Before we take questions I'd like to summarize some key takeaways from the quarter.

Safety is an important metric not only for the obvious reasons, but because our employees are our most valuable asset we want to continue to drive that into the overall culture of the company.

First I want to again highlight our employees efforts through the first three quarters of the year, we place a great emphasis on safety and productivity and they are delivering both at a high level.

It is also a critical factor in our ability to continue working for existing customers and attracting new customers.

Safety is an important metric not only for the obvious reasons, but because our employees are our most valuable asset we want to continue to drive that into the overall culture of the company.

Second despite macroeconomic challenges we are seeing a lot of positive momentum across many of our businesses.

It is also a critical factor in our ability to continue working for existing customers and attracting new customers.

In the utility segment, we are benefiting from a growing power delivery market, while working to improve margins by getting past some underperforming projects and contracts we acquired.

Second despite macroeconomic challenges we are.

We're also gaining share in communications and effectively managing our gas operations business. Despite a slight slowdown in the market in 2023.

Seeing a lot of positive momentum across many of our businesses.

In the utility segment, we are benefiting from a growing power delivery market, while working to improve margins by getting past some underperforming projects and contracts we acquired.

The energy segment continues to gain momentum in renewables and we are working to stay ahead of potential challenges that could slow or impede the progress we have worked hard to achieve over the past several years.

We're also gaining share in communications and effectively managing our gas operations business. Despite a slight slowdown in the market in 2023.

In the industrial businesses, we are optimistic and excited about the significant growth potential that lies ahead and confident in our ability to execute on a solid backlog of projects.

And all of our businesses, we are approaching each bid each contract and each project with the goal of delivering great service for our clients, while improving our profitability and cash flow.

In the industrial businesses, we are optimistic and excited about the significant growth potential that lies ahead and confident in our ability to execute on a solid backlog of projects.

Morris has had a great 2023, thus far and we are in a great position to achieve the operational and financial goals, we set for ourselves by finishing strong in Q4.

And all of our businesses, we are approaching each bid each contract and each project with the goal of delivering great service for our clients, while improving our profitability and cash flow.

This will require us managing our business to adjust for seasonal impacts executing on work with high quality and productivity and winning work to set us up for an even better year in 2024.

Morris has had a great 2023, thus far and we are in a great position to achieve the operational and financial goals, we set for ourselves by finishing strong in Q4.

I am proud of the successes, we have shared as a company and believe that we are moving further down the path of consistent successful execution.

This will require us managing our business to adjust for seasonal impacts executing on work with high quality and productivity and winning work to set us up for an even better year in 2024.

<unk> down this path, we believe the latest to margin expansion and improved cash flow generation that will allow us the flexibility to pay down debt and make investments in the most attractive markets in which we operate.

I am proud of successes, we have shared as a company and believe that we are moving further down the path of consistent successful execution.

And ultimately to the benefit of our customers employees and shareholders.

We will now open up the call for your questions.

At this time I would like to remind everyone wanted to ask a question Press Star then the number one on your telephone keypad.

And ultimately to the benefit of our customers employees and shareholders.

We will now open up the call for your questions.

Please bear in mind that one question and one follow up will be allowed for this Q&A session. We will pause for just a moment to compile the Q&A roster.

At this time I would like to remind everyone wanted to ask a question Press Star then the number one on your telephone keypad.

Your first question comes from the line of Steven Fisher with UBS, Steven Your line is open.

Please bear in mind that one question and one follow up will be announced with this Q&A session. We will pause for just a moment to compile the Q&A roster.

Thanks, Good morning, I was wondering.

If you could just maybe give us some color on the how big the impact of the <unk> projects were in the quarter on the impact on utilities margins sure.

Okay.

Your first question comes from the line of Steven Fisher with UBS, Steven Your line is open.

What the margin would've been excluding that because it seems like the Q4 implied a pretty big step up to it.

Thanks, Good morning.

If you could just maybe give us.

Some color on the how big the impact with the DLH projects were in the quarter on the impact on utilities margins.

At the midpoint of that range I'm wondering if those MSA renewals that have higher margins are already.

What the margin would've been excluding that because it seems like the Q4 implied a pretty big step up.

Expect to get ramped up in Q4 or is there just something else that.

Helping that Q4 implied.

At the midpoint of that range I'm wondering if those MSA renewals that iron margins are already.

Yes, Steve the impact it was just a few million dollars for the quarter, but on that revenue.

Expected to ramp up in Q4 or is there just something else.

It took us down by.

75 to 100 basis points compared to what we were expecting but we think we've got most of that behind us.

Helping that Q4 implied.

Yes, Steve the impact it was just a few million dollars for the quarter, but on that revenue.

Q4 margins are going to be sequentially lower like they normally are due to the timing of.

Took us down by.

Winter kicking in in a lot of our customers shutting down for the holidays.

75 to 100 basis points compared to what we were expecting but we think we've got most of that behind US Q4 margins are going to be sequentially lower like they normally are due to the timing of.

But so we're expecting full year gross margins for utilities to be at the bottom end of our range.

Winter kicking in in a lot of our customers shutting down for the holidays.

Okay. That's helpful.

And I'm wondering if you could talk about what's happening in the gas segment, you mentioned some slowdown in some push outs can you just give a little bit of color there.

But so we're expecting full year gross margins for utilities to be at the bottom end of our range.

No. It's really just some work out west that was that was pulled forward a little bit.

Okay. That's helpful.

And I'm wondering if you could talk about what's happening in the gas segment, you mentioned some slowdown in some push outs can you just give a little bit of color there.

We'll probably see some more push.

Also so theres always a possibility when you do this look at this work on a quarterly basis, it ebbs and flows and clients, it's really their money to spend so they spend it when they want to all we do is provide a service for them, but there was some work that was done earlier this year.

No. It's really just some work out west there was there was pulled forward a little bit.

We'll probably see some more push it.

Also so theres always a possibility when you do this look at this work on a quarterly basis. It ebbs and flows the clients, it's really their money to spend so they spend it when they want to all we do is provide a service for them, but there was some work that was done earlier this year.

They've decided to slow down maybe they have reached their budgets are decided to curtail their spending towards the end of the year last part of the year.

Nothing major.

Okay, and then just last year.

And you mentioned, you're booked for 2024 and renewables.

That they've decided to slow down maybe they have reached their budgets are decided to curtail their spending towards the end of the year last part of the year.

<unk> are you in all of that work proceeding as planned given some of the dynamics that are out there in terms of interest rates.

Nothing major.

Okay, and then just lastly.

You mentioned, you're booked for 2024 and renewables.

Clarity around tax rules I know you mentioned some of the smaller developers are going to speak to the bigger ones.

Constant are you and all of that work proceeding as planned given some of the dynamics that are out there in terms of interest rates.

Do you feel about your own book of business, you're seeing delays with that relative to the risks that you mentioned.

Clarity around tax rules I know you mentioned some of the smaller developers are going to feed the bigger ones.

Towards 2024, I don't think so I think we're very comfortable with where those projects are we partnered with some very good clients very reputable.

How do you feel about your own book of business, you're seeing delays with that relative to the risks that you mentioned.

And we've been involved with their projects for.

For months before we even sign the contract. So we know where they are with respect to <unk>.

Towards 2024, I don't think so I think we're very comfortable with where those projects are we partnered with some very good clients very reputable.

The FERC financials position on the projects, we know where they are with respect to delivery of the key components for the facilities that we're building. So I think we're pretty comfortable with 'twenty four 'twenty five.

And we've been involved with their projects for.

For months before we even sign the contracts. So we know where they are with respect to <unk>.

To be seen but we'll see.

They are the front financials position on the projects, we know where they are with respect to delivery of the key components for the facilities that we're building. So I think we're pretty comfortable with 'twenty four 'twenty five.

Okay. Thank you very much.

Your next question comes from the line of Lee Jagoda.

From.

From CJS Securities. Your line is open.

To be seen but we'll see.

<unk>.

Hi, good morning.

Okay. Thank you very much.

Your next question comes from the line of Lee Chuckled.

Ken I guess first can you quantify.

Uh huh.

Got it.

The closeouts in renewables and as you look out to Q4 are there any additional closeouts that we could expect to hit margins, possibly.

From CJS Securities. Your line is open.

Hi, good morning.

Ken I guess first can you quantify the closeouts in renewables and as you look out to Q4 are there any additional closeouts that we could expect to hit margins, possibly.

Yes, I don't have the exact numbers in front of me on renewables I think it contributed roughly 50 basis points to margin for that segment this quarter.

And then and then.

Right now we're not anticipating any significant project closeouts in Q4, we have a lot of projects. They are actually going be starting up in Q4, which is why we will probably see revenue in that segment.

Yes, I don't have the exact numbers in front of me on renewables I think it contributed roughly 50 basis points to margin for that segment this quarter.

And then and then.

Up sequentially in Q4 compared to Q3.

Right now we're not anticipating any significant project closeouts in Q4, we have a lot of projects that are actually going to be starting up in Q4.

Yes.

And I think you mentioned some of the mix was.

Maybe lower margin in Q4 versus Q3 in <unk>.

This is why we will probably see revenue in that segment.

And energy is that correct.

Up sequentially in Q4 compared to Q3.

Correct, yes because of that.

Yes.

Got you.

And I think you mentioned some of the mix was.

Just one more on cash flow.

Maybe lower margin in Q4 versus Q3 in.

How should we think about the level of free cash flow generation in Q4, and then as we look out to 2024 has anything changed relative to the contracts that youre going to start versus the stuff that we've seen over the last year that should help smooth out some of this free cash flow.

And energy is that correct.

Correct, yes because of that.

Got you.

One more on on cash flow.

No.

Answer to your last question first I think cash flow is going to continue to be.

Relatively seasonal within the utility segment, but within the energy segment, it's going to be lumpy based on the starts and completion.

No.

And the completion of project with respect to free cash flow.

To answer your last question first I think cash flow is can continue to be.

I think we are going to have our seasonally strong Q4, I do not at all believe it's going to be as high or as strong as it was last year.

Relatively seasonal within the utility segment, but within the energy segment, it's going to be lumpy based on the starts and completion.

Last year everything just kind of all came together in Q4, whereas this year, where we're seeing some benefit in Q3 and depending on the timing of projects completed and new projects starting up we could see some of Q4 cash flow actually slip into Q1.

The completion of projects with respect to free cash flow.

I think we are going to have our seasonally strong Q4, I do not at all believe it's going to be as high or as strong as it was last year.

Which is not uncommon in similar to what we had happened two years ago.

Great. Thanks very much.

Okay.

Your next question comes from the line of Jerry Revich with Goldman Sachs.

Which is not uncommon in similar to what we had happened two years ago.

Your line is open.

Yes, hi, good morning, everyone.

Tom I'm wondering if you could just update us on your ability to ramp up crews in the solar business. I think you were planning to have 15 crews at year end.

Great. Thanks very much.

Okay.

Your next question comes from the line of Jerry Revich with Goldman Sachs. Jerry Your line is open.

Yes, hi, good morning, everyone.

I'll talk about are you folks on track for that and what are the plans.

Tom I'm wondering if you could just update us on your ability to ramp up crews in the solar business. I think you were planning to have 15 crews at year end.

For next year and separately.

Mentioned, a number of risk factors for the industry I just want to make sure nothing has changed in terms of the contract structures that you folks setup, where any delays don't impact.

Talk about are you folks on track for that and what are the plans.

For next year.

Your margin profile, it's more of a function of.

Separately, you mentioned a number of risk factors.

Topline impact for you folks when that happens or at least it's been historically and I just want to make sure. That's still the case given the cautionary remarks that you've included earlier in the conversation. Thanks.

Or the industry I just want to make sure nothing has changed in terms of the contract structures that you folks setup, where any delays don't impact.

Your margin profile, it's more of a function of.

Yes, I'll answer your last question first so I don't forget it.

Topline impact for you folks when that happens or at least it's been historically and I just want to make sure. That's still the case given the cautionary remarks that you included earlier in the conversation. Thanks.

But we have not changed our language in our contracts, we still have the same protections.

It was doing some pre investing that also to make sure that we have the materials and the components that we're responsible for but but as far as the client obligations. They still remain in our contracts, we have not changed those and the clients haven't really forced us to push this do either so we pretty much align with clients that have a surety of supply and I think theyre fairly.

Yes.

Answer your last question first so I don't forget it.

But we have not changed our language in our contracts. We still have the same protections. We're still doing some pre investing that also to make sure that we have the materials and the components that we're responsible for but but as far as the client obligations. They still remain in our contracts, we have not changed those and the clients haven't really forced us to push this do.

Comparable.

We've seen it.

And the ease of delivery issues ease up going into it towards the end of 2023 and they expect to see even improvement in 2024, so hopefully that will not be an issue. We don't expect it to be even if it is it's not a risk.

Either so we are pretty much aligned with clients that have a surety of supply.

And I think they are fairly comfortable that we have.

St.

The first question.

He's up delivery issues ease up going into it towards the end of 2023 and they expect to see even improvement in 2024, so hopefully that will not be an issue. We don't expect it to be even if it is it's not a risk.

So we're yes, we're right on track.

Trying to build <unk> CAD 15 crews by the end of this year and we're racing we've got our 14th CRU already onboard and training. We've got parts of our 15th crew on board right now and we expect to have them in place by the end of the year.

The first question.

So we're yes, we're right on track.

Trying to build 15, CAD 15 crews by the end of this year and we're racing we've got our 14th CRU already onboard and training. We've got parts of our 15th crew on board right now and we expect to have them in place by the end of the year.

And next year Super we're looking at where they are getting some growth next year and we'll just grow our teams based on what that growth is to support those project needs.

Okay Super and then nice to hear the constructive outlook on 24, Jay can you just expand on the growth levers that you have utilities sounds like pretty good pipeline of renewables, but utilities.

And next year Super we're looking at yes.

Where are they getting some growth next year and what does grow our teams based on what that growth is to support those project needs.

As Ken mentioned that can be hand to mouth. So is it.

Okay Super and then nice to hear the constructive outlook on 24, Jay can you just expand on the growth levers that you have utilities sounds like pretty good pipeline of renewables, but utilities.

Visibility on the margin profile, improving or what gives you the constructive growth comments.

The visibility that you alluded to in the prepared remarks for 2004.

As Ken mentioned that can be hand to mouth. So is it.

One is definitely that I think with these msas that we've already negotiated some of those went into effect in 2003, the balance of them go into effect in 2020 for US we have we have that working in our favor. The other thing is.

Visibility on the margin profile, improving or what gives you the constructive growth comments.

Visibility that you alluded to in the prepared remarks for 24.

We've made a lot of changes within our power delivery group brought brought in a lot of talent and we expect to start seeing we're seeing it now as we close out 2003, we are seeing margin improvement as we close out you can't do a whole lot with troubled projects, you've got to get through them, but in the new work that they've taken on their performance.

One is definitely that I think with these msas that we've already negotiated some of those took went into effect in 2003 to balance them go into effect in 2020 for US we have we have that working in our favor. The other thing is.

We've made a lot of changes within our power delivery group brought in a lot of talent and we expect to start seeing we're seeing it now as we close out 2003, we are seeing margin improvement as we close out you can't do a whole lot with troubled projects, you've got to get through them, but in the new work that they've taken on their performance.

A forming well so that to carry on into 2024, I think our communications business is performing extremely well.

During the course of the year in 2023, they had one project that was a little bit of a draw on them, but they are finishing they finished that job up and thats behind them for the most part.

Forming well so that to carry on into 2024, I think our communications business is performing extremely well I think sometime during the course of the year in 2023. They had one project that was a little bit of a draw on them, but they are finishing they finish that job up and thats behind them for the most part.

In gas.

Yes.

Not a real fast growing market for us and we will probably be fairly flat with maybe some growth in that business, it's a well performing business for us so they can they perform extremely well.

Gas.

We see them, we do we see our project work, increasing our power delivery group, let me step back.

It's not a real fast growing market for us and we will probably be fairly flat with maybe some growth in that business, it's a well performing business for us so they can they perform extremely well.

Say that.

Okay.

Okay Super Thank you.

Our next question comes from the line of Adam with Thompson Davis, Adam Your line is open.

Yes, we see and we do we see our project work, increasing our power delivery group, let me step back.

Hey, good morning, guys, congrats on a solid quarter.

Say that.

Okay Super Thank you.

You made a comment about $14 billion of industrial projects can you just flesh that out a little bit.

Our next question comes from the line of Adam with Thompson Davis, Adam Your line is open.

It's a funnel of projects.

Hey, good morning, guys, congrats on a solid quarter.

That we have identified data kind of fit in our wheelhouse that we're going to pursue pursue a portion of those if we definitely are going to pursue a $14 billion worth of work, but it is it is an addressable market for us and a lot of that work is I think I noted in my comments that about 80% of that work is in our engineering and industrial construction.

Heavy.

Made a comment about $14 billion of industrial projects can you just flesh that out a little bit.

Yes.

Funnel of projects that we.

And they are really riding our strengths the size and the type of project work that we have an expertise in which is really what we're focusing on trying to make sure that we improve our margins to continue to see margin expansion.

And they are really right in our strengths there.

And are those.

2020 for construction starts.

And the type of project work that we have an expertise in which is really what we're focusing on trying to make sure that we improve our margins to continue to see margin expansion.

Some of that will carry into 'twenty there'll be 'twenty 'twenty four for sure no carry into 2025.

I'll get into the EPC, then you have a period of 4% to six eight months, where your the clients doing designer we're doing design on the project before they move to the field. Some of these project or projects that will go directly to the field.

And are those.

2020 for construction starts.

Some of that will carry into 'twenty there'll be 'twenty 'twenty four for sure no carry into 2025.

Okay and.

And I hate to ask this because we've talked about this extensively but I still don't quite know what the message is on solar like I think that's still a growth market for you guys next year, but I just.

Into the EPC then you have a period of four to six eight months, where your the clients doing design or we're doing design on the projects before they move to the field. Some of these project or projects that will go directly to the field.

Kind of wanted to make sure that.

It's definitely a growth market, but when you get to 1 billion.

Okay.

And size Youre, not going to continue to grow at 100% a year.

We can we continue a disciplined approach to hiring and developing our teams and the work that we take on and so we're still expecting 20% to 30% to 40% growth in that business in the next year.

Kind of wanted to make sure that.

It's definitely a growth market, but when you get to 1 billion.

Dollars in size Youre, not going to continue to grow at 100% of year. So we can we continue a disciplined approach to hiring and developing our teams and the work that we take on and so we're still expecting 20% to 30% to 40% growth in that business in the next year.

Okay perfect. Thank you guys.

Your next question comes from the line of Brent Thielman with D. A Davidson your line is open.

Yes.

Great.

Sure.

Okay perfect. Thank you guys.

The utilities business I guess the question in thinking about 'twenty four I mean, if the.

Your next question comes from the line of Brent Thielman with D. A Davidson.

Productivity issues and challenges and PIH sort of cycle out this year, you've got the restructuring pricing terms on contracts.

Okay.

Great.

The utility business I guess the question in thinking about 'twenty four.

Starting to take hold in 'twenty four why wouldn't we see sort of a margin range towards the upper end of your targets next year. If youre also getting the benefits that sort of.

Productivity issues and challenges and PIH sort of cycle out this year, you've got the restructuring pricing terms on contracts.

More project work in power delivery I'm, just trying to kind of bridge that gap why we wouldn't see a significant increase in margin utilities I think that's what exactly what you're going to expect.

Starting to take hold in 'twenty four why wouldn't we see sort of a margin range towards the upper end of your targets next year. If youre also getting the benefits of sort of.

That's.

Where we're trending to.

More project work in power delivery I'm, just trying to kind of bridge that gap why we wouldn't see a significant increase in margin utility that's what exactly what you're going to expect.

Okay. So I think we'd ask you to.

Andre and wouldn't be a big or according to that you could expect that 'twenty four.

That's.

Okay.

Where we're trending to.

Okay, and then Tom I mean, just sorry, if you've covered it but what's the outlook for the pipeline business next year I mean, it sounds like it's come in a lot better than you had expected in 'twenty three.

Yeah.

Okay. So I think we ask you to please.

Andre and wouldn't be a big or according to that yes, you can expect that 'twenty four.

They have a lot of opportunities on smaller projects and what I mean by smaller as their projects are less than $100 million or $50 $60 $30 million projects.

Okay.

As long as we win our share of that work.

They have a lot of opportunities.

Execute on it which we have been able to do this year.

Some smaller projects and what I mean by smaller as their projects are less than $100 million or $50 $60 $30 million projects.

There'll be okay. It's just not going to be it's still not a great market for pipeline and it's not going to be Frank I don't think for the next two years minimum.

As long as we win our share of that work.

But our guidance is right sized their businesses than.

Execute on it which we have been able to do this year.

And they are performing on the work that they've won they just got to continue to do that.

And then there'll be okay. It's just not going to be it's still not a great market for pipeline and it's not going to be Frank I don't think for the next two years minimum.

Got it and then just back on utilities Com.

Comment about just the talent acquisition, obviously pretty competitive market right now maybe.

But our guidance is right sized their businesses.

They're performing on the work that they've won.

Got to continue to do that.

You can talk about the things youre doing to <unk>.

Yes.

Wire that talent should we think it is.

Got it.

And then just back on utilities.

Somewhat of an inhibitor to growth next year in that business, just kind of want to put that in context.

Comment about the talent acquisition, obviously pretty competitive market right now maybe.

Yes.

It is not an inhibitor as long as we are successful.

If you could talk about the things youre doing to acquire that talent should we think it is.

It's just not about it's not about necessarily about just being the highest paying contractor out there because we're not going to be.

<unk> had been inhibitor to growth next year in that business, just kind of want to put that in context.

Package.

Okay.

It's compensation its benefits.

It is not an inhibitor as long as we're successful.

<unk> career development.

It's just not about it's not about necessarily about just being the highest paying contractor out there because we're not going to be it's the total package. It's it's compensation its benefits.

Is.

Well they are focusing on the retention of the people that you have with were really focused on doing.

Providing equity in the company and opportunities to buy equity in the company. It's all of those things and I think what.

<unk> career development.

As well.

What we're starting to see a success breeds success and people like working for companies that have good cultures that care about their people that helped develop and then lay out career paths and A&P and have competitive benefits and they are winning work and performing well on the projects and I think thats.

They are focusing on the retention of the people that you have which is what we're really focused on doing.

Providing equity in the company and opportunities to buy equity in the company. It's all of those things and I think what.

What we're starting to see a success breeds success and people like working for companies that have good cultures that care about their people that helped develop them and lay out career paths and A&P and have competitive benefits and they are winning work and performing well on the projects and I think that is.

What we're starting to see that.

We saw that in our industrial group over the last couple of years as they've improved their performance and their margins getting people's a lot easier and retaining them is much easier now and we're seeing that with power deliveries. We brought in this leadership talent that people are excited about being part of that business and they want to see where these guys can take it and I think so all these other things.

What we're starting to see that.

And I think will help will help us, but it doesn't take away from the fact that it's tough market.

And our competitors are always after good talent.

Understood. Thank you.

And I think will help will help us, but it doesn't take away from the fact that it's tough market.

Our final question comes from the line of Julio Romero with Sidoti and company. Your line is open.

US and our competitors are always after good talent.

Yes.

Hey, good morning.

Understood. Thank you.

How much were renewable sales in the quarter and what are you guys expect for the fourth quarter.

Okay.

Our final question comes from the line of Julio Romero with Sidoti <unk> Company. Your line is open.

Let's see renewables sales in the quarter were about $325 million.

Hey, good morning.

How much for our renewable sales in the quarter and what are you guys expect for the fourth quarter.

For the fourth quarter could be as much as yes for the fourth quarter, it's probably going to be if they close everything that theyre targeting can be over <unk> 5 billion, maybe even as much as $600 million.

So, let's see renewables sales in the quarter were about $325 million for.

Okay, Great and then.

For the fourth quarter could be as much as yes for the fourth quarter, it's probably going to be if they close everything that theyre targeting it can be over <unk> 5 billion, maybe even as much as $600 million.

Hey, Tom you listed a few challenges within the renewables area.

But you also talked about how you're well positioned aligned yourself with customers to kind of be more of a 1 billion going forward.

Maybe looking beyond 2020 for whats the biggest potential concern that you're just keeping your eye on out of the factors that you mentioned.

Okay, Great and then.

Hey, Tom you listed a few challenges within the renewables area.

But you also talked about how you're well positioned aligned yourself with customers to kind of be more resilient going forward.

Anything that affects supply chain.

Maybe looking beyond 2020 for whats the biggest potential concern that you're just keeping your eye on out of the factors that you mentioned.

Mentioned in my comments earlier.

Transmission anything thats associated with transmission Interconnects.

What are you going to be the impacts of what's going on in the Ukraine, because that has definitely impacted the supply of transformers and some of that gear.

Okay.

Anything that affects supply chain.

In my comments earlier.

Breakers random other other components.

Transmission anything thats associated with transmission Interconnects.

How long is that going to last I know some U S manufacturing is picking up.

What are you going to be the impacts of what's going on in the Ukraine, because that has definitely impacted the supply of transformers and some of that gear.

And I think we're finding other sources, we're actually pre buying trying to get ahead of that but.

If supply Transformers Breakers goes to 100 weeks.

Breakers random other other components.

How long is that going to last I know some U S manufacturing is picking up.

That pushes jobs and less the clients have already secured supply. So that definitely is a concern in late 'twenty four 'twenty five.

And I think we're finding other sources, where actually pre buying trying to get ahead of that but.

If supply of Transformers Breakers goes to 100 weeks.

That's not solve for lease.

Actions are taken to deal with it.

That pushes jobs and less the clients have already secured supply. So that definitely is a concern in late 'twenty four 'twenty five.

Okay. That's helpful. There and then just.

The customers you mentioned, you're aligned yourself with on the renewable side and the work you're going after that on a relative basis that seems less affected by higher interest rates at least for the moment.

That's not solve for lease.

Actions are taken to deal with it.

Okay. That's helpful. There and then just.

Yeah, we're not we're not hearing our customers talk about that at all.

Okay.

Okay very good thanks.

Thanks very much.

Yeah, we're not we're not hearing our customers talk about that at all.

We would like to take another question from me with CJ Securities CJS Securities. Your line is open.

Okay.

Yes.

Okay very good thanks.

Hey, just following up on Adam's question, and maybe piggybacking on Hulu.

Thanks very much.

We would like to take another question from me with CJ Securities CJS Securities. Your line is open.

Tom I think you mentioned, 20% to 30% to 40% growth in solar next year can you just give us a baseline for 2023 that we're working off of in that business.

Hey, just following up on Adam's question, and maybe piggybacking on Julio.

What 0.13535 is where we expect to end the year.

Tom I think you mentioned, 20% to 30% to 40% growth in solar next year can you just give us a baseline for 2023 that we're working off of in that business.

So I went through in great. Thanks.

Yeah.

13535 is where we expect to end the year.

I would now like to turn the call back over to Tom Mccormick.

So I want to reiterate thanks.

Thank you for your questions and for participating on the call. This morning.

We've reached some important milestones as a company so far this year and are optimistic about the future.

I would now like to turn the call back over.

To Tom Mccormick.

But we know there is still work to be done.

We have to continuously build on our strong company culture to attract top talent improve productivity in our operations and provide quality service to our customers in order to become the company. We believe we can be.

Thank you for your questions and for participating on the call. This morning.

We've reached some important milestones as a company so far this year and are optimistic about the future.

But we know there is still work to be done.

I'm excited to be in a position to help lead a great team towards these goals.

You again for your time and interest in Morris.

Okay.

I am excited to be in a position to help lead a great team towards these goals.

Ladies and gentlemen.

Today's conference you may now disconnect.

You again for your time and interest in for Morris.

Thank you for your time.

[music].

Okay.

Ladies and gentlemen.

Today's conference you may now disconnect.

Thank you for your time.

[music].

Yeah.

[music].

Yes.

[music].

Okay.

[music].

Yes.

Q3 2023 Primoris Services Corp Earnings Call

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