Q1 2024 Construction Partners Inc Earnings Call
Operator: Greetings and welcome to the Construction Partners first quarter 2024 results conference call. At this time, all participants are in a listen-only mode.
Greetings and welcome to the construction parking partners first quarter 2024 results conference call.
At this time all participants are in a listen only mode.
Operator: A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Black of Investor Relations. Thank you, sir.
A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host Rick Black Investor Relations. Thank you Sir you may begin.
Rick Black: You may begin. Thank you, operator. And good morning, everyone.
Thank you operator, and good morning, everyone. We appreciate you joining us for the construction partners' call to review first quarter results for fiscal 2024.
Rick Black: We appreciate you joining us for the construction partners call to review first quarter results for fiscal 2024. This call is also being webcast and can be accessed through the audio link on the events and presentations page of the investor relations section of constructionpartners.net. Information recorded on this call speaks only as of today, February 9th, 2024. Please be advised that any time-sensitive information may no longer be accurate as of the date of any replay listening or transcript reading.
This call is also being webcast and can be accessed through the audio link on the events and presentations page of the Investor Relations section of construction partners Dot net.
Information recorded on this call speaks only as of today February nine 2024, please be advised that any time sensitive information may no longer be accurate as of the date of any replay listening or transcript reading.
Rick Black: I would also like to remind you that the statements made in today's discussion that are not historical facts, including statements of expectations for future events or future financial performance, are considered forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We will be making forward-looking statements as part of today's call that, by their nature, are uncertain and outside of the company's control. However, actual results may differ materially.
I would also like to remind you that statements made in today's discussion that are not historical facts, including statements of expectations or future events or future financial performance are considered forward looking statements made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 995.
We will be making forward looking statements as part of today's call. They are by their nature are uncertain and outside of the company's control actual results may differ materially. Please refer to our earnings press release for our disclosure on forward looking statements. These factors and other risks and uncertainties are described in detail in.
Rick Black: Please refer to our earnings press release for our disclosure on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Management will also refer to non-GAAP measures, including adjusted EBITDA. Reconciliations to the nearest gap measures can be found at the end of our earnings press release. Construction Partners assumes no obligation to publicly update or revise any forward-looking specifications.
The company's filings with the Securities and Exchange Commission.
Management will also refer to non-GAAP measures, including adjusted EBITDA.
Reconciliations to the nearest GAAP measures can be found at the end of our earnings press release construction partners assumes no obligation to publicly update or revise any forward looking statements and now I would like to turn the call over to construction partners CEO Jule Smith jewel.
Rick Black: And now, I would like to turn the call over to Construction Partners CEO, Jewel Smith. Jewel? Thank you, Rick. And good morning, everyone. Joining me on the call today are Greg Hoffman, our Chief Financial Officer, and Ned Fleming, our Executive Chairman. We are off to a good start to our fiscal year, and I'd first like to thank our 4,400 employees throughout the Southeast for their hard work and professionalism that contributed to a successful first quarter. Revenue, net income, earnings per share, and adjusted EBITDA were all up significantly compared to Q1 last year. We are pleased to report a record backlog of $1.62 billion as of quarter end, reflecting a demand environment that remains strong for both public and private work. In this first quarter, we experienced typical seasonal weather, with October and November being a bit drier than usual, while December was a bit wetter than usual.
Thank you Rick and good morning, everyone.
Joining me on the call today are Greg Hoffman, our Chief Financial Officer.
Ned Fleming, our executive Chairman.
We are off to a good start to our fiscal year now I'd first like to thank our 4400 employees throughout the southeast for their hard work and professionalism that contributed to a successful first quarter.
Revenue net income earnings per share and adjusted EBITDA were all up significantly compared to Q1 last year.
We are pleased to report a record backlog of $162 billion as of quarter end, the flattening of demand environment that remains strong for both public and private work.
This first quarter, we experienced typical seasonal weather.
With October and November are bit drier than usual.
December was a bit wetter than usual.
Jewel Smith: Our crews and teams were productive and delivered excellent results this quarter. Focusing more on the demand environment for construction services, there continues to be elevated demand for road repair, maintenance, and expansion projects across our markets as a result of our country's continued migration south. Each of our six states is well-funded for this work, with the federal government's IIJA funding further supporting infrastructure investment, from road projects to airports to ports and rail lines. Because of the migration to the Sunbelt of both new residents and businesses, commercial economic activity in our markets has remained steady with an active bidding environment.
Our crews and teams were productive and delivered excellent results this quarter.
Focusing more on the demand environment for construction services, there continues to be elevated demand for road repair.
<unk> and expansion projects.
<unk> of our markets as a result of our countries continued migration south.
Each of our six states are well funded for this work with the federal government JA funding further supporting infrastructure investments from road projects to airports ports and rail lines.
Because of the migration to the Sunbelt are both new residents and businesses.
The commercial economic activity in our markets has remained steady with an active bidding environment.
Jewel Smith: We anticipate that our work mix for FY24 will remain very similar to last year and typical for CPI, with approximately 63% public projects and 37% Private Projects. Turning now to the CPI Strategic Growth Model. In this fiscal year, we've so far completed four strategic acquisitions, entering new markets, expanding market share in existing markets, and adding capacity, services, and talented new team members to the CPI family. Most recently, we announced on January 3 the acquisitions of SJ&L General Contractor, a hot-mix asphalt and site work company headquartered in Huntsville, Alabama, and Littlefield Construction Company, a soil-based surface treatment and site work company headquartered in Waycross, Georgia.
We anticipate that our work mix for FY 'twenty four.
We will remain very similar to last year and typical for CPI with approximately 63% public projects.
And 37% private projects.
Turning now to Cps strategic growth model in.
In this fiscal year, we've so far completed four strategic acquisitions entering new markets expanding market share in existing markets.
And adding capacity services and talented new team members to the CPI family.
Most recently, we announced on January 3rd the acquisitions of <unk> General contractor, a hot mix asphalt and site work company headquartered in Huntsville, Alabama.
<unk> construction company.
So base surface treatment and sidewalk company headquartered in Waycross, Georgia.
Jewel Smith: As we discussed in detail during our Analyst Day, a key component of our growth strategy is to actively expand our relative market share and service capabilities within existing markets. Both the SJ&L and Littlefield acquisitions expand our service offerings in existing markets while also adding valuable crews and equipment. In the case of SJ&L in Huntsville, Alabama, we are integrating this team with our existing platform company in the state, Wiregrass Construction Company. The Greater Huntsville Metro Area and Interstate 65 Corridor continue to experience tremendous growth. And as a combined organization, we can now offer turnkey services, expanding the construction value chain on both private and public project opportunities within this market. Likewise, our Georgia platform company, The Scruggs Company, entered the Waycross Market just a few months ago through the establishment of a Greenfield Hot Mix asphalt plant.
As we discussed in detail during our analyst day, a key component of our growth strategy is to actively expand our relative market share and service capabilities within existing markets.
Both the <unk> and Littlefield acquisitions expand our service offerings in existing markets, while also adding valuable crews and equipment.
In the case of best Jal in Huntsville, Alabama, we are integrating this team.
With our existing platform company in the state wide grass construction company.
The greater Huntsville Metro area, and Interstate 65 corridor continued.
To experience tremendous growth.
And as a combined organization, we can now offer turnkey services spanning the construction value chain on both private and public project opportunities within this market.
Likewise, our GA platform company. The Scruggs company entered the Waycross market just a few months ago.
The establishment of a greenfield hot mix asphalt plant.
Jewel Smith: Now having acquired Littlefield, we are in an even better position to capitalize on the market that reaches from the Port of Brunswick into South Central Georgia. We are pleased to expand our presence in these crucial growth markets and proud to welcome the employees of SJ&L in Littlefield into our continually growing CPI family. We continue to have numerous and active conversations with potential sellers both inside and outside of our current state. The universe of potential opportunities in our highly fragmented industry is substantial. However, we remain patient and focused on finding the best strategic acquisitions that expand our footprint, increase capacity, grow relative market share, and fit well within our CPI code. We believe CPI is seen as the buyer of choice for many owners in the Southeast due to our reputation for treating sellers fairly, providing attractive career opportunities for their employees, and our track record for successfully integrating and growing companies. As we continually discuss with the market, CPI's founding strategy has three main components, first to operate a high relative market share business in local markets, building low risk, high margin projects for repeat customers, and generating strong free cash flow.
Now having acquired little field, we are even better positioned to.
To capitalize on the market it reaches from the Port of Brunswick.
Into south Central Georgia.
We were pleased to expand our presence in these crucial growth markets I'm proud to welcome the employees the best J in their own little fill into our continually growing CPI family.
We continue to have numerous in active conversations with potential sellers, both inside and outside of our current states.
The universe of potential opportunities in a highly fragmented industry is substantial.
However, we remain patient and focused on finding the best strategic acquisitions that expand our footprint.
Increased capacity grow relative market share.
And fit well within our CPI culture.
We believe CPI is seen as the buyer of choice for many owners in the south east due to our reputation for treating sellers fairly.
Providing attractive career opportunities for their employees.
And our track record for successfully integrating and growing companies.
As we continually discuss with the market.
<unk> founding strategy has three main components.
First to operate a high relative market share business and local markets building.
Building low risk high margin projects from repeat customers and generating strong free cash flow.
Jewel Smith: Second, to capitalize on the need for the nation and our states to invest in catching up on deferred infrastructure maintenance and capacity. And third, as our industry goes through a generational consolidation, to be the leader in building a scalable business by acquiring businesses in our industry. Our five-year strategic plan, which we call Roadmap 2027, simply outlines our plan to continue implementing CPI strategy, with growth targets that represent annual revenue growth of 15 to 20 percent and EBITDA margins in the range of 13% to 14% by 2027. The foundation of our strategic plan remains our people.
Second to capitalize on the need for the nation and our states to invest in catching up on deferred infrastructure maintenance and capacity.
And third as our industry goes through a generational consolidation to be the leader in building a scalable business by acquiring businesses in our industry.
Our five year strategic plan that we call roadmap 2027.
Simply outlines our plan to continue implementing CPI strategy with.
With growth targets that represent annual revenue growth of 15% to 20%.
And EBITDA margins in the range of 13% to 14% by 2027.
The foundation of our strategic plan remains our people.
Jewel Smith: We plan to continue building a competitive advantage through our workforce, maintaining our organizational culture as a family of companies, and providing superior benefits and career opportunities, which attract and retain the best construction professionals and CPR. We are dedicated to building better lives and to building the infrastructure that keeps our communities connected. In summary, we are pleased after Q1 to be right on track with our plan as we enter the second quarter of our seasonal business, where we are hard at work maintaining our fleet and asphalt plant and preparing for the busy work season ahead in the spring and the summer. I'd now like to turn the call over to Greg. Thank you, Jewel.
We plan to continue building, our competitive advantage through our workforce, maintaining our organizational culture as our family of companies and providing superior benefits and career opportunities.
Which attract and retain the best construction professionals.
At CPI.
We are dedicated to building better lives and to building the infrastructure that keeps our communities connected.
In summary, we are pleased after Q1 to be right on track with our plan as we enter the second quarter of our seasonal business, where we are hard at work, maintaining our fleet and asphalt plants and preparing for the busy work season ahead in the spring.
In the summer.
I would now like to turn the call over to Greg.
Thank you Jill and good morning, everyone.
Greg Hoffman: And good morning, everyone. I'll begin with a review of our key performance metrics for the first fiscal quarter compared to the first fiscal quarter in 2023. Revenue was $396.5 million, up 16%. The increase included $29.6 million of revenue attributable to acquisitions completed during and subsequent to the three months ending December 31, 2022, and an increase of approximately $25.1 million of revenue in the company's existing markets. Contract work and sales of HMA and aggregates to third parties. The mix of total revenue growth for the quarter was approximately 7.3% organic revenue and approximately 8.7% from recent acquisitions. Gross profit was $51.9 million or 13.1% of revenue compared to $30.5 million or 8.9% of revenue in Q1 2025. General and administrative expenses were $36 million, and as a percentage of revenue, they were 9.1% compared to 8.7% in the same period last year.
I'll begin with a review of our key performance metrics for the first fiscal quarter compared to the fiscal first quarter in 2023.
Revenue was $396 $5 million up 16%.
The increase included $29 $6 million of revenue attributable to acquisitions completed during and subsequent to the three months ended December 31 2022.
And an increase of approximately $25 $1 million of revenue in the company's existing markets contract work in sales of HMA in aggregates to third parties.
The mix of total revenue growth for the quarter was approximately seven 3% organic revenue and approximately eight 7% from recent acquisitions.
Gross profit was $51 $9 million or 13, 1% of revenue compared to 34 $35 billion or eight 9% of revenue in Q1 2023.
General and administrative expenses were $36 billion and as a percentage of revenue were nine 1% compared to eight 7% in the same period last year.
Greg Hoffman: That income was $9.8 million, and diluted earnings per share were 19 cents, up from $1.9 million and diluted earnings per share of $0.04 in the same quarter last year. Adjusted EBITDA was $40.9 million, an increase of 50.4%; adjusted EBITDA margin for the quarter was 10.3% compared to 8% in the first quarter last year. You can find gap to non-gap reconciliations of net income and adjusted EBIT In addition, as Jewel mentioned, we are reporting a record project backlog of $1.62 billion at December 31, 2023, up from $1.6 billion at the end of our Q4 fiscal year 2025. Turning now to the balance sheet. We had $68.7 million of cash and cash equivalents and $154 million available under the credit facility, net of a reduction for outstanding letters of credit. In addition, we have the ability to establish an incremental revolving credit facility up to the greater of $200 million or the total trailing 12 months adjusted evenly. We have $280 million of principal outstanding under the term loan and $163 million outstanding under the revolving credit facility.
Net income was $9 $8 million and diluted earnings per share were <unk> 19.
Up from $91 9 million and diluted earnings per share of <unk> in the same quarter last year.
Adjusted EBITDA was $40 9 million an increase of 54%.
Adjusted EBITDA margin for the quarter was 10, 3% compared to 8% in the first quarter last year.
You can find GAAP to non-GAAP reconciliations of net income and adjusted EBITDA financial measures in today's earnings release.
In addition, as Joe mentioned, we are reporting a record project backlog of 162 billion at December 31, 2023 up from $1 $6 billion at the end of our Q4 fiscal year 2023.
Turning now to the balance sheet.
We had $68 $7 million of cash and cash equivalents.
$154 million available under the credit facility net of a reduction for outstanding letters of credit.
In addition, we have the ability to establish an incremental revolving credit facility up to the greater of $200 million.
Our total trailing 12 months adjusted EBITDA.
We have $280 million of principal outstanding under the term loan and $163 million outstanding under the revolving credit facility.
Greg Hoffman: The availability of our credit facility and cash generation will continue to provide flexibility and capacity to allow for potential near-term acquisitions and high-value growth opportunities. As of the end of the quarter, our debt to trailing 12-month EBITDA ratio was $1.78. Our expectation is the leverage ratio will maintain a range of 1.5 to 2.5 times while continuing to add sustained profitable growth. Cash provided by operating activities was $60.4 million compared to $28.9 million in the same quarter last year. Net capital expenditures in the first quarter were $24.3 million.
The availability on our credit facility and cash generation will continue to provide flexibility and capacity to allow for potential near term acquisitions and high value growth opportunities.
As of the end of the quarter, our debt to trailing 12 months EBITDA ratio was one seven to eight times.
Our expectation is the leverage ratio will maintain a range of one five to two five times, while continuing to add sustained profitable growth.
Cash provided by operating activities was $64 million.
Compared to the $28 $9 million in the same quarter last year.
Net capital expenditure expenditures in the first quarter were $24 $3 million.
Operator: We expect net capital expenditures for fiscal 2024 to be in the range of $90 to $95 million. This includes maintenance capex of approximately 3.25% of revenue, with the remaining amount invested in high-return growth initiatives. Today we are maintaining our previously disclosed fiscal year 2024 outlook. We expect Revenue in the range of $1.75 to $1.825 billion; net income in the range of $63 to $70 million, and adjusted EBITDA in the range of $197 to $219 million, which reflects adjusted EBITDA margins in the range of 11.3% to 12%. And with that, we are now ready to take your questions, Operator. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. Any confirmation tone will indicate you're live in the question queue. You may press star 2 if you would like to remove your question from the queue.
We expect net capital expenditures for fiscal 2024 to be in the range of $90 million to $95 million. This includes maintenance capex of approximately $3 two 5% of revenue with the remaining amount invested in high return growth initiatives.
Today, we are maintaining our previously disclosed fiscal year 2020 for outlook.
We expect.
Revenue in the range of $1.
75 to one $8 billion to $5 billion net.
Net income in the range of $63 million to $70 million.
And adjusted EBITDA in the range of $197 million to $219 million.
Which reflects adjusted EBITDA margin in the range of 11, 3% to 12%.
And with that we are now ready to take your questions operator.
Thank you we will now be conducting a question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is my question queue.
You May press Star two if you would like to remove your questions on the queue.
Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Thank you. Our first question comes from the line of Kathryn Thompson with Thompson Research Group. Please proceed with your question.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Thank you. Our first question comes from the line of Kathryn Thompson with Thompson Research Group. Please proceed with your question.
Hi, Thank you for taking my questions today and I just wanted to morning. So it makes sense to me.
Kathryn Ingram Thompson: I just wanted to focus on two morning wanted to focus on two end markets. And firstly, the DOT work this quarter was 37% versus 33% and Q1 for the last two years, but the public contribution overall in Q1 was slightly lower than the previous quarters at 59% versus 61%. So it just seems that public non-DOT work was a lower contributor to this quarter. Is there anything to call out on the municipal level that could be driving this or any other color just to account for the Delta? No, Kathryn, I don't think so.
Alright, okay.
And market and first of all the <unk> work this quarter. Please.
37% versus 33.
Hum.
In Q1 for the last two years to put the public contribution overall in Q1 was slightly lower than that.
The previous quarters, 59% versus 61, so it just seems that public non D. O T. Barclays I love are contributing to this quarter is there anything to call out on the municipal level that could be driving this or any other color just to account for the delta.
No Catherine I I don't think so.
Jewel Smith: We bid a lot of public work that's city, counties, and DOTs, and you know, so the mix of what we're doing on public work in any one quarter can vary. But there's nothing particular that's changed about that. We do anticipate this year, as we said in the prepared remarks, that our mix of work will be about 63% public and 37% private. You know, in the public work... cities, counties, DOT, and airports, different, they'll all play a part in that public mix.
We did a lot of public work.
City counties and Dot's and.
So the mix of what we're doing on public work in any one quarter can vary but.
Theres nothing in particular, that's changed about that.
We do anticipate this year as we said in the prepared remarks that.
Our mix of work will be about 63% public and 37% private.
In the public work.
Cities counties D O T in airports different.
All play a.
Part of that public mix.
Jewel Smith: Okay, perfect. And then on the private side, you know, all our channel checks still point to manufacturing, heavy industrial still strong, and some edges of weakness continuing for traditional office and shopping centers. Can you touch more on current trends you're seeing on the private side and how the type of work for heavy versus light is differing from any trend you're seeing in highway work? Yeah, I think you're exactly right with what you said, Kathryn. What we're seeing is that as businesses continue to migrate to the southeast as they reshore. We're seeing a lot of manufacturing facilities get built, headquarters buildings, and a pharmaceutical manufacturing site. That's a lot more of what we're bidding on. We do continue to see residential stay very steady, but there are not as many office buildings and retail buildings in the mix, but there's a lot more of the, as you would say, the heavy commercial sites.
Okay, perfect and then on the private side.
You know all our channel checks still point to manufacturing heavy industrial is still strong.
And some some edges of weakness continuing it for traditional office and shopping centers.
Can you touch more on current trends Youre seeing.
On the private side.
And how the type of work for happy versus light is.
Differing from any trends youre seeing in highway work.
Yes, I think youre exactly right with what you said Kathryn what we're seeing is that.
As businesses continue to migrate to the southeast as they re sure.
We're seeing a lot of manufacturing facilities get built headquarters buildings.
Pharmaceutical manufacturing sites, that's a lot more of what we're bidding all we do continue to see residential stayed very steady.
But there's not as many office buildings and retail buildings in the mix, but theres a lot more of the as you would say the heavy commercial sites.
Jewel Smith: And the final question, this is more on, we've seen some abatement of raw materials costs, but other costs are going up. What are you seeing from DOTs and other contractors in terms of bidding expectations around input costs? And are there any other types of costs like insurance that are preventing projects from moving forward?
Okay and then final question just is more on how we've seen some abatement of raw materials.
But there are other costs are going up what are you seeing from Ts and other contractors in terms of bidding expectations around input costs and are there any other type of costs like insurance that are preventing projects moving forward.
I would say Catherine the clearly inflation.
Jewel Smith: I would say, Kathryn, clearly inflation has forced our DOTs to adjust their estimates to match the reality of input costs that are out there in the marketplace. And I think they're doing that. We're seeing their estimates go up to where projects aren't getting held up. It has affected their purchasing power to some extent, but there's still a lot of things being bid, and I don't see projects getting held up by that. I think they're adjusting to the new world of input costs. I think inflation continues to be steady. It's not out of hand like it was a couple years ago, but I think the DOTs are, by and large, keeping up with that in their outlooks and their estimates. Great, thanks so much for answering my questions today.
Our D O T a pad to adjust their estimates to match the reality of input costs that.
Are out there in the marketplace and I think they theyre doing that were seeing their estimates go up to where projects are getting held up it.
It has affected their purchasing power to some extent, but theres still a lot of things being bid and I don't see projects getting held up.
By that I think they're adjusting to the.
To the new world of.
Of input costs I think that inflation is continues to be.
Be steady it's not it's not out of hand like it was a couple of years ago, but I think the D. O T is by and large are keeping up with that and their outlooks in their estimates.
Okay, great. Thanks, so much for answering my questions today.
Patrick Tyler Brown: Okay, thanks. Our next question comes from the line of Tyler Brown with Raymond James. Please proceed with your question. Hey, good morning, guys. Good morning. Hey, Jewel.
Okay. Thank you.
Our next question comes from the line of Tyler Brown with Raymond James. Please proceed with your question.
Hey, good morning, guys.
Hey, good morning.
Jewel Smith: So it sounds like in Q1, the weather was fairly normal. Any thoughts here on Q2 for weather? I know it's been off to maybe a rough start here in Q2, just anything to think about there? Well, January's been cold, at least the first couple weeks with the polar vortex, but the reality is, Tyler, you know, we have expectations in our seasonal business. You know, in Q1, we expect October to be great, and it was. We expect December to be wet, and it was, and so it was typical. We expect January to not have great weather.
Hey, Joel so it sounds like in Q1 weather was fairly normal.
Any thoughts here on Q2 for whether I know, it's been often maybe a rough start here in Q2, just anything to think about there.
Well January has been cold at least the first couple of weeks with the polar vortex, but the reality is Tyler you Oh, we have expectations.
And our seasonal business Q1, we expect October to be great and it was we expect December to be wet and it was and so it was typical.
We expect January to not be great weather.
Jewel Smith: That's when we're fixing our equipment, as I said. And so we're just getting ready for the work season. So we were able to work where we could in January, but it definitely was pretty cold in a lot of places. Now, that's helpful.
When we're fixing our equipment as I said.
And so we're just getting ready for the work season. So.
We were able to work and where we could in January and but it definitely was.
Pretty cold in a lot of places.
Okay.
Greg Hoffman: And then, Greg, just so I have it for modeling, but at the midpoint of the revenue guide, I think it's calling for something like mid-teens revenue growth, but just can you remind us how much of that is from expected M&A? Yeah, you're right. It's 15% was the projected midpoint from last year, and it's going to be typical of what it was in the first quarter, about half and half, an equal percentage of organic and inorganic, and that's, you know, probably in the range of, you know, $125-$130 million of acquisitive revenue. Perfect. Okay, that's super helpful.
That's helpful and then Greg I, just saw a habit for modeling, but at the midpoint of the revenue guide I think it's calling for something like a mid teens revenue growth, but just can you remind us how much of that is from expected M&A.
Yeah, you're right.
15% was the projected.
Mid point from last year.
And it's gonna be typical to what it was in the first quarter about half and half.
Equal percentage organic and inorganic.
And Thats.
Probably in the range of <unk>.
120 $530 million of acquisitive revenue.
Okay perfect. Okay. That's super helpful. And then Joe So I know the M&A hasn't been a driver since we're talking about it but you you seem to have had a lot of success with Greenfield and I'm just curious if that will become.
Jewel Smith: And then, Joel, so I know that M&A has been a driver since we've been talking about it, but you seem to have had a lot of success with greenfields, and I'm just curious if that will become a bigger part of, call it, the external growth story in the coming years. And if we just take Waycross as an example, how does establishing a greenfield hot mix plant in a new market drive discussions around additional M&S? Right? Tyler, a good question.
Part of call up the external growth story in coming years, and if we just take way cross as an example.
How does establishing a greenfield hot mix plant in a new market drive discussions around additional M&A.
Right.
Tyler Good question Greenfields have always been.
Jewel Smith: Greenfields have always been one of our three growth strategies where we see an opportunity to go to an adjacent market, and Waycross was just a perfect example of seeing an opportunity in an adjacent market for the Scruggs Company to put a hot mix asphalt plant. And that really led to the discussion with the Littlefield Company about acquiring their business and bringing their workers and their equipment into that area, that Waycross area. You know, once we establish a greenfield and we're in an area that does provide opportunities for us to try to build market share in that market. And you're right; Waycross was a perfect example of that.
One of our three growth.
Growth strategies, where we see an opportunity to go to an adjacent market and Waycross was just a perfect example.
<unk> seen an opportunity in an adjacent market for the Scruggs company to go put a hot mix asphalt plant.
And that really led to the discussion with the Littlefield company.
Acquiring their business and bringing their workers in there.
Equipment into that area that waycross area. So.
Once we establish a greenfield and we're in an area that does provide opportunities for us to to try to build market share in that market and Youre right way Cross was a perfect example of that so.
Jewel Smith: So, you know, greenfields are sometimes the answer; sometimes an acquisition to move into an area is the answer. But we're studying all of them. Yeah, no, perfect.
Greenfields or sometimes the answer sometimes an acquisition to move into an area. The answer but we were studying all level.
Jewel Smith: That's very helpful. Just real quickly, you kind of conceptually understand that backlogs are strong. It feels like work is picking up on the public side. You look at a lot of private companies, and I'm assuming that they are effectively full as well.
Perfect. That's very helpful. Just real quickly you'll kind of conceptually backlogs are strong it feels like work is picking up on the public side you look at a lot of private companies I'm, assuming that they are effectively full as well. So I'm just curious if your internal metrics. However, you you.
Jewel Smith: So I'm just curious if your internal metrics, however you measure them, are you seeing fewer bidders or more rational bidding for public work, given that, let's say, the market is just generally full? Well, I would say, Tyler, yes, to a certain degree, people have good backlogs, and the construction industry has a lot of work. It's still a competitive bidding environment, but I would say, yes, there probably are fewer bidders due to everyone having a lot of work, but I think that's a sign of a healthy market. Okay, perfect. My last one here, Greg, just kind of coming back to the model.
Some of them are you are you seeing fewer bidders or more rational bidding for public work given that hit.
The market is just generally Paul.
Well I would say Tyler to yes to a certain degree people have good backlogs in the construction industry has a lot of work.
It's still a competitive bidding environment, but I would say, yes, there's probably due to everyone. Having a lot of work there is probably <unk>.
Fewer bidders and I think that's the sign of a healthy market.
Okay. My last one here, Greg just kind of coming back to the model.
Greg Hoffman: I know that there was a gain on the Blue Water Facility Exchange last Q1. But just any broad thoughts, just from a modeling perspective, how we should think about gains on sale per quarter. Is it maybe a million bucks or something like that? Just any help would be great.
I know that there was a gain on the blue water facility exchange last Q1.
But just any broad thoughts just from a modeling perspective, how we should think about gains on sale per quarter or is it maybe a million bucks or something like that just any help would be there.
Greg Hoffman: Yeah, I think that's, that's, that's right. From a modeling standpoint, that was certainly a one-off. I think every year gain on sale equipment is part of our strategy related to you know, owning, you know, operating, and then acquiring replacements. So yeah, that's, I would say that's a pretty good number. Okay, very good. Thanks, guys. Appreciate the time.
Yeah, I think that's true.
That's right.
Our modeling standpoint, yes that was certainly a one off I think every year.
Gain on sale of equipment as part of our strategy.
Related to.
You know owning.
Operating and then acquiring replacement so yeah, that's I would say that's a pretty good number.
Okay very good thanks, guys appreciate the time.
Patrick Tyler Brown: Hey Tyler, thank you. Thanks. Our next question comes from the line of Andy Wittmann with Baird. Please proceed with your question. Yeah, good morning, and thanks for taking my questions.
Okay. Thank you.
Our next question comes from the line of Andy Wittmann with Baird. Please proceed with your question.
Yeah, good morning, and thanks for taking my questions.
Andrew John Wittmann: I guess I was going to start out just digging into the margins in the quarter a little bit. Maybe I'll start with the G&A margins here. The raw number was up a decent amount. $3 million or so above kind of where the run rate's been the last few quarters. And so, Greg, I was wondering if you could just comment on that. Is there anything?
I guess I'm, just going to start out just by digging into the the margins in the quarter, a little bit and maybe I'll start with G&A margins here. The raw number was up a decent amount.
$3 million or so above kind of where the run rate spend the last few quarters and so Greg I was wondering if you could just comment on that is there anything.
Greg Hoffman: in that number that makes it unusually high or low, you kind of did some more acquisitions. So I thought maybe there's some deal costs in there or something else. But you tell us, Is this the new run rate, or is there something different than that we should... But you know, I think this is about what we would expect. We, you know, if you compare to last year, We talked a little bit about, you know, there was still some, you know, $50 million worth of low gross margin work that we had to complete. And, you know, so we're not, you know, now that we're into, you know, We're still 24, we're not seeing those anymore, but in terms of overhead and acquisitions, We were slightly up this year, this quarter compared to last year, but I think what you're seeing there is, individual expenses that maybe we're out of period, but we're still expecting the year to turn out to be what we expected. Can you just remind us what it was that you expected for the year in G&A? Yeah. 8%.
In that number that makes it unusually high or low.
You kind of did some more acquisitions. So I thought maybe there was some deal costs in there or something else, but you tell US is this the new run rate or is there something different from that what should we expect.
But I think this is about what we would expect.
We if you compare to last year.
We talked a little bit about there was still some $50 million worth of low gross margin work that we had to complete.
And so now that we're into fiscal.
Fiscal 'twenty four we're not seeing those anymore, but in terms of overhead and acquisitions.
Yeah.
We were slightly up this year this quarter compared to last year.
But I think what youre seeing there is.
Individual expenses that maybe were out of period, but we're still expecting the.
Year to turn out to me what we expected.
Got it can you just remind us what it was that you expected for the year in G&A.
Yeah.
8%.
Greg Hoffman: Okay, and then just on gross margins. Yeah, obviously, you're starting to get some of the recovery with your backlog now being better priced and inflation coming down. Can you maybe talk about how this quarter went? Are we now at the run rate where you kind of feel like the price cost dynamics are kind of fully behind you, and you're operating at the gross margins that you expect? And maybe you could just expand on that also by talking about how.
Okay, and then just on gross margins.
Obviously, you're starting to get some of the recovery with your with your backlog now being better priced than inflation.
Coming down Joe can you maybe talk about how all this quarter.
Reflects is are we now at a run rate, where you kind of feel like.
The price cost dynamics are kind of fully behind you and you're operating at the gross margins that you expect and maybe if you could just expand on that also by talking about how the.
Jewel Smith: The expectations for the gross margins in the backlog that you've recently won compared to what you've been putting up here this quarter and the last few quarters. Yeah, Andy, I think that's exactly right. I mean, just as we said in the summer, it's just really back to normal for CPI, and I think that's what you saw this quarter. If you remember last year in the first quarter, we said we were finishing up a lot of this pre-inflationary backlog because a lot of the projects we do finish in the October, November, December timeframe. They get the final paving.
The expectations of the gross margins in the backlog that you've recently, one compare to what you've been putting up here this quarter in the last few quarters.
Yeah, Andy I think that's exactly right I mean I think.
Just as we said you know in the summer.
It's just really back to normal for CPI and I think that's what you saw this quarter.
If you remember last year in the first quarter. We said, we're finishing up a lot of this pre inflationary backlog because a lot of the projects. We do finish in the October November December timeframe, there they get final paving.
Jewel Smith: And so last year's first quarter, we were just finishing a lot of that work. So what you're seeing this quarter is really just us back to normal, doing work that has the cost baked in. And so it's very much just a normal business.
And so you know last year's first quarter, we were just finishing a lot of that work. So what youre seeing this quarter is really just us back to normal doing work.
It has.
You know the cost baked in and so it's very much just a.
Jewel Smith: And I would say we're adding work to backlog at healthy margins. We're seeing that our crews and our teams in all the areas are going out there and finding ways to win on projects, which is very much back to the norm of CPI, where more projects finish at a better than bid margin, and so, to us, it's really just getting back to the normal operating model of CPI. Okay. Um, just one last final question, probably for Greg, I'm guessing.
Normal business and I would say, we're adding backlog.
Two we're adding work to backlog at healthy margins.
We're seeing that are.
Crews and our teams in all the areas.
Are going out there and finding ways to win on projects, which is very much back to the norm.
Of CPI, where more projects finish up better than bid margin.
So.
To us, it's really just getting back to the normal operating model of CPR.
Got it okay.
Just one last final question, probably for Greg I'm guessing.
Andrew John Wittmann: Um, I was just kind of curious that when you think about revenues from HMA or agribusiness and the third parties this first quarter in 24 versus the first quarter in 23. Greg, can you talk about how that changed and the impact that that had on margins, maybe like total dollars sold to third parties, just so we can understand how much of a component of your revenue mix that part of your business was. Yeah, absolutely. So, I guess, first of all, let me say that, you know, that particular area of sales revenue for us is focused more on the commercial private market. So, you know.
I was just kind of curious when you think about revenues of HMA or aggregates to third parties. This first quarter and 24 versus the first quarter and 23, Greg can you talk about.
How how that changed and the impact that that had on margins maybe like total total dollar sold to third parties. Just so we can understand how much of a component of your revenue mix.
Of your business was.
Yeah, absolutely. So I guess first of all let me say that.
That particular area of sales revenue for us.
Is focused.
More in the commercial private market so.
Greg Hoffman: It's like internally, we noticed that that was still a very strong component of our business. So it's really good to see, I think it's just another internal indicator for us that, you know, that activity is still strong. We are typically in the 10 to 12%, I think we've talked about before, third-party sales of both aggregate and hot-mix asphalt each year in our revenue. And there wasn't any change this year versus last year, still kind of consistently in that range. Still pretty consistent,
So like internally, we noticed that that was still a very strong component of our of our business. So it was really good to see I think just another internal indicator for us.
You know that that activity is still strong.
We are typically in the 10% to 12%.
I think we've talked about before.
Third party sales of both aggregate and hot mix asphalt each year in our in our revenue.
And there wasn't a change this year versus last year is still kind of consistently in that range.
Greg Hoffman: Yeah. Okay. All right.
So still pretty consistent okay.
Andrew John Wittmann: Great. Thanks a lot, guys. Thanks, Andy.
Alright, great. Thanks, a lot guys.
Thanks, Andy.
Michael J. Feniger: Our next question comes from the line of Michael Feniger with Bank of America. Please proceed with your question. Hey, yeah, thanks guys. Thanks for taking my questions. Just, I think you might have touched on it a little bit. Maybe it was the weather in January. Just curious, with such a strong start to the year, any reason to not raise the full-year outlook? Was there anything that kind of stuck out to you?
Our next.
Question comes from the line of Michael Feniger with Bank of America. Please proceed with your question.
Hey, Yeah. Thanks, guys. Thanks for taking my questions. Just I think you might have touched on it a little bit maybe it was weather in January just curious with such a strong start to the year.
Any reason to not raise the full year outlook was there anything that kind of stuck out to you is there anything we should be aware of that you're implying maybe just.
Jewel Smith: Is there anything we should be aware of that you're implying maybe, with with with margins maybe the last the next nine months that that will change your expectations from coming into the year? No, Michael, not at all. I'm glad you asked that question. We typically look at our business as two halves of the year. And so you know, that's why we talk about our revenue being 4060 of our EBITDA, typically 3070. You know, we really try to just get through the first two quarters and then assess our business at mid-year. And so, you know, we feel good about our guidance. There's no, there's nothing we're doing other than just saying we're reaffirming that. We'll take a good, hard look at it after the second quarter, you know, at our mid-year. Great. And just with the quarter, anything you touch on with the margin, we obviously saw, you know, there's lower diesel, maybe liquid asphalt, just, was that a benefit to the margin in Q1? And how are you thinking with where those prices are today?
With margins maybe in the last the next nine months that changed your expectations from coming into that into the year.
No Michael are not at all I'm glad you asked that question.
We typically look at our business as two halves of the year.
And so you know that's why we talk about our revenue was $40 60 of our Ebitdas typically 30 70.
You know, we just we really tried to just get through the first two quarters and then assess our business at mid year.
So.
We feel good about our guidance there's no there's nothing we're doing other than just saying.
We're reaffirming that we will take a good hard look at it after the second quarter you know in our mid year.
Great and just.
With the quarter.
And if you could touch on what the margin on and we obviously saw.
Theres lower diesel maybe liquid asphalt.
But was that a benefit to the margin in Q1, and how you think about where that those prices are today, what it means kind of the next three quarters if it stays at this level.
Greg Hoffman: What does it mean kind of for the next three quarters if it stays at this level? Yeah, Michael, you know, I think but, We always say that, you know, when there is some downward pricing and energy costs, I do get a little tailwind, and when it goes up, we see a little headwind, and I don't think that has changed.
Yes, Michael.
I think but.
We always say is that.
When there is some downward pricing in energy costs, when do we get a little tailwind and when it goes up we see a little headwind and I don't think that has changed.
Greg Hoffman: I think if you look back over the last 12 to 18 months, primarily diesel and natural gas have fluctuated within a pretty tight range; it seems like it was more back in early 2022 when it kind of spiked up. So I think we're operating within a pretty decently stable range and you know, certainly taking those slight tailwinds when we can get them. And just my last one: obviously, we're going into an election year.
If you look back over the last 12 to 18 months.
<unk>.
But primarily diesel and natural gas have fluctuated within a pretty tight range. It seems like it was more back in.
Early 2022, when it when it kind of spiked up so I think we're operating within a pretty decently stable range and you know certainly taking those slight tailwind when we can get them.
Great and just my last one obviously, where we're going.
Going into an election year.
Jewel Smith: I'm curious to hear from you on the ground, does that create any uncertainty, you think, with your business, or is this less of a concern, maybe, compared to prior election years, because you do have that legislation that, you know, the IAJ that was passed? Just curious, kind of, how we think about that in the election year with some of the funding and if it's a little different this go around than maybe what you have seen in other prior election years. Thanks, everyone. Yeah, Michael.
I'm curious if you can hear on the ground.
Does that create any uncertainty do you think that your business or is it less of a concern maybe compared to prior election years, because you do have that legislation.
The IAG that was passed just curious kind of how we think about that in election year with some of the funding.
And if it's a little different this go around than maybe what you've seen in other prior election years. Thanks, everyone.
Yes, Michael.
Jewel Smith: Good question. You know, the good thing for us is, and Washington, D.C. certainly has a lot of things they argue about, but infrastructure funding is probably the most bipartisan thing in Washington. And so both parties see the need to invest in the nation's infrastructure. They always have.
Good question.
You know the.
The good thing for US is in Washington D. C. Certainly has a lot of things they argue about but infrastructure funding is probably the most bipartisan thing in Washington and so.
Both parties see the need to invest in our nation's infrastructure, they always have and so.
Stanley Stoker Elliott: And so, we really don't see the election, however it turns out, really affecting the funding for the IJA or the surface transportation funding overall. So clearly, we want the economy to remain strong and stable, but we really don't think the election is going to have a big impact on our business. Thanks, everyone. Our next question comes from the line of Stanley Elliott with Stiefel. Please proceed with your question. Hey, good morning, everybody. Could you guys talk about, like, when you all would expect your backlogs to normalize? I mean, it looks like you've got cover for the rest of the year.
We really don't see the election.
However, it turns out really affecting the funding.
For that J E or the.
The surface transportation funding overall, so clear.
Clearly, we want the economy to remain strong and stable and but we really are.
I don't think the election is going to have a big impact on our business.
Thanks, everyone.
Our next question comes from the line of Stanley Elliott with Stifel. Please proceed with your question.
Hey, good morning, everybody.
Good morning.
About like when you all would expect your backlogs to normalize I mean, it looks like you've got cover for the rest of the year.
Jewel Smith: Curious if we should see some improvement on the organic side. How can you flex the labor component to maybe add above the seven plus percent sort of numbers you guys are looking at on the organic side? Stanley, I'll address the backlog first and then organic growth. The backlog, you know, set another record this quarter, and so I think that's 13 quarters in a row, which is very atypical for CPI in that our backlog sequentially has always tended in the busy season to go down when we're burning off a lot of backlog, and so that indicates two things. Number one, we're growing, and number two, it's an active bid environment. But at some point, we can only sell so much ahead of our resources, and so at some point, it won't surprise us at all for our backlog to go down sequentially. But it does give us good visibility, and it does allow us to stay patient at the bid table, which are great things. On the organic growth side, we continue to focus heavily on organic growth.
Curious if we should see some improvement on on the organic side.
How can you flex the labor component to maybe to add above the seven plus percent sort of number you guys are looking at on the organic side.
Yeah.
Stay away Alpha I'll.
I'll address the backlog first and then organic growth.
The.
Our backlog.
Wasn't set another record this quarter and so I think thats 13 quarters in a row, which is very atypical for CPI.
And that our backlog sequentially.
As always tended in the busy season to go down when we're burning off a lot of backlog and so that indicates two things number one we're growing.
And number two.
Active.
Bid environment.
But at some point, we can only sell but so much ahead of our resources and so at some point, it's not going to surprise us at all for it to our backlog to go down sequentially.
So, but it does give us good visibility it does allow us to stay patient at the bid table.
What's your what's your great things.
One the organic growth side, we continue to focus heavily on organic growth.
Jewel Smith: And you're right, to do that, we have to add labor. And so we continue to add labor and equipment and invest in organic growth. As Greg said, beyond maintenance capex, we add equipment, we hire people, and try to invest in high-value growth initiatives on the organic side.
Youre right to do that we have to add labor.
And so we continue to add labor and equipment and to invest in organic growth.
As Greg said, you know beyond maintenance Capex, we add equipment, when we hire people and.
Try to invest in high value growth initiatives on the organic side.
Jewel Smith: That's great. And in terms of the backlog or the pipeline of work, any kind of drilled-down color you guys could share on maybe some of the states that you guys are seeing the most activity? I'm just curious to try to get a little sense within the portfolio there. Well, I would say all six states have active bid environments, so there's no state that I would say is of any concern. Clearly, when you look at our states of Florida, Tennessee, and South Carolina, they just have great funding programs and are very, very active. Florida is clearly experiencing just an incredible amount of migration. So is Tennessee and South Carolina.
That's great and then in terms of kind of the backlog or the pipeline of work any any kind of drill down.
Color you guys could share on maybe some of the states that you guys are seeing the most activity.
Just curious trying to get a little sense within the portfolio there.
Well I would say all six states, we have active bid environments. So theres no state that I would say is any concern clearly when you look at our states.
Florida, Tennessee, and South Carolina are just have.
Great funding programs and a very very active.
Florida is clearly.
<unk> experience and just an incredible amount of migration, but so was Tennessee, and South Carolina, North Carolina has a very healthy funding mechanism. So.
Jewel Smith: North Carolina has a very healthy funding mechanism. So it's, Georgia is great. I mean, all of our platform companies are adding work to the backlog and bidding on a lot of work. So we're blessed in that regard. Perfect guys, I'll turn it over. Thanks so much and best of luck.
Georgia is great I mean, it's.
All of our platform companies are adding work to backlog.
And.
And bidding a lot of work so we're blessed in that regard.
Perfect guys I'll turn it over thanks, so much and best of luck.
Stanley Stoker Elliott: Thanks, Stanley. Our next question comes from the line of Adam Thalhimer with Thompson Davis. Please proceed with your question. Hey, good morning guys. Great quarter. Hey Adam, I gotta be honest, Stanley stole all my questions. But, maybe I'll just double up.
Thanks, Dan.
Our next question comes from the line of Adam <unk> with Thompson Davis. Please proceed with your question.
Hey, good morning, guys great quarter.
Hey, Adam here I gotta be honest Stanley stole all my questions.
[laughter], maybe I'll just double up I was curious on kind of your expectations for D. O T bidding in the next few months.
Adam Robert Thalhimer: I was curious about your expectations for DOT bidding in the next few months. Well, we've got quite a bit to bid on. You know, the DOT, as you know, doesn't bid evenly throughout the year. A lot of their work goes bid in the next few months in some of our states. We've got a pretty big lettuce crop in North Carolina this month and South Carolina here next week. So in the wintertime, they do a lot of work that they want to do in the spring and summer, and so it's pretty active. And then, Jewel, are any of the ankle weights still hanging around?
Well, we've got quite a bit the bid on the D. O T. As you know doesn't bid.
Evenly throughout the year a lot of their work does bid in the next few months.
Some of our states and so.
We've got a pretty big letting in North Carolina, This month and South Carolina here next week, so they're there they're the wintertime they let a lot of work that they want to do in the spring and summer.
And so it's pretty active.
And then Joel.
Any of the ankle weights still hanging around I was curious if labor is getting a little bit better.
Jewel Smith: I was curious if labor is getting a little bit better. I would say it's pretty much normal now, Adam. I mean, clearly, the generational, uh, as I've talked about the generational just, uh, retiring of our workforce makes it harder to find skilled operators, but I think that's an advantage for us because we're going to do what it takes to attract and retain a workforce. And so, we see that as an advantage that we're going to try to leverage.
I would say, it's pretty much normal now.
I mean, clearly the generational.
I've talked about the generational just.
Retiring of our workforce makes it harder to find skilled operators, but I think that's an advantage for us because we're going to do what it takes to attract and retain a workforce.
So we see that as an advantage that we're going to try to leverage.
Jewel Smith: But as far as just finding labor to fill our crews... The annual raises, the cost of labor, it's back to normal. It's a pass-through cost that is not out of control like it was right after COVID and the reopening of the economy. So I would definitely say I don't feel like we're running with any ankle weights now.
But as far as just finding labor to fill our crews.
The annual raises.
The cost of labor. It just it's back to normal it's a pass through cost that is not out of control like it was right after COVID-19 and the reopening of the economy. So I would definitely say I don't feel like we're running with any ankle weights now.
Adam Robert Thalhimer: Sounds good. Thanks, guys. All right, Adam, thank you. As a reminder, if you would like to ask a question, press star 1 on your telephone keypad. Our next question comes from Linda Brent Thielman with D.A. Davidson.
Sounds good thanks, guys.
Alright, thank you.
As a reminder, if you would like to ask a question press star one on your telephone keypad.
Our next question comes from the line of Brent Thielman with D. A Davidson. Please proceed with your question.
Brent Thielman: Please proceed with your question. Hey, thanks. Good morning. A lot covered here.
Hey, Thanks, good morning.
Jewel Smith: I guess just just a couple here, Jewel, morning, is the fact that your markets are so good, impacting your ability to do deals as fast as you'd like it, you know, your results are solid, assume many of the potential targets are to just wondering if that has an impact on solar expectations or any other reason. Yeah Brent, that's a good question and one that we get asked a lot, and the reality is... The markets, and them being solid, really don't play into our sellers' thoughts because our sellers are thinking more long-term with what's best for their families, and they're doing family-oriented things, you know, generational planning, and what you know they've made a lot of money in this business for decades, and so they're really not looking at the short-term market, and uh, so, I really haven't I really haven't seen anything about the current, you know, funding making them less willing to sell. We're in a lot of conversations throughout the Southeast and the Sun Belt with potential sellers. Um, you know, our pipeline is active. So, but the markets being healthy really isn't a big consideration for them.
Good morning, I guess, just a couple here Joel good morning.
In June the fact that your markets you're still good.
<unk> your ability to do deals it's massive.
Like your results are solid through many of the potential targets are to just wondering if that's.
I have an impact on seller expectations.
Our expectation is reasonable.
Yeah, Brent that's a good question and one that we get asked a lot and the reality is.
The markets and then be in solid really don't play entire sellers.
<unk> solved because our sellers are thinking more long term with what's best for their family and their Theyre doing family.
You know generational planning and what you know.
They've made a lot of money in this business for for decades, and so they're really not looking at the short term market.
So.
I really haven't seen any change in their expectations I really haven't seen any.
Thing about the current.
Funding.
Making them.
Less willing to sell where we're in a lot of conversations throughout the southeast in the Sun belt with potential sellers.
Pipeline is active.
So, but the market's been healthy really isn't a big consideration for them. It's more what's best you know just for the overall business and their families long term.
Greg Hoffman: It's more what's best, you know, just for the overall business and their families in the long term. Okay, that's great, Joel. And then, Greg, this one might be for you.
Okay, that's great Joe and then.
Greg This one might be for you.
Brent Thielman: Apologize if you'd mentioned this in the script, but the first quarter cash flow was unseasonably good, really good, and just curious, you know, do we see that? Do we see the typical pattern through the rest of the year? Or is this going to be less? Yeah, no, I think that, you know, yeah, it was a good first quarter. First of all, margins helped, right, year over year, certainly have more to do with revenue going up quarter over quarter. Both created great cash flow opportunities just to turn that revenue into cash. I think in terms of the rest of the year, we're going to see more traditional, you know, going back to what we've experienced from a cash flow perspective over the years. Obviously, the last couple of years were strange and different, but I'm expecting to go back to more normal cash flow in 2020.
Jack if you'd mentioned missed it that in the script.
First quarter cash flow was unseasonably good really good and just curious.
Do we see that do we see the typical pattern through the rest of the year or is this going to be less than a typical year for cash flow.
Yeah, No I think that yeah.
It wasn't good it was a good first quarter I you know first of all margins helped drive year over year.
Certainly have more to more and in revenue going up quarter over quarter. Both created great cash flow opportunities just to turn that revenue and the cash I think in terms of the rest of the year, we were gonna see more traditional.
You know going back to what we have experienced from a cash flow perspective over the years. Obviously the last couple of years were strange and different but I'm expecting to go back to more normal cash flow for 2024.
Greg Hoffman: Great, thank you guys. Thanks, Brent. Our next question comes from Brian Russo with Sidoti. Please proceed with your question. Yeah, hi, good morning. Morning, Brian.
Okay, great. Thank you guys.
Thanks, Brett.
Our next question comes from Brian Russo with Sidoti. Please proceed with your question.
Hi, good morning.
Good morning, Brian just good.
Brian J. Russo: Just morning, just a follow-up on the DOT, you know, letting activity. I mean, how would you compare it, you know, to last year? Is it, you know, accelerating, you know, for the DOTs are, you know, anxious to get the IIJ matching funds, you know, or is it just more, you know, turnkey based on their state programs? Just curious.
Good morning, just just to follow up on the letting activity I mean, how would you compare it to last year.
Is it accelerating.
Because it's D O cheese are anxious to get the IHA.
Matching funds or is it just more turnkey based on their state programs just curious.
Jewel Smith: Yeah, Brian, I think both of those are right. I think that the IIJA funds come through the normal programs that the federal government gives money to the states in the federal fiscal year, and so the states have to spend that money or commit it. And so I think it's very similar to last year in what the states are doing. But I also think the states... they have their own funds. As we talked about previously, Florida, Tennessee, South Carolina, North Carolina, and now Georgia recently announced they're using state funds to augment infrastructure funding because they need to keep up with the migration to their states.
Yeah, Brian I think both of those are right I think the E J a funds come through the normal.
Programs that the federal government gives the money to the states in the federal fiscal year, and so the states have to spend that money or committed.
And so I think it's very similar to last year and what the states are doing.
But I also think the states.
Are they have their own funds as we talked about previously, Florida, Tennessee, South Carolina, North Carolina, and now, Georgia recently announced they're they're using state funds to augment infrastructure funding.
Because they they need to keep up with the migration to their states and so.
Jewel Smith: We really see that the DOT's activity is, if anything, higher than last year, but certainly very similar. It's an active bidding environment, and I think that we, you know, the IJA, we are still just really in the early innings, maybe the third or fourth inning of this money getting to the projects and being spent. And so we've still got a long way to go with that.
We really see that the D O t's activity if anything it's it's a more than last year.
But certainly very similar and so.
It's an active bidding environment and.
I think that we.
A J a we still are just really are.
Or in the early innings, maybe the third or fourth inning of this money getting to the to the projects and being spent.
And so we still got a long way to go with that.
Jewel Smith: Okay, great. And then just on the backlog, obviously, you know, another strong quarter despite the seasonality of the business. I mean, how would you characterize, you know, the projects on the public side and then maybe the private side? I mean, you know, is it still, you know, similar size and duration on the public side? And then is there a heavier concentration, you know, in manufacturing or in industrial on the commercial side?
Okay, Great and then just on the backlog, obviously, another strong quarter despite seasonality.
Of the business I mean, how would you characterize that.
The projects on the public side, and then maybe the private side.
Still.
Similar size and duration on the public side and that answer is a heavier concentration.
Manufacturing and industrial.
Jewel Smith: Yeah, Brian, I think, you know, an analysis of our backlog, obviously, takes kind of what we say we're going to do in terms of the mix of revenue going forward. I think Joel said a minute ago that 63-37 is kind of what we expect public to private. And that's pretty normal. It was what it was last year, so I think the makeup is very similar. And then in terms of the duration of the project, and the size of the project, it's also very similar.
On the commercial side.
Yeah, Brian I think.
And the analysis of our backlog, obviously is dictates kind of what we say we're going to do in terms of the mix of revenue going forward I think Joel said a minute ago at $63 37 is kind of what we expect public to private.
And that's pretty normal it was what it was last year.
So I think the make up is very similar.
And then in terms of duration of project size of project.
It is also very similar way.
Brian J. Russo: We track that and want to understand that because, you know, we've talked before about that there's a sweet spot that we're, you know, trying to achieve, and it has not changed. All right, great. Thank you. Thanks, Brian. We have no further questions at this time. I would like to turn the floor back over to management for closing comments. Yes, we'd just like to thank everyone for joining us this morning. We look forward to speaking with you again next quarter. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day!
We track that and went to understand that because you know.
We've talked before there.
Theres, a sweet spot that were achieved.
Cheap trying to achieve.
It has not changed.
Okay, Alright, great. Thank you.
Thanks, Brian.
We have no further questions at this time I would like to turn the floor back over to management for closing comments.
Yes, we'd just like to thank everyone for joining us this morning, and we look forward to speaking with you again next quarter.
Ladies and gentlemen. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.