Q3 2024 MYR Group Inc Earnings Call

Good day and thank you for standing by welcome to the NYU Group third quarter 2024 conference call At this time I'll participate in our listen only mode

After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you depress star one on your telephone. You'll then hear an automated message advising your hand is raised.

To withdraw your question, please press star one and one again. Please be advised, today's conference is being recorded. I would like to end the conference over your speaker day. David Gutierrez, of the Dresner Corps Conservatives, please go ahead.

Thank you and good morning everyone. I'd like to welcome you to the Amwire Group Conference Call to discuss the company's third quarter results for 2024, which were reported yesterday.

Joining us on today's call are Rick Schwartz, President and Chief Executive Officer, Kelly Huntington, Senior Vice President and Chief Financial Officer.

Brian Stern, Senior Vice President and Chief Operating Officer of M.Y. Groups Transmission and Distribution segment. And Don Egan, Senior Vice President and Chief Operating Officer of M.Y.R. Groups Commercial and Industrial segment.

If you did not receive yesterday's press release, please contact us on our 4th service is at 312-780-7204, and we will send you a copy. We're going to the MWR group website where a copy is available under the Investor Relations tab.

Also, webcast replete today's call will be available for seven days on the investor's page of the NYR Group website at nyrgroup.com

Before we begin, I want to remind you that this discussion may contain forward-looking statements. Any such statements are based upon information available to MR Group's management as of this date. And MR Group assumes no obligation to update any such forward-looking statements.

These four looking statements involve risks and uncertainties that could cause actual results to differ materially from the four looking statements.

Accordingly, the statements are no guarantee of future performance.

These risks and uncertainties are discussed in the company's annual report on Form 10K for the year ended December 31, 2023. The company's quarterly report on Form 10K for the third quarter of 2024, and in yesterday's press release.

Speaker Change: Certain non-gap financial information will be discussed on the call today. A reconciliation of these non-gap measures to the most comparable gap measures is set forth in yesterday's press release. With that set, let me turn the call over to Rick Schwartz.

Rick Schwartz: Thanks, David. Good morning everyone. Welcome to our third quarter 2024 conference call to discuss financial and operational results.

I will begin by providing the summary of the third quarter results, and then we'll turn the call over to Kelly Huntington, our Chief Financial Officer for more details financial review.

Following Kelly's overview, Brian Stern and Don Egan, Chief Operating Officers for our T&D and CNI segments, will provide a summary of our segments performance and discuss some of them where our group's opportunities are going forward. I will then conclude today's call with some closing remarks and open the call up for your questions.

Kelly: Our steady third quarter performance improvement was a result of our strong market position and the strengthening of our longstanding customer relationships. As we continue to resolve unfavorable impacts from a relatively small group of projects that were discussed last quarter.

With the exception of these projects that are anticipated to reach mechanical completion in fourth quarter, we are seeing strong project execution across our business segments.

Opportunities for long-term growth remain healthy as we continue to see strong bidding activity, as well as opportunities to build new relationships and expand existing ones.

In July, the Edison Electrical Institute projected that U.S. investor-owned utilities will invest between 186 and $203 billion in annual capital investments from 2024 to 2026.

in order to meet the growing electrification demand.

We can continue to track these major expansion projects that may lead to future work opportunities in growth, while remaining committee committed to executing projects for our value customers.

Our CNI segment continues to see strong bidding activity in our core markets will capture new opportunities and transportation, data centers and pharmaceuticals.

Kelly: As always, our success is grounded in an unwavering commitment to our customers, safe and reliable project execution, and the dedication of our counter to team members.

Speaker Change: I thank each of them for their hard work and the important role they play in helping our company grow. Now, Kelly will provide details on our third quarter of 2024 financial results.

Kelly: Thank you Rick and good morning everyone. Our third quarter change was for revenue, or $888 million, which represents a decrease of $52 million or $5.5 per cent compared to the same period last year.

Our third quarter TND revenue, or $482 million. A decrease of 12% compared to the same period last year.

Speaker Change: The breakdown of T&D revenue was $277 million for transmission and $205 million for distribution.

T&D segment revenues decreased due to a reduction of $81 million in revenue on transmission projects, partially offset by an increase of $14 million in revenue on distribution projects.

Transmission revenues include revenues from our Clean Energy Project.

Speaker Change: Work performed under Master Service Agreements, represented approximately 55% of our T&E revenues.

Speaker Change: C&I revenues were $46 million and increased the 4% compared to the same period last year. The C&I segment revenues primarily increased due to an increase in revenue on fixed price contracts and T&E contracts.

Our gross margin was 8.7% for the third quarter of 2024 compared to 9.8% for the same period last year.

The decrease in growth margin was primarily related to unfavorable impacts from certain clean energy projects in T&D and a single C&I project.

T&D operating income margin was 3.6% for the third quarter of 2024 compared to operating income of 6.6% for the same period last year.

The decrease with primarily related to losses on certain clean energy projects due to unfavorable weather conditions, labor and project inefficiencies, higher labor and contract related costs and contractual disputes.

In addition, Gajal Extension's caused by owner furnished panel delays led to increased cost on two clean energy projects for which we are pursuing chain daughters.

Combined the growth, profit changes related to clean energy projects, negatively impacted operating income as a percentage of revenues by 5.5%.

Many of these projects have reached mechanical completion and the remaining projects are anticipated to reach mechanical completion in the fourth quarter of 2024.

The Ni operating income margin was 5% for the third quarter of 2024 compared to 3.6% for the same period last year.

The increase was primarily due to the continued benefit of higher margins on certain projects near-income completion, as well as better than anticipated productivity and a favorable change for further experience during the quarter-third quarter.

These increases were partially offset by a single project that was discussed in the prior quarter, which had a negative impact of 2.9% on CNI operating income margin during the quarter, third quarter.

Speaker Change: This project is anticipated to reach substantial completion during the fourth quarter of 2024. The loss on this project was primarily due to scope additions, increased labor costs related to schedule compression and lower productivity due to access and workflow issues.

3rd quarter 2024 SGNA expenses, work 58 million dollars, a decrease of 2 million dollars compared to the same period last year.

The decrease was primarily due to a decrease in employee incentive compensation costs, and a decrease in contingent compensation expense related to a prior acquisition. Partially offset by an increase in employee-related expenses to support future growth.

Our third quarter effective tax rate was 42.5% compared to 30.3% for the same period last year.

The increase was primarily due to higher permanent difference items, mostly related to deductibility limits on contingent compensation associated with the CSI acquisition, which was successfully achieved during the third quarter of 2024, as well as higher U.S. taxes on Canadian income.

34, 2020, for net income was $11 million, compared to net income of $22 million for the same period last year. Net income for diluted share was $65, compared to $1.28 for the same period last year.

3rd quarter 2024 EBITDA was $37 million compared to $47 million for the same period last year.

Total backlog, as of September 30, 2024, was $2.6 billion. 1% lower than a year ago and a 2% increase from the prior quarter.

Total backlog as of September 30, 2024 consisted of $799 million for our T&D segment and $1.8 billion for our CNI segment.

3rd quarter 2024 operating cash flow was thirty-six million dollars compared to operating cash flow as thirteen million dollars for the same period last year. The increase in cash provided by operating activities was primarily due to the timing of Billings and Payments associated with project starts in completion.

3,424 free cash flow was positive $18 million compared to negative free cash flow of $10 million for the same period last year. Reflecting the increase in operating cash flow and lower capital expenditure.

During the quarter we repurchased 526,000 shares at an average price of $111.65.

Year to date, we have repurchased $643,000. At an average price of $116.54 for a total cost of $75 million. Exhausting our current show repurchase program.

Moving to liquidity in our balance sheet, we had approximately $269 million of working capital, $93 million of funded debt, and $376 million in borrowing availability under our credit facility as of September for 30 of 2024.

Speaker Change: We have continued to maintain a strong funded debt to EBITDA leverage ratio of 0.7x4x10. As of September 30, 2024.

We believe that our credit facility, strong balance sheet and future cash flow from operations Will enable us to meet our working capital needs, before the organic rows of our business For Sue Acquisition and Opportunistic Group for just share.

and I'll now turn the call over to Brian Stern, who will provide an overview of our transmission and distribution segment.

Thanks, Kelly, and good morning everyone.

Brian Stern: The third quarter performance of our T&D segment was steady, even though we remain unfavorably impacted by clean energy projects that are scheduled to reach mechanical completion by the end of the year.

Brian Stern: Our transmission and distribution portfolio saw solid performance, executing projects of various sizes throughout our regions, and generating new opportunities through longstanding customer relationships.

Strong Bitting Activity continued in the third quarter. Reflecting the investments being made across the country to meet the growing electrification demand.

Speaker Change: The D&A, but said, released a positive outlook on T&D spending in September. The firm compared three-year cat-backs forecast for utilities, and estimated T&D spend will increase 30 percent in 2024 to 2026.

Comparative 2021-223

and according to the C3 Groups 2024 North American Electric Transmission Market forecast released in September.

U.S. investor owned utility spent $90 billion for placing, growing and maintaining their tending grids in 2023.

with distributions spending increasing in record to 15%.

and increased electrification, the clean energy transition, low growth.

and System Harding, they're all significant market drivers now.

Speaker Change: and are expected to continue to be drivers into the future. The need for new and upgraded electric infrastructure has potential to create future opportunities for our business. And our Western Region, Great South Western Construction, Stardin Electric, and High Country Electric, for former Storm Response, were related to our King's Pearl and Lee. Great South Western is also awarded a new Master Service Agreement contract in the Mid-Atlantic Region.

Audi's the ELEMIRS Company, one substation projects and Tennessee, and transmission work in Iowa, as well as storm response work of its own. Our little electric continues to see MSA and transmission work in the Northeast.

In summary, our T&D segment remains committed to partnering with our value customers and safely providing project delivery while strengthening and expanding those relationships from mutually beneficial outcomes.

Speaker Change: I want to thank our employees for helping us reach our high standards every day. We are optimistic about the outlook of the TND industry and look forward to playing a key role in helping our customers meet the future energy demand in the U.S. and Canada.

Speaker Change: and we'll now turn the call over to Don Egan, who will provide an overview of our commercial and industrial segment.

Don Egan: Thanks Brian and good morning everyone.

Don Egan: Our CNI results improve from the previous quarter as we saw steady performance thanks to the strength of our core markets. We continue to execute projects of various sizes across the segment and strategically monitor and bid new opportunities.

Don Egan: CSI Electrical Contractors was awarded the replacement passenger terminal design bill project for Hollywood Burbank Airport in California. Now you did approximately $100 million, with an expected completion date in late 2026.

This furlough solidifies our strong working relationships in the region.

Fadescenders continue to provide ongoing and long-term opportunities across the segment with new awards in the quarter.

Don Egan: Health Care, aerospace, transportation and pharmaceuticals are also markets where we continue to execute on projects and see healthy bidding activity.

Our statement continued to be unfavorably impacted by a single project, which continues to present headwinds as we work towards substantial completion during the fourth quarter of this year.

Don Egan: Moving forward, the future as promising as our chosen core markets are expected to grow during the rest of the year and into 2020. The consensus construction forecast from the American Institute of Architecture released in July, expects industrial facilities to see strong double-digit spending grow throughout the rest of 2024.

With healthcare facilities specifically forecasted to rise 3.5% in 2025. The Dodd-Momenam Index released in July also reported an increase of 17% over the past 12 months across all segments.

with Data Centers continuing to play an important role in market growth.

Inc. Inclusion. We're encouraged by the forecast of our chosen core markets, which aligns with the healthy bidding activity we currently see.

By remaining the nimble partner for our customers, backed by the dedication of our talented employees, we will continue to work to safely execute projects and deliver value to our customers and shareholders.

Thanks everyone for your time today. I will now turn the call back to Ray who will provide us with some closing comments.

Thank you for those updates, Kelly Brian and Don, our third quarter performance reflects the resiliency of our core markets and the strength of our longstanding customer relationships as we continue to complete a relatively small group of underperforming projects.

Bitting Activity of Cross-R Business segments remain healthy.

and Market Forecasts are positive throughout the remainder of this year and into 2025.

Our focus is continually placed on emphasizing our customers' needs. Further developing and supporting our skilled employees, and providing value by successfully and safely executing projects.

Finally, I want to thank each of you for your continuous support of M.Y.R. Group. We look forward to progressing our business strategies, while strengthening our client relationships and creating chairholder value. Operator, we are now ready to open the call up for your comments and questions.

Thank you, ladies and gentlemen, if you have a question or a comment at this time, please press star one on your telephone. If your question has been answered, you wish to move yourself from the queue, please press star one on again. We will pause for a moment while we compile our queue and a roster.

Our first question comes from Adi Murak with Goldman Sachs, a line is open.

Hi, good morning, team. You mentioned some, that there are some change orders you're pursuing for the Clean Energy Project. Can you give any additional color there, the potential impact on margins? Should we expect a little bit of a bump temporarily in realized margins for these change orders? How should we think about the progression?

Don Egan: Thanks!

For us, we need to get these projects behind us. We do have change orders we're pursuing. Again, as we close out these projects, we evaluate those every quarter and look where we're at. And really try to assess it on a real time basis. So we do that every quarter, we're continuing to have conversations with the clients.

and we will probably continue to have some impacts from these projects as we get into the sort of finish the fourth quarter, but those should all be behind us a year and.

Don Egan: Gordon and them.

Sorry, I'm just to add on to that. So I think when you look at the T&D operating in Commergeon, you know, similar to what we talked about last quarter, we expect to be in the middle of the target range when you exclude the impacts of the the the the alert project.

Yeah, that's what I was about to ask next. So like margin progression core, T&D business seems like it's doing well, CNI as well.

Speaker Change: Can you give us a little bit more color on that progression trajectory from here? Is it too early to think about upside to the ranges you've provided previously? Any color there?

Sure I'll start on that and then Rick Maywena has some broader market context.

For the CNIside operating in Ken Mergen, also expecting to be in the middle part of the range, excluding the impacts of the single project that we talked about that will reach the substantial completion here in the fourth quarter.

Speaker Change: It is we go forward into next year, you know, our expectation as these projects reach completion is that we'll have those behind us and we should be operating in the middle part of our each of our segment ranges so that's the 7 to 10 and a half percent on the T&D side.

and the 46% on the CNI side as we look forward into 2025.

and as Kelly said, we, you know, next quarter year or the fourth quarter we need to get these projects behind us after that, we see strong, you know, market opportunities out there. But again, to early do a just kind of our margin profile, but as Kelly said, we anticipate, you know, being in that mid-frainge.

for next year and hopefully we see opportunities that can take us above that.

That's very, I will thank you so much.

Speaker Change: Our next question comes from Sang GideJing with Keybank, your line is open.

Sang GideJing: Great, thank you so much for taking my questions, Rick and Kelly, can you talk a little bit about your T&D backlog, Rick and how much solar you still have in there and if the terms on those are different from what you have been burning currently?

Yeah, we really have a defined, you know, the exact amount that's carried in our backlog, but as you know, we've been very selective on the T&D side of which projects we're taking on as far as solar projects.

Sang GideJing: So with that I would say our backlog continues to decline and that's on the solar side.

Well, growing on our core team, what I call our core, you know, TMD business. So as we all form, we're going to continue to be selective.

On those projects we still don't mind the solar market.

But with the right terms and conditions, I would say there's been no new projects that have been identified that are problem projects on the solar side.

Sang GideJing: of our team deeplessness or even on our CNICI by this the one project. So we're still talking about the same projects we had last quarter with nothing new added there. So I think our core business is Kelly said earlier is operating very well.

Speaker Change: Minus, those few problem projects. Kelly, anything you want to add.

Yeah, I'm just to connect that thingy to kind of what our expectations have been moving to the fourth quarter. You know, T&D revenue we expect to be probably flattest to the third quarter. We're expecting to see lower clean energy revenues in that segment as additional projects reach mechanical completion. But that's offset by growth in our core T&D business.

and you know just while we're on the topic, you know from a CNI perspective, they're in the fourth quarter, we see revenue being flat to down slightly compared to third quarter and that really will just depend on project timing and how things roll out in the fourth quarter versus in the next year.

So while we're talking about folk, you can ask you about margin progression, three-cut to folk you as some of these problems projects start to reach mechanical completion, should we expect the trend to move towards your midpoint of your long-term ranges?

Yeah, I'll go back to the comments I made earlier, you know, we're expecting without the impacts of these problem projects in clean energy on the T&D side and the single project on CNI that will be operating in the middle part of the range. You know, I thought I think we saw a good progression, you know, relative to the losses that we experienced on those projects in the second quarter versus the third quarter. But we still have work to do on those projects and until they're done, we may have risk around those projects. And of course, we are carrying them at lower margins until they're completed. So they will have a drag on our performance that has been, you know, has been strong and with within our expectations outside of these projects.

and Kelly, can I ask you a question on free cash flow? So your free cash flow was stronger than what we had model for this quarter. So is there anything that you can help us understand if there was a specific reason for that? That positive close out or just kind of something to kind of like understand that better?

You know, for us, a lot of it when you look quarter by quarter really comes back to, you know, the timing of when projects are starting and wrapping up so that can make it a little bit lumpy.

I think we benefited from that. We've also seen some modest reversals on balances for retainedage, for example, and for total pending change order, so that's helping to support positive cash flows. I think if we look into next year, we do see an outlook for stronger cash flows relative to certainly what we saw in 2023 and on a year to date basis so far this year, then that's really driven by our outlook for increased profitability from both segments.

Speaker Change: and you know I say we do still face ahead when like all companies interest rates are coming down but they're still high so payment terms you know continued to be a focus of conversations with customers but you know I think a lot of that's in our numbers today.

Garden, very helpful. Thank you so much for taking my questions.

Speaker Change: Thank you.

Speaker Change: i

Next question comes from just in half with beard, your line is open.

Great, yes, I'm a couple of them.

I guess clarification was one maybe bigger picture thinking about exterior.

and Kelly Huntington, starting on the CMI margin of 5% you guys talked about the three or 50 basis points in negative adjustments I guess.

Speaker Change: and that was a one project. And you also said there was some offsets that had a positive change order. I was just wondering if you could kind of quantify that. And the five percent given those headwinds was quite strong for the quarter. So just want to make sure that we have all pieces.

Yeah, you know, we did have some positives and you know, we identified those. We also have them, you might remember the last couple of quarters that we've noticed some positive adjustments that have been helping to offset that and as we're carrying those projects forward to completion, we're carrying them at higher margins. I think a little bit of this is also that our losses have really been concentrated in a couple of areas, right? So the one project on the CNI side, the solar projects on the T&D side and when you're, you know, when you're only taking out the bad, it's leaving all of the good, right? And we typically you have some positives and minuses.

Speaker Change: and a given quarter, but our minuses recently have been really concentrated in just a couple of areas and so that's why we're a little cautious. When you normalize those out, remember we've also got some things that have been positive in those quarters as well that we expect over time kind of even out.

Okay, all right, well I guess you, you kind of talked about the four and a secs and being at the midpoint. So I guess we'll just look at those in the net balancing at that five here.

I definitely second question is just on, I don't think as you mentioned anything but do you have any detail about just kind of the storm impact for the quarter or what you've seen in 4Q and usually that's really high margin high utilization stuff. Maybe just some context of

Speaker Change: What the contribution that's been versus maybe historical year of how much storm work that you usually do.

We always have some storm work in our numbers, so I would say, we've talked before, the majority of our work that we really, you know, we need to look at 50% of our work, this MSA work and majority of those clients are all part of mutual assistance.

So they tell us how many crews we can take off, where we really try building our businesses around that solid day to day work.

We like Storm with work, we like being able to support it, but again.

Our clients really tell us how many people we can remove from their work and send to storm.

So for us it's usually not a needle mover, but it is usually a positive contributor, but not a needle mover by itself.

Okay, fair enough today, you know, this is obviously the usually active season, so I just didn't know if there was anything on that but yeah. And I guess just my last one here at 15 about 25.

You know, to the back log.

Speaker Change: at the stands right now with kind of...

Winding Down the Solider portfolio of the projects you've been completing, you're flat. I'm just trying to think about...

You know, from a high level what you would be thinking about in terms of revenue growth for 25. I mean, it's flat back law, consistent with kind of a flat-ish revenue outlook for the year. Or, you know, is there stuff and it's expected to come in that's not in the back law that maybe gets some growth expectations above that.

and just trying to get an idea of where you're thinking for 25.

Yeah, I'll start off on that and I'm sure Rick will want to ask the market context. So when you look at the N.I. and our traditional T&D business we're seeing high-single digits growth opportunities in both segments, I think that headwind is you highlighted against part of that is the strong contribution. We've still seen from a revenue perspective this year from clean energy work.

and that relative to the comments that Rick made about the future and backlog. So that has represented about 12% of our work here today in the T&D segment.

Yeah, and again, Kelly said, we see great market opportunities on the T&HD side to continue to grow our business, you know, minus solar and solar market, you know, improved in the markets. We've been talking about, we anticipate taking on some work there and being able to add that to our backlog. But I think, and on the CNI, I think we've shown, in order, in order, we can, we can, that there is project opportunities and we are growing that backlog. So for us, it's just making sure we choose the right opportunities and we remain selective.

Speaker Change: Thank you very much and I'm glad the staff is all contributing here to the year that's good to see you.

Thank you. One moment for our next question.

The next question comes from Brian Brophy with Steefleer, Ladder's Open.

Brian Brophy: Yeah, thanks. Good morning everybody. So, question on CNI backlog. I'm so it was quite strong in the corner. Can you talk about what's driving that? And is there any particular large project to call out or end market that's driving them to the target of that? Thanks.

I wouldn't say a large, large project by itself. We've done talked about the, you know, $100 million, or approximately a project that we picked up.

at the Hollywood Burn Bank Airport. That was part of it. I would say in all the markets we're in right now, we're seeing a lot of activity. Good opportunities going forward. I wouldn't say it's all contribute to both of just one area or one.

You know, extremely large project. We've got a pretty balanced portfolio.

Okay, thanks. And then wanted to ask on Capitol deployment. Obviously, it looks like you guys bought back quite a bit of stock in the third quarter used up the entire authorization. Can you talk about higher thinking about priorities for cash going forward here?

Sure, so, you know, we, and...

Speaker Change: We are really focused on how do we capital, just like capital for growth and we're seeing good opportunities, though both from an organic growth perspective.

Brian Brophy: You know we remain interested in talking acquisitions that we think could create your holder value.

So we do see that prioritizing that as we go forward. That said, we've always thought about sharing purchases opportunistically and we even after a couple of tough quarters we have a strong balance sheet. So we've got flexibility. I think to support what makes sense from a value creation perspective.

Brian Brophy: Thanks for watching.

Speaker Change: Next question comes from John Rathlete, KCCA, your line is open. Good morning, everyone!

Mark, just sort of a point of clarification, are you pursuing at this point any solar work or are you just looking elsewhere until maybe the environment changes?

No, we continue to pursue it. We like the solar market as we said it's been a positive contributor on the CNI side.

Speaker Change: and we've had good growth on that side in select markets. We talked about a couple of geographic areas that we have historically done that work under the T&D segment, that have been what I'd call challenged on margins or the, you know.

Brian Brophy: The way the projector are being did right now, so we're going to remain selective, make sure we have the right terms and conditions, but we're not getting out of that market. We like the market overall, we've been in it a long time. Again, it just comes down to make sure we have the right pricing in terms and conditions that we're going to do so.

Okay, but is a service say the environment.

General Ace Speaking is a little bit more competitive.

Not in all markets, again, I said it's been positive on, you know, in the geographic areas that we've done it on the CNI side.

So I wouldn't say it's it.

and a challenging work on that side. In a couple areas it has and really that's affected our T&D side at the projects that are clean energy one. So again, overall I wouldn't say it's aggressive everywhere.

and Kelly, when you look at the performance of the problem projects in the past quarter, in the third quarter, just curious.

Did they come out better than you were looking for or were they pretty much in line with what you were thinking in terms of the losses and so on?

Yeah, it's an interesting question, John. You know, we always, anytime we're closing the books at the quarter, we're taking all the information we have at that time to estimate what we think that costs to complete will be and so we're taking that into consideration.

Brian Brophy: Yeah, I think when we talk about solar, you may have noticed in our disclosure that the biggest driver for us in the quarter on those challenge solar projects was unfeavorable weather. So that was a hit for us, that certainly we hadn't anticipated.

and we reported our second quarter result. So, you know, those are the kinds of risk we can face as we close out projects and why, you know, we've tried to give as much disclosure as we can around when we reach mechanical completion for the solar project, so we're the substantial completion for the CNI project.

Because we know that comes more predictable what to expect after that point, even though the work is an 100% done.

Speaker Change: So with that mind, would it be fair to assume that as you look into the fourth quarter, those projects will be less a bit drag than they were in the third quarter.

I think we certainly hope so that until the work is complete. We're the accounting rules don't permit us to take a worth case to use. We're taking all the information we have when we close the quarter. But we know at a minimum we're going to carry these projects that lower margins until they're complete.

Brian Brophy: and my truth about it.

Speaker Change: And I think I would add to that, John, as we've also got ongoing conversations with the clients. So when it comes to the change orders or potential claims out there, we're continuing to have those. And as I said, this is project-skid closer to completing. And we reach that mechanical completion. Those conversations accelerate.

So that can always be an effective way either positive or negative, but again, we anticipate getting these projects at least mechanical completion by year. All right, we're thank you very much.

Speaker Change: Again, ladies and gentlemen, if you have a question or a comment at this time, please for a star one one on your telephone.

Speaker Change: i

Speaker Change: and I'm not showing any further questions at this time, I'll turn the call back over to Rick for any closing comments.

Two conclude on behalf of Kelly, Brian, Don and myself. I sincerely thank you for joining us on the call today. I don't have anything further, and we look forward to working with you going forward and speaking with you again on our next conference call. Until then, stay safe.