Q3 2024 Southland Holdings Inc Earnings Call
Speaker Change: Cody Gallarda, Alex Murray, Cody Gallarda, Alex Murray, Cody Gallarda, Alex Murray,
Speaker Change: Good morning, ladies and gentlemen, and welcome to the Southland Holdings Inc. 3rd quarter 2024 conference call.
At this time, all lines are in the listen-only mode.
Speaker Change: Following the presentation, we will conduct a question and answer session.
Speaker Change: If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, November 13, 2024. I would now like to turn the conference over to Alex Murray. Please go ahead.
Alex Murray: Good morning, everyone, and welcome to the Shelton third quarter 2024 conference call.
Alex Murray: This is Alex Murray, Director of Corporate Development and Investor Relations.
Alex Murray: Join me today are Frank Renda, President and Chief Executive Officer.
and Cody Gallarda, Executive Vice President and Chief Financial Officer.
Speaker Change: Before we begin, I'd like to remind everyone that this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995.
Speaker Change: Forward-looking statements are neither historical facts nor assurances of future performance.
forward-looking statements are uncertain and outside of Southland's control.
Speaker Change: Southam's actual results and financial condition may differ materially from those projected in the forward-looking statements.
Speaker Change: Therefore, you should not rely on any of these forward-looking statements, and we do not undertake any duty to update these statements.
Speaker Change: For a discussion of some of the risks that could affect results, please see the Risk Factors section of our Form 10-K for the year ended December 31, 2023 that was filed with the SEC on March 4, 2024, and discussion on Form 10-Q for the quarter ended September 30, 2024 that was filed with the SEC last night.
Speaker Change: We will also refer to non-GAAP financial measures, and you will find reconciliations in the press release relating to this conference call, which can be found on the Investor Relations page of our website.
Speaker Change: With that, I will now turn the call over to Frank. Thank you, Alex. Good morning and thank you for joining Southland's third quarter 2024 conference call. Third quarter revenue was $173 million with a gross loss of $51 million.
Frank Renda: It is important to bifurcate our third quarter income statement between the M&P business, certain legacy projects, and our new core business.
Frank Renda: excluding unfavorable adjustments from the M&P business and certain legacy projects, our gross profit in the quarter was $20 million.
Frank Renda: The unfavorable adjustments, which were largely non-cash in the quarter, negatively impacted our results by $71 million.
Frank Renda: The unfavorable adjustments were driven by recent dispute resolutions, scheduled delays that increased completion costs on certain projects, and reduced expected recoveries on legacy projects.
Frank Renda: At the end of the quarter, we had approximately $180 million of remaining M&P backlog.
Frank Renda: and approximately $105 million of non-MMP legacy backlog. We expect the remaining MMP backlog to be substantially complete by the end of 2025.
Frank Renda: Despite the significant impact of non-cash charges on this quarter's results, we are encouraged by the strong performance of our new core projects which delivered double-digit margins.
This result underscores the strength of our strategic initiatives.
and gives us confidence in our direction.
Frank Renda: The solid performance of our new core projects aligns well with our long-term strategy, as these initiatives are not only delivering strong margins now, but also positioning us for sustained success.
Frank Renda: I'm very excited about the new core work, which makes up approximately $2.5 billion of backlog. Our new core work is the best backlog we've ever had. This work provides us with great visibility heading into 2025 as our new core projects continue to ramp up and our legacy projects continue to burn off.
Frank Renda: Given the strength in our new core backlog and strategic improvements to internal processes, I expect we will return to profitability in 2025.
Frank Renda: During the third quarter we also successfully executed upon several strategic initiatives to bolster our balance sheet.
Frank Renda: We close the quarter with the strongest quarter-end cash position we've ever had since going public.
We closed the $42.5 million real estate transaction in July.
Frank Renda: We also closed a $160 million senior secured term loan facility with Caledon Commercial Finance in the quarter. The initial term loan consisted of a $140 million initial draw term loan and a committed $20 million delayed draw term loan.
Frank Renda: This refinance extended the maturity of a large portion of our debt to 2028. The real estate transaction and the new facility significantly strengthened our promise sheet.
Frank Renda: This strengthened balance sheet gives us additional flexibility, enabling us to capitalize on new opportunities, confidently execute on our backlog, and respond swiftly to market changes.
Frank Renda: With our enhanced cash position, we are better positioned to drive higher profitability and pursue attractive opportunities in our markets.
Frank Renda: We ended the quarter with $2.74 billion of backlog, essentially flat from last quarter and up from $2.54 billion at the end of the third quarter last year.
Frank Renda: We booked approximately $140 million of new awards during the quarter. This included a $132 million water treatment plant for the Bureau of Reclamation. We also have several projects which we are the apparent low bidder on and expect to convert into backlog after finalizing contract negotiations.
Frank Renda: We are thrilled with the momentum of our new core backlog, but the pipeline we are tracking is truly exceptional, the most robust and promising we've ever seen. We believe we are well positioned to capitalize on this significant opportunity.
Frank Renda: We are experiencing sustained demand across our core markets as demand for infrastructure construction services continues to outpace the supply of qualified contractors.
Frank Renda: This imbalance has created a unique opportunity for us to bid on projects with limited competition.
Frank Renda: Moving forward, we will remain selective, focusing on projects that align well with our strengths and objectives.
Frank Renda: A key component of our strategic plan is to focus on securing smaller-dollar, shorter-duration projects that yield quick cash flow. We're pursuing numerous shorter-duration projects in the $30-$150 million range.
that expect to bid over the next six months.
Frank Renda: Our civil segment market continues to be very attractive. It is a key area of focus for us to pick up shorter duration projects.
Frank Renda: We're also tracking some larger projects in our civil segment, including the $600 million I-35 CAPEX drainage release tunnel in Austin, Texas, the $350 million Hydro One Tunnel in Toronto, Canada,
Frank Renda: $120 million dollar civil and utility package for Dallas-Fort Worth Airport's Terminal F
Frank Renda: and the $500 million Hudson River Gateway Tunnel in between New York and New Jersey.
Frank Renda: In our transportation segment, upcoming opportunities include the $300 million I-195 Washington Bridge replacement in Rhode Island and the $1 billion Garden City Parkway Skybridge in Ontario, Canada.
Frank Renda: We're also actively engaging with state and local officials in the Southeast to explore ways we can support and contribute to rebuilding the region's infrastructure following the recent natural disasters.
Frank Renda: Additionally, we expect to have the opportunity to bid on smaller packages from large programs we are tracking over the coming quarters.
Frank Renda: This includes the $1 billion Red River Valley Water Supply Program in North Dakota. We are currently working on an initial phase of this program.
Frank Renda: We're also tracking various packages from the approximately $7 billion GBRA Water Secure Program, a $2 billion program for the Northern Colorado Water District, and a $440 million water program for the City of Thornton, Colorado.
Frank Renda: We're tracking over $20 billion of transportation projects in the Northeast. We're also following projects in some of our key transportation markets, including Texas and Florida, which are planning to spend tens of billions of dollars in the coming years.
Frank Renda: This robust pipeline gives us clear visibility into long-term growth opportunities that will drive our business for years to come. With unmatched resources and expertise, we are uniquely positioned to fully capitalize on this unprecedented potential.
To recap, we faced several non-cash losses this quarter.
Frank Renda: largely due to the impacts of the M&P business and certain legacy projects.
Frank Renda: We are excited about how our new core work is performing and the visibility our new core backlog provides us as we head into 2025.
Frank Renda: We have also made significant strides to improve our balance sheet and end of the quarter with the highest quarter in cash balance we have had since becoming a public company.
Frank Renda: The improvement in our balance sheet positions us well to perform on our great backlog and capitalize on the best pipeline of opportunities we have ever seen.
Frank Renda: Before closing, I'd like to highlight some recent achievements by our teams.
Frank Renda: Thanks to the hard work and dedication of our people, we have recently achieved several operational milestones, including opening the east and westbound lanes of a paving project in Arkansas,
Frank Renda: and completing the final concrete deck placement on a challenging bridge project in the Midwest.
Frank Renda: Thank you to each of our team members for your unwavering commitment to safety and quality, which sets us up for a strong 2025 and beyond.
Cody Gallarda: With that, I'll now turn the call over to Cody for a financial update.
Cody Gallarda: Thank you, Frank, and good morning, everyone. I will provide an overview of our financial performance during the third quarter 2024. You can find additional details and information in the financial statements, footnotes, and management's discussion and analysis that were filed on Form 10-Q last night.
Cody Gallarda: Revenue for the quarter was $173 million, down from $312 million in the same period in 2023.
Cody Gallarda: Additionally, the timing of project closeouts and new project starts also contributed to the decrease in revenue year-over-year.
Cody Gallarda: We substantially completed a large marine project in the Bahamas during the second quarter of this year. This project contributed $54 million more to revenue in the third quarter last year compared to this year, and delayed starts resulted in us not replacing as much revenue as anticipated in the quarter.
Cody Gallarda: Gross loss for the third quarter was $51 million, compared to a gross profit of $30 million from the same period in 2023.
Cody Gallarda: Gross profit margin in the quarter was negative 30% compared to 10% in the same period of the prior year. Unfavorable charges of 72 million dollars from legacy projects impacted results.
Cody Gallarda: This was the result of certain dispute resolutions, scheduled delays that increased completion costs on certain projects, and reduced expected recoveries on legacy projects. These charges had significant non-cash impacts in the quarter.
Cody Gallarda: Selling, general, and administrative costs in the third quarter were $17.5 million, an increase of $2.2 million compared to the same period in 2023.
Cody Gallarda: Interest expense for the quarter was 7.5 million dollars, an increase of 1.3 million compared to the same period in 2023.
Cody Gallarda: The difference was attributable to increased borrowing costs and higher debt balances.
Cody Gallarda: We expect interest expense to be approximately 9.5 million dollars per quarter on a go-forward basis
Cody Gallarda: Income tax benefit was $17 million for the quarter, compared to tax expense of $5 million for the same period of last year.
Cody Gallarda: On a go-forward basis, we expect our effective tax rate to be in the 20-24% range, depending on certain tax credits, non-deductible items, and certain state and local taxes.
Cody Gallarda: We reported a net loss of $55 million, or negative $1.14 per share in the quarter, compared to net income of $4 million, or $0.08 per share, in the same period last year.
Cody Gallarda: In the third quarter, we produced EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, of negative $59 million compared to EBITDA of positive $22 million for the same period in 2023.
Now to touch on segment performance for the quarter.
Cody Gallarda: Our civil segment had revenues of $56 million, a decrease of $35 million from the same period in 2023. Our civil segment gross loss was $18 million compared to a gross profit of $12 million in the same period in the prior year.
Cody Gallarda: As a percentage of revenue for the quarter, our civil segment had gross profit margin of negative 33% compared to 14% in the same period in 2023.
Cody Gallarda: Unfavorable charges of 27 million dollars from legacy civil projects impacted results in the quarter.
Cody Gallarda: For the quarter, our transportation segment had revenues of $117 million, a decrease of $104 million from the same period in 2023.
Cody Gallarda: Our transportation segment gross loss was $33 million. This compares to a gross profit of $17 million in the same period in the prior year.
Cody Gallarda: As a percentage of revenue for the quarter, our transportation segment had a gross profit margin of negative 28% compared to positive 8% for the same period in 2023.
Cody Gallarda: Unfavorable charges of $44 million from materials and paving and legacy projects significantly impacted this segment's results.
Cody Gallarda: This segment was impacted by $18 million of charges in the materials and paving business and a $17 million charge on a bridge project in the Midwest, which was largely due to a dispute resolution.
These charges were significantly non-cash on the quarter.
Cody Gallarda: Turning to the balance sheet, as of September 30th, 2024, we had net debt of $212 million, inclusive of cash and restricted cash of $107 million.
Cody Gallarda: As previously announced, we closed a $160 million Senior Secured Term Loan Facility with Caledon Commercial Finance in the quarter. The initial term loan consisted of a $140 million initial draw term loan and a committed $20 million delayed draw term loan.
Cody Gallarda: This facility provided us with additional liquidity and extended our debt maturity significantly to 2028.
Cody Gallarda: As we move forward, we're encouraged by the potential for substantial future cash inflows from the resolution of disputes and change orders related to our legacy projects, along with the strong performance we're seeing in our new core projects.
Speaker Change: Thank you for your time and interest in Southland. I'll now pass the call back to the operator for your questions.
Thank you. Bye.
Speaker Change: Thank you and ladies and gentlemen we will now begin the question-and-answer session. To ask a question you may press the star followed by the number one on your telephone keypad. If you're using a speakerphone please pick up your handset before pressing any keys. To withdraw your question please press the star followed by the number two. Once again please press the star one to join the queue.
Speaker Change: And your first question comes from the line of Adam Thalheimer with Thompson Divis. Please go ahead.
Hey, good morning guys. Tough quarter.
Hey, good morning, Adam.
Speaker Change: The $105 million of non-MMP legacy backlog, what's the time frame on that burning off?
Speaker Change: So that we expect to be substantially complete by the end of 2025 with one project that will have a tail into 2026 but we believe it will be immaterial at that point.
Okay.
What was the revenue impact from the
unfavorable from the non-cash unfavorable adjustments in the quarter.
Speaker Change: So when you look at what we've disclosed, there's approximately 71 million dollars that were a decrease in recognized revenue based on the cumulative catch-up impacts of percentage completion accounting.
Speaker Change: that contributed to the lower top line volume. The remaining contribution to the top line decreased, and forgive the backwards speak there, but had to do with
Speaker Change: projects being pushed out to the right on the timeline. The work hasn't gone away. We still have the two and a half billion of great new core backlog.
Speaker Change: were excited about, but that was the contribution, that was the decrease in contribution that led to the volume dip in Q3, in addition to that included the project in the Bahamas we specified in our opening remarks.
Speaker Change: Okay and Frank what how do you think about you talked about focusing on smaller quick-turn work 30 to 150 million dollars
Speaker Change: But then you also gave a list of, you know, mega projects that you're going to. How do you think about that?
Speaker Change: how you're going to allocate resources going forward between those two buckets.
staple project and in areas and then also in
Speaker Change: maximize our resources by taking some of those 30 to 140 million dollar projects.
Speaker Change: And so when I talk about balance, you want to balance the, you know, the cash coming in, kind of maximizing resources right now.
Speaker Change: disappointing tough quarter but the pipeline is incredible out there and you kind of hit on it. The key to maximizing that return is to maximize what you can get from from your resources and and that's why we're looking at a mix of projects right now.
Speaker Change: Got it. Last one for me, what do you guys think the timing of additional claims settlements will be?
Speaker Change: So we're at the table on a number of them. We've disclosed in the past that we've got a half of our.
Speaker Change: contract assets balance are in claims on fully completed projects. We expect significant cash flows coming off from those settlements as owners are running out of abilities to delay owing us money and we believe we're due and think that will be a large part of our 2025 story and cash generation.
Great, thanks guys.
Thanks, Adam.
I'm going to be a little bit more nervous.
Speaker Change: And your next question comes from the line of Brent Tillman with DA Davidson. Please go ahead.
Speaker Change: Thanks, good morning guys. I just had a question on the non-MNP
legacy business maybe you could talk through
Speaker Change: You know, when those projects were picked up, is this new to the business, something you came across, just a little more history around.
That piece of portfolio would be helpful.
Speaker Change: Yeah, yeah. Thanks, Brent. You know, kind of touching on, you know, those non-MMP projects that I think you're referring to.
Speaker Change: We had charges that had cumulative catch-up effect, which drove the current period profit margin negative. Our legacy backlog is down to $105 million and is expected to be substantially complete over the next few quarters.
Speaker Change: That's it. The legacy impacts, you know, our civil-produced mid-teen margins.
Speaker Change: And, you know, as far as when those projects were picked up, Brent, they were picked up in that 2018-2019 timeframe. And we expect those to be wrapping up.
in 2025.
Okay.
Speaker Change: Thanks, Frank. And then I guess, you know, look, the bidding climate is very healthy. With the changes you've made to the capital structure...
Speaker Change: and I guess as you look at your bonding capacity available today, Frank, I mean you didn't talk around some other project pursuits.
that are out there, but I'm trying to understand.
Speaker Change: your capacity to add more business at this stage to what you already have, I guess, you know, what's the
Speaker Change: what's the threshold backlog can go to relative to what you're able to do right now.
Speaker Change: Yeah, so you know we're sitting with a near backlog of 2.5 billion dollars in our new core backlog. That's the best in our company's history.
Speaker Change: Our surety partners are an integral part, you know, to our long-term success and we meet with them kind of regularly to talk about all the opportunities that we are tracking.
Speaker Change: We look at the resources, you know, in regards to equipment, personnel, where we're at in different locations. Having that $2.5 billion in core backlog, total $2.754 billion in total backlog.
That $2.5 billion gives us...
Speaker Change: visibility into exactly what we can do over the next few years.
Speaker Change: And as far as what we can add, we're just going to be extremely selective. You know, the jobs that we're targeting have to be absolutely perfect to maximize the return that we're going to get on our resources.
Speaker Change: We think we have the best backlog, $2.5 billion in our core market. But we see the pipeline as even a greater opportunity than we have right now. So extremely tough quarter.
Speaker Change: but we have completely reset. We're laser focused on our core market and exactly what we do, and we expect to return to profitability.
quickly in 2025.
Speaker Change: Yeah, I think Brent, maybe just to add a little color from the balance sheet side, you know, we're sitting with the strongest cash position that we've had since going public.
Speaker Change: which is a big part of kind of where we are in this this turnaround section for Sapline. Not optimal as Frank mentioned before, you know I go very disappointed in the corner quarter, excuse me, but I can't be more optimistic about where we're going.
Speaker Change: Yep, maybe just to follow up to that. I mean, it sounds like maybe the timing of ramping up on some of this work pushed to the right a little bit. Obviously, there's a lot of activity and
Speaker Change: Southeast here recently maybe that had some influence but is you is you ramp up on these projects and setting anything else aside with the legacy
Speaker Change: sort of backlog or collections efforts. I mean, should you should you expect to see an acceleration in cash flow with that, Cody? I'm just trying to get a sense of how we can think about cash flow X.
Cody Gallarda: Yes, some of you guys are in the business right now.
Yeah, great question.
Cody Gallarda: We think there's a high probability and opportunity for that, particularly as you look at kind of the leading indicators on cash flow with the increase in BIE that we have, as well as, you know, some of the decreases in CIE as we've had some settlements and work completed.
with the legacy portfolio.
Cody Gallarda: So I think when you look at the cadence of what we've announced over the last you know I'd say 24 month horizon on projects you know earlier on in that time period we had
Cody Gallarda: some significant larger projects that are starting off slower than we had initially hoped for. They did provide great mode payments which contributed to that increase in BIE and the health of our cash position.
Cody Gallarda: But it's also why you've seen the more recent announcements focused on that smaller side. And getting, as Frank mentioned, some of that quicker turn work to focus on cash generation to help us bridge the gap to these larger projects really kicking off and making a meaningful impact.
Got it. Okay. Thanks guys. I'll pass it on.
That's brilliant, thanks Brad.
Thank you. Bye.
Speaker Change: and your next question comes from the line of Christian Schwab with Craig Helen please go ahead
Christian Schwab: maybe first, you know, could you quantify what the revenue impact was, you know, from the push on the quarter, you know, due to hurricanes and other project start times?
Speaker Change: Yeah, I think, Tyler, good to hear from you. Thanks for joining. When you look at the overall volume decrease in cost of goods, and we're at that, call it...
Speaker Change: 60 million mark, which makes up about half of the overall shortfall. That's going to be representative of that timeline shift that we talked about, where the work's still coming. It's just moved to the right on the time spectrum.
Speaker Change: The rest of it being some of the projects we mentioned earlier that contributed to the decrease in revenue.
Speaker Change: So it's still coming, you know, the third quarter dip is an anomaly from our perspective and what we expect going forward and think we'll have a good recovery volume-wise in Q4 and it will extend on into 2025 as, you know, that large, you know, great backlog for us makes more of a contribution.
All right, that's great, and then...
Speaker Change: Of the 180 million left in the M&P work and then I think it was 105 million of other, you know, kind of bucketed legacy work, you know, is there a way to think about what those, you know, gross profit impacts of the rest of that business might look like over the next, you know, several quarters or through next year? Or is it really, you know, kind of hard to tell it's just based on individual...
Speaker Change: Yeah, appreciate you giving me the easy out there. I'll try and...
Speaker Change: Go a little bit beyond that, you know, we book projects as we do every quarter, you know, that that number continuing to dwindle, you know, we feel very good about the new work making enough.
Speaker Change: of a larger contribution to overshadow what's left of that zero margin and lower margin work in the 180. So hope to see that make less of an impact moving forward and really speak to the health that we see in the business mid and long term.
Okay.
and then
Speaker Change: last one here I think you know the civil and transport both segments down sequentially you know kind of similar percentages in the quarter you know you guys sound you know
Any view on those two comparatively?
Thanks.
Speaker Change: Yeah, we're excited about both markets. Civil are typically quicker burn projects so, you know, if we pick up five or six civil jobs we would expect those to burn a little bit quicker.
Speaker Change: As far as transportation, you know, there's just so many opportunities out there. But, you know, specifically to next year, those might be a little bit longer burn. But the $2.5 billion of backlog that we already have in transportation and civil.
Speaker Change: I think we'll start to see those really show themselves in the first quarter of next year and you know running off in the next couple of years so
Speaker Change: excited about both and expecting to return to profitability in 2025.
Alright, that sounds great. That's all for us. Thanks guys.
Thanks, Tyler. I appreciate it.
Speaker Change: And once again, if you would like to ask a question, simply press the star followed by the number one on your telephone keypad.
Speaker Change: And your next question comes from the line of Julio Romero with Tidori and Company. Please go ahead.
Thanks. Hey, good morning, Frank, Cody, Alex.
Speaker Change: Hey, could we, how should we be thinking about backlog conversion in the fourth quarter? Maybe to start there.
Yeah, so we think, you know, backlog.
Speaker Change: conversion in the fourth quarter where we expect to see some of that the timeline shift that I referred earlier you know coming to fruition in Q4.
Speaker Change: There still are uncertainties around Project STARTS, as we've always discussed.
Speaker Change: So we do see a recovery volume-wise from the dip that we had in Q3. You know, but we expect to fight through that and then getting into 2025, you know, to echo Frank's opening remarks is where we really see that return to profitability for both of our segments.
Speaker Change: Gotcha, I guess another way of asking is just do you think volume rebounds sequentially in fourth quarter relative to the third quarter?
Speaker Change: Yes, we do see volume rebounding just given the level of charges and also their impact on derecognition of revenue from prior periods, kind of being that non-cash element we discussed. So yes, we do expect a sequential recovery in top line numbers.
Got it. No, that's very helpful, Cody. Thank you.
Speaker Change: On MMP, how should we kind of think about the cadence of this 180 million or so of MMP revenue to burn off for the next five quarters? Should we kind of just model like a straight line 35 million or do you expect some lumpiness earlier in that timeline or later? Any help there?
Speaker Change: Yeah, that's a great question, Julio. I would not recommend a straight line. You know, there is going to be kind of work that finishes off earlier and then tapers down. There is a decent chunk of work out there that, you know, we're
Speaker Change: negotiating with the owner on what finishing that remaining backlog looks like and we'll have more information on that when appropriate but we still fully expect to be substantially complete over the next few quarters and then you hopefully
Speaker Change: plan on M&P being down to an immaterial point where we won't be discussing it after 2025.
Speaker Change: Okay, that's helpful. I think last quarter when you guys spoke about dispute settlements, you gave us a cash inflow number that was expected for the third quarter. I was wondering if you could give us the same kind of cash flow expectation from dispute settlements for the fourth quarter.
Speaker Change: Yeah, that was specific to the events that had happened on the Arkansas paving job, which we had announced. So no announcements or expectations on cash conversion from claims in the M&P segment or otherwise in Q4 and beyond.
Speaker Change: Suffice to say though, as mentioned earlier, we expect significant cash inflows from claim settlements as we're near the finish line on several large claims throughout 2025, depending how those negotiations finalize out.
Speaker Change: Got it. Very helpful there. Maybe last one for me would just be, you know, talking a little bit more about the shift to some of these shorter duration projects.
Speaker Change: Can you maybe speak to some of the processes you're taking on the risk mitigation front that might be different and help stem some of the issues you've seen on some longer duration work? I think Frank you mentioned you know being extremely selective with projects. Just any other detail you could provide in terms of kind of what you're doing differently that can kind of help minimize the risk of losses.
Speaker Change: Yeah, so I think the shift started, you know, a couple years back. It just takes a while on some of these projects to get started and they kind of start paying off.
Speaker Change: but we are targeting projects in our core market and of the $2.7 billion that we talk about, 2.5 billion are in the core markets.
Speaker Change: and I guess the shift that I would say was getting out of the M&P business was the main decision that we made.
Speaker Change: and so you're going to naturally have more quick-hitting civil projects.
Speaker Change: focused on picking up the right projects and there's hundreds to choose from in that 30 to 150 million dollar range and in the civil segment so really excited about about that market. Yeah I think also might just add on just some details behind Frank's emphasis on changes we made several years ago.
Speaker Change: I really want to commend our entire procurement team, starting with John Dorma and Ken Chaplin and the rest of their staff, on really overhauling our entire procurement process and focusing on a qualitative and quantitative assessment.
Speaker Change: process to make sure that we're covering all of our risk points to the best that we can, so we're set up for that long-term risk mitigation. So as Frank mentioned, it takes a while for that to flow through and
Speaker Change: and demonstrate itself in our financial results but we're confident that we'll be able to discuss that upcoming calls.
Great, I appreciate the color. Thanks very much.
I thank you.
Speaker Change: And we're showing no further questions at this time. I would like to turn it back to Frank Renda for closing remarks.
Frank Renda: Thank you all for your interest in Southland and look forward to speaking next quarter.
Speaker Change: Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.