Construction Partners Inc

NASDAQ:ROAD

Earnings Call Analysis

Strong Revenue and Profit Growth Driving Optimism

This quarter, the company achieved record results, with revenue increasing by 22.7% to $517.8 million and net income rising 42.4% to $30.9 million. Organic growth was impressive, contributing 13% to the total revenue increase. The project backlog grew to $1.86 billion, providing solid revenue visibility for the next year. The company raised its fiscal 2024 outlook and continues to pursue strategic acquisitions to fuel future growth. Adjusted EBITDA grew 30.5%, achieving a 14.1% margin. The company's ROAD-Map 2027 aims for annual revenue growth of 15-20% and EBITDA margins of 13-14%.

Strong Performance in Q3

Construction Partners reported a notable revenue of $517.8 million for the third quarter, representing an increase of 22.7% compared to the same period last year. This growth was driven by approximately 13% organic revenue growth and nearly 9.7% from strategic acquisitions. Year-to-date, the company's organic growth stands at 9.3%, which contributes significantly to a total growth rate of 18%.

Boost in Margins and Profitability

The company's financial health is reflected in its gross profit, which rose to $83.5 million, up 30% year-over-year. The net income surged 42.4% to $30.9 million, marking a significant boost in profitability for Construction Partners. The adjusted EBITDA reached $73.2 million with an adjusted EBITDA margin of 14.1%, an increase from 13.3% in the previous year, indicating effective cost management and solid operational execution.

Robust Backlog Growth

The project backlog grew to $1.86 billion, up from $1.79 billion in the prior quarter. The company anticipates having 80% to 85% of its contract revenue for the next 12 months secured in this backlog. This marks an improvement from 70% to 75% at the same time last year, suggesting solid visibility and confidence in future revenue streams.

Strategic Acquisitions Fuel Future Growth

CPI has completed seven acquisitions this fiscal year, including Hudson Paving and Robinson Pavement Company. These acquisitions not only enhance the company's operational scope but are also integrated into its growth strategy, which aims for annual revenue growth of 15% to 20%, with plans to maintain a healthy balance between organic and acquisitive growth.

New Financial Guidance

Following the record performance in Q3, Construction Partners raised its fiscal 2024 guidance for revenue, targeting a range of $1.835 billion to $1.860 billion. For net income, the estimate is set between $73.5 million to $76 million, with adjusted EBITDA projected to be between $219 million to $228 million—implying an EBITDA margin between 11.9% and 12.3%.

Management’s Confidence and Market Outlook

Management expressed optimism regarding future growth, highlighting a stable demand for construction projects due to strong public funding and a positive economic climate across the Southeastern United States. The potential for new business in public sector projects, particularly infrastructure investments, remains a focal point for ongoing growth. Management is keen to leverage the growing backlog and prospective acquisitions to navigate through and capitalize on market dynamics.

Maintained Operational Excellence Amid Challenges

CPI faces competitive dynamics in the construction industry yet highlights a strategy-focused on maintaining productive operations. The ability to adapt to weather conditions and capacity adjustments ensures that the company remains agile, allowing for quick responses to market demand changes and operational challenges. Continued workforce development is seen as pivotal in driving productivity improvements and overall project execution.

Earnings Call Transcript 2024-Q3

[Operator]

Greetings. Welcome to Construction Partners' Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Black, with Investor Relations. Thank you. You may begin.

[Rick Black]

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Construction Partners conference call to review third 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, August 9, 2024. We please be advised that any time-sensitive information may no longer be accurate as of the date of any replay listening or transcript reading.

I would also like to remind you that the statements made in today's discussion that are not historical facts, including statements of expectations or future events or future financial performance, are forward-looking statements made pursuant to the safe harbor's provision 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. Actual results may differ materially.

Please refer to our earnings press release for our disclosures 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 and 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. Jule?

[F. Smith, executive]

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.

I want to start by directly thanking the more than 4,800 men and women across the CPI family of companies for their hard work this quarter. The story of this quarter was operational excellence across the Southeast on hundreds of projects under construction and many days and nights operating asphalt plants, quarries and terminals.

CPI success has always been driven by our talented, dedicated construction professionals. And as our work season shifted this quarter into high gear and long hours, our team delivered.

Q3 was a strong quarter for CPI. Compared to a year ago, we grew revenue 23%, adjusted EBITDA of 31% and our margins increased to 14.1% for the quarter. It's also important to note that of the 23% revenue growth in the quarter, 13% was organic growth. Year-to-date, organic growth represents 9.3% of our total 18% revenue growth. This is consistent with our outlook on organic growth for the year to account for approximately half of our total growth. On a daily basis, we focus on organic growth in our current and adjacent markets, which is a critical component of our strategy to achieve our ROAD-Map 2027 goals.

During the quarter, the economic conditions were stable for our industry and demand for the type of construction projects we perform remains high. Public project lettings continued to be strong supported by the healthy funding programs at the state, local and federal levels throughout our Southeastern states. These public investments include a variety of infrastructure projects ran from highways and bridges to airports, railroads and military bases.

We also continued to see steady demand for commercial projects. with many fast-growing economic centers within our local markets. In particular, we continue to see areas of strength in the private market for manufacturing, corporate site development, large economic development projects and residential. This sustained demand continues to drive project backlog growth, which again increased during the quarter. As of June 30, our backlog was $1.86 billion.

Turning now to our strategic growth model. We have acquired 7 companies this fiscal year beginning in October. Two of these acquisitions were made since our last earnings call. In June, we acquired Hudson Paving in Rockingham, North Carolina. Hudson extends our reach into the Sand Hills region of North Carolina. Now as part of our Fred Smith Company platform, this new plant and construction operation in Rockingham, allows us to fully serve the rapidly growing pad Hurst and Southern pounds market area.

And last week, we announced the acquisition of Robinson Pavement Company in Columbus, Georgia. This expansion of 3 new hot mix asphalt plants and construction operations in Columbus, and the surrounding area positions CPI in a strategic location adjacent to our existing operations in both Georgia and Alabama.

As a growing economic market supported by [ Fort Moore ] in Columbus, this represents an important market for us and a natural next step for our growth in the state of Georgia. Robinson Paving has long been a highly respected contractor in Georgia, and will continue to operate as a branded division of our Georgia platform company, the [ Skrunks ] Company.

We are excited to have added these high-quality companies with excellent reputations into our organization, and we want to welcome both our Hudson Paving and Robinson Paving employees as teammates within the CPI family of companies. Acquisitions have always been a part of our growth model as we enter new areas, expand market share and add capacity, services and talented new team members.

Importantly, our acquisition strategy also fuels our future organic growth, helping keep us on a path to achieve our ROAD-Map 2027 goals which are annual revenue growth of 15% to 20% with approximately half of the growth being acquisitive and half organic and expanding our EBITDA margins in the range of 13% to 14% and by 2027.

Currently, we continue to see a very active environment for acquisition opportunities as our industry is going through a generational transition and we believe we're the leader in building a scalable business by acquiring great privately held construction companies.

While we continue to have conversations with potential sellers, both inside and outside of our current states, it's important for us to remain patient and focused on finding the best strategic acquisitions that will bring operational excellence and add to the great culture of the CPI family of companies.

In summary, we had a record third quarter and consequently are raising our fiscal 2024 outlook. Our record backlog provides visibility for the remainder of fiscal 2024 and allows us to enter fiscal 2025 with momentum and growth.

Finally, we remain optimistic about the future based upon our healthy local markets across the Southeast, the numerous opportunities available as we continue to execute on our growth strategy, and most importantly, the continued development of our talented workforce to lead and manage a larger and more profitable CPI into the future.

I'd now like to turn the call over to Greg.

[Gregory Hoffman, executive]

Thank you, Jule, and good morning, everyone. I'll begin with a review of our key performance metrics for the fiscal third quarter compared to the fiscal third quarter in 2023. Revenue was $517.8 million, up 22.7%. The increase included $40.9 million of revenue from acquisitions completed during and subsequent to the 3 months ended June 30, 2023. We and an increase of approximately $55 million of revenue in our existing markets.

The mix of total revenue growth for the quarter was approximately 13% organic revenue and approximately 9.7% from these recent acquisitions. And as Jule mentioned, for the 9 months year-to-date, our organic to acquisitive mix is half and half, with organic growth to 3 quarters of 9.3% out of our total growth of 18%.

Gross profit was $83.5 million, an increase of 30% on compared to the same quarter last year. General and administrative expenses were $38.9 million or 7.5% of total revenue compared to $32.2 million or 7.6% of total revenue in the same quarter last year. We remain on pace for G&A expenses to end the fiscal year at approximately 8% of revenue.

Net income for the quarter was $30.9 million, up 42.4% compared to net income of $21.7 million in the same quarter last year. Adjusted EBITDA was $73.2 million, an increase of 30.5%. Adjusted EBITDA margin for the quarter was 14.1%, and compared to 13.3% in the third quarter last year. You can find a reconciliation of net income to adjusted EBITDA in today's earnings release.

In addition, we grew project backlog to $1.86 billion at June 30, up from $1.79 billion at the end of last quarter. We now estimate that we have 80% to 85% of the next 12 months contract revenue booked in backlog, which is up from 70% to 75% at this time last year.

Turning now to the balance sheet. We had $58.4 million of cash and cash equivalents. As it relates to our credit availability, during the quarter, we converted our $200 million accordion for the terms of the credit agreement, into an additional $75 million of revolving credit facility availability, as well as converting $125 million under the revolving credit facility to term debt.

As a result, we now have $309.7 million available under the credit facility, net of a reduction for outstanding letters of credit. We have $397.5 million of principal outstanding under the term loan and $81.9 million outstanding under the revolving credit facility. The additional 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 1.81x. Our expectation is the leverage ratio will maintain a range of 1.5 to 2.5x while continuing to add sustained profitable growth.

Cash provided by operating activities was $35 million. Year-to-date cash provided by operating activities for fiscal 2024 and 2023 was $113.2 million and $94.5 million, respectively.

Trailing 12 months return on capital employed was 11.4% as of June 30. Net capital expenditures year-to-date were $62.4 million. 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 3.25% of revenue with the remaining amount invested in high-return growth initiatives.

Based on our performance to date and our visibility through the remainder of the year, we are raising our FY '24 outlook ranges as follows: revenue in the range of $1.835 billion to $1.860 billion, net income in the range of $73.5 million to $76 million, adjusted EBITDA in the range of $219 million to $228 million. This indicates an adjusted EBITDA margin for fiscal '24 in the range of 11.9% to 12.3%.

And with that, we are now ready to take your questions. Operator?

[Operator]

[Operator Instructions] Our first question is from Kathryn Thompson with Thompson Research Group.

[Kathryn Thompson, analyst]

First, I want to focus on backlogs and parsing out a little bit more detail in terms of what is driving this. You've seen 15 quarters in a row of sequential backlog growth, but still are on that path to 13% to 14% EBITDA margins, which is a difficult thing to do to have both hand-in-hand. Could you give a little bit more clarity on the public end markets included in the backlog versus private end market, understanding that the public has a greater percentage of more ongoing repair and maintenance and private being more new construction?

[F. Smith, executive]

Kathryn, thank you. It has been 15 quarters now of the backlog increasing and I've said for 2 or 3 years now that that's abnormal. CPI to its history in the summer work season. backlog went down sequentially. So I'll say it again, I'm starting to wonder myself, but really, just as a reflection of our demand markets continuing to be strong.

Let's just take them each one, private. The private market continues to be steady. We continue to see a lot of opportunities to bid there. And then in the public markets, each of our states is now getting the IIJA money, in our second year of really them using that money. And so we're seeing plenty of opportunities to bid there. And 4 of our states have passed supplemental funding. And so that's just creating a continued good market to bid in.

So we're seeing good work on both added to our backlog. Greg and I noticed in our backlog this quarter that the percent of public backlog maybe went up a couple of percent from 65% to 67% or 68%, which you would expect as the IIJA is really now in full gear. So I wouldn't be surprised to see that come through on the P&L in the next 12 months. But it's not -- it's no big change. It's just a slight tick up in public.

So we're excited about just the visibility the backlog gives us going into 2025. And we're going to continue to be patient. That's what a good backlog gives you. You talked about the margins part of our margins getting to 13% to 14% is being able to be patient at the bid table.

[Kathryn Thompson, analyst]

Okay. And just a follow-up, in particular on the private end market. Like what types of projects are you seeing? And have you seen any change as the years progressed with the residential end market?

[F. Smith, executive]

Yes. We -- as we said in the prepared remarks, it's really more of what we've been talking about, which is just a lot of the projects that you would expect to come with the reshoring of businesses moving to the Southeast. So we've seen corporate manufacturing facilities, corporate headquarters, industrial parks that can service give businesses in place to operate. Residential has been steady. We really haven't seen any huge uptick or shrinking of that market. It's been pretty steady for the developer to build a subdivision.

[Kathryn Thompson, analyst]

And just a clarification, have you seen any change in the residential cadence? Because it is a little -- it's a little different than what we have heard from other markets. It could be just your geographic focus, but any sequential change with residential?

[F. Smith, executive]

We really haven't seen much change at all. I mean, residential is not a big part of what we do. But in the places where we do it, in the Panhandle of Florida and Raleigh and other places that we're really involved with residential developers, they've been pretty steady.

[Operator]

Our next question is from Tyler Brown with Raymond James.

[Patrick Brown, analyst]

I appreciate all the guidance. You guys have been quite active on the M&A front, and I appreciate that maybe half the growth here in '24 will be from M&A. But as you look at it right now, how much from acquisitions that you have already completed here in '24 should roll into '25? I guess my point is, do you already have 2 or 3 points of growth kind of in the bag from the role of the benefit of deals you've already done?

[F. Smith, executive]

Yes, Tyler, we do. We would estimate that to be in the 90 to 110 range right now rolling into '25.

[Patrick Brown, analyst]

Okay. an incremental benefit in '25?

[F. Smith, executive]

Right.

[Patrick Brown, analyst]

Okay. That's pretty good. Okay. So I want to talk about this really quickly because I think this year, you put some unannounced M&A into your guide given the mechanics around the Analyst Day. But as we start to think about how you guys think about your fiscal '25 guidance, what is your philosophy going to be around M&A? Should we expect you to put some unannounced M&A in that guidance? Or will you only include the M&A that has been announced. And I don't mean to split a lot of air here but I do think this is going to be really important on how we think about your guide into '25.

[F. Smith, executive]

Yes. Tyler, great question. As you know, typically, we don't put unannounced or aspirational acquisitions into our guide. We did last year just simply for it to be -- to make sense at our Analyst Day, but we envision just getting back to our normal guidance methodology of just putting in what we've announced so far. And so it should be easier to move forward into '25.

[Patrick Brown, analyst]

Excellent. Very helpful. And just let me squeeze 1 last 1 on margins. So obviously, great improvement there. I'm a pretty simple guy here. So when I think about margin improvement, it's either a function of you bidding better with maybe more sophisticated tools? Or are you seeing more cost disinflation than you had been expecting -- or maybe I'm missing it all together, maybe public mix is helping. But just any big picture thoughts that really got you to that 14-plus percent margin this quarter?

[F. Smith, executive]

Yes. Tyler, we've talked about 3 levers of margin expansion, 1 being just building better markets and being able to be able to put more money on the bids. And so that's certainly one. The other is vertical integration. And so our terminals and aggregate facilities are contributing a little more each year, and then 1/3 is scale. And so I feel like all 3 of those are contributing and working together. And so that's really continues to be the story on the margins.

[Ned Fleming, executive]

Tyler, this is Ned. I would tell you one thing, the people in the -- as we look at the statistics for people that are laying asphalt, that are working hard every day in hot weather and the cold weather, they're doing a fantastic job. Their productivity continues to increase. Their team orientation continues to increase. Jule and the management tender leading well in that area.

So I think one of the things I would say with margin is you've got to go to work every single day in this business, and those people are doing an absolutely fabulous job led by people that respect them, they trust them and then encourage them in Jule and Greg and really this whole team all the way down. And that's -- you're not going to put a number to it, but I'm just telling you watching how hard those folks work and we want to treat them well is a huge benefit to the margins as we move forward.

[Operator]

Our next question is from Andrew Wittmann with Baird.

[Andrew J. Wittmann, analyst]

Great. I guess maybe I'll launch off with the last series of questions there and ask you, Jule, a little bit to expand a little bit about the -- the first thing about building better markets and how, if at all, your bidding process is allowing you to compare your current backlog, your new win margins to what you've done maybe over the last year. Are you still seeing as bid margin growth? Maybe you can comment on that, please.

[F. Smith, executive]

Yes. Andy, it's a good question. It's 1 that we can ever take an eye off of. Our industry is competitive and that's not going to ever change. And so we have to be the low bid and -- but what we're trying to do is be patient at the bid table and use our good backlog to be disciplined and patient. But also if we continue to work on cost and keep your cost down, as Ned said, if we can be more productive in the field, that gains margin as well.

But one of the things CPI has always done, and we're seeing the return to that is the guys in the field find ways to win and be production. And so on more jobs than not, we finish at a higher in margin than we did. And so that's 1 of the things that really helped this quarter was just the ability to write up projects as they're getting built.

[Andrew J. Wittmann, analyst]

Yes. That's helpful. And then maybe just a comment here, guys. We had hurricane season start a little bit earlier than normal here. in your fiscal fourth quarter. And I was just wondering how through today, the quarter is unfolding. As it slowed you down and you need to make it up in the back end of the quarter, maybe just some comments around where you are with the weather?

[F. Smith, executive]

We've had 2 quarters in a row now, Andy, where weather has really balanced out a weather than normal month is balanced out with a dry than normal month. And that's what we try to communicate to the market is over time where other evens out. July so far this quarter has been better than normal. And then first week of August, we've had a hurricane March through 4 of our states, and just left Raleigh this morning. But we'll just have to see how the rest of the quarter goes. We could have really good weather the rest of August and September and be just fine. So we don't try to get ahead of ourselves there.

[Andrew J. Wittmann, analyst]

But as it relates to that fourth quarter guidance, you feel like you've discounted what you've seen so far through the quarter so far?

[F. Smith, executive]

I'm going to let Greg answer that as to what he's factored in and put him on the hot seat. Greg?

[Gregory Hoffman, executive]

Yes. No, I think we've just tried to think about this quarter, the same way we've realized the earlier to that the quarter balances out. We always talk a lot about the first half of the year and the second half of the year kind of balance and oftentimes that occurs within the quarter, and that's kind of what we're anticipating happening this quarter.

[Operator]

Our next question is from Adam Thalhimer with Thompson Davis & Company.

[Adam Thalhimer, analyst]

Congrats on the nice beat. I wanted to ask about a sequential backlog growth. How much of that was organic and how much of that was acquired?

[F. Smith, executive]

Well, we had about $40 million come in through acquisitions this quarter. So as our acquisitions come in over the year. They have different impact to the quarter, but this quarter it was about $40 million, so the rest was organic.

[Adam Thalhimer, analyst]

Sounds like a similar mix to revenue?

[F. Smith, executive]

That's right.

[Adam Thalhimer, analyst]

And then what would be your thoughts on some potential. You talked about M&A, but on the growth CapEx side, growth projects, maybe a new asphalt terminal? Any thoughts there?

[F. Smith, executive]

Adam, we're always thinking about vertical integration and things like that. I will tell you, I want to use this question to just really brag on Greg he has really instituted a very disciplined growth CapEx process with all of our operating companies and evaluating where to invest our growth CapEx money on the projects that are going to make the most impact. And I think you're seeing that come through in the organic growth this quarter and this year. There's a lot of good opportunities, and we can't invest in them all, and I think he's done a really good job of putting the investments where it's going to make the most difference.

[Operator]

Our next question is from Stanley Elliott with Stifel.

[Stanley Elliott, analyst]

Could you talk a little bit about -- I mean, we're pretty much through the earnings season. The numbers you guys are putting up on the organic side, 13% is vastly different than a lot of your -- the folks that are supplying rock to you guys. Can you talk about some of the disconnect on how you guys are so positive and a lot of those other businesses were kind of flat to likely down on an organic volume basis?

[F. Smith, executive]

Yes, Stanley, I can only speak to what we're doing. We're continuing in the markets we're working in to grow market share. and to work in adjacent markets on greenfields. And we've got a great demand environment. So that's really driving our ability to grow organically and where we have the opportunities, we're adding crews and able to do more work.

And as I said in the remarks, the acquisitions we did a year ago and 1.5 years or 2 years ago, they're creating opportunities for us to grow organically. And I think Hudson Paving and Robinson a year from now, are going to give us the opportunity to grow organically in 2025 and 2026. So we're continuing to just execute on our strategy. We've always been a growth company of 15% to 20%. We see that continuing about half organic. And that's really what we see moving forward.

[Stanley Elliott, analyst]

Yes, it's kind of what I had thought and nice to hear. And then Jule, you mentioned the crude productivity increasing. Do you guys think that's a function of you'll have more people and more crews to be able to put to work. And so you can flex to various locations, if weather is an issue moved to another location or the ability to flex or work longer hours because of the number of people or even maybe if you have machines to help with the lay down. Just curious kind of if you could kind of parse out a little bit about what you're doing on the productivity side to drive this outsized growth?

[F. Smith, executive]

Yes. Great question. I'm glad you asked that, Stanley, because what Ned said is so important. And it really isn't a function of having more machines. What it is, is just great leadership and great people throughout an organization. And we talked a lot over the last 3 years about workforce development and focusing on building people, training them, and [ Robert Bono ], our VP of Personnel, has worked with the operating companies on attracting and retaining the best workforce because it just really comes down to the people.

The equipment doesn't make a big difference at all in our business. It all comes down to the people and the greater team we have, that's when you start to see the results come through we're building thousands of projects at 1 time. And so if you have great people, they're going to find ways to win more often than not on those projects.

[Operator]

Our final question is from Brent Thielman with D.A. Davidson.

[Brent Thielman, analyst]

I had a few questions here. First, Jule, any initiatives to try to increase the penetration into some of these sort of non-DOT public areas. I heard you called out airports and military bases. My understanding is that those sorts of opportunities can be large and accretive since you may not have as many people that expect to get into those types of facilities. So just thoughts on if you've got more initiatives around that, and I guess, if those are margin accretive to you?

[F. Smith, executive]

Yes, Brent, you're exactly right. Some projects are very difficult, require a lot of prequalification and skill expertise and those are going to have less people bidding on them. military bases and airports are certainly to, just like you said. And so where we can work on those type of projects, we absolutely are. Our new acquisition, our newest teammates Robinson Paving in Columbus they literally are right outside the gate from Fort Moore, one of the largest bases in the Southeast. They have spent decades working at Fort Moore. And so that's a very attractive addition to our team and universe.

[Brent Thielman, analyst]

Got it. And then I heard a little bit about some shift in the competitive landscape just with some of the slowing in these private sectors obviously influenced to some degree by interest rates has shifted some contractors towards public work. Obviously, there's great funding and visibility there. I expect this is pretty regional, but just wondering if you're experiencing any of that.

[F. Smith, executive]

Brent, we've addressed that for a few quarters, and we keep looking to see if the commercial private market is slowing down. And the reality is we just don't see that. It's staying steady. If anything, it's a little better this year than it was last year. We're bidding both types of projects, public and private but we really haven't seen a big slowdown in our commercial opportunities, but it's something we watch closely.

But even if it did slow down, our crews would simply switch to doing more public work. And so it's not something that we worry about a lot. We just we have a certain amount of capacity to make asphalt, lay down asphalt, move dirt and our crews can work either on public jobs or private jobs.

[Brent Thielman, analyst]

Jule, maybe just one more. I mean one of the things that seems noticeable to me is there's been a propensity for some larger projects getting released out there. And I know you guys manage that and try to focus on the smaller stuff. But has there been any shift to maybe try to work a little more on some of those general contractors as a subcontractor to try and get a more of a piece of that pie? Again, I understand you want to manage the size of stuff that you're approaching, but it seems like there's opportunity there. So just curious how you're approaching that.

[F. Smith, executive]

No, Brent, you're right. There are larger projects coming out now with IIJA, and we're participating in those as subcontractors. And when they're letting our markets, we're very active with those either a dedicated subcontractor or is a subcontractor is a JV partner. So while we don't want to build mega projects and take that risk as the prime contractor, that's just not something we see as the best use of our resources where we can participate in the projects as a subcontractor, that's very good work for us.

[Operator]

We have reached the end of our question-and-answer session. I would like to turn it back over to management for closing remarks.

[F. Smith, executive]

We appreciate everyone joining us today, and we look forward to speaking with you again soon.

[Operator]

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.