Sterling Construction Company Inc

NASDAQ:STRL

Earnings Call Transcript 2020-Q3

[Operator]

Greetings. And welcome to the Sterling Construction Company's Third Quarter 2020 Earnings Conference Call and Webcast. As a reminder, this conference is being recorded and all participants are in a listen-only mode. There are accompanying slides on the Investor Relations section of the company's website.

Before turning the call over to Joe Cutillo, Sterling Construction's Chief Executive Officer, I will read the Safe Harbor statement. Some discussions made today may include forward-looking statements. Actual results could differ materially from the statements made today.

Please refer to Sterling's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligations to update forward-looking statements as a result of new information, future events or otherwise.

Please also note that management may refer to EBITDA, adjusted EBITDA, adjusted net income or adjusted earnings per share on this call, which are all financial measures not recognized under US GAAP. As required by SEC regulations and rules, these non-GAAP financial measures are reconciled to the most comparable GAAP financial measures in our earnings release issued yesterday afternoon.

I'll now turn the call over to Mr. Joe Cutillo. Thank you, sir. Please go ahead.

[Joseph Cutillo, CEO]

Thanks, Donna. Good morning, everyone. And thank you for joining Sterling's third quarter 2020 earnings call on this busy Election Day. I hope all of you have either already voted or plan on doing so. We often take for granted how great our country is, and the freedoms that we have. The right to vote and guide our future is one of those freedoms we should never pass up.

Before we go over the results of another great quarter, let's talk briefly about where we are with our strategy to transform the company by reducing risk, increasing margins and diversifying our end markets. At the end of the third quarter, just over 50% of our total revenues came from our heavy civil sector.

And less than 30% of our revenues are now coming from low bid heavy highway projects. Remember, in 2015 we had well over 90% of our business coming from low bid heavy highway projects. This shift away from low bid high risk jobs to alternative delivery projects and other end markets like aviation and rail has enabled us to increase our total margins in the heavy civil sector from low single digits to high single digits in just a few short years.

Our residential and specialty service sectors now represent close to 50% of our total revenue and contribute over 90% of our operating income. These lower risk, faster turned jobs not only produce more consistent margins, but provide solid positive cash flow and higher growth opportunities.

As we go forward, the strategy will remain the same. We will continue to focus on improving margins in the heavy civil sector and organically growing our lower risk, higher margin, residential and specialty service sectors. In addition, we will begin looking for strategic tuck-ins and potentially a fourth sector acquisition once we achieve our post Plateau acquisition debt targets.

Now let's talk about the fantastic results of another outstanding quarter. I'd like to remind everyone that no company can achieve the quarter over quarter year over year results we have without great people. And I'm proud to say our 3000 plus employees proved again they're the best in the industry.

For the quarter, versus the third quarter 2019. Our revenues were up 31%. Our operating income and EBITDA both more than doubled. And cash flows from operating activities more than tripled to $38.7 billion. Our heavy civil sectors revenues and margins were both down slightly versus the third quarter prior year.

These declines were predominantly driven by project mix, and a change in estimated cost to complete a three bridge project in Texas. The mix shift was driven by lower aviation and alternative delivery revenues in the quarter versus prior year. We believe the mix shift was just a timing issue and will return back to normal in the fourth quarter.

Our residential sector was up 6% in revenues and up 4% in operating income. The modest decline in operating margin was driven by a temporary price concession given during the peak of the pandemic, increased lumber prices, and a higher percentage of slabs coming from our Houston market.

Our specialty service sector had significant increases in both revenue and operating income driven by the addition of the Plateau acquisition in the fourth quarter of 2019. Overall, the company had an outstanding quarter during some very challenging times and is positioned well to finish the year strong and on track with our guidance.

With that, I'll turn it over to Ron to give you more details on the quarter and the year to date.

[Ronald Ballschmiede, EVP and CFO]

Thanks, Joe. And good morning everyone. I am pleased to provide a summary of our 2020 third quarter results. With this being a full year of including the Plateau acquisition in our consolidated results. Most of the acquisition, integration and new financing noise related onetime costs are now behind us providing a cleaner picture of our financial performance.

The actions we have made progressing our multiyear strategy, including the transformational acquisition of Plateau continues to be apparent in substantially all of our financial measures. Today's conference call, together with our earnings release Form 10-Q and the investor deck posted to our website should provide insight into our strategic progress in delivering strong earnings and cash flow and improving liquidity while reducing risk.

Not to be overlooked this strong performance came during the most challenging period across our country in many decades. Now, let me take you through our financial highlights starting with our backlog metrics at Slide number five.

At September 30, 2020 our backlog totaled a record high $1.238 million, a 16% increase over the beginning of the year. Heavy civil backlog increased 13%. While specialty services backlog increased 25% from the beginning of 2020.

The gross margin in our third quarter of 2020 backlog was 12.4%. A 90 basis point increase from December 31, 2019. Unsigned low bid awards totaled $270 million at the end of September 2020. We finished the third quarter with combined backlog of $1.508 million, a 12% increase over the start of the year.

The gross margin of our combined backlog increased to 11.6% at September 30, 2020, up from 11% at the beginning of the year. Our year-to-date 2020 book to burn factors for the combined heavy civil and specialty services segment were 118% and 117%, for backlog and combined backlog respectively.

Note that the book to burn computations include only the revenues from heavy civil and specialty services and excludes residential revenue and it is not a backlog driven business. Let's go to Side six for a summary of our consolidated results. Note that the slide includes quarterly results for three periods, the second and third quarters of 2020 and the comparable prior year third quarter.

Given the magnitude of the Plateau acquisition, and the related acquisition, financing and changes in NOL accounting, which occurred in late 2019. The second quarter of 2020 was included to highlight the “same-store” sequential quarter revenues.

Our third quarter 2020 revenues up $383 million increased by $92 million, or 31% over the comparable 2019 quarter. Third quarter 2020 specialty services revenues increased by $107 million over the comparable 2019 period driven by the Plateau acquisition.

The acquisition was also the major driver of the significant increase in gross profit and the 300 basis point gross margin improvement over the periods. The Q3 2020 revenue decline from the sequential prior quarter reflects a $17 million reduction in heavy civil revenues.

I will discuss the significant year-over-year segment results in a moment. The increased SG&A from Q3 2019 reflects a Plateau acquisition including corporate related costs, while the SG&A decline in the sequential quarter was principally the result of lower stock-based compensation expense.

The third quarter 2020 decline in other operating expense net for both prior periods reflects a decline in gross profit from our 50% owned consolidated subsidiaries, reflecting a lower income sharing expense. This decline reflects the temporarily lower revenues and gross margin from a mix - changing mix in Q3 2020.

We continue to expect our full year other operating expense net to be in the $14 million to $16 million range. Operating income for Q3 2020 was $29 million for an operating margin of 7.5%, which was consistent with our expectations.

Operating income for Q2 2020 totaled $33 million an operating margin of 8.5 - 8.25%. Our record second quarter 2020, operating returns benefited from entering the second quarter with record combined backlog and poor weather in Q1 2020, which pushed incremental revenues and earnings into the 2020 second quarter.

Higher net interest expense in both 2020 periods over the 2019 period reflect the acquisitions related borrowings. Our effective income tax rate for the first three quarters of 2020 was 28.5% compared to 8.9% for the comparable 2019 period. Beginning in 2020, our income tax expense includes a non-cash tax provision of approximately 22% of our taxable income, or approximately $11 million year-to-date.

We expect our full year effective income tax rate to be approximately 28.5% an increase from our previous expectation of 28.2%. Our third quarter net income totaled $15.2 million or $0.54 per share, compared to the third quarter of 2019 net income of $8 million or $0.30 per share.

Third quarter 2020 adjusted EBITDA increased more than two times to $36.7 million from $15.4 million over the comparable 2019 period. Slide seven, highlights the third quarter segments results. Heavy civil revenues decreased by $18 million or 8% in the third quarter, reflecting a $6 million increase in heavy highway revenues and a $24 million decrease in aviation and other heavy civil revenues.

This temporary revenue mix change to a higher heavy highway component had a negative impact on our operating returns for the quarter. Also during the quarter, heavy civil results included a charge for increased estimated costs to complete a three bridge project in Texas.

We continue to expect substantial completion of these three bridges in the first, second and third quarters of 2021. The increase in specialty services revenue and operating income primarily reflects the inclusion of Plateau in the 2020 results.

Additionally, Plateau entered the 2020 second quarter with record backlog and as I previously discussed, poor first quarter weather pushed work into the second quarter. Both of these factors together with a favorable project mix contribution to the second quarter 2020 operating margins.

Third quarter 2020 residential revenues totaled $42.4 million or a 6.3% increase over the third quarter of 2019. Our Houston expansion continues to pick-up speed. Houston accounted for 15% of residential's third quarter 2020 completed slabs compared to 11% in the third quarter of 2019.

Residential operating margins declined 50 basis points in the Q3 '20 period. Resulting from temporary COVID-19 related pricing pressures from our customers, and significant cost increase for lumber in concrete during the quarter.

Now let's move to Slide 18, which summarizes our cash flow generation and de leveraging strategy. I'm sorry, Slide eight. The graph presents our deleveraging expectations beginning with the October '19 Plateau acquisition in the new five-year credit facility.

Our September 30, 2019 pro forma forward-looking EBITDA coverage ratio was approximately 3.5%. Based upon our continued progress in executing the strategy - the strategic actions to improve our base business results in our competence in the quality of Plateau's future cash flows, we were comfortable with a higher acquisition related day one leverage ratio.

We set the objective to bring the coverage ratio down to 2.5 times by the end of 2021. The graph reflects where we are to date and our targets through the end of 2021. Importantly, only the scheduled funded debt payments are included in the leverage computations for the future periods presented.

During the third quarter we repaid the $20 million of revolver borrowings, which were outstanding at June 30, 2020. At the end of the third quarter of 2020, we had zero revolver borrowings and have full availability of our $75 million revolver.

Our competence in our deleveraging strategy has been reinforced by the experience of the first four quarters of Plateau results, together with Sterling's based business performance and our consolidated expectations. Examples supporting our confidence include; record backlog levels with increasing gross margin.

Secondly, our first nine months of 2020 performance exceeded our initial expectations supporting the midyear increase in our 2020 revenue and net income guidance. Even with the challenges of managing through the continuing COVID-19 issues. Next, our adjusted EBITDA for the first nine months of 2020 total $99.2 million a $57 million improvement over the 2019 comparable period.

We continue to believe that our full year 2020 adjusted EBITDA will be in the $125 million to $135 million range. In addition, our cash flow from operating activities for the first three months of 2020 totaled $90.9 million. A tenfold improvement over the $8.5 million of cash flow from operations in the comparable 2019 period.

For the full year 2020, in addition to depreciation and amortization, we expect additional non-cash expenses totaling $24 million to $28 million. These non-cash expenses include the utilization of our NOL, stock-based compensation and non-cash interest expense.

Finally, moving to our balance sheet, our September 30, 2020 cash and cash equivalent balance totaled $72.6 million, compared to $45.7 million at the beginning of 2020. This cash increase reflects investing $20.5 million on net capital expenditures during the year-to-date 2020 period.

Finally, please note that the third quarter 2020 investor deck posted to our website includes an appendix to assist our stakeholders with modeling considerations, understanding the key components of our cash flows and various non-GAAP disclosures.

Now I'll turn the call back over to Joe. Joe?

[Joseph Cutillo, CEO]

Thanks Ron. And once again, another outstanding quarter. As we look forward to the fourth quarter and beyond, our Dallas and Houston residential markets remain strong and our largest customers remain bullish for 2021. Our specialty service sector markets are driven by multi-year build out strategies that have only become stronger as a result of the pandemic.

In the heavy civil sector, we have seen several states around the country reduce their 2021 DOT budgets. And we anticipate 2021 bid activity across the country will be down slightly versus 2020. However, with our strong backlog, improved backlog margins and our diversification away from heavy highway, we are less concerned about a significant impact in 2021.

And believe 2022 will return to historic or above historic levels for the DOTs. As a result, we are holding our full year guidance and anticipate continued bottom-line growth into 2021. Our full year guidance of $1.415 billion to $1.43 billion in revenues, and an adjusted net income midpoint of $42.5 million, represents a 73% improvement over 2019 and will deliver approximately $1.52 in earnings per share to our shareholders. Overall 2020 will be another outstanding year for the Sterling team and its shareholders.

With that I'd like to turn it over for questions.

[Operator]

[Operator Instructions]. Our first question is coming from Sean Eastman of KeyBanc Capital Markets. Please go ahead.

[Sean Eastman, KeyBanc Capital Markets]

Gentlemen, nice job this quarter.

[Joseph Cutillo, CEO]

Thanks, Sean.

[Sean Eastman, KeyBanc Capital Markets]

I just wanted to start on the civil margins. Just trying to get some perspective on both the charge in the quarter, the increase in cost to complete as well as the mix dynamics. Just as I try to think about where you said margins should trend into 2021, I'm trying to understand what sort of a normal range is there and understand how the mix is shifting in that business as we look into next year.

[Joseph Cutillo, CEO]

Yes, I'll start off with the mix piece and then Ron could get into the details. I wouldn't get too analytical and overly concerned about a significant mix change. It's really a timing issue. We had more active projects in this quarter in aviation last year.

We've got aviation projects that are just getting ready to start. We've got the three big design build project that are in the early stages are fully ramped up. So that's the challenges, you always will have some lumpiness in this world. And it's really hard to compare.

I will tell you, when we look at our backlog and our breakdown of our backlog, we have not seen a significant mix shift with the exception. In general we've gotten less and less of a low bid heavy highway. And as we go into next year, we'll continue to shrink that part of the business.

Got to go into the margins.

[Ronald Ballschmiede, EVP and CFO]

Sure. So yeah, the couple things in the quarter. But the largest single item is the updated costs on the multi-bridge project in Northern Texas here. This is a project that's been in one in 2019. It is making progress. We continue to have challenges with the owners design and the related productivity comes out of that.

So, we took a $3.5 million charge in the quarter. The good news is we're still on pace to finish those jobs. The schedules are moving forward on a couple of backwards on one. But in the end, we continue to expect hitting our dates that we thought we would hit at the beginning of the year after the fourth quarter true up and settlement we had with the Texas DOT on the project.

[Joseph Cutillo, CEO]

Sean, one of the things we're doing on that project is, we, I'm sure between now that have change orders claims that we'll try to fight for. However, we've taken the approach that we're paying as we're going. If we see a cost increase, we're going to take that hit now.

So that we don't come to the end and we've got a big adjustment or change. So, we're adding to that very closely. And if we think we've got an adjustment, we're going to take the punishment, and we'll fight for claims and change orders when we get to the end and hopefully get some of those. But we don't have work. We're trying not to build this big pent up risk at the end of the project.

[Ronald Ballschmiede, EVP and CFO]

Yes, and then moving back towards the mix, sort of beyond the $3.5 million. We had a bad perfect storm, maybe in the quarter. So yes, our aviation revenues were down by about 50%. That is temporary. We have just under a quarter billion dollars of backlog in aviation.

So we should see that recover in the back half of the year, the most significant projects are into that Salt Lake City Airport and a couple others. So that together with the other large aviation in areas the project in the Pacific, which will really burn in the late first quarter and second quarter of 2021. So timing on those primarily.

In the meantime, we continue to focus on the mix change from continuing to put pressure on what we bid on for hard bid or low bid, kind of same terms we use, work in Texas particularly, which is a predominantly hard bid state.

So, I think Texas revenues for the quarter-over-quarter were down $16 million by design. And we will continue to work on that ratio to continue to focus on alternative delivery and non-pure heavy highway up hard bid opportunities. So, I think we'll see that trend start to reverse as we continue to ramp-up the projects.

They have been ramping-up slower than are the two three big alternate delivery projects in the Rocky Mountain region. But they are full speed ahead at this point in time and we'll continue to ramp. And as always subject to weather coming up on the back half of the fourth quarter when we get some snow flying in the Rocky Mountains.

And so I think it bolstered back to usual. And I think when you look at our backlog 1.5 billion combined to Joe's point earlier, we do expect a slowdown in 2021. However, we have about if you do the straight math, a year and three quarters of having civil backlog, which is probably the longest duration we have had a long time.

So we're in good shape for 2021. We'll see what happens on the biding activity. Hopefully we're looking back to little normal and we move forward.

[Sean Eastman, KeyBanc Capital Markets]

A lot of full detail in there. Just to round out the discussion as we look into next year with the alternative delivery projects ramping up, presumably at sort of above overall segment, average margin. What should we be holding you guys accountable to in terms of where this heavy civil operating margin should be into next year? Or should it be north of 2%?

Any kind of just rough idea range of expectations for - what you would see as an acceptable margin performance in that segment next year?

[Joseph Cutillo, CEO]

I don't think that we see that margin going backwards by any stretch of imagination. We will continue to tick up from historicals as we wean off more and more of the low bid heavy highway. That's our lowest margin stuff. And we're taking [ph] more of the alternate delivery in aviation.

When you look at the differential of margins, there's several points between the two of the low bid and into alternative delivery. So Sean, that should not be going backwards, that should be ticking up slightly and following.

If you follow our backlog trends and our margins in our backlog trends, we think up 50 basis points or 60 basis points. Overall, the margin should follow that. We've been very good at executing rate slightly above the average bid margins. The anomaly this quarter is that old three bridge project where we took some more costs that we think we're going to have between now and again.

[Ronald Ballschmiede, EVP and CFO]

As you look backwards, we essentially are wound down our big projects, all by the end of 2019. 2020 we're really just ramping them up. And a good indicator of our largest of those is our minority interest, which year-to-date is hundreds of thousands. And that's about half ownership, if you will, our partner just under half.

So I mean, that is an indicator that we really have very few heavy highways alternative delivery work in 2020, that will ramp up a little bit fourth quarter. So long story short, if you look at Q3 year-to-date last year, before the fourth quarter, we would expect to bid that kind of average margin going forward, simply driven by the continued shrinking of the hard bid component of heavy highway backlog.

[Sean Eastman, KeyBanc Capital Markets]

Got you. Great. And then shifting over to specialty, clearly a marquee [ph] year for this business, pretty impressive results. I just wonder, is this a really tough comp in this business as we look into next year? It seems like the end market, visibility and demand is very resilient.

But I wonder from a capacity perspective is there a point at which you're - you've got a sort of ramp hiring and training and maybe some CapEx to actually grow up in this level?

[Joseph Cutillo, CEO]

You're hitting the nail right on the head. We are - our biggest challenge as we go into 2021 is that capacity piece. Not on yellow iron, we can always get yellow iron. But the growth of the Plateau business this year far exceeded everybody's expectation.

And they're stretched to the limit right now. And we're working on, what we call an active recruiting and training program for the next generation or incremental project managers and those sorts of resources. But the reality is that takes time.

So we don't expect anywhere near the increase next year that we saw this year year-over-year, but we'll see some increased. The markets are strong. We feel very good about the market. It's just how much can we take out and make sure we deliver that same level of quality and service to these key customers. And the last thing we want to do is disappoint them by trying to grow the business too quickly.

[Sean Eastman, KeyBanc Capital Markets]

Interesting stuff. Thanks for all the color. I really appreciate it, guys.

[Joseph Cutillo, CEO]

Thank you.

[Operator]

[Operator Instructions]. Our next question is coming from Brent Thielman of D.A. Davidson. Please go ahead.

[Brent Thielman, D.A. Davidson]

Great. Thanks. Great quarter.

[Joseph Cutillo, CEO]

Thanks, Brent.

[Brent Thielman, D.A. Davidson]

Maybe following up on specialty. Joe, talk a little bit about the market dynamics there. What you are hearing from your customers? Is there been unusual delays, anything like that as we start to frame some sort of external expectations into '21?

[Joseph Cutillo, CEO]

Yes, I think, what we've heard - what I think people underestimate is the big customers out there. These are multiyear plans, right. So, if you take Home Depot, they've got a five-year plan. Amazon's got a four to five-year plan. And so they're pretty solid on those plans. So there's some good visibility out there.

If anything, we think between the data centers, and the ecommerce side of the world, with the pandemic, the activity around that seems to be greater and the need is obviously greater. And we think that we will see as we get in a little bit further in the 2021, not only the same core customers that we've historically done business, but we'll see more and more activities from other customers that are trying to accelerate their e commerce activities.

Now, the difficult thing of that is, as you could imagine, you don't just flip a switch and say, we're going to double our distribution centers in ecommerce, there is some lead time with buying the land, securing the locations, all that kind of stuff. So, I don't think we'll see a major shift early in 2021.

But I think as we get into the back half of 2021, we'll see not only - in the beginning of 2021, we'll see continued strength with our core customers. But in the back half of 2021, it wouldn't surprise me to see some bigger programs put in place by some of the next tier of customers that are really earlier in the ecommerce phase of their of their strategy.

[Brent Thielman, D.A. Davidson]

Okay. Joe can you talk understanding you guys are going to focus on paying down debt delevering over the next 12 months. But can you talk about some of the initiatives you have for the business next year, related to either, sort of adding new markets to specialty and residential or even sort of cross selling opportunities where one can leverage the other's capabilities?

[Joseph Cutillo, CEO]

Yes. So what we'll start with residential. The nice thing is that the Houston market is on fire and continues to be on fire. I think people are finally realizing everybody thinks of the Houston market as an oil driven market that is no longer the case.

This is a rapidly growing market for a lot of different other business reasons. We have plenty of runway within Houston to grow out over the next 12 to 24 months without any problem and still not have a dominant market share.

I will tell you though, in parallel. We're early. I think as we get into the back end of 2021, the Austin market appears to be coming on faster than we would have anticipated with the announcement of Tesla moving there and a few other big companies moving operations there. And we're seeing builders trying to acquire land in and around that market at greater rates than they have historically.

So, I think as we get towards the end of 2021, if it continues down this path, we'll be talking about Austin more for 2022 timeframe. On the specialty side, Brent, our strategy is to let our key customers, pull us to new geographies with them.

And the nice thing is we've recently been pulled to Tennessee with Facebook, and to Mississippi with Amazon, which are both two new states for us two new geographies. And we're going to let them drive and dictate where we go with them and where we expand. That's our first premise.

We do also believe that there are some-- within the geographic footprint of specialty there are some other markets and customers that we historically have not gone after, which would be natural organic growth for us. But in parallel, we talk about buying down debt, we'll continue to do that at accelerated rate.

If we could find the right tuck-ins to add incremental goods or services, I'll call it to the specialty sector, which could broaden their footprint with their existing customers and get these, I'll call it, accretive margins to the company. We've started talking about that approach and it has been kicking around some different ideas in that space.

[Brent Thielman, D.A. Davidson]

Okay, that's great. Maybe on residential, talked about a little bit of compression and margins. I get the inflationary effects there. But more wondering about the negotiations with customers. Getting back to kind of the pricing levels you've seen before?

[Joseph Cutillo, CEO]

Yes, I would tell you, with the exception of one customer, if the existing time. All the other customers have gone back to their historical pricing, we still have one customer that is resisting, but the others went back. So we got a little bit of a timing issue there.

And we believe that lumber prices should start coming back to normal in the first quarter of 2021. We saw lumber, a kind of put it in perspective, I think it was costing us over $300 more per slab in just lumber prices. So they more than doubled for us in the period.

And that doesn't sound like a lot. But when you're doing the volume of slabs that we're doing, it is a tremendous amount. Remember, the slabs are smaller now than they were. So as a percentage of cost it's a sizable increase.

So the team did a great job of overcoming a lot of that cost. It would have been a lot worse. They just kind of took it and went status quo. But it was just a reality. And the timing of that unable to push those costs on in the middle of price reductions.

[Brent Thielman, D.A. Davidson]

Okay, great. Thanks, Joe. Maybe one more, Ron. If I take the EBITDA guidance how much free cash flow you generated year-to-date. I mean, it looks like you guys could be doing $90 million to $100 million in free cash flow this year. Is that roughly what you're expecting?

[Ronald Ballschmiede, EVP and CFO]

It is. I think across all of our segments, they've just done a fantastic job of managing, not just collecting, but their whole investment in contract capital and otherwise. So I think we will continue to grow that a bit and be in that range at the end of the year.

I think to your earlier question we have locked in now, since we kind of got a better feel for the fourth quarter and capital needs that will be at $20 million to $25 million of net CapEx. Wouldn't surprise me if that number peaks up in 2021. But more to come on that once we understand that the Plateau particularly.

They don't throw around little bobcats. They throw around multi hundred dollar pieces of iron. So we are very focused on making sure we get our best returns fed as a love to be fed in new CapEx. So we'll be talking about that to focus obviously in the early 2021.

[Brent Thielman, D.A. Davidson]

Okay. Well, maybe to push on that just a little more, Ron. I mean, respect that CapEx might come up a bit more, but if Plateau holds up into next year. Obviously residential business probably looks pretty good, civil looks good. I mean, any reason to believe we can generate around this range of free cash flow again in '21?

[Ronald Ballschmiede, EVP and CFO]

No, I think our model is working and we wouldn't expect any big change in the model.

[Brent Thielman, D.A. Davidson]

Yes. Okay. Thanks very much, guys. Congrats again.

[Joseph Cutillo, CEO]

Thanks, Brent.

[Operator]

Thank you. At this time, I'd like to turn the floor back over to Mr. Cutillo for closing comments.

[Joseph Cutillo, CEO]

Thanks, Donna. I'd like to thank everyone again for joining today's call. If you have any follow up questions or wish to set up a call, please refer to the information provided in the press release associated with our Investor Relations. Thanks again for participating. And I hope everyone has a great day.

[Operator]

Ladies and gentlemen, thank you for your participation. You may disconnect your lines and log off the webcast at this time and have a wonderful day.