Construction Partners Inc (ROAD) 2024 Q1 法說會逐字稿

Greetings and welcome to the Construction Partner's First Quarter 2024 Results Conference Call. (Operator Instructions). As reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Black; of Investor Relations Officer. You may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Construction Partners call to review first quarter results for fiscal 2024.

This call is also being webcast and can be accessed through the audio link on the Events and Presentations page of the Investor Relations section of construction partners.net information recorded on this call speaks only as of today, February 9, 2024. Please be advised that any time-sensitive information may no longer be accurate as of the date of any replay listening or transcript reading.

And I would also like to remind you the statements made in today's discussion that are not historical facts, including statements of expectations or future events for future financial performance are considered forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 we will be making forward-looking statements as part of today's call.

By their nature are uncertain and outside of the company's control. Actual results may differ materially. Please refer to our earnings press release for our disclosure on forward-looking statements. These factors and other risks and uncertainties are described in detail in the Company's filings with the Securities and Exchange Commission.

Management will also refer to non-GAAP measures, including adjusted EBITDA. Reconciliations to the nearest GAAP measures can be found at the end of our earnings press release. Construction Partners assumes no obligation to publicly update or revise any forward-looking statement.

And now I would like to turn the call over to Construction Partners' CEO. Jule Smith; Jule?

Thank you, Rick, and good morning, everyone. Joining me on the call today are Greg Hoffman, our Chief Financial Officer, and Ned Fleming; our Executive Chairman. We are off to a good start to our fiscal year, and I'd first like to thank our 4,400 employees throughout the Southeast for their hard work and professionalism that contributed to a successful first quarter revenue, net income, earnings per share, and adjusted EBITDA were all up significantly compared to Q1 last year.

We are pleased to report a record backlog of $1.62 billion as of quarter end, reflecting a demand environment that remained strong for both public and private work. This first quarter we experienced typical seasonal weather with October and November a bit drier than usual. While December was a bit wetter than usual, our crews and teams were productive and delivered excellent results this quarter.

Focusing more on the demand environment for construction services, there continues to be elevated demand for road repair, maintenance and expansion projects across our markets as a result of our country's continued migration soil. Each of our 6 states are well funded for this work.

With the federal government's IIJA funding further supporting infrastructure investments from road projects to airports to ports and rail lines. Because of the migration to the Sunbelt of both new residents and businesses, the commercial economic activity in our markets has remained steady with an active bidding environment.

We anticipate that our work mix for FY '24 will remain very similar to last year and typical for CPI, with approximately 63% public projects and 37% private projects.

Turning now to CPS strategic growth model in this fiscal year we've so far completed four strategic acquisitions, entering new markets, expanding market share in existing markets and adding capacity services and talented new team members to the CPSI family.

Most recently, we announced on January 3 the acquisitions of SJ&L General contractor, a hot mix asphalt and site work company headquartered in Huntsville, Alabama and Littlefield Construction Company, a soil base, surface treatment and site work company headquartered in Waycross, Georgia.

As we discussed in detail during our Analyst Day, a key component of our growth strategy is to actively expand our relative market share and service capabilities within existing markets. Both the SJ&L and Littlefield acquisitions expand our service offerings in existing markets while also adding valuable crews and equipment.

In the case of SJ&L in Huntsville, Alabama, we are integrating this team with our existing platform company in the state, Wiregrass construction company. The greater Huntsville metro area and interstate 65 corridor continue to experience tremendous growth and as a combined organization, we can now offer turnkey services, spanning the construction value chain on both private and public project opportunities within this market.

Likewise, our Georgia platform company, the Scrubs Company entered the Waycross market just a few months ago through the establishment of a greenfield hot mix asphalt plant. Now having acquired Littlefield, we are even better positioned to capitalize on the market that reaches from the Port of Brunswick into South Central Georgia. We are pleased to expand our presence in these crucial growth markets and proud to welcome the employees of SG&A and Littlefield into our continually growing CPI family.

We continue to have numerous and active conversations with potential sellers, both inside and outside of our current states. The universe of potential opportunities in our highly fragmented industry is substantial. However, we remain patient and focused on finding the best strategic acquisitions that expand our footprint and increase capacity, grow relative market share and fit well within our CPR culture.

We believe CPRs seen as the buyer of choice for many owners in the southeast due to our reputation for treating sellers, fairly providing attractive career opportunities for their employees and our track record for successfully integrating and growing companies.

As we continually discuss with the market. CPI's. founding strategy has three main components first to operate a high relative market share business in local markets, building low risk, high-margin projects for repeat customers, and generating strong free cash flow, second, to capitalize on the need for the nation and our states to invest in catching up on deferred infrastructure, maintenance and capacity. And third, as our industry goes through a generational consolidation to be the leader in building a scalable business by acquiring businesses in our industry.

Our 5-year strategic plan that we call Roadmap 2027 simply outlines our plan to continue implementing CPR strategy with growth targets that represent annual revenue growth of 15% to 20% and EBITDA margins in the range of 13% to 14% 2027. The foundation of our strategic plan remains our people.

We plan to continue building a competitive advantage through our workforce, maintaining our organizational culture as a family of companies and providing superior benefits and career opportunities, which attract and retain the best construction professionals at CPR, we are dedicated to building better lives and to building the infrastructure that keeps our communities connected.

In summary, we are pleased after Q1 to be right on track with our plan as we enter the second quarter of our seasonal business where we are hard at work, maintaining our fleet and asphalt plants and preparing for the busy work season ahead in the spring and the summer.

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

Thank you, Jule, and good morning, everyone. I'll begin with a review of our key performance metrics for the first fiscal quarter compared with the fiscal first quarter in 2023 revenue was $396.5 million, up 16%. The increase included $29.6 million of revenue attributable to acquisitions completed during and subsequent to the three months ended December 31st, 2022,

And an increase of approximately $25.1 million of revenue in the company's existing markets and contract work and sales of HMA and aggregates to third parties. The mix of total revenue growth for the quarter was approximately 7.3% organic revenue and approximately 8.7% from recent acquisitions. Gross profit was $51.9 million or 13.1% of revenue compared to $30.5 million or 8.9% of revenue in Q1 2023.

General and administrative expenses were $36 million and as a percentage of revenue were 9.1% compared to 8.7% in the same period last year. Net income was $9.8 million and diluted earnings per share were $0.19, up from $1.9 million and diluted earnings per share of $0.04 in the same quarter last year.

Adjusted EBITDA was $40.9 million, an increase of 50.4%. Adjusted EBITDA margin for the quarter was 10.3% compared to 8% in the first quarter last year. You can find GAAP to non-GAAP reconciliations of net income and adjusted EBITDA financial measures in today's earnings release.

In addition, as Jule mentioned, we are reporting a record project backlog of $1.62 billion at December 31st, 2023, up from $1.6 billion at the end of our Q4 fiscal year 2023.

Turning now to the balance sheet, we had $68.7 million of cash and cash equivalents and $154 million available under the credit facility, net of a reduction for outstanding letters of credit. In addition, we have the ability to establish an incremental revolving credit facility up to the greater of $200 million or total trailing 12 months adjusted EBITDA.

We have $280 million of principal outstanding under the term loan and $163 million outstanding under the Rubik revolving credit facility. The availability on our credit facility and cash generation will continue to provide flexibility and capacity to allow for potential near-term acquisitions and high value growth opportunities.

As of the end of the quarter, our debt to trailing 12 months EBITDA ratio was 1.78 times. Our expectation is the leverage ratio will maintain a range of 1.5times to 2.5 times while continuing to add sustained profitable growth. Cash provided by operating activities was $60.4 million compared to the $28.9 million in the same quarter last year.

Net capital expenditures in the first quarter were $24.3 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.

Today, we are maintaining our previously disclosed fiscal year 2024 outlook. We expect revenue in the range of $1.75 billion to $1.825 billion, net income in the range of $63 million to $70 million and adjusted EBITDA in the range of $197 million to $219 million, which reflects adjusted EBITDA margin in the range of 11.3% to 12%. And with that, we are now ready to take your questions. Operator?

(Operator Instructions)

Kathryn Thompson with Thompson Research Group.

Thank you for taking my questions today.

Good morning,

I just wanted to more folks come to mind part of focus into our end markets. And first, with the DOT work with this quarter was 37% versus 33% in Q1 for the last two years. But the public contribution overall in Q1 was slightly lower than the previous quarters. At 59% versus 61%. So it just seems that public non DOT work, which has a lower contributed to this quarter's, or is there anything to call out on the municipal level that could be driving this? Or any other color just account for the delta?

No, Kathryn, I don't think so. We bid a lot of public work that's city counties and DOTs. And so the mix of what we're doing on public work in any one quarter can vary, but there's nothing particular that's changed about that. We do anticipate this year. As we said in the prepared remarks, that our mix of work will be about 63% public and 37% private in the public work of cities, counties DOT and airports different. They'll all play a role know part in that public mix.

Okay, perfect. And then on the private side of our channel checks still point to manufacturing heavy industrial still strong on and some edges of weakness on a continuing and for traditional office and shopping centers. Can you touch more on current trends you're seeing on the private side and how the type of work for heavy versus light is and differing from any trends you're seeing in highway work?

Yes, I think you're exactly right with what you said Catherine, what we're seeing is that as businesses continue to migrate to the Southeast as they ReaShure, we're seeing a lot of manufacturing facilities get built. Our headquarters buildings, our pharmaceutical manufacturing sites. That's a lot more of what we're bidding on. We do continue to see residential stay very steady, but there's not as many office buildings and retail buildings in the mix but there's a lot more of the, as you would say, the heavy commercial sites.

And then final question just is more on we've seen some abatement of raw materials, but the other costs are going up. What are you seeing from DOTs or in other contractors in terms of bidding expectations around input cost? And are there any other type of costs like insurance that are and preventing projects from moving forward?

I would say, Katherine, the clearly inflation our DOTs have had to adjust their estimates to match the reality of the input costs that are out there in the marketplace. And I think they're doing that. We're seeing their estimates go up to where projects aren't getting held up. It has affected their purchasing power to some extent, but there's still a lot of things being bid and I don't see projects getting held up by that. I think they're adjusting to the to the new world of input costs. I think that inflation is continues to be steady. It's not it's not out of hand like it was a couple of years ago, but I think the DOTs by and large are keeping up with that in their outlooks and their estimates.

Okay. Thanks so much for answering that question in the back.

Okay. Thank you.

Tyler Brown with Raymond James.

Hey, good morning, guys, which are more or less a jewel, so it sounds like in Q1 weather was fairly normal. Just any thoughts here on Q2 for weather? I know it's been off and maybe a rough start here in Q2. Just anything to think about there?

Well, January's been cold, at least the first couple of weeks with the polar vortex. But throughout the years, Tyler, we have expectations in our seasonal business in Q1. We expect October to be great. And it was we expect December to be wet and it was.

And so, it was typical. We expect January to not be great whether this was when we're fixing our equipment, as I said. And so, we're just getting ready for the work season. So, we were able to work where we could in January and done, but it definitely was a pretty cold in a lot of places.

And now that's helpful. And then, Greg, I just so I have that for modeling. But at the midpoint of the revenue guide, I think it's calling for something like a mid [10s] revenue growth. But just can you remind us how much of that is from expected M&A?

Yeah, you're right. It's 15% was the projected midpoint from last year, and it's going to be typical to what it was in the first quarter on about half-and-half equal percentage organic and inorganic. And that's probably in the range of $125 million, $130 million of acquisitive revenue.

And then, Joel, so I know that M&A has been a driver since we're talking about it. But you seem to have had a lot of success with greenfields. And I'm just curious if that will become bigger part of, call it, the external growth story in coming years. And if we just take Waycross as an example, how does establishing a greenfield hot mix plant in a new market drive discussions around additional M&A?

Right, Tyler, good question. Greenfields have always been one of our three growth strategies where we see an opportunity to go to an adjacent market. And Waycross was just a perfect example. I've seen an opportunity in an adjacent market for the Scruggs company to go put a hot-mix asphalt plant.

And that really led to the discussion with the Littlefield company about acquiring their business and bringing their workers and their equipment into that area that way, cross area.

So, once we establish a greenfield and we're in an area that does provide opportunities for us to continue to build market share in that market. And you're right, Waycross was a perfect example of that. So greenfields are sometimes the answer, sometimes an acquisition to move into. And here's the answer, but we're studying all level.

No. Perfect. That's very helpful. Just real quickly, Jule, kind of conceptually backlogs are strong. It feels like work is picking up on the public side. You look at a lot of private companies. I'm assuming they are effectively full as well. So I'm just curious if your internal metrics, however you measure them. Are you seeing fewer bidders or more rational bidding for public work given that, let's say, the market is just generally full?

Well, I would say, Tyler, yes, to a certain degree, people have good backlogs and the construction industry has a lot of work. Still a competitive bidding environment, but I would say, yes, there's probably due to everyone having a lot of work. There's probably fewer bidders, and I think that's the sign of a healthy market.

Yes. Okay. My last one here, Greg, just kind of coming back to the model. I know that there was a gain on the Bluewater Facility Exchange last Q1. But just any broad thoughts just from a modeling perspective, how we should think about gains on sale per quarter? Is it maybe $1 million or something like that? Just any help would be there?

Thanks. Yes. I think that's right from a modeling standpoint, yes. That was certainly a one-off I think every year, gain on sale of equipment is part of our strategy related to owning operating and then acquiring replacement. So yes, that's. I would say that's a pretty good number.

Very good. Thanks, guys. Appreciate the time.

Thank you.

Thanks.

Andy Wittman with Baird

Yeah, good morning and thanks for taking my questions. I guess I'm just going to start out just by digging into the margins in the quarter, a little bit. Maybe I'll start with the G&A margins here on the rod number was up a decent amount from about $3 million or so above kind of where the run rate has been the last few quarters? And so, Greg, I was wondering if you could just comment on that? Is there anything in that number that makes it unusually high or low, you kind of did some more acquisitions. So, I thought maybe there's some deal costs in there or something else, but you tell us is this new run rate or is there something different from that? What should we expect?

And I think this is about what we would expect on. We are if you compare to last year and we talked a little bit about there was still some $50 million worth of low gross margin work that we had to complete. And so, we're not now that we're into no fiscal '24. We're not seeing those anymore. But in terms of overhead and acquisitions, we were slightly up this year this quarter compared to last year. But I think what you're seeing there is individual expenses that maybe we were out of period, but we're still expecting the year to turn out to me what we expect.

Can you just remind us what it was that you expected for the year and G&A?

Yeah, 8%.

Okay. And then just on gross margins, obviously you're starting to get some of the recovery with your with your backlog now being better priced than inflation coming down to. Can you maybe talk about how this quarter it reflects? Are we now at the run rate where you kind of feel like the price cost dynamics are kind of fully behind you and you're operating at that gross margins that you expect. And maybe if you could just expand on that also by talking about how on the expectations of the gross margins in the backlog that you've recently won compared to what you've been putting up here this quarter and the last few quarters.

Yes, the I think that's exactly right. I mean, I think just as we said in the summer, we're just really back to normal for CPR. And I think that's what you saw this quarter. And if you remember last year in the first quarter, we said we're finishing up a lot of this pretty inflationary backlog because a lot of the projects we do finish in the October, November, December timeframe, they get final paving.

And so, you know, last year's first quarter we were just finishing a lot of that work. So what you're seeing this quarter is really just us back to normal from doing work that's has the costs are baked in. And so, it's very much just a normal business.

And I would say we're adding backlog to. We're adding work to backlog at healthy margins. We're seeing that our crews and our teams in all the areas are going out there and finding ways to win on projects, which is very much back to the norm CPI, where more projects finish up better than bid margin. And so, to us, it's really just getting back to the normal operating model of CPI.

I got it. Okay. Just one last final question, probably for Greg, I'm guessing, and I was just kind of curious when you think about some revenues of HMA for aggregates to third parties, this first quarter '24 versus the first quarter and '23. Greg, can you talk about and how that changed and the impact that that had on margins, maybe like total total dollars sold to third parties. And just so we can understand how much of a component of your revenue mix that part of your business was?

Yeah, absolutely. So, I guess, first of all, let me say that that particular area of sales revenue for us is focused on more in the commercial private market so on. So, like internally, we noticed that that was still a very strong component of our of our business.

So, it's really good to see. I think just another internal indicator for us that that activity is still strong. We are typically in the 10% to 12%, and I think we've talked about before of third party sales of both aggregate and hot mix asphalt each year in our revenue from

And there wasn't a change this year versus last year still kind of consistently in that range.

Still pretty consistent, yes.

Yeah. Okay, great. Thanks. A lot there.

Michael Feniger with Bank of America

Just I think you might have touched on it a little bit maybe with weather in January. Just curious with such a strong start to the year, any reason to not raise the full year outlook? Was there anything that kind of stuck out to you? Is there anything we should be aware of that you're implying maybe just with margins maybe in the last the next 9 months that changed your expectations from coming into the year?

No, Michael. Not at all. I'm glad you asked that question. We typically look at our business as 2 halves of the year. And so that's why we talk about our revenue is 40-60 of our EBITDA is typically 30-70. We just try to just get through the first 2 quarters and then assess our business at midyear. And so we feel good about our guidance. There's nothing we're doing other than just saying we're reaffirming that. We'll take a good hard look at it after the second quarter in our mid-year.

And just with the quarter, anything you touch on with the margin on we obviously saw there's lower diesel, maybe liquid asphalt. Just was that a benefit to the margin in Q1? And how are you thinking about where that those prices are today what it means kind of for the next 3 quarters if it stays at this level?

Yeah, Michael, I think what we always say is that when there is some downward pricing in energy costs, we do get a little tailwind. And when it goes up, we see a little little headwind. And I don't think that has changed from I think if you look back over the last 12, so 18 months on, but primarily diesel and natural gas have fluctuated within a pretty tight range. It seems like it was more back in early 2022 when it when it kind of spiked up. So, I think we're operating within a pretty decently stable range and certainly taking those slight tailwinds when we can get it.

Great. And just on my last one, obviously, we're going into an election year. I'm curious your view here on the ground of that create any uncertainty you think that your business? Or is this less of a concern maybe compared to prior election years because you do have that legislation that you're IG that was passed? Just curious kind of how we think about that in an election year from the funding on and if it's a little different this go around than maybe what you have seen in other prior election years, thanks, everyone.

And Michael, on good question. You know, the good thing for us is in Washington, D.C. certainly has a lot of things they argue about, but infrastructure funding is probably the most bipartisan thing in Washington. And so, both parties see the need to invest in the nation's infrastructure they always have.

And so, we really don't see the election. However, it turns out really affecting the funding for that, Jay or the on the surface transportation funding overall. So clearly, we want the economy to remain strong and stable. And but we really I don't think the election is going to have a big impact on our business.

Thanks, everyone.

Stanley Elliott with Stifel.

Talk about like when you all would expect your backlog logs to normalize? I mean, it looks like you've got covered for the rest of the year. Curious if we should see some improvement on the organic side. How can you flex the labor component to maybe to add above the seven plus percent sort of numbers you guys are looking at on the organic side?

I'll address the backlog first and then organic growth from the our backlog was enough to set another record this quarter. And so, I think that's 13 quarters in a row, which is very atypical for CPI and that our backlog sequentially has always tended in the busy season to go down when we're burning off a lot of backlogs.

And so that indicates two things. Number one, we're growing. And number two, it's a active bid environment, but at some point, we can only sell, but so much ahead of our resources. And so at some point, it's not will surprise us at all for it to our backlog to go down sequentially from.

So, but it does give us good visibility. It does allow us to stay patient at the bid table, which is which are great things on the organic growth side, we continue to focus heavily on organic growth. And you're right to do that, we have to add labor. And so we continue to add labor and equipment and invest in organic growth, as Greg said, you know, beyond maintenance CapEx, we add equipment when we hire people and trying to invest in high-value growth initiatives on the organic side.

And then in terms of kind of the backlog or the pipeline of work, any kind of drill down color you guys could share on maybe some of the states that you guys are seeing the most activity? I'm just curious to try to get a little sense within the portfolio there.

Well, I would say all six states, we have active bid environment. So there's no state that I would say is any concern. Clearly, when you look at our states, Florida, Tennessee and South Carolina are just have great funding programs. And we're very, very active in Florida as clearly our experience in just an incredible amount of migration, but so is Tennessee and South Carolina, North Carolina has a very healthy funding mechanism. So it's Georgia's great I mean, it's there's all of our platform companies are adding work to backlog and and bidding a lot of work. So we're blessed in that regard.

Perfect, guys. I'll turn it over. Thanks so much and best of luck.

Thanks, Stanley.

Adam Thalhimer with Thompson Davis.

Hey, good morning, guys. Great quarter out of your morning. I got to be honest, Stanley stole all my questions. Maybe I'll just double up. I was curious on kind of your expectations for DOT bidding in the next few months.

Well, we've got quite a bit. The bid on the DOT, as you know, doesn't bid on evenly throughout the year. A lot of their work does bid in the next few months in some of our states. And so we've got a pretty big leading in North Carolina this month and South Carolina here next week. So they're there the wintertime. They let a lot of work that they want to do in the spring and summer. And so it's pretty active.

And then, Jule, any of the ankle weights still hanging around? I was curious if labor is getting a little bit better.

I would say it's pretty much normal now, Adam. I mean, clearly the generational as I've talked about, the generational just retiring of our workforce makes it harder to find skilled operators. But I think that's an advantage for us because we're going to do what it takes to attract and retain a workforce.

And so we see that as an advantage that we're going to try to leverage. But as far as just finding labor to fill our crews, the annual raises the cost of labor. It just it's back to normal. It's a pass-through cost that is not out of control like it was right after COVID and the reopening of the economy. So I would definitely say, I don't feel like we're running with any ankle weights now.

That's good.

(Operator Instructions) Brent Thielman with D.A. Davidson

Hey, thanks. Good morning. I'm locked and loaded. I guess, just a couple here, Joel. Joel, the fact that your markets are so good impacting your ability to do deals as fast as you like. Your results are solid. I assume many of the potential targets are, too. Just wondering if that's have an impact on so or expectations or so or expectations reasonable?

Yes, Brett, that's a good question. And one that we get asked a lot. And the reality is the markets. And then B and solid really don't play entire sellers falls because our sellers are thinking more long term with what's best for their family and there, they're doing family, you know, generational planning and what they they've made a lot of money in this business for decades.

And so, they're really not looking at the short-term market. And so, I really haven't seen any change in their expectations or really haven't seen anything about the current funding, making them less willing to sell. We're in a lot of conversations throughout the Southeast and the Sunbelt with potential sellers. Our pipeline is active. So the markets being healthy really isn't a big consideration for them. It's more what's best just for the overall our business and their families long term.

Okay. That's great. Jule. And then, Greg, this one might be for you, apologize if you mentioned this in the script, but beyond the first quarter, cash flow was and seasonably really good. And just curious. Yes. Do we see that?

Do we see the typical pattern through the rest of the year that's going to be less than a typical year for cash flow?

Yeah, no, I think that yes, it was a good it was a good first quarter audio. First of all, margins helped drive year over year on certainly have more to more end and revenue going up quarter over quarter, both created great cash flow opportunities.

Just to turn that revenue into cash, I think in terms of the rest of the year, we're going to see more traditional going back to what we've experienced from a cash flow perspective over the years. Obviously, the last couple of years on we're strange and different, but we're expecting to go back to more normal cash flow for 2024.

Okay, great. Thank you, guys.

Thanks, Brett.

Brian Russo with Sidoti.

Your morning to more branded morning. Just a follow up on the DOT letting activity. I mean, how would you compare to last year? Is it accelerating because of DOTs? Are you anxious to get the IIAJ. matching funds? Was it just more turnkey based on their state programs? Just curious.

Yes, Brian, I think both of those are right. I think that IIJA. funds come through the normal programs that the federal government gives the money to the states in the federal fiscal year. And so the states have to spend that money are committed.

And so I think it's very similar to last year in the what the states are doing, but also think the states are they have their own funds, as we talked about previously, Florida, Tennessee, South Carolina, North Carolina, and now Georgia recently announced their they're using some state funds to augment infrastructure funding because they need to keep up with the migration to their states.

And so, we really see that the DOT's activity, if anything, it's more than last year, but certainly very similar. And so, it's an active bidding environment. And I think that we that IIAJ., we still are just really are in the early innings, maybe the third or fourth inning of that this money getting to the to the projects and being spent. And so we've still got a lot of long way to go with that.

Okay, great. And then just on the backlog, obviously another strong quarter despite the seasonality of the business. I mean, how would you characterize the projects on the public side? And then maybe the private side, I mean, is it still similar size and duration on the public side? And then is there a heavier concentration in manufacturing or in industrial on the commercial side?

Yeah, Brian, I think of what the analysis of our backlog obviously is dictates kind of what we say we're going to do in terms of the mix of revenue going forward. I think Joel said a minute ago at 63%, 37% is kind of what we expect public to private, and that's pretty normal.

That was what it was last year on the market. So, I think the makeup is very similar. And in terms of duration of project size of project is also very similar way. We track that and want to understand that because we've talked before there that there's a sweet spot that were were achieved trying to achieve it. It has not changed.

All right. Great. Thank you.

Thanks, Brian.

We have no further questions at this time. I would like to turn the floor back over to management for closing comments.

Yes. We'd just like to thank everyone for joining us this morning, and we look forward to speaking with you again next quarter.

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.