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spk02: Greetings and welcome to the Construction Partners, Inc. first quarter earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Rick Black. Thank you, Mr. Black. You may begin.
spk00: Thank you, Operator, and good morning, everyone. We appreciate you joining us for the Construction Partners Conference call to review first quarter fiscal 2022 results. 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, February 4, 2022, so please be advised that any time-sensitive information may no longer be accurate at the time of any replay. I would like to remind you that the statements made in today's discussion that are not historical facts, including statements of expectations for 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 the earnings press release that was issued today for our discussions 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 the adjusted EBITDA. Reconciliation 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, Jewel Smith. Jewel?
spk06: Thank you, Rick, and good morning, everyone. With me on the call today are Alan Palmer, our Chief Financial Officer, and Ned Fleming, our executive chairman, as well as other members of our senior team. I'll start by stating that all of our teams across five states did a great job this quarter. Last year, we acquired several companies and made several important additions to our organization to prepare construction partners for continued growth. We now have over 3,000 employees who are focused on both the safety and operational excellence every day. I would like to personally thank each of them for their hard work managing our business through unprecedented challenges in the economy and our industry that have persisted over the past nine months. Once I've given an overview of the first quarter, I will hand the call over to Alan to review the financial results in more detail. Then before taking questions, Ned will provide additional strategic and organizational commentary about the company and our recent history. In the first quarter, construction partners achieved a record quarterly revenue of $285 million, a 49% increase compared to the same quarter last year. We have been focused on growing our services and relative market share in our current markets, so I'm pleased that approximately 30% of this increase was from organic growth, while 19% was acquisitive growth. Adjusted EBITDA in the first quarter was $26.4 million, of 12% compared to the same quarter last year. The positive first quarter results were driven mainly by three factors. First, we had strong operational performance at our asphalt plants, aggregate operations, and asphalt terminal. Second, we experienced favorable weather conditions during the quarter throughout our markets. And finally, the acquisitions we have completed over the last 15 months are adding value, and making positive contributions as expected. CPI's record project backlog of $1.09 billion demonstrates the strong demand for infrastructure services throughout our southeastern footprint. Also, we are pleased to see our backlog margins continue to grow. We anticipate that backlog margin growth will help future profit margins as this backlog is converted. We believe Construction Partners is well positioned to capitalize on future infrastructure demands that the $1.2 trillion bipartisan infrastructure bill passed in November will create over the next six to eight years. Construction Partners will participate in many types of projects being funded, including roads, bridges, airports, ports, and railroad infrastructure investments. We are monitoring the planning of how these funds will begin to be allocated from both federal and state governments, and we anticipate meaningful project demand beginning in late 2022 and beyond. As a reminder, expected increases related to the new infrastructure bill are not reflected in our FY22 outlook. As we mentioned on our last call, we have been dealing with atypical inflation in the overall economy's supply chain and labor market, that continues to affect gross margins. While normal and typical inflation is largely a pass-through item for CPI, the rapid and sharp rise of inflation has led us to adjust our pass-through mechanisms in an effort to lessen the impact on our newer backlog. For example, we've been adding contingencies in our bids to deal with the uncertainty of labor materials currently. Ultimately, once these economic realities smooth out in the future, we are confident that inflation will continue to be a pass-through cost for us. We do believe that our current adjustments for these increased costs are represented in our FY22 outlook. Pertaining to labor, there continues to be a definite challenge throughout the economy in the short term and for the construction industry in the long term. In the current environment, I believe CPI's workforce model is faring better than most, meaning our local market strategy allows our people to spend every night at home with their families. Also, the reoccurring and steady nature of our project work offers stability to our employees. In the long run, CPI will maintain our longtime culture of teamwork while leveraging our skill and footprint to create a distinct competitive advantage and offering great benefits and career opportunities to a younger generation. To be one of the winners in the construction industry moving forward, CPI has taken the necessary steps now to attract and retain a talented workforce that can capitalize on the investments being made in our nation's infrastructure. Turning now to acquisitions. We are pleased with the acquisitions completed over the past year that have further expanded our footprint into new and growing markets and will continue to drive future organic growth and margin expansion over time. The pipeline continues to expand for new opportunities to make acquisitions that strategically fit the CPI business model. As a consolidator in a fragmented industry segment, we will continue to strategically acquire businesses that expand our footprint and increase both our manufacturing and construction services vertical integration. This strategy leads to the growth of our relative market share while also allowing us to capture more margin along the value chain of services. We remain focused both on our growth strategy and operational excellence as we directly contribute to the investment in our nation's infrastructure. With a record first quarter behind us and a historically high backlog moving forward, we remain bullish on both the organic and acquisitive growth in the years ahead. I'd now like to turn the call over to Alan to discuss our financial results in greater detail.
spk10: Thank you, Jewel, and good morning, everyone. I will begin with a review of our key performance metrics in the first quarter of fiscal 2022. Revenue was $285 million, up 49.3% compared to the prior year. Acquisitions completed subsequent to December 31, 2020, contributed $37.8 million of revenue and we had an increase of $56.3 million of revenue in our existing markets. Gross profit was $33 million, an increase of 7.7% compared to the same quarter last year. General and administrative expenses were $24.9 million or 8.8% of total revenue compared to $20.1 million or 10.5% of total revenue in the prior year. In fiscal year 2022, we expect general and administrative expenses as a percentage of revenue to remain in the range of 8.5% to 9%. Net income was $5.5 million for the first quarter compared to net income of $7.9 million for the same quarter last year. Adjusted EBITDA for the first quarter fiscal 2022 was $26.4 million, up 12.2% compared to the first quarter last year. You can find GAAP to non-GAAP reconciliations of adjusted EBITDA financial measures at the end of today's press release. Turning now to the balance sheet, at December 31st, 2021, we had $35.6 million of cash and $123.7 million of availability under our revolving credit facility after the reduction for outstanding letters of credit. As of the end of the quarter, our debt to trailing 12 months' EBITDA ratio was 2.49. This liquidity provides financial flexibility and capital capacity for potential near-term acquisitions, allowing us to respond to growth opportunities when they arise. Capital expenditures for the first quarter of fiscal 2022 were $15.1 million. We expect capital expenditures for the fiscal year to be in the range of $60 to $65 million. We're reporting a record project backlog at December 31st, 2021 of $1.09 billion compared to $966.2 million at September 30th of 2021. and $65.6 million at December 31, 2020. In summary, we are pleased with our overall growth, recent acquisitions, and record project backlog with growing margins. I'll now turn the call over to Ned.
spk07: Thank you, Alan. CPI reported significant growth in the first quarter with both organic and acquisitive growth. These results demonstrate the successful execution of our strategy to grow organically in our existing markets and acquire complementary companies throughout the southeastern region as we gain scale and add valuable services, equipment, and most importantly, knowledgeable and talented people. As a founder of this business and someone that has been deeply involved from the beginning, it is important to point out the unprecedented environment we have been operating in for the past two years. as our economy, industry, and company have had to quickly and proactively adjust to multiple and significant challenges, from a pandemic to inflationary pressures such as labor and materials shortages, supply chain issues, and energy pricing swings, among other events. Never before have we experienced this many macroeconomic challenges at one time. CPI has successfully managed through these challenges while continuing to grow organically and acquire and integrate various strategic companies. Considering all of this makes the current success of CPI that much more impressive. In addition, the leadership team, in conjunction with the board, has been and continues to be committed to prudently invest in the right people, processes, and technology to further strengthen and support this robust yet disciplined growth plan. Our investments over the past year were critical to position the organization for future growth. Now, with the passage of the new federal infrastructure bill, We see even more opportunities. Quite simply, the roads in our end markets and across the country continue to decline and need repair. This is a trend that is not sustainable. We believe CPI will benefit from renewed activity and infrastructure spending over the next several years. The future is very bright for CPI, and we have an excellent team leading the company as we continue to grow and expand our organization, as well as CPI's geographic footprint. We remain committed to successfully executing our long-term strategy of disciplined profitable growth to enhance shareholder value. And finally, as a long-term shareholder of ROAD, I have not sold any of the shares I have personally accumulated, and I remain bullish on the future of this business. With that, we'll now take questions. Operator?
spk02: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Thank you. Our first question is from Josh Wilson with Raymond James. Please proceed with your question, Mr. Wilson.
spk09: Thanks, and congrats on the quarter. Hey, good morning, Josh. In terms of the year-on-year decline in gross margin, there's a variety of moving parts, obviously, between commodities and labor. Could you give us some more color on exactly what the contributions were from the different buckets?
spk06: Well, Josh, you know, we are focused on gross margins. And, you know, when you look year over year, you know, compared to the first quarter of 2020, where we had some real tailwinds from oil and energy, you know, dropping so much. This year it was the exact opposite. You know, we're still dealing with supply disruptions, the labor market, and energy prices going up, you know, 55% to 60% over 2021. So, you know, it's tough to compare to 2020, but as I said in my remarks, We are managing through it. We are building resiliency in our backlog to deal with the supply chain disruptions. And as our backlog margins are growing, we think that these things I've called ankle weights in the past, they're going to subside over time. And so that's how we are managing through it and looking forward.
spk09: When do you think margins will start to be up year on year?
spk06: Well, we see backlog margins growing as a good sign as we convert old backlog that obviously we did before we knew, you know, just the economic impacts that hit beginning about March of last year. And as we start to build backlog that has those considerations in, we see margins increasing. And we feel like that the markets are efficient and that they're going to resolve over time, whether it be supply chain or labor markets or just our pass-through costs being passed through quicker. So we really see that as we move forward, margins are going to increase. We can't know exactly when the economic challenges are going to subside, but we are Managing through it, and we feel like that as we go through it, we get better at managing through it. And so we feel good about margins outlook over time.
spk09: And last one for me, do you still think the normal seasonality of sales first half, second half holds, or does the strong organic growth in the first quarter change that?
spk06: Well, we did have strong organic growth in the first quarter, Josh. You're right. We've been focused on organic growth. and building our business in our current markets. We were pleased to see that. As far as seasonality, we do play an outdoor game, and so we had good weather conditions in the first quarter. We tend to see our quarters balance out, and so we don't get too excited about good weather in one quarter, and we really look at the year as a whole. As far as the seasonality, You know, we've always said it was 40-60 because that's historically been what it is. We feel like the last couple years it's been more like 42-58, maybe dealing with as the climate evolves and we have warmer winters and wetter summers. So it could be more like 42-58, but we feel like largely, you know, it'll be similar to what it's always been.
spk09: Got it. Good luck with the next quarter.
spk06: Thank you, Josh.
spk02: Thank you. The next question is from Stanley Elliott with Stiefel. Please proceed with your question, Mr. Elliott.
spk08: Thank you. Hey, good morning, everyone. Thank you guys for taking the call. Can you talk a little more about the labor environment? I mean, is there any risk to the four-year guide, kind of given how tight labor markets have been, especially in the construction markets?
spk06: Well, you know, as I said, Stanley, the labor market is indeed a challenge. You know, I stopped at Starbucks at 5.30 this morning where I normally stop. And there was a sign on the door this morning that said, due to labor challenges, we're now opening at 7 a.m., so I've got to find a new place to get coffee in the morning. So it's throughout the entire economy. But, you know, I feel like we're using our model to try to compete well. And, you know, as I said, having a local strategy where our folks are in their local markets and going home every night, I think it's helpful right now. But also, we're doing a lot of things to attract and retain a workforce for the long run. You know, there are going to be winners and losers in the construction industry in terms of keeping a workforce, and we're committed to being one of the winners, and that takes a lot of proactive steps. You know, as far as the outlook for this year, you know, we feel like we sort of have built in to our outlook that, You know, there's uncertainty moving forward in the short term. And so clearly the labor market remains a challenge, but we feel like we sort of factored that in already.
spk08: Perfect. And then could you all drill down a little bit more in the strong organic growth? I mean, was it just a function of you worked three more weeks this year versus last year? You mentioned expanding the services piece. So you're obviously trying to expand the umbrella. Any sort of color there would be helpful, and then even any sort of regional commentary would be great, too.
spk06: Yes. As far as organic growth, Stanley, it is something we've been focused on, and I would say there's several drivers of it. The first thing is we are trying to grow our vertical integration of services, and so we can bid on a wider variety of projects in the markets we're in. You know, the PLT acquisition helped with that, but we also are expanding organically and building those services and markets we're in. Then the second thing is we're just in a lot more markets, and so we're able to bid on a longer list of projects. And so that's helping drive organic growth. And finally, there's just a lot of demand. You know, on the private side, we see in the southeast, there continues to be a lot of private economic activity. And on the public side, the DOTs, the counties and the cities, they're all, they have really strong programs right now. You know, I said last May that we felt like the lettings year over year were going to go up 20% due to not only healthy gas taxes, but they had a lot of COVID relief money. And when you look at it, what really happened, I think I undershot it. It's more like about 35% in our five states, year-over-year increase in lettings. So I think the demand sides are helping to drive organic growth quite a bit.
spk02: Thank you. The next question is from Adam Thelema with Thompson Davis. Please proceed with your question, Mr. Talaima.
spk01: Hey, good morning, guys. Nice quarter.
spk06: Good morning, Adam.
spk01: Alan, I guess a question for you. I was hoping you could comment on anticipated Q2 cash flow, just given the really strong revenue in Q1.
spk10: Yeah, good question. I mean, typically what we see A little bit in our first quarter because it's usually a drop-off from our fourth quarter is a little bit more positive cash flow, but I guess the good news was our revenue actually grew between our fourth quarter of last year and first quarter. But certainly as the revenue, as Jewel said, kind of balances out in that second quarter, we should see a much more positive cash flow. So in quarters where we're growing, Because of financing those receivables and a lot of our vendors have to be paid quicker, especially subcontractors and truckers, we see the opposite happen. But second quarter should be a much more positive cash flow from operations because you're collecting all of those December and type receivables. So that's what we would expect and that's what we've kind of got built into our model. And then as the third quarter ramps up, kind of the opposite of that is going to happen. But certainly should be good cash flow. And then, of course, the acquisitions that were made in the first quarter have an impact on that because we don't typically buy the receivables of the companies that we buy. So we've got to fund that working capital for that initial quarter.
spk01: Okay. What was the impact of that last piece?
spk10: Not as much with these two because in the case of King, we did actually buy their stock, so it was a stock purchase and it was a platform. But with J. Miller, for example, typically our working capital drain is about 5% of revenue. They were smaller, so it was not that large in this particular quarter. But, for example, last year when we made the four acquisitions, it was fairly substantial there. Got it. The growing revenue, I mean, it's unprecedented that our first quarter of a year has exceeded our fourth quarter. That's never happened in our 20-something year history.
spk01: And it's a good problem to have. Because you talked about, I think you talked about $30 to $35 million of revenue that was deferred. So obviously you got all that back in December. in the December quarter?
spk06: Yeah, Adam, you know, we did have a lot of weather in the fourth quarter, and that revenue, as we said then, moved into the first quarter. And we did have a good first quarter, and we had good weather. You know, I think it's one thing that's a real positive is not only do we have a record revenue quarter for revenue, but we actually grew backlog. And you wouldn't expect that to be quite as strong. And I think that just reflects the demand for infrastructure services in the Southeast. So we grew backlog and we grew backlog margins, you know, coming out of the first quarter.
spk01: Okay. And then just last one for me, you know, Jewel, just high level, like what the, what is your comfort level on leverage? And like, how are you thinking about acquisitions now that you're kind of two, two and a half times on the leverage front?
spk06: Yeah, Adam, you know, we will continue to use leverage if we see growth opportunities we think makes, you know, smart strategic sense. We're very mindful of, you know, using it smartly and not having too much. Our bank covenants allow us to go up to three times cash flow. And so, you know, we're mindful of that. But we think it makes sense to use that tool. to grow and to make smart strategic investments, but we also want to, you know, not use it too much.
spk01: Sounds good. Talk to you soon.
spk06: All right. Thank you, Adam.
spk02: Thank you. The next question is from Michael Feniger with Bank of America. Mr. Feniger, you may proceed with your question.
spk03: Thanks. Hey, guys. Thanks, everyone. Hey, Mark. Hey, everybody. When we think of last year, I know that North Carolina acquisitions weighed down on the margin. So maybe just to start with that, what was the margin on that book of business last year in the first half versus second half? or now in Q1, I'm basically trying to get at is are we seeing, I know the margins are much lower than your corporate average, but are they starting to step up a little bit?
spk10: Yeah, Adam, let me just say one thing. In the first quarter of last year, they did not have that significant of an impact on our first quarter last year because they were made throughout the first quarter. And then we went into the second, third, and fourth quarter where our operations everywhere were having some of the constraints. But the acquisitions that we made last year have all had positive contributions in this first quarter. And we said even in the fourth quarter last year, we were seeing all of the acquisitions begin to improve. So the acquisitions, as you all said earlier, have had a positive contribution The beginning of an acquisition is always somewhat of a drain as we work through their backlog. But the backlog on the ones that were made last year, we're through that and we're into backlog that we bid and won.
spk03: Got it. And I know some of this is public information, but can you just help us where liquid asphalt is right now? Is it actually up a lot from the end of the year when we think of January? And if it stays at these current levels, how much will it be up year over year in Q2? Because the year over year impact was a lot in Q1 for obvious reasons, but how much would it be up in Q2 and then in the second half?
spk06: You know, Michael, I was looking at that yesterday, and, you know, oil went up 55 to 60 percent in 2021, and liquid asphalt prices went up between 25 and 30 percent. And, you know, while that is a pass-through cost because our DOTs and our contracts largely have indexes, you know, it creates a little bit of a headwind from a timing standpoint. Just as in 2020 when it fell, our indexes reduced but it created a tailwind for us already in the first quarter or the second quarter uh we've seen oil continue to rise and we've seen asphalt prices continue to go up so um you know we you know you you read just like we do about where oil prices are going and so uh it'll continue to be a pass-through cost force uh but As it rises, especially when it rises sharply as it has in 2021, it's a little bit of a headwind. But we still see that in the first quarter and the second quarter where oil has continued to rise.
spk02: Okay.
spk03: Fair enough. And then just on the federal funding to some of the states from infrastructure, as you mentioned, it was signed in November, but Some of the appropriations have been held up. I'm sure it will get released. Your backlog was still building. So are you seeing any delay there since you feel like infrastructure is more of a 2023 story? And just on an organic basis, can your guys' organic growth actually accelerate from 2022 into 2023? I'm not asking for 2023 guidance, but If we just layer on what the federal funding could be in the second half of this year, could we actually see organic growth step up next year?
spk06: Right. Well, good question. So let's unpack that a little bit. You know, in our guidance for 2022, we said organic growth would be between 5% and 10%. We still feel like that that's a very reasonable expectation. focused on organic growth, and clearly the demand side helps. Currently, the infrastructure bill is not a real factor in any lettings. It's not a factor in our guidance for 2022. I agree with you. The appropriations are going to happen. We see DOTs starting to program and anticipate that money, but really The lettings for this year being driven by money they already have, which is from those various COVID relief bills. So long-term, I think it will drive organic growth. I think both the COVID relief money in 2022 and then the infrastructure investments in 2023 and beyond, which we anticipate is going to really last about six to eight years before that money gets spent. I think that's going to drive meaningful organic growth in CPI. Thank you. Thank you.
spk02: Thank you. The next question is from Justin Hawk with Baird. Please proceed with your question, Mr. Baird.
spk04: I was hoping to get just an update on the North Carolina DOT business because, you know, that used to be, you know, a good 12%, 13% of your revenue. And obviously, you know, it's a pressure we all know and kind of dropped off. But it's not disclosed here as one of your biggest customers. So it's still less than 10% of revenue. I'm just curious how the recovery is going in there and what you're seeing at the North Carolina DOT specifically.
spk06: Yeah, Justin, good morning. You're right, the North Carolina DOT has long been one of CPI's biggest customers, and it will continue to be a major customer moving forward. You know, the recovery in North Carolina, as I stated before, is going really well. North Carolina did go about 18 months without letting work. That had some significant impacts in the state's construction industry. CPI was able to pivot and to do a lot of commercial work during that time, which really helped. So it's good that our model, you know, we can do various types of construction. But now, North Carolina, I mean, we're benefiting from a very healthy program in their lettings. And also, the acquisitions we made last fall and winter got into 13% new markets in North Carolina. That's really a big part of what's growing our backlog now is the DOT has a healthy program of lettings, and we have a lot of geographic footprint in North Carolina to bid. So North Carolina, I think, is very healthy moving forward. I think they've got a strong funding mechanism, and so with this infrastructure bill, We anticipate the North Carolina DOT being a major customer in the future.
spk04: Got it. I guess my second question, just turning back to the margins here and maybe trying to understand the trajectory, I mean, your guidance is implying, you know, much better EBITDA margins for the year and, you know, with the 1Q still pressured on the gross margin. I just want to understand kind of the trajectory of what you're expecting for the margins. I mean... In 2Q, it sounds like this gross margin pressure is going to continue. I mean, are you expecting the margins to remain lower than they were a year ago in the second quarter and then recover in the second half? Or what's kind of the trajectory you're thinking of how the backlog transitions on the margins?
spk10: Yeah, good question. This is Alan. There are two things that are going to affect the second quarter. that always affect the second quarter compared to the first or the third or fourth. That generally is our lowest revenue quarter. The fixed cost recovery that we benefit from mostly in the third and fourth quarter are negative drivers of the margin in the second quarter. That's always the case. The second quarter is going to still be dealing with some of the jobs that that we weren't able to get into the bid because a year ago or nine months ago, when we bid those jobs, we didn't have some of the contingencies that are in bids now. So we're working through the lower contract margin jobs. The third and fourth quarter would definitely benefit from the jobs that are raising the gross profit margin on jobs as we're completing those. but also the significant improvement in margins where you've got higher volumes going through your plants and your equipment in those quarters. So kind of what happened last year, if you went back and looked at it, from the first quarter to the third and fourth quarter, where normally the margins would go up because of these new pressures, these unprecedented price increases and things, you actually had a decline. This year you're going to have really the reverse of that is what we expect, is the first quarter, even though it had high volume, it's dealing with lower margin jobs. The third and fourth quarter are going to be the ones that have the higher volume and also have the higher margin jobs. So almost a reverse on the trajectory of the gross profit and EBITDA margins.
spk04: Yeah. Okay. That's helpful. Thank you, guys. All right. Thank you, Justin.
spk02: Thank you. The next question is from Brent Tillman with DA Davidson. Please proceed with your question, Mr. Tillman.
spk05: Hey, great. Thank you. Hey, you know, sitting here a year ago, my might've been hard to fathom kind of inflation we've seen in the marketplace, obviously, but I, you know, I would think yourselves and the industry are sort of better prepared for it or anticipating it, you know, kind of one year later, I guess the question is with the new contracts and awards you booked or pursuing, do you feel those sort of more effectively allow you to recapture or offset, you know, what could be a situation of a hundred dollars plus oil and, diesel that's 20, 30, 40 cents higher two to three quarters from now.
spk06: Good morning, Brent. Yes, I would say our pass-through mechanisms and repricing of bids will really help us to capture that. I really have been glad that the CPI project durations six to nine months in the last year because it allows us to reprice and not be stuck with long-term contracts. So as we have repriced bids, we have increased equipment rates to deal with higher diesel fuel costs. We repriced our mix to the asphalt plants to deal with higher asphalt prices so you know it is you're right it has been quite a last year dealing with sharp inflation but we feel like we are managing through it better and better and so we feel like and we're going to continue to pass it through like we always have we just learned that you know to pass it through faster yep okay that's helpful um
spk05: Maybe just on the labor situation, Joel, you obviously have had to deal with this internally. It seems like, if I understood it right, that was even more of a challenge maybe for some of the smaller subcontractors to utilize within the industry. Are you performing more of those functions internally now in order to get these projects to the completion line?
spk06: That's an interesting question. The answer on the is yes, we are forming more of the services now and vertically integrating because our subcontractors have struggled with that. You know, I would say the entire construction industry has struggled with this. So on one hand, it's a negative and we deal with it. On the other hand, I think it's been a positive in some ways for CPI because I know we've won several projects where the customer... We weren't necessarily below bid, but the customer awarded the project to us because they knew we had the resources and the labor force to finish the work on time. And so every construction company is dealing with it and I think we're faring pretty well. But we are definitely doing more work in-house to just have the liability of having that workforce there.
spk05: Okay. Thanks, Joel. I hope you found some coffee, by the way. I did. Thank you, Brent. All right. Best of luck. Thank you.
spk02: Thank you. There are no further questions at this time. I would like to turn the floor back over to the management for closing comments.
spk06: Okay. Thank you, Operator. In summary, Our new fiscal year is also a strong start. We have a very busy spring and summer work season ahead of us, but our teams are prepared and ready for the bright future we see to continue growing the company and delivering value for our stakeholders. Thank you all for joining today's call. We look forward to speaking with you on our next conference call.
spk02: Thank you. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.
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