Sterling Infrastructure, Inc.

Greetings. Welcome to Sterling Infrastructure's 2022 Fourth Quarter and Year-End 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 this call over to Joe Cotillo, Sterling'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, 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligation to update forward-looking statements as a result of new information, future events, or otherwise. Please note that management may report may reference EBITDA, adjusted EBITDA, adjusted net income, adjusted earnings per share on this call, which are all financial measures not recognized under U.S. GAAP. As required by the SEC rules, regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in our earnings release issued yesterday afternoon. I will now turn the call over to Mr. Joe Cotello. Thank you, sir. Please go ahead.

Thanks, Sherry. Good morning, everyone, and thank you for joining Sterling's fourth quarter and full year 2022 earnings call. It's hard to believe this is my sixth year-end earnings call as CEO of Sterling. It's always fun to reflect back on all the accomplishments and see the transformed company that is stronger than ever. These accomplishments are a tribute to our people, our culture, and our strategy. Without the best people in the industry delivering the Sterling way, none of this would have been possible. The only thing that excites me more are the opportunities we have ahead of us. But before we discuss that, I'd like to talk about the results and the accomplishments of the fourth quarter and the full year. In addition, I'll talk about our current markets and our 2023 outlook. Unless otherwise stated, All numbers discussed today will be for continued operations. In 2022, we continue to be one of the safest work environments in our industry. We won two National Safety Awards, and our largest transportation business went the entire year without a recordable or lost time incident. Our employees' commitment to keep each other safe, along with the continuous training that takes place, is really paying off. We continue to look for innovative ways to get even better with the use of new proactive indicators and artificial intelligence. Our journey will never stop until everyone goes home safe every day. 2022 marked another year of significant progress in our journey to become a leading infrastructure service provider. For the year, our infrastructure segment grew 93%. Approximately one-third of this growth was organic, And two-thirds of this growth was from the acquisition of Papillo. The infrastructure is now 51% of our total revenue and 66% of our total segment operating income. It remains our fastest growing and highest margin segment. The strong demand for data centers, distribution centers, and the reemergence of U.S. manufacturing has enabled us to end the year with record backlog. Our building solution segment continued to deliver strong results, even with a second half decline in the residential market. On just over 1% total revenue growth, building solutions delivered a 12% increase in operating income versus prior year. This increase was driven by our team's continued focus on price and productivity. 20% of our segment operating income now comes from building solutions. Favorable market conditions and margin improvements continued in our transportation segment throughout the year. The combination of higher quality work and the continued shift away from low bid to alternative delivery projects delivered a 34% improvement in operating income on 14% less revenue. A major contributor to the revenue drop was a conscious shift of transportation resources to perform higher margin commercial and e-infrastructure work in the Rocky Mountains. Another strategic accomplishment in this segment was the divestiture of our 50% owned venture in California. The risk-return ratio of the market, coupled with our 50% ownership stake, made this a non-strategic asset. At year end, our combined backlog in transportation was up 19% and the margins in backlog increased 200 basis points versus year end prior year. Our transportation segment, that represents 14% of our segment operating income. For the quarter, our consolidated revenue was up 26%. Our gross profit was up 31% and our net income was up 80% versus prior year. For the full year, our revenue grew 25%, our gross profit improved 35%, or 110 basis points, and is now at 15.5%. Our operating income was up 49%, our net income increased 54%, and our earnings per share were up 49%. In addition, we generated $219 million of cash from operations, and finished the year with $182 million of total cash on the balance sheet, up over $120 million from prior year. These results are incredible when you consider the challenges we had to overcome with inflation, the supply chain, and a declining residential market. We entered 2023 with a combined backlog of $1.69 billion, up 25% over December 2021. And the margin in our combined backlog improved 160 basis points. As we look forward to 2023, the strong market conditions in e-infrastructure and transportation solutions coupled with our margin improvements and year-end backlog enables us to forecast another record year for Sterling. Based on the midpoints of our 2023 guidance, our revenue will grow 10.2%. Our net income will improve 10.6%, and our earnings per share will increase 8.4%. Our full year guidance range for 2023 are as follows. Revenues will be between $1.9 and $2 billion. Net income will be between $104 and $110 million. Our earnings per share will be between $3.33 and $3.35. And our EBITDA will be between 220 and 235 million. With that, I'd like to turn it over to Ron to give you more details on the quarter and the full year. Ron? Thanks, Joe, and good morning. I am pleased to discuss our record fourth quarter and full year performance. Our updated investor relations slide presentation has been posted to our website and includes additional financial details to help further understand our 2022 results. The presentation also provides additional modeling considerations which underpin our 2023 revenue and earnings guidance. As you may recall, we closed on the Petillo acquisition on December 30, 2021, resulting with the inclusion of Petillo's financial results for all of 2022. Additionally, on November 30, 2022, we sold Sterling's 50% ownership interest in Meyers for $18 million. We received $12 million of cash in early January 2023 and will receive the balance over the next few years. The divestiture is consistent with our strategy of reducing our portfolio of low bid, heavy highway projects in order to increase Sterling's margins and reduce risk. The financial operating results of Meyers have been presented as a discontinued operations for 2022 and prior periods. For the year ended December 31, 2022, we reported net income from discontinued operations of $9.7 million, consisting of an after-tax gain of $13.2 million from the sale, which was partially offset by after-tax loss from operations of $3.5 million. Now let me take you through our financial highlights, starting with our backlog metrics. At December 31, 22, our backlog totaled $1,414,000,000, up $86,000,000 from the beginning of the year. The gross margin of this backlog was 14.3%, a 170 basis point improvement over the beginning of the year. A higher portion of e-infrastructure backlog and increased transportation backlog margins drove this improvement. Unsigned low bid awards at the end of 2020 totaled $275 million, an increase from $23 million at the beginning of the year. We finished the year with a combined backlog of $1,689,000,000. a $339 million increase over 2021. Our gross profit in combined backlog was 14.2% compared to 12.6% at the beginning of the year. Our full year 2022 book-to-burn ratios were 1.06 times for backlogs and 1.22 times for combined backlogs. Revenue for the fourth quarter was $488 million, up $93 million over 2021. Our full year 2022 revenues totaled $1,769,000,000, up $355 million from 2021. As a result of our strong backlog and opportunities in our e-infrastructure and transportation markets, our 2023 revenue guidance range is $1.9 to $2 billion. Moving to our segments, our current quarter e-infrastructure revenues were $247 million, an increase over the prior year quarter of $120 million. Full-year e-infrastructure revenue was $905 million, an increase of $437 million over 2021. The year-over-year revenue increase included $289 million from the late 2021 acquisition of Attillo, and e-infrastructure organic growth of $148 million. Including Petillo acquisition on a pro forma basis, 2022 organic revenue growth was 32% and 35% for the fourth quarter and full year, respectively. The e-infrastructure organic growth reflects the continuing strong demand for data centers, distribution centers, warehouses, and, more recently, new manufacturing opportunities across our expanding footprint. Transportation revenues were $127 million in the current quarter, a decrease of $23 million, or 15% from the prior year. Full year transportation revenues were $542 million, a decrease over the prior year of $85.6 million, or 14%. The revenue decline was driven by a shift of transportation resources to perform additional higher margin commercial and e-infrastructure work, and due to the timing of the execution of our backlog. Consistent with our strategic intent, Low bid heavy highway work declined by approximately $10 million year over year. The current year quarter building solutions revenue was $75 million, a decrease over the prior year quarter of $4 million. The full year building solutions revenues were $232 million, an increase of $4 million over the prior period. Building solutions revenue increases were partially driven by higher demand in the multifamily market, partially offset by a decline in single-family housing as ownership became less affordable due to increasing interest rates and inflation. Current quarter consolidated gross profit was $69 million, an increase of $16 million over the prior year quarter. Gross margin increased to 15.4% or 60 basis points over the comparable 2021. Full year consolidated 2022 gross profit was $275 million, an increase of $71 million over 2021. That provided for gross margin increase to $15.5 million, 15.5% or 113 basis points over 2021. Both the fourth quarter and full year gross margins were at record levels. This consolidated margin increase reflects the increased mix of revenues from our higher margin e-infrastructure segment and increased margins from both our transportation and building solutions markets. Our gross margin improvements were negatively impacted by continuing supply challenges and inflationary pressures, which primarily impact our e-infrastructure and building solution segments. General and administrative expense was flat in the quarter compared to the prior year and increased $17.3 million to $86.5 million for the full year. Over 70% of this increase was attributable to the Petillo acquisition, with a balance driven by inflation and higher revenue-related incremental costs. We continue to expect our full-year G&A expense to be approximately 5% of revenues. Operating income for the fourth quarter was $37 million, an increase from $20 million for the prior year quarter. Current quarter operating margin increased to 8.3% compared to 5.3% 6% in the prior year quarter. For the full year, 2022 operating income was $159.9 million, reflecting a $52.9 million increase over the prior year. Our full year operating margin increased to 9% compared to 7.6% in the prior year. Both fourth quarter and full year operating margins were at record levels. Our effective income tax rate for the 2022 fourth quarter and full year was approximately 34% and 30% respectively. We expect our full year 2023 effective income tax rate to be 28% to 29%. The net effect of all these items resulted in a fourth quarter net income of $20.2 million, or 66 cents per share. 2022 full year net income of $96.7 million or $3.16 per share. Our net income guidance is $104 million to $110 million for 2023 and our earnings per share guidance is $3.33 to $3.53 per share. Our fourth quarter EBITDA totaled $49 million $49.9 million, an increase of 78% over the prior year quarter. Full year 2022 guidance totaled $208.7 million, an increase of 51% over the prior year period. As a percent of revenues, EBITDA improved 11.1% of revenue for the quarter, up from 7.9% in the prior year quarter. For the year, EBITDA improved to $11.8 million of revenue percent as compared to 9.8% in 2021. We expect our 2023 EBITDA to be in the range of $220 to $235 million. Cash flow from operating activities in 2022 was a very strong $219 million compared to $158 million for the prior year. The current quarter 2022 cash flow from operations was $88.5 million. Our strong third quarter and fourth quarter cash flows totaled $185 million and allowed us to more than recover from a slow cash generation in the first half. The 2022 cash flow fluctuations were principally driven by significant organic growth from our e-infrastructure segment, as well as improved margins from each of our other sectors. Cash flow from investing activities included $56 million of CapEx, $18 million related to the Arizona residential slab acquisition, and $16 million related to the disposition of Meyers. The CapEx reflects the higher E infrastructure solutions activities, including the impact of the Petillo operations. Our cash flow from financing activities was a $33 million outflow, which included $23 million related to scheduled debt payments. Finally, the diversity and strength of our portfolio businesses, our strong liquidity position, consisting of $182 million cash at the end of the year and our comfortable 1.9 times EBITDA leverage, we are well preferred to take advantages of additional opportunities in 2023 and beyond. Now I'll turn it back over to Joe. Thanks, Ron. As we look at 2023 and beyond, we believe our e-infrastructure segment will remain our fastest growing, highest margin segment for the next several years. Data center activity remains strong, and the need for data management continues to grow. If you step back and think of it, data collection technology is integrated in everything we use. Our homes, our cars, and our phones are all becoming one linked control system. Every time a new product comes out, it's more about the ancillary tech features than the products itself. This pace will only increase as we bring on new technologies and integrate artificial intelligence. E-commerce distribution center growth remains solid as big name retailers build out their networks to compete with Amazon. The reemergence of U.S. manufacturing is happening faster than we anticipated. The largest near-term opportunities are around the production of electric vehicles and the batteries for these vehicles. The size and scope of these facilities make them a perfect fit for our strengths and our services. As we look forward, data centers, e-commerce, distribution, and manufacturing will provide us with strong growth opportunities for the next three to five years. We will continue to look for acquisitions in this segment and add to further capabilities or geographic coverage. Building solutions remains our second highest margin and operating income segment, we continue to see good growth in the multifamily space as first-time homes become less affordable. On the residential front, we have seen continued growth in the Houston market and slowdowns in both the Dallas and Phoenix markets. We believe the markets in Dallas and Phoenix will remain slow in the first half of 2023, but see this slowdown as an opportunity to pick up additional resources and market share. The need for first-time homes is strong, but affordability remains a challenge. To help counter this, builders are taking actions to offset both cost and interest rates. We believe we'll begin seeing a positive impact of these actions late in the second quarter or early third quarter 2023. Historically, we've come out of downturns with larger market share and stronger positions than we've gone into them. We continue to look for adding additional services and capacity in 2023 if the right opportunity presents itself. Our transportation segment is now seeing strong momentum from the infrastructure build. We continue to improve our margins by focusing on alternative delivery highway, aviation, and rail. In addition, the increased bid activity enables us to be even more selective in 2023. As we go forward, the strategy will remain the same. Focus on reducing risk and improving margins would manage revenue growth. In addition, we will continue to evaluate opportunities to ship resources from transportation to our e-infrastructure and building solution segments and geographies outside their existing footprints. 2022 is a great year, and 2023 is positioned to be even better. We have built a proven platform of diverse infrastructure services that deliver today and could be expanded upon in the future. We've come a long way as a company, but are still in the early innings of what we can do. It is really exciting and an honor to be leading this great company and this amazing team. With that, I'd like to turn it over for questions.

Thank you. 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. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Brent Seelman with DA-Davison. Please proceed.

Hey, great. Good morning, Joe, Ron. Congrats on a great year. I guess first question, just with respect to the guidance for 2023, wondering if you can provide anything more specific in terms of the expectations for the three businesses. Joe, Ron, I mean, I guess in particular, be curious how you're thinking about building solutions over the course of the year. I think I heard you say you thought maybe more positive impacts coming in the second half, but if you could provide anything more there, that'd be helpful.

You want to give some of the detail, but let me give you a high level. We saw the slowdown in the third and fourth quarter last year. Looks like it's, I'll call it, stabilized to a degree coming into the first quarter. We've really seen the builders take They took a lot of actions, but they didn't really take a lot of the actions until we saw more of them starting to hit in the fourth quarter. Some of those are around buying down points, giving discounts on homes, but where we think some of this will also start to kick in is the next homes that they're getting ready to build, they're either taking a little less of the frills out of the homes or downgrading the appliances They're doing several things that take significant cost out. And if you think of it, those homes won't start hitting the market until second and third quarter of this year. And we think the combination of those things will really get people back. And one of the things the builders keep telling us is the traffic is down, but the hit rate is up significantly. So the people coming in are buying homes, and there's still a lot of demand. Ron, you want to give some more detail on that? Sure. So with that, on the residential side, certainly in the first half, we wouldn't expect growth. We'd expect some smaller decline, kind of reducing first quarter to second quarter, as we see it leveling out or improving at some point in time. So I think full year, our crystal ball says kind of a push in revenues. That looks like it will continue to be helped by multifamily housing and improving our major markets pretty quick. Interestingly, Houston has held up very well. Houston is still growing. We haven't seen a decline at all in Houston. It's one of the few markets in the US that really hasn't seen a decline across it. That certainly helps and we're hoping we can allocate more resources to that market. From the e-infrastructure side, we're expecting a very solid year with nice growth. We've seen a couple of press releases in the last six months for what I call the EV world. Those are large projects, relatively quick book and burn, meaning that average for that sector is less than a year on average compared to less than two years between one and two on the transportation side. So we expect some maybe even low double digit revenue growth for that segment. Really depends on how fast we can move up and get going on these jobs. But it's very strong. And then on the transportation side, We'll be up low single digits. I think that's consistent with our plan. A couple variables in there. We have a large design build in our unsigned. That's the majority of our $200 million plus of unsigned work. As soon as that gets approved, we will ramp up, and that will likely be in the back half of the year where we'll see some meaningful revenues coming from that individual project. But the market's solid, and our backlog's solid. I think that'll keep going. Just to put a number on something, we talked a little bit about moving resources around. As we report our segments, those by the product, not the business unit. For instance, this year our transportation group footprint has done about $85 million of revenues from both commercial work and e-infrastructure work in their footprint. They're busier than it looks, this pure transportation business, but that's really consistent right on our strategy, higher risk, higher margins, lower risk work, and a steady stream of what I'll call risk-adjusted transportation work with alternative delivery and manageable hard bin work. That's kind of the big picture.

Okay, I appreciate all that, Ron. Just to clarify, you think building solutions could potentially be flat for the year?

Yeah, pretty close.

Yeah.

Yeah. Okay. Second better than first, third better than second, and fourth is, you know, fourth is always down a little bit for the holidays, et cetera, in weather. Yeah.

Okay. And a strong outlook there for e-infrastructure. Just wondering what's already in... backlog today versus what you need to pick up over the course of this year to kind of reach the targets for the segment and put it in that guidance?

Yeah, generally we've got about six months of backlog in place. I will tell you we're in a better position than that right now for the year. We still need to pick up a little bit in the northeast. We've got some capacity coming free there in the second half, but there's a lot of activity The two recent ruins with the Rivian and the SK Battery Plant, those are very, very large projects that will consume a fair amount of the southeast capacity this year and fills them up right now. We'll look if other very large projects come out in the southeast. We may even do some build of those using any resources from Patilla that come available in the second half of the year.

Okay. And then, Joe, I mean, it's been a year since your last big transaction. Maybe just thoughts on the M&A pipeline, how serious some of those discussions might be going, and likelihood we could see something here in 23. Yeah, so...

Yeah, we're certainly, on the tuck-in front, we're always looking hard, right? And small deals, I'll call it $10 to $50 million deals, we're looking at every day. For bigger deals, we are certainly looking. We haven't found the right one. We'd like the banking world maybe to come back a little bit. That would be nice. It would help us. So our strategy right now is How do we continue to look, maybe have something close or lined up when the banking world's come back? We'll execute on that. We definitely would like to add something of size or even that fourth leg if possible, Brett. We're continuing to move on that. Just a little more challenging in today's banking world to jump on it. On a positive front, we're sitting with a bunch of cash. And we've got to figure out what to do with that to make the best return for our investors.

Okay. Thanks, guys.

I'll pass it on. Thanks, Brent. Good talking to you.

Our next question is from Sean Eastman with KeyBank Capital Markets. Please proceed.

Hi, guys. This is Alex. I'm for Sean this morning. Thanks for taking our questions. So on e-infrastructure, Can we just talk about the external supply chain environment, kind of how this has trended in the recent months? I'm just wondering if this has gotten any better or worse. And then in 2023, like the segment won't be comping off a year without Petillo, so there won't be that margin headwind from the lower margin work. So is it fair to expect some healthy margin expansion in this segment this year?

Well, let me talk about the supply chain first. You know, on the The two biggest drivers on supply chain for our e-infrastructure are pipe and diesel fuel. We've seen diesel fuel at least stabilize, so it's a little more predictable than what it was. When we had to go from two-something a gallon to five-something a gallon in, I think it was 45 days, that's a little hard to predict, right? So it's stabilized, so I think we've got our pricing models and contracts built more effectively around that. So theoretically, we should see, as we get into later in the year, after the second quarter, some pickup in margins related to that, for sure. Pipe still remains a long lead time item. And so what we've ended up doing is still a little bit of a productivity hit. But I'll tell you, we're getting better at scheduling the project, knowing that the pipe is going to be out towards the end. We're starting to see, for the first time, some equipment availability for what I'll call the traditional machines, excavators, dozers, even seeing some articulated trucks just in the last few weeks on the market available from CAT. So that's a good sign. Some of the specialty stuff is still long lead times. I'd like to see their pricing come down. I'm not sure we're going to see that, but the pricing's up about 30% on equipment. I think it hasn't necessarily gotten a lot better, but it's at least stabilized and more predictable overall, and we can manage that more effectively. Maybe for clarity, we expect both units infrastructure units to increase revenues. I don't want to make people think that we're going to be down in the Northeast. They have a very nice backlog and a good opportunity list, if you will. They just tend to have a little bit smaller, they have to sell more pieces of it, but we expect them to have another good year. In answer to your question of margin versus between the two, Overall, in today's run rate, it's about a 2% delta all in for the different type of scope of work that we do in the northeast compared to the southeast or southern part of the United States, southeastern part of the United States. That number, that'll stay about the same. It'll inch down in a big year or slow year or mix and things like that, but that's sort of a permanent, I'll call it, point and a half to two and a quarter until something happens, something different happens, but we don't expect that. That's what is our success, and with the union environment, that is what our clients prefer that we do, and our clients are important to us. Yeah, I think the real, you will always see a net shift down with the addition of the pillow and the other services, but we believe that in the second half, we will claw back some of the some of the erosion and margin that we saw from the supply chain. Again, it's stabilized. I think our pricing in our new jobs are much more firm in what I'll call the risk of diesel going back up to $7 or $6 or $5 a gallon versus $3 if we built it in that way or if we built it into $5 going to $8 or $9. I think it's much lower than it was this time last year.

Got it. And then I just wanted to ask about transportation margins. Obviously, you guys don't have Myers & Sons in the segment anymore. How much more room is there for margins to run in the segment? I think last quarter you guys were talking about getting another point or so over the next 18 to 24 months. I'm just wondering if this is still the case.

Yeah, I think it's actually a little higher than that. I think we'll get over the next 18 months more like two to two and a half points. And if we continue to see the shift and work, it could be better. But I feel pretty good with two to two and a half points over the next 18 months. Some of that will be a backlog. We can't rock it up that fast, but we should see a steady increase in gross margin and backlog. Our gross margin's up about 200 basis points right now, so that'll flow through over the next 18 months. And that was year over year, I would say 50-50 disposition versus selling at higher margins. That increased.

Yep. And my last question, I don't think I see a cash flow guidance anywhere for 2023. I know you guys have historically talked about operating income as a good proxy for your operating cash flow. Is this a fair assumption to make in 2023?

I think it is. I think, if you recall, we – We didn't start out strong in the first half of this year, so I probably backed off of getting to the operating income number. But the back half was just incredible. So I'm staying with, you know, it's hard to predict, but I think the continuing view would be start with operating income. We think we can continue to get in that ballpark given the structure we have today.

Thank you.

Thank you.

As a reminder, there's star 1 on your telephone keypad if you would like to ask a question. Our next question is from Brian Russo with Sedoti. Please proceed.

Hi. Good morning.

Hey, Brian.

Hey. Just to follow up on the transport, do you have the capacity or, you know, the appetite to try to enhance the top line? So you could have accelerating top line growth along with 200 basis points of margin improvement. It seems like the IIJA and given where you are in the Rockies and I believe Idaho, those are pretty strong markets for infrastructure. Just wondering what maybe your post 2023 strategy might be.

Yeah, we certainly have the capacity Our strategy has been to be very selective, continue to get this margin up to the point where if we get the margins up to 13%, 14%, then we'll look at growing it at a more aggressive rate. The thing that's a little bit deceiving to people is that we are actually growing at a much faster rate in the Rocky Mountains than the total numbers look at. We're continuing to shrink that low bid revenue uh in several of the other areas so texas continues to shrink along with some of the other other markets so it offsets that so the net is at three to five percent but our growth rate in the rocky mountains is is historically better than that we'll continue to do that as long as that work uh work remains and how soon do you think you can burn uh the remaining you know um

heavy-type highway work that you're currently shedding?

Yeah, when we look at our backlog, it probably averages two years in the heavy highway space. And there's a blend. There's jobs that will burn in six months, and there's jobs that are three years long. But the bigger jobs that are in there, the design builds, the alternative delivery, there are usually 18 to 24 months durations on those. So we don't have an exact number, but 18 to 24 months is a pretty good number. I generally just use two years. And we're pretty close to being where we want to be on hard bid work. Hard bid, high-wave work, there is strategic hard bid opportunities that we will continue to go after, but the Me Too work is Only $10 million down, that's not because we slowed down. It's because we have less of that type of work that we want to reduce. So $10 million for the year, that's pretty much declaring victory at this point in time, if you ever can do that. So that'll be kind of a continuing flow. We have a little bit. We have some jobs we will replace that will ultimately bring in better backlog. But the same percentage might be as we have today for hard bid, just at better margins.

Okay, great. And then just to follow up on e-infrastructure, you know, low double digit organic growth is pretty strong. You know, and I'm just curious, you kind of have a unique service offering, right, in site development. We've heard from several E&C companies over the last couple of weeks, you know, directly point to data centers and or electric vehicle manufacturing or just reshoring in general as a fairly, you know, robust market going forward. And I'm just curious, you know, is low double digit top line growth, is that, you know, sustainable, you know, when we get out past 12 months?

Yeah, well, we look at, we say the average over a three-year period, you know, the markets say that it's going to be kind of high single digits. So far, we've outpaced that significantly every single year. our goal would be to try to keep it in that high single below double-digit growth. We certainly see the opportunities there. If you look at the cycle, data centers are extremely strong and continue to have a long future. We don't see that slowing down anytime soon. In the e-commerce world, even though Amazon slowed down, the rest of the world is trying to catch Amazon. It's building very quickly. And recently talking to some of the folks at Amazon, their plans are pretty strong when you get out past 24 and building more. So we see that continuing to be strong. But the manufacturing piece is really not only a nice new entree for us, but the most important thing about that is the size and the scope of these projects. The bigger, the more dirt you have to move, the more complicated in a short period of time is our forte. We've got the most horsepower of anybody out there. And the recent announcement of the SK job, that job has got 14 million yards of dirt on it. And I know that on the surface doesn't mean a lot to people, but that's equivalent to 1.4 million dump trucks of dirt. Or if you stack those dump trucks up, you would go from New York to California, back to New York, and then back to about St. Louis is how they would stack, to kind of put it in perspective of how much dirt's being moved on that job in approximately a year. So these are really good. There's more and more talk on chip manufacturing. I'll be honest, that's a little further behind. We haven't seen those projects progress or be at the point that the EVs and the battery plants are, but there's going to be more electric vehicle builds and more battery plants down through the southeast and up through the northeast. We're very pleased with those and it's a great shot of of adrenaline for us and a little extra boost over the next several years.

Okay, great. Thank you very much.

We have reached the end of our question and answer session. I would like to turn the conference back over to Joe Cotillo for closing comments.

Thanks, Sherry. I'd like to thank everyone again for joining today's call. If you have any follow-up questions or wish to schedule a call with us, please refer to the information provided in the press release associated with our investor relations group here at Sterling or our partners at the Equity Group. I hope everybody has a great day, and thanks again. Thank you.

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