Arcosa, Inc.

Good morning, ladies and gentlemen, and welcome to the ARCOSA Fourth Quarter and Full Year 2023 earnings conference call. My name is Todd and I will be your conference coordinator today. As a reminder, today's call is being recorded. Now I would like to turn the call over to your host, Erin Drabeck, Director of Investor Relations for ARCOSA. Ms. Drabeck, you may begin.

Good morning, everyone, and thank you for joining ARCOSA's Fourth Quarter and Full Year 2023 earnings call. With me today are Antonio Carrillo, President and CEO, and Gail Peck, CFO. A question and answer session will follow their prepared remarks. A copy of yesterday's press release and the slide presentation for this morning's call are posted on our Investor Relations website, .ARCOSA.com. A replay of today's call will be available for the next two weeks. Instructions for accessing the replay number are included in the press release. A replay of the webcast will be available for one year on our website under the news and events tab. Today's comments and presentation slides contain financial measures that have not been prepared in accordance with GAAP. Reconciliation of non-GAAP financial measures to the closest GAAP measure are included in the appendix of the slide presentation. In addition, today's conference call contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Board-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Please refer to the company's SEC filings for more information on these risks and uncertainties, including the press release we filed yesterday and our Form 10-K expected to be filed later today. I would now like to turn the call over to Antonio. Thank

you, Erin. Good morning and thank you for joining us to discuss our fourth quarter and full year 2023 results and the outlook for 2024. I will start with a few key messages. 2023 represented another solid year of operational and financial performance for ARCOSA. Our success reflects the effective execution of our strategy and the talent and dedication of our outstanding team. Normalizing for the sale of the storage tank business, ARCOSA generated double-digit growth in revenue and adjusted the VITA for 2023, outpacing the guidance we set at the beginning of the year. Additionally, we drove solid improvement in adjusted the VITA margin, reflecting a favorable pricing environment, increased operational leverage in our transportation products business, and the benefit of wind tower tax credits. Finally, we reported 50% increase in full year operating cash flow that helped fund key growth initiatives. Strategically, we continue to advance our objectives and position our portfolio for sustainable long-term growth. Following the divestiture of the storage tank business in the fourth quarter of 2022, we redeployed a portion of the sale proceeds to strengthen our construction product segment. Over the past year, we closed six bolt-on acquisitions, expanding our geographic presence in key natural and recycled aggregates markets, including Florida, and enhancing our capabilities in trench shoring. Consistent with our disciplined approach to capital allocation, these strategic acquisitions were completed at attractive valuations. We also progressed on several important organic initiatives, which included the expansion of our specialty plaster capacity, completion of our new concrete pole facility in Florida, as well as the buildout of our wind tower facility in New Mexico, which we expect will deliver its first hour mid-year. Looking broadly at our 2023 performance, our growth businesses benefited from healthy market fundamentals, proactive pricing actions, and reduced inflationary pressures as the year progressed. Our cyclical businesses performed well, led by our transportation products business, who adjusted the VITA more than double. Operationally, our wind tower business outperformed our expectations in 2023 and achieved the VITA profitability for the year exclusive of Pax credits, reflecting our focus on optimizing our production and managing costs as we prepare for an anticipated multi-year up-cycle. Turning to our fourth quarter results on slide 11, consolidated adjusted VITA grew 38% on revenue growth of 17%. Similar to our full year results, growth was driven by increase across all three segments. Fourth quarter adjusted VITA margin gained 220 basis points year over year benefiting from higher barge and rail component production, increased volume in utility structures, and a favorable impact from wind tax credits. We ended the year with a strong balance sheet and ample liquidity, providing the flexibility to invest in growth initiatives while returning cash to shareholders. I will now turn over the call to Gail to discuss our segment performance, and then I will return to update you on our 2024 outlook. Gail?

Thank you, Antonio. I'll begin on slide 12 to discuss fourth quarter segment results. In construction products, revenues increased 7% primarily due to higher pricing across our aggregates and specialty materials businesses and both organic and acquisition related volume growth in our shoring business. On a freight adjusted basis, segment revenues increased 10% year over year. Adjusted segment EBITDA increased 7%, reflecting strong pricing gains as well as operational improvements in our specialty materials business. Excluding land sales from both quarters, adjusted segment EBITDA increased 14% year over year, and freight adjusted segment EBITDA margin improved 90 basis points, driven by unit profitability gains and reduced inflationary pressures. Turning to natural aggregates, average organic pricing was up low double digits year over year on a freight adjusted basis, with pricing gains across our footprint. Pricing strength was notable in the quarter, especially when compared to strong pricing growth achieved in last year's fourth quarter. Volumes increased low single digits, led by our Texas region, which benefited from favorable weather compared to last year, an uptick in residential activity, and the contribution of the new Greenfield location in central Texas. For the full year, organic pricing grew in the mid teens, positioning us well for continued pricing momentum in 2024. The full year natural aggregate volumes were roughly flat with the prior year, as the volume increase in the back half of the year offset a first half decline. In recycled aggregates, we achieved broad based pricing strength that more than offset a roughly 20% volume decline, resulting in strong product unit profitability gains and margin expansion. Earlier in the quarter, we entered the central Florida recycling market with a small acquisition, and the integration is progressing smoothly. Within specialty materials, we continued to see healthy demand, particularly for our plaster and lightweight product lines, which had solid pricing gains during the quarter. Adjusted EBITDA margin improved year over year, positively impacting the segment margin by roughly 35 basis points, as we continue to focus on operational improvements and increased throughput in our plaster facility. Finally, our trench shoring business reported a 14% increase in revenues on higher organic volumes, as well as contribution from the Houston acquisition completed in the first quarter. Margin expanded nicely and order levels remained healthy. Moving to engineered structures on slide 13, revenues for our utility wind and related structures businesses increased 15%, largely due to higher volumes in utility structures. Adjusted segment EBITDA for these businesses increased 89%, and margin expanded 530 basis points. During the quarter, we recognized 10.6 million in AMP tax credits, resulting in full year net tax credits of $25 million, exceeding the high end of our expectations by about $3 million due to additional guidance issued by the IRS in December. This guidance allowed the recognition of tax credits for towers started in 2022 and delivered in 2023. Fourth quarter margin for our utility structures business improved both year over year and sequentially from the third quarter. We expect customer mix to remain a headwind in the first half of 2024, but we remain focused on continuing to enhance margins in this business. We ended the year with combined backlog for utility wind and related structures of $1.4 billion, more than double our backlog at the end of 2022. Turning to transportation products on slide 14, revenues were up 49% and volumes and pricing increased across the segment, led by our barge business. Adjusted segment EBITDA increased 67%, resulting in margin expansion of 150 basis points, despite some additional costs incurred by the barge business early in the quarter to address low river water levels. We received barge orders of $86 million during the quarter, all for 24 delivery, which substantially fills our planned production capacity for the year. We ended the year with barge backlog of $254 million, up 13% year over year. I'll conclude on slide 16 with some comments on our cash flow and balance sheet position. During the quarter, we generated $10 million of free cash flow up from a deficit of $60 million in last year's fourth quarter, driven by a combination of stronger net earnings and lower working capital requirements, adjusted for the buildup of the wind tower tax credit. For the full year, free cash flow increased 37% to $94 million. Capital expenditures in 2023 were $204 million, in line with the midpoint of our annual guidance. During the year, we invested significantly to complete several key organic growth initiatives across engineered structures and construction products. Additionally, we have made substantial progress on the wind tower facility in New Mexico since announcing the project at the end of the first quarter. We expected to deploy approximately $15 million of additional capex in the first half of the year to complete the project. In late third quarter, we also commenced the build out of a new galvanizing line in one of our utility structures facilities in Mexico to optimize our costs. We anticipate it will be operational by the end of the year. For modeling purposes, we see full year 2024 capex of $175 to $190 million. This range includes growth capex of $55 to $60 million that is expected to be more first half weighted based on the timing of projects. We forecast depreciation, depletion, and amortization expense to be in the range of approximately $178 to $183 million, up $21 million year over year at the midpoint of the range, reflecting the full year impact of large organic projects completed in 2023 and additional investment in 2024. We anticipate a full year 2024 effective tax rate of 17 to 18%, taking into consideration the expected impact from AMP tax credits in our wind towers business. Wrapping up, we ended the year with net debt to adjust to EBITDA of 1.3 times, up from one time at the end of the third quarter, as we borrowed an additional $60 million under our revolving credit facility in December to help fund the Florida hard rock acquisition in natural aggregates. We ended 2024 with a strong balance sheet with available liquidity of $523 million and no material near term debt maturities. I will now turn the call back over to Antonio for more discussion on our 2024 outlook. Thank

you, Gail. Turning to slide 18, looking ahead to 2024, our course is well positioned for continued growth. The infrastructure led demand environment across our portfolio remains favorable, and we expect continued expansion in our growth businesses, complemented by improving production volumes in our cyclical businesses. From a CAPEX perspective, we expect another year of significant investment as Gail mentioned. In addition to our wind tower plant in New Mexico and the new galvanizing line in utility structures, we expect to continue to pursue financially accretive acquisitions that strengthen our capabilities and increase our margins. In summary, we forecast a 2024 revenue at the midpoint of our guidance to be $2.59 billion, up 12% compared to 2023. Our 2024 adjusted EBITDA forecast at the midpoint of our guidance is $400 million, up 16% year over year, excluding the $22 million land sale gain recognized in the first quarter of 2023. The midpoint of our adjusted EBITDA guidance implies an adjusted EBITDA margin of .4% up approximately 40 basis points compared to 2023, as we further optimize our profitability. Turning to slide 19 to review our outlook for our growth businesses, we anticipate a solid year for our construction products. On the demand front, we expect positive contributions from highway and infrastructure project activity, as well as growth in heavy industrial construction and multifamily residential in certain markets. As I noted last quarter, the single-family residential construction market appears to have stabilized, but it's not yet clear when housing starts will return to consistent growth. Across our construction materials business, we expect overall organic growth to be roughly flat versus prior year. Importantly, inclement weather in January is expected to weigh on first quarter results. We expect our 2023 acquisitions should contribute positively with an accretive overall margin. Pricing remains attractive, and we continue to be focused on driving unit profitability and margin improvement through 2024. Utility and related structures are poised for a stronger year in 2024, recovering from operational performance challenges in the second half of 2023. Market conditions remain supportive for continued volume growth. Overall, our utility customers' forward-looking CAPEX programs are at higher spending levels, with a focus on electric grid hardening initiatives and the ongoing transition to alternative energy sources. Meanwhile, our traffic business should benefit from continued federal infrastructure spending, particularly within our faster-growing Southeast market. Due to the expected customer and product mix in our utility structures backlog, we anticipate stronger EBITDA in the second half of 2024 relative to the first half. We were pleased with the sequential margin improvement in the fourth quarter and are committed to building on that progress through 2024. Turning to slide 20. 2023 was a transition year for our wind towers business in which we built backlog in preparation for a multi-year upcycle. Our current backlog of approximately one billion provides solid production visibility into 2028. While we did not book any additional orders during the fourth quarter, consumer interest in onshore wind projects remains high, and as projects move further along the planning stage, inquiries should convert into additional backlog. Meanwhile, we remain focused on the start-up of the New Mexico facility to support the expected production ramp-up in 2024 and beyond. As our wind tower production volume scales, we plan to continue to invest to strengthen our capabilities and enhance our manufacturing flexibility. Turning to slide 21. Our barge business generated significantly stronger results in 2023 as volume and pricing improved from the 2022 cyclical lows. We remain well positioned for further expansion in 2024 as the market continues to recover. We expect to be selective with our orders, prioritizing those that enhance our profitability, and yet generate incremental operating leverage as volume scales. Although steel prices remain elevated, customers have responded favorably when we are successful with strategic sourcing, evidenced by our 1.2 times book to build in the fourth quarter. Additionally, our ability to substitute lower price hot rolled coil for plate steel in the manufacturing process provides manufacturing flexibility. Strengthening customer demand for barges is evident not only in the fourth quarter revenue, which nearly doubled from the prior year, but also in our backlog, which grew 13% year over year in the fourth quarter. We're also encouraged by new liquid barge orders in the fourth quarter, a trend that may point to broadening market demand as we enter 2024. As a result, we have substantially filled our production capacity for 2024, and we're focused on extending our backlog into 2025. Overall, we expect another strong year for our barge business in 2024 with higher production volume and further improvement in profitability. In our steel components business, the outlook remains positive as market demand is expected to be stable. In addition, we anticipate a more balanced competitive environment for freight railcar coupled products following the favorable outcome of the trade case against China and Mexico, which has positive implications for both the new railcar and maintenance market. With North American railcar delivery's forecast to remain at stable replacement levels, we anticipate our steel components business will generate further gains in profitability on moderate revenue growth. In closing, our course has delivered strong financial performance in 2023, and we enter 2024 with positive momentum. Across our businesses, we remain focused on operational execution, portfolio optimization, and capital allocation, both organically and through acquisitions to our growth businesses. We expect healthy market fundamentals to continue to drive solve results in our growth businesses, while our cyclical businesses are poised to benefit from increased production and greater operating leverage. We will continue to advance our strategic objectives while investing to capture future growth opportunities across our portfolio. Operator now would like to open the call for questions.

The floor is now open for your questions. If you have a question at this time, please press star one on your telephone keypad. You may remove yourself at any time by pressing star two. Once again, to ask a question, please press star one at this time. Our first question comes from Trey Grooms with the Stevens. Please go ahead.

Hey, good morning, Antonio and Gail. Congrats on a strong finish to the year. Thanks, Trey. You guys continue to execute well and are making nice progress on filling out the construction products assets through acquisitions. And Antonio, I know there is a strategic focus to continue to simplify the overall asset portfolio and simplify the story. And you guys have made large strides there, clearly selling the storage tank business as part of that as well. But can you can you update us on kind of where you are in that thought or where your thoughts are on that process? And given where we are with the more cyclical businesses starting to kind of start to improve there and just update on those thoughts, please.

Sure, Trey. And let me give you the big picture. I think you're absolutely right. The way you describe it, we have and we want to continue to allocate capital into our growth business. As you know, we define our growth businesses as the construction segment and the engineer structures. We see very good opportunities to continue to redeploy capital. We're building a nice pipeline, strengthening our M&A small group that we have internally. So we want to continue to expand our capabilities to redeploy capital. That's on the redeployment. On the simplification, it continues to be a priority for us. As I've said before, M&A has a life of its own. It happens when it needs to happen, when the business is ready, when the market is in the right time. So what I can tell you is we will continue to pursue that simplification and we will continue to pursue the reallocation of capital, both in construction and engineer structures. So it's top of mind for us and for our board and for everyone in the company.

All right, Antonio. Thanks for the update there. Also, maybe switching gears just a little bit. You know, there was, if you could maybe just touch on the demand trends that you're seeing across, you mentioned residential, maybe starting to see some improvement there. But if you could also maybe touch on the parts of your business, particularly in construction, that kind of touched the non-res and infrastructure. Can you kind of talk about what you're seeing in the demand trends and those in markets as well as we look into 24?

Sure. As I mentioned on the residential side, you know, we've seen a stabilization of the demand. As Gail mentioned, our volumes in the second half of the year were better than the first half last year. So I think we've seen kind of a bottom. And at the same time, we see very good progress and very, very strong demand from the infrastructure side. We also see a very nice and we expect more on the heavy industrial side. There's a significant trend, I think, across the country on the industrialization of the whole country, not only heavy industrial, but also when you see the A.I. revolution happening, there's going to be a lot of infrastructure that needs to be developed there. There's a lot of on the energy side, power plants and all sorts of energy related infrastructure. So I am very optimistic on the industrial side on the and that part of the equation. And then multifamily is a regional thing. In some places we're seeing better trends than in others. So it's a little more spotty. But the good news is since we spawn, we've grown our footprints. So now we have a lot more exposure than just to Texas. So of course, that creates some variability. But at the same time, we are I think with the acquisitions we've done, we're getting into markets that are very, very attractive. Perfect. Florida is an example. No, we just to finish my comment, Florida, we closed it in December, the acquisition of the hard rock. If you remember in the third quarter, we announced the recycle aggregates in Florida also. So what that proves is that our method of going and setting a foot somewhere, then opportunities start coming to us and we want to continue to build around the footprint.

Got it. Perfect. Thank you for taking my questions and good luck for the rest of the year.

Thank you, Trey.

Thank you. Our next question comes from Julio Romero with Sudoti and Company. Please go ahead.

Hi, good morning, Antonio and Gail. This is Alex on for Julio. Morning.

Good morning.

My first question is on the guidance and seasonality. Can you speak to what's expected from guidance from a segment perspective in terms of seasonality? Curious, you know, which of the business units are expected to follow a traditional seasonal cadence versus, pardon me, versus a more sequential ramp as we progress through the year?

Good morning, Alex. This is Gail. I'll take that. That's a good question. And as we've said in our comments, as we look to 2024, we see the EBITDA more second half weighted. And there's a few things that are driving that as you're questioning on seasonality. That's certainly one of them. Q1 is normally our most seasonally slow quarter for construction. We did have, we commented in the scripts that we did face some tough weather in January. So we will have that. We'll fight that headwind in Q1 along with the normal weather seasonality. That was in construction for sure, given the outdoor nature of the business. But we felt that weather impact pretty broadly across our portfolio with freezing temperatures in rain where we had some some downtime in our, actually in our manufacturing facilities. But, you know, we'll push through that. But you so you have the typical seasonality with Q1. I think we've been pretty transparent with the large land sale that we had in Q1 last year. So that won't repeat in Q1. And we've given our guidance impacts excluding the land sale. So kind of apart from those typical things, as I think about the businesses, utility structures is another one where we mentioned the second half stronger than the first half. Maybe I would even go so broad as to say the engineered segment is going to be more weighted towards the second half. And there's a few things driving that. First is the fact as we look at our customer mix in utility structures and how the project timing and the cadence of that, we see a better mix in the second half than the first half. Still very strong demand drivers, robust outlook for that business. But that's the way it plays out based on the backlog visibility we have today. When you think about the other impacts to second half for the segment, I would call out the startup of our new facilities, both the Berlin, New Mexico, and the wind tower facility that will be a drag on first half EBITDA contributing in the second half. So that's going to be impactful to the cadence as well as the new concrete pole facility within utility structures. We finished that virtually in December of last year. So we will see positive contributions from that. Accretive to the overall segment in the fourth quarter, but there's going to be a climb associated with the ramp up of that as well. I think the only other place maybe where you might see a slight second half step up to first half would be in barge as we continue to ramp the business. But I think those are the general view of the world as we see it here in February for 2024. Let

me just complement something that I think Gail mentioned it, but I want to if you think of our COSA through 2024, as I mentioned, we closed 2023 strong. We entered into 2024. We're ramping up concrete pole plant. We are ramping up. We already have a lot of employees in Berlin. They're starting to cut plate, roll plate, weld plate. But we are building a tremendous amount of cost in the plant as we go through the first half of the year until they start producing. And once they start producing, efficiency is very slow climbing. So you have the new concrete pole plant. You have the Berlin plant. You have ramp up in both of the barge plants. You have a ramp up in another winter plant. So our COSA is building up capacity as we go through the year and carrying all those costs and inefficiencies as we build up. And as we exit 2024, we should have a very strong manufacturing capacity and ready for the upcycle that we expect.

Thank you very much, Gail and Antonio. Great context. And one follow up and final question from me on the engineered structure segment. Curious about the customer hesitation or general sentiment around final guidelines on the 10 percent domestic content bonus. You know, curious just how you expect orders and overall demand to trend after that guidance is finalized.

We really don't expect a lot of we have not heard of any pushback from our customers at the moment. So we have we don't expect any any impact to our to our guidance or to our backlogs with this new guidance. So we were not concerned about it.

Yeah, and I guess I would just add, Alex, as it relates to the IRA, most of the virtually all the impacts related to wind have really played out the way we we anticipated. So we're pleased with with the way things have have rolled out on that side.

Yeah. And we if you remember most of our most of our manufacturing, with the exception of two plants, is in the US. We are very focused on US manufacturing, and that's been our focus.

I appreciate that. Thank you very much. And that's all for me.

Once again, if you would like to ask a question, please press star one at this time. Our next question comes from John Ramirez with David. Please go ahead.

Hi, good morning. Just looking at the legal challenges to the project, what's the feedback from that customer regarding plans and proposed delivery schedules going forward? How does that look?

We haven't heard anything. So we are we don't we haven't heard any any feedback from the customer or from anything else. So we keep we keep going.

Okay, thank you. And just piggybacking off the previous question. So the any additional inputs from Treasury that changing the expectations around the credits for the towers. So there's looking at your guidance for 2024. So there's no you're not expecting any changes into your guidance for how you're utilizing your tax credits then.

So I'll take that, Alex. So how we recognize and account for our tax credits, very similar to 2023. We are rolling those in as a reduction of cost of sale. So no, no, no change in regard to that. You know, and generally, as you think about the tax credit, we really manage the business holistically for, you know, total, total, total EBITDA and total profitability. But, you know, as as as we ramp in Wind Tower and we expect revenues to grow in Wind Tower, we would expect the tax credit to grow along with that. You know, probably there are things as I've talked about before that impact the size of the credit. Certainly the wattage of the turbine is at a three section or four section tower. But those things aside, I think generally we can expect to see the tax credit grow in line with revenue growth, all else being equal. So not that impactful to overall margin because it's going to grow in line with with revenue, but certainly is going to add to our EBITDA growth in 2024.

Perfect. Thank you. And just one more for me. You talked about price momentum going into 2024 for aggregates. Is are you guys considering any mid-year price increases?

Normally we do a price increase in the middle of the year. So, yes, we expect to continue to raise prices wherever we can.

And I would just say, Alex, at this juncture, given it so early in the year, we don't we don't roll those into our guidance. But but certainly taking a very price discipline approach.

Perfect. Thank you. I'll jump back in.

Thank you. Our next question comes from Garrix Mois with Loop Capital Markets. Please go ahead.

Oh, hi. Thanks. Congrats on the quarter. I'm hoping first if you could go over the variance within your revenue guidance, what would have to happen to reach the low end and the high end of the six to 18 percent range that you've offered?

I'll take that, Garrix. See if I can pull some of it apart for you. There's a lot of a lot of moving parts, as you know. I think, you know, as we think about our cyclical businesses, and maybe I'll start there, we've got good backlog visibility. So when you think about our barge business, we have two hundred and fifty five million of backlog at the end of 2023. We said that is all for 2024 delivery. We've substantially filled our production plans and we're taking order inquiries for 2025. So, you know, you look at the ramp, you look at where we finished 2023. We have our marine components revenue in addition to our backlog. So you could be approaching, you know, close to 20 percent revenue growth in the barge business with a backlog that is solidified. We feel pretty comfortable about that. You know, likewise in wind, we have good visibility for 2024. So I don't I don't see any risk to the wind backlog. There's potentially upside if we take additional orders. I think the focus for us really is on orders for 25 and beyond. I'll let Antonio comment there, you know, when I wrap up. But, you know, not not a lot of risk associated with the downside on barger wind and, you know, potentially some upside. But I'd say somewhat limited on 24 with more growth and 25 for those businesses. You know, utility, same thing. We have we have a good backlog. We have a shadow backlog that we don't include in in reportable backlog. You know, high single digit revenue growth in utility structures is is is feels comfortable. And then on construction, you know, we feel very confident in the outlook. The demand outlook, as Antonio said, you know, a rough start with weather. We're used to that. We've got some inorganic contributions that we will see in 2024. I think the way maybe to think about top line and construction is is is we had, you know, close to seven percent top line revenue growth last year. You know, maybe a hundred basis points or so of that was inorganic. And we could expect maybe a slightly larger inorganic piece in in in 2024 to get you in that that high single digit area of revenue growth for construction next year. You know, that is what the one business where we don't have a backlog, but we feel pretty confident in the in the demand drivers that that we see in the in the tailwinds from the infrastructure rolling in more more strongly in 2024.

The only thing I would add to Gail's comment is the other thing that, you know, we know how to do it. We do it constantly. But wrapping up facilities, it's always a risk. There's always things that can happen and we need to hire a lot of people and we need to train people and we need to produce products. And it's always a risk. It's going to be a heavy lift for the year. But the good news, I think, is the demand side. I mean, the demand side is there and it's all up to us to perform well for the year because we have everything to be successful.

That's that's great color. I appreciate that. I just want to follow up on the inorganic growth opportunities. I think just to be clear, first off, the stronger inorganic growth in construction products, that assumes the acquisitions in both the fourth quarter and the recently announced one. I guess that was in the fourth quarter as well in South Florida. So I just want to confirm that and it doesn't include any new acquisitions. And then just as a follow up to that, just how do you think about acquisitions more broadly within construction products? Maybe talk about bolt ons as opposed to new platforms. Are you in the markets that you want to be in now? Or are there other regions that you want to expand in and just maybe speak to how that looks in twenty

twenty four? You're correct. The guidance from the first side does not include any new acquisitions. Last year we had very little inorganic EBITDA coming from from previous acquisitions. So this year we expect a little more because we made them at the end of the year and these acquisitions, it takes time to integrate them. There's some integration costs and things. So normally it takes a little time for them to start being accretive. But we do expect them to be accretive to our margins in twenty twenty four. On the future acquisitions, I would say I've said before, but it's it's you know, do we like bigger ones? Of course we like bigger ones. They're not available. And most of the time when we see something bigger, we'll be interested in it. As you've seen some of the multiples that are being paid for the larger ones. You know, one of the things we believe is we believe in buying in discipline, capital allocation, and we're buying this acquisition at multiples that we believe are are good and generate value for our investors. So we'll continue to look for acquisitions on the multiple side and larger also if we can find them at reasonable prices. And we are still looking for additional platforms in other regions. We still have several regions we're interested in, where we do not have a presence. And so but today we have a lot more opportunities to redeploy capital than we had five years ago when we were only in Texas. Today we can redeploy it in California and Arizona, in Texas, in Florida, along the Gulf Coast, in Tennessee. So we are building a nice platform that we can expand and we need to get good at buying this small opportunity at reasonable prices. We also see opportunities to redeploy capital in engineer structures. There's gaps in our in our in our product portfolio that we need to fill. We can do it organically or inorganically, and we're working both sides of the equation. So so I think you'll see us continue to be active on the M&A market. Sounds good. Thanks for that and best of luck.

Thank you. We have no further questions at this time. This will conclude the ARCOSA fourth quarter and full year 2023 earnings conference call. We thank you for your participation. You may disconnect at any time.