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spk05: Good day and welcome to today's second quarter 2022 Orion Group Holdings, Inc. earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. As a reminder, today's call is being recorded. I would now like to turn today's call over to Fran Okoneski, Vice President, Investor Relations. Please go ahead, sir.
spk09: Thank you, Lisa. Good morning, everyone, and welcome to Orion Group Holdings second quarter 2022 earnings conference call and webcast. Joining me today are Austin Schanfelter, Orion Group Holdings Interim CEO, and Craig Owen, currently serving in the capacity of Chief Financial Officer Advisor. Regarding the format of the call, we've allocated about 10 minutes for prepared remarks in which Austin and Craig will highlight our results and update our outlook. We will then open the call for questions. During the course of this conference call, we will make projections and other forward-looking statements. regarding among other things our end markets, revenues, gross profits, gross margin, EBITDA, EBITDA margin, backlog, projects, and negotiation and pending awards, as well as our estimates and assumptions regarding our future growth, administrative expenses, and capital expenditures. These statements are predictions that are subject to risks and uncertainty, including those described in our 10-K that may cause actual results to differ materially from those statements. Moreover, past performance is not necessarily an indicator of future results. By providing this information, we undertake no obligation to update or revise any projections or forward-looking statements, whether as a result of new developments or otherwise. Also, please note that adjusted net income, adjusted earnings per share, EBITDA, and EBITDA margin are non-GAAP financial measures under the rules of the Securities and Exchange Commission, including Regulation G. Please refer to reconciliations and definitions inclusive of the most comparable GAAP measures and reconciliation tables accompanying this earnings conference call within the press release issued last evening. The press release can be found on our website at www.OrionGroupHoldingsInc.com. Also, for additional discussion of risk factors that could cause actual results to differ materially from our current expectations, please refer to our quarterly and annual filings with the SEC, which are also available in the Investors section of our website. And with that, I would like to turn the call over to Austin Chanfelter, interim CEO, Austin.
spk07: Good morning. Thank you, Fran. First, I'd like to thank the entire team for embracing the changes and the new expectations that have been set in the past 60 days. I appreciate the actions that are underway and that needed to be provided clear, successful path forward. As we work to conclude the onboarding of a new leadership team, The steps we are taking now will enhance and set up the foundation for the success of that new team. These steps include company-wide focus on obtaining margins, margin improvement on all projects, ensuring the ability to capture all cost escalations, continuously downsizing unproductive markets, monetizing real estate, improving liquidity, increasing project wins from negotiation processes, not just low bid.
spk08: And once again, key is onboarding a new management team.
spk07: Just one example of the efforts that we put forward. June, we will post our first profit. We posted our first profit in concrete for the year. Our backlog remains solid. and we continue to see clear opportunities in our end markets, which will be further enhanced as the full impact of the Infrastructure Act comes online. In addition to improving our liquidity by our performance, we also are focused on our DSOs. Please note that just one day improvement adds over $2.5 million of liquidity. With regards to real estate, We have two pending transactions on our Port Lavaca properties. We believe these will close in the second half of this year. We have fully engaged with DBRE on developing a disposition strategy on the remaining properties. I'll go into that more later in the Q&A. All proceeds from the pending transactions will go to the reduction of our revolver, which will add to our liquidity. Last but definitely not least, we are on the way to selecting our next CEO. We expect this process and the hiring to be completed in August. The CFO search is well underway and has been very positive as well. Our current schedule to have this selection made, most likely towards the end of August. I look forward to our Q&A sessions, and I'd like to turn the call over to Craig.
spk02: Thank you, Austin, and thanks, everyone, for joining us. I'll now discuss the financial results for the second quarter in more detail. Revenues for the quarter were $195 million, up as compared to $146 million in the second quarter of 2021 and $175 million in the first quarter. The increase was primarily due to higher volume in the concrete business and the startup of large jobs that were awarded in the second half of 21 in the marine business. Second quarter gross profit was $14.3 million compared to $12.3 million in the prior year period. The increase was primarily driven by efficiencies in equipment and labor utilization and a change in mix of work in the marine segment in the current period, partially offset by unabsorbed indirect expenses in the concrete segment. Second quarter gross profit was up 12% as compared to the first quarter gross profit of $12.8 million And year-to-date gross profit of $27.2 million was up over 100% compared to the second half of 2021. As a percentage of revenues, gross profit margin was 7.4% in the second quarter, down from 8.4% in the prior year period, and up slightly from the first quarter. Turning to the segments. In the second quarter, the marine segment had revenues of $82.3 million and adjusted EBITDA of $8.7 million. equating to an adjusted EBITDA margin of 10.6%. This compares to 63.9 million of revenue, adjusted EBITDA of 7.8 million, and an adjusted EBITDA margin of 12.2% in the prior year period. Marine results were down slightly on revenues and up on adjusted EBITDA and adjusted EBITDA margin compared to the first quarter of 22 that had revenues of 84.5 million adjusted EBITDA of $7.3 million, and an adjusted EBITDA margin of 8.6%. The increase in adjusted EBITDA compared to the second quarter of 21 was driven primarily by startup of large jobs awarded in the second half of 21. The concrete segment had second quarter revenues of $112.3 million, adjusted EBITDA of a negative $3 million, and adjusted EBITDA margin of a negative 2.7%. This compares to $81.9 million of revenue, adjusted EBITDA of $400,000, and adjusted EBITDA margin of negative 0.5% in the second quarter of 2021. Concrete results were up compared to the first quarter of 2022 that had revenues of $90.5 million, adjusted EBITDA of negative $2.0 million, and an adjusted EBITDA margin of a negative 2.3%. The concrete segments Second quarter results, as compared to the second quarter of 21, were impacted by decreased project performance due to inefficiencies in executing work, partially offset by higher volume. SG&A expenses for the second quarter were $17.2 million, or 8.9% of revenues, compared to $13.7 million, or 9.3% of revenues in the prior year period. The increase in SG&A compared to the prior year was primarily due to severance, consulting fees related to management transition, property tax true-ups in the current year period, and as a result of the true-up, reducing bonus expense in the prior year period. Net loss for the second quarter was $3.1 million, or 10 cents diluted loss per share. Adjusted for non-recurring items and the tax impact from valuation allowances, adjusted net loss was $0.9 million, or $0.03 loss per share. Second quarter adjusted EBITDA was $5.7 million, representing an adjusted EBITDA margin of 2.9%. This compares to adjusted EBITDA of $7.4 million and an adjusted EBITDA margin of 5.1% in the prior year period, and adjusted EBITDA of $5.2 million and adjusted EBITDA margin of 3% in the first quarter. Turning to bidding metrics, in the second quarter, the company bid on approximately $1.8 billion worth of opportunities and was successful on $194 million. This resulted in a win rate of 10.8% and a book-to-bill ratio of 1.0 times for the quarter. As of June 30, 22, backlog was $603 million, up from $394 million at the end of the prior year period. Of quarter and backlog, $281 million was in the marine segment and $322 million was in the concrete segment. Approximately 81% or $487 million of the quarter-ending backlog will burn during the next 12 months, with the remainder associated with longer-term projects burning throughout 2023 and into 2024. Additionally, the company is the apparent successful bidder or has been awarded 153 million of new work subsequent to the end of the second quarter. Of this, approximately 149 million is related to the marine segment, while 4 million is related to the concrete segment. The company ended the quarter with 33 million of outstanding debt, 31.9 million of which was related to the revolver. As of June 30th, 2022, the company had approximately 8.1 million of cash, and $8.4 million of availability under its revolving credit facility. The company is in compliance with its credit agreement covenants. With that, I'll turn the call back to Lisa for Q&A.
spk05: Thank you. If you would like to ask a question on the phone lines today, please press star 1 on your telephone keypad. Again, everyone, that is star 1 to ask a question. We'll pause for a moment.
spk04: We'll take our first question from Julio Romero with Sidoti & Company.
spk08: Hey, good morning. Thanks very much for taking my questions. Morning.
spk03: So I wanted to start off on the Marine side. If you could just maybe speak on the successful bids of $149 million in Marine. Seems pretty sizable. And if you could just touch on maybe the margin profile and if those awards are public or private.
spk07: They're a little bit of a mix of both the public and private. The margins on those, I think, I can tell you, it would range from a 10% to about a 12.5% margin on the projects. There was a lot of detailed discussion. What is notable is much of that was negotiated work, not low bid.
spk08: Got it. Understood.
spk03: And I guess if we could just talk about concrete a little bit, just talk about why, you know, profitability kind of trended down sequentially and maybe what you expect for profitability and concrete in the back half of the year?
spk07: Well, we were finished, you know, when I got in here, we went over and we changed a lot. I talked a lot about changing our margin approach in that business. And we've instituted a lot of new minimum margins that we'll do bids on and take on new work. We had to burn off existing work in the last quarter, and we're seeing the impact of burning that work off. One of the big examples that I can give you is We've reduced the backlog in Central Texas by over 9 million in the second quarter. Going forward, we've reduced the jobs by 15 projects to the fact we only have 19 projects left in the market. This is a market that's given us a lot of challenges attempting to make margin at all, and we've had a lot of losses there. So this is the subject where I talk about downsizing unproductive markets. And that still came into our numbers in the second quarter. Reducing this by 9 million and dropping the project numbers, we expect to see margin improvements in concrete throughout the third and fourth quarter.
spk03: Okay, very good. And maybe last one for me is just, if you could broadly maybe speak on, you know, demand trends in your private markets, both marine and concrete, and Are you currently seeing any signs of, you know, rates maybe leading to any demand changes at all?
spk07: Well, what's interesting, first of all, in the rates, we've gone ahead and changed a lot of our margin profile on our bidding across both divisions, both marine and concrete. And in doing so, we've been successful in winning what I would call better work, better quality work with great customers at a higher level. We're not seeing margin compression at this point. Matter of fact, I'm seeing a little bit of the opposite. We're testing those markets a little bit more. Secondly, we're working really hard to make sure that we're building in contingency language in all of our contracts to handle any unforeseen escalation type of cost that we're experiencing through this time. And most of our customers, if not all, have been working with us very closely on On that issue that we haven't had a lot of pushback. The, the fact we're still seeing strong markets in both Houston and Dallas. We're not seeing any integration in the opportunities that we have. We're being more picky, so we're going to probably see a little bit of reduction in revenue. Positively positive reduction in revenue and concrete, but here again with the eye on increasing margins. And profitability the, the marine market. has remained fairly strong, and this is without the infrastructure bill coming into play at this point yet. I think we'll start seeing, you know, a lot more of that coming in maybe the fourth quarter and then start hitting us in the first part of next year.
spk08: Great. Thanks very much, and I'll pass it on. Thank you for your time, William.
spk04: We'll take our next question from Joe Gomez with Noble Capital.
spk08: Good morning and thanks for taking the questions. Hey, good morning, Joe. Morning, Joe.
spk10: So, just maybe you can talk a little bit, you know, on the utilization. You know, one of your goals was to improve the utilization of the fleet and your equipment. You mentioned some better utilization in today's call. You know, how much more do you think you can have there on the upside, and what are you doing to try to continuously improve that utilization?
spk07: We just put a couple new marine assets on the market recently. That didn't happen in the second quarter, but it did happen last week. That could generate anywhere from a low end of $3 million to a high end of maybe $4.5 million. to us. It's equipment that we have not been using. We are bringing online a new dredge that will be coming out in October. We'll have significant impact to both our revenue and margins in the fourth quarter of this year and, of course, on through next year. It'll probably run at a much more efficient path. The productivity of that vessel should be really strong for us. And that's coming on, like I said, in October. But we'll continue to look at any asset that's not being deployed at a high level.
spk08: Okay.
spk10: And you mentioned briefly on the real estate sales, and you're going to answer some more, talk about them some more in the Q&A. You know, kind of where do we stand on east-west and port? LaCava, you know, We were hopeful that those deals last quarter were going to be completed. Maybe just really give us an in-depth update on where we stand. I know, especially on East-West, you had talked previously about that could be worth significantly more if you had taken a couple of actions. Where are you leaning towards now in terms of that property?
spk07: Yes. Well, I think what, you know, I definitely got my hands around these, all these properties in this quarter, in the past quarter. And let me update you where we are. We have two pending transactions in Port Lavaca, combined value of around $17.5 million. I believe that those transactions will take place in the third quarter to fourth quarter, but be completed. But we will have deals in place, I believe, in the third quarter. just don't have the closing dates or closing times on those deals at this particular time. We are partnering now with CBRE, and we've developed a strategy and working on a strategy, multiple tiered strategy, on East Wind, West Jones, and Baytown. We're looking at a lease sale combination with some groups. We're looking at a joint venture with some groups that then a joint venture would be get somebody that can help us remove The concept I was talking about before, somebody to remove the fill and be a partner of ours in the process, thus raise the money and we become partners in that. We're also looking at a joint marketing solution with local other landowners in the area if we combine the properties that the combination of them would drive value in moving the properties as well. These conversations are ongoing right now. They're multiple tiered in a few ways. I would expect that we make a final decision on those in the next 30 to 40 days, depending on the input we get, the interest we get, but we're working down three paths to try to work out a strategy to monetize those locations.
spk08: Is the previous agreement that you had on East-West, is that now gone?
spk10: terminated, expired, however we want to term it?
spk07: We terminated it and they've asked to come back in. They're just one of the other people that are looking at these solutions. We are fully free and clear to do any one of these three directions at this time.
spk08: Okay, great. That's it for me. I'll pass it on. Thank you. Thank you very much. Thanks, Joe.
spk05: Our next question comes from Alex Rigel with B. Reilly. Please go ahead.
spk01: Thank you. Good morning, Austin. Good morning.
spk09: Hey, Alex.
spk01: Austin, you mentioned you posted a profit in the concrete segment in June. Has that continued into July? Do you think we could see a profit for the entire quarter in the third quarter in that segment?
spk07: That's my expectation. What we've done there is, you know, the big thing of concrete, as I said the last call, is that we were doing 70% of our projects profitably on margin as per our bill, our estimations. And what I've done with the team over there is we've started removing locations that we've not been successful, clients we've not been successful with, and situations that we just couldn't overcome. And this is the whole downsizing of the markets that we're just not being productive in. And by taking that out, you're going to see a reduction in revenues, more like a little bit in the division. You're going to see a reduction in cost in the division. And we should see an increased margin in the business and a consistency of those margins in the business. So my expectation is they have less write downs and problematic projects. push the profitability back to where it should be. It won't all happen in the third quarter, but trajectory wise, I'm looking for improvement month over month over month.
spk01: Just kind of follow up on that answer. You mentioned that you're expecting sort of commercial revenue to, I don't know, you know, tail down a little bit. But yet segment backlog in commercial concrete is incredibly strong at 322. That's up from 287 in the first quarter. And that's up from 224 last year. So how soon do you see that sort of tailing lower?
spk07: Well, here again, I don't mind getting good revenue. You're going to see our central Texas area continue to reduce in size and backlog. And we're now refilling that at the base. unless we get super margins on an opportunity. So we're being very cautious, you know, what we've been and how we've been there. But the markets in Dallas and Houston remain strong. And those are markets that we have a history of producing margins and producing positive results. So I think there's a combination of drawdown in some locations. In other locations, we're going to take positive opportunities where we can perform correctly.
spk01: That's very helpful. Within your heavy civil segment, the backlog of 281, what portion of that is associated with dredging?
spk07: I don't have that percentage to tell you. I would imagine it's around 30 to 35 percent. It could be a little higher. That goes, depending on how many pieces of equipment we've got working, that changes pretty rapidly. You're going to see it grow to over I would think 45 to 50% the second half of the year as we online the new dredge.
spk01: And that brings me back to CapEx. Understanding you've got kind of a big CapEx spend year because of that dredge, what is your full year view on what the CapEx spend could be in total for 2022? And how do you see that trending in 2023?
spk07: Well, I see, I see it going up in 2023, you know, when the new management team gets here and creates their strategy and where they're going. We're looking at a couple other adjacent markets at this particular point that would be conducive for us to look at and go into. But right now it's 16 this year. I would believe that we're going to be looking at some more expense in the following year, probably another two to $3 million at this point. And a lot of it would also depend on exactly what we're going to do with ERP next year. And those decisions will be made probably in the next 30 to 45 days.
spk08: Thank you very much. Very helpful.
spk07: Thank you, Alex.
spk05: As a reminder, everyone, that is star one to ask a question. We'll take our next question from Marco Rodriguez with Stonegate Capital Markets.
spk11: Good morning, everyone. Thank you for taking my questions. Good morning, Marco. I was wondering a little bit of a follow-up question in regard to the concrete market in Central Texas. Just obviously confirming that Central Texas you guys are defining as Austin and San Antonio. And if you can maybe help us understand a little bit there, obviously you're going to be reducing the exposure to that particular area in Texas. Can you give us a sense as far as mix is concerned between your revenue mix, rather, between South, North, and Central Texas?
spk07: Well, at the end of the day, Central Texas is probably our smallest region, well, it is our smallest region in concrete by a substantial amount. So it probably would represent, it represented probably about 20% of our total work in concrete. The problem is that 20% was really struggled to make any profit margins at all for us over the last two years. And we've done a lot of things to change it, tried to change management, tried to change bidding processes, estimating processes, but we just have not built a better mousetrap down there over the last few years. And so we've just taken a realistic view at the market, and we just need to downsize very strongly down there and only take jobs down there that we can truly predict our margins to come through. And so it's going to really cut that market down substantially over the next probably three, four months.
spk11: Got it. And can you maybe discuss some of the dynamics you're seeing that makes Central Texas much more difficult for you guys when it comes to bidding? I mean, Austin is obviously also still seeing quite a bit of growth compared to Dallas and Houston. Just kind of help us understand some of those dynamics.
spk07: Well, let me put it this way. Let me look at why Houston and why Dallas is doing much better. We have people in both those markets that have been around the company for many, many years. These are folks that know the market, understand all the difficulties, understand how concrete the suppliers work with us. We have most favored nation status with a lot of our vendors, and we have a very good relationship open relationship with a lot of our clients that we've had for many, many years. All those things take out risk and all those things add to predictability. So we're just well established in the Houston and the Dallas market. And I think that adds to our ability to be profitable and be predictable and have results. If you look at the Austin market and San Antonio market, those are markets that we tried to grow and expand into. And we just have never gotten a good footing down there in those markets. You know, we've tried to change out people. We've tried to change out personnel in the sense of out in the field. We have clients that are new to us that we haven't had a long-term relationship with. And, you know, it's different down there in that area when it comes to rules, regulations, process, procedures that have impacted some of our projects as well. So I believe it's more about the unknown and the risk profile That's down in Austin and San Antonio for us. And at the end of the day, you know, we got to admit when you can build a good team and when you can pull it together when you can't. And that's the thing we've dealt with very clearly now. And we're moving on.
spk11: Got it. Very, very helpful. Also, I was just kind of curious here on the low bidder numbers. They kind of stood out to me with Marina 149 and Concrete at 400. kind of looking at the fact that those numbers are at the high end and the low end of your historical ranges, if you will. Is there something that we should kind of read into that, those numbers?
spk07: Well, it's probably the answer I should have given Alex. When you see a low number and low bid in concrete, that's exactly my point. We're being very careful what we're bidding right now that we're going to have profit in the work. So indirectly, that's living proof that we're not chasing revenues in concrete at this moment in time. And we're going to be very disciplined in our approach. So that should have been my, it's a good answer for you, but it should have been my answer for Alex when he asked the question. So we are focused totally on our capacity that we have in marine, looking for great opportunities that are timed well for us. And that's what happened in this this last quarter, we were able to negotiate some things in marine to give us that look, not only in 22, but go out in 23 as well. These are more long-term projects that we're trying to finalize. One of the reasons they're still in low bid in the contract form is because we're still working out the details of the contracts.
spk11: Got it. Very helpful. And then just last quick kind of a follow-up. On the East-West Jones sale, very helpful color that you provided. I don't know if I caught, do you have any sort of a timing or a timeframe when you think that might come to fruition?
spk07: Well, if you knew the pressure that I was putting on people to get an answer, my timeline is I want to have this done before the end of August. I don't know if that's realistic with everything that's going on in the markets today, the cost of money and capital. But we are definitely all hands on deck with our partners. DBRE, and I think that they're a great team down here. They're very knowledgeable in the end markets in Houston. They know how important this is to us. I know we remind them a lot about trying to get to a solution. We'll continue to press. I can't predict how the markets are going to work, but I can tell you the effort, the focus, and the determination is all intact and all in a place. If we got solid offers, we're not going to grind out a few extra bucks. We want these properties gone and we want to make sure that we move on and do what we're supposed to be doing. Let's run a business, not run it in real estate.
spk08: Got it. Thank you guys very much for your time. I really appreciate it. Thank you. Thank you.
spk05: As a reminder, everyone, that is star one to ask a question. We'll take our next question from Poe Frat with Alliance Global Partners.
spk06: Morning. If you could just highlight on Port Lavaca, It's a little surprising that there's another $12.5 million of potential proceeds there. Can you just talk about the old deal of $5 million and whether the new deal is $12.5 or sort of have the parameters changed on the two different bids that you have right now?
spk07: They are changing a little bit. We have a brand new offer that's come in on the one property. It's increased from the five. for a lot of positive reasons. And so we're working on those details right now and trying to close that deal. The other one is a, the other property is going to be a sales lease back and we're finalizing the terms of that deal, hopefully in the next two to three weeks.
spk06: Great. And then, you know, previously we'd talked about a working estimate, you know, under the old deal for East West Jones of, sort of, as I recall, the mid-30s. Can you give us an idea of sort of your targeted proceeds there? I know there's a couple different, you know, possible avenues you go forward as far as a joint venture or other things, but sort of what's a working estimate on the value of that property?
spk07: Well, if you think about the three different opportunities we have, where we do a lease and sale, where we lease part of it out and sell part of it, you know, I think the numbers still hold. I think you're still looking at approximately a $30 to $35 million number of value as the property as is with a lot of fill on it. But sales leaseback, it depends on how we break that out. If we do the joint marketing, that number would hold, but it would have a better chance of selling because the other locations we're talking to don't have the fill on it. And it's something that people could work out over time. and not have to have the access to the property immediately. So that's an opportunity. Now, if we get into the joint venture where we have an individual that comes in and works with us to remove fill over a period of time, that would probably, that will definitely raise the value of the property, but then we would share it in that upside with another joint venture partner.
spk06: Great. And reading into the second bullet of ensuring the ability to capture all cost escalators, can you talk about potentially where you're seeing cost pressures, both on the concrete side and then also on the marine side? And then, Austin, you offered a targeted margin for the the awards that you had in Marine of 10% to 12.5% gross margins. Could you do the same thing on concrete?
spk07: The margins I offered to you on Marine, just to make sure it's clear, is on some of the new work that we've just obtained. Some of our work now in the past has been a little bit lower. Right now, we're very focused on making sure that we improve our margins on everything we bid. So going forward, those are new goals and objectives for us. The same thing does lie in concrete. We are basically looking at a 10% or better margin target in concrete and everything we bid right now. I don't want to give anything more away or more details away than that. But at the end of the day, we're definitely increased what our minimum requirements to bid are internally.
spk06: And then just to clarify, when you talk about, you know, target margins, is it gross margin, EBITDA margins? Can we just, you know, clarify that definition?
spk07: It'd be gross margins.
spk06: Okay. And then can you talk about cost pressures, please?
spk07: Yeah, it's across the board. I mean, concrete, first of all, availability of concrete is a challenge. It goes up and it goes down in the Houston market and the the Texas market itself, but the cost is up without a doubt. We need to build those escalations. And I mean, I look at the roofing industry. You can't sign a roofing contract now without an escalation clause. We're doing that a lot more in our contracts and our agreements now going forward. And we're actually going back and talking to our existing clients about these issues. And for the most part, they've been incredibly cooperative and very, very understanding that it's just a fact. It's not something that we're trying to leverage them on, but it's a real fact. So we're being very proactive on those fronts, but you're seeing it in fuel prices. We're seeing it in concrete in the actual cost of that. We're seeing it in steel. We're seeing it in any kind of metal or steel, you know, that whole market. We're seeing it in wood and framing and things like that that we have to purchase in lumber. So we just, bottom line is we're working closely with our clients on all of our new bins to make sure those things are included and our bins are time sensitive. And we're also going back with our old clients.
spk06: Great. Thanks for your time.
spk08: Thank you. Thanks, Bob.
spk04: We have a follow-up question from Joe Gomez with Noble Capital.
spk08: Yeah, just one quick follow-up.
spk10: You know, you guys have previously been guiding into the mid-30s in the adjusted EBITDA Range and wondering if you're still sticking with that, or if you're making any changes with that guidance.
spk07: Well, right now, you know, to be candid with you with new leadership coming on board, you know, just giving them some, some, a little bit of leeway as they work through the process. You know, I'm, I'm internally looking at 25 to 30 at this point. I think that it's, you know. I feel we have the ability to get to 30. But, I mean, I think that we just have to be sensitive about we've had the change of me coming in. We've got a change of another group coming in. And, you know, it's going to take them a little longer to get up to speed than it did me to get going there. But, you know, I feel confident that the team is in a place where we're very focused on margins, very focused on doing better and performing better over the second half of this year. I think situations are – good for us to have a better second half than we did the first half. But I think I'm looking at 25, 30 at this point in time.
spk10: That's a pretty substantial drop in the blow-in there from the mid-30s previously, especially when you're looking at, you're saying, you know, things are improving. I'm not quite sure I'm following on why it would be going down that much.
spk07: Well, the first half of this year was pretty low. I mean, we're at about 8 million, 8.7 million right now. So if you look at it from what we got done in the first half, and then you start looking at 30 to 30 plus in the second half of the year, those are some really good-sized numbers. I'm not saying that we can't get there. I'm just saying that we are going to have another change in leadership. We are going to have some cost here going forward to make some of those changes. And we just got to be, I just try to be realistic with everybody and not have a number that's maybe not attainable. But we're working towards the 30. We have our plans to get to the 30.
spk08: I'm just being cautious. Okay, that's fair enough. Thank you.
spk04: And that does conclude the question and answer session.
spk05: I would like to turn the call back over to Fran Okoneski for any additional or closing remarks.
spk09: Hey, thanks, Lisa. Thanks, everyone, for your interest in joining our second quarter results conference call. We look forward to speaking with you again in October to discuss our third quarterly results. Thank you, and have a great day.
spk05: Thank you, and that does conclude today's presentation.
spk04: Thank you for your participation, and you may now disconnect.
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