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01/10 16:56
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial improvements, including reduced net loss and positive EBITDA. The Civil segment shows strong margins, and the company has a robust backlog and pipeline, suggesting future growth. Management's optimism about margin improvements and cash flow in the coming quarters is positive. However, the decrease in Transportation revenue and lack of specific guidance on weather impacts and legacy claims resolution are minor concerns. Overall, the sentiment is positive, with expectations of continued growth and improved financial performance.
Revenue $215 million, down $36 million from the same period in 2024. The decrease was due to impacts from weather and timing on new project starts.
Gross Profit $13.4 million, an increase of $53 million from the same period in 2024. The improvement was driven by strong performance in new core work and less impact from legacy projects.
Gross Profit Margin 6.2%, compared to negative 15.9% in the prior year. The improvement was attributed to disciplined bidding strategy and expertise in executing complex high-value projects.
Selling, General and Administrative Costs $13.6 million, a decrease of $2.1 million compared to the same period in 2024. The decrease was primarily due to lower preconstruction expenses.
Interest Expense $10 million, up $3.3 million from the prior year. The increase was driven by a real estate transaction, increased interest rates on borrowings, and increased deferred financing costs.
Income Tax Benefit $0.1 million, compared to $16 million in the same period last year. The effective tax rate was 0.6%.
Net Loss $10.3 million or $0.19 per share, compared to a net loss of $46 million or $0.96 per share in the same period last year.
EBITDA $4.2 million, compared to negative $49.9 million for the same period in 2024.
Civil Segment Revenue $81.5 million, compared to $79.4 million in the same period in 2024. Gross profit was $14.6 million, an increase of $5.4 million from the prior year, with a gross profit margin of 17.9% compared to 11.5% in 2024.
Transportation Segment Revenue $133.9 million, a decrease of $38.3 million from the same period in 2024. Gross loss was $1.2 million, an improvement from a gross loss of $49.2 million in the prior year, with a negative gross profit margin of 0.9% compared to negative 28.6% in 2024.
Materials & Paving Revenue $21.7 million, with a gross loss of $3.8 million. The backlog decreased from $139 million to $99 million, with substantial completion expected by the end of 2025.
US 1 Jupiter Federal Bridge: Opened in Florida to improve transportation for the region.
Shands Bridge project: Started driving the first 60-inch piles for the new bridge over the St. John's River.
Ashbridges Bay Outfall Tunnel: Successfully flooded in Toronto, nearing completion of this multiyear project.
Center Hill and Wolf Creek Dam gate replacement projects: Installed the first gates in Tennessee and Kentucky.
McNeil tunnel project: Awarded in Austin, Texas, contributing to $67 million in new awards.
Bridge rehab project: Executed a $77 million contract in the Pacific Northwest.
Pending proposals: Includes Pier 31 extension in Connecticut, Eleuthera Glass Window Bridge in the Bahamas, and Phase 3 of Winnipeg North End Sewage Treatment Plant.
Revenue: Reported $215 million for Q2 2025, down $36 million from the same period in 2024.
Gross profit: Increased to $13.4 million, up $53 million from the same period in 2024.
Gross profit margin: Improved to 6.2% from negative 15.9% in the prior year.
Civil segment performance: Delivered a gross profit margin of 18% due to disciplined bidding and execution of high-value projects.
Transportation segment performance: Had a negative gross profit margin of 0.9%, impacted by a $7 million unfavorable adjustment on a legacy bridge project.
Focus on high-margin projects: Prioritizing profitability over top-line growth.
Infrastructure investment: Benefiting from federal and state funding, including the IIJA and Texas' $20 billion water infrastructure plan.
Legacy projects: Winding down legacy projects to improve overall profitability.
Adverse Weather Conditions: Unfavorable weather impacted revenue and delayed project starts, affecting financial performance and operational timelines.
Delayed Project Starts: Two water resource projects in the West, with a combined contract value of over $340 million, experienced delays outside the company's control, impacting revenue and project ramp-up.
Interest Expense Increase: Interest expense rose by $3.3 million due to higher interest rates, a real estate transaction, and increased deferred financing costs, adding financial pressure.
Legacy Projects Impact: Legacy projects, particularly a bridge project in the Midwest, caused a $7 million unfavorable adjustment and negatively impacted Transportation segment margins.
Materials & Paving Business Challenges: The Materials & Paving business line reported a $3.8 million gross loss and a declining backlog, with projects expected to substantially complete by 2025.
Economic and Market Uncertainties: While the company is optimistic about federal and state infrastructure funding, uncertainties remain regarding the reauthorization of federal spending post-2026.
Revenue expectations: Revenue for the quarter was lower than anticipated due to impacts from weather and timing on new project starts. Two water resource projects in the West, totaling over $340 million in combined contract value, experienced delayed starts but have now started and are expected to ramp up by the end of the year.
Backlog and new awards: During the quarter, approximately $67 million in new awards were added, bringing the total backlog to approximately $2.32 billion. The company expects to convert high-margin short-duration projects to backlog and has executed a $77 million contract in the Transportation segment for a bridge rehab project in the Pacific Northwest. An additional $65 million of new projects are being finalized and expected to convert to backlog in the third quarter.
Market outlook: The company remains confident in sustained investment and robust demand for infrastructure, driven by federal and state government funding. The IIJA is expected to provide a strong tailwind for several years, with bipartisan support anticipated for reauthorization of spending. State and local spending is strong in key markets, particularly in the Sun Belt, with long-term plans to address population shifts and aging infrastructure.
Texas water infrastructure: The Texas Senate passed House Joint Resolution 7, which, if approved by voters in November, will allocate $20 billion for water infrastructure development projects over the next two decades. The company is well-positioned to participate in rebuilding and expanding Texas' water resources.
Future project opportunities: The company is pursuing proposals for several projects, including the Pier 31 extension at the Naval Submarine Base in Groton, Connecticut; the Eleuthera Glass Window Bridge in the Bahamas; and Phase 3 of the Winnipeg North End Sewage Treatment Plant. Numerous water resource projects across the Sun Belt are also being targeted.
Profitability focus: The company continues to focus on high-quality, high-margin work, proactively managing its cost structure, and maintaining strong financial discipline. Improved margins this year indicate the success of this strategy.
The selected topic was not discussed during the call.
The earnings call presents a mixed picture. While there are positive developments such as strong civil segment performance, backlog growth, and opportunities from Texas's Proposition 4, financials are concerning with net losses and negative EBITDA. The Q&A highlights potential growth in data centers and tunnel projects but reveals uncertainties in cash flow and legacy claims. Despite some optimism, the lack of clear guidance and unresolved issues tempers the overall sentiment, leading to a neutral outlook for the stock price in the near term.
The earnings call highlights strong financial improvements, including reduced net loss and positive EBITDA. The Civil segment shows strong margins, and the company has a robust backlog and pipeline, suggesting future growth. Management's optimism about margin improvements and cash flow in the coming quarters is positive. However, the decrease in Transportation revenue and lack of specific guidance on weather impacts and legacy claims resolution are minor concerns. Overall, the sentiment is positive, with expectations of continued growth and improved financial performance.
The earnings call summary presents mixed results: improved gross profit margins and a strong backlog, but significant net losses and increased interest expenses. The Q&A session highlights optimism in the Civil segment and potential cash flow from claims, but uncertainty remains with the Materials & Paving segment and transportation revenue. The lack of clear guidance on margin profiles and revenue contraction adds to the uncertainty. With no market cap data, a neutral impact (-2% to 2%) is predicted, balancing positive project developments against financial challenges.
The earnings call presents a mixed outlook. Positive elements include revenue and margin growth, alongside successful project completions. However, the lack of specific guidance, potential regulatory and operational risks, and absence of a share buyback program dampen enthusiasm. Q&A insights reveal management's cautious optimism but also highlight uncertainties, particularly in achieving positive EBITDA and cash flow timing. Given these factors, a neutral sentiment is warranted, as the positives and negatives appear balanced, with no strong catalyst for significant stock price movement.
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