Visionary Holdings Inc. (GV) Q2 2019 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Goldfield Corporation Second Quarter 2019 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Josh Littman of Alpha IR Group. You may begin.

Thank you, and good morning, everyone. I would like to welcome you to the Goldfield Corporation conference call to discuss the company’s second quarter results for 2019, which were reported yesterday. Joining us on today’s call are President and Chief Executive Officer, John Sottile; and Chief Financial Officer, Steve Wherry. If you did not receive yesterday’s press release, please contact Alpha IR Group at 312-445-2870, and we will send you a copy or go to Goldfield’s website where a copy is available under the Investor Relations tab. A replay of today’s webcast will be available on the company’s website under the Investor Relations tab. Before we begin, I want to remind you this discussion may contain forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as may, will, expect, anticipate, believe, estimate, plan and continue or similar words. Any forward-looking statements are based upon Goldfield’s management’s current expectations about future events, and Goldfield assumes no obligation to update any such forward-looking statements, except as required by law. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Accordingly, these forward-looking statements are no guarantee of future performance. These risks and uncertainties are discussed in the company’s Form 10-Q for the quarterly period ended June 30, 2019. Also, certain non-GAAP financial information will be discussed on the call today. A reconciliation of this non-GAAP information to the most comparable GAAP measure is set forth in yesterday’s press release, which can be found on the Investors section of the company’s website. With that said, let me turn the call over to John Sottile.

Thank you, Josh, and good morning. We appreciate you joining us and for your interest in the Goldfield Corporation. After my initial remarks, I will turn the discussion over to our CFO, Steve Wherry, who will update you on the financial performance for the second quarter. We reported record revenue for the first-half of 2019. The company experienced impressive growth in revenue and gross margin in our electrical construction operations in the Mid-Atlantic and Southeast regions during this period. We are pleased with the continued growth and profitability of our foundation operations at Southeast Power Corporation and Precision Foundations. We have been successful in acquiring new customers and expanding existing relationships. The company continues to pursue the renewal of material MSAs with significant legacy customers in active and expanded service territories. Recently, we also received confirmation of an award of a multi-year MSA with a long-term customer. Although we have achieved strong successes in most regions, our bottom line has been negatively impacted by adverse weather conditions and unanticipated production issues encountered on some projects in our Texas Southwest region. More specifically, we have had several challenging projects that carried over into the second quarter. Gross margin for the six months declined to 14.6% from 20.3% in our Electrical Construction segment. Recently, we have secured additional new projects that are expected to have a positive impact on revenue in our Texas Southwest operations during the second-half of 2019. The increased revenue is expected to reduce non-productive crew expenses and the underabsorption of fixed costs. We are emerging from the challenge in this region with a healthy backlog of work, including some jobs that have already commenced and are expected to be completed during the second-half of 2019. Our real estate development operations delivered a solid performance. All of the units from our most recently completed oceanfront project have been sold or are under contract for sale. At this point, I’d like to turn the call over to Steve Wherry, our CFO, to provide a review of our financials. Steve?

Thank you, John, and good morning, everyone. On today’s call, I will be reviewing our second quarter results as compared to the prior year. 2019 second quarter total revenue was $44.4 million, an increase of $6.9 million, or 18.3% compared to the same period last year. The increase in total revenue was primarily attributable to increases in real estate development operations. Electrical construction revenue in the 2019 second quarter was $39.2 million, an increase of $3 million, or 8.3% from $36.2 million for the same period in 2018, primarily due to increases in projects awarded and work completed in the Mid-Atlantic region as a result of service line expansion and continued growth in both non-MSA and MSA customer project activity. As expected, revenue from real estate development operations increased to $5.2 million for the three months ended June 30, 2019 from $1.3 million in the same period in 2018 due to the increase in the number of units sold. Gross margin on electrical construction operations decreased to 14.5%, compared to 19.1% for the same period in 2018. Comparing the year-over-year second quarter results, depreciation and amortization expenses increased approximately $736,000, or 36.8% to $2.7 million. This increase was mainly due to the increase in capital expenditures to support revenue growth in electrical construction operations. Selling, general and administrative expenses increased $230,000, or 10.9% to $2.3 million, mainly due to selling expenses in our real estate development operations. Operating income was $1.6 million in the 2019 second quarter, compared to $3.4 million in the same 2018 period. The decrease was primarily attributable to lower electrical construction margins, as well as higher depreciation and SG&A expenses partially offset by real estate development operations sales activity. Net income decreased to $819,000, or $0.03 per share for the 2019 second quarter from $2.2 million, or $0.08 per share in the same period of 2018. Cash provided by our operating activities in the period ended June 30, 2019, totaled $11.5 million, compared to the year-ago period of $1.8 million. The increase in operating cash flows is primarily attributable to the completion of sales of properties within our real estate development operations. EBITDA for the second quarter ended June 30, 2019 was $4.5 million, compared to $5.4 million for the same period of 2018. Total backlog at June 30, 2019 increased $53.4 million, or 36.5% to $199.5 million, compared to $146.1 million as of June 30, 2018. At the end of the second quarter, our 12-month total electrical construction backlog increased 24.7% to $106.7 million, compared to $85.5 million one year ago, mainly due to the increase in MSA project activity, partially offset by adjustments to existing MSA backlog estimates. Our provision for income taxes was $482,000 in the second quarter of 2019 versus $1 million in the same period last year. Our current effective tax rate for the second quarter is 37.1%, compared to 32.5% in the same period last year. The effective tax rate for both the comparable periods differs from the federal statutory rate of 21% primarily due to non-deductible expenses and state income taxes. At June 30, 2019, we had approximately $15 million of cash and cash equivalents; $35.8 million of funded debt; $33.4 million of working capital; and an $18 million revolving line of credit, of which $17.4 million was available for borrowing. Total capital expenditures for the six months ended June 30, 2019 was $14.3 million, compared to $7.6 million in the same period a year ago. This increase was due to a combination of factors, including equipment purchased for expansion efforts, continued fleet upgrades and the decision to purchase equipment coming off master lease during the first six months of 2019. Our updated CapEx projection for the 2019 full-year is $19.2 million. This concludes our prepared remarks. Operator, please open the call to questions.

Thank you. [Operator Instructions] Ladies and gentlemen, at this time, we will be conducting a question-and-answer-session. [Operator Instructions] Thank you. Our first question comes from the line of Sam Rebotsky with SER Asset Management. Please proceed with your question.

Good morning, John and Steve.

Good morning, Sam.

Let me address the Texas problem. The – what – the contracts that you’ve gotten, you sort of talk about for the second-half, do you expect the problems to be eliminated in the third quarter? And have you resolved the – is it just a matter of having work, or is there any problem with the employees, et cetera? And how do we look at Texas going forward?

All right. Sam, as we have discussed, we have implemented plans and – to reevaluate how we are to – bidding the jobs in Texas moving forward on our last call. We should see Texas at a break-even point in the second-half of 2019. The issues that we faced in bidding work have been implemented since the adverse weather conditions just have wreaked havoc on us and other contractors in that area. But we are addressing it from a very granular perspective, for instance, that we – one of the projects there that was – caused a particular loss dealt with substantial rain affecting the right of ways. When that condition may exist in the future, we are going to cover that issue in the bid. What exists today in Texas when you’re looking at a project is not necessarily what happens in the future. And the Texas is – parts of the Eastern Texas, when the ground becomes very wet, it is critical that you have matting and/or the proper equipment on a non-rubber tire or track equipment to build the project. As such, we are addressing all projects that have the potential, principally in Eastern Texas. West Texas, the rainfall is very small and those issues generally don’t exist. But in Eastern Texas, we are bidding the jobs with – to address those issues moving forward. Now we’ve been doing that for sometime. We are just now seeing that those projects come online in the second-half of the year. Additionally, we – in order to keep our crews active and have non-productive labor – and to avoid non-productive labor, we had reduced our profit margins in earlier quarters. That period is over with. Projects moving forward will be bid with normal profit margins as new work comes up for bid. And during the second-half of the year, many of the jobs will have normal profit margins and a related shop overhead and safety in the bid form. So those are the plan that we developed, and this was developed in a prior quarter. The work gets bid during the quarter. And then many times, you don’t see the work come online until a whole quarter later as these projects get delays and so forth. We’re also addressing the project delays that we have seen out there. You’ll get these three-week gaps in some of the projects that can cause material issues with respect to labor and how you move your labor around. So that’s our plan for Texas, Sam.

Okay. Is it fair to say that the third quarter might not break-even? And the – although we will break-even for this next six months. And the $20 million that’s not included in the backlog as of June 30, is this Texas, or is it your general business?

No. The $20 million is one MSA in Florida, if that’s what we’re talking about.

Yes.

Okay.

Yes. But it’s not Texas, the MSAs.

No, it’s not Texas. The other regions have different MSAs than Texas. You get a constant flow of work both in our Mid-Atlantic and Southeast Florida – and in Florida. So having said that, even though they were at smaller margins, they keep the workforce intact. So that’s – these type of MSAs may be pursued more aggressively in the future in Texas because of the yo-yo impact on the projects, where labor goes up and down much more than they do under a straight MSA. So if we were to get an MSA, one similar in Texas, and they’re out there, then it would allow us to do the same bid work above the MSA.

Okay. One thing – the further thing, is it fair to consider a relationship with a larger company that Goldfield may be part of that has greater depth and more experience, and Goldfield with all their experiences get a greater valuation and the – contribute more profitably as part of not a giant company, but a little larger company?

I don’t think so, Sam. I think the – our problem is very specific. If you look at our other regional offices, you see excellent performance throughout the rest of the company, actually, very strong performance, excellent growth, as you – during the six months, Texas was actually down in revenue also – although we saw an increase in revenue of how much, Steve? Is there an increase in revenue?

Yes, I think it was – Q2 2019, we were up $3 million for the quarter.

But how about six months?

Six months, we were up $10 million. But we were down…

We’re down $5 million in Texas.

$5 million in Texas.

So despite that, we are seeing strong growth, and we – in revenue. Yes, I think, we did, say, it was 20%. The – we are seeing strong growth in revenue moving forward. The – I don’t believe it would serve us well, because our constraint on the issues we faced in Texas, we’re either going to fix them during the second-half or consider alternatives, either scaling alternatives or other.

Okay. Look, one further question relative to the real estate. How many of the units that will be closed in the third quarter that we haven’t closed. Steve mentioned there’s a bunch of closings, but they’re all in contract, or you mentioned a bunch of – in contract. How many units are in contract there were not closed at June 30 that will be closed in the next quarter?

It’s not material. They’re only three units. There’s one at Abacos, the final one there. And then the final two units at Harbor Beach in the finished projects area. We do have another building under construction at Harbor Beach as we continue forward and it’s not material. I think it’s like the revenue would be, I don’t know, about $1.5 million or $1.8 million. $1.5 million. Yes, $1.5 million.

Okay.

So it’s not material, but it’s additional revenue and related profit with respect to real estate. Real estate, as you know, is a yo-yo depending upon when projects are completed.

Okay. I’m going to let somebody else ask a question. I’ll come back in if there’s time, John. Hopefully, everything gets – I know you’re working hard to get things corrected. Hopefully, you get corrected in the stock to get a greater valuation. Right now, the market is not comfortable that you’re going to accomplish what you’re saying you’re accomplishing. And I guess, the market is saying, show me. So good luck…

And I agree with you. We – nobody knows that better than us, and Texas is constantly on our mind. It is elephant country, okay? And it is being able to get, I think, a more consistent level of revenue. The yo-yo effect is challenging. And as I said, if our plans don’t work, we will consider other methodologies. We’re – we don’t intend to stand around and lose money in Texas. We will do something different out there if our plan doesn’t work. Now our – like I say, we have implemented the plan, we have confidence in it. And moving forward, certainly for the second-half of the year, we feel that Texas will be profitable. This is with the work on hand. This assumes no additional projects that are awarded in the second-half. So we’re playing it very tight to the chest with respect to our expectations during the second-half.

Good luck. Thank you, John. Thank you, Steve.

Thank you, Sam.

Thank you. Our next question comes from the line of [George Gaspar], [ph] a private investor. Please proceed with your question.

Yes. Good morning to everyone. John, just…

Good morning.

…a little bit further on the comparison as well regarding Texas in general. But can you relate what you are doing in Texas relative to the Southeastern part of the United States where you’re very strong in your main areas of activity? In terms of the types of work that you’re doing, is there anything different in Texas relative to what you’re doing in the Southeast, or is there – are there some add-ons that could increase your activity?

George, as I’ve previously mentioned, the challenge in Texas deals with a consistent workload.

Yes.

We have that in our Florida southern operations and we have that in our Mid-Atlantic operations. And with the exception of our foundation work, there is a consistent workload coming from the MSAs. The contracts in Texas at present do not have that constant feed of projects and there has been an erratic awards. The second-half of the year, there were a substantially greater number of projects in-house than there were during the first-half of the year. So our revenue should be up substantially in the second-half in Texas. But it’s a challenge that you’re also just now going to start seeing the profit that we have built into the projects that as we move forward, all of the projects will not be bid on thin margins, they will all have normal margins. So it’s the consistency from the MSAs in Florida.

Okay. And a little bit more on this, John. I know you’ve been – I think they’re at like two, three years now, you’ve been in the Southwest – or the Texas market. And you’ve experienced, even last year, I recall, some heavy rain situations that made it difficult for you. And I think, did you make a comment that you’re integrating some variables into your contracting to eliminate that cost structure that you’re seeing on employee retentions when they can’t work and that sort of thing?

If they can’t work, we lay them off or allocate them to other projects that they can go on. If they cannot go on other jobs, we do not – it is now the policy of the company to go ahead and lay off the employees. These are – the way Texas work is a little different than other regions. Texas labor comes in batches – job batches. For instance, if you get a project, you may add 30 people and they all come at one time. They tend to move more in packs, where in other regions, there is a very, very consistent workforce. Don’t get me wrong, in Texas, we have a consistent, but a lower level of people – lower number of people that are on the payroll all the time. But in – where there is a greater fluctuation in the number of people on the payroll in Texas. So a lot of coming in and going out there.

All right. Okay.

Also, in the bidding process, to further answer that question. As I mentioned to Sam Rebotsky, in the bidding process, we are addressing the weather conditions and we are putting them into the bid. And the adverse weather conditions that we have faced can truly wreak havoc on your productivity in the event that you encounter excessive water if you don’t have adequate matting. I mean I could go on for an hour of all of the ramifications that you run into when the right of ways give way, your equipment can’t go up and down the right of way, and you cannot get concrete forward in the holes, and it’s a whole plethora of adverse circumstances that we are just not going to deal with in the future. We’re going to make sure, on jobs we bid, are going to have those issues covered. If we don’t get the work, we don’t get the work. We’re not going to be bidding stuff that has that kind of risk in it. I’m talking about Eastern Texas.

Right. Okay. And one last question, if I could. And it relates to towers – communication towers.

Towers?

Yes. And I wanted to kind of channel it toward 5G. But there’s apparently a lot of install that’s going to be required on towers and outgoing towers away from the larger towers. Are you doing anything on that sort of thing?

We do occasionally put a foundation in for a tower. But it is – we have not found it to be a good resource for profitability in our foundation business. They’re extremely competitive. There’s a lot of – they’re usually one-offs, meaning, that there is one foundation in your mobilization, demobilization can be extremely expensive. Occasionally, we will turn in a number and get a project. But are projects are more built around foundations for substation and transmission lines.

All right. Gotcha. Okay. Thank you, kindly.

Thank you, sir.

Thank you. The next question comes from Brett Reiss with Janney Montgomery Scott. Please proceed with your question.

Yes. Good morning. Mr. Sottile, I guess, it’s a relative negotiation kind of question. The utility customer in Eastern Texas, do they have a vested interest in not pushing you up against the wall when you’re trying to apportion the risk of the weather issues, because they want to make sure that there’s multiple suppliers of what you do? I just – if they put everybody out of business, nobody is going to be able to do the utility work you’re doing?

Mr. Reiss, it’s – you would think so. But, however, depending on who the utility is, the major utilities, the non-coop type or the old REA or – type utilities, government deals are very different in their bidding process than the utilities like Oncor or CPS utilities or other utilities that we work for in Texas. They generally have preapproved contractors on their bid list, where you – the more government-based utilities are – the non-investor-owned utilities will, if you can make a bond, you can get the job. And there always seems that – those are extremely competitive. We have found that they are so competitive that it is uneconomic for us to venture into that territory in the future. The biggest job issue we had in 2019 was on a non-investor-owned utility and we’ve about taken the position. We’ve had all the fun we want with those. We have not done well on them. And the latest one that particularly hurt the first-half of the year just drove the nail in the coffin with respect to working for them. They’re just not worth it, because no matter – I shouldn’t say not worth it. We generally will not be bidding those in the future simply because they’re too cheap. Texas is competitive. I’m not engaging [ph]. I mean we bid other projects that – we get our fair share of the projects, but we have seen other projects that some of the – it’s stunned me on what some of the contractors are willing to bid and how much money they leave on the table. But that’s welcome to the construction business.

Right.

I think that the plans that we have undertaken – or the plan we have undertaken on how we’re addressing the bidding on our projects, our margins moving forward, will yield very well for us moving forward. There is an enormous amount of T-line construction in Texas that is in the pipeline. And I question if there are adequate contractors to fully fulfill the work, because there’s work around the rest of the country, too.

Right. And just in terms of the mechanics of the new contracts where the utility bears some of the risk of the weather-related problems, is it – they agreed to pay a sort of surcharge if the rain results in you having to incur the extra expense of the matting for the proper equipment. Is that the way it works?

Generally, that – and to simplify the matter, yes. You put a unit price and there for mats, for instance, and if we are able to put the unit price in the project. If the customer does not allow that, we’re going to put it in there in our bid. If the customer permits on an as-needed basis, that works well for the customer in the event that it’s dry. And if it’s wet, then they will – we can’t take that kind of risk, because any one project, 10%, 20% of the project or 30% of the project, may need matting. We can’t afford that risk in the future. Sometimes, 100% of the value of the contract. I mean it’s – it all depends on the project, and we are just not in a position to take that risk.

Right. Now the…

And the utilities will pay for many – many of the utilities have a line item that it is – in the event that you need the matting or other related equipment, I mean, it could be track equipment, that it’s on a unit price basis.

Right. Now the drafting of these contracts, are they done by an in-house counsel, or do you outsource it to an outside law firm that has these capabilities in construction law?

We do both. We do a lot of it in-house. Many of the contracts are very similar. Depending on who the contracts are for, I like to keep working for utilities. I understand them. You’re working directly for them. When you get in the EPC business, the contracts become extremely challenging, because you’re not working for the utility, you are working for an engineering company. We’re seeing more and more of that type of work and the contracts are onerous. They’re challenging and can be very tiring. It is – a lot of it’s just plain English in the contracts of their expectations and what we’re prepared to assume. It is – having a specialist in contract law relating to utilities doesn’t necessarily mitigate the issues that may arise in a contract. We have found very little problem dealing direct with utilities. It’s more the language in the EPC-type contracts, they’re onerous. They are just very, very, very one-sided. The other thing is when you’re dealing with a utility oftentimes, you’re able to negotiate in the field the necessary changes.

Right, right. One last one [Multiple Speakers]

The EPCs, you got to go through the engineering company that’s got to negotiate with your own.

Right. One last one, do we have in place a share buyback authorization? And how much is – remains on it with the stock down here? Does the company have an appetite to utilize it?

The answer is yes to both. We’re trying to allocate our cash resources to accommodate share buybacks and equipment – purchases of new equipment to accommodate growth and expected growth in the future. We have an existing – Steve, you’ve got the numbers or was it 2 million?

2.7 million remaining.

Yes. We have an additional 2,700,000 shares remaining under our buyback program.

Okay. Thank you for taking my questions. I appreciate it.

Thank you for your call, sir.

Thank you. The next question comes from [Justin Saunders], a private investor. Please proceed with your question.

Good morning, guys. I’m piggybacking on the end of the last question there, and I think you’ve covered margins pretty well. But I noticed we’re also taking up our CapEx from end of year last year, what $14 million and change to $19 million. So can you talk about taking that CapEx relative to the Texas market? Are we pouring the cash over there? Does it make sense to hold off? Love to allocate that back to shareholders, but the way the balance sheet is moving right now, it’s probably not a good idea. Can you just talk around those points a little bit?

Okay. First of all, the – Texas, it doesn’t get an abnormal amount of the CapEx. Part of our CapEx, and if Steve wants to he can share with you, is we have a number that we have discussed of master lease of – master leases that aggregate, how much, Steve, $8 million to $11 million?

Yes.

Somewhere between $8 million and $11 million that we discussed last year that we plan to exercise our right to repurchase. We originally entered into master lease agreements for 60 months. And when the time came to replace that equipment, under a master lease, normally, what you do is, you give all the equipment back and then buy the new – master lease the equipment moving forward. When we started having discussions a year, year-and-a-half ago on the new equipment that we will be replacing the expiring master leases, all of the regional offices did not want to give up their existing equipment. And after we did the financial analysis on it, it was determined that there would be a savings to the company, all things considered of over $2 million over a two-year period on an annual basis. So after we looked at that, we said, "Golly gee whiz. This equipment is lasting much, much longer." So our maintenance programs have allowed us to keep this equipment more up-to-date and in better shape. And the unwillingness of our regional VPs to give the equipment up, we are very pleased with that. So having said that, how much is it, Steve, do you remember?

I think it’s about $11 million in assets. And then in 2019, we’re looking to buy out $4.5 million.

And – but that’s three – that’s a two-year – two to three-year program that aggregate about $11 million?

Right. $11 million over three years. 2019 is $4.5 million, about $6 million next year. And why not let me explain that? That is, as John says, the leases – or the five-year leases are coming up, they’re coming due, so it’s – do you enter into new leases? Do you buy the equipment, or do you turn it back in? So…

It’s caused us to reconsider, I mean you can go into the how you reconsider, Steve, when you’re examining the future master leases that we enter into might be for much longer periods.

Yes. We’re looking at some recently going into a seven-year period instead of a five, just because we’re finding that these current ones the fields want to keeps.

And because of the very high residual values that are placed on the equipment by the – we don’t do this through a bank. We do this through…

The manufacturer.

Yes, the OEM. So the OEM does it. They will put a much, much higher residual value, some of them 40% after a very long period. It is – it reduces our monthly costs on some pieces, several thousand dollars per month per piece of equipment, dropping the average monthly cost on the equipment. So moving forward, we will probably be doing a lot of 84 months, Steve, or…

84 months. I mean, for instance, we’ve got some equipment that if you rented it, it’s $12,000 a month. If you master lease it, you got a seven-year commitment, but it might be $6,000 a month.

So I mean, the savings is going to be 50% against an RPO over the master lease. The master lease can oftentimes be cheaper than outright purchases borrowing the money to do it or certainly in line, because you have to consider the very high residual values placed on the equipment by the OEM, which are, again, it initially surprised us, because we had gone to our bank with this and our bank did not have a clue and no disrespect to the bank. But when you’re dealing in utility equipment, you need to be talking to the manufacturer and the financing departments – the master lease departments of the OEM.

Yes. The various banks will come to you, but they just – their terms just don’t match you. They don’t know what to do with the equipment at the end. They don’t know what it’s worth at the end. So it’s been interesting. And then we look at the end of the lease term whether we look at a fair market value buyout or whether we look at a fixed price purchase option buyout at the end.

A lot of time goes into this, my concern. What was the second-half of your question?

Well, that’s – yes, I loved the analysis going into the financing vehicle there. But really, you kind of touched on it, if you could flesh that out, is the Texas weighting of that CapEx, because we’ve got growth in the Southeast and the Mid-Atlantic, returns, we’re very comfortable with. Are we – is Texas overweighted on the CapEx when these other divisions are showing the things that we desire?

I think the – Texas, I don’t have the exact number in front of me on that. But the Texas CapEx, I’m sure, has grown during 2019. And as I mentioned, we expect a – with the work we have on hand, Texas revenue should grow materially in the second-half of, say, above $25 million during the second-half of 2019. So the run rate is much greater than the first six months and that’s with no additional work being awarded. This is only work that’s in-house. That’s assuming we get nothing in the next five months.

Got it. Thank you.

Yes, sure.

Thank you. Our next question comes from the line of Kurt Caramanidis with Carl M. Hennig. Please proceed with your question.

Hi. guys. What did Texas lose in the first-half? I know you’re looking for break-even in the second-half.

Approximately $4 million. And in second-half, we were break-even.

Great. And then real estate, I got the revenue and the gross margin. What did that contribute to the bottom line in the first-half, like $1 million, $1.5 million?

I don’t know all since – let me just see with Steve – because that should be in the 10-Q.

…give me just a second.

Give him a second, because it’s in the 10-Q under the…

Real estate margin, real estate operating income was $1.7 million.

In the first-half.

Okay.

In the first six months.

Okay. And that you kind of expect to be close to nil the second-half?

Well…

It will be small. I mean, we got $1.5 million in sales. So…

Assuming margins are the same in the third quarter, I mean, the third quarter is going to have about $1.5 million in revenue with that same margin that they had in the first-half. It is what – it is the fourth quarter where the real estate is going to be down strongly. We’re going to be switching gears as we bring on additional oceanfront projects. They simply are not going to be done in 2020. It will be 2021 before they’re done. So the revenue is going to come from the townhouses and the single family.

Okay, great. Thank you.

Thank you very much, sir.

Thank you. I’m showing no further questions at this time. So I will hand the call back to John Sottile for any additional concluding comments.

I would like to thank everyone for joining us at our conference call today. Also, I would like to express my sincere thanks to our shareholders for their continued support.

Ladies and gentlemen, this does conclude today’s teleconference. Again, we thank you for your participation, and you may disconnect your lines at this time.