Good morning, everyone and welcome to the MYR Group Fourth Quarter 2016 Earnings Results Conference Call. Today's conference is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Kristine Walczak of Dresner Corporate Services. Please go ahead madam.

Thank you, and good morning, everyone. I would like to welcome you to the MYR Group conference call to discuss the Company's fourth quarter and full year results for 2016. Joining us on today's call are Rick Swartz, President and Chief Executive Officer; Betty Johnson, Senior Vice President and Chief Financial Officer and Treasurer; Tod Cooper, Senior Vice President and Chief Operating Officer of MYR Groups' Transmission and Distribution Segment, and Jeff Waneka, Senior Vice President and Chief Operating Officer of MYR Groups' Commercial and Industrial Segment. If you did not receive this morning's press release, please contact Dresner Corporate Services at 312-726-3600, and we will send you a copy or go to MYR Group's website, where a copy is available under the Investor Relations tab. Also, a replay of today's call will be available until Thursday, March 16, 2017, 11:59 Eastern Time by dialing 855-859-2056 or 404-537-3406 and entering Conference ID 51679991. Before we begin, I want to remind you this discussion may contain forward-looking statements. Any such statements are based upon information available to MYR Groups' Management as of this date and MYR Group assumes no obligation to update any such forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Accordingly, these statements are no guarantee of future performance. These risks and uncertainties are discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and in yesterday’s press release. 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. With that said, let me turn the call over to Rick Swartz.

Good morning, everyone. Welcome to our fourth quarter and full year 2016 conference call to discuss financial and operational results. Today marks the first time I will be participating in the call as President and CEO of MYR Group. As you may know, Bill Koertner will be continuing in his role as Chairman of the Board. I would like to extend my appreciation to Bill for his years of leadership and guidance and look forward to his support as we continue to grow the Company and deliver positive results to our customers and stockholders. I will begin our call today by providing a brief summary of the fourth quarter and full year results and then turn the call over to Betty Johnson our Chief Financial Officer for a more detailed financial review. Following Betty's discussion, Tod Cooper and Jeff Waneka, our newly appointed Chief Operating Officers for our T&D and C&I segments will provide an industry outlook and discuss some the MYR Groups' opportunities going forward. I will then conclude with some closing remarks and open the call up for your comments and questions. Our fourth quarter benefited from favorable weather which enhanced our project progress and improved equipment utilization. And our full year 2016 financial performance demonstrates the success of our efforts to grow MYR Group to our three-pronged strategy of prudent capital allocation for acquisitions, organic growth and return of capital to our stockholders. Our full-year revenues of $1.14 billion was a record high for the second consecutive year and backlog grew by $68.2 million to $688.8 million from last quarter. Although our investments in the organic growth prong of our strategy contributed to our revenue and backlog growth in 2016, overall it didn't contribute as much to operating income as we have planned due to a slower…

Thank you, Rick and good morning everyone. As Rick stated earlier, MYR Group's efforts related to our three-pronged strategy of prudent capital allocation for acquisitions, organic growth and return of capital to stockholders have improved our fourth-quarter results as compared to the prior year. Our fourth-quarter revenues, gross profit, EPS and backlog all improved both year-over-year as well as sequentially over each quarter of this year. Our fourth quarter 2016 revenues were $343.7 million which represented a record high revenue for the quarter. This also represented an increase of $72.5 million or 26.7% compared to the same period of last year. The increase was primarily due to higher revenue from large transmission projects, organic growth in our new geographic markets, and favorable weather conditions in certain areas. Fourth quarter - our T&D fourth quarter revenues reached a record high at $250.9 million, an increase of $49.7 million or 24.7% compared to the same period last year. The breakdown of T&D revenues for the fourth quarter of 2016 was $196.4 million for transmission and $54.5 million for distribution. C&I revenues also reached a record high at $92.7 million, an increase of $22.7 million or 32.6% compared to the same period last year. Our overall gross profit in the fourth quarter of 2016 was $41.9 million compared to $32.6 million in the fourth quarter of 2015. The increase in gross profit was primarily due to higher revenue and improved gross margins. Our gross margin was 12.2% in the fourth quarter of 2016 compared to 12% in the same period last year. The increase in gross margin was largely due to favorable weather experienced during the fourth quarter, improved performance in certain jobs and favorable close-outs on several projects. This was partially offset by costs associated with unrecognized revenue related to pending project…

Thanks, Betty and good morning everyone. During 2016 our transmission and distribution segment executed projects of all types and sizes throughout the U.S. and Canada while pursuing new work in an active bid market. In particular we saw in an increase in large project opportunities and engineer, procure, construct or EPC work. All of which resulted in another year of solid of performance. In the fourth quarter we began constructions of Cross Texas Transmissions, Limestone to Gibbons Creek 68 miles 345 KV transmission line in Texas which is part of the Houston import project and is expected to be completed in the spring of 2018. In addition we are nearing completion of the 32 mile 161 to 345 KV conversion on the MVP 16 transmission line project with MidAmerican Energy and Illinois and we started work on the 29 mile 161 to 345 KV conversion Kildeer to Hampton transmission project for ITC in Iowa. Substation projects awards included the EPC contract for the West Texas 345 KV reactors project for electric transmission Texas, an affiliate of American Electric Power, the South Street substation replacement project for national grid in Rhode Island, as well as smaller new and upgraded projects for several utilities across the country. Work continues on the Keewatinohk 230 KV AC switchyard in Manitoba Canada which is part of the Bipole III transmission reliability project. This project in addition to Western Pacific Enterprises established relationships - Western Pacific Enterprises established relationships further enhances our ability to perform work in Canada. Recent industry announcements indicate that there will be ample bidding opportunities on projects of all sizes throughout the U.S. and Canada which bodes well for increased growth opportunity for MYR. Edison Electric Institute published its annual transmission projects at a Glance report which indicates the transmission investments are…

Thanks Tod, and good morning everyone. Activity in our C&I segment was strong throughout the fourth quarter and our record revenues and backlog in 2016 were due to significant growth in all our markets. In addition, we believe that the acquisition of Western Pacific Enterprises in the fourth quarter will present exciting C&I opportunities in Canada primarily related to healthcare and transportation. Project activity throughout 2016 reflected our ability to meet the complex demand of our clients and healthcare construction in particular remained a key contributor to revenue. We continued work on the new 1.2 million square-foot Denver Veterans Administration Medical Center, the new 670,000 square foot Banner University Medical Center in Tucson Arizona and the 361,000 square foot Eastern Maine Medical Center in Bangor, Maine. In Canada Western Pacific Enterprises is currently providing electrical services for the 282,000 square foot Stanton Territorial Hospital in the Northwest Territories which is scheduled to be complete in 2018. In the fourth quarter, we were awarded preconstruction service contracts for the new 300,000 square foot North Children's Hospital and 194,000 square foot expansion to San Francis hospital both in Colorado Springs. Our Transportation Division experiences significant growth in 2016 due to fewer part to several contract awards in California and Washington State, two of our new markets. Additionally, in Colorado we completed two notable projects for the Colorado Department of Transportation which bolstered our portfolio of expertise related to the latest transportation technologies. Looking ahead, we expect strong growth to continue in our new and established markets and expect our core competencies in healthcare, data centers, commercial, industrial, education, aviation and manufacturing facilities will help us gain a share of these opportunities across the country. Healthcare projects show no signs of slowing down. Several new project opportunities have been announced and multiple facilities…

Thank you for the market updates Tod and Jeff. Another solid quarter and a year of strong financial and operational performance provide us with a confident that our strategies are sound and will remain solid in the near and long term. The investments in organic growth and acquisitions we made are fueling growth. We will continue to invest in our business to drive growth and to strive to achieve top tier financial performance over the long term by identifying viable new opportunities for ongoing expansion. Additionally, we will continue to refine our capabilities for infrastructural improvement and provide meaningful careers for our people while maintaining our financial strength and liquidity. Finally, we will continue to be disciplined in our approach towards allocating capital as we continue to work to maintain a strong record of operational excellence and delivering consistent returns to our stockholders. Of course, we would not be where we are today without the exceptional people who make up MYR Group. As I reflect upon our achievements over the past year and look to the future of our company, I am confident that our talented leadership team and highly skilled workforce will continue to elevate our position in the industry. To conclude on behalf of Betty, Tod, Jeff, and myself, I sincerely thank you for joining us on the call today. I'd also like to thank you for your ongoing confidence in MYR Group, and I look forward to updating you on future calls. Operator, we are now ready to open up the call for comments and questions.

[Operator Instructions] And our first question comes from the line of Tahira Afzal with KeyBanc. Your line is now open.

Hi, Rick and team, congrats on a fantastic quarter. I guess first question is given the strengths you've seen in backlog, and for me really the big surprise has been C&I. How do you look at your topline playing out at this point? You've seen good growth in 2016 where it seems you could even exceed that in 2017. So any qualitative thoughts would be helpful.

Yes Tahira, I think when we look at that, we see a lot of opportunities. On the C&I side, Jeff and his team are in there every day talking to our clients, talking to engineers, seeing what's coming in the market. As we've said in the past, what really limit us on saying we’re going to really have accelerated backlog growth. So we strive for that as the timing as it works. We see a lot of activity out there but again when those projects actually come to market and then the timing of it, sometimes we see those pushed out one quarter and that makes a big difference for us on how we count backlog because again, we only count backlog when we have the contract in hand. So it’s a little bit different than some of our competitors.

Got it. And just to follow-up on that. I mean, should we be looking at the fourth quarter as the type of revenue run rate you can support going forward? I know that first quarter has a bit of seasonality in it But just trying to see where topline, what the revenue power is right now as I see it?

That’s a great question, Tahira. It is something fourth quarter we did have some really good benefits from weather, our equipment utilization was up and as you said, first quarter has some seasonality in it. It usually does. It depends when frost is coming out of the ground, some of the weather that’s been happening across the country. It has impacted us. So I guess when I look at fourth quarter, I would say that was a little bit different than the run rate you should expect in first or second quarter.

Got it. Thank you. And I have a follow up, and then I’ll hop back in the queue. You know the C&I bookings were phenomenal and it seems to be pretty diverse from where you started out in that business few years back given in terms of growth. So as you look beyond 2017, is it fair to say your growth is going to be less about just your typical commercial non-resi and it sort of seems to be migrating more towards transportation, healthcare and a lot of other things.

We've always been focused in those markets. Again, I'd say on C&I areas where we were regional players in certain areas, and we've expanded that. We've taken it into Seattle, California. If you look back at the kind of return of the market in Phoenix area, Tucson area, that Arizona market, it lags behind what we saw in any other part of the country. And we’re starting to see strength there now and that’s coming back. So that affected our backlog in 2016. And then as we said, some of the organic growth areas of California, Seattle, Nevada, those areas are starting to pay the dividends and we are starting to receive some work. So again it didn’t add to the bottom line as much as we would like for those organic growth areas in 2016 but we see them carrying their own coming into 2017.

Let me just add further from a C&I backlog perspective and revenue you also have - you talked a lot about organic growth but the acquisitions that we had in the last year between WPE and ASP both having the C&I focus on them has significantly helped that segment.

Got it, okay. I will hop back in the queue. Thank you.

And our next question comes from the line of Bobby Burleson with Canaccord Genuity. Your line is now open.

Yes, good morning. So I just had a question on organic growth initiatives, you mentioned that seeing some of those are progressing a little slower than expected. Is there kind of a bit of pent-up award activity that you guys are expecting here in the first half based on kind of delays and timing of some of those awards?

Outside of probability acquisitions where you’re just talking strictly organic growth. Again we went into those areas with solid business plan, so it is something that we put a plan together, if we knew it would be we have to make investment before it started paying off, so some of those had a two year ramp up period or a year ramp up period. We continue to hire the right people, modify the groups we have and I would say that relationships are starting to expand and we hope for some awards in the near future.

Okay, great. Just curious about California in particular with some other valid measures that have passed whether or not you're seeing any increase in kind of the bid pipeline or project opportunities bidding on there?

I'll start and I will turn it over to Jeff, I mean from the stance that I look at it from, we are starting to see a lot of rumblings out there. There is projects that are starting to last on the transportation side but kind of those all those valid issues in some of that stuff that took place hasn't fully been recognized yet or those projects haven't come out but everything from my side looks very promising in the California market. Jeff, you got anything to add.

I agree Rick. Most of that work is in the design phase now and so we're very engaged with the engineering firms and some of the larger clients will be pursuing those projects. It does bode for some healthy work in the future but it is going to take a little while for that work to hit the market.

But something like that, I guess 2018 is unreasonable in terms of timeframe maybe or you guys can benefit from some of those projects?

I would agree that we will start to see that in 2018.

Okay. Thank you.

And our next question comes from the line of Andy Wittman with Robert W. Baird. Your line is now open.

Good morning and thanks for taking my questions. I wanted to ask about backlog and as you look at what you're bidding at today and the burn rate that you expect to experience, if you expect that the backlog will finish higher in both segments organically by the end of the year?

Again Andy that comes back to the timing of the award, I'll go back and I will let Tod add. I mean we are in our clients offices. He and his people are there every week talking to our clients again same as on the commercial side talking to the engineers, seeing what's out there. People are extremely busy right now but as projects come to market, the permitting everything that's required to actually take him to market or at least to the construction phase of it, we really don’t - we are not in control of that timing but we still see the small to mid size projects being released in - I guess they're coming out at timely flow right now and we see quite a bit of activity on the larger size, those ones still I think are coming. But some of them are still pushed out due to permitting and other issues. Tod you have…

As you mentioned in tracking the larger projects as we mentioned earlier on the call several are in the - still in the permitting stages, they are progressing forward and we see a few of them that may happen here in 2017 but we are not 100% confident that they will be out there. So as Rick mentioned, it definitely has to do with the timing of the awards and even in addition to the timing of the awards the delay in the time to prepare and start actual construction on this projects.

Got it. So some of the outlook for the larger projects sounds like you're talking to customers but maybe they haven't seen a formal RFP at least at this point?

Yes, and we haven’t seen any pullback on the larger project I’d say it's a if not a win I mean, it’s - I guess it’s more above when it will happen not if they are going to be happening.

Okay.

Sorry about that.

No, I thought that’s what you meant. And may be just looking at backlog as it stands today the stuff that you’ve already won an awarded can you talk about the margin profile really in both segments of the business obviously over the last several years your backlog has been more construction content and less pass through to you guys and I'm just curious is that - still if that trend is continued in the T&D side. And then specifically in the C&I business, how does the backlog margin that you have today compare against what you had maybe a year ago?

I would say they are very similar the markets remain competitive though there is - we see increased work out there, we see increased opportunities out there. The market still remains very competitive what we hope for more maybe some of this GAAP increase and some other construction increase and markets will pull some of the people maybe a little out of our market more into those markets and may be we’ll see some margin increases but we haven't really seen them to-date - we had in the past.

It’s sounds like so like for like projects are similar margins is already mix shift in the backlog that’s either larger projects that might higher margins or anything like that we should be aware of? A – Tod Cooper: We don’t really release that on a project by project basis we do by T&D and C&I and really don't put it into effect on size of project or what we have in our backlog.

When it comes to that mix issue you see a little increase in the C&I from the segment mix slightly but are getting more into the size of the jobs or the types of jobs.

Yes, and historically C&I margins are little lower than they are on T&D side.

Yes, we are hoping that the additional opportunities that are out there are starting to allow for a little bit more selectivity and what we're pursuing and sometimes that will lead to opportunities that have somewhat better margin that probably what occurred in this last quarter.

Okay, that’s helpful. Just given the magnitude of the C&I sequential backlog increased here, I think it would be helpful for investors to know how much of that backlog was in fact acquired but do you have the number handy to provide?

Are you talking about the or the acquisition…

Basically how much of the acquisition - how much did the acquisition contribute to your backlog?

Take about a 50 million on that one, so that's what it added to us in backlog.

Okay. And that’s mostly C&I.

Yes.

Okay, that’s helpful. I’m keep going here because I think people want to know the CapEx budget and tax rate but what you're thinking for 2017 on those two factors?

From a capital expenditure perspective as our company and the Board reviews our plans for 2017 is pretty similar to what our historical was been as you know in 2016 our CapEx spend was down and we just – it's all in matter of timing and when awards come out and mix of the work and then capital that we need to spend but think about it more from the longer term over the last several years versus just 2016 reduction. Some more of that at that back to that higher level and then as far as the tax rate, yes we had increase that we saw here in the fourth quarter but I would say that this fourth quarter items that we pointed out is unusual are more anomalies if you want - if you go back to more of a historical excluding those anomalies would be back to what we get going forward assuming no changes in overall rates that come out from new administration.

Yes, keep an eye on that one. Okay, so something in the high 30s and is kind of what you guys are posting and that be where you'd be taking today.

That’s correct. That’s more of our historical right.

All right. I will leave the floor finally and turn it over. Thank you.

And our next question comes from the line of Noelle Dilts with Stifel. Your line is now open.

Hi guys, and congratulations on a nice quarter. I was hoping you could just comment a bit on how you're thinking about the Trump Administration and potential policy changes and how they might impact the transmission market. So specifically any thoughts around the clean power plan I guess if the clean power plan is stayed what you think - how you're thinking about the re-through from that into the transmission market would be one area that I am interested in. And then another would be just in terms of some of deregulation you’re talking about and potentially accelerating and some the sighting and permitting processes how you’re thinking about this potential changes?

I guess from our conversations internal and with our clients, I think it's wait-and-see. I don’t see it as something that anyone pulling back everybody hoping that there is way to get these projects to market quicker and any - I guess any permitting or anything that could be moved ahead on that side it happens. So I think everybody just in a wait-and-see but I haven't seen anybody delay projects or pull them back or do anything even on the clean power side they're not doing anything until they basically see what happens. So everybody is still proceeding I guess and it’s wait-and-see game.

Okay. And then regarding just general Canadians T&D market and even C&I, how you guys - are you seeing some improvement there? How are you thinking about those markets as you head in 2017?

Well I will cover them as two separate segments, T&D remains very competitive in Canada something that we're going after work we didn't have a huge investment on the T&D side in Canada, we'll go after one-off projects and we look at it and as market comes back we’ll compete at our cost was a fair margin but we didn’t have a big investment in that segments so we've kind of been able to sit back and watch it. On that side and I don't mean we’re not actively pursuing projects but we see them very competitive and maybe some of them below where we would be willing to go in that. On the C&I side we strategically went after WPE. We've been talking to them for years. We looked at that side their location is in Vancouver that area that's a growing area, the C&I continues to expand there. It’s not something we really seen that market pullback at this time. So they're more of similar to what we are with our C&I presence in the U.S., they're more of a regional player in Canada. They're not across Canada so we see really good opportunities out in the engineering and our customers as we talk to them. Jeff you got anything to add?

I agree Rick, they have a very sound base of clients. They are very well respected in the market and I think that the addition of MYR Group to WPE just even helps them be in a more favorable position to capture work going forward.

And helps us with some of the work they have pursued and completed that we haven’t done, some of the transportation work that’s kind of been a different segment than we are.

Okay. That’s helpful. And then I guess just shifting to U.S. market quickly last year there was a lot of talk about delays around per quarter 1,000. Can you just talk about I guess as we sit here today how the order is impacting the market in your opinion either positively or negatively. And then you mentioned more projects coming EPC and could you talk a little bit about - how you think your position for those jobs and if you have bit of a competitive advantage of your smaller competitors on those type of projects?

Yes, I’ll start and then I’ll let Tod add a little bit on the both side, I would say we saw some activity last year. I don't think it was as quick if you go back into 2015 where people were anticipating 16 FERC projects coming out, I don't think that was quite as many that were released or out but we do see it as additional ones coming out in the future and we do see that moving forward. So we do see some strength on the FERC project coming out. On EPC side, we think that as a continuing growth area for us. It' something that contractors want to be able to bring the product to market quicker and this cuts a couple of phases of having gone through the engineering, the bidding side all that, all that procurement side, and it allows them to get the project in place a little quicker. Tod, you got anything to add to that?

What we are seeing on the EPC front is in part due to large spend increases that we mentioned earlier. And in order to get these projects to market quicker, we are seeing some of our, several of our clients choosing to go to EPC route. So with our past experience on several projects and in current projects, we think we're positioned pretty well to be competitive in that market.

And our next question comes from the line of Stefan Neely with Avondale Partners. Your line is now open.

Hi, good morning. Congratulations on the good quarter, and Rick, congrats on your new role. I was curious if you could kind of give us some thoughts on what you're thinking about in terms of your plan on organic growth spending. Obviously, you had a fair amount of success with that in the past. I was wondering if your plans at this point in time continue that same level of investment going into 2017.

We continue to evaluate business cases and look at them from, as we said on past calls, at our district level, at our management level. People are put together business cases. I get them across my desk along with Jeff, and Tod, and Betty all the time. We evaluate them, we look at each one independently, and then we balance that with kind of the investments we've already made because we’ve got to see some results out of some of them. So we've got some target out there, and we will continue to expand. But we also want to see the results from the past before we just keep adding on to it. It is an investment, and it’s not just dollars, but people’s time, and we’ve got to make sure that we treat those things like acquisition, and we give them the attention they need.

Perfect, that’s helpful. My other question, I was curious if you could give us some details on the job where you are waiting for change orders. Obviously I know there's only so much you can tell us, but I was wondering if you had any inkling on the timeline, and whether those were particularly material or not.

At any given time, we've got multiple change orders and things out there. I think we've talked about a couple in the past, but I would say the larger one that we talked about last quarter is progressing, and we hope to have that final in the next quarter or so. But again, it’s somewhat material, but it's not going to move the needle a whole lot.

Okay, excellent, thanks a lot. And last question kind of in the same thing there, is on the project closeout. You guys obviously had some benefits from that in Q3, and clearly in Q4 as well. Was that a material driver, the margins during the quarter, or was it mostly weather? And also do you expect to see kind of a good pace of closeouts in Q1 as well and Q2? How are you thinking about that going forward?

I would say as far as far what we’ve experienced third and fourth quarter, you are correct. We had some very good closeouts that happened. Weather was very good during the fourth quarter, allowed us to closeout some of those projects. If I'm looking at kind of our portfolio business and where we are at on some the projects that would closeout, I don't see that happening per say in the first or second quarter, but I do see that happening later in the year.

Okay, excellent. Thanks so much for taking my questions.

Thank you. And our next question comes from the line of John Braatz with Kansas City Capital. Your line is now open.

Morning, Rick, Betty. Question on your back to the organic growth initiatives. I think Rick you mentioned that it wasn't quite what you would like to be in 2016. Can you give us a sense as to maybe how much of a hit to earnings it might've been? How costly it might have been in 2016?

I’ll start and then I'll turn it over to Betty. But when I look at it overall, last year my goal was to have the SG&A covered. That kind of that investment on a run rate going forward by the end of the year. We came very close to that, but we didn't quite do it. And again, we don't give individual district results, but I would say we're fairly close. This year I see some great opportunities and a way for us to grow in that. So again we don't give guidance or we don't give results district-by-district but that's kind of. Betty you got anything there.

No, just absolutely helped on from a revenue perspective and bringing in volume but from an overall perspective we're seeing progressive improvements in various different business units. Certainly without a doubt quarter-over-quarter and you kind of - you're right across that, that mark off started to see the contributions, some of them are already contributed at the same level that other business units but not all of them but we're seeing progress.

And these long-term commitments, this isn't something that we went into market thinking we would only be there two years or we're going to try it out. These are ones where we believe the long-term outlook of that market is good for us to be in, same way we approach acquisitions. We don't want an acquisition, they're just going to give us a short pop we want something that’s going to be there for the long term.

Sure. Sort of a short term question, you indicated in the fourth quarter that weather was there beneficial. First quarter weather has been pretty good too, February was maybe the warmest month we've seen historically in a long time. How does the weather look like it's playing so far this year, I mean could the CFA rule impact in the first quarter from weather?

What I would say what we've seen so far is probably not as favorable as what we had in the fourth quarter. I mean we've had areas that had lot of rain, we’ve had areas that had a lot of wind. We've had areas where frost has come out of the ground early but it's not dry enough to - but not warm enough to dry up all that mud. So progress has been hampered. We see all those things. And then certain parts of the country again have had good weather but it's kind of where your balance of your work is and looking at that size so, I wouldn't - from just overall it hasn't been as favorable as it was in the fourth quarter which affects our equipment utilization too.

Okay. All right Rick, thank you very much.

[Operator Instructions] And our next question is a follow-up question from the line of Tahira Afzal. Your line is now open.

Thank you very much. I guess I had one other follow up question. Rick if you look obviously the C&I business has the greater momentum in a sense right now but if you look out a year from now and we'll sitting at the same place, which of your two segments do you see more momentum and then more potential for organic growth.

I see both areas and I'm just saying that Tahira. That's why exactly when we split up the roles of the COO into Jeff and Tod roles we did that, so they both had a focus on their business segments because we see the same potential in either one to grow. And our saying is to have controllable growth and then balance that organic acquisitions. And then focus on both so we can succeed.

And what the scale you have now - could you be by next year hitting that 14% gross margin profile again?

I wouldn't look at it that way. I mean I think you got a look at it as a longer-term race. We're out to do what makes sense, we're not out just to push topline growth. We've got to also make sure that we focus on the bottom line and as I said on previous question, we’re going to focus on that bottom line growth and make sure that these organic growth areas are producing before we just keep adding on top of them.

Got it. But I mean could you get back if you were to look, just two years back you were smaller company and you were doing 14% gross margins, I mean would you be open to being seeing those again as it realistic at some point over the next couple of years.

The market a couple years ago was different than it is today and some of the close-outs we had and all those we tried to disclose every quarter kind of those ups and downs within that and allow you guys to forecast for that. So, I wouldn't take it, I wouldn't model it that aggressive.

And we've always talked about in our modeling looking at those margins more on the longer term and as a mater not only taking out our - the unusual margin adjustments that we identify but the years of the 2013 and 2014 been anomalous to not to assume that we're going to be able to get back to that same level.

Got it. Rick, I think Bill has trained you well [indiscernible] before he left.

Well, thank you.

Thank you very much again. And congrats again to you and your team.

Thank you. And we have a follow up question from the line of Andy Wittman with Robert W Baird. Your line is now open.

Great, thanks. So the buyback, you said $20 million was left under the current authorization. Was that through '17 or 18 is my first question. Then I guess, also wanted to just kind of get posture towards using the buyback. You didn't use them in 4-Q and obviously in the 10-K you mentioned that you won't be as aggressive that seems pretty obvious. But I guess, specific questions would be, do you have plan to deploy the $20 million through a program, a 10b (5)1 type plan or do you expect to continue to go opportunistically in the marketplace? What's the realistic level of kind of average leverage you want to be? Is this trend continues, EBITDA is going to go higher, and that's going to allow you to take on more leverage. Just want to understand kind of your thought process behind utilization of the remaining portion of the buyback with those items as a backdrop.

I’ll start, and then I’m sure Rick will add. But when it comes to the start buyback business, something that we review every quarter with the Board and then each quarter addressing it, and you’re right when it comes to the $20 million, that is August of 2017. So, we continue to get assessed. Overall what’s our capital structure and where do we want to invest between our organic acquisition and the stock buyback clearly our goal is to increase our leverage last year in 2016 that we accomplished majority of that by July, and we really haven’t seen this buyback. Since then because of the program being less aggressive, and we’ll continue to reassess that using the example of spending the money to purchase companies like WPE. So the stock buyback in that period and will constantly reassess stock price where is that today is a lot different than it was in this time a year ago. So those will be like early assess at that point.

And if we can find the right opportunities for an acquisition or an organic growth area where we see long term potential, we will use that money towards that. It’s not that we are against doing that, but again all the time we are looking at acquisitions we've got them coming across our desk for the majority of them we end up turning them down because we are looking for that right cultural fit. We are looking for something that ties to the business we are in or that we understand. So as I said in the past, we are not going to get outside of what we know. It’s going to be construction related in some form and it’s going to have a culture similar to ours. So when those come along, like WPE or E.S. Bolous or High Country, we try to capitalize on those, but there’s a lot out there that come across our deck but doesn't quite have that cultural fit. So we end up passing them or the pricing is outside of what we feel is right.

Okay, great. And then just clarification on the $1.2 million on other income, I just want to make sure we understood this correctly. Did you say that that was - had to do with contingent consideration? Was that like a reversal of a potential earn-out or release of in liability?

Good question because it is something that's more accounting driven and that - maybe is easy to understand. That all relates to WPE the US$1.4 million and it relates to - as we were looking at WPE for many years and eventually went to the process of closing, we wanted to address a process to manage our risk, as well as giving the sellers upside on things that they might believe might come through. We think this margin guarantee is typical margin in our business. It kind of substance over form that $1.4 million, the way we would look at it would typically be up in margin but purchase accounting requires that to be as other income because of this consideration that the owners would pay us back for the margin guaranteed at that closing day. So you can look at it as two separate components or actually look at it together. It's below the line. So it’s not part of our segment operating income for the C&I business. So it really makes us hold not in the large pickup, it just makes it full.

Got it. So basically they didn't hit numbers that they whatever that you guys agreed on and the margin guarantee because they didn’t hit their numbers, they get loss and you guys certainly get more that's the way to look at this. And how much more contingent consideration - is this the only contingent consideration is in the form of a margin guarantee or is there some sort of like more former or traditional earn-outs that could be paid in couple of years now and how much capital is risk in that?

Well there is two components, I mean this margin guarantee it will end in 2017 and it is just subject to whether in suitable ways this could be increase where they are going to pay us more back for whatever - the jobs the performance, as well as obviously down based upon that performance. So when it comes to that - you referred to a earn-out contingent consideration the contract definitely provides for earn-out over several year period. So, that's separate from this that would be compensation expense in future years.

Okay. That's helpful. Thank you very much.

Thank you. And I'm showing no further questions at this time. I would now like to turn the call back to Rick Swartz, Chief Executive Officer for any closing remarks.

Thank you everyone for participating on today's call. As always, I’d like to thank you, thank our strong management team and employees for their hard work and our stockholders for the continued support. I don't have anything further. We look forward to working with you going forward and speaking to you again on the next conference call.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. And you may all disconnect. Everyone have a great day.