Orion Group Holdings, Inc. (ORN) Q1 2018 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. And welcome to the Q1 2018 Orion Group Holdings Inc Earnings Conference Call. At this time, all participants are in listen-only mode. Later we’ll conduct a question-and-answer session and instructions will follow at that time [Operator Instructions]. As a reminder, this conference maybe recorded. I would now like to turn the conference over to your host Mr. Shane Martin. Sir, you may begin.

Thank you, Valerie. Good morning everyone. And welcome to Orion Group Holdings' first quarter 2018 earnings conference call and webcast. Joining me today are Mark Stauffer, Orion Group Holdings' President and Chief Executive Officer and Chris DeAlmeida, our Executive Vice President and Chief Financial Officer. Regarding the format of the call, we have allocated about 15 minutes for prepared remarks, in which Mark and Chris will highlight our results and update our market 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, projections 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 rules of the Securities and Exchange Commission, including Regulation G. Please refer to the reconciliations and definitions, inclusive of the most comparable GAAP measures and reconciliation tables accompanying this earnings call, within the press release issued this morning. The press release can be found on our Web site 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 on the Investors section of our Web site. And with that, I would like to turn the call over to Mark Stauffer, President and Chief Executive Officer. Mark?

Thank you, Shane. And thanks for joining us this morning. I'd like to first thank our 2,500 coworkers for all their hard work, dedication and commitment to our Company. It’s through our combined efforts we strive every day to safely meet our customers’ needs, while working towards our strategic objectives. I'm pleased with our start to 2018. During the first quarter, we had solid execution with continued strong market drivers. While weather patterns impacted production in our Concrete segment, our Marine segment experienced solid execution. Additionally, we continue to see strong end market drivers across our business, and we continue to expect 2018 will see improvements over 2017. As we go forward, we will continue to execute on our strategy of seeking to be the premier specialty construction company focused on providing solutions to our customers across the infrastructure, industrial and building sectors, while building our market share and enhancing our operations in these areas. We will continue to look for opportunities in these areas through both greenfield and M&A efforts. As we previously discussed, we made several changes within our Marine segment during 2017 to solidify and improve our operational results, while continuing to provide high-quality services to our customers. As we saw the in fourth quarter of 2017 and the first quarter of 2018, these changes are helping to produce improved operational performance and leading to solid bottom line improvement. We have been and continue to be committed to our Marine segment and providing quality services to meet our customers’ unique needs. Within our Concrete segment, we will continue to focus on expanding our services and market share in our Central Texas Dallas-Fort Worth market, while focusing on maintaining market share in Houston. We believe there continues to be solid demand drivers for Concrete segment, and expect to see continued long-term expansion and growth opportunities. Finally, I’m pleased with our efforts today in the industrial. While leveraging our skill set and customer base, we are expanding our addressable market to provide high-quality services to meet more of our customers’ needs. We are pleased with progress in this sector and expect to see further opportunities throughout 2018. As we’ve stated before, we will continue to work to deploy new capital to high return high free cash flow businesses with a focus on increasing our return on invested capital. We expect to continue to see solid demand drivers across the infrastructure, industrial and building sectors. Additionally, with the favorable macro economic conditions we see, we believe conditions exist for improved bid pricing. And we remain hopeful that markets will recognize the prevailing positive conditions and adjust accordingly. The infrastructure sector, which consists of our Marine segment, continues to provide both public and private opportunities to maintain and expand facilities on U.S. waterways. Throughout our operating areas, market fundamentals remain positive and we are seeing pockets of margin expansion. Private sector bid opportunities continue from downstream energy customers as they expand their waterside facilities associated with refining and storage. In addition, recreational demand continues from private and public customers with bid opportunities related to cruise lines remaining promising, as we track projects related to new destinations or refurbishment of existing destinations in the grid. Finally, we continue to see demand from port authorities, which are generating opportunities as they execute their expansion plans to handle larger vessels and increase traffic flow. The underlying fundamentals of our Marine business remain sound with solid demand drivers, bid opportunities and a good backlog. We will continue to provide to be a leading and premier marine construction company. Turning to the building sector, which consists of our Concrete segment. We continue to have solid long-term demand drivers as well. The markets we currently serve continue to retain their positions as leading centers for population growth and business expansion. Population growth throughout our markets continues to drive new distribution centers, offers expansion, reseller and grocery facilities, multifamily housing units, educational facilities and medical facilities. In Houston, we continue to experience a competitive environment, but we are focused on providing high quality services and maintaining market share. We are also focused on expanding our market share and service offerings in the Dallas-Fort Worth market in the Central Texas market, both of which we expect to continue to provide long-term opportunity. In all markets, we will continue our pursuit of structural projects in addition to live commercial work. In the industrial sector, we are continuing our greenfield expansion by combining talent and resources from the Marine and Concrete segments to continue to pursue and execute foundation work inside the industrial environment and other land-based environments. We are beginning to execute work in this sector and are pursuing additional opportunities to build backlog. The massive long-term petrochemical driven opportunities along the Gulf Coast provide significant potential to expand our addressable project opportunity. In closing, we had a strong first quarter and a nice start to our year as we continue to focus our efforts on solid execution of work to produce solid bottom-line results. The combination of strong fundamentals, improving efficiencies in our business and opportunities for targeted acquisitions, we believe we are extremely well-positioned to take advantage of improved economic conditions and increased infrastructure spending. We are also focused on maintaining and enhancing the improvements we've made in Marine segment, seeking profitable growth opportunities in the Dallas-Fort Worth and Central Texas markets in our Concrete segments and continuing to expand our addressable market by pursuing bid opportunities in the industrial sector. We remain focused on delivering high quality projects to our customers with continued expansion of our services across our operating segments and areas. We are excited about the future as we continue to execute our strategic plan and believe we have solid fundamentals for future success. Now, I would like to turn the call over to Chris to review the financial results in more detail. Chris?

Thank you, Mark and thanks for joining us. For the first quarter 2018, we reported net income of $4.1 million or $0.14 diluted earnings per share. These results compare to a net loss of $1.8 million or $0.07 loss per diluted share in the same period a year ago. During the first quarter of 2018, we settled on an operational legal matter that impacted our ability to win certain projects in 2017. This settlement helps recoup certain loss revenues and expenses incurred to settle the matter. Excluding the one-time other gain, results for the first quarter 2018 would have been net income of $98,000 or approximately breakeven diluted earnings per share. Contract revenues for the first quarter 2018 were $136.8 million, of which 46% came from our Marine segment and 54% came from our Concrete segment. Within the Marine segment, 47% of first quarter 2018 revenue was generated from federal, state and local government agencies, while 53% was generated from the private sector. This compares to 63% of first quarter 2017 revenues being generated from federal, state and local government agencies and $37% from the private sector In the Concrete segment, more than 75% of first quarter 2018 revenue is generated from the private sector as compared to 90% in the prior year. As we move forward, we expect to continue to see a higher mix of private sector revenues driven by the contracts we are pursuing and the overall mix of our concrete and industrial business. First quarter 2018 gross profit was $15.8 million or a gross margin of 11.6%, which compares to first quarter 2017 gross profit of $13 million or gross margin of 9.4%. SG&A expense for the first quarter 2018 was $15 million or 11% of contract revenues, which is flat compared to the prior year. SG&A expense for the first quarter 2018 was slightly better than anticipated due to lower bonus accrual expense and other costs saving. As we move forward, we expect leverage from our SG&A expense and we expect this expense as a percent of revenue to decline. For the full year 2018, we expect SG&A as a percent of revenue to be around 11%. Beyond 2018, we expect to continue to see leverage from SG&A below the 11% mark. First quarter 2018 EBITDA was $13.8 million or 10.1% EBITDA margin. This compares to first quarter 2017 EBITDA of $6 million or 4.4% EBITDA margin. For the first quarter 2018, we bid on $747 million worth opportunities and were successful on $132 million, which resulted in an 18% win rate for the quarter and a book to bill ratio of just under one time. As of March 31, 2018, we had backlog of $355 million, of which $182 million was related to the Marine segment while $173 million was related to the Concrete segment. Moreover, we are the apparent low bidder or we've been awarded subsequent to the end of the first quarter, an additional $33 million worth of opportunities. Of that, $26 million is related to the Marine segment while $7 million is related to concrete segment. In total, this means we currently have $388 million of projects between backlog and low bid. Now turning to the balance sheet. As of March 31, 2018, we had $9 million of cash on hand and access to $44 million under our revolving line of credit. We ended the quarter with approximately $80 million in total debt outstanding, of which $5 million was related to the revolver and approximately $75 million was related to the term loan. As we go forward, we will continue to focus on paying down debt with excess free cash flows. We believe our liquidity position is more than adequate for general business requirements and for servicing our debt going forward. Additionally, we are in compliance with our financial covenants, including being below the 3 times leverage ratio required at the end of the first quarter. Finally, our bonding program remains solid and is more than adequate to support our bid activities. As we look ahead, we are pleased with the level of opportunities we have in front of us across our business sectors. Our backlog and low bid activity remains strong and we are optimistic given the healthy bid opportunities we’ve been seeing over the past several month. Currently, we have $886 million worth of total bids outstanding, of which $338 million are related to the Marine segment and $548 million are related to the Concrete segment. As Mark mentioned, we’re pleased with our start to 2018. While weather patterns affected our concrete segment, our Marine segment performed well with solid execution. As we continue throughout the year, we will focus on maintaining improvements in our Marine business, while seeking growth opportunities in our Concrete segment. Additionally, we will continue to focus on developing our industrial services both on and off the water. In closing, we are excited about the future and look forward to seeing continued improvement in 2018. With that, I'll turn the call back over to the operator to begin the Q&A portion of the call.

Thank you [Operator Instructions]. Our first question comes from Matt Duncan of Stephens Inc. Your line is open.

This is Will on the call for Matt today. Can you touch on the other gain again and explain what that was. Seems like a big tailwind. It’s probably non-recurring in nature. So just want to better understand what’s flowing through there?

It is non-recurring. But as Chris said in his remarks, it’s a settlement of an operational legal matter related to data loss and market data that impacted our ability to win certain projects last year. So it’s a recovery, a favorable recovery in that matter. It helps us recoup certain loss revenues and then also the expenses we incurred to pursue that matter. So we’re very pleased with that. However, even without that, we think we had a nice quarter, nice start to the year, very pleased with where we are with respect to 2018.

I think that the SG&A expense line was better than we and others had expected. So what were the drivers behind that expense leverage this quarter? And what should we expect, I guess from a quarterly basis? Chris, you alluded to 11% for the year. But just as we go through the year, what are you expecting?

So again, the better performance this quarter was driven by bonus accruals expense, which is directly related to overall performance, which can fluctuate clearly on the performance of the company. And we do have some additional cost savings along the way. As I said, I expect it to be around 11% for the full year and I expect that to be fairly even between the quarters for the remainder of the year.

And switching over to backlog turning lower in the past three quarters, trying to figure out -- our competitors gain share on work there and margins below your return threshold. And when do you start to think that book to bill will move above that one-time work?

Well again there’s normal ebb and flow of the running cycles and bids. As we’ve talked about for couple of calls, we have, on the Concrete side, seeing some margin or excuse me some competitive pressure in Houston that’s impacted our win rate, some on the concrete side. But again, overall, we like the opportunities we see in front of us. We are focused on maintaining market share in Houston and adapting short-term, and we think that the short-term issue in Houston again we’re bullish on all of the markets in concrete long-term in Houston as well. Last year in 2016, we had a large project come in at the tail end of ’16, that was within backlog, did not burn much in the front half of the year last year. So that’s also -- we've got that a tough comp there on that. But where we are with backlog and the opportunities we see in front of us is we’ve got $880 some million dollars of bids outstanding, almost $0.5 billion of that on the concrete side. If we look back historically of where we are with bids outstanding, I mean we’re very pleased with that. So as we look at all of our data points, backlog, bids outstanding, upcoming bid opportunities, we like where we are. And again, are pleased with start to the year and think that we’ve got the markets in front of us to achieve our objectives this year.

And last thing from me on guidance. Is it too early to give a revenue outlook at this point? And given the strong profit start that we’ve seen, what are your EBITDA expectations. Are we still looking for the high 30s to low 40s, excluding the gain or how should we be thinking about that?

We don't do revenue guidance, so I’ll stay clear to that. I’ll let you come up with that one. On the EBITDA side, yes, we feel comfortable with the upper 30s to low 40s and that was through the one-time gain, the one-time other gain we had in Q1.

Thank you. Our next question comes from Ben Klieve of NOBLE Capital Markets. Your line is now open.

One follow up question to the legal settlement here, I am wondering if we can elaborate a bit on how this impacted your 2017 operations. And then with the some are now concluding, how will this impact 2018 operation? Is there anything that we can -- I'm trying to understand how to compare 2017 to 2018, given that this event transpired?

Fair question and it’s not a difficult one to answer. We definitely think it impacted opportunities that we would have otherwise had in 2017. How much of that -- it's possible some of that impact would have occurred in 2017, some of it would have occurred in 2018, obviously. As you know as the book work in or you pursue opportunities, there is a time delay between when you obtain work and execute work. Again, I’m not going to try to quantify what impact it had last year. Definitely, I think it had -- would have had impact this year. And again, we’re very pleased with that settlement. And I think that is likely shown as an operational item, because that's where it impacted it.

And a couple of other questions; one, curious about the status of hurricane related work on two fronts. One, with the passage of the budget, do you expect any bid or proposal activity to come to light in a meaningful ways here over the next couple of quarters? And second, how have commercial opportunities come to market over the past few months?

Well again, as I think the opportunities related to the hurricanes from last year are playing out according to the playing book, we did have opportunities late last year, particularly survey work and some dredging work that occurred late last year Q4. We are hopeful that we’ll continue to see opportunities moving forward. There's little bit of a longer tail for infrastructure work, which is what we anticipate. We are tracking opportunities related to that. We have seen further modifications to some of our Corps of Engineers projects that will start burning as we go through the year. So we’re pleased about that, and some of that is directly related to the hurricane activity from last year on. Again, we are expecting to see, as you said, with some of the funding approved for the balance of the fiscal year, we are expecting additional opportunities to come out with respect to the Corps of Engineers work in particular that will provide additional opportunities for us, and we’re pleased about that. But again, I think it’s playing out about as expected. We typically will see survey and dredging work initially in the shorter term, which we’re seeing. And then we'll see more of the infrastructure longer term fixes throughout the next couple of years. But frankly, it’ll be additive to other opportunities that we would normally be pursuing and bidding on.

Another question with regards to the industrial segment. With that segment in its infancy but now a couple of quarters -- a few quarters here. I am wondering to what degree you are investing in either physical assets or business development efforts that would have any impact on, any negative impact on margins given that work is being done just on a couple of awards at this point. Is there any drag on margins from that segment? Or is it still nominal at this point that it’s just not anything we should consider?

It’s the latter. It’s nominal, so I don’t think -- it’s not a drag. We’re being very careful about standing this up in a way such that it does -- it is not a drag. We are adding folks as we add business. And so -- and again it’s not particularly capital-intensive business that we’re pursuing -- and/or it’s utilizing assets that we otherwise already have in each of our existing segment. So some of this work that we pursue -- are opportunities that will involve; again the skill set of the existing segments; so again, not a drag at all; and again, we’re being very careful about how we stand that out to make sure that it’s additives and not a distraction.

And then one final question for me, and I will get back in queue here. I am curious in the marine segment. If you can point to any of the larger port deepening awards coming in the market here in the next few quarters that you think are uniquely attracted to you given your geographies and asset base? Thank you.

Well, I think a lot of -- as we’ve said, this is the long term play out I made comments in my remarks today. The port authorities are executing on their plans in multiple phases over several years. There has been a lot of work ongoing already the last few years, which we participated in. We continue to expect to see that, and it varies from port-to-port. There are some East Coast ports that have significant deepening projects underway. We expect to continue to monitor all the opportunities that those provide along with all the other opportunities that we see from other end market drivers, and pursue those that make the most sense. So we view it as a positive. Regardless of whether or not we pursue and win any particular project or not, we view it as a positive thing for our business. And so we continue to see those opportunities. And again, we think those are going to stretch out over the next several years. And just to further specifically answer, there's nothing in particular that I would say today is, hey this is one we really want to get. We’re tracking stuff. We’re bidding on stuff. It’s providing opportunities along with all the other opportunities we see from our other end market drivers.

Thank you. Our next question comes from Jon Tanwanteng of CJS Securities. Your line is open.

It’s Pete Lucas from Jon. Just on the concrete business, you mentioned overall paying down debt is a priority, but also looking for growth in the Dallas-Fort Worth area. So fair to say still looking at acquisitions in those areas, or are you guys happy with where you are and looking to grow organically there?

Yes, happy with where we are, looking to go organically. We’ve got a great team in all of our areas, a great team up the Dallas-Fort Worth market. And believe that we can achieve our objectives organically, obviously, never say never, if the right opportunity presents itself, of course we would take a hard look at it. But we think we can achieve our objectives organically.

And staying with the concrete business, any color you can give us on what the growth rate would look like without the [indiscernible]?

Keep in mind, Q1 is our seasonally weaker quarter across company, and affects both segments. We would have expected probably a little bit more margin expansion than we had. If you look at -- think of fourth quarter into first quarter, fourth quarter was impacted by -- again, weather, however, $74 million revenue in that period $3.1 million of operating income. If you look at Q1, we did a similar $74 million of revenue, and about $0.8 million of operating income. So that is impacted by both weather and some of those market depression that we saw. Overall, I would expect it probably to be 5% to 10% better have we had some of the weather.

Thank you. Our next question comes from Marco Rodriguez of Stonegate Capital. Your line is open.

I had a really quick follow-up question on the concrete side of the business. You mentioned that obviously sequentially, normally you have a bit of a down quarter here, especially on the concrete side. Just wondering how much revenues you saw from TBC in the quarter?

We don’t split that out any further.

So no organic growth figures that you can provide or anything of that nature…

Not really, I mean, because we don’t split that out specifically. Obviously, you’ve got a historical stuff from TBC when we took it over. But again, I think going back to Chris's prior answer, clearly on the year-over-year comparisons, we have the addition of South Texas to the business but that was offset by the things Chris was talking about, particularly the weather patterns. And I want to be very -- I talked about this on the last call. But just a tough quarter in terms the timing of front coming through, the pretty massive temperature swings that we would see week-in week-out, we had a couple of freezes, hard freezes within South Texas, are a big event for us down here. And then just the pattern of every couple of days having some rainy weather come through and then being good for a couple of days, and then coming back the rainy weather, just tough continuity for the full production in the quarter. But again, I go back to what Chris said in prior answer that factors into it. And again, certainly, the addition of Central Texas has been positive, but again offset by some of those challenges we faced in the quarter. We are starting to see weather improves, we’re hopeful that that pattern is behind us now, and we can get to more and more concrete.

And then in the second half of ’17 on the concrete side at least and on that segment, there was quite some impact on the revenue side from hurricane related activity, delaying projects or what have you. Was there any of that revenue being caught up into Q1, or are you pass that?

Well, I think with respect to the Concrete segment, I think again to your point right there is exactly that is that. That didn’t necessarily create any new opportunities for us on the concrete side, but what it did was it just pushed everything rightwards. So obviously, in Q3 last year, we had the massive-massive impacts in Texas on -- particularly from hurricane Harvey. And then of course we went into the winter months where we’ve had this difficult weather pattern, different impacts. And then Harvey was just the total shutdown thing, and shut the jobs down for a period of time, both in terms of just securing our personnel and their families from the effect but also getting job sites dry down and being able to move around the city again to start pouring work and stuff like that. So again, just the tough weather patterns for the last few months, coming out of that, coming into the winter months, just a difficult weather pattern in the winter months, as I just talked about. So again basically shifted work rightward. Having, said all that though, again, we like the opportunities we see in front of us. Again, we’re pursuing both structural work and live commercial work. We’ve got a lot of bids outstanding, as Chris mentioned in his remarks. And we’re focused on winning that work and getting out and executing it.

And one thing I’d point out Marco is really for the entire business -- both segments, there was not a massive catch up of work in Q2. So the results that we saw in the first quarter were driven by normal operations, but not necessarily a big catch up.

And last quick question, just on the industrial side, the projects that you’re out there bidding on. I am wondering maybe if you could talk a little bit the market itself. What you learned thus far from the bid markets? What might have been a little bit different than what you’re expecting? And maybe talk a little bit about how perhaps your expectations might be shifting?

Again, we spent a lot of time last year in 2017, really laying the ground work for this. We spent a lot of time on the business development side. Again, leveraging our existing customer relations and just really looking at projects that we would have already been pursuing, but just really only on the Marine portion of that work, the waterfront portion of that work. So we did learn some from some our bids submitted last year. We came closed on a couple of things that we didn't quite get there on, but they were great learning experiences that we’ve fine-tuned our bidding process there with respect to this type of work. So that’s what we -- to your point about the learning experience, we learned with some of the bids we did last year. But now we feel like we've got a lot of momentum with us in that area. We continue to track work, bid on work. And again, a lot of this is for customers that we already have as existing customers. And some of these things that we’re pursuing as well, there's a Marine components to it that we're pursuing. But then there’s also the more industrial off the water opportunity with it. So we like where we are. We’re starting and execute on work that to pay off from some of the stuff we did last year. And so we're pleased with where we are.

Thank you. Our next question comes from Min Cho of B. Riley. Your line is open.

Congratulations on the quarter, just couple of our random questions here. First of all, can you talk about Marine asset utilization currently?

In Q1, it was down from where we would've liked it to be. I think some of the core work that we were hoping to get modifications on from related to hurricane work, there’s a little bit of a delay. We did some of that work in Q4. Some of it was delayed in getting modifications done to some contracts. So we didn't quite get as much utilization as we were hopeful for in Q1. I think just the results we have that we’re very pleased with in spite of that point. We had good utilization with -- around some of the other Marine asset. But now we’ve won some work in the last quarter and we’ve gotten some of these modifications done to core projects. So we do anticipate as we go throughout the next couple of quarters there’ll be some uptick in some of those asset utilizations. But overall, we are pleased with quarter but there were some assets that we would liked just been a little more utilization in Q1.

Also, was there any positive impact in the quarter from the emergency dredging work that you saw in the fourth quarter following the hurricane?

Well, in the fourth quarter, yes, we did execute on some of the fourth quarter. We did have a higher utilization in the fourth quarter with some of those assets. There was a break, not a little bit of a break. There was a big break in Q1 where we really didn't execute on any of that in the quarter. But as we were getting some mods done and the core was also letting other projects out, so that normal and letting activity that occurs at the tail end of the year and then gets strengthened up at the beginning of year. So again, we expect to see a little bit of a benefit from that on the utilization front, going forward, in the next couple of quarters but not much of that happened in Q1.

And then Mark you talked about M&A opportunities driving growth going forward. Obviously, you don’t really need that on the Marine side. And it sounds like -- on most of your Texas business, you’re pretty okay on concrete. Where are you looking for M&A opportunities? Are you looking for new geographies for concrete or just on the industrial side, if you can just talk a little bit about that M&A?

Well, to be clear on the model March was both greenfield and M&A. So going back to my prior answer on the concrete side of things is we don’t think we -- right not currently, we’ve got a lot of growth opportunities in front of us just on an organic basis. So we’re not necessarily targeting any M&A activity there. Clearly, we want to be -- as always, we’ll be opportunistic if the right opportunity presents itself. But I think where I could see M&A potentially occurring with the -- in the industrial space, to your point, I think on the Marine side, on the Concrete side. While it’s a possibility, it’s not necessarily something that’s a necessity to drive our strategy. On the industrial side, it’s not necessarily a necessity to drive our strategy either, but it certainly is something that we’ve got a keener eye out for as a potential to help boost our growth in the industrial space. So again, we intend to be selective, opportunistic, we’re not going to do something just do something, because we think we have a plan in place now to achieve our strategy. But we definitely -- I think that to the extent we see something and again, I’ll say this, there’s nothing -- there's no news to report today on this front. But to the extent, I think something that makes a lot of sense to execute our strategy on where that might occur, would more than likely be in the industrial space.

And then just finally, the last couple of quarters, you've been talking about increased competition on the Concrete side in Houston, and your expectations to maintain share. I mean are you -- I mean if you could just weigh maintaining a share versus market opportunity in Houston. Why it is so important that you continue to maintain share if you see competition continuing to increase there?

Well, a couple of points; is one, because we think this is a short-term problem; and two is, it’s very much a relationship driven business. As a reminder in the Concrete business, we’re working through the general -- we’re subcontractor to the general. We want to be certain that we’re able to maintain those relationships, provide good quality service to them. We’ve got the geographic footprint in Houston to meet their needs across the market and it’s just very important I think that we continue to maintain those relationships, and provide the service to those guys. Again, we think this is a shorter-term issue. As I’ve said in my remarks, and this is not the comment related just to Concrete, it’s related across-the-board of our businesses. We believe the economic conditions are positive there is positive macro drivers. We believe that the market should recognize these positive indicators, and we react accordingly. And sometimes, we scratch our head at some of what our competitors doing with respect to pricing. But clearly long-term, we think Houston, as well as the other markets we serve is in fact on Concrete side, are going to be areas for growth, going to continue to provide us good opportunity for us. And so we view any of this competitive pressure as temporary.

Thank you. I am showing no further questions at this time. I’d like to turn the conference back over to Shane Martin for any closing remarks.

Everyone, thank you for joining us on the call this morning, and we look forward to seeing everyone on the next call.