Greetings, and welcome to Orion Group Holdings, Inc First Quarter 2022 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during today's conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
I would now like to turn this conference over to your host, Mr. Francis Okoniewski, Vice President, Investor Relations. Thank you, sir. You may begin.
Thank you, Laura. Good morning, everyone, and welcome to Orion Group Holdings First Quarter 2022 Earnings Conference Call and Webcast. Joining me today are Austin Shanfelter, Orion Group Holdings Interim Chief Executive Officer, and Craig Owen, currently serving in the capacity of Chief Financial Officer Advisor. Regarding the format of the call, we've allocated about 10 minutes for prepared remarks, in which Austin and Craig will highlight our results and update our outlook. We will then open the call for questions.
During the course of this conference call, we will make projections and other forward-looking statements regarding, among other things, our end markets, revenues, gross profits, gross margin, EBITDA margin, backlog, projects in negotiation, and pending awards, as well as our estimates and assumptions regarding our future growth, administrative expenses, 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 our 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 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 website at www.oriongroupholdingsinc.com.
Also, for additional discussion of risk factors that could cause actual results to differ materially from our current expectations, please refer to our quarterly annual filings with the SEC, which are also available in the investors section of our website.
With that, I would like to turn the call over to Austin Shanfelter, Interim Chief Executive Officer. Austin?
Good morning, and thank you, Fran. First thing I'd like to do is thank all the Orion team members, business partners and clients for their leadership, commitment and support over the past few weeks. It's been quite busy around here. Our path forward is very clear. We must improve the quality of our backlog, enhance our operating margins, and improve our fleet and equipment utilization. As we take action to improve our execution, our management team will be operation-focused to meet or exceed project budgets. Our end markets are strong, and the opportunities to improve margins in both marine segment and concrete are very clear to me. We are well underway with our search process for our new CEO and CFO. This is proving to be a tremendous opportunity for us to hire seasoned, proven, successful leaders to join the Orion team.
I look forward to working directly with our management team to consistently improve performance. We believe there are opportunities in the second quarter to enhance results. Our team understands the need to enhance liquidity, improve margins, sales of properties, and cost reductions will impact that goal very soon. I look forward to our Q&A session.
I would now like to turn the call over to Craig to discuss our financial results in more detail. Craig?
Thank you, Austin, and thanks everyone for joining us. I'll now discuss the financial results for the first quarter in more detail. Revenues for the quarter were $175 million compared to $153 million in the first quarter of 2021, and $162 million in the fourth quarter. The increase compared to the first quarter of 2021 was primarily due to the start-up of large jobs that were awarded in the second half of 2021 in the marine business and increased cubic yard production on light commercial projects in the concrete business. First quarter gross profit was $12.8 million compared to $15.5 million in the prior year period.
The decrease was primarily driven by decreased project performance in the concrete business as a result of project conditions, reduced dredging volume in the current quarter, and a change in mix of work in the current period. First quarter gross profit was up almost 100% compared to the fourth quarter gross profit of $6.6 million. As a percentage of revenues, gross profit margin was 7.3% in the first quarter, down from 10.1% in the prior year period and up from 4.1% in the fourth quarter. Turning to the segments. In the first quarter, the marine segment had revenues of $84.5 million and an adjusted EBITDA of $7.3 million, equating to an adjusted EBITDA margin of 8.6%.
This compares to $72.1 million of revenue, adjusted EBITDA of $7.9 million, and an adjusted EBITDA margin of 10.9% in the prior year period. Marine results were up across the board compared to the fourth quarter of 2021 that had revenues of $73.1 million, adjusted EBITDA of $5.2 million, and adjusted EBITDA margin of 7.1%. The decrease in EBITDA and EBITDA margin compared to the first quarter of 2021 was driven by reduced dredging volume in the current quarter and a change in mix of the work in the current period. The concrete segment had first quarter revenues of $90.5 million, adjusted EBITDA of -$2 million, and adjusted EBITDA margin of -2.3%.
This compares to $81.2 million of revenue, adjusted EBITDA of $1.7 million, and adjusted EBITDA margin of 2.1% in the first quarter of 2021. Concrete results were also up across the board compared to the fourth quarter of 2021 that had revenues of $89.2 million, adjusted EBITDA of -$4.3 million, and adjusted EBITDA margin of -4.9%. The concrete segment's first quarter results as compared to the first quarter of 2021 were impacted by decreased project performance due to inefficiencies in executing work, partially offset by increased cubic yard production on commercial light projects. SG&A expenses in the first quarter were $16.2 million or 9.2% of revenues, compared to $14.6 million or 9.5% of revenues in the prior year period.
The increase in SG&A compared to the prior year was primarily due to additional consulting fees related to the management transition and additional property taxes, partially offset by reduced bonus expense. Net loss for the first quarter was $4.9 million or $0.16 diluted loss per share. Adjusted for non-recurring items and the tax impact from valuation allowances, adjusted net loss was $3.2 million or $0.10 loss per share. First quarter adjusted EBITDA was $5.2 million, representing an adjusted EBITDA margin of 3%. This compares to adjusted EBITDA of $9.5 million and adjusted EBITDA margin of 6.2% in the prior year period and adjusted EBITDA of $0.8 million and adjusted EBITDA margin of 0.5% in the fourth quarter.
Turning to bidding metrics, in the first quarter, the company bid on approximately $1.3 billion worth of opportunities and was successful on $189 million. This resulted in a win rate of 14% and a book-to-bill ratio of 1.08x for the quarter. At quarter-end, backlog was $604 million, up from $365 million at the end of the prior year period. Of quarter-end backlog, $317 million was in the marine segment and $287 million was in the concrete segment. Approximately 82% or $496 million of the quarter-end backlog will burn in the next 12 months, with the remainder associated with longer-term projects burning through 2023 and into 2024.
The company is apparently the successful bidder and has been awarded $112 million of new work subsequent to the end of the first quarter. Of this, approximately $30 million is related to marine, while $82 million is related to concrete. On our current guidance, as we stated earlier this month, we are reaffirming our expectation of full year adjusted EBITDA in the mid-$30 million area. As always, we will provide an update on this as we progress throughout the year. The company ended the quarter with $28.1 million of outstanding debt, $26.9 million of which was related to the revolver. At quarter end, the company had approximately $6.7 million of cash and $13.4 million of availability under its revolving credit facility. The company is in compliance with its credit agreement covenants.
With that, I'll turn the call back to Laura for Q&A.
At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys. One moment while I poll for questions. Our first question comes from the line of Joe Gomes with Noble Capital. You may proceed with your question.
Good morning, and thanks for taking the questions.
Good morning, Joe.
Austin, you've now been, you know, CEO for roughly, let's call it three weeks. Can you kind of give us your first impressions? You know, what more do you need to see and analyze before you kind of put together a longer-term game plan here?
Well, I think people who know me, I've already started putting my game plan together, and I've already started making some changes and dealing with some issues. You know, I'm an operationally focused type of individual, and so literally, I've had the opportunity to meet with all of our key partners that support the business and all of our key leaders the last two weeks. It's very clear, like I said in my opening comments, that we need to improve the quality of backlog. The good news on that subject is that, you know, in the concrete industry, the concrete business that we've been in, which is the one we've been having most of our trouble with on margins, is a business that the projects turn quite quickly.
I'm taking some action with that group to improve the process of what we bid things at, how much we bid, and how focused we are on certain opportunities. I think we can have instant impact on that that may even affect us during the second quarter. Just enhancing operational margins. We're gonna look at things a lot closer from our estimating perspective, the type of project we have, our client quality. We have some fantastic clients.
That we've had for many, many years that are very predictable and are awesome to work with, and our teams really understand their needs. We wanna really focus on those opportunities and grow those and expand those. Sometimes when you get into new business opportunities, new types of projects, those tend to be things that we underestimate, maybe the difficulty to roll into those projects. We're gonna put some real strong discipline into the types of things we bid and the types of customers we work for going forward. The last thing that I've been very active in already is the looking at the fleet utilization and equipment utilization.
One of the things that has hurt the company over the years is that, you know, we go through dredging where it's very strong, and then it drops off on us. We're gonna really work with our clients, with our customers and try to smooth out that, the opportunity in that kind of category. Short-term, I think we're gonna make some strong impact in the next literally 30 days, and we've already started it. Long-term, I'll have to get folks updated as soon as I can to what the long-term solutions are gonna be, going forward. I do think there's opportunities right away to make instant impact and to change some directions on some of the business that we have.
Great. That's good to hear. You somewhat touched on it. What does the bid environment look like today? Is it getting even more competitive out there? Or maybe you could just give us a little more color on how the bid environment looks.
Well, as I look at the bid environment, it's been really strong. There's a lot of opportunity out there. I just think that it's about a selection process. You know, it's sometimes people don't look at it in detail in the sense of, you know, you get a bid opportunity, you look at the bid opportunity, it looks like a nice job, but maybe you don't know the customer that well. Maybe you haven't worked with them in the past. Maybe we don't have a track record with them. I'm just gonna help the team really look at maybe a new way of looking at the opportunities and really focusing on opportunities that would be best for Orion, best for TAS.
I think that can enhance our ability to have more wins and have more predictable margins in the business going forward.
Okay, great. Maybe if I could sneak one more in, any update on the property sales?
Yes. We have two. Both properties are under agreement right now. What I will tell you is that I'm gonna be a little bit stronger on the situation of if they don't close in a very short period of time. I'm gonna look at other options. For example, the East West Jones property. You know, we're trying to sell it as is. If we were able to get a partner that needed that fill and started working in a process to get that fill removed from that property, at a very reasonable rate or maybe even for free, for them to get the fill for free, that property would maybe triple in value.
If we don't get some take on the deals that we currently have or we have any more delays with the current deals we have, I'm gonna look for options. I don't wanna sit on this any longer and wait for something good to happen. I think we can make something good happen.
Sounds great. Thanks for taking the questions. I'll get back in queue.
My pleasure.
Our next question comes from the line of Julio Romero with Sidoti. You may proceed with your question.
Hey, good morning. Thanks for taking my questions.
Good morning, Julio.
Austin, I'd love to get your thoughts on what you're looking for from a new CEO.
You know, I will tell you the biggest thing I'm looking for on both CEO and CFO. I'm really looking for seasoned professionals, folks that really understand operations. They really understand the financial world, and they bring together years of history that are proven track records. I think that, you know, this company has tried to bring people up through the structure of the business before. You know, nobody knew what COVID was gonna be. Nobody's been through a rough time. I mean, I sit here, I went through Y2K. I don't know if that's something you wanna brag about, but, you know, we've been through a lot.
I think that bringing in that seasoned type of professional will really enhance the company's ability to perform, to be more predictable. You're gonna see. I believe you'll see a very operational, a very predictable person be hired as a CFO or CEO. I really, you know, right now, Craig's doing a fantastic job as the interim CFO, and I think that we'll have some great candidates, maybe even including him, going forward on that position. You know, we're gonna get some good people here for sure, and I'm excited about that.
Okay, that's helpful. I guess, you know, if you could talk about the ISG strategy, what do you think maybe went wrong with ISG? Do you think it's the right strategy and maybe it just needs better execution? Then secondly, maybe any thoughts to maybe taking a fresh look at what target margins would be for both segments and what a timeframe would be to get there?
I think anytime you have the opportunity in which we did, was look at this business in a different way and have third parties come in and have you understand maybe where the exposures are and where the improvements can be. I don't think that's ever wasted time, right? You have to look at how much you spent to get what you got out of results. We definitely opened up some eyes and saw things that we have to improve on. You know, did it do everything we want it to do? No. There's no way it did that. It did open up our eyes to a lot of issues that we have to complete and keep working on.
Now, on the other side of that is, you know, this thing is if we bid correctly, we have the right people on the field, we have to bid correctly, then we have to perform to those bids. You know, I think that when I look at this company, I think it bats around, you know, 80%, on that process. You know, so when people talk about, for example, the concrete business, and they ask me, "Why are you in that? You're not making the money." Well, we're not making the money because we have issues in some of our work, and we just don't perform on some of our projects. So we've got to tighten that up. We've got to go be more aggressive on jobs that aren't meeting budgets and forecasts.
We've got to start looking at, are those the types of projects, are those the clients, are those the type of issues that we want to be looking at going forward? A lot more discipline in estimating and bidding. A lot more discipline on how we put teams into projects and new projects and things like that. I think we can make some changes to reduce any losses, any shortcomings in the business very quickly. That's my world. That's what I've been involved with my whole life, and it's near and dear to my heart. Expect change.
Okay. Very helpful. Thanks very much for the color.
Our next question comes from the line of Alex Rygiel with B. Riley. You may proceed with your question.
Good morning, Austin. A couple quick questions here. It kind of dovetails on your last answer, but concrete segment backlog $287 million. I mean, that's this all-time record high. That's fantastic. But obviously, margin profile is kind of lousy. I guess my question here is, I'm assuming you've spent a lot of time here really digging into that backlog number and getting comfortable with trying to turn that around. But can you kind of talk a little bit more about that?
Well, yes, Alex. Good. First of all, good to talk to you. The way I look at the whole concrete issue is that, look, we've bid what we bid, we've won what we've won. How do we go ahead and impact some of the tougher jobs, the tighter margin projects we've got? We're going to have to elevate the type of person we get in there so we can protect those margins. We have to move some crews around, move some management around, personnel around to really make sure that we really own those bids, those estimates, and those margins. At times, I don't think we've done that as well as we should have in the past. That's number one.
Number two is, those are all quick turn projects for the most part. You're looking at a division that probably 70% of our work we turn in between 60-90 days. Everything we're bidding for, we're going to have a lot more discipline in. There's a small period of focus on, let's say, a $100 million network, that we need to put teams on those projects that are truly capable, truly predictable of performance and try to improve our outcome of those. So we're meeting on those type of issues constantly. I'm talking to the management team there. We may bring in some people that I've worked with in the past to really help us, assist us in making sure that that's what we accomplish.
Excellent. Then turning over to the heavy civil marine segment. You know, backlog there at $317 isn't all that shabby over the last, you know, handful of years. Solid number. Can you talk a little bit about mix there? Because mix is a big driver to the margin profile of that business. Again, what I mean by mix there is how much exposure in that backlog do you have right now for future dredging projects, and how should we think about that coming through the P&L over the next couple of quarters?
Yeah. Great question. You know, at the end of the day, the division has done really well when dredging's hot in the market, and when it's down a little bit, it's a little tougher margins for us in the business. We're going to work with our clients a lot next few weeks. We're setting up meetings right now to start working with the corps and working with other groups about trying to smooth the flow of the work and flow of the opportunities. Which will really assist us in many, many ways as a business. I think we got to get candid about what the utilization is, how we can improve utilization and dredging. I hope to get that done in the next 30-45 days.
It'll let us look at the rest of the year very in a lot more functional way. The question is, do we have our equipment in the right locations for the right opportunities? You know, would it be better for us to move something into to another market that we're not utilizing here at the strong as strong as we possibly can and break into new areas? I'll be really diving into that. You know, what I do like about what's happening with marine is there's a lot more discipline in that group right now about what they're bidding, how they're doing the work. We're bringing in some quality people.
I'm excited about adding some quality backlog to that division because I think we can handle it now maybe better than we could have, you know, six, nine months ago or whatever. I want to really encourage the team to, you know, we're going to go out there looking for, you know, where we have to to bring good people back, to get people in. To my competitors, we're going to be starting to build this business and driving it forward with positive people.
One last question. You know, CapEx has been running a little high here over the last couple of quarters. Can you address that and sort of your views of CapEx spending throughout the remainder of 2022?
You know, I don't have that. You know, Alex, just to be really candid with you, it's not been an area of my focus in my first 20 days. It's something that I will look at very carefully, and we'll get some guidance out there to the whole, you know, to all of our shareholders and things as soon as possible. You know, we definitely know we got to look at that really hard and, you know, we'll get back to you soon.
Excellent. Thank you very much. Good luck.
Thank you, Alex.
Our next question comes from the line of Marco Rodriguez with Stonegate Capital Markets. You may proceed with your question.
Good morning, everybody. Thank you for taking my questions. I kind of wanted to follow up a little bit on some of the prior questioning, specific, I guess, towards the backlog, Austin, around the concrete. I heard you say that obviously you're looking to improve that, get better discipline, better bidding. Can you maybe talk a little bit about what you sort of found, over your review period, as to where maybe that segment kind of went, awry in terms of their bidding? I mean, I guess the ISG strategy was supposed to have implemented a little bit better of a disciplined, and I believe that the ERP was supposed to kind of help out with that as well. Can you maybe just talk a little bit about that?
You know, I'm gonna tell you what I think happened. You know, I have enough knowledge to be dangerous there. I think what happened is all this opportunity was coming in here very quickly through a lot of different clients. Our estimating team probably got overwhelmed. I think that maybe at the end of the day, in our process to supply the people to do the work got a little overwhelmed at a time when you still had the lag of COVID, so you still had the opportunities coming in, supply chains affecting you, COVID's hitting you, we're taking on more work at that time, and guess what happens? You don't perform at the level you're supposed to perform at. You miss things.
You think you have the right amount of people, now the project's got delays on it. Equipment's supposed to show up, now you got delays on it. I think it's kind of an interesting thing. We're in the middle of some tough environment. We are growing our backlog, the jobs are turning very quickly, and you can't react to them. Right now in that division, I'm gonna be more focused on quality of bid, not size of backlog. I want good projects. I want projects that we are fully aware that we can get them done, people that don't have supply chains issues as much.
Maybe that our margins are a little bit higher, that we tend to negotiate more than we tend to low bid on. You know, those are the things I'm gonna really focus on, those opportunities, take our best estimators, put them on the best jobs with the best operators, and looking for improved margins across the board.
Got it. Very helpful. Then on the marine side, in the backlog, obviously I heard your comments in terms of your focus on trying to improve utilization, helping with the mix in terms of getting some more dredging work, and having quality individuals in there to kind of help you with the bidding aspects. Just wondering if you can maybe talk a little bit about the backlog for marine. Is that margin profile where it should be? Did perhaps maybe some of the undisciplined nature, if you will, that impacted the concrete segment also kind of hit a little bit in the marine? Any color there?
Yeah. Well, I would look right at the first quarter. Historically, the first quarter's been a little tough quarter for marine over the last three-four years. If you look at that first quarter then and a little bit over the past compared to now, we had a really strong first quarter in marine. That tells me that the discipline's gotten in there and that it is affecting the ability for the division to perform. I look forward to that getting better quarter after quarter here this year. I think you got something you can really relate to when you look at maybe the past couple years, first quarter marine compared to now. I think things are kicking in.
I'm pretty excited about the backlog we have. I'm very positive about the backlog that we're looking at right now to lock in and to bid on.
Got it. Last quick question for me, kind of a housekeeping item. I believe you guys mentioned some write-downs in the concrete segment. I'm assuming those hit gross margin. Can you kind of quantify that?
You know, our numbers are the numbers we report. I don't. You want the second one.
I can get back to you.
Okay. We'll have to respond back on the details of that. You know, there's jobs that, you know, we just didn't perform at the level that we need to perform at all. They're in our numbers right now. I can't tell you exactly where they are. You know, I can't give you the details to the question you've asked at this point.
Got it. No worries. I've got it. Thank you guys for your time. I really--
I gotta get busy in my first 20 days.
Right. I understand. Thank you guys for your time. I really appreciate it.
Appreciate that, Rod.
Our next question comes to the line of Poe Fratt with Alliance Global Partners. You may proceed with your question.
Yeah, good morning. Austin, it seems like a little bit of a Groundhog Day here. You know, you came in in 2019. You know, you improved as a COO. The improvement was pretty apparent pretty quickly. Can you just talk about the environment now versus, you know, your tenure as COO three years ago? Maybe help us understand why the changes that you made or the turnaround that happened, it wasn't durable.
You know, I gotta say this, you know, I'm a 65-year-old guy that's been in this business for an awful long time. I'm an operator. I've always been an operator no matter where I've been, you know, done things with. I've seen things probably a little different, a little quicker than a lot of folks do, whether that's whatever. I've been in the field my whole life. I understand what's going on out there. I think I have an ability to impact people in the field and teams in the field very quickly. You know, maybe when I'm not there doing it every day, it changed some things, you know. I don't look for blame there. I just look for.
You know, it's a frustrating issue. You know, I believe we can make change here long term this time. I don't know what's gonna be the keys, but I'm driving to make sustainable change that lasts way past me making the change of CEO, going forward. I think by building here, once again, bringing in a seasoned professional to CFO position, bringing in a seasoned operational professional to CEO position, I think are gonna help us really grow the business. Really reach its potential and not have to look back to what happened, you know. We've got to drive things as we see them here today.
The fact that I'm gonna stay on after the new CEO's named for about another year, for the rest of the year, whatever it takes, as the executive chair, I think, tells the market, our investors that we're committed to having this next change be smooth, the next change to be accountable, the next change to be realistic of what to expect. We're not gonna let up until we get that right.
Great, that's helpful. Would you categorize the sort of, you know, the slipping back into the old ways as more of a people issue or a systems issue?
Well, here again, I would tell you that it's probably people issue. I mean, you can have the best IT platform in the world at your company, but if you don't have people out there doing the things they need to do in the field every single day in and day out, that don't have all that assistance of information every day, then you slip, you know. Here again, I think the point that I wanna make is you've got a lot of successful managers, a lot of successful estimators, a lot of successful projects that the company has performed on. The problem is it slipped on some, and when it slipped, it really slipped hard, and it really went backwards hard.
You know, this is not a total rebuild, a total fix. This is attacking the issues that we've had and attacking maybe a division or a, you know, a certain opportunities that we went over our skis on. This is about looking at certain areas and resolving them. One of the things I've talked to the whole team about is that if you have a project that's not in a positive mode, and it goes to negative, you'll be on my list, not just on your manager's list. I think we just have to raise that level of awareness and raise that level of focus that we're not gonna allow that to happen.
Okay. On East West Jones, can you just confirm that the, you know, the preliminary sales agreement for, you know, a sale in the mid-30s is still intact and, you know, on track to potentially close, you know, around the middle of the year?
Well, it's on track through the end of this month, I believe. They have until the end of this month to put hard money in. In a few days, we'll know that answer.
You seem to imply that with a little bit of improvement, whether you know talking about the fill, that that property might triple. You know, is that a, you know, can you give us sort of a timeframe on how much work and how much time it would take to get you know that property value over $100 million?
Well, let's say it would double. Just for discussion sake, let's say we could double the value of that property. You know, I don't know how fast we get that fill out of there, but that property's value is, and it was for us, it wouldn't be for anybody else, that would be the only place in Houston Ship Channel where you could instantly start dumping materials out of the Ship Channel right in that location again. It just drives the value up. If it's the only place, it would be the most convenient place, it takes the value up substantially. You know, it's just something that if we can't get this sold in a short period of time, I wanna look at other options.
I don't wanna be talking in about six months talking about, "Hey, we got a new offer," and, "Hey, we're still at the same number." You know, right now, we gotta get focused on running our business, making this happen. This is a liquidity event that would be awesome if we could get it done. It'd be fantastic for the firm. If it doesn't move quickly, I'm not gonna be patient. I'm not gonna wait for the next person in. Maybe the fact we start moving it out, moves somebody up on this food chain a little bit faster themselves. Maybe by getting that, material, removed, somebody else might look at it that way, and then the property becomes more attractive as well. I just don't want it to sit in the same form it is.
I wanna move forward with something positive, functional, that may cause something to happen that's really positive.
Great. You know, I know it's a lot smaller, but, you know, you sort of alluded to a sale that slipped pretty much consistently for the last several quarters. Can you just update us on Port Lavaca?
To be clear with you, it's a financing issue for the individuals that want the property. You know, they want it. They want it bad. They totally communicate with us constantly. It's just getting the money and to be able to close the opportunity.
Great. Thanks for your time.
You're quite welcome. Oops, sorry.
As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from the line of Daniel Albano with Albano Capital. You may proceed with your question.
Yeah. Hey, Austin, can you hear me?
Sure can, Daniel.
Yeah, great.
How do you like the quality of our call? We're speaking to you on a cell phone, so we have a little problem with our phone system today, so you can hear me clearly.
No, no worries. So two questions. One is, if I look at the concrete segment from 2018, it had a minus adjusted EBITDA margin of -1.5%, 19.3%, 22.1% , and 21-1.2% . It's clearly, in my opinion, has destroyed you know, a decent chunk of the value of the equity. Why would you not sell it? I mean, you've been even for a low price, say, book value. You know, four years into it, you know where the you see where the stock is at. I just honestly, I mean, if you look at the last four years, it's a bad business. Why would you not.
How do you justify keeping it given, you know, not one, not two, not three, but four years of pretty abysmal returns? I got a second part question. Thanks.
Okay. Well, you know, I wanna find the value in our business, and I'm gonna look at every single thing that you need to look at. I believe, knowing the team like I know them, I believe that we can impact that business in a way that it's positive and in a way that it's gonna drive value to the shareholders of this company. If you wanna ask me that question in two quarters, it could be a whole different answer. Right now, I would ask you to. I've done this before in my life. I'm in a different position right now to dictate decisions, to drive decisions, to drive process, to drive procedures, and this business can be fixed.
Once again, I'm gonna go back, and I'm gonna say to you're looking at the full results. What I have the benefit to do is look at the parts, and I'm telling you that there's a lot of this business is performing quite well. Now, that might go right into your argument and your discussion. If you have that, why are you still holding on to it? Well, if you were seeing that performance on, let's say, on 70% of the business, you may not feel the same way about what you're asking me, okay? I'm gonna work at getting that business heading in the right direction, getting the right people in it, so the entire business is performing. When we see those numbers, then I think we should make the decision.
I'm not gonna take a lot of time. I'm not gonna procrastinate. I don't have that button in my life. I have a sense of urgency. I'm gonna go through that process. I'm gonna trust my instincts, my ability to do what I think I can bring to this table, my team's ability to step up where they need to step up. I feel comfortable with the leadership there. They're good people. They're strong people. It's gonna take the few things that we need to do to make a couple changes and get that more discipline in the results.
Got it. Well said. I'll come back and ask it a couple of quarters and, yeah, on the concrete segment, hopefully we see, you know.
Please do. I'd like to-- Just follow up.
Yeah. I certainly would. I'm a big shareholder, so I got the vested interest here. Second question is on the East West Jones property. You know, what if, I mean, given you've got a market cap somewhere around $70 million today, you know, if you could go from, you know, in your words, you know, $30 million- $60 million in East West Jones, I mean, do you have the ability to go do that? I mean, you have a contractual commitment where you got to sell it for $30 million.
I mean, to me, you know, if I'm sitting with an asset I could double, you know, if I'm sitting over a company that's got a $70 million market cap, and I got an asset market cap go from $30 million- $60 million, you know, that seems like a no-brainer. Do you have the ability to get out of the $30 million contract and, you know, try to double your money, try to double the sales price on East West Jones or no? Or, you know, or you've got a contractual commitment. Thanks.
Yeah. What I'm clearly saying to you, Daniel, is that I'm not gonna sit on the snowball offers that are happening, a lot of conditions to close the property. I'm not gonna do that. I'm gonna call as many people in Houston as I can to see if I can find partners to possibly start taking that fill out of that property. I think the fact that if we start doing that, it could either may go through the full process to get it all the way done, or if we start doing it partially, somebody may look at this property a lot differently than they're looking at it today. You know, I just believe that sitting here waiting for an offer may not be the best idea.
Also, if I could sell that thing for maybe a little bit less than we have it on the market right now, and somebody can come in, close, and fund in a very short period of time, I'm not gonna ignore that either. You know, because I don't want to. The property is not what we do. However, the liquidity would make a big change in the company. I'm gonna be more aggressive on making a decision that I believe and the board believes will add value to this company, to the shareholders in a very short period of time. I can't tell you exactly what's gonna happen today, but I tell you it won't be taking me that long to make a decision.
Perfect. Just a close follow on, promise I'm done. The proceeds on the land sales, you know, given the, you know, the challenging, you know, margins in the business, you know, I would advocate for either, you know, unless, you know, it's just working capital you absolutely need, but it's working capital for, you know, particularly on the concrete side that is, you know, challenging returns, you know, either reduce debt or buy back shares. What are you gonna use to, you know--
Reduce debt.
Got it. That's all I had. Thanks for taking all my questions, Austin.
Thank you very much. Look forward to talking to you.
Ladies and gentlemen, we have reached the end of today's question and answer session. I would like to turn this call back over to Mr. Francis Okoniewski for closing remarks.
Thanks, Laura. Thanks everyone for joining our Q1 2022 Earnings Conference Call. We look forward to updating you on our Q2 results in July. Have a great day.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.