Okay, fantastic. We will get going with the next fireside with Orion Marine, ticker ORN. Very excited to have Travis Boone, President and CEO, and Alison Vasquez, Executive Vice President and CFO, here. Travis, Alison, thanks for doing this. Appreciate it.
Sure. Thanks for having us.
Productive couple of days of meetings here for sure. Again, I want to start off, just maybe given the visibility of the company to have Travis take a couple of minutes, talk about what you do, especially for those that are newer to the story, and then we can get to the specifics.
Sure. So we are a construction company. We have two segments. One is concrete and one is marine. Our concrete business, we get that people think when I say concrete that we're a ready-mix supplier or something like that. We are a buyer of ready-mix. We build buildings with concrete. So everything from 45-story towers to very large industrial warehouse, data centers, different things like that with concrete. And then our marine business is we do kind of everything marine construction, anything that's kind of construction over water, everything from bridges to working in our ports, wharves, bulkheads, pipelines. We have a lot of commercial divers. We do a lot of work for the Navy. So kind of anything and everything that's infrastructure on over or under the water.
Okay. And Travis, I mean, I've known the company a long time. You came in a few years ago, Alison, more recently. And I think this is kind of what's really interesting about the story. Maybe you could talk a little bit about what the first phase of what you've done has been all about.
Sure.
What does the second phase look like? What are we looking to going forward?
Yeah. So when I came into Orion, we had, I'll just say , there were a lot of things that needed attention. We spent the last three years really getting the company kind of turned around and on a different path, getting it healthy. And that has been a lot of work to get to the point where we are. It was really about kind of building a foundation so we could grow. We've got pretty extraordinary market opportunities in front of us in the marine business. And so we've been positioning the company so that we can now take off and turn toward growth. And that's where Alison comes in. And we're kind of heading into that phase of our story.
Okay.
Yeah. And I'll just add that the work that Travis and the team have done over the last several years just to really stabilize and solidify and mature the back office, as well as the front office, is really showing up in the numbers. If you look at the company's just track record, so Travis joined in 2022, late 2022. If you look at the LTM metrics, so the trailing 12-month metrics for revenue, for EBITDA, for EBITDA margin, over each of those quarters, starting in the third quarter of 2023, you'll see revenue growth, which is good. So the company is growing every single quarter. But more importantly, you see margin expansion in every single quarter on an LTM basis.
And that's just a demonstration of the discipline that Travis and the team have really infused into the system and just the investment in the tools and the people and professionalizing just front to back to office.
Okay. Actually, before we get into some of the markets, can you guys talk about your backgrounds prior to Orion and sort of where you were before?
Sure. I just joined a few months ago, so I'm getting ready to celebrate my three-month anniversary. I came from KBR, where I was there for almost 10 years. I did a number of different corporate roles. I worked with Brent pretty closely. I was head of IR and FP&A for about a five-year period that was quite transformational from a KBR perspective. I led audit. I was a business unit CFO in our LNG and our process technology business. And then most recently, I was Chief Accounting Officer before I came to join Travis at Orion.
So I've been here. This past Friday was my three-year anniversary of being at Orion. Before that, I worked for AECOM for 23 years. I started as an entry-level bridge engineer thinking I was going to be a technical guy and I did step back even before I started. My dad was a contractor, so I grew up in construction and decided to become an engineer thinking it would be a little more stable than the construction world because it is a little up and down at times. I went to be an engineer and very quickly started kind of moving into bigger roles and leading people, and kind of the groups kept getting bigger. I started with URS. It got acquired by AECOM in 2014, and during that time, I kind of started jumping big jumps in my roles.
When I left three years ago, I was leading most of the company in the Pacific. I think it was about a $4 billion business and about 8,000 people in 88 offices, so it was a pretty big organization. I actually ran into some of my former colleagues here recently at an event, and they were asking me if I was ever going to come back. Not a chance. I'm having way too much fun. I'm never looking back, so.
What was it to you, Travis? I mean, I think it's interesting. We've had the conversation, and both of you, actually. I mean, you came from big, stable organizations. Good tailwinds, arguably, to them. But what is it here?
Yeah. So I got the phone call to come to Orion. I didn't even know who Orion was. It was a small company that I hadn't had any experience working with. And they started looking at us, saw a $2 stock price, and I was not at all interested at first. And then kept after me. And I started thinking about all the things that the company I worked for was doing in the marine world, everything from engineering, planning, permitting, environmental work, and all this. And there was so much activity in kind of the marine world. I started thinking about the opportunity this could be if there's a company that needs some help. I kind of had become the turnaround guy at AECOM, with different pieces of business getting added on that I got turned in the right direction.
And so I wasn't necessarily afraid of the turnaround. And then on top of that, there was all this huge opportunity of marine construction that was going to be there. So I thought, if we can get this company turned around and then catch this huge wave that's coming, it could be really exciting. And so that's what we're doing. And it's been really gratifying so far that things have worked as I had hoped they would and we're on a really good path.
Good. Okay. Well, maybe just to get into some of the markets, you've been pretty active in port projects. Maybe talk about the pipeline of opportunities there. I mean, what do you see as the main drivers right now behind that?
Yeah. So we do a ton of work in the different ports around the country. Some of these ports we've worked in for 40 or 50 years. And we've long been a provider of critical infrastructure in these ports. And the thing is, a lot of these ports, they were built in the 1950s and 1960s, and they were built for much smaller ships. Panama Canal was expanded not that long ago. There's much bigger cargo ships coming through there. And so all these port facilities have capital projects that they're doing. They're planning. They're trying to get funding for permitting, all of that sort of thing. And so there's a lot of work happening in the ports across the country, especially on kind of the eastern half of the U.S. And there's a ton of opportunity there that some of it's funded by IIJA and other mechanisms.
But it's a pretty exciting time. And the great thing is, in our business, there's multiple different drivers of kind of the tailwinds that we have. It's everything from the ports to I'm sure we're going to talk about Navy in the Pacific. And there's all these different things, different colors of money that are coming together kind of all at one time in the industry that creates a really cool dynamic.
Anything, and I do want to talk about the federal stuff, but the tax legislation, I mean, any impacts that's going to have on your business indirectly?
Sure. I'll take that. From a tax perspective, from an Orion perspective, it won't have huge impacts on us directly. I think the bigger impact is going to be the indirect impact and the impact on our clients. And so just with the bonus depreciation that clients are going to be getting, that is locked in, that will continue, the interest deduction. So there is a much more rich interest deduction now that is allowed to the clients. And so as our clients are thinking about the economics behind their projects, there does continue to be some uncertainty on the tariff side that's getting, I think, much clearer. The incentives on the tax, specifically with depreciation and interest, really help balance out the economics.
From that perspective, we are seeing clients really moving much more closely on the private side, moving much more closely to making decisions on all those big LNG and petrochemical and energy facilities across the Gulf Coast, all of which have large marine components, all of which are things where we have the credentials. We've worked on those types of projects. Many of those projects are on our pipeline that we're actively pursuing.
Okay. Well, the federal side's been interesting. You've already been engaged in some stuff in Hawaii, obviously. Maybe you can talk about what is coming there, Travis. What can you see? I know these things are large, and the timing can be difficult to predict, but talk about those and then the political actions out there that sort of reinforce the opportunity. Be curious.
Yeah. So we've been working for the Navy for decades. We've done a lot of work for the Navy around in the Caribbean and around the U.S. We now, two and a half, almost, yeah, about two and a half years ago, won a very large project at Pearl Harbor, building a dry dock for nuclear subs with a couple of partners. And that's been a really big transformational project for us, the biggest project we've ever done, a $450 million contract for us. It's a $3.4 billion project overall. But it's the first of many major infrastructure projects in the Pacific, all related to China deterrence. And it's not a prepare for war with China; it's to prevent war with China, right?
As China has had increased aggression in the South China Sea, I think everybody's aware of kind of what's the tensions with Taiwan and what's going on there. China has made it very clear that everybody, I think, in the DoD world at least, knows that China has pretty aggressive plans in the Pacific. So the U.S. government said, "Okay, we've got to keep this from happening, and we're going to do it by having a very visible presence throughout the Pacific." So throughout all the islands, some of them, if you ever watched World War II movies and things like that, Wake Island, Kwajalein, Tinian, Yap, Midway, Guam, all these places out there, there are big infrastructure projects planned by the Navy. The idea is just to be very visible in the Pacific so that China stays back. It's not to take over these islands.
It's not to do anything aggressive. It's really just to say, "Okay, we're here, so you don't need to come here." And so these projects, obviously, with it being the Pacific, is a very large ocean. I don't know if any of you have ever flown to Guam, but it's a long, long ways over there. And there's a lot of islands out there that these projects are planned on. And so there's quite a bit of work. Quite a bit of it is marine work. Some of it's not, but there's a large volume of it. I mean, the Navy hasn't, I don't think, ever published a number, but it's well over $100 billion that's planned to be spent out there in the next 3-10 years, let's say. It's a large amount of work.
The types of things that you see potentially down pipeline, are these $100 million, $200 million, are they as big as Hawaii?
Yeah. I mean, there's some projects that are $1 billion-dollar projects. Some are $100 million. I would say they probably range from generally $100 million- $1 billion. There's some that are north of that and some that may be a little south of that, but they're large projects.
Okay, and then on the private side, hopefully, things unlock a little bit, but presumably LNG terminals. Is there anything else in there that we ought to be thinking about?
You know, we've seen and heard a ton of activity around LNG in the Gulf in the last six to nine months. I think the change in administration sort of opened up a lot of activity there that hadn't been there before, and so that's definitely a good opportunity for us, but I would say it even goes beyond that. It's just industrial. We've got multiple opportunities kind of there, industrial or petrochem or other type things that are not even outside of just LNG, but there seems to be a fair amount of interest in the kind of private sector, industrial world to get things built, a lot of it in the Gulf, some of it in Western Canada, other places like that, so it's a pretty exciting time there.
Okay. Well, one more on marine. It's been newsworthy, but there's obviously a desire to have a shipbuilding renaissance here, whether anyone believes it or not. Is it real? Your thoughts there.
Yeah, so I think it was "Restoring America's Maritime Dominance," the executive order that Trump signed, and I think it established some ways for not only really pushing kind of Navy and Coast Guard type shipyard work, but also for some of these private shipyards, tax incentives and low-interest loans and all kinds of things that were established there that really will help them get some things going. I do think it's real. I don't think it's immediate. I think it's going to take some time, not unlike IIJA. It takes some time to really take root, but I do think it's, again, another tailwind that we're excited about.
Yeah. Okay. Just on the concrete side, the data center activity you guys are involved in is obviously really interesting. I don't want to undersell some of the other things that you're doing there, but what's the status of sort of the non-data center market for you right now in concrete?
Yeah, it's decent. We've got some healthcare projects we're working on. We've got some manufacturing projects we're working on. And so we do a pretty broad range of things. We're building a catering building for United Airlines in Houston, kind of a variety of different things. We have built some multi-use kind of towers and things like that that have some residential. That seems like it's taken a break for a minute, but there's quite a few other things that are picking up the slack. We're also doing a wastewater treatment plant currently, and some other things like that. So I think some of the public sector work will be good to fill in a gap there with some of the residential-type things.
Yeah, and how have you been able to grow that data center side of the business so well into new geographies? What's been your strategy?
Yeah. So we were doing data centers before data centers were cool. So we've been doing them for probably 20 years or so. And most of those were in North Texas. A lot of people may not know, but North Texas was, for a long time, the number two data center market in the country. And we started building them quite a while ago. And so we kind of got established as a key provider for the concrete portion of data centers long ago. But it's been obviously ramped up pretty significantly in the last two years. And now that's our work in those because we've done so many so well in North Texas. We're doing a huge one in Iowa right now. We're doing another one in Phoenix. And so it's kind of spread.
We've got a pretty good amount of work currently and in the future in data centers. It's a great market for us.
Are these multiple sort of general contractor relationships that bring you in, or?
It is. The general contractor relationships are very key to these things. One of the two I just mentioned, Iowa and Phoenix, both happen to be with the same general contractor. And these guys, these data center projects are high-pressure projects. The owners expect a lot. It's quick, quick, quality, and less important is the price side, right? And so that's been a good spot where relationships do matter and our past performance matters a lot. And then things like our safety record. We have an extraordinary safety record, which is kind of unheard of in the concrete construction world. And that gets a lot of the owners' attention because the owners are involved in a lot of the decisions with data centers. In a lot of our work, they pick a GC and they just let the GC go and pick who they want to work on the projects.
But the owners are a little more involved when it comes to data centers because they want it to be done right the first time and that sort of thing. And we often have gotten the nod to be the provider for the concrete contractor because of our safety record, not because of our price, which is really a great thing to be a part of .
Do you have visibility beyond the backlog? I mean, you have some sense for what you could already be doing into 2026?
Yeah. So data centers, there's not a ton of visibility unless it's one of these big, highly publicized, multi-gazillion-dollar data centers that get talked about. A lot of them are super secret. They go in and secretly buy the land, and we're signing all these NDAs and everything is. So it's kind of they tee it up, and then they tell us about it, and it's go time quickly after that. So there's not a ton of visibility like there are in a lot of our other projects where you know it's coming for long in advance. So we know of certain ones that are, but there's not like a year like in our marine business. We know a project's going to be built three years from now. We have no idea on the data center side. It's pretty short visibility because of all the secrecy that's involved with them.
Okay.
Even on just the rest of the concrete business, it's somewhat like that. There's a lot less visibility when we look at the pipeline of what's in the pipeline. We can see out four or five years on marine, but for concrete, it really is you have a good view for the next 12 months. So at any given time, you know what you're going to be bidding on generally, but then every month, new opportunities will come in that just kind of fall out of the sky. But I would say that's for most of the concrete business. But for the data centers, absolutely, just in terms of just that more immediate, they are much more cloak and dagger in terms of when we actually see them. They're much more close to actually breaking ground of when we see the opportunities.
Yeah. The other thing I wanted to ask you, I mean, maybe even to sort of set the record straight, I think on the last call, you talked about competition with data centers. May or may not have been the reason stock saw some volatility beyond other things, right? Maybe just set the record straight for what you're really seeing. What's the impact? Is it having an effect on your margins?
I made a statement, something to the effect of we're seeing more competition in data centers as a matter-of-fact statement, and I think a lot got read into what I was saying, that it was a dire situation. We weren't going to be doing any more data center work or something like that. It's no secret. I mean, data centers are the cool thing, and everybody's trying to find a way in, whether it's somebody that does paint or does whatever. Everybody's trying to get a piece of data centers, and I was making a matter-of-fact statement. There's more competition. It doesn't mean that we're not going to keep doing the data center work. We are a key provider. We're going to keep being a key provider.
Again, we often get picked not because of our price, but because we know what we're doing, and we've done it a lot, so.
Yeah. Good. I had to ask.
Thanks. Thanks.
I mean, Travis, performance is key for that business. There's been some variability in the past. Maybe if you could talk to the group about what you've implemented there to secure good sort of bottom-line performance going forward.
Sure. You know, construction where a lot of cases it's low-bid environment. I've often said to people that you can win every single job if you want it bad enough, right? It's just cut the number and that was kind of the position that when I came in, we had sort of been in. We had a lot of our whole portfolio was full of projects that we had bid at really low margins. I mean, some of these things were bid at like 2% margins, and if you know anything about construction, that's crazy, and so one of the first things right out of the chute was implementing a minimum bid margin threshold on all of our projects, and that's been kind of that was a floor that we haven't crossed, and so we did that.
We also got really disciplined about what we were pursuing, not just pursuing everything that comes along, but let's get smart about it. It's kind of the whole work smarter, not harder approach. Let's find the projects we want to work on that we can make money on with the right partners, the right clients, and really focus on those and let the other stuff go. And so we try to get in front of pursuits, find out about them early, and really have a good plan for how we're going to win the job before it's time to go into the flurry of the bid activity. Know what we're going to do, have our plan together, and really be disciplined about all of that part of it. And that's made a huge difference in our business, in our backlog, in our ability to do better projects.
Okay.
And I think , importantly, it's also changed the mindset of our people because I think initially people were like, "Well, we're going out of business. We're never going to win work again." And I think people realized that they could bid at profitable margins where the company could still make money. They could go out. As long as we're disciplined about how we structure what we go after and the quality of the relationships and the quality of how we prioritize, we have a much higher P Win on those. And so if we pour our resources into those higher probability, good project, good profitability projects, it helps everyone. So people get to work on better projects, more stable, just more stability in the organization. And all of that just feeds back into kind of that enduring culture.
Good. Okay. A little bit on some of the financial objectives or aspirations you guys have talked about publicly for the two operating segments. Well, I guess if you could talk to those a little more specifically, where you see these businesses going, both from a sort of revenue or margin perspective.
Yeah. So from a revenue perspective, I would say that the baseline expectation is that both of the businesses should have good, healthy, organic growth. So good, healthy growth is probably anywhere between 8% and 12% on a normalized kind of annual basis. Now, with some of the market tailwinds that we have, from a long-term perspective, we do expect as some of these big opportunities are coming into the market, that we're going to see some years that should outpace that. But we have set and we've established an expectation that the business is expected to grow. Now, we have some big projects that are wrapping up, but the team's done a really good job of positioning well and winning new work and booking. We announced this week that we had some additional bookings that were interesting just in terms of distribution and balance across the portfolio.
But it's just kind of motivating the team on just that growth mindset. And then it comes down to the margins. And then what are the expectations around the margins? From a long-term perspective, we expect our marine business to continue to have good, healthy, double-digit margins. So from a contribution perspective, and that's where they are now. They may span anywhere from 11% to 13% or 14% on a contribution perspective. So that's without all the corporate overhead loaded on it. On the concrete side, I would say that the contribution margins that the concrete business is producing today are mid-single digits, so probably 4%, 5%, 6% in that range. We said it was 5.5% in the second quarter.
We expect that they will be in that range, but over time, over the next probably two, three, four years, we expect that they will be able to get to that upper single-digit margin. So, from a concrete perspective, because it is low capital intensity, it's a business that can scale up and down with the market. I think kind of an upper single-digit EBITDA margin is a fair margin for that. There's a higher level of capital intensity associated with our marine business, but that is absolutely paid back in the higher profitability that we can win on those projects.
Okay. To get Marine to a billion-dollar business, I mean, there's a lot of specialized equipment, things like that involved here. Is that going to require some investments to get you there?
Yeah. So , on the marine business, it's kind of important to point out. So in U.S. waters, all the vessels that work in U.S. waters, Jones Act is a big thing for us, right? So they have to be U.S. vessels, U.S. crews, U.S. companies that are doing the work, which keeps out foreign competition. It's a really good thing for us. But it also means that vessels are more expensive than the Dutch can get or the Chinese can get or whatever. So there is a pretty big capital outlay when you're growing. It does cost some money to build these vessels or buy these vessels, and as well as the kind of maintenance and upkeep on them. But as far as the growth goes, there's definitely. We will need to continue to buy this marine equipment to be able to go with the growth.
Generally speaking, a lot of the equipment we need is. It's not hard to get. It's barges. It's a big crane sitting on a barge and things like that. In some cases, it's more specialized equipment that either takes a long time or is very, very expensive to get. Whether it's a derrick barge or a dredge or something like that, those things are not as easy to come by. And you either got to build them or you got to buy them, so.
Okay, but today, at the revenue threshold you're at, you don't feel capacity constrained. You can push harder.
Definitely.
Okay. Maybe just on that front, your capital allocation priorities going forward, what does potential M&A look like if that's something you're looking at?
Yeah. We talk about our inorganic growth side of things. When we're a company that's built by acquisition, but we haven't done one in, I don't know, probably 10 years. It's been a while since we've bought any companies. But it is part of what we're looking at. We've looked at some that we've passed on and continue to look for the right opportunity to pick up. We're looking for the way kind of the way I talk about it is we're looking to fill gaps. Is it a capability gap, a geographic gap, or is it people and equipment that we need? And so we're looking for those, typically tuck-ins, obviously on the marine side. And it's a fairly fragmented business. There's a few big players and a lot of smaller regional players. So things like culture are important, and other things.
So we're looking for the right type of company when it comes to that we think we can integrate successfully. And three years from now, we're really happy we made the acquisition, so.
Yeah. Appetite for leverage. And I guess the second part of that would be, do your customers or subsets of your customers scrutinize your balance sheet?
Not really. So I mean, because most of our, on the government side or on the marine side, especially the public projects we have, they require bonding. And so most of our projects are bonded on that side of the business. So that means that essentially our clients have outsourced the scrutiny of our balance sheet to someone else. But I would say from a leverage perspective, right now we're sitting just over a turn of leverage on a net perspective. And as a corporation, I think we would feel comfortable just based on the stability of the earnings profile that we've put together over the last several years, probably going to two, maybe above two to the extent that we can have a very high probability near-term path back to two. But I think two times is probably comfortable.
That would be a good place for us.
Okay. Okay. Any questions?
The property? Yeah. Thanks for asking, by the way.
What keeps it from being sold?
Fear. So just he's asking. We have a piece of property that we've owned for quite some time. It was a property that's been used for over 100 years as a dredge spoil disposal area. So it's basically two kind of mountains of dirt that have been dredged out of the Houston Ship Channel for the last 100-plus years. And it reached capacity like nine years ago. And the company explored different ways to do something with it and chose to sell it. So it was on the market before I got here. It's been kind of a real thorn that we've had to deal with. And the reality, I mean, it's a property that if we, if it were cleaned off, and if you guys know anything about the Houston Ship Channel, it's very dense industrial development.
This is 341 acres right in the middle of the most dense part of the Houston Ship Channel.
On the water.
Right. Right on the rest of it, right on the Ship Channel. It's got rail access. It's got everything that any developer would want. We've been told it's worth, if it were cleaned off, it didn't have the dirt on it, it would be like a $150 million piece of property. As it sits right now, the last time we were under contract was for $30 million, and it's fallen through a few times in the last few years, kind of during the due diligence phase for different reasons, but it's been a pain. Just, I think there's, and when I answered, the quick answer was fear. I think it's two big piles of dirt that somebody has to deal with, and they have no idea what they're getting into and that sort of thing, but we're continuing to market it. We've been active with it.
And I think there's some, we're hoping to get it done here before too long, so.
Sounds like it might be worth cleaning off.
Definitely. Definitely.
I guess I'm getting at government becomes a bigger mix of those tailwinds and margins, that bring margins.
I think there's two sides of that. I would say the first piece of it is just the fact that there are so many tailwinds in the marine construction industry. And when I talked about kind of the limited pool of competition, generally speaking, with all the work that's coming, the margins are naturally going to go up because it's a simple supply and demand scenario, right? So you got that dynamic. And then on top of that, I would say, or more specifically to your question, I would say probably the work in the Pacific is with the Navy. That's probably a little higher margin sort of work because not everybody wants to work in far-flung places of the Pacific. And it's higher risk type work and that sort of thing. So that typically generates a higher margin.
So I guess that would probably be my. I don't know.
Yeah. I would say, I would only say in addition that because there are so few players that are at scale in marine construction, it really does limit. So as we see this big bow wave of opportunities that are coming over the horizon, everyone's dance cards are going to get full, including our own, which means that it's going to naturally act as a price escalator. So I do think that just because there's a limited amount of supply capacity on the construction side, that over time, like over the next five, 10 years, that there will be a natural just escalation of because of all of those things that Travis talked about in terms of the barriers to actually becoming a marine contractor, in addition to the fact that it is quite technical and they're not the easiest types of projects to execute.
And so it takes a really special expertise.
Maybe just as you take on these really large projects, I think you said you're partnering with two others on that $150 million project. Is that like JV?
Yeah, kind of. We're subbed to the JV, but.
Right. Okay. So how do you just mitigate the risk? It's fixed price work. It's really large. It's really far away. We see projects close all the time.
Yeah. So whether it's that project or others, we take a really disciplined approach when we bid projects. And at the end of the day, even though it's big and it is complex type work, at the end of the day, we're not building a process plant or something like that where there's a lot of unknowns over a long period of time. At the end of the day, we're working with very large tinker toys, right? It's large piles. It's concrete. It's rebar, very easily quantifiable materials. And so we don't have a situation where we've got huge overruns of materials or things like that. There's price escalations at times when we do things to mitigate that risk. But generally speaking, it's very simple parts and pieces we're working with. So it's not hard to quantify what we're doing.
The part that maybe the hardest part to quantify is production. Like, how long is it going to take to drive a 210-foot-long, 85-inch-diameter steel pile into some crazy bedrock that's down there in Hawaii, right? So there's things like that that we have to. And then, so then we also, on top of having estimated the project with the materials and productions, there's also on every project, we put together a risk register. What are all the things that could go wrong on this project? And we build a contingency pool with that based on the probability of each of those items happening. We have a contingency pool. And that goes in. I mean, that's part of our bid numbers is including contingency. And so if some of those things happen, then we've got that to pull from.
And if it doesn't happen, then we put it to the bottom line. And then we do things like with our materials. We always do everything we can to limit any risk of escalation. So we either build an escalation into there for material prices going up. And we also lock down prices. As soon as we get awarded a project, we lock the prices down on everything we can with our suppliers. And then they have the risk of material escalation and that sort of thing at that point.