Greetings, and welcome to the Construction Partners first quarter earnings conference call. At this time, all participants are in a listen-only mode. A brief question- and- answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Black, Investor Relations for Construction Partners. Thank you, sir. You may begin.
Thank you, operator. Good morning, everyone. We appreciate you joining us for the Construction Partners conference call to review first quarter fiscal 2020 results. This call is also being webcast and can be accessed through the audio link on the events and presentations page of the investor relations section of constructionpartners.net. Information recorded on this call speaks only as of today, February 7, 2020. Please be advised that any time-sensitive information may no longer be accurate as of the date of any replay. I also would like to remind you that the statements made in today's discussion that are not historical facts, including statements of expectations or future events or future financial performance, are considered forward-looking statements made pursuant to the safe harbors provision of the Private Securities Litigation Reform Act of 1995.
We will be making forward-looking statements as part of today's call that, by their nature, are uncertain and outside of the company's control. Actual results may differ materially. Please refer to the earnings press release that was issued this morning for our full disclosure on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Management will also refer to non-GAAP measures, including Adjusted EBITDA. Reconciliations to the nearest GAAP measures can be found at the end of our earnings press release. Construction Partners assumes no obligation to publicly update or revise any forward-looking statements. Now I would like to turn the call over to Construction Partners President and CEO, Mr. Charles Owens. Charles?
Thank you, Rick, and good morning, everyone. With me on the call today are Ned Fleming, our Executive Chairman, and Alan Palmer, our Chief Financial Officer. I will start today by providing an update on our first quarter, and I will then turn the call over to Ned for a few additional comments. Finally, Alan will review our financial results before we take your questions. We are pleased with our performance in the first quarter that produced double-digit year-over-year growth in revenue, gross profit and Adjusted EBITDA. This growth was driven both by improved performance in our existing markets and by recent strategic acquisitions in Florida and Alabama. The first half of our fiscal year historically produces approximately 40% of our annual revenue based on the seasonality of our business, and these first quarter results are in line with our expectations.
We continue to see sustained demand across our 33 distinct markets for road repair and maintenance work. We also see sustained competition. In this business, we are competing every day for work. Our team is focused on reducing costs and maximizing efficiencies throughout our organization and construction project work to achieve profitable growth. It is important to point out that the flexibility of our model provides opportunities to pursue projects that will allow us to enhance the utilization of our workforce and equipment. We continue to pursue projects, both public and private, that all possess the best opportunity to grow profitability. Another key aspect of our business is our geographic diversity. Operating across 33 separate markets in multiple states, we have exposure to different local economic environments on the private side.
On the public side, we have five different state DOTs and a large number of other public entities that we can work with throughout these markets. This diversity allows us to bid on both public and private projects to maximize our vertically integrated business model. Turning to our recent acquisitions, we have fully integrated the acquisition we made in October, which is a hot mix asphalt plant and a paving company in a high growth area of the Florida East Coast. We have now successfully completed five acquisitions since our IPO in May 2018 and a total of 20 acquisitions since founding the business in 2001. We are pleased with the performance of the operations we acquired in Florida and Alabama. We continue to see growth opportunities in those markets. In Florida, in particular, where we now have a broader footprint in the eastern side of the state.
We expect these markets to benefit from the close proximity and enhanced vertical integration with our diverse equipment fleet and workforce capable of performing a broad range of services. We believe they are meaningful opportunities to add scale, drive growth, and provide value for our customers. As we progress through fiscal 2020, we will continue to consistently execute the strategy of controlled profitable growth utilizing three primary levers. By doing more work in our current market, by making strategic acquisitions, and by expanding through greenfield opportunities.
We continue to have active conversations with potential acquisition candidates. We also remain patient with acquisition opportunities and evaluate prospects that best fit our strategy. Before turning the call over to Ned, I would like to thank our senior management team for their leadership, and I would also like to thank our more than 2,200 employees for their dedication and hard work that enable us to execute our strategy. I turn the call over to Ned Fleming, our Executive Chairman, for a few additional comments. Ned?
Thank you, Charles, and good morning to everyone. The team delivered an excellent first quarter. As Charles and Alan have expressed many times, this is a seasonal business that ramps up throughout the year and expands from both a top line and a profitability standpoint during the second half of the year. As we evaluate our first quarter results and look at the opportunities to come throughout the year, with a combination of projected company growth and a number of potential acquisition candidates in markets of interest to us, we are truly excited about our future. Quite simply, the positive supply and demand dynamics of our business have remained pretty much the same since we started CPI in 2001. Roads are deteriorating and local, state, and federal government funds are being used to repair them.
In fact, I might argue that those dynamics are even better today because the deteriorating road conditions across the country have not improved, and in most places have worsened. More and more states are taking ownership by implementing gas taxes to help maintain and improve roadways in their states, which is exactly what has happened in all the states we operate in. As Charles mentioned, we have a flexible model enabling the team to work on private or public projects across the 33 unique mini-economies in which we compete. Some of our markets are experiencing good economic growth right now, others have less growth, and others might be down or slightly flat. However, our broad geographic diversity brings stability and consistency to the company.
Also, we have the flexibility to move equipment and crews and the ability to do different size and all type projects, which further differentiates us from many of our competitors. Over the last 20 years, our business model has shown resilience and consistency in different economic and competitive environments. The team is committed to continually improving business processes to grow revenues and margins. The opportunities today to utilize technology, integrate more efficient processes, benefit from a more flexible organization to drive efficiency are terrific. As the entire CPI teams continue to execute at a high level led by seasoned and experienced operators across the organization, we plan to continue to deliver strong results consistent with our strategy for achieving controlled, profitable growth. Throughout the year, we plan to continue to tell our story to investors, which we believe provides a very compelling investment thesis.
The team continues to work hard to enhance financial results, cash generation, and maximize value for our shareholders as well as all the stakeholders. With that, I'd like to turn the call over to our CFO, Alan Palmer. Alan?
Thank you, Ned, and good morning, everyone. I want to start by quickly highlighting our key performance metrics in the first quarter. From a financial standpoint, as Charles mentioned, year-over-year growth in the first quarter was driven by improved performance in our existing markets and by recent strategic acquisitions in Florida and Alabama. Revenue for the quarter increased to $175.3 million, up $21 million over the same quarter last year. Organic revenue growth was approximately $7.9 million, and acquisitive revenue growth was approximately $13.1 million attributable to acquisitions completed subsequent to the quarter ended December 31st, 2018. Gross profit increased to $23.8 million, up approximately $2.6 million over the same period last year, primarily due to higher revenue and a higher margin. Net income was $5.5 million, up from $5.2 million compared to the same quarter last year.
Earnings per share were $0.11 compared to $0.10 per share last year. Note that interest expense declined approximately $235,000 compared to the same quarter last year due to a decrease in the average interest rate as a result of amending our credit agreement in June 2019. Our effective tax rate was 19.5% compared to 24.3% for the same period last year. The lower effective tax rate was due to a discrete tax reduction of $363,000 in the quarter related to an amended state income tax return. We expect our effective tax rate for the remainder of the fiscal year to be approximately 25.2%. Adjusted EBITDA increased approximately $2.5 million to $17.2 million, resulting in an Adjusted EBITDA margin of 9.8% compared to 9.5% in the first quarter last year.
The higher Adjusted EBITDA was a combination of a higher gross profit and depreciation, depletion, and amortization, partially offset by an increase in general and administrative expenses. General and administrative expenses were $17.1 million in the first quarter of 2020 compared to last year of $14.4 million. The $2.7 million increase was primarily the result of a $1.4 million increase in management personnel payroll and benefits, a $797,000 increase attributable to acquisitions completed subsequent to December 31st, 2018, and a $395,000 increase in stock compensation expense. Turning now to the balance sheet. At December 31st, 2019, we had $49.4 million of cash and $13.6 million of availability under our $30 million revolving credit facility after deducting outstanding letters of credit. Our debt to trailing 12 months EBITDA ratio was less than one time at 0.730. We have a very strong balance sheet to support our growth opportunities.
Cash provided by operating activities was $1.5 million for the three months ended December 31st, 2019, compared to $1.2 million for the three months ended December 31st, 2018. CapEx in the first quarter of fiscal 2020 was $23.6 million. Excluding approximately $11.5 million to purchase certain equipment that was previously subject to operating leases, our CapEx was $12.1 million in the first quarter compared to $7.4 million in the same quarter last year. For fiscal 2020, we expect our capital expenditures to be in the range of $44 million-$47 million, excluding the $11.5 million purchase of equipment that was previously subject to operating leases. Project backlog at December 31st, 2019 was $539.1 million compared to $531.6 million at September 30th, 2019 and $572 million at December 31st, 2018.
Of our current $539 million in backlog, approximately 75% or $403 million is expected to be completed during the remainder of our fiscal year. We maintain a construction backlog composed primarily of recurring maintenance related projects of the type that we prefer, a nd we continue to see opportunities to bid on these projects in our markets. Keep in mind that we focus on our backlog in 33 distinct markets, meaning we want to have 6-9 months of backlog in our markets. As these market specific backlogs are aggregated for our company-wide backlog, while the overall amount can fluctuate quarter-over-quarter based on several large projects either being added or completed, we focus on the overall health of backlog in terms of the next 12 months in each specific market. We also maintain a disciplined approach to strategically focus on recurring repair and maintenance projects.
Historically, our backlog builds during our second and third quarters as more of these projects are typically let in February through May. We are maintaining our full year outlook for fiscal 2020 based on our historical experience of generating approximately 40% of our revenue in the first half of the fiscal year and approximately 60% during the second half. Our fiscal year 2020 outlook with regard to revenue, net income, and Adjusted EBITDA are as follows. Revenue of $830 million-$870 million compared to $783.2 million in fiscal year 2019. Net income of $39 million-$44 million compared to $43.1 million in fiscal year 2019. Adjusted EBITDA of $94 million-$102 million compared to $92.3 million in fiscal year 2019. In summary, we are pleased with our first quarter results, and we continue to see positive market trends and project demand in fiscal 2020.
With that, we'll now take questions. Operator?
Thank you. We will now be conducting the question- and- answer session. If you would like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please ask one question and one follow-up, and then re-queue for additional questions. Our first question comes from the line of Michael Feniger with Bank of America Merrill Lynch. Please proceed. We will move on to our next question, which comes from the line of Adam Thalhimer with Thompson Davis. Please proceed with your question.
Hey, good morning, guys. Nice quarter.
Good morning. Thank you.
Can you give us a little more color on, you said you like to have six to nine months of backlog in your specific markets. Can you give us a little more color on how you guys view the current level of backlog?
Considering the time of year, we're pleased with it. We do expect with the projects that we've got available coming up in the next few months and what we've already seen as far as our bid results in January for that to build like it typically would going into the end of the second quarter, and then there will not be as much build in the third and fourth because we do so much of our revenue. We see a lot of good opportunities out in front of us in many of our markets to be able to build that backlog some more.
Okay. Curious on the seasonality of EBITDA. Last couple of years, EBITDA has declined from December to March before it picked up in the back half. Would you expect a similar trend this year?
Yes. Generally, our volume in our second quarter, which is January through March, is the lowest volume of the year. A lot of the fixed costs that we incur in January, especially in repairs of plants and equipment in the slowdown, they impact that margin. Our job margins are fairly consistent throughout the year, the plants and equipment counts are the ones where we have a lot of fixed costs that will incur in that quarter with a lot lower revenue. That's usually our lowest gross profit quarter.
Okay. Thank you.
Thank you.
Thank you. Our next question is from Michael Feniger with Bank of America Merrill Lynch. Please proceed with your question. Mr. Feniger, your line is live.
Yep. Can you hear me?
Yes.
Yep. Sorry, guys.
Good morning.
Yeah. Good morning. Sorry about that. I apologize for that. I'm sorry if I'm making you guys repeat your question here. Maybe we could just touch on the SG&A. I think it was pretty high as a percentage of sales. I know there's a seasonal impact with the lower revenue. Maybe you just touched on this with the question prior, but is there anything we should be aware of with costs from new acquisitions or something that was running a little bit higher in the first quarter, and how that might trend through the rest of the year?
In the first quarter, we had about $800,000 of G&A that was related to acquisitions that we didn't have in the same quarter last year. Quarter-over-quarter this year to last year, that was part of it. We also had about $400,000 of non-cash equity related to the directors last year chose to take their directors' compensation in stock instead of cash, and so that was a non-cash that we did not have in the same quarter last year. The other was just primarily increase in staff that we've added in the administrative level. We also have some expenses in our first quarter that occur in that quarter for safety awards and other type of employee costs that generally they're paid in December, prior to the end of our first quarter. They kind of bump up that first quarter.
That amount should trend down in the second, third, and fourth quarter, absent any additional acquisitions. The run rate for overhead in this first quarter should be the highest for the year.
Okay. That's very helpful. Then, I'm just curious, like, the FAST Act authorization, I think, expires in September this year. Look, I think you guys have been in this industry for a long time. You've seen this before. I'm just curious if you could flag to us how we should see the markets evolving, how DOT budgets kind of evolve as we approach September, if any changes at all?
Hey, this is Charles. We really don't see any major impact at all. It's just kind of almost become standard for these things to expire, and then they get funded through CRs. We really don't anticipate any slowdown. We still got a lot of tailwind in our back with a lot of the states that gas taxes have kicked in, and they continue to kick in. Obviously, we don't have anything in our model based on anything new. We just think it's going to be business as usual. Yeah, the State of the Union address and then the rebuttal by the Democratic Party, and I think their first comment was about infrastructure bills. There's certainly a consensus across all the political spectrum to get something done, and we're hopeful that that might get done before the FAST Act expires.
As Charles said, if it doesn't, continuing resolutions are a normal part of it, and the DOTs have gotten very accustomed to that in the last 10 years.
That makes sense. If I could just squeeze one on the private side. I know we're talking a lot about the public side. Are you guys observing anything in your districts on the private side that suggests alarm? There's been some concerns on the non-res construction side in some areas and some states. I'm just curious if you guys are observing any of that in your book of business.
On the private side, we're still seeing a lot of commercial, we're still seeing a little bit of residential, that's kind of been normal, that's a business that we don't chase too hard is the ones related strictly to the residential developments, because a little bit of their seasonality. In the markets that we're in, we're still seeing a very strong economy. We're still seeing a lot of work being let and so forth. The markets that we're in, we're very positive that it's going to be a continuation for the next several months.
Fair enough.
Thank you. We'll move on to our next question, which comes from Andy Wittmann with Robert W. Baird. Please proceed.
Great. Thanks. Good morning, guys. I guess my first question is probably here for Alan, and just wanted to talk about the CapEx number. You guys called out last quarter very clearly that you'd have this kind of operating lease buyout. Alan, I was hoping you could just give all the investors here a little bit of a flavor of the types of things that were involved in those leases. If you could, it would be very helpful for you to quantify the amount of lease expense or rent expense on those operating leases that was previously expensed that's now going to turn into depreciation on a go-forward basis.
Okay. The amount that we bought out in October was $11.5 million was the fair market value of those leases. From a depreciation standpoint, that would equate to approximately $2 million a year. I don't have an exact lease expense amount, but it probably would be $2.5 million I would say. I can get that exact number because we did our analysis of whether to buy it out. That was, for us, that was figured into our 2020 budget because we knew we were going to do those because those leases were going to go on our books one way or the other, as a capital asset. We also, when you look at the balance sheet, you'll see that we booked about another $8.5 million worth of the value of operating lease assets because we became subject to the new lease standards October 1st.
To the first part of the question, all of that would have been equipment related that we bought out. Those would've been operating leases for bulldozers, rollers, trucks. There were a good number of dump trucks that we had leased, some other heavy equipment. That's the type of things that we had on operating leases. We still have some of that, we have a number of locations that we lease property that our asphalt plants are sitting on, whether it be in a quarry or just outside of a quarry. That is the majority of what is in that operating right-of-use asset. There's some additional yellow iron, not a lot.
That's helpful. Thank you for that. Just another aspect here of the cash flow here. As I calculated here, the DSO there up a decent number of days sequentially. I was just wondering if you could kind of give some of the mechanics behind that. Certainly the fact that you did an acquisition in the quarter, you don't get all the revenue in that quarter from that acquisition, but you do book all the receivables. I have to imagine that's part of it.
Right
I don't know if you could help just understand what's going on here, because last quarter, there was a lot of discussion about how there were some state DOTs that were paying you kind of slow, and you thought that you'd catch up on that. I just thought it'd be helpful for everyone to hear a little bit about the status of some of those receivables that you talked about last quarter and have it relate back here to the DSO calculation.
Yeah. We do expect for the delays from the DOT to have less impact as we go through the year. Unfortunately, the first quarter, December specifically, there are a lot of holidays and while our accounts payable people weren't taking off, we kept paying our bills. A lot of the customers took advantage of the holidays and said they'd pay us in January. From a past due standpoint, which is really what we look at, we are still in good shape there. We have very few write-offs of receivables, and certainly not on the public side. The delay in collecting some of them, it's still real, but it should not increase.
We do feel like we can get back a little bit more on track in the second quarter because we won't have the holidays where they take off for the last week or two, which is when we often get paid from the DOTs.
Okay. That's helpful. Then I guess just my last question here has to do with the comment from the prepared remarks. You kind of mentioned that as you see continued state growth, but there's also sustained competition. Charles, I was wondering if you could just expand upon that a little bit. Is the competition pricing any differently or going about their business any differently? Are you referring to anything specifically that you saw here during the quarter or new entrants, things of that? I just thought maybe kind of expanding upon that commentary on the competition would be helpful.
From a competitive standpoint, obviously, this business is a very competitive business, and it's always been. As far as anything that we see any different that we normally haven't seen, we're not seeing anything. I guess the point I brought out was that every job we get that is normally on a competitive basis, and that's one reason that we have to work so hard to improve our efficiencies and really understand our markets so we can maximize our profitability.
Okay. Good. I'll leave it there. Thank you very much.
Thank you.
Thank you. Our next question is from Trey Grooms with Stephens. Please proceed.
Hi, this is actually Noah Merkousko on for Trey.
Hey. Good morning.
Morning. My first question, it looked like the Adjusted EBITDA margin was up about 30 basis points, but it came in a little bit lower than we were expecting. Is this in line with your expectations, and maybe was there anything in the quarter that pressured the margins more than you had originally thought?
It was very much in line with our expectations as far as what we expected. Our jobs performed at a very good level in the quarter. We had enough volume going through the plants and the equipment that they were in line. Actually, the plants were slightly better, and the equipment just slightly more cost than we had. Overall, those were in line. We were pleased with our external sales that contribute to that and the performance of the liquid asphalt terminal. We were actually at the gross profit line. We were a little bit higher than what we anticipated on that revenue. I've talked a little bit about the G&A. That was a little bit higher than what our expectation was.
Again, part of that's due to those costs that come in in that fourth quarter that when we're budgeting, they're more equal throughout the year. Then we had about almost $700,000, $800,000, I think it was, of acquisition cost in the quarter. The overall margin was just maybe 10 basis points above what we expected.
Okay. That's helpful. Just to follow up on that, your guide implies an EBITDA margin of 11.5%. How should we think about that ramping up? Last year, I think the back half saw that margin 4%-5% higher. Would that be a good assumption to use for this year?
Yeah, that should be pretty much in line. The second quarter historically is going to be the lowest margin if we followed the typical, and then that third and fourth quarter is when it's generally going to be 4% or 5% higher, and then you average out to that 11% because you're going to do about 60% of your work in that quarter. It's not only going to be a higher margin, but it's going to be on that higher revenue. We still feel good about our full-year guidance. Of course, when we finish our second quarter, we generally give an update on our annual guidance at that time, of course, at that time, we'll know what that second quarter looks like.
All right. Thanks. That's helpful, and I'll leave it there.
Thank you, Noah.
Thank you. Our next question comes from Josh Wilson with Raymond James. Please proceed.
Thanks, and good morning.
Good morning.
First, last quarter you talked about the mix of project letting maybe being a little biased towards mega projects. Can you talk about how that's evolved and what you see that looking like going forward? Is that normalizing as you had previously thought?
Yeah. When we talked about it last quarter, I think we were talking really more about as it related to the backlog and having not built that up some and as much in the third and fourth quarter. A lot of that was happening in, I'd say, the January through August, September period last year, we didn't see a lot of mega projects out in the future. That's still the case. We're not seeing a lot of those large projects out there that eat up a lot of it. We are seeing a return more to the more repair and maintenance type projects. There's still some time before that's going to happen real strongly in North Carolina.
That was one where they spent a lot on the mega projects in the early part of 2019 and kind of got a little bit behind with their budget. We've been able to stay busy in our markets by shifting a little bit more to cities and counties and private work. Those don't generally give you a big backlog boost because those are generally smaller contracts than DOTs, but they keep you very busy. The outlook we see in the next 9-12 months as far as projects to bid, I don't think we're seeing a single mega project in the outlook of DOT projects that we've got coming up in any of our states that I recall.
Got it. Then in the December quarter of last year, there were some pretty significant weather headwinds. Anything to note here? Is this pretty representative, you think, of what this quarter's seasonality should look like?
Yeah. This was a much closer return to normal. I think the percentage of our annual revenue in the first quarter is usually somewhere between 20.5% and 21.5% of our annual revenue. In this quarter, it was 21% of the low end of our guidance. Very typical. Had a really good start with October, November. December, due to the Christmas and New Year's falling in the middle of the week, that was more of a disruption than usual. We had some unfavorable weather the last half of December, so we lost a little momentum there. Overall, I'd say it was a very typical first quarter.
Last one from me, in terms of the gas tax benefits in Alabama, I think in the past you've talked about those ramping up in the back half. Is that still your expectation?
Definitely. We're seeing coming up in February, March, the cities and counties got projects that they're letting, and that's exactly what we expected.
Got it. Good luck with the next quarter.
Thank you.
Thank you. Our next question is from Bill Newby with D.A. Davidson. Please proceed with your question.
Good morning. Stick to my questions.
Yes, Bill.
Charles, just wanted to touch on Alabama quickly. I guess, are you guys starting to see bidding activity pick up in that market at all now that you have that transportation bill in place? I guess if you haven't, do you have any line of sight into when that acceleration might begin?
Yes. We're seeing the gas tax money being put in place now. We're seeing more projects as related to the gas tax increase. We anticipate that to continue as we go further. As you know, when you first put something in place, you kind of go through a short period of time. You need to collect it before you spend it. That's one thing about the Alabama DOT. They do a pretty good job in making sure that they don't get too far out over their skis with the projects they let versus the money coming in.
I guess, just quickly on the asphalt mix cost, are you seeing anything in that market shifting since the beginning of the year? I guess I'm just wondering with IMO 2020 in place or if there's any dynamics there that are kind of moving around.
We haven't seen anything that's really made any kind of impact to us at all about it. Matter of fact, I think diesel fuel is down fairly low right now. We just don't anticipate anything from that impact that's going to have any impact on our business.
Bill, the asphalt cement prices normally during the winter, those will drop. That's what we've seen this year. That's one reason we have the terminal to try to do a winter fill where we store extra material when the price is lower. Really any change in asphalt cement has been more typical of what happens in the winter anyway, as opposed to any kind of big reaction to IMO 2020.
As Charles mentioned, and I think we may have talked about on the call before, the prior time, if there was any area we were going to expect much impact or much price change, it was in the diesel fuel because of what the ships were going to have to burn. In fact, we've seen diesel costs after probably mid-November have just kind of trended down and really had no spike. Of course, some of that's a lot more related to the price of oil and all that's going on in China. We really have not seen any impact that we would attribute to IMO 2020 at this time.
All right. That's great. Very helpful, guys. I appreciate it.
Yes.
Thank you. Our next question is a follow-up from Michael Feniger with Bank of America Merrill Lynch. Please proceed with your question.
Hey, guys. Yeah, just a quick follow-up and apologies if you already addressed this. I'm just curious on your pipeline with the acquisitions. Are you seeing an accelerating pace of companies willing to discuss with you, maybe family businesses looking to try to get in front of the election or election risk there? Is it kind of just the same kind of pace of discussions that have played out for you guys the last few quarters? Thanks.
All right. Thank you, Michael. This is Charles. We're seeing about the same pace. Obviously, the driver to getting these things done is the sellers because it's big steps, and they want to make sure that they make good decisions and get their employees with good people. As far as I'd just say it's kind of a normal pace right now. We're having a lot of conversations with a pretty good group of people, and obviously we feel very positive for this year for some of them to come to fruition. That's kind of where that stands.
All right. Thanks, guys.
Thank you. It appears there are no further questions at this time. I'd like to pass the floor back over to management for any additional concluding comments.
Okay. I'd like to thank everyone for joining the call today. We look forward to speaking with you all on the next conference call. We will remain focused on executing our strategy. I hope everyone has a good week.
Ladies and gentlemen, we thank you for your participation. This does conclude today's conference call. You may disconnect your lines at this time.