Sterling Construction Company,Inc。(STRL) 首席执行官 Joe Cutillo 于 2019年 第二季度业绩 - 收益电话会议记录

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Sterling Construction Company, Inc. (NASDAQ:STRL) Q2 2019 Results Earnings Conference Call August 6, 2019 9:00 AM ET

Sterling Construction Company,Inc。(纳斯达克股票代码:[STRL])2019年第二季度业绩收益电话会议2019年8月6日美国东部时间上午9:00

公司参与者

Joe Cutillo - CEO
Ron Ballschmiede - CFO

  • Joe Cutillo - 首席执行官
  • Ron Ballschmiede - 首席财务官

电话会议参与者

Brent Thielman - D.A. Davidson
Sean Eastman - KeyBanc Capital Markets

  • 布伦特·蒂尔曼 - D.A.戴维森
  • 肖恩伊士曼 - KeyBanc资本市场

会议主持员

Greetings, and welcome to the Sterling Construction Company's second quarter 2019 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded.
Before turning the call over to Joe Cutillo, Sterling Construction's Chief Executive Officer, I will read the Safe Harbor statement.
Some of the discussions today may include forward-looking statements. Actual results could differ materially from statements made today. Please refer to Sterling's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions. The Company assumes no obligation to update forward-looking statements as a result of new information, future events or otherwise.
Now I would like to turn the call over to Joe Cutillo.

问候,欢迎来到Sterling Construction Company的2019年第二季度收益电话会议和网络直播。 此时,所有参与者都处于只听模式。 问答环节将在正式演讲之后进行。 提醒一下,这次会议正在录制中。

在将电话转交给Sterling Construction首席执行官Joe Cutillo之前,我将阅读安全港声明。

今天的一些讨论可能包括前瞻性陈述。 实际结果可能与今天的陈述产生重大差异。 请参阅Sterling最新的10-K和10-Q申请,以更全面地描述可能影响这些预测和假设的风险因素。 公司不承担因新信息,未来事件或其他原因而更新前瞻性陈述的义务。

现在我想把电话转给Joe Cutillo。

Joe Cutillo

Thanks, Brad. Good morning, everyone, and thank you for joining our second-quarter call. I'm sure by now, you've heard multiple times from our peers, how the weather has impacted their quarter. And unfortunately, they were not alone. The severe weather conditions, especially in the Texas market, significantly hampered our ability to execute active heavy civil projects and delayed the start on multiple new ones.
In addition to the challenges on the heavy civil side, we incurred 30 down days in our residential business in Dallas. As much as we've tried to be conservative and plan for above normal rain days, we would have never included losing 30% of a quarter's total days in a forecast. As a result, we came in slightly lower than our expectations, but did not stop making significant progress in multiple areas during the quarter and still achieved a near flat year-over-year result.
For the quarter, our net income was $7.8 million versus the prior year of $8.2 million, with $10 million less revenue coming from our highest-margin business. That $10 million of revenue would have delivered approximately $1.5 million of incremental net income and the quarter would have gone from a slight miss to an exceed. Versus prior year, our SG&A was down over $2.5 million, and our cash grew to $71.7 million.
Our combined backlog hit an all-time high of over $1.2 billion and more importantly, the margins in backlog hit a new record of 9.1%. We continue to stay on track to achieve our 2021 goal to have 50% or less of our revenue coming from our low-bid heavy-highway business as 43% of our revenues for the quarter came from other heavy civil activities. This is a critical part of our strategy focused on growing our bottom line, while reducing our overall risk.
Our markets remain strong with the potential to become even stronger. The next transportation bill called the Americas Transportation Infrastructure Act was just approved by the Senate Environmental and Public Works Committee. If approved by the whole Senate and passed as a Bill, this legislation would increase the annual spend on highways and bridges by 17% and the policy through 2025, a full five-year extension to the FAST Act that expires in October of 2020.
Now let's move to the full year. Even with all the continued progress in the quarter and the great effort from our employees to claw back some of the lost days, the accumulated weather impact from both the first and second quarter and the delayed starts of new projects is causing us to temper our full-year outlook. We now expect revenues to be between $1.010 billion and $1.025 billion and our net income to be between $27 million and $29 million.
Even though this is not as high as we'd like to see, the midpoint of our guidance still represents a solid double-digit net income growth over 2018 with record backlog and record margins going into 2020. With that, I'd like to turn it over to Ron to give you more details on the quarter and the full year.
Ron?

谢谢,布拉德。大家早上好,感谢您加入我们的第二季度电话会议。我相信,到目前为止,你已经多次听到我们的同行,天气如何影响他们的季度。不幸的是,他们并不孤单。恶劣的天气条件,特别是在德克萨斯州的市场,严重阻碍了我们执行积极的重型民用项目的能力,并推迟了多个新项目的启动。

除了沉重的民事方面的挑战,我们在达拉斯的住宅业务中度过了30天。尽管我们已经尝试保守并计划在正常的降雨天数以上,但我们绝不会在预测中损失四分之一的总天数的30%。因此,我们的预期略低于我们的预期,但在本季度并未停止在多个领域取得重大进展,并且仍然取得了接近同比的结果。

本季度,我们的净收入为780万美元,而去年同期为820万美元,我们的利润率最高的业务收入减少了1000万美元。 1000万美元的收入将带来约150万美元的增量净收入,而本季度将从轻微的失败变为超过。与去年相比,我们的SG&A下跌超过250万美元,我们的现金增长到7170万美元。

我们的合并积压达到了12亿美元的历史新高,更重要的是,积压的利润率创下了9.1%的新纪录。我们继续保持正常运行,以实现2021年的目标,即我们的低投标重型公路业务收入的50%或更少,因为本季度我们收入的43%来自其他重型民用活动。这是我们战略的关键部分,专注于增加我们的底线,同时降低我们的整体风险。

我们的市场依然强劲,有可能变得更强大。下一个名为“美洲运输基础设施法案”的运输法案刚刚被参议院环境和公共工程委员会批准。如果得到整个参议院的批准并作为法案获得通过,这项立法将使高速公路和桥梁的年度支出增加17%,并将政策延长至2025年,这是对2020年10月到期的FAST法案的五年延长。

现在让我们搬到全年。即使本季度所有持续的进展以及我们的员工努力追回一些失去的日子,第一季度和第二季度累积的天气影响以及新项目的延迟启动都会让我们充满活力年展望。我们现在预计收入在10.10亿美元到10.25亿美元之间,我们的净收入在2700万美元到2900万美元之间。

虽然这并不像我们希望的那么高,但我们指导的中点仍然代表着2018年的两位数净收入增长,创纪录的积压和创纪录的利润率将进入2020年。有了这个,我想把它交给罗恩,为你提供有关季度和全年的更多细节。

罗恩?

Ron Ballschmiede

Thanks, Joe, and good morning, everybody. Let me take you through our second-quarter 2019 operating results. Heavy civil construction backlog was $909 million at the end of the quarter compared to $851 million at the beginning of the year. Combined backlog, which includes our backlog and unsigned low bids awards -- low bid awards totaled $1.224 billion with an overall combined backlog gross margin of 9.1%.
This reflects the highest combined backlog, together with the strongest combined backlog gross margin in Sterling's history. Our heavy civil construction backlog book-to-burn factor was 144% for the second quarter of 2019 and was 114% for the first six months. Our combined backlog book-to-burn factor was 106% and 120% for the second quarter and the first half of 2019, respectively. Just as a reminder, our backlog figures are comprised entirely of heavy civil construction projects.
Residential construction, which recognizes revenue when the concrete slabs are completed, accounted for approximately 14% of our second-quarter 2019 revenue. Total revenue for the second quarter of 2019 was $264 million, down $4.6 million or 2% from the prior-year period. Heavy civil construction revenues grew $4.8 million or 2% over the prior-year quarter. Residential construction revenues were $36 million, a decrease of 21% from the second quarter of 2018.
The increase in heavy civil construction revenues was driven by $26.7 million of additional revenue coming from fully controlled heavy highway work and increased aviation work. These increases were largely offset by lower 2019 revenue from two large construction joint venture projects, which were substantially complete by the end of 2018. Additionally, our heavy civil 2019 second-quarter revenues were negatively impacted by abnormal inclement weather and delayed notices to proceed of components of our backlog. The decrease in residential construction revenues was due to severe weather conditions in Texas with 30 unworkable days in the second quarter.
These adverse weather conditions decreased slabs completed in the quarter by 23%. As you likely saw in our earnings release, we completed an all-time record for slabs completed in July once the weather returned to normal. Gross profit was $25.5 million in the quarter, a decrease of $5.6 million from the 2018 second quarter. Gross margin declined by 190 basis points to 9.7%.
The decreased margin was driven by lower revenues from our highest margin residential construction segment and our lower margin -- and a lower margin mix of our heavy civil construction projects. G&A expense for the second quarter of 2019 was $10.8 million compared to $13.2 million in the prior quarter -- prior-year quarter. The quarter-over-quarter decrease was primarily attributable to higher 2018 pre-bid activities for design build and other alternative heavy civil projects. As a percent of our revenues, second-quarter 2019 G&A expense decreased to 4.1% or 80 basis points, down from our comparable 2018 period.

谢谢,乔,大家早上好。让我带您了解2019年第二季度的运营结果。截至本季度末,民用建筑积压量为9.09亿美元,而年初为8.51亿美元。合并积压,包括我们的积压和未签约的低出价奖励 - 低出价奖励总额为12.24亿美元,整体积压毛利率为9.1%。

这反映了最高的合并积压,以及Sterling历史上最强的合并积压毛利率。我们在2019年第二季度的重型土木建筑积压账面燃烧因子为144%,前六个月为114%。我们的第二季度和2019年上半年的积压书籍燃烧因子分别为106%和120%。提醒一下,我们的积压数据完全由重型民用建筑项目组成。

住宅建筑在混凝土板完工时确认收入,占2019年第二季度收入的约14%。 2019年第二季度的总收入为2.64亿美元,比去年同期减少460万美元或2%。重型民用建筑收入比去年同期增长480万美元或2%。住宅建筑收入为3600万美元,比2018年第二季度减少了21%。

重型民用建筑收入的增加是由于完全控制的重型公路工程和航空工作增加带来的2670万美元的额外收入。这些增长在很大程度上被两个大型建筑合资项目的2019年收入减少所抵消,这些项目在2018年底基本完成。此外,我们2019年第二季度的重大收入受到异常恶劣天气和延迟通知的影响。我们积压的组成部分。住宅建筑收入的减少是由于德克萨斯州的恶劣天气导致第二季度30天无法工作。

这些恶劣的天气条件使本季度完成的板坯减少了23%。正如您在我们的财报发布中看到的那样,一旦天气恢复正常,我们就完成了7月份完成的板坯的历史记录。本季度毛利润为2550万美元,比2018年第二季度减少560万美元。毛利率下降190个基点至9.7%。

保证金减少的原因是我们的最高保证金住宅建筑业务收入减少以及我们的利润率较低 - 以及我们重型民用建筑项目的利润率较低。 2019年第二季度的G&A费用为1,080万美元,而上一季度为去年同期的1320万美元。季度环比下降主要是由于2018年设计建造和其他重型民用项目的投标前活动增加。作为我们收入的百分比,2019年第二季度的G&A费用从2018年的可比期间下降至4.1%或80个基点。

Other operating expense for the second quarter of 2019 was $3.5 million, a decrease of $2.2 million from the comparable 2018 quarter. The decrease was primarily the result of lower members' interest and earn-out expenses. Our operating income for the second quarter of 2019 was $11.2 million, a decrease of $1 million from the comparable 2018 quarter. From an operating segment standpoint, residential construction accounted for approximately $700,000 of the quarter-over-quarter operating income decline with the balance attributable to heavy civil construction.
Net interest expense for the second quarter of 2019 was $2.6 million, down from $2.9 million in the prior-year period. Our second quarter of 2019 income tax expense increased $700,000, compared to $100,000 in the prior year's -- prior-year period. The increase reflects additional noncash tax expense. Finally, the second-quarter 2019 non-controlling owners interest declined by $900,000 reflecting the completion of the large construction joint venture projects in late 2018, which I mentioned earlier.
The net effect of all these resulted in second-quarter 2019 net income of $7.8 million and a net income per share of $0.29 compared to the prior-year period net income of $8.2 million or $0.30 per diluted share. EBITDA for the trailing 12 months ended June 30, 2019, totaled $54.3 million, an increase of $50.3 million for the 12 months ended June 30, 2018.
Moving to our balance sheet. We ended the quarter with cash of 700 -- I'm sorry, $71.7 million compared to $56.8 million at the end of the first quarter. Our debt net of cash was $6.0 million at June 30, 2019. The components of our June 30, '19, cash balance includes generally available cash of $52 million, the highest in recent years. The remaining $19.7 million of cash is attributable to our construction -- consolidated 50% owned subsidiaries and construction joint ventures. Consistent with our historical seasonal trends, we expect our consolidated cash balance to grow throughout the balance of the year, and our cash flow from operating activities to approximate our full-year operating income.
Finally, as Joe mentioned earlier, the inclement weather we experienced in the second quarter and delayed starts of several heavy civil projects has caused us to temper our full-year expectations. To reiterate our revised full-year 2019 guidance, we expect revenues to be between $1.010 billion and $1.025 billion. The lower revenue guidance represents a $68 million midpoint-to-midpoint reduction from our previous guidance. Additionally, we expect our 2019 net income to be $27 million to $29 million compared to our prior net income guidance of $29 million to $32 million. Our diluted weighted average common shares outstanding is expected to be approximately $26.7 million -- I'm sorry, 26.7 million shares for 2019.
Now I'll turn the call back to Joe.

2019年第二季度的其他运营费用为350万美元,比2018年同期减少了220万美元。减少的主要原因是会员的利息和盈利开支减少。我们2019年第二季度的营业收入为1120万美元,比2018季度减少了100万美元。从经营业务的角度来看,住宅建筑占季度营业收入减少约70万美元,余额归因于重型民用建筑。

2019年第二季度的净利息支出为260万美元,低于去年同期的290万美元。我们的2019年第二季度所得税费用增加了70万美元,而去年同期为10万美元。这一增长反映了额外的非现金税费用。最后,2019年第二季度非控股所有者权益减少了90万美元,这反映了我在前面提到的2018年末大型建筑合资项目的完成情况。

所有这些的净效应导致2019年第二季度净收入为780万美元,每股净收益为0.29美元,而去年同期净收入为820万美元,每股摊薄收益为0.30美元。截至2019年6月30日的过去12个月的EBITDA总计为5430万美元,比截至2018年6月30日的12个月增加了5030万美元。

转到我们的资产负债表。我们在本季度以700现金结束了 - 对不起,7170万美元,而第一季度末为5680万美元。我们在2019年6月30日的现金债务净额为600万美元。我们在2009年6月30日的现金余额包括一般可用现金5200万美元,是近年来最高的。剩余的1,970万美元现金归属于我们的建设 - 合并50%的子公司和建筑合资企业。与我们的历史季节趋势一致,我们预计我们的综合现金余额将在整个年度的余额中增长,而我们的经营活动现金流量将接近我们的全年营业收入。

最后,正如乔先前提到的那样,我们在第二季度遇到的恶劣天气以及几个重型民用项目的延迟启动使我们对全年的期望产生了影响。重申我们修订的2019年全年指引,我们预计收入将在10.10亿美元至10.25亿美元之间。较低的收入指导意味着从我们之前的指导中减少6800万美元的中点到中点。此外,我们预计2019年的净收入为2700万美元至2900万美元,而之前的净收入指标为2900万美元至3200万美元。我们的稀释加权平均普通股预计将达到约2670万美元 - 对不起,2019年为2670万股。

现在我将把电话转回给乔。

Joe Cutillo

Thanks, Ron. Even though the adverse weather in the quarter caused us to come in lower than our expectation, we come away very optimistic about the progress we've made, as well as the outlook for the future. Our backlog remains at an all-time high with a record -- with record average margins. Our free cash continues to grow as we diligently look for ways to lever it.
Our residential business started the third quarter with a new record for number of slabs completed in a month. And we continue to make progress diversifying our business into adjacent markets outside the heavy highway space. When you take all of these factors into account, you see a Sterling that is stronger, more resilient and positioned for many years of success to come. With that, we'd be happy to take your questions.

谢谢,罗恩。 尽管本季度的恶劣天气导致我们的预期低于我们的预期,但我们对我们取得的进展以及对未来的展望非常乐观。 我们的积压率创历史新高,创历史新高 - 创纪录的平均利润率。 随着我们努力寻找方法,我们的自由现金继续增长。

我们的住宅业务在第三季度开始,创下了一个月内完成的板坯数量的新记录。 我们继续在繁忙的高速公路空间之外将业务多元化发展到邻近市场。 当您将所有这些因素考虑在内时,您会发现Sterling更强大,更有弹性,并且可以定位多年的成功。 有了这个,我们很乐意回答你的问题。

问答环节

Thank you. [Operator instructions] Our first question today comes from Brent Thielman of D.A. Davidson. Please go ahead.

谢谢。 [运营商指示]我们今天的第一个问题来自D.A.的Brent Thielman。戴维森。 请继续。

布伦特·蒂尔曼

Great. Thanks. Good morning. I guess, a question on some of the larger civil jobs where it sounds like start-up has shifted a bit to the right. I guess, is the cause of the delay simply weather or are there any other kind of factors involved there?

非常好。 谢谢。 早上好。 我想,对于一些听起来像初创公司的大型民事工作的问题已经向右转移了一些。 我猜,延迟的原因只是天气还是还有其他因素?

Joe Cutillo

Yes. There's no factors that worry us about the jobs not getting released or anything like that, if that's part of the question, really related to weather delays. You can imagine, before we can get started on jobs, there's things like utilities that have to be moved, the right of ways. There's a whole bunch of activities that generally take place.
So the days that we're not working generally, those activities are taking place as well. So we saw a couple of jobs that get pushed out for that. We did have a job in Hawaii that is pushed for some design change issues that they're working on. And just Hawaii and the design changes caused the job that then get pushed into the bird mating season, which then pushes it out another three months, right? So, it is what it is, and we'll continue to progress with it. But those are the kind of things that we saw in the quarter.

是。 没有因素让我们担心没有被释放的工作或类似的事情,如果这是问题的一部分,真的与天气延迟有关。 你可以想象,在我们开始工作之前,有一些事情,比如必须移动的公用事业,方式的权利。 通常会发生一大堆活动。

因此,在我们一般不工作的日子里,这些活动也在进行中。 所以我们看到了几个被推出的工作。 我们确实在夏威夷有一份工作,因为他们正在努力解决一些设计变更问题。 只是夏威夷和设计的变化导致了这项工作,然后被推入鸟类交配季节,然后将其推出另外三个月,对吧? 所以它就是这样,我们将继续发展它。 但那些是我们在本季度看到的那种东西。

布伦特·蒂尔曼

Okay. Thanks, Joe. And then the gross margin improvement in backlog, how much do you attribute to that, I guess, the shift in the type of work you're bidding, maybe versus what just looks like easier environment in general in terms of bid activity?

好的。 谢谢,乔。 然后积压的毛利率有所改善,你认为这个数量有多大,我想,你所投标的工作类型的转变,或许与投标活动方面看起来更简单的环境相比?

Joe Cutillo

Yes. I'll let Ron help out on this, but I'll give you a couple of different categories. We certainly see a lift as we continue to migrate the backlog to less heavy highway, low-bid projects and the heavy civil weather. The other thing that's helping us is even within heavy highway, part of our strategic initiative and predominantly in the Rocky Mount areas is we're going to alternative delivery projects.
So CMGC design builds, those tend to provide better margins than the traditional eight people at the bid table and the lowest bid takes upon that day. We can add a lot more value to the end customer and as a result, manage the projects more effectively and efficiently and make higher margins. So those two things are what's really really driving it. We've seen slight upticks in what I'll call market-driven pricing.
But the dominant share of what's driving it would fall under those two categories. Ron, do you have anything to add to that?

是。 我会让罗恩帮忙解决这个问题,但我会给你几个不同的类别。 当我们继续将积压工作转移到不太重的高速公路,低价竞标项目和繁重的民用天气时,我们当然看到了升力。 另一件帮助我们的事情即使是在高速公路上,我们的战略计划的一部分,主要是在落基山地区,我们将进行替代交付项目。

因此,CMGC设计的构建往往比投标表上的传统八人提供更好的利润,并且当天的出价最低。 我们可以为最终客户增加更多价值,从而更有效地管理项目并获得更高的利润。 所以这两件事真正推动了它。 我们已经看到了我称之为市场驱动的定价的微小上升。

但是推动它的主导份额将属于这两类。 罗恩,你有什么要补充的吗?

Ron Ballschmiede

No. I think those are the two keys. And I think the alternative delivery work that one of those jobs are slipping a bit is still in our combined backlog, it's two thirds of our unsigned. That is still in the design side.
And when it ramps up, it will be either late this year, second -- late in the back quarters or maybe pushing to '19 or '20 when it really starts going. But it's making good progress across the finish line. And we're also making pretty good project -- progress on the $100 million project we announced that started later in the second quarter, but -- then earlier than we thought, but it's going and going forward at this point in time.

不,我认为这是两个关键。 而且我认为其中一项工作正在下滑的替代交付工作仍然在我们的合并积压中,它是我们未签约的三分之二。 这仍然在设计方面。

当它上升时,它将在今年晚些时候,第二个 - 在后面的季度后期,或者可能在真正开始的时候推到'19或'20。 但它在终点线上取得了很好的进展。 而且我们也做了相当不错的项目 - 我们宣布在第二季度晚些时候开始的1亿美元项目的进展,但是 - 比我们想象的更早,但是现在这个项目正在进行中。

Joe Cutillo

Yes. And Brent, just to add a little bit broader than that. One of the things that we -- it really to the way is positive for the quarter is Tealstone had a rough quarter with all the raining in Dallas, nothing they can do about it. They cut back some fatigue and had a great recovery.
But the really important part of that message is their margins remained fundamentally the same. So as we continue to broaden the mix of our portfolio of products, we're trying to not only raise the margin, but also take out some of this vulnerability or variation from month to month, quarter to quarter, and it helped just smooth that out.

是。 布伦特,只是增加了一点点。 其中一件事 - 它真正对这个季度来说是积极的是Tealstone在达拉斯的所有下雨都有一个艰难的季度,他们无能为力。 他们减轻了一些疲劳,恢复得很好。

但这一信息的真正重要部分是它们的利润率基本保持不变。 因此,随着我们继续扩大我们产品组合的组合,我们不仅试图提高利润率,而且还试图从一个月到一个季度,季度到一个季度中消除部分漏洞或变化,这有助于出。

Ron Ballschmiede

And I would add, we tend to associate Teal going just for the residential business, but they have a nice commercial business, predominantly in Texas who had the same weather day challenges as our residential business had. So that certainly didn't help the heavy civil side grow by what we thought it would grow in the quarter.

我想补充一点,我们倾向于将Teal归功于住宅业务,但他们有一个很好的商业业务,主要是在德克萨斯州,他们与我们的住宅业务有相同的天气挑战。 因此,在我们认为本季度会增长的情况下,这肯定无助于繁重的民事方面的增长。

布伦特·蒂尔曼

Okay. That's helpful. I guess, my other question would just be, could you talk about the progress on the Houston rollout, kind of, how high do you think that could be this year? And are you starting to gain some visibility yet into 2020? Or is it that too soon?

好的。 这很有帮助。 我想,我的另一个问题就是,你能否谈谈休斯顿推出的进展,有点,你认为今年有多高? 你是否开始在2020年之前获得一些可见度? 还是那么快?

Joe Cutillo

Yes. It's a little hard on 2020. It's kind of we're in the chicken, and the egg get worked on crews and crews get worked and it go down. But I would tell you, Houston in the quarter had the same fundamental issues as Dallas had. We had to collaborate. However, in the month of July, part of that record, we caught 60 slabs in Houston in that one month, which is, I believe, the most we've done in a particular month. So we're continuing to see that ramp up. We're still very optimistic. The Houston market, consistent with everything we've said. It's just -- it's getting that ramp-up and that consistency to continue to add crews.

是。 这对2020年来说有点困难。我们有点像鸡一样,鸡蛋得到了工作,船员和工作人员得到了工作,它就会失败。 但我会告诉你,休斯敦在这个季度有与达拉斯相同的基本问题。 我们必须合作。 然而,在7月份,也就是那个记录的一部分,我们在一个月内在休斯顿抓到了60块板坯,我相信这是我们在特定月份所做的最多。 所以我们继续看到这个增长。 我们仍然非常乐观。 休斯敦市场,与我们所说的一切一致。 它只是 - 它正在逐渐增加,并且这种一致性继续增加工作人员。

布伦特·蒂尔曼

Okay, great. I'll pass it on. Thank you.

好,太棒了。 我会传递它。 谢谢。

Ron Ballschmiede

Thank you, Brent.

谢谢你,布伦特。

会议主持员

The next question is from Tahira Afzal of KeyBanc. Please go ahead.

接下来的问题来自KeyBanc的Tahira Afzal。 请继续。

肖恩伊士曼

Hi, team, this is Sean on for Tahira today. The first question for me is just I was just hoping to get an update on the prospect pipeline outside of Texas in heavy civil? And then, also may be specifically outside of heavy highway, just kind of what you're seeing over the next couple of quarters? And maybe just to tie it together, how you're expecting backlog to trend through the end of '19?

嗨,团队,这是Sean今天为Tahira。 对我来说,第一个问题是,我只是希望了解德克萨斯州以外的重要民用建筑的最新情况? 然后,也可能特别是在高速公路之外,只是你在接下来几个季度看到的东西? 也许只是把它联系在一起,你期望在19年底之前积压趋势?

Joe Cutillo

Yes. Well, welcome back, Sean. We don't see any significant changes one way or the other. The markets have been very stable, very consistent.
The highway market remains robust. We think that I've got a -- unfortunate, I've got a call later this afternoon on this new highway bill. So although a lot more tomorrow than I know today. But we're very optimistic with this year going into 2020, we're starting to see budgets of DOTs going into next year, we used glimpses at them because their -- remember, their fiscal year ends in September.
Everything looks very strong going into next year on the highway side. Aviation side is -- continues to grow and expand. The aviation bill that was passed at the end of last year, it has continued to drive more and more aviation projects. So that market looks very robust for us.
The residential side is just very consistent right now. We're kind of just plugging away, weather is our biggest issue there. There's all kinds of buzz in the news and in the markets on housing slowing down and all that. We saw the interest rates dropped last week.
We've been kind of status quo, I'll call it, the steady as we go. We think, and we're hoping to see a boost from some of the recent activities. So I think our backlog should continue to grow slightly through the back half of the year. The thing that could change that, to some degree, is if a big project kicked off a little earlier.
We've heard it before we fill that with some other projects. But we don't see any significant change from what I'll call the historical track and run rates through the rest of this year.

是。好吧,欢迎回来,肖恩。我们没有看到任何重大变化。市场非常稳定,非常一致。

高速公路市场依然强劲。我们认为我有一个 - 不幸的是,我今天下午晚些时候接到了这条新公路法案的电话。所以虽然明天比我今天知道的要多得多。但是我们对今年进入2020年非常乐观,我们开始看到DOT的预算将在明年进行,我们对它们进行了一瞥,因为他们 - 记住,他们的财政年度将在9月份结束。

从高速公路一侧到明年,一切看起来都很强劲。航空方面 - 继续增长和扩大。该航空法案于去年年底通过,继续推动越来越多的航空项目。所以这个市场看起来非常强大。

住宅方面现在非常一致。我们只是插手而已,天气是我们最大的问题。新闻和市场上的各种各样的嗡嗡声在房屋放缓等等。我们看到上周利率下降。

我们一直都是现状,我会称之为稳定,我们走的是稳定的。我们认为,我们希望看到一些近期活动的推动。所以我认为我们的积压应该会在今年下半年继续略有增长。在某种程度上,可以改变这一点的是,如果一个大项目提前开始。

在我们填写其他一些项目之前,我们已经听过了。但是我们没有看到任何重大变化,从我称之为历史轨道和今年剩余时间的运行率。

肖恩伊士曼

Okay, great. And then on the residential side, it looks like you guys were able to maintain a pretty good margin in the second quarter despite the weather dislocation. So I'm just kind of wondering how you guys manage that? And then based on how Houston's building out, I'm just wondering how we should be thinking about the residential margin progression from this kind of high 13% level we've been seeing?

好,太棒了。 然后在住宅方面,看起来你们在第二季度能够保持相当好的利润,尽管天气错位。 所以我只是想知道你们是如何管理的? 然后根据休斯顿的建设情况,我只是想知道我们应该如何考虑从我们看到的这种高13%的住宅利润率进展?

Joe Cutillo

Yes. Well, first, I hope that -- I don't know that a lot of people believe us when we said that what we really like about the Tealstone model was the subcontract element of it and the ability to maintain margins when you see a little bit of a downturn. We had a quarter downturn, not because of the market, but because of weather. And I think we showed first hand that that is, in fact, true.
It goes back to the model, Sean, where the labor piece -- the majority of the labor piece of the Tealstone business is subcontracted. So if we're not pouring, we're not paying. And we paid that by the square foot. So when they get back to work, we're going to work increased hours to get stuff out. It doesn't cost us at the premium. We really like that subcontract model. And this is exactly why. The margins, as we go into Houston, you certainly have some start-up costs and a little bit of inefficiencies and ineffectiveness in the new market.
Those margins are a little lower than the Dallas markets but continue to inch up. But I'd say, over time, the margins are going to be relatively consistent with where they are, plus or minus, call it, half a point or something like that. I don't see any major movements in there. Now someday, we all know the housing market will slow down. I'm sure we'll see some pressure on pricing, and that's where it's tough. But we hope back to see that for a long period of time.

是。好吧,首先,我希望 - 我不知道很多人相信我们,当我们说我们真正喜欢的Tealstone模型是它的转包元素和当你看到一点时保持利润的能力有点低迷。我们有四分之一的低迷,不是因为市场,而是因为天气。而且我认为我们亲眼目睹了事实上这是真的。

它可以追溯到模型肖恩,那里的劳动力 - 蒂尔斯通业务的大部分劳动力都是分包的。所以,如果我们不倾盆大雨,我们就不付钱了。我们用平方英尺付了钱。因此,当他们重新开始工作时,我们会花更多的时间来完成工作。它不会花费我们的溢价。我们非常喜欢这种转包模式。这就是原因。在我们进入休斯顿的时候,你肯定会有一些启动成本,以及新市场中的一些低效率和无效率。

这些利润率略低于达拉斯市场,但继续增长。但是我会说,随着时间的推移,利润率将与它们所处的位置相对一致,加上或减去,称之为,半点或类似的东西。我没有看到任何重大动向。总有一天,我们都知道住房市场会放缓。我相信我们会看到一些定价压力,而这就是艰难的地方。但我们希望在很长一段时间内都能看到这一点。

Ron Ballschmiede

And I would add. Even in the subcontractors are pretty easy to describe, a good portion of our solid workforce that are out in the field are performance-based pay. Unfortunately, it's hard for them to give a lot of performance when it's raining. And that's what you're seeing in some of the variable margin staying very small fixed cost.
It just puts along right at that consistent operating income of 13 plus or minus a point -- by less than a point actually. And we like that. We -- it really drives great behavior by both our internal people and our subcontractors to be as efficient as we can, both on the material side and on the labor side.

我想补充一点。 即使在分包商中也很容易描述,我们在外地的大部分员工都是以绩效为基础的薪酬。 不幸的是,当下雨时,他们很难提供很多表现。 这就是你所看到的一些可变边际保持非常小的固定成本。

它恰好与13点加上或减去一点的持续营业收入相吻合 - 实际上不到一点。 我们喜欢这样。 我们 - 无论是在物质方面还是在劳动方面,我们的内部人员和分包商都能提供极好的行为。

肖恩伊士曼

Very helpful. I guess, lastly, is this kind of Tealstone labor flex what we saw on the SG&A line this quarter because relative to our model, that kind of SG&A leverage take the day in the quarter to an extent? So I just wanted to understand what we saw there.

很有帮助。 我想,最后,这种Tealstone劳动力是我们在本季度在SG&A线上所看到的,因为相对于我们的模型,这种SG&A杠杆在一定程度上占据了一个季度的一天? 所以我只是想了解我们在那里看到了什么。

Joe Cutillo

No. Most of that's cost that we talk about and Tealstone is up in the gross profit and just falls down. The big factor was last year, we were working on three pretty significant large projects. One of them is in backlog.
One of them is in combined and one is still out there hoping to be added to our backlog. We still have some work going on but not peaking out. Actually, there was one more that we're working on in -- outside of the Rocky Mountain. So those tend to be lumpy, and we tend to spend a fair amount of money on getting those across to finish line.
So we just didn't have a whole lot of that. We still have one out there that we're working on to get across finish line. But last year was sort of a perfect storm. Good news, we're working on four at once to get across finish line as supposed to right now, we have a couple in there.

不是。我们谈论的大部分成本和Tealstone的毛利润都在下降,而且刚刚下降。 最重要的因素是去年,我们正在开展三个相当重要的大型项目。 其中一个是积压的。

其中一个是合并的,一个仍然在那里希望被添加到我们的积压。 我们仍然有一些工作正在进行,但没有达到顶峰。 实际上,还有一个我们正在进行的工作 - 落基山之外。 所以那些往往是块状的,我们倾向于花费相当多的钱来让那些人走到终点。

所以我们没有那么多。 我们还有一个在那里,我们正在努力跨越终点线。 但去年是一场完美的风暴。 好消息是,我们正在努力实现目前正在进行的四条终点线,我们在那里有一对夫妇。

Ron Ballschmiede

Yes. Generally, we would see -- we saw one a quarter, that would be a lot for us. It's just timing of several obligate at the same time last year.

是。 一般来说,我们会看到 - 我们看到了四分之一,这对我们来说很重要。 这只是去年同一时间几个专案的时间。

肖恩伊士曼

Got it. Really helpful. Thanks so much for the time.

得到它了。 真有帮助。 非常感谢您的时间。

Joe Cutillo

Thanks, Sean.

谢谢,肖恩。

会议主持员

There are no additional questions at this time. I would like to turn the call back to Joe Cutillo for closing remarks.

目前没有其他问题。 我想把这个电话转回Joe Cutillo的闭幕词。

Joe Cutillo

Thanks, Brad. Thanks again, everyone, for joining our call today. If you have any follow-up questions or wish to schedule a call, please refer to the contact information provided in the press release associated with our investor relations group at Sterling or our partners at The Equity Group. Thank you, everybody, and have a great day.

谢谢,布拉德。 再次感谢大家今天加入我们的电话会议。 如果您有任何后续问题或希望安排电话会议,请参阅与我们在Sterling的投资者关系小组或我们在Equity Group的合作伙伴相关的新闻稿中提供的联系信息。 谢谢大家,祝你有个美好的一天。

会议主持员

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

今天的会议结束了。 您可以在此时断开线路。 感谢您的参与。

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