Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: What factors could lead to the low end of sales guidance and still result in meaningful EBITDA margin expansion? A: Kyle Larkin, President and CEO, explained that the midpoint of their guidance aligns with their long-term organic growth rate. The low end of sales guidance does not include any inorganic M&A acquisitions. The strong CAP and high-quality project portfolio are expected to drive margin expansion, supported by improvements in the materials business through pricing and operational efficiencies.
Q: If the company hits the high end of the EBITDA margin target, could this lead to raising the 2027 targets? A: Kyle Larkin noted that achieving the high end of the target would depend on making the right capital investments and leveraging strong operating cash flows. They are focused on strengthening home market positions and exploring M&A opportunities that could be EBITDA margin accretive, which could potentially push margins above 14%.
Q: How did vertically integrated revenue trend in 2024, and will it grow faster than total sales in 2025? A: Kyle Larkin stated that vertically integrated revenue is growing at a fast pace, consistent with the overall business. The strong market environment, particularly in California, supports continued growth in vertically integrated revenue.
Q: What are the regional expectations for 2025, and where might growth exceed expectations? A: Kyle Larkin highlighted strong markets across all geographies, driven by robust public and private markets. The company expects to build CAP significantly, with $450 million more in low bids compared to the previous year, indicating strong growth potential across regions.
Q: What are the expectations for free cash flow in 2025? A: Staci Woolsey, CFO, mentioned targeting operating cash flow at 9% of revenue and free cash flow at around 50% of EBITDA. The company had strong cash flow performance in 2024, and they expect to maintain this level in 2025.
Q: Was there any significant project closeout in Q4 that impacted cash flow? A: Staci Woolsey clarified that there were no significant project closeouts or unusual items in Q4. There was a large milestone payment collected, but no major claims or closeouts affected cash flow.
Q: What are the inflation expectations for 2025, and how is the company managing it? A: Kyle Larkin expects inflation to be around 3% and noted that it is already factored into pricing, especially for asphalt. The company has coverage on supplier and contractor sides to mitigate price fluctuations, ensuring protection against inflation impacts.
Q: What is the status of the expected gain on sales of assets that was not realized in Q4? A: Kyle Larkin confirmed that the expected gain on sale of an asset was pushed to 2025 and is not included in the current guidance. Completion of this sale in 2025 could positively impact guidance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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