Orion Group Holdings Inc Q3 FY2021 Earnings Call

Greetings, and welcome to the Orion Group Holdings, Inc. Third Quarter 2021 Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce Fran Okoniewski, Vice President of Investor Relations. Thank you. You may begin.

Good morning, everyone, and welcome to Orion Group Holdings Third Quarter 2021 Earnings Conference Call and Webcast. My name is Fran Okoniewski, Vice President of Investor Relations, and joining me today is Mark Stauffer, Orion Group Holdings President and Chief Executive Officer. Regarding the format of the call, we've allocated about 10 minutes for prepared remarks in which Mark will highlight our results and update our market outlook. We will then open the call for questions. Through the course of this conference call, we'll make projections and forward-looking statements regarding, among other things, our end markets, revenues, gross profits, gross margin, EBITDA, EBITDA margin, backlog, projects and negotiation and pending awards as well as our estimates and assumptions regarding our future growth, administrative expenses, and capital expenditures. These statements are predictions that are subject to risks and uncertainties, including those described in our 10-K that may cause actual results to differ materially from those statements. Moreover, past performance is not necessarily an indicator of our future results. By providing this information, we undertake no obligation to update or revise any new projections or forward-looking statements, whether as a result of new developments or otherwise. Also, please note that adjusted net income, adjusted earnings per share, EBITDA, and EBITDA margin are non-GAAP financial measures under the rules of the Securities and Exchange Commission, including Regulation G. Please refer to the reconciliations and definitions inclusive for the most comparable GAAP measures and reconciliation tables accompanying this earnings call within the press release issued yesterday. The press release can be found at our website at www.oriongroupholdingsinc.com. Also for additional discussion of risk factors that could cause actual results to differ materially from our current expectations, please refer to our quarterly and annual filings with the SEC, which are also available in the Investors section of our website. And with that, I'd like to turn the call over to Mark Stauffer, President and Chief Executive Officer. Mark?

Thank you, and good morning, everyone. Thanks for joining us today. Please bear with me as I'm a bit under the weather. As previously announced, Robert will be departing us this week. I'll be covering the information he would normally cover on our call today, but I wanted to thank Robert for all his hard work, particularly over the last few years, and wish him all the best in his new endeavors. Today, we'll discuss our third quarter results, discuss our markets and our outlook. I'll begin with an overview of the quarter, then discuss our financial performance in more detail, and finally, discuss our market outlook before we turn to Q&A. As always, I'd like to begin by thanking our fellow team members for their hard work and dedication and to remind everyone that safety of our employees is a key priority. We want to ensure that our team members leave work the same way they came in, healthy and injury-free. We remain deeply committed to our Target Zero program to support our vision of zero incidents, zero harm. On our last call, we noted that some of the performance that we were targeting for 2021 could shift into 2022. We saw this in the third quarter as revenue was well short of our targets. Revenue was impacted by the phasing of work, project win rates and timing, tropical weather, and COVID-19 related items. In the Marine segment, a large portion of our year-over-year decline in revenues was a result of project phasing. Last year's third quarter saw some full swing on a number of sizable projects, which have since completed. While in the current year, prior period win rates, projects pushing rightward, and projects recently awarded that have yet to commence, resulted in a gap in project burn for the third quarter, resulting in a negative revenue variance. As noted in the latest project announcements, recently awarded projects will begin ramping up as we move through the fourth quarter and into 2022. We also discussed our optimism regarding the activity level in our end markets, the robust pipeline of bid opportunities, and our intention to remain disciplined in our approach to bidding work. Our disciplined approach was rewarded in the third quarter as we saw 45% growth sequentially in our backlog with an overall book-to-bill of 2.28x. In our Marine business, we saw a win rate of 53.4% on a book-to-bill of 4.83x. We remain optimistic about the trends and project opportunities across our end markets, in particular, those end markets that are emerging from pandemic-related impacts. Our current level of quoted work is approximately $2 billion, which remains at elevated level sequentially, is almost double the level a year ago and is up almost 30% from the end of last year. The current level of bids outstanding, improved macroeconomic environment, and a potential infrastructure bill gives us confidence that we will continue to see a robust project pipeline with good opportunities available to grow our backlog, positioning us for improved performance in 2022. Now I'll discuss our financial results for Q3 in more detail. Revenues for the third quarter 2021 were $139.9 million compared to $189.4 million in the third quarter of 2020, or a decrease of 26.1%. The decrease was due to the phasing of work, project win rates and timing, tropical weather, and COVID-19 related items. Third quarter gross profit was $6.6 million compared to $22.5 million in the prior year period. The year-over-year decline is attributable to the items just mentioned, which also increased our indirect cost from unabsorbed labor and equipment. As a percentage of revenues, gross profit margin was 4.7% in the third quarter of 2021 compared to 11.9% in the prior year period. Turning to our segments. In the third quarter of 2021, our Marine segment had revenues of $54.7 million and an adjusted EBITDA of $0.5 million, equating to an adjusted EBITDA margin of 0.9%. In the prior year period, we generated revenues of $112.9 million and adjusted EBITDA of $13.4 million with an adjusted EBITDA margin of 11.9%. Marine revenues and EBITDA declined due to the aforementioned items. However, as previously noted, we announced a number of project awards for our Marine business, providing backlog to support improving results. Our Concrete segment had third quarter revenues of $85.2 million compared to $76.6 million in the third quarter of 2020. Adjusted EBITDA for the Concrete segment was negative $1 million compared to $3.6 million in the prior year period. Our Concrete segment's third quarter results were impacted by tropical weather and COVID-19 related items, along with the cost overrun on the completion of one project. SG&A expenses for the first third quarter were $15.7 million or 11.2% of revenues compared to $15.3 million or 8.1% of revenues in the prior year period. The increase in SG&A dollars compared to the prior year was primarily related to ERP implementation, partially offset by a decrease in bonus expense. Net loss for the third quarter of 2021 was $10.2 million or $0.33 diluted loss per share. This includes a nonrecurring expense of $1.4 million for the implementation of a new ERP system. Adjusting for nonrecurring items and tax expense associated with the movement in certain valuation allowances, adjusted net loss was $8.4 million or $0.27 loss per share. Third quarter adjusted EBITDA was negative $500,000, representing an adjusted EBITDA margin of 0.3%. This compares to $17 million for an adjusted EBITDA margin of 9% in the prior year period. Turning to our bidding metrics. For the third quarter of 2021, we bid on approximately $1.3 billion worth of opportunities and were successful on $318 million. This resulted in a book-to-bill ratio of 2.28x and a win rate of 24.3% for the quarter. As of September 30, 2021, our backlog was $573 million, up from $394 million at June 30th and $429 million at the same time last year. $380 million of our backlog was associated with our Marine segment, and $193 million was associated with our Concrete segment. Additionally, we are the apparent low bidder or have been awarded subsequent to the end of the quarter, $103 million worth of opportunities. Of this, approximately $47 million is related to the Marine segment, while $56 million is related to the Concrete segment. Moving to our balance sheet. As of September 30, 2021, we had approximately $900,000 of cash on hand and $29.3 million of availability under our revolving credit facility. We ended the quarter with $19.4 million of debt outstanding, all of which is related to our revolver, a leverage ratio of 1.34x and a fixed charge coverage ratio of 1.83x, both well within covenant requirements. Turning to our markets. As I noted earlier, we continue to see improvement in our end markets that were impacted by the COVID-19 pandemic and we see an upward trend in project lettings in these end markets. Winning new awards and replenishing our backlog remains a key focus, and our primary focus will be bidding on the most attractive projects that support our profitability goals. We will remain disciplined in our bidding approach. We continue to reach beyond our traditional project targets in geographic regions to secure quality backlog. As we recently announced during the quarter, we secured our first project for our Concrete business in the Florida market, and we are actively working to build on this success. We will continue to target select larger, longer-duration projects, which provide us with greater operational visibility. The two recently announced large projects for our Marine business fit this profile, with both projects scheduled to complete in 2024. In our Marine segment, we continue to pursue opportunities in the public sector at the federal, state, and local levels, including port expansion projects, Department of Transportation work involving bridges over water, Navy facilities, and environmental and flood control projects. We are also pursuing project opportunities in the private sector, as evidenced by the recently announced awards for private sector Department of Transportation projects along the Gulf Coast. As stated before, the passage of an infrastructure bill would be an additional catalyst for our end markets. However, even without this pending bill, we expect to see continued project opportunities for infrastructure projects in our markets. Ports in the U.S. are expected to spend over $160 billion over the next 5 years, focused on capacity expansions and upgrades. Likewise, absent a Federal Infrastructure Bill, we still expect Congress to address long-term highway funding by alternative means. According to the American Society of Civil Engineers, over 46,000 bridges in the U.S. are considered structurally deficient, and 42% of all bridges are over 50 years old. In our Concrete business, we continue to see projects from a variety of end markets, such as tech, e-commerce, and large retail moving forward. Demographic trends will continue to drive project opportunities in our markets. In Texas, we continue to see corporate relocations, such as a recently announced headquarters move to Austin. Similar demographic changes are opening up opportunities for us in the Florida market. To sum up, although our third quarter results were disappointing, we are heartened by the solid backlog we added during the quarter, along with the overall positive bid opportunities we see ahead. With that, I'll turn the call over to the operator for Q&A.

Our first questions come from Marco Rodriguez with Stonegate Capital.

I was wondering if you might be able to quantify the impacts you saw from all the headwinds in the quarter.

Yes, Marco, the vast majority of them were related to the project phasing, particularly in the Marine business. That was the biggest impact to the quarter. You saw the significant drop-off in revenue in that segment. That accounts for about 80% of the impact. We did have a hurricane and a couple of hurricanes, tropical weather along the Gulf Coast, which affected our Texas operations and our operations in the New Orleans area. And we had COVID impacts too, just like a lot of other people saw, we had a big spike in COVID cases, particularly in some of our project management teams with the Delta variant that kind of spiked up in the third quarter, particularly in August and September. We've now seen that drop off. And I think as of last week, we only have one open case in the company. So that's good news. But the vast majority is just the phasing, just the gaps created by a multitude of things: the timing of new awards, the runoff of prior work that we had been working on, the projects pushing rightward. And obviously, a lot of the work that we've recently won will start during the fourth quarter and into 2022. So again, the major headwind in Q3 was around the phasing of work, particularly on the Marine side.

Got it. Very helpful. And can you give us a sense as far as what your utilization rates might have been in the Marine segment? And then in your prepared remarks, you indicated that there's obviously going to be an improvement in Q4, just kind of given all the backlog that you have. Can you maybe then also put a little bit finer point on what you envision your utilization rates moving towards in Q4 and then into fiscal '22?

Yes. I think we don't give specifics on utilization rates for competitive reasons, but suffice to say, because of the phasing issue I just talked about, utilization rates were well below normal on the Marine side, which is where the bulk of our equipment is. And of course, that's a double-edged sword. So we didn't have the revenue to generate higher gross profits at the job level. And then, of course, we have a higher rate of unabsorbed equipment and labor cost just due to the utilization. So utilization, for the third quarter, was well below where we would like to see it. We do expect that to start improving as we get into the fourth quarter and start getting some of the projects ramped up, particularly, we're expecting to see some of the dredging projects that we recently announced begin during the fourth quarter, so we'll start to see improvements in the utilization of those assets.

Understood. And then can you also give us a sense as far as what the margin profile looks like for the new contract that you announced here recently?

We don't get into specifics on margins, but I will say this: we've set out what our targets are for our EBITDA margins for both segments. And we think these projects help us to start moving towards those goals. We see a significant amount of uptick in utilization, which will be good for us. We got a lot of good, particularly on the Marine side, some good long-term anchor projects, if you will, that will continue to provide a good base to build from as we go through '22 and into '23. And again, we have capacity levels to continue pursuing the upcoming bid opportunities, and hopefully, securing a good quality backlog, which is what we're focused on. So I think the recently announced projects are consistent with driving us towards our overall targets for margins.

Got it. And last question for me. Just wondering if you can update us on the pricing environment for the Concrete segment.

It varies by type of project and geographic location. Some markets are a little more competitive than others, when I'm talking Houston, Dallas, and Central Texas, it depends on the type of project. But we think that we've made good strides in that division in terms of where we want to be. Obviously, we didn't perform at the bottom line level in the division in the third quarter. A lot of that was due to some of the wet weather and the COVID impacts I talked about earlier, with project management teams being impacted there. And then we had one project that we were completing a structural project that we've completed, and we had cost overruns, but it's a single project. I think in terms of the overall competitive landscape, it's a mixed bag, but we're focused on, again, like I said, finding those projects that help us have the most attractive prospects for achieving our targeted margins, and we think that works out there. There's a lot of good prospects for us in the pipeline. And as we've talked about, new awards for a low bidder since the beginning of the quarter, we continue to recognize new awards as we're moving forward here.

Got it. Appreciate your time. Thanks.

Our next questions come from the line of Julio Romero with Sidoti.

Thanks for taking the questions.

All right.

So I wanted to follow-up on Marco's question. On the margins for the recently won projects. I think you mentioned that the margins are moving towards the segment target ranges, but would that indicate that maybe the bid margins are somewhat below the target ranges, but perhaps with some execution you can get to the target?

Well, I think it's a couple of different things. Not all projects are made the same. Some projects have more materials in them, some projects may have subcontracts to them. And that's why we don't necessarily get into specifics about margins on individual projects. What I would say is though, a very big positive that we picked up the backlog that we did, will absorb a tremendous amount of labor and equipment and provide that kind of anchor base for that as we move forward, providing the visibility for that equipment and labor. And still, we have capacity to pursue additional work. So obviously, our objective is always to meet or beat our bid margins, but also keep a focus on all the project mix that we have, both what we have in hand today and what we're pursuing going forward to achieve our objectives, and we think these projects help us do that.

Okay. Can you provide information on the number of unproductive days you experienced this quarter, or compare it to the same quarter last year?

Yes. I think it was a little bit up from the prior quarter. We didn't quantify it, but it was effectively a couple of weeks' worth of impact from weather, and again, aggregated all that wasn't consistent throughout. But obviously, the tropical weather that hit Texas impacted both our segments for a few days, a good part of a week just to secure and recover from the wet weather. New Orleans, again, we kind of had two different tropical impacts over there, one a hurricane and one of remnants from the tropical weather in Texas. So again, a couple of weeks' worth of impact there.

Okay. Got it. And then the last one for me is just on a quick update on ERP and when you expect to start seeing the results? Will the benefits from ERP flow through the income statement?

Sure. Well, as we've talked before, we're on schedule in our implementation. We're getting into the meat and potatoes of that right now. And we're still targeting full implementation by midyear next year. As you may be aware, when you're doing an implementation like this, you have to run parallel for a little bit. There's a lot involved in terms of making sure that you don't turn off the old system before you got the new system up and running smoothly. But we are on target. We think as we get this implemented by midyear next year fully, we will start seeing incremental benefits from that each quarter going forward. Again, we think this is going to be a really great opportunity for us to improve our business with the utilization of our new system.

Okay. And best of luck in the fourth quarter.

Thank you. Our next questions come from the line of Alex Rygiel with B. Riley.

Mark, could you quantify the cost overruns associated with that Concrete project?

Yes. It was a little over $1 million, and it had to do with concrete overruns and a lot of that. The concrete overruns were due to a number of different factors. This is a first structural project, a large structural project we're doing in a new market, the Central Texas market. We had issues with labor turnover during the course of the project. We also had some rework on some of the upper floors that we had to do and ended up having a little bit of an overrun on the quantity of materials due to the rework and some other things. And so that impact was recognized in the third quarter. The project is executing well in that division. This project is completing. It was substantially complete at the end of the third quarter.

And then the project award in Daytona, which I guess is a new market. Can you talk a little bit about sort of your expectations for when this market might turn profitable?

Well, we were hoping to make a little more progress this year, but this is a relatively small project for us, but we do have dedicated resources from our Concrete division located in the market. We are chasing a number of opportunities in that market. We think that right now, we're leveraging the infrastructure, if you will, of our Marine business in that market. So we don't have a lot of cost in that market. And obviously, any work that we pick up, we expect to be profitable work for us and to start contributing. Our expectation for this year kind of got pushed into next year, but we're targeting kind of an initial foray of about $25 million of revenue coming out of that market. That's our initial target. This gets us started on that. So we got a relatively small light commercial project, but we've got a number of opportunities that existing general contractors or customers that we have today in our Texas markets have been asking us to quote on work in that market. And so we've got a lot of potential opportunity up in front of us.

And you won a lot of work in the quarter, which is fantastic. But can you talk about sort of the burn rate of that work? Is it all work that's going to get burned off in 2022? Or is it going to stretch out a number of years?

It's a combination. We have a couple of large projects that we won and announced, including the Florida Department of Transportation job and four other jobs, which will extend into 2024 due to their longer duration. Some recent dredging work we just picked up will be completed in the first half of 2022. Overall, we have a mix of projects, with some dock work primarily scheduled for completion in 2022, and others extending beyond that.

Thank you. Our next questions come from the line of Poe Fratt with Noble Capital Markets.

Just a follow-up on the backlog burn. Can you be a little more specific on what you think will burn off in the fourth quarter? And then also for the full year of 2022?

In the fourth quarter, we are ramping up on several projects. This means that some dredging work may begin during the quarter. We are preparing for other projects, such as certain DOT initiatives, and handling the usual submissions typical of a startup project. We expect some mobilization to occur in the fourth quarter, but the major work won’t really kick off until 2022. We are anticipating an improvement in utilization and gross profit for Q4 as these projects start. Looking ahead to next year, a significant portion of our backlog will be addressed in 2022, though some larger projects, particularly the Florida Department of Transportation contract and the Texas port project, will continue into 2024. While a substantial part of our backlog is set to be completed in the next 12 months, we also have a portion that will extend beyond 2022. Our project duration remains consistent, typically falling within a 3 to 9-month range. Most of our backlog is in that 3 to 12-month timeframe, with a few projects extending well beyond that period.

Got you. So will the fourth quarter look more like the second quarter or more like this past quarter?

Well, I think probably somewhere in between. I don't think it's going to look like this past quarter. Obviously, our focus is trying to perform better, obviously, from where we were in Q3. We do think we'll have increased utilization again as these projects start up. We don't think it's going to look like the third quarter, but we keep grinding away. Our objective is to have positive EBITDA and move towards improvement on the bottom line as well. So I think somewhere in between that is probably realistic at this point from where we see the start-up of this work in Q4.

I may have missed it, but when you mentioned the shortfall, you stated that 80% of it was due to gaps in project timing. What number is that 80% based on? Should we consider last year's EBITDA for the third quarter to assess the shortfall, or would it be more appropriate to compare it to the second quarter, Mark?

It would be somewhere in between because we are comparing to the previous year and not using that prior year as our target for the third quarter of this year. If you consider what our target might have been for the quarter, it was probably a bit lower than what we achieved last year. Last year, we had several large projects, such as the T5 project in Seattle, which consumed a lot of resources. We used significantly more on that project in the third quarter last year compared to this year. There are various factors at play, but essentially, the main reason for the shortfall when compared to last year is related to project timing.

It seems that the last two quarters have been quite challenging due to unexpected events, such as weather issues and COVID. What percentage of your workforce is currently vaccinated? Do you have that information?

We do have a handle on that number. I really don't want to give that out publicly, but we are making a lot of progress in getting people vaccinated. And obviously, we're addressing the potential for these mandates that are in the works right now. We will be fully compliant with any mandates that come down. We're making progress on that. But as I said, we're not unlike a lot of other people that you've seen or you've seen in the numbers out there. We saw in the second quarter our COVID cases dropped dramatically from where they had been tracking late last year and into the first quarter this year as the vaccine started taking hold and things like that or other forms of immunity. Our case load dropped off almost nothing by the end of the second quarter. But then the third quarter, the Delta variant, we did see a significant spike up in our cases, which, as I said earlier, we've seen that drop off as we got through the third quarter into the fourth quarter, and we're back to a very low case load. And we're making progress on the vaccination front with getting a good chunk of our workforce vaccinated.

When you consider the various challenges faced this quarter, some of which may extend into the fourth quarter, how do you anticipate 2022 will compare to previous years? Ideally, it wouldn't be similar to 2021, which was a terrible year. Would it be more in line with 2019? Achieving figures similar to 2020 in terms of earnings or EBITDA seems quite ambitious, but is it possible to return to the levels seen in 2019, Mark?

Well, I think what I would say, again, we kind of talked about this in the remarks, there is a lot of the progress we hope to make in '21 looks like it's pushing into '22. Again, in a lot of respects, this has been our COVID year from the standpoint. I've said that before, with just the impacts to the markets and things like that and the substantial level of backlog that we had going into the pandemic, which benefited us in 2020. And then we were disappointed in the whole economy restart in '21 and the lingering impacts in our markets from the COVID pandemic. That being said, I do think we're getting through that. We've obviously got some challenges out there from the macro standpoint. But we do see a good pipeline of work up there. We've got good backlog. We've got an elevated level of work quoted and outstanding. We continue to win work. So our expectation is that we see improvement over '21, for sure, and focused on getting back towards what our expectations were for '21, and that's where our focus is right now.

Great. I understand there's another bridge project in Florida that will be out for bid in December. Do you have enough capacity to handle two bridge projects at the same time, or are you considering focusing on other projects where you feel more comfortable, especially on the Marine side, while also looking to build up the Concrete side?

Of course, the resources in each division are largely independent of each other. So one wouldn't have an impact on the other. That said, we do have capacity, as I said earlier, to chase additional work which we are doing. Whether or not we do have capacity for the project you're referencing, whether we go after that project or pursue alternative work that we're looking at is to be determined. But I think the takeaway is that we have the capacity to keep bidding and winning work. And of course, as I said earlier several times in my remarks, we will be disciplined in our approach. We want to select and go after the projects that we think have the best opportunity for us to achieve our objectives. And so we'll factor all that into which projects we bid on and how we bid on those projects, what our bid rate is and how we view our competitive capacity or competitive standing on the various opportunities that we see in front of us.

Yes, there is more of a public-private mix now. Looking back, closing the sale of Tampa was a really positive event. There are other potential asset sales, such as East West Jones. Can you discuss the timing for any additional asset sales? More importantly, how do you plan to use the funds? Your stock is currently around $4.30. What are your thoughts on buybacks at this time?

Well, on the buyback front, obviously, that's always a consideration for us, particularly as you say, where the stock is. Again, in the near term, we do have a lot of work that we just picked up. So we want to be cognizant of the working capital needs to get started on the volume of work that we just picked up. Of course, we're still working on our ERP implementation, which we just talked about. And as a reminder, we are in the process of rebuilding a dredge to replace capacity in our dredge fleet. So those are all things that are ongoing right now that are near term prospects. With respect to the timing of asset sales, our property in Port Lavaca could be any time, it could be this quarter, it could be next quarter, we'll have to see on that. I mean, we're making progress there and getting to a close date, but don't have one set yet. On East and West Jones, we do have that property under contract now. But obviously, there's a lot to do between now and closing. So it's possible we could see that close in the first half of next year, but too soon to tell at this point.

I apologize for some of the questions, but it's interesting that you have a contract with East West Jones. It seems that the zoning issues you faced in Tampa might not be a problem here, so hopefully, the zoning initiatives won't be a concern. Can you provide a potential estimate? We were anticipating around $1.40 million to $1.45 million; is that in the right range for that asset sale?

It's less than that. It's kind of in the mid-30s range. We had it listed at a higher price, but we think the offer that we received is a good offer. And so we're focused on trying to get that close. Different issues, of course, as you mentioned, than we had in Tampa. But we'll see how we get through the diligence period with this buyer, and we're focused on getting that deal closed as quickly as we can. But again, too soon to tell, it's possible that it would close by mid next year.

Great. That's great news. And then just one last one, if you wouldn't mind, with capital spending, you're talking about rebuilding an asset. Can you talk about capital spending in the fourth quarter and then for 2022? It seems like it's lagged a little bit through the first nine months of 2021. So that would be helpful.

Yes, we are starting with a target of about $20 million. We will manage that as necessary. Considering the results from the third quarter, we are being cautious about the timing of capital expenditures. We expect a slight increase in capital spending, but in the fourth quarter, we should remain below the $20 million mark that we mentioned earlier this year. This is preliminary and will be reviewed in future discussions about 2022. For now, the $20 million level is a good baseline, and we will provide updates as we progress.

Our next questions come from the line of Tristan Bar.

I’m a bit surprised by the overall tone of this call. Clearly, the third quarter did not meet expectations, and the fourth quarter is also looking weak. However, this appears to be a low point. Considering the contract awards announced and the heightened focus on infrastructure, whether or not we see a federal bill is not for me to say. Nonetheless, there is increased attention in this area. You have $40 million worth of properties for sale. Even if we set aside your target margins, if you approach historical margins, the company is quite undervalued. Many of the issues mentioned for the third and fourth quarters are already reflected in the stock price of $4.25. I believe you missed a significant opportunity by not offering a broader range of guidance for 2022, which would change how investors view this company. I wish you would have realized that this time of year is when many investors look toward 2022 and assess company prospects and values. At $4.25, given reasonable expectations for 2022, I think the company is heavily undervalued.

Thank you for your feedback and comments. As I discussed with Poe earlier regarding the previous questions, our focus is to align with our objectives from 2021 as we transition into 2022. We anticipate the improvements you mentioned as we approach 2022, and we are committed to that goal, having made significant efforts with the backlog we've built in the third quarter. Looking ahead to the fourth quarter, we will be seeking to secure more work and enhance the backlog further.

For those that are new to the story or newer to the story, I think it would help if you remind people what you were looking for in 2021.

For '21, we were looking for EBITDA in the low to mid-40s range. And again, that's the commentary around the expectations for 2021 shifting into '22. We've still got more work to pick up in order to achieve that, but that's what our focus is on.

So taking a step back, though, again, I think that should be explicit and not necessarily kind of dancing around it. I mean, if you say, hey, these are expectations, and we still need to work towards them, but this is what we think is achievable if we execute on our plans. Again, taking that number and looking at where you currently stand, particularly if you now have the other property under contract, the stock looks incredibly cheap. And I think, while I don't think you guys should have glossed over the issues, I mean, clearly, you had some operational issues and some weather issues in Q3, and clearly, some of those are going to persist into Q4. Again, I think there should be some aspect of giving investors reason for hope because if you guys even approach $40 million and this company is incredibly cheap looking at 2022. That's just my opinion.

I agree with you. To reiterate what I mentioned earlier, the main takeaway from the quarter is that we believe it's a low point. We anticipate seeing improvement as we enter the fourth quarter and into 2022. We have a significant increase in backlog and the capacity to handle even more. That’s what we are focused on moving forward.

Thank you. There are no further questions at this time. I would like to turn the call back over to management for any closing remarks.

Okay. Thank you, Darryl, and thank you, everyone, for joining our third quarter earnings conference call. We look forward to talking with you again in February for our year-end and Q4 results. Thank you, and have a great day.

Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.