Orion Group Holdings, Inc.
Q1 2021 Earnings Call Transcript

Published: 2 May 2021

[Operator:]

Greetings. And welcome to the Orion Group Holdings' First Quarter 2021 Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Francis Okoniewski, Vice President of Investor Relations.

[Francis Okoniewski:]

Good morning everyone and welcome to Orion Group Holdings' first quarter 2021 earnings conference call and webcast. My name is Fran Okoniewski, I'm Vice President, Investor Relations and joining me today are Mark Stauffer, Orion Group Holdings' President and Chief Executive Officer; and Robert Tabb, our Executive Vice President and Chief Financial Officer.

[Mark Stauffer:]

Thank you, and good morning, everyone. Thanks for joining us today. Today, we'll discuss our first quarter 2021 results, provide updates on the benefits we continue to reap from our ISG and other operational improvement initiatives, and discuss our current outlook. I'll begin with an overview of the first quarter; Robert will then discuss our financial performance in more detail. Then I'll come back to discuss our markets and provide an update on our ERP implementation before we turn to Q&A. As always, I'd like to begin by thanking our team for their hard work and commitment to our success, not only with regard to operational and financial performance, but most importantly, with respect to safety.

[Robert Tabb:]

Thank you, Mark and thanks everyone for joining us. Today, I will review the financial results for the first quarter of 2021, then provide updates on the company's liquidity position, and the status of our real estate transactions. Starting with the financials, revenues for the first quarter of 2021 were $153.3 million, compared to $166.6 million in the first quarter of 2020, or a decrease of 7.9%. The decrease in revenues were driven by a combination of the timing and mix of projects from period-to-period and the extreme winter weather in Texas.

[A - Mark Stauffer:]

Thanks Robert. Turning to our markets, as I've stated previously, many of our end markets have continued to function normally or at increased levels during the pandemic, while others have seen project opportunities slide to the right.

[Operator:]

Thank you. At this time, we will be conducting a question-and-answer session. Our first question today is from Julio Romero of Sidoti & Company. Please proceed with your question.

[Julio Romero:]

Hey, good morning, everyone.

[Mark Stauffer:]

Good morning.

[Robert Tabb:]

Good morning.

[Julio Romero:]

Hey. So, wanted to ask generally, can you speak to the quotation level relative -- environment relative to one quarter ago? It sounds based on the prepared remarks, like it's certainly improving, what are you seeing out there in terms of activity levels? And do you find conditions to be supportive overall?

[Mark Stauffer:]

Yes, I think overall, we do. Again, it's the highest level of quoted work we've had outstanding in our history, we've got a number of projects that even in the government sector that we're bidding on that are not determined at the time of bid, they're under an evaluation period, it's kind of an RFP process. So, we've got a number of those outstanding right now. We've got several large projects that we've priced and we're waiting word on those. And again, as we commented on in the remarks, we have a significant amount of low bidder work at this point, and again, that's the highest we've reported out in about five quarters. So, we feel good in our Concrete business that -- a lot of opportunity there, and all of our markets, and then also in markets outside of our traditional markets in Texas. And on the Marine side, again, seeing work in the government sectors that we mentioned, but also which we're seeing things move forward in those areas in the private sector that were more impacted by COVID. That seems to be stirring and stuff coming out and pricing going in. So, we're pretty confident in the opportunities we see in front of us.

[Julio Romero:]

Got it. And on the Concrete segment, wanted to ask about potential geographic expansion there. I know you mentioned in your prepared remarks, you're targeting projects outside of Texas, such as -- I believe you cited Florida as an example. How about opportunities in other regions? I know you mentioned Louisiana in the past, can you just speak to maybe other opportunities outside of Texas and Florida?

[Mark Stauffer:]

Yes. Absolutely, yes, we've been working in Louisiana. We haven't won yet, but it's -- definitely we're competitive and very good effort by our team. And we're starting to get opportunities and invitations to look at work in other places besides Texas from our own -- some of our GCs. As we may have mentioned before, some of our GCs work in markets outside of Texas and have more national footprint. And so we've -- they know that we're looking to step outside of Texas, we're getting some -- getting opportunities and coming from other places now that they know what we can do. They know the quality of work we do, they know the quality teams we have. And so they're starting to ping us on other places as they're pursuing work in other markets for them. But for sure, we're definitely -- Florida is an area of great interest for us. It's -- population is growing, it's an incoming destination for population growth, just like Texas is. So, some of the same drivers that drive opportunities in that market are what we're seeing in Texas. And we're very familiar with that market, long standing presence in our Marine side and a great way for us to leverage our existing footprint to pursue these opportunities. Really pleased with our progress on that.

[Julio Romero:]

Great. And then just last one for me here is did you mention in your remarks that you expect backlog to expand sequentially as we progress throughout the year?

[Mark Stauffer:]

Well, what I said was -- is we've referenced the $134 million, we referenced all the opportunity, the quoted work we have out there, the pipeline we see. So, we think we're positioned for that to happen. Obviously, we have to bid work, we have to win work. But certainly we feel good about the prospects of a building backlog as we go through the year.

[Julio Romero:]

Sounds good. Thanks for taking the questions.

[Mark Stauffer:]

Yes.

[Operator:]

The next question is from Alex Rygiel of B. Riley FBR. Please proceed with your question.

[Alex Rygiel:]

Thank you. Good morning, Mark. Your win rate in the quarter was on the low end of historical levels. Can you help us to understand why?

[Mark Stauffer:]

Yes, it really relates to timing of awards and it goes back to what I was saying for the last question around -- a lot of work that's quoted, even in the government sector, that's RFP type work, the way we do our calculations. Those -- all those quoted work that we have outstanding, all the stuff that we're waiting for determination on is not included in the calculation that we do. So, we view it as a timing thing and we would expect that to increase as we go through the second quarter. We've already got a lot of work that's been low bidding -- a low better, as we mentioned in our remarks, historical level of quoted work outstanding. So, as we get determinations on these things, we feel good about our chances and a lot of the work that we've quoted, we would expect that to uptick as we get into the second third quarter.

[Alex Rygiel:]

And then the SG&A target of 8.5%. When might you get to this level?

[Robert Tabb:]

We think that as we progress through the year, we have a good shot at this year from adjusted standpoint removing out all of the ERP. What we'll also have moving expenses as we sell some of these properties, which we'll add back. But no, it's a target for this year and we think we'll get there. Now, it's going to be weighted, right? It's going to be a little bit heavier on those percentages in the earlier part of the year we've got to abate as we get into the year.

[Alex Rygiel:]

And then lastly, sounds like you're going to spend a little bit of CapEx on some dredge rebuilds. Can you quantify that for 2021 and 2022?

[Mark Stauffer:]

Well, for 2021, we'll fit it into the levels that we talked about before. So, we've begun the process of converting the dredge that we had been using as a booster, so we're going to convert it back, but not only that, we'll rebuild it and upgrade it. So that process is ongoing and that will fit within the CapEx targets that we've talked about previously for 2021. Premature to talk about 2022 at this point, but we will be talking about that as we as we go throughout the year. That's going to be a multi-year program for us. But -- so we will comment on that in terms of -- when we talked about 2022 CapEx and beyond. So, we'll have more to say about that as we go through the year.

[Alex Rygiel:]

Thank you.

[Operator:]

The next question is from Marco Rodriguez of Stonegate Capital Markets. Please proceed with your question.

[Marco Rodriguez:]

Good morning, everyone. Thank you for taking my questions. I was wondering if you can spend a little bit time here on the asset sales that are obviously recognized to your P&L, had a fairly high level gain in this quarter -- a little bit higher than what your historical trends are? I know this is kind of an ongoing thing and it might be difficult question to answer, but I believe in your prepared remarks, you're expecting additional gains on asset sales. How should we be thinking about these sales through this fiscal year? What sort of levels might be implied inside of your guidance? And then I'm assuming a lot of these higher level sales are basically being driven by the ISG review, and the effort to increase utilization rates, any color would be helpful.

[Mark Stauffer:]

Yes, well, I think there's kind of two separate things. There's one, it's kind of a normal, ordinary course of business that we've talked about through ISG. And just making sure that we -- if we have any equipment or tools that we use in the operations that are -- don't have the utilization or the return metrics that we want to see, then we look to dispose of those or otherwise figure out a way to -- just gain efficiencies in our use of equipment. Specifically, what Robert was talking about -- and in my comments are related around real estate, which Robert's covered in detail in his remarks. That -- those were more what we were speaking about to our remarks than the kind of the first category, which is just sort of ordinary course and a continuation of -- making sure that we've got the right equipment for our work and that has -- and some of that may mean, we're selling equipment, not replacing it, some of it may just be the ordinary course of -- something's reached the end of its life, we're selling that and we're replacing it with something new. So, it's a churn in the assets and we've got CapEx on the other -- that may offset some of those sales.

[Marco Rodriguez:]

Got it understood. And so just also clarify the non-operational asset sales, those are not included in any sort of guidance, correct?

[Robert Tabb:]

No, they're not.

[Marco Rodriguez:]

Got it, understood. And I don't know if I missed this on the call, but did you quantify the impact that the winter weather had on Q1 results? And if I remember correctly, we were talking about this, on the last call, that there was an expectation that this would probably be made up in Q2, Q3. Just kind of wondering if that's still the game plan, if you will, and wondering also if there might be any sort of compression in the margins just because of the delay?

[Mark Stauffer:]

Well, so -- yes, we did -- in the remarks, we referred to the impact of Q1 was about -- it was about $8.2 million topline impact because of the winter storm in Texas, and about $0.03 per share -- we were about $0.03 lower on our EPS as a result of the winter storm. Keeping in mind, I mean, the work will still get done. It flies to the right, but as far as -- being additive to future periods, it doesn't really work that way. Its -- again the work didn't go away, but we'll still execute on all that work that was delayed during that period. But again, it -- it's not additive to future periods. It just gets executed in future periods.

[Marco Rodriguez:]

Got it, understood. And then in terms of the Concrete segment, just looking at the operating margins, maybe if you can talk a little bit more about that and framing it in regard to the ISG review process. Obviously, the operating margins are not at the level that you're aiming for just quite yet. And you've made some improvements in terms of the types of bidding on work that is supposed to help kind of drive that. Maybe if you kind of update us on your thinking there on the IGS review process and how those margins might move a little bit here in the next, I don't know, 12 months or so?

[Mark Stauffer:]

Well, I think -- the -- again, the ISG initiatives have been implemented at this point. So, it's just as part of our daily DNA as we execute our work. I as you point out, we've still got work to do, to get to where our targeted levels are. That being said though, we've made tremendous progress. We continue to make progress. We saw that again in Q1 even with the challenging weather. For those that don't know, I mean it's the worst winter storm in Texas since 1890. All 254 counties in Texas were under a winter storm warning. I mean that's historical by any measure. And despite all of that, our team had made improvements in our Concrete business. So, we're moving in the right direction. We're -- we still have work to do. Our team is out there, we've got the right people and the right team and the right attitude and all of that to keep moving. And we're -- we factor that into where we expect to be for 2021. And we're keeping the move ahead on this effort and are very confident that we'll get to where our targeted margins are expected. But we've made a lot of progress. We continue to do so and we continue in Q1 despite the challenges.

[Marco Rodriguez:]

Understood. Thank you very much for your time. I really appreciate it.

[Operator:]

The next question is from Poe Fratt of NOBLE Capital Markets. Please proceed with your question.

[Poe Fratt:]

Yes. Good morning, Mark. Good morning, Robert. Good morning, Fran. I just had a couple -- first of all, a couple, 40,000 foot level questions. Just when you look at the sort of the way the company is structured right now, when you're talking about potentially making accretive acquisitions, can you talk about where potentially you're devoting most of your time and energy in identifying those acquisitions?

[Mark Stauffer:]

Well, we're not going to get into a whole bunch of detail. I mean its early days on this, but I mean we're looking for things that we're not being restricted. I mean we could potentially look for things that are within our existing businesses or complimentary services, complimentary geographic regions. Obviously, we'll factor in capital needs, CapEx needs, are they heavy or light and, again, looking for those things that can enhance and have a higher margin type businesses and -- or higher margin type services. So, anything that is in our existing lanes or maybe even adjacent lanes that can provide that forces is things that we're looking at. We're out there looking at things talking to investment bankers and think that we got some good opportunities to generate some opportunities for us to look at and successfully make the transaction happen.

[Poe Fratt:]

Right. And then, Mark, I was a little surprised that you were optimistic -- or it seemed like you're more optimistic on the cruise industry and I'm not sure how recent it is, but it seemed like the Royal Caribbean CEO made some comments about just said that Georgetown cruise port was uncertain and remained uncertain. And I was just trying to factor in sort of what you're looking at as far as the cruise industry over the next 12 to 18 months?

[Mark Stauffer:]

Yes. Well, I would tell -- I would separate Georgetown and Cayman Islands from any color on the remarks that cruise business and the cruise industry, in general. Georgetown -- the Georgetown pier has always been kind of an elusive goal for the cruise industry. I can tell you we did work down in Georgetown back in 2005, and they were talking about the cruise pier back then. As you know last year, there was -- pre-COVID, there was a lot of talk about that. But that kind of started sort of the local populations' opposition to that cruise pier was being felt even before COVID happened. So, I do think the cruise lines are reassessing that one but, Cayman doesn't I think speak for what we're seeing in other areas. We've been tracking -- and we're tracking pre-COVID projects in other areas. We've been tracking cruise pier activity or cruise-drive infrastructure project in the states as well. And we're starting to see moving on some of those things. We're starting to see moving on activity that we think will move forward in other places besides Cayman. So, I quite frankly wouldn't -- I don't place a lot of stock in the Cayman project moving forward at this stage. I'll believe it when I see it kind of thing. But that doesn't mean there's not going to be a lot of other activity elsewhere. I think bookings for 2022 cruises are up, new ships are being built. New ships are being built with -- to run off LNG. So, that's pretty interesting for us on a couple of different levels. So we think, there's going to be a lot of opportunities driven for us out of the cruise industry.

[Poe Fratt:]

Okay, great. And then when you look at Concrete and potentially, bidding into Florida, can you give us an appreciation for whether any of the low bids pending award or any of the quotes are associated with work in Florida? You already said that you bid into Louisiana, but I was wondering if Florida, is it active from the standpoint, we might see something over the second half or the rest of the year? Or is it still more on the horizon?

[Mark Stauffer:]

Well, I would -- two parts. One to answer your first question, no, nothing in our low bid or quoted at this stage is active in Florida. But the second part of your question, yes, we are targeting getting work in Florida this year. So, we've got prospects that we're chasing and pursuing and our focus is on gaining work in Florida this year.

[Poe Fratt:]

Okay, great. And then Robert, from a standpoint of a previous question had asked or referred to guidance, and I'm not sure -- maybe I just wasn't listening that carefully. But did you give guidance for 2021 whether it's from a revenue or EBITDA perspective or would you be willing to?

[Robert Tabb:]

Yes, on the last call, we said, mid to high $40 million range from an EBITDA standpoint. And I think Marco was asking about the asset sales, the real estate sales are not factored into that guidance. Any equipment sales and things like that that pieces factor, but the real estate gains are not considered in that number.

[Poe Fratt:]

Great. So, the guidance is unchanged from that mid to high $40 million range?

[Robert Tabb:]

That’s what I'm saying, yes.

[Poe Fratt:]

And again exclusive of ERP cost?

[Robert Tabb:]

Yes, exclusive ERP and any moving costs associated with our assets.

[Poe Fratt:]

And then it looks like Robert, in the first quarter, the ERP costs were a little bit lower than what I thought they might be for the run rate for the year. Is that accurate? And mean also could you give us an idea of sort of how the ERP expenses will look for the rest of the year?

[Robert Tabb:]

I expected this to start wrapping up. We got through the design phase, through the first part of the year. But this is a piece where -- this is a time where we'll start spending more dollars. So, you'll see that that ramp up. No change in that overall price tag. We think that to go live sometime in the middle of next year. But what I would expect is to see a nice ramp over the next couple of quarters.

[Poe Fratt:]

Sort of in the $1.5 million to $2 million range per quarter, or it's sort of can you give us an appreciation for just how much of a ramp?

[Robert Tabb:]

Yes, it really just depends on the consulting. A lot of this is the consulting dollars into consulting hours if that breaks out. We have a better feel of the timing. But yes, I could see it jumping up in that $1 million range.

[Poe Fratt:]

Great. And just to confirm your working estimate for CapEx for 2021 remains $20 million?

[Robert Tabb:]

Yes, we said $22 million to $20 million in our guidance.

[Poe Fratt:]

Great. Thank you.

[Operator:]

The next question is from Gerry Heffernan of Walthausen & Co. Please proceed with your question.

[Gerry Heffernan:]

Hello, guys. Thanks for taking the call. To start off with I have a rather elementary question here and it goes back to the person that had asked about the win rate. And Mark you commented on timing of awards comes into that as far as why is it so low, which to me, begs the question, what exactly is the win rate because it sounded like if you bid on 10 projects, won one, lost one and the other eight are still outstanding as not decided, is that a 10% win rate?

[Mark Stauffer:]

Well, the way we calculate it -- and this is the method that we consistently do -- we've consistently done it is that until we have the determination of the outcome of the bid, we don't factor it into the stats -- the calculation of the stats, and that's consistent with how we've done it over overtime. So, there's no change in how we've done it for this quarter versus the previous something quarters. So, if we have work that we've quoted, but there's no determination on it, it does not factor into the win rate calculation.

[Gerry Heffernan:]

Okay. All right. I just wanted to make sure I understood that clearly. In regards to this $2 billion of bids outstanding, how does that break out between Marine and Cement, if you can just give me just roughly?

[Mark Stauffer:]

Roughly, probably about 75% of that is on the Concrete side and 25%, roughly, is on the Marine side, which is consistent with what we see just historically. We bid a higher volume of work in our Concrete business as a subcontractor. And we have different competitive dynamics. Our Targeted win rates are a little bit lower in that business than it is in the Marine business. So, we are consistent with what we kind of see.

[Gerry Heffernan:]

Okay, very good. And so of the 25%, as Marine, call it, 500 and understand I'm just talking rail numbers here, I don't want to get too specific with it. How does that number stand up historically in regards to Marine bids outstanding and marine activity out there?

[Mark Stauffer:]

It is -- it's a fairly -- it's towards the upper end of what we would see historically. So, it's higher than average, I would say, based off our historical last few years.

[Gerry Heffernan:]

Okay. And is there any geographic focus to that? Is it well diversified? Is there any one area that's really juicing that business activity?

[Mark Stauffer:]

No, it's kind of across the board. I mean I was -- again, I think, as we talked about before and mentioned again, today, the energy space in the Caribbean market has been somewhat muted for the last year based off COVID. We're starting to see stirrings on that. But in terms of geographic, that kind of -- the quoted work, outstanding, low bids, it's kind of -- its spread across the geographic footprint.

[Gerry Heffernan:]

Okay. And, as you said, 500 would be above average, but we're not talking peak levels here. What is the capability of assets in the Marine construction business, in total industry-wide to handle a $500 million bidding activity? At what point does the industry become taxed on having assets available to meet demand?

[Mark Stauffer:]

That's a tough question. But I think -- because, again, it depends on the type of service that's involved in a project. If you're talking about dredging services, that's kind of one thing. And I think the industry has capacity to serve as an uptick, if you will, in infrastructure spend, from the Corps of Engineers, as an example. With respect to other stuff, because it just depends, again, on the type of project, what sort of assets are needed to be used for that project. And it depends on again, on what equipments you might be using, because there's a certain amount of flex capacity that that you have access to as an example, a crane can work on land or can work on water, so there's -- that's not a limiting factor at all if you needed more lifting capacity. Floating equipment, that's a different story, but we certainly have capacity within our fleet, but there's also third-party rental capacity that's out there, so that can be flexed. So, that is one of the -- I can't give you a number about what the overall size of the market is because we pulled from so many different places. And our kind of work is always a subset of have a broader picture, if that makes sense for you. But I think if I understand your question, I think there's capacity in the system, there's capacity to flex that we believe and can take a higher volume of work as the economy picks up, and we potentially see an infrastructure bill.

[Gerry Heffernan:]

Okay, I appreciate that. I was just trying to get a feel for anywhere near a point where bidding margin start to push up because of asset availability, but it sounds like that's not the case.

[Mark Stauffer:]

I think -- again, I think other dynamics go into that in terms of the volume of work coming out. If we see GDP numbers continue to come out with -- today, first quarter came out, that was a pretty healthy clip. If we keep seeing that, there will be opportunities to pull -- press margins up as utilization increases. I would say it that way.

[Gerry Heffernan:]

Okay. Well, that's certainly very good to hear. Hey, in early 2020, one of the first stimulus bills that came out, I forget if it was number one or number two, in fact, I don't even know what number we're on now. There was a carve out for harbor efforts, I think of 15 something million or whatever. Did you guys actually see that low into business activity? And it's a lot of people are talking about an infrastructure bill, and everybody thinks it's a good idea and will be good for them, but I'm wondering how much this -- from our government level has been lift service versus you guys actually seeing it where you go? Well, that that would not have happened if it was not from the stimulus effort.

[Mark Stauffer:]

Well, I -- we are seeing a lot of spend in -- from port authorities as they execute their plan. Again, I think that's kind of come from either their own ability to generate capital investment funds, coupled with whatever they've been getting from the federal government on that. There is talk in the stimulus bills that we've seen running around, and obviously, we'll have to wait and see what ultimately gets done and what that looks like. But I do know water infrastructure in particular ports are what we've seen are being discussed in some of the bills that are getting kicked around. And I think I've mentioned this on a call before, but we go back 10 years to kind of a previous kind of stimulus bill back in the Obama -- early Obama -- first Obama administration, there was -- it was not a large amount, but it was a huge amount for the Corps of Engineers. I mean, it was only a $5 billion or $10 billion, but it was a massive amount compared to what their normal budget is. So, they effectively almost had a doubling of their budget for a couple of years there from stimulus. So, a little bit can go a long way relative to the overall size that's being kicked around here versus -- for like the Corps of Engineers. But we also would expect if infrastructure bill get done for DoT, the benefit from that from the state DoT, which would drive bridge work for us and for port authorities that's been talked about a lot in things that we've seen too, which would continue to help drive the expansion plans and a lot of these port authorities already have on the books.

[Gerry Heffernan:]

Okay. Last area of discussion, if you would. I'd appreciate if we could talk a little bit about capital allocation. Your -- to the extent that you're able to work towards your annual forecast here of mid high 40s of EBITDA that will be back to back years. I believe last year, the tally was around $47 million of EBITDA. Even with the ERP effort, there still should be a pretty good free cash flow to further reduce debt on the balance sheet. Can you talk to us about -- and then and you know what, I missed the comment on where the State of the Tampa real estate sale is if you would remind me never being delinquent and missing that. But what do you do with the current tax structure you have? What do you do with a clean balance sheet, understanding that you already talked about M&A earlier? And at this share price and this valuate -- primarily, its valuation given strong EBITDA and free cash flow, how do you find an acquisition that is better than just buying shares of your own company?

[Mark Stauffer:]

Well, as Robert said in his remarks, and I did mine, we get to the point, and we'll evaluate all uses of capital including pure buyback. So, the way we look at it is the fortunate thing is it gives us a lot of flexibility. Obviously, as you mentioned, we have ERP, but you've kind of commented on that. We have ERP, where we're reinvesting in the dredge fleet as we talked about. And we're able to have really take advantage of -- be opportunistic on the M&A front. If something makes sense, obviously, we're -- it has would have to make sense for us. But, we'll evaluate all uses of capital including share buyback. So, everything's on the table and the good thing is we have the flexibility to look at all of the options.

[Gerry Heffernan:]

Okay. Can talk to your current debt structure, because I don't think you have great flexibility in that? And we certainly know from other information that the banks are desperate to have lending facilities, it would seem to me that post the Tampa sell, you would pay things off and enjoy a lot of free lunches from bankers trying to get your business.

[Robert Tabb:]

Yes, we -- as we get the Tampa sail complete, we'll definitely have the flexibility to change the structure and look at alternative options. I think you're correct, it is a strong banking market right now. I think Gerry the best thing is -- and we've tried to allude to this on the last call, and on this call is, as we get closer to those closing dates, we're going to make sure that we have maximum flexibility. We've talked to the banks, we have internal conversations. We're going to what's best and what creates the most value.

[Mark Stauffer:]

Operator, can we -- we have two folks in the queue, and we only have a few more minutes left. Can we move to the next caller please?

[Operator:]

Yes, sir. Our next question is from Christopher Sansone of Sansone Advisors. Please proceed with your question.

[Christopher Sansone:]

Hi, good morning. One quick question for me, regarding the $135 million award, how does the profitability on that award compared to your 2021 operating budget? Thank you.

[Mark Stauffer:]

It's in line with the work that we've been executing on and fits in line with what our guidance is for 2021.

[Christopher Sansone:]

Thank you.

[Operator:]

The next question is a follow-up from Poe Fratt of NOBLE Capital Markets. Please proceed with your question.

[Poe Fratt:]

Yes, thank you. Gerry pretty much hit all the points I've wanted to -- on cash flow and balance sheet and just maybe just a follow-up a couple things just so that we can sort of get an idea of how quickly this could develop. The second reading for the Tampa City Council is May 6th. When -- how quickly can you close after that? And then secondly, of the availability of $68 million, Robert, how much is the credit facility that expires in June? And could you move to cancel that early because you have such a strong balance sheet and you're generating free cash?

[Robert Tabb:]

Well, on the first one, I'll refer you back to my comments. We believe that property will -- the capital property will wrap-up sometime in Q2. As far as the debt you're talking about, the 364-day credit facility wraps up at the end of next month. We'll have some flexibility there with that banking group to further our strategic plan. Whether it's a creative M&A or something else, we definitely -- we definitely have been communicating with our banks and I think we're all in locks.

[Poe Fratt:]

Great. Really well-positioned. Thank you, Robert.

[Robert Tabb:]

Thank you, Poe.

[Operator:]

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

[Francis Okoniewski:]

Okay, thank you, Brock and thank you everyone for joining our Q1 earnings conference call. We look forward to talking with you again in late July for our Q2 earnings results. Thank you and have a great day.

[Operator:]

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