Greetings, and welcome to the Sterling Construction Company's conference call and webcast to discuss the acquisition of Petillo. As a reminder, this conference is being recorded and all participants are in a listen-only mode. There are accompanying slides on the investor relations section of the company's website. Before turning the call over to Joe Cutillo, Sterling's Chief Executive Officer, I will read the safe harbor statement. Some discussions made today may include forward-looking statements. Actual results could differ materially from the statements made today. Please refer to Sterling's most recent 8-K filings and 10-K and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions. This company assumes no obligations to update forward-looking statements as a result of new information, future events, or otherwise. Please also note that management may reference EBITDA, adjusted EBITDA, adjusted net income, or adjusted earnings per share on this call, which are all financial measures not recognized under U.S. GAAP. As required by SEC rules or regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in our earnings release issued yesterday afternoon. I'll now turn the call over to Mr. Joe Cutillo. Thank you, sir. Please go ahead. Thank you. I'd like to start by thanking everyone for joining today's call to learn a little more about our latest add to the Sterling family, Petillo. Before I talk about the details or give you a little more specifics on Petillo itself, I think it's important to step back and understand strategically why this is so important to us and where it positions us as we go forward. If we think back to 2016, when we put together our original strategy for the company, and 95% of our business was coming from low bid heavy highway, we articulated a path forward that would reduce our risk, diversify our end markets, and continue to grow our margins, and build a platform for significant future growth. In 2017, we added the first acquisition, which was our Tealstone acquisition at the time, doing residential slabs in the Houston market. Since then, we've grown that business in the Dallas market, not only from Dallas, but into Houston. In 2021, we expanded into the Phoenix market with the number one, number two, number three, and number four builders in the country. We continue to see great opportunities in front of us from not only a geographic expansion opportunity, but a growth opportunity, as we move forward. In 2020, we added Plateau to the portfolio, which was our first step into site development for E-Infrastructure and e-commerce type customers. It broadened our geographic footprint, brought us into a blue chip customer base in rapidly growing end markets with much higher margins and much lower risk than we had in the past. All of last year, we talked about what we would do with our cash, as we continued to buy down debt and throw off record earnings. We said that we would continue our focus in growing our highest margin, lowest risk areas with either bolt-ons, tuck-ins, or potentially look for a fourth sector, which would be around some other infrastructure specialty services. As a result, at the end of the year, we made a small acquisition that we announced on the 28th, which was Kimes for soil stabilization, that we've tucked into the Plateau business. That business is an area that we've seen the growth rates of soil stabilization demand on our projects grow 300%-400% over the last 24 months. We've continued to look at adding capacity in that space and found out, frankly, the best decision and easiest decision for us was to make a small acquisition, add that capacity immediately, and be able to leverage that across our footprint. In addition, what we're gonna talk about today is Petillo. Petillo is a specialty site development company up in the Northeast, focused with the same end markets that we do with Plateau, whether that's e-commerce, data centers, large sports facilities, et cetera. They're the largest player we've been able to find outside of our Plateau business. When we looked at them, what we realized is that they were really, I'll call it a mini Plateau, that's a few years behind in their evolution and development. The acquisition fits perfectly into our E-Infrastructure sector, broadens our footprint up and down the East Coast, expands our capabilities, not only from a site development standpoint, but Petillo offers added capabilities in slab. They actually will do the end slab for a lot of these warehouses, sound walls, paving, et cetera. Let's go to slide four. All right. Talk a little bit in detail on Petillo. If you take a look at Petillo itself, the way we look at it is it's kinda half the size of Plateau with half the earnings, but with the potential to continue to grow as we move forward. Again, site excavation, utility work, erosion control, concrete installation and repairs, and paving are the main efforts and activities that take place. When we take a look at the customer profile on slide five and the geographic footprint, what we realize is a very similar end customers to what we do with Plateau, very similar end developers that we do with Plateau. It just broadens our footprint, broadens our capabilities, and makes those relationships with those end customers even stronger than they've been in the past. We've recently talked, and throughout last year, talked many times about our customers continuing to try to pull us into other geographies and other footprints. This expands us into those footprints with capabilities immediately. We think not only will we get the immediate pickup, but there are also some very nice complementary synergies between Plateau and Petillo to grow each one of those businesses even faster in the future. Ron, you wanna talk about the financial profile and the accretiveness of it? Sure. As Joe mentioned, it's pretty easy to do, like, get excited because almost all the math is coming off of a great acquisition for Plateau and dividing it by two and including the revenues, the EBITDA, the price, et cetera, et cetera. A really great business. I think one of the things that makes it even better is some of the things that Joe spoke to, which is, we'll get to leverage in a second. But certainly, the cash flow generation for the last 24- 25 months enable us to do this with some significant accretion coming out of it. What I have on the slide is just some highlights for the nine months ended September 2021 and the last year's numbers. You can see the Petillo columns, but more importantly, when you get over to the right columns of both the sets of numbers, the pro forma combined, and of course, these are in the 8-K that was filed yesterday for further information. But you can see for the nine months ended, the net income accretion is about 16%, $8 million period-over-period, year-over-year, or three quarters for last year compared to this year, and about 14% on an EPS basis. For 12 months ended December 31st, Petillo had an incredible year, which would, when you do the pro formas on top of Sterling, accretion of $60 million of net income or 40%, together with earnings accretion, about 34%. Just incredibly positive for the with and without this transaction. Flipping to the next page, on page seven, this is sort of a little bit of a journey going backwards. As you recall, when we closed on the Plateau acquisition in early October 2019, we leveraged up higher than what we would say is our bandwidth that we'd like to stay in, but we did that on purpose. The quality of the cash flow was such that we believed that it would come down nicely. When you look at the graph, at the pro forma as-of-date on the acquisition of Plateau, our forward-looking EBITDA leverage ratio was 3.5 x. We've committed to ourselves and our stakeholders that we would get that down to around 2x- 2.5x by the end of 2021. We blew through that during the first quarter of 2021, so that we weren't done with that. When you go across the slide, at Q3, we're at 2.2 x. Because of the balance sheet that we have and the cash flow that enabled us to pay down the debt and releverage a little bit, the pro forma leverage ratio at the Petillo acquisition date is 2.4x. Twenty basis points buys us, give or take $40 million of EBITDA, which I think has been great. Just some highlights. A cash price for Petillo was $175 million. We used $20 million of company stock, so $195 million base purchase price. We funded that with a new term loan, essentially the same terms as we had on our existing term loans, same duration, same rates, same governance. We borrowed $140 million and used $35 million of our balance sheet cash to top up that purchase price. I think that all that's against the background of some pretty strong cash flows in the past, and we're pretty confident we'll continue with that. Good. Overall, if we take a look at the kind of value proposition that it brings to us, it continues to add to our highest growth, highest margin platform. We now have the geographic presence throughout the Northeast and the Southeast. If you take a step back and take a look at the East Coast from whether it's data center growth or e-commerce growth, it is the one of the highest growing areas in the U.S., where we'll have the lion's share of market share as we go forward, continues to build out our strategy and platform as we go forward. We're serving the leading national customers. We continue to expand our presence with blue-chip customers versus going after what we call public work customers, which are higher value, higher margins, what we continue to call sticky, where we have a value proposition that others can't overcome and make it hard for us to have major competition. We'll continue to look to add both capabilities and other offerings within this sector as we go into 2022. Along with our Building Solutions sector. The markets overall are extremely strong. The backlog for Petillo is at an all-time high going into 2022. We feel very good on not only where we're positioned today, but where this positions us over the next three to five years. With that, I think we'll turn it over for questions. Thank you. We'll now be conducting a question-and-answer session. If you'd like to be placed in the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star one. One moment, please, while we poll for questions. Our first question today is coming from Sean Eastman from KeyBanc Capital Markets. Your line is now live. Morning, Sean. Hi, good morning. This is actually Alex on for Sean today. Okay. Thanks for taking our questions, and congrats on the deal. Thanks. Can you talk about what drives margins for Petillo? It looks like the margin profile is even stronger than Sterling Specialty segment. Why is that? It looks like Petillo's margins are tracking lower year-on-year in 2021. We would just like to understand what's driving that variability. The margins, if you step back and look at, we break down the projects by A projects, B projects, and C projects. If you take a look at Petillo's margins on their A and B projects, which are predominantly site development, either very large site development or smaller site developments, they overlay right on top of Plateau. They're almost exactly identical. Where Petillo's margin looks a little bit different is with some of the added offerings. When you start doing the total slab or retaining walls and some of that, some of those margins are slightly lower than the site development piece. It skews those margins a little bit, but it gives them a competitive advantage to pick up those higher margins. They've also found that they've got some efficiencies and effectiveness out of managing those work streams for the overall project. When you look at the segment, really not a lot of difference there. The confusion is we've got some of the corporate costs in the segment that you're not seeing hit the Petillo numbers. Got it. Can you help us understand a little bit more about Petillo's three-year go forward revenue CAGR, how it looks compared to Plateau in your specialty segment of 5%-7%? Yeah, we think it's, we see no reason that it wouldn't be right on top of that, very similar growth rates. They're coming into 2022, and I think they have around $175 million of backlog, which is an incredible amount of backlog into 2022. We would hope we might even see a little higher than that as we get into 2022. We don't see anything that would cause us to think that those profiles would be any less than Plateau's. Got it. One last from me. Leverage now at 2.4x. I think you guys were trying to get this down to 2.0x before the end of the year. Can you just talk about your deleveraging strategy going forward? Can you talk about the free cash flow profile of Petillo's business as well, and maybe how free cash flow to EBIT conversion compares to consolidated Sterling or Plateau even? Sure. Ron, you wanna take that? Sure. Let's see here. Sorry, what was the first part of the question? 24, what's our buy-down kind of Oh, yeah. I think our bandwidth or our comfort range is somewhere between 2 and 3. Right now we're on the lower end of the midpoint of that, but we're happy there. We'll pay down debt if we don't have anything better to do to grow our company in different ways. I think we're very comfortable there, and we'll probably keep it that way. I think on the cash flow conversion, Plateau will look like Petillo, and vice versa. The CapEx tends to run low double digits, so $10 million-$12 million a year. That of course will always depend on what kind of growth comes out of it, that we need to either increase or keep it at that level. The cash flow conversion should be very similar to Plateau. It's really interesting. If you erase the names and looked at all the statistics, you would see- One half the size and one half everything. Yeah, you could almost cut everything in half, right, and it's lines right up. Beyond, they run their projects well on a investment standpoint, as well as that whole segment runs basically a push on net balance sheet, plus or minus. What this really shows to me, you know, is the leverage we got off of not only the Plateau acquisition, but the rest of our strategy, the amount of cash we're able to throw off, make an acquisition of this size and this caliber with really not moving our debt ratio, and positioning ourselves even faster as we will buy down the debt to be positioned to do another nice deal in the future. I think, you know, by the end of the year, without the transaction, we would've been well below two because we spent $35 million of cash on this, another almost $10 million on the stabilization business, and that would've put us somewhere in a 1-point-something range. Which is probably too low. Yeah, exactly. That, that's our comfort zone. Thank you. Thank you. Next question is coming from Brent Thielman from D.A. Davidson. Your line is now live. Hey. Thank you. Hello, Brent. Congrats on the transaction. Thanks. Hey, Joe or Ron, can you just talk around it. It looks like they're gonna have a little slower 2021 versus 2020. Maybe just talk around what caused that. Doesn't sound like that's an issue going forward. Maybe just a little more color there. It's two things drove it early in the year. If you look at the how they finished, they finished extremely strong. There was a couple major weather events up in the Northeast that were abnormal in the Jersey area. They usually don't get that big snowstorms and stuff. They shut down some jobs and pushed some jobs from beginning. Then they also ran into, in the first quarter, some supply chain issues on some projects. They had to push some projects out and delayed some activities. They were back on normal pace throughout the back half of the year. Looking at the backlog going into 2022 and looking at the projections and trajectory, they'll be right back on track. Nothing significant there, more of a timing issue. Also in the prior year, they had a couple killer projects that ended in their fourth quarter that really inflated their numbers over their normal trend, what I'll call a growth trend. They saw a little bit of an abnormal spike up in 2021 and a little bit of a headwind in 2020 rather, and a little bit of a headwind in the beginning of 2021. Yeah. If you think about it, our land development margins for the first three quarters were down somewhere between 1% and 1.5%. Supply chain. It didn't surprise us at all that we saw that very similar impact, at least on a global basis, on Plateau's or on Petillo's business for the first nine months of this year. That together with just a bang-up completion of last year. Are those supply chain issues a concern going forward? Or maybe you can just- No. I think, you know, I think like anything, Brent, early last year, everybody got hit the hardest with them. They figured out how to manage through them and do that sort of thing. It's a temporary blip. Well, again, we looked at the back half of the year, performance trends and run rates. They're right back where they need to be. Okay. You know, maybe you could just talk to the capabilities that they may offer that you don't already have and could be leveraged. And then also, I mean, it looks like a pretty similar client overlap, but, you know, are there any other- Yeah Blue chip customers they have that you don't have and could be leveraged? You know what? I'll start with that. What they do have are, if you think of blue chip customers, there's a handful of end developers that are doing the majority of their work. We're dealing with a good portion of those, but they have a group of developers that they work with that they're very close to, that's different than ours. We think there are some opportunities both ways. We think we can pull them into our portfolio, or there could be opportunities for us to get pulled into their portfolio in some of the southern states, where we're not doing that. We think there's a nice opportunity there. From a capability standpoint, you know, what they do that we don't and what we do that they don't, what we do that they don't is they sub out all their blasting and they sub out their soil stabilization. We've got blasting capabilities. We've just added to that soil stabilization capabilities. This will make us strategically look at some other things as we go forward to add some capacities there, so we can immediately help them out in those areas. What they do that we don't, they do paving. They'll do concrete slabs on some of the warehouses themselves. They do all their sound walls, curb and guttering. The easiest way to think of it is, and they do their utilities as well. The easiest way to think of it is, Plateau goes into a raw piece of dirt, takes it to the point where they're gonna come in and pour us a slab and basically is done and leaves. Petillo stays, until that slab is done and some of the paving, curb and gutter and sound walls are done, and then they leave. That's just more of a requirement of their customer base up in the Northeast. They want them to manage that and drive it. They found that it's helped them from a scheduling standpoint and productivity standpoint to do those type activities. We'll look at to see if that makes sense to expand further into the Southeast, and vice versa. Don't have a direct answer for you today. It's, you know, what's the margin profile and what's the risk of that, and we'll continue to look at it. This is, I think, a pretty equipment-intensive business, maybe just the state of the equipment you're acquiring. Is it gonna require some upfront capital to upgrade that? Just thoughts there. Yeah. They are, they've got a very good fleet. I'll tell you could probably eat off any piece of equipment they have. Unbelievable what they do and maintain and the caliber of the equipment that they have. We will have a nice opportunity with our Cat relationship, and our contract. We'll be one of the biggest customers of Cat in the country when we put this in. We'll be able to leverage that and get some help to them on some pricing and availability of parts and stuff. So very good fleet. As Rob said, they spend about $10 million a year in capital to continue to grow it. It's all big equipment, very much like Plateau, no small stuff, and in great shape. We don't have any concerns with having to go in and redo or make major capital investments to upgrade the fleet or do anything like that. They're using all telematics and all of the latest software, drones, et cetera, that we're using. As a matter of fact, in a couple areas, they're actually more sophisticated on some software. We've already had Plateau up there evaluating what they're doing and how they're using it. Plateau is already talking about pulling that into their process 'cause they think they can get some efficiencies out of it. It's always interesting as we talk about acquisitions, one of the biggest and most important things for us are the people and the culture. Mike Petillo is a phenomenal young kid. He started the business himself, you know, pretty much out of school. He's been doing it since 1994, I think is when it started. He's engaged, he's involved, he understands every element of the business. He's very articulate, very meticulous. And culturally, when we brought the Plateau team and the Petillo team together, they were 95% exactly the same, which was a great thing for us. The other 5% that each business is doing differently, it was pretty exciting to see each one of the businesses saying, "How do we learn and take what you're doing to make us better?" Really a good fit. That's great. Well, congratulations again on the transaction. Thanks for taking the question. Thanks, Brent. Thank you. Next question today is coming from Noelle Dilts in from Stifel. Your line is now live. Good morning, Noelle. Noelle Dilts, perhaps your phone is on mute. Hi. Good morning. Sorry about that. Congrats on the deal. Just one question from me. I was hoping you could discuss just kind of the typical project size and touch a little bit more on the contract structure. You know, you kind of discussed that in the presentation that this lowers the risk profile of the company, so just wanna make sure I'm thinking about that correctly from a contract perspective. Thanks. Yeah. Very, very similar to Plateau. The average duration of the jobs are probably six months or so. What we've really seen, it's very nice. When you go back and look at the history of Plateau and the history of Petillo, watching how they've evolved and grown, they've really gone down very parallel paths. I would say that Petillo is three to five years behind Plateau not from an operation, but from a project size and migration. But their average size is about $10 million a project. That has more than doubled in size over the last two years, I would say, going back and looking at it. They're continuing to move further and further into these mega projects that are the $35 million-$50+ million projects that we're doing for the big data centers and big warehouses. But very, very similar risk profile to what Plateau sees. The only nuance that they run into, which I wouldn't say is an incremental risk, it's actually a nice opportunity for them is, as you can imagine around the Jersey area and some of those areas, they have a contaminated soil segment that removes and deposits or disposes of contaminated soil. They don't burn it or do any of the remediation piece of it. That's a big piece as you're tearing down a lot of these old warehouses, distribution centers, factories, and redoing the land for the mega centers today. Very helpful. Thank you. Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further closing comments. Well, thanks again for joining today's call. I think it's a pretty exciting time here at Sterling. Not only have we positioned the company for a tremendous 2022, and have tremendous tailwinds in all of our markets, the addition of Petillo into the portfolio is just gonna broaden that strength and make us larger and able to grow faster in our highest margin, lowest risk businesses. It further opens up the opportunity to add other pieces and elements to the business as we move forward. If you'd like to schedule a specific call with us, please contact us through either our investor relations or the information on our website, and we'll gladly take follow-up calls. Have a good day, everybody. Thanks. Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.