Question-and-Answer Session
Operator
(Operator instructions) Our first question is from Steve Ferazani from Sidoti & Company.
Steve Ferazani – Sidoti & Company
Good morning. Just trying to figure out – significant sequential improvement in the margin on the Water side, I know last quarter you talked about seasonality being an issue and some problems getting some projects started. But, can you give a little more color here about why it was such a nice jump?
Andrew Schmitt
Well, you remember last quarter, Steve, we talked about the big construction problems we had because of the wet weather. And that really just – it really has a big impact and that was probably all of the impact. I’m not aware that the mix changed too much. But when we get slowed down like that, we end up with this situation in our business where you got all this fixed costs in the short run and you really can’t lay the people off just because it’s raining, so it really puts us in a bit of a box. So when the weather improves like it does in the second quarter, we really get a running start on these projects and they make up a lot a ground.
So it’s a big swing, but that’s always a problem and I think we said last time that February, March, April period according to the US weather forecasters said been one of the wettest, if not the wettest on record. So that was really excessive. And as soon as things dried out, I guess we're able to go back to work and we had a good backlog. And typically when you do go back to work you’re behind, so everybody is in a mode to really execute on a very efficient way because you typically have now fallen behind on these projects. Some of these projects have charges to you when you got a time frame to finish these projects into, so you typically have sufficient motivation to get it done, so you don’t run into damage charges.
Steve Ferazani – Sidoti & Company
Moving forward, seeing the backlog is still very strong, can we look at this sort of profit level as being reasonable barring seasonal factors?
Andrew Schmitt
Yes, I would think so. Typically, the third quarter is not bad for us weather wise either. You simply deal a little bit with some slowdown sometimes at the end. But for the most of part, second quarter last couple of years, we used to say it was a toss up between the second and third quarter and that was historically true. Since we’ve owned Reynolds, the second quarter seems to be the better of the two parts, but by and large, when you look at the infrastructure group, they've got the backlog in the business, they execute, we don't have any problems on job. Typically, it's not going to be too much difference.
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