Question-and-Answer Session
Operator
(Operator Instructions).Your first comes from Matt Duncan – Stephens Incorporated.
Matt Duncan - Stephens Inc.
First question I've got is you're going back to this increased bid activity you're talking about. If I remember correctly on the August call you mentioned that as well and I'm curious, has bid activity increased further from then to now? Are you seeing, kind of, a continued increase in this bid activity and when do you think you might start to see some of this bid activity turn into backlog?
Michael J. Bradley
To answer the first part of your question, Matt, the bid activity has picked up since the August call and it's really across a broader range of project opportunities, which is encouraging. I think that there's a lot of budget activity going on. There seems to be more serious planning on projects into 2010, all of which right now we see as encouraging.
I think the question remains as to when projects will get awarded, you know - we've continued to see at least starting early to mid last year, or calendar year 2009, you know, companies pulling back on spending and deferring capital. We're hopefully seeing some of that start to shift. We have seen an up-tick in maintenance activity recently so, you know, right now we're encouraged with what we're seeing.
Matt Duncan - Stephens Inc.
Mike, if I look at your margin levels that you posted this quarter, you know, the construction growth margin, I guess, was up pretty significantly from about 50 basis points, I guess, from the May quarter, and that's all in $23 million less revenue.
I'm just curious, kind of, what drove that? Was that maybe sold project execution on some projects that you were finishing that were fixed priced in nature or was there something else helping with that gross margin?
Michael J. Bradley
Well I think it was primarily just good execution on our projects. That's been a focus of ours, Matt, for some time in improving, you know, our project execution. And I think, you know, we're seeing that in our gross margins, so I think that's really what I think is driving that.
Matt Duncan - Stephens Inc.
Do you think you can hold gross margin around these levels or is the pricing pressure and higher contract risk that you've talked about maybe competitively maybe going to weigh on the margin level that you posted this quarter? And then, as a follow up to that and I guess, kind of, a little bit different question, Tom, can you tell us where that $1.2 million legal flee flowed through the P&L?
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