Alex Rygiel

Alex Rygiel from Texas Capital asked for more details on the improvement in contractual terms for new awards and their long-term implications, as well as an update on a multi-billion dollar healthcare facility project for Rudolph and Sletten and opportunities in high-tech manufacturing/reshoring.

Answer

Gary Smalley, CEO and President, explained that limited competition has allowed the company to negotiate better payment terms and eliminate provisions like 'no damages for delay,' which should lead to fewer disputes. He confirmed the multi-billion dollar healthcare project is in pre-construction with a high likelihood of proceeding, primarily impacting 2027, but noted that the Building segment's current focus is on healthcare, education, and hospitality, not high-tech manufacturing.

Alex Rygiel from Texas Capital asked Gary Smalley to elaborate on the improved contract terms for new awards and their long-term implications for Tutor Perini. He also inquired about a multi-billion dollar healthcare facility opportunity for Rudolph and Sletten and the company's outlook on high-tech manufacturing and reshoring opportunities over the next decade.

Answer

Gary Smalley, CEO and President, detailed how limited competition has allowed for better contractual terms, including improved payment, "no damages for delay" clauses, and differing site conditions provisions, which are expected to reduce future disputes and litigation. He confirmed the multi-billion dollar healthcare project for Rudolph and Sletten is in pre-construction with a high probability of advancing to construction, primarily in 2027, and clarified that the company's current Building segment focus is on healthcare, education, and hospitality, not high-tech manufacturing.

Alex Rygiel from Texas Capital Securities questioned Green Brick Partners on its current inventory levels, both for the company and across its operating markets, and sought directional guidance on 2026 community count growth and anticipated land spend.

Answer

President and COO Jed Dolson stated the company is carrying higher finished spec inventory due to strong buyer demand across all price points. CFO Jeff Cox specified about five finished specs per community at year-end, with Trophy accounting for half, equating to 1-1.5 months of supply. Jed Dolson added that Green Brick is 'middle of the pack' compared to competitors' inventory. Jeff Cox indicated a goal to increase community count by year-end 2026, noting new deals take 18-24 months to market. CEO Jim Brickman highlighted Trophy's higher sales pace reduces reliance on community count growth for unit expansion. Jed Dolson projected meaningful acceleration in community count 2-3 years out. Jeff Cox anticipated higher land spend for 2026 given increased lot supply, though specific guidance is pending, and Jed Dolson mentioned adding horizontal development dollars to previous land acquisition.

Alex Rygiel asked about Green Brick Partners' current inventory levels, specifically finished specs, and how these compare to broader market inventory across their operating regions. He also sought directional guidance on community count growth for 2026 and whether land spend in 2026 is expected to decrease from 2025 levels.

Answer

President and COO Jed Dolson stated that Green Brick Partners is carrying higher levels of finished spec inventory across all price points due to strong buyer demand for quick move-in homes, positioning them in the middle of the pack compared to competitors. CFO Jeff Cox specified about five finished specs per community, equating to 1-1.5 months of supply for Trophy. Regarding community count, Jeff Cox mentioned a slight decrease in 2025 but a goal to increase it by the end of 2026, with new deals taking 18-24 months to market. Jim Brickman highlighted that Trophy's higher sales pace means significant unit growth doesn't solely rely on community count. Jed Dolson added that meaningful acceleration in community count is expected in two to three years. For land spend, Jeff Cox indicated that specific guidance isn't ready but anticipates higher land spend in 2026 given the increased lot supply, while Jed Dolson noted significant horizontal development investment.

Alex Rygiel from Texas Capital Securities inquired about the outlook for housing starts, the specific components of the gross margin decline beyond incentives, and the company's current inventory levels relative to the broader market.

Answer

President & COO Jed Dolson stated that housing starts will be managed to match the sales pace and that the company is focused on maintaining an adequate supply of finished homes to meet current buyer demand. Interim CFO Jeffery Cox confirmed the remaining gross margin pressure was due to a product mix shift toward the Trophy brand. CEO James Brickman added that Green Brick's strong balance sheet provides a competitive advantage, allowing them to build spec homes when more leveraged peers cannot.

Alex Rygiel asked about the key variables that could influence Bristow Group's 2026 guidance, potentially leading to upside or downside surprises. He also sought insights into where the next notable government contracts might emerge and their potential timeline.

Answer

SVP and CFO Jennifer Whalen identified macro environment factors like oil prices (affecting 15% of exploration revenues), foreign exchange rates (British pound and euro impacting SAR contracts), and supply chain constraints/improvements as key variables for 2026 guidance. President and CEO Chris Bradshaw noted ongoing encouraging conversations with several European governments regarding outsourced Coast Guard opportunities, similar to existing contracts in the UK, Netherlands, and Ireland. He also highlighted broader opportunities for public-private partnerships with militaries and governments in Europe and the Americas to meet increased defense spending objectives, though no published tangible timeline exists for many SAR projects.

Alex Rygiel asked about the key variables that could influence Bristow's 2026 guidance, potentially leading to upside or downside surprises. He also sought information on where the next significant government contracts might emerge and their anticipated timelines.

Answer

SVP and CFO Jennifer Whalen identified macro environment factors like oil prices (affecting 15% of exploration-related revenues), foreign exchange rates (especially GBP and Euro for SAR contracts), and supply chain constraints or improvements as key variables impacting guidance. President and CEO Chris Bradshaw noted ongoing conversations with European governments about outsourcing non-combatant services like civilian Coast Guard, similar to existing contracts. He expressed optimism about the pipeline for additional government search and rescue work and broader public-private partnerships in Europe and the Americas to meet increased defense spending objectives, though without a published tangible timeline.

Alex Rygiel asked for an understanding of the market opportunity size for manufacturing, high tech, and fab plants in the coming years.

Answer

CEO Joseph Cutillo described semiconductor as being in its early innings, with major phases expected around 2030, but some projects hitting sooner. He noted that semiconductor plants are 7-10 year projects, potentially approaching $1 billion each, significantly larger than typical 3-year data center jobs. He also mentioned pharma plants with 3-5 year lead times. Mr. Cutillo emphasized that data center customers are not slowing down, planning bigger and more builds, and that Sterling's geographic expansion is proactive for future projects, particularly highlighting the 'on fire' Texas market.

Alex Rygiel asked for an understanding of the market opportunity size for manufacturing, high tech, and fab plants in the coming years.

Answer

CEO Joseph Cutillo described the semiconductor market as being in its early innings, with projects lasting 7-10 years and scopes approaching $1 billion, though major phases are expected closer to 2030. He also noted pharma plants with 3-5 year cycles and continued acceleration in data centers. Mr. Cutillo emphasized that geographic expansion is proactive, preparing for future projects, and highlighted the significant growth in the Texas market.

Alex Rygiel inquired about Sterling's historical experience with permitting issues causing project delays. He also asked if there were any signs of improvement or 'green shoots' for the building solutions segment anticipated in 2026.

Answer

CEO Joe Cutillo acknowledged that the permitting process is significantly longer post-COVID, often delaying project starts before contracts are finalized, and is a major factor in the extended timelines for mega projects like chip plants. Regarding building solutions, he stated that while the market has flattened, no significant uptick is expected until the second half of 2026 at the earliest, despite some builder programs and potentially decreasing interest rates.

Alex Rygiel from Texas Capital Securities asked if Sterling Infrastructure generally experiences permitting issues that could delay project starts, noting that the process is longer than pre-COVID. He also inquired about any 'green shoots' or signs of improvement within the building solutions segment that might indicate a recovery starting in 2026.

Answer

Joe Cutillo, CEO, confirmed that the permitting process is significantly longer than pre-COVID (e.g., 6 weeks now taking 3-5 months), delaying project starts before contracts are finalized. He stated that while this is a 'long pole in the tent' for accelerating onshoring/reshoring, Sterling typically sees delays before equipment is on-site. Regarding building solutions, Cutillo indicated that the market has flattened and is not worsening, but he does not anticipate an uptick until the second half of 2026 at the earliest, even with potential interest rate declines and builder programs.

Alex Rygiel with Texas Capital inquired about DNOW's strategies and activities to retain and incentivize key employees from both DNOW and MRC Global, particularly amidst the current ERP headwinds.

Answer

President and CEO David Cherechinsky acknowledged expected turnover during the merger, exacerbated by ERP disruptions. He detailed intentional efforts to retain top talent through financial rewards (bonuses, commissions) and by placing them in leadership roles for long-term growth. Cherechinsky emphasized demonstrating future benefits such as increased remuneration, enhanced supplier importance, and improved customer value through supply chain management. He also highlighted the shared mentality of top sales and operations leadership from MRC Global in these efforts.

Alex Rygiel asked for more details on LGI Homes' older inventory and the land that may be sold in 2026. He also questioned the elevated cancellation rates, specifically how long homes are typically off the market before cancellation, and if the reasons for cancellations have changed recently.

Answer

Eric Lipar, Chairman and CEO, explained that land sales primarily involve finished lots where LGI Homes has excess inventory, opportunistically selling to other builders to generate income and reduce debt. Charles Merdian, CFO and Treasurer, added that older inventory refers to communities with outsized starts relative to absorption pace, prompting strategic pricing decisions. Mr. Lipar confirmed that the cancellation rate is elevated, but the reason remains strictly the buyer's ability to secure financing. He noted that customers are taking longer to qualify, and LGI Homes' strategy is to keep them engaged longer, which, while increasing cancellations, is ultimately accretive to closings.

Alex Rygiel of Texas Capital Securities requested more details on LGI Homes' older inventory and the land positions that may be sold in 2026. He also asked about LGI Homes' elevated cancellation rates, specifically how long homes are typically off the market before cancellation and if the underlying reasons for cancellations have changed recently.

Answer

Eric Lipar, Chairman and CEO of LGI Homes, explained that land sales primarily involve excess finished lots, aiming to generate other income and reduce debt. Charles Merdian, CFO, added that older inventory refers to homes in communities where starts outpaced actual absorption, leading to targeted pricing decisions. Eric Lipar confirmed that the cancellation rate is elevated but the primary reason—inability to secure financing—has not changed. He noted customers are taking longer to finalize financing, and the company's strategy to keep them engaged longer, while increasing cancellations, is believed to be accretive to net closings.

Alex Rygiel of Texas Capital Securities inquired about the outlook for finished lot sales to other builders. He also asked for an explanation of the high cancellation rate in the quarter and what actions were being taken to mitigate it.

Answer

CFO & Treasurer Charles Merdian described finished lot sales as unpredictable but noted that the company is evaluating opportunities to sell excess lots to manage leverage and inventory. Regarding the cancellation rate, Merdian explained that it was inflated by a declining gross order pace and, most significantly, the cancellation of a large wholesale contract booked in Q1. Without that single event, the rate would have been in a more normalized range.

Alex Rygiel asked for broader comments on Washington policy and how it is being contemplated in the company's guidance, particularly regarding housing and affordability.

Answer

CEO Peter Jackson highlighted the increased focus on housing affordability from the federal government, noting promising incremental benefits despite not all ideas coming to fruition. He found the alignment between federal funding (e.g., transportation) and local compliance with reasonable regulations (codes, density) particularly interesting. He believes this reinforces efforts to overcome 'NIMBYism' and address societal problems caused by tight restrictions, viewing these conversations and incremental steps as encouraging compared to previous years.

Alex Rygiel asked for broader comments on Washington policy and how it is being contemplated in Builders FirstSource's guidance.

Answer

CEO Peter Jackson noted increased federal focus on housing affordability and promising incremental benefits. He highlighted the interesting alignment between federal funding (e.g., transportation) and local compliance with reasonable regulations (e.g., density), which he sees as positive steps against NIMBYism, though significant impact is yet to be seen.

Alex Rygiel of Texas Capital Bank asked if competitors were pulling back or if suppliers were taking notable actions to reduce supply, and questioned what specific factors changed from the prior plan to cause the reduction in guidance.

Answer

CEO Peter Jackson stated he has not seen any dramatic pullbacks from competitors or suppliers, noting everyone is managing the downturn but no one has made major moves. He then specified that the guidance was trimmed primarily due to a weaker-than-forecasted market for single-family starts and lower OSB commodity prices.

Alex Rygiel asked if the sale of Century Living units impacted Q4 gross margins, about the effectiveness of teaser interest rates in driving buyer action, and the industry's current level of spec inventory heading into the spring selling season.

Answer

Scott Dixon, Chief Financial Officer, clarified that the sale of Century Living units was not included in gross margin calculations or incentive commentary. Regarding interest rates, Dixon explained that while teaser rates below 4% (especially for ARM products) and 4.875% 30-year fixed rates are used to address affordability, the average originated mortgage rate was consistently in the 5.25%-5.5% range. On spec inventory, Dixon noted that Century and the industry entered the year with fewer specs, but improved cycle times (114 calendar days for Century) allow for rapid new product creation if market conditions improve.

Alex Rygiel asked about the drivers behind Century Communities' adjusted gross margin exceeding guidance, specifically whether it was due to broader cost controls or fewer incentives on new sales. He also inquired about the increasing use of adjustable-rate mortgages (ARMs) by buyers, its potential impact on Q4, and how ARMs affect the company's profitability and margins.

Answer

Scott Dixon, Chief Financial Officer, explained that the improved adjusted gross margin was primarily due to continued success in reducing direct construction costs, which offset higher incentives. Regarding ARMs, Mr. Dixon noted their growing consumer acceptance, especially among first-time buyers, as they offer lower initial rates without requiring 30-year buy-downs. He expects ARMs to remain a significant part of originations in Q4, helping address affordability challenges.

Alex Rygiel of Texas Capital Securities inquired about Century's land investment plans for the second half of 2025 and the types of mortgage products, including ARMs, that homebuyers are currently utilizing.

Answer

CEO Robert Francescon stated that the company will reduce its land investment, having already dropped 12,000 lots in Q2, and is now focused on pushing out terms into 2026. CFO J. Scott Dixon added that their land-light strategy provides flexibility and noted that mortgages are about 70% government and 30% conventional, with increasing buyer acceptance of ARMs since late Q1.

Alex Rygiel inquired about the integration activities of the Canada's Best acquisition and traction in the U.S. banking vertical, the need for recent price increases given tariffs and raw material inflation, and any notable CapEx needs for operational improvements.

Answer

President and CEO Jim Clark praised Canada's Best's cultural fit and entrepreneurial spirit, noting ongoing integration with JSI's Collingwood facility. He mentioned initial discussions and small wins in U.S. retail banking, with a 12-24 month gestation period for large projects. Jim Clark and CFO Jim Galeese clarified that price adjustments are made regularly, not blanket changes, due to project-based business, with minimal tariff impact on display solutions. They indicated no notable CapEx needs, emphasizing broader investments beyond capital spend.

Alex Rygiel asked about management's confidence in sustaining EBITDA margins above the 10% level and questioned the size of the total addressable market for LSI in the bakery and checkout areas of the grocery channel.

Answer

President and CEO Jim Clark expressed confidence in the company's ability to consistently achieve EBITDA margins of 11% or higher, in line with the Fast Forward 2028 plan, while acknowledging that strategic decisions like acquisitions may cause temporary variations. He described the addressable market in grocery for bakery and checkout solutions as 'massive' and well beyond the company's current ability to serve, representing a significant, long-term growth opportunity.

Alex Rygiel asked how Quanta might get involved in nuclear power, given its gaining momentum.

Answer

President and CEO Duke Austin stated that Quanta would be involved 'around the edges' of nuclear projects, performing ancillary services, but would not cross the 'nuke fence' or engage in reactor-related work due to associated risks.

Alex Rygiel asked about nuclear power gaining momentum and how Quanta Services might get involved in related projects.

Answer

President and CEO Duke Austin stated that Quanta is comfortable participating in projects around nuclear facilities, as long as they do not have to operate 'behind the NERC fence and the nuke fence.' He clarified that the company is not interested in taking on the risks associated with reactor construction or operations, but can perform many ancillary services.

Alex Rygiel asked about the percentage of D.R. Horton's buyers using adjustable rate mortgages (ARMs) and how this has changed over the last 12 months. He also inquired about the average square footage of floor plans as D.R. Horton reaccelerates starts, asking if it has changed significantly or if modestly smaller homes are expected for the foreseeable future.

Answer

SVP of Communications Jessica Hansen stated that ARM usage has increased from essentially zero to a mid-to-high single-digit percentage on closings in the most recent quarter, with expectations for it to drift up gradually. President and CEO Paul Romanowski noted that the average square footage has continued to drift down slightly but not significantly over the last 12 months. He expects homes to be on the smaller end in communities, with D.R. Horton remaining responsive to market demand.

Alex Rygiel asked about the percentage of D.R. Horton's buyers using adjustable rate mortgages (ARMs) and how this has changed over the last 12 months. He also inquired about the average square footage of floor plans as D.R. Horton reaccelerates starts, asking if there have been significant changes or if modestly smaller homes are expected for the foreseeable future.

Answer

Jessica Hansen, SVP of Communications, stated that ARM usage has increased from essentially zero to a mid-to-high single-digit percentage on closings in the most recent quarter, with new ARM products tethered to rate buydowns, and expects this percentage to drift up gradually. Paul Romanowski, President and CEO, indicated that average square footage has continued to drift down slightly, suggesting modestly smaller homes. He noted that the ability to sell homes earlier in the process allows them to be more responsive to market demand rather than being limited by pre-selected inventory.

Alex Rygiel of Texas Capital Securities asked for commentary on geographic demand trends and any market outliers. He also inquired what the company's low cancellation rate indicates about the economy, consumer confidence, and buyer quality.

Answer

EVP & COO Michael Murray mentioned dynamic changes in Florida markets, while SVP Jessica Hansen pointed to the Pacific Northwest as lagging slightly. President and CEO Paul Romanowski interpreted the low cancellation rate as a sign of committed buyers who are able to qualify, with Michael Murray adding that over 12,000 first-time homebuyers closed in the quarter.

Alex Rygiel of Texas Capital Securities asked for commentary on geographic demand trends and any market outliers. He also inquired what the company's low cancellation rate indicates about the broader economy, consumer confidence, and buyer credit quality.

Answer

EVP and COO Michael Murray mentioned dynamic changes in Florida but consistent performance elsewhere. SVP Jessica Hansen added that the Northwest was a slight laggard. President and CEO Paul Romanowski interpreted the low cancellation rate as a sign of committed, qualified buyers. Michael Murray highlighted that over 12,000 first-time homebuyers closed in the quarter, indicating strong underlying motivation.

Alex Rygiel from Texas Capital Securities inquired about the factors driving discussions for large orders with community owners, the sustainability of the current average selling price (ASP), and sought more detail on the market slowdown in Georgia.

Answer

President & CEO Duncan Bates explained that interest from large community customers is reviving as they acquire new properties and as financing markets improve, allowing them to monetize stabilized parks. He attributed the higher ASP primarily to a sales mix shift toward company-owned retail stores and expects it to remain elevated. Bates confirmed the Southeast market, particularly out of the Georgia plant, is slower, reflecting a broader trend and a higher reliance on the currently subdued community customer channel.

Asked if the year-to-date fleet expansion is on track, what might cause an acceleration of that plan, and which geographic markets are currently receiving the most investment.

Answer

The fleet expansion and CapEx are on plan, with revenue growth being driven by higher utilization. An acceleration would depend on second-half performance. Geographically, investment is focused on the South, particularly the Gulf Coast and Texas, with an eye towards the Midwest as a future strong market.

Alex Rygiel questioned whether the year-to-date fleet expansion is on track with plans and what scenarios might lead to an acceleration of this investment. He also asked for details on the specific geographic markets where the company is currently focusing its fleet investments.

Answer

SVP & CFO Gregg Piontek confirmed that the CapEx plan is on track, with revenue growth being driven by higher utilization rather than just fleet size. He noted that an acceleration would depend on second-half performance. President and CEO Matthew Lanigan identified the South, particularly the Gulf Coast and Texas, as strong markets in the first half, with the Midwest expected to be a key growth area moving forward.

Alex Rygiel of Texas Capital Securities asked if the year-to-date fleet expansion is on track with plans and what scenarios might trigger an acceleration. He also asked which geographic markets are currently receiving the most investment.

Answer

SVP & CFO Gregg Piontek confirmed that CapEx is proceeding as planned, with revenue growth benefiting from higher utilization, and noted that an acceleration would depend on second-half demand. President and CEO Matthew Lanigan identified the South, including the Gulf Coast and Texas, as key investment areas in the first half, with the Midwest expected to be a focus going forward.

Alex Rygiel questioned if the year-to-date fleet expansion is on track with plans and what scenarios might lead to an acceleration of this investment. He also asked which specific geographic markets are currently receiving the most fleet investment.

Answer

SVP & CFO Gregg Piontek confirmed that the CapEx plan is on track, with revenue growth being driven more by higher utilization than just fleet size. He mentioned that an acceleration would depend on second-half performance. President and CEO Matthew Lanigan identified the South, particularly the Gulf Coast and Texas, as strong markets in the first half, with the Midwest expected to be a key growth area moving forward.

Alex Rygiel of Texas Capital Securities asked for details on Beazer's cancellation rate, how it compares to peers, and if there are opportunities for better retention. He also questioned whether the Q4 closing ASP guidance could serve as a reliable baseline for fiscal 2026.

Answer

SVP and CFO David Goldberg stated that the cancellation rate is within the normal 15-20% range, though at the higher end due to consumer confidence issues, and that there was 'nothing to see there.' He declined to provide guidance on the 2026 ASP, stating that the company would address it on a future call.

Asked about the 2025 EBITDA growth outlook, the strategy for share buybacks, and the potential impact of the recent election on the business.

Answer

The executive anticipates at least low double-digit earnings growth in 2025, potentially a record year. The capital allocation strategy remains disciplined, with buybacks as an option, but the focus is on opportunistic and smart deployment. The recent election is viewed as a positive, given the expected continued investment in infrastructure and defense.

Alex Rygiel from B. Riley inquired about the rationale for stock-based compensation declining as a percentage of revenue and requested updates on the data center market, particularly for AI, and whether multifamily housing opportunities are reaccelerating.

Answer

Executive Gary Bowman explained that the decline in stock-based compensation as a percentage of revenue results from several factors: more metered use of stock awards, the burn-off of pre-IPO grants, a potential shift to more cash-based compensation, and revenue growth outpacing the expense. Both executives confirmed robust activity in the data center market, with opportunities in site engineering and future potential for interior MEP work. They also affirmed seeing "significant movement" and a high degree of optimism for an acceleration in the multifamily market.

Asked about current and future cycle times, cost reduction opportunities, the nature of the inventory build-up in Texas, and the near-term M&A strategy.

Answer

Cycle times have significantly improved from 9 months to an average of 7 months, boosting returns. Cost savings are coming from operational efficiencies (headcount reduction saving ~$5M annually) and purchasing scale (rebates of ~$2,500/home). The inventory build is a strategic necessity to meet buyer demand for quick move-ins. While focused on deleveraging, the company remains opportunistic regarding M&A.