Good morning. My name is Steven, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Granite Construction Investor Relations Fourth Quarter 2016 Earnings Conference Call. All lines have been placed on mute to prevent any background noise, and after the speakers' remarks, there will be a question-and-answer period. Please note, we will take one question and one follow-up question from each participant. It's now my pleasure to turn the floor over to your host, Granite Construction Director of Investor Relations, Ron Botoff. Sir, the floor is yours.

Welcome to the Granite Construction Incorporated fourth quarter 2016 earnings conference call. I am pleased to be here today with President and Chief Executive Officer, Jim Roberts, and Executive Vice President and Chief Financial Officer, Laurel Krzeminski. We begin today with an overview of the Company's Safe Harbor language. Some of the discussion today may include forward-looking statements. Actual results could differ materially from the statements made today. Please refer to Granite's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions. The Company assumes no obligation to update forward-looking statements whether as a result of new information, future events, or otherwise. Certain non-GAAP measures may be discussed during the call and from time-to-time by the Company's executives. And please note that a reconciliation of certain non-GAAP measures is included as part of our earnings press release. For more information, visit our Investor Relations website, at investor.graniteconstruction.com. Thank you. Now, I'd like to turn the call over to Granite Construction Incorporated, Chief Executive Officer, Jim Roberts.

Thank you, Ron, and good morning, everyone. Thank you for joining us to review our recent results and our outlook. Before we talk about 2016 highlights and future Granite opportunities, let me first thank and congratulate Granite employees and teams for another year of solid safety performance. As we grow and as our opportunities continue to broaden, we're focused on enabling and empowering our employees to get home safely each and every single day. Our team's emphasis on improving safety in and around our work zones is a constant, a key component to operational and financial performance. On a personal note, I offer my regards and my support to all Granite employees and their families who was part of an evacuation order for nearly 200,000 people, who were told to relocate to higher ground due to the weakening of the Oroville Dam in Northern California this past week. With winter storms and erratic weather conditions continuing to pound our country, our society's decades long underinvestment in infrastructure is creating a wake. The resulting damage though, thankfully, not yet catastrophic, highlights the potential devastation. It highlights and puts a human face on our very real need to rebuild America's infrastructure. Now is the time to act before all of the work and investment of previous generations begins to crumble right in front of our eyes. Before I hand the call over to Laurel today, I'm going to spend a few minutes on our overall performance, including some segment trends. Then, I will finish with some thoughts on what we believe is an improving macro environment for our company, for our sector, and for our investors. Another particularly strong Construction segment performance was countered by challenges at certain large projects during the quarter and throughout the year. And while we needed the…

Thank you, Jim. And good morning, everyone. For the year, a 6.1% revenue increase met our mid-single-digit growth expectations, and it helped us to eclipse $2.5 billion in revenue for the first time since 2008. Notably, our fourth quarter 2016 revenue of $666.7 million was our best fourth quarter revenue performance since 2006, and our third-best ever. During the quarter, and throughout 2016, consistently strong Construction segment results were countered by underperformance in our Large Project segment. Company gross profit increased slightly in 2016 to more than $301 million, with consolidated gross profit margin of 12%, down from 12.6% last year. In the fourth quarter, profitability and earnings impacted negatively by certain large projects and some tough winter weather, took a step back from particularly strong results last year. As a result, 2016 earnings per share finished at $1.42, down 6.4% from $1.52 last year. However, our business continues to operate overall at a very high level, and we expect to build significantly from the healthy foundational level of profitability we have achieved in the past two years. The investments we continue to make in our business and in our people are paying dividends. We finished 2016 with record year-end backlog of nearly $3.5 billion, up 19.8%. Large Project Construction backlog increased 19.8% year-over-year to nearly $2.5 billion. And Construction segment backlog grew 19.7% from 2015 to finish above $1 billion; another year-end record. As we've seen each quarter this year, fourth quarter bookings were broad based across end markets and geographies continuing to highlight the benefits of diversification and the broadening of opportunities for our business. Looking at the segment detail, fourth quarter Construction segment revenue increased more than 5% to $359.7 million, with 2016 Construction revenue improving 8.1% to nearly $1.4 billion. In the fourth quarter, segment gross…

Thank you very much Laurel. Yes, we are very optimistic, and our team is already. Granite employees are poised to accelerate growth this year even without the benefit of a step-up up at the federal level or state level in California. These remain incremental growth drivers and opportunities. With the backdrop of improving public funding trends across the country, our growth outlook is encouraging. We continue to invest in our people and our businesses. We are primed for growth. So with a positive outlook across our business, we continue to challenge our leaders to take their teams to even higher levels of expectation and success. With record company year-end backlog of $3.5 billion, we are confident that our team is going to achieve our expectations for much improved results beginning in 2017. And with that, we will be happy to take your questions.

Our first question comes from Jerry Revich with Goldman Sachs. Please go ahead. Jerry Revich - Goldman Sachs & Co.: Hi. Good morning, everyone.

Good morning, Jerry. Jerry Revich - Goldman Sachs & Co.: I'm wondering if you folks can talk about the large construction projects that you highlighted that were headwind in the quarter. Where are we in the process? When did they roll off? And are any of them at the point where they're gross profit negative? Or are the margins just lower than what was anticipated?

Okay. So, let me first of all suggest that none of them are negative. And we expect them to roll off late this year and next year. And let me give a little color, Jerry, on some of the issues that are out there and I'm thinking about these three jobs that we discussed in preferably not giving any individual names, but let me give you some issues that are going on out there. Permits, some of these larger projects require the owner to provide permits for us to be able to build our work and they need to get out ahead of us with permits. One of major projects we struggled mightily trying to get permit so that we can build the work out in front of us. And therefore, we have a significant impact on the schedule. We believe it's a compensable item with the owner. And the owner is working with us through a dispute resolution process. But what happens is that, these are prolonged discussions, and in the interim, we end up not booking any profit on that kind of work. Another issue on one of our jobs, we have significant weather that we believe contractually allows us to be compensated for whether or not just relative to an extension of time, but also compensable for additional cost to accelerate the job to get back into the original schedule if needed. Again, the owner in this case thinks that it's not a compensable item we do. So once again we have an issue, it goes through the dispute resolution process, and towards the end of the job, we intend and hope to come to resolution. We've got some scope changes on some jobs where some owners are asking to change the internal design of the job…

Okay. You bet, Jerry. So as always, we try to look about a two-year outlook out in front of us in large projects. And it takes quite a bit of time in order to engage with the owners, potential joint venture partners, design teams. And we're looking close to about $20 billion over the next two years. We are taking the position that we like to lead projects, if at all possible. We're looking at projects that might be a tab smaller than they were historically, but at the same time, we have a larger role in them. And we're looking specifically at projects where we know the owners, and they're good to deal with. And we are looking heavily at projects diving deep into the contractual requirements to make sure that the issues that we've seen in the past are not repeated in the future. But the pipeline is full, it's healthy. And we're going to be demanding higher margins and expectations going forward in this business. Jerry Revich - Goldman Sachs & Co.: Okay. Thank you, Jim

Thank you very much, Jerry.

The next question comes from Nick Coppola with Thompson Research. Please go ahead.

Hey, good morning.

Good morning.

Good morning, Nick.

So, I wanted to make sure I understand your commentary about the FAST Act. It sounds like, there hasn't been any benefit to date. What are the key drivers to start seeing some of those dollars flow through? And what are your expectations throughout the year?

Okay. So let's remember what the Fast Act did for us. So back in December in 2015, we got the Fact Act passed as a real benefit to the industry. It's a five year long bill, $305 billion. And what it did was provide really some stability in the DOTs funding and that has happened. So the DOTs know that they have a certain amount of money set aside for their businesses going forward. So there has been that benefit, but it hasn't been a finance – or monitory benefit because the incremental dollars that were supposed to be added to the program starting in this year were held back, because we're now funding the Fast Act and the federal spending environment through a continuing resolution, which basically means, they're going to continue to fund the federal highway, federal transportation program at the same level as last fiscal year. So what we're already understanding is that between now and April, the end of April, there could be an opportunity to see this be fully funded again, which would throw another $1 billion back into the program, which would be obviously incrementally added moneys that we haven't seen yet. So there has been a benefit because of the stability, but there has not been any financial benefit from increased spending.

Okay. That's helpful. And then another policy type question. Could you just talk a bit about Measure M and how you plan to benefit from that?

Okay, you bet. So, last November and there were a host of very positive ballot measures that were passed. And I mentioned the number of $200 billion in November for the ballot initiatives. I'll run them through real quickly, then I'll talk a little bit about the benefits in each of them. So LA County, Measure M, which is the one that Nick is referring to here was basically a $120 billion program over 40 years. So it's a $3 billion year program, and it's an LA County measure. Interestingly enough, we, in the historically have not been a major player in the downtown proper LA market. But recently, timing is everything, right, have moved in and have some significant work there at LAX and some other work in the area. So we will be a player in receiving, certainly all portion of the $3 billion per year over the next 40 years. The other thing that happens when you start having that type of inflection relative to funding in a marketplace, it starts taking the competitive teams involvement in those projects which opens up the overall market in the surrounding areas who are being less competitive. So we love the idea that there's more money in the system. Our competitors – if we don't get to work, our competitors will and that will change the pricing mechanism and create opportunities for us even if we don't get Measure M work. But I do think we will get our share of that. Nick, a couple of other items that are really important to us. Santa Clara, passed Measure B. Santa Clara County which is in the South Bay Area of California, that's $5.5 billion, we're a major player in the Bay Area. BART, the subway system, have a $1.5 billion play there. Stanislaus County, which is out in the Central Valley of California have almost a $1 billion measure there which is a very large addition to the program out in the valley. Monterey County, right down here in our backyard, Measure X was $565 million. Merced, again out in the Valley of California, $450 million. Santa Cruz County, $400 million. It's just a great list now. The other thing that happened was also our California-induced programs. But we saw a great pass of a great bill or a measure up in the State of Washington, the Sound Transit which is $54 billion addition over 25 years, and we're a player with Sound Transit. They're a very good owner. They have a very good program, and that will really help our Washington state business as well.

All right. That's some great color. Thanks for taking my questions.

Thanks, Nick.

The next question comes from Alex Rygiel with FBR. Please go ahead. Alex J. Rygiel - FBR Capital Markets & Co.: Thank you. Good morning, Jim.

Good morning, Alex. How are you doing? Alex J. Rygiel - FBR Capital Markets & Co.: Not too bad. You referenced the California Transportation Bill with a, sort of a drop-dead passage date – deadline date of April 6th. Let's just jump forward and cross our fingers and hope that they meet that deadline. When might you start to see bidding opportunities and when might you start to see revenue coming through the P&L?

Okay. So, Alex, I'm with you. I always keep anything legislatively, I keep my fingers crossed. So we're both in the same game there. And I wouldn't call it a drop-dead date, but I would say that it is the most encouraging time goal that we've seen in the last 12 months when we've really been working hard to get a transportation bill in California. So let's assume for a moment that, April 6th comes along and the bill is passed, which certainly we have significant momentum today for that to occur. So several things need to occur. First of all, the Governor put in his budget for 2017 fiscal year, $4.3 billion of additional spending. We have two bills on the floor today, one actually is SB-1 has recently been passed by the Senate Transportation Committee with a seven to two vote. So that was a very good vote for us, to get that one passed. And that's a $6.3 billion additional funding mechanism per year. And AB-1 over on the assembly side is virtually identical to SB-1 at $6.3 billion. So, first of all, let's talk about the size of what we could see in April when we get a bill assuming that it is April and assuming that we get a bill. Let's just assume for the moment that it's somewhere in the neighborhood of $5 billion additional funding per year. In a state, different than the Feds, they can get this enacted much faster and get it put into the system, I would say, within two quarters, probably into the system allowing work to start bidding. And I would say that you would probably see stuff on the street, bidding by the end of the year and you would see it in our 2018 financials. Alex J. Rygiel - FBR Capital Markets & Co.: That is great news. And then Laurel, maybe a little bit more color on the three projects. There's been a couple of quarters in a row now where we've had some sort of headwinds on certain large projects. Is there any way you could quantify the to-date headwinds that have passed through the P&L in 2016?

In our footnotes in our financial statements, we have a section that's called revisions and estimates, and our 10-K will be coming out later today. And it shows you the number of projects and how much was written up or down and gives you a range there. And I'll tell you what you're going to see in that is somewhere around a year-over-year difference in large projects of about $20 million. Alex J. Rygiel - FBR Capital Markets & Co.: That's helpful. Thank you. I'll get back in queue. I appreciate it.

Thanks, Alex.

The next question comes from Michael Dudas with Vertical Research. Please go ahead.

Good morning, Jim, Ron, Laurel.

Good morning.

Good morning, Mike.

Good morning, Mike.

First question, you mentioned in your prepared remarks about Construction Materials business. As you look into 2017, will we see continued shift for using more of your aggregate internally? And are you seeing any additional positive signs from some of the opportunities selling externally to some of your competitors out in the market?

Okay. So let's talk about it, because that's a portion of our business that's near and dear to my heart. It's – the Materials business has really stabilized over the last couple of years. And I'm not sure I can give you an exact direction relative to internal versus external. What happened in 2015 was, we bid some very large projects in California, and Granite was not the low bidder on them, but one of our materials utilizers and customers was. So you saw a couple of huge projects move in to our customers realm which created external material sales for us. Just the opposite happened in 2016. We had some very large material-driven projects that Granite was the low bidder on, and so the materials went over to Granite versus our third-party customers. We see the committed volumes, Mike, for 2017 already greater than 2016. So, we're already – and we can call it backlog, although we don't analyze backlog from an external discussion standpoint. Our committed volumes for 2017, and I'll say across the West are very healthy going into the year. And that's both internal and external. And you can kind of think about it over the last couple of years, it's been about a 50-50 split. And historically, and I'll say this from a historical standpoint. Historically, the driver as the markets get stronger, which I believe they will, and that's – if we get a transportation bill in California, and some federal infusion. I think you're going to see our external customer base outpace our internal customer base. The stronger the marketplace, the faster the external market increases. And so, I think what you'll probably see in 2017 assuming all things are equal, Mike, a stronger shift towards external than internal.

And better pricing I would think?

Yes, definitely better pricing. We've had a couple of price increases. We had – our last price increase was at the end of last year. We've been able to see, I'll call it mid-single digit range increases. We'll say 5% across the West on an annualized basis. I think we're working on getting another single-digit increase this year. That I think is going to happen up until we point where the demand changes. If the demand begins to change due to a California Transportation Bill and due to some federal funding, then I think that creates an inflection point for pricing. But I don't see pricing dramatically changing until we get significant additional funding in place. And I do believe that if we get that in place, the Materials business, always is the first location where we see a material change in the marketplace. So we'll keep our eye on that Mike. But if we get some infusion both in California and the Feds, I think what you'll start seeing is, the Materials business will move up faster than the other two businesses.

Excellent. And Jim, my follow-up is, assuming the three drivers of California transportation, FAST Act moneys and if there something comes out of the Trump administration, that all hits in say 2018 and 2019. As investors and ground stock, how should we look – should Granite be seeing big volume opportunities or is it more towards margin opportunities for the bottom line in an environment where demand exceeds supply pretty nicely?

Okay. So typically what happens, every time and I've been through several of these Mike relative to big market adjustments. And we'll talk about this one as a nice upward market adjustment. First thing you're going to see is pricing changes. You're going to see some margin, the margin change first. Because what happens is and you're going to see it in the Materials business first and then the Construction business. What will happen is that, our competitors as the demand changes they will fill up fairly fast. And once they fill up, they will basically slowdown or just basically stop bidding work. So in the interim, in the very short-term, pricing will come up and it will come up quite quickly. The second thing that will happen is that as they slowdown in their bidding opportunities, we have tremendous elasticity inside Granite. We can scale up and we can do a lot more work. So, I think secondarily, you're going to start seeing our volume go up. And the nice part about it is, if you get the volume increase tied with the price increases, that's where you start seeing the real leverage in terms of the overall returns of the company.

Jim, thank you very much. Very helpful.

All right, Mike. Thank you.

The next question comes from Bobby Burleson with Canaccord. Please go ahead.

Hi. Good morning. Thanks for taking my questions.

Hi, Bobby.

Sure, Bobby.

Hi. So, the first one would be just kind of big picture. Let's say we didn't get a Trump infrastructure plan at all. But FAST Act is working in terms of better visibility for kind of longer duration projects, and there are some incremental funding also from the state and local level. Do we still enter one of your best kind of opportunities in the market that you guys have seen versus kind of the historical upturns?

Okay. So, I think that what you're asking Bobby is, let's leave the Trump infrastructure uplift aside for the moment. And let's assume that we get a California bill. I do think that's probably one of the biggest drivers of our West Coast business, is going to be the California Transportation Bill, that will hit much faster than anything coming from the Feds. But even if we don't have anything from the Trump administration or and we do not get a California bill, we're pretty comfortable with the guidance that we gave you. We believe that's where the company is going without the infusion of those additional funding mechanism. So I still think, it's very healthy, without it the ballot initiatives are exactly, you nailed it. The local measures simultaneously coupled with the private market, the industrial, commercial, renewable energy markets, are going to continue to try growth in our Construction segment. But what will happen with the California bill and the Trump infrastructure program, it will start changing pricing. And it will change price quite quickly. So, we're right where we are. We have very strong organic growth, but we will not get to an inflection point without both of those happening.

And how does the FAST Act factor to this?

It's already part of the program today. I'd say, just a stability mechanism more than anything, Bobby. I don't see it as creating significant demand except that as you start seeing additional measures and let's talk about the local measures. As long as there is a healthy state budget, which there is in lot of the states today, and the Feds are doing their part with the FAST Act, and the local measures are there, then we don't see general funds out of the state start robbing these pools and we see that money actually going to transportation, which I think is where it is today. So from that perspective, I just put the FAST Act down as part of our foundation for where we are today.

Okay. And then I guess, just in terms of timing of awards, should we expect any kind of air pocket of backlog sometime in the first half? Do you have to stay for the timing of awards you win to hear back on and in terms of year-over-year growth.

Did you say an air pocket, is that what you said?

Yeah. Is there going to be a pause in the ability to grow that part on a year-over-year basis?

No, I don't think so. I think we've got a very consistent bidding environment right now. There is work being bid both at the construction and large projects level. Again, large projects is very lumpy, and it historically has always been very lumpy. We have quite a few projects that have been bid and we're waiting for results on right now. And with one of those lamps in the first quarter, it could be a big uptick in the first quarter. I do think what you'll see also in the first quarter is the construction activity, is typically quite strong in the first part of the year from a bidding perspective. So in the first quarter and second quarter construction should be active, but large projects are always lumpy.

Okay. Great. Thank you.

You bet. You bet, Bobby.

The next question comes from Joe Giordano with Cowen & Company. Please go ahead.

Hey guys, good morning. This is Tristan in for Joe today. I just had a quick one on M&A. You've talked about doing a deal in the past. How is your pipeline looking right now? And then, is the primary reason for not having done something already is more based on pricing or the quality of assets available?

Okay. I want to repeat that a little bit. If you're focusing on M&A only, but is that basically the question? How come we haven't done anything yet?

Yes.

Okay. So, well, remember what we've talked about with M&A and maybe I will just rephrase where we stand. We are in an inquisitive mode. We do believe that acquisitions are part of our strategic plan to get us to where we want to be in the next five years. We publicly stated that there are two environments that we're focused on. One is expanding our vertically integrated business model that we currently have in California in the West. Taking that to the East, we believe that's a very strong model. We believe we're very good players in that model, and that we are looking for building that model throughout the country. So that's certainly an opportunity. And that we do have opportunities in that pipeline. We also have opportunities in the water pipeline. And we've mentioned that before. The other significant area of diversification that is our primary area, would be water. And I personally believe that's going to be a huge infusion, funding into that program over the next 5 years to 10 years. And again, we have some opportunities in that pipeline as well. So both, the vertical integration, geographic diversification, and the water diversification plays are in the pipeline, and we are working through the system. And as you know, they take time sometimes. You get to the dance, and really the music stops, and sometimes the music plays and you complete the dance. So we have a team of people that are dedicated to that process in Granite, and they're working on deals constantly.

Okay. Thanks for the color. When you talk about water, a water opportunity, is it more on the transportation side or the treatment side?

Both. I think, when we talk about water, what we're really looking at is trying to be a countrywide, vertically integrated player in the water industry. We're a large player, heavy construction player today. We're in the pipelining business today. We would see it in the treatment, the pipelines, the lining, the entire infrastructure model of water.

Thank you.

Next question comes from Brent Thielman with D. A. Davidson. Please, go ahead. Brent Edward Thielman - D. A. Davidson & Co.: Hi, good morning.

Good morning, Brent. Brent Edward Thielman - D. A. Davidson & Co.: I guess most questions have been answered here. But maybe one for the Construction segment. Your margin is 17%, really good, despite some problems I think you had with weather. Yeah, is it fair to say, you would have seen something north of that level of profitability if you had kind of a milder December? And does this give you any comfort around maybe a level above mid-teens longer-term?

Well, let me suggest this. The biggest issue for weather and let's say December, because December was eight days or nine days of rain, and that really did hamper the work in the West. What happens in the Construction business is, most of that business is local work. And when rain occurs, even though there may not be rain afterwards, it takes time to put the job to dry out and sometimes the owners flat say we're done. They know the holidays are coming, and need to shut the jobs down, and that happened on a major job in Southern California this year. And so, I would say the biggest issue in Construction was more revenue driven than margin driven, because we take a percentage of completion recognition on our jobs. So unless the weather caused a physical write-down on the job, it really didn't change the margin, but it did change the actual gross profit and revenue that we could have performed in the month of December. And that's another reason why this December was a little slower than last year was because a lot of projects were just flash shutdown in the West due to the weather. And the same thing on the Construction Materials segment in the quarter. Once that weather hits, and all of our customers take a look outside, and say, well I don't expect it to dry out for three days or four days. They basically say, it's time to go home for the winter, and we'll come back in the spring. And just another note, Brent, on that same topic. It has been significantly wet in the month of January. And it's still raining today. In fact, on the way in this morning, it was raining and the winds blowing. And I'm one of those guys that, probably is one of the few people in the State of California that cringes everyday at rains because it certainly impacts our business, but we need it. And the reservoirs are filled up and this is going to be a really good long-term program for the State of California and the Western U.S., but it certainly did hurt December and it hurt January. Brent Edward Thielman - D. A. Davidson & Co.: Okay, okay. That's good color. Maybe more of a housekeeping question, Laurel, in terms of D&A and thinking about that margin target for 2017. Should that D&A hold relatively flat or is there anything that's rolling off there?

We expect our DD&A to go up actually due to the CapEx. So somewhere around $75 million up a little bit from this year. Brent Edward Thielman - D. A. Davidson & Co.: Okay. Great. Thank you. Best of luck.

Thanks.

Thank you very much, Brent.

The next question comes from Ryan Cassil with Seaport Global Securities. Please go ahead.

Good morning. This is Jacob on...

Good morning, Ryan.

...for Ryan. This is Jacob for Ryan.

Oh, Jacob. Okay.

Hi. As markets begin to ramp over the next couple of years, could you give us an update maybe on how you see your cost structure playing out versus competitors, in reference to the owning versus renting equipment dynamic?

Okay. So let me give you a – I think it's a great discussion point about our cost structure in general. And let me talk about it in general. Then I'll talk about the equipment on rent-to-own. Yeah. So, certainly we have some very large – and I'm going to talk on the Materials facilities first Jacob. We have some very large Materials facilities. They have been underutilized now for years and years and years. And so as the market ramps up and the potential volumes increase, we have a very, very scalable product in terms of our materials facilities. And that's going to be a really nice opportunity for us for incremental margin, just relative to production. We've been underutilized our capacity significantly in our Materials business. So we could easily ramp up 40%, 50%, even greater percent in our Materials business without having to make major investments in our plants. On our rolling stock, we analyze that heavily every single year and we certainly look at lease, rent versus own. We do believe that the ability for us to have a very low cost of capital allows our ownership cost to be much lower than a rental environment and we'll continue to do that. Certainly, as we ramp up, we need to keep CapEx in line with our operating cash flow. We'll balance the two out, and if we need to rent, we will rent. And we typically rent during the peak months in the summer when we don't believe on the long-term that we're going to need those pieces of equipment in a – I'll call it, through the winter and through several more years. So rent-to-own is on a year-by-year decision, but certainly as you can see, our CapEx is increasing. We're buying more rolling stock, more plant equipment, and we believe – we have always believed that owning equipment is much more beneficial to the company than renting. Now, I will say this, about relative to the overall size of our fleet, we do see it increasing and that's why you're going to see the depreciation go up. And again, I think that's really healthy. And the value of that fleet will come into play, the real value as we increase the utilization of all the individual pieces. And as that utilization increases, so does our efficiency. So, again, we'll go back to the ownership side as we consider it to be more beneficial.

All right. Thank you for the color.

Thanks, Jacob.

The next question is a follow up from Alex Rygiel with FBR. Please go ahead. Alex J. Rygiel - FBR Capital Markets & Co.: Thank you. Either Jim or Laurel, the Construction backlog is up about 20% year-over-year. It's been up 20% to 30% year-over-year now for five quarters in a row. But the Construction revenue has been only increasing maybe 5% to 10% a year in the last four quarters or five quarters. What's the disconnect there? Is the project size getting longer and getting stretched? Or are you expecting a very significant near-term ramp sort of as a catch-up?

Okay. Two things. First of all, the observation was correct, Alex. The average size of the project is getting a little bigger. So the burn time is getting longer. And so that's why as that ramps up, it doesn't burn off as fast. So you don't see the same equivalent 20% increase on a volume basis. With that said, I do believe that there is a point here where you're going to see the Construction business grow faster than what we've had in the past, and that was one of the things that we talked about earlier, that's going to be one of the first drivers of our volume increase. Right after Materials, it will be the Construction business. The other thing that's happened in the Construction business is, we've actually, over the last three years to four years developed some very strong relationships with private partners. And those private customers have some very large projects. And those are turning over a longer period of time than our standard smaller DOT work. So, although the margins are great and the burn's a little slower, but I do think that you'll see our overall growth rate pick up a little bit as we discussed in our guidance. Alex J. Rygiel - FBR Capital Markets & Co.: Very helpful. Thank you.

Thank you, Alex.

The next question comes from Rohit Seth with SunTrust. Please go ahead.

Hey, thanks for taking my question. Just on the California highway bill, you had mentioned potentially a $5 billion per year spend. What's the spend been like over the last few years in California?

Well, it's not very good. Let me just suggest that. It's actually reduced itself over the last several years from about $2.5 billion to about $1.7 billion. So if you think about it, this is not the size of a new bill. This is additive to the current level. So at the low-end, the additional amount that has been discussed from the Governor is $4.3 billion. At the high-end, both Senator Beall and Senator Frazier's bills are at the $6 billion level. So those are additive to the $1.7 billion.

Got you. Okay. And that's all I had to ask. Thank you.

Okay, Rohit. Thank you.

Thank you.

The next question comes from Brian Rafn with Morgan Dempsey Capital Management. Please, go ahead.

Good morning, Jim.

Good morning, Brian. I would have been disappointed, if you hadn't been on the line.

I'm pushing that star button. You must put buy-side guys at the bottom of the list.

Well, I don't have anything to do with that Brian. So don't hold that against me, okay.

All right, all right. Let me ask you on something that Bill Dore used to talk about, bid day discipline. Selection of type of projects, knowing the owner's profile, is there any deviation because you guys are focused on that for a decade. Is there a greater stringency? Is there more a leakage with what you think, owners are trying to push on to you and shift risk? How do you see that? Because you guys have always kind of focused on that for at least the last 7 years, 8 years, 10 years. So I can't believe that's a new problem with some of these major projects on the heavy civil side?

Okay, Brian. I'm going to tell Mr. Dore that you mentioned him by the way. And you're right on it, and you know us well Brian, that bid day discipline is imperative. I do believe though, with that said that as we got into these very complicated P3 design-build projects that the contractual requirements have changed. And literally speaking, and I'll give you an example on one job. On one job, we are doing, that is a very large P3, there was only a couple of words that changed from the standard DOT language to the language in this contract. And those couple of words, and I'm talking a word here and there, changes the whole complexity of the job relative to the quality requirements of a project in the field. So it's almost like going through these very onerous contracts with a fine-tooth comb now, to make sure that you don't miss something and you don't make an assumption that the contractual language is the same as it was before. And they have become very onerous, and that is exactly why Brian that we have gone out and really determined even more so than before who we want to work with and who we don't want to work with. And I believe that as we see this macro uptick, it's going to really allow us to be much more conservative as to who we deal with. And we're going to be able to pick and choose. And if we just look at language and it's ambiguous, we don't need to bid the work. I would say that, during the downturn unfortunately, we probably knew some of this language was ambiguous. We looked at it and figured we'll be able to work with the owners and the relationships obviously have struggled on some of those jobs. But bid day discipline is right up our alley. Our teams are focused on it and the other part of it is obviously contractual understanding.

Yeah. Okay. No. I appreciate that. When you talk about the FAST Act, that kind of an overall federal umbrella, you've got some very aggressive state DOTs. We've seen that here in Wisconsin. You've got the local referendums. If you layer in the Trump infrastructure, you've heard that bantering with the $1 trillion and it could be transit pipelines, defense, it could be all over the place. If you have that type of really robust demand, for you guys does it make you more selective from a margin standpoint and looking selectively at deals or do you open the spending and really ramp up your rolling stock and add small hot-mix plants. And is it really about expanding bench strength and really going after the volume.

Okay. So, first of all, I would suggest that having gone through this several times now, that the first thing to do is to be selective. The first thing to do is to make sure that you understand from a business intelligence standpoint, how every individual market is acting and reacting to the changes. So you don't go out and just ramp up and get a bunch of backlog. First thing that does is, it ruins the marketplace, and we consider our self to be a market leader. So we'll sit back and we'll watch and we'll be selective and then what we'll look at is pricing and certainly it is going to be an advantageous position to go into the marketplace to increase our rolling stock and our plant equipment. So, we've already in advance of these what we see as a ramp up. We've been out increasing our CapEx. The problem is going to happen if you're in a reactive mode, you're not going to have access to the equipment and the plant facilities in a timely manner to be able to facilitate the upside from those projects. That's why we've ramped up our CapEx significantly over the last couple of years because we see this happening. But we're going to be very selective first and then we'll slowly open up the volume mechanism. But again, you don't want to open up the volume mechanism where it starts diluting the pricing opportunities. So it's a real fine line Brian.

Yeah. Okay. And then on – you talked a little bit more about some of the private – some of the subdivision real estate, homebuilding, power, wind, solar. If we see a defense build up like you guys did some defense work I think in Guam.

Right.

What are some of that non-transit stuff that you're seeing maybe as a counterbalance?

You bet. So, first of all, on the private sector side, we've seen a real ramp up in the commercial industrial side. Big boxes are coming back, and big boxes that are for us even $30 million, $40 million a box for grading and underground and site work. That was stagnant in the last six years. And we're seeing industrial parts popping up again and the local smaller players, those are a little bit above their capabilities, especially when you get to a big moving job and real big underground job. So I would say industrial commercial has come back nicely, the renewable energy is still strong with us. I don't see that changing. We've got a very nice backlog of renewable energy work, mostly in the solar sector, a little bit in the wind sector. I also see the transmission distribution business very strong. We're getting as you know Brian, we do a lot of construction management work in that sector and we're actually in the hiring mode there with a lot of new contracts with utility companies. So that's very nice. Overall, I think you see the federal and defense market starting to get more robust. We're starting to see more activity at the U.S. basis. We're starting to see Guam come up again and I think we have a whole separate federal division that handles that work. So that's very nice. And probably where the big money is on the private side, is the high-tech side. That's where we're seeing that make major investments in their campuses and in their distribution centers. And so, we're following them very closely, but it's a combination of all the above, Brian.

All right. Thanks, guys.

Okay, Brian. Take care.

This is the end of Q&A. And I would now like to turn the call back over to our host.

Well, thank you, everybody for your questions, a lot of great questions. A quick note for our shareholders and our analysts, Laurel, Ron and I will be on the road in Connecticut. We'll be in New York twice. We'll be in Las Vegas for CONEXPO. And we'll be in Florida over the next six weeks. So please do not hesitate to reach out, so that we can catch-up with all of you very soon. And thank you to all of our employees for keeping your fellow workers safe every day, and performing at an exemplary level. We greatly appreciate it. As always Laurel, Ron and I are available for follow-up if you have any further questions. Thank you, everyone.

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