May. 13 at 3:52 PM
$ESOA upon review this is the worst FQ2 they have ever had. Gross margin has never been lower and with rising operating expenses they have incurred an abnormally large loss. This is the first time their water segment has ever had a negative gross margin, and a (36%) GM in the nat gas pipeline business is insane
This is not a weather issue, this is them bidding projects poorly and executing even worse. Water revenue organically grew 17%, 74%, 46% the past three Qs while water GM declined from 22% to 16% to (3.4%), a classic sign that Doug chose to chase revenue growth by spray bidding opportunities without margin consideration. His father and brother made the same mistakes in the nat gas pipeline business 15-20 years ago, and now we are seeing the apple has not fallen far
Gross margin in the electrical segment has also declined for the first time in over a year, which the blame on Nucor's Kokomo plant despite a Nucor ramp in West Virginia - essentially replacement contracts are worse
