John Bair : Just what the delay on the Hawaiian bid project was? I may have missed it, but…
Rick McTaggart: Yes, they asked us to extend the — the client asked the bidders to extend their pricing until the end of the year. They had — they still haven’t decided whether they’re going to proceed with the project or not or they didn’t give us too much information on why they wanted the extension. But they have until December 31 now to get the pricing that we bid back in June.
John Bair : Okay. Do you have any sense of how many other entities are bidding on the project?
Rick McTaggart: Well, we know that a total of three, including ourselves were involved in the bidding process. We actually don’t know how many actually bid. We had a number of questions from over the last few months. And we’re just waiting for them to decide what they’re going to do. It’s a nice project, and we hope we get it.
Operator: Our next question will be a follow-up from Gerry Sweeney with ROTH Capital.
Gerard Sweeney : Just a question on margins. Rick, you did mention there’s going to be some inflationary pass-throughs at the end of the year. But even in like the bulk side, when you had some of that energy pass-through gross profit dollars sort of stayed as a pass-through. So gross profit dollars may stay the same, but it may make the percentage look lower. Is that an accurate assessment?
Rick McTaggart: I would guess, yes, because we don’t — we’re not meant to make any margin on the pass-through. So the revenues increased significantly, I think, because of the energy price changes.
David Sasnett : Yes. Gerry, since our plants are very efficient we make a very small margin on the energy pass-through very minimal on some plants. But when you add the number to the numerator and the denominator, it affects the margin.
Gerard Sweeney : That’s what I figured out. Okay. So it’s — gross profit dollars haven’t changed, just the percentage has and mostly just because of the energy pass-through that revenue.
David Sasnett : That’s it exactly, yes.
Operator: And our next question will come from Christine Song with New Century Advisors.
Christine Song : I just had a question on capital allocation. And I know you guys had mentioned in the M&A activity you have — you’re pursuing two opportunities, the wastewater and manufacturing equipment in the mining sector, if I heard you correctly. So can you elaborate on these two opportunities, specifically the mining sector opportunity? And also, if you can kind of size in terms of what kind of multiples you guys find attractive for buying. And then also your thoughts on buybacks as well as increase in dividends with your capital allocation?
Rick McTaggart: Yes, sure, Christine. The — when I spoke about that earlier, I mean I said acquisitions and partnerships. The mining sector opportunity is a partnership opportunity. So that would mainly impact our manufacturing segment. It would be partnership with some other entities to provide equipment to a fast-growing sector of the mining industry. So there wouldn’t be necessarily any or much capital investment there in that particular situation. The other acquisition, the wastewater acquisition, I mean we don’t talk about values right now. I mean we’re in the midst of negotiating something with the owners. But it would be in line with what we’ve done in the past. I mean we don’t do any sort of $30 million, $40 million, $50 million acquisitions. We haven’t done recently anyway. They’re more sort of sub-$10 million deals that give us a very attractive opportunity to grow our existing service offerings into a new market that’s grown very rapidly.
David Sasnett : And with respect to our dividends and buybacks. Our company actually proposed initiating a stock buyback program several years ago around in 2008. Unfortunately, our articles of incorporation requires shareholder approval for us to have a stock buyback plan and we proposed to our shareholders. I think it was 2008, 2009, we proposed that we have the authority to mend articles of incorporation to allow us to stock buybacks. And that proposal was not approved by our shareholders. So legally, we’re not allowed to buy back our own stock at the moment.
Rick McTaggart: Without shareholder approval.
David Sasnett : We’d have to get a proxy out of them, we would have to get shareholder approval given that we failed one time doing — getting that approval, I don’t think we’re contemplating it again anytime soon. Look, our dividend policy is such that — we believe our company’s valuation is based more upon our growth and the amount of dividends that we pay. We think we’re viewed as a growth company, more than an income stock. So we’d like to allocate our existing cash reserves to do projects and new business. However, I think our Board of Directors is aware that if we continue to accumulate cash balances, we probably will — probably increase our dividends, but I can’t speak for them. But ideally, we’d like to allocate capital new businesses, acquisitions, projects. But if we find out that we have excess cash, I’m sure our Board will fully do the increase.
Operator: At this time, this concludes our question-and-answer session. I’d like to now turn the call back over to Mr. McTaggart. Sir, please go ahead.
