Last year, it was a negative cash flow from operations because we did so much revenue in December, which was the last month of the quarter. But back on a bigger scale and you pointed something out there, when we acquired Ferebee, it was at the very end of the quarter, it was in the first of December. But because it was an acquisition that included their working capital, we did not have to fund that working capital, which would have been $9 million or $10 million roughly out of our cash flow from operating activities, it was part of down in the purchase price, where other periods, if we buy a company and we’re not buying the working capital, then it shows up as working capital. We have to fund out of that first month and that ends up in that first quarter that we report.
So that’s a, say, $10 million difference that would have come out of operating cash flow if it had not been a platform company where we acquire the working capital. So those are things, nuances, that can make a difference. But again, last year, the organic revenue was higher in the quarter. And again, if it happens at the end of the quarter, that working capital cash flow doesn’t show up until the next following quarter.
Tyler Brown: Yes. No, I appreciate all the detail. I’m still kind of figuring it all out here, but just very helpful. It’s a cash generative model, and I was just trying to understand that better.
Operator: Our next question is from Michael Feniger with Bank of America.
Michael Feniger: Can you just help us understand with where liquid asphalt is today? It rolled over pretty hard. I realize, Alan, it might take a bite out of your revenue in the back half, but does it help your margin? Maybe you can just remind us how do think about that lag between your price and liquid asphalt and how that rolls through?
Alan Palmer: It has to do with when we bid the job. Like this quarter, we got $4.7 million worth of revenue related to them paying us for the higher cost liquid compared to when we bid the job. So it adds revenue, but zero profit on that. So when it’s adding revenue, it has a slight impact on your margin. $4.7 million, if there’s no margin and your average margin is 10%, then that’s $500,000. It’s not that huge, but it has a tiny impact. If that is going down, again, you take away the revenue, but you still have the margin on that, because the margin — you’re just offsetting cost dollar for dollar. Unfortunately, you have to run it through as revenue because of the way the contract works. So it has a slight improvement in your margin.
It really is a bigger impact on how much your revenue is and what your overall margin is because it’s $5 million or $4.7 million out of $341 million. But it goes both ways. It’s what we refer to as a slight tailwind when the costs are going down. And we have cost on non-index jobs and FOB sales that when it’s going up, that is a headwind in margin and when it’s going down, it’s a tailwind in margin.
Michael Feniger: And I mean, just on that, Alan, I realize there’s been a lot of moving parts, a lot of moving parts impacting the gross margin over the years. If we look pre-pandemic, so before COVID, surge in cost inflation, your gross margin was 15% to 16%. Is there anything structurally challenging the business preventing you from getting back there over time?
